|   | [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                       |   |
|   |          | March      31, 2008 and December 31, 2007                        | 3      |
|   |          |                                                             |   |
|   |          | Condensed      Consolidated Statements of Income                 |   |
|   |          | Three      Months Ended March 31, 2008 and 2007                  | 5      |
|   |          |                                                             |   |
|   |          | Condensed      Consolidated Statements of Cash Flows             |   |
|   |          | Three      Months Ended March 31, 2008 and 2007                  | 6      |
|   |          |                                                             |   |
|   |          | Condensed      Consolidated Statements of Comprehensive Income   |   |
|   |          | Three      Months Ended March 31, 2008 and 2007                  | 7      |
|   |          |                                                             |   |
|   |          | Notes      to Condensed Consolidated Financial Statements        | 8      |
|   |          |                                                             |   |
|   |          | Report      of Independent Registered Public Accounting Firm     | 19     |
|   |          |                                                             |   |
|   | Item      2.  | Management’s      Discussion and Analysis of Financial     |   |
|   |          | Condition      and Results of Operations                         | 20     |
|   |          |                                                             |   |
|   | Item      3.  | Quantitative      and Qualitative Disclosure about Market Risk   | 35     |
|   |          |                                                             |   |
|   | Item      4.  | Controls      and Procedures                                     | 37     |
|   |          |                                                             |   |
|   |          | PART      II. Other Information                                  |   |
|   | Item      1.  | Legal      Proceedings                                           | 37     |
|   |          |                                                             |   |
|   | Item      1A. | Risk      Factors                                                | 37     |
|   |          |                                                             |   |
|   | Item      2.  | Unregistered      Sales of Equity Securities and Use of Proceeds | 38     |
|   |          |                                                             |   |
|   | Item      3.  | Defaults      Upon Senior Securities                             | 38     |
|   |          |                                                             |   |
|   | Item      4.  | Submission      of Matters to a Vote of Security Holders         | 38     |
|   |          |                                                             |   |
|   | Item      5.  | Other      Information                                           | 38     |
|   |          |                                                             |   |
|   | Item      6.  | Exhibits                                                         | 39     |
|   |          |                                                             |   |
|   | Signatures    |                                                             | 40     |

|                                                                                                                              |   | March      31,                           |      |   |   | December      31, |   |
|-----------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------|-----------|--------|--------|-------------------|--------|
|                                                                                                                              |   | 2008                                     |      |   |   | 2007              |   |
|                                                                                                                              |   | (In      thousands except share amounts) |      |
| ASSETS                                                                                                                            |   |                                     |      |   |   |              |   |   |   |
| Current      assets:                                                                                                              |   |                                     |      |   |   |              |   |   |   |
| Cash      and cash equivalents                                                                                                    |   | $                                        | 848       |   |   |              | $      | 1,076 |   |
| Restricted      cash                                                                                                              |   |                                     | 19        |   |   |              |   | 19 |   |
| Accounts      receivable, net of allowance for doubtful accounts of $3,500 at March 31,      2008 and $3,350 at December 31, 2007 |   |                                     | 174,955   |   |   |              |   | 159,455 |   |
| Materials      and supplies                                                                                                       |   |                                     | 13,850    |   |   |              |   | 13,558 |   |
| Other                                                                                                                             |   |                                     | 24,734    |   |   |              |   | 22,907 |   |
| Total      current assets                                                                                                         |   |                                     | 214,406   |   |   |              |   | 197,015 |   |
|                                                                                                                              |   |                                     |      |   |   |              |   |   |   |
| Property      and equipment:                                                                                                      |   |                                     |      |   |   |              |   |   |   |
| Drilling      equipment                                                                                                           |   |                                     | 1,023,694 |   |   |              |   | 987,184 |   |
| Oil      and natural gas properties, on the full cost                                                                             |   |                                     |      |   |   |              |   |   |   |
| method:                                                                                                                           |   |                                     |      |   |   |              |   |   |   |
| Proved      properties                                                                                                            |   |                                     | 1,721,162 |   |   |              |   | 1,624,478 |   |
| Undeveloped      leasehold not being amortized                                                                                    |   |                                     | 73,307    |   |   |              |   | 64,722 |   |
| Gas      gathering and processing equipment                                                                                       |   |                                     | 127,611   |   |   |              |   | 119,515 |   |
| Transportation      equipment                                                                                                     |   |                                     | 23,947    |   |   |              |   | 23,240 |   |
| Other                                                                                                                             |   |                                     | 20,238    |   |   |              |   | 19,974 |   |
|                                                                                                                              |   |                                     | 2,989,959 |   |   |              |   | 2,839,113 |   |
| Less      accumulated depreciation, depletion, amortization                                                                       |   |                                     |      |   |   |              |   |   |   |
| and      impairment                                                                                                               |   |                                     | 980,167   |   |   |              |   | 927,759 |   |
| Net      property and equipment                                                                                                   |   |                                     | 2,009,792 |   |   |              |   | 1,911,354 |   |
|                                                                                                                              |   |                                     |      |   |   |              |   |   |   |
| Goodwill                                                                                                                          |   |                                     | 62,808    |   |   |              |   | 62,808 |   |
| Other      intangible assets, net                                                                                                 |   |                                     | 12,636    |   |   |              |   | 13,798 |   |
| Other      assets                                                                                                                 |   |                                     | 14,756    |   |   |              |   | 14,844 |   |
| Total      assets                                                                                                                 |   | $                                        | 2,314,398 |   |   |              | $      | 2,199,819 |   |

|                                                     |   | March      31,                           |      |   |   | December      31, |   |
|----------------------------------------------------------|--------|------------------------------------------|-----------|--------|--------|-------------------|--------|
|                                                     |   | 2008                                     |      |   |   | 2007              |   |
|                                                     |   | (In      thousands except share amounts) |      |
| LIABILITIES      AND SHAREHOLDERS’ EQUITY          |   |                                     |      |   |   |              |   |   |   |
| Current      liabilities:                                |   |                                     |      |   |   |              |   |   |   |
| Accounts      payable                                    |   | $                                        | 97,998    |   |   |              | $      | 100,258 |   |
| Accrued      liabilities                                 |   |                                     | 30,313    |   |   |              |   | 40,508 |   |
| Income      taxes payable                                |   |                                     | 9,396     |   |   |              |   | — |   |
| Contract      advances                                   |   |                                     | 3,972     |   |   |              |   | 6,825 |   |
| Current      portion of derivative liabilities           |   |                                     | 26,761    |   |   |              |   | 56 |   |
| Current      portion of other liabilities                |   |                                     | 9,871     |   |   |              |   | 8,757 |   |
|          Total current liabilities        |   |                                     | 178,311   |   |   |              |   | 156,404 |   |
|                                                     |   |                                     |      |   |   |              |   |   |   |
| Long-term      debt                                      |   |                                     | 116,600   |   |   |              |   | 120,600 |   |
| Other      long-term liabilities                         |   |                                     | 66,514    |   |   |              |   | 59,115 |   |
| Deferred      income taxes                               |   |                                     | 455,992   |   |   |              |   | 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,      47,138,795 and 47,035,089 shares        |   |                                     |      |   |   |              |   |   |   |
| issued,      respectively                                |   |                                     | 9,301     |   |   |              |   | 9,280 |   |
| Capital      in excess of par value                      |   |                                     | 352,258   |   |   |              |   | 344,512 |   |
| Accumulated      other comprehensive income (loss)       |   |                                     | (21,507   | )      |   |              |   | 1,160 |   |
| Retained      earnings                                   |   |                                     | 1,156,929 |   |   |              |   | 1,079,865 |   |
|          Total shareholders’ equity |   |                                     | 1,496,981 |   |   |              |   | 1,434,817 |   |
| Total      liabilities and shareholders’ equity    |   | $                                        | 2,314,398 |   |   |              | $      | 2,199,819 |   |

|                                          | Three      Months Ended                      |    |
|-----------------------------------------------|----------------------------------------------|---------|
|                                          | March      31,                               |    |
|                                          | 2008                                         |    | 2007 |   |
|                                          | (In      thousands except per share amounts) |    |
| Revenues:                                     |                                         |    |   |   |   |   |
| Contract      drilling                        | $                                            | 147,247 |   | $ | 160,285 |   |
| Oil      and natural gas                      |                                         | 130,002 |   |   | 86,106 |   |
| Gas      gathering and processing             |                                         | 44,223  |   |   | 30,768 |   |
| Other                                         |                                         | (110    | ) |   | 112 |   |
| Total      revenues                           |                                         | 321,362 |   |   | 277,271 |   |
|                                          |                                         |    |   |   |   |   |
| Expenses:                                     |                                         |    |   |   |   |   |
| Contract      drilling:                       |                                         |    |   |   |   |   |
| Operating      costs                          |                                         | 74,461  |   |   | 76,287 |   |
| Depreciation                                  |                                         | 15,364  |   |   | 12,717 |   |
| Oil      and natural gas:                     |                                         |    |   |   |   |   |
| Operating      costs                          |                                         | 27,601  |   |   | 22,139 |   |
| Depreciation,      depletion and amortization |                                         | 35,715  |   |   | 29,347 |   |
| Gas      gathering and processing:            |                                         |    |   |   |   |   |
| Operating      costs                          |                                         | 35,072  |   |   | 27,501 |   |
| Depreciation      and amortization            |                                         | 3,481   |   |   | 2,339 |   |
| General      and administrative               |                                         | 6,525   |   |   | 5,182 |   |
| Interest                                      |                                         | 820     |   |   | 1,641 |   |
| Total      expenses                           |                                         | 199,039 |   |   | 177,153 |   |
| Income      Before Income Taxes               |                                         | 122,323 |   |   | 100,118 |   |
|                                          |                                         |    |   |   |   |   |
| Income      Tax Expense:                      |                                         |    |   |   |   |   |
| Current                                       |                                         | 15,447  |   |   | 22,697 |   |
| Deferred                                      |                                         | 29,812  |   |   | 12,939 |   |
| Total      income taxes                       |                                         | 45,259  |   |   | 35,636 |   |
|                                          |                                         |    |   |   |   |   |
| Net      income                               | $                                            | 77,064  |   | $ | 64,482 |   |
|                                          |                                         |    |   |   |   |   |
| Net      income per common share:             |                                         |    |   |   |   |   |
| Basic                                         | $                                            | 1.66    |   | $ | 1.39 |   |
|                                          |                                         |    |   |   |   |   |
| Diluted                                       | $                                            | 1.65    |   | $ | 1.39 |   |

|                                                      |   | Three      Months Ended |     |
|-----------------------------------------------------------|--------|-------------------------|----------|
|                                                      |   | March      31,          |     |
|                                                      |   | 2008                    |     |   |   | 2007 |   |
|                                                      |   | (In      thousands)     |     |
| OPERATING      ACTIVITIES:                                |   |                    |     |   |   |   |   |   |   |
| Net      income                                           |   | $                       | 77,064   |   |   |   | $ | 64,482 |   |
| Adjustments      to reconcile net income to net cash      |   |                    |     |   |   |   |   |   |   |
| provided      by operating activities:                    |   |                    |     |   |   |   |   |   |   |
| Depreciation,      depletion and amortization             |   |                    | 54,734   |   |   |   |   | 44,617 |   |
| Deferred      tax expense                                 |   |                    | 29,812   |   |   |   |   | 12,939 |   |
| Other                                                     |   |                    | 4,108    |   |   |   |   | 2,379 |   |
| Changes      in operating assets and liabilities          |   |                    |     |   |   |   |   |   |   |
| increasing      (decreasing) cash:                        |   |                    |     |   |   |   |   |   |   |
| Accounts      receivable                                  |   |                    | (15,650  | ) |   |   |   | 8,522 |   |
| Accounts      payable                                     |   |                    | 2,119    |   |   |   |   | (15,877 | ) |
| Material      and supplies inventory                      |   |                    | (292     | ) |   |   |   | 499 |   |
| Accrued      liabilities                                  |   |                    | 8,729    |   |   |   |   | 10,619 |   |
| Contract      advances                                    |   |                    | (2,853   | ) |   |   |   | (640 | ) |
| Other      – net                                    |   |                    | 1,019    |   |   |   |   | 1,166 |   |
| Net      cash provided by operating activities            |   |                    | 158,790  |   |   |   |   | 128,706 |   |
|                                                      |   |                    |     |   |   |   |   |   |   |
| INVESTING      ACTIVITIES:                                |   |                    |     |   |   |   |   |   |   |
| Capital      expenditures                                 |   |                    | (159,504 | ) |   |   |   | (112,403 | ) |
| Proceeds      from disposition of assets                  |   |                    | 736      |   |   |   |   | 1,153 |   |
| Other-net                                                 |   |                    | —  |   |   |   |   | (1 | ) |
| Net      cash used in investing activities                |   |                    | (158,768 | ) |   |   |   | (111,251 | ) |
|                                                      |   |                    |     |   |   |   |   |   |   |
| FINANCING      ACTIVITIES:                                |   |                    |     |   |   |   |   |   |   |
| Borrowings      under line of credit                      |   |                    | 56,500   |   |   |   |   | 22,100 |   |
| Payments      under line of credit                        |   |                    | (60,500  | ) |   |   |   | (44,400 | ) |
| Proceeds      from exercise of stock options              |   |                    | 323      |   |   |   |   | 191 |   |
| Book      overdrafts                                      |   |                    | 3,427    |   |   |   |   | 4,668 |   |
| Net      cash used in financing activities                |   |                    | (250     | ) |   |   |   | (17,441 | ) |
|                                                      |   |                    |     |   |   |   |   |   |   |
| Net      increase (decrease) in cash and cash equivalents |   |                    | (228     | ) |   |   |   | 14 |   |
|                                                      |   |                    |     |   |   |   |   |   |   |
| Cash      and cash equivalents, beginning of period       |   |                    | 1,076    |   |   |   |   | 589 |   |
| Cash      and cash equivalents, end of period             |   | $                       | 848      |   |   |   | $ | 603 |   |

|                                                   |   | Three      Months Ended |    |
|--------------------------------------------------------|--------|-------------------------|---------|
|                                                   |   | March      31,          |    |
|                                                   |   | 2008                    |    | 2007 |   |
|                                                   |   | (In      thousands)     |    |
| Net      income                                        |   | $                       | 77,064  |   | $ | 64,482 |   |
| Other      comprehensive income,                       |   |                    |    |   |   |   |   |
| Net      of taxes:                                     |   |                    |    |   |   |   |   |
| Change      in value of derivative instruments used as |   |                    |    |   |   |   |   |
| cash      flow hedges (net of tax of $13,294 and $877) |   |                    | (22,664 | ) |   | (1,534 | ) |
| Reclassification      - derivative settlements         |   |                    |    |   |   |   |   |
| (net      of tax of $1 and $114)                       |   |                    | (1      | ) |   | (209 | ) |
| Comprehensive      income                              |   | $                       | 54,399  |   | $ | 62,739 |   |

|                                                                       |   |                                         |    | Weighted      |   |      |   |
|----------------------------------------------------------------------------|--------|----------------------------------------------|---------|---------------|--------|-----------|--------|
|                                                                       |   | Income                                       |    | Shares        |   | Per-Share |   |
|                                                                       |   | (Numerator)                                  |    | (Denominator) |   | Amount    |   |
|                                                                       |   | (In      thousands except per share amounts) |    |
| For      the three months ended                                            |   |                                         |    |          |   |      |   |   |   |   |
| March      31, 2008:                                                       |   |                                         |    |          |   |      |   |   |   |   |
| Basic      earnings per common share                                       |   | $                                            | 77,064  |          |   | 46,481    |   | $ | 1.66 |   |
| Effect      of dilutive stock options, restricted                          |   |                                         |    |          |   |      |   |   |   |   |
| stock      and stock appreciation rights (SARs)                            |   |                                         | — |          |   | 319       |   |   | (0.01 | ) |
| Diluted      earnings per common share                                     |   | $                                            | 77,064  |          |   | 46,800    |   | $ | 1.65 |   |
|                                                                       |   |                                         |    |          |   |      |   |   |   |   |
| For      the three months ended                                            |   |                                         |    |          |   |      |   |   |   |   |
| March      31, 2007:                                                       |   |                                         |    |          |   |      |   |   |   |   |
| Basic      earnings per common share                                       |   | $                                            | 64,482  |          |   | 46,330    |   | $ | 1.39 |   |
| Effect      of dilutive stock options, restricted                          |   |                                         |    |          |   |      |   |   |   |   |
|     stock      and SARs                                |   |                                         | — |          |   | 203       |   |   | — |   |
|       Diluted      earnings per common share |   | $                                            | 64,482  |          |   | 46,533    |   | $ | 1.39 |   |

|                        |   | 2008   |    |   |   | 2007   |
|-----------------------------|--------|--------|---------|--------|--------|--------|
|                        |   |   |    |   |   |   |   |   |
| Options      and SARs       |   |   | 105,665 |   |   |   |   | 33,000 |
|                        |   |   |    |   |   |   |   |   |
| Average      Exercise Price |   | $      | 56.33   |   |   |   | $ | 61.40 |

|                                                                    |   | March      31,      |    | December      31, |   |
|-------------------------------------------------------------------------|--------|---------------------|---------|-------------------|--------|
|                                                                    |   | 2008                |    | 2007              |   |
|                                                                    |   | (In      thousands) |    |
| Revolving      credit facility,                                         |   |                |    |              |   |   |   |
|   with      interest at March 31, 2008  of 4.7% and |   |                |    |              |   |   |   |
|   December      31, 2007 of 6.0%                              |   | $                   | 116,600 |              | $      | 120,600 |   |
|                                                                    |   |                |    |              |   |   |   |
| Less      current portion                                               |   |                | — |              |   | — |   |
|                                                                    |   |                |    |              |   |   |   |
| Total      long-term debt                                               |   | $                   | 116,600 |              | $      | 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 property, 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. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                       |   |                | March      31, |   |   | December      31, |   |
|------------------------------------------------------------|--------|---------------------|----------------|--------|--------|-------------------|--------|
|                                                       |   |                | 2008           |   |   | 2007              |   |
|                                                       |   | (In      thousands) |
|                                                       |   |                |           |   |   |              |   |
| Plugging      liability                                    |   | $                   | 34,085         |   | $      | 33,191            |   |
| Derivative      liabilities – commodity hedges       |   |                | 32,744         |   |   | —           |   |
| Derivative      liabilities – interest rate swaps    |   |                | 1,515          |   |   | 249               |   |
| Workers’      compensation                           |   |                | 22,717         |   |   | 22,469            |   |
| Separation      benefit plans                              |   |                | 5,300          |   |   | 4,945             |   |
| Gas      balancing liability                               |   |                | 3,364          |   |   | 3,364             |   |
| Deferred      compensation plan                            |   |                | 2,856          |   |   | 2,987             |   |
| Retirement      agreement                                  |   |                | 565            |   |   | 723               |   |
|                                                       |   |                | 103,146        |   |   | 67,928            |   |
| Less      current portion including derivative liabilities |   |                | 36,632         |   |   | 8,813             |   |
| Total      other long-term liabilities                     |   | $                   | 66,514         |   | $      | 59,115            |   |

|                                    |   | Three      Months EndedMarch      31, |   |
|-----------------------------------------|--------|---------------------------------------|--------|
|                                    |   | 2008                                  |   | 2007 |   |
|                                    |   | (In      thousands)                   |   |
|                                    |   |                                  |   |   |   |   |   |
| Plugging      liability, January 1:     |   | $                                     | 33,191 |   | $ | 33,692 |   |
| Accretion      of discount              |   |                                  | 422    |   |   | 434 |   |
| Liability      incurred                 |   |                                  | 588    |   |   | 325 |   |
| Liability      settled                  |   |                                  | (163   | ) |   | (331 | ) |
| Revision      of estimates              |   |                                  | 47     |   |   | 135 |   |
| Plugging      liability, March 31       |   |                                  | 34,085 |   |   | 34,255 |   |
| Less      current portion               |   |                                  | 710    |   |   | 1,091 |   |
| Total      long-term plugging liability |   | $                                     | 33,375 |   | $ | 33,164 |   |

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.

|                                       | Three      Months Ended |   |
|--------------------------------------------|-------------------------|--------|
|                                       | March      31,          |   |
|                                       | 2008                    |   | 2007 |   |
|                                       |                    |   |   |   |   |   |
| Number      of shares granted              |                    | 14,500 |   |   | — |   |
|                                       |                    |   |   |   |   |   |
| Estimated      fair value (in millions)    | $                       | 0.6    |   | $ | — |   |
|                                       |                    |   |   |   |   |   |
| Percentage      of shares granted that are |                    |   |   |   |   |   |
| expected      to be distributed            |                    | 89     | % |   | — |   |
|                                       |                    |   |   |   |   |   |

| Term                                |   | Amount                                |   |  Fixed      Rate |   | Floating      Rate |   | Fair      Value Asset (Liability)                                                                                       |
|-------------------------------------|--------|---------------------------------------|--------|-----------------------|--------|--------------------|--------|-------------------------------------------------------------------------------------------------------------------------|
| ($      in thousands)               |
| December      2007 – May 2012 |   | $     15,000 |   | 4.53%                 |   | 3      month LIBOR |   | $                       (868)      |
| December      2007 – May 2012 |   | $     15,000 |   | 4.16%                 |   | 3      month LIBOR |   |                    (647) |
|                                |   |                                  |   |                  |   |               |   | $               (1,515)                      |

| ·   | 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 natural gas liquids (NGLs) recovered from natural      gas in comparison to the amount received for the equivalent MMBtu’s of      natural gas if unprocessed. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                      |                | 2008   |   |   |   | 2007    |   |
|-------------------------------------------|---------------------|--------|--------|--------|--------|---------|--------|
|                                      | (In      thousands) |   |
| Increases      (decreases) in:            |                |   |   |   |   |    |   |
| Oil      and natural gas revenue          | $                   | (112   | )      |   | $      | 152     |   |
| Gas      gathering and processing revenue |                | (119   | )      |   |   | — |   |
|                                      |                |   |   |   |   |    |   |
| Gas      gathering and processing expense |                | (182   | )      |   |   | — |   |
|                                      |                |   |   |   |   |    |   |
| Impact      on pre-tax earnings           | $                   | (49    | )      |   | $      | 152     |   |

| Term                                     |   | Sell/      Purch. |   | Commodity                     |   | Hedged      Volume    |   | Weighted      Average Fixed Price for Swaps |   | Market                           |
|------------------------------------------|--------|-------------------|--------|-------------------------------|--------|-----------------------|--------|---------------------------------------------|--------|----------------------------------|
| Apr’08                             |   | Sell              |   | Liquids      – swap (1) |   | 582,000      Gal/mo   |   | $1.16                                       |   | OPIS      - Conway               |
| Apr’08                             |   | Sell              |   | Liquids      – swap (1) |   | 750,000      Gal/mo   |   | $1.11                                       |   | OPIS      – Mont Belvieu   |
| Apr  –      Dec’08 |   | Sell              |   | Crude      oil – swap   |   | 1,000      Bbl/day    |   | $91.32                                      |   | WTI      - NYMEX                 |
| Apr  –      Dec’08 |   | Sell              |   | Crude      oil - collar       |   | 1,000      Bbl/day    |   | $85.00      put & $98.75 call           |   | WTI      - NYMEX                 |
| Apr  –      Dec’08 |   | Sell              |   | Crude      oil - collar       |   | 500      Bbl/day      |   | $90.00      put & $102.50 call          |   | WTI      - NYMEX                 |
| Apr  –      Dec’08 |   | Sell              |   | Natural      gas – swap |   | 20,000      MMBtu/day |   | $7.52                                       |   | IF      – Centerpoint East |
| Apr  –      Dec’08 |   | Sell              |   | Natural      gas - collar     |   | 10,000      MMBtu/day |   | $7.00      put & $8.40 call             |   | IF      – Centerpoint East |
| Apr  –      Dec’08 |   | Sell              |   | Natural      gas - collar     |   | 10,000      MMBtu/day |   | $7.20      put & $8.80 call             |   | IF      – Tenn (Zone 0)    |
| Apr  –      Dec’08 |   | Sell              |   | Natural      gas - collar     |   | 10,000      MMBtu/day |   | $7.50      put & $8.70 call             |   | NGPL-TXOK                        |
| 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)    |

| Term                          |   | Sell/      Purchase |   | Commodity                     |   | Hedged      Volume    |   | Weighted      Average Fixed Price |   | Market             |
|-------------------------------|--------|---------------------|--------|-------------------------------|--------|-----------------------|--------|-----------------------------------|--------|--------------------|
| Apr’08                  |   | Sell                |   | Liquids      – swap (1) |   | 1,836,000      Gal/mo |   | $   1.34           |   | OPIS      - Conway |
| Apr’08                  |   | Purchase            |   | Natural      gas – swap |   | 171,000      MMBtu/mo |   | $   6.46           |   | IF      - PEPL     |
| May      – Jul’08 |   | Sell                |   | Liquids      – swap (1) |   | 1,330,000      Gal/mo |   | $   1.27           |   | OPIS      - Conway |
| May      – Jul’08 |   | Purchase            |   | Natural      gas – swap |   | 116,300      MMBtu/mo |   | $   6.93           |   | IF      - PEPL     |
| Aug      – Dec’08 |   | Sell                |   | Liquid      – swap (2)  |   | 188,000      Gal/mo   |   | $   1.43           |   | OPIS      - Conway |
| Aug      – Dec’08 |   | Purchase            |   | Natural      gas – swap |   | 17,000      MMBtu/mo  |   | $   6.91           |   | IF      - PEPL     |

| Term                          |   | Sell/      Purchase |   | Commodity                     |   | Hedged      Volume   |   | Weighted      Average Fixed Price |   | Market             |
|-------------------------------|--------|---------------------|--------|-------------------------------|--------|----------------------|--------|-----------------------------------|--------|--------------------|
| May      – Dec’08 |   | Sell                |   | Liquids      – swap (1) |   | 507,020      Gal/mo  |   | $   1.41           |   | OPIS      - Conway |
| May      – Jul’08 |   | Purchase            |   | Natural      gas – swap |   | 43,175      MMBtu/mo |   | $   9.41           |   | IF      - PEPL     |
| Aug      – Dec’08 |   | Sell                |   | Liquid      – swap (2)  |   | 217,400      Gal/mo  |   | $   1.68           |   | OPIS      - Conway |
| Aug      – Dec’08 |   | Purchase            |   | Natural      gas – swap |   | 63,090      MMBtu/mo |   | $   9.55           |   | 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. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                   |    March 31,      2008 |   |
|----------------------------------------|---------------------------------------|--------|
|                                   |                                  |   | Level      1 |   |   | Level      2 |   |   | Level      3 |   |   | Total |   |
|                                   | (In      thousands)                   |
| Financial      assets (liabilities):   |                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      rate swaps               |                                  | $      | — |   | $ | — |   | $ | (1,515 | ) | $ | (1,515 | ) |
| Crude      oil swaps                   |                                  |   | — |   |   | (2,241 | ) |   | — |   |   | (2,241 | ) |
| Natural      gas and NGL swaps and     |                                  |   |   |   |   |   |   |   |   |   |   |   |   |
| crude      oil and natural gas collars |                                  |   | — |   |   | — |   |   | (30,382 | ) |   | (30,382 | ) |

|                                                                  |   | Net      Derivatives     |
|-----------------------------------------------------------------------|--------|--------------------------|
|                                                                  |   | Interest      Rate Swaps |   |   | Commodity      Swaps and Collars |   |
|                                                                  |   | (In      thousands)      |   |
| January      1, 2008                                                  |   | $                        | (153 | ) |   | $ | 2,625 |   |
| Total      gains or losses (realized and unrealized):                 |   |                     |   |   |   |   |   |   |
|          Included in earnings (1)                      |   |                     | 51 |   |   |   | 554 |   |
|          Included in other comprehensive income (loss) |   |                     | (1,362 | ) |   |   | (33,007 | ) |
| Purchases,      issuance and settlements                              |   |                     | (51 | ) |   |   | (554 | ) |
| March      31, 2008                                                   |   | $                        | (1,515 | ) |   | $ | (30,382 | ) |
|                                                                  |   |                     |   |   |   |   |   |   |
| Total      gains (losses) for the period included in earnings         |   |                     |   |   |   |   |   |   |
| attributable      to the change in unrealized gain (loss)             |   |                     |   |   |   |   |   |   |
| relating      to assets still held as of March 31, 2008               |   | $                        | — |   |   | $ | — |   |

    -     Contract  Drilling, 
    -     Oil  and Natural Gas and 
    -     Mid-Stream 

|                                      |   | Three      Months Ended |    |
|-------------------------------------------|--------|-------------------------|---------|
|                                      |   | March      31,          |    |
|                                      |   | 2008                    |    | 2007 |   |
|                                      |   | (In      thousands)     |    |
| Revenues:                                 |   |                    |    |   |   |   |   |
| Contract      drilling                    |   | $                       | 163,914 |   | $ | 168,813 |   |
| Elimination      of inter-segment revenue |   |                    | 16,667  |   |   | 8,528 |   |
| Contract      drilling net of             |   |                    |    |   |   |   |   |
| inter-segment      revenue                |   |                    | 147,247 |   |   | 160,285 |   |
|                                      |   |                    |    |   |   |   |   |
| Oil      and natural gas                  |   |                    | 130,002 |   |   | 86,106 |   |
|                                      |   |                    |    |   |   |   |   |
| Gas      gathering and processing         |   |                    | 56,559  |   |   | 33,931 |   |
| Elimination      of inter-segment revenue |   |                    | 12,336  |   |   | 3,163 |   |
| Gas      gathering and processing         |   |                    |    |   |   |   |   |
| net      of inter-segment revenue         |   |                    | 44,223  |   |   | 30,768 |   |
|                                      |   |                    |    |   |   |   |   |
| Other                                     |   |                    | (110    | ) |   | 112 |   |
| Total      revenues                       |   | $                       | 321,362 |   | $ | 277,271 |   |
|                                      |   |                    |    |   |   |   |   |
| Operating      Income (1):                |   |                    |    |   |   |   |   |
| Contract      drilling                    |   | $                       | 57,422  |   | $ | 71,281 |   |
| Oil      and natural gas                  |   |                    | 66,686  |   |   | 34,620 |   |
| Gas      gathering and processing         |   |                    | 5,670   |   |   | 928 |   |
| Total      operating income               |   |                    | 129,778 |   |   | 106,829 |   |
| General      and administrative expense   |   |                    | (6,525  | ) |   | (5,182 | ) |
| Interest      expense                     |   |                    | (820    | ) |   | (1,641 | ) |
| Other      income - net                   |   |                    | (110    | ) |   | 112 |   |
| Income      before income taxes           |   | $                       | 122,323 |   | $ | 100,118 |   |

|   | (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                                |
|-----------------------------------------------------------|
| •  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 to a lesser extent for our ownaccount.         |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| •  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. This segment buys, sells, gathers, processes and treats      natural gas for third parties and for our own    account. |

| •  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.                                                               |

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

|                                                 |   | March      31,                         |      |    | %      |      |
|------------------------------------------------------|--------|----------------------------------------|-----------|---------|--------|-----------|
|                                                 |   |                                   | 2008      |    |   | 2007      |   |   | Change |   |
|                                                 |   | (In      thousands except percentages) |      |
| Working      capital                                 |   | $                                      | 36,095    |    | $      | 47,292    |   |   | (24 | )% |
| Long-term      debt                                  |   | $                                      | 116,600   |    | $      | 152,000   |   |   | (23 | )% |
| Shareholders’      equity                      |   | $                                      | 1,496,981 |    | $      | 1,225,651 |   |   | 22 | % |
| Ratio      of long-term debt to total capitalization |   |                                   | 7.2       | %       |   | 11.0      | % |   | (35 | )% |
| Net      income                                      |   | $                                      | 77,064    |    | $      | 64,482    |   |   | 20 | % |
| Net      cash provided by operating activities       |   | $                                      | 158,790   |    | $      | 128,706   |   |   | 23 | % |
| Net      cash used in investing activities           |   | $                                      | (158,768  | )       | $      | (111,251  | ) |   | 43 | % |
| Net      cash used in financing activities      |   | $                                      | (250      | )  | $      | (17,441   | )  |   | (99 | )% |

|                                                             |   | Three      Months Ended March      31, |    |   |  % |    |
|------------------------------------------------------------------|--------|----------------------------------------|---------|--------|---------|---------|
|                                                             |   |                                   | 2008    |   |    | 2007    |   |   | Change |   |
| Contract      Drilling:                                          |   |                                   |    |   |    |    |   |   |   |   |
| Average      number of our drilling rigs in use during           |   |                                   |    |   |    |    |   |   |   |   |
| the      period                                                  |   |                                   | 100.6   |   |    | 96.8    |   |   | 4 | % |
| Total      number of drilling rigs owned at the end              |   |                                   |    |   |    |    |   |   |   |   |
| of      the period                                               |   |                                   | 129     |   |    | 118     |   |   | 9 | % |
| Average      dayrate                                             |   | $                                      | 17,997  |   | $       | 19,427  |   |   | (7 | )% |
| Oil      and Natural Gas:                                        |   |                                   |    |   |    |    |   |   |   |   |
| Oil      production (MBbls)                                      |   |                                   | 292     |   |    | 232     |   |   | 26 | % |
| Natural      gas liquids production (MBbls)                      |   |                                   | 306     |   |    | 124     |   |   | 147 | % |
| Natural      gas production (MMcf)                               |   |                                   | 11,161  |   |    | 10,673  |   |   | 5 | % |
| Average      oil price per barrel received                       |   | $                                      | 93.32   |   | $       | 55.13   |   |   | 69 | % |
| Average      oil price per barrel received excluding hedges      |   | $                                      | 96.25   |   | $       | 55.13   |   |   | 75 | % |
| Average      NGL price per barrel received                       |   | $                                      | 52.04   |   | $       | 33.43   |   |   | 56 | % |
| Average      NGL price per barrel received excluding hedges      |   | $                                      | 51.49   |   | $       | 33.43   |   |   | 54 | % |
| Average      natural gas price per mcf received                  |   | $                                      | 7.65    |   | $       | 6.37    |   |   | 20 | % |
| Average      natural gas price per mcf received excluding hedges |   | $                                      | 7.60    |   | $       | 6.36    |   |   | 19 | % |
| Mid-Stream:                                                      |   |                                   |    |   |    |    |   |   |   |   |
| Gas      gathered—MMBtu/day                                |   |                                   | 200,697 |   |    | 226,081 |   |   | (11 | )% |
| Gas      processed—MMBtu/day                               |   |                                   | 59,797  |   |    | 43,327  |   |   | 38 | % |
| Gas      liquids sold — gallons/day                        |   |                                   | 183,924 |   |    | 95,964  |   |   | 92 | % |
| Number      of natural gas gathering systems                     |   |                                   | 36      |   |    | 37      |   |   | (3 | )% |
| Number      of processing plants                                 |   |                                   | 8       |   |    | 7       |   |   | 14 | % |

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

| •  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 property, 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)                       |   | $                           | 138,787     |   | $ | 5,349 |   | $ | 10,699 |   | $ | 122,739 |   | $ | — |   |
| Retirement      agreements (2)           |   |                        | 565         |   |   | 550 |   |   | 15 |   |   | — |   |   | — |   |
| Operating      leases (3)                |   |                        | 3,774       |   |   | 1,818 |   |   | 1,763 |   |   | 193 |   |   | — |   |
| Drill      pipe, drilling components and |   |                        |        |   |   |   |   |   |   |   |   |   |   |   |   |   |
| equipment      purchases (4)             |   |                        | 15,639      |   |   | 15,639 |   |   | — |   |   | — |   |   | — |   |
| Total      contractual obligations       |   | $                           | 158,765     |   | $ | 23,356 |   | $ | 12,477 |   | $ | 122,932 |   | $ | — |   |

| (1) | See      previous discussion in MD&A regarding our bank credit facility. This      obligation is presented in accordance with the terms of the credit      facility and includes interest calculated using our March 31,      2008  interest rate of 4.6% 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 October 2008. These liabilities, as presented      above, are undiscounted. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (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      2008, we have committed to purchase approximately $14.5 million of drill      pipe, drill collars and related equipment and $1.1 million of      tubing. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                    |   | 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)                     |   | $                                                               | 2,856   |   |   | Unknown |   |   | Unknown |   |   | Unknown |   |   | Unknown |   |
| Separation      benefit plans (2)                       |   | $                                                               | 5,300   |   | $ | 72 |   |   | Unknown |   |   | Unknown |   |   | Unknown |   |
| Derivative      liabilities – commodity hedges    |   | $                                                               | 32,744  |   | $ | 26,418 |   |   | 6,326 |   |   | — |   | $ | — |   |
| Derivative      liabilities – interest rate swaps |   | $                                                               | 1,515   |   | $ | 343 |   |   | 686 |   |   | 486 |   | $ | — |   |
| Plugging      liability (3)                             |   | $                                                               | 34,085  |   | $ | 710 |   | $ | 6,857 |   | $ | 2,562 |   | $ | 23,956 |   |
| Gas      balancing liability (4)                        |   | $                                                               | 3,364   |   |   | Unknown |   |   | Unknown |   |   | Unknown |   |   | Unknown |   |
| Repurchase      obligations (5)                         |   | $                                                               | — |   |   | Unknown |   |   | Unknown |   |   | Unknown |   |   | Unknown |   |
| Workers’      compensation liability (6)          |   | $                                                               | 22,717  |   | $ | 8,539 |   | $ | 3,974 |   | $ | 1,394 |   | $ | 8,810 |   |

| (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. 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 March 31, 2008,      there were 31 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. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (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 |   | $                  (868)      |
| December      2007 – May 2012 |   | $     15,000 |   | 4.16%                 |   | 3      month LIBOR |   |                    (647) |
|                                |   |                                  |   |                  |   |               |   | $               (1,515)                      |

|                              |   | Apr‘08 |   | Apr      – Dec’08 |
|-----------------------------------|--------|--------------|--------|-------------------------------|
| Monthly      NGL production       |   | 29           | %      |                          | — | % |
| Daily      oil production         |   | 72           | %      |                          | 72 | % |
| Daily      natural gas production |   | 40           | %      |                          | 40 | % |

|                                  |   | Apr‘08 |   | May      – Jul’08 |    | Aug      – Dec’08 |
|---------------------------------------|--------|--------------|--------|-------------------------------|---------|-------------------------------|
| Full      stream fractionation spread |   | 65           | %      |                          | — | %                             |   | — | % |
| Ethane      frac spread               |   | —      | %      |                          | 70      | %                             |   | 29 | % |
| Propane      frac spread              |   | —      | %      |                          | 71      | %                             |   | 46 | % |
| Iso-butane      frac spread           |   | —      | %      |                          | 62      | %                             |   | 24 | % |
| Normal      butane frac spread        |   | —      | %      |                          | 62      | %                             |   | 24 | % |
| Gasoline      frac spread             |   | —      | %      |                          | 48      | %                             |   | 24 | % |

|                                      |                | 2008   |   |   |   | 2007    |   |
|-------------------------------------------|---------------------|--------|--------|--------|--------|---------|--------|
|                                      | (In      thousands) |   |
| Increases      (decreases) in:            |                |   |   |   |   |    |   |
| Oil      and natural gas revenue          | $                   | (112   | )      |   | $      | 152     |   |
| Gas      gathering and processing revenue |                | (119   | )      |   |   | — |   |
|                                      |                |   |   |   |   |    |   |
| Gas      gathering and processing expense |                | (182   | )      |   |   | — |   |
|                                      |                |   |   |   |   |    |   |
| Impact      on pre-tax earnings           | $                   | (49    | )      |   | $      | 152     |   |

|                                                            |   |  Quarter      Ended March 31, |        |   | Percent |        |
|-----------------------------------------------------------------|--------|------------------------------------|-------------|--------|---------|-------------|
|                                                            |   |                               | 2008        |   |    | 2007        |   |   | Change |   |
|                                                            |   |                               |        |   |    |        |   |   |   |   |
| Total      revenue                                              |   | $                                  | 321,362,000 |   | $       | 277,271,000 |   |   | 16 | % |
| Net      income                                                 |   | $                                  | 77,064,000  |   | $       | 64,482,000  |   |   | 20 | % |
| Contract      Drilling:                                         |   |                               |        |   |    |        |   |   |   |   |
| Revenue                                                         |   | $                                  | 147,247,000 |   | $       | 160,285,000 |   |   | (8 | )% |
| Operating      costs excluding depreciation                     |   | $                                  | 74,461,000  |   | $       | 76,287,000  |   |   | (2 | )% |
| Percentage      of revenue from daywork contracts               |   |                               | 100         | %      |    | 100         | % |   | — | % |
| Average      number of drilling rigs in use                     |   |                               | 100.6       |   |    | 96.8        |   |   | 4 | % |
| Average      dayrate on daywork contracts                       |   | $                                  | 17,997      |   | $       | 19,427      |   |   | (7 | )% |
| Depreciation                                                    |   | $                                  | 15,364,000  |   | $       | 12,717,000  |   |   | 21 | % |
| Oil      and Natural Gas:                                       |   |                               |        |   |    |        |   |   |   |   |
| Revenue                                                         |   | $                                  | 130,002,000 |   | $       | 86,106,000  |   |   | 51 | % |
| Operating      costs excluding depreciation,                    |   |                               |        |   |    |        |   |   |   |   |
| depletion      and amortization                                 |   | $                                  | 27,601,000  |   | $       | 22,139,000  |   |   | 25 | % |
| Average      oil price (Bbl)                                    |   | $                                  | 93.32       |   | $       | 55.13       |   |   | 69 | % |
| Average      NGL price (Bbl)                                    |   | $                                  | 52.04       |   | $       | 33.43       |   |   | 56 | % |
| Average      natural gas price (Mcf)                            |   | $                                  | 7.65        |   | $       | 6.37        |   |   | 20 | % |
| Oil      production (Bbl)                                       |   |                               | 292,000     |   |    | 232,000     |   |   | 26 | % |
| NGL      production (Bbl)                                       |   |                               | 306,000     |   |    | 124,000     |   |   | 147 | % |
| Natural      gas production (Mcf)                               |   |                               | 11,161,000  |   |    | 10,673,000  |   |   | 5 | % |
| Depreciation,      depletion and amortization                   |   |                               |        |   |    |        |   |   |   |   |
| rate      (Mcfe)                                                |   | $                                  | 2.41        |   | $       | 2.28        |   |   | 6 | % |
| Depreciation,      depletion and amortization                   |   | $                                  | 35,715,000  |   | $       | 29,347,000  |   |   | 22 | % |
| Mid-Stream      Operations:                                     |   |                               |        |   |    |        |   |   |   |   |
| Revenue                                                         |   | $                                  | 44,223,000  |   | $       | 30,768,000  |   |   | 44 | % |
| Operating      costs excluding depreciation                     |   |                               |        |   |    |        |   |   |   |   |
| and      amortization                                           |   | $                                  | 35,072,000  |   | $       | 27,501,000  |   |   | 28 | % |
| Depreciation      and amortization                              |   | $                                  | 3,481,000   |   | $       | 2,339,000   |   |   | 49 | % |
| Gas      gathered—MMBtu/day                               |   |                               | 200,697     |   |    | 226,081     |   |   | (11 | )% |
| Gas      processed—MMBtu/day                              |   |                               | 59,797      |   |    | 43,327      |   |   | 38 | % |
|     Gas      liquids sold—gallons/day |   |                               | 183,924     |   |    | 95,964      |   |   | 92 | % |
|                                                            |   |                               |        |   |    |        |   |   |   |   |
| General      and administrative expense                         |   | $                                  | 6,525,000   |   | $       | 5,182,000   |   |   | 26 | % |
| Interest      expense                                           |   | $                                  | 820,000     |   | $       | 1,641,000   |   |   | (50 | )% |
| Income      tax expense                                         |   | $                                  | 45,259,000  |   | $       | 35,636,000  |   |   | 27 | % |
| Average      interest rate                                      |   |                               | 5.4         | %      |    | 6.1         | % |   | (11 | )% |
| Average      long-term debt outstanding                         |   | $                                  | 137,995,000 |   | $       | 164,451,000 |   |   | (16 | )% |

|   | • |   | the      amount and nature of our future 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; and                         |
|   | • |   | demand      for our drilling rigs and drilling rigrates.                              |

|   | • |   | 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; and                                                              |
|   | • |   | other      factors, most of which are beyond ourcontrol.                                              |

| Term                                     |   | Sell/      Purch. |   | Commodity                     |   | Hedged      Volume    |   | Weighted      Average Fixed Price for Swaps |   | Market                           |
|------------------------------------------|--------|-------------------|--------|-------------------------------|--------|-----------------------|--------|---------------------------------------------|--------|----------------------------------|
| Apr’08                             |   | Sell              |   | Liquids      – swap (1) |   | 582,000      Gal/mo   |   | $1.16                                       |   | OPIS      - Conway               |
| Apr’08                             |   | Sell              |   | Liquids      – swap (1) |   | 750,000      Gal/mo   |   | $1.11                                       |   | OPIS      – Mont Belvieu   |
| Apr  –      Dec’08 |   | Sell              |   | Crude      oil – swap   |   | 1,000      Bbl/day    |   | $91.32                                      |   | WTI      - NYMEX                 |
| Apr  –      Dec’08 |   | Sell              |   | Crude      oil - collar       |   | 1,000      Bbl/day    |   | $85.00      put & $98.75 call           |   | WTI      - NYMEX                 |
| Apr  –      Dec’08 |   | Sell              |   | Crude      oil - collar       |   | 500      Bbl/day      |   | $90.00      put & $102.50 call          |   | WTI      - NYMEX                 |
| Apr  –      Dec’08 |   | Sell              |   | Natural      gas – swap |   | 20,000      MMBtu/day |   | $7.52                                       |   | IF      – Centerpoint East |
| Apr  –      Dec’08 |   | Sell              |   | Natural      gas - collar     |   | 10,000      MMBtu/day |   | $7.00      put & $8.40 call             |   | IF      – Centerpoint East |
| Apr  –      Dec’08 |   | Sell              |   | Natural      gas - collar     |   | 10,000      MMBtu/day |   | $7.20      put & $8.80 call             |   | IF      – Tenn (Zone 0)    |
| Apr  –      Dec’08 |   | Sell              |   | Natural      gas - collar     |   | 10,000      MMBtu/day |   | $7.50      put & $8.70 call             |   | NGPL-TXOK                        |
| 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)    |

| Term                          |   | Sell/      Purchase |   | Commodity                     |   | Hedged      Volume    |   | Weighted      Average Fixed Price |   | Market             |
|-------------------------------|--------|---------------------|--------|-------------------------------|--------|-----------------------|--------|-----------------------------------|--------|--------------------|
| Apr’08                  |   | Sell                |   | Liquids      – swap (1) |   | 1,836,000      Gal/mo |   | $   1.34           |   | OPIS      - Conway |
| Apr’08                  |   | Purchase            |   | Natural      gas – swap |   | 171,000      MMBtu/mo |   | $   6.46           |   | IF      - PEPL     |
| May      – Jul’08 |   | Sell                |   | Liquids      – swap (1) |   | 1,330,000      Gal/mo |   | $   1.27           |   | OPIS      - Conway |
| May      – Jul’08 |   | Purchase            |   | Natural      gas – swap |   | 116,300      MMBtu/mo |   | $   6.93           |   | IF      - PEPL     |
| Aug      – Dec’08 |   | Sell                |   | Liquid      – swap (2)  |   | 188,000      Gal/mo   |   | $   1.43           |   | OPIS      - Conway |
| Aug      – Dec’08 |   | Purchase            |   | Natural      gas – swap |   | 17,000      MMBtu/mo  |   | $   6.91           |   | IF      - PEPL     |

| Term                          |   | Sell/      Purchase |   | Commodity                     |   | Hedged      Volume   |   | Weighted      Average Fixed Price |   | Market             |
|-------------------------------|--------|---------------------|--------|-------------------------------|--------|----------------------|--------|-----------------------------------|--------|--------------------|
| May      – Dec’08 |   | Sell                |   | Liquids      – swap (1) |   | 507,020      Gal/mo  |   | $   1.41           |   | OPIS      - Conway |
| May      – Jul’08 |   | Purchase            |   | Natural      gas – swap |   | 43,175      MMBtu/mo |   | $   9.41           |   | IF      - PEPL     |
| Aug      – Dec’08 |   | Sell                |   | Liquid      – swap (2)  |   | 217,400      Gal/mo  |   | $   1.68           |   | OPIS      - Conway |
| Aug      – Dec’08 |   | Purchase            |   | Natural      gas – swap |   | 63,090      MMBtu/mo |   | $   9.55           |   | 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 |
| January 1,      2008 to January 31, 2008   |    | 6,037                                          |    | $                                                            | 46.25   |                                                                                           | 6,037   |                                                                                                                                | — |
| February 1,      2008 to February 29, 2008 |    | —                                        |    |                                                         | — |                                                                                           | — |                                                                                                                                | — |
| March 1,      2008 to March 31, 2008       |    | —                                        |    |                                                         | — |                                                                                           | — |                                                                                                                                | — |
|                                                 |    |                                           |    |                                                         |    |                                                                                           |    |                                                                                                                                |    |
| Total                                                |    | 6,037                                          |    | $                                                            | 46.25   |                                                                                           | 6,037   |                                                                                                                                | — |
|                                                 |         |                                           |         |                                                         |    |                                                                                                |    |                                                                                                                                     |    |
|                                                 |    |                                           |    |                                                         |    |                                                                                           |    |                                                                                                                                |    |

| (1)    | The      shares were repurchased to remit withholding of taxes on the value of      stock distributed with the January 1, 2008 vesting distribution for grants      previously made from our “Unit Corporation Stock and Incentive      Compensation Plan” (2,794 shares) adopted May 3, 2006 and our “Employee      Stock Bonus Plan” (3,243 shares) adopted December 1984 and terminated for      the purpose of future grants on 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:  May      6, 2008 | By:  /s/ Larry      D. Pinkston |
|                              | LARRY      D. PINKSTON                    |
|                              | Chief      Executive Officer and Director |
|                              |                                      |
| Date:  May      6, 2008 | By:  /s/ David      T. Merrill  |
|                              | DAVID      T. MERRILL                     |
|                              | Chief      Financial Officer and          |
|                              | Treasurer                                 |