CONFIDENTIAL

For Private Placement Purposes Only                  Copy No. _________________


               UNIT 2003 EMPLOYEE OIL AND GAS LIMITED PARTNERSHIP
                             1000 Kensington Tower I
                                7130 South Lewis
                              Tulsa, Oklahoma 74136
                                 (918) 493-7700


                               A PRIVATE OFFERING
                                       OF
                      UNITS OF LIMITED PARTNERSHIP INTEREST

                      -------------------------------------

     THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR UNDER APPLICABLE STATE SECURITIES ACTS IN RELIANCE ON EXEMPTIONS
PROVIDED BY SUCH ACTS. THESE SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION UNDER SUCH ACTS OR AN OPINION OF COUNSEL
ACCEPTABLE TO THE GENERAL PARTNER THAT SUCH REGISTRATION IS NOT REQUIRED.
FURTHER, THE RESALE OF A UNIT MAY RESULT IN SUBSTANTIAL TAX LIABILITY TO THE
INVESTOR. SEE "FEDERAL INCOME TAX CONSIDERATIONS." ACCORDINGLY, THESE UNITS
SHOULD BE CONSIDERED ONLY FOR LONG-TERM INVESTMENT. SEE "PLAN OF DISTRIBUTION --
SUITABILITY OF INVESTORS."

                      -------------------------------------

     THE INFORMATION CONTAINED IN THIS PRIVATE OFFERING MEMORANDUM IS PROVIDED
BY THE GENERAL PARTNER SOLELY FOR THE PERSONS RECEIVING IT FROM THE GENERAL
PARTNER AND ANY REPRODUCTION OR DISTRIBUTION OF THIS PRIVATE OFFERING
MEMORANDUM, IN WHOLE OR IN PART, OR THE DIVULGENCE OF ANY OF ITS CONTENTS IS
PROHIBITED AND MAY CONSTITUTE A VIOLATION OF CERTAIN STATE SECURITIES LAWS. THE
OFFEREE, BY ACCEPTING DELIVERY OF THIS PRIVATE OFFERING MEMORANDUM, AGREES TO
RETURN IT AND ALL ENCLOSED DOCUMENTS TO THE GENERAL PARTNER IF THE OFFEREE DOES
NOT UNDERTAKE TO PURCHASE ANY OF THE UNITS OFFERED HEREBY.

                      -------------------------------------

               Private Offering Memorandum Date December 30, 2002




<PAGE>


                                600 Preformation
                      Units of Limited Partnership Interest
                                     in the
                               UNIT 2003 EMPLOYEE
                         OIL AND GAS LIMITED PARTNERSHIP


                      -------------------------------------

                          $1,000 Per Unit Plus Possible
                     Additional Assessments of $100 Per Unit
                         (Minimum Investment - 2 Units)
                    Minimum Aggregate Subscriptions Necessary
                         to Form Partnership - 50 Units

                      -------------------------------------

     A maximum of 600 (minimum of 50) units of limited partnership interest
("Units") in the UNIT 2003 EMPLOYEE OIL AND GAS LIMITED PARTNERSHIP, a proposed
Oklahoma limited partnership (the "Partnership"), are being offered privately
only to certain employees of Unit Corporation ("UNIT") and its subsidiaries and
the directors of UNIT at a price of $1,000 per Unit. Subscriptions shall be for
not less than 2 Units ($2,000). The Partnership is being formed for the purpose
of conducting oil and gas drilling and development operations. Purchasers of the
Units will become Limited Partners in the Partnership. Unit Petroleum Company
("UPC" or the "General Partner") will serve as General Partner of the
Partnership. UPC's address is 1000 Kensington Tower I, 7130 South Lewis Avenue,
Tulsa, Oklahoma 74136, and telephone (918) 493-7700.

                THE RIGHTS AND OBLIGATIONS OF THE GENERAL PARTNER
                  AND THE LIMITED PARTNERS ARE GOVERNED BY THE
               AGREEMENT OF LIMITED PARTNERSHIP (THE "AGREEMENT"),
               A COPY OF WHICH ACCOMPANIES THIS MEMORANDUM AND IS
                        INCORPORATED HEREIN BY REFERENCE

             AN INVESTMENT IN THE UNITS IS SPECULATIVE AND INVOLVES
               A HIGH DEGREE OF RISK. SEE "RISK FACTORS." CERTAIN
                           SIGNIFICANT RISKS INCLUDE:

         .    Drilling to establish productive oil and natural gas properties is
              inherently speculative.

         .    Participants will rely solely on the management capability and
              expertise of the General Partner.

         .    Limited Partners must assume the risks of an illiquid investment.

         .    Investment in the Units is suitable only for investors having
              sufficient financial resources and who desire a long-term
              investment.

         .    Conflicts of interest exist and additional conflicts of
              interest may arise between the General Partner and the Limited
              Partners, and there are no pre-determined procedures for
              resolving any such conflicts.

                                       ii
<PAGE>
         .    Significant tax considerations to be considered by an investor
              include:

              .    possible audit of income tax returns of the Partnership
                   and/or the Limited Partners and adjustment to their reported
                   tax liabilities; and

              .    a Limited Partner will not benefit from his or her
                   share of Partnership deductions in excess of his or
                   her share of Partnership income unless he or she has
                   passive income from other activities.

         .    There can be no assurance that the Partnership will have
              adequate funds to provide cash distributions to the Limited
              Partners. The amount and timing of any such distributions will
              be within the complete discretion of the General Partner.

         .    The amount of any cash distribution which a Limited Partner
              may receive from the Partnership could be insufficient to pay
              the tax liability incurred by such Limited Partner with
              respect to income or gain allocated to such Limited Partner by
              the Partnership.

         .    Certain provisions in the Agreement modify what would
              otherwise be the applicable Oklahoma law as to the fiduciary
              standards for general partners in limited partnerships. Those
              standards in the Agreement could be less advantageous to the
              Limited Partners than the corresponding fiduciary standards
              otherwise applicable under Oklahoma law. The purchase of Units
              may be deemed as consent to the fiduciary standards set forth
              in the Agreement.
                     -------------------------------------

     EXCEPT AS STATED UNDER "ADDITIONAL INFORMATION," NO PERSON HAS BEEN
AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN
THOSE CONTAINED IN THIS PRIVATE OFFERING MEMORANDUM IN CONNECTION WITH THIS
OFFERING AND SUCH REPRESENTATIONS, IF ANY, MAY NOT BE RELIED UPON. THE
INFORMATION CONTAINED IN THIS PRIVATE OFFERING MEMORANDUM IS AS OF THE DATE OF
THIS MEMORANDUM UNLESS ANOTHER DATE IS SPECIFIED.
                      -------------------------------------

     PROSPECTIVE INVESTORS ARE NOT TO CONSTRUE THE CONTENTS OF THIS PRIVATE
OFFERING MEMORANDUM AS LEGAL, BUSINESS, OR TAX ADVICE. EACH INVESTOR SHOULD
CONSULT HIS OR HER OWN ATTORNEY, BUSINESS ADVISOR AND TAX ADVISOR AS TO LEGAL,
BUSINESS, TAX AND RELATED MATTERS CONCERNING HIS OR HER INVESTMENT. PROSPECTIVE
INVESTORS ARE URGED TO REQUEST ANY ADDITIONAL INFORMATION THEY MAY CONSIDER
NECESSARY TO MAKE AN INFORMED INVESTMENT DECISION.
                     -------------------------------------



                                      iii
<PAGE>

     THE SECURITIES OFFERED BY THIS MEMORANDUM HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION, THE
OKLAHOMA SECURITIES COMMISSION OR BY THE SECURITIES REGULATORY AUTHORITY OF ANY
OTHER STATE, NOR HAS ANY COMMISSION OR AUTHORITY PASSED UPON OR ENDORSED THE
MERITS OF THIS OFFERING OR THE ACCURACY OR ADEQUACY OF THIS PRIVATE OFFERING
MEMORANDUM. ANY REPRESENTATION CONTRARY TO THE FOREGOING IS UNLAWFUL.

                      -------------------------------------

     THESE UNITS ARE BEING OFFERED SUBJECT TO PRIOR SALE, TO WITHDRAWAL,
CANCELLATION OR MODIFICATION OF THE OFFER WITHOUT NOTICE AND TO THE FURTHER
CONDITIONS SET FORTH HEREIN.

                      -------------------------------------

     IN CONNECTION WITH THE REGISTRATION OF THE PARTNERSHIP AS A "TAX SHELTER"
PURSUANT TO SECTION 6111 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED,
PLEASE NOTE THAT ISSUANCE OF A REGISTRATION NUMBER DOES NOT INDICATE THAT AN
INVESTMENT IN THE PARTNERSHIP OR THE CLAIMED TAX BENEFITS THEREFROM HAVE BEEN
REVIEWED, EXAMINED OR APPROVED BY THE INTERNAL REVENUE SERVICE.

                      -------------------------------------

                             ADDITIONAL INFORMATION

     Each prospective investor, or his or her qualified representative named in
writing, has the opportunity (1) to obtain additional information necessary to
verify the accuracy of the information supplied herewith or hereafter, and (2)
to ask questions and receive answers concerning the terms and conditions of the
offering. If you desire to avail yourself of the opportunity, please contact:

                              Mark E. Schell, Esq.
                             1000 Kensington Tower I
                                7130 South Lewis
                              Tulsa, Oklahoma 74136
                                 (918) 493-7700



                                       iv
<PAGE>




     The following documents and instruments are available to qualified offerees
upon written request:

              1.       Amended and Restated Certificate of Incorporation and
                       By-Laws of UNIT.

              2.       Certificate of Incorporation and By-Laws of Unit
                       Petroleum Company.

              3.       UNIT's Employees' Thrift Plan.

              4.       UNIT's Amended and Restated Stock Option Plan and
                       related prospectuses covering shares of Common Stock
                       issuable upon exercise of outstanding options.

              5.       UNIT's Non Employee Directors' Stock Option Plan.

              6.       The Credit Agreement and the notes payable of UNIT.

              7.       All periodic reports on Forms 10-K, 10-Q and 8-K and
                       all proxy materials filed by or on behalf of UNIT
                       with the Securities and Exchange Commission pursuant
                       to the Securities Exchange Act of 1934, as amended,
                       during calendar year 2002, the annual report to
                       shareholders and all quarterly reports to
                       shareholders submitted by UNIT to its shareholders
                       during calendar year 2002.

              8.       The agreements of limited partnership for the prior
                       oil and gas drilling programs and prior employee
                       programs of Unit Petroleum Company, UNIT and Unit
                       Drilling and Exploration Company ("UDEC").

              9.       All periodic reports filed with the Securities and
                       Exchange Commission and all reports and information
                       provided to limited partners in all limited
                       partnerships of which Unit Petroleum Company, UNIT or
                       UDEC now serves or has served in the past as a
                       general partner.

              10.      The agreement of limited partnership for the Unit
                       1986 Energy Income Limited Partnership.



                                       v
<PAGE>


SUMMARY OF CONTENTS

                                                                        Page
                                                                        ----
SUMMARY OF PROGRAM.........................................................1
   Terms of the Offering...................................................1
   Risk Factors............................................................2
   Additional Financing....................................................4
   Proposed Activities.....................................................4
   Application of Proceeds.................................................4
   Participation in Costs and Revenues.....................................5
   Compensation............................................................6
   Federal Income Tax Considerations; Opinion of Counsel...................6
RISK FACTORS...............................................................7
     INVESTMENT RISKS......................................................7
     TAX STATUS AND TAX RISKS.............................................13
     OPERATIONAL RISKS....................................................14
TERMS OF THE OFFERING.....................................................16
   General................................................................16
   Limited Partnership Interests..........................................17
   Subscription Rights....................................................17
   Payment for Units; Delinquent Installment..............................18
   Right of Presentment...................................................19
   Rollup or Consolidation of Partnership.................................20
ADDITIONAL FINANCING......................................................21
   Additional Assessments.................................................21
   Prior Programs.........................................................22
   Partnership Borrowings.................................................22
PLAN OF DISTRIBUTION......................................................23
   Suitability of Investors...............................................23
RELATIONSHIP OF THE PARTNERSHIP, THE GENERAL PARTNER AND AFFILIATES.......24
PROPOSED ACTIVITIES.......................................................24
   General................................................................24
   Partnership Objectives.................................................27
   Areas of Interest......................................................27
   Transfer of Properties.................................................27
   Record Title to Partnership Properties.................................28
   Marketing of Reserves..................................................28
   Conduct of Operations..................................................28
APPLICATION OF PROCEEDS...................................................29
PARTICIPATION IN COSTS AND REVENUES.......................................29
COMPENSATION..............................................................31
   Supervision of Operations..............................................31
   Purchase of Equipment and Provision of Services........................32
   Prior Programs.........................................................32
MANAGEMENT................................................................34
   The General Partner....................................................34
   Officers, Directors and Key Employees..................................34
   Prior Employee Programs................................................37
   Ownership of Common Stock..............................................39
   Interest of Management in Certain Transactions.........................40
CONFLICTS OF INTEREST.....................................................40
   Acquisition of Properties and Drilling Operations......................41
   Participation in UNIT's Drilling or Income Programs....................42
   Transfer of Properties.................................................42
   Partnership Assets.....................................................43
   Transactions with the General Partner or Affiliates....................43
   Right of Presentment Price Determination...............................44
   Receipt of Compensation Regardless of Profitability....................44
   Legal Counsel..........................................................44

                                       vi
<PAGE>
FIDUCIARY RESPONSIBILITY..................................................44
   General................................................................44
   Liability and Indemnification..........................................45
PRIOR ACTIVITIES..........................................................46
   Prior Employee Programs................................................48
   Results of the Prior Oil and Gas Programs..............................49
FEDERAL INCOME TAX CONSIDERATIONS.........................................58
   Summary of Conclusions.................................................58
   General Tax Effects of Partnership Structure...........................61
   Ownership of Partnership Properties....................................61
   Intangible Drilling and Development Costs Deductions...................62
   Depletion Deductions...................................................63
   Depreciation Deductions................................................64
   Interest Deductions....................................................64
   Transaction Fees.......................................................65
   Basis and At Risk Limitations..........................................65
   Passive Loss Limitations...............................................66
   Alternative Minimum Tax................................................66
   Gain or Loss on Sale of Property or Units..............................67
   Partnership Distributions..............................................67
   Partnership Allocations................................................68
   Profit Motive..........................................................68
   Administrative Matters.................................................68
   Accounting Methods and Periods.........................................69
   State and Local Taxes..................................................70
   Individual Tax Advice Should Be Sought.................................70
COMPETITION, MARKETS AND REGULATION.......................................70
   Marketing of Production................................................70
   Regulation of Partnership Operations...................................71
   Natural Gas Price Regulation...........................................71
   Oil Price Regulation...................................................75
   State Regulation of Oil and Gas Production.............................75
   Legislative and Regulatory Production and Pricing Proposals............75
   Production and Environmental Regulation................................76
SUMMARY OF THE LIMITED PARTNERSHIP AGREEMENT..............................77
   Partnership Distributions..............................................77
   Deposit and Use of Funds...............................................77
   Power and Authority....................................................78
   Rollup or Consolidation of the Partnership.............................78
   Limited Liability......................................................79
   Records, Reports and Returns...........................................79
   Transferability of Interests...........................................80
   Amendments.............................................................81
   Voting Rights..........................................................82
   Exculpation and Indemnification of the General Partner.................82
   Termination............................................................83
   Insurance..............................................................83
COUNSEL...................................................................83
GLOSSARY..................................................................84
FINANCIAL STATEMENTS......................................................87

EXHIBIT A     - AGREEMENT OF LIMITED PARTNERSHIP
EXHIBIT B     - LEGAL OPINION



                                      vii
<PAGE>



                               SUMMARY OF PROGRAM


     This summary is not a complete description of the terms and consequences of
an investment in the Partnership and is qualified in its entirety by the more
detailed information appearing throughout this Private Offering Memorandum (this
"Memorandum"). For definitions of certain terms used in this Memorandum, see
"GLOSSARY."

Terms of the Offering

     Limited Partnership Interests. Unit 2003 Employee Oil and Gas Limited
Partnership, a proposed Oklahoma limited partnership (the "Partnership"), offers
600 preformation units of limited partnership interest ("Units") in the
Partnership. The offer is made only to certain employees of Unit Corporation
("UNIT") and its subsidiaries and directors of UNIT (see "TERMS OF THE OFFERING
-- Subscription Rights"). Unless the context otherwise requires, all references
in this Memorandum to UNIT shall include all or any of its subsidiaries. Unit
Petroleum Company ("UPC" or the "General Partner"), a wholly owned subsidiary of
UNIT, will serve as General Partner of the Partnership.

     To invest in the Units, the Limited Partner Subscription Agreement and
Suitability Statement (the "Subscription Agreement") (see Attachment I to
Exhibit A hereto) must be executed and forwarded to the offices of the General
Partner at its address listed on the cover of this Memorandum. The Subscription
Agreement must be received by the General Partner not later than 5:00 P.M.
Central Standard Time on January 27, 2003 (extendable by the General Partner for
up to 30 days). Subscription Agreements may be delivered to the office of the
General Partner. No payment is required upon delivery of the Subscription
Agreement. Payment for the Units will be made either (i) in four equal
Installments, the first of such Installments being due on March 15, 2003 and the
remaining three of such Installments being due on June 15, September 15, and
December 15, 2003, respectively, or (ii) through equal deductions from 2003
salary commencing immediately after formation of the Partnership.

     The purchase price of each Unit is $1,000, and the minimum permissible
purchase is two Units ($2,000) for each subscriber. Additional Assessments of up
to $100 per Unit may be required (see "ADDITIONAL FINANCING -- Additional
Assessments"). Maximum purchases by employees (other than directors) will be for
an amount equal to one-half of their base salaries for calendar year 2003. Each
member of the Board of Directors of UNIT may subscribe for up to 200 Units
($200,000). The Partnership must sell at least 50 Units ($50,000) before the
Partnership will be formed. No Units will be offered for sale after the
Effective Date (see "GLOSSARY") except upon compliance with the provisions of
Article XIII of the Agreement. The General Partner may, at its option, purchase
Units as a Limited Partner, including any amount that may be necessary to meet
the minimum number of Units required for formation of the Partnership. The
Partnership will terminate on December 31, 2033, unless it is terminated earlier
pursuant to the provisions of the Agreement or by operation of law. See "TERMS
OF THE OFFERING -- Limited Partnership Interests"; "TERMS OF THE OFFERING --
Subscription Rights"; and "SUMMARY OF THE LIMITED PARTNERSHIP AGREEMENT --
Termination."

     Units will be offered only to those qualified employees of UNIT or any of
its subsidiaries at the date of formation of the Partnership whose annual base
salaries for 2003 have been set at $22,680 or more and directors of UNIT who
meet certain financial requirements which will enable them to bear the economic
risks of an investment in the Partnership and who can demonstrate that they have
sufficient investment experience and expertise to evaluate the risks and merits
of such an investment. The offering will be made privately by the officers and
directors of UPC or UNIT, except that in states which require participation by a
registered broker-dealer in the offer and sale of securities, the Units will be
offered

                                       1
<PAGE>
through such broker-dealer as may be selected by the General Partner.
Any participating broker-dealer may be reimbursed for actual out-of-pocket
expenses. Such reimbursements will be borne by the General Partner.

     Subscription Rights. Only salaried employees of UNIT or any of its
subsidiaries whose annual base salaries for 2003 have been set at $22,680 or
more and directors of UNIT are eligible to subscribe for Units. Employees may
not purchase Units for an amount in excess of one-half of their base salaries
for calendar year 2003. Directors' subscriptions may not be for more than 200
Units ($200,000). Only employees and directors who are U.S. citizens are
eligible to participate in the offering. In addition, employees and directors
must be able to bear the economic risks of an investment in the Partnership and
must have sufficient investment experience and expertise to evaluate the risks
and merits of such an investment. See "TERMS OF THE OFFERING -- Subscription
Rights."

     Right of Presentment. After December 31, 2004, the Limited Partners will
have the right to present their Units to the General Partner for purchase. The
General Partner will not be obligated to purchase more than 20% of the then
outstanding Units in any one calendar year. The purchase price to be paid for
the Units will be determined by a specific valuation formula. See "TERMS OF THE
OFFERING -- Right of Presentment" for a description of the valuation formula and
a discussion of the manner in which the right of presentment may be exercised by
the Limited Partners.

Risk Factors

     An investment in the Partnership has many risks. The "RISK FACTORS" section
of this Memorandum contains a detailed discussion of the most important risks,
organized into Investment Risks (the risks related to the Partnership's
investment in oil and gas properties and drilling activities, to an investment
in the Partnership and to the provisions of the Agreement); Tax Risks (the risks
arising from the tax laws as they apply to the Partnership and its investment in
oil and gas properties and drilling activities); and Operational Risks (the
risks involved in conducting oil and gas operations). The following are certain
of the risks which are more fully described under "RISK FACTORS". Each
prospective investor should review the "RISK FACTORS" section carefully before
deciding to subscribe for Units.

         Investment Risks:

         .        Future oil and natural gas prices are unpredictable. If oil
                  and natural gas prices go down, the Partnership's
                  distributions, if any, to the Limited Partners will be
                  adversely affected.

         .        The General Partner is authorized under the Agreement to
                  cause, in its sole discretion, the sale or transfer of the
                  Partnership's assets to, or the merger or consolidation of the
                  Partnership with, another partnership, corporation or other
                  business entity. Such action could have a material impact on
                  the nature of the investment of all Limited Partners.

         .        Except for certain transfers to the General Partner and other
                  restricted transfers, the Agreement prohibits a Limited
                  Partner from transferring Units. Thus, except for the limited
                  right of the Limited Partners after December 31, 2004 to
                  present their Units to the General Partner for purchase,
                  Limited Partners will not be able to liquidate their
                  investments.

         .        The Partnership could be formed with as little as $50,000 in
                  Capital Contributions (excluding the Capital Contributions of
                  the General Partner). As the total amount of Capital
                  Contributions to the Partnership will determine the number and
                  diversification of Partnership Properties, the ability of the
                  Partnership to pursue its investment objectives

                                       2

<PAGE>
                  may be restricted in the event that the Partnership receives
                  only the minimum amount of Capital Contributions.

         .        The drilling and completion operations to be undertaken by the
                  Partnership for the development of oil and natural gas
                  reserves involve the possibility of a total loss of an
                  investment in the Partnership.

         .        The General Partner will have the exclusive management and
                  control of all aspects of the business of the Partnership. The
                  Limited Partners will have no opportunity to participate in
                  the management and control of any aspect of the Partnership's
                  activities. Accordingly, the Limited Partners will be entirely
                  dependent upon the management skills and expertise of the
                  General Partner.

         .        Conflicts of interest exist and additional conflicts of
                  interest may arise between the General Partner and the Limited
                  Partners, and there are no pre-determined procedures for
                  resolving any such conflicts. Accordingly the General Partner
                  could cause the Partnership to take actions to the benefit of
                  the General Partner but not to the benefit of the Limited
                  Partners.

         .        Certain provisions in the Agreement modify what would
                  otherwise be the applicable Oklahoma law as to the fiduciary
                  standards for a general partner in a limited partnership. The
                  fiduciary standards in the Agreement could be less
                  advantageous to the Limited Partners and more advantageous to
                  the General Partner than corresponding fiduciary standards
                  otherwise applicable under Oklahoma law. The purchase of Units
                  may be deemed as consent to the fiduciary standards set forth
                  in the Agreement.

         .        There can be no assurances that the Partnership will have
                  adequate funds to provide cash distributions to the Limited
                  Partners. The amount and timing of any such distributions will
                  be within the complete discretion of the General Partner.

         .        The amount of any cash distributions which Limited Partners
                  may receive from the Partnership could be insufficient to pay
                  the tax liability incurred by such Limited Partners with
                  respect to income or gain allocated to such Limited Partners
                  by the Partnership.

         Tax Risks:

         .        Tax laws and regulations applicable to partnership investments
                  may change at any time and these changes may be applicable
                  retroactively.

         .        Certain allocations of income, gain, loss and deduction of the
                  Partnership among the Partners may be challenged by the
                  Internal Revenue Service (the "Service"). A successful
                  challenge would likely result in a Limited Partner having to
                  report additional taxable income or being denied a deduction.

         .        Investment as a Limited Partner may be less advisable for a
                  person who does not have substantial current taxable income
                  from trade or business activities in which the Limited Partner
                  does not materially participate.

         .        Federal income tax payable by a Limited Partner by reason of
                  his or her allocated share of Partnership income for any year
                  may exceed the Partnership distributions to a Limited Partner
                  for the year.

         Operational Risks:

                                       3

<PAGE>
         .        The search for oil and gas is highly speculative and the
                  drilling activities conducted by the Partnership may result in
                  a well that may be dry or productive wells that do not produce
                  sufficient oil and gas to produce a profit or result in a
                  return of the Limited Partners' investment.

         .        Certain hazards may be encountered in drilling wells which
                  could lead to substantial liabilities to third parties or
                  governmental entities. In addition, governmental regulations
                  or new laws relating to environmental matters could increase
                  Partnership costs, delay or prevent drilling a well, require
                  the Partnership to cease operations in certain areas or expose
                  the Partnership to significant liabilities for violations of
                  such laws and regulations.

Additional Financing

     Additional Assessments. After the Aggregate Subscription received from the
Limited Partners has been fully expended or committed and the General Partner's
Minimum Capital Contribution has been fully expended, the General Partner may
make one or more calls for Additional Assessments from the Limited Partners if
additional funds are required to pay the Limited Partners' share of Drilling
Costs, Special Production and Marketing Costs or Leasehold Acquisition Costs.
The maximum amount of total Additional Assessments which may be called for by
the General Partner is $100 per Unit. See "ADDITIONAL FINANCING -- Additional
Assessments."

     Partnership Borrowings. After the General Partner's Minimum Capital
Contribution has been expended, the General Partner may cause the Partnership to
borrow funds required to pay Drilling Costs, Special Production and Marketing
Costs or Leasehold Acquisition Costs of Productive properties. Additionally, the
General Partner may, but is not required to, advance funds to the Partnership to
pay such costs. See "ADDITIONAL FINANCING -- Partnership Borrowings."

Proposed Activities

     General. The Partnership is being formed for the purposes of acquiring
producing oil and gas properties and conducting oil and gas drilling and
development operations. The Partnership will, with certain limited exceptions,
participate on a proportionate basis with UPC in each producing oil and gas
lease acquired and in each oil and gas well commenced by UPC for its own account
or by UNIT during the period from January 1, 2003, if the Partnership is formed
prior to such date or from the date of the formation of the Partnership if
subsequent to January 1, 2003, until December 31, 2003, and will, with certain
limited exceptions, serve as a co-general partner with UNIT in any drilling or
income programs which may be formed by the General Partner or UNIT in 2003. See
"PROPOSED ACTIVITIES."

     Partnership Objectives. The Partnership is being formed to provide eligible
employees and directors the opportunity to participate in the oil and gas
exploration and producing property acquisition activities of UNIT during 2003.
UNIT hopes that participation in the Partnership will provide the participants
with greater proprietary interests in UNIT's operations and the potential for
realizing a more direct benefit in the event these operations prove to be
profitable. The Partnership has been structured to achieve the objective of
providing the Limited Partners with essentially the same economic returns that
UNIT realizes from the wells drilled or acquired during 2003.

Application of Proceeds

     The offering proceeds will be used to pay the Leasehold Acquisition Costs
incurred by the Partnership to acquire those producing oil and gas leases in
which the Partnership participates and the Leasehold Acquisition Costs,
exploration, drilling and development costs incurred by the Partnership

                                       4
<PAGE>
pursuant to drilling activities in which the Partnership participates. The
General Partner estimates (based on historical operating experience) that such
costs may be expended as shown below based on the assumption of a maximum number
of subscriptions in the first column and a minimum number of subscriptions in
the second column:

                                           $600,000           $50,000
                                            Program           Program

Leasehold Acquisition Costs
   of Properties to Be Drilled...........   $30,000            $2,500

Drilling Costs of Exploratory
   Wells(1)..............................    30,000             2,500

Drilling Costs of Development
   Wells(1)..............................   420,000            35,000

Leasehold Acquisition Costs of
   Productive Properties.................   120,000            10,000

Reimbursement of General
   Partner's Overhead Costs(2)...........      --                --
                                           --------           -------
Total....................................  $600,000           $50,000
---------------
(1) See "GLOSSARY."

(2) The Agreement provides that the General Partner shall be reimbursed by the
Partnership for that portion of its general and administrative overhead expense
attributable to its conduct of Partnership business and affairs but such
reimbursement will be made only out of Partnership Revenue. See "COMPENSATION."

Participation in Costs and Revenues

     Partnership costs, expenses and revenues will be allocated among the
Partners in the following percentages:

                                       5

<PAGE>
                                            General           Limited
COSTS AND EXPENSES                          Partner          Partners
                                            -------          --------
    Organizational and offering costs
    of the Partnership and any
    drilling or income programs
    in which the Partnership
    participates as a co-general
    partner.............................      100%                0%

    All other Partnership costs
    and expenses

    Prior to time Limited Partner
      Capital Contributions are
      entirely expended.................        1%               99%

    After expenditure of Limited
      Partner Capital Contributions
      and until expenditure of
      General Partner's Minimum
      Capital Contribution..............      100%                0%


    After expenditure of General            General            Limited
      Partner's Minimum Capital            Partner's          Partners'
      Contribution......................  Percentage(1)     Percentage(1)

                                            General            Limited
                                           Partner's          Partners'
REVENUES................................  Percentage(1)     Percentage(1)
---------------
1) See "GLOSSARY."

Compensation

     The General Partner will not receive any management fees in connection with
the operation of the Partnership. The Partnership will reimburse the General
Partner for that portion of its general and administrative overhead expense
attributable to its conduct of Partnership business and affairs. See
"COMPENSATION."

Federal Income Tax Considerations; Opinion of Counsel

     The General Partner has received an opinion from its tax counsel, Conner &
Winters, P.C. ("Conner & Winters"), concerning all material federal income tax
issues applicable to an investment in the Partnership. To be fully understood,
the complete discussion of these matters set forth in the full tax opinion in
Exhibit B should be read by each prospective investor. Based upon current laws,
regulations, interpretations, and court decisions, Conner & Winters has rendered
its opinion that (i) the material federal income tax benefits in the aggregate
from an investment in the Partnership will be realized; (ii) the Partnership
will be treated as a partnership for federal income tax purposes and not as a
corporation and not as an association taxable as a corporation; (iii) to the
extent the Partnership's wells are timely drilled and its drilling costs are
timely paid, then subject to the limitations on deductions discussed in such
opinion, the Partners will be entitled to claim as deductions their pro rata
shares of the Partnership's intangible drilling and development costs ("IDC")
paid in 2003; (iv) for most Limited Partners, the Partnership's operations will
be considered a passive activity within the meaning of Section 469 of the
Internal Revenue Code of 1986, as amended (the "Code"), and losses generated
therefrom will be limited by the passive activity provisions of the Code; (v) to
the extent provided herein, the Partners' distributive shares of Partnership tax
items will be determined and allocated substantially in accordance

                                       6

<PAGE>
with the terms of the Partnership Agreement; and (vi) the Partnership will
not be required to register with the Service as a tax shelter.

     Due to the lack of authority regarding, or the essentially factual nature
of certain issues, Conner & Winters expresses no opinion on the following: (i)
the impact of an investment in the Partnership on an investor's alternative
minimum tax liability; (ii) whether, under Code Section 183, the losses of the
Partnership will be treated as derived from "activities not engaged in for
profit," and therefore nondeductible from other gross income (due to the
inherently factual nature of a Partner's interest and motive in investing in the
Partnership); (iii) whether any of the Partnership's properties will be
considered "proven" for purposes of depletion deductions; (iv) whether any
interest incurred by a Partner with respect to any borrowings incurred to
purchase Units will be deductible or subject to limitations on deductibility;
and (v) whether the Partnership will be treated as the tax owner of Partnership
Properties acquired by the General Partner as nominee for the Partnership.

     THIS MEMORANDUM CONTAINS AN EXPLANATION OF THE MORE SIGNIFICANT TERMS AND
PROVISIONS OF THE AGREEMENT OF LIMITED PARTNERSHIP WHICH IS ATTACHED AS EXHIBIT
A. THE SUMMARY OF THE AGREEMENT CONTAINED IN THIS MEMORANDUM IS QUALIFIED IN ITS
ENTIRETY BY SUCH REFERENCE AND ACCORDINGLY THE AGREEMENT SHOULD BE CAREFULLY
REVIEWED AND CONSIDERED.


                                  RISK FACTORS

     Prospective purchasers of Units should carefully study the information
contained in this Memorandum and should make their own evaluations of the
probability for the discovery of oil and natural gas through exploration.

INVESTMENT RISKS

Financial Risks of Drilling Operations

     The Partnership will participate with the General Partner (including, with
certain limited exceptions, other drilling programs sponsored by it, or UNIT)
and, in some cases, other parties ("joint interest parties") in connection with
drilling operations conducted on properties in which the Partnership has an
interest. It is not anticipated that all such drilling operations will be
conducted under turnkey drilling contracts and, thus, all of the parties
participating in the drilling operations on a particular property, including the
Partnership, may be fully liable for their proportionate share of all costs of
such operations even if the actual costs significantly exceed the original cost
estimates. Further, if any joint interest party defaults in its obligation to
pay its share of the costs, the other joint interest parties may be required to
fund the deficiency until, if ever, it can be collected from the defaulting
party. As a result of forced pooling or similar proceedings (see "COMPETITION,
MARKETS AND REGULATION"), the Partnership may acquire larger fractional
interests in Partnership Properties than originally anticipated and, thus, be
required to bear a greater share of the costs of operations. As a result of the
foregoing, the Partnership could become liable for amounts significantly in
excess of the amounts originally anticipated to be expended in connection with
the operations and, in such event, would have only limited means for providing
needed additional funds (see "ADDITIONAL FINANCING"). Also, if a well is
operated by a company which does not or cannot pay the costs and expenses of
drilling or operating a Partnership Well, the Partnership's interest in such
well may become subject to liens and claims of creditors who supplied services
or materials in connection with such operations even though the Partnership may
have previously paid its share of such costs and expenses to the operator. If

                                       7

<PAGE>
the operator is unable or unwilling to pay the amount due, the Partnership might
have to pay its share of the amounts owing to such creditors in order to
preserve its interest in the well which would mean that it would, in effect, be
paying for certain of such costs and expenses twice.

Dependence Upon General Partner

     The Limited Partners will acquire interests in the Partnership, not in the
General Partner or UNIT. They will not participate in either increases or
decreases in the General Partner's or UNIT's net worth or the value of its
common stock. Nevertheless, because the General Partner is primarily responsible
for the proper conduct of the Partnership's business and affairs and is
obligated to provide certain funds that will be required in connection with its
operations, a significant financial reversal for the General Partner or UNIT
could have an adverse effect on the Partnership and the Limited Partners'
interests therein.

     Under the Partnership Agreement, UPC is designated as the General Partner
of the Partnership and is given the exclusive authority to manage and operate
the Partnership's business. See "SUMMARY OF THE LIMITED PARTNERSHIP AGREEMENT --
Power and Authority". Accordingly, Limited Partners must rely solely on the
General Partner to make all decisions on behalf of the Partnership, as the
Limited Partners will have no role in the management of the business of the
Partnership.

     The Partnership's success will depend, in part, upon the management
provided by the General Partner, the ability of the General Partner to select
and acquire oil and gas properties on which Partnership Wells capable of
producing oil and natural gas in commercial quantities may be drilled, to fund
the acquisition of revenue producing properties, and to market oil and natural
gas produced from Partnership Wells.

Conflicts of Interest

     UNIT and its subsidiaries have engaged in oil and gas exploration and
development and in the acquisition of producing properties for their own account
and as the sponsors of drilling and income programs formed with third party
investors. It is anticipated that UNIT and its subsidiaries will continue to
engage in such activities. However, with certain exceptions, it is likely that
the Partnership will participate as a working interest owner in all producing
oil and gas leases acquired and in all oil and gas wells commenced by the
General Partner or UNIT for its own account during the period from January 1,
2003, if the Partnership is formed prior to such date, or from the date of the
formation of the Partnership, if subsequent to January 1, 2003, through December
31, 2003 and, with certain limited exceptions, will be a co-general partner of
any drilling or income programs, or both, formed by the General Partner or UNIT
in 2003. The General Partner will determine which prospects will be acquired or
drilled. With respect to prospects to be drilled, certain of the wells which are
drilled for the separate account of the Partnership and the General Partner may
be drilled on prospects on which initial drilling operations were conducted by
UNIT or the General Partner prior to the formation of the Partnership. Further,
certain of the Partnership Wells will be drilled on prospects on which the
General Partner and possibly future employee programs may conduct additional
drilling operations in years subsequent to 2003. Except with respect to its
participation as a co-general partner of any drilling or income program
sponsored by the General Partner or UNIT, the Partnership will have an interest
only in those wells begun in 2003 and will have no rights in production from
wells commenced in years other than 2003. Likewise, if additional interests are
acquired in wells participated in by the Partnership after 2003, the Partnership
will generally not be entitled to participate in the acquisition of such
additional interests. See "CONFLICTS OF INTEREST -- Acquisition of Properties
and Drilling Operations."

                                       8

<PAGE>
     The Partnership may enter into contracts for the drilling of some or all of
the Partnership Wells with affiliates of the General Partner. Likewise the
Partnership may sell or market some or all of its natural gas production to an
affiliate of the General Partner. These contracts may not necessarily be
negotiated on an arm's - length basis. The General Partner is subject to a
conflict of interest in selecting an affiliate of the General Partner to drill
the Partnership Wells and/or market the natural gas therefrom. The compensation
under these contracts will be determined at the time of entering into each such
contract, and the costs to be paid thereunder or the sale price to be received
will be one which is competitive with the costs charged or the prices paid by
unaffiliated parties in the same geographic region. The General Partner will
make the determination of what are competitive rates or prices in the area. No
provision has been made for an independent review of the fairness and
reasonableness of such compensation. See "CONFLICTS OF INTERESTS -- Transactions
with the General Partner or Affiliates."

Prohibition on Transferability; Lack of Liquidity

     Except for certain transfers (i) to the General Partner, (ii) to or for the
benefit of the transferor Limited Partner or members of his or her immediate
family sharing the same residence, and (iii) by reason of death or operation of
law, a Limited Partner may not transfer or assign Units. The General Partner has
agreed, however, that it will, if requested at any time after December 31, 2004,
buy Units for prices determined either by an independent petroleum engineering
firm or the General Partner pursuant to a formula described under "TERMS OF THE
OFFERING -- Right of Presentment." This obligation of the General Partner to
purchase Units when requested is limited and does not assure the liquidity of a
Limited Partner's investment, and the price received may be less than if the
Limited Partner continued to hold his or her Units. In addition, similar
commitments have been made and may hereafter be made to investors in other oil
and gas drilling, income and employee programs sponsored by the General Partner
or UNIT. There can be no assurance that the General Partner will have the
financial resources to honor its repurchase commitments. See "TERMS OF THE
OFFERING -- Right of Presentment."

Delay of Cash Distributions

     For income tax purposes, a Limited Partner must report his or her
distributive (allocated) share of the income, gains, losses and deductions of
the Partnership whether or not cash distributions are made. No cash
distributions are expected to be made earlier than the first quarter of 2004. In
addition, to the extent that the Partnership uses its revenues to repay
borrowings or to finance its activities (see "ADDITIONAL FINANCING"), the funds
available for cash distributions by the Partnership will be reduced or may be
unavailable. It is possible that the amount of tax payable by a Limited Partner
on his or her distributive share of the income of the Partnership will exceed
his or her cash distributions from the Partnership. See "FEDERAL INCOME TAX
CONSIDERATIONS."

     If and the date any distributions commence and their subsequent timing or
amount cannot be accurately predicted. The decision as to whether or not the
Partnership will make a cash distribution at any particular time will be made
solely by the General Partner.

Limitations on Voting and Other Rights of Limited Partners

     The Agreement, as permitted under the Oklahoma Revised Uniform Limited
Partnership Act (the "Act"), eliminates or limits the rights of the Limited
Partners to take certain actions, such as:

         .        withdrawing from the Partnership,

         .        transferring Units without restrictions, or

                                       9

<PAGE>
         .        consenting to or voting upon certain matters such as:

                  (i) admitting a new General Partner,

                  (ii) admitting Substituted Limited Partners, and

                  (iii) dissolving the Partnership.

Furthermore, the Agreement imposes restrictions on the exercise of voting rights
granted to Limited Partners. See "SUMMARY OF THE LIMITED PARTNERSHIP AGREEMENT
-- Voting Rights." Without the provisions to the contrary which are contained in
the Agreement, the Act provides that certain actions can be taken only with the
consent of all Limited Partners. Those provisions of the Agreement which provide
for or require the vote of the Limited Partners, generally permit the approval
of a proposal by the vote of Limited Partners holding a majority of the
outstanding Units. See "SUMMARY OF THE LIMITED PARTNERSHIP AGREEMENT -- Voting
Rights." Thus, Limited Partners who do not agree with or do not wish to be
subject to the proposed action may nevertheless become subject to the action if
the required majority approval is obtained. Notwithstanding the rights granted
to Limited Partners under the Agreement and the Act, the General Partner retains
substantial discretion as to the operation of the Partnership.

Rollup or Consolidation of Partnership

     Under the terms of the Agreement, at any time two years or more after the
Partnership has completed substantially all of its property acquisition,
drilling and development operations, the General Partner is authorized to cause
the Partnership to transfer its assets to, or to merge or consolidate with,
another partnership or a corporation or other entity for the purpose of
combining the oil and gas properties and other assets of the Partnership with
those of other partnerships formed for investment or participation by the
employees, directors and/or consultants of UNIT or any of its subsidiaries. Such
transfer or combination may be effected without the vote, approval or consent of
the Limited Partners. In such event, the Limited Partners will receive interests
in the transferee or resulting entity which will mean that they will most likely
participate in the results of a larger number of properties but will have
proportionately smaller allocable interests therein. Any such transaction is
required to be effected in a manner which UNIT and the General Partner believe
is fair and equitable to the Limited Partners but there can be no assurance that
such transaction will in fact be in the best interests of the Limited Partners.
Limited Partners have no dissenters' or appraisal rights under the terms of the
Agreement or the Act. Such a transaction would result in the termination and
dissolution of the Partnership. While there can be no assurance that the
Partnership will participate in such a transaction, the General Partner
currently anticipates that the Partnership will, at the appropriate time, be
involved in such a transaction. See "TERMS OF OFFERING," and "SUMMARY OF THE
LIMITED PARTNERSHIP AGREEMENT."

Partnership Borrowings

     The General Partner has the authority to cause the Partnership to borrow
funds to pay certain costs of the Partnership. While the use of financing to
preserve the Partnership's equity in oil and gas properties will be intended to
increase the Partnership's profits, such financing could have the effect of
increasing the Partnership's losses if the Partnership is unsuccessful. In
addition, the Partnership may have to mortgage its oil and gas properties and
other assets in order to obtain additional financing. If the Partnership
defaults on such indebtedness, the lender may foreclose and the Partnership
could lose its investment in such oil and gas properties and other assets. See
"ADDITIONAL FINANCING -- Partnership Borrowings."

                                       10

<PAGE>
Limited Liability

     Under the Act a Limited Partner's liability for the obligations of the
Partnership is limited to such Limited Partner's Capital Contribution and such
Limited Partner's share of Partnership assets. In addition, if a Limited Partner
receives a return of any part of his or her Capital Contribution, such Limited
Partner is generally liable to the Partnership for a period of one year
thereafter (or six years in the event such return is in violation of the
Agreement) for the amount of the returned contribution. A Limited Partner will
not otherwise be liable for the obligations of the Partnership unless, in
addition to the exercise of his or her rights and powers as a Limited Partner,
such Limited Partner participates in the control of the business of the
Partnership.

     The Agreement provides that by a vote of a majority in interest, the
Limited Partners may effect certain changes in the Partnership such as
termination and dissolution of the Partnership and amendment of the Agreement.
The exercise of any of these and certain other rights is conditioned upon
receipt of an opinion by Conner & Winters for the Limited Partners or an order
or judgment of a court of competent jurisdiction to the effect that the exercise
of such rights will not result in the loss of the limited liability of the
Limited Partners or cause the Partnership to be classified as an association
taxable as a corporation (see "SUMMARY OF THE LIMITED PARTNERSHIP AGREEMENT --
Amendments" and "SUMMARY OF THE LIMITED PARTNERSHIP AGREEMENT -- Termination").
As a result of certain judicial opinions it is not clear that these rights will
ever be available to the Limited Partners. Nevertheless, in spite of the receipt
of any such opinion or judicial order, it is still possible that the exercise of
any such rights by the Limited Partners may result in the loss of the Limited
Partners' limited liability. The Partnership will be governed by the Act. The
Act expressly permits limited partners to vote on certain specified partnership
matters without being deemed to be participating in the control of the
Partnership's business and, thus, should result in greater certainty and more
easily obtainable opinions of Conner & Winters regarding the exercise of most of
the Limited Partners' rights.

     If the Partnership is dissolved and its business is not to be continued,
the Partnership will be wound up. In connection with the winding up of the
Partnership, all of its properties may be sold and the proceeds thereof credited
to the accounts of the Partners. Properties not sold will, upon termination of
the Partnership, be distributed to the Partners. The distribution of Partnership
Properties to the Limited Partners would result in their having unlimited
liability with respect to such properties. See "SUMMARY OF THE LIMITED
PARTNERSHIP AGREEMENT -- Limited Liability."

Partnership Acting as Co-General Partner

     It is anticipated that the Partnership will serve as a co-general partner
in any drilling or income programs formed by the General Partner or UNIT during
2003. See "PROPOSED ACTIVITIES." Accordingly, the Partnership generally will be
liable for the obligation and recourse liabilities of any such drilling or
income program formed. While a Limited Partner's liability for such claims will
be limited to such Limited Partners Capital Contribution and share of
Partnership assets, such claims if satisfied from the Partnership's assets could
adversely affect the operations of the Partnership.

Past-Due Installments; Acceleration; Additional Assessments

     Installments and Additional Assessments (see "ADDITIONAL FINANCING") are
legally binding obligations and past-due amounts will bear interest at the rate
set forth in the Agreement; provided, however, that if the General Partner
determines that the total Aggregate Subscription is not required to fund the
Partnership's business and operations, then the General Partner may, at its sole
option, elect to release the Limited Partners from their obligation to pay one
or more Installments and amend any relevant Partnership documents accordingly.
It is anticipated that the total Aggregate

                                       11

<PAGE>
Subscription will be required to fund the Partnership's business and
operations. In the event an Installment is not paid when due and the General
Partner has not released the Limited Partners from their obligation to pay such
Installment, then the General Partner may, at its sole option, purchase all
Units of the director or employee who fails to pay such Installment, at a price
equal to the amount of the prior Installments paid by such person. The General
Partner may also bring legal proceedings to collect any unpaid Installments not
waived by it or Additional Assessments. In addition, as indicated under "TERMS
OF THE OFFERING -- Payment for Units; Delinquent Installment," if an employee's
employment with or position as a director of the General Partner, UNIT or any
affiliate thereof is terminated other than by reason of Normal Retirement (see
"GLOSSARY"), death or disability prior to the time the full amount of the
subscription price for his or her Units has been paid, all unpaid Installments
not waived by the General Partner as described above will become due and payable
upon such termination.

Partnership Funds

     Except for Capital Contributions, Partnership funds are expected to be
commingled with funds of the General Partner or UNIT. Thus, Partnership funds
could become subject to the claims of creditors of the General Partner or UNIT.
The General Partner believes that its assets and net worth are such that the
risk of loss to the Partnership by virtue of such fact is minimal but there can
be no assurance that the Partnership will not suffer losses of its funds to
creditors of the General Partner or UNIT.

Compliance With Federal and State Securities Laws

     This offering has not been registered under the Securities Act of 1933, as
amended, in reliance upon exemptive provisions of said act. Further, these
interests are being sold pursuant to exemptions from registration in the various
states in which they are being offered and may be subject to additional
restrictions in such jurisdictions on transfer. There is no assurance that the
offering presently qualifies or will continue to qualify under such exemptive
provisions due to, among other things, the adequacy of disclosure and the manner
of distribution of the offering, the existence of similar offerings conducted by
the General Partner or UNIT or its affiliates in the past or in the future, a
failure or delay in providing notices or other required filings, the conduct of
other oil and gas activities by the General Partner or UNIT and its affiliates
or the change of any securities laws or regulations.

     If and to the extent suits for rescission are brought and successfully
concluded for failure to register this offering or other offerings under the
Securities Act of 1933, as amended, or state securities acts, or for acts or
omissions constituting certain prohibited practices under any of said acts, both
the capital and assets of the General Partner and the Partnership could be
adversely affected, thus jeopardizing the ability of the Partnership to operate
successfully. Further, the time and capital of the General Partner could be
expended in defending an action by investors or by state or federal authorities
even where the Partnership and the General Partner are ultimately exonerated.

Title To Properties

     The Partnership Agreement empowers the General Partner, UNIT or any of
their affiliates, to hold title to the Partnership Properties for the benefit of
the Partnership. As such it is possible that the Partnership Properties could be
subject to the claims of creditors of the General Partner. The General Partner
is of the opinion that the likelihood of the occurrence of such claims is
remote. However, the Partnership Property could be subject to claims and
litigation in the event that the General Partner failed to pay its debts or
became subject to the claims of creditors.

                                       12
<PAGE>
Use of Partnership Funds to Exculpate and Indemnify the General Partner

     The Agreement contains certain provisions which are intended to limit the
liability of the General Partner and its affiliates for certain acts or
omissions within the scope of the authority conferred upon them by the
Agreement. In addition, under the Agreement, the General Partner will be
indemnified by the Partnership against losses, judgments, liabilities, expenses
and amounts paid in settlement sustained by it in connection with the
Partnership so long as the losses, judgments, liabilities, expenses or amounts
were not the result of gross negligence or willful misconduct on the part of the
General Partner. See "SUMMARY OF THE LIMITED PARTNERSHIP AGREEMENT --
Exculpation and Indemnification of the General Partner."

The Partnership Agreement May Limit the Fiduciary Obligation of the General
Partner to the Partnership and the Limited Partners

     The Agreement contains certain provisions which modify what would otherwise
be the applicable Oklahoma law relating to the fiduciary standards of the
General Partner to the Limited Partners. The fiduciary standards in the
Agreement could be less advantageous to the Limited Partners and more
advantageous to the General Partner than the corresponding fiduciary standards
otherwise applicable under Oklahoma law (although there are very few legal
precedents clarifying exactly what fiduciary standards would otherwise be
applicable under Oklahoma law). The purchase of Units may be deemed as consent
to the fiduciary standards set forth in the Agreement. See "FIDUCIARY
RESPONSIBILITY." As a result of these provisions in the Agreement, the Limited
Partners may find it more difficult to hold the General Partner responsible for
acting in the best interest of the Partnership and the Limited Partners than if
the fiduciary standards of the otherwise applicable Oklahoma law governed the
situation.

TAX STATUS AND TAX RISKS

     It is possible that the tax treatment currently available with respect to
oil and gas exploration and production will be modified or eliminated on a
retroactive or prospective basis by legislative, judicial, or administrative
actions. The limited tax benefits associated with oil and gas exploration do not
eliminate the inherent economic risks. See "Federal Income Tax Considerations."

Partnership Classification

     Conner & Winters has rendered its opinion that the Partnership will be
classified for federal income tax purposes as a partnership and not as a
corporation, an association taxable as a corporation or a "publicly traded
partnership." Such opinion is not binding on the Service or the courts. If the
Partnership were classified as a corporation, association taxable as a
corporation or publicly traded partnership, any income, gain, loss, deduction,
or credit of the Partnership would remain at the entity level, and not flow
through to the Partners, the income of the Partnership would be subject to
corporate tax rates at the entity level and distributions to the Partners could
be considered dividend distributions. See "Federal Income Tax
Considerations--General Tax Effects of Partnership Structure."

Limited Partner Interests

     An investment as a Limited Partner may not be advisable for a person who
does not anticipate having substantial current taxable income from passive trade
or business activities (not counting dividend or interest income). Such a person
cannot utilize any passive losses generated by the Partnership until and unless
he or she has realized "passive income". Partnership income, losses, gains, and
deductions allocable to most Limited Partners will be subject to the "passive
activity loss" rules.

                                       13
<PAGE>
Tax Liabilities in Excess of Cash Distributions

     For any taxable year, federal income tax payable by a Partner by reason of
his or her distributive share of Partnership taxable income may exceed the cash
distributed to such Partner by the Partnership. A Partner must include in his or
her own income tax return for a taxable year his or her share of the items of
the Partnership's income, gain, profit, loss, and deductions for the year, to
the extent required under the Code as then in effect, whether or not cash
proceeds are actually distributed to the Partner. For example, income from the
Partnership's sale of gas production will be taxable to Partners as ordinary
income subject to depletion and other deductions whether or not the proceeds
from such sale are actually distributed (for example, where Partnership income
is used to repay Partnership indebtedness).

Items Not Covered by the Tax Opinion

     Due to the lack of authority regarding, or the essentially factual nature
of certain issues, Conner & Winters has expressed no opinion as to the
following: (i) the impact of an investment in the Partnership on an investor's
alternative minimum tax liability; (ii) whether, under Code Section 183, the
losses of the Partnership will be treated as derived from "activities not
engaged in for profit," and therefore nondeductible from other gross income (due
to the inherently factual nature of a Partner's interest and motive in investing
in the Partnership); (iii) whether any of the Partnership's properties will be
considered "proven" for purposes of depletion deductions; (iv) whether interest
paid by a Partner with respect to any borrowings incurred to purchase Units will
be deductible or subject to limitations on deductibility; and (v) whether the
Partnership will be treated as the tax owner of Partnership Properties acquired
by the General Partner as nominee for the Partnership.

     The determination of various of the above-referenced issues is dependent on
facts not currently available. Therefore, Conner & Winters is unable to render
an opinion at this time with respect to such issues. Also, the unknown facts
with respect to the various issues referred to above will vary from Partner to
Partner and will result in different tax consequences and burdens for individual
Partners.

     Prospective investors should recognize that an opinion of Conner & Winters
merely represents Conner & Winters' best legal judgment under existing statutes,
judicial decisions, and administrative regulations and interpretations. There
can be no assurance that some of the deductions claimed by the Partnership in
reliance upon an opinion of Conner & Winters will not be challenged successfully
by the Service.

OPERATIONAL RISKS

Risks Inherent in Oil and Gas Operations

     The Partnership will be participating with the General Partner in acquiring
producing oil and gas leases and in the drilling of those oil and gas wells
commenced by the General Partner from the later of January 1, 2003 or the time
the Partnership is formed through December 31, 2003 and, with certain limited
exceptions, serving as a co-general partner of any oil and gas drilling or
income programs, or both, formed by the General Partner or UNIT during 2003.

     All drilling to establish productive oil and natural gas properties is
inherently speculative. The techniques presently available to identify the
existence and location of pools of oil and natural gas are indirect, and,
therefore, a considerable amount of personal judgment is involved in the
selection of any prospect for drilling. The economics of oil and natural gas
drilling and production are affected or may be affected in the future by a
number of factors which are beyond the control of the General Partner, including
(i) the general demand in the economy for energy fuels, (ii) the worldwide
supply of oil and natural gas, (iii) the price of, as well as governmental
policies with respect to, oil imports, (iv) potential

                                       14
<PAGE>
competition from competing alternative fuels, (v) governmental regulation
of prices for oil and natural gas production, gathering and transportation, (vi)
state regulations affecting allowable rates of production, well spacing and
other factors, and (vii) availability of drilling rigs, casing and other
necessary goods and services. See "COMPETITION, MARKETS AND REGULATION." The
revenues, if any, generated from Partnership operations will be highly dependent
upon the future prices and demand for oil and natural gas. The factors
enumerated above affect, and will continue to affect, oil and natural gas
prices. Recently, prices for oil and natural gas have fluctuated over a wide
range.

Operating and Environmental Hazards

     Operating hazards such as fires, explosions, blowouts, unusual formations,
formations with abnormal pressures and other unforeseen conditions are sometimes
encountered in drilling wells. On occasion, substantial liabilities to third
parties or governmental entities may be incurred, the payment of which could
reduce the funds available for exploration and development or result in loss of
Partnership Properties. The Partnership will attempt to maintain customary
insurance coverage, but the Partnership may be subject to liability for
pollution and other damages or may lose substantial portions of its properties
due to hazards against which it cannot insure or against which it may elect not
to insure due to unreasonably high or prohibitive premium costs or for other
reasons. The activities of the Partnership may expose it to potential liability
for pollution or other damages under laws and regulations relating to
environmental matters (see "Government Regulation and Environmental Risks"
below).

Competition

     The oil and gas industry is highly competitive. The Partnership will be
involved in intense competition for the acquisition of quality undeveloped
leases and producing oil and gas properties. There can be no assurance that a
sufficient number of suitable oil and gas properties will be available for
acquisition or development by the Partnership. The Partnership will be competing
with numerous major and independent companies which possess financial resources
and staffs larger than those available to it. The Partnership, therefore, may be
unable in certain instances to acquire desirable leases or supplies or may
encounter delays in commencing or completing Partnership operations.

Markets for Oil and Natural Gas Production

     Historically (prior to the early 1980s), world oil prices were established
and maintained largely as a result of the actions of members of OPEC to limit,
and maintain a base price for, their oil production. Until recently, however,
members of OPEC were unable to agree to and maintain price and production
controls, which resulted in significant downward pressure on oil prices.
Commencing in early 2001, OPEC members were able to reach agreement on oil
production levels which has contributed to a rise in oil prices. Although future
levels of production by the members of OPEC or the degree to which oil prices
will be affected thereby cannot be predicted, it is possible that prices for oil
produced in the future will be higher or lower than those currently available.
There can be no assurance that the oil that the Partnership produces can be
marketed on favorable price and other contractual terms. See "COMPETITION,
MARKETS AND REGULATION -- Marketing of Production."

     The natural gas market is also unsettled due to a number of factors. In the
past, production from natural gas wells in some geographic areas of the United
States was curtailed for considerable periods of time due to a lack of market
demand. Over the past several years demand for natural gas has increased greatly
limiting the number of wells being shut in for lack of demand. It is possible,
however, that Partnership Wells may in the future be shut-in or that natural gas
will be sold on terms less favorable than might otherwise be obtained should
demand for gas lessen in the future. Competition for available markets has been
vigorous and there remains great uncertainty about prices that purchasers will

                                       15
<PAGE>
pay. In recent years, significant court decisions and regulatory changes have
affected the natural gas markets. As a result of such court decisions,
regulatory changes and unsettled market conditions, natural gas regulations may
be modified in the future and may be subject to further judicial review or
invalidation. The combination of these factors, among others, makes it
particularly difficult to estimate accurately future prices of natural gas, and
any assumptions concerning future prices may prove incorrect. Natural gas
surpluses could result in the Partnership's inability to market natural gas
profitably, causing Partnership Wells to curtail production and/or receive lower
prices for its natural gas, situations which would adversely affect the
Partnership's ability to make cash distributions to its participants. See
"COMPETITION, MARKETS AND REGULATION."

     In the event that the Partnership discovers or acquires natural gas
reserves, there may be delays in commencing or continuing production due to the
need for gathering and pipeline facilities, contract negotiation with the
available market, pipeline capacities, seasonal takes by the gas purchaser or a
surplus of available gas reserves in a particular area.

Government Regulation and Environmental Risks

     The oil and gas business is subject to pervasive government regulation
under which, among other things, rates of production from producing properties
may be fixed and the prices for gas produced from such producing properties may
be impacted. It is possible that these regulations pertaining to rates of
production could become more pervasive and stringent in the future. The
activities of the Partnership may expose it to potential liability under laws
and regulations relating to environmental matters which could adversely affect
the Partnership. Compliance with these laws and regulations may increase
Partnership costs, delay or prevent the drilling of wells, delay or prevent the
acquisition of otherwise desirable producing oil and gas properties, require the
Partnership to cease operations in certain areas, and cause delays in the
production of oil and gas. See "COMPETITION, MARKETING AND REGULATION."

Leasehold Defects

     In certain instances, the Partnership may not be able to obtain a title
opinion or report with respect to a producing property that is acquired.
Consequently, the Partnership's title to any such property may be uncertain.
Furthermore, even if certain technical defects do appear in title opinions or
reports with respect to a particular property, the General Partner, in its sole
discretion, may determine that it is in the best interest of the Partnership to
acquire such property without taking any curative action.


                              TERMS OF THE OFFERING

General

      .        600 Maximum Units; 50 Minimum Units

      .        $1,000 Units; Minimum subscription: $2,000

      .        Minimum Partnership: $50,000 in subscriptions

      .        Maximum Partnership: $600,000 in subscriptions

                                       16

<PAGE>
Limited Partnership Interests

     The Partnership hereby offers to certain employees (described under
"Subscription Rights" below) and directors of UNIT and its subsidiaries an
aggregate of 600 Units. The purchase price of each Unit is $1,000, and the
minimum permissible purchase by any eligible subscriber is two Units ($2,000).
See "Subscription Rights" below for the maximum number of Units that may be
acquired by subscribers.

     The Partnership will be formed as an Oklahoma limited partnership upon the
closing of the offering of Units made by this Memorandum. The General Partner
will be Unit Petroleum Company (the "General Partner", or "UPC"), an Oklahoma
corporation. Partnership operations will be conducted from the General Partner's
offices, the address of which is 1000 Kensington Tower I, 7130 South Lewis
Avenue, Tulsa, Oklahoma 74136, telephone (918) 493-7700.

     The offering of Units will be closed on January 27, 2003 unless extended by
the General Partner for up to 30 days, and all Units subscribed will be issued
on the Effective Date. The offering may be withdrawn by the General Partner at
any time prior to such date if it believes it to be in the best interests of the
eligible employees and Directors or the General Partner not to proceed with the
offering.

     If at least 50 Units ($50,000) are not subscribed prior to the termination
of the offering, the Partnership will not commence business. The General Partner
may, on its own accord, purchase Units and, in such capacity, will enjoy the
same rights and obligations as other Limited Partners, except the General
Partner will have unlimited liability. The General Partner may, in its
discretion, purchase Units sufficient to reach the minimum Aggregate
Subscription ($50,000). Because the General Partner or its affiliates might
benefit from the successful completion of this offering (see "PARTICIPATION IN
COSTS, AND REVENUES" and "COMPENSATION"), investors should not expect that sales
of the minimum Aggregate Subscription indicate that such sales have been made to
investors that have no financial or other interest in the offering or that have
otherwise exercised independent investment discretion. Further, the sale of the
minimum Aggregate Subscription is not designed as a protection to investors to
indicate that their interest is shared by other unaffiliated investors and no
investor should place any reliance on the sale of the minimum Aggregate
Subscription as an indication of the merits of this offering. Units acquired by
the General Partner will be for investment purposes only without a present
intent for resale and there is no limit on the number of Units that may be
acquired by it.

Subscription Rights

     Units are offered only to persons who are salaried employees of UNIT or its
subsidiaries at the date of formation of the Partnership and whose annual base
salaries for 2003 (excluding bonuses) have been set at $22,680 or more and to
directors of UNIT. Only employees and directors who are U.S. citizens are
eligible to participate in the offering. In addition, employees and directors
must be able to bear the economic risks of an investment in the Partnership and
must have sufficient investment experience and expertise to evaluate the risks
and merits of such an investment. See "PLAN OF DISTRIBUTION -- Suitability of
Investors."

     Eligible employees and directors are restricted as to the number of Units
they may purchase in the offering. The maximum number of Units which can be
acquired by any employee is that number of whole Units which can be purchased
with an amount which does not exceed one-half of the employee's base salary for
2003. Each director of UNIT may subscribe for a maximum of 200 Units (maximum
investment of $200,000). At December 4, 2002 there were approximately 262 people
eligible to purchase Units.

                                       17

<PAGE>
     Eligible employees and directors may acquire Units through a corporation or
other entity in which all of the beneficial interests are owned by them or
permitted assignees (see "SUMMARY OF THE LIMITED PARTNERSHIP AGREEMENT --
Transferability of Interests"); provided that such employees or Directors will
be jointly and severally liable with such entity for payment of the Capital
Subscription.

     If all eligible employees and directors subscribed for the maximum number
of Units, the Units would be oversubscribed. In that event, Units would be
allocated among the respective subscribers in the proportion that each
subscription amount bears to total subscriptions obtained.

     No employee is obligated to purchase Units in order to remain in the employ
of UNIT, and the purchase of Units by any employee will not obligate UNIT to
continue the employment of such employee. Units may be subscribed for by the
spouse or a trust for the minor children of eligible employees and directors.

Payment for Units; Delinquent Installment

     The Capital Subscriptions of the Limited Partners will be payable either
(i) in four equal Installments, the first of such Installments being due on
March 15, 2003 and the remaining three of such Installments being due on June
15, September 15, and December 15, 2003, respectively, or (ii) by employees so
electing in the space provided on the Subscription Agreement, through equal
deductions from 2003 salary paid to the employee by the General Partner, UNIT or
its subsidiaries commencing immediately after formation of the Partnership. If
an employee or director who has subscribed for Units (either directly or through
a corporation or other entity) ceases to be employed by or serve as a director
of the General Partner, UNIT or any of its subsidiaries for any reason other
than death, disability or Normal Retirement prior to the time the full amount of
all Installments not waived by the General Partner as described below are due,
then the due date for any such unpaid Installments shall be accelerated so that
the full amount of his or her unpaid Capital Subscription will be due and
payable on the effective date of such termination.

     Each Installment will be a legally binding obligation of the Limited
Partner and any past due amounts will bear interest at an annual rate equal to
two percentage points in excess of the prime rate of interest of Bank of
Oklahoma, N.A., Tulsa, Oklahoma; provided, however, that if the General Partner
determines that the total Aggregate Subscription is not required to fund the
Partnership's business and operations, then the General Partner may, at its sole
option, elect to release the Limited Partners from their obligation to pay one
or more Installments. If the General Partner elects to waive the payment of an
Installment, it will notify all Limited Partners promptly in writing of its
decision and will, to the extent required, amend the certificate of limited
partnership and any other relevant Partnership documents accordingly. It is
currently anticipated that the total Aggregate Subscription will be required,
however, to fund the Partnership's business and operations.

     In the event a Limited Partner fails to pay any Installment when due and
the General Partner has not released the Limited Partners from their obligation
to pay such Installment, then the General Partner, at its sole option and
discretion, may elect to purchase the Units of such defaulting Limited Partner
at a price equal to the total amount of the Capital Contributions actually paid
into the Partnership by such defaulting Limited Partner, less the amount of any
Partnership distributions that may have been received by him or her. Such option
may be exercised by the General Partner by written notice to the Limited Partner
at any time after the date that the unpaid Installment was due and will be
deemed exercised when the amount of the purchase price is first tendered to the
defaulting Limited Partner. The General Partner may, in its discretion, accept
payments of delinquent Installments not waived by it but will not be required to
do so.

                                       18

<PAGE>
     In the event that the General Partner elects to purchase the Units of a
defaulting Limited Partner, it must pay into the Partnership the amount of the
delinquent Installment (excluding any interest that may have accrued thereon)
and pay each additional Installment, if any, payable with respect to such Units
as it becomes due. By virtue of such purchase, the General Partner will be
allocated all Partnership Revenues, be charged with all Partnership costs and
expenses attributable to such Units and will enjoy the same rights and
obligations as other Limited Partners, except the General Partner will have
unlimited liability.

Right of Presentment

     After December 31, 2004, and annually thereafter, Limited Partners will
have the right to present their Units to the General Partner for purchase. The
General Partner will not be obligated to purchase more than 20% of the then
outstanding Units in any one calendar year. The purchase price to be paid for
the Units of any Limited Partner presenting them for purchase will be based on
the net asset value of the Partnership which shall be equal to:

         (1)      The value of the proved reserves attributable to the
                  Partnership Properties, determined as set forth below; plus

         (2)      The estimated salvage value of tangible equipment installed on
                  Partnership Wells less the costs of plugging and abandoning
                  the wells, both discounted at the rate utilized to determine
                  the value of the Partnership's reserves as set forth below;
                  plus

         (3)      The lower of cost or fair market value of all Partnership
                  Properties to which proved reserves have not been attributed
                  but which have not been condemned, as determined by an
                  independent petroleum engineering firm or the General Partner,
                  as the case may be; plus

         (4)      Cash on hand; plus

         (5)      Prepaid expenses and accounts receivable (less a reasonable
                  reserve for doubtful accounts); plus

         (6)      The estimated market value of all other Partnership assets
                  not included in (1) through (5) above, determined by the
                  General Partner; MINUS

         (7)      An amount equal to all debts, obligations and other
                  liabilities of the Partnership.

The price to be paid for each Limited Partner's interest of the net asset value
will be his or her proportionate share of such net asset value less 75% of the
amount of any distributions received by him or her which are attributable to the
sales of the Partnership production since the date as of which the Partnership's
proved reserves are estimated.

         The value of the proved reserves attributable to Partnership Properties
will be determined as follows:

         (i)      First, the future net revenues from the production and sale of
                  the proved reserves will be estimated as of the end of the
                  calendar year in which presentment is made based on an
                  independent engineering firm's report and its determinations
                  of the prices to be used as well as the escalations, if any,
                  of such prices and cost or, if no report was made, as
                  determined by the General Partner;

                                       19

<PAGE>
         (ii)     Next, the future net revenues from the production and sale of
                  proved reserves as determined above will be discounted at an
                  annual rate which is one percentage point higher than the
                  prime rate of interest being charged by the Bank of Oklahoma,
                  N.A., Tulsa, Oklahoma, or any successor bank, as of the date
                  such reserves are estimated; and

         (iii)    Finally, the total discounted value of the future net revenues
                  from the production and sale of proved reserves will be
                  reduced by an additional 25% to take into account the risks
                  and uncertainties associated with the production and sale of
                  the reserves and other unforeseen uncertainties.

     A Limited Partner who elects to have his or her Units purchased by the
General Partner should be aware that estimates of future net recoverable
reserves of oil and gas and estimates of future net revenues to be received
therefrom are based on a great many factors, some of which, particularly future
prices of production, are usually variable and uncertain and are always
determined by predictions of future events. Accordingly, it is common for the
actual production and revenues received to vary from earlier estimates.
Estimates made in the first few years of production from a property will be
based on relatively little production history and will not be as reliable as
later estimates based on longer production history. As a result of all the
foregoing, reserve estimates and estimates of future net revenues from
production may vary from year to year.

     This right of presentment may be exercised by written notice from a Limited
Partner to the General Partner. The sale will be effective as of the close of
business on the last day of the calendar year in which such notice is given or,
at the General Partner's election, at 7:00 A.M. on the following day. Within 120
days after the end of the calendar year, the General Partner will furnish each
Limited Partner who gave such notice during the calendar year a statement
showing the cash purchase price which would be paid for the Limited Partner's
interest as of December 31 of the preceding year, which statement will include a
summary of estimated reserves and future net revenues and sufficient material to
reveal how the purchase price was determined. The Limited Partner must, within
30 days after receipt of such statement, reaffirm his or her election to sell to
the General Partner.

     As noted above, the General Partner will not be obligated to purchase in
any one calendar year more than 20% of the Units in the Partnership then
outstanding. Moreover, the General Partner will not be obligated to purchase any
Units pursuant to such right if such purchase, when added to the total of all
other sales, exchanges, transfers or assignments of Units within the preceding
12 months, would result in the Partnership being considered to have terminated
within the meaning of Section 708 of the Code or would cause the Partnership to
lose its status as a partnership for federal income tax purposes. If more than
the number of Units which may be purchased are tendered in any one year, the
Limited Partners from whom the Units are to be purchased will be determined by
lot. Any Units presented but not purchased with respect to one year will have
priority for such purchase the following year.

     The General Partner does not intend to establish a cash reserve to fund its
obligation to purchase Units, but will use funds provided by its operations or
borrowed funds (if available), using its assets (including such Units purchased
or to be purchased from Limited Partners) as collateral to fund such
obligations. However, there is no assurance that the General Partner will have
sufficient financial resources to discharge its obligations.

Rollup or Consolidation of Partnership

     The Agreement provides that two years or more after the Partnership has
completed substantially all of its property acquisition, drilling and
development operations, the General Partner may, without the vote, consent or
approval of the Limited Partners, cause all or substantially all of the oil and

                                       20

<PAGE>
gas properties and other assets of the Partnership to be sold, assigned or
transferred to, or the Partnership merged or consolidated with, another
partnership or a corporation, trust or other entity for the purpose of combining
the assets of two or more of the oil and gas partnerships formed for investment
or participation by employees, directors and/or consultants of UNIT or any of
its subsidiaries; provided, however, that the valuation of the oil and gas
properties and other assets of all such participating partnerships for purposes
of such transfer or combination shall be made on a consistent basis and in a
manner which the General Partner and UNIT believe is fair and equitable to the
Limited Partners. As a consequence of any such transfer or combination, the
Partnership shall be dissolved and terminated and the Limited Partners shall
receive partnership interests, stock or other equity interests in the transferee
or resulting entity. Any such action will cause the Limited Partners'
attributable interest in the Partnership Properties to be diluted but it will
also provide them with attributable interests in the properties and other assets
of the other partnerships participating in the consolidation. It also may reduce
somewhat the amount of their attributable shares of the direct and indirect
costs of administering the Partnership. See "RISK FACTORS -- Investment Risks -
Roll-Up or Consolidation of Partnership."


                              ADDITIONAL FINANCING

     The General Partner will use its best efforts, consistent with Partnership
objectives, to acquire Productive properties and complete the Partnership's
drilling and development operations before the Aggregate Subscription has been
fully expended or committed. However, funds in addition to the Aggregate
Subscription may be required to pay costs and expenses which are chargeable to
the Limited Partners. In those instances described below, the General Partner
may call for Additional Assessments or may apply Partnership Revenue allocable
to the Limited Partners in payment and satisfaction of such costs or the General
Partner may, but shall not be required to, fund the deficiency with Partnership
borrowings to be repaid with Partnership Revenue.

Additional Assessments

     When the Aggregate Subscription has been fully expended or committed, the
General Partner may make one or more calls for any portion or all of the maximum
Additional Assessments of $100 per Unit. However, no Additional Assessments may
be required before the General Partner's Minimum Capital Contribution has been
fully expended. Such assessments may be used to pay the Limited Partners' share
of the Drilling Costs, Special Production and Marketing Costs or Leasehold
Acquisition Costs of Productive properties which are chargeable to the Limited
Partners. The amount of the Additional Assessment so called shall be due and
payable on or before such date as the General Partner may set in such call,
which in no event will be earlier than thirty (30) days after the date of
mailing of the call. The notice of the call for Additional Assessments will
specify the amount of the assessment being required, the intended use of such
funds, the date on which the contributions are payable and describe the
consequences of nonpayment. Although the Limited Partners who do not respond
will participate in production, if any, obtained from operations conducted with
the proceeds from the aggregate Additional Assessments paid into the
Partnership, the amount of the unpaid Additional Assessment shall bear interest
at the annual rate equal to two (2) percentage points in excess of the prime
rate of interest of Bank of Oklahoma, N.A., Tulsa, Oklahoma, or successor bank,
as announced and in effect from time to time, until paid. The Partnership will
have a lien on the defaulting Limited Partner's interest in the Partnership and
the General Partner may retain Partnership Revenue otherwise available for
distribution to the defaulting Limited Partner until an amount equal to the
unpaid Additional Assessment and interest is received. Furthermore, the General
Partner may satisfy such lien by proceeding with legal action to enforce the
lien and the defaulting Limited Partner shall pay all expenses of collection,
including interest, court costs and a reasonable attorney's fee.

                                       21

<PAGE>
Prior Programs

     In the prior employee programs conducted by UNIT or the General Partner in
each of the years 1984 through 2002, Additional Assessments could be called for
as provided herein. At September 30, 2002, there had been no calls for
Additional Assessments in such programs. There can be no assurance, however,
that Additional Assessments will not be required to pay Partnership costs.

Partnership Borrowings

     At any time after the General Partner's Minimum Capital Contribution has
been fully expended, the General Partner may cause the Partnership to borrow
funds for the purpose of paying Drilling Costs, Special Production and Marketing
Costs or Leasehold Acquisition Costs of Productive properties, which borrowings
may be secured by interests in the Partnership Properties and will be repaid,
including interest accruing thereon, out of Partnership Revenue. The General
Partner may, but is not required to, advance funds to the Partnership for the
same purposes for which Partnership borrowings are authorized. With respect to
any such advances, the General Partner will receive interest in an amount equal
to the lesser of the interest which would be charged to the Partnership by
unrelated banks on comparable loans for the same purpose or the General
Partner's interest cost with respect to such loan, where it borrows the same. No
financing charges will be levied by the General Partner in connection with any
such loan. If Partnership borrowings secured by interests in the Partnership
Wells and repayable out of Partnership Revenue cannot be arranged on a basis
which, in the opinion of the General Partner, is fair and reasonable, and the
entire sum required to pay such costs is not available from Partnership Revenue,
the General Partner may dispose of some or all of the Partnership Properties
upon which such operations were to be conducted by sale, farm-out or
abandonment.

     If the Partnership requires funds to conduct Partnership operations during
the period between any of the Installments due from the Limited Partners, then,
notwithstanding the foregoing, the General Partner shall advance funds to the
Partnership in an amount equal to the funds then required to conduct such
operations but in no event more than the total amount of the Aggregate
Subscription remaining unpaid. With respect to any such advances, the General
Partner shall receive no interest thereon and no financing charges will be
levied by the General Partner in connection therewith. The General Partner shall
be repaid out of the Installments thereafter paid into the capital of the
Partnership when due.

     The Partnership may attempt to finance any expenses in excess of the
Partners' Capital Subscriptions by the foregoing means and any other means which
the General Partner deems in the best interests of the Partnership, but the
Partnership's inability to meet such costs could result in the deferral of
drilling operations or in the inability to participate in future drilling or in
non-consent penalties pursuant to which co-owners of particular working
interests recover several times the amount which would have been funded by the
Partnership in accordance with its ownership interest before the Partnership
would participate in revenues.

     The use of Partnership Revenue allocable to the Limited Partners to pay
Partnership costs and expenses and to repay any Partnership borrowings will mean
that such revenue will not be available for distribution to the Limited
Partners. Nonetheless, the Limited Partners may incur income tax liability by
virtue of that revenue and, thus, may not receive distributions from the
Partnership in amounts necessary to pay such income tax. However, the use of
such revenue to pay Partnership costs and expenses may generate additional
deductions for the Limited Partners.

                                       22

<PAGE>
                              PLAN OF DISTRIBUTION

     Units will be offered privately only to select persons who can demonstrate
to the General Partner that they have both the economic means and investment
expertise to qualify as suitable investors. The Units will be offered and sold
by the officers and directors of UPC or UNIT.

Suitability of Investors

     Subscriptions should be made only by appropriate persons who can reasonably
benefit from an investment in the Partnership. In this regard, a subscription
will generally be accepted only from a person who can represent that such person
has (or in the case of a husband and wife, acting as joint tenants, tenants in
common or tenants in the entirety, that they have) a net worth, including home,
furnishings and automobiles, of at least five times the amount of his or her
Capital Subscription, and estimates that such person will have during the
current year adjusted gross income in an amount which will enable him or her to
bear the economic risks of his or her investment in the Partnership. Such person
must also demonstrate that he or she has sufficient investment experience and
expertise to evaluate the risks and merits of an investment in the Partnership.

     Participation in the Partnership is intended only for those persons willing
to assume the risk of a speculative, illiquid, long-term investment. Entitlement
to and maintenance of the exemptions from registration provided by Sections 3(b)
and/or 4(2) of the Securities Act of 1933, as amended, require the imposition of
certain limitations on the persons to whom offers may be made, and from whom
subscriptions may be accepted. Therefore, this offering is limited to persons
who, by virtue of investment acumen or financial resources, satisfy the General
Partner that they meet suitability standards consistent with the maintenance and
preservation of the exemptions provided by Sections 3(b) and/or 4(2) and by the
applicable rules and regulations of the Securities and Exchange Commission, as
well as those contained herein and in the Subscription Agreement. Persons
offering interests shall sufficiently inquire of a prospective investor to be
reasonably assured that such investor meets such acceptable standards.
Suitability standards may also be imposed by the regulatory authorities of the
various states in which interests may be offered.








                                       23
<PAGE>



                        RELATIONSHIP OF THE PARTNERSHIP,
                       THE GENERAL PARTNER AND AFFILIATES

         The following diagram depicts the primary relationships among the
Partnership, the General Partner and certain of its affiliates.

                               UNIT CORPORATION
                                       |
                                       |
                                       |
                ---------------------------------------------
                |                                           |
                |                                           |
                |  General Partner                          |
                |  ---------------                          |
        ----------------------------              ---------------------------
        |  Unit Petroleum Company  |              |  Unit Drilling Company  |
        ----------------------------              ---------------------------
                |
                |
        ----------------------------
        |  Unit 2003 Employee Oil  |
        |     & Gas Limited        |
        |       Partnership        |
        ----------------------------
                |
                |
                |  Limited Partners
                |  ----------------
        ----------------------------
        |    Eligible Employees    |
        |          and             |
        |       Directors          |
        ----------------------------


                               PROPOSED ACTIVITIES

General

     The Partnership will, with certain limited exceptions, participate in all
of UNIT's or UPC's oil and gas activities commenced during 2003. The Partnership
will acquire 2 1/2% of essentially all of UNIT's interest in such activities.
The activities will include (i) participating as a joint working interest owner
with UNIT or UPC in any producing leases acquired and in any wells commenced by
UNIT or UPC other than as a general partner in a drilling or income program
during 2003 and (ii) serving as a co-general partner in any drilling or income
programs, or both, formed by the General Partner or UNIT during 2003.

     Acquisition of Properties and Drilling Operations. The Partnership will
participate, to the extent of 2 1/2% of UPC or UNIT's final interest in each
well, as a fractional working interest holder in any producing leases acquired
and in any drilling operations conducted by UPC or UNIT for its own account
which are acquired or commenced, respectively, from January 1, 2003, or the time
of the formation of the Partnership if subsequent to January 1, 2003, until
December 31, 2003, except for wells, if any:

         (i)      drilled outside the 48 contiguous United States;

         (ii)     drilled as part of secondary or tertiary recovery operations
                  which were in existence prior to formation of the Partnership;

                                       24

<PAGE>
         (iii)    drilled by third parties under farm-out or similar
                  arrangements with UNIT or the General Partner or whereby UNIT
                  or the General Partner may be entitled to an overriding
                  royalty, reversionary or other similar interest in the
                  production from such wells but is not obligated to pay any of
                  the Drilling Costs thereof;

         (iv)     acquired by UNIT or the General Partner through the
                  acquisition by UNIT or the General Partner of, or merger of
                  UNIT or the General Partner with, other companies (However,
                  this exception may, at the discretion of Unit or the General
                  Partner, be waived); or

         (v)      with respect to which the General Partner does not believe
                  that the potential economic return therefrom justifies the
                  costs of participation by the Partnership.

Instances referred to in (v) could occur when UNIT or one of its subsidiaries
agrees to participate in the ownership of a prospect for its own account in
order to obtain the contract to drill the well thereon. There may be situations
where the potential economic return of the well alone would not be sufficient to
warrant participation by UNIT but when considered in light of the revenues
expected to be realized as a result of the drilling contract, such participation
is desirable from UNIT's standpoint. However, in such a situation, the
Partnership would not be entitled to any of the revenues generated by the
drilling contract so its participation in the well would not be desirable.

     For these purposes, the drilling of a well will be deemed to have commenced
on the "spud date," i.e., the date that the drilling rig is set up and actual
drilling operations are commenced. Any clearing or other site preparation
operations will not be considered part of the drilling operations for these
purposes.

     Participation in Drilling or Income Programs. Except for certain limited
exceptions it is anticipated that the Partnership will participate with UPC or
UNIT as a co-general partner of any drilling or income programs, or both, formed
by UPC or UNIT and its affiliates during 2003. The Partnership will be charged
with 2 1/2% of the total costs and expenses charged to the general partners and
allocated 2 1/2% of the revenues allocable to the general partners in any such
program and UPC or UNIT will be charged with the remaining 97 1/2% of the
general partners' share of costs and expenses and allocated the remaining 97
1/2% of the general partners' share of program revenues.

     UNIT or its affiliates formed drilling programs for outside investors from
1979 through 1984. In 1987, the Unit 1986 Energy Income Limited Partnership (the
"1986 Energy Program") was formed primarily to acquire interests in producing
oil and gas properties. See "PRIOR ACTIVITIES." All of the programs were formed
as limited partnerships and interests in all of the programs other than the Unit
1979 Oil and Gas Program and the 1986 Energy Program were offered in registered
public offerings. The 1979 Program and 1986 Energy Program were offered
privately to a limited number of sophisticated investors.

     No drilling or income programs for third party investors were formed in
2002. Although it does not currently contemplate doing so, UNIT may form such
drilling or income programs during 2003. If such a program is formed, there
would be only one or two such programs and they probably would be privately
offered. The precise revenue and cost sharing format of any such programs has
not been determined.

     The cost and revenue sharing provisions of virtually all drilling programs
offered to third parties generally require the limited partners or investors to
bear a somewhat higher percentage of the program's drilling and development
costs than the percentage of program revenues to which they are entitled.
Likewise, the general partners will normally receive a higher percentage of
revenues than the percentage of drilling and development costs which they are
required to pay. The difference in these percentages is

                                       25
<PAGE>
often referred to as the general partners' "promote." Any drilling program
which UNIT or UPC may form in 2003 for outside investors would likely have some
amount of "promote" for the general partner(s).

     Any income program may use the same or a similar format as that used for
the 1986 Partnership. In the 1986 Partnership, virtually all partnership costs
and expenses other than property acquisition costs are allocated to the partners
in the same percentages that partnership revenue is being shared at the time
such expenses are incurred, with property acquisition costs and certain other
expenses being charged 85% to the accounts of the limited partners and 15% to
the accounts of the general partners. Partnership revenue in the 1986
Partnership is allocated 85% to the limited partners' accounts and 15% to the
general partners' accounts until program payout (as defined in the agreement of
limited partnership for the 1986 Partnership). After program payout, the
percentages of partnership revenue allocable to the respective accounts of the
partners depend upon the length of the period during which program payout occurs
and range from 60% to the limited partners' accounts and 40% to the general
partners' accounts to 85% to the limited partners' accounts and 15% to the
general partners' accounts.

     As co-general partners of any drilling or income programs that may be
formed by UNIT and/or UPC during 2003 and participated in by the Partnership,
UNIT and/or UPC and the Partnership will share the costs, expenses and revenues
allocable to the general partners on a proportionate basis, 97 1/2% for the
account of UNIT and/or UPC and 2 1/2% for the account of the Partnership. The
Partnership will not receive any portion of any management fees payable to the
general partners nor any fees or payments for supervisory services which UNIT or
UPC may render to such programs as operator of program wells or other fees and
payments which UNIT or UPC may be entitled to receive from such programs for
services rendered to them or goods, materials, equipment or other property sold
to them.

     Extent and Nature of Operations. Although the General Partner maintains a
general inventory of prospects, it cannot predict with certainty on which of
those prospects wells will be started during 2003 nor can it predict what
producing properties, if any, will be acquired by it during 2003. Further, since
the General Partner anticipates that the Partnership will acquire a small
interest (either directly or through any drilling or income programs of which it
or UNIT serves as a general partner) in approximately 125 to 150 wells (however,
the exact number of wells may vary greatly depending on the actual activity
undertaken), it would be impractical to describe in any detail all of the
properties in which the Partnership can be expected to acquire some interest.

     The Partnership's drilling and development operations are expected to
include both Exploratory Wells and comparatively lower-risk Development Wells.
Exploratory Wells include both the high-risk "wildcat" wells which are located
in areas substantially removed from existing production and "controlled"
Exploratory Wells which are located in areas where production has been
established and where objective horizons have produced from similar geological
features in the vicinity. Based on UNIT's historical profile of its drilling
operations, it is presently anticipated that the portion of the Aggregate
Subscription expended for Partnership drilling operations (see "APPLICATION OF
PROCEEDS") will be spent approximately 7% on Exploratory Wells and 93% on
Development Wells. However, these percentages may vary significantly.

     Certain of the Partnership's Development Wells may be drilled on prospects
on which initial drilling operations were conducted by the General Partner or
UNIT prior to the formation of the Partnership. Further, certain of the
Partnership Wells will be drilled on prospects on which the General Partner,
UNIT or possibly future employee programs may conduct additional drilling
operations in years subsequent to 2003. In either instance, the Partnership will
have an interest only in those wells begun in 2003 and will have no rights in
production from wells commenced in years other than 2003 even though

                                       26

<PAGE>

such other wells may be located on prospects or spacing units on which
Partnership Wells have been drilled. Furthermore, it is possible that in years
subsequent to 2003, UNIT, UPC or possibly future employee programs will acquire
additional interests in wells participated in by the Partnership. In such event
the Partnership will generally not be entitled to share in the acquisition of
such additional interests. With respect to the acquisition of producing
properties, UNIT will endeavor to diversify its investments by acquiring
properties located in differing geographic locations and by balancing its
investments between properties having high rates of production in early years
and properties with more consistent production over a longer term. See
"CONFLICTS OF INTERESTS -- Acquisition of Properties and Drilling Operations."

Partnership Objectives

     The Partnership is being formed to provide eligible employees and directors
the opportunity to participate in the oil and gas exploration and producing
property acquisition activities of UNIT during 2003. UNIT hopes that
participation in the Partnership will provide the participants with greater
proprietary interests in its operations and the potential for realizing a more
direct benefit in the event these operations prove to be profitable. The
Partnership has been structured to achieve the objective of providing the
Limited Partners with essentially the same economic returns that UNIT realizes
from the wells drilled or acquired during 2003.

Areas of Interest

     The Agreement authorizes the Partnership to engage in oil and gas
exploration, drilling and development operations and to acquire producing oil
and gas properties anywhere in the United States, but the areas presently under
consideration are located in the states of Oklahoma, Texas, Louisiana, Kansas,
Arkansas, Colorado, Montana, North Dakota and Wyoming. It is possible that the
Partnership may drill in inland waterways, riverbeds, bayous or marshes but no
drilling in the open seas will be attempted. Plans to conduct drilling and
development operations or to acquire producing properties in certain of these
states may be abandoned if attractive prospects cannot be obtained upon
satisfactory terms or if the Partnership is not fully subscribed.

Transfer of Properties

     In the case of wells drilled or producing properties acquired by the
Partnership and UPC or UNIT for their own accounts and not through another
drilling or income program, the Partnership will acquire from UPC or UNIT a
portion of the fractional undivided working interest in the properties or
portions thereof comprising the spacing unit on which a proposed Partnership
Well is to be drilled or on which a producing Partnership Well is located, and
UPC or UNIT will retain for its own account all or a portion of the remainder of
such working interest. Such working interests will be sold to the Partnership
for an amount equal to the Leasehold Acquisition Costs attributable to the
interest being acquired. Neither UNIT nor its affiliates will retain any
overrides or other burdens on the working interests conveyed to the Partnership,
and the respective working interests of UPC or UNIT and the Partnership in a
property will bear their proportionate shares of costs and revenues.

     The Partnership's direct interest in a property will only encompass the
area included within the spacing unit on which a Partnership Well is to be
drilled or on which a producing Partnership Well is located, and, in the case of
a Partnership Well to be drilled, it will acquire that interest only when the
drilling of the well is ready to commence. If the size of a spacing unit is ever
reduced, or any subsequent well in which the Partnership has no interest is
drilled thereon, the Partnership will have no interest in any additional wells
drilled on properties which were part of the original spacing unit unless such
additional wells are commenced during 2003. If additional interests in
Partnership Wells are

                                       27

<PAGE>
acquired in years subsequent to 2003 the Partnership will generally not be
entitled to participate or share in the acquisition of such additional
interests. In addition, if the Partnership Well drilled on a spacing unit is dry
or abandoned, the Partnership will not have an interest in any subsequent or
additional well drilled on the spacing unit unless it is commenced during 2003.
The Partnership will never own any significant amounts of undeveloped properties
or have an occasion to sell or farm out any undeveloped Partnership Properties.

     Transfers of properties to any drilling or income programs of which the
Partnership serves as a general partner will be governed by the provisions of
the agreement of limited partnership in effect with respect thereto. If any such
program is to be offered publicly, those provisions will have to be consistent
with the provisions contained in the Guidelines for the Registration of Oil and
Gas Programs adopted by the North American Securities Administrators
Association, Inc.

Record Title to Partnership Properties

     Record title to the Partnership Properties will be held by the General
Partner. However, the General Partner will hold the Partnership Properties as a
nominee for the Partnership under a form of nominee agreement to be entered into
between the General Partner and the Partnership. Under the form of nominee
agreement, the General Partner will disclaim any beneficial interest in the
Partnership Properties held as nominee for the Partnership.

Marketing of Reserves

     The General Partner has the authority to market the oil and gas production
of the Partnership. In this connection, it may execute on behalf of the
Partnership division orders, contracts for the marketing or sale of oil, gas or
other hydrocarbons or other marketing agreements. Sales of the oil and gas
production of the Partnership will be to independent third parties or to the
General Partner or its affiliates (see "CONFLICTS OF INTEREST").

Conduct of Operations

     The General Partner will have full, exclusive and complete discretion and
control over the management, business and affairs of the Partnership and will
make all decisions affecting the Partnership Properties. To the extent that
Partnership funds are reasonably available, the General Partner will cause the
Partnership to (1) test and investigate the Partnership Properties by
appropriate geological and geophysical means, (2) conduct drilling and
development operations on such Partnership Properties as it deems appropriate in
view of such testing and investigation, (3) attempt completion of wells so
drilled if in its opinion conditions warrant the attempt and (4) properly equip
and complete productive Partnership Wells. The General Partner will also cause
the Partnership's productive wells to be operated in accordance with sound and
economical oil and gas recovery practices.

     The General Partner will operate certain drilling and productive wells on
behalf of the Partnership in accordance with the terms of the Agreement (see
"COMPENSATION"). In those cases, execution of separate operating agreements will
not be necessary unless third party owners are involved, e.g., fractional
undivided interest Partnership Properties and Partnership Properties that are
pooled or unitized with other properties owned by third parties. In such cases,
and in all cases where Partnership Properties are operated by third parties, the
General Partner will, where appropriate, make or cause to be made and enter into
operating agreements, pooling agreements, unitization agreements, etc., in the
form in general use in the area where the affected property is located. The
General Partner is also authorized to execute production sales contracts on
behalf of the Partnership.

                                       28
<PAGE>
                             APPLICATION OF PROCEEDS

     The Aggregate Subscription will be used to pay costs and expenses incurred
in the operations of the Partnership which are chargeable to the Limited
Partners. The organizational costs of the Partnership and the offering costs of
the Units will be paid by the General Partner.

     If all 600 Units offered hereby are sold, the proceeds to the Partnership
would be $600,000. If the minimum 50 Units are sold, the proceeds to the
Partnership would be $50,000. The General Partner estimates that the gross
proceeds will be expended as follows:



                                   $600,000 Program      $50,000 Program
                                  ------------------   ------------------
                                  Percent    Amount    Percent    Amount
                                  -------   --------   -------   --------
Leasehold Acquisition Costs
  of Properties to Be Drilled...     5%     $ 30,000      5%      $ 2,500
Drilling Costs of Exploratory
  Wells.........................     5%       30,000      5%        2,500
Drilling Costs of Develop-
  ment Wells....................    70%      420,000     70%       35,000
Leasehold Acquisition Costs
  of Productive Properties......    20%      120,000     20%       10,000

    Total.......................   100%     $600,000    100%      $50,000

     The foregoing allocation between Drilling Costs and Leasehold Acquisition
Costs is solely an estimate and the actual percentages may vary materially from
this estimate. Funds otherwise available for drilling Exploratory Wells will be
reduced to the extent that such funds are used in conducting development
operations in which the Partnership participates.

     Until Capital Contributions are invested in the Partnership's operations,
they will be temporarily deposited, with or without interest, in one or more
bank accounts of the Partnership or invested in short-term United States
government securities, money market funds, bank certificates of deposit or
commercial paper rated as "A1" or "P1" as the General Partner deems advisable.
Partnership funds other than Capital Contributions may be commingled with the
funds of the General Partner or UNIT.


                       PARTICIPATION IN COSTS AND REVENUES

     All costs of organizing the Partnership and offering Units therein will be
paid by the General Partner. All costs incurred in the offering and syndication
of any drilling or income program formed by UPC or UNIT and its affiliates
during 2003 in which the Partnership participates as a co-general partner will
also be paid by the General Partner. All other Partnership costs and expenses
will be charged 99% to the Limited Partners and 1% to the General Partner until
such time as the Aggregate Subscription has been fully expended. Thereafter and
until the General Partner's Minimum Capital Contribution has been fully
expended, all of such costs and expenses will be charged to the General Partner.
After the General Partner's Minimum Capital Contribution has been fully
expended, such costs and expenses will be charged to the respective accounts of
the General Partner and the Limited Partners on the basis of their respective
Percentages (see "GLOSSARY").

                                       29

<PAGE>
     All Partnership Revenues will be allocated between the General Partner and
the Limited Partners on the basis of their respective Percentages.

     The General Partner's Minimum Capital Contribution will be determined as of
December 31, 2003 and will be an amount equal to:

         (a)      all costs and expenses previously charged to the General
                  Partner as of that date, plus

         (b)      the General Partner's good faith estimate of the additional
                  amounts that it will have to contribute in order to fund the
                  Leasehold Acquisition Costs and Drilling Costs expected to be
                  incurred by the Partnership after that date.

The respective Percentages of the General Partner and the Limited Partners will
then be determined as of December 31, 2003 based on the relative contributions
of the Partners previously made and expected to be made in the future during the
remainder of the Partnership's property acquisition and drilling phases. See
"GLOSSARY -- General Partner's Minimum Capital Contribution", "General Partner's
Percentage" and " Limited Partners' Percentage." If the General Partner's
estimate of future Leasehold Acquisition Costs and Drilling Costs proves to be
lower than the actual amount of such costs and expenses, the excess amounts will
be charged to the Partners on the basis of their respective Percentages and the
Limited Partners' share will be paid out of their share of Partnership Revenues,
Additional Assessments required of them or the proceeds of Partnership
borrowings. See "ADDITIONAL FINANCING." If the General Partner's estimate of
such costs and expenses proves to be higher than the actual costs and expenses,
the General Partner will continue to bear Partnership costs and expenses that
would otherwise have been chargeable to the Limited Partners until the total
Partnership costs and expenses charged to it (including, without limitation,
offering and organizational costs, Operating Expenses, general and
administrative overhead costs and reimbursements and Special Production and
Marketing Costs as well as Leasehold Acquisition Costs and Drilling Costs) since
the formation of the Partnership equals the General Partner's Minimum Capital
Contribution. In addition to actual contributions of cash or properties, any
Partner will be deemed to have contributed amounts of Partnership Revenues
allocated to it which are used to pay its share of Partnership costs and
expenses.

     The following table presents a summary of the allocation of Partnership
costs, expenses and revenues between the General Partner and the Limited
Partners:

                                                   General          Limited
                                                   Partner          Partners
                                                   -------          --------
COSTS AND EXPENSES

..  Organizational and offering
   costs of the Partnership
   and any drilling or income
   programs in which the
   Partnership participates
   as a co-general partner....................      100%               0%

..  All other Partnership Costs and Expenses:

   .  Prior to time Limited
      Partner Capital
      Contributions are
      Entirely expended.......................        1%              99%

                                       30

<PAGE>
   .  After expenditure of
      Limited Partner Capital
      Contributions and until
      expenditure of General
      Partner's Minimum Capital
      Contribution...........................       100%               0%

      After expenditure of
      General Partner's                           General           Limited
      Minimum Capital                            Partner's         Partners'
      Contribution...........................    Percentage       Percentage

                                                  General           Limited
                                                 Partner's         Partners'
REVENUES                                         Percentage       Percentage


                                  COMPENSATION

Supervision of Operations

     It is anticipated that the General Partner will operate most, if not all,
Partnership Properties during the drilling of Partnership Wells and most, if not
all, productive Partnership Wells. For the General Partner's services performed
as operator, the Partnership will compensate the General Partner its pro rata
portion of the compensation due to the General Partner under the operating
agreements, if any, in effect with respect to such wells or, if none is in
effect for such wells, at rates no higher than those normally charged in the
same or a comparable geographic area by non-affiliated persons or companies
dealing at arm's length.

     That portion of the General Partner's general and administrative overhead
expense that is attributable to its conduct of the actual and necessary
business, affairs and operations of the Partnership will be reimbursed by the
Partnership out of Partnership Revenue. The General Partner's general and
administrative overhead expenses are determined in accordance with industry
practices. The costs and expenses to be allocated include all customary and
routine legal, accounting, geological, engineering, travel, office rent,
telephone, secretarial, salaries, data processing, word processing and other
incidental reasonable expenses necessary to the conduct of the Partnership's
business and generated by the General Partner or allocated to it by UNIT, but
will not include filing fees, commissions, professional fees, printing costs and
other expenses incurred in forming the Partnership or offering interests
therein. The amount of such costs and expenses to be reimbursed with respect to
any particular period will be determined by allocating to the Partnership that
portion of the General Partner's total general and administrative overhead
expense incurred during such period which is equal to the ratio of the
Partnership's total expenditures compared to the total expenditures by the
General Partner for its own account. The portion of such general and
administrative overhead expense reimbursement which is charged to the Limited
Partners may not exceed an amount equal to 3% of the Aggregate Subscription
during the first 12 months of the Partnership's operations, and in each
succeeding twelve-month period, the lesser of (a) 2% of the Aggregate
Subscription and (b) 10% of the total Partnership Revenue realized in such
twelve-month period. Administrative expenses incurred directly by the
Partnership, or incurred by the General Partner on behalf of the Partnership and
reimbursable to the General Partner, such as legal, accounting, auditing,
reporting, engineering, mailing and other such fees, costs and expenses are not
considered a part of the general and administrative expense reimbursed to the
General Partner and the amounts thereof will not be subject to the limitations
described in the preceding sentence.

                                       31

<PAGE>
Purchase of Equipment and Provision of Services

     UNIT, through its subsidiary Unit Drilling Company, will probably perform
significant drilling services for the Partnership. In addition, UNIT owns a 40%
interest in Superior Pipeline Company, L.L.C., an Oklahoma limited liability
company, which may build or own an interest in certain gathering systems through
which a portion of the Partnership's gas production is transported.

     These persons are in the business of supplying such equipment and services
to non-affiliated parties in the industry and any such equipment and such
services will be acquired or provided at prices or rates no higher than those
normally charged in the same or comparable geographic area by non-affiliated
persons or companies dealing at arms' length. Production purchased by any
affiliate of UNIT will be for prices which are not less than the highest posted
price (in the case of crude oil) or prevailing price (in the case of natural
gas) in the same field or area.

     UNIT or one of its affiliates may provide other goods or services to the
Partnership in which event the compensation received therefore will be subject
to the same restrictions and conditions described above and under "CONFLICTS OF
INTEREST" below.

Prior Programs

     UNIT was formed in 1986 in connection with a major reorganization and
recapitalization whereby UNIT acquired all of the assets and liabilities of all
of the limited partnerships formed by UNIT's predecessor, Unit Drilling and
Exploration Company ("UDEC"), during the period of 1980 through 1983 in exchange
for shares of UNIT's common stock and UDEC was merged with a wholly owned
subsidiary of UNIT whereby UDEC was the surviving corporation and thereby became
a wholly owned subsidiary of UNIT. UNIT has conducted one oil and gas program
since the date of its formation, the 1986 Energy Program. The 1986 Energy
Program was formed on June 12, 1987 with total subscriptions of one million
dollars. The Unit 1986 Employee Oil and Gas Limited Partnership is a co-general
partner with Unit Petroleum Company of the 1986 Energy Program. Direct
compensation charged to or paid by the partnerships and earned by the General
Partners for their services in connection with these programs through September
30, 2002, is set forth below.










                                       32
<PAGE>

                                     Compensation
                                         for
                                     Supervision    Reimbursement
                                          and         of General
                                     Operation of    Administra-       Fees
                                      Productive        tive        Received as
                                          and       and Overhead    a Drilling
                       Management       Drilling     Expense(2)     Contractor
Program                   Fee(1)      Wells(2)(3)      (3)(4)          (2)
-------               -------------   -----------    -----------    ----------

1979................       150,000     2,723,146      2,495,263     1,835,762
1980................       200,000       261,456      1,345,158     1,810,310
1981................  1,250,000(5)       329,695      1,892,568     4,047,260
1981-II.............       450,000       158,406      1,607,706     1,629,201
1982-A..............       634,200       521,910      1,688,024     4,110,107
1982-B..............       316,650       331,594      1,224,023     4,945,437
1983-A..............        50,600       151,289        698,597       695,255
1984................             -       287,414        914,271       829,503
1984 Employee(*)....             -         3,924          5,000        13,452
1985 Employee(*)....             -        10,316              -        54,892
1986 Energy
Income Fund(**).....             -       314,750      1,119,372        64,945
1986 Employee(*)....             -        23,505              -        59,446
1987 Employee(*)....             -        50,688              -        97,079
1988 Employee(*)....             -        93,854              -       112,861
1989 Employee(*)....             -        54,536              -       165,436
1990 Employee(*)....             -        28,884              -       144,722
1991 Employee.......             -       557,299              -       144,993
1992 Employee.......             -       155,039              -        14,934
1993 Employee.......             -        83,269              -        68,504
Consolidated
Program(*)..........             -       169,465              -             -
1994 Employee.......             -       117,902              -        41,807
1995 Employee.......             -        70,000              -        35,903
1996 Employee.......             -        81,435              -       112,911
1997 Employee.......             -        71,359              -       170,174
1998 Employee.......             -        53,953              -       161,259
1999 Employee.......             -        88,323              -       186,408
2000 Employee.......             -        41,223              -       600,775
2001 Employee.......             -         8,164              -       363,567
2002 Employee.......             -           959              -       138,887
---------------
(*) Effective December 31, 1993, pursuant to an Agreement and Plan of Merger,
this employee partnership was merged with and into the Unit Consolidated
Employee Oil and Gas Limited Partnership (the "Consolidated Program"), with the
latter being the surviving limited partnership. See Prior Activities.

(**) Formed primarily for purposes of acquiring producing oil and gas
properties.

         (1) Paid to both UDEC and a prior Key Employee Exploration Fund as
general partners. No management fee was payable to UDEC or any of its affiliates
by any of the 1984 - 2002 Employee Programs and no management fee is payable by
the Partnership to UNIT or any of its affiliates.

         (2) Paid only to UDEC.

         (3) In the case of compensation for supervision and operation of
productive wells and reimbursement of UNIT's general and administrative overhead
expense, the general partners generally

                                       33
<PAGE>

were charged with and paid a percentage of such amounts equal to the percentage
of partnership revenues being allocated to them.

         (4) Although the partnership agreement for each of the 1985 - 2002
Employee Programs provides that the General Partner is entitled to reimbursement
for the general administrative and overhead expenses attributable to each of
such programs, the General Partner has to date elected not to seek such
reimbursement. However, there can be no assurance that the General Partner will
continue to forego such reimbursement in the future.

         (5) Includes a special allocation of gross revenues totaling $500,000.


                                   MANAGEMENT

The General Partner

     UNIT was formed in 1986 in connection with a major reorganization and
recapitalization whereby UNIT acquired all of the assets and liabilities of all
of the limited partnerships formed by UNIT's predecessor, UDEC, during the
period of 1980 through 1983 in exchange for shares of UNIT's common stock and
UDEC was merged with a wholly owned subsidiary of UNIT whereby UDEC was the
surviving corporation and thereby became a wholly owned subsidiary of UNIT. UPC
was incorporated in the State of Oklahoma on February 9, 1984 as Sunshine
Development Corporation ("SDC"). On October 8, 1985 pursuant to the terms of a
Stock Purchase Agreement," UDEC purchased all of the issued and outstanding
stock of SDC whereby SDC became a wholly owned subsidiary of UDEC. On February
1, 1988, pursuant to the terms of an "Amended and Restated Certificate of
Incorporation", SDC was renamed Unit Petroleum Company.

     UPC's as well as UNIT's, principal office is at 1000 Kensington Tower I,
7130 South Lewis Avenue, Tulsa, Oklahoma 74136 and its telephone number is (918)
493-7700. UNIT through its various subsidiaries is engaged in the onshore
contract drilling of oil and gas wells and in the exploration for and production
of oil and gas. Unless the context otherwise requires, references in this
Memorandum to UNIT include its predecessor as well as all or any of its
subsidiaries.

Officers, Directors and Key Employees

     The Partnership will have no directors or officers. The directors of the
General Partner are elected annually and serve until their successors are
elected and qualified. Directors of UNIT are elected at the Annual Meeting of
Shareholders for a staggered term of three years each, or until their successors
are duly elected and qualified. The executive officers of the General Partner
are elected by and serve at the pleasure of its Board of Directors. The names,
ages and respective positions of the directors and executive officers of UNIT
are as follows:


       Name                     Age                         Position
       ----                     ---                         --------


King P. Kirchner                 75                   Chairman of the Board
                                                       and Director

John G. Nikkel                   67                   President, Chief
                                                       Executive Officer,
                                                       Chief Operating
                                                       Officer and Director


                                       34

<PAGE>
       Name                     Age                         Position
       ----                     ---                         --------

O. Earle Lamborn                 67                   Senior Vice President,
                                                       Drilling and Director

Philip M. Keeley                 61                   Senior Vice President,
                                                       Exploration and
                                                       Production

Larry D. Pinkston                48                   Vice President,
                                                       Treasurer and Chief
                                                       Financial Officer

Mark E. Schell                   45                   Secretary and General
                                                       Counsel

William B. Morgan                58                   Director

Don Cook                         77                   Director

John S. Zink                     74                   Director

John H. Williams                 84                   Director

J. Michael Adcock                53                   Director

     The names, ages and respective positions of the directors and executive
officers of UPC are as follows:

       Name                     Age                         Position
       ----                     ---                         --------

John G. Nikkel                   67                   Chairman of the Board,
                                                       President and Director

Philip M. Keeley                 61                   Vice President and
                                                       Director

Mark E. Schell                   45                   Secretary and General
                                                       Counsel

Larry Pinkston                   48                   Treasurer

     Mr. Kirchner, a co-founder of UNIT, has been the Chairman of the Board and
a director since 1963. He served as the Company's President until November 1983
and as its Chief Executive Officer until June 30, 2001. Mr. Kirchner is a
Registered Professional Engineer within the State of Oklahoma, having received
degrees in Mechanical Engineering from Oklahoma State University and in
Petroleum Engineering, with honors, from the University of Oklahoma. Following
graduation, he was employed by Lufkin Manufacturing as a development engineer
for hydraulic pumping units. Prior to co-founding Unit he served in the US Army
during the Korean War and after that as vice-president engineering and
operations for Woolaroc Oil Company.

                                       35

<PAGE>
     Mr. Nikkel joined UNIT in 1983 as its President and a director. On July 1,
2001 Mr. Nikkel was elected to the additional office of Chief Executive Officer.
From 1976 until January 1982 when he co-founded Nike Exploration Company, Mr.
Nikkel was an officer and director of Cotton Petroleum Corporation, serving as
the President of Cotton from 1979 until his departure. Prior to joining Cotton,
Mr. Nikkel was employed by Amoco Production Company for 18 years, last serving
as Division Geologist for Amoco's Denver Division. Mr. Nikkel presently serves
as President and a director of Nike Exploration Company. Mr. Nikkel received a
Bachelor of Science degree in Geology and Mathematics from Texas Christian
University.

     Mr. Lamborn has been actively involved in the oil field for over 50 years,
joining UNIT's predecessor in 1952 prior to its becoming a publicly-held
corporation. He was elected Vice President, Drilling in 1973 and to his current
position as Senior Vice President, Drilling and director in 1979.

     Mr. Keeley joined UNIT in November 1983 as Senior Vice President,
Exploration and Production. Prior to that time, Mr. Keeley co-founded (with Mr.
Nikkel) Nike Exploration Company in January 1982 and, until November 2001,
served as Executive Vice President and a director of that company. From 1977
until 1982, Mr. Keeley was employed by Cotton Petroleum Corporation, serving
first as Manager of Land and from 1979 as Vice President and a director. Before
joining Cotton, Mr. Keeley was employed for four years by Apexco, Inc. as
Manager of Land and prior thereto he was employed by Texaco, Inc. for nine
years. He received a Bachelor of Arts degree in Petroleum Land Management from
the University of Oklahoma.

     Mr. Pinkston joined UNIT in December 1981. He had served as Corporate
Budget Director and Assistant Controller prior to being appointed Controller in
February 1985. He has been Treasurer since December 1986 and was elected to the
position of Vice President and Chief Financial Officer in May 1989. In December
2002, he was elected to the additional position of Executive Vice President. He
holds a Bachelor of Science Degree in Accounting from East Central University of
Oklahoma and is a Certified Public Accountant.

     Mr. Schell joined UNIT in January 1987, as its Secretary and General
Counsel. In December 2002, he was elected to the additional position of Senior
Vice President. From 1979 until joining UNIT, Mr. Schell was Counsel, Vice
President and a member of the Board of Directors of C&S Exploration, Inc. He
received a Bachelor of Science degree in Political Science from Arizona State
University and his Juris Doctorate degree from the University of Tulsa Law
School. He is a member of the Oklahoma and American Bar Association as well as
being a member of the American Corporate Counsel Association and the American
Society of Corporate Secretaries.

     Mr. Morgan was elected a director of UNIT in February 1988. Mr. Morgan has
been Executive Vice President and General Counsel of St. John Health System,
Inc., Tulsa, Oklahoma, since March 1, 1995 and, since October 1, 1996, the
President of its principal for profit subsidiary Utica Services, Inc. Before
that, he was a Partner in the law firm of Doerner, Saunders, Daniel & Anderson,
Tulsa, Oklahoma, for over 20 years.

     Mr. Cook has served as a director of UNIT since UNIT's inception. He is a
Certified Public Accountant and was a partner in the accounting firm of Finley &
Cook, Shawnee, Oklahoma, from 1950 until 1987, when he retired.

     Mr. Zink was elected a director of UNIT in May 1982. For over 5 years, he
has been a principal in several privately held companies engaged in the
businesses of designing and manufacturing equipment used in the petroleum
industry, construction and heating and air conditioning services and

                                       36

<PAGE>
installation. He holds a Bachelor of Science degree in Mechanical Engineering
from Oklahoma State University. He is also a director of Matrix Service Company,
Tulsa, Oklahoma.

     Mr. Williams was elected a director of UNIT in December 1988. Prior to
retiring on December 31, 1978, he was Chairman of the Board and Chief Executive
Officer of The Williams Companies, Inc. where he continues to serve as an
honorary director. Mr. Williams also serves as a director of Apco Argentina,
Inc., and Willbros Group, Inc. In addition, Mr. Williams also serves as a
director of the Gilcrease Museum and is a member of the Tulsa Performing Arts
Center Trust.

     Mr. Adcock was elected a director of UNIT in December 1997. He is an
attorney and currently manages a private trust that deals in real estate, oil
and gas properties and other equity investments. He is Chairman of the Board of
Arvest Bank, Shawnee and Community Health Partners, Inc. , formerly Mid America
Heathcare, Inc. Between 1997 through September, 1998 he was the Chairman of the
Board of Ameribank and President and Chief Executive Officer of American
National Bank and Trust Company of Shawnee, Oklahoma, and Chairman of AmeriTrust
Corporation, Tulsa, Oklahoma. Prior to holding these positions, he was engaged
in the private practice of law and served as General Counsel for Ameribank
Corporation.

Prior Employee Programs

     Since 1984, UNIT has formed limited partnerships for investment by certain
of its key employees and directors that participate with UNIT in its exploration
and production operations. The name, month of formation and amount of limited
partner capital subscriptions of each of these limited partnerships (the
"Employee Programs") are set forth below.

                                                                Limited
                                                               Partners'
                                                                Capital
           Name                            Formed            Subscriptions
           ----                            ------            -------------
Unit 1984 Employee Oil and Gas
Program                                  April 1984             $348,000

Unit 1985 Employee Oil and Gas
Limited Partnership                     January 1985            $378,000

Unit 1986 Employee Oil and Gas
Limited Partnership                     January 1986            $307,000

Unit 1987 Employee Oil and Gas
Limited Partnership                      March 1987             $209,000

Unit 1988 Employee Oil and Gas
Limited Partnership                    April 29, 1988           $177,000

Unit 1989 Employee Oil and Gas
Limited Partnership                   December 30, 1988         $157,000

Unit 1990 Employee Oil and Gas
Limited Partnership                    January 19,1990          $253,000

Unit 1991 Employee Oil and Gas
Limited Partnership                    January 7, 1991          $263,000

Unit 1992 Employee Oil and Gas
Limited Partnership                   January 23, 1992          $240,000

                                       37

<PAGE>
Unit 1993 Employee Oil and Gas
Limited Partnership                   January 21, 1993          $245,000

Unit 1994 Employee Oil and Gas
Limited Partnership                   January 19, 1994          $284,000

Unit 1995 Employee Oil and Gas
Limited Partnership                     March 7, 1995           $454,000

Unit 1996 Employee Oil and Gas
Limited Partnership                   February 5, 1996          $437,000

Unit 1997 Employee Oil and Gas
Limited Partnership                   February 4, 1997          $413,000

Unit 1998 Employee Oil and Gas
Limited Partnership                   February 19, 1998         $471,000

Unit 1999 Employee Oil and Gas
Limited Partnership                   February 22, 1999         $188,000

Unit 2000 Employee Oil and Gas
Limited Partnership                   February 22, 2000         $199,000

Unit 2001 Employee Oil and Gas
Limited Partnership                   February 9, 2001          $370,000

Unit 2002 Employee Oil and Gas
Limited Partnership                   January 30, 2002          $457,000

     One-half of the capital subscriptions from all limited partners were
required to be paid in the 1984 Employee Program, three-fourths of the capital
subscriptions from all limited partners were required to be paid in the 1985
Employee Program and the 1986 Employee Program. All of the capital subscriptions
from all limited partners, including those shown below, were required to be paid
in the 1987 through 1999 Employee Programs. The capital subscriptions of the
following limited partners to the 2000, 2001 and 2002 Employee Programs were as
shown below:




                                                     Amount of Capital
                                                        Subcription
                     Position with                      -----------
Subscriber                UNIT               2000          2001         2002
----------                ----               ----          ----         ----

King P.      Chairman of the Board and
Kirchner     Director                     $      0      $ 25,000(1)  $100,000(1)

             Chief Executive Officer,
John G.      President, Chief Operating
Nikkel       Officer and Director         $114,264(2)   $151,400(2)  $100,000(2)

Philip M.    Senior Vice President,
Keeley       Exploration and Production   $ 33,736(2)   $ 43,600(2)  $ 40,000(2)
---------------
         (1) Mr. Kirchner invested $25,000 indirectly in the 2001 Employee
Program and $100,000 in the 2002 Employee Program, through the King P. Kirchner
Revocable Trust as permitted by the limited partnership agreement of those
Employee Programs.

         (2) Messrs. Nikkel and Keeley have invested in the 2000, 2001 and 2002
Employee Programs both directly and through Nike Exploration Company which until
October of 2001 was owned 71.4% by Mr. Nikkel and members of his family and
28.6% by Mr. Keeley. Subsequent to October of

                                       38

<PAGE>
2001, Mr. Nikkel and members of his family were the sole owners of Nike
Exploration Company. The amounts invested directly and indirectly through Nike
Exploration Company in the 2000, 2001 and 2002 Employee Programs by Messrs.
Nikkel and Keeley are set forth below:


                                                                  Nike
         Employee         Mr. Nikkel           Mr. Keeley      Exploration
          Program          Directly             Directly         Company
         --------         ----------           ----------      -----------
            2000           $ 60,000              $12,000         $ 76,000
            2001           $ 80,000              $15,000         $100,000
            2002           $100,000              $40,000         $100,000

Ownership of Common Stock

     UNIT's Common Stock is listed on the New York Stock Exchange as reported on
the Composite Tape. On December 3, 2002 there were 43,337,300 shares
outstanding.

     As of December 3, 2002, the directors and officers of UNIT owned of record
or beneficially owned shares of UNIT Common Stock as follows:


                                         Amount of
                                        Beneficial               % of
Name                                    Ownership (1)       Outstanding (1)
----                                    ---------           -----------

King P. Kirchner.............            677,128  (2)          1.56
John Williams................             11,000  (3)          *
Don Cook.....................             31,118  (3)          *
Philip M. Keeley.............            135,725  (2)(4)       *
Earle Lamborn................            271,507  (2)(4)       *
John G. Nikkel...............            436,409  (2)(4)       *
Larry D. Pinkston............             63,243  (2)(4)       *
Mark E. Schell...............             67,608  (2)(4)       *
John S. Zink.................             71,500  (3)          *
William B. Morgan............             20,400  (3)          *
J. Michael Adcock............            602,291  (3)(5)       1.38

All Officers and Directors
   as a Group................          2,387,929               5.47
---------------
         *Less than 1%

         (1) The number of shares includes the shares presently issued and
outstanding plus the number of shares which any owner has the right to acquire
within 60 days after December 3, 2002, pursuant to the exercise of currently
exercisable stock options. For purposes of calculating the percent of the shares
outstanding held by each owner, the total number of shares excludes the shares
which all other persons have the right to acquire within 60 days after December
3, 2002 pursuant to the exercise of currently exercisable stock options.

                                       39

<PAGE>
         (2) Includes shares of common stock held under UNIT's 401(k) thrift
plan as of December 4, 2002 for the account of: Earle Lamborn, 13,979; John G.
Nikkel, 31,682; Philip M. Keeley, 11,991; Larry D. Pinkston, 2,268; and Mark E.
Schell, 30,197.

         (3) Includes unexercised stock options granted under UNIT's
non-Employee Directors' Stock Option Plan to each of the following, all of which
are currently exercisable at the discretion of the holder: J. Michael Adcock,
15,500; Don Cook, 25,500; William B. Morgan, 14,500; John H. Williams, 7,000;
John S. Zink, 28,000; and King P. Kirchner 3,500 shares and all non-Employee
Directors as a group, 94,000.

         (4) Includes unexercised stock options granted under UNIT's Amended and
Restated Stock Option Plan to each of the following, all of which are
exercisable within 60 days from December 3, 2002 at the discretion of the
holder: John G. Nikkel 95,000; Philip M. Keeley, 37,500; Earle Lamborn, 43,500;
Larry D. Pinkston, 20,100; and Mark E. Schell, 20,100.

         (5) Of the shares shown, Mr. J. Michael Adcock is deemed to be the
beneficial owner of 585,791 shares by virtue of his position as one of three
trustees of the Don Bodard 1995 Revocable Trust.

Interest of Management in Certain Transactions

     Reference is made to "COMPENSATION" for a discussion of the compensation
for supervision and operation of productive wells and the reimbursement of
overhead expenses attributable to the Partnership's operations to which UNIT is
entitled under the terms of the Partnership Agreement.


                              CONFLICTS OF INTEREST

     There will be situations in which the individual interests of the General
Partner and the Limited Partners will conflict. Although the General Partner is
obligated to deal fairly and in good faith with the Limited Partners and conduct
Partnership operations using the standards of a prudent operator in the oil and
gas industry, such conflicts may not in every instance be resolved to the
maximum advantage of the Limited Partners. Certain circumstances which will or
may involve potential conflicts of interest are as follows:

     .    The General Partner currently manages and in the future will
          sponsor and manage oil and natural gas drilling programs
          similar to the Partnership.

     .    The General Partner will decide which prospects the Partnership
          will acquire.

     .    The General Partner will act as operator for Partnership Wells
          and will, through its affiliates, furnish drilling and/or
          marketing services with respect to Partnership Wells, the
          terms of which have not been negotiated by non-affiliated
          persons.

     .    The General Partner is a general partner of numerous other
          partnerships, and owes duties of good faith dealing to such
          other partnerships.

     .    The General Partner and its affiliates engage in drilling,
          operating and producing activities for other partnerships.

                                       40

<PAGE>
Acquisition of Properties and Drilling Operations

     With certain limited exceptions it is anticipated that the Partnership will
participate in each producing property, if any, acquired by the General Partner
and in the drilling of each of the wells, if any, commenced by the General
Partner for its own account during the period commencing January 1, 2003, or
from the formation of the Partnership if subsequent to January 1, 2003, through
December 31, 2003 except for wells:

         (i)      drilled outside the 48 contiguous United States;

         (ii)     drilled as part of secondary or tertiary recovery operations
                  which were in existence prior to formation of the Partnership;

         (iii)    drilled by third parties under farm-out or similar
                  arrangements with UNIT or the General Partner or whereby UNIT
                  or the General Partner may be entitled to an overriding
                  royalty, reversionary or other similar interest in the
                  production from such wells but is not obligated to pay any of
                  the Drilling Costs thereof;

         (iv)     acquired by UNIT or the General Partner through the
                  acquisition by UNIT or the General Partner of, or merger of
                  UNIT or the General Partner with, other companies; or

         (v)      with respect to which the General Partner does not believe
                  that the potential economic return therefrom justifies the
                  costs and participation by the Partnership.

As a result, the Partnership may have an interest in wells located on prospects
on which producing wells have been drilled by UNIT or the General Partner in
prior years. Likewise, it is possible that the Partnership will participate in
the drilling of initial wells on prospects on which some or all of the
development or offset wells will be drilled in years subsequent to 2003. In the
latter case, the Partnership would have no right to participate in the drilling
of such development or offset wells.

     Sometimes UNIT will agree to participate in drilling operations on a
prospect which it may not believe are fully warranted from an economic
standpoint if it believes that such participation is necessary for, or will
significantly increase its chances of, obtaining a contract to drill the well
with one of its drilling rigs and the revenues from the contract make the
economics of the entire arrangement desirable from UNIT's standpoint. In such an
instance, the Partnership would not be entitled to any of the drilling contract
revenues so the General Partner will not cause the Partnership to participate in
such a well. However, an analysis of the economic potential of any proposed well
is a very inexact science and wells which have a very high potential commonly
prove to be dry or only marginally profitable and occasionally a well with
apparently very little promise may prove to be very profitable. Thus, there can
be no assurance that the General Partner will always make the most profitable
decision from the Partnership's standpoint in determining in which of such
potential wells the Partnership should or should not participate.

     Because the Partnership will acquire an interest only in those properties
comprising the spacing unit on which each Partnership Well is located, it will
not be entitled to participate in other wells drilled by the General Partner,
UNIT or any of its affiliates in the same prospect area unless the drilling of
those wells commences during the period from January 1, 2003, or from the
formation of the Partnership if subsequent to January 1, 2003, through December
31, 2003. If the size of a spacing unit in which the Partnership has an interest
is reduced, the Partnership will have no interest in any additional well drilled
on the property comprising the original spacing unit unless it is commenced
during the period from January 1, 2003, or from the formation of the Partnership
if subsequent to January 1, 2003, through December 31, 2003. Likewise the
Partnership would have no interest in any increased density wells

                                       41

<PAGE>
drilled on the original spacing unit unless such wells were drilled
during 2003. In addition, if additional interests are acquired in wells
participated in by the Partnership after 2003, the Partnership will generally
not be entitled to participate in the acquisition of such additional interests.
Management believes that the apparent conflicts of interest arising from these
situations are mitigated by the fact that the Partnership is expected to
participate in all of UNIT's drilling operations (with the exceptions noted
above) conducted during the period. Thus, there is little opportunity for the
General Partner to selectively choose Partnership drilling locations for the
purpose of proving up other properties of UNIT or its affiliates in which the
Partnership has no interest. Further, the Partnership will benefit in many
instances by its participation in the drilling of wells located on prospects
previously proved up by drilling operations conducted by UNIT prior to formation
of the Partnership.

Participation in UNIT's Drilling or Income Programs

     If UNIT forms any drilling or income programs in 2003, it is anticipated
that the Partnership will serve as a co-general partner with UNIT in any such
drilling or income programs, or both. As the other co-general partner of any
such drilling or income program, UNIT would have exclusive management and
control over the business, operations and affairs of the drilling or income
program. Conflicts of interest may arise between the limited partners and the
general partners of such drilling or income program and it is possible that UNIT
may elect to resolve those conflicts in favor of the limited partners. Further,
if any such drilling or income program is offered publicly, the program
agreement will be required to contain a number of provisions concerning the
conduct of program operations and handling conflicts of interests required by
the Guidelines for the Registration of Oil and Gas Programs adopted by the North
American Securities Administrators Association, Inc. Such provisions may
significantly reduce the flexibility of UNIT in managing such programs or may
affect the profitability of the program operations or the transactions between
the general partners and the program.

Transfer of Properties

     The General Partner or its affiliates are authorized to transfer interests
in oil and gas properties to the Partnership, in which case the General Partner
or its affiliate will receive an amount equal to the Leasehold Acquisition Costs
attributable to the interests being acquired by the Partnership in the spacing
unit on which the Partnership Well is located or is to be drilled. The amount of
the Leasehold Acquisition Costs attributable to the fractional undivided
interest in a property transferred to the Partnership by the General Partner or
any affiliate shall not be reduced or offset by the amount of any gain or profit
the General Partner or its affiliate might have realized by any prior sale or
transfer of a fractional undivided interest in the property to an unaffiliated
third party for a price in excess of the portion of the Leasehold Acquisition
Costs of the property that is attributable to the transferred interest. The
Partnership will not be reimbursed for or refunded any Leasehold Acquisition
Costs if the size of a spacing unit on which a Partnership Well is located or
drilled is reduced even though the Partnership will have no interest in any
subsequent wells drilled on the area encompassed by the original spacing unit
unless they are commenced during 2003.

     A sale, transfer or conveyance to the Partnership of less than all of the
ownership of the General Partner or its affiliates in any interest or property
is prohibited unless:

         (1)      the interest retained by the General Partner or its affiliates
                  is a proportionate working interest;

         (2)      the obligations of the Partnership with respect to the
                  properties will be substantially the same proportionately as
                  those of the General Partner or its affiliates at the time it
                  acquired the properties; and

                                       42

<PAGE>
         (3)      the Partnership's interest in revenues will not be less than
                  the proportionate interest therein of the General Partner or
                  its affiliates when it acquired the properties.

With respect to the General Partner or its affiliates' remaining interest, it
may retain such interest for its own account or it may sell, transfer, farm-out
or otherwise convey all or a portion of such remaining interest to
non-affiliated industry members, which may occur either before or after the
transfer of the interests in the same properties to the Partnership. The General
Partner or its affiliates may realize a profit on the interests or may be
carried to some extent with respect to its cost obligations in connection with
any drilling on such properties and any such profit or interests will be
strictly for the account of the General Partner or its affiliates and the
Partnership will have no claim with respect thereto. The General Partner or its
affiliates may not retain any overrides or other burdens on the property
conveyed to the Partnership (other than overriding royalty interests granted to
geologists and other persons employed or retained by the General Partner or its
affiliates) and may not enter into any farm-out arrangements with respect to its
retained interest except to non-affiliated third parties or other programs
managed by the General Partner or its affiliates.

Partnership Assets

     The General Partner will not take any action with respect to assets or
property of the Partnership which does not benefit primarily the Partnership as
a whole. The General Partner will not utilize the funds of the Partnership as
compensating balances for the benefit of the General Partner or its affiliates.
All benefits from marketing arrangements or other relationships affecting
property of the Partnership will be fairly and equitably apportioned according
to the respective interests of the Partnership and the General Partner.

     The Partnership Agreement provides that when the Partnership is terminated,
there will be an accounting with respect to its assets, liabilities and
accounts. The Partnership's physical property and its oil and gas properties may
be sold for cash. Except in the case of an election by the General Partner to
terminate the Partnership before the tenth anniversary of the Effective Date,
Partnership Properties may be sold to the General Partner or any of its
affiliates for their fair market value as determined in good faith by the
General Partner.

Transactions with the General Partner or Affiliates

     UNIT provides through its subsidiary Unit Drilling Company contract
drilling services in the ordinary course of its business. UNIT also owns a 40%
interest in Superior Pipeline Company, L.L.C. which is engaged in the business
of buying and building gas gathering systems. It is anticipated that the
Partnership will obtain services, equipment and supplies from one or both of
such persons. In addition, UNIT may supply other goods or services to the
Partnership. The terms of any contracts or agreements between the Partnership
and UNIT or any affiliate will be no less favorable to the Partnership than
those of comparable contracts or agreements entered into, and will be at prices
not in excess of (or in the case of purchases of production, less than) those
charged in the same geographical area, by non-affiliated persons or companies
dealing at arm's length.

     For its services as a drilling contractor, Unit Drilling Company will
charge the Partnership on either a daywork (a specified per day rate for each
day a drilling rig is on the drill site), a footage (a specified rate per foot
drilled) or a turnkey (specified amount for drilling the well) basis. The rate
charged by Unit Drilling Company for such services will be the same as those
offered to unaffiliated third parties in the same or similar geographic areas.

                                       43

<PAGE>
Right of Presentment Price Determination

     Under the terms of the Partnership Agreement, a Limited Partner can,
subject to certain conditions, require the General Partner to purchase his or
her Units at a price determined by the application of a stated formula to the
estimated future net revenues attributable to the Partnership's estimated proved
reserves. See "TERMS OF THE OFFERING -- Right of Presentment." It is anticipated
that if an independent engineering firm makes an evaluation of the proved
reserves of the Partnership, the result of that evaluation will be used in
determining the price to be paid to a Limited Partner exercising his or her
right of presentment. However, if no such independent evaluation is made, the
right of presentment purchase price will be determined by using the proved
reserves and future net revenue estimates of the technical staff of the General
Partner.

Receipt of Compensation Regardless of Profitability

     The General Partner is entitled to receive its fees and other compensation
and reimbursements from the Partnership regardless of whether the Partnership
operates at a profit or loss. See "PARTICIPATION IN COSTS AND REVENUES" and
"COMPENSATION." Such fees, compensation and reimbursements will decrease the
Limited Partners' share of any profits generated by operations of the
Partnership or increase losses if such operations should prove unprofitable.

Legal Counsel

     Conner & Winters, P.C. serves as special legal counsel for the General
Partner. Such firm has performed legal services for the General Partner and UNIT
and is expected to render legal services to the Partnership. Although such firm
has indicated its intention to withdraw from representation of the Partnership
if conflicts of interest do in fact arise, there can be no assurance that
representation of both the General Partner or UNIT and the Partnership by such
firm will not be disadvantageous to the Partnership.


                            FIDUCIARY RESPONSIBILITY

General

     Under Oklahoma law, the General Partner will have a fiduciary duty to the
Limited Partners and consequently must exercise good faith, fairness and loyalty
in the handling of the Partnership's affairs. The General Partner must provide
Limited Partners (or their representatives) with timely and full information
concerning matters affecting the business of the Partnership. Each Limited
Partner may inspect the Partnership's books and records upon reasonable prior
notice. The nature of the fiduciary duties of general partners is an evolving
area of law and prospective investors who have questions concerning the duties
of the General Partner should consult with their counsel.

     Regardless of the fiduciary obligations of the General Partner, the General
Partner, UNIT or its affiliates, subject to any restrictions or requirements set
forth in the Agreement, may:

         .        engage independently of the Partnership in all aspects of
                  the oil and gas business, either for their own accounts or
                  for the accounts of others;

         .        sell interests in oil and gas properties held by them to,
                  purchase oil and gas production from, and engage in other
                  transactions with, the Partnership;

         .        serve as general partner of other oil and gas drilling or
                  income partnerships, including those which may be in
                  competition with the Partnership; and

                                       44

<PAGE>
         .        engage in other activities that may involve conflicts of
                  interest.

See "CONFLICTS OF INTEREST." Thus, unlike the strict duty of a fiduciary who
must act solely in the best interests of his or her beneficiary, the Agreement
permits the General Partner to consider, among other things, the interests of
other partnerships sponsored by the General Partner, UNIT or its affiliates in
resolving investment and other conflicts of interest. The foregoing provisions
permit the General Partner to conduct its own operations and to act as the
general partner of more than one similar partnership or investment program and
for the Partnership to benefit from its experience resulting therefrom, but
relieves the General Partner of the strict fiduciary duty of a general partner
acting as such for only one investment program at a time. These provisions are
primarily intended to reconcile the applicable duties under Oklahoma law with
the fact that the General Partner will manage and administer its own oil and gas
operations and a number of other oil and gas investment programs with which
possible conflicts of interests may arise and resolve such conflicts in a manner
consistent with the expectation of the investors in all such programs, the
General Partner's fiduciary duties and customary business practices and statutes
applicable thereto.

Liability and Indemnification

     The Agreement provides that the General Partner will perform its duties in
an efficient and businesslike manner with due caution and in accordance with
established practices of the oil and gas industry. The Agreement further
provides that the General Partner and its affiliates will not be liable to the
Partnership or the Partners, and will be indemnified by the Partnership, for any
expense (including attorney fees), loss or damage incurred by reason of any act
or omission performed or omitted in good faith in a manner reasonably believed
by the General Partner or its affiliates to be within the scope of authority and
in the best interest of the Partnership or the Partners unless the General
Partner or its affiliates is guilty of gross negligence or willful misconduct.
While not totally certain under Oklahoma law, absent specific provisions in the
partnership agreement to the contrary, a general partner of a limited
partnership may be liable to its limited partners if it fails to conduct the
partnership affairs with the same amount of care which ordinarily prudent
persons would use in similar circumstances. Consequently, the Agreement may be
viewed as requiring a lesser standard of duty and care than what Oklahoma law
might otherwise require of the General Partner.

     Any claim against the Partnership for indemnification must be satisfied
only out of Partnership assets including insurance proceeds, if any, and none of
the Limited Partners will have personal liability therefore.

     The Limited Partners may have more limited rights of action than they would
have absent the liability and indemnification provisions above. Moreover,
indemnification enforced by the General Partner under such provisions will
reduce the assets of the Partnership. It should be noted, however, that it is
the position of the Securities and Exchange Commission ("Commission") that any
attempt to limit the liability of a general partner or to indemnify a general
partner under the federal securities laws is contrary to public policy and,
therefore, unenforceable. The General Partner has been advised of the position
of the Commission.

     Generally, the Limited Partners' remedy for the General Partner's breach of
a fiduciary duty will be to bring a legal action against the General Partner to
recover any damages, generally measured by the benefits earned by the General
Partner as a result of the fiduciary breach. Additionally, Limited Partners may
also be able to obtain other forms of relief, including injunctive relief. The
Act provides that a limited partner may bring an action in the name of a limited
partnership (a partnership derivative action) to recover a judgment in its favor
if general partners with authority to do so have refused to bring the action or
if an effort to cause such general partners to bring the action is not likely to
succeed.

                                       45

<PAGE>
                                PRIOR ACTIVITIES

     UNIT has been engaged in oil and gas exploration and development operations
since late 1974 and has conducted oil and gas drilling programs using the
limited partnership format since 1979. The following table depicts the drilling
results achieved as of September 30, 2002 by UNIT during each year since 1975.
Because of the unpredictability of oil and gas exploration in general, such
results should not be considered indicative of the results that may be achieved
by the Partnership.


                             Gross Wells(2)              Net Wells(3)
Year Ended            -------------------------  -------------------------------
July 31(1)            Total   Oil   Gas    Dry     Total   Oil     Gas     Dry
----------            ----- ------ ----- ------  ------- ------- ------- -------

1975 Exploratory......    2      0     2      0      .01       0     .01       0
     Development......    4      0     2      2      .07       0     .03     .04
                      ----- ------ ----- ------  ------- ------- ------- -------
                          6      0     4      2      .08       0     .04     .04
                      ----- ------ ----- ------  ------- ------- ------- -------

1976 Exploratory......    1      0     0      1      .01       0       0     .01
     Development......    8      0     6      2      .29       0     .28     .01
                      ----- ------ ----- ------  ------- ------- ------- -------
                          9      0     6      3      .30       0     .28     .02
                      ----- ------ ----- ------  ------- ------- ------- -------

1977 Exploratory......    9      0     3      6     1.50       0     .45    1.05
     Development......   16      0     9      7     2.00       0     .70    1.30
                      ----- ------ ----- ------  ------- ------- ------- -------
                         25      0    12     13     3.50       0    1.15    2.35
                      ----- ------ ----- ------  ------- ------- ------- -------

1978 Exploratory......    8      1     1      6     1.17     .34     .15     .68
     Development......   26      0    13     13     2.64       0     .76    1.88
                      ----- ------ ----- ------  ------- ------- ------- -------
                         34      1    14     19     3.81     .34     .91    2.56
                      ----- ------ ----- ------  ------- ------- ------- -------

1979 Exploratory......   10      0     5      5     1.40       0     .76     .64
     Development......   16      1     8      7     1.99     .06     .95     .98
                      ----- ------ ----- ------  ------- ------- ------- -------
                         26      1    13     12     3.39     .06    1.71    1.62
                      ----- ------ ----- ------  ------- ------- ------- -------

1980 Exploratory......    1      0     1      0     1.28       0     .23    1.05
     Development......   10      0     8      2     3.13       0     .85    2.28
                      ----- ------ ----- ------  ------- ------- ------- -------
                         11      0     9      2     4.41       0    1.08    3.33
                      ----- ------ ----- ------  ------- ------- ------- -------

                          Gross Wells (2)                 Net Wells(3)
Year Ended                ---------------                 ------------
December 31(1)        Total   Oil   Gas   Dry     Total    Oil     Gas     Dry
--------------        ----- ------ ----- ------  ------- ------- ------- -------

1981 Exploratory......   14      1     4      9     1.12     .02     .16     .94
     Development......   66     18    29     19     7.38    2.96    1.77    2.65
                      ----- ------ ----- ------  ------- ------- ------- -------
         Total........   80     19    33     28     8.50    2.98    1.93    3.59
                      ----- ------ ----- ------  ------- ------- ------- -------

1982 Exploratory......   40      5     9     26     3.39     .60     .32    2.47
     Development......  100     22    51     27    11.70    4.70    2.71    4.29
                      ----- ------ ----- ------  ------- ------- ------- -------
         Total........  140     27    60     53    15.09    5.30    3.03    6.76
                      ----- ------ ----- ------  ------- ------- ------- -------

1983 Exploratory......    6      2     0      4     1.31     .72       0     .59
     Development......   72     18    26     28     8.01    3.45    1.17    3.39
                      ----- ------ ----- ------  ------- ------- ------- -------
         Total........   78     20    26     32     9.32    4.17    1.17    3.98
                      ----- ------ ----- ------  ------- ------- ------- -------

1984 Exploratory......    2      1     1      0      .52     .49     .03       0
     Development......   50     15    22     13     6.81    3.42    2.74     .65
                      ----- ------ ----- ------  ------- ------- ------- -------
         Total........   52     16    23     13     7.33    3.91    2.77     .65
                      ----- ------ ----- ------  ------- ------- ------- -------

                                       46

<PAGE>
                          Gross Wells (2)                 Net Wells(3)
Year Ended                ---------------                 ------------
December 31(1)        Total   Oil   Gas   Dry     Total    Oil     Gas     Dry
--------------        ----- ------ ----- ------  ------- ------- ------- -------

1985 Exploratory......    0      0     0      0        0       0       0       0
     Development......   38     11    16     11     8.32    2.89    2.39    3.04
                      ----- ------ ----- ------  ------- ------- ------- -------
         Total........   38     11    16     11     8.32    2.89    2.39    3.04
                      ----- ------ ----- ------  ------- ------- ------- -------

1986 Exploratory......    0      0     0      0        0       0       0       0
     Development......   21      4     6     11     3.85     .81    1.01    2.03
                      ----- ------ ----- ------  ------- ------- ------- -------
         Total........   21      4     6     11     3.85     .81    1.01    2.03
                      ----- ------ ----- ------  ------- ------- ------- -------

1987 Exploratory......    0      0     0      0        0       0       0       0
     Development......   46     23    10     13    11.91    7.95    1.76    2.34
                      ----- ------ ----- ------  ------- ------- ------- -------
         Total........   46     23    10     13    11.91    7.95    1.76    2.34
                      ----- ------ ----- ------  ------- ------- ------- -------

1988 Exploratory......    0      0     0      0        0       0       0       0
     Development......   39     20    10      9    22.56   14.77    4.05    3.74
                      ----- ------ ----- ------  ------- ------- ------- -------
         Total........   39     20    10      9    22.56   14.77    4.05    3.74
                      ----- ------ ----- ------  ------- ------- ------- -------

1989 Exploratory......    3      0     1      2     1.97       0     .47    1.50
     Development......   40     12    15     13    18.83    8.81    4.13    5.89
                      ----- ------ ----- ------  ------- ------- ------- -------
         Total........   43     12    16     15    20.80    8.81    4.60    7.39
                      ----- ------ ----- ------  ------- ------- ------- -------

1990 Exploratory......    5      0     2      3     1.22       0     .12    1.10
     Development......   35     11    14     10    16.53    8.38    3.52    4.63
                      ----- ------ ----- ------  ------- ------- ------- -------
         Total........   40     11    16     13    17.75    8.38    3.64    5.73
                      ----- ------ ----- ------  ------- ------- ------- -------

1991 Exploratory......    4      0     0      4      .82       0       0     .82
     Development......   28     10     9      9    15.88    8.61    3.91    3.36
                      ----- ------ ----- ------  ------- ------- ------- -------
         Total........   32     10     9     13    16.70    8.61    3.91    4.18
                      ----- ------ ----- ------  ------- ------- ------- -------

1992 Exploratory......    0      0     0      0        0       0       0       0
     Development......   18      1    11      6     5.81    1.00    3.33    1.48
                      ----- ------ ----- ------  ------- ------- ------- -------
         Total........   18      1    11      6     5.81    1.00    3.33    1.48
                      ----- ------ ----- ------  ------- ------- ------- -------

1993 Exploratory......    1      0     0      1      .10       0       0     .10
     Development......   16      9     6      1    12.48    8.98    3.32     .18
                      ----- ------ ----- ------  ------- ------- ------- -------
         Total........   17      9     6      2    12.58    8.98    3.32     .28
                      ----- ------ ----- ------  ------- ------- ------- -------

1994 Exploratory......    3      0     1      2     1.71       0     .95     .76
     Development......   57      5    40     12    25.79    4.75   14.14    6.90
                      ----- ------ ----- ------  ------- ------- ------- -------
         Total........   60      5    41     14    27.50    4.75   15.09    7.66
                      ----- ------ ----- ------  ------- ------- ------- -------

1995 Exploratory......    0      0     0      0        0       0       0       0
     Development......   45     15    24      6    14.94    4.67    8.04    2.23
                      ----- ------ ----- ------  ------- ------- ------- -------
         Total........   45     15    24      6    14.94    4.67    8.04    2.23
                      ----- ------ ----- ------  ------- ------- ------- -------

1996 Exploratory......    0      0     0      0        0       0       0       0
     Development......   70     10    51      9    32.09    7.61   20.09    4.39
                      ----- ------ ----- ------  ------- ------- ------- -------
         Total........   70     10    51      9    32.09    7.61   20.09    4.39
                      ----- ------ ----- ------  ------- ------- ------- -------

1997 Exploratory......    2      0     0      2     2.00       0       0    2.00
     Development......   80      8    58     14    35.94    4.35   23.29    8.30
                      ----- ------ ----- ------  ------- ------- ------- -------
         Total........   82      8    58     16    37.94    4.35   23.29   10.30
                      ----- ------ ----- ------  ------- ------- ------- -------

                                       47
<PAGE>
                          Gross Wells (2)                 Net Wells(3)
Year Ended                ---------------                 ------------
December 31(1)        Total   Oil   Gas   Dry     Total    Oil     Gas     Dry
--------------        ----- ------ ----- ------  ------- ------- ------- -------

1998 Exploratory......    2      0     1      1      .63       0    .375     .26
     Development......   76      3    52     21    30.17     .31  18.750   11.11
                      ----- ------ ----- ------  ------- ------- ------- -------
         Total........   78      3    53     22    30.80     .31  19.125   11.37
                      ----- ------ ----- ------  ------- ------- ------- -------

1999 Exploratory......    0      0     0      0        0       0       0       0
     Development......   51      1    42      8     21.8      .4    17.4     4.0
                      ----- ------ ----- ------  ------- ------- ------- -------
         Total........   51      1    42      8     21.8      .4    17.4     4.0
                      ----- ------ ----- ------  ------- ------- ------- -------

2000 Exploratory......    2      0     2      0     1.72       0    1.72       0
     Development......   98      7    73     18    38.37    1.45   28.55    8.37
                      ----- ------ ----- ------  ------- ------- ------- -------
         Total........  100      7    75     18    40.09    1.45   30.27    8.37
                      ----- ------ ----- ------  ------- ------- ------- -------

2001 Exploratory......    3      0     0      3     2.03       0       0    2.03
     Development......  123      7    94     22    49.94    1.08   34.12   14.74
                      ----- ------ ----- ------  ------- ------- ------- -------
         Total........  126      7    94     25    51.97    1.08   34.12   16.77
                      ----- ------ ----- ------  ------- ------- ------- -------

Period of January 1,
 2002 to
 September 30, 2002

     Exploratory......    4      0     1      3      .38       0     .01     .37
     Development......   57      3    42     12    32.58    1.62   21.57    9.39
                      ----- ------ ----- ------  ------- ------- ------- -------
         Total........   61      3    43     15    32.96    1.62   21.58    9.76
                      ----- ------ ----- ------  ------- ------- ------- -------
---------------
         (1) Except as indicated, the figures used in this table relate to wells
drilled and completed during each of the 12 month periods ended July 31 or
December 31, as the case may be. Oil wells and gas wells shown include both
producing wells and wells capable of production.

         (2)      "Gross Wells" refers to the total number of wells in which
there was participation by UNIT.

         (3) "Net Wells" refers to the aggregate leasehold working interest of
UNIT in such wells. For example, a 50% leasehold working interest in a well
drilled represents 1.0 Gross Well, but a .50 Net Well.

Prior Employee Programs

     During the period of 1979 to 1983, persons who were designated key
employees of UNIT by its board of directors participated in the Unit Key
Employee Exploration Funds (the "Funds"). These Funds were formed as general
partnerships for the purpose of participating in 10% of all of the exploration
and development operations conducted by UNIT during a specified period. Except
for the Fund formed in 1983, each of the prior Funds served as one of the
general partners in at least one of the prior drilling programs sponsored by
UNIT and was allocated 10% of the expenses and revenues allocable to the general
partners as a group. In each of these Funds the costs charged to it in
connection with its operations were financed with the proceeds of bank
borrowings and out of the Funds' share of revenues.

     The 1983 Fund served as the sole capital limited partner in the Unit 1983-A
Oil and Gas Program and as such made no contribution to the capital of that
program and shared in 10% of the costs and revenues otherwise allocable to the
General Partner after the distributions to the General Partner

                                       48
<PAGE>
from the program equaled the amount of its contributions thereto plus UNIT's
interest costs with respect to the unrecovered amount of its contributions.

     Because of the differences in structure, format and plan of operations
between the prior Funds and the Partnership and because of the uncertainties
which are inherent in oil and gas operations generally, the results achieved by
the prior Funds should not be considered indicative of the results the
Partnership may achieve.

     For each year from 1984 through 2002, a separate Employee Program was
formed as an Oklahoma limited partnership with UNIT or UPC as its sole general
partner (UPC now serves as the sole general partner of each of these Employee
Programs) and with eligible employees and directors of UNIT and its subsidiaries
who subscribed for units therein as the limited partners. Each Employee Program
participated on a proportionate basis (to the extent of 10% of the General
Partner's interest in each case except for the 1986 and 1987 Employee Programs,
in which case the percentage participation was 15% and the 1992 - 2001 Employee
Programs, in which case the percentage was 5% and the 2001 and 2002 Employee
Programs in which case the percentage was 2 1/2%) in all of UNIT's oil and gas
exploration and development operations conducted during the calendar year for
which the program was formed beginning with its date of formation if it was
formed after January 1. Although the terms and provisions of these Employee
Programs are virtually identical to those of the Partnership, because of the
unpredictability of oil and gas exploration and development in general, the
results for the Employee Programs shown below should not be considered
indicative of the results that may be achieved by the Partnership.

     As noted above, the Funds and the Employee Programs have participated in a
specified percentage (ranging from 2 1/2% to 15%, depending on the program) of
virtually all of UNIT's or the General Partner's exploration and development
operations conducted since the latter half of 1979. Thus, the drilling results
of these partnerships would be proportionate to those drilling results of UNIT
for the periods beginning after the fiscal year ended July 31, 1979 shown above.

Results of the Prior Oil and Gas Programs

     In each of the General Partner's prior oil and gas programs other than the
Unit 1983-A Oil and Gas Program and the Unit 1984 Oil and Gas Limited
Partnership, one of the prior Funds also served as a general partner. The 1983
Fund served as the sole capital limited partner of the Unit 1983-A Oil and Gas
Program and the 1984 Employee Program serves as a general partner of the Unit
1984 Oil and Gas Limited Partnership. The Unit 1979 Oil and Gas Program was the
first limited partnership drilling program of which UNIT was a sponsor. The
revenue sharing terms of the 1979 Program are generally 70% to the limited
partners and 30% to the general partners until 150% program payout at which time
the revenues are to be shared 55% to the limited partners and 45% to the general
partners. The revenue sharing terms of the Unit 1980 Oil and Gas Program were
generally 60% to the limited partners and 40% to the general partners. The
revenue sharing terms of the Unit 1981 Oil and Gas Program were generally 70% to
the limited partners and 30% to the general partners until program payout and
50% to the limited partners and 50% to the general partners thereafter. The
revenue sharing terms of the Unit 1981-II Oil and Gas Program, the Unit 1982-A
Oil and Gas Program and the Unit 1982-B Oil and Gas Program (60% to the limited
partners and 40% to the general partners) were substantially the same as those
of the Unit 1983-A Oil and Gas Program and the Unit 1984 Oil and Gas Limited
Partnership (65% to the limited partners and 35% to the general partner) except
that the general partners' cost percentage and the general partners' revenue
share in each of those prior programs could not be less than 25%. The following
tables depict the drilling results at September 30, 2002, and the economic
results at September 30, 2002 of prior oil and gas programs and the 1984 - 2002
Employee Programs. On September 12,

                                       49
<PAGE>
1986, in connection with a major restructuring and recapitalization, UNIT
acquired all of the assets and liabilities of the programs formed during 1980
through 1983 and these programs have now been dissolved. Effective December 31,
1993, pursuant to an Agreement and Plan of Merger, dated as of December 28,
1993, all of the assets and all of the liabilities of the 1984, 1985, 1986,
1987, 1988, 1989 and 1990 Employee Programs were merged with and consolidated
into a new Employee Program called the Unit Consolidated Employee Oil and Gas
Limited Partnership, an Oklahoma Limited Partnership which was formed November
30, 1993 (the "Consolidated Program"). The Consolidated Program holds no assets
other than those acquired in the merger with the 1984 through 1990 Employee
Programs. The Unit 1979 Oil and Gas Program continues in existence as do all of
the Employee Programs formed since 1991. Certain of these programs have not
completed all of their drilling and development operations. Moreover, because of
the unpredictability of oil and gas exploration and development in general, the
results shown below should not be considered indicative of the results that may
be achieved by the Partnership.


                                DRILLING RESULTS

                            As of September 30, 2002

                            Gross Wells                    Net Wells
                            -----------                    ---------
Programs              Total   Oil   Gas   Dry     Total    Oil     Gas     Dry
--------              ----- ------ ----- ------  ------- ------- ------- -------

1979
Exploratory Wells.....    6      0     2      4     2.43    0.00    0.65    1.78
Development Wells.....   21     16     1      4    17.28   14.14    0.03    3.11
                      ----- ------ ----- ------  ------- ------- ------- -------
Total.................   27     16     3      8    19.71   14.14    0.68    4.89
                      ----- ------ ----- ------  ------- ------- ------- -------

1980(1)
Exploratory Wells.....   15      2     5      8     5.65    0.50    2.14    3.01
Development Wells.....   32      5    15     12    12.77    1.17    5.75    5.85
                      ----- ------ ----- ------  ------- ------- ------- -------
Total.................   47      7    20     20    18.42    1.67    7.89    8.86
                      ----- ------ ----- ------  ------- ------- ------- -------

1981(1)
Exploratory Wells.....   11      1     4      6     4.61    0.33    0.88    3.40
Development Wells.....   67     14    34     19    21.77    5.03    6.61   10.13
                      ----- ------ ----- ------  ------- ------- ------- -------
Total.................   78     15    38     25    26.38    5.36    7.49   13.53
                      ----- ------ ----- ------  ------- ------- ------- -------

1981-II(1)
Exploratory Wells.....   13      1     5      7     5.21    0.25    1.12    3.84
Development Wells.....   45      3    29     13     9.07    0.69    4.78    3.60
                      ----- ------ ----- ------  ------- ------- ------- -------
Total.................   58      4    34     20    14.28    0.94    5.90    7.44
                      ----- ------ ----- ------  ------- ------- ------- -------

1982-A(1)
Exploratory Wells.....   11      3     1      7     3.55    0.78    0.00    2.77
Development Wells.....   69     23    22     24    25.22   13.09    3.59    8.54
                      ----- ------ ----- ------  ------- ------- ------- -------
Total.................   80     26    23     31    28.77   13.87    3.59   11.31
                      ----- ------ ----- ------  ------- ------- ------- -------

1982-B(1)
Exploratory Wells.....    4      1     1      2     2.28    0.80    0.08    1.40
Development Wells.....   41     16     9     16    18.60    9.47    1.01    8.12
                      ----- ------ ----- ------  ------- ------- ------- -------
Total.................   45     17    10     18    20.88   10.27    1.09    9.52
                      ----- ------ ----- ------  ------- ------- ------- -------

1983-A(1)
Exploratory Wells.....    1      1     0      0     1.00    1.00    0.00    0.00
Development Wells.....   26     14    10      2     6.60    4.39    1.27    0.94
                      ----- ------ ----- ------  ------- ------- ------- -------
Total.................   27     15    10      2     7.60    5.39    1.27    0.94
                      ----- ------ ----- ------  ------- ------- ------- -------

1984
Exploratory Wells.....    0      0     0      0     0.00    0.00    0.00    0.00
Development Wells.....   21      1    10     10     5.89     .38    3.08    2.43
                      ----- ------ ----- ------  ------- ------- ------- -------
Total.................   21      1    10     10     5.89     .38    3.08    2.43
                      ----- ------ ----- ------  ------- ------- ------- -------
---------------
         (1) On September 12, 1986, Unit acquired all of the assets and
liabilities of this Program and the Program has been dissolved.

                                       50
<PAGE>

                                EMPLOYEE PROGRAMS

                            As of September 30, 2002

                            Gross Wells                    Net Wells
                            -----------                    ---------
Programs              Total   Oil   Gas   Dry     Total    Oil     Gas     Dry
--------              ----- ------ ----- ------  ------- ------- ------- -------

1984(1)
Empl.
Exploratory Wells.....    0      0     0      0     0.00    0.00   0.00     0.00
Development Wells.....   25      4    12      9      .14     .02    .06      .06
                      ----- ------ ----- ------  ------- ------- ------- -------
Total.................   25      4    12      9      .14     .02    .06      .06
                      ----- ------ ----- ------  ------- ------- ------- -------
1985(1)
Empl.
Exploratory Wells.....    0      0     0      0     0.00    0.00   0.00     0.00
Development Wells.....   30      8    10     12      .38     .12    .08      .18
                      ----- ------ ----- ------  ------- ------- ------- -------
Total.................   30      8    10     12      .38     .12    .08      .18
                      ----- ------ ----- ------  ------- ------- ------- -------

1986(1)
Empl.
Exploratory Wells.....    0      0     0      0     0.00    0.00   0.00     0.00
Development Wells.....   18      6     8      4      .48     .12    .30      .06
                      ----- ------ ----- ------  ------- ------- ------- -------
Total.................   18      6     8      4      .48     .12    .30      .06
                      ----- ------ ----- ------  ------- ------- ------- -------

1987(1)
Empl.
Exploratory Wells.....    0      0     0      0     0.00    0.00   0.00     0.00
Development Wells.....   21     12     5      4     1.17     .74    .25      .18
                      ----- ------ ----- ------  ------- ------- ------- -------
Total.................   21     12     5      4     1.17     .74    .25      .18
                      ----- ------ ----- ------  ------- ------- ------- -------

1988(1)
Empl.
Exploratory Wells.....    0      0     0      0     0.00    0.00   0.00     0.00
Development Wells.....   29     15     9      5     1.55    1.03    .28      .24
                      ----- ------ ----- ------  ------- ------- ------- -------
Total.................   29     15     9      5     1.55    1.03    .28      .24
                      ----- ------ ----- ------  ------- ------- ------- -------

1989(1)
Empl.
Exploratory Wells.....    0      0     0      0     0.00    0.00   0.00     0.00
Development Wells.....   32      7    14     11     1.48     .59    .36      .53
                      ----- ------ ----- ------  ------- ------- ------- -------
Total.................   32      7    14     11     1.48     .59    .36      .53
                      ----- ------ ----- ------  ------- ------- ------- -------

1990(1)
Empl.
Exploratory Wells.....    5      0     2      3     .122    0.00    .01      .11
Development Wells.....   34     11    14      9     1.65     .83    .35      .46
                      ----- ------ ----- ------  ------- ------- ------- -------
Total.................   39     11    16     12     1.78     .83    .36      .57
                      ----- ------ ----- ------  ------- ------- ------- -------

1991
Empl.
Exploratory Wells.....    4      0     0      4      .08    0.00    0.00     .08
Development Wells.....   28     10     9      9     1.59     .86     .39     .34
                      ----- ------ ----- ------  ------- ------- ------- -------
Total.................   32     10     9     13     1.67     .86     .39     .42
                      ----- ------ ----- ------  ------- ------- ------- -------

1992
Empl.
Exploratory Wells.....    0      0     0      0     0.00    0.00    0.00    0.00
Development Wells.....   18      1    11      6      .29     .05     .17     .07
                      ----- ------ ----- ------  ------- ------- ------- -------
Total.................   18      1    11      6      .29     .05     .17     .07
                      ----- ------ ----- ------  ------- ------- ------- -------

1993
Empl.
Exploratory Wells.....    0      0     0      0     0.00    0.00    0.00    0.00
Development Wells.....   16      9     6      1      .63     .45     .17     .01
                      ----- ------ ----- ------  ------- ------- ------- -------
Total.................   16      9     6      1      .63     .45     .17     .01
                      ----- ------ ----- ------  ------- ------- ------- -------

1994
Empl.
Exploratory Wells.....    3      0     1      2      .09    0.00     .05     .04
Development Wells.....   57      5    40     12     1.29     .24     .70     .35
                      ----- ------ ----- ------  ------- ------- ------- -------
Total.................   60      5    41     14     1.38     .24     .75     .39
                      ----- ------ ----- ------  ------- ------- ------- -------

1995
Empl.
Exploratory Wells.....    0      0     0      0     0.00    0.00    0.00    0.00
Development Wells.....   45     15    24      6      .74     .23     .40     .11
                      ----- ------ ----- ------  ------- ------- ------- -------
Total.................   45     15    24      6      .74     .23     .40     .11
                      ----- ------ ----- ------  ------- ------- ------- -------

1996
Empl.
Exploratory Wells.....    0      0     0      0     0.00    0.00    0.00    0.00
Development Wells.....   53      7    38      8     1.24     .27     .76     .21
                      ----- ------ ----- ------  ------- ------- ------- -------
Total.................   53      7    38      8     1.24     .27     .76     .21
                      ----- ------ ----- ------  ------- ------- ------- -------

                                       51

<PAGE>
                            Gross Wells                    Net Wells
                            -----------                    ---------
Programs              Total   Oil   Gas   Dry     Total    Oil     Gas     Dry
--------              ----- ------ ----- ------  ------- ------- ------- -------

1997
Empl.
Exploratory Wells.....    2      0     0      2      .10    0.00    0.00     .10
Development Wells.....   80      8    58     14     1.80     .22    1.16     .42
                      ----- ------ ----- ------  ------- ------- ------- -------
Total.................   82      8    58     16     1.90     .22    1.16     .52
                      ----- ------ ----- ------  ------- ------- ------- -------

1998
Empl.
Exploratory Wells.....    2      0     1      1      .03    0.00     .02     .01
Development Wells.....   76      3    52     21     1.51     .02     .94     .56
                      ----- ------ ----- ------  ------- ------- ------- -------
Total.................   78      3    53     22     1.54     .02     .96     .57
                      ----- ------ ----- ------  ------- ------- ------- -------

1999
Empl.
Exploratory Wells.....    0      0     0      0     0.00    0.00    0.00    0.00
Development Wells.....   51      1    42      8     1.09     .02     .87     .20
                      ----- ------ ----- ------  ------- ------- ------- -------
Total.................   51      1    42      8     1.09     .02     .87     .20
                      ----- ------ ----- ------  ------- ------- ------- -------

2000
Empl.
Exploratory Wells.....    2      0     2      0      .09    0.00     .09    0.00
Development Wells.....   98      7    73     18     1.92     .07    1.43     .42
                      ----- ------ ----- ------  ------- ------- ------- -------
Total.................  100      7    75     18     2.01     .07    1.52     .42
                      ----- ------ ----- ------  ------- ------- ------- -------

2001
Empl.
Exploratory Wells.....    3      0     0      3      .05    0.00    0.00     .05
Development Wells.....  123      7    94     22     1.25     .03     .85     .37
                      ----- ------ ----- ------  ------- ------- ------- -------
Total.................  126      7    94     25     1.30     .03     .85     .42
                      ----- ------ ----- ------  ------- ------- ------- -------

2002
Empl.
Exploratory Wells.....    4      0     1      3      .01    0.00    0.00     .01
Development Wells.....   57      3    42     12      .82     .04     .78    0.00
                      ----- ------ ----- ------  ------- ------- ------- -------
Total.................   61      3    43     15      .83     .04     .78     .01
                      ----- ------ ----- ------  ------- ------- ------- -------
---------------
         (1)      Effective December 31, 1993 this Program was merged with
and into the Consolidated Program.



















                                       52
<PAGE>


                        GENERAL PARTNERS' PAYOUT TABLE(1)

                            As of September 30, 2002


                                                             Total
                                                           Revenues
                                                             Before
                                                           Deducting
                                           Total           Operating
                        Total            Revenues            Costs
                    Expenditures           Before         for 3 Months
                     Including           Deducting           Ended
                     Operating           Operating        September 30,
Program               Costs(2)             Costs              2002
-------               --------             -----              ----

1979...............  $8,680,055         $10,723,123         $16,976
1980...............   4,043,599           4,044,424              -
1981...............   8,325,594           6,338,173              -
1981-II............   6,642,875           3,995,616              -
1982-A.............   9,190,842           6,782,893              -
1982-B.............   4,213,710           3,126,326              -
1983-A.............   2,277,514           1,312,531              -
1984...............   2,463,539           2,135,735          22,459
1984 Employee(*)...       1,542               1,745              -
1985 Employee(*)...       2,820               1,808              -
1986 Energy
Income Fund(**)....   1,675,234           1,749,312          16,054
1986 Employee(*)...       4,403               6,813              -
1987 Employee(*)...     624,354             815,358              -
1988 Employee(*)...   1,196,564           1,588,132              -
1989 Employee(*)...   1,424,525           1,171,961              -
1990 Employee(*)...     653,563             525,572              -
1991 Employee......   2,316,972           2,982,144          47,494
1992 Employee......     237,800             392,505           6,509
1993 Employee......     484,248             709,061           7,427
Consolidated
Program............      16,514              15,021             294
1994 Employee......   1,417,597           1,797,038          31,186
1995 Employee......     484,461             587,263           9,519
1996 Employee......     897,447             852,709          12,412
1997 Employee......   1,251,738           1,132,057          28,779
1998 Employee......   1,164,961           1,030,506          39,295
1999 Employee......     932,790           1,255,997          46,747
2000 Employee......   1,852,868           1,681,199          76,522
2001 Employee......     879,481             235,808          47,293
2002 Employee......     299,615              55,108          32,988
---------------
(*) Effective December 31, 1993, this program was merged with and into the
Consolidated Program.

(**) Formed primarily for purposes of acquiring producing oil and gas
properties.


                                       53
<PAGE>


                        LIMITED PARTNERS' PAYOUT TABLE(1)

                            As of September 30, 2002


                                                             Total
                                                           Revenues
                                                             Before
                                                           Deducting
                                           Total           Operating
                        Total            Revenues            Costs
                    Expenditures           Before         for 3 Months
                     Including           Deducting           Ended
                     Operating           Operating        September 30,
Program               Costs(2)             Costs              2002
-------               --------             -----              ----

1979............... $14,605,719         $18,687,656         $20,748
1980...............  17,688,367           6,949,008              -
1981...............  37,073,946          15,768,826              -
1981-II............  18,638,600           7,028,946              -
1982-A.............  24,866,078          12,708,949              -
1982-B.............  12,069,566           5,367,312              -
1983-A.............   3,770,856           1,922,177              -
1984...............   3,118,590           2,230,338          22,459
1984 Employee(*)...     120,942             171,540              -
1985 Employee(*)...     277,901             178,984              -
1986 Energy
Income Fund(**)....   2,725,195           3,744,463          24,193
1986 Employee(*)...     435,858             676,972              -
1987 Employee(*)...     341,846             469,830              -
1988 Employee(*)...     333,898             446,044              -
1989 Employee(*)...     179,593             175,331              -
1990 Employee(*)...     300,852             188,848              -
1991 Employee......     610,721             794,939          12,625
1992 Employee......     612,995           1,013,387          16,737
1993 Employee......     440,661             656,598           6,747
Consolidated
Program............   (379,965)           1,487,654          28,618
1994 Employee......     575,005             736,120          12,728
1995 Employee......     774,015             923,897          14,881
1996 Employee......     549,392             524,462           7,601
1997 Employee......     583,763             509,596          12,927
1998 Employee......     605,594             524,038          20,302
1999 Employee......     283,370             375,167          13,963
2000 Employee......     254,558             229,383          10,434
2001 Employee......     402,838             105,943          21,247
2002 Employee......     245,139              45,088          26,990
---------------
(*) Effective December 31, 1993, this program was merged with and into the
Consolidated Program.

(**) Formed primarily for purposes of acquiring producing oil and gas
properties.




                                       54
<PAGE>


                       GENERAL PARTNERS' NET CASH TABLE(1)

                            As of September 30, 2002



                                            Total                   Total
                                           Revenues                Revenues
                                             Less                  Distrib-
                                           Operating                 uted
                     Total        Total    Costs for                 for
                  Expenditures  Revenues   3 Months                3 Months
                      Less       Less       Ended        Total      Ended
                   Operating   Operating   Sept. 30,   Revenues    Sept. 30,
Program             Costs(2)     Costs       2002     Distributed    2002
-------             --------     -----       ----     -----------    ----

1979.............. $2,805,917  $4,848,985  $(17,048)   $3,952,564   $     -
1980..............  2,628,978   2,629,803          -    2,635,751         -
1981..............  6,546,160   4,558,739          -    5,368,272         -
1981-II...........  4,817,145   2,169,886          -    2,609,000         -
1982-A............  6,297,972   3,890,023          -    3,755,000         -
1982-B............  2,565,504   1,478,120          -    1,158,000         -
1983-A............  1,380,331     415,348          -      819,000         -
1984..............    933,334     605,530      4,532      949,234     9,850
1984 Employee(*)..        874       1,077          -        1,000         -
1985 Employee(*)..      2,300       1,288          -        1,035         -
1986 Energy
Income Fund(**)...    177,078     251,156    (5,650)      466,265         -
1986 Employee(*)..      2,698       5,108          -        4,486         -
1987 Employee(*)..    357,368     548,372          -      465,800         -
1988 Employee(*)..    770,272   1,161,840          -      942,800         -
1989 Employee(*)..  1,010,133     752,569          -      607,900         -
1990 Employee(*)..    466,272     338,281          -      266,600         -
1991 Employee.....  1,058,426   1,732,599     26,428    1,601,520    32,000
1992 Employee.....     99,349     254,055      3,913      227,639     4,000
1993 Employee.....    311,944     536,758      4,849      467,780     4,600
Consolidated
Program...........     10,448       8,955        148       10,147       450
1994 Employee.....    854,905   1,234,347     17,745    1,060,708    15,000
1995 Employee.....    330,555     433,358      7,534      345,504     7,000
1996 Employee.....    681,566     636,828      5,233      442,583     7,250
1997 Employee.....  1,054,610     934,929     21,218      677,477    19,500
1998 Employee.....    920,634     786,180     25,947      612,718    24,500
1999 Employee.....    706,130   1,029,337     33,382      768,578    38,000
2000 Employee.....  1,535,890   1,364,221     31,171      731,669    75,500
2001 Employee.....    840,917     197,244     38,940       40,000    33,000
2002 Employee.....    295,446      50,939     30,389            -         -
---------------
(*) Effective December 31, 1993, this program was merged with and into the
Consolidated Program.

(**) Formed primarily for purposes of acquiring producing oil and gas
properties.


                                       55

<PAGE>
                       LIMITED PARTNERS' NET CASH TABLE(1)

                            As of September 30, 2002

                                                 Total                 Total
                                                Revenues             Revenues
                                                 Less                Distrib-
                          Total                Operating               uted
                        Expendit-     Total     Cost for               for 3
                          ures      Revenues    3 Months    Total      Months
                          Less        Less       Ended    Revenues     Ended
            Capital     Operating   Operating   Sept. 30,  Distrib-   Sept. 30,
Program   Contributed    Costs(2)     Costs       2002       uted       2002
-------   -----------    --------     -----       ----       ----       ----

1979..... $3,000,000    $6,085,402 $10,167,338 $(20,154) $6,198,801 $      -(5)
1980..... 12,000,000(3) 14,469,265   3,729,906         -    760,000        -

1981..... 29,255,000(4) 32,700,741  11,395,621         -  5,335,065        -

1981-II.. 15,000,000    16,603,760   4,994,106         -  1,710,001        -
1982-A... 21,140,000    21,591,442   9,434,313         -  6,342,000        -
1982-B... 10,555,000     9,935,850   3,233,596         -  2,828,740        -
1983-A...  2,530,000     2,993,705   1,145,026         -    227,700        -
1984.....  1,875,000     2,038,016   1,149,764    14,222    892,751   11,025(6)
1984
Employee(*)  174,000        86,664     137,262         -    125,280        -
1985
Employee(*)  283,500       227,670     128,753         -    182,644        -
1986 Energy
Income
Fund(**).  1,000,000       988,116   2,077,383   (5,104)  1,896,500    4,400(7)
1986
Employee(*)  229,750       267,008     508,122         -    460,007        -
1987
Employee(*)  209,000       207,060     335,044         -    324,845        -
1988
Employee(*)  177,000       214,712     326,858         -    281,630        -
1989
Employee(*)  157,000       157,306     153,044         -    147,737        -
1990
Employee(*)  253,000       254,483     142,479         -    180,895        -
1991
Employee.    263,000       275,981     460,198     7,025    428,427    7,890 (8)
1992
Employee.    240,000       256,285     656,677    10,061    616,808    8,880 (9)
1993
Employee.    245,000       281,472     497,410     4,373    454,965    3,920(10)
Consol-
idated...          -     (957,279)     910,340    14,907    923,860   14,219(11)
1994
Employee.    284,000       344,637     505,752     7,240    426,568    5,680(12)
1995
Employee.    454,000       493,241     643,123    12,029    563,444   11,350(13)
1996
Employee.    437,000       419,561     394,631   (1,273)    378,005    3,059(14)
1997
Employee.    413,000       494,711     420,544     9,530    339,486    7,434(15)
1998
Employee.    471,000       486,199     404,643    13,424    386,691   12,717(16)
1999
Employee.    141,000       214,330     306,127     9,972    279,556   10,904(17)
2000
Employee.    199,000       209,793     184,618     3,770    166,165    9,751(18)
2001
Employee.    370,000       385,513      88,618    17,496     41,440   11,840(19)
2002
Employee.    370,000       241,729      41,678    24,863          -        -
---------------
(*) Effective December 31, 1993, this program was merged with and into the
Consolidated Program.

(**) Formed primarily for purposes of acquiring producing oil and gas
properties.

         (1)  Amounts reflect the accrual method of accounting.

         (2)  Does not include expenditures of $237,600, $920,453, $2,252,900,
$1,480,248, $2,079,268, $985,371 and $241,076 which were obtained from bank
borrowings and used to pay the limited partners' share of sales commissions of
$237,600, $722,453, $1,940,400, $1,183,248, $1,656,468, $827,046 and $190,476
and organization costs of $--0--, $198,000, $312,500, $297,000, $422,800,
$158,325 and $50,600 for the 1979, 1980, 1981, 1981-II, 1982-A, 1982-B and
1983-A Programs, respectively.

                                       56

<PAGE>
         (3)  Includes original subscriptions of limited partners totaling
$10,000,000 and additional assessments totaling $2,000,000.

         (4)  Includes original subscriptions of limited partners totaling
$25,000,000 and additional assessments totaling $4,255,000.

         (5)  In November 2002 the 1979 Program made a distribution of $-0- to
that program's limited partners. (In November 2002, no distribution was made to
the 1979 Program's limited partners.)

         (6)  In November 2002 the 1984 Program made a distribution of $13,545
to that program's limited partners.

         (7)  In November 2002 the 1986 Program made a distribution of $3,500
to that program's limited partners.

         (8)  In November 2002 the 1991 Employee Program made a distribution
of $5,786 to that program's limited partners.

         (9)  In November 2002 the 1992 Employee Program made a distribution
of $10,080 to that program's limited partners.

         (10) In November 2002 the 1993 Employee Program made a distribution
of $4,410 to that program's limited partners.

         (11) In November 2002 the Consolidated Program made a distribution
of $16,605 to that program's limited partners.

         (12) In November 2002 the 1994 Employee Program made a distribution
of $7,100 to that program's limited partners.

         (13) In November 2002 the 1995 Employee Program made a distribution
of $9,080 to that program's limited partners.

         (14) In November 2002 the 1996 Employee Program made a distribution
of $4,807 to that program's limited partners.

         (15) In November 2002 the 1997 Employee Program made a distribution
of $8,673 to that program's limited partners.

         (16) In November 2002 the 1998 Employee Program made a distribution
of $12,246 to that program's limited partners.

         (17) In November 2002 the 1999 Employee Program made a distribution
of $8,648 to that program's limited partners.

         (18) In November 2002 the 2000 Employee Program made a distribution
of $7,562 to that program's limited partners.

         (19) In November 2002 the 2001 Employee Program made a distribution
of $12,950 to that program's limited partners.





                                       57

<PAGE>
                        FEDERAL INCOME TAX CONSIDERATIONS

     The full tax opinion of Conner & Winters is attached to this Memorandum as
Exhibit B. All prospective investors should review Exhibit B in its entirety
before investing in the Partnership. All references in this "Federal Income Tax
Considerations" section to the opinion of Conner & Winters are to the tax
opinion set forth in Exhibit B.

     The following is a summary of the opinions of Conner & Winters on all
material federal income tax consequences to the Partnership and to the Limited
Partners. There may be aspects of a particular investor's tax situation which
are not addressed in the following discussion or in Exhibit B. Additionally, the
resolution of certain tax issues depends upon future facts and circumstances not
known to Conner & Winters as of the date of this Memorandum; thus, no assurance
as to the final resolution of such issues should be drawn from the following
discussion.

     The following statements are based upon the provisions of the Code,
existing and proposed regulations promulgated under the Code ("Regulations"),
current administrative rulings, and court decisions. It is possible that
legislative or administrative changes or future court decisions may
significantly modify the statements and opinions expressed herein. Such changes
could be retroactive with respect to transactions occurring prior to the date of
such changes.

     Moreover, uncertainty exists concerning some of the federal income tax
aspects of the transactions being undertaken by the Partnership. Some of the tax
positions being taken by the Partnership may be challenged by the Service and
any such challenge could be successful. Thus, there can be no assurance that all
of the anticipated tax benefits of an investment in the Partnership will be
realized.

     Conner & Winters' opinion is based upon the transactions described in this
Memorandum (the "Transaction") and upon facts as they have been represented to
Conner & Winters or determined by it as of the date of the opinion. Any
alteration of the facts may adversely affect the opinions rendered. It is
possible, however, that a variation of such facts could result in some of the
tax benefits being eliminated or deferred to future years.

     Because of the factual nature of the inquiry, and in certain cases the lack
of clear authority in the law, it is not possible to reach a judgment as to the
outcome on the merits (either favorable or unfavorable) of certain material
federal income tax issues as described more fully herein.

Summary of Conclusions

     Opinions expressed: The following is a summary of the specific opinions
expressed by Conner & Winters with respect to Federal Income Tax Considerations
discussed herein.

     TO BE FULLY UNDERSTOOD, THE COMPLETE DISCUSSION OF THESE MATTERS SET FORTH
IN THE FULL TAX OPINION IN EXHIBIT B SHOULD BE READ BY EACH PROSPECTIVE LIMITED
PARTNER.

     1. The material federal income tax benefits in the aggregate from an
investment in the Partnership will be realized.

     2. The Partnership will be treated as a partnership for federal income tax
purposes and not as a corporation, an association taxable as a corporation or a
"publicly traded partnership". See "Partnership Status"; "Federal Taxation of
Partnerships."

                                       58

<PAGE>
     3. To the extent the Partnership's wells are timely drilled and its
drilling costs are timely paid, the Partners will be entitled to their pro rata
shares of the Partnership's intangible drilling and development costs ("IDC")
paid in 2003. See "Intangible Drilling and Development Costs Deductions."

     4. Most Limited Partners' Units will be considered as ownership interests
in a passive activity within the meaning of Code Section 469 and losses
generated therefrom will be limited by the passive activity provisions of the
Code. See "Passive Loss and Credit Limitations."

     5. To the extent provided herein, the Partners' distributive shares of
Partnership tax items will be determined and allocated substantially in
accordance with the terms of the Partnership Agreement. See "Partnership
Allocations."

     6. The Partnership will not be required to register with the Service as a
tax shelter. See "Registration as a Tax Shelter."

     No opinion expressed: Due to the lack of authority regarding, or the
essentially factual nature of, the issue, Conner & Winters expresses no opinion
as to:

     1. The impact of an investment in the Partnership on an investor's
alternative minimum tax liability, due to the factual nature of the issue (See
"Alternative Minimum Tax");

     2. Whether, under Code Section 183, the losses of the Partnership will be
treated as derived from "activities not engaged in for profit", and therefore
nondeductible from other gross income, due to the inherently factual nature of a
Partner's interest and motive in engaging in the Transaction (See "Profit
Motive");

     3. Whether each Partner will be entitled to percentage depletion since such
a determination is dependent upon the status of the Partner as an independent
producer and on the Partner's other oil and gas production; due to the
inherently factual nature of such a determination, Conner & Winters is unable to
render an opinion as to the availability of percentage depletion (See "Depletion
Deductions");

     4. Whether any interest incurred by a Partner with respect to any
borrowings to acquire a Unit will be deductible or subject to limitations on
deductibility, due to the factual nature of the issue; and

     5. Whether the Partnership will be treated as the tax owner of Partnership
Properties acquired by the General Partner as nominee for the Partnership.

     General Information: Certain matters contained herein are not considered to
address a material tax consequence and are for general information, including
the matters contained in sections dealing with gain or loss on the sale of Units
or of Property, Partnership distributions, tax audits, penalties, and state,
local, and self-employment tax. See "General Tax Effects of Partnership
Structure," "Gain or Loss on Sale of Properties or Units," "Partnership
Distributions," "Administrative Matters," "Accounting Methods and Periods," and
"State and Local Tax."

     Facts and Representations: The opinions of Conner & Winters are also based
upon the facts described in this Memorandum and upon certain representations
made to it by the General Partner, including the following:

     1. The Partnership Agreement to be entered into by and among the General
Partner and Limited Partners and any amendments thereto will be duly executed
and will be made available to any Limited Partner upon written request. The
Partnership Agreement will be duly recorded in all places required under the
Oklahoma Revised Uniform Limited Partnership Act (the "Act") for the due

                                       59

<PAGE>
formation of the Partnership and for the continuation thereof in accordance with
the terms of the Partnership Agreement. The Partnership will at all times be
operated in accordance with the terms of the Partnership Agreement, the
Memorandum, and the Act.

     2. No election will be made by the Partnership, Limited Partners, or
General Partner to be excluded from the application of the provisions of
Subchapter K of the Code.

     3. The Partnership will own operating mineral interests, as defined in the
Code and in the Regulations, and none of the Partnership's revenues will be from
non-working interests.

     4. The General Partner will cause the Partnership to properly elect to
deduct currently all IDC.

     5. The Partnership will have a December 31 taxable year and will report its
income on the accrual basis.

     6. All Partnership wells will be spudded by not later than December 31,
2003. The entire amount to be paid under any drilling and operating agreements
entered into by the Partnership will be attributable to IDC.

     7. Such drilling and operating agreements will be duly executed and will
govern the operation of the Partnership's wells.

     8. Based upon the General Partner's review of its experience with its
previous oil and gas partnerships for the past several years and upon the
intended operations of the Partnership, the General Partner believes that the
sum of (i) the aggregate deductions, including depletion deductions, and (ii)
350 percent of the aggregate tax credits from the Partnership will not, as of
the close of any of the first five years ending after the date on which Units
are offered for sale, exceed two times the aggregate cash invested by the
Partners in the Partnership as of such dates. In that regard, the General
Partner has reviewed the economics of its similar oil and gas partnerships for
the past several years, and has represented that it has determined that none of
those partnerships has resulted in a "tax shelter ratio", as such term is
defined in the Code and Regulations, greater than two to one. Further, the
General Partner has represented that the deductions that are or will be
represented as potentially allowable to an investor will not result in the
Partnership having a tax shelter ratio, as such term is defined in the Code and
Regulations, greater than two to one and believes that no person could
reasonably infer from representations made, or to be made, in connection with
the offering of Units that such sums as of such dates will exceed two times the
Partners' cash investments as of such dates.

         9. The General Partner believes that at least 90% of the gross income
of the Partnership will constitute income derived from the exploration,
development, production, and/or marketing of oil and gas. The General Partner
does not believe that any market will ever exist for the sale of Units and the
General Partner will not make a market for the Units. Further, the Units will
not be traded on an established securities market.

     10. The Partnership and each Partner will have the objective of carrying on
the business of the Partnership for profit and dividing the gain therefrom.

     11. The General Partner will, as nominee for the Partnership, acquire and
hold title to Partnership Properties on behalf of the Partnership; the General
Partner will enter into an agency agreement before the General Partner acquires
any such oil and gas properties on behalf of the Partnership; the agency
agreement will reflect that the General Partner's acquisition of Partnership

                                       60

<PAGE>
properties is on behalf of the Partnership; and the General Partner will execute
assignments of all oil and gas interests acquired by it on behalf of the
Partnership to the Partnership.

     The opinions of Conner & Winters are also subject to all the assumptions,
qualifications, and limitations set forth in the following discussion and in the
opinion, including the assumptions that each of the Partners has full power,
authority, and legal right to enter into and perform the terms of the
Partnership Agreement and to take any and all actions thereunder in connection
with the transactions contemplated thereby.

     Each prospective investor should be aware that, unlike a ruling from the
Service, an opinion of Conner & Winters represents only Conner & Winters' best
judgment. THERE CAN BE NO ASSURANCE THAT THE SERVICE WILL NOT SUCCESSFULLY
ASSERT POSITIONS WHICH ARE INCONSISTENT WITH THE OPINIONS OF CONNER & WINTERS
SET FORTH IN THIS DISCUSSION AND EXHIBIT B OR IN THE TAX REPORTING POSITIONS
TAKEN BY THE PARTNERS OR THE PARTNERSHIP. EACH PROSPECTIVE INVESTOR SHOULD
CONSULT HIS OR HER OWN TAX ADVISOR TO DETERMINE THE EFFECT OF THE TAX ISSUES
DISCUSSED HEREIN AND IN EXHIBIT B ON HIS OR HER INDIVIDUAL TAX SITUATION.

General Tax Effects of Partnership Structure

     The Partnership will be formed as a limited partnership pursuant to the
Partnership Agreement and the laws of the State of Oklahoma. No tax ruling will
be sought from the Service as to the status of the Partnership as a partnership
for federal income tax purposes. The applicability of the federal income tax
consequences described herein depends on the treatment of the Partnership as a
partnership for federal income tax purposes and not as a corporation and not as
an association taxable as a corporation. Any tax benefits anticipated from an
investment in the Partnership would be adversely affected or eliminated if the
Partnership were treated as a corporation for federal income tax purposes.

     Conner & Winters is of the opinion that, at the time of its formation, the
Partnership will be treated as a partnership for federal income tax purposes.
The opinion is based on the provisions of the Partnership Agreement, applicable
state and federal law and representations made by the General Partner. The
opinion of Conner & Winters is not binding on the Service. In addition, no
assurance can be given that the Partnership will not lose partnership status as
a result of changes in either the manner in which it is operated or the facts
upon which the opinion of Conner & Winters is based.

     Under the Code, a partnership is not a taxable entity and, accordingly,
incurs no federal income tax liability. Rather, a partnership is a
"pass-through" entity which is required to file an information income tax return
with the Service. In general, the character of a partner's share of each item of
income, gain, loss, deduction, and credit is determined at the partnership
level. Each partner is allocated a distributive share of such items in
accordance with the partnership agreement and is required to take such items
into account in determining the partner's income. Each partner includes such
amounts in determining his or her income for any taxable year of the partnership
ending within or with the taxable year of the partner, without regard to whether
the partner has received or will receive any cash distributions from the
partnership.

Ownership of Partnership Properties

     The General Partner has indicated that it, as nominee for the Partnership
(the "Nominee"), will acquire and hold title to Partnership Properties on behalf
of the Partnership. The Nominee and the Partnership will enter into an agency
agreement before the Nominee acquires any oil and gas properties

                                       61

<PAGE>
on behalf of the Partnership. That agency agreement will reflect that the
Nominee's acquisition of Partnership Properties is on behalf of the Partnership.
The Nominee will execute assignments to all oil and gas interest acquired by the
Nominee on behalf of the Partnership to the Partnership. For various cost and
procedural reasons, the assignments will not be recorded in the real estate
records in the counties in which the Partnership Properties are located. That
is, while the Partnership will be the owner of the Partnership Properties, there
will be no public record of that ownership. It is possible that the Service
could assert that the Nominee should be treated for federal income tax purposes
as the owner of the Partnership Properties, notwithstanding the assignment of
those Partnership Properties to the Partnership. If the Service were to argue
successfully that the Nominee should be treated as the tax owner of the
Partnership Properties, there would be significant adverse federal income tax
consequences to the Limited Partners, such as the unavailability of depletion
deductions in respect of income from Partnership Properties. The Service is
concerned that taxpayers not be able to shift the tax consequences of
transactions between parties based on the parties' declaration that one party is
the agent of another; the Service generally requires that taxpayers respect the
form of their transactions and ownership of property. Based on this concern, the
Service may challenge the Partnership's treatment of Partnership Properties, and
tax attributes thereof, which are held of record by the Nominee.

     In Commissioner of Internal Revenue v. Bollinger, 485 U.S. 340 (1988), the
United States Supreme Court reviewed a principal-agent relationship and held for
the taxpayer in concluding that the principal should be treated as the tax owner
of property held in the name of the agent. In that case the Supreme Court noted
that "It seems to us that the genuineness of the agency relationship is
adequately assured, and tax-avoiding manipulation adequately avoided, when the
fact that the corporation is acting as agent for its shareholders with respect
to a particular asset is set forth in a written agreement at the time the asset
is acquired, the corporation functions as agent and not principal with respect
to the asset for all purposes, and the corporation is held out as the agent and
not principal in all dealings with third parties relating to the asset." While
the Partnership and the Nominee will have in place an agreement defining their
relationship before any Partnership Properties are acquired by the Nominee and
the Nominee will function as agent with respect to those Partnership Properties
on behalf of the Partnership, the Nominee will not hold itself out to all third
parties as the agent of the Partnership in dealings relating to the Partnership
Properties. Unlike the relationship between the principal and the agent in
Bollinger, the Nominee will, however, assign title to Partnership Properties to
the Partnership, but will not record those assignments. Accordingly, the facts
related to the relationship between the Nominee and the Partnership are not the
same as the facts in Bollinger and it is not clear that the failure of the
Nominee to hold itself out to third parties as the agent of the Partnership in
dealings relating to Partnership Properties should result in the treatment of
the Nominee as the tax owner of the Partnership Properties. For the foregoing
reasons, Conner & Winters have not expressed an opinion on this issue, but
Conner & Winters believe that substantial arguments may be made that the
Partnership should be treated as the tax owner of Partnership Properties
acquired by the Nominee on the Partnership's behalf. If the Partnership were not
treated as the tax owner of Partnership Properties, then the following
discussions which relate to the Partners' deduction of tax items which are
derived from Partnership Properties, such as IDC, depletion and depreciation,
would not be applicable.

Intangible Drilling and Development Costs Deductions

     Congress granted to the Secretary of the Treasury the authority to
prescribe regulations that would allow taxpayers the option of deducting, rather
than capitalizing, IDC. The Secretary's rules state that, in general, the option
to deduct IDC applies only to expenditures for drilling and development items
that do not have a salvage value.

                                       62

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     The Memorandum provides that 75% of the Partners' capital contributions
will be utilized for IDC, which will flow through to the Partners as a
deductible item in the year of investment. The deduction of IDC by most Limited
Partners generally will be available only to offset passive income. Based on a
deduction of 75% of a Partner's capital contribution, a one Unit ($1,000)
investor in a 35% marginal Federal tax bracket could possibly reduce taxes
payable by $262. The investor might also realize additional tax savings on
income taxes in the state in which such investor resides.

     Classification of Costs. In general, IDC consists of those costs which in
and of themselves have no salvage value. In previous partnerships for which the
General Partner has served as general partner, intangible drilling and
development costs have ranged from 72% to 27% of the investors' contributions.
While the planned activities of the Partnership are similar in nature to those
of prior partnerships, the amount of expenditures classified as IDC could be
greater or less than for prior partnerships. In addition, a partnership's
classification of a cost as IDC is not binding on the Service, which might
reclassify an item labeled as IDC as a cost which must be capitalized. To the
extent not deductible, such amounts will be included in the Partnership's basis
in a mineral property and in the Partners' tax basis in their interests in the
Partnership.

     Timing of Deductions. Although the Partnership will elect to deduct IDC,
each investor has an option of deducting IDC, or capitalizing all or a part of
the IDC and amortizing it on a straight-line basis over a sixty-month period,
beginning with the taxable month in which the expenditure is made. In addition
to the effect of this change on regular taxable income, the two methods have
different treatment under the Alternative Minimum Tax ("AMT") (see "Alternative
Minimum Tax").

     Although the General Partner will attempt to satisfy each requirement of
the Service and judicial authority for deductibility of IDC in 2003 for the
Partnership, no assurance can be given that the Service will not successfully
contend that the IDC of a Partnership well which is not completed until 2004 is
not deductible in whole or in part until 2004. Furthermore, no assurance can be
given that the Service will not challenge the current deduction of IDC because
of the prepayment being made to a related party. If the Service were successful
with such a challenge, the Partners' deductions for IDC would be deferred to
later years.

     Recapture of IDC. IDC previously deducted that is allocable to a property
(directly or through the ownership of an interest in a partnership) and which,
if capitalized, would have been included in the adjusted basis of the property
is recaptured as ordinary income to the extent of any gain realized upon the
disposition of the property. Treasury regulations provide that recapture is
determined at the partner level (subject to certain anti-abuse provisions).
Where only a portion of recapture property is disposed of, any IDC related to
the entire property is recaptured to the extent of the gain realized on the
portion of the property sold. In the case of the disposition of an undivided
interest in a property (as opposed to the disposition of a portion of the
property), a proportionate part of the IDC with respect to the property is
treated as allocable to the transferred undivided interest to the extent of any
realized gain.

Depletion Deductions

     The owner of an economic interest in an oil and gas property is entitled to
claim the greater of percentage depletion or cost depletion with respect to oil
and gas properties which qualify for such depletion methods. In the case of
partnerships, the depletion allowance must be computed separately by each
partner and not by the partnership. For properties placed in service after 1986,
depletion deductions, to the extent they reduce basis in an oil and gas
property, are subject to recapture under Code section 1254.

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     Cost depletion for any year is determined by multiplying the number of
units (e.g., barrels of oil or Mcf of gas) sold during the year by a fraction,
the numerator of which is the cost or other basis of the mineral interest and
the denominator of which is total reserves available at the beginning of the
period. In no event can the cost depletion exceed the adjusted basis of the
property to which it relates.

     Percentage depletion is a statutory allowance pursuant to which a deduction
currently equal to 15% of the taxpayer's gross income from each property is
allowed in any taxable year, not to exceed 100% of the taxpayer's taxable income
from the property (computed without the allowance for depletion) with the
aggregate deduction limited to 65% of the taxpayer's taxable income for the year
(computed without regard to percentage depletion and net operating loss and
capital loss carrybacks). The percentage depletion deduction rate will vary with
the price of oil, but the rate will not be less than 15%. A percentage depletion
deduction that is disallowed in a year due to the 65% of taxable income
limitation may be carried forward and allowed as a deduction for a subsequent
year, subject to the 65% limitation in that subsequent year. Percentage
depletion deductions reduce the taxpayer's adjusted basis in the property.
However, unlike cost depletion, percentage depletion deductions are not limited
to the adjusted basis of the property; the percentage depletion amount continues
to be allowable as a deduction after the adjusted basis has been reduced to
zero.

     The availability of depletion, whether cost or percentage, will be
determined separately by each Partner. Each Partner must separately keep records
of his share of the adjusted basis in an oil or gas property, adjust such share
of the adjusted basis for any depletion taken on such property, and use such
adjusted basis each year in the computation of his cost depletion or in the
computation of his gain or loss on the disposition of such property. These
requirements may place an administrative burden on a Partner.

Depreciation Deductions

     The Partnership will claim depreciation, cost recovery, and amortization
deductions with respect to its basis in Partnership Property as permitted by the
Code. For most of the Partnership's tangible personal property, the "modified
accelerated cost recovery system" ("MACRS") must be used in calculating the cost
recovery deductions. Thus, the cost of lease equipment and well equipment, such
as casing, tubing, tanks, and pumping units, and the cost of oil or gas
pipelines cannot be deducted currently, but must be capitalized and recovered
under MACRS. The cost recovery deduction for most equipment used in domestic oil
and gas exploration and production and for most of the tangible personal
property used in natural gas gathering systems is calculated using the 200%
declining balance method switching to the straight-line method, a seven-year
recovery period, and a half-year convention. If an accelerated depreciation
method is used, a portion of the depreciation will be a preference item for AMT
purposes.

Interest Deductions

     In the Transaction, the Limited Partners will acquire their interests by
remitting cash in the amount of $1,000 per Unit to the Partnership. Some Limited
Partners may choose to borrow the funds necessary to acquire a Unit and may
incur interest expense in connection with those loans. Conner & Winters is
unable to express an opinion with respect to the deductibility of any interest
paid or incurred on such a loan because the deductibility of such interest is
dependent upon facts unique to each Limited Partner.

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Transaction Fees

     The Partnership may classify a portion of the fees or expense
reimbursements to be paid to third parties and to the General Partner as
expenses which are deductible as organizational expenses or otherwise. There is
no assurance that the Service will allow the deductibility of such expenses and
Conner & Winters expresses no opinion with respect to the allocation of such
fees or reimbursements to deductible and nondeductible items.

     Generally, expenditures made in connection with the creation of, and with
sales of interests in, a partnership will fit within one of several categories.

     A partnership may elect to amortize and deduct its organizational expenses
ratably over a period of not less than 60 months commencing with the month the
partnership begins business. Examples of organizational expenses are legal fees
for services incident to the organization of the partnership, such as
negotiation and preparation of a partnership agreement, accounting fees for
services incident to the organization of the partnership, and filing fees.

     No deduction is allowable for "syndication expenses," examples of which
include brokerage fees, registration fees, legal fees of the underwriter or
placement agent and the issuer (general partners or the partnership) for
securities advice and for advice pertaining to the adequacy of tax disclosures
in the offering or private placement memorandum for securities law purposes,
printing costs, and other selling or promotional material. These costs must be
capitalized. Payments for services performed in connection with the acquisition
of capital assets must be amortized over the useful life of such assets.

     No deduction is allowable with respect to "start-up expenditures," although
such expenditures may be capitalized and amortized over a period of not less
than 60 months.

     The Partnership intends to make overhead reimbursement payments to the
General Partner, as described in greater detail in the Memorandum. To be
deductible, payments to a partner must be for services rendered by the partner
other than in his or its capacity as a partner or for compensation determined
without regard to partnership income. Payments which are not deductible because
they fail to meet this test may be treated as special allocations of income to
the recipient partner and thereby decrease the net loss, or increase the net
income among all partners. If the Service were to successfully challenge the
General Partner's allocations, a Partner's taxable income could be increased,
thereby resulting in increased taxes and in potential liability for interest and
penalties.

Basis and At Risk Limitations

     A Partner's share of Partnership losses will be allowed as a deduction by
the Partner only to the extent of the aggregate amount with respect to which the
taxpayer-Partner is "at risk" for the Partnership's activity at the close of the
taxable year. Any such loss disallowed by the "at risk" limitation shall be
treated as a deduction allocable to the activity in the first succeeding taxable
year.

     The Code provides that a taxpayer must recognize taxable income to the
extent that his or her "at risk" amount is reduced below zero. This "recaptured"
income is limited to the sum of the loss deductions previously allowed to the
taxpayer, less any amounts previously recaptured. A taxpayer may be allowed a
deduction for the recaptured amounts included in his taxable income if and when
he increases his amount "at risk" in a subsequent taxable year.

     The Limited Partners will purchase Units by tendering cash to the
Partnership. To the extent the cash contributed constitutes the "personal funds"
of the Partners, the Partners should be considered at risk with respect to those
amounts. If the cash contributed constitutes "personal funds," in the opinion of

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Conner & Winters, neither the at risk rules nor the adjusted basis rules will
limit the deductibility of losses generated from the Partnership and allocated
to a Limited Partner, to the extent of such Limited Partner's cash
contributions. In no event, however, may a Partner deduct his distributive share
of partnership loss where such share exceeds the Partner's tax basis in the
Partnership.

Passive Loss Limitations

     Introduction. The deductibility of losses generated from passive activities
will be limited for certain taxpayers. The passive activity loss limitations
apply to individuals, estates, trusts, and personal service corporations as well
as, to a lesser extent, closely held C corporations.

     The definition of a "passive activity" generally encompasses all rental
activities as well as all activities with respect to which the taxpayer does not
"materially participate." A taxpayer will be considered as materially
participating in a venture only if the taxpayer is involved in the operations of
the activity on a "regular, continuous, and substantial" basis. In addition, no
limited partnership interest will be treated as an interest with respect to
which a taxpayer materially participates.

     Passive activity losses ("PALs") of a taxpayer are the amounts of such
taxpayer's losses from passive activities for a taxable year. Individuals and
personal service corporations are entitled to deduct PALs only to the extent of
their passive income whereas closely held C corporations (other than personal
service corporations) can offset PALs against both passive and net active
income, but not against portfolio (dividends, interest, etc.) income. In
calculating passive income and loss, however, all passive activities of the
taxpayer are aggregated. PALs disallowed as a result of the above rules will be
suspended and can be carried forward indefinitely to offset future passive (or
passive and active, in the case of a closely held C corporation) income.

     Upon a taxpayer's disposition of his entire interest in a passive activity
in a fully taxable transaction not involving a related party, any passive loss
of such taxpayer that was suspended by the provisions of the passive activity
loss rules is deductible against either passive or non-passive income.

     Limited Partner Interests. Most Limited Partners' distributive shares of
the Partnership's losses will be treated as PALs, the availability of which will
be limited in each case to the individual Partner's passive income in all
passive activities in which the Limited Partner has an interest. If a Limited
Partner does not have sufficient passive income to utilize the PALs, the
disallowed PALs will be suspended and may be carried forward to be deducted
against passive income arising in future years. Further, upon the disposition by
a Limited Partner of his entire interest in the Partnership to an unrelated
party in a fully taxable transaction, such suspended losses will be available,
as described above.

Alternative Minimum Tax

     Tax benefits associated with oil and gas exploration activities similar to
that of the Partnership had for several years been subject to the AMT.
Specifically, prior to January 1, 1993, IDC was an AMT preference item to the
extent that "excess IDC" exceeded 65% of a taxpayer's net income from oil and
gas properties for the year. Excess IDC was the amount by which the taxpayer's
IDC deduction exceeded the deduction that would have been allowed if the IDC had
been capitalized and amortized on a straight-line basis over ten years.
Percentage depletion, to the extent it exceeded a property's basis, was also an
AMT preference item.

     For independent producers in taxable years beginning after 1992, the Energy
Policy Act of 1992 repealed the treatment of percentage depletion as a
preference item for AMT purposes and reduced the AMT on expensing of IDC by 30%.

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Gain or Loss on Sale of Property or Units

     In the event some or all of the property of the Partnership is sold, or
upon sale of a Unit, a Limited Partner will realize gain to the extent the
amount realized exceeds his or her basis in the Partnership. In such case, there
may be recapture, as ordinary income, of IDCs and depletion previously allocated
to such Limited Partner. If the gain realized exceeds the amount of the
recapture income, the Limited Partner will recognize capital gains for the
balance.

     It is possible that a Limited Partner will be required to recognize
ordinary income pursuant to the recapture rules in excess of the taxable income
on the disposition transaction or in a situation where the disposition
transaction resulted in a taxable loss. To balance the excess income, the
Limited Partner would recognize a capital loss for the difference between the
gain and the income. Depending on a Limited Partner's particular tax situation,
some or all of this loss might be deferred to future years, resulting in a
greater tax liability in the year in which the sale was made and a reduced
future tax liability.

     Any partner who sells or exchanges interests in a partnership must
generally notify the partnership in writing within 30 days of such transaction
in accordance with Regulations and must attach a statement to his tax return
reflecting certain facts regarding the sale or exchange. The notice must include
names, addresses, and taxpayer identification numbers (if known) of the
transferor and transferee and the date of the exchange. The partnership also is
required to provide copies to the transferor and the transferee of information
it is required to provide to the Service in connection with such a transfer.

     A Limited Partner who is required to notify the Partnership of a transfer
of his or her Partnership interest and who fails to do so may be fined $50 for
each failure, limited to $100,000 provided there is no intentional disregard of
the filing requirement. Similarly, the Partnership may be fined for failure to
report the transfer. The partnership's penalty is $50 for each failure, limited
to $250,000 provided there is no intentional disregard of the filing
requirement.

Partnership Distributions

     Under the Code, any increase in a partner's share of partnership
liabilities, or any increase in such partner's individual liabilities by reason
of an assumption by him or her of partnership liabilities is considered to be a
contribution of money by the partner to the partnership. Similarly, any decrease
in a partner's share of partnership liabilities or any decrease in such
partner's individual liabilities by reason of the partnership's assumption of
such individual liabilities will be considered as a distribution, a constructive
distribution, of money to the partner by the partnership.

     A Partner's adjusted basis in his or her Units will initially consist of
the cash he or she contributes to the Partnership. His or her basis will be
increased by his or her share of Partnership income and decreased by his or her
share of Partnership losses and distributions. To the extent that actual or
constructive distributions are in excess of a Partner's adjusted basis in his or
her Partnership interest (after adjustment for contributions and his or her
share of income and losses of the Partnership), that excess will generally be
treated as gain from the sale of a capital asset. In addition, gain could be
recognized to a distributee partner upon the disproportionate distribution to a
partner of unrealized receivables or substantially appreciated inventory. The
Partnership Agreement prohibits distributions to a Limited Partner to the extent
such distribution would create or increase a deficit in a Limited Partner's
Capital Account.

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Partnership Allocations

     The Partners' distributive shares of partnership income, gain, loss, and
deduction should be determined and allocated substantially in accordance with
the terms of the Partnership Agreement.

     The Service could contend that the allocations contained in the Partnership
Agreement do not have substantial economic effect or are not in accordance with
the Partners' interests in the Partnership and may seek to reallocate these
items in a manner that will increase the income or gain or decrease the
deductions allocable to a Partner.

Profit Motive

     The existence of economic, non-tax motives for entering into the
Transaction is essential if the Partners are to obtain the tax benefits
associated with an investment in the Partnership. That is, Partners must seek to
make a profit from their activities with respect to the Partnership and its
activities beyond any tax benefits derived from those activities or risk losing
those tax benefits.

     Where an activity entered into by an individual is not engaged in for
profit, the individual's deductions with respect to that activity are limited to
those not dependent upon the nature of the activity (e.g., interest and taxes);
any remaining deductions are limited to gross income from the activity for the
year. Should it be determined that a Partner's motives with respect to the
Transaction are "not for profit," the Service could disallow all or a portion of
the deductions generated by the Partnership's activities and allocated to such
Partner.

     The Code generally provides for a presumption that an activity is entered
into for profit where gross income from the activity exceeds the deductions
attributable to such activity for three or more of the five consecutive taxable
years ending with the taxable year in question. At the taxpayer's election, such
presumption can relate to three or more of the taxable years in the 5-year
period beginning with the taxable year in which the taxpayer first engages in
the activity.

     Due to the inherently factual nature of a Partner's intent and motive in
engaging in the Transaction, Conner & Winters does not express an opinion as to
the ultimate resolution of this issue in the event of a challenge by the
Service.

Administrative Matters

     Returns and Audits. While no federal income tax is required to be paid by
an organization classified as a partnership for federal income tax purposes, a
partnership must file federal income tax information returns which are subject
to audit by the Service. Any such audit may lead to adjustments, in which event
the Limited Partners may be required to file amended personal federal income tax
returns. Any such audit may also lead to an audit of a Limited Partner's
individual tax return and adjustments to items unrelated to an investment in
Units.

     For purposes of reporting, audit, and assessment of additional federal
income tax, the tax treatment of "partnership items" is determined at the
partnership level. Partnership items will include those items that the
Regulations provide are more appropriately determined at the partnership level
than the partner level. The Service generally cannot initiate deficiency
proceedings against an individual partner with respect to partnership items
without first conducting an administrative proceeding at the partnership level
as to the correctness of the partnership's treatment of the item. An individual
partner may not file suit for a credit or a refund arising out of a partnership
item without first filing a request for an administrative proceeding by the
Service at the partnership level. Individual partners are entitled to notice of
such administrative proceedings and decisions therein, except in the case of
partners with less

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than 1% profits interest in a partnership having more than
100 partners. If a group of partners having an aggregate profits interest of 5%
or more in such a partnership so requests, however, the Service also must mail
notice to a partner appointed by that group to receive notice. All partners,
whether or not entitled to notice, are entitled to participate in the
administrative proceedings at the partnership level, although the Partnership
Agreement provides for waiver of certain of these rights by the Limited
Partners. All Partners, including those not entitled to notice, may be bound by
a settlement reached by the Partnership's representative, the "tax matters
partner," which will be Unit Petroleum Company. If a proposed tax deficiency is
contested in any court by any Partner or by the General Partner, all Partners
may be deemed parties to such litigation and bound by the result reached
therein.

     Consistency Requirements. A partner must generally treat partnership items
on his or her federal income tax returns consistently with the treatment of such
items on the partnership information return unless he or she files a statement
with the Service identifying the inconsistency or otherwise satisfies the
requirements for waiver of the consistency requirement. Failure to satisfy this
requirement will result in an adjustment to conform the partner's treatment of
the item with the treatment of the item on the partnership return. Intentional
or negligent disregard of the consistency requirement may subject a partner to
substantial penalties.

     Compliance Provisions. Taxpayers are subject to several penalties and other
provisions that encourage compliance with the federal income tax laws, including
an accuracy-related penalty in an amount equal to 20% of the portion of an
underpayment of tax caused by negligence, intentional disregard of rules or
regulations or any "substantial understatement" of income tax. A "substantial
understatement" of tax is an understatement of income tax that exceeds the
greater of (a) 10% of the tax required to be shown on the return (the correct
tax), or (b) $5,000 ($10,000 in the case of a corporation other than an S
corporation or personal holding corporation).

     Except in the case of understatements attributable to "tax shelter" items,
an item of understatement may not give rise to the penalty if (a) there is or
was "substantial authority" for the taxpayer's treatment of the item or (b) all
facts relevant to the tax treatment of the item are disclosed on the return or
on a statement attached to the return, and there is a reasonable basis for the
tax treatment of such item by the taxpayer. In the case of partnerships, the
disclosure is to be made on the return of the partnership. Under the applicable
Regulations, however, an individual partner may make adequate disclosure with
respect to partnership items if certain conditions are met.

     In the case of understatements attributable to "tax shelter" items, the
substantial understatement penalty may be avoided only if the taxpayer
establishes that, in addition to having substantial authority for his or her
position, he or she reasonably believed the treatment claimed was more likely
than not the proper treatment of the item. A "tax shelter" item is one that
arises from a partnership (or other form of investment) the principal purpose of
which is the avoidance or evasion of federal income tax.

     Based on the definition of a "tax shelter" in the Regulations, performance
of previous partnerships, and the planned activities of the Partnership, the
General Partner does not believe that the Partnership will qualify as a "tax
shelter" under the Code, and will not register it as such.

Accounting Methods and Periods

     The Partnership will use the accrual method of accounting and will select
the calendar year as its taxable year.

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State and Local Taxes

     The opinions expressed herein are limited to issues of federal income tax
law and do not address issues of state or local law. Prospective investors are
urged to consult their tax advisors regarding the impact of state and local laws
on an investment in the Partnership.

Individual Tax Advice Should Be Sought

     The foregoing is only a summary of the material tax considerations that may
affect an investor's decision regarding the purchase of Units. The tax
considerations attendant to an investment in a Partnership are complex and vary
with individual circumstances. Each prospective investor should review such tax
consequences with his tax advisor.


                       COMPETITION, MARKETS AND REGULATION

     The oil and gas industry is highly competitive in all its phases. The
Partnership will encounter strong competition from both major independent oil
companies and individuals, many of which possess substantial financial
resources, in acquiring economically desirable prospects and equipment and labor
to operate and maintain Partnership Properties. There are likewise numerous
companies and individuals engaged in the organization and conduct of oil and gas
drilling programs and there is a high degree of competition among such companies
and individuals in the offering of their programs.

Marketing of Production

     The availability of a ready market for any oil and gas produced from
Partnership Wells will depend upon numerous factors beyond the control of the
Partnership, including the extent of domestic production and importation of oil
and gas, the proximity of Partnership Wells to gas pipelines and the capacity of
such gas pipelines, the marketing of other competitive fuels, fluctuation in
demand, governmental regulation of production, refining and transportation,
general national and worldwide economic conditions, and the pricing, use and
allocation of oil and gas and their substitute fuels.

     The demand for gas decreased significantly in the 1980s due to economic
conditions, conservation and other factors. As a result of such reduced demand
and other factors, including the Power Plant and Industrial Fuel Use Act (the
"Fuel Use Act") which related to the use of oil and gas in the United States in
certain fuel burning installations, many pipeline companies began purchasing gas
on terms which were not as favorable to sellers as terms governing purchases of
gas prior thereto. Spot market gas prices declined generally during that period.
While the Fuel Use Act has been repealed and the markets for gas have improved
significantly recently, there can be no assurance that such improvement will
continue. As a result, it is possible that there may be significant delays in
selling any gas from Partnership Properties.

     In the event the Partnership acquires an interest in a gas well or
completes a productive gas well, or a well that produces both oil and gas, the
well may be shut in for a substantial period of time for lack of a market if the
well is in an area distant from existing gas pipelines. The well may remain shut
in until such time as a gas pipeline, with available capacity, is extended to
such an area or until such time as sufficient wells are drilled to establish
adequate reserves which would justify the construction of a gas pipeline,
processing facilities, if necessary, and a transmission system.

     The worldwide supply of oil has been largely dependent upon rates of
production of foreign reserves. Although in recent years the demand for oil has
slightly increased in this country, imports of foreign oil continue to increase.
Consequently, historically the prices for domestic oil production have

                                       70
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generally remained low. Future domestic oil prices will depend largely upon
the actions of foreign producers with respect to rates of production and it is
virtually impossible to predict what actions those producers will take in the
future. Prices may also be affected by political and other factors relating to
the Middle East. As a result, it is possible that prices for oil, if any,
produced from a Partnership Well will be lower than those currently available or
projected at the time the interest therein is acquired. In view of the many
uncertainties affecting the supply and demand for crude oil and natural gas, and
the change in the makeup of the Congress of the United States and the resulting
potential for a different focus for the United States energy policy, the General
Partner is unable to predict what future gas and oil prices will be.

Regulation of Partnership Operations

     Production of any oil and gas found by the Partnership will be affected by
state and federal regulations. All states in which the Partnership intends to
conduct activities have statutory provisions regulating the production and sale
of oil and gas. Such statutes, and the regulations promulgated in connection
therewith, generally are intended to prevent waste of oil and gas and to protect
correlative rights and the opportunities to produce oil and gas as between
owners of a common reservoir. Certain state regulatory authorities also regulate
the amount of oil and gas produced by assigning allowable rates of production to
each well or proration unit. Pertinent state and federal statutes and
regulations also extend to the prevention and clean-up of pollution. These laws
and regulations are subject to change and no predictions can be made as to what
changes may be made or the effect of such changes on the Partnership's
operations.

     Under the laws and administrative regulations of the State of Oklahoma
regarding forced pooling, owners of oil and gas leases or unleased mineral
interests may be required to elect to participate in the drilling of a well with
other fractional undivided interest owners within an established spacing unit or
to sell or farm out their interest therein. The terms of any such sale or
farm-out are generally those determined by the Oklahoma Corporation Commission
to be equal to the most favorable terms then available in the area in arm's
length transactions although there can be no assurance that this will be the
case. In addition, if properties become the subject of a forced pooling order,
drilling operations may have to be undertaken at a time or with other parties
which the General Partner feels may not be in the best interest of the
Partnership. In such event, the Partnership may have to farm out or assign its
interest in such properties. In addition, if a property which might otherwise be
acquired by the Partnership becomes subject to such an order, it may become
unavailable to the Partnership. Finally, as a result of forced pooling
proceedings involving a Partnership Property, the Partnership may acquire a
larger than anticipated interest in such property, thereby increasing its share
of the costs of operations to be conducted.

Natural Gas Price Regulation

     Partnership Revenues are likely to be dependent on the sale and
transportation of natural gas that may be subject to regulation by the Federal
Energy Regulatory Commission ("FERC"). Historically the sale of natural gas has
been regulated by the FERC under the Natural Gas Act of 1938 ("NGA") and/or the
Natural Gas Policy Act of 1978 ("NGPA"). Under the NGPA, natural gas is divided
into numerous, complex categories based on, among other things, when, where and
how deep the gas well was drilled and whether the gas was committed to
interstate or intrastate commerce on the day before the date of enactment of the
statute. These categories determine whether the natural gas remains subject to
non-price regulation under the NGA and/or to maximum price restrictions under
the NGPA. In addition to setting ceiling prices for natural gas, FERC approval
is required for both the commencement and abandonment of sales of certain
categories of gas in interstate commerce for resale and for the

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transportation of natural gas in interstate commerce. FERC has general
investigatory and other powers, including limited authority to set aside or
modify terms of gas purchase contracts subject to its jurisdiction. Price and
non-price regulation of natural gas produced from most wells drilled after 1978
has terminated. That gas may be sold without prior regulatory approval and at
whatever price the market will bear.

     On July 26, 1989, the Natural Gas Wellhead Decontrol Act of 1989 became
effective. Consequently, due to this statutory deregulation and FERC's issuance
of Order No. 547 discussed below, as of January 7, 1993 the price of virtually
all gas produced by producers not affiliated with interstate pipelines has been
deregulated by FERC.

     Market determined prices for deregulated categories of natural gas
fluctuate in response to market pressures which currently favor purchasers and
disfavor producers. As a result of the deregulation of a greater proportion of
the domestic United States gas market and an increased availability of natural
gas transportation, a competitive trading market for gas has developed. For
several reasons the supply of gas has exceeded demand. The General Partner
cannot reliably predict at this time whether such supply/demand imbalance will
improve or worsen from a producer's viewpoint.

     During the past several years, FERC has adopted several regulations
designed to create a more competitive, less regulated market for natural gas.
These regulations have materially affected the market for natural gas.

     FERC's initial major initiative was adoption of its "open-access
transportation program," through Order No.s 436 and 500. Regulation of Natural
Gas Pipelines After Partial Wellhead Decontrol, Order No. 436, 50 Fed. Reg.
42,408 (October 18, 1985), vacated and remanded, Associated Gas Distributors v.
FERC, 824 F.2d 981 (D.C. Cir. 1987), cert. denied, 485 U.S. 1006 (1988),
readopted on an interim basis, Order No. 500, 52 Fed. Reg. 30,344 (Aug. 14,
1987), remanded, American Gas Association v. FERC, 888 F.2d 136 (D.C. Cir.
1989), readopted, Order No. 500-H, 54 Fed. Reg. 52,344 (Dec. 21, 1989), reh'g
granted in part and denied in part, Order No. 500-I, 55 Red. Reg. 6605 (Feb. 26,
1990), aff'd in part and remanded in part, American Gas Association v. FERC, 912
F.2d 1496 (D.C. Cir. 1990), cert. denied, 111 S. Ct. 957 (1991). Order 436
implemented three key requirements: (1) jurisdictional pipelines were required
to permit their firm sales customers to convert their firm sales entitlements to
a volumetrically equivalent amount of firm transportation service over a
five-year period; (2) jurisdictional pipelines were required to offer their
open-access transportation services without discrimination or preference; and
(3) jurisdictional pipelines were required to design maximum rates to ration
capacity during peak periods and to maximize throughput for firm service during
off-peak periods and for interruptible service during all periods. The
availability of transportation under Order 500 greatly expanded the free trading
market for natural gas, including the establishment of an active and viable spot
market.

     Subsequently, in Order 636 the FERC focused on whether the resulting
regulatory structure provided all gas sellers with the same regulatory
opportunity to compete for gas purchasers. It decided that the form of bundled
pipeline services (gas sales and transportation) was unduly discriminatory and
anticompetitive. Pipeline Service Obligations and Revisions to Regulations
Governing Self-Implementing Transportation; and Regulation of Natural Gas
Pipelines After Wellhead Decontrol, Order No. 636, 57 Fed. Reg. 13,267 (Apr. 16,
1992), III FERC Stats. & Regs. Preambles Paragraph 30,939, at 30,406;
Regulations of Natural Gas Pipelines After Partial Wellhead Decontrol, and Order
Denying Rehearing in Part, Granting Rehearing in Part, and Clarifying Order No.
636, Order No. 636-A, 57 Fed. Reg. 36,128 (Aug. 12, 1992), III FERC Stats. &
Regs. Preambles Paragraph 30,950; Regulation of Natural Gas Pipelines After

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Partial Wellhead Decontrol; Regulation of Natural Gas Pipelines After Partial
Wellhead Decontrol; Order Denying Rehearing and Clarifying Order Nos. 636 and
636-A, Order No. 636-B, 57 Fed. Reg. 57,911 (Dec. 8, 1992).

     Among other things, Order 636 required each interstate pipeline company to
"unbundle" its traditional wholesale services and create and make available on
an open and nondiscriminatory basis numerous constituent services (such as
gathering services, storage services, firm and interruptible transportation
services, and stand-by sales services) and to adopt a new rate making
methodology (Straight Fixed Variable) to determine appropriate rates for those
services. To the extent the pipeline company or its sales affiliate makes gas
sales as a merchant in the future, it will do so in direct competition with all
other sellers pursuant to private contracts; however, pipeline companies have or
will become "transporters only." Order 636 also allows pipeline companies to act
as agents for their customers in arranging the transportation of gas purchased
from any supplier, including the pipeline itself, and to charge a negotiated fee
for such agency services. The FERC required each pipeline company to develop the
specific terms of service in individual proceedings and to submit for approval
by FERC a compliance filing which set forth the pipeline company's new, detailed
procedures.

     In response to a Court remand, on February 27, 1997 FERC issued its final
rule further revising Order 636. Pipeline Service Obligations and Revisions to
Regulations Governing Self-Implementing Transportation Under Part 284 and
Regulation of National Pipelines After Partial Wellhead Decontrol, 62 Fed. Reg.
10204 (Mar. 6, 1997). It modified its regulation by (i) changing the selection
of a twenty-year matching term for the right of first refusal and instead
adopting a five-year matching term and (ii) reversing the requirement that
pipelines allocate 10% of GSR costs to interruptible customers and requiring
that pipelines propose the percentage that interruptible customers will bear
based on the individual circumstances present on each pipeline. Most of the
individual pipeline restructurings arising from Order 636 have been completed.

     In essence, the goal of Order 636 is to make a pipeline's position as gas
merchant indistinguishable from that of a non-pipeline supplier. It, therefore,
pushes the point of sale of gas by pipelines upstream, perhaps all the way to
the wellhead. Order 636 also requires pipelines to give firm transportation
customers flexibility with respect to receipt and delivery points (except that a
firm shipper's choice of delivery point cannot be downstream of the existing
primary delivery point) and to allow "no-notice" service (which means that gas
is available not only simultaneously but also without prior nomination, with the
only limitation being the customer's daily contract demand) if the pipeline
offered no-notice city-gate sales service on May 18, 1992. Thus, this separation
of pipelines' sales and transportation allows non-pipeline sellers to acquire
firm downstream transportation rights and thus to offer buyers what is
effectively a bundled city-gate sales service and it permits each customer to
assemble a package of services that serves its individual requirements. But it
also makes more difficult the coordination of gas supply and transportation.

     The results of these changes could increase the marketability of natural
gas and place the burden of obtaining supplies of natural gas for local
distribution systems directly on distributors who would no longer be able to
rely on the aggregation of supplies by the interstate pipelines. Such
distributors may return to longer term contracts with suppliers who can assure a
secure supply of natural gas. A return to longer term contracts and the
attendant decrease in gas available for the spot market could improve gas
prices. The primary beneficiaries of these changes should be gas marketers and
the producers who are able to demonstrate the availability of an assured
long-term supply of natural gas to local distribution purchasers and to large
end users. However, due to the still evolutionary nature of Order 636 and its
implementation, it is not possible at this time to project the impact Order 636
will have on the Partnership's ability to sell gas directly into gas markets
previously served by the gas pipelines.

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     As a corollary to Order 636, FERC issued Order 547, which is a blanket
certificate of public convenience and necessity pursuant to Section 7 of the NGA
that authorizes any person who is not an interstate pipeline or an affiliate
thereof to make sales for resale at negotiated rates in interstate commerce of
any category of gas that is subject to the Commission's NGA jurisdiction. (There
are certain requirements which must be met before an affiliated marketer of an
interstate pipeline can avail itself of this certification.) Regulations
Governing Blanket Marketer Sales Certificates, Order No. 547, 57 Fed. Reg.
57,952 (Dec. 8, 1992) (to be codified at 18 C.F.R. Sections 284.401 - .402). The
blanket certificates were effective January 7, 1993, and do not require any
further application by a person. The goal of Order 457, in conjunction with
Orders 636, 636-A and 636-B, is to provide all merchants of natural gas a "level
playing field" so that gas merchants who are not interstate pipelines are on an
equal footing with interstate pipeline merchants who are afforded blanket sales
certificates pursuant to Order 636.

     The FERC has also begun to allow individual companies to depart from
cost-of-service regulation and set market-based rates if they can show they lack
significant market power or have mitigated market power. See, e.g., Richmond Gas
Storage Systems, 59 FERC Paragraph 61,316 (1992); El Paso Natural Gas Company,
54 FERC Paragraph 61,316, reh'g granted and denied in part, 56 FERC Paragraph
61,290 (1990); Transcontinental Gas Pipe Line Corp., 53 FERC Paragraph 61,446,
reh'g granted and denied in part, 57 FERC Paragraph 61,345 (1991). Since the
FERC has stated that "[w]here companies have market power, market-based rates
are not appropriate," in order to "enhance productive efficiency in
non-competitive markets," the FERC issued a rule allowing pipelines (and
electric utilities) "to propose incentive rate mechanisms as alternatives to
traditional cost-of-service regulations." Incentive Ratemaking for Interstate
Natural Gas Pipelines, Oil Pipelines, and Electric Utilities; Policy Statement
on Incentive Regulation, 57 Fed. Reg. 55,231 (Nov. 24, 1992). The FERC has
established five specific regulatory standards for implementing specific
incentive mechanisms: they should (1) be prospective, (2) be voluntary, (3) be
understandable, (4) result in quantifiable benefits to consumers including an
upper limit on the risk to consumers that the incentive rates would be higher
than rates they would have paid under traditional regulation, and (5)
demonstrate how they maintain or enhance incentives to improve the quality of
service.

     Other regulatory actions have included elimination of minimum take and
minimum bill provisions of pipeline sales tariffs (Order 380) and authorization
of automatic abandonment authority upon expiration or termination of the
underlying contracts (Order 490). FERC has also provided several forms of
"blanket" certificates authorizing sales of gas with pregranted abandonment.

     In addition, in Order 451, FERC established an alternative maximum lawful
price for certain NGPA Section 104 and 106 gas produced from wells drilled prior
to 1975 (so-called "old gas") which otherwise would be subject to lower ceiling
prices. FERC provided, however, that the higher price could be collected only
where the parties amended the contract or pursuant to complicated "good faith
negotiation" rules which permit purchasers facing requests for increased prices
to seek reduction of certain higher prices and authorize abandonment of both the
higher cost and lower cost supplies if agreement cannot be reached. After the
Fifth Circuit vacated Order 451 as an invalid exercise of FERC's authority, the
United States Supreme Court reversed that decision and upheld the entirety of
Order 451.

     The issuance of Order 636 and its future interpretation, as well as the
future interpretation and application by FERC of all of the above rules and its
broad authority, or of the state and local regulations by the relevant agencies,
could affect the terms and availability of transportation services for
transportation of natural gas to customers and the prices at which gas can be
sold on behalf of the Partnership. For instance, as a result of Order 636, many
interstate pipeline companies have divested

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their gathering systems, either to unregulated affiliates or to third
persons, a practice which could result in separate, and higher, rates for
gathering a producer's natural gas. In proceedings during mid and late 1994
allowing various interstate natural gas companies' spindowns or spinoffs of
gathering facilities, the FERC held that, except in limited circumstances of
abuse, it generally lacks jurisdiction over a pipeline's gathering affiliates,
which neither transport natural gas in interstate commerce nor sell gas in
interstate commerce for resale. However, pipelines spinning down gathering
systems have to include two Order No. 497 standards of conduct in their tariffs:
nondiscriminatory access to transportation for all sources of supply and no
tying of pipeline transportation service to any service by the pipeline's
gathering affiliate. In addition, if unable to reach a mutually acceptable
gathering contract with a present user of the gathering facilities, the FERC
required that the pipeline must offer a two-year "default contract" to existing
users of the gathering facilities. However, on appeal, while the United States
Court of Appeals for the District of Columbia upheld the FERC's allowing the
spinning down of gathering facilities to a non-regulated affiliate, in Conoco
Inc. v. FERC, 90 F.3d 536, 552-53 (D.C. Cir. 1996) the D.C. Circuit remanded the
FERC's default contract mechanism. On February 18, 1997 the United States
Supreme Court denied a petition to review the D. C. Circuit's decision. As a
result of FERC's action, some states have enacted or are considering statutory
and/or regulatory provisions to regulate gathering systems. Consequently, the
General Partner cannot reliably predict at this time how regulation will
ultimately impact Partnership Revenue.

Oil Price Regulation

     With respect to oil pipeline rates subject to the FERC's jurisdiction under
the Interstate Commerce Act, in October 1993 the FERC issued Order 561 to
implement the requirements of Title XVIII of the Energy Policy Act of 1992.
Order 561 established an indexing system, effective January 1, 1995, under which
many oil pipelines are able to readily change their rates to track changes in
the Producer Price Index for Finished Goods (PPI-FG), minus one percent. This
index established ceiling levels for rates. Order 561 also permits
cost-of-service proceedings to establish just and reasonable rates. The Order
does not alter the right of a pipeline to seek FERC authorization to charge
market rates. However, until the FERC makes the finding that the pipeline does
not exercise significant market power, the pipeline's rates cannot exceed the
applicable index ceiling level or a level justified by the pipeline's cost of
service.

State Regulation of Oil and Gas Production

     Most states in which the Partnership may conduct oil and gas activities
regulate the production and sale of oil and natural gas. Those states generally
impose requirements or restrictions for obtaining drilling permits, the method
of developing new fields, the spacing and operation of wells and the prevention
of waste of oil and gas resources. In addition, most states regulate the rate of
production and may establish maximum daily production allowable from both oil
and gas wells on a market demand or conservation basis. Until recently there has
been no limit on allowable daily production on the basis of market demand,
although at some locations production continues to be regulated for conservation
or market purposes. In 1992 Oklahoma and Texas imposed additional limitations on
gas production to more closely track market demand. The General Partner cannot
predict whether any state regulatory agency may issue additional allowable
reductions which may adversely affect the Partnership's ability to produce its
gas reserves.

Legislative and Regulatory Production and Pricing Proposals

     A number of legislative and regulatory proposals continually are advanced
which, if put into effect, could have an impact on the petroleum industry. The
various proposals involve, among other things, an oil import fee, restructuring
how oil pipeline rates are determined and implemented reducing

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production allowables, providing purchasers with "market-out" options in
existing and future gas purchase contracts, eliminating or limiting the
operation of take-or-pay clauses, eliminating or limiting the operation of
"indefinite price escalator clauses" (e.g., pricing provisions which allow
prices to escalate by means of reference to prices being paid by other
purchasers of natural gas or prices for competing fuels), and state regulation
of gathering systems. Proposals concerning these and other matters have been and
will be made by members of the President's office, Congress, regulatory agencies
and special interest groups. The General Partner cannot predict what legislation
or regulatory changes, if any, may result from such proposals or any effect
therefrom on the Partnership.

     The effect of these regulations could be to decrease allowable production
on Partnership Properties and thereby to decrease Partnership Revenues. However,
by decreasing the amount of natural gas available in the market, such
regulations could also have the effect of increasing prices of natural gas,
although there can be no assurance that any such increase will occur. There can
also be no assurance that the proposed regulations described above will be
adopted or that they will be adopted upon the terms set forth above.
Additionally, such proposals, if adopted, are likely to be challenged in the
courts and there can be no assurance as to the outcome of any such challenge.

Production and Environmental Regulation

     Certain states in which the Partnership may drill and own productive
properties control production from wells through regulations establishing the
spacing of wells, limiting the number of days in a given month during which a
well can produce and otherwise limiting the rate of allowable production.

     In addition, the federal government and various state governments have
adopted laws and regulations regarding protection of the environment. These laws
and regulations may require the acquisition of a permit before or after drilling
commences, impose requirements that increase the cost of operations, prohibit
drilling activities on certain lands lying within wilderness areas or other
environmentally sensitive areas and impose substantial liabilities for pollution
resulting from drilling operations, particularly operations in offshore waters
or on submerged lands.

     A past, present, or future release or threatened release of a hazardous
substance into the air, water, or ground by the Partnership or as a result of
disposal practices may subject the Partnership to liability under the
Comprehensive Environmental Response, Compensation and Liability Act, as amended
("CERCLA"), the Resource Conservation Recovery Act ("RCRA"), the Clean Water
Act, and/or similar state laws, and any regulations promulgated pursuant
thereto. Under CERCLA and similar laws, the Partnership may be fully liable for
the cleanup costs of a release of hazardous substances even though it
contributed to only part of the release. While liability under CERCLA and
similar laws may be limited under certain circumstances, typically the limits
are so high that the maximum liability would likely have a significant adverse
effect on the Partnership. In certain circumstances, the Partnership may have
liability for releases of hazardous substances by previous owners of Partnership
Properties. Additionally, the discharge or substantial threat of a discharge of
oil by the Partnership into United States waters or onto an adjoining shoreline
may subject the Partnership to liability under the Oil Pollution Act of 1990 and
similar state laws. While liability under the Oil Pollution Act of 1990 is
limited under certain circumstances, the maximum liability under those limits
would still likely have a significant adverse effect on the Partnership. The
Partnership's operations generally will be covered by the insurance carried by
the General Partner or UNIT, if any. However, there can be no assurance that
such insurance coverage will always be in force or that, if in force, it will
adequately cover any losses or liability the Partnership may incur.

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     Violation of environmental legislation and regulations may result in the
imposition of fines or civil or criminal penalties and, in certain
circumstances, the entry of an order for the removal, remediation and abatement
of the conditions, or suspension of the activities, giving rise to the
violation. The General Partner believes that the Partnership will comply with
all orders and regulations applicable to its operations. However, in view of the
many uncertainties with respect to the current controls, including their
duration and possible modification, the General Partner cannot predict the
overall effect of such controls on such operations. Similarly, the General
Partner cannot predict what future environmental laws may be enacted or
regulations may be promulgated and what, if any, impact they would have on
operations or Partnership Revenue.


                  SUMMARY OF THE LIMITED PARTNERSHIP AGREEMENT

     The business and affairs of the Partnership and the respective rights and
obligations of the Partners will be governed by the Agreement. The following is
a summary of certain pertinent provisions of the Agreement which have not been
as fully discussed elsewhere in this Memorandum but does not purport to be a
complete description of all relevant terms and provisions of the Agreement and
is qualified in its entirety by express reference to the Agreement. Each
prospective subscriber should carefully review the entire Agreement.

Partnership Distributions

     The General Partner will make quarterly determinations of the Partnership's
cash position. If it determines that excess cash is available for distribution,
it will be distributed to the Partners in the same proportions that Partnership
Revenue has been allocated to them after giving effect to previous distributions
and to portions of such revenues theretofore used or expected to be thereafter
used to pay costs incurred in conducting Partnership operations or to repay
Partnership borrowings. It is expected that no cash distributions will be made
earlier than the first quarter of 2004. Distributions of cash determined by the
General Partner to be available therefore will be made to the Limited Partners
quarterly and to the General Partner at any time. All Partnership funds
distributed to the Limited Partners shall be distributed to the persons who were
record holders of Units on the day on which the distribution is made. Thus,
regardless of when an assignment of Units is made, any distribution with respect
to the Units which are assigned will be made entirely to the assignee without
regard to the period of time prior to the date of such assignment that the
assignee holds the Units.

     The Partnership will terminate automatically on December 31, 2033 unless
prior thereto the General Partner or Limited Partners holding a majority of the
outstanding Units elect to terminate the Partnership as of an earlier date. Upon
termination of the Partnership, the debts, liabilities and obligations of the
Partnership will be paid and the Partnership's oil and gas properties and any
tangible equipment, materials or other personal property may be sold for cash.
The cash received will be used to make certain adjusting payments to the
Partners (see "SUMMARY OF THE LIMITED PARTNERSHIP AGREEMENT -- Termination").
Any remaining cash and properties will then be distributed to the Partners in
proportion to and to the extent of any remaining balances in the Partners'
capital accounts and then in undivided percentage interests to the Partners in
the same proportions that Partnership Revenues are being shared at the time of
such termination (see "SUMMARY OF THE LIMITED PARTNERSHIP AGREEMENT --
Termination").

Deposit and Use of Funds

     Until required in the conduct of the Partnership's business, Partnership
funds, including, but not limited to, the Capital Contributions, Partnership
Revenue and proceeds of borrowings by the

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Partnership, will be deposited, with or without interest, in one or more
bank accounts of the Partnership in a bank or banks to be selected by the
General Partner or invested in short-term United States government securities,
money market funds, bank certificates of deposit or commercial paper rated as
"A1" or "P1" as the General Partner, in its sole discretion, deems advisable.
Any interest or other income generated by such deposits or investments will be
for the Partnership's account. Except for Capital Contributions, Partnership
funds from any of the various sources mentioned above may be commingled with
funds of the General Partner and may be used, expended and distributed as
authorized by the terms and provisions of the Agreement. The General Partner
will be entitled to prompt reimbursement of expenses it incurs on behalf of the
Partnership.

Power and Authority

     In managing the business and affairs of the Partnership, the General
Partner is authorized to take such action as it considers appropriate and in the
best interests of the Partnership (see Section 10.1 of the Agreement). The
General Partner is authorized to engage legal counsel and otherwise to act with
respect to Service audits, assessments and administrative and judicial
proceedings as it deems in the best interests of the Partnership and pursuant to
the provisions of the Code.

     The General Partner is granted a broad power of attorney authorizing it to
execute certain documents required in connection with the organization,
qualification, continuance, modification and termination of the Partnership on
behalf of the Limited Partners (see Sections 1.5 and 1.6 of the Agreement).
Certain actions, such as an assignment for the benefit of its creditors or a
sale of substantially all of the Partnership Properties, except in connection
with the termination, roll-up or consolidation of the Partnership, cannot be
taken by the General Partner without the consent of a majority in interest of
the Limited Partners and the receipt of an opinion of Conner & Winters as
described under "Assignments by the General Partner" below (see Sections 10.15
and 12.1 of the Agreement).

     The Agreement provides that the General Partner will either conduct the
Partnership's drilling and production operations and operate each Partnership
Well or arrange for a third party operator to conduct such operations. The
General Partner will, on behalf of the Partnership, enter into an appropriate
operating agreement with the other owners of properties to be developed by the
Partnership authorizing either the General Partner or a third party operator to
conduct such operations. The Partnership Agreement further provides that the
Partnership will take such action in connection with operations pursuant to such
operating agreements as the General Partner, in its sole discretion, deems
appropriate and in the best interests of the Partnership, and the decision of
the General Partner with respect thereto will be binding upon the Partnership.

Rollup or Consolidation of the Partnership

     Two years or more after the Partnership has completed substantially all of
its property acquisition, drilling and development operations, the General
Partner may, without the vote, consent or approval of the Limited Partners,
cause all or substantially all of the oil and gas properties and other assets of
the Partnership to be sold, assigned or transferred to, or the Partnership
merged or consolidated with, another partnership or a corporation, trust or
other entity for the purpose of combining the assets of two or more of the oil
and gas partnerships formed for investment or participation by employees,
directors and/or consultants of UNIT or any of its subsidiaries; provided,
however, that the valuation of the oil and gas properties and other assets of
all such participating partnerships for purposes of such transfer or combination
shall be made on a consistent basis and in a manner which the General Partner
and UNIT believe is fair and equitable to the Limited Partners. As a consequence
of any such transfer or combination, the Partnership will be dissolved and
terminated and the Limited Partners shall receive

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partnership interests, stock or other equity interests in the transferee or
resulting entity. See "RISK FACTORS -- Investment Risks - Roll-Up or
Consolidation of the Partnership."

Limited Liability

     Under the Act, a limited partner is not generally liable for partnership
obligations unless he or she takes part in the control of the business. The
Agreement provides that the Limited Partners cannot bind or commit the
Partnership or take part in the control of its business or management of its
affairs, and that the Limited Partners will not be personally liable for any
debts or losses of the Partnership. However, the amounts contributed to the
Partnership by the Limited Partners and the Limited Partners' interests in
Partnership assets, including amounts of undistributed Partnership Revenue
allocable to the Limited Partners, will be subject to the claims of creditors of
the Partnership. A Limited Partner (or his or her estate) will be obligated to
contribute cash to the Partnership, even if the Limited Partner is unable to do
so because of death, disability or any other reason, for:

              (1) any unpaid contribution which the Limited Partner agreed
     to make to the Partnership; and

              (2) any return, in whole or in part, of the Limited Partner's
     contribution to the extent necessary to discharge Partnership
     liabilities to all creditors who extended credit or whose claims arose
     before such return.

     Liability of a Limited Partner is limited by the Act to one year for any
return of his or her contribution not in violation of the Partnership Agreement
or such Act and six years on any return of his or her contribution in violation
of the Partnership Agreement or such Act. A partner is deemed to have received a
return of his or her contribution to the extent that a distribution to him or
her reduces his or her share of the fair value of the net assets of the
Partnership below the value of his or her contribution which has not been
distributed to him or her. How this provision applies to a partnership whose
primary assets are producing oil and gas properties or other depleting assets is
not entirely clear. The Agreement provides that for the purposes of this
provision, the value of a Limited Partner's contribution which has not been
distributed to him or her at any point in time will be the Limited Partner's
Percentage of the stated capital of the Partnership allocated to the Limited
Partners as reflected in its financial statements as of such point in time.

     Maintenance of limited liability of the Limited Partners in other
jurisdictions in which the Partnership may operate may require compliance with
certain legal requirements of those jurisdictions. In such jurisdictions, the
General Partner shall cause the Partnership to operate in such a manner as it,
on the advice of responsible Conner & Winters, deems appropriate to avoid
unlimited liability for the Limited Partners (see Sections 1.5, 12.1 and 12.2 of
the Agreement). After the termination of the Partnership, any distribution of
Partnership Properties to the Limited Partners would result in their having
unlimited liability with respect to such properties.

     Although the Partnership will, with certain limited exceptions, serve as a
co-general partner of any drilling or income programs formed by UNIT or UPC in
2003 (see "PROPOSED ACTIVITIES"), the general liability of the Partnership will
not flow through to the Limited Partners.

Records, Reports and Returns

     The General Partner will maintain adequate books, records, accounts and
files for the Partnership and keep the Limited Partners informed by means of
written interim reports rendered within 60 days after each quarter of the
Partnership's fiscal year. The reports will set forth the source and disposition
of Partnership Revenues during the quarter.

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     Engineering reports on the Partnership Properties will be prepared by the
General Partner for each year for which the General Partner prepares such a
report in connection with its own activities. Such report will include an
estimate of the total oil and gas proven reserves of the Partnership, the dollar
value thereof and the value of the Limited Partners' interest in such reserve
value. The report shall also contain an estimate of the life of the Partnership
Properties and the present worth of the reserves. Each Limited Partner will
receive a summary statement of such report which will reflect the value of the
Limited Partners' interest in such reserves.

     The General Partner will timely file the Partnership's income tax returns
and by March 15 of each year or as soon thereafter as practicable, furnish each
person who was a Limited Partner during the prior year all available information
necessary for inclusion in his or her federal income tax return. (See Section
8.1 of the Agreement).

Transferability of Interests

     Restrictions. A Limited Partner may not transfer or assign Units except for
certain transfers:

         .        to the General Partner;

         .        to or for the benefit of himself or herself,  his or her
                  spouse, or other members of the transferor Limited Partner's
                  immediate family sharing the same residence;

         .        to any corporation or other entity whose beneficial owners
                  are all Limited Partners or permitted assignees;

         .        by the General Partner to any person who at the time of such
                  transfer is an employee of the General Partner,  UNIT or
                  its subsidiaries; and

         .        by reason of death or operation of law.

     Further, no sale or exchange of any Units may be made if the sale of such
interest would, in the opinion of counsel for the Partnership, result in a
termination of the Partnership for purposes of Section 708 of the Code, violate
any applicable securities laws or cause the Partnership to be treated as an
association taxable as a corporation for federal income tax purposes; provided,
however, that this condition may be waived by the General Partner, in its sole
discretion. Moreover, in no event shall all or any portion of a Limited
Partner's Units be assigned to a minor or an incompetent, except by will,
intestate succession, in trust, or pursuant to the Uniform Gifts to Minors Act.

     As the offer and sale of the Units are not being registered under the
Securities Act of 1933, as amended, they may be sold, transferred, assigned or
otherwise disposed of by a Limited Partner only if, in the opinion of counsel
for the Partnership, such transfer or assignment would not violate, or cause the
offering of the Units to be violative of, such act or applicable state
securities laws, including investor suitability standards thereunder. Because of
the structure and anticipated operation of the Partnership, Rule 144 under the
Securities Act of 1933 will not be available to Limited Partners in connection
with any such sales.

     Assignees. An assignee of a Limited Partner does not automatically become a
Substituted Limited Partner, but has the right to receive the same share of
Partnership Revenue and distributions thereof to which the assignor Limited
Partner would have been entitled. A Limited Partner who assigns his or her
Partnership interest ceases to be a Limited Partner, except that until a
Substituted Limited Partner is admitted in his or her place, the assignor
retains the statutory rights of an assignor of a Limited Partner's interest
under the partnership laws of the State of Oklahoma. The assignee of a

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Partnership interest who does not become a Substituted Limited Partner and
desires to make a further assignment of such interest is subject to all of the
restrictions on transferability of Partnership interests described herein and in
the Partnership Agreement.

     In the event of the death, incapacity or bankruptcy of a Limited Partner,
his or her legal representatives will have all the rights of a Limited Partner
only for the purpose of settling or liquidating his or her estate and such power
as the decedent, incompetent or bankrupt Limited Partner possessed to assign all
or any part of his or her interest in the Partnership and to join with such
assignee in satisfying conditions precedent to such assignee's becoming a
Substituted Limited Partner.

     A purported sale, assignment or transfer of a Limited Partner's interest
will be recognized by the Partnership when it has received written notice of
such sale or assignment in form satisfactory to the General Partner, signed by
both parties, containing the purchaser's or assignee's acceptance of the terms
of the Agreement and a representation by the parties that the sale or assignment
was lawful. Such sale or assignment will be recognized as of the date of such
notice, except that if such date is more than 30 days prior to the time of
filing, such sale or assignment will be recognized as of the time the notice was
filed with the Partnership. Distributions of Partnership Revenue will be made
only to those persons who were record owners of Units on the day any such
distribution is made.

     Substituted Limited Partners. No Limited Partner has the right to
substitute an assignee as a Limited Partner in his or her place. The General
Partner, however, has the right in its sole discretion to permit such assignee
to become a Substituted Limited Partner and any such permission by the General
Partner is binding and conclusive without the consent or approval of any Limited
Partner. Any Substituted Limited Partner must, as a condition to receiving any
interest of the Limited Partner, agree in writing to be bound by the terms and
conditions of the Partnership Agreement, pay or agree to pay the costs and
expenses incurred by the Partnership in taking the actions necessary in
connection with his or her substitution as a Limited Partner and satisfy the
other conditions specified in Article XIII of the Partnership Agreement.

     Assignments by the General Partner. The General Partner may not sell,
assign, transfer or otherwise dispose of its interest in the Partnership except
with the prior consent of a majority in interest of the Limited Partners,
provided that no such consent is required if the sale, assignment or transfer is
pursuant to a bona fide merger, other corporate reorganization or complete
liquidation, sale of substantially all of the General Partner's assets (provided
the purchasers agree to assume the duties and obligations of the General
Partner) or any sale or transfer to UNIT or any affiliate of UNIT. Any consent
of the Limited Partners will not be effective without an opinion of counsel to
the Partnership or an order or judgment of a court of competent jurisdiction to
the effect that the exercise of such right will not be deemed to evidence that
the Limited Partners are taking part in the management of the Partnership's
business and affairs and will not result in a loss of any Limited Partner's
limited liability or cause the Partnership to be classified as an association
taxable as a corporation for federal income tax purposes (see Section 12.1 of
the Agreement). Any transferee of the General Partner's interest may become a
substitute General Partner by assuming and agreeing to perform all of the duties
and obligations of a General Partner under the Agreement. In such event, the
transferring General Partner, upon making a proper accounting to the substitute
General Partner, will be relieved of any further duties or obligations with
respect to any future Partnership operations.

Amendments

     The Agreement may be amended upon the approval by a majority in interest of
the Limited Partners, except that amendments changing the Partners'
participation in costs and revenues, increasing or decreasing the General
Partner's compensation or otherwise materially and adversely affecting the

                                       81

<PAGE>
interests of either the Limited Partners or the General Partner must be approved
by all Limited Partners if their interests would be adversely affected thereby
or by the General Partner if its interest would be adversely affected thereby.
The Limited Partners have no right to propose amendments to the Agreement.

Voting Rights

     Under the Agreement, the Limited Partners will have very limited rights to
vote on any Partnership matters. Except for certain special amendments referred
to under "Amendments" above, matters submitted to the Limited Partners for
determination will be determined by the affirmative vote of Limited Partners
holding a majority of the outstanding Units. Units held by the General Partner
may be voted by it.

     Generally, Limited Partners owning more than 50% of the outstanding Units
of the Partnership may, without the necessity of concurrence by the General
Partner, vote to:

         .        Approve the execution or delivery of any assignment for the
                  benefit of the Partnership's creditors;

         .        Approve the sale or disposal of all or substantially all of
                  the Partnership's assets, except pursuant to (i) a rollup or
                  consolidation of the Partnership (see "Rollup or Consolidation
                  of the Partnership" above) or (ii) termination (see
                  "Termination" below);

         .        Approve the General Partner's sale, assignment, transfer or
                  disposal of its interest in the Partnership, unless such sale,
                  assignment or transfer is pursuant to (i) a merger or other
                  corporate reorganization, or liquidation or sale of
                  substantially all of its assets, and the purchaser agrees to
                  assume the duties and obligations of the General Partner, or
                  (ii) any sale to UNIT or its affiliates;

         .        Terminate and dissolve the Partnership; or

         .        Approve any amendments to the Agreement which may be proposed
                  by the General Partner;

provided, however, any approvals, consents or elections of the Limited Partners
will not become effective unless prior to the exercise thereof the General
Partner is furnished with an opinion of counsel for the Partnership, or an order
or judgment of any court of competent jurisdiction, that the exercise of such
rights:

         .        Will not be deemed to evidence that the Limited Partners are
                  taking part in the control or management of the Partnership's
                  business affairs;

         .        Will not result in the loss of any Limited Partner's limited
                  liability under the Act; and

         .        Will not result in the Partnership being classified as an
                  association taxable as a corporation for federal income tax
                  purposes.

Exculpation and Indemnification of the General Partner

     Pursuant to the Agreement, neither the General Partner or any affiliate
thereof will have any liability to the Partnership or to any Partners therein
for any loss suffered by the Partnership or such Partner that arises out of any
action or inaction of the General Partner or any affiliate thereof if the
General Partner or affiliate thereof in good faith determined that such course
of conduct was in the best

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<PAGE>
interest of the Partnership, the General Partner or affiliate was acting on
behalf of or performing services for the Partnership, such liability or loss was
not the result of gross negligence or willful misconduct by the General Partner
or affiliates thereof, and payments arising from such indemnification or
agreement to hold harmless are receivable only out of the tangible net assets of
the Partnership.

Termination

     The Partnership will terminate automatically on December 31, 2033. In
addition, upon the dissolution (other than pursuant to a merger, or other
corporate reorganization or sale), bankruptcy, legal disability or withdrawal of
the General Partner, the Partnership shall immediately be dissolved and
terminated. The Act provides, however, that the Limited Partners may elect to
reform and reconstitute themselves as a limited partnership within 90 days after
such dissolution under the provisions in the Partnership Agreement or under any
other terms. The Partnership may terminate sooner if a majority in interest of
the Limited Partners or the General Partner elects to dissolve and terminate the
Partnership as of an earlier date. Such right to accelerate termination of the
Partnership by the Limited Partners will not be available unless prior to any
exercise thereof the Limited Partners proposing such termination obtain and
furnish to the General Partner an opinion, order or judgment in the form
referred to above under "Transferability of Interests - Assignments by the
General Partner." The withdrawal, expulsion, dissolution, death, legal
disability, bankruptcy or insolvency of any Limited Partner will not effect a
dissolution or termination of the Partnership. In the event of an election to
terminate the Partnership prior to expiration of its stated terms, 90 days'
prior written notice must be given to all Partners specifying the termination
date which must be the last day of a calendar month following such 90 day period
unless an earlier date is approved by Limited Partners holding a majority of the
outstanding Units.

     When the Partnership is terminated, there will be an accounting with
respect to its assets, liabilities and accounts. The Partnership's physical
property and its oil and gas properties may be sold for cash. Except in the case
of an election by the General Partner to terminate the Partnership before the
tenth anniversary of the Effective Date, Partnership Properties may be sold to
the General Partner or any of its affiliates for their fair market value as
determined in good faith by the General Partner.

     Upon termination, all of the Partnership's debts, liabilities and
obligations, including expenses incurred in connection with the termination and
the sale or distribution of Partnership assets, will be paid. All Partnership
borrowings will be paid in full. When the specified payments have all been made,
the remaining cash and properties of the Partnership, if any, will be
distributed to the Partners as set forth under "Partnership Distributions" above
(see Section 16.4 of the Agreement). Such distribution will result in the
Limited Partners' having unlimited liability with respect to any Partnership
Properties distributed to them.

Insurance

     The General Partner will use its best efforts to obtain such insurance as
it deems prudent to serve as protection against liability for loss and damage.
Such insurance may include, but is not limited to, public liability, automotive
liability, workers' compensation and employer's liability insurance and blowout
and control of well insurance.


                                     COUNSEL

     Conner & Winters, P.C., 3700 First Place Tower, Tulsa, Oklahoma, has acted
as special counsel to the General Partner in connection with certain aspects of
this offering. Conner & Winters has assisted

                                       83

<PAGE>
in the preparation of the Agreement and this Memorandum. In connection with
the preparation of this Memorandum, Conner & Winters has relied entirely upon
information submitted to it by the General Partner. Certain of this information
has been verified by Conner & Winters in the course of its representation, but
no systematic effort has been made to verify all of the material information
contained herein, and much of such information is not subject to independent
verification. In addition, Conner & Winters has made no independent
investigation of the financial information concerning the General Partner.
Further, while passing on certain legal matters, Conner & Winters has not passed
on the investment merits nor is it qualified to do so. Because substantial
portions of the information contained in this Memorandum have not been
independently verified, each investor must make whatever independent inquiries
the investor or his or her advisors deem necessary or desirable to verify or
confirm the statements made herein.


                                    GLOSSARY

     As used herein and in the Agreement, the following terms and phrases will
have the meanings indicated.

     (a) "Additional Assessments" are amounts required to be contributed by the
Limited Partners to the Partnership upon a call therefore by the General Partner
in the manner described under "ADDITIONAL FINANCING -- Additional Assessments."

     (b) An "affiliate" of another person is (1) any person directly or
indirectly owning, controlling or holding with power to vote 10% or more of the
outstanding voting securities of such other person; (2) any person 10% or more
of whose outstanding voting securities are directly or indirectly owned,
controlled, or held with power to vote, by such other person; (3) any person
directly or indirectly controlling, controlled by, or under common control with
such other person; (4) any officer, director, trustee or partner of such other
person; and (5) if such other person is an officer, director, trustee or
partner, any company for which such person acts in any such capacity.

     (c) The "Aggregate Subscription" is the sum of the Capital Subscriptions of
all Limited Partners.

     (d) "Agreement" and "Partnership Agreement" refers to the Agreement of
Limited Partnership attached as Exhibit A to this Private Offering Memorandum.

     (e) The "Capital Contribution" of a Limited Partner is the amount of the
Capital Subscription actually paid in by him or her, or by any predecessor in
interest, to the capital of the Partnership including any payments made by
deductions from salary. The "Capital Contribution" of the General Partner
includes the amounts contributed to the Partnership or paid by the General
Partner or by any Limited Partner whose Units are purchased by the General
Partner pursuant to Section 4.2 of the Agreement because of a default by such
Limited Partner in the payment of an Installment or pursuant to Article XV of
the Agreement, including payments made by deductions from the salary of such
Limited Partner.

     (f) The "Capital Subscription" of a Limited Partner or his or her assignee
(including the General Partner where Units are transferred pursuant to Section
4.2 of the Agreement) is the amount specified in the Subscription Agreement
executed by such Limited Partner for payment by him or her to the capital of the
Partnership in accordance with the provisions of the Agreement, reduced by the
amounts thereof from which the Limited Partners have been released by the
General Partner of their obligation to pay.

                                       84

<PAGE>
     (g) A "Development Well" means a well intended to be drilled within the
proved areas of a known oil or gas reservoir to the depth of a stratigraphic
horizon known to be productive.

     (h) "Director" refers to the duly elected directors of UNIT as well as all
honorary directors and consultants to the Board of Directors of UNIT.

     (i) "Drilling Costs" are those costs incurred in drilling, testing,
completing and equipping a well to the point that it proves to be dry and is
abandoned or is ready to commence commercial production of oil or gas therefrom.

     (j) "Effective Date" refers to the date on which the certificate evidencing
formation of the Partnership is filed with the Secretary of State of the State
of Oklahoma as required by the Act (54 Okla. Stat. 1991, Section 309).

     (k) An "Exploratory Well" means a well drilled to find production in an
unproven area, to find a new reservoir in a field previously found to be
productive or to extend greatly the limits of a known reservoir.

     (l) A "farm-out" is an agreement whereby the owner of an oil and gas
property agrees to assign such property, usually retaining some interest therein
such as an overriding royalty, a production payment, a net profits interest or a
carried working interest, subject in most cases, however, to the drilling of one
or more wells or other performance by the prospective assignee as a condition of
the assignment.

     (m) The "General Partner's Minimum Capital Contribution" is that amount
equal to the total of (i) all Partnership costs and expenses charged to its
account from the time of the formation of the Partnership through December 31,
2003, plus (ii) the General Partner's estimate of the total Leasehold
Acquisition Costs and Drilling Costs expected to be incurred by the Partnership
subsequent to December 31, 2003, if any, minus (iii) the amount, if any, of the
unexpended Aggregate Subscription at December 31, 2003.

     (n) The "General Partner's Percentage" is that percentage determined by
dividing the amount of the General Partner's Minimum Capital Contribution by the
total of (i) the General Partner's Minimum Capital Contribution plus (ii) the
Aggregate Subscription.

     (o) "Installments" refer to the periodic payments of the Capital
Subscription, which are payable either (i) in four equal installments due on
March 15, June 15, September 15, 2003 and December 15, 2003, respectively, or
(ii) if an employee so elects, through equal deductions from 2003 salary
commencing immediately after formation of the Partnership.

     (p) "Leasehold Acquisition Costs" with respect to properties, if any,
acquired by the Partnership from non-affiliated parties mean the actual costs to
the Partnership of and in acquiring the properties, and, with respect to
properties acquired by the Partnership from the General Partner, UNIT or its
affiliates are, without duplication, the sum of:

         (1)      the prices paid by the General Partner, UNIT or its affiliates
                  in acquiring an oil and gas property, including purchase
                  option fees and charges, bonuses and penalties, if any;

         (2)      title insurance or examination costs, broker's commissions,
                  filing fees, recording costs, transfer taxes, if any, and like
                  charges incurred in connection with the acquisition of such
                  property;

                                       85

<PAGE>
         (3)      a pro rata portion of the actual, necessary and reasonable
                  expenses of the General Partner, UNIT or its affiliates for
                  seismic and geophysical services;

         (4)      rentals, shut-in royalties and ad valorem taxes paid by the
                  General Partner, UNIT or its affiliates with respect to such
                  property to the date of its transfer to the Partnership;

         (5)      interest and points actually incurred on funds used by the
                  General Partner, UNIT or its affiliates to acquire or
                  maintain such property; and

         (6)      such portion of the General Partner's, UNIT or its affiliates'
                  reasonable, necessary and actual expenses for geological,
                  engineering, drafting, accounting, legal and other like
                  services allocated to the acquisition, operations and
                  maintenance of the property in accordance with generally
                  accepted industry practices, except for expenses in connection
                  with the past drilling of wells which are not producers of
                  sufficient quantities of oil or gas to make commercially
                  reasonable their continued operations, and provided that the
                  costs and expenses enumerated in (4), (5) and (6) above with
                  respect to any particular property shall have been incurred
                  not more than thirty-six (36) months prior to the acquisition
                  of such property by the Partnership.

In the event a fractional undivided interest in a property is sold or
transferred by the General Partner, UNIT or any affiliate to an unaffiliated
third party for an amount in excess of that portion of the original cost of the
property attributable to the transferred interest, the amount of such excess
shall not reduce or be offset against the amount of the Leasehold Acquisition
Costs attributable to any interest in the same property which is transferred to
the Partnership.

     (q) "Limited Partners" are those persons who acquire Units in the
Partnership upon its formation and those transferees of Units who are accepted
as Substituted Limited Partners. The General Partner may also be a Limited
Partner if it subscribes for Units or if it subsequently acquires Units by (i)
the exercise by a Limited Partner of his or her right of presentment; (ii) a
purchase by the General Partner of the Units of a Limited Partner who defaults
in the payment of an Installment; or (iii) any other assignment or transfer.

     (r) The "Limited Partners' Percentage" is that percentage determined by
dividing the amount of the Aggregate Subscription by the total of (i) the
General Partner's Minimum Capital Contribution plus (ii) the Aggregate
Subscription.

     (s) "Normal Retirement" means retirement under the terms of a pension or
similar retirement plan adopted by the General Partner, UNIT or any subsidiary
with whom a Limited Partner is employed as in effect at the time of retirement.

     (t) "Oil and gas properties" are oil and gas leasehold working interests,
fee interests, mineral interests, royalty interests, overriding royalty
interests, production payments, options or rights to lease or acquire such
interests, geophysical exploration permits and any tangible or intangible
properties or other rights incident thereto, whether real, personal or mixed.

     (u) "Operating Expenses" are expenditures made and costs incurred in
producing and marketing oil or gas from completed wells, including, in addition
to labor, fuel, repairs, hauling, material, supplies, utility charges and other
costs incident to or necessary for the maintenance or operation of such wells or
the marketing of production therefrom, ad valorem, severance and other such
taxes (other than windfall profit taxes), insurance and casualty loss expense
and compensation to well operators or others for services rendered in conducting
such operations.

                                       86

<PAGE>
     (v) The General Partner and the Limited Partners are sometimes collectively
referred to as the "Partners."

     (w) "Partnership Agreement" and "Agreement" refer to the Agreement of
Limited Partnership attached as Exhibit A to this Private Offering Memorandum.

     (x) The "Partnership Properties" are oil and gas properties or interests
therein acquired by the Partnership or properties acquired by any partnership or
joint venture in which the Partnership is a partner or joint venturer, whether
acquired by purchase, option exercise or otherwise.

     (y) "Partnership Revenue" refers to the Partnership's gross revenues from
all sources, including interest income, proceeds from sales of production, the
Partnership's share of revenues from partnerships or joint ventures of which it
is a member, sales or other dispositions of Partnership Properties or other
Partnership assets, provided that contributions to Partnership capital by the
Partners and the proceeds of any Partnership borrowings are specifically
excluded and dry-hole and bottom-hole contributions shall be treated as
reductions of the costs giving rise to the right to receive such contributions.

     (z) "Partnership Wells" are any and all of the oil and gas wells in which
the Partnership has an interest, either directly or indirectly through any other
partnership or joint venture.

     (aa) "Productive properties" are oil and gas properties that have been
tested by drilling and determined to be capable of producing oil or gas in
commercial quantities.

     (bb) A "spacing unit" is a drilling and spacing, production or similar unit
established by any regulatory body with jurisdiction, or in the absence of such
a regulatory body or action thereby, the acreage attributable to wells drilled
under the normal spacing pattern in such area or if no such spacing unit is
designated, in keeping with generally accepted industry practices, or the
largest of such units in the event of multiple objective formations.

     (cc) "Special Production and Marketing Costs" are costs and expenses that
are not normally and customarily incurred in connection with drilling, producing
and marketing operations, including without limitation, costs incurred in
constructing compressor plants, gasoline plants, gas gathering systems, natural
gas processing plants, pipeline systems and salt water disposal systems and
costs incurred in installing pressure maintenance and secondary or tertiary
production projects.

     (dd) "Subscription Agreement" refers to the form of Limited Partner
Subscription Agreement and Suitability Statement attached as Attachment I to the
Partnership Agreement.

     (ee) A "Substituted Limited Partner" is a transferee, donee, heir, legatee
or other recipient of all or any portion of a Limited Partner's interest in the
Partnership with respect to whom all conditions and consents required to become
a Substituted Limited Partner under Article XIII of the Partnership Agreement
have been satisfied and given.

     (ff) A "Unit" is a preformation unit of limited partnership interest of a
Limited Partner in the Partnership representing a Capital Subscription of One
Thousand Dollars ($1,000).


                              FINANCIAL STATEMENTS

     On January 1, 1988 all of the oil and natural gas properties previously
owned by Unit Drilling and Exploration Company ("UDEC") and UNIT were
transferred into Sunshine Development Company through a contribution of capital.
Included in the transfer were all interests previously owned

                                       87

<PAGE>
by UDEC in numerous General and Limited Partnerships sponsored by UDEC.
Effective February 1, 1988, Sunshine Development Company, a wholly owned
subsidiary of UDEC, pursuant to an "Amended and Restated Certificate of
Incorporation" was renamed Unit Petroleum Company and became a wholly owned
subsidiary of UNIT.

     Unit Petroleum Company functions as the operating entity for all oil and
natural gas exploration and production activities including operating any
partnerships for UNIT.

     The consolidated balance sheet of Unit Petroleum Company at October 31,
2002 is unaudited and includes all adjustments which UNIT considers necessary
for a fair presentation of the financial position of Unit Petroleum Company at
October 31, 2002.































                                       88
<PAGE>
                      Unit Petroleum Company and Subsidiary
                           Consolidated Balance Sheet
                                 (In Thousands)
                                                               October 31, 2002
                                                                 (Unaudited)
                              Assets
                              ------
Current Assets:
         Cash and cash equivalents                            $             442
         Trade accounts receivable                                        9,081
         Materials and supplies, at lower of cost or market               3,120
         Other                                                              516
                                                              -----------------
                      Total current assets                               13,159
                                                              -----------------

Property and Equipment:
         Oil and natural gas properties, on the full
           cost method                                                  440,942
         Other                                                              525
                                                              -----------------
                                                                        441,467

         Less accumulated depreciation, depletion,
              amortization and impairment                               215,850
                                                              -----------------
                      Net property and equipment                        225,617
                                                              -----------------

Other Assets                                                                 62
                                                              -----------------

Total Assets                                                  $         238,838
                                                              =================

                Liabilities and Shareholders' Equity
                ------------------------------------
Current Liabilities:
         Accounts payable                                     $           8,125
         Accounts payable to parent                                       8,384
         Contract advances                                                   50
         Accrued liabilities                                              1,372
                                                              -----------------
                      Total current liabilities                          17,931
                                                              -----------------

Deferred Income Taxes                                                    55,599

Shareholders' Equity:
         Common stock, $1.00 par value, 500 shares
              authorized and outstanding                                      1
         Capital in excess of par value                                  31,543
         Retained earnings                                              133,764
                                                              -----------------
                      Total shareholders' Equity                        165,308
                                                              -----------------

Total Liabilities and Shareholders' Equity                    $         238,838
                                                              =================


                                       89
<PAGE>












                                    EXHIBIT A




               UNIT 2003 EMPLOYEE OIL AND GAS LIMITED PARTNERSHIP


                        AGREEMENT OF LIMITED PARTNERSHIP




































                                      A-1
<PAGE>


                                      INDEX

ARTICLE I Formation of Limited Partnership...................................3

ARTICLE II Definitions.......................................................4

ARTICLE III Purposes and Powers of the Partnership...........................8

ARTICLE IV Partner Capital Contributions....................................10

ARTICLE V Deposit and Use of Capital Contributions and
            Other Partnership Funds.........................................11

ARTICLE VI Sharing of Costs, Capital Accounts and Allocation
             of Charges and Income..........................................13

ARTICLE VII Fiscal Year, Accountings and Reports............................17

ARTICLE VIII Tax Returns and Elections......................................17

ARTICLE IX Distributions....................................................18

ARTICLE X Rights, Duties and Obligations of the General Partner.............18

ARTICLE XI Compensation and Reimbursements..................................23

ARTICLE XII Rights and Obligations of Limited Partners......................24

ARTICLE XIII Transferability of Limited Partner's Interest..................25

ARTICLE XIV Assignments by the General Partner..............................27

ARTICLE XV Limited Partners' Right of Presentment...........................28

ARTICLE XVI Termination and Dissolution of Partnership......................29

ARTICLE XVII Notices........................................................31

ARTICLE XVIII Amendments....................................................32

ARTICLE XIX General Provisions..............................................32


ATTACHMENT I               Limited Partner Subscription Agreement
                           and Suitability Statement.......................I-1










                                      A-2
<PAGE>


               UNIT 2003 EMPLOYEE OIL AND GAS LIMITED PARTNERSHIP
                        AGREEMENT OF LIMITED PARTNERSHIP


     THIS AGREEMENT OF LIMITED PARTNERSHIP (this "Agreement") is made and
entered into by and among Unit Petroleum Company, an Oklahoma corporation,
hereinafter referred to as the "General Partner" or "UPC" (which term shall
include any successors or assigns of UPC), and each of those persons who have
executed a counterpart of the Limited Partner Subscription Agreement and
Suitability Statement attached as Attachment I to this Agreement that have been
accepted by the General Partner, said persons being hereinafter collectively
referred to as the "Limited Partners."

     WITNESSETH THAT:


                                    ARTICLE I
                        Formation of Limited Partnership

     1.1 The parties to this Agreement hereby form a Limited Partnership (the
"Partnership") pursuant to the Revised Uniform Limited Partnership Act of the
State of Oklahoma (the "Act"). The terms and provisions hereof will be construed
and interpreted in accordance with the terms and provisions of the Act and if
any of the terms and provisions of this Agreement should be deemed inconsistent
with those terms and provisions of the Act which under the Act may not be
altered by agreement of the parties, the Act will be controlling, but otherwise
this Agreement will be controlling.

     1.2 The Partnership will be conducted under the name of "Unit 2003 Employee
Oil and Gas Limited Partnership" in Oklahoma, and under such name or variations
of such name as the General Partner deems appropriate to comply with the laws of
the other jurisdictions in which the Partnership does business.

     1.3 The principal office of the Partnership will be 1000 Kensington Tower
I, 7130 South Lewis Avenue, P.O. Box 702500, Tulsa, Oklahoma 74136, or at such
other location as may from time to time be designated by the General Partner,
and the Partnership's agent for service of process shall be Unit Corporation
("UNIT," which term shall include all or any of its subsidiaries or affiliates
unless the context otherwise requires) at the same address.

     1.4 The Partnership will be effective on the date on which the certificate
evidencing formation of the Partnership is filed with the Secretary of State of
the State of Oklahoma. Its business and operations will not be commenced prior
to such date. The Partnership will continue in existence until December 31,
2033, unless sooner terminated pursuant to any provisions of this Agreement.

     1.5 The parties hereto will execute such certificates and other documents,
and the General Partner will file, record and publish such certificates and
documents, as may be necessary or appropriate to comply with the requirements
for the formation and operation of a limited partnership under the Act and as
the General Partner, upon advice of counsel, deems necessary or appropriate to
comply with requirements of applicable laws governing the formation and
operations of a limited partnership (or a partnership in which special partners
have a limited liability) in all other jurisdictions where the Partnership
desires to conduct business, including, but not limited to, filings under the
Fictitious Name Act, Assumed Name Act or

                                      A-3
<PAGE>
similar law in effect in the counties, parishes and other governmental
jurisdictions in which the Partnership conducts business. The General Partner
shall not be required to deliver or mail a copy of the certificate of limited
partnership or any amendments thereto filed pursuant to the Act to the Limited
Partners.

     1.6 Each Limited Partner by his or her execution of a counterpart of the
Subscription Agreement irrevocably constitutes and appoints the General Partner
such Limited Partner's true and lawful attorney and agent, with full power and
authority in such Limited Partner's name, place and stead, to execute, sign,
acknowledge, swear to, deliver, file and record in the appropriate public
offices (i) all certificates or other instruments (including, without
limitation, counterparts of this Agreement) and amendments thereto which the
General Partner deems appropriate to qualify or continue the Partnership as a
limited partnership (or a partnership in which special partners have limited
liability) in the jurisdictions in which the Partnership conducts business; (ii)
all instruments and amendments thereto which the General Partner deems
appropriate to reflect any change or modification of this Agreement, the
admission of additional or substitute Partners in accordance with the terms of
this Agreement, the release or waiver of the Limited Partners from the
obligation to pay in one or more of the installments of their Capital
Subscriptions pursuant to Section 4.2 below and the termination of the
Partnership and the cancellation of the certificate of limited partnership;
(iii) all conveyances and other instruments which the General Partner deems
appropriate to evidence and reflect any sales or transfers, including sales or
transfers upon or in connection with the dissolution and termination of the
Partnership; and (iv) all consents to transfers of Partnership interests, to the
admission of substitute or additional Partners or to the withdrawal or reduction
of any Partner's invested capital, to the extent that such actions are
authorized by the terms of this Agreement. The Power of Attorney granted herein
is irrevocable and is a power coupled with an interest and will survive the
death, disability, dissolution, bankruptcy, insolvency or incapacity of a
Limited Partner.


                                   ARTICLE II
                                   Definitions

     2.1 Whenever used in this Agreement the following terms will have the
meanings described below:

          (a) The "Additional Assessments" of the Limited Partners are those
     amounts, if any, which they are required to pay into the capital of the
     Partnership pursuant to Section 5.3 of this Agreement.

          (b) An "affiliate" of another person is (1) any person directly or
     indirectly owning, controlling or holding with power to vote 10% or more of
     the outstanding voting securities of such other person; (2) any person 10%
     or more of whose outstanding voting securities are directly or indirectly
     owned, controlled, or held with power to vote, by such other person; (3)
     any person directly or indirectly controlling, controlled by, or under
     common control with such other person; (4) any officer, director, trustee
     or partner of such other person; and (5) if such other person is an
     officer, director, trustee or partner, any company for which such person
     acts in any such capacity.

          (c) The "Aggregate Subscription" is the sum of the Capital
     Subscriptions of all Limited Partners.


                                      A-4

<PAGE>
          (d) The "Capital Contribution" of a Limited Partner is the amount of
     the Capital Subscription actually paid in by him or her, or by any
     predecessor in interest, to the capital of the Partnership, including any
     payments made by deductions from salary. The "Capital Contribution" of the
     General Partner includes the amounts contributed to the Partnership or paid
     by the General Partner or by any Limited Partner whose Units are purchased
     by the General Partner including purchases pursuant to Section 4.2 of this
     Agreement because of a default by such Limited Partner in the payment of a
     subscription installment or pursuant to Article XV of this Agreement,
     including payments made by deductions from the salary of such Limited
     Partner.

          (e) The "Capital Subscription" of a Limited Partner or his or her
     assignee (including the General Partner where Units are transferred
     pursuant to Section 4.2 of this Agreement) is the amount specified in the
     Subscription Agreement executed by such Limited Partner for payment by him
     or her to the capital of the Partnership in accordance with the provisions
     of this Agreement, reduced by the amount thereof from which the Limited
     Partner has been released by the General Partner of his or her obligation
     to pay pursuant to Section 4.2 hereof.

          (f) "Drilling Costs" are those costs incurred in drilling, testing,
     completing and equipping a Partnership Well to the point that it proves to
     be dry and is abandoned or is ready to commence commercial production of
     oil or gas therefrom.

          (g) "Effective Date" refers to the date on which the certificate
     evidencing formation of the Partnership is filed with the Secretary of
     State of the State of Oklahoma as required by the Act (54 Okla. Stat. 1991,
     Section 309).

          (h) A "farm-out" is an agreement whereby the owner of an oil and gas
     property agrees to assign such property, usually retaining some interest
     therein such as an overriding royalty, a production payment, a net profits
     interest or a carried working interest, subject in most cases, however, to
     the drilling of one or more wells or other performance by the prospective
     assignee as a condition of the assignment.

          (i) The "General Partner's Minimum Capital Contribution" is that
     amount equal to the total of (i) all Partnership costs and expenses charged
     to its account from the time of the formation of the Partnership through
     December 31, 2003, plus (ii) the General Partner's estimate of the total
     Leasehold Acquisition Costs and Drilling Costs expected to be incurred by
     the Partnership subsequent to December 31, 2003, minus (iii) the amount, if
     any, of the unexpended Aggregate Subscription at December 31, 2003.

          (j) The "General Partner's Percentage" is that percentage determined
     by dividing the amount of the General Partner's Minimum Capital
     Contribution by the total of (i) the General Partner's Minimum Capital
     Contribution plus (ii) the Aggregate Subscription.

          (k) "Leasehold Acquisition Costs" with respect to properties, if any,
     acquired by the Partnership from non-affiliated parties mean the actual
     costs to the Partnership of and in acquiring the properties, and, with
     respect to properties acquired by the Partnership from the General Partner,
     UNIT or its affiliates, are, without duplication, the sum of: (1) the
     prices paid by the General Partner, UNIT or its affiliates in acquiring an
     oil and gas property, including purchase option fees and charges, bonuses
     and penalties,

                                      A-5

<PAGE>
     if any; (2) title insurance or examination costs, broker's
     commissions, filing fees, recording costs, transfer taxes, if any, and like
     charges incurred in connection with the acquisition of such property; (3) a
     pro rata portion of the actual, necessary and reasonable expenses of the
     General Partner, UNIT or its affiliates for seismic and geophysical
     services; (4) rentals, shut-in royalties and ad valorem taxes paid by the
     General Partner, UNIT or its affiliates with respect to such property to
     the date of its transfer to the Partnership; (5) interest and points
     actually incurred on funds used by the General Partner, UNIT or its
     affiliates to acquire or maintain such property; and (6) such portion of
     the General Partner's, UNIT's or its affiliates' reasonable, necessary and
     actual expenses for geological, engineering, drafting, accounting, legal
     and other like services allocated to the acquisition, operations and
     maintenance of the property in accordance with generally accepted industry
     practices, except for expenses in connection with the past drilling of
     wells which are not producers of sufficient quantities of oil or gas to
     make commercially reasonable their continued operations, and provided that
     the costs and expenses enumerated in (4), (5) and (6) above with respect to
     any particular property shall have been incurred not more than thirty-six
     (36) months prior to the acquisition of such property by the Partnership.
     In the event a fractional undivided interest in a property is sold or
     transferred by the General Partner, UNIT or any affiliate to an
     unaffiliated third party for an amount in excess of that portion of the
     original cost of the property attributable to the transferred interest, the
     amount of such excess shall not reduce or be offset against the amount of
     the Leasehold Acquisition Costs attributable to any interest in the same
     property which is transferred to the Partnership.

          (l) "Limited Partners" are those persons who acquire Units in the
     Partnership upon its formation and those transferees of Units who are
     accepted as Substituted Limited Partners. The General Partner may also be a
     Limited Partner if it subscribes for Units or if it subsequently acquires
     Units by (i) the exercise by a Limited Partner of his or her right of
     presentment; (ii) a purchase by the General Partner of the Units of a
     Limited Partner who defaults in the payment of any subscription
     installment; or (iii) any other assignment or transfer.

          (m) The "Limited Partners' Percentage" is that percentage determined
     by dividing the amount of the Aggregate Subscription by the total of (i)
     the General Partner's Minimum Capital Contribution plus (ii) the Aggregate
     Subscription.

          (n) "Normal Retirement" means retirement under the provision of a
     pension or similar retirement plan adopted by the General Partner, UNIT or
     any subsidiary with whom a Limited Partner is employed as in effect at the
     time of the employee's retirement.

          (o) "Oil and gas properties" are oil and gas leasehold working
     interests, fee interests, mineral interests, royalty interests, overriding
     royalty interests, production payments, options or rights to lease or
     acquire such interests, geophysical exploration permits and any tangible or
     intangible properties or other rights incident thereto, whether real,
     personal or mixed.

          (p) "Operating Expenses" are expenditures made and costs incurred in
     producing and marketing oil or gas from completed wells, including, in
     addition to labor, fuel, repairs, hauling, material, supplies, utility
     charges and other costs incident to or necessary for the maintenance or
     operation of such wells or the marketing of production


                                      A-6

<PAGE>
     therefrom, ad valorem, severance and other such taxes (other than
     windfall profit taxes), insurance and casualty loss expense and
     compensation to well operators or others for services rendered in
     conducting such operations.

          (q) The General Partner and the Limited Partners are sometimes
     collectively referred to as the "Partners."

          (r) The "Partnership Properties" are oil and gas properties or
     interests therein acquired by the Partnership or properties acquired by any
     partnership or joint venture in which the Partnership is a partner or joint
     venturer, whether acquired by purchase, option exercise or otherwise.

          (s) "Partnership Revenue" refers to the Partnership's gross revenues
     from all sources, including interest income, proceeds from sales of
     production, the Partnership's share of revenues from partnerships or joint
     ventures of which it is a member, sales or other dispositions of
     Partnership Properties or other Partnership assets, provided that
     contributions to Partnership capital by the Partners and the proceeds of
     any Partnership borrowings are specifically excluded and dry-hole and
     bottom-hole contributions shall be treated as reductions of the costs
     giving rise to the right to receive such contributions.

          (t) "Partnership Wells" are any and all of the oil and gas wells in
     which the Partnership has an interest, either directly or indirectly
     through any other partnership or joint venture.

          (u) "Productive properties" are oil and gas properties that have been
     tested by drilling and determined to be capable of producing oil or gas in
     commercial quantities.

          (v) "Special Production and Marketing Costs" are costs and expenses
     that are not normally and customarily incurred in connection with drilling,
     producing and marketing operations, including without limitation, costs
     incurred in constructing compressor plants, gasoline plants, gas gathering
     systems, natural gas processing plants, pipeline systems and salt water
     disposal systems and costs incurred in installing pressure maintenance and
     secondary or tertiary production projects.

          (w) "Subscription Agreement" refers to the form of Limited Partner
     Subscription Agreement and Suitability Statement attached as Attachment I
     to this Agreement.

          (x) A "Substituted Limited Partner" is a transferee, donee, heir,
     legatee or other recipient of all or any portion of a Limited Partner's
     interest in the Partnership with respect to whom all conditions and
     consents required to become a Substituted Limited Partner under Article
     XIII have been satisfied and given.

          (y) A "Unit" is a preformation unit of limited partnership interest of
     a Limited Partner in the Partnership representing a Capital Subscription of
     One Thousand Dollars ($1,000).





                                      A-7

<PAGE>
                                   ARTICLE III
                     Purposes and Powers of the Partnership

     3.1 The purposes of the Partnership will be to acquire productive oil
and gas properties and to explore for, produce, treat, transport and market oil,
gas or both, or products derived therefrom, anywhere in the United States. It is
contemplated that all or most of the Partnership's operations will be conducted
as part of the operations of the General Partner and its affiliates, but the
Partnership may engage in operations on its own or in conjunction with
unaffiliated third parties. In accomplishing such purposes the Partnership may:

          (a) acquire oil and gas properties, either alone or in conjunction
     with other parties;

          (b) conduct geological and geophysical investigations, including,
     without limitation, seismic exploration, core drilling and other means and
     methods of exploration;

          (c) drill, equip, complete, rework, reequip, recomplete, plug back,
     deepen, plug and abandon Partnership Wells as the General Partner deems
     advisable;

          (d) acquire and dispose of tangible lease and well equipment for use
     or used in connection with Partnership Wells;

          (e) employ or retain such personnel and obtain such legal, accounting,
     geological, geophysical, engineering and other professional services and
     advice as the General Partner may deem advisable in the course of the
     Partnership's operations under this Agreement;

          (f) either pay or elect not to pay delay rentals or shut-in royalties
     on Partnership Properties as appropriate in the judgment of the General
     Partner, it being understood that the General Partner will not be liable
     for failure to make correct or timely payments of delay rentals or shut-in
     royalties if such failure was due to any reason other than gross negligence
     or lack of good faith;

          (g) make or give dry-hole or bottom-hole or other contributions of oil
     and gas properties, money or both, to encourage drilling by others in the
     vicinity of or on Partnership Properties;

          (h) negotiate for and accept dry-hole, bottom-hole or other
     contributions of oil and gas properties, cash or both, as consideration for
     the drilling of a Partnership Well, with oil and gas properties so
     acquired, if any, to become Partnership Properties;

          (i) pay all ad valorem taxes levied or assessed against the
     Partnership Properties, all taxes upon or measured by the production of oil
     or gas or other hydrocarbons therefrom, and all other taxes (other than
     income taxes) directly relating to operations conducted under this
     Agreement;

          (j) enter into and operate pursuant to operating agreements with
     respect to Partnership Properties naming either the General Partner, any of
     its affiliates or a third party as operator, or enter into partnership
     agreements with third parties whereby the Partnership may be either a
     general or a limited partner (including any partnerships formed or
     sponsored by the General Partner or in which the General Partner may also

                                      A-8

<PAGE>
     be a partner), which operating or partnership agreements shall contain such
     terms, provisions and conditions as the General Partner deems appropriate;

          (k) execute all documents or instruments of any kind which the General
     Partner deems appropriate for carrying out the purposes of the Partnership,
     including, without limitation, unitization agreements, gasoline plant
     contracts, recycling agreements and agreements relating to pressure
     maintenance and secondary or tertiary production projects;

          (l) purchase and establish inventories of equipment and material
     required or expected to be required in connection with its operations;

          (m) contract or enter into agreements with unaffiliated third parties,
     the General Partner or its affiliates for the performance of services and
     the purchase and sale of material, equipment, supplies and property, both
     real and personal, provided, however, that any such contracts or agreements
     with the General Partner or any of its affiliates shall, except as
     otherwise provided herein, provide for prices, fees, rates, charges or
     other compensation which are not greater than those available from, being
     paid to or charged by unaffiliated third parties dealing at arm's length in
     the same or a similar geographic area for the same or comparable services,
     material, equipment, supplies or property;

          (n) conduct operations either alone or as a joint venturer, co-tenant,
     partner or in any other manner of participation with third persons and to
     enter into agreements and contracts setting forth the terms and provisions
     of such participation;

          (o) borrow money from banks and other lending institutions for
     Partnership purposes and pledge Partnership Properties (including
     production therefrom) for the repayment of such loans, it being understood
     that no bank or other lending institution to which the General Partner
     makes application for a loan will be required to inquire as to the purposes
     for which such loan is sought, and as between the Partnership and such bank
     or lending institution it will be conclusively presumed that the proceeds
     of such loan are to be and will be used for purposes authorized under the
     terms of this Agreement;

          (p) hold Partnership Properties in its own name or in the name of the
     General Partner, UNIT or any affiliate or any other party as nominee for
     the Partnership;

          (q) sell, relinquish, release, farm-out, abandon or otherwise dispose
     of Partnership Properties, including undeveloped, productive and condemned
     properties;

          (r) produce, treat, transport and market oil and gas and execute
     division orders, contracts for the marketing or sale of oil, gas or other
     hydrocarbons and other marketing agreements;

          (s) purchase, sell or pledge payments out of production from
     Partnership Properties; and

          (t) perform any and all other acts or activities customary or incident
     to exploration for or development, production and marketing of oil and gas.




                                      A-9

<PAGE>
                                   ARTICLE IV
                          Partner Capital Contributions

     4.1 The General Partner will have the unrestricted right to admit such
parties as Limited Partners as it deems advisable. By their execution of the
Subscription Agreement, the Limited Partners severally agree, subject to the
acceptance of their subscription by the General Partner, to be bound by the
terms hereof as Limited Partners.

     4.2 The Capital Subscriptions of the Limited Partners will be payable
either (i) in four equal installments on March 15, 2003, June 15, 2003,
September 15, 2003, and December 15, 2003, respectively, or (ii) by employees so
electing, through equal deductions from 2003 salary paid to the employee by the
General Partner, UNIT or its subsidiaries commencing immediately after the
Effective Date. Notwithstanding the foregoing, if in the judgment of the General
Partner, the entire amount of the Aggregate Subscription is not required for
purposes of conducting the business, operations and affairs of the Partnership,
the General Partner may, at its sole option, elect to release the Limited
Partners from the obligation to pay in one or more of the installments of their
Capital Subscriptions. If Units are acquired by a corporation or other entity,
the beneficial owners of the interests therein shall be jointly and severally
liable for the payment of the Capital Subscription. If an employee or director
who has subscribed for Units (either directly or through a corporation or other
entity) ceases to be employed by or a director of the General Partner, UNIT or
any of its subsidiaries for any reason other than death, disability or Normal
Retirement prior to the time the full amount of his or her Capital Subscription
is paid, then the due date for any unpaid amount shall be accelerated so that
the full amount of his or her unpaid Capital Subscription shall be due and
payable on the effective date of such termination. The Capital Subscriptions
shall be legally binding obligations of the Limited Partners and any past due
amounts shall bear interest at the annual rate equal to two (2) percentage
points in excess of the prime rate of interest of Bank of Oklahoma, N.A., Tulsa,
Oklahoma, or successor bank, as announced and in effect from time to time, until
paid. Further, in the event a Limited Partner fails to pay any installment when
due, the General Partner, at its sole option and discretion, may elect to
purchase the Units of such defaulting Limited Partner at a price equal to the
total amount of the Capital Contributions actually paid into the Partnership by
such defaulting Limited Partner, less the amount of any Partnership
distributions that may have been received by him or her. Such option may be
exercised by the General Partner by written notice to the Limited Partner at any
time after the date that the unpaid installment was due and shall be deemed
exercised when the amount of the purchase price is first tendered to the
defaulting Limited Partner. The General Partner may, in its discretion, accept
payments of delinquent installments but shall not be required to do so. In the
event that the General Partner elects to purchase the Units of a defaulting
Limited Partner, it shall pay into the Partnership the amount of the delinquent
installment (excluding any interest that may have accrued thereon) and shall pay
each additional installment, if any, payable with respect to such Units as it
becomes due. By virtue of such purchase, the General Partner shall be allocated
all Partnership Revenues and be charged with all Partnership costs and expenses
attributable to such Units otherwise allocable or chargeable to the defaulting
Limited Partner to the extent provided in Section 13.9.

     4.3 If the Partnership requires funds to conduct Partnership operations
during the period between any of the installments due as set forth in Section
4.2 above, then, notwithstanding the provisions of Section 5.4 below, the
General Partner shall advance funds to the Partnership in an amount equal to the
funds then required to conduct such operations but in

                                      A-10

<PAGE>
no event more than the total amount of the Aggregate Subscription remaining
unpaid. With respect to any such advances, the General Partner shall receive no
interest thereon and no financing charges will be levied by the General Partner
in connection therewith. The General Partner shall be repaid out of the Capital
Subscription installments thereafter paid into the capital of the Partnership
when due.

     4.4 Additional Assessments required by the General Partner pursuant to
Section 5.3 of this Agreement will be payable in cash on such date as the
General Partner may set in its written notice, but in no event will such
assessments be due earlier than thirty (30) days after the date of mailing of
the notice. Notice of the General Partner's call for Additional Assessments
shall specify the amount required, the manner in which the additional funds will
be expended, the date on which such amounts are payable, and the consequences of
non-payment. The General Partner will not be required to accept late payments of
such amounts, but it may in its discretion do so.

     4.5 The General Partner will contribute to the capital of the Partnership
amounts equal to the total of all costs paid by the Partnership that are charged
to the General Partner's account as such costs are incurred.


                                    ARTICLE V
                  Deposit and Use of Capital Contributions and
                             Other Partnership Funds

     5.1 Until required in the conduct of the Partnership's business,
Partnership funds, including, but not limited to, Capital Contributions,
Partnership Revenue and proceeds of borrowings by the Partnership, will be
deposited, with or without interest, in one or more bank accounts of the
Partnership in a bank or banks selected by the General Partner or invested in
short-term United States government securities, money market funds, bank
certificates of deposit or commercial paper rated as "A1" or "P1" as the General
Partner, in its sole discretion, deems advisable. Any interest or other income
generated by such deposits or investments will be for the Partnership's account.
Except for Capital Contributions, Partnership funds from any of the various
sources mentioned above may be commingled with other Partnership funds and with
the funds of the General Partner and may be withdrawn, expended and distributed
as authorized by the terms and provisions of this Agreement.

     5.2 The Capital Contributions of the Limited Partners will be expended for
costs incurred by the Partnership that, in accordance with the terms of this
Agreement, are properly chargeable to the Limited Partners' accounts.

     5.3 After the General Partner's Minimum Capital Contribution has been fully
expended, if the Aggregate Subscription has all been fully expended or committed
and additional funds are required in order to pay Drilling Costs, Special
Production and Marketing Costs or Leasehold Acquisition Costs of productive
properties which are chargeable to the Limited Partners, the General Partner
may, but shall not be required to, make one or more calls for Additional
Assessments from Limited Partners pursuant to Section 4.4; provided, however,
that the aggregate amount of Additional Assessments called of the Limited
Partners may not exceed $100 per Unit. The Limited Partners who do not respond
will participate in production, if any, obtained from the aggregate Additional
Assessments paid into the Partnership. However, the amount of the unpaid
Additional Assessment shall bear interest at the annual rate equal to two

                                      A-11

<PAGE>
(2) percentage points in excess of the prime rate of interest of Bank of
Oklahoma, N.A., Tulsa, Oklahoma, or successor bank, as announced and in effect
from time to time, until paid. The Partnership will have a lien on the
defaulting Limited Partner's interest in the Partnership and the General Partner
may apply Partnership Revenue otherwise available for distribution to the
defaulting Limited Partner until an amount equal to the unpaid Additional
Assessment and interest is received. Furthermore, the General Partner may
satisfy such lien by proceeding with legal action to enforce the lien and the
defaulting Limited Partner shall pay all expenses of collection, including
interest, court costs and a reasonable attorney's fee.

     5.4 After the General Partner's Minimum Capital Contribution has been fully
expended, the General Partner may cause the Partnership to borrow funds for the
purpose of paying Drilling Costs, Special Production and Marketing Costs or
Leasehold Acquisition Costs of productive properties, which borrowings may be
secured by interests in the Partnership Properties and will be repaid, including
interest accruing thereon, out of Partnership Revenue allocable to the accounts
of the Partners on whose behalf the proceeds of such borrowings are expended.
The General Partner may, but is not required to, advance funds to the
Partnership for the same purposes for which Partnership borrowings are
authorized by this Section 5.4. With respect to any such advances, the General
Partner shall receive interest in an amount equal to the lesser of the interest
which would be charged to the Partnership by unrelated banks on comparable loans
for the same purpose or the General Partner's interest cost with respect to such
loan, where it borrows the same. No financing charges will be levied by the
General Partner in connection with any such loan. If Partnership borrowings
secured by interests in the Partnership Properties and repayable out of
Partnership Revenue cannot be arranged on a basis which, in the opinion of the
General Partner, is fair and reasonable, and the entire sum required to pay
costs of the type referred to above is not available from Partnership Revenue,
the Partnership may elect not to drill or participate in the drilling of a well
or the General Partner may dispose of the Partnership Properties upon which such
operations were to be conducted by sale (subject to any other applicable
provisions of this Agreement), farm-out or abandonment.

     5.5 The General Partner may utilize Partnership Revenue allocable to the
respective accounts of the Partners to pay any Partnership costs and expenses
properly chargeable to the accounts of such Partners.

     5.6 With respect to any Partnership activity and subject to the
restrictions set forth in Sections 5.3 and 5.4 above, it shall be in the sole
discretion of the General Partner whether to call for Additional Assessments,
arrange for borrowings on behalf of the Partners, utilize Partnership Revenue or
sell (subject to any other applicable provisions of this Agreement), farm-out or
abandon Partnership Properties.

     5.7 The Partnership Properties and production therefrom may be pledged,
mortgaged or otherwise encumbered as security for borrowings by the Partnership
authorized by Section 5.4 above, provided that the holder of indebtedness
arising by virtue of such borrowings may not have or acquire, at any time as a
result of making any such loans, any direct or indirect interest in the profits,
capital or property of the Partnership other than as a secured creditor.





                                      A-12
<PAGE>
                                   ARTICLE VI
                     Sharing of Costs, Capital Accounts and
                        Allocation of Charges and Income

     6.1 All costs of organizing the Partnership and offering Units therein will
be paid by the General Partner. All costs incurred in the offering and
syndication of any drilling or income program formed by UPC or UNIT and its
affiliates during 2003 in which the Partnership participates as a co-general
partner will also be paid by the General Partner.

     6.2 All other Partnership costs and expenses will be charged 99% to the
accounts of the Limited Partners and 1% to the account of the General Partner
until such time as the Aggregate Subscription has been fully expended.
Thereafter and until the General Partner's Minimum Capital Contribution has been
fully expended, all of such costs and expenses will be charged to the General
Partner. After the General Partner's Minimum Capital Contribution has been fully
expended, such costs and expenses will be charged to the respective accounts of
the General Partner and the Limited Partners on the basis of their respective
Percentages.

     6.3 All Partnership Revenues will be allocated between the General Partner
and the Limited Partners on the basis of their respective Percentages.

     6.4 Partnership costs, expenses and Revenues which are charged and
allocated to the Limited Partners shall be charged and allocated to their
respective accounts in the proportion the Units of each Limited Partner bear to
the total number of outstanding Units.

     6.5 Capital accounts shall be established and maintained for each Partner
in accordance with tax accounting principles and with valid regulations issued
by the U.S. Treasury Department under subsection 704(b) (the "704 Regulations")
of the Internal Revenue Code of 1986, as amended (the "Code"). To the extent
that tax accounting principles and the 704 Regulations may conflict, the latter
shall control. In connection with the establishment and maintenance of such
capital accounts, the following provisions shall apply:

          (a) Each Partner's capital account shall be (i) increased by the
     amount of money contributed by him or her to the Partnership, the fair
     market value of property contributed by him or her to the Partnership (net
     of liabilities securing such contributed property that the Partnership is
     considered to assume or take subject to under section 752 of the Code) and
     allocations to him or her of Partnership income and gain (except to the
     extent such income or gain has previously been reflected in his or her
     capital account by adjustments thereto) and (ii) decreased by the amount of
     money distributed to him or her by the Partnership, the fair market value
     of property distributed to him or her by the Partnership (net of
     liabilities securing such distributed property that such Partner is
     considered to assume or take subject to under section 752 of the Code) and
     allocations to him or her of Partnership loss, deduction (except to the
     extent such loss or deduction has previously been reflected in his or her
     capital account by adjustments thereto) and expenditures described in
     section 705(a)(2)(B) of the Code.

          (b) In the event Partnership Property is distributed to a Partner,
     then, before the capital account of such Partner is adjusted as required by
     subsection (a) of this Section 6.5, the capital accounts of the Partners
     shall be adjusted to reflect the manner in which the unrealized income,
     gain, loss and deduction inherent in such property (that has not been
     reflected in such capital accounts previously) would be allocated among the

                                      A-13

<PAGE>
     Partners if there were a taxable disposition of such property for its fair
     market value on the date of distribution.

          (c) If, pursuant to this Agreement, Partnership Property is reflected
     on the books of the Partnership at a book value that differs from the
     adjusted tax basis of such property, then the Partners' capital accounts
     shall be adjusted in accordance with the 704 Regulations for allocations to
     the Partners of depreciation, depletion, amortization, and gain or loss, as
     computed for book purposes, with respect to such property.

          (d) The Partners' capital accounts shall be adjusted for depletion and
     gain or loss with respect to the Partnership's oil or gas properties in
     whichever of the following manners the General Partner determines is in the
     best interests of the Partners:

               (i) the Partners' capital accounts shall be reduced by a
          simulated depletion allowance computed on each oil or gas property
          using either the cost depletion method or the percentage depletion
          method (without regard to the limitations under the Code which could
          apply to less than all Partners); provided, however, that the choice
          between the cost depletion method and the simulated depletion method
          shall be made on a property-by-property basis in the first taxable
          year of the Partnership for which such choice is relevant for an oil
          or gas property, and such choice shall be binding for all Partnership
          taxable years during which such oil or gas property is held by the
          Partnership. Such reductions for depletion shall not exceed the
          aggregate adjusted basis allocated to the Partners with respect to
          such oil or gas property. Such reductions for depletion shall be
          allocated among the Partners' capital accounts in the same proportions
          as the adjusted basis in the particular property is allocated to each
          Partner. Upon the taxable disposition of an oil or gas property by the
          Partnership, the Partnership's simulated gain or loss shall be
          determined by subtracting its simulated adjusted basis (aggregate
          adjusted tax basis of the Partners less simulated depletion
          allowances) in such property from the amount realized on such
          disposition and the Partners' capital accounts shall be increased or
          reduced, as the case may be, by the amount of the simulated gain or
          loss on such disposition in proportion to the Partners' allocable
          shares of the total amount realized on such disposition, or

               (ii) the Partnership shall reduce the capital account of each
          Partner in an amount equal to such Partner's depletion allowance with
          respect to each oil or gas property of the Partnership (for the
          Partner's taxable year that ends within the Partnership's taxable
          year), but such reductions for depletion shall not exceed the adjusted
          basis allocated to such Partner with respect to such property. Upon
          the taxable disposition of an oil or gas property by the Partnership,
          the capital account of each Partner shall be reduced or increased, as
          the case may be, by the amount of the difference between such
          Partner's allocable share of the total amount realized on such
          disposition and such Partner's remaining adjusted tax basis in such
          property.

          (e) For purposes of determining the capital account balance of any
     Partner as of the end of any Partnership taxable year for purposes of
     Subsection 6.6(f) hereof, such Partner's capital account shall be reduced
     by:


                                      A-14

<PAGE>

               (i) adjustments that, as of the end of such year, reasonably are
          expected to be made to such Partner's capital account pursuant to
          paragraph (b)(2)(iv)(k) of the 704 Regulations for depletion
          allowances with respect to oil and gas properties of the Partnership,

               (ii) allocations of loss and deduction that, as of the end of
          such year, reasonably are expected to be made to such Partner pursuant
          to Code section 704(e)(2), Code section 706(d), and paragraph
          (b)(2)(ii) of section 1.751-1 of regulations promulgated under the
          Code, and

               (iii) distributions that, as of the end of such year, reasonably
          are expected to be made to such Partner to the extent they exceed
          offsetting increases to such Partner's capital account that reasonably
          are expected to occur during (or prior to) the Partnership taxable
          years in which such distributions reasonably are expected to be made.

     6.6 With respect to the various allocations of Partnership income,
gain, loss, deduction and credit for federal income tax purposes, it is hereby
agreed as follows:

          (a) To the extent permitted by law, all charges, deductions and losses
     shall be allocated for federal income tax purposes in the same manner as
     the costs in respect of which such charges, deductions and losses are
     charged to the respective accounts of the Partners. The Partners bearing
     the costs shall be entitled to the deductions (including, without
     limitation, cost recovery allowances, depreciation and cost depletion) and
     credits that are attributable to such costs.

          (b) The Partnership shall allocate to each Partner his or her portion
     of the adjusted basis in each depletable Partnership Property as required
     by Section 613A(c)(7)(D) of the Code based upon the interest of said
     Partner in the capital of the Partnership as of the time of the acquisition
     of such Partnership Property. To the extent permitted by the Code, such
     allocation shall be based upon said Partner's interest (i) in the
     Partnership capital used to acquire the property, or (ii) in the adjusted
     basis of the property if it is contributed to the Partnership. If such
     allocation of basis is not permitted under the Code, then basis will be
     allocated in the permissible manner which the General Partner deems will
     most closely achieve the result intended above.

          (c) Partnership Revenue shall be allocated for federal income tax
     purposes in the same manner as it is allocated to the respective accounts
     of the Partners pursuant to Sections 6.3 and 6.4 above.

          (d) Depreciation or cost recovery allowance recapture and recapture of
     intangible drilling and development costs, if any, due as a result of sales
     or dispositions of assets shall be allocated in the same proportion that
     the depreciation, cost recovery allowances or intangible drilling and
     development costs being recaptured were allocated.

          (e) Notwithstanding anything to the contrary stated herein,

               (i) there shall be allocated first to other Limited Partners and
          then to the General Partner any item of loss, deduction, credit or
          allowance that, but for this Subsection 6.6(e), would have been
          allocated to any Limited Partner that is not obligated to restore any
          deficit balance in such Limited Partner's capital account and would
          have thereupon caused or increased a deficit balance in such Limited

                                      A-15
<PAGE>
          Partner's capital account as of the end of the Partnership's
          taxable year to which such allocation related (after taking into
          consideration the numbered items specified in Subsection 6.5(e)
          hereof);

               (ii) any Limited Partner that is not obligated to restore any
          deficit balance in such Limited Partner's capital account who
          unexpectedly receives an adjustment, allocation or distribution
          specified in Subsection 6.5(e) hereof shall be allocated items of
          income and gain in an amount and manner sufficient to eliminate such
          deficit balance as quickly as possible; and

               (iii) in the event any allocations of loss, deduction, credit or
          allowance are made to a Limited Partner or the General Partner
          pursuant to clause (i) of this Subsection 6.6(e), then such Limited
          Partner and/or the General Partner shall be subsequently allocated all
          items of income and gain pro rata as they were allocated the item(s)
          of loss, deduction, credit or allowance under such clause (i) until
          the aggregate amount of such allocations of income and gain is equal
          to the aggregate amount of any such allocations of loss, deduction,
          credit or allowance allocated to such Partner(s) pursuant to clause
          (i) of this Subsection 6.6(e).

          (f) Notwithstanding any other provision of this Agreement, if, under
     any provision of this Agreement, the capital account of any Partner is
     adjusted to reflect the difference between the basis to the Partnership of
     Partnership Property and such property's fair market value, then all items
     of income, gain, loss and deduction with respect to such property shall be
     allocated among the Partners so as to take account of the variation between
     the basis of such property and its fair market value at the time of the
     adjustment to such Partner's capital account in accordance with the
     requirements of subsection 704(c) of the Code, or in the same manner as
     provided under subsection 704(c) of the Code.

     6.7 Notwithstanding anything to the contrary that may be expressed or
implied in this Agreement, the interest of the General Partner in each material
item of Partnership income, gain, loss, deduction or credit shall be equal to at
least one percent of each such item at all times during the existence of the
Partnership. In determining the General Partner's interest in such items, Units
owned by the General Partner shall not be taken into account.

     6.8 Except as provided in subsections (a) through (d) of this Section 6.8,
in the case of a change in a Partner's interest in the Partnership during a
taxable year of the Partnership, all Partnership income, gain, loss, deduction
or credit allocable to the Partners shall be allocated to the persons who were
Partners during the period to which such item is attributable in accordance with
the Partners' interests in the Partnership during such period regardless of when
such item is paid or received by the Partnership.

          (a) With respect to certain "allocable cash basis items" (as such term
     is defined in the Code) of Partnership Revenue, gain, loss, deduction or
     credit, if, during any taxable year of the Partnership there is change in
     any Partner's interest in the Partnership, then, except to the extent
     provided in regulations prescribed under Section 706 of the Code, each
     Partner's allocable share of any "allocable cash basis item" shall be
     determined by (i) assigning the appropriate portion of each such item to
     each day in the period to which it is attributable, and (ii) allocating the
     portion assigned to any such day

                                      A-16

<PAGE>
     among the Partners in proportion to their interests in the Partnership
     at the close of such day.

          (b) If, by adhering to the method of allocation described in the
     immediately preceding subsection of this Section 6.8, a portion of any
     "allocable cash basis item" is attributable to any period before the
     beginning of the Partnership taxable year in which such item is received or
     paid, such portion shall be (i) assigned to the first day of the taxable
     year in which it is received or paid, and (ii) allocated among the persons
     who were Partners in the Partnership during the period to which such
     portion is attributable in accordance with their interests in the
     Partnership during such period.

          (c) If any portion of any "allocable cash basis item" paid or received
     by the Partnership in a taxable year is attributable to a period after the
     close of that taxable year, such portion shall be (i) assigned to the last
     day of the taxable year in which it is paid or received, and (ii) allocated
     among the persons who are Partners in proportion to their interests in the
     Partnership at the close of such day.

          (d) If any deduction is allocated to a person with respect to an
     "allocable cash basis item" attributable to a period before the beginning
     of the Partnership taxable year and such person is not a Partner of the
     Partnership on the first day of the Partnership taxable year, such
     deduction shall be capitalized by the Partnership and treated in the manner
     provided for in Section 755 of the Code.


                                   ARTICLE VII
                      Fiscal Year, Accountings and Reports

     7.1 Unless the Code requires otherwise, the fiscal year of the Partnership
will be the calendar year and the books of the Partnership will be kept in
accordance with usual and customary accounting practices on the accrual method.

     7.2 Within sixty (60) days after the end of each quarter of each
Partnership fiscal year, each person who was a Limited Partner during such
period will be furnished a report setting forth the source and disposition of
Partnership funds during the quarter.

     7.3 Not later than the end of the fiscal year in which all Partnership
Wells are drilled and completed, and sufficient production history has been
obtained on Partnership Wells to evaluate properly the reserves attributable
thereto, the General Partner will make an evaluation of Partnership Properties
as of the last day of such fiscal year. The report shall include an estimate of
the total oil and gas proven reserves of the Partnership and the dollar value
thereof and the value of the Limited Partner's interest in such reserve value.
It shall also contain an estimate of the present worth of the reserves. Each
Limited Partner will receive a summary statement of such report reflecting the
Limited Partners' interest in such reserve value.


                                  ARTICLE VIII
                            Tax Returns and Elections

     8.1 Unless the Code requires otherwise, the General Partner will cause the
Partnership to elect the calendar year as its taxable year and will timely file
all Partnership income tax returns required to be filed by the jurisdictions in
which the Partnership conducts business or


                                      A-17

<PAGE>
derives income. By March 15 of each year or as soon thereafter as
practicable, the General Partner will furnish all available information
necessary for inclusion in the income tax returns of each person who was a
Limited Partner during the prior fiscal year. The General Partner shall be the
"Tax Matters Partner" for the Partnership pursuant to the provisions of Section
6231 of the Code subject to the provisions of Section 10.22 below.

     8.2 The Partnership will elect to deduct intangible drilling and
development costs currently as an expense for income tax purposes and will elect
to use the available depreciation method which, in the General Partner's
judgment, is in the best interest of the Partners.

     8.3 The General Partner shall have the right in its sole discretion at any
time to make or not to make such other elections as are authorized or permitted
by any law or regulation for income tax purposes (including any election under
Section 754 of the Code).


                                   ARTICLE IX
                                  Distributions

     9.1 The Partnership's available cash will be distributed to the Limited
Partners and the General Partner in the same proportions that Partnership
Revenue has been allocated to them after giving effect to previous distributions
and to portions of such revenue theretofore used or retained to pay costs
incurred or expected to be incurred in conducting Partnership operations or to
repay borrowings theretofore or expected to be thereafter obtained by the
Partnership. Within forty-five (45) days after the end of each calendar quarter,
the General Partner will determine the amount of cash available for distribution
to the Limited Partners and will distribute such amount, if any, as promptly
thereafter as reasonably possible. Distributions of cash to the General Partner
may be at any time the General Partner determines there is cash available
therefor. The General Partner's determination of the cash available for
distribution will be conclusive and binding upon all Partners. All Partnership
funds distributed to the Limited Partners shall be distributed to the persons
who were record holders of Units on the day on which the distribution is made.


                                    ARTICLE X
              Rights, Duties and Obligations of the General Partner

     10.1 Subject to the limitations of this Agreement, the General Partner will
have full, exclusive and complete discretion in the management and control of
the business of the Partnership and will make all decisions affecting its
business and affairs or the Partnership Properties. The General Partner will
have, subject to the provisions of this Article X, full power and authority to
take any action described in Article III above and execute and deliver in the
name of and on behalf of the Partnership such documents or instruments as the
General Partner deems appropriate for the conduct of Partnership business. No
person, firm or corporation dealing with the Partnership will be required to
inquire into the authority of the General Partner to take any action or make any
decision.

     10.2 The General Partner will perform the duties imposed upon it under this
Agreement in an efficient and businesslike manner with due caution and in
accordance with established practices of the oil and gas industry, but the
General Partner shall not be liable, responsible or accountable in damages or
otherwise to the Partnership or any of the Partners for, and the Partnership
shall indemnify, defend against and save harmless the General Partner, from

                                      A-18

<PAGE>
any expense (including attorneys' fees), loss or damage incurred by reason
of any act or omission performed or omitted in good faith on behalf of the
Partnership or the Partners, and in a manner reasonably believed by the General
Partner to be within the scope of the authority granted by this Agreement and in
the best interests of the Partnership or the Partners, provided that the General
Partner is not guilty of gross negligence or willful misconduct with respect to
such acts or omissions, and further provided that the satisfaction of any
indemnification and any saving harmless shall be from and limited to Partnership
assets including insurance proceeds, if any, and no Partner shall have any
personal liability on account thereof. For purposes of this Section 10.2 only,
the term General Partner includes the General Partner, affiliates of the General
Partner and any officer, director or employee of the General Partner or any of
its affiliates such that all of such parties are covered by the indemnities
provided herein.

     10.3 The General Partner will utilize its organization and employees and
will hire outside consultants for the Partnership as necessary in order to
provide experienced, qualified and competent personnel to conduct the
Partnership's business. With certain limited exceptions it is the intent of the
Partners that the Partnership participate as a co-general partner of any oil and
gas drilling or income programs, or both, formed by the General Partner or UNIT
for third party investors during 2003 and to participate on a proportionate
working interest basis in each producing oil and gas lease acquired and in the
drilling of each oil and gas well commenced by the General Partner or UNIT for
its own account during the period from the later of January 1, 2003 or the
Effective Date through December 31, 2003 (except for wells, if any, (i) drilled
outside of the 48 contiguous United States; (ii) drilled as part of secondary or
tertiary recovery operations which were in existence prior to the formation of
the Partnership; (iii) drilled by third parties under farm-out or similar
arrangements with the General Partner or UNIT or whereby the General Partner or
UNIT may be entitled to an overriding royalty, reversionary or other similar
interest in the production from such wells but is not obligated to pay any of
the Drilling Costs thereof; (iv) acquired by UNIT or the General Partner through
the acquisition by UNIT or the General Partner of, or merger of UNIT or the
General Partner with, other companies; or (v) with respect to which the General
Partner does not believe that the potential economic return therefrom justifies
the costs of participation by the Partnership).

     10.4 The General Partner, UNIT or any affiliate thereof will transfer to
the Partnership interests in oil and gas properties comprising the spacing unit
on which a Partnership Well is located or is to be drilled for the separate
account of the Partnership, provided that no broker's commissions or fees of a
similar nature will be paid in connection with any such transfer and the
consideration paid by the Partnership will be equal to the Leasehold Acquisition
Costs of the property so transferred. If the size of a spacing unit on which a
Partnership Well is located is ever reduced or increased well density is
permitted thereon, the Partnership will not be entitled to any reimbursement or
recoupment of any portion of the Leasehold Acquisition Costs paid with respect
thereto notwithstanding the provisions of Section 10.7 below.

     10.5 With respect to certain transactions involving Partnership Properties,
it is hereby agreed as follows:

          (a) A sale, transfer or conveyance by the General Partner or any
     affiliate of less than its entire interest in such property is prohibited
     unless (i) the interest retained by the General Partner or its affiliate is
     a proportionate working interest, (ii) the respective obligations of the
     General Partner or its affiliate and the Partnership are substantially the
     same proportionately as those of the General Partner or its affiliate at
     the time it acquired

                                      A-19

<PAGE>
     the property and (iii) the Partnership's interest in revenues will not
     be less than the proportionate interest therein of the General Partner or
     its affiliate when it acquired the property. The General Partner or its
     affiliate may retain the remaining interest for its own account or it may
     sell, transfer, farm-out or otherwise convey all or a portion of such
     remaining interest to non-affiliated industry members. In connection with
     any such sale, transfer, farm-out or other conveyance of such interest to
     non-affiliated industry members, which may occur either before or after the
     transfer of the interests in the same properties to the Partnership, the
     General Partner or its affiliate may realize a profit on the interests or
     may be carried to some extent with respect to its cost obligations in
     connection with any drilling on such properties and any such profit or
     interest will be strictly for the account of the General Partner and the
     Partnership will have no claim with respect thereto.

          (b) The General Partner or its affiliates may not retain any overrides
     or other burdens on property conveyed to the Partnership (other than
     overriding royalty interests granted to geologists and other persons
     employed or retained by the General Partner or its affiliates).

     10.6 The General Partner will cause the Partnership Properties to be
acquired in accordance with the customs of the oil and gas industry in the area.
The Partnership will be required to do only such title work with respect to its
oil and gas properties as the General Partner in its sole judgment deems
appropriate in light of the area, any applicable drilling or expiration dates
and any other material factors.

     10.7 Partnership Properties shall be transferred to the Partnership after
the decision to acquire a productive property or the commitment to drill a
Partnership Well thereon has been made. The Partnership shall acquire interests
in only those properties of the General Partner or UNIT which comprise the
spacing unit on which the Partnership Well is drilled or on which a producing
Partnership Well is located. If a spacing unit on which a Partnership Well is
drilled or located is ever reduced, or any subsequent well in which the
Partnership has no interest is drilled thereon, the Partnership will have no
interest in any such subsequent or additional wells drilled on properties which
were a part of the original spacing unit unless any such additional well is
commenced during 2003 or is drilled by a drilling or income program of which the
Partnership is a partner. Likewise if UNIT, UPC or any affiliate, including any
oil and gas partnership subsequently formed for investment or participation by
employees, directors and/or consultants of UNIT or any of its subsidiaries,
acquires additional interests in Partnership Wells after 2003 the Partnership
generally will not be entitled to participate in the acquisition of such
additional interests. In addition, if a Partnership Well drilled on a spacing
unit is dry or abandoned, the Partnership will not have an interest in any
subsequent or additional well drilled on the spacing unit unless it is commenced
during 2003 or is drilled by a drilling or income program of which the
Partnership is a partner.

     10.8 The General Partner, UNIT or its affiliates will either conduct the
Partnership's drilling and production operations and operate each Partnership
Well or arrange for a third party operator to conduct such operations. The
General Partner will, on behalf of the Partnership, enter into appropriate
operating agreements with other owners of Partnership Wells authorizing the
General Partner, its affiliates or a third party operator to conduct such
operations. The Partnership will take such action in connection with operations
pursuant to said operating agreements as the General Partner, in its sole
discretion, deems appropriate and in the best

                                      A-20

<PAGE>
interests of the Partnership, and the decision of the General Partner with
respect thereto will be binding upon the Partnership.

     10.9 The General Partner will cause the Partnership to plug and abandon its
dry holes and abandoned wells in accordance with rules and regulations of the
governmental regulatory body having jurisdiction.

     10.10 The General Partner may pool or unitize Partnership Properties with
other oil and gas properties when such pooling or unitization is required by a
governmental regulatory body, when well spacing as determined by any such body
requires such pooling or unitization, or when, in the General Partner's opinion,
such pooling or unitization is in the best interests of the Partnership.

     10.11 The General Partner will have authority to make and enter into
contracts for the sale of the Partnership's share of oil or gas production from
Partnership Wells, including contracts for the sale of such production to the
General Partner, UNIT or its affiliates; provided, however, that the production
purchased by the General Partner, UNIT or any of its affiliates will be for
prices which are not less than the highest posted price (in the case of crude
oil production) or prevailing price (in the case of natural gas production) in
the same field or area.

     10.12 The General Partner will use its best efforts to procure and maintain
for the Partnership, and at its expense, such insurance coverage with
responsible companies as may be reasonably available for such premium costs as
would not be considered to be unreasonably high or prohibitive with respect to
each item of coverage and as the General Partner considers necessary for the
protection of the Partnership and the Partners. The coverage will be in such
amounts and will cover such risks as the General Partner believes warranted by
the operations conducted hereunder. Such risks may include but will not
necessarily be limited to public liability and automobile liability, each
covering bodily injury, death and property damage, workmen's compensation and
employer's liability insurance and blowout and control of well insurance.

     10.13 In order to conduct properly the business of the Partnership, and in
order to keep the Partners properly informed, the General Partner will:

          (a) maintain adequate records and files identifying the Partnership
     Properties and containing all pertinent information in regard thereto that
     is obtained or developed pursuant to this Agreement;

          (b) maintain a complete and accurate record of the acquisition and
     disposition of each Partnership Property;

          (c) maintain appropriate books and records reflecting the
     Partnership's revenue and expense and each Partner's participation therein;

          (d) maintain a capital account for each Partner with appropriate
     records as necessary in order to reflect each Partner's interest in the
     Partnership and furnish required tax information; and

          (e) keep the Limited Partners informed by means of written reports on
     the acquisition of Partnership Properties and the progress of the business
     and operations of the Partnership, which reports will be rendered
     semi-annually and at such more frequent

                                      A-21

<PAGE>
     intervals during the progress of Partnership operations as the General
     Partner deems appropriate.

     10.14 The General Partner, UNIT and the officers, directors, employees and
affiliates thereof may own, purchase or otherwise acquire and deal in oil and
gas properties, drill wells, conduct operations and otherwise engage in any
aspect of the oil and gas business, either for their own accounts or for the
accounts of others. Each Limited Partner hereby agrees that engaging in any
activity permitted by this Section 10.14 will not be considered a breach of any
duty that the General Partner, UNIT or the officers, directors, employees and
affiliates thereof may have to the Partnership or the Limited Partners, and that
the Partnership and the Limited Partners will not have any interest in any
properties acquired or profits which may be realized with respect to any such
activity.

     10.15 Subject to Section 12.1, without the prior consent of Limited
Partners holding a majority of the outstanding Units, the General Partner will
not (i) make, execute or deliver any assignment for the benefit of the
Partnership's creditors; or (ii) contract to sell all or substantially all of
the Partnership Properties (except as permitted by Sections 10.23 and 16.4(b)).

     10.16 In contracting for services to and insurance coverage for the
Partnership and its activities and operations, and in acquiring material,
equipment and personal property on behalf of the Partnership, the General
Partner will use its best efforts to obtain such services, insurance, material,
equipment and personal property at prices no less favorable than those normally
charged in the same or in comparable geographic areas by non-affiliated persons
or companies dealing at arm's length. No rebates, concessions or compensation of
a similar nature will be paid to the General Partner by the person or company
supplying such services, insurance, material, equipment and personal property.

     10.17 The General Partner, UNIT or its affiliates are authorized to provide
equipment, materials and services to the Partnership in connection with the
conduct of its operations, provided, that the terms of any contracts between the
Partnership and the General Partner, UNIT or any affiliates, or the officers,
directors, employees and affiliates thereof must be no less favorable to the
Partnership than those of comparable contracts entered into, and will be at
prices not in excess of those charged in the same geographical area by
non-affiliated persons or companies dealing at arm's length. Any such contracts
for services must be in writing precisely describing the services to be rendered
and all compensation to be paid.

     10.18 The General Partner may cause the Partnership to hold Partnership
Properties in the Partnership's name, or in the name of the General Partner,
UNIT, any affiliates thereof or some third party as nominee for the Partnership.
If record title to a Partnership Property is to be held permanently in the name
of a nominee, such nominee arrangement will be evidenced and documented by a
nominee agreement identifying the Partnership Properties so held and disclaiming
any beneficial interest therein by the nominee.

     10.19 The General Partner will be generally liable for the debts and
obligations of the Partnership, provided that any claims against the Partnership
shall be satisfied first out of the assets of the Partnership and only
thereafter out of the separate assets of the General Partner.

     10.20 The Partnership may not make any loans to the General Partner, UNIT
or any of its affiliates.

                                      A-22

<PAGE>
     10.21 The General Partner will use its best efforts at all times to
maintain its net worth at a level that is sufficient to insure that the
Partnership will be classified for federal income tax purposes as a partnership,
rather than as an association taxable as a corporation, on account of the net
worth of the General Partner.

     10.22 The Tax Matters Partner designated in Section 8.1 above is authorized
to engage legal counsel and accountants and to incur expense on behalf of the
Partnership in contesting, challenging and defending against any audits,
assessments and administrative or judicial proceedings conducted or participated
in by the Internal Revenue Service with respect to the Partnership's operations
and affairs.

     10.23 At any time two years or more after the Partnership has completed
substantially all of its property acquisition, drilling and development
operations, the General Partner may, without the vote, consent or approval of
the Limited Partners, cause all or substantially all of the oil and gas
properties and other assets of the Partnership to be sold, assigned or
transferred to, or the Partnership merged or consolidated with, another
partnership or a corporation, trust or other entity for the purpose of combining
the assets of two or more of the oil and gas partnerships formed for investment
or participation by employees, directors and/or consultants of UNIT or any of
its subsidiaries; provided, however, that the valuation of the oil and gas
properties and other assets of all such participating partnerships for purposes
of such transfer or combination shall be made on a consistent basis and in a
manner which the General Partner and UNIT believe is fair and equitable to the
Limited Partners. As a consequence of any such transfer or combination, the
Partnership shall be dissolved and terminated pursuant to Article XVI hereof and
the Limited Partners shall receive partnership interests, stock or other equity
interests in the transferee or resulting entity.


                                   ARTICLE XI
                         Compensation and Reimbursements

     11.1 For the General Partner's services performed as operator of productive
Partnership Wells located on Partnership Properties and as operator during the
drilling of Partnership Wells, the Partnership will compensate the General
Partner at rates no higher than those normally charged in the same or a
comparable geographic area by non-affiliated persons or companies dealing at
arm's length. The General Partner will not receive compensation for such
services performed in connection with the operation of Partnership Wells
operated by third party operators, but such third party operators will be
compensated as provided in the operating agreements in effect with respect to
such wells and the Partnership will pay its proportionate share of such
compensation.

     11.2 The General Partner will be reimbursed by the Partnership out of
Partnership Revenues for that portion of its general and administrative overhead
expense that is attributable to its conduct of the actual and necessary
business, affairs and operations of the Partnership. The General Partner's
general and administrative overhead expenses will be determined in accordance
with industry practices. The allocable costs and expenses will include all
customary and routine legal, accounting, geological, engineering, travel, office
rent, telephone, secretarial, salaries, data processing, word processing and
other incidental reasonable expenses necessary to the conduct of the
Partnership's business and generated by the General Partner or allocated to it
by UNIT, but will not include filing fees, commissions, professional fees,
printing costs and

                                      A-23

<PAGE>
other expenses incurred in forming the Partnership or offering interests
therein. Also excluded will be any general and administrative overhead expense
of the General Partner or UNIT which may be attributable to its services as an
operator of Partnership Wells for which it receives compensation pursuant to
Section 11.1 above. The portion of the General Partner's general and
administrative overhead expense to be reimbursed by the Partnership with respect
to any particular period will be determined by allocating to the Partnership
that portion of the General Partner's total general and administrative overhead
expense incurred during such period which is equal to the ratio of the
Partnership's total expenditures compared to the total expenditures by the
General Partner for its own account. The portion of such general and
administrative overhead expense reimbursement which is charged to the Limited
Partners may not exceed an amount equal to 3% of the Aggregate Subscription
during the first 12 months of the Partnership's operations, and in each
succeeding twelve-month period, the lesser of (a) 2% of the Aggregate
Subscription and (b) 10% of the total Partnership Revenue realized in such
twelve-month period. Administrative expenses incurred directly by the
Partnership, or incurred by the General Partner on behalf of the Partnership and
reimbursable to the General Partner, such as legal, accounting, auditing,
reporting, engineering, mailing and other such fees, costs and expenses are not
to be deemed a part of the general and administrative expense of the General
Partner which is to be reimbursed pursuant to this Section 11.2 and the amounts
thereof will not be subject to the limitations described in the preceding
sentence.


                                   ARTICLE XII
                   Rights and Obligations of Limited Partners

     12.1 The Limited Partners, in their capacity as such, cannot transact any
business for the Partnership or take part in the control of its business or
management of its affairs. Limited Partners will have no power to execute any
agreements on behalf of, or otherwise bind or commit, the Partnership. They may
give consents and approvals as herein provided and exercise the rights and
powers granted to them in this Agreement, it being understood that the exercise
of such rights and powers will be deemed to be matters affecting the basic
structure of the Partnership and not the exercise of control over its business;
provided, however, that exercise of any of the rights and powers granted to the
Limited Partners in Sections 10.15, 12.3, 14.1, 16.1 and 18.1 will not be
authorized or effective unless prior to the exercise thereof the General Partner
is furnished an opinion of counsel for the Partnership or an order or judgment
of any court of competent jurisdiction to the effect that the exercise of such
rights or powers (i) will not be deemed to evidence that the Limited Partners
are taking part in the control of or management of the Partnership's business
and affairs, (ii) will not result in the loss of any Limited Partner's limited
liability and (iii) will not result in the Partnership being classified as an
association taxable as a corporation for federal income tax purposes.

     12.2 The Limited Partners will not be personally liable for any debts or
losses of the Partnership. Except as otherwise specifically provided herein, no
Partner will be responsible for losses of any other Partners.

     12.3 Except as otherwise provided in this Agreement, no Limited Partner
will be entitled to the return of his contribution. Distributions of Partnership
assets pursuant to this Agreement may be considered and treated as returns of
contributions if so designated by law or, subject to Section 12.1, by agreement
of the General Partner and Limited Partners holding a

                                      A-24

<PAGE>
majority of the outstanding Units. The value of a Limited Partner's
undistributed contribution determined for the purposes of Section 39 of the Act
at any point in time shall be his or her percentage of the amount of the
Partnership's stated capital allocated to the Limited Partners as reflected in
the financial statements of the Partnership as of such point in time. No Partner
will receive any interest on his or her contributions and no Partner will have
any priority over any other Partner as to the return of contributions.


                                  ARTICLE XIII
                  Transferability of Limited Partner's Interest

     13.1 Notwithstanding the provisions of Section 13.3, no sale, exchange,
transfer or assignment of a Limited Partner's interest in the Partnership may be
made unless in the opinion of counsel for the Partnership,

          (a) such sale, exchange, transfer or assignment, when added to the
     total of all other sales, exchanges, transfers or assignments of interests
     in the Partnership within the preceding 12 months, would not result in the
     Partnership being considered to have terminated within the meaning of
     Section 708 of the Code (provided, however, that this condition may be
     waived by the General Partner in its discretion);

          (b) such sale, exchange, transfer or assignment would not violate, or
     cause the offering of the Units to be violative of, the Securities Act of
     1933, as amended, or any state securities or "blue sky" laws (including any
     investor suitability standards) applicable to the Partnership or the
     interest to be sold, exchanged, transferred or assigned; and

          (c) such sale, exchange, transfer or assignment would not cause the
     Partnership to lose its status as a partnership for federal income tax
     purposes, and said opinion of counsel is delivered in writing to the
     Partnership prior to the date of the sale, exchange, transfer or
     assignment.

     13.2 In no event shall all or any part of an interest in the Partnership be
assigned or transferred to a minor (except in trust or pursuant to the Uniform
Gifts to Minors Act) or an incompetent (except in trust), except by will or
intestate succession.

     13.3 Except for transfers or assignments (in trust or otherwise) by a
Limited Partner of all or any part of his or her interest in the Partnership

          (a) to the General Partner,

          (b) to or for the benefit of himself or herself, his or her spouse, or
     other members of his or her immediate family sharing the same household,

          (c) to a corporation or other entity in which all of the beneficial
     owners are Limited Partners or assigns permitted in (a) and (b) above, or

          (d) by the General Partner to any person who at the time of such
     transfer is an employee of the General Partner, UNIT or its subsidiaries,
     no Limited Partner's Units or any portion thereof may be sold, assigned or
     transferred except by reason of death or operation of law.

     13.4 If a Limited Partner dies, his or her executor, administrator or
trustee, or, if he or she is adjudicated incompetent, his or her committee,
guardian or conservator, or, if he or she

                                      A-25

<PAGE>
becomes bankrupt, the trustee or receiver of his or her estate, shall have
all the rights of a Limited Partner for the purpose of settling or managing his
or her estate and such power as the deceased, incapacitated or bankrupt Limited
Partner possessed to assign all or any part of his or her interest and to join
with such assignee in satisfying conditions precedent to such assignee's
becoming a Substituted Limited Partner.

     13.5 The Partnership shall not recognize for any purpose any purported
sale, assignment or transfer of all or any fraction of the interest of a Limited
Partner in the Partnership, unless the provisions of Section 13.1 shall have
been complied with and there shall have been filed with the Partnership a
written and dated notification of such sale, assignment or transfer in form
satisfactory to the General Partner, executed and acknowledged by both the
seller, assignor or transferor and the purchaser, assignee or transferee and
such notification (i) contains the acceptance by the purchaser, assignee or
transferee of all of the terms and provisions of this Agreement and (ii)
represents that such sale, assignment or transfer was made in accordance with
all applicable laws and regulations. Any sale, assignment or transfer shall be
recognized by the Partnership as effective on the date of such notification if
the date of such notification is within thirty (30) days of the date on which
such notification is filed with the Partnership, and otherwise shall be
recognized as effective on the date such notification is filed with the
Partnership.

     13.6 Any Limited Partner who shall assign all of his or her interest in the
Partnership shall cease to be a Limited Partner, except that, unless and until a
Substituted Limited Partner is admitted in his or her stead, such assigning
Limited Partner shall retain the statutory rights of the assignor of a Limited
Partner's interest under the Act.

     13.7 A person who is the assignee of all or any fraction of the interest of
a Limited Partner, but does not become a Substituted Limited Partner and desires
to make a further assignment of such interest, shall be subject to all the
provisions of this Article XIII to the same extent and in the same manner as any
Limited Partner desiring to make an assignment of his or her interest.

     13.8 No Limited Partner shall have the right to substitute a purchaser,
assignee, transferee, donee, heir, legatee, distributee or other recipient of
all or any portion of such Limited Partner's interest in the Partnership as a
Limited Partner in his or her place. Any such purchaser, assignee, transferee,
donee, legatee, distributee or other recipient of an interest in the Partnership
shall be admitted to the Partnership as a Substituted Limited Partner only with
the consent of the General Partner, which consent shall be granted or withheld
in the sole and absolute discretion of the General Partner and may be
arbitrarily withheld, and only by an amendment to this Agreement or the
certificate of limited partnership duly executed and recorded in the proper
records of each jurisdiction in which the Partnership owns mineral interests and
filed in the proper records of the State of Oklahoma. Any such consent by the
General Partner shall be binding and conclusive without the consent of any
Limited Partners and may be evidenced by the execution of the General Partner of
an amendment to this Agreement or the certificate of limited partnership,
evidencing the admission of such person as a Substituted Limited Partner.

     13.9 No person shall become a Substituted Limited Partner until such person
shall have:

          (a) become a party to, and adopted all of the terms and conditions of,
     this Agreement;


                                      A-26

<PAGE>
          (b) if such person is a corporation, partnership or trust, provided
     the General Partner with evidence satisfactory to counsel for the
     Partnership of such person's authority to become a Limited Partner under
     the terms and provisions of this Agreement; and

          (c) paid or agreed to pay the costs and expenses incurred by the
     Partnership in connection with such person's becoming a Limited Partner.

Provided, however, that for the purpose of allocating Partnership Revenue, costs
and expenses, a person shall be treated as having become, and as appearing in
the records of the Partnership as, a Substituted Limited Partner on such date as
the sale, assignment or transfer was recognized by the Partnership pursuant to
Section 13.5.

     13.10 By his or her execution of his or her Subscription Agreement, each
Limited Partner represents and warrants to the General Partner and to the
Partnership that his or her acquisition of his or her interest in the
Partnership is made as principal for his or her own account for investment
purposes only and not with a view to the resale or distribution of such
interest. Each Limited Partner agrees that he or she will not sell, assign or
otherwise transfer his or her interest in the Partnership or any fraction
thereof unless such interest has been registered under the Securities Act of
1933, as amended, or such sale, assignment or transfer is exempt from such
registration and, in any event, he or she will not so sell, assign or otherwise
transfer his or her interest or any fraction thereof to any person who does not
similarly represent, warrant and agree.


                                   ARTICLE XIV
                       Assignments by the General Partner

     14.1 The General Partner may not sell, assign, transfer or otherwise
dispose of its interest in the Partnership except with the prior consent,
subject to Section 12.1, of Limited Partners holding a majority of the
outstanding Units; provided that a sale, assignment or transfer may be effective
without such consent if pursuant to a bona fide merger, any other corporate
reorganization or a complete liquidation, pursuant to a sale of all or
substantially all of the General Partner's assets (provided the purchasers of
such assets agree to assume the duties and obligations of the General Partner)
or a sale or transfer to UNIT or any affiliates of UNIT. If the Limited
Partners' consent to a proposed transfer is required, the General Partner will,
concurrently with the request for such consent, give the Limited Partners
written notice identifying the interest to be transferred, the date on which the
transfer is to be effective, the proposed transferee and the substitute General
Partner, if any.

     14.2 Sales, assignments and transfers of the interests in the Partnership
owned by the General Partner will be subject to, and the assignee will acquire
the assigned interest subject to, all of the terms and provisions of this
Agreement.

     14.3 If the Limited Partners' consent to a transfer of the General
Partner's interest in the Partnership is obtained as above provided, or is not
required, the transferee may become a substitute General Partner hereunder. The
substitute General Partner will assume and agree to perform all of the General
Partner's duties and obligations hereunder and the transferring General Partner
will, upon making a proper accounting to the substitute General Partner, be
relieved of

                                      A-27

<PAGE>
any further duties or obligations hereunder with respect to Partnership
operations thereafter occurring.


                                   ARTICLE XV
                     Limited Partners' Right of Presentment

     15.1 After December 31, 2004, each Limited Partner will have the option,
subject to the terms and conditions set forth in this Article XV, to require the
General Partner to purchase all (but not less than all) of his or her Units,
provided that the option may not be exercised after the date of any notice that
will effect a dissolution and termination of the Partnership pursuant to Article
XVI below. Any such exercise shall be effected by written notice thereof
delivered to the General Partner.

     15.2 Sales of Limited Partners' Units pursuant to this Article XV will be
effective, and the purchase price for such interests will be determined, as of
the close of business on the last day of the calendar year in which the Limited
Partner's notice exercising his or her option is given, or, at the General
Partner's election, as of 7:00 o'clock A.M. on the following day.

     15.3 The purchase price to be paid for the Units of any Limited Partner who
exercises the option granted in this Article XV will be determined in the
following manner. First, future gross revenues expected to be derived from the
production and sale of the proved reserves attributable to Partnership
Properties will be estimated, as of the end of the calendar year in which
presentment is made, by the independent engineering firm preparing a report on
the reserves of the Partnership, or if no such firm is preparing a report as of
the end of the calendar year in which the option is exercised, then by the
General Partner. Next, future net revenues will be calculated by deducting
anticipated expenses (including Operating Expenses and other costs that will be
incurred in producing and marketing such reserves and any gross production,
excise, or other taxes, other than federal income taxes, based on the oil and
gas production of the Partnership or sales thereof) from estimated future gross
revenues. The price to be used in calculating future gross revenues as well as
the estimates of price and cost escalations to be used in such calculations will
be those of such independent engineering firm or the General Partner, whichever
is making the determination. Then the present worth of the future net revenues
will be calculated by discounting the estimated future net revenues at that rate
per annum which is one (1) percentage point higher than the prime rate of
interest being charged by Bank of Oklahoma, N.A., Tulsa, Oklahoma, or any
successor bank, as such prime rate of interest is announced by said bank as of
the date such reserves are estimated. This amount will be reduced by an
additional 25% to take into account the uncertainties attendant to the
production and sale of oil and gas reserves and other unforeseen contingencies.
Estimated salvage value of tangible equipment installed on the Partnership Wells
and costs of plugging and abandoning the productive Partnership Wells, both
discounted at the aforementioned rate from the expected date of abandonment,
will be considered, and Partnership Properties, if any, which do not have proved
reserves attributable to them but which have not been condemned will be valued
at the lower of cost or their then current market value as determined by the
aforementioned independent petroleum engineering firm or General Partner, as the
case may be. The Partnership's cash on hand, prepaid expenses, accounts
receivable (less a reasonable reserve for doubtful accounts) and the market
value of its other assets as determined by the General Partner will be added to
the value of the Partnership Properties thus determined, and the Partnership's

                                      A-28

<PAGE>
debts, obligations and other liabilities will be deducted, to arrive at the
Partnership's net asset value for purposes of this Section 15.3. The price to be
paid for the Limited Partner's interest will be his or her proportionate share
of such net asset value less 75% of the amount of any Partnership distributions
received by him or her which are attributable to sales of Partnership production
since the date as of which the Partnership's proved reserves are estimated.

     15.4 Within one hundred twenty (120) days after the end of any calendar
year in which a Limited Partner exercises his or her option to require purchase
of his or her Units as provided in this Article XV, the General Partner will
furnish to such Limited Partner a statement showing the price to be paid for his
or her Units and evidencing that such price has been determined in accordance
with the provisions of Section 15.3 above. The statement will show which portion
of the proposed purchase price is represented by the value of the proved
reserves and by each of the other classes of Partnership assets and liabilities
attributable to the account of the Limited Partner. The Limited Partner will
then have thirty (30) days to confirm, by further notice to the General Partner,
his or her intention to sell his or her Units to the General Partner. If the
Limited Partner timely confirms his or her intention to sell, the sale will be
consummated and the price paid in cash within ten (10) days after such
confirmation. The General Partner will not be obligated to purchase (i) any
Units pursuant to such right if such purchase, when added to the total of all
other sales, exchanges, transfers or assignments of the Units within the
preceding 12 months, would result in the Partnership being considered to have
terminated within the meaning of Section 708 of the Code or would cause the
Partnership to lose its status as a partnership for federal income tax purposes,
or (ii) in any one calendar year more than 20% of the Units in the Partnership
then outstanding. If less than all of the Units tendered are purchased, the
interests purchased will be selected by lot. The Limited Partners whose tendered
Units were rejected by reason of the foregoing limitation shall be entitled to
priority in the following year. Contemporaneously with the closing of any such
sale, the Limited Partner will execute such certificates or other documents and
perform such acts as the General Partner deems necessary to effect the sale and
transfer of the liquidating Limited Partner's Units to the General Partner and
to preserve the limited liability status of the Partnership under the laws of
the jurisdictions in which it is doing business.

     15.5 As used in Sections 15.3 and 15.4 above, the term "proved reserves"
shall have the meaning ascribed thereto in Regulation S-X adopted by the
Securities and Exchange Commission.


                                   ARTICLE XVI
                   Termination and Dissolution of Partnership

     16.1 The Partnership will terminate automatically on December 31, 2033,
unless prior thereto, subject to Section 12.1 above, the General Partner or
Limited Partners holding a majority of the outstanding Units elect to terminate
the Partnership as of an earlier date. In the event of such earlier termination,
ninety (90) days' written notice will be given to all other Partners. The
termination date will be specified in such notice and must be the last day of
any calendar month following expiration of the ninety (90) day period unless an
earlier date is approved by Limited Partners holding a majority of the
outstanding Units.

     16.2 Upon the dissolution (other than pursuant to a merger or other
corporate reorganization), bankruptcy, legal disability or withdrawal of the
General Partner (other than

                                      A-29

<PAGE>
pursuant to Section 14.1 above), the Partnership shall immediately be
dissolved and terminated; provided, however, that nothing in this Agreement
shall impair, restrict or limit the rights and powers of the Partners under the
laws of the State of Oklahoma and any other jurisdiction in which the
Partnership is doing business to reform and reconstitute themselves as a limited
partnership within ninety (90) days following the dissolution of the Partnership
either under provisions identical to those set forth herein or under any other
provisions. The withdrawal, expulsion, dissolution, death, legal disability,
bankruptcy or insolvency of any Limited Partner will not effect a dissolution or
termination of the Partnership.

     16.3 Upon termination of the Partnership by action of the Limited Partners
pursuant to Section 16.1 hereof or as a result of an event under Section 16.2
hereof, a party designated by the Limited Partners holding a majority of the
outstanding Units will act as Liquidating Trustee. In any other case, the
General Partner will act as Liquidating Trustee.

     16.4 As soon as possible after December 31, 2033, or the date of the notice
of or event causing an earlier termination of the Partnership, the Liquidating
Trustee will begin to wind up the Partnership's business and affairs. In this
regard:

          (a) The Liquidating Trustee will furnish or obtain an accounting with
     respect to all Partnership accounts and the account of each Partner and
     with respect to the Partnership's assets and liabilities and its operations
     from the date of the last previous audit of the Partnership to the date of
     such dissolution;

          (b) The Liquidating Trustee may, in its discretion, sell any or all
     productive and non-productive properties which, except in the case of an
     election by the General Partner to terminate the Partnership prior to the
     tenth anniversary of the Effective Date, may be sold to the General Partner
     or any of its affiliates for their fair market value as determined in good
     faith by the General Partner;

          (c) The Liquidating Trustee shall:

               (i) pay all of the Partnership's debts, liabilities and
          obligations to its creditors, including the General Partner; and

               (ii) pay all expenses incurred in connection with the
          termination, liquidation and dissolution of the Partnership and
          distribution of its assets as herein provided;

          (d) The Liquidating Trustee shall ascertain the fair market value by
     appraisal or other reasonable means of all assets of the Partnership
     remaining unsold, and each Partner's capital account shall be charged or
     credited, as the case may be, as if such property had been sold at such
     fair market value and the gain or loss realized thereby had been allocated
     to and among the Partners in accordance with Article VI hereof; and

          (e) On or as soon as practicable after the effective date of the
     termination, all remaining cash and any other properties and assets of the
     Partnership not sold pursuant to the preceding subsections of this Section
     16.4 will be distributed to the Partners (i) in proportion to and to the
     extent of any remaining balances in the Partners' capital accounts and then
     (ii) in undivided interests to the Partners in the same proportions that
     Partnership Revenues are being shared at the time of such termination,
     provided, that:

                                      A-30

<PAGE>
               (i) the various interests distributed to the respective Partners
          will be distributed subject to such liens, encumbrances, restrictions,
          contracts, operating agreements, obligations, commitments or
          undertakings as existed with respect to such interests at the time
          they were acquired by the Partnership or were subsequently created or
          entered into by the Partnership;

               (ii) if interests in the Partnership Wells that are not subject
          to any operating agreement are to be distributed, the Partners will,
          concurrently with the distribution, enter into standard form operating
          agreements covering the subsequent operation of each such well which
          will, if the termination is effected pursuant to Section 16.1 above,
          be in a form satisfactory to the General Partner and will name the
          General Partner or its designee as operator; and

               (iii) no Partner shall be distributed an interest in any asset if
          the distribution would result in a deficit balance or increase the
          deficit balance in its capital account (after making the adjustments
          referred to in this Section 16.4 relating to distributions in kind).

     16.5 If the General Partner has a deficit balance in its capital account
following the distribution(s) provided for in Section 16.4(e) above, as
determined after taking into account all adjustments to its capital account for
the taxable year of the Partnership during which such distribution occurs, it
shall restore the amount of such deficit balance to the Partnership within
ninety (90) days and such amount shall be distributed to the other Partners in
accordance with their positive capital account balances.

     16.6 Notwithstanding anything to the contrary in this Agreement, upon the
dissolution and termination of the Partnership, the General Partner will
contribute to the Partnership the lesser of: (a) the deficit balance in its
capital account; or (b) the excess of 1.01 percent of the total Capital
Contributions of the Limited Partners over the capital previously contributed by
the General Partner.


                                  ARTICLE XVII
                                     Notices

     17.1 All notices, consents, requests, demands, offers, reports and other
communications required or permitted shall be deemed to be given or made when
personally delivered to the party entitled thereto, or when sent by United
States mail in a sealed envelope, with postage prepaid, addressed, if to the
General Partner, to 1000 Kensington Tower I, 7130 South Lewis Avenue, P. O. Box
702500, Tulsa, Oklahoma 74136, and, if to a Limited Partner, to the address set
forth below such Limited Partner's signature on the counterpart of the
Subscription Agreement that he or she originally executed and delivered to the
General Partner. The General Partner may change its address by giving notice to
all Limited Partners. Limited Partners may change their address by giving notice
to the General Partner.




                                      A-31

<PAGE>
                                  ARTICLE XVIII
                                   Amendments

     18.1 Limited Partners do not have the right to propose amendments to this
Agreement. The General Partner may propose an amendment or amendments to this
Agreement by mailing to the Limited Partners a notice describing the proposed
amendment and a form to be returned by the Limited Partners indicating whether
they oppose or approve of its adoption. Such notice will include the text of the
proposed amendment, which will have been approved in advance by counsel for the
Partnership. If, within sixty (60) days, or such shorter period as may be
designated by the General Partner, after any notice proposing an amendment or
amendments to this Agreement has been mailed, Limited Partners holding a
majority of the outstanding Units have properly executed and returned the form
indicating that they approve of and consent to adoption of the proposed
amendment, such amendment will become effective as of the date specified in such
notice, provided that no amendment which alters the allocations specified in
Article VI above, changes the compensation and reimbursement provisions set
forth in Article XI above or is otherwise materially adverse to the interests of
the Limited Partners will become effective unless approved by all Limited
Partners. If an amendment does become effective, all Partners will promptly
evidence such effectiveness by executing such certificates and other instruments
as the General Partner may deem necessary or appropriate under the laws of the
jurisdictions in which the Partnership is then doing business in order to
reflect the amendment.


                                   ARTICLE XIX
                               General Provisions

     19.1 This Agreement embodies the entire understanding and agreement between
the Partners concerning the Partnership, and supersedes any and all prior
negotiations, understandings or agreements in regard thereto.

     19.2 In those cases where this Agreement requires opinions to be expressed
by, or actions to be approved by, counsel for Limited Partners, such counsel
must be qualified and experienced in the fields of federal income taxation and
partnership and securities laws.

     19.3 This Agreement and the Subscription Agreement may be executed in
multiple counterpart copies, each of which will be considered an original and
all of which constitute one and the same instrument.

     19.4 This Agreement will be deemed to have been executed and delivered in
the State of Oklahoma and will be construed and interpreted according to the
laws of that State.

     19.5 This Agreement and all of the terms and provisions hereof will be
binding upon and will inure to the benefit of the Partners and their respective
heirs, executors, administrators, trustees, successors and assigns.






















                                      A-32

<PAGE>
         EXECUTED in the name of and on behalf of the undersigned General
Partner this _____ day of January, 2003 but effective as of the Effective Date.


                                                         "General Partner"
                                                      UNIT PETROLEUM COMPANY
Attest:



By___________________________________     By___________________________________
         Mark E. Schell, Secretary                John G. Nikkel, President

































                                      A-33
<PAGE>
                  LIMITED PARTNER SUBSCRIPTION AGREEMENT AND
                              SUITABILITY STATEMENT

                (ALL INFORMATION WILL BE TREATED CONFIDENTIALLY)


Unit 2003 Employee Oil and Gas Limited Partnership
c/o Unit Petroleum Company
1000 Kensington Center
7130 South Lewis Avenue
Tulsa, Oklahoma 74136

                                         RE:  Unit 2003 Employee Oil and
                                              Gas Limited Partnership

Gentlemen:

     In connection with the subscription of the undersigned for units of limited
partnership interest ("Units") in the Unit 2003 Employee Oil and Gas Limited
Partnership (the "Partnership") which the undersigned tenders herewith to Unit
Petroleum Company (the "General Partner"), the undersigned is hereby furnishing
the Partnership and the General Partner the information set forth herein below
and makes the representations and warranties set forth below, to indicate
whether the undersigned is a suitable subscriber for Units in the Partnership.
As a condition precedent to investing in the Partnership, the undersigned hereby
represents, warrants, covenants and agrees as follows:

     1. The undersigned acknowledges that he or she has received and reviewed a
copy of the Private Offering Memorandum (the "Offering Memorandum") dated
December 30, 2002 of the Unit 2003 Employee Oil and Gas Limited Partnership,
relating to the offering of Units in the Partnership, and all Exhibits thereto,
including the Agreement of Limited Partnership (the "Agreement"), and
understands that the Units will be offered to others on the terms and in the
manner described in the Offering Memorandum. The undersigned hereby subscribes
for the number of Units set forth below pursuant to the terms of the Offering
Memorandum and tenders his or her Capital Subscription as required and agrees to
pay his or her Additional Assessments upon call or calls by the General Partner;
and the undersigned acknowledges that he or she shall have the right to withdraw
this subscription only up until the time the General Partner executes and
accepts the undersigned's subscription and that the General Partner may reject
any subscription for any reason without liability to it; and, further, the
undersigned agrees to comply with the terms of the Agreement and to execute any
and all further documents necessary in connection with his or her admission to
the Partnership.

     2. The undersigned has reviewed and acknowledges execution of the Power of
Attorney set forth in the Agreement and elsewhere in this instrument.








                                      I-1

<PAGE>
     3. The undersigned is aware that no federal or state regulatory agency has
made any findings or determination as to the fairness for public or private
investment, nor any recommendation or endorsement, of the purchase of Units as
an investment.

     4. The undersigned recognizes the speculative nature and risks of loss
associated with oil and gas investments and that he or she may suffer a complete
loss of his or her investment. The Units subscribed for hereby constitute an
investment which is suitable and consistent with his or her investment program
and that his or her financial situation enables him or her to bear the risks of
this investment. The undersigned represents that he or she has adequate means of
providing for his or her current needs and possible personal contingencies, and
that he or she has no need for liquidity of this investment.

     5. The undersigned confirms that he or she understands, and has fully
considered for purposes of this investment, the RISK FACTORS set forth in the
Offering Memorandum and that (i) the Units are speculative investments which
involve a high degree of risk of loss by the undersigned of his or her
investment therein, (ii) there is a risk that the anticipated tax benefits under
the Agreement could be challenged by the Internal Revenue Service or could be
affected by changes in the Internal Revenue Code of 1986, as amended, the
regulations thereunder or administrative or judicial interpretations thereof
thereby depriving Limited Partners of anticipated tax benefits, (iii) the
General Partner and its affiliates will engage in transactions with the
Partnership which may result in a profit and, in the future, may be engaged in
businesses which are competitive with that of the Partnership, and the
undersigned agrees and consents to such activities, even though there are
conflicts of interest inherent therein, and (iv) there are substantial
restrictions on the transferability of, and there will be no public market for,
the Units and, accordingly, it may be difficult for him or her to liquidate his
or her investment in the Units in case of emergency, if possible at all.

     6. The undersigned confirms that in making his or her decision to purchase
the Units subscribed for he or she has relied upon independent investigations
made by him or her (or by his or her own professional tax and other advisors)
and that he or she has been given the opportunity to examine all documents and
to ask questions of, and to receive answers from the General Partner or any
person(s) acting on its behalf concerning the terms and conditions of the
offering or any other matter set forth in the Offering Memorandum, and to obtain
any additional information, to the extent the General Partner possesses such
information or can acquire it without unreasonable effort or expense, necessary
to verify the accuracy of the information set forth in the Offering Memorandum,
and that no representations have been made to him or her and no offering
materials have been furnished to him or her concerning the Units, the
Partnership, its business or prospects or other matters, except as set forth in
the Offering Memorandum and the other materials described in the Offering
Memorandum.

     7. The undersigned understands that the Units are being offered and sold
under an exemption from registration provided by Sections 3(b) and/or 4(2) of
the Securities Act of 1933, as amended (the "Act"), and warrants and represents
that any Units subscribed for are being acquired by the undersigned solely for
his or her own account, for investment purposes only, and are not being
purchased with a view to or for the resale, distribution, subdivision or
fractionalization thereof; the undersigned has no agreement or other
arrangement, formal or


                                      I-2

<PAGE>
informal, with any person to sell, transfer or pledge any part of any Units
subscribed for or which would guarantee the undersigned any rights to such
Units; the undersigned has no plans to enter into any such agreement or
arrangement, and, consequently, he or she must bear the economic risk of the
investment for an indefinite period of time because the Units cannot be resold
or otherwise transferred unless subsequently registered under the Act (which
neither the General Partner nor the Partnership is obligated to do), or an
exemption from such registration is available and, in any event, unless
transferred in compliance with the Agreement.

     8. The undersigned further understands that the exemption under Rule 144 of
the Act will not be generally available because of the conditions and
limitations of such rule; that, in the absence of the availability of such rule,
any disposition by him or her of any portion of his or her investment will
require compliance under the Act; and that the Partnership and the General
Partner are under no obligation to take any action in furtherance of making such
exemption available.

     9. The undersigned is aware that the General Partner will have full and
complete control of Partnership operations and that he or she must depend on the
General Partner to manage the Partnership profitably; and that a Limited Partner
does not have the same rights as a stockholder in a corporation or the
protection which stockholders might have, since limited partners have limited
rights in determining policy.

     10. The undersigned is aware that the General Partner will receive
compensation for its services irrespective of the economic success of the
Partnership.

     11. The undersigned represents and warrants as follows (please mark and
complete all applicable categories):

          (a) If an individual, the undersigned is the sole party in interest,
     and the undersigned is at least 21 years of age and a bona fide resident
     and domiciliary (not a temporary or transient resident) of the state set
     forth opposite his or her signature hereto;

                                ____ YES ____ NO

          (b) If a partnership or corporation, the undersigned meets the
     following: (1) the entity has not been formed for the purposes of making
     this investment; (2) the entity was formed on ____________; and (3) the
     entity has a history of investments similar to the type described in the
     Offering Memorandum;

                                ____ YES ____ NO

          (c) The undersigned meets all suitability standards and acknowledges
     being aware of all legend conditions applicable to his or her state of
     residence as set forth herein;

                                ____ YES ____ NO


                                      I-3

<PAGE>
          (d) (i) The undersigned has a net worth (including home, furnishings
     and automobiles) of at least five times the amount of his or her Capital
     Subscription, and anticipates that he or she will have adjusted gross
     income during the current year in an amount which will enable him or her to
     bear the economic risks of the investment in the Partnership;

                                ____ YES ____ NO

          and

          (ii) The undersigned is a salaried employee of Unit Corporation
     ("UNIT") or any of its subsidiaries at the date of formation of the
     Partnership whose annual base salary for 2003 has been set at $22,680 or
     more, or the undersigned is a director of UNIT;

                                ____ YES ____ NO

          and

          (e) The undersigned _____ is or _____ is not a citizen of the United
     States.

     12. The undersigned represents and agrees that he or she has had sufficient
opportunity to make inquiries of the General Partner in order to supplement
information contained in the Offering Memorandum respecting the offering, and
that any information so requested has been made available to his or her
satisfaction, and he or she has had the opportunity to verify such information.
The undersigned further agrees and represents that he or she has knowledge and
experience in business and financial matters, and with respect to investments
generally, and in particular, investments generally comparable to the offering,
so as to enable him or her to utilize such information to evaluate the risks of
this investment and to make an informed investment decision. The following is a
brief description of the undersigned's experience in the evaluation of other
investments generally comparable to the offering:
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________

     13. The undersigned is aware that the Partnership and the General Partner
have been and are relying upon the representations and warranties set forth in
this Limited Partner Subscription Agreement and Suitability Statement, in part,
in determining whether the offering meets the conditions specified in Rules of
the Securities and Exchange Commission and the exemption from registration
provided by Sections 3(b) and/or 4(2) of the Act.

     14. All of the information which the undersigned has furnished the General
Partner herein or previously with respect to the undersigned's financial
position and business experience is correct and complete as of the date of this
Agreement, and, if there should be any material


                                       I-4

<PAGE>
change in such information prior to the closing of the offering period of
the Units, the undersigned will immediately furnish such revised or corrected
information to the General Partner. The undersigned agrees that the foregoing
representations and warranties shall survive his or her admission to the
Partnership, as well as any acceptance or rejection of a subscription for the
Units.

     If the subscription tendered hereby of the undersigned is accepted by the
General Partner, the undersigned hereby executes and swears to the Agreement of
Limited Partnership of Unit 2003 Employee Oil and Gas Limited Partnership as a
Limited Partner, thereby agreeing to all the terms thereof and duly appoints the
General Partner, with full power of substitution, his or her true and lawful
attorney to execute, file, swear to and record any Certificate of Limited
Partnership or amendments thereto or cancellation thereof and any other
instruments which may be required by law in any jurisdiction to permit
qualification of the Partnership as a limited partnership or for any other
purposes necessary to implement the Partnership's purposes.

     THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, THE OKLAHOMA SECURITIES ACT OR
OTHER APPLICABLE STATE SECURITIES ACTS. THE SECURITIES HAVE BEEN ACQUIRED FOR
INVESTMENT AND MAY NOT BE SOLD OR TRANSFERRED FOR VALUE IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION OF THEM UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND/OR THE OKLAHOMA SECURITIES ACT, OR ANY OTHER APPLICABLE ACT, OR AN OPINION
OF COUNSEL TO UNIT 2003 EMPLOYEE OIL AND GAS LIMITED PARTNERSHIP THAT SUCH
REGISTRATION IS NOT REQUIRED UNDER SUCH ACT.

     The undersigned hereby subscribes for _____ Units (minimum subscription: 2
Units) at a price of $1,000 per Unit for a total Capital Subscription (as
defined in Article II of the Agreement) of $________________, which shall be due
and payable either:

     (Check One)

_______      (a) in four equal installments on March 15, 2003, June 15, 2003,
September 15, 2003 and December 15, 2003, respectively; or

_______      (b) through equal deductions from 2003 salary of the undersigned
commencing immediately after the Effective Date (as defined in Article II of the
Agreement).








                                      I-5

<PAGE>
                                            RESIDENT
LIMITED PARTNER                             ADDRESS
---------------                             -------       (If placing Units
                                                          in the name of spouse
________________________   _________________________      or trustee for minor
                                                          child or children,
________________________   _________________________      please provide name,
Signature                                                 address of such
                                                          spouse or trustee and
________________________      Mailing Address             Social Security or Tax
Please Print Name             if different:               Identification Number)

                                                          TAX I.D. OR SOCIAL
                            _________________________     SECURITY NO.
                                                          ------------

Date: ____________________  _________________________     __________________


ACCEPTED THIS _____ DAY OF __________________, 2003.

UNIT 2003 EMPLOYEE OIL AND GAS LIMITED PARTNERSHIP


By ____________________________________
         Authorized Officer of Unit
         Petroleum Company, General Partner

     Upon completion, an executed copy of this Limited Partner Subscription
Agreement and Suitability Statement should be returned to Unit 2003 Employee Oil
and Gas Limited Partnership, Attention Mark E. Schell, 1000 Kensington Tower I,
7130 South Lewis Avenue, Tulsa, Oklahoma 74136. The General Partner, after
acceptance, will return a copy of the accepted Subscription Agreement to the
Limited Partner.
















                                      I-6