Corporate Presentation

Transcription

1 Corporate Presentation May 22, 2018

2 Forward Looking Statement This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of All statements, other than statements of historical facts, included in this presentation that address activities, events or developments that the Company expects, believes or anticipates will or may occur in the future are forward-looking statements. The words believe, expect, anticipate, plan, intend, foresee, should, would, could, or other similar expressions are intended to identify forward-looking statements, which are generally not historical in nature. However, the absence of these words does not mean that the statements are not forward-looking. Without limiting the generality of the foregoing, forward-looking statements contained in this presentation specifically include the expectations of plans, strategies, objectives and anticipated financial and operating results of the Company, including as to the Company s drilling program, production, hedging activities, capital expenditure levels and other guidance included in this presentation. These statements are based on certain assumptions made by the Company based on management s expectations and perception of historical trends, current conditions, anticipated future developments and other factors believed to be appropriate. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the Company, which may cause actual results to differ materially from those implied or expressed by the forward-looking statements. These include risks relating to financial performance and results, current economic conditions and resulting capital restraints, prices and demand for oil and natural gas, availability of drilling equipment and personnel, availability of sufficient capital to execute the Company s business plan, the Company s ability to replace reserves and efficiently develop and exploit its current reserves and other important factors that could cause actual results to differ materially from those projected. Any forward-looking statement speaks only as of the date on which such statement is made and the Company undertakes no obligation to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by applicable law. The SEC generally permits oil and gas companies, in filings made with the SEC, to disclose only proved reserves, which are reserve estimates that geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions. In this communication, the Company uses the term unproved reserves which the SEC guidelines prohibit from being included in filings with the SEC. Unproved reserves refers to the Company s internal estimates of hydrocarbon quantities that may be potentially discovered through exploratory drilling or recovered with additional drilling or recovery techniques. Unproved reserves may not constitute reserves within the meaning of the Society of Petroleum Engineer s Petroleum Resource Management System or proposed SEC rules and does not include any proved reserves. Actual quantities that may be ultimately recovered from the Company s interests will differ substantially. Factors affecting ultimate recovery include the scope of the Company s ongoing drilling program, which will be directly affected by the availability of capital, drilling and production costs, availability of drilling services and equipment, drilling results, lease expirations, transportation constraints, regulatory approvals and other factors; and actual drilling results, including geological and mechanical factors affecting recovery rates. Estimates of unproved reserves may change significantly as development of the Company s core assets provide additional data. In addition, our production forecasts and expectations for future periods are dependent upon many assumptions, including estimates of production decline rates from existing wells and the undertaking and outcome of future drilling activity, which may be affected by significant commodity price declines or drilling cost increases. This presentation contains financial measures that have not been prepared in accordance with U.S. Generally Accepted Accounting Principles ( non-gaap financial measures ) including LTM EBITDA and certain debt ratios. The non-gaap financial measures should not be considered a substitute for financial measures prepared in accordance with U.S. Generally Accepted Accounting Principles ( GAAP ). We urge you to review the reconciliations of the non-gaap financial measures to GAAP financial measures in the appendix. 2

3 A Diversified Energy Company Casper Anadarko Basin Permian Basin Mississippian Basin Oklahoma City 6 Marcellus Tulsa Headquarters Arkoma Basin North La/ East Texas Basin Pittsburgh Tulsa based, incorporated in 1963 Integrated approach to business allows Unit to capture margin from each business segment 95 Unit Rigs Houston Gulf Coast Basin E&P Operations Midstream Operations Office Location 3

4 Company Highlights Highly economic opportunities for our E&P segment Contract drilling segment activity rebounding Midstream segment EBITDA poised for growth Fiscally conservative Capital spending in line with cash flow 4 4

5 2017 Accomplishments Exploration & Production Acquired certain oil and natural gas assets located in our core Hoxbar play in western Oklahoma for $54.3 million implied adjusted price of ~$1,000 per undeveloped acre. Total year end 2017 proved oil and natural gas reserves increased 27% over Replaced 300% of 2017 production with new reserves. Drilling Placed one new BOSS drilling rig into service at the end of the second quarter. Reactivated 14 SCR drilling rigs. All ten BOSS drilling rigs operating during the year. Midstream Record operating profit (revenue less operating expense) of $51.7 million, a 7% increase over Connected five wells to Pittsburgh Mills gathering system (increasing gathered volumes up to 141 MMcf/day); connected three wells to Segno gathering system (increasing gathered volumes to record high of 98.2 MMcf/day). 5

6 Core Upstream Producing Areas Average Production (MBoe/d) Net Wells Drilled: ~ est Natural Gas Oil / NGLs NGLs 28% Oil 18% Gas 54% Q Daily Production: 46.5 MBoe/d Mid Continent Region Hoxbar/STACK Granite Wash Upper Gulf Coast Region Wilcox Key focus areas include: Gulf Coast: Wilcox (Southeast Texas) Mid-Continent: Granite Wash (Texas Panhandle) Hoxbar (Western Oklahoma) STACK (Western Oklahoma) 6

7 Track Record of Reserve Growth Natural Gas Oil / NGLs 450% 300% 285% 261% 221% 161% 169% 166% 150% 0% -150% (119%) Proved Reserves (MMBoe) Annual Reserve Replacement Average: 176% 171% 186% 176% 113% 337% 202% 204% 161% (1%) %

8 SOHOT Low Cost, High ROR Oil Play Lease Operator Spud Date IP-30 Boe/d % Oil Lateral Length Schmidt #1-10H Unit 9/ ,000 Nina #1-22H Unit 8/17 1, ,855 McConnell #1-11H Unit 10/17 1, ,943 Schenk Tr. #1-17HXL Unit 11/17 2, ,825 Liv. Land #1HXL Unit 1/ ,985 Torralba #1H Kaiser 1/ ,839 Amanda #1H Kaiser 3/ , Denotes Unit non-op working interest. Marchand Vertical Marchand Horizontal 350% Single Well Economics Type Curve Marchand 5,000 Marchand 7,500 IP - 30 (Boe/d) ROR 119% 171% EUR (Mboe) % Liquids 83% 83% Lateral Length 5,000 7,500 Well Cost ($mm) $5.4 $6.7 IRR % 300% 250% 200% 150% 100% 1 5/1/2018 Strip Price Deck with 1 st Production Starting 5/1/2018. See Q Economic Prices in Appendix (also available at 50% 0% $60 / $2.50 5/1 Nymex $70 / $3.00 $80 / $3.50 Marchand 5k Marchand 7.5k 8

9 SOHOT Growing Oil Production and Improving Capital Efficiency 600, , , , , ,000 0 Quarterly Net BOE Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Gas NGL Oil Geology Marchand stacked lenses provide multiple oil drilling targets Medrano proved gas potential Land 23,000 contiguous net acres 65% HBP Majority operated Working interest 50-70% 40 to 50 location inventory steady with continued acquisition of bolt on acreage Waterflood potential Operations Running one Unit Drilling rig Incremental optimization of drilling and completion process has kept cost low without sacrificing EUR Extended laterals (XL) improving capital efficiency 9

10 Granite Wash Low Risk Wet Gas Condensate Play with NGL Price Upside Well Operator Spud Date IP-30 MMcfe/d Gas % Lateral Length Dixon 5554 XL #1H Unit 2/ % 7,503 Dixon 5554 EXL #4H Unit 2/ % 7,474 Carr 1357 EXL #1H Unit 3/ % 7,891 Carr 1357 EXL #2H Unit 5/ % 7,663 Francis 5859 EXL #2H Unit 9/ % 9,442 Dixon 5554 EXL #5H Unit 6/ % 7,802 Meek 6836H Unit 5/ % 4,375 Single Well Economics Unit Tecolote Jones FourPoint Le Norman BP GW C1 GW B GW G Type Curve Granite Granite Granite Wash C1 Wash G Wash B IP - 30 (Mcfe/d) 9,960 9,000 7,902 ROR 43% 44% 26% EUR (Bcfe) % Gas 48% 77% 52% Lateral Length 7,500 7,500 7,500 Well Cost ($mm) $6.2 $6.2 $ % 100% 1 5/1/2018 Strip Price Deck with 1 st Production Starting 5/1/2018. See Q Economic Prices in Appendix (also available at IRR % 80% 60% 40% 20% 0% $60 / $2.50 5/1 Nymex $70 / $3.00 $80 / $3.50 Granite Wash C1 Granite Wash G Granite Wash B 10

11 Granite Wash Competitive Advantages Drive Differentiated Value 4,000 3,500 3,000 2,500 2,000 1,500 1, Buffalo Wallow Quarterly Net MMcfe Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Gas NGL Oil Geology 11 Stacked Granite Wash lenses significantly improves capital efficiency Sands present across acreage Land 9,000 net largely contiguous acres allow for extended lateral (XL) drilling 90% HBP and Operated Average working interest 90% potential XL locations Continuing to expand position Operations/Infrastructure/Processing Running one Unit Drilling rig Incremental process improvements continue to decrease drilling days SWD network lowers disposal costs 80% Water recycling pits lower frack costs Electricity across field lowers lifting costs Superior processes the gas improving cash margin 11

12 STACK Core - Provides High ROR Oil/Wet Gas with Dry Gas Optionality 7 Dry Gas 8 Unit s Acreage Meramec Woodford Type Curve Condensate Oil Oil Window Condensate Window Dry Gas* Window IP - 30 (Boe/d, Mcfe/d*) 1,706 1,773 15,415* ROR 108% 68% 15% EUR (Mboe/Bcfe*) 1,939 1, * % Liquids/Gas 65% 58% 99% Lateral Length 10,000 10,000 10,000 Well Cost ($mm) $10.7 $10.7 $ Lease Operator Spud Date IP-30 MMcfe/d Gas % Lateral Length Anderson Half Continental 2/ % 9,676 Edith Mae Continental 6/ % 9,743 Abbott Com Cimarex 8/2017 Flowing Back 10,385 Hicks BIA Marathon 7/ % 9,652 Reece Jane Continental 2/ % 9,898 Wyatt Continental 8/ % 8,805 Eagle Continental 9/2017 WOC 9,679 Gripe FIU Continental 8/ % 10,175 Lease Operator Spud Date IP-30 Boe/d Liquids % Lateral Length Jordan Devon 4/2017 1,636 51% 10,050 ML Devon 9/2016 1,766 48% 4,676 Carpenter Cimarex 10/2017 WOC 4,786 Privott Devon 10/2016 4,308 57% 10,112 Lorene Continental 7/2017 5,483 30% 10,186 Geronimo 89 Energy 6/ % 4,797 Rafter J Ranch Marathon 7/2017 1,017 27% 4,111 Denotes Unit working interest 250% 200% 150% 100% 1 5/1/2018 Strip Price Deck with 1 st Production Starting 5/1/2018. See Q Economic Prices in Appendix (also available at IRR % 50% 0% Single Well Economics $60 / $2.50 5/1 Nymex $70 / $3.00 $80 / $3.50 Stack Condensate Stack Dry Gas Stack Oil 12

13 STACK West Successful Extension of Meramec and Potential for Osage Development Unit s Acreage Meramec Osage Type Curve Oil Condensate Dry Gas STACK Ext Meramec STACK Osage IP - 30 (Boe/d) 1,040 1,203 ROR 77% 35% Total EUR (Mboe) % Liquids 63% 57% Lateral Length 5,000 5,000 Well Cost ($mm) $6.2 $ Lease Operator Spud Date IP-30 Boe/d Liquids % Lateral Length Cox Tapstone 9/2017 1,583 20% 10,009 Rebecca Tapstone 11/ % 10,130 Randi Tapstone 7/ % 10,178 Bond Comanche 6/2017 1,305 40% 4,300 Walters Newfield 7/2017 1,598 77% 10,179 Ward Comanche 106/ % 4,162 Medrill Sandridge 10/2016 1,164 85% 4,681 Schoeppel Chesapeake 7/ % 4,764 McConnell Comanche 6/ % 4,493 Drinnon Tapstone 5/ % 4,111 Olive Lee Devon 3/2014 1,755 19% 4,594 Bivens Tapstone 11/2017 1,363 48% 4,436 Lease Operator Spud Date IP-30 Mmcfe/d Gas % Lateral Length Stephen Chesapeake 9/ % 4,925 Tucker Council Oak 6/ % 4,378 IRR % Denotes Unit working interest 200% 150% 100% 1 5/1/2018 Strip Price Deck with 1 st Production Starting 5/1/2018. See Q Economic Prices in Appendix (also available at % 0% Single Well Economics $60 / $2.50 5/1 Nymex $70 / $3.00 $80 / $3.50 Stack Ext Meramec Stack Osage 13

14 STACK Growing into Core Area for Unit Petroleum 140, , ,000 80,000 60,000 40,000 20,000 0 Quarterly Net BOE Q1'17 Q2'17 Q3'17 Q4'17 Gas NGL Oil Geology Stacked drilling targets in Osage, Meramec and Woodford Red Fork Potential in some areas Sands consistently present across play Land 17,000 net acres in STACK/STACK West 85% HBP provides hydrocarbon mix optionality potential operated locations with working interest of 40-60% potential non-operated locations with working interest of ~5% Operations Running one Unit Drilling rig Participating ~50 non-op wells in 2018 Focused on oil and wet gas window Dry gas delayed until gas margins and takeaway capacity improves 14

15 Wilcox Conventional Stacked Over-Pressured Intervals Provide Low Cost Homerun Potential BCFE POLK Gilly Field Prior Years Drilling Horizontal Wells TYLER 3D AREA 494 mi.² HARDIN Wilcox Annual Production JASPER Projected Gas Oil NGLs LOEX ($/MCFE) $/MCFE Overall Wilcox Drilling Program Results Drilled 170 operated wells since 2003 (160 vertical, 10 horizontal) Program ROR > 80% Operated with working interest ~ 92% Production: ~ 110 MMcfe/d (42% liquids) Running one Unit Drilling rig Gilly Field World Class Wet Gas Reservoir 500 Bcfe stacked pay gas resource Cumulative production ~ 115 Bcfe Average EUR of Bcfe per well Typical well ~ $6 MM cost, ROR > 100% Unit s Wilcox Competitive Advantages Premium Gulf Coast pricing for oil and gas Wet Gas/Condensate provides margin uplift Large 3D seismic database provides consistent stream of exploratory prospect ideas Conventional over-pressured reservoirs provide homerun potential at low acreage costs 15

16 Wilcox Exceptional Recompletion & Workover Results 2017 Composite Gross Production from Recompletions and Workovers 28 Recompletions & 13 Workovers Total Cost: $15MM End of Year 34.0 MMcfd 900 bopd Start of Year 9.0 MMcfd 300 bopd 16

17 Wilcox Trend Provides an Extensive Play Area Wilcox Strategy for Future Growth Continue development of Gilly Field area with vertical and horizontal drilling and over 80 stacked pay recompletion/workover opportunities in existing wells Drill and delineate inventory of exploratory prospects with homerun potential (e.g. Wing/Cherry Creek/Brandt prospects) Utilize horizontal drilling to extend field boundaries and accelerate reserve recovery (e.g. NE Segno/Village Mills Fields)

18 Core Area Cash Margins $10.00 $9.00 Adjusted Base $9.01 $0.42 $8.00 $7.00 $6.00 $1.56 Adjusted Base $6.75 $0.70 Adjusted Base $5.86 $/Mcfe $5.00 $4.00 $3.00 $2.00 $1.00 $7.03 $1.17 $4.88 $0.81 $1.18 $3.87 Adjusted Base $4.76 $0.87 $0.97 $2.93 Adjusted Base $4.59 $1.29 $1.09 $2.21 Adjusted Base $3.01 $0.80 $0.88 $1.33 Differential - Adjusted* LOE & Taxes Cash Margin Gas Base, $2.85 *Differentials adjusted for production stream mix $0.00 SOHOT STACK Oil STACK Condensate Wilcox Granite Wash STACK Dry Gas % Gas 17% 25% 42% 60% 63% 99% Note: Assumes 6:1 gas to oil ratio. Adjusted base represents the weighted average commodity price per Mcfe of the area s production (using WTI, Henry Hub and Mont Belvieu propane for NGL). Adjusted Base also includes 50% of applicable midstream margin for Granite Wash and Wilcox. 18

19 Rig Fleet Presence in Key Regions 95 rig fleet HP: 21% 71 1,000-1,700 HP: 75% 4 2,000 HP: 4% 10 69% electric 54% 1,500 HP or greater 34 equipped with skidding or walking systems 27 additional can be skidded 34% total fleet utilization at present All ten BOSS rigs operating Entered into long-term contract for 11 th BOSS rig 10 Current Rigs Operating (1) Area # of Rigs Mid Continent 18 Bakken 4 Niobrara 1 Permian 7 Pinedale 1 Gulf Coast 1 Total (1) As of May 18,

20 SCR Rigs Continue to Make an Important Contribution At industry trough 13 drilling rigs operating Currently, 32 drilling rigs operating All BOSS rigs operating SCR rigs operating 0 May 5, 2016 Dec. 31, 2016 Sept. 4, 2017 Dec. 31, 2017 May 18, 2018 A/C SCR 20

21 Average Dayrates and Margins (1) $20, % Margins and Dayrates $15,000 $10,000 $5,000 75% 50% 25% Average Rig Utilization Decline in dayrates lagged utilization decrease due to long-term contract roll-off Utilization increased from low in Q Margins improved from Q forward $ Q1'18 0% Margins Dayrates Average Rig Utilization (1) See Reconciliation of Average Daily Operating Margin Before Elimination of Intercompany Rig Profit and Bad Debt Expense in Appendix (also available at 21

22 The BOSS Drilling Rig Optimized for Pad Drilling Multi-direction walking system Faster Between Locations Quick assembly substructure truck loads More Hydraulic Horsepower (2) 2,200 horsepower mud pumps 1,500 gpm available with one pump Environmentally Conscious Dual-fuel capable engines Compact location footprint All ten BOSS rigs currently under contract 11 th BOSS rig under construction 22

23 Superior Joint Venture Overview SP Investor Holdings LLC 50% 50% Retains 50% equity interest Received $300 million Retains operational control of Superior Pipeline Acquired 50% equity interest $300 million consideration Non-managing member Access to additional growth capital To be governed by new board of directors Four directors from Unit Four directors from SP Investor Holdings Implied Valuation of $600 million* * 2017 Adjusted EBITDA of $51.7 million. 23

24 Unit Corporation Pro-Forma Superior Transaction (in thousands except leverage ratios) 3/31/2018 Pro Forma Long term debt Bank $ 147,700 $ 0 Bonds (net of discount & issuance cost) 642, ,822 Total $ 790,522 $ 642,822 Cash ,444 Unused bank commitment 325, ,213 Total liquidity (1) $ 326,265 $ 573,657 Adjusted EBITDA $ 328,688 $ 302,927 Net debt leverage ratio 2.40x 1.63x (1) On May 10, 2018, Superior entered into a five year $200 million senior secured revolving credit facility with an option to increase the credit amount up to $250 million, subject to certain conditions. 24

25 Midstream Core Operations Hemphill Reno Bellmon Tulsa Headquarters Panola Northern Oklahoma and Kansas 2,000,000+ dedicated acres 193 MMcf/d processing capacity 609 miles of gathering pipeline Texas Panhandle 47,000+ dedicated acres 135 MMcf/d processing capacity 331 miles of gathering pipeline Central & Eastern OK 62,000+ dedicated acres 12 MMcf/d processing capacity 397 miles of gathering pipeline Key Metrics 22 active systems Three natural gas treatment plants 340 MMcf/d processing capacity Q1 18 average processing volume of 151 MMcf/d Approx. 1,452 miles of pipeline Segno East Texas 62 miles of gathering pipeline 120 MMcf/d dehy capacity Q1 18 average gathered volume of 84.9 MMcf/d Pittsburgh Regional office Brook Field Pittsburgh Mills Snow Shoe Processing facilities Gathering systems Appalachia 66,000+ dedicated acres 53 miles of gathering pipeline Q1 18 average gathered volume of MMcf/d Bruceton Mills 25

26 Midstream Segment Contract Mix 2010 Q Contract Mix Based on Volume 49% 51% Fee Based Commodity Based 35% 65% 85% 15% Contract Mix Based on Margin Fee Based Commodity Based 41% 59% Unit vs. 3 rd Party Margin Contribution 41% 40% 59% 3 rd Party Unit 60% 26

27 Debt Structure No Near-Term Maturities Senior Subordinated Notes $650 million, 6.625% 10-year, NC5; maturity 2021 Ratings S&P Moody s Fitch Corporate B+ B2 B+ Senior Subordinated Notes BB- B3 BB- Key Covenants Interest coverage ratio 2.25x (1) 3/31/ x (1,2) Secured Bank Facility (Redetermined April 2018) * Borrowing Base and Elected Commitment $525/$475 million Outstanding (2) $147.7 million Maturity April /31/2018 Actual Key Covenants Current ratio 1.0 to 1.0 (1) 2.18x (1,2) Senior Indebtedness ratio 2.75 (1) 0.45x (1,2) Pro forma $425 million (3) $0 (3) Pro forma 1.63x (3) 0.0 (3) (1) As defined in Indenture/Credit Agreement. (2) As of March 31, (3) Pro forma after close of Superior transaction. * Drilling rigs are not included in borrowing base. 27

28 Segment Contribution Revenues ($ millions) Adjusted EBITDA ($ millions) (1) $1,600 $1,573 $800 $787 $1,400 $1,200 $600 $1,000 $800 $600 $854 $602 $740 $400 $410 $252 $313 $400 $200 $205 $200 $89 $ Q1'18 $ Q1'18 Oil and Natural Gas Contract Drilling Midstream (1) See Non-GAAP Financial Measures in Appendix (also available at 28

29 Operating Segment Capital Expenditures (1) (In Millions) $1,500 $1,000 $500 $ Forecast Oil and Natural Gas Contract Drilling Midstream (1) Net of acquisitions and plugging liability revisions. 29

30 Investment Highlights Sale of 50% equity stake in Superior highlights asset value and provides growth capital to benefit all three Unit Business segments Conservative balance sheet with corporate net debt < 2X EBITDA and philosophy of spending within cash flow Integrated business model captures economics from drilling, production and gathering activities Opportunity-rich upstream portfolio with compelling economics Upstream capital allocated to areas generating highest rates of return in the Company s portfolio Contract drilling segment activity level rebounding 30

31 APPENDIX 31

32 Non-GAAP Financial Measures - Corporate Adjusted EBITDA Three months ended March 31, Years ended December 31, ($ In Millions) Net Income (Loss) $16 $8 $136 ($1,037) ($136) $118 Income Taxes (627) (71) (58) Depreciation, Depletion and Amortization Impairments , Interest Expense (Gain) loss on derivatives (15) 7 (30) (26) 23 (15) Settlements during the period of matured derivative contracts (1) (2) (6) Stock compensation plans Other non-cash items 1 (1) (Gain) loss on disposition of assets (9) 7 (3) --- Adjusted EBITDA $75 $89 $785 $408 $250 $313 32

33 Non-GAAP Financial Measures - Segments Segment Cash Operating Margin Three months ended March 31, Years ended December 31, ($ In Millions) Unit Petroleum Income (Loss) Before Income Taxes (1) $ 36 $ 36 $ 199 $ (1,631) $ (102) $ 125 Depreciation, Depletion and Amortization Impairment of Oil and Natural Gas Properties , Adjusted EBITDA $ 58 $ 67 $ 552 $ 220 $ 174 $ 227 Unit Drilling Income (Loss) Before Income Taxes (1) $ (5) $ 1 $ 42 $ 45 $ (13) $ (4) Depreciation and Impairment Adjusted EBITDA $ 8 $ 14 $ 202 $ 109 $ 34 $ 52 Superior Pipeline Income (Loss) Before Income Taxes (1) $ 2 $ 3 $ 2 $ (30) $ 2 $ 8 Depreciation, Amortization and Impairment Adjusted EBITDA $ 13 $ 14 $ 50 $ 41 $ 48 $ 52 (1) After intercompany eliminations and does not include allocation of G&A expense. 33

34 Non-GAAP Financial Measures Reconciliation of Average Contract Drilling Daily Operating Margin Before Elimination of Intercompany Rig Profit and Bad Debt Expense Three months ended Years ended (In thousands except for operating days March 31, December 31, and operating margins) Contract drilling revenue $37,185 $45,989 $476,517 $265,668 $122,086 $174,720 Contract drilling operating cost 29,227 31, , ,408 88, ,600 Operating profit from contract drilling $7,958 $14,322 $201,584 $109,260 $33,932 $52,120 Add: Elimination of intercompany rig profit and bad debt expense Operating profit from contract drilling before elimination of intercompany rig profit and bad debt expense ,343 3, ,620 7,958 14, , ,251 34,167 53,740 Contract drilling operating days 2,291 2,849 27,516 12,681 6,374 10,964 Average daily operating margin before elimination of intercompany rig profit and bad debt expense $3,474 $5,179 $8,392 $8,931 $5,360 $4,901 34

35 Pro-forma Reconciliation Pro-forma Reconciliation of First Quarter 2018 Results as if Superior Transaction Occurred (In millions) Oil and Natural Gas Contract Drilling Midstream Other Total Consolidated Income (loss) before income taxes $35.2 $1.5 $4.6 ($29.8) $11.5 Pro-forma Intercompany impact (0.9) Pro-forma Interest impact (0.5) Pro-forma income (loss) before income taxes $35.4 $1.5 $3.2 ($26.8) $13.3 Pro-forma taxes (7.4) 3.2 Pro-forma net income (loss) (19.4) 10.1 Net income attributable to non-controlling interest (1.6) --- (1.6) Net income attributable to Unit $25.6 $1.1 $1.2 ($19.4) $8.5 35

36 Derivative Summary Q2 Q3 Q4 CRUDE: Collars Volume (Bbl) Weighted Avg Floor Weighted Avg Ceiling Way Collars Volume (Bbl) 182, , , , Weighted Avg Floor $47.50 $47.50 $47.50 $ Weighted Avg Subfloor $37.50 $37.50 $37.50 $ Weighted Avg Ceiling $56.08 $56.08 $56.08 $ Swaps Volume (Bbl) 364, , , Weighted Avg Swap $53.52 $53.52 $ NATURAL GAS: Collars Volume (MMBtu) 2,730,000 2,760, Weighted Avg Floor $2.67 $ Weighted Avg Ceiling $2.97 $ Way Collars Volume (MMBtu) 1,820,000 1,840,000 1,840, Weighted Avg Floor $3.00 $3.00 $ Weighted Avg Subfloor $2.50 $2.50 $ Weighted Avg Ceiling $3.51 $3.51 $ Swaps Volume (MMBtu) 3,640,000 3,680,000 2,150, Weighted Avg Swap $2.99 $2.99 $ Basis Swaps Volume (MMBtu) 2,730,000 2,760,000 2,450,000 18,250,000 10,950,000 Weighted Avg Swap ($0.48) ($0.48) ($0.52) ($0.43) ($0.28) PROPANE: Swaps Volume (Bbl) 136, , Weighted Avg Swap $ $

37 Q Economic Prices Strip Case* Crude Natural Gas MB C2 MB C3 MB C3 $ per barrel MB NC4 MB ic4 MB C5+ CW C2 CW C3 CW NC4 CW ic4 CW C $ $2.851 $0.282 $0.876 $ $0.973 $1.089 $1.524 $0.101 $0.764 $0.789 $1.038 $ $ $2.741 $0.272 $0.808 $ $0.898 $1.005 $1.406 $0.097 $0.705 $0.728 $0.958 $ $ $2.708 $0.268 $0.743 $ $0.826 $0.924 $1.293 $0.096 $0.648 $0.669 $0.881 $ $ $2.726 $0.270 $0.701 $ $0.779 $0.872 $1.219 $0.096 $0.612 $0.631 $0.831 $ $ $2.779 $0.275 $0.677 $ $0.752 $0.842 $1.177 $0.098 $0.590 $0.609 $0.802 $1.147 Thereafter $ $2.779 $0.275 $0.677 $ $0.752 $0.842 $1.177 $0.098 $0.590 $0.609 $0.802 $1.147 *Strip prices as of 5/1/

38 CORPORATE PRESENTATION May 22, 2018