Unit Corporation filed voluntary petitions under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Texas, Houston Division to effectuate a pre-negotiated Chapter 11 plan of reorganization that will reduce the company’s funded debt obligations by more than $650 million and right-size the company’s balance sheet for go-forward operations.

Vinson & Elkins is serving as legal advisor, Evercore Group is serving as investment banker and Opportune is serving as restructuring advisor to Unit Corporation.

Unit Corporation expects to continue to operate in the ordinary course throughout the Chapter 11 process without material disruption to its vendors, customers or partners. The company’s 50% owned midstream affiliate, Superior Pipeline Company and its subsidiaries, is not a debtor in the Chapter 11 cases and is unaffected by the company’s Chapter 11 filing. Additionally, the company does not anticipate that payments to vendors and suppliers of its subsidiary Unit Drilling Company will be impacted.

The Chapter 11 petitions were filed in accordance with a restructuring support agreement between Unit Corporation, the holders of more than 70% of the company’s 6.625% senior subordinated notes due 2021 and all of the lenders under the company’s senior credit agreement (RBL lenders). The restructuring support agreement sets forth the principal terms of the restructuring transaction that will be effectuated by the plan of reorganization, including an equitization of all of the outstanding subordinated notes and the replacement of the existing RBL facility and the DIP financing with a $180 million exit financing facility. Consummation of the plan of reorganization will be subject to confirmation by the court and other conditions in the plan, the restructuring support agreement and related transaction documents.

“Like many companies in the oil and gas industry, we have felt the impact of the severe downturn in commodity prices, which has only worsened with the COVID-19 pandemic,” David T. Merrill, president and CEO of Unit Corporation, said. “While facing this challenging environment, we have worked diligently to explore a variety of strategic alternatives to cut costs, improve our liquidity and address near-term debt maturities. We are pleased to receive the support of our lenders and noteholders and are confident that, on emergence from Chapter 11, we will be better positioned to meet our challenges and realize the potential of our company.”

With the filing, and subject to court approval, Unit Corporation received a commitment from the RBL lenders that are parties to the restructuring support agreement to provide up to $36 million in debtor-in-possession financing. The company anticipates up to $18 million will be available on an interim basis. This financing, combined with the company’s usual operating cash flows, is expected to provide sufficient liquidity for the company to continue to operate in the ordinary course through the restructuring process.

The company filed several customary motions with the court seeking authorization to support its operations while this process is ongoing, including authority to continue payment of employee wages, salaries and benefits without interruption, and to continue paying all vendors and suppliers of Unit Drilling Company in the ordinary course of business. The company expects to receive court approval for these requests.

Weil, Gotshal & Manges is serving as legal advisor and Greenhill & Co is serving as financial advisor to an ad hoc group of holders of subordinated notes.

Unit Corporation is a publicly-held energy company engaged through its subsidiaries in oil and gas exploration, production, contract drilling, and natural gas gathering and processing.