|   | [x]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR15(d) |
|--------|----------------------------------------------------------|

|   | OF      THE SECURITIES EXCHANGE ACT OF 1934 |
|--------|---------------------------------------------|

|   | OR |
|--------|----|

|   | [  ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR  15(d) |
|--------|------------------------------------------------------------------------|

|   | OF      THE SECURITIES EXCHANGE ACT OF 1934 |
|--------|---------------------------------------------|

|   | Delaware                                            | 73-1283193                                |
|--------|-----------------------------------------------------|-------------------------------------------|
|   | (State      or other jurisdiction of incorporation) | (I.R.S.      Employer Identification No.) |

|   | 7130      South Lewis, Suite 1000,      Tulsa,      Oklahoma | 74136           |
|--------|-------------------------------------------------------------------|-----------------|
|   | (Address      of principal executive offices)                     | (Zip      Code) |

|   | (918)      493-7700                                            |
|--------|----------------------------------------------------------------|
|   | (Registrant’s      telephone number, including areacode) |

|   | None                                                      |
|--------|-----------------------------------------------------------|
|   | (Former      name, former address and former fiscal year, |
|   | if      changed since last report)                        |

|   | Yes      [x] | No      [  ] |
|--------|--------------|------------------------|

| Large      accelerated filer [x] | Accelerated      filer [  ] | Non-accelerated      filer [  ] | Smaller      reporting company [  ] |
|----------------------------------|---------------------------------------|-------------------------------------------|-----------------------------------------------|

|   | Yes      [  ] | No      [x] |
|--------|-------------------------|-------------|

|   |          |                                                             | Page   |
|--------|---------------|------------------------------------------------------------------|--------|
|   |          |                                                             | Number |
|   |          | PART      I. Financial Information                               |   |
|   | Item      1.  | Financial      Statements (Unaudited)                            |   |
|   |          |                                                             |   |
|   |          | Condensed      Consolidated Balance Sheets                       |   |
|   |          | September      30, 2008 and December 31, 2007                    | 3      |
|   |          |                                                             |   |
|   |          | Condensed      Consolidated Statements of Income                 |   |
|   |          | Three      and Nine Months Ended September 30, 2008 and 2007     | 5      |
|   |          |                                                             |   |
|   |          | Condensed      Consolidated Statements of Cash Flows             |   |
|   |          | Nine      Months Ended September 30, 2008 and 2007               | 6      |
|   |          |                                                             |   |
|   |          | Condensed      Consolidated Statements of Comprehensive Income   |   |
|   |          | Three      and Nine Months Ended September 30, 2008 and 2007     | 7      |
|   |          |                                                             |   |
|   |          | Notes      to Condensed Consolidated Financial Statements        | 8      |
|   |          |                                                             |   |
|   |          | Report      of Independent Registered Public Accounting Firm     | 20     |
|   |          |                                                             |   |
|   | Item      2.  | Management’s      Discussion and Analysis of Financial     |   |
|   |          | Condition      and Results of Operations                         | 21     |
|   |          |                                                             |   |
|   | Item      3.  | Quantitative      and Qualitative Disclosure About Market Risk   | 42     |
|   |          |                                                             |   |
|   | Item      4.  | Controls      and Procedures                                     | 43     |
|   |          |                                                             |   |
|   |          | PART      II. Other Information                                  |   |
|   | Item      1.  | Legal      Proceedings                                           | 43     |
|   |          |                                                             |   |
|   | Item      1A. | Risk      Factors                                                | 43     |
|   |          |                                                             |   |
|   | Item      2.  | Unregistered      Sales of Equity Securities and Use of Proceeds | 45     |
|   |          |                                                             |   |
|   | Item      3.  | Defaults      Upon Senior Securities                             | 45     |
|   |          |                                                             |   |
|   | Item      4.  | Submission      of Matters to a Vote of Security Holders         | 45     |
|   |          |                                                             |   |
|   | Item      5.  | Other      Information                                           | 45     |
|   |          |                                                             |   |
|   | Item      6.  | Exhibits                                                         | 45     |
|   |          |                                                             |   |
|   | Signatures    |                                                             | 46     |

|                                                                                                                                  |   | September      30,                       |      |   |   | December      31, |   |
|---------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------|-----------|--------|--------|-------------------|--------|
|                                                                                                                                  |   | 2008                                     |      |   |   | 2007              |   |
|                                                                                                                                  |   | (In      thousands except share amounts) |      |
| ASSETS                                                                                                                                |   |                                     |      |   |   |              |   |   |   |
| Current      assets:                                                                                                                  |   |                                     |      |   |   |              |   |   |   |
| Cash      and cash equivalents                                                                                                        |   | $                                        | 1,007     |   |   |              | $      | 1,076 |   |
| Restricted      cash                                                                                                                  |   |                                     | 19        |   |   |              |   | 19 |   |
| Accounts      receivable, net of allowance for doubtful accounts of $3,423 at September      30, 2008 and $3,350 at December 31, 2007 |   |                                     | 192,119   |   |   |              |   | 159,455 |   |
| Materials      and supplies                                                                                                           |   |                                     | 7,255     |   |   |              |   | 13,558 |   |
| Other                                                                                                                                 |   |                                     | 23,940    |   |   |              |   | 22,907 |   |
| Total      current assets                                                                                                             |   |                                     | 224,340   |   |   |              |   | 197,015 |   |
|                                                                                                                                  |   |                                     |      |   |   |              |   |   |   |
| Property      and equipment:                                                                                                          |   |                                     |      |   |   |              |   |   |   |
| Drilling      equipment                                                                                                               |   |                                     | 1,123,139 |   |   |              |   | 987,184 |   |
| Oil      and natural gas properties, on the full cost                                                                                 |   |                                     |      |   |   |              |   |   |   |
| method:                                                                                                                               |   |                                     |      |   |   |              |   |   |   |
| Proved      properties                                                                                                                |   |                                     | 1,997,267 |   |   |              |   | 1,624,478 |   |
| Undeveloped      leasehold not being amortized                                                                                        |   |                                     | 149,855   |   |   |              |   | 64,722 |   |
| Gas      gathering and processing equipment                                                                                           |   |                                     | 155,177   |   |   |              |   | 119,515 |   |
| Transportation      equipment                                                                                                         |   |                                     | 24,782    |   |   |              |   | 23,240 |   |
| Other                                                                                                                                 |   |                                     | 21,980    |   |   |              |   | 19,974 |   |
|                                                                                                                                  |   |                                     | 3,472,200 |   |   |              |   | 2,839,113 |   |
| Less      accumulated depreciation, depletion, amortization                                                                           |   |                                     |      |   |   |              |   |   |   |
| and      impairment                                                                                                                   |   |                                     | 1,098,312 |   |   |              |   | 927,759 |   |
| Net      property and equipment                                                                                                       |   |                                     | 2,373,888 |   |   |              |   | 1,911,354 |   |
|                                                                                                                                  |   |                                     |      |   |   |              |   |   |   |
| Goodwill                                                                                                                              |   |                                     | 62,808    |   |   |              |   | 62,808 |   |
| Other      intangible assets, net                                                                                                     |   |                                     | 10,371    |   |   |              |   | 13,798 |   |
| Other      assets                                                                                                                     |   |                                     | 19,941    |   |   |              |   | 14,844 |   |
| Total      assets                                                                                                                     |   | $                                        | 2,691,348 |   |   |              | $      | 2,199,819 |   |

|                                                                      |   | September      30,                       |      |   |   | December      31, |   |
|---------------------------------------------------------------------------|--------|------------------------------------------|-----------|--------|--------|-------------------|--------|
|                                                                      |   | 2008                                     |      |   |   | 2007              |   |
|                                                                      |   | (In      thousands except share amounts) |      |
| LIABILITIES      AND SHAREHOLDERS’ EQUITY                           |   |                                     |      |   |   |              |   |   |   |
| Current      liabilities:                                                 |   |                                     |      |   |   |              |   |   |   |
| Accounts      payable                                                     |   | $                                        | 121,928   |   |   |              | $      | 100,258 |   |
| Accrued      liabilities                                                  |   |                                     | 45,919    |   |   |              |   | 40,508 |   |
| Income      taxes payable                                                 |   |                                     | 2,756     |   |   |              |   | — |   |
| Contract      advances                                                    |   |                                     | 5,316     |   |   |              |   | 6,825 |   |
| Current      portion of derivative liabilities                            |   |                                     | 971       |   |   |              |   | 56 |   |
| Current      portion of other liabilities                                 |   |                                     | 10,565    |   |   |              |   | 8,757 |   |
| Total      current liabilities                                            |   |                                     | 187,455   |   |   |              |   | 156,404 |   |
|                                                                      |   |                                     |      |   |   |              |   |   |   |
| Long-term      debt                                                       |   |                                     | 148,000   |   |   |              |   | 120,600 |   |
| Other      long-term liabilities                                          |   |                                     | 90,483    |   |   |              |   | 59,115 |   |
| Deferred      income taxes                                                |   |                                     | 542,326   |   |   |              |   | 428,883 |   |
|                                                                      |   |                                     |      |   |   |              |   |   |   |
| Shareholders’      equity:                                          |   |                                     |      |   |   |              |   |   |   |
| Preferred      stock, $1.00 par value, 5,000,000 shares                   |   |                                     |      |   |   |              |   |   |   |
| authorized,      none issued                                              |   |                                     | —   |   |   |              |   | — |   |
| Common      stock, $.20 par value, 175,000,000 shares                     |   |                                     |      |   |   |              |   |   |   |
|     authorized,      47,256,068 and 47,035,089 shares |   |                                     |      |   |   |              |   |   |   |
|     issued,      respectively                         |   |                                     | 9,325     |   |   |              |   | 9,280 |   |
| Capital      in excess of par value                                       |   |                                     | 362,530   |   |   |              |   | 344,512 |   |
| Accumulated      other comprehensive income                               |   |                                     | 7,891     |   |   |              |   | 1,160 |   |
| Retained      earnings                                                    |   |                                     | 1,343,338 |   |   |              |   | 1,079,865 |   |
| Total      shareholders’ equity                                     |   |                                     | 1,723,084 |   |   |              |   | 1,434,817 |   |
| Total      liabilities and shareholders’ equity                     |   | $                                        | 2,691,348 |   |   |              | $      | 2,199,819 |   |

|                               | Three      Months Ended |                                         | Nine      Months Ended |   |
|------------------------------------|-------------------------|----------------------------------------------|------------------------|--------|
|                               | September      30,      |                                         | September      30,     |   |
|                               | 2008                    |                                         | 2007                   |   | 2008 |   | 2007 |   |
|                               |                    | (In      thousands except per share amounts) |                   |
| Revenues:                          |                    |                                         |                   |   |   |   |   |   |   |   |   |   |
| Contract      drilling             | $                       | 169,044                                      |                   | $      | 157,769 |   | $ | 467,519 |   | $ | 472,403 |   |
| Oil      and natural gas           |                    | 152,343                                      |                   |   | 95,231 |   |   | 446,644 |   |   | 277,680 |   |
| Gas      gathering and processing  |                    | 54,079                                       |                   |   | 32,784 |   |   | 153,102 |   |   | 99,321 |   |
| Other      income (expense), net   |                    | 97                                           |                   |   | 551 |   |   | (193 | ) |   | 842 |   |
| Total      revenues                |                    | 375,563                                      |                   |   | 286,335 |   |   | 1,067,072 |   |   | 850,246 |   |
|                               |                    |                                         |                   |   |   |   |   |   |   |   |   |   |
| Expenses:                          |                    |                                         |                   |   |   |   |   |   |   |   |   |   |
| Contract      drilling:            |                    |                                         |                   |   |   |   |   |   |   |   |   |   |
| Operating      costs               |                    | 81,802                                       |                   |   | 77,951 |   |   | 234,541 |   |   | 228,967 |   |
| Depreciation                       |                    | 18,968                                       |                   |   | 14,793 |   |   | 51,320 |   |   | 41,192 |   |
| Oil      and natural gas:          |                    |                                         |                   |   |   |   |   |   |   |   |   |   |
| Operating      costs               |                    | 32,095                                       |                   |   | 23,101 |   |   | 90,353 |   |   | 69,701 |   |
| Depreciation,      depletion and   |                    |                                         |                   |   |   |   |   |   |   |   |   |   |
| amortization                       |                    | 40,053                                       |                   |   | 32,297 |   |   | 114,756 |   |   | 92,367 |   |
| Gas      gathering and processing: |                    |                                         |                   |   |   |   |   |   |   |   |   |   |
| Operating      costs               |                    | 45,381                                       |                   |   | 28,275 |   |   | 125,617 |   |   | 87,171 |   |
| Depreciation      and amortization |                    | 3,788                                        |                   |   | 2,858 |   |   | 10,932 |   |   | 7,752 |   |
| General      and administrative    |                    | 6,928                                        |                   |   | 5,355 |   |   | 20,179 |   |   | 15,784 |   |
| Interest,      net                 |                    | 69                                           |                   |   | 1,797 |   |   | 1,162 |   |   | 5,167 |   |
| Total      operating expenses      |                    | 229,084                                      |                   |   | 186,427 |   |   | 648,860 |   |   | 548,101 |   |
| Income      before income taxes    |                    | 146,479                                      |                   |   | 99,908 |   |   | 418,212 |   |   | 302,145 |   |
|                               |                    |                                         |                   |   |   |   |   |   |   |   |   |   |
| Income      tax expense:           |                    |                                         |                   |   |   |   |   |   |   |   |   |   |
| Current                            |                    | 16,026                                       |                   |   | 11,152 |   |   | 41,161 |   |   | 53,498 |   |
| Deferred                           |                    | 38,172                                       |                   |   | 24,695 |   |   | 113,578 |   |   | 54,538 |   |
| Total      income taxes            |                    | 54,198                                       |                   |   | 35,847 |   |   | 154,739 |   |   | 108,036 |   |
|                               |                    |                                         |                   |   |   |   |   |   |   |   |   |   |
| Net      income                    | $                       | 92,281                                       |                   | $      | 64,061 |   | $ | 263,473 |   | $ | 194,109 |   |
|                               |                    |                                         |                   |   |   |   |   |   |   |   |   |   |
| Net      income per common share:  |                    |                                         |                   |   |   |   |   |   |   |   |   |   |
| Basic                              | $                       | 1.98                                         |                   | $      | 1.38 |   | $ | 5.66 |   | $ | 4.19 |   |
|                               |                    |                                         |                   |   |   |   |   |   |   |   |   |   |
| Diluted                            | $                       | 1.96                                         |                   | $      | 1.37 |   | $ | 5.61 |   | $ | 4.16 |   |

|                                                      |   | Nine      Months Ended |     |
|-----------------------------------------------------------|--------|------------------------|----------|
|                                                      |   | September      30,     |     |
|                                                      |   | 2008                   |     |   |   | 2007 |   |
|                                                      |   | (In      thousands)    |     |
| OPERATING      ACTIVITIES:                                |   |                   |     |   |   |   |   |   |   |
| Net      income                                           |   | $                      | 263,473  |   |   |   | $ | 194,109 |   |
| Adjustments      to reconcile net income to net cash      |   |                   |     |   |   |   |   |   |   |
| provided      by operating activities:                    |   |                   |     |   |   |   |   |   |   |
| Depreciation,      depletion and amortization             |   |                   | 177,436  |   |   |   |   | 141,968 |   |
| Deferred      tax expense                                 |   |                   | 113,578  |   |   |   |   | 54,538 |   |
| Other                                                     |   |                   | 13,325   |   |   |   |   | 3,792 |   |
| Changes      in operating assets and liabilities          |   |                   |     |   |   |   |   |   |   |
| increasing      (decreasing) cash:                        |   |                   |     |   |   |   |   |   |   |
| Accounts      receivable                                  |   |                   | (32,814  | ) |   |   |   | 35,023 |   |
| Accounts      payable                                     |   |                   | (30,603  | ) |   |   |   | (24,497 | ) |
| Material      and supplies inventory                      |   |                   | 6,303    |   |   |   |   | 1,969 |   |
| Accrued      liabilities                                  |   |                   | 16,100   |   |   |   |   | (14,066 | ) |
| Contract      advances                                    |   |                   | (1,509   | ) |   |   |   | (1,830 | ) |
| Other      – net                                    |   |                   | (222     | ) |   |   |   | (1,627 | ) |
| Net      cash provided by operating activities            |   |                   | 525,067  |   |   |   |   | 389,379 |   |
|                                                      |   |                   |     |   |   |   |   |   |   |
| INVESTING      ACTIVITIES:                                |   |                   |     |   |   |   |   |   |   |
| Capital      expenditures                                 |   |                   | (553,660 | ) |   |   |   | (344,524 | ) |
| Cash      paid for acquisitions                           |   |                   | (25,727  | ) |   |   |   | (38,500 | ) |
| Proceeds      from disposition of assets                  |   |                   | 3,783    |   |   |   |   | 3,866 |   |
| Other      – net                                    |   |                   | (2,714   | ) |   |   |   | (388 | ) |
| Net      cash used in investing activities                |   |                   | (578,318 | ) |   |   |   | (379,546 | ) |
|                                                      |   |                   |     |   |   |   |   |   |   |
| FINANCING      ACTIVITIES:                                |   |                   |     |   |   |   |   |   |   |
| Borrowings      under line of credit                      |   |                   | 279,600  |   |   |   |   | 144,600 |   |
| Payments      under line of credit                        |   |                   | (252,200 | ) |   |   |   | (165,300 | ) |
| Proceeds      from exercise of stock options              |   |                   | 2,507    |   |   |   |   | 659 |   |
| Tax      benefit from stock options                       |   |                   | 771      |   |   |   |   | — |   |
| Book      overdrafts                                      |   |                   | 22,504   |   |   |   |   | 10,472 |   |
| Net      cash provided by (used in) financing activities  |   |                   | 53,182   |   |   |   |   | (9,569 | ) |
|                                                      |   |                   |     |   |   |   |   |   |   |
| Net      increase (decrease) in cash and cash equivalents |   |                   | (69      | ) |   |   |   | 264 |   |
|                                                      |   |                   |     |   |   |   |   |   |   |
| Cash      and cash equivalents, beginning of period       |   |                   | 1,076    |   |   |   |   | 589 |   |
| Cash      and cash equivalents, end of period             |   | $                      | 1,007    |   |   |   | $ | 853 |   |

|                               |   | Three      Months Ended |    | Nine      Months Ended |   |
|------------------------------------|--------|-------------------------|---------|------------------------|--------|
|                               |   | September      30,      |    | September      30,     |   |
|                               |   | 2008                    |    | 2007                   |   | 2008 |   | 2007 |   |
|                               |   | (In      thousands)     |    |
| Net      income                    |   | $                       | 92,281  |                   | $      | 64,061 |   | $ | 263,473 |   | $ | 194,109 |   |
| Other      comprehensive income,   |   |                    |    |                   |   |   |   |   |   |   |   |   |   |
| net      of taxes:                 |   |                    |    |                   |   |   |   |   |   |   |   |   |   |
| Change      in value of derivative |   |                    |    |                   |   |   |   |   |   |   |   |   |   |
| instruments      used as cash      |   |                    |    |                   |   |   |   |   |   |   |   |   |   |
| flow      hedges, net of tax of    |   |                    |    |                   |   |   |   |   |   |   |   |   |   |
| $34,277,      $(52), $(3,929)      |   |                    |    |                   |   |   |   |   |   |   |   |   |   |
| and      $161                      |   |                    | 58,361  |                   |   | (122 | ) |   | (6,721 | ) |   | (1,026 | ) |
| Reclassification      - derivative |   |                    |    |                   |   |   |   |   |   |   |   |   |   |
| Settlements,      net of tax of    |   |                    |    |                   |   |   |   |   |   |   |   |   |   |
| $2,716,      $(93), $7,901         |   |                    |    |                   |   |   |   |   |   |   |   |   |   |
| and      $(158)                    |   |                    | 4,626   |                   |   | (121 | ) |   | 13,453 |   |   | (442 | ) |
| Comprehensive      income          |   | $                       | 155,268 |                   | $      | 63,818 |   | $ | 270,205 |   | $ | 192,641 |   |

|                                                             |   |                                         |    | Weighted      |   |      |   |
|------------------------------------------------------------------|--------|----------------------------------------------|---------|---------------|--------|-----------|--------|
|                                                             |   | Income                                       |    | Shares        |   | Per-Share |   |
|                                                             |   | (Numerator)                                  |    | (Denominator) |   | Amount    |   |
|                                                             |   | (In      thousands except per share amounts) |    |
| For      the three months ended                                  |   |                                         |    |          |   |      |   |   |   |   |
| September      30, 2008:                                         |   |                                         |    |          |   |      |   |   |   |   |
| Basic      earnings per common share                             |   | $                                            | 92,281  |          |   | 46,634    |   | $ | 1.98 |   |
| Effect      of dilutive stock options, restricted                |   |                                         |    |          |   |      |   |   |   |   |
| stock      and stock appreciation rights                         |   |                                         | — |          |   | 409       |   |   | (0.02 | ) |
| Diluted      earnings per common share                           |   | $                                            | 92,281  |          |   | 47,043    |   | $ | 1.96 |   |
|                                                             |   |                                         |    |          |   |      |   |   |   |   |
| For      the three months ended                                  |   |                                         |    |          |   |      |   |   |   |   |
| September      30, 2007:                                         |   |                                         |    |          |   |      |   |   |   |   |
| Basic      earnings per common share                             |   | $                                            | 64,061  |          |   | 46,382    |   | $ | 1.38 |   |
| Effect      of dilutive stock options, restricted                |   |                                         |    |          |   |      |   |   |   |   |
|     stock      and stock appreciation rights |   |                                         | — |          |   | 249       |   |   | (0.01 | ) |
| Diluted      earnings per common share                           |   | $                                            | 64,061  |          |   | 46,631    |   | $ | 1.37 |   |

|                        |   | 2008   |   |   |   | 2007   |
|-----------------------------|--------|--------|--------|--------|--------|--------|
|                        |   |   |   |   |   |   |   |   |
| Options      and SARs       |   |   | 28,000 |   |   |   |   | 61,000 |
|                        |   |   |   |   |   |   |   |   |
| Average      Exercise Price |   | $      | 73.26  |   |   |   | $ | 59.67 |

|                                              |   |                                         |    | Weighted      |   |      |   |
|---------------------------------------------------|--------|----------------------------------------------|---------|---------------|--------|-----------|--------|
|                                              |   | Income                                       |    | Shares        |   | Per-Share |   |
|                                              |   | (Numerator)                                  |    | (Denominator) |   | Amount    |   |
|                                              |   | (In      thousands except per share amounts) |    |
| For      the nine months ended                    |   |                                         |    |          |   |      |   |   |   |   |
| September      30, 2008:                          |   |                                         |    |          |   |      |   |   |   |   |
| Basic      earnings per common share              |   | $                                            | 263,473 |          |   | 46,568    |   | $ | 5.66 |   |
| Effect      of dilutive stock options, restricted |   |                                         |    |          |   |      |   |   |   |   |
| stock      and SARs                               |   |                                         | — |          |   | 366       |   |   | (0.05 | ) |
| Diluted      earnings per common share            |   | $                                            | 263,473 |          |   | 46,934    |   | $ | 5.61 |   |
|                                              |   |                                         |    |          |   |      |   |   |   |   |
| For      the nine months ended                    |   |                                         |    |          |   |      |   |   |   |   |
| September      30, 2007:                          |   |                                         |    |          |   |      |   |   |   |   |
| Basic      earnings per common share              |   | $                                            | 194,109 |          |   | 46,361    |   | $ | 4.19 |   |
| Effect      of dilutive stock options, restricted |   |                                         |    |          |   |      |   |   |   |   |
|     stock      and SARs       |   |                                         | — |          |   | 259       |   |   | (0.03 | ) |
| Diluted      earnings per common share            |   | $                                            | 194,109 |          |   | 46,620    |   | $ | 4.16 |   |

|                        |   | 2008   |   |   |   | 2007   |
|-----------------------------|--------|--------|--------|--------|--------|--------|
|                        |   |   |   |   |   |   |   |   |
| Options      and SARs       |   |   | 28,000 |   |   |   |   | 61,000 |
|                        |   |   |   |   |   |   |   |   |
| Average      Exercise Price |   | $      | 73.26  |   |   |   | $ | 59.67 |

|                                                             |   | September      30,  |    | December      31, |   |
|------------------------------------------------------------------|--------|---------------------|---------|-------------------|--------|
|                                                             |   | 2008                |    | 2007              |   |
|                                                             |   | (In      thousands) |    |
| Revolving      credit facility,                                  |   |                |    |              |   |   |   |
|   with      interest of 3.8% at September 30, 2008 and |   |                |    |              |   |   |   |
|   6.0%      at December 31, 2007                       |   | $                   | 148,000 |              | $      | 120,600 |   |
|                                                             |   |                |    |              |   |   |   |
| Less      current portion                                        |   |                | — |              |   | — |   |
|                                                             |   |                |    |              |   |   |   |
| Total      long-term debt                                        |   | $                   | 148,000 |              | $      | 120,600 |   |
|                                                             |   |                |    |              |   |   |   |

| ·   | the      payment of dividends (other than stock dividends) during any fiscal year      in excess of 25% of our consolidated net income for the preceding fiscal      year; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | the      incurrence of additional debt with certain limited exceptions;      and |
|--------------------|----------------------------------------------------------------------------------|

| ·   | the      creation or existence of mortgages or liens, other than those in the      ordinary course of business, on any of our properties, except in favor of      our lenders. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | consolidated      net worth of at least $900 million; |
|--------------------|-------------------------------------------------------|

| ·   | a      current ratio (as defined in the Credit Facility) of not less than 1 to 1;      and |
|--------------------|--------------------------------------------------------------------------------------------|

| ·   | a      leverage ratio of long-term debt to consolidated EBITDA (as defined in the      Credit Facility) for the most recently ended rolling four fiscal quarters      of no greater than 3.50 to 1.0. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                       |   |                | September      30, |   |   | December      31, |   |
|------------------------------------------------------------|--------|---------------------|--------------------|--------|--------|-------------------|--------|
|                                                       |   |                | 2008               |   |   | 2007              |   |
|                                                       |   | (In      thousands) |
|                                                       |   |                |               |   |   |              |   |
| Plugging      liability                                    |   | $                   | 63,623             |   | $      | 33,191            |   |
| Derivative      liabilities – commodity hedges       |   |                | 817                |   |   | —           |   |
| Derivative      liabilities – interest rate swaps    |   |                | 566                |   |   | 249               |   |
| Workers’      compensation                           |   |                | 24,442             |   |   | 22,469            |   |
| Separation      benefit plans                              |   |                | 5,901              |   |   | 4,945             |   |
| Gas      balancing liability                               |   |                | 3,364              |   |   | 3,364             |   |
| Deferred      compensation plan                            |   |                | 3,063              |   |   | 2,987             |   |
| Retirement      agreements                                 |   |                | 243                |   |   | 723               |   |
|                                                       |   |                | 102,019            |   |   | 67,928            |   |
| Less      current portion including derivative liabilities |   |                | 11,536             |   |   | 8,813             |   |
| Total      other long-term liabilities                     |   | $                   | 90,483             |   | $      | 59,115            |   |

|                                    |   | Nine      Months EndedSeptember      30, |   |
|-----------------------------------------|--------|------------------------------------------|--------|
|                                    |   | 2008                                     |   | 2007 |   |
|                                    |   | (In      thousands)                      |   |
|                                    |   |                                     |   |   |   |   |   |
| Plugging      liability, January 1:     |   | $                                        | 33,191 |   | $ | 33,692 |   |
| Accretion      of discount              |   |                                     | 1,345  |   |   | 1,326 |   |
| Liability      incurred                 |   |                                     | 2,432  |   |   | 1,274 |   |
| Liability      settled                  |   |                                     | (529   | ) |   | (1,382 | ) |
| Revision      of estimates (1)          |   |                                     | 27,184 |   |   | (4,148 | ) |
| Plugging      liability, September 30   |   |                                     | 63,623 |   |   | 30,762 |   |
| Less      current portion               |   |                                     | 1,035  |   |   | 1,678 |   |
| Total      long-term plugging liability |   | $                                        | 62,588 |   | $ | 29,084 |   |

Fair Value Measurements. InSeptember 2006, the FASB issued Statement No. 157 (FAS 157), “Fair ValueMeasurements,” which establishes a framework for measuring fair value andrequires additional disclosures about fair value measurements. Beginning January1, 2008, we partially applied FAS 157 as allowed by FASB Staff Position (FSP)157-2, which delayed the effective date of FAS 157 for nonfinancial assets andliabilities.  As of January 1, 2008, we have applied the provisions of FAS157 to our financial instruments and the impact was not material.  UnderFSP 157-2, we will be required to apply FAS 157 to our nonfinancial assets andliabilities beginning January 1, 2009.  We are currently reviewing theapplicability of FAS 157 to our nonfinancial assets and liabilities and thepotential impact that application will have on our consolidated financialstatements.

|                                    |   | Nine      Months Ended |    |
|-----------------------------------------|--------|------------------------|---------|
|                                    |   | September      30,     |    |
|                                    |   | 2008                   |    | 2007 |   |
|                                    |   |                   |    |   |   |   |   |
| Options      granted                    |   |                   | 28,000  |   |   | 28,000 |   |
| Estimated      fair value (in millions) |   | $                      | 0.7     |   | $ | 0.6 |   |
| Estimate      of stock volatility       |   |                   | 0.32    |   |   | 0.33 |   |
| Estimated      dividend yield           |   |                   | — | % |   | — | % |
| Risk      free interest rate            |   |                   | 3.00    | % |   | 5.00 | % |
| Expected      life based on             |   |                   |    |   |   |   |   |
| prior      experience (in years)        |   |                   | 5       |   |   | 5 |   |
| Forfeiture      rate                    |   |                   | 5       | % |   | 5 | % |

|                                    |   | Three      Months Ended |   | Nine      Months Ended |   |
|-----------------------------------------|--------|-------------------------|--------|------------------------|--------|
|                                    |   | September      30,      |   | September      30,     |   |
|                                    |   | 2008                    |   | 2007                   |   | 2008 |   | 2007 |   |
|                                    |   |                    |   |                   |   |   |   |   |   |   |   |   |   |
| Shares      granted                     |   |                    | 5,100  |                   |   | 409,932 |   |   | 28,350 |   |   | 415,432 |   |
|                                    |   |                    |   |                   |   |   |   |   |   |   |   |   |   |
| Estimated      fair value (in millions) |   | $                       | 0.3    |                   | $      | 17.6 |   | $ | 1.4 |   | $ | 17.9 |   |
|                                    |   |                    |   |                   |   |   |   |   |   |   |   |   |   |
| Percentage      of shares granted       |   |                    |   |                   |   |   |   |   |   |   |   |   |   |
| expected      to be distributed         |   |                    | 89     | %                      |   | 89 | % |   | 89 | % |   | 89 | % |
|                                    |   |                    |   |                   |   |   |   |   |   |   |   |   |   |

| Term                                |   | Amount                                |   | Fixed      Rate |   | Floating      Rate |   | Fair      Value Asset (Liability)                                                                                                                                                                                                    |
|-------------------------------------|--------|---------------------------------------|--------|-----------------|--------|--------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ($      in thousands)               |
| December      2007 – May 2012 |   | $     15,000 |   | 4.53%           |   | 3      month LIBOR |   | $                                     (379) |
| December      2007 – May 2012 |   | $     15,000 |   | 4.16%           |   | 3      month LIBOR |   |                     (187)                                                                                                        |
|                                |   |                                  |   |            |   |               |   | $                                     (566) |

| ·   | Swaps.  We      receive or pay a fixed price for the hedged commodity and pay or receive a      floating market price to the counterparty.  The fixed-price      payment and the floating-price payment are netted, resulting in a net      amount due to or from thecounterparty. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Collars.  A      collar contains a fixed floor price (put) and a ceiling price      (call).  If the market price exceeds the call strike price or      falls below the put strike price, we receive the fixed price and pay the      market price.  If the market price is between the call and the      put strike price, no payments are due from either  party. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Fractionation      Spreads.  In our mid-stream segment, we enter into both      NGL sales swaps and natural gas purchase swaps, to lock in our      fractionation spread for a percentage of our natural gas      processed.  The fractionation spread is the difference in the      value received for the NGLs recovered from natural gas in comparison to      the amount received for the equivalent MMBtu’s of natural gas if      unprocessed. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                      |   | Three      Months Ended |   | Nine      Months Ended |   |
|-------------------------------------------|--------|-------------------------|--------|------------------------|--------|
|                                      |   | September      30,      |   | September      30,     |   |
|                                      |   | 2008                    |   | 2007                   |   | 2008 |   |   | 2007 |   |
|                                      |   | (In      thousands)     |   |
| Increases      (decreases) in:            |   |                    |   |                   |   |   |   |   |   |   |   |   |   |   |
| Oil      and natural gas revenue          |   | $                       | (6,725 | )                      | $      | 1,784 |   | $ | (20,255 | ) |   | $ | 1,936 |   |
| Gas      gathering and processing revenue |   |                    | (377   | )                      |   | (622 | ) |   | (1,925 | ) |   |   | (622 | ) |
|                                      |   |                    |   |                   |   |   |   |   |   |   |   |   |   |   |
| Gas      gathering and processing expense |   |                    | 116    |                   |   | 1,101 |   |   | (1,005 | ) |   |   | 1,101 |   |
|                                      |   |                    |   |                   |   |   |   |   |   |   |   |   |   |   |
| Impact      on pre-tax earnings           |   | $                       | (7,218 | )                      | $      | 61 |   | $ | (21,175 | ) |   | $ | 213 |   |

| Term                                     |   | Sell/      Purch |   | Commodity                     |   | Hedged      Volume    |   | Weighted      Average Fixed Price for Swaps |   | Market                           |
|------------------------------------------|--------|------------------|--------|-------------------------------|--------|-----------------------|--------|---------------------------------------------|--------|----------------------------------|
| Oct  –      Dec’08 |   | Sell             |   | Crude      oil – swap   |   | 1,000      Bbl/day    |   | $91.32                                      |   | WTI      - NYMEX                 |
| Oct  –      Dec’08 |   | Sell             |   | Crude      oil - collar       |   | 1,000      Bbl/day    |   | $85.00      put & $98.75 call           |   | WTI      - NYMEX                 |
| Oct  –      Dec’08 |   | Sell             |   | Crude      oil - collar       |   | 500      Bbl/day      |   | $90.00      put & $102.50 call          |   | WTI      - NYMEX                 |
| Oct  –      Dec’08 |   | Sell             |   | Natural      gas – swap |   | 20,000      MMBtu/day |   | $7.52                                       |   | IF –      Centerpoint East |
| Oct  –      Dec’08 |   | Sell             |   | Natural      gas - collar     |   | 10,000      MMBtu/day |   | $7.00      put & $8.40 call             |   | IF –      Centerpoint East |
| Oct  –      Dec’08 |   | Sell             |   | Natural      gas - collar     |   | 10,000      MMBtu/day |   | $7.20      put & $8.80 call             |   | IF –      Tenn (Zone 0)    |
| Oct  –      Dec’08 |   | Sell             |   | Natural      gas - collar     |   | 10,000      MMBtu/day |   | $7.50      put & $8.70 call             |   | NGPL-TXOK                        |
|                                     |   |             |   |                          |   |                  |   |                                        |   |                             |
| Jan  –      Dec’09 |   | Sell             |   | Crude      oil - collar       |   | 500      Bbl/day      |   | $100.00      put & $156.25 call         |   | WTI      - NYMEX                 |
| Jan  –      Dec’09 |   | Sell             |   | Natural      gas – swap |   | 10,000      MMBtu/day |   | $7.77                                       |   | IF –      Centerpoint East |
| Jan  –      Dec’09 |   | Sell             |   | Natural      gas – swap |   | 10,000      MMBtu/day |   | $8.28                                       |   | IF –      Tenn (Zone 0)    |
| Jan  –      Dec’09 |   | Sell             |   | Natural      gas - collar     |   | 10,000      MMBtu/day |   | $8.22      put & $10.80 call            |   | HH-NYMEX                         |

| Term                          |   | Sell/      Purchase |   | Commodity                     |   | Hedged      Volume    |   | Weighted      Average Fixed Price |   | Market             |
|-------------------------------|--------|---------------------|--------|-------------------------------|--------|-----------------------|--------|-----------------------------------|--------|--------------------|
| Oct      – Dec’08 |   | Sell                |   | Liquid      – swap (1)  |   | 1,636,845      Gal/mo |   | $   1.48           |   | OPIS      - Conway |
| Oct      – Dec’08 |   | Purchase            |   | Natural      gas – swap |   | 143,180      MMBtu/mo |   | $   9.45           |   | IF -      PEPL     |

| ·   | Level      1 - unadjusted quoted prices in active markets for identical assets and      liabilities. |
|--------------------|------------------------------------------------------------------------------------------------------|

| ·   | Level      2 - significant observable pricing inputs other than quoted prices      included within level 1 that are either directly or indirectly observable      as of the reporting date.  Essentially, inputs (variables used      in the pricing models) that are derived principally from or corroborated      by observable market data. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Level      3 - generally unobservable inputs which are developed based on the best      information available and may include our own internal    data. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                   |    September 30,      2008 |   |
|----------------------------------------|-------------------------------------------|--------|
|                                   |                                      |   | Level      1 |   |   | Level      2 |   |   | Level      3 |   |   | Total |   |
|                                   | (In      thousands)                       |
| Financial      assets (liabilities):   |                                      |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      rate swaps               |                                      | $      | — |   | $ | — |   | $ | (566 | ) | $ | (566 | ) |
| Crude      oil swaps                   |                                      |   | — |   |   | (836 | ) |   | — |   |   | (836 | ) |
| Natural      gas and NGL swaps and     |                                      |   |   |   |   |   |   |   |   |   |   |   |   |
| crude      oil and natural gas collars |                                      |   | — |   |   | — |   |   | 13,928 |   |   | 13,928 |   |

|                                                          |   | Net      Derivatives                               |
|---------------------------------------------------------------|--------|----------------------------------------------------|
|                                                          |   | For      the Three Months Ended September 30, 2008 |   | For      the Nine Months Ended September 30, 2008 |
|                                                          |   | Interest      Rate Swaps                           |   |   | Commodity      Swaps and Collars |   |   | Interest      Rate Swaps |   |   | Commodity      Swaps and Collars |   |
|                                                          |   | (In      thousands)                                |
| Beginning      of period                                      |   | $                                                  | (343 | ) |   | $ | (78,043 | ) |   | $ | (153 | ) |   | $ | 2,625 |   |
| Total      gains or losses (realized and unrealized):         |   |                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Included      in earnings (1)                                 |   |                                               | (124 | ) |   |   | (4,750 | ) |   |   | (179 | ) |   |   | (15,130 | ) |
| Included      in other comprehensive income (loss)            |   |                                               | (223 | ) |   |   | 91,971 |   |   |   | (413 | ) |   |   | 11,303 |   |
| Purchases,      issuance and settlements                      |   |                                               | 124 |   |   |   | 4,750 |   |   |   | 179 |   |   |   | 15,130 |   |
| End      of period                                            |   | $                                                  | (566 | ) |   | $ | 13,928 |   |   | $ | (566 | ) |   | $ | 13,928 |   |
|                                                          |   |                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      gains (losses) for the period included in earnings |   |                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| attributable      to the change in unrealized gain (loss)     |   |                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| relating      to assets still held as of September 30, 2008   |   | $                                                  | — |   |   | $ | — |   |   | $ | — |   |   | $ | — |   |

|                                      |   | Three      Months Ended |    | Nine      Months Ended |   |
|-------------------------------------------|--------|-------------------------|---------|------------------------|--------|
|                                      |   | September      30,      |    | September      30,     |   |
|                                      |   | 2008                    |    | 2007                   |   | 2008 |   | 2007 |   |
|                                      |   | (In      thousands)     |    |
| Revenues:                                 |   |                    |    |                   |   |   |   |   |   |   |   |   |   |
| Contract      drilling                    |   | $                       | 186,407 |                   | $      | 169,780 |   | $ | 517,430 |   | $ | 503,580 |   |
| Elimination      of inter-segment revenue |   |                    | 17,363  |                   |   | 12,011 |   |   | 49,911 |   |   | 31,177 |   |
| Contract      drilling net of             |   |                    |    |                   |   |   |   |   |   |   |   |   |   |
| inter-segment      revenue                |   |                    | 169,044 |                   |   | 157,769 |   |   | 467,519 |   |   | 472,403 |   |
|                                      |   |                    |    |                   |   |   |   |   |   |   |   |   |   |
| Oil      and natural gas                  |   |                    | 152,343 |                   |   | 95,231 |   |   | 446,644 |   |   | 277,680 |   |
|                                      |   |                    |    |                   |   |   |   |   |   |   |   |   |   |
| Gas      gathering and processing         |   |                    | 69,983  |                   |   | 40,042 |   |   | 200,271 |   |   | 112,908 |   |
| Elimination      of inter-segment revenue |   |                    | 15,904  |                   |   | 7,258 |   |   | 47,169 |   |   | 13,587 |   |
| Gas      gathering and processing         |   |                    |    |                   |   |   |   |   |   |   |   |   |   |
| net      of inter-segment revenue         |   |                    | 54,079  |                   |   | 32,784 |   |   | 153,102 |   |   | 99,321 |   |
|                                      |   |                    |    |                   |   |   |   |   |   |   |   |   |   |
| Other                                     |   |                    | 97      |                   |   | 551 |   |   | (193 | ) |   | 842 |   |
| Total      revenues                       |   | $                       | 375,563 |                   | $      | 286,335 |   | $ | 1,067,072 |   | $ | 850,246 |   |
|                                      |   |                    |    |                   |   |   |   |   |   |   |   |   |   |
| Operating      Income (1):                |   |                    |    |                   |   |   |   |   |   |   |   |   |   |
| Contract      drilling                    |   | $                       | 68,274  |                   | $      | 65,025 |   | $ | 181,658 |   | $ | 202,244 |   |
| Oil      and natural gas                  |   |                    | 80,195  |                   |   | 39,833 |   |   | 241,535 |   |   | 115,612 |   |
| Gas      gathering and processing         |   |                    | 4,910   |                   |   | 1,651 |   |   | 16,553 |   |   | 4,398 |   |
| Total      operating income               |   |                    | 153,379 |                   |   | 106,509 |   |   | 439,746 |   |   | 322,254 |   |
| General      and administrative expense   |   |                    | (6,928  | )                      |   | (5,355 | ) |   | (20,179 | ) |   | (15,784 | ) |
| Interest      expense, net                |   |                    | (69     | )                      |   | (1,797 | ) |   | (1,162 | ) |   |  (5,167 | ) |
| Other      income - net                   |   |                    | 97      |                   |   | 551 |   |   | (193 | ) |   | 842 |   |
| Income      before income taxes           |   | $                       | 146,479 |                   | $      | 99,908 |   | $ | 418,212 |   | $ | 302,145 |   |

|   | (1) | Operating      income is total operating revenues less operating expenses, depreciation,      depletion and amortization and does not include non-operating revenues,      general corporate expenses, interest expense or income    taxes. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| •  General                                |
|-----------------------------------------------------------|
| •  Business      Outlook                  |
| •  Executive      Summary                 |
| •  Financial      Condition and Liquidity |
| •  New      Accounting Pronouncements     |
| •  Results      of Operations             |

| •  Contract Drilling –      carried out by our subsidiary Unit Drilling Company and its subsidiaries.      This segment contracts to drill onshore oil and natural gas wells for      others and for our own account.                                                  |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  Oil and Natural Gas –      carried out by our subsidiary Unit Petroleum Company. This segment      explores, develops, acquires and produces oil and natural gas properties      for our own account.                                                               |
| •  Gas Gathering and Processing      (Mid-Stream) – carried out by      our subsidiary Superior Pipeline Company, L.L.C. and its subsidiaries.      This segment buys, sells, gathers, processes and treats natural gas for      third parties and for our ownaccount. |

| Date                   |   | Gas      Spot Price Henry Hub ($      per MMBtu) |   | Crude      Oil WTI-Cushing, OK ($      per Bbl) |
|------------------------|--------|-------------------------------------------------------|--------|------------------------------------------------------|
| July      1, 2008      |   | $                                                     | 13.19  |                                                 | $ | 140.99 |
| August      1, 2008    |   | $                                                     | 9.26   |                                                 | $ | 125.10 |
| September      1, 2008 |   | $                                                     | 8.24   |                                                 | $ | 115.48 |
| October      1, 2008   |   | $                                                     | 7.17   |                                                 | $ | 98.55 |
| November      1, 2008  |   | $                                                     | 6.20   |                                                 | $ | 67.81 |

| ·   | We      had previously announced plans, in our contract drilling segment, to      build up to eight additional drilling rigs and to buy one additional new      drilling rig.  Due to the recent declines in commodity prices      and the unsettled outlook for commodity prices during 2009, we have      cancelled the construction of one of these drillings rigs (the one we had      planned to work for our exploration segment) and we are in discussions      with the customers for the other seven drilling rigs regarding the      possibility of postponing the construction of some of these drilling rigs      and instead substituting under the contracts one of our existing drilling      rigs. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | We      have recently been notified by several of our drilling rig customers that      they plan on releasing up to 16 drilling rigs currently under contract. Of      those we have already contracted four to other  customers. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | We      had estimated the number of gross wells to be drilled by our oil and      natural gas segment in 2008 to be around 300, we now anticipate that      number to be around 275 wells. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | We      had previously estimated capital expenditures for our oil and gas segment      to be approximately $470.0 million, excluding acquisitions, for      2008.  That estimate is now anticipated to be approximately      $438.0 million. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| •  the      demand for and the dayrates we receive for our drilling      rigs;                                                                            |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  the      quantity of natural gas, oil and NGLs we produce;                                                                                             |
| •  the      prices we receive for our natural gas production and, to a lesser extent,      the prices we receive for our oil and NGL production;      and |
| •  the      margins we obtain from our natural gas gathering and processing      contracts.                                                               |

|   |   |
|--------|--------|

|                                                     |   | September      30,                     |      |   | %      |      |
|----------------------------------------------------------|--------|----------------------------------------|-----------|--------|--------|-----------|
|                                                     |   |                                   | 2008      |   |   | 2007      |   |   | Change |  (1) |
|                                                     |   | (In      thousands except percentages) |      |
| Working      capital                                     |   | $                                      | 36,885    |   | $      | 48,159    |   |   | (23 | )% |
| Long-term      debt                                      |   | $                                      | 148,000   |   | $      | 153,600   |   |   | (4 | )% |
| Shareholders’      equity                          |   | $                                      | 1,723,084 |   | $      | 1,358,611 |   |   | 27 | % |
| Ratio      of long-term debt to total capitalization     |   |                                   | 8         | %      |   | 10        | % |   | (20 | )% |
| Net      income                                          |   | $                                      | 263,473   |   | $      | 194,109   |   |   | 36 | % |
| Net      cash provided by operating activities           |   | $                                      | 525,067   |   | $      | 389,379   |   |   | 35 | % |
| Net      cash used in investing activities               |   | $                                      | (578,318  | )      | $      | (379,546  | ) |   | 52 | % |
| Net      cash provided by (used in) financing activities |   | $                                      | 53,182    |   | $      | (9,569    | )  |   | NM |   |

| (1)   | NM      – A percentage calculation is not meaningful due to change in signs, a      zero-value denominator or a percentage change greater than      200. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                             |   | Nine      Months Ended September 30, |    |   | %      |    |
|------------------------------------------------------------------|--------|--------------------------------------|---------|--------|--------|---------|
|                                                             |   |                                 | 2008    |   |   | 2007    |   |   | Change |   |
| Contract      Drilling:                                          |   |                                 |    |   |   |    |   |   |   |   |
| Average      number of our drilling rigs in use during           |   |                                 |    |   |   |    |   |   |   |   |
| the      period                                                  |   |                                 | 105.3   |   |   | 98.4    |   |   | 7 | % |
| Total      number of drilling rigs owned at the end              |   |                                 |    |   |   |    |   |   |   |   |
| of      the period                                               |   |                                 | 131     |   |   | 128     |   |   | 2 | % |
| Average      dayrate                                             |   | $                                    | 18,190  |   | $      | 18,858  |   |   | (4 | )% |
| Oil      and Natural Gas:                                        |   |                                 |    |   |   |    |   |   |   |   |
| Oil      production (MBbls)                                      |   |                                 | 942     |   |   | 792     |   |   | 19 | % |
| Natural      gas liquids production (MBbls)                      |   |                                 | 962     |   |   | 468     |   |   | 106 | % |
| Natural      gas production (MMcf)                               |   |                                 | 35,143  |   |   | 32,507  |   |   | 8 | % |
| Average      oil price per barrel received                       |   | $                                    | 99.33   |   | $      | 64.04   |   |   | 55 | % |
| Average      oil price per barrel received excluding hedges      |   | $                                    | 112.15  |   | $      | 64.04   |   |   | 75 | % |
| Average      NGL price per barrel received                       |   | $                                    | 56.87   |   | $      | 39.44   |   |   | 44 | % |
| Average      NGL price per barrel received excluding hedges      |   | $                                    | 56.78   |   | $      | 39.44   |   |   | 44 | % |
| Average      natural gas price per mcf received                  |   | $                                    | 8.35    |   | $      | 6.30    |   |   | 33 | % |
| Average      natural gas price per mcf received excluding hedges |   | $                                    | 8.58    |   | $      | 6.24    |   |   | 38 | % |
| Mid-Stream:                                                      |   |                                 |    |   |   |    |   |   |   |   |
| Gas      gathered—MMBtu/day                                |   |                                 | 200,652 |   |   | 221,943 |   |   | (10 | )% |
| Gas      processed—MMBtu/day                               |   |                                 | 66,219  |   |   | 47,432  |   |   | 40 | % |
| Gas      liquids sold — gallons/day                        |   |                                 | 195,303 |   |   | 115,781 |   |   | 69 | % |
| Number      of natural gas gathering systems                     |   |                                 | 36      |   |   | 36      |   |   | — | % |
| Number      of processing plants                                 |   |                                 | 8       |   |   | 7       |   |   | 14 | % |

| Lender                                   |   | Participation      Interest |
|------------------------------------------|--------|-----------------------------|
| Bank      of Oklahoma, N.A.              |   | 18.75%                      |
| Bank      of America, N.A.               |   | 18.75%                      |
| BMO      Capital Markets Financing, Inc. |   | 18.75%                      |
| Compass      Bank                        |   | 12.50%                      |
| Comerica      Bank                       |   | 08.75%                      |
| Fortis      Capital Corp.                |   | 08.75%                      |
| Calyon      New York Branch              |   | 08.75%                      |
| Sterling      Bank                       |   | 05.00%                      |
|                                     |   | 100.00%                     |

|   |   |
|--------|--------|

| •  the      payment of dividends (other than stock dividends) during any fiscal year      in excess of 25% of our         |
|-------------------------------------------------------------------------------------------------------------------------------------------|
| consolidated      net income for the preceding fiscal year;                                                                               |
| •  the      incurrence of additional debt with certain very limited exceptions;      and                                  |
| •  the      creation or existence of mortgages or liens, other than those in the      ordinary course of business, on any |
| of      our properties, except in favor of our  lenders.                                                                                  |

|   |   |
|--------|--------|

| •  a      consolidated net worth of at least $900.0million;                                                        |
|------------------------------------------------------------------------------------------------------------------------------------|
| •  a      current ratio (as defined in the Credit Facility) of not less than 1 to 1;      and                      |
| •  a      leverage ratio of long-term debt to consolidated EBITDA (as defined in the      Credit Facility) for the |
| most      recently ended rolling four fiscal quarters of no greater than 3.50 to      1.0.                                         |

|                                     |   | Payments      Due by Period |        |
|------------------------------------------|--------|-----------------------------|-------------|
|                                     |   |                        |        |   |   | Less      Than |   |   | 2-3 |   |   | 4-5 |   |   | After |   |
|                                     |   |                        | Total  |   |   | 1      Year |   |   | Years |   |   | Years |   |   | 5      Years |   |
|                                     |   |                        |        |   |   |   |   | (In      thousands) |   |   |   |   |   |   |   |
| Bank      debt (1)                       |   | $                           | 169,212     |   | $ | 5,785 |   | $ | 11,570 |   | $ | 151,857 |   | $ | — |   |
| Retirement      agreements (2)           |   |                        | 243         |   |   | 243 |   |   | — |   |   | — |   |   | — |   |
| Operating      leases (3)                |   |                        | 3,363       |   |   | 2,089 |   |   | 1,197 |   |   | 77 |   |   | — |   |
| Drill      pipe, drilling components and |   |                        |        |   |   |   |   |   |   |   |   |   |   |   |   |   |
| equipment      purchases (4)             |   |                        | 101,045     |   |   | 101,045 |   |   | — |   |   | — |   |   | — |   |
| Total      contractual obligations       |   | $                           | 273,863     |   | $ | 109,162 |   | $ | 12,767 |   | $ | 151,934 |   | $ | — |   |

| (1) | See      previous discussion in MD&A regarding our Credit Facility. This      obligation is presented in accordance with the terms of the Credit      Facility and includes interest calculated using our September 30, 2008      interest rate of 3.9% which includes the effect of the interest rate      swaps. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | In      the second quarter of 2001, we recorded $1.3 million in additional      employee benefit expenses for the present value of a separation agreement      made in connection with the retirement of King Kirchner from his position      as chief executive officer. The liability associated with this expense,      including accrued interest, is paid in monthly payments of $25,000 which      started in July 2003 and continues through June 2009. In the first quarter      of 2005, we recorded $0.7 million in additional employee benefit expense      for the present value of a separation agreement made in connection with      the retirement of John Nikkel from his position as chief executive      officer. The liability associated with this expense, including accrued      interest, is paid in monthly payments of $31,250 which started in November      2006 and continuing through October2008. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | We      lease office space in Tulsa and Woodward, Oklahoma; Houston and Midland,      Texas; Pittsburgh, Pennsylvania and Denver, Colorado under the terms      of operating leases expiring through January 31, 2012. Additionally, we      have several equipment leases and lease space on short-term commitments to      stack excess drilling rig equipment and production    inventory. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | For      the next twelve months, we have committed to purchase approximately $83.9      million of new drilling rig components, drill pipe, drill collars and      related equipment, $8.4 million of casing, 107 vehicles for $2.5 million      and a remaining $6.3 million for two new processing plants. Both plants      will be held for future growth or expansion of existing      facilities. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                    |   | Estimated Amount of Commitment      Expiration Per Period  |    |
|---------------------------------------------------------|--------|-----------------------------------------------------------------|---------|
|                                                    |   |                                                            |    |   |   | Less |   |   |   |   |   |   |   |   |   |   |
|                                                    |   |                                                            | Total   |   |   | Than      1 |   |   | 2-3 |   |   | 4-5 |   |   | After      5 |   |
| Other      Commitments                                  |   |                                                            | Accrued |   |   | Year |   |   | Years |   |   | Years |   |   | Years |   |
|                                                    |   |  (In      thousands)                                       |    |
| Deferred      compensation plan (1)                     |   | $                                                               | 3,063   |   |   | Unknown |   |   | Unknown |   |   | Unknown |   |   | Unknown |   |
| Separation      benefit plans (2)                       |   | $                                                               | 5,901   |   | $ | 243 |   |   | Unknown |   |   | Unknown |   |   | Unknown |   |
| Derivative      liabilities – commodity hedges    |   | $                                                               | 817     |   | $ | 817 |   | $ | — |   | $ | — |   | $ | — |   |
| Derivative      liabilities – interest rate swaps |   | $                                                               | 566     |   | $ | 154 |   | $ | 309 |   | $ | 103 |   | $ | — |   |
| Plugging      liability (3)                             |   | $                                                               | 63,623  |   | $ | 1,035 |   | $ | 9,369 |   | $ | 2,856 |   | $ | 50,363 |   |
| Gas      balancing liability (4)                        |   | $                                                               | 3,364   |   |   | Unknown |   |   | Unknown |   |   | Unknown |   |   | Unknown |   |
| Repurchase      obligations (5)                         |   | $                                                               | — |   |   | Unknown |   |   | Unknown |   |   | Unknown |   |   | Unknown |   |
| Workers’      compensation liability (6)          |   | $                                                               | 24,442  |   | $ | 9,044 |   | $ | 4,108 |   | $ | 1,549 |   | $ | 9,741 |   |

| (1) | We      provide a salary deferral plan which allows participants to defer the      recognition of salary for income tax purposes until actual distribution of      benefits, which occurs at either termination of employment, death or      certain defined unforeseeable emergency hardships. We recognize payroll      expense and record a liability, included in other long-term liabilities in      our Consolidated Balance Sheet, at the time of  deferral. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Effective      January 1, 1997, we adopted a separation benefit plan (“Separation Plan”).      The Separation Plan allows eligible employees whose employment with us is      involuntarily terminated or, in the case of an employee who has completed      20 years of service, voluntarily or involuntarily terminated, to receive      benefits equivalent to four weeks salary for every whole year of service      completed with the company up to a maximum of 104 weeks. To receive      payments, the recipient must waive any claims against us in exchange for      receiving the separation benefits. On October 28, 1997, we adopted a      Separation Benefit Plan for Senior Management (“Senior Plan”). The Senior      Plan provides certain officers and key executives of the company with      benefits generally equivalent to the Separation Plan. Currently there are      no participants in the Senior Plan. The Compensation Committee of the      Board of Directors has absolute discretion in the selection of the      individuals covered in this plan. On May 5, 2004 we also adopted the      Special Separation Benefit Plan (“Special Plan”). This plan is identical      to the Separation Benefit Plan with the exception that the benefits under      the plan vest on the earliest of a participant’s reaching the age of 65 or      serving 20 years with the company. At September 30, 2008, there were 39      eligible employees to participate in the Special  Plan. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | When      a well is drilled or acquired, under Financial Accounting Standards No.      143 (FAS 143), “Accounting for Asset Retirement Obligations,” we have      recorded the fair value of liabilities associated with the retirement of      long-lived assets (mainly plugging and abandonment costs for our depleted      wells). |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | We      have recorded a liability for those properties we believe do not have      sufficient oil, NGLs and natural gas reserves to allow the under-produced      owners to recover their under-production from future production      volumes. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (5) | We      formed The Unit 1984 Oil and Gas Limited Partnership and the 1986 Energy      Income Limited Partnership along with private limited partnerships (the      “Partnerships”) with certain qualified employees, officers and directors      from 1984 through 2008, with a subsidiary of ours serving as general      partner. The Partnerships were formed for the purpose of conducting oil      and natural gas acquisition, drilling and development operations and      serving as co-general partner with us in any additional limited      partnerships formed during that year. The Partnerships participated on a      proportionate basis with us in most drilling operations and most producing      property acquisitions commenced by us for our own account during the      period from the formation of the Partnership through December 31 of that      year. These partnership agreements require, on the election of a limited      partner, that we repurchase the limited partner’s interest at amounts to      be determined by appraisal in the future. Such repurchases in any one year      are limited to 20% of the units outstanding. We made repurchases of      $241,000 and $7,000 in 2008 and 2006, respectively, and did not have any      repurchases in 2007. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (6)   | We      have recorded a liability for future estimated payments related to      workers’ compensation claims primarily associated with our contract      drilling segment. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Term                                |   | Amount                                |   | Fixed      Rate |   | Floating      Rate |   | Fair      Value Asset (Liability)                                                                                                                                                                                              |
|-------------------------------------|--------|---------------------------------------|--------|-----------------|--------|--------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ($      in thousands)               |
| December      2007 – May 2012 |   | $     15,000 |   | 4.53%           |   | 3      month LIBOR |   | $                                    (379) |
| December      2007 – May 2012 |   | $     15,000 |   | 4.16%           |   | 3      month LIBOR |   |                    (187)                                                                                                        |
|                                |   |                                  |   |            |   |               |   | $                                    (566) |

|                              |   |   | Oct      – Dec’08 |   | Jan      – Dec’09 |
|-----------------------------------|--------|--------|-------------------------------|--------|-------------------------------|
| Daily      oil production         |   |   | 75                            | %      |                          | 15 | % |
| Daily      natural gas production |   |   | 35                            | %      |                          | 35 | % |

|                           |   |   | Oct      – Dec’08 |
|--------------------------------|--------|--------|-------------------------------|
| Ethane      frac spread        |   |   | 52                            | % |
| Propane      frac spread       |   |   | 62                            | % |
| Iso-butane      frac spread    |   |   | 38                            | % |
| Normal      butane frac spread |   |   | 39                            | % |
| Gasoline      frac spread      |   |   | 40                            | % |

|                                      |   | Three      Months Ended |   | Nine      Months Ended |   |
|-------------------------------------------|--------|-------------------------|--------|------------------------|--------|
|                                      |   | September      30,      |   | September      30,     |   |
|                                      |   | 2008                    |   | 2007                   |   | 2008 |   |   | 2007 |   |
|                                      |   | (In      thousands)     |   |
| Increases      (decreases) in:            |   |                    |   |                   |   |   |   |   |   |   |   |   |   |   |
| Oil      and natural gas revenue          |   | $                       | (6,725 | )                      | $      | 1,784 |   | $ | (20,255 | ) |   | $ | 1,936 |   |
| Gas      gathering and processing revenue |   |                    | (377   | )                      |   | (622 | ) |   | (1,925 | ) |   |   | (622 | ) |
|                                      |   |                    |   |                   |   |   |   |   |   |   |   |   |   |   |
| Gas      gathering and processing expense |   |                    | 116    |                   |   | 1,101 |   |   | (1,005 | ) |   |   | 1,101 |   |
|                                      |   |                    |   |                   |   |   |   |   |   |   |   |   |   |   |
| Impact      on pre-tax earnings           |   | $                       | (7,218 | )                      | $      | 61 |   | $ | (21,175 | ) |   | $ | 213 |   |

|                                                            |   |  Quarter      Ended September 30, |        |   | Percent |        |
|-----------------------------------------------------------------|--------|----------------------------------------|-------------|--------|---------|-------------|
|                                                            |   |                                   | 2008        |   |    | 2007        |   |   | Change |   |
|                                                            |   |                                   |        |   |    |        |   |   |   |   |
| Total      revenue                                              |   | $                                      | 375,563,000 |   | $       | 286,335,000 |   |   | 31 | % |
| Net      income                                                 |   | $                                      | 92,281,000  |   | $       | 64,061,000  |   |   | 44 | % |
| Contract      Drilling:                                         |   |                                   |        |   |    |        |   |   |   |   |
| Revenue                                                         |   | $                                      | 169,044,000 |   | $       | 157,769,000 |   |   | 7 | % |
| Operating      costs excluding depreciation                     |   | $                                      | 81,802,000  |   | $       | 77,951,000  |   |   | 5 | % |
| Percentage      of revenue from daywork contracts               |   |                                   | 100         | %      |    | 100         | % |   | — | % |
| Average      number of drilling rigs in use                     |   |                                   | 110.7       |   |    | 100.3       |   |   | 10 | % |
| Average      dayrate on daywork contracts                       |   | $                                      | 18,644      |   | $       | 18,470      |   |   | 1 | % |
| Depreciation                                                    |   | $                                      | 18,968,000  |   | $       | 14,793,000  |   |   | 28 | % |
| Oil      and Natural Gas:                                       |   |                                   |        |   |    |        |   |   |   |   |
| Revenue                                                         |   | $                                      | 152,343,000 |   | $       | 95,231,000  |   |   | 60 | % |
| Operating      costs excluding depreciation,                    |   |                                   |        |   |    |        |   |   |   |   |
| depletion      and amortization                                 |   | $                                      | 32,095,000  |   | $       | 23,101,000  |   |   | 39 | % |
| Average      oil price (Bbl)                                    |   | $                                      | 101.82      |   | $       | 62.01       |   |   | 64 | % |
| Average      NGL price (Bbl)                                    |   | $                                      | 61.78       |   | $       | 44.18       |   |   | 40 | % |
| Average      natural gas price (Mcf)                            |   | $                                      | 8.20        |   | $       | 5.77        |   |   | 42 | % |
| Oil      production (Bbl)                                       |   |                                   | 316,000     |   |    | 297,000     |   |   | 6 | % |
| NGL      production (Bbl)                                       |   |                                   | 306,000     |   |    | 173,000     |   |   | 77 | % |
| Natural      gas production (Mcf)                               |   |                                   | 12,134,000  |   |    | 11,206,000  |   |   | 8 | % |
| Depreciation,      depletion and amortization                   |   |                                   |        |   |    |        |   |   |   |   |
| rate      (Mcfe)                                                |   | $                                      | 2.51        |   | $       | 2.29        |   |   | 10 | % |
| Depreciation,      depletion and amortization                   |   | $                                      | 40,053,000  |   | $       | 32,297,000  |   |   | 24 | % |
| Mid-Stream      Operations:                                     |   |                                   |        |   |    |        |   |   |   |   |
| Revenue                                                         |   | $                                      | 54,079,000  |   | $       | 32,784,000  |   |   | 65 | % |
| Operating      costs excluding depreciation                     |   |                                   |        |   |    |        |   |   |   |   |
| and      amortization                                           |   | $                                      | 45,381,000  |   | $       | 28,275,000  |   |   | 60 | % |
| Depreciation      and amortization                              |   | $                                      | 3,788,000   |   | $       | 2,858,000   |   |   | 33 | % |
| Gas      gathered—MMBtu/day                               |   |                                   | 195,914     |   |    | 221,508     |   |   | (12 | )% |
| Gas      processed—MMBtu/day                              |   |                                   | 71,260      |   |    | 55,721      |   |   | 28 | % |
|     Gas      liquids sold—gallons/day |   |                                   | 199,805     |   |    | 137,098     |   |   | 46 | % |
|                                                            |   |                                   |        |   |    |        |   |   |   |   |
| General      and administrative expense                         |   | $                                      | 6,928,000   |   | $       | 5,355,000   |   |   | 29 | % |
| Interest      expense, net                                      |   | $                                      | 69,000      |   | $       | 1,797,000   |   |   | (96 | )% |
| Income      tax expense                                         |   | $                                      | 54,198,000  |   | $       | 35,847,000  |   |   | 51 | % |
| Average      interest rate                                      |   |                                   | 4.3         | %      |    | 6.1         | % |   | (30 | )% |
| Average      long-term debt outstanding                         |   | $                                      | 142,059,000 |   | $       | 182,385,000 |   |   | (22 | )% |

|                                              |   |  Nine      Months Ended September 30, |          |   | Percent |        |
|---------------------------------------------------|--------|--------------------------------------------|---------------|--------|---------|-------------|
|                                              |   |                                       | 2008          |   |    | 2007        |   |   | Change |   |
|                                              |   |                                       |          |   |    |        |   |   |   |   |
| Total      revenue                                |   | $                                          | 1,067,072,000 |   | $       | 850,246,000 |   |   | 26 | % |
| Net      income                                   |   | $                                          | 263,473,000   |   | $       | 194,109,000 |   |   | 36 | % |
| Contract      Drilling:                           |   |                                       |          |   |    |        |   |   |   |   |
| Revenue                                           |   | $                                          | 467,519,000   |   | $       | 472,403,000 |   |   | (1 | )% |
| Operating      costs excluding depreciation       |   | $                                          | 234,541,000   |   | $       | 228,967,000 |   |   | 2 | % |
| Percentage      of revenue from daywork contracts |   |                                       | 100           | %      |    | 100         | % |   | — | % |
| Average      number of drilling rigs in use       |   |                                       | 105.3         |   |    | 98.4        |   |   | 7 | % |
| Average      dayrate on daywork contracts         |   | $                                          | 18,190        |   | $       | 18,858      |   |   | (4 | )% |
| Depreciation                                      |   | $                                          | 51,320,000    |   | $       | 41,192,000  |   |   | 25 | % |
| Oil      and Natural Gas:                         |   |                                       |          |   |    |        |   |   |   |   |
| Revenue                                           |   | $                                          | 446,644,000   |   | $       | 277,680,000 |   |   | 61 | % |
| Operating      costs excluding depreciation,      |   |                                       |          |   |    |        |   |   |   |   |
| depletion      and amortization                   |   | $                                          | 90,353,000    |   | $       | 69,701,000  |   |   | 30 | % |
| Average      oil price (Bbl)                      |   | $                                          | 99.33         |   | $       | 64.04       |   |   | 55 | % |
| Average      NGL price (Bbl)                      |   | $                                          | 56.87         |   | $       | 39.44       |   |   | 44 | % |
| Average      natural gas price (Mcf)              |   | $                                          | 8.35          |   | $       | 6.30        |   |   | 33 | % |
| Oil      production (Bbl)                         |   |                                       | 942,000       |   |    | 792,000     |   |   | 19 | % |
| NGL      production (Bbl)                         |   |                                       | 962,000       |   |    | 468,000     |   |   | 106 | % |
| Natural      gas production (Mcf)                 |   |                                       | 35,143,000    |   |    | 32,507,000  |   |   | 8 | % |
| Depreciation,      depletion and amortization     |   |                                       |          |   |    |        |   |   |   |   |
| rate      (Mcfe)                                  |   | $                                          | 2.45          |   | $       | 2.29        |   |   | 7 | % |
| Depreciation,      depletion and amortization     |   | $                                          | 114,756,000   |   | $       | 92,367,000  |   |   | 24 | % |
| Mid-Stream      Operations:                       |   |                                       |          |   |    |        |   |   |   |   |
| Revenue                                           |   | $                                          | 153,102,000   |   | $       | 99,321,000  |   |   | 54 | % |
| Operating      costs excluding depreciation       |   |                                       |          |   |    |        |   |   |   |   |
| and      amortization                             |   | $                                          | 125,617,000   |   | $       | 87,171,000  |   |   | 44 | % |
| Depreciation      and amortization                |   | $                                          | 10,932,000    |   | $       | 7,752,000   |   |   | 41 | % |
| Gas      gathered—MMBtu/day                 |   |                                       | 200,652       |   |    | 221,943     |   |   | (10 | )% |
| Gas      processed—MMBtu/day                |   |                                       | 66,219        |   |    | 47,432      |   |   | 40 | % |
| Gas      liquids sold—gallons/day           |   |                                       | 195,303       |   |    | 115,781     |   |   | 69 | % |
|                                              |   |                                       |          |   |    |        |   |   |   |   |
| General      and administrative expense           |   | $                                          | 20,179,000    |   | $       | 15,784,000  |   |   | 28 | % |
| Interest      expense, net                        |   | $                                          | 1,162,000     |   | $       | 5,167,000   |   |   | (78 | )% |
| Income      tax expense                           |   | $                                          | 154,739,000   |   | $       | 108,036,000 |   |   | 43 | % |
| Average      interest rate                        |   |                                       | 4.7           | %      |    | 6.1         | % |   | (23 | )% |
| Average      long-term debt outstanding           |   | $                                          | 131,531,000   |   | $       | 175,408,000 |   |   | (25 | )% |

|   | • |   | the      amount and nature of our future capital expenditures and how we expect to      fund our capital expenditures; |
|--------|---------|--------|------------------------------------------------------------------------------------------------------------------------|
|   | • |   | the      amount of wells to be drilled or reworked;                                                                    |
|   | • |   | prices      for oil and natural gas;                                                                                   |
|   | • |   | demand      for oil and natural gas;                                                                                   |
|   | • |   | our      exploration prospects;                                                                                        |
|   | • |   | estimates      of our proved oil and natural gas reserves;                                                             |
|   | • |   | oil      and natural gas reserve potential;                                                                            |
|   | • |   | development      and infill drilling potential;                                                                        |
|   | • |   | our      drilling prospects;                                                                                           |
|   | • |   | expansion      and other development trends of the oil and natural gas      industry;                                  |
|   | • |   | our      business strategy;                                                                                            |
|   | • |   | production      of oil and natural gas reserves;                                                                       |
|   | • |   | growth      potential for our mid-stream operations;                                                                   |
|   | • |   | gathering      systems and processing plants we plan to construct or    acquire;                                       |
|   | • |   | volumes      and prices for natural gas gathered and processed;                                                        |
|   | • |   | expansion      and growth of our business and operations;                                                              |
|   | • |   | demand      for our drilling rigs and drilling rig rates; and                                                          |
|   | • |   | our      belief that the final outcome of our legal proceedings will not materially      affect our financial results. |

|   | • |   | the      risk factors discussed in this report and in the documents we incorporate      by reference; |
|--------|---------|--------|-------------------------------------------------------------------------------------------------------|
|   | • |   | general      economic, market or business conditions;                                                 |
|   | • |   | the      nature or lack of business opportunities that wepursue;                                      |
|   | • |   | demand      for our land drilling services;                                                           |
|   | • |   | changes      in laws or regulations;                                                                  |
|   | • |   | the      time period associated with the current decrease in commodity prices;      and               |
|   | • |   | other      factors, most of which are beyond ourcontrol.                                              |

| Term                                     |   | Sell/      Purch |   | Commodity                     |   | Hedged      Volume    |   | Weighted      Average Fixed Price for Swaps |   | Market                           |
|------------------------------------------|--------|------------------|--------|-------------------------------|--------|-----------------------|--------|---------------------------------------------|--------|----------------------------------|
| Oct  –      Dec’08 |   | Sell             |   | Crude      oil – swap   |   | 1,000      Bbl/day    |   | $91.32                                      |   | WTI      - NYMEX                 |
| Oct  –      Dec’08 |   | Sell             |   | Crude      oil - collar       |   | 1,000      Bbl/day    |   | $85.00      put & $98.75 call           |   | WTI      - NYMEX                 |
| Oct  –      Dec’08 |   | Sell             |   | Crude      oil - collar       |   | 500      Bbl/day      |   | $90.00      put & $102.50 call          |   | WTI      - NYMEX                 |
| Oct  –      Dec’08 |   | Sell             |   | Natural      gas – swap |   | 20,000      MMBtu/day |   | $7.52                                       |   | IF –      Centerpoint East |
| Oct  –      Dec’08 |   | Sell             |   | Natural      gas - collar     |   | 10,000      MMBtu/day |   | $7.00      put & $8.40 call             |   | IF –      Centerpoint East |
| Oct  –      Dec’08 |   | Sell             |   | Natural      gas - collar     |   | 10,000      MMBtu/day |   | $7.20      put & $8.80 call             |   | IF –      Tenn (Zone 0)    |
| Oct  –      Dec’08 |   | Sell             |   | Natural      gas - collar     |   | 10,000      MMBtu/day |   | $7.50      put & $8.70 call             |   | NGPL-TXOK                        |
|                                     |   |             |   |                          |   |                  |   |                                        |   |                             |
| Jan  –      Dec’09 |   | Sell             |   | Crude      oil - collar       |   | 500      Bbl/day      |   | $100.00      put & $156.25 call         |   | WTI      - NYMEX                 |
| Jan  –      Dec’09 |   | Sell             |   | Natural      gas – swap |   | 10,000      MMBtu/day |   | $5.74                                       |   | IF –      PEPL             |
| Jan  –      Dec’09 |   | Sell             |   | Natural      gas – swap |   | 20,000      MMBtu/day |   | $6.95                                       |   | IF –      Centerpoint East |
| Jan  –      Dec’09 |   | Sell             |   | Natural      gas – swap |   | 10,000      MMBtu/day |   | $8.28                                       |   | IF –      Tenn (Zone 0)    |
| Jan  –      Dec’09 |   | Sell             |   | Natural      gas - collar     |   | 10,000      MMBtu/day |   | $8.22      put & $10.80 call            |   | HH-NYMEX                         |

| Term                          |   | Sell/      Purchase |   | Commodity                     |   | Hedged      Volume    |   | Weighted      Average Fixed Price |   | Market             |
|-------------------------------|--------|---------------------|--------|-------------------------------|--------|-----------------------|--------|-----------------------------------|--------|--------------------|
| Oct      – Dec’08 |   | Sell                |   | Liquid      – swap (1)  |   | 1,636,845      Gal/mo |   | $   1.48           |   | OPIS      - Conway |
| Oct      – Dec’08 |   | Purchase            |   | Natural      gas – swap |   | 143,180      MMBtu/mo |   | $   9.45           |   | IF -      PEPL     |

| Period                                                 |         | (a)TotalNumber      ofSharesPurchased      (1) |         | (b) Average Price Paid Per Share(2) |    | (c)TotalNumberof      SharesPurchasedAs      Part ofPubliclyAnnouncedPlans      orPrograms      (1) |    | (d)MaximumNumber      (orApproximateDollar Value)of      SharesThat      MayYet      BePurchasedUnder      thePlans      orPrograms |
|--------------------------------------------------------|--------------|------------------------------------------------|--------------|--------------------------------------------------------------|---------|-----------------------------------------------------------------------------------------------------|---------|------------------------------------------------------------------------------------------------------------------------------------------|
| July 1,      2008 to July 31, 2008           |    | 330                                            |    | $                                                            | 77.97   |                                                                                           | 330     |                                                                                                                                | — |
| August 1,      2008 to August 31, 2008       |    | —                                        |    |                                                         | — |                                                                                           | — |                                                                                                                                | — |
| September 1,      2008 to September 30, 2008 |    | —                                        |    |                                                         | — |                                                                                           | — |                                                                                                                                | — |
|                                                   |    |                                           |    |                                                         |    |                                                                                           |    |                                                                                                                                |   |
| Total                                                  |    | 330                                            |    | $                                                            | 77.97   |                                                                                           | 330     |                                                                                                                                | — |

----

| (1)    | The      shares were repurchased to remit withholding of taxes on the value of      stock distributed with the July 16, 2008 vesting distribution for grants      previously made from our “Unit Corporation Stock and Incentive      Compensation Plan” adopted May 3, 2006. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                      |
| (2)    | The      price paid per common share represents the closing sales price of a share      of our common stock as reported by the NYSE on the day that the stock was      acquired by us.                                                                                                    |

|   | 15     | Letter      re:  Unaudited Interim Financial Information.                         |
|--------|--------|---------------------------------------------------------------------------------------------|
|   |   |                                                                                        |
|   | 31.1   | Certification      of Chief Executive Officer under Rule 13a – 14(a) ofthe            |
|   |   | Exchange      Act.                                                                          |
|   |   |                                                                                        |
|   | 31.2   | Certification      of Chief Financial Officer under Rule 13a – 14(a) ofthe            |
|   |   | Exchange      Act.                                                                          |
|   |   |                                                                                        |
|   | 32     | Certification      of Chief Executive Officer and Chief Financial Officer    under          |
|   |   | Rule      13a – 14(a) of the Exchange Act and 18 U.S.C. Section 1350, as      adopted |
|   |   | under      Section 906 of the Sarbanes-Oxley Act of2002.                                    |

|                                   |                                      | Unit      Corporation |
|----------------------------------------|-------------------------------------------|-----------------------|
| Date:  November      4, 2008 | By:  /s/ Larry D.      Pinkston |
|                                   | LARRY      D. PINKSTON                    |
|                                   | Chief      Executive Officer and Director |
|                                   |                                      |
| Date:  November      4, 2008 | By:  /s/ David T.      Merrill  |
|                                   | DAVID      T. MERRILL                     |
|                                   | Chief      Financial Officer and          |
|                                   | Treasurer                                 |