UNT Unit Corp

RISK FACTORS

You should carefully consider the risk factors below as well as the other information contained in this prospectus before investing in the New Notes. In addition, you should carefully consider, among other things, the matters discussed under “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018, as well as the other information incorporated by reference in this prospectus. The risks described below and in our Annual Report are not the only risks facing us. Additional risks and uncertainties not currently known to us or those we currently view to be immaterial may also materially and adversely affect our business, financial condition, or results of operations. Any of the following risks could materially and adversely affect our business, financial condition, or results of operations. In such a case, you may lose all or part of your investment. The risks discussed below also include forward-looking statements, and our actual results may differ substantially from those discussed in these forward-looking statements. See “Cautionary Note Regarding Forward-Looking Statements.”

Risks Relating to the Exchange Offer and Consent Solicitation

We may not complete the Exchange Offer and Consent Solicitation at all, or may complete the Exchange Offer with respect to less than all of the Old Notes.

The completion of the Exchange Offer and Consent Solicitation is subject to the satisfaction, or in certain cases, waiver of specified conditions. See “General Terms of the Exchange Offer and Consent Solicitation—Conditions of the Exchange Offer and Consent Solicitation.” In particular, our obligations to accept Old Notes are subject to, and conditioned upon, either (i) the consummation of the amendment to the Unit Credit Agreement or (ii) a refinancing or replacement of the Unit Credit Agreement as described under “Prospectus Summary—Recent Developments—Credit Agreement Amendment”, which condition will not be waived. There are no assurances that we will complete the amendment to the Unit Credit Agreement on substantially the terms described in this prospectus or at all, or that we will be able to refinance or replace the Unit Credit Agreement with a credit facility that, among other things, permits the issuance of the New Notes, the incurrence of guarantees of the New Notes and the grant of liens securing the New Notes. If the conditions to the completion of the Exchange Offer and Consent Solicitation are not satisfied or, if permitted, waived, the Exchange Offer may not be completed.

Our ability to make required payments under our indebtedness would be adversely affected if we were to be unable to complete the Exchange Offer and Consent Solicitation. The purpose of the Exchange Offer is to extend the maturity profile of our outstanding indebtedness and eliminate short to medium-term refinancing and related risks associated with our capital structure. The October 18, 2023 scheduled maturity date of the loans under the Unit Credit Agreement will accelerate to November 16, 2020 to the extent that, on or before that date, all the Old Notes are not repurchased, redeemed, or refinanced with indebtedness having a maturity date at least six months following October 18, 2023 (the “Credit Agreement Extension Condition”). If we complete the Exchange Offer with respect to less than all of the Old Notes, then the Credit Agreement Extension Condition will not be immediately satisfied and we may not be able to satisfy it thereafter. If we are not able to complete the Exchange Offer and Consent Solicitation, doubt may arise about the Company’s ability to timely repay the Old Notes.

If we are unable to consummate the Exchange Offer and Consent Solicitation, we will consider other restructuring alternatives available to us at that time. Any alternative restructuring could be on terms less favorable to the holders of Old Notes than the terms of the Exchange Offer and Consent Solicitation.

If we are unable to consummate the Exchange Offer and Consent Solicitation, or less than all of the Old Notes are tendered in the Exchange, we will consider other restructuring alternatives available to us at that time. Those alternatives may include refinancing the Unit Credit Agreement, asset dispositions, joint ventures, or alternative refinancing transactions or the commencement of a Chapter 11 proceeding with or without a pre-arranged plan of reorganization. There can be no assurance that any alternative restructuring arrangement or plan will be pursued or accomplished. Any alternative restructuring could be on terms less favorable to the

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holders of Old Notes than the terms of the Exchange Offer and Consent Solicitation. If we are unable to satisfy the Credit Agreement Extension Condition, there can be no assurance that we will be able to repay or refinance the Unit Credit Agreement on its accelerated maturity date or the Old Notes on their existing maturity date. Accordingly, there is a risk that the ability of the holders of Old Notes to recover their investments would be substantially delayed and/or impaired if the proposed Exchange Offer is not consummated. If the Exchange Offer is not completed or is delayed, the market prices of the Old Notes may decline to the extent that the current market prices reflect an assumption that the Exchange Offer (or a similar transaction) will be completed and/or the Credit Agreement Extension Condition will be satisfied.

A long and protracted restructuring could cause us to lose key management employees and otherwise adversely affect our business.

If we fail to consummate the Exchange Offer, any alternative we pursue, whether in or out of court, may take substantially longer to consummate than the Exchange Offer. A protracted financial restructuring could disrupt our business and would divert the attention of our management from the operation of our business and implementation of our business plan. It is possible that such a prolonged financial restructuring or bankruptcy proceeding would cause us to lose many of our key management employees. Such losses of key management employees would likely make it difficult for us to complete a financial restructuring and may make it less likely that we will be able to continue as a viable business.

The uncertainty surrounding a prolonged financial restructuring could also have other adverse effects on us. For example, it could also adversely affect:

We will incur significant costs in conducting the Exchange Offer and Consent Solicitation.

The Exchange Offer and Consent Solicitation have resulted, and will continue to result, in significant costs to us, including advisory and professional fees paid in connection with evaluating our alternatives under the Old Notes and pursuing the Exchange Offer and Consent Solicitation.

We have not obtained a third–party determination that the Exchange Offer is fair to holders of the Old Notes.

We are not making a recommendation as to whether holders of the Old Notes should exchange their Old Notes or consent to the Proposed Amendments. We have not retained and do not intend to retain any unaffiliated representative to act solely on behalf of the holders of the Old Notes for purposes of negotiating the Exchange Offer or preparing a report concerning the fairness of the Exchange Offer. We cannot assure holders of the Old Notes that the value of the exchange consideration received in the Exchange Offer will in the future equal or exceed the value of the Old Notes tendered, and we do not take a position as to whether you ought to participate in the Exchange Offer and Consent Solicitation.

You may not receive New Notes in the Exchange Offer and Consent Solicitation if the applicable procedures for the Exchange Offer and Consent Solicitation are not followed.

We will issue the New Notes in exchange for your Old Notes only if you tender your Old Notes and deliver properly completed documentation for the Exchange Offer. For the Exchange Offer, you must deliver the

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electronic transmittal through DTC’s ATOP before expiration of the Exchange Offer and Consent Solicitation. See “General Terms of the Exchange Offer and Consent Solicitation—Procedures for Tendering Old Notes” for a description of the procedures to be followed to tender your Old Notes.

If the Exchange Offer is consummated, holders of Old Notes that do not exchange their Old Notes in the Exchange Offer will be subject to certain additional risks.

If the Exchange Offer is consummated, holders that do not validly tender their Old Notes in the Exchange Offer will not be entitled to receive exchange consideration. The New Notes and the related guarantees will be unsubordinated second lien obligations and will rank senior in right of payment to the Old Notes. In the event of a bankruptcy or other insolvency proceeding, our obligations under the Unit Credit Agreement, the New Notes and any other indebtedness to which the Old Notes are subordinated as to security and in right of payment will be paid in priority to the Old Notes and there can be no assurance that the value of our assets will be adequate to provide for repayment of the Old Notes in full, or at all.

In addition, consummation of the Exchange Offer and Consent Solicitation would substantially reduce the aggregate principal amount of Old Notes outstanding, which could adversely affect the trading market, if any, for the untendered Old Notes. This could adversely affect the liquidity, market price, and price volatility of any untendered Old Notes. If a market for untendered Old Notes exists, those Old Notes may trade at a discount to the price at which the Old Notes would trade if the amount outstanding had not been reduced, depending on prevailing interest rates, the market for similar securities, and other factors.

Also, we may from time to time purchase any Old Notes that remain outstanding after consummation of the Exchange Offer through open market or privately negotiated transactions, one or more tenders or exchange offers or otherwise, on terms that may be less advantageous to holders than the terms of the Exchange Offer.

If the Proposed Amendments become operative, holders of Old Notes will no longer benefit from certain of the protections currently provided by the Existing Indenture.

The Proposed Amendments, if adopted and effected, would result in the elimination of substantially all restrictive covenants and certain events of default in the Existing Indenture, including, among other things, covenants that limit Unit’s and its subsidiaries’ ability to incur indebtedness, make restricted payments, create or incur liens and engage in mergers or consolidations or transfer all or substantially all of their property and assets. The elimination of these protections could permit Unit and its subsidiaries, subject to restrictions in our other debt instruments, to take certain actions previously prohibited that could materially increase Unit’s credit risk or could otherwise be materially adverse to holders, and could adversely affect the market prices and credit ratings of the non-tendered Old Notes. The Proposed Amendments, if adopted and effected, would also waive any existing defaults and events of default (including any default or event of default alleged in connection with the Exchange Offer or the Consent Solicitation) under the Existing Indenture, other than any default or event of default that cannot be waived without the consent of 100% of the holders under the Existing Indenture. See “Proposed Amendments to Existing Indenture and Old Notes.”

If the Proposed Amendments become operative, Unit’s future subsidiaries will not be required to guarantee the Old Notes and may incur significant indebtedness, and Unit and the existing subsidiary guarantors of the Old Notes may make investments in or transfer assets to such subsidiaries, which may be required to guarantee the New Notes and other indebtedness of Unit but not the Old Notes.

The Proposed Amendments would eliminate the requirement that Unit’s future restricted subsidiaries become guarantors of the Old Notes. As a result, the Old Notes may also be structurally subordinated to the indebtedness of any of Unit’s future restricted subsidiaries, including guarantees of the New Notes. If the Proposed Amendments become operative, the Existing Indenture will not limit the transfer of assets to, or investments in, subsidiaries that do not guarantee the Old Notes. There can be no assurance that Unit and the

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subsidiary guarantors of the Old Notes will not transfer significant amounts of assets to, or make significant investments in, such non-guarantor subsidiaries, or any other persons.

Existing rating agency ratings for the Old Notes may not be maintained.

It is possible that, as a result of the Exchange Offer and the issuance of the New Notes, one or more rating agencies, including Moody’s Investors Service, Inc. (“Moody’s”), Fitch Ratings, Inc. (“Fitch”) and S&P Global Ratings (“S&P”), would take action to downgrade or negatively comment on their respective ratings on the Old Notes. Any downgrade or negative comment would likely adversely affect the market price of the Old Notes. In addition, if any of our other outstanding debt that is rated is downgraded, raising capital will become more difficult for us, borrowing costs in respect of any indebtedness incurred to refinance the Old Notes, the Unit Credit Agreement, the Superior Credit Agreement and other future borrowings may increase and the market price of the Old Notes may decrease.

Certain consideration paid to holders in the Exchange Offer could be subject to avoidance as a preferential transfer.

If we were to become a debtor in a case under the U.S. Bankruptcy Code within 90 days after the consummation of the Exchange Offer (or, with respect to any insiders, as defined in the U.S. Bankruptcy Code, within one year after consummation of the Exchange Offer) and certain other conditions were met, it is possible that the consideration paid to holders of Old Notes in the Exchange Offer (including the security for the New Notes), absent any of the U.S. Bankruptcy Code’s defenses to avoidance, could be subject to avoidance, in whole or in part, as a preferential transfer and, to the extent avoided, the value of such consideration could be recovered from such holders and possibly from subsequent transferees.

Tenders of Old Notes before the Withdrawal Deadline are irrevocable after the Withdrawal Deadline.

Any Old Notes validly tendered before the Withdrawal Deadline that are not validly withdrawn before the Withdrawal Deadline may not be withdrawn on or after the Withdrawal Deadline, and Old Notes validly tendered on or after the Withdrawal Deadline may not be withdrawn, subject to limited circumstances described in “Withdrawal of Tenders; Revocation of Consents”. Any holder who validly withdraws previously tendered Old Notes and does not re-tender those Old Notes at or before the Early Tender Date will not receive the Early Exchange Consideration for those Old Notes and any such holder that does not re-tender the previously tendered Old Notes at or before the Expiration Date will not receive the Late Exchange Consideration for such Old Notes.

Consents to the Proposed Amendments may not be revoked after the Consent Revocation Deadline.

Consents to the Proposed Amendments may be revoked at any time prior to the Consent Revocation Deadline, but may not be revoked at any time thereafter. Consents may be revoked only by validly withdrawing the associated tendered Old Notes. A valid withdrawal of tendered Old Notes prior to the Consent Revocation Deadline will be deemed to be a concurrent revocation of the related consent to the Proposed Amendments, and a revocation of a consent to the Proposed Amendments prior to the Consent Revocation Deadline will be deemed to be a concurrent withdrawal of the related tendered Old Notes. However, a valid withdrawal of Old Notes after the Consent Revocation Deadline will not be deemed a revocation of the related consents and your consents will continue to be deemed delivered. No additional payment will be made for a holder’s consent to the Proposed Amendments.

The U.S. federal income tax consequences of the adoption of the Proposed Amendments are uncertain.

The U.S. federal income tax consequences to a U.S. Holder (as defined below under “Certain United States Federal Income Tax Consequences”) that does not tender its Old Notes in the Exchange Offer is uncertain and could be adverse. In particular, if the adoption of the Proposed Amendments constitutes a “significant

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modification” of the Existing Notes for U.S. federal income tax purposes, such adoption would constitute a deemed exchange of the Old Notes by a non-tendering U.S. Holder and could result in gain recognition and otherwise affect the timing, character and amount of income recognized by such U.S. Holder with respect to the Old Notes. Holders should read the discussion below under “Certain United States Federal Income Tax Consequences” and are urged to consult their own tax advisors as to the U.S. federal income tax consequences of the adoption of the Proposed Amendments.

Risks Relating to Holding the New Notes

Our substantial level of indebtedness could materially adversely affect our ability to generate enough cash to fulfill our obligations under the New Notes, our ability to react to changes in our business, and our ability to incur additional indebtedness to fund future needs.

After giving effect to the Exchange Offer and the borrowing base reduction under the Unit Credit Agreement to $275 million effective on September 26, 2019, we would have $770.8 million of total indebtedness outstanding as of June 30, 2019, and the ability to borrow up to an additional $160.2 million under the Unit Credit Agreement and up to $188.65 million under the Superior Credit Agreement.

Our substantial level of indebtedness will increase the possibility that we may be unable to generate enough cash to pay, when due, the principal of, interest on or other amounts due in respect of our indebtedness. Our substantial indebtedness, combined with our other financial obligations and contractual commitments, could have important consequences for our noteholders. For example, it could:

Despite our substantial level of indebtedness, we may still incur significantly more debt, which could exacerbate any or all of the risks described above.

We may be able to incur other substantial indebtedness in the future. Although the Unit Credit Agreement and the Superior Credit Agreement limit, and the New Indenture will limit, our ability and the ability of our subsidiaries to incur additional indebtedness, these restrictions are subject to a number of qualifications and

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exceptions and, under certain circumstances, debt incurred in compliance with these restrictions could be substantial. In addition, the New Indenture may not prevent us from incurring obligations that do not constitute indebtedness. See “Description of New Notes.” To the extent that we incur additional indebtedness or other obligations, the risks associated with our substantial leverage described above, including our possible inability to service our debt, would increase.

We may not generate enough cash to service all our indebtedness, including the New Notes, and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not succeed.

Our ability to make scheduled payments on or to refinance our debt obligations, including the Unit Credit Agreement, the Old Notes that remain outstanding following the Exchange Offer and the New Notes, depends on our financial condition and operating performance, which are subject to prevailing economic and competitive conditions and to certain financial, business, legislative, regulatory, and other factors beyond our control. We may not maintain enough cash flows from operating activities to permit us to fund our day-to-day operations or to pay the principal, premium, if any, and interest on our indebtedness, including the New Notes.

If our cash flows and capital resources are not enough to fund our debt service obligations and other cash requirements, we could face substantial liquidity problems and could be forced to reduce or delay investments and capital expenditures or to sell assets or operations, seek additional capital or restructure or refinance our indebtedness, including the Unit Credit Agreement, the Old Notes that remain outstanding following the Exchange Offer and the New Notes. In particular, if we consummate the Exchange Offer but fewer than all of the Old Notes are tendered and accepted in the exchange, then the Credit Agreement Extension Condition will not be satisfied and there can be no assurances that we will have the wherewithal or flexibility under our existing indebtedness to satisfy it thereafter. We may not be able to effect any alternative measures on commercially reasonable terms or at all and, even if successful, those alternative actions may not allow us to meet our scheduled debt service obligations. The Unit Credit Agreement and the Superior Credit Agreement restrict, and the New Indenture will restrict, our ability and the ability of certain of our subsidiaries to (a) dispose of assets and use the proceeds from any such dispositions and (b) raise debt capital to be used to repay indebtedness when it becomes due. We may not be able to consummate dispositions or to obtain proceeds in an amount enough to meet any debt service obligations then due. See “Description of Other Indebtedness” and “Description of New Notes.”

In addition, we conduct our operations through our subsidiaries, some of which are not guarantors of the New Notes or our other indebtedness. Repayment of our indebtedness, including the New Notes, depends on the generation of cash flow by our subsidiaries and those subsidiaries’ ability to provide cash to us, by dividend, debt repayment, or otherwise. Unless they are guarantors of the New Notes, our subsidiaries have no obligation to pay amounts due on the New Notes or to provide funds for that purpose. Our subsidiaries may not, or may not be permitted to, make distributions to enable us to make payments on our indebtedness, including the New Notes. Each subsidiary is a distinct legal entity and, under certain circumstances, legal and contractual restrictions may limit our ability to obtain cash from our subsidiaries. If we do not receive distributions from our subsidiaries, we may be unable to make required principal and interest payments on our indebtedness, including the New Notes.

Our inability to generate enough cash flows to satisfy our debt obligations, or to refinance our indebtedness on commercially reasonable terms or at all, would materially and adversely affect our financial position and results of operations and our ability to satisfy our obligations under the New Notes. If we cannot make scheduled payments on our debt, we will be in default, and as a result, holders of the New Notes (and lenders and holders under any of our existing and future indebtedness) could declare all outstanding principal and interest to be due and payable, the lenders under the Unit Credit Agreement and the Superior Credit Agreement could terminate their commitments to loan money, our secured lenders, including the administrative agent under the Unit Credit Agreement, on behalf of the lenders thereunder, and the Collateral Trustee under the New Indenture, on behalf of the holders of the New Notes, could foreclose against the assets securing such indebtedness and we could be forced into bankruptcy or liquidation, in each case, which would have a material adverse effect on the market

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price of the New Notes and could materially impair the likelihood of holders receiving repayment of their New Notes in full or at all, thereby resulting in your losing your investment in the New Notes.

We may redeem the New Notes at par at any time.

We may redeem all or, from time to time, a portion of the New Notes at a redemption price equal to         % of the principal amount of the New Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date. If we redeem all or a portion of the New Notes, holders of such New Notes may not obtain their expected return on those New Notes and may not be able to reinvest the proceeds from the redemption in an investment that results in a comparable return. Holders of the New Notes will have no right to opt out of the redemption provisions of the New Notes.

The assets of our subsidiaries that do not guarantee the New Notes will be subject to the prior claims of the creditors of those non-guarantor subsidiaries.

Not all of our subsidiaries will guarantee the New Notes. As of, and for the six months ended, June 30, 2019, our non-guarantor subsidiaries (including Superior and its subsidiaries) generated 27% of our consolidated revenues and 4% of our consolidated operating income and accounted for 17% of our consolidated assets. Our subsidiaries are separate and distinct legal entities and, if any subsidiary is not a Subsidiary Guarantor, that subsidiary will have no obligation whatsoever to make any payment of principal or interest on the New Notes. In the event of any non-guarantor subsidiary’s bankruptcy, insolvency, liquidation, dissolution, reorganization, or similar proceeding, the creditors of that subsidiary, including trade creditors, would be entitled to be paid in full before any assets of that subsidiary or the proceeds from any sale thereof would be available to us as the equity owner of that subsidiary, and in turn to the holders of the New Notes. As a result, the New Notes and the guarantees will be structurally subordinated to all indebtedness and other obligations, including trade payables, of our subsidiaries that do not guarantee the New Notes.

As of June 30, 2019, after giving effect to this offering and the use of proceeds therefrom, our non-guarantor subsidiaries would have had total liabilities (excluding intercompany liabilities) of approximately $51 million. In addition, as of that date, Superior and its subsidiaries had approximately $7.5 million of indebtedness outstanding under the Superior Credit Agreement with the ability to borrow up to $200 million thereunder. The New Indenture will, subject to some limitations, permit our non-guarantor subsidiaries to incur additional indebtedness and will not contain any limitation on the amount of other liabilities, like trade payables, that may be incurred by these subsidiaries. Furthermore, Superior and its subsidiaries will be designated as unrestricted subsidiaries under the New Indenture and, as a result, Superior and its subsidiaries will not be subject to any of the restrictive covenants of the New Indenture. Therefore, the New Indenture will not restricted in any manner Superior and its subsidiaries from incurring additional indebtedness and other obligations.

In addition, the New Indenture will provide that a Subsidiary Guarantor will be automatically released from its guarantee of the New Notes upon the occurrence of certain events, including, but not limited to (i) such Subsidiary Guarantor being designated as an unrestricted subsidiary under the New Indenture and (ii) if that Subsidiary Guarantor is released from all of its obligations under the Unit Credit Agreement and that Subsidiary Guarantor does not guarantee any other indebtedness of us or any other Subsidiary Guarantor. See “Description of New Notes—Subsidiary Guarantees.”

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Restrictions imposed by the New Indenture and the agreements governing our other outstanding indebtedness, including the Unit Credit Agreement and the Superior Credit Agreement, may limit our ability to operate our business and to finance our future operations or capital needs or to engage in other business activities. If we violate certain restrictions under the Unit Credit Agreement, the Superior Credit Agreement or the New Indenture, our debt could be accelerated, and we may not have enough cash to pay our accelerated debt.

The New Indenture, and the agreements governing our other outstanding indebtedness, including the Unit Credit Agreement and the Superior Credit Agreement, contain or will contain various covenants that limit, among other things, our ability and the ability of certain of our subsidiaries to:

In particular, the Unit Credit Agreement does not permit the issuance of the New Notes, the incurrence of guarantees of the New Notes and the grant of liens securing the New Notes. All of these restrictions are subject to several important qualifications and exceptions. In addition, the Unit Credit Agreement also requires us to maintain a minimum current assets to current liabilities ratio and a maximum funded debt to EBITDA ratio. The Superior Credit Agreement also requires us to maintain a minimum interest coverage ratio and maximum funded debt to EBITDA ratio. See “Description of Other Indebtedness”. We cannot assure you that our future operating results will enable us to comply with these financial maintenance covenants.

As a result of these covenants, we will be limited in how we can conduct our business and may be unable to engage in favorable business activities or finance future operations or capital needs. Accordingly, these restrictions may limit our flexibility to operate our business. A failure to comply with the restrictions in the New Indenture, the Unit Credit Agreement, the Superior Credit Agreement, or to maintain the financial ratios required by the Unit Credit Agreement and the Superior Credit Agreement could lead to an event of default, which could cause an acceleration of the defaulted indebtedness and any other indebtedness to which a cross-acceleration or cross default provision applies. If acceleration occurs, we may not have or be able to obtain enough funds to make any accelerated payments, including those under the New Notes, or to borrow enough funds to refinance such debt. Even if new financing were available it may not be on terms acceptable to us. In addition, lenders may be able to terminate any commitments they had made to make available further funds.

You may find it difficult to sell your New Notes.

The New Notes are a new issue of securities and, although the New Notes will be registered under the Securities Act, the New Notes will not be listed on any securities exchange. Because there is no public market for the New Notes, you may not be able to resell them.

We cannot assure you that an active market will develop for the New Notes or that any trading market that does develop will be liquid. If an active market does not develop or is not maintained, the market price and liquidity of the New Notes may be adversely affected. If a market for the New Notes develops, they may trade at

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a discount from their historic trading prices. Any trading market for and the price of the New Notes may be adversely affected by:

In addition, the market for non-investment grade indebtedness has been historically subject to disruptions that have caused substantial volatility in the prices of securities similar to the New Notes. In addition, the market for the New Notes, if any, may be subject to similar disruptions. Any such disruption could adversely affect the value of the New Notes.

Credit rating agencies continually review their ratings for the companies they follow, including us. The credit rating agencies also evaluate our industry as a whole and may change their credit rating for us based on their overall view of our industry. Rating organizations may lower their respective ratings of the New Notes or decide not to continue to rate the New Notes in their sole discretion. The reduction, suspension, or withdrawal of the ratings of the New Notes will not constitute an event of default under the New Indenture. However, any reduction, suspension, or withdrawal of these ratings may adversely affect the market price or liquidity of the New Notes.

We may be unable to purchase your New Notes upon a change of control.

If a Change of Control (as defined in “Description of New Notes”) occurs, unless we have exercised our right to redeem the New Notes, we will have to make an offer to repurchase the New Notes from the holders at a price in cash described in this prospectus, see “Description of New Notes—Change of Control”. However, we may not be able to repurchase the New Notes when a Change of Control occurs because we may not have enough funds to do so. We may also be required to offer to repurchase certain of our or our subsidiaries’ other debt upon a change of control, and that event may also give rise to an event of default under the Unit Credit Agreement. In addition, agreements governing indebtedness incurred in the future may restrict us from repurchasing the New Notes if a Change of Control occurs. Any failure to repurchase properly tendered New Notes would constitute an event of default under the New Indenture, which could cause an acceleration of our and our subsidiaries’ other indebtedness. In addition, certain mergers or consolidations will not constitute a change of control and will not require us to make an offer to repurchase the New Notes.

A ratings agency downgrade could lead to increased borrowing costs and credit stress.

If one or more rating agencies that rate the New Notes either assigns the New Notes a rating lower than the rating expected by investors, or later reduces its rating, the market price of the New Notes, if any, would be adversely affected. In addition, if any of our other outstanding debt that is rated is downgraded, raising capital will become more difficult for us, borrowing costs in respect of any indebtedness incurred to refinance any outstanding Old Notes, the Unit Credit Agreement, the Superior Credit Agreement and other future borrowings may increase and the market price of the New Notes, if any, may decrease.

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If the New Notes receive an investment grade rating, many covenants in the New Indenture will be suspended, thereby reducing some of your protections in the New Indenture.

If at any time the New Notes receive investment grade ratings from both S&P and Moody’s, subject to certain conditions, many covenants in the New Indenture, applicable to us and our restricted subsidiaries, including the limitations on indebtedness and restricted payments, will be suspended. See “Description of New Notes—Certain Covenants—Effectiveness of Covenants.” While these covenants will be reinstated if we fail to maintain investment grade ratings on the New Notes, during the suspension period noteholders will not have the protection of these covenants, and we will have greater flexibility to, among other things, incur indebtedness and make restricted payments.

The New Notes will mature after a substantial portion of our other indebtedness.

A large portion of our existing indebtedness (including under the Unit Credit Agreement) will mature before the maturity of the New Notes, including any Old Notes not tendered and accepted in the Exchange Offer. Therefore, we will be required to repay other creditors before we repay the principal of the New Notes. As a result, we may not have enough cash to repay all amounts owing on the New Notes at maturity. There can be no assurance that we will have the ability to borrow or otherwise raise the amounts necessary to repay or refinance such amounts.

Holders of the Old Notes are being offered New Notes with a later maturity than the Old Notes. Holders who tender the Old Notes and whose tender is accepted will be exposed to the risk of nonpayment on the securities they hold for a longer period of time than non-tendering holders. For instance, following the maturity date of the Old Notes, but before the maturity date of the New Notes issued in exchange for the Old Notes, Unit may become subject to a bankruptcy or similar proceeding. If so, holders of the Old Notes who opted not to participate in the Exchange Offer may have been paid in full, and there is a risk that the holders of Old Notes who opted to participate in the Exchange Offer and who received the New Notes would not be paid in full.

Federal and state fraudulent transfer laws may permit a court to void the New Notes, the guarantees, and the liens securing the New Notes, to subordinate claims in respect of the New Notes, the guarantees and the liens securing the New Notes and to require noteholders to return payments received and, if that occurs, you may not receive any payments on the New Notes.

Federal and state fraudulent transfer and conveyance statutes may apply to the issuance of the New Notes, the incurrence of any guarantees of the New Notes, including the guarantee the Subsidiary Guarantors entered into upon issuance of the New Notes, and the grant of liens securing the New Notes by Unit and the Subsidiary Guarantors (including any future guarantees, and future liens). Under federal bankruptcy law and comparable provisions of state fraudulent transfer or conveyance laws, which may vary from state to state, the issuance of the New Notes, the incurrence of the guarantees or the grant of liens securing the New Notes could be voided as a fraudulent transfer or conveyance if (1) Unit or any of the Subsidiary Guarantors, as applicable, issued the New Notes, incurred the guarantees or granted the liens with the intent of hindering, delaying, or defrauding creditors or (2) Unit or any of the Subsidiary Guarantors, as applicable, received less than reasonably equivalent value or fair consideration in return for issuing the New Notes, incurring the guarantees, or granting the liens and, in the case of (2) only, one of the following was also true at the time thereof:

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Enforcement of any of the guarantees against any Subsidiary Guarantor will be subject to certain defenses available to such guarantor in the relevant jurisdiction. These laws and defenses generally include those that relate to corporate purpose or benefit, fraudulent conveyance or transfer, voidable preference, insolvency or bankruptcy challenges, financial assistance, preservation of share capital, thin capitalization, capital maintenance or similar laws, regulations or defenses affecting the rights of creditors generally. If one or more of these laws and defenses are applicable, a Subsidiary Guarantor may have no liability or decreased liability under its guarantee depending on the amounts of its other obligations and applicable law. Limitations on the enforceability of judgments obtained in New York courts in such jurisdictions could also limit the enforceability of any guarantee against any Subsidiary Guarantor.

As a general matter, value is given for a transfer or an obligation if, in exchange for the transfer or obligation, property is transferred or a valid antecedent debt is secured or satisfied. A court could find that by virtue of the fact that the New Notes were issued by Unit for its direct benefit, and only indirectly for any Subsidiary Guarantor’s benefit, that a Subsidiary Guarantor did not receive reasonably equivalent benefit directly or indirectly from the issuance of the New Notes or the applicable guarantee and/or lien.

Unit cannot be certain as to the standards a court would use to determine whether or not Unit or the Subsidiary Guarantors were solvent at the relevant time or, regardless of the standard that a court uses, that the incurrence of the guarantees would not be subordinated to Unit’s or any of the Subsidiary Guarantors’ other debt. Generally, however, an entity would be considered insolvent if, at the time it incurred indebtedness:

If a court were to find that the issuance of the New Notes, the incurrence of a guarantee or the grant of liens was a fraudulent transfer or conveyance, the court could void the payment obligations under the New Notes or such guarantee or subordinate the New Notes or such guarantee to presently existing and future indebtedness of the Company or of the applicable Subsidiary Guarantor, or require the holders of the New Notes to repay any amounts received with respect to such guarantee or void the granting of liens to secure the New Notes or the related guarantees. In the event of a finding that a fraudulent transfer or conveyance occurred, you may not receive any repayment on the New Notes (or the guarantees).

Although each guarantee will contain a provision intended to limit that Subsidiary Guarantor’s liability to the maximum amount that it could incur without causing the incurrence of obligations under its guarantee to be a fraudulent transfer, this provision may not be effective to protect those guarantees from being voided under fraudulent transfer law, or may reduce that Subsidiary Guarantor’s obligation to an amount that effectively makes its guarantee worthless. For example, in a Florida bankruptcy court decision, which was subsequently reinstated by the United States Court of Appeals for the 11th Circuit on other grounds, this kind of provision was found to be ineffective to protect the guarantees.

Furthermore, in the event that a bankruptcy case were to be commenced under the bankruptcy code, the Company could be subject to claims, with respect to any payments made within 90 days before the commencement of such a case, that it or any of the Subsidiary Guarantors were insolvent at the time any such payments were made and that all or a portion of such payments, which could include payments of amounts due

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under the New Notes or the guarantees might be deemed to constitute a preference, under the Bankruptcy Code, and that such payments should be voided by the bankruptcy court and recovered from the recipients for the benefit of the entire bankruptcy estate.

Receipt of payment on the New Notes, and the enforcement of remedies under the subsidiary guarantees, may be limited in bankruptcy or in equity.

An investment in the New Notes, as in any security, involves insolvency and bankruptcy considerations that investors should carefully consider. If we or any of our Subsidiary Guarantors become a debtor subject to insolvency proceedings under the U.S. Bankruptcy Code, it is likely to result in delays in the payment of the New Notes and in exercising enforcement remedies under the New Notes or the guarantees. Provisions under the U.S. Bankruptcy Code or general principles of equity that could cause the impairment of your rights include the automatic stay, avoidance of preferential transfers by a trustee or a debtor-in-possession, substantive consolidation, limitations of collectability of unmatured interest or attorneys’ fees and forced restructuring of the New Notes.

If a bankruptcy court substantively consolidated us and our subsidiaries, the assets of each entity would be subject to the claims of creditors of all entities. This would expose you not only to the usual impairments arising from bankruptcy, but also to potential dilution of the amount ultimately recoverable because of the larger creditor base. Forced restructuring of the New Notes could occur through the “cramdown” provision of the U.S. Bankruptcy Code. Under this provision, the New Notes could be restructured over your objections as to their general terms, primarily interest rate and maturity.

Because each Subsidiary Guarantor’s liability under its guarantees may be reduced to zero, voided or released under certain circumstances, the holders of the New Notes may not receive any payments from some or all of the Subsidiary Guarantors.

Holders of the New Notes have the benefit of the guarantees of the Subsidiary Guarantors. However, as described above, those guarantees are limited to the maximum amount the Subsidiary Guarantors are permitted to guarantee under applicable law. As a result, a Subsidiary Guarantor’s liability under its guarantee could be reduced to zero, depending on (among other things) the amount of other obligations of that Subsidiary Guarantor. Further, under the circumstances discussed more fully above, a court under federal or state fraudulent conveyance and fraudulent transfer statutes could void the obligations under a guarantee (and any related security interest) or further subordinate it to all other obligations of the Subsidiary Guarantor. See “—Federal and state fraudulent transfer laws may permit a court to void the New Notes, the guarantees, and the liens securing the New Notes, to subordinate claims in respect of the New Notes, the guarantees and the liens securing the New Notes and to require noteholders to return payments received and, if that occurs, you may not receive any payments on the New Notes.” In addition, you will lose the benefit of a particular guarantee if it is released under certain circumstances described under “Description of New Notes—Subsidiary Guarantees.

The value of the New Notes Collateral securing the New Notes and the related guarantees may not be sufficient to satisfy Unit’s and the Subsidiary Guarantors’ obligations under the New Notes.

Obligations under the New Notes will be secured by second-priority liens on the New Notes Collateral. No appraisal of the value of the New Notes Collateral has been made in connection with this Exchange Offer, and the fair market value of the New Notes Collateral will be subject to fluctuations based on factors that include, among others, changing economic conditions, competition, the demand, supply and market price for oil and gas and other future trends. By its nature, some or all of the New Notes Collateral may be illiquid and may have no readily ascertainable market value. If there is a foreclosure, liquidation, bankruptcy or similar proceeding, the holders of the New Notes will be entitled to be repaid in full from the proceeds of the New Notes Collateral after any payment is made in respect of any indebtedness with a senior or prior security interest against such New Notes Collateral (including our obligations under the Unit Credit Agreement) and before any payment is made in

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respect of any other indebtedness that is secured by a junior lien on that New Notes Collateral or that is unsecured. Moreover, the holders of any other additional indebtedness, if any, secured by a second-priority lien on the New Notes Collateral will share proceeds of that New Notes Collateral ratably with the holders of the New Notes, thereby diluting the New Notes Collateral coverage available to holders of the New Notes. In particular, the fair market value of the New Notes Collateral may not be sufficient to repay the holders of the New Notes upon any foreclosure, liquidation, bankruptcy or similar proceeding and after the repayment of indebtedness with senior or prior security interests in the New Notes Collateral (including in respect of the Unit Credit Agreement).

There also can be no assurance that the New Notes Collateral will be saleable, and even if saleable, the timing of its liquidation would be uncertain. Accordingly, there may not be sufficient New Notes Collateral to pay all or any of the amounts due on the New Notes. Any claim for the difference between the amount, if any, realized by holders of the New Notes from the sale of the New Notes Collateral securing the New Notes and the obligations due under the New Notes will rank equally in right of payment with all of Unit’s unsecured unsubordinated indebtedness and other obligations, including trade payables. In addition, as discussed further below, the holders of the New Notes would not be entitled to receive post-petition interest or applicable fees, costs, expenses, or charges to the extent the amount of the obligations due under the New Notes exceeded the value of the New Notes Collateral (after taking into account all other debt that was also secured by the New Notes Collateral on a pari passu basis or senior basis (including with respect to the Unit Credit Agreement), or any “adequate protection” on account of any undersecured portion of the New Notes). See “—In the event of a bankruptcy of us or any of the Subsidiary Guarantors, holders of the New Notes may be deemed to have an unsecured claim to the extent that our obligations in respect of the New Notes exceed the fair market value of the New Notes Collateral securing the New Notes and the related guarantees.”

With respect to some of the New Notes Collateral, the security interest of the Collateral Trustee and its ability to foreclose (subject to the terms of the Intercreditor Agreement) will also be limited by the need to meet certain requirements, like obtaining third-party consents and making additional filings. If Unit is unable to obtain these consents or make these filings, the security interests may be invalid and the holders will not be entitled to the New Notes Collateral or any recovery with respect thereto. We cannot assure you that any required consents will be obtained on a timely basis or at all. These requirements may limit the number of potential bidders for certain New Notes Collateral in any foreclosure or other auction and may delay any sale, either of which events may have an adverse effect on the sale price of the New Notes Collateral. Therefore, the practical value of realizing on the New Notes Collateral may, without the appropriate consents and filings, be limited.

To the extent that preexisting liens, liens permitted under the New Indenture and other rights, including higher-priority liens, encumber any of the New Notes Collateral securing the New Notes and the guarantees, those parties have or may exercise rights and remedies with respect to the New Notes Collateral that could adversely affect the value of the New Notes Collateral and the ability of the Collateral Trustee, the Trustee or the holders of the New Notes to realize or foreclose on the New Notes Collateral.

All commitments under the Unit Credit Agreement are secured by the New Notes Collateral on a first lien basis and will be entitled to payment out of the proceeds of any sale of the New Notes Collateral on a senior basis to the holders of the New Notes. The New Indenture will also permit Unit and the Subsidiary Guarantors to create additional liens on the New Notes Collateral under specified circumstances, some of which liens may be pari passu with or senior to the liens securing the New Notes. Any obligations secured by such liens may further dilute the collateral coverage and limit the recovery from the realization of the collateral available to satisfy holders of the New Notes. See “Description of New Notes—Certain Covenants—Liens”.

The Unit Credit Agreement does not currently permit the issuance of the New Notes, the incurrence of guarantees of the New Notes and the grant of liens securing the New Notes.

The Unit Credit Agreement does not permit the issuance of the New Notes, the incurrence of guarantees of the New Notes and the grant of liens securing the New Notes. As described under “Prospectus Summary—Recent

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Developments—Credit Agreement Amendment”, Unit is pursuing an amendment to the Unit Credit Agreement to permit such things. If such amendment is not consummated, or if we cannot refinance or replace the Unit Credit Agreement with a credit facility that permits the issuance of the New Notes, the incurrence of guarantees of the New Notes and the grant of liens securing the New Notes, we cannot fulfill our obligation to accept Old Notes in the Exchange Offer.

Your right to receive payments on the New Notes is effectively subordinated to the right of lenders under the Unit Credit Agreement with respect to the New Notes Collateral to the extent of the value of the New Notes Collateral.

The New Notes and the related guarantees will be secured on a second lien basis by the New Notes Collateral. The lenders under the Unit Credit Agreement and the lenders under any other permitted debt secured on a first-priority basis by the New Notes Collateral will have claims that are before the claims of holders of the New Notes with respect to the New Notes Collateral to the extent of the value of the New Notes Collateral securing that other indebtedness on a first-priority basis. In the event of any distribution or payment of those assets in any foreclosure, dissolution, winding-up, liquidation, reorganization, or other bankruptcy proceeding, the lenders under the Unit Credit Agreement and lenders under any other permitted debt secured on a first-priority basis by the New Notes Collateral will have a prior claim to the New Notes Collateral. After claims of the lenders under the Unit Credit Agreement and lenders under any other permitted debt secured on a first-priority basis by the New Notes Collateral have been satisfied in full, there may be no assets constituting New Notes Collateral remaining to be applied to satisfy the claims of holders of the New Notes. As a result, with respect to the New Notes Collateral granted by Unit and the Subsidiary Guarantors, holders of the New Notes may receive less, ratably, than the lenders under the Unit Credit Agreement and lenders under any other permitted debt secured on a first-priority basis by the New Notes Collateral.

As of June 30, 2019, on a pro forma basis after giving effect to Exchange Offer and the new borrowing base under the Unit Credit Agreement effective as of September 26, 2019, approximately $113.25 million of borrowings would have been outstanding under the Unit Credit Agreement and approximately $160.2 million of borrowings would have been available and undrawn under the Unit Credit Agreement (after giving effect to $1.550 million of letters of credit), the availability of which is subject to certain conditions including its borrowing base availability, all of which would be secured, if borrowed, and would be effectively senior to the New Notes with respect to the New Notes Collateral to the extent of the value thereof.

The security interests in the New Notes Collateral will be granted to the Collateral Trustee rather than directly to the holders of the New Notes.

The ability of the Collateral Trustee to enforce certain of the New Notes Collateral may be restricted by local law. The security interests in the New Notes Collateral that will secure the New Notes and the related guarantees will not be granted directly to the holders of the New Notes but will be granted only for the benefit of the Collateral Trustee. The New Indenture and related documents will provide that only the Collateral Trustee has the right to enforce upon the New Notes Collateral (subject to the terms of the Intercreditor Agreement) in accordance with the terms of the security documents relating to the New Notes. Consequently, holders of the New Notes will not have direct security interests and will not be entitled to take enforcement actions in respect of the New Notes Collateral, except through the Collateral Trustee.

The Intercreditor Agreement will limit the ability of the holders of the New Notes to exercise rights and remedies with respect to the New Notes Collateral.

The rights of the holders of the New Notes with respect to the New Notes Collateral will be substantially limited by the terms of the lien ranking provisions in the Intercreditor Agreement. Under the terms of the Intercreditor Agreement, at any time that any Priority Lien Obligations (as defined below) are outstanding, almost any action that may be taken in respect of the New Notes Collateral will be at the direction of the

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administrative agent or the collateral agent under the Priority Lien Documents (as defined below), and the holders of the New Notes will not have the ability to control or direct such actions, including the right to exercise remedies with respect to, challenge the liens on, or object to actions taken by the Priority Lien Collateral Agent (as defined below) even if the rights of holders of the New Notes are adversely affected, except after the expiration of a 180-day standstill period triggered by a notice of acceleration of the Second Lien Obligations (as defined below), so long as the Priority Lien Collateral Agent (or any other holder of priority lien claims) is not then exercising certain rights or remedies with respect to the New Notes Collateral.

We cannot provide any assurance that the Intercreditor Agreement will be entered into on substantially the same terms described in this prospectus.

Sales of assets by Unit and the Subsidiary Guarantors could reduce the New Notes Collateral and the related guarantees.

The security documents that will relate to the New Notes will allow Unit and the Subsidiary Guarantors to remain in possession of, retain exclusive control over, freely operate and collect, invest and dispose of any income from, the New Notes Collateral, subject to the terms of the Intercreditor Agreement. To the extent Unit or a Subsidiary Guarantor sells any assets that constitute New Notes Collateral, the proceeds from such sale will be subject to the liens securing the New Notes and the related guarantees only to the extent such proceeds would otherwise constitute New Notes Collateral securing the New Notes and the related guarantees under the security documents. Such proceeds will also be subject to the security interests of certain creditors other than the holders of the New Notes, some of which may be senior or before the liens held by the holders of the New Notes (including under the Unit Credit Agreement) or may have a lien in those assets that is pari passu with the lien of the holders of the New Notes. To the extent the proceeds from any sale of New Notes Collateral do not constitute New Notes Collateral under the security documents, the pool of assets securing the New Notes and the related guarantees will be reduced, and the New Notes and the related guarantees will not be secured by such proceeds.

Not all of our properties and assets have been pledged to secure the Unit Credit Agreement on a first-priority basis and the New Notes on a second-priority basis. Furthermore, the New Notes are not secured by all of the Collateral securing the Unit Credit Agreement.

Not all of our properties and assets will be pledged to secure the New Notes. The New Notes Collateral securing the Unit Credit Agreement on a first-priority basis and the New Notes on a second-priority basis will consist of:

All of the rest of our properties and assets that do not fall within the above categories have not been pledged to secure the Unit Credit Agreement or the New Notes. Furthermore, the New Notes will not be secured by any collateral that may be pledged to certain issuers of letters of credit under the Unit Credit Agreement that are not pledged generally to all of the lenders under Unit Credit Agreement or to the administrative agent thereunder for the benefit of the lenders as a whole.

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If an event of default occurs and the maturity of the New Notes is accelerated, the New Notes and the related guarantees will rank pari passu with the holders of other unsecured indebtedness (and other secured indebtedness not secured by such excluded assets) of the relevant obligor with respect to any assets that do not constitute New Notes Collateral. As a result, if any non-New Notes Collateral assets are pledged as security for any other indebtedness, then the New Notes will be effectively subordinated to such other indebtedness to the extent of the value of such non-New Notes Collateral assets.

Certain laws and regulations may impose restrictions or limitations on foreclosure.

Unit’s obligations under the New Notes and the Subsidiary Guarantors’ obligations under the guarantees are secured only by the New Notes Collateral described in this prospectus. The Collateral Trustee’s ability to foreclose on the New Notes Collateral on behalf of the holders of the New Notes may be subject to perfection, priority issues, state law requirements, applicable bankruptcy law, and practical problems associated with the realization of the Collateral Trustee’s security interest in or lien on the New Notes Collateral, including cure rights, foreclosing on the New Notes Collateral within the time periods permitted by third parties or prescribed by laws, obtaining third-party consents, making additional filings, statutory rights of redemption, and the effect of the order of foreclosure. We cannot assure you that the consents of any third parties and approvals by governmental entities or courts of competent jurisdiction will be given when required to facilitate a foreclosure on such assets. Therefore, we cannot assure you that foreclosure on the New Notes Collateral will be sufficient to make all payments on the New Notes.

Rights of holders of the New Notes in the New Notes Collateral may be adversely affected by the failure to create or perfect the security interests in the New Notes Collateral.

The Unit Credit Agreement is secured on a first lien basis by the New Notes Collateral. Applicable law requires that a security interest in certain tangible and intangible assets can only be properly perfected and its priority retained through certain actions undertaken by the secured party. The liens on the New Notes Collateral securing the New Notes may not be perfected if we are not able to take the actions necessary to perfect any of these liens on or before the date of the issuance of the New Notes or thereafter. We will have limited obligations to perfect the security interest of the holders of the New Notes in specified collateral other than the filing of financing statements and any mortgages. To the extent a security interest in certain New Notes Collateral is not properly perfected on the date of the issuance of the New Notes, that security interest might be avoidable in bankruptcy, which could impact the value of the New Notes Collateral. See “—Any future pledge of New Notes Collateral or guarantee may be avoidable in bankruptcy.”

If after the date the Notes are issued additional assets are pledged to secure the Unit Credit Agreement, the Indenture will require that such assets are also pledged to secure the New Notes on a second-priority basis, unless such assets constitute “second priority excluded collateral.” In such instances, additional financing statements or mortgages, as the case may be, would be required to be filed to perfect the security interest in such assets. Depending on the type of the assets constituting after-acquired collateral, additional action may be required to perfect the security interest in such assets. Applicable law requires that certain property and rights acquired after the grant of a general security interest can be perfected only at the time that property and rights are acquired and identified. Neither the Trustee or the Collateral Trustee will be responsible to monitor, and there can be no assurance that Unit will inform the Trustee or Collateral Trustee of, the future acquisition of property and rights that constitute New Notes Collateral, and that the necessary action will be taken to properly perfect the security interest in such after-acquired collateral. The Collateral Trustee will have no obligation to monitor the acquisition of additional property or rights that constitute New Notes Collateral or the perfection of any security interests therein. That inaction may result in the loss of the security interest in that New Notes Collateral or the priority of the security interest in favor of the New Notes and the guarantees against third parties. Even if the necessary action is taken to properly perfect liens on New Notes Collateral acquired or arising in the future, those liens may potentially be avoidable as a preference in any bankruptcy proceeding under certain circumstances. See “—Any future pledge of New Notes Collateral or guarantee may be avoidable in bankruptcy.”

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Security over certain collateral, including all mortgages on oil and gas properties, on which a lien in favor of the Collateral Trustee is required, may not be perfected on the Closing Date.

Security interests over certain collateral, including all mortgages on oil and gas properties, which will be required under the New Indenture, will not be perfected on the Closing Date. To the extent such security interests are not perfected on such date, we will be required to have such security interests thereafter perfected promptly, but in no event submitted for recording with the applicable governmental authorities later than the date that is 90 days after the Closing Date, but there can be no assurance that such security interest will be perfected on a timely basis. In the event that more than a reasonable time passes between the issuance of the New Notes and the perfection of the security interests on the oil and gas properties, such security interests may be set aside or avoided as a preferential transfer if the collateral grantor becomes a debtor that is the subject of a voluntary or involuntary bankruptcy case under the U.S. Bankruptcy Code (or under certain similar state law insolvency proceedings) on or before 90 days from the perfection of the security interests. In the event of such a determination in such bankruptcy case or insolvency proceeding, the Collateral Trustee will not have a security interest in that collateral.

Your security interest in certain items of present and future collateral may not be perfected. Even if your security interests in certain items of collateral are perfected, it may not be practicable for you to enforce or economically benefit from your rights with respect to such security interests.

The security interests are not perfected with respect to certain items of collateral that cannot be perfected by the filing of financing statements in each debtor’s jurisdiction of organization, the filing of mortgages, the delivery of possession of certificated securities, the filing of a notice of security interest with the U.S. Patent and Trademark Office or the U.S. Copyright Office or certain other conventional methods to perfect security interests in the United States. Security interests in collateral such as deposit accounts and securities accounts, which require or benefit from additional special filings or other actions or the obtaining of additional consents, may not be perfected or may not have priority with respect to the security interests of other creditors. We and the Subsidiary Guarantors will have limited obligations to perfect the security interest of the holders of the New Notes in specified collateral. To the extent that your security interests in any items of collateral are unperfected, your rights with respect to such collateral are equal to the rights of our general unsecured creditors in the event of any bankruptcy filed by or against us under applicable U.S. federal bankruptcy laws.

Moreover, the Collateral Trustee may need to obtain the consent of a governmental agency to obtain or enforce a security interest in certain of the collateral or to otherwise operate our business. We cannot assure you that the Collateral Trustee will be able to obtain any such consent or that any consent will not be delayed, the event of which may adversely affect your rights as holders. Moreover, the Collateral Trustee in exercising its rights to foreclose on certain assets may need to commence governmental proceedings in order to obtain any necessary governmental approvals. As a result, there may be prolonged delays in receiving such approval, or such approval may not be granted to the Collateral Trustee, the result of which may adversely affect your rights as holders.

Lien searches may not reveal all liens on the New Notes Collateral.

We cannot guarantee that the lien searches on the New Notes Collateral that will secure the New Notes and the related guarantees will reveal any or all existing liens on the New Notes Collateral. Any existing lien, including undiscovered liens, could be significant, could be prior in ranking to the liens securing the New Notes and guarantees thereof and could have an adverse effect on the ability of the Collateral Trustee to realize or foreclose upon the New Notes Collateral securing the New Notes and guarantees thereof.

The New Notes Collateral is subject to casualty risks.

We intend to maintain insurance or otherwise insure against hazards in a manner consistent with our past practice. There are, however, certain losses that may be either uninsurable or not economically insurable, in

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whole or in part. Insurance proceeds may not compensate us fully for our losses. If there is a complete or partial loss or impairment in value of any of the New Notes Collateral, the insurance proceeds may not be sufficient to satisfy all of the secured obligations, including the New Notes and the related guarantees.

The imposition of certain permitted liens will, under certain circumstances, permit the liens on the related assets securing the New Notes and the related guarantees to be subordinated to such permitted liens.

The New Indenture will permit liens in favor of third parties to secure additional debt, including purchase money indebtedness and capital lease obligations, and, in the case of certain of those liens, the liens on the related assets securing the New Notes and the related guarantees may, under certain circumstances, be subordinated to such permitted liens. Unit’s and its restricted subsidiaries’ ability to incur additional debt and liens on such additional debt in favor of third parties is subject to limitations as described herein under the heading “Description of New Notes.”

Any future pledge of New Notes Collateral or guarantee may be avoidable in bankruptcy.

If after the date the Notes are issued additional assets are pledged to secure the Unit Credit Agreement, the Indenture will require that such assets are also pledged to secure the New Notes on a second-priority basis, unless such assets constitute “second-priority excluded collateral.” In addition, if any subsidiary becomes a guarantor under the Unit Credit Agreement or guarantees any other Indebtedness of Unit or any subsidiary guarantor, then the Indenture will require such subsidiary to guarantee the New Notes. New Notes Collateral pledged, or guarantees issued, after the Closing Date may be treated under bankruptcy law as if they were pledged to secure, or delivered to guarantee, as applicable, previously existing indebtedness.

Any future pledge of New Notes Collateral or issuance of a guarantee in favor of the holders of the New Notes may be avoidable by the pledgor (as a debtor in possession), guarantor (as a debtor in possession), by its trustee in bankruptcy, or potentially by other creditors if certain events or circumstances exist or occur, including, among others, if (1) the pledgor or guarantor is insolvent at the time of the pledge and/or issuance of the guarantee, (2) the pledge and/or issuance of the guarantee permits the holders of the New Notes to receive a greater recovery in a hypothetical Chapter 7 case than if such pledge and/or guarantee had not been given and (3) a bankruptcy proceeding in respect of the pledgor or guarantor is commenced within 90 days following the pledge or the perfection thereof and/or the issuance of the guarantee, or, in certain circumstances, a longer period. Accordingly, if Unit or any Subsidiary Guarantor were to file for bankruptcy protection after the Closing Date and any pledge of New Notes Collateral not pledged, or any guarantees not issued, on the Closing Date had been pledged or perfected or issued less than 90 days before commencement of such bankruptcy proceeding, such pledges or guarantees are materially more likely to be avoided as a preference by the bankruptcy court than if delivered on the Closing Date (even if the other guarantees or liens issued on the Closing Date would no longer be subject to such risk). To the extent that the grant of any such security interest and/or guarantee is avoided as a preference or otherwise, you would lose the benefit of such security interest and/or guarantee.

Rights of holders of the New Notes in the New Notes Collateral may be adversely affected by bankruptcy proceedings.

The right of the Collateral Trustee to foreclose upon, repossess and dispose of the New Notes Collateral securing the New Notes and the related guarantees is likely to be significantly impaired (or at a minimum delayed) by federal bankruptcy law if bankruptcy proceedings are commenced by or against Unit or the Subsidiary Guarantors before, or possibly even after, the Collateral Trustee has repossessed and disposed of the New Notes Collateral. Under the U.S. Bankruptcy Code, a secured creditor, like the Collateral Trustee, is prohibited from foreclosing upon or repossessing its security from a debtor in a bankruptcy case, or from disposing of security previously repossessed from a debtor, without prior bankruptcy court approval (which may not be given under the circumstances). Moreover, bankruptcy law permits the debtor to continue to retain and use collateral, and the proceeds, products, rents or profits of the collateral, even though the debtor is in default under

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the applicable debt instruments, provided that the secured creditor is given “adequate protection.” The meaning of the term “adequate protection” may vary according to the circumstances, but it is intended in general to protect the value of the secured creditor’s interest in its collateral and may include cash payments or the granting of additional or replacement security, if and when the court in its discretion determines, for any diminution in the value of the collateral as a result of the automatic stay of repossession or disposition or any use of the collateral by the debtor during the pendency of the bankruptcy case. A bankruptcy court may determine that a secured creditor may not require compensation for a diminution in the value of its collateral if the value of the collateral exceeds the debt it secures. In view of both the lack of a precise definition of the term “adequate protection” under the U.S. Bankruptcy Code and the broad discretionary powers of a bankruptcy court, it is impossible to predict how, whether or when payments under the New Notes could be made following the commencement of a bankruptcy case, the length of the delay in making any such payments or whether any such payment will be made at all or in what form, whether or when the Collateral Trustee could or would repossess or dispose of the New Notes Collateral, the value of the New Notes Collateral as of the commencement date of any bankruptcy proceedings, or whether or to what extent or in what form holders of the New Notes would be compensated for any delay in payment or loss of the value of the New Notes Collateral through the requirements of “adequate protection.”

Furthermore, any disposition of the New Notes Collateral during a bankruptcy case outside of the ordinary course of business would also require approval from the bankruptcy court (which may not be given under the circumstances).

Moreover, the Trustee and Collateral Trustee under the New Indenture may need to evaluate the impact of the potential liabilities before determining to foreclose on collateral consisting of real property, if any, because secured creditors that hold a security interest in real property may be held liable under environmental laws for the costs of remediating or preventing the release or threatened releases of hazardous substances at such real property. Consequently, the Collateral Trustee may decline to foreclose on such collateral or exercise remedies available in respect thereof if it does not receive indemnification to its satisfaction from the holders of the New Notes.

In addition, the Intercreditor Agreement will contain certain provisions benefiting holders of Priority Lien Obligations that prevent the holders of the New Notes from objecting to a number of important matters regarding the New Notes Collateral or otherwise limit their rights as secured creditors following a filing for bankruptcy, including the right to object to any debtor-in-possession financing proposed or consented to by the holders of Priority Lien Obligations (including any such additional financing that is secured by prior liens on the New Notes Collateral) or to seek “adequate protection” under U.S. bankruptcy laws in certain circumstances for protection of its secured position. As a result, after a bankruptcy filing, the value of the New Notes Collateral could materially deteriorate and holders of the New Notes would be unable to raise a variety of objections. The holders of the New Notes may also be required to turn over to the holders of Priority Lien Obligations certain funds they may receive in connection with a bankruptcy case. These waivers and limitations could significantly limit rights that would otherwise be available to holders of the New Notes as secured creditors in a bankruptcy proceeding, and could adversely affect their ability to recover amounts owed on the New Notes.

In the event of a bankruptcy of us or any of the Subsidiary Guarantors, holders of the New Notes may be deemed to have an unsecured claim to the extent that our obligations in respect of the New Notes exceed the fair market value of the New Notes Collateral securing the New Notes and the related guarantees.

In any bankruptcy proceeding with respect to us or any of the Subsidiary Guarantors, it is possible that the bankruptcy trustee, the debtor-in-possession or competing creditors will assert that the fair market value of the New Notes Collateral (taking into account the relative priority of the liens securing the New Notes) available to satisfy the New Notes on the date of the bankruptcy filing was less than the then-current principal amount of the New Notes. Upon a finding by the bankruptcy court that any of the New Notes are undercollateralized, the claims in the bankruptcy proceeding with respect to the New Notes would be bifurcated between a secured claim in an

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amount equal to the value of the New Notes Collateral and an unsecured claim with respect to the remainder of its claim that would not be entitled to the benefits of security in the New Notes Collateral. In such event, the secured claims of the holders of the New Notes would be limited to the value of the New Notes Collateral (subject to the terms of the Intercreditor Agreement).

Other consequences of a finding of undercollateralization would be, among other things, a lack of entitlement on the part of the New Notes that are undercollateralized to receive post-petition interest and a lack of entitlement on the part of the unsecured portion of such New Notes to receive “adequate protection” under federal bankruptcy laws. In addition, if any payments of post-petition interest had been made at any time before such a finding of undercollateralization, those payments would be recharacterized by the bankruptcy court as a reduction of the principal amount of the secured claim with respect to the New Notes that are undercollateralized.

If a bankruptcy petition were filed by or against Unit or any of the Subsidiary Guarantors in the United States, the allowed claim for the New Notes may be less than the principal amount of the New Notes stated in the New Indenture.

If a bankruptcy petition were filed by or against Unit or any of the Subsidiary Guarantors under the U.S. Bankruptcy Code after the issuance of the New Notes, the claim by any holder of the New Notes for the principal amount thereof may be limited to the amount of the fair market value of the Old Notes tendered in exchange for the new Notes. Any such discount that was not amortized as of the date of the bankruptcy filing would constitute unmatured interest, which is not allowable as part of a bankruptcy claim under the U.S. Bankruptcy Code. Accordingly, holders of the New Notes under these circumstances may receive an amount that is less than the principal amount thereof stated in the New Indenture.

There are circumstances other than repayment or discharge of the New Notes under which the New Notes Collateral and the guarantees would be released automatically, without your consent or the consent of the Trustee and the Collateral Trustee, and you may not realize any payment upon the release of such New Notes Collateral.

Pursuant to the New Indenture, under various circumstances all or a portion of the New Notes Collateral securing the New Notes and guarantees would be released automatically without your consent or the consent of the Trustee or the Collateral Trustee, including:

The New Indenture will also permit us to designate one or more of our restricted subsidiaries as unrestricted subsidiaries, subject to certain conditions. If we designate a subsidiary as an unrestricted subsidiary, all the liens on any collateral owned by such unrestricted subsidiary or any of its subsidiaries and any guarantees of the New Notes by such unrestricted subsidiary or any of its subsidiaries will be automatically released under the New Indenture. Designation of one or more of our subsidiaries as an unrestricted subsidiary will therefore reduce the

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aggregate value of the New Notes Collateral to the extent that liens on the assets of the unrestricted subsidiary and its subsidiaries are released. In addition, the creditors of any such unrestricted subsidiary and its subsidiaries will have a claim on the assets of the unrestricted subsidiary and its subsidiaries senior to the claim of the holders of the New Notes.

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