CONFIDENTIAL

For Private Placement Purposes Only


               UNIT 2004 EMPLOYEE OIL AND GAS LIMITED PARTNERSHIP
                          7130 South Lewis, Suite 1000
                              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 January 8, 2004




<PAGE>


                                600 Preformation
                      Units of Limited Partnership Interest
                                     in the
                               UNIT 2004 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 2004 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 7130 South Lewis, Suite 1000, 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.



                             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.
                          7130 South Lewis, Suite 1000
                              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.   Restated Unit Corporation Amended and Restated Stock Option Plan and
          related prospectuses covering shares of Common Stock issuable upon
          exercise of outstanding options.

     5.   UNIT's 2002 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 2003, the annual report to
          shareholders and all quarterly reports to shareholders submitted by
          UNIT to its shareholders during calendar year 2003.

     8.   The Registration Statement on Form S-3 (File No. 333-104165) and all
          supplemental prospectuses filed with the SEC pursuant to Rule 424.

     9.   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").

     10.  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.

     11.  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..........................................16
   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.........................................................21
   Partnership Borrowings.................................................22
PLAN OF DISTRIBUTION......................................................22
   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.........................41
CONFLICTS OF INTEREST.....................................................41
   Acquisition of Properties and Drilling Operations......................41
   Participation in UNIT's Drilling or Income Programs....................42
   Transfer of Properties.................................................43
   Partnership Assets.....................................................44
   Transactions with the General Partner or Affiliates....................44
   Right of Presentment Price Determination...............................44
   Receipt of Compensation Regardless of Profitability....................44
   Legal Counsel..........................................................45

                                       vi
<PAGE>

FIDUCIARY RESPONSIBILITY..................................................45
   General................................................................45
   Liability and Indemnification..........................................46
PRIOR ACTIVITIES..........................................................46
   Prior Employee Programs................................................49
   Results of the Prior Oil and Gas Programs..............................50
FEDERAL INCOME TAX CONSIDERATIONS.........................................58
   Summary of Conclusions.................................................59
   General Tax Effects of Partnership Structure...........................61
   Ownership of Partnership Properties....................................62
   Intangible Drilling and Development Costs Deductions...................63
   Depletion Deductions...................................................63
   Depreciation Deductions................................................64
   Transaction Fees.......................................................64
   Basis and At Risk Limitations..........................................65
   Passive Loss Limitations...............................................65
   Gain or Loss on Sale of Property or Units..............................66
   Partnership Distributions..............................................66
   Partnership Allocations................................................67
   Administrative Matters.................................................67
   Accounting Methods and Periods.........................................68
   State and Local Taxes..................................................68
   Individual Tax Advice Should Be Sought.................................68
COMPETITION, MARKETS AND REGULATION.......................................69
   Marketing of Production................................................69
   Regulation of Partnership Operations...................................70
   Natural Gas Price Regulation...........................................70
   Oil Price Regulation...................................................74
   State Regulation of Oil and Gas Production.............................74
   Legislative and Regulatory Production and Pricing Proposals............74
   Production and Environmental Regulation................................75
SUMMARY OF THE LIMITED PARTNERSHIP AGREEMENT..............................76
   Partnership Distributions..............................................76
   Deposit and Use of Funds...............................................76
   Power and Authority....................................................77
   Rollup or Consolidation of the Partnership.............................77
   Limited Liability......................................................77
   Records, Reports and Returns...........................................78
   Transferability of Interests...........................................79
   Amendments.............................................................80
   Voting Rights..........................................................81
   Exculpation and Indemnification of the General Partner.................81
   Termination............................................................82
   Insurance..............................................................82
COUNSEL...................................................................82
GLOSSARY..................................................................83
FINANCIAL STATEMENTS......................................................86

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 2004 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 30, 2004 (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, 2004 and the
remaining three of such Installments being due on June 15, September 15, and
December 15, 2004, respectively, or (ii) through equal deductions from 2004
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 2004. Each
member of the Board of Directors of UNIT may subscribe for up to 250 Units
($250,000). 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, 2034, 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 2004 have been set at $36,000 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 2004 have been set at $36,000 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 2004. Directors' subscriptions may not be for more than 250
Units ($250,000). 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, 2005, 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:

     o    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.

     o    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.

     o    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, 2005 to present their Units to the General
          Partner for purchase, Limited Partners will not be able to liquidate
          their investments.

     o    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.

     o    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.

     o    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.

     o    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.

     o    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.

     o    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.

     o    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:

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

     o    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.

     o    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.

     o    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>

     o    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.

     o    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, 2004, if the Partnership is formed
prior to such date or from the date of the formation of the Partnership if
subsequent to January 1, 2004, until December 31, 2004, 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 2004. 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 2004.
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 2004.

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

REVENUES........................  General Partner's           Limited Partners'
                                    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 2004; (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'

                                       6
<PAGE>

distributive shares of Partnership tax items will be determined and allocated
substantially in accordance 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

                                       7
<PAGE>

the Partnership may have previously paid its share of such costs and expenses to
the operator. If 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,
2004, if the Partnership is formed prior to such date, or from the date of the
formation of the Partnership, if subsequent to January 1, 2004, through December
31, 2004 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 2004. 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 2004. 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 2004 and will have no rights in production from
wells commenced in years other than 2004. Likewise, if additional interests are
acquired in wells participated in by the Partnership after 2004, 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, 2005,
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 2005. 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:

         o        withdrawing from the Partnership,

         o        transferring Units without restrictions, or

                                       9
<PAGE>

         o        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
2004. 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). Most Limited
Partners will be subject to the "passive activity loss" rules and will be unable
to use passive losses generated by the Partnership until and unless he or she
has realized "passive income".

                                       13
<PAGE>

Tax Liabilities in Excess of Cash Distributions

     A Partner must include in his or her own income tax return his or her share
of the items of the Partnership's income, gain, profit, loss, and deductions
whether or not cash proceeds are actually distributed to the Partner to pay any
tax resulting from the Partnership's activities. 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 any of the Partnership's
properties will be considered "proven" for purposes of depletion deductions; and
(iii) 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 legal counsel
merely represents such counsel's best legal judgment under existing statutes,
judicial decisions, and administrative regulations and interpretations. There
can be no assurance that deductions claimed by the Partnership in reliance upon
the 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, 2004 or the time
the Partnership is formed through December 31, 2004 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 2004.

     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 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.

                                       14
<PAGE>

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
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

                                       15
<PAGE>

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

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

                                       16
<PAGE>

conducted from the General Partner's offices, the address of which is 7130 South
Lewis, Suite 1000, Tulsa, Oklahoma 74136, telephone (918) 493-7700.

     The offering of Units will be closed on January 30, 2004 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 2004 (excluding bonuses) have been set at $36,000 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
2004. Each director of UNIT may subscribe for a maximum of 250 Units (maximum
investment of $250,000). At January 6, 2004 there were approximately 274 people
eligible to purchase Units.

     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.

                                       17
<PAGE>

     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, 2004 and the remaining three of such Installments being due on June
15, September 15, and December 15, 2004, respectively, or (ii) by employees so
electing in the space provided on the Subscription Agreement, through equal
deductions from 2004 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.

     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.


                                       18
<PAGE>

Right of Presentment

     After December 31, 2005, 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;

         (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.


                                       19
<PAGE>

     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
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

                                       20
<PAGE>

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.

Prior Programs

     In the prior employee programs conducted by UNIT or the General Partner in
each of the years 1984 through 2003, Additional Assessments could be called for
as provided herein. At September 30, 2003, 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.


                                       21
<PAGE>

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.


                              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.


                                       22
<PAGE>

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 2004 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 2004. The Partnership
will acquire 1% 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
2004 and (ii) serving as a co-general partner in any drilling or income
programs, or both, formed by the General Partner or UNIT during 2004.

     Acquisition of Properties and Drilling Operations. The Partnership will
participate, to the extent of 1% 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, 2004, or the time of the
formation of the Partnership if subsequent to January 1, 2004, until December
31, 2004, 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 2004. The Partnership will be charged
with 1% of the total costs and expenses charged to the general partners and
allocated 1% of the revenues allocable to the general partners in any such
program and UPC or UNIT will be charged with the remaining 99% of the general
partners' share of costs and expenses and allocated the remaining 99% 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
2003. Although it does not currently contemplate doing so, UNIT may form such
drilling or income programs during 2004. 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 2004 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 2004 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, 99% for the account
of UNIT and/or UPC and 1% 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 2004 nor can it predict what
producing properties, if any, will be acquired by it during 2004. 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 150 - 200 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 2004. In either instance, the Partnership will
have an interest only in those wells begun in 2004 and will have no rights in
production from wells commenced in years other than 2004 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 2004, 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 2004. 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 2004.

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 2004. If additional interests in
Partnership Wells are

                                       27
<PAGE>

acquired in years subsequent to 2004 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 2004.
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 2004 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, 2004 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, 2004 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 Partner            Limited Partners
                                    ---------------            ----------------
COSTS AND EXPENSES

o    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%

o    All other Partnership Costs and
     Expenses:

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


                                       30
<PAGE>

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

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

REVENUES                           General Partner's           Limited Partners'
                                       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. UNIT also 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 as well as a 16.71%
limited partnership interest in Eagle Energy Partners I, L.P., a Texas limited
partnership, that buys and sells natural gas. It is possible that this limited
partnership may buy some of the Partnerships natural gas production.

     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, 2003, is set forth below.


                                       32
<PAGE>


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

1979(***).............    150,000    2,833,720         2,539,915       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..................          -      300,505           964,738         829,503
1984 Employee(*)......          -        3,924             5,000          13,452
1985 Employee(*)......          -       10,316                 -          54,892
1986 Energy
Income Fund(**).......          -      343,912         1,224,907          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(****)...          -      572,357                 -         144,993
1992 Employee(****)...          -      159,914                 -          14,934
1993 Employee(****)...          -       85,790                 -          68,504
1994 Employee(****)...          -      122,392                 -          42,135
1995 Employee(****)...          -       72,331                 -          35,903
1996 Employee(****)...          -       85,199                 -         112,911
1997 Employee(****)...          -       75,475                 -         170,174
1998 Employee(****)...          -       57,689                 -         161,343
1999 Employee(****)...          -       95,782                 -         186,408
Consolidated
Program(*)(****)......          -      208,885                 -             613
2000 Employee.........          -       60,314                 -         600,771
2001 Employee.........          -       15,519                 -         362,975
2002 Employee.........          -        7,229                 -         274,089
2003 Employee.........          -        1,388                 -         224,358
---------------

(*) 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.

(***) Effective July 1, 2003 this program was dissolved.

(****) Effective December 31, 2002, 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.


                                       33
<PAGE>

         (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 - 2003 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 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 - 2003
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, in exchange for
shares of UNIT's common stock in a transaction whereby UDEC became a wholly
owned subsidiary of UNIT. UPC was incorporated in the State of Oklahoma on
February 9, 1984 as Sunshine Development Corporation ("SDC") and was acquired by
UDEC in 1985. The name was changed to Unit Petroleum Company in 1988. 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 7130 South Lewis, Suite
1000, 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:


                                       34
<PAGE>


         Name                   Age                     Position
         ----                   ---                     --------
King P. Kirchner                76               Director

John G. Nikkel                  68               Chairman of the Board,
                                                 Chief Executive Officer,
                                                 Chief Operating Officer
                                                 and Director

Larry D. Pinkston               49               President, Treasurer and
                                                 Chief Financial Officer

Mark E. Schell                  46               Senior Vice President,
                                                 Secretary and General Counsel

O. Earle Lamborn                68               Senior Vice President, Drilling
                                                 and Director

Philip M. Keeley                62               Senior Vice President,
                                                 Exploration and Production

David T. Merrill                42               Vice President, Finance

William B. Morgan               59               Director

Don Cook                        78               Director

John S. Zink                    75               Director

John H. Williams                85               Director

J. Michael Adcock               54               Director

Mark E. Monroe                  49               Director

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

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

John G. Nikkel                  68               Chairman of the Board and
                                                 Director

Larry Pinkston                  49               President and Treasurer

Philip M. Keeley                62               Executive Vice President and
                                                 Director

Mark E. Schell                  46               Secretary and General Counsel


                                       35
<PAGE>

     Mr. Kirchner, a co-founder of UNIT, has been a director since 1963. He
served as the Company's President until November 1983, as its Chief Executive
Officer until June 30, 2001, and served as the Chairman of the Board until July
31, 2003. 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.

     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
and served as President until July 31, 2003. 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. 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 June
2003, he was elected to the additional position of 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. Lamborn was elected Vice President, Drilling in 1973 and to his current
position as Senior Vice President, Drilling and director in 1979. He 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.

     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. Merrill joined Unit in August 2003 as Vice President, Finance. From May
1999 through August 2003, Mr. Merrill served as Senior Vice President, Finance
with TV Guide Networks, Inc. From July 1996 through May 1999 he was a Senior
Manager with Deloitte & Touche LLP. From July 1994 through July 1996 he was
Director of Financial Reporting and Special Projects for MAPCO, Inc. He began
his career as an auditor with Deloitte, Haskins & Sells in 1983. Mr. Merrill
received a Bachelor

                                       37
<PAGE>

of Business Administration Degree in Accounting from the University of Oklahoma
and is a Certified Public Accountant.

     Mr. Morgan was elected a director of UNIT in February 1988. For over 5
years, Mr. Morgan has been Executive Vice President and General Counsel of St.
John Health System, Inc., Tulsa, Oklahoma, and 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
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 a director of Community Health Partners, Inc., formerly
Mid America Healthcare, Inc. Between 1997 and 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.

     Mr. Monroe was the Chief Executive Officer and President of Louis Dreyfus
Natural Gas Corp., a publicly-held natural gas exploration and production
company, until the sale of the company in 2001. Prior to the formation of Louis
Dreyfus Natural Gas in 1990, Mr. Monroe was the Chief Financial Officer of
Bogert Oil Company, a publicly-held exploration and production company
headquartered in Oklahoma City, Oklahoma. From 1976 to 1980, he was an Audit
Manager for the public accounting firm of Deloitte & Touche in Dallas, Texas.
Mr. Monroe currently serves as a member of the Board of Directors for
Continental Resources, Inc., a privately-held exploration and production company
headquartered in Enid, Oklahoma. He has served as President of the Oklahoma
Independent Petroleum Association, on the Domestic Petroleum Council, on the
National Petroleum Council and on the Boards of the Independent Petroleum
Association of America and the Petroleum Club of Oklahoma City. Mr. Monroe
graduated from the University of Texas at Austin with a BBA degree in 1975 and
is a Certified Public Accountant.

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

                                       37
<PAGE>

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

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

Unit 2003 Employee Oil and Gas Limited
   Partnership                             January 31, 2003          $284,000


                                       38
<PAGE>

     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 2003 Employee Programs. The capital subscriptions of the
following limited partners to the 2001, 2002 and 2003 Employee Programs were as
shown below:



                     Position with                 Amount of Capital
   Subscriber            UNIT                          Subscription
                                                       ------------
                                              2001          2002           2003
                                              ----          ----           ----

King P. Kirchner     Director             $25,000 (1)     100,000 (1)     40,000

John G. Nikkel       Chairman, Chief     $151,400 (2)     100,000 (2)     80,000
                     Executive Officer,
                     Chief Operating
                     Officer and Director

Earle Lamborn        Senior Vice Presi-    20,000 (3)           0              0
                     dent and Director

Philip M. Keeley     Senior Vice Presi-   $43,600 (2)      40,000 (2)     20,000
                     dent, Exploration
                     and Production
---------------

     (1) Mr. Kirchner invested $25,000 indirectly in the 2001 Employee Program,
$100,000 in the 2002 Employee Program and $40,000 in the 2003 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 2001, 2002 and 2003
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 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 2001,
2002 and 2003 Employee Programs by Messrs. Nikkel and Keeley are set forth
below:

                                                                      Nike
    Employee            Mr. Nikkel           Mr. Keeley           Exploration
    Program              Directly             Directly              Company
    -------              --------             --------              -------

      2001                $80,000              $15,000             $100,000
      2002               $100,000              $40,000             $100,000
      2003                $80,000              $20,000              $60,000

     (3) Mr. Lamborn invested $20,000 indirectly in the 2001 Employee Program
through the Earle Lamborn Revocable Trust as permitted by the limited
partnership agreement.

Ownership of Common Stock

     UNIT's Common Stock is listed on the New York Stock Exchange as reported on
the Composite Tape. On January 5, 2004 there were 45,590,154 shares outstanding.

     As of January 5, 2004, the directors and officers of UNIT owned of record
or beneficially owned shares of UNIT Common Stock as follows:


                                       39
<PAGE>


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

King P. Kirchner..................   446,920  (2)                    *
John Williams.....................    11,500  (3)                    *
Don Cook..........................    33,818  (3)                    *
Philip M. Keeley..................   117,156  (2)(4)                 *
Earle Lamborn.....................   222,397  (2)(4)                 *
John G. Nikkel....................   426,468  (2)(4)                 *
Larry D. Pinkston.................    69,166  (2)(4)                 *
Mark E. Schell....................    70,492  (2)(4)                 *
John S. Zink......................     9,100  (3)                    *
William B. Morgan.................    23,900  (3)                    *
J. Michael Adcock.................   455,891  (3)(5)                 *
Mark E. Monroe....................     1,000                         *

All Officers and Directors
      as a Group.................. 1,887,808  (2)(3)(4)(5)
---------------

         *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 January 5, 2004, 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 January
5, 2004 pursuant to the exercise of currently exercisable stock options.

     (2) Includes shares of common stock held under UNIT's 401(k) thrift plan as
of January 5, 2004 for the account of: Earle Lamborn, 14,603; John G. Nikkel,
32,307; Philip M. Keeley, 12,616; Larry D. Pinkston, 3,491; and Mark E. Schell,
30,981.

     (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,
14,000; Don Cook, 26,500; William B. Morgan, 15,500; John H. Williams, 10,500;
John S. Zink, 7,000; and King P. Kirchner 7,000 shares and all Non-Employee
Directors as a group, 80,500.

     (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 January 5, 2004 at the discretion of the holder:
John G. Nikkel 47,500; Philip M. Keeley, 19,000; Larry D. Pinkston, 25,500; and
Mark E. Schell, 25,500.

     (5) Of the shares shown, Mr. J. Michael Adcock is deemed to be the
beneficial owner of 440,891 shares by virtue of his position as one of three
trustees of the Don Bodard 1995 Revocable Trust.


                                       40
<PAGE>

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.

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, 2004, or
from the formation of the Partnership if subsequent to January 1, 2004, through
December 31, 2004 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

                                       41
<PAGE>

         (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 2004. 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, 2004, or from the
formation of the Partnership if subsequent to January 1, 2004, through December
31, 2004. 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, 2004, or from the formation of the Partnership
if subsequent to January 1, 2004, through December 31, 2004. Likewise the
Partnership would have no interest in any increased density wells drilled on the
original spacing unit unless such wells were drilled during 2004. In addition,
if additional interests are acquired in wells participated in by the Partnership
after 2004, 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 2004, 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.

                                       42
<PAGE>

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 2004.

     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

         (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.


                                       43
<PAGE>

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 and a 16.71% limited partnership
interest in Eagle Energy Partners I, L.P., a Texas partnership. Eagle is in the
business of buying and selling natural gas. It is anticipated that the
Partnership will obtain services, equipment and supplies from one or all 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.

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

                                       44
<PAGE>

"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:

         o        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;

         o        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;

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

         o        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

                                       45
<PAGE>

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.


                                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, 2003 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.


                                       46
<PAGE>



Year Ended                   Gross Wells(2)                 Net Wells(3)
                             --------------                 ------------
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    .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
                        ---    ---     ---  ---       ----   ---   ----  -----

Year Ended                   Gross Wells (2)                Net Wells(3)
                             ---------------                ------------
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

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


                                       47
<PAGE>

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

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

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      21.80    .4  17.40    4.0
                        ---    ---     ---  ---      -----  ----  -----   ----
         Total........   51      1      42    8      21.80    .4  17.40    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


                                       48
<PAGE>

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

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

2002 Exploratory......    6      0       2    4       1.34     0    .90    .44
     Development......   91      4      63   24      47.15  1.92  29.71  15.52
                        ---    ---     ---  ---       ----  ----   ----   ----
         Total........   97      4      65   28      48.49  1.92  30.61  15.96

Period of January 1, 2003
to September 30, 2003

     Exploratory.......    2     1       1    0       1.20   .20   1.00      0
     Development.......   96     4      77   15      36.84  1.92  25.73   9.19
                         ---   ---     ---  ---       ----  ----   ----   ----
         Total.........   98     5      78   15      38.04  2.12  26.73   9.19

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

     (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 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.


                                       49
<PAGE>

     For each year from 1984 through 2003, 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 2002 and 2003 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 was generally 70% to the limited
partners and 30% to the general partners until 150% program payout at which time
the revenues were to be shared 55% to the limited partners and 45% to the
general partners. The 1979 Program was dissolved effective July 1, 2003. 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, 2003, and the economic results at September
30, 2003 of prior oil and gas programs and the 1984 - 2003 Employee Programs. On
September 12, 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").
Effective December 31, 2002, pursuant to an Agreement and Plan of

                                       50
<PAGE>

Merger, dated December 27, 2002, all of the assets and all of the liabilities of
the 1991, 1992, 1993, 1994, 1995, 1996, 1997, 1998, and 1999 Employee Programs
were merged with and consolidated into to the Consolidated Program. The
Consolidated Program holds no assets other than those acquired in the mergers
with the 1984 through 1999 Employee Programs. All of the Employee Programs
formed since 2000 continue in existence. 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, 2003

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

1979(1)    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(2)    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(2)    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(2) 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..................    8    4   34   20  14.28   0.94  5.90  7.44

1982-A(2)  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(2)  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(2)  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) Effective July 1, 2003 this program was dissolved.

     (2) On September 12, 1986, Unit acquired all of the assets and liabilities
of this Program and the Program has been dissolved.


                                       51
<PAGE>


                                EMPLOYEE PROGRAMS

                            As of September 30, 2003

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

1984(1)  Exploratory Wells......    0    0    0    0   0.00   0.00  0.00  0.00
Empl.    Development Wells......   25    4   12    9    .14    .02   .06   .06
                                   --   --   --   --  -----  -----  ----  ----
         Total..................   25    4   12    9    .14    .02   .06   .06

1985(1)  Exploratory Wells......    0    0    0    0   0.00   0.00  0.00  0.00
Empl.    Development Wells......   30    8   10   12    .38    .12   .08   .18
                                   --   --   --   --  -----  -----  ----  ----
         Total..................   30    8   10   12    .38    .12   .08   .18

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

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

1988(1)  Exploratory Wells......    0    0    0    0      0     0      0     0
Empl.    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)  Exploratory Wells......
Empl.    Development Wells......   32    7   14   11   1.48    .59   .36   .53
                                   --   --   --   --  -----  -----  ----  ----
         Total..................   32    7   14   11   1.48    .59   .36   .53

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

1991(2)  Exploratory Wells......    4    0    0    4    .08      0     0   .08
Empl.    Development Wells......   28   10    9    9   1.59    .86   .39   .34
                                   --   --   --   --  -----  -----  ----  ----
         Total..................   32   10    9   13   1.67    .86   .39   .42

1992(2)  Exploratory Wells......    0    0    0    0      0      0     0     0
Empl.    Development Wells......   18    1   11    6    .29    .05   .17   .07
                                   --   --   --   --  -----  -----  ----  ----
         Total..................   8     1   11    6    .29    .05   .17   .07

1993(2)  Exploratory Wells......    0    0    0    0      0      0     0     0
Empl.    Development Wells......   16    9    6    1    .63    .45   .17   .01
                                   --   --   --   --  -----  -----  ----  ----
         Total..................   16    9    6    1    .63    .45   .17   .01

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

1995(2)  Exploratory Wells......    0    0    0    0      0      0     0     0
Empl.    Development Wells......   45   15   24    6    .74    .23   .40   .11
                                   --   --   --   --  -----  -----  ----  ----
         Total..................   45   15   24    6    .74    .23   .40   .11

1996(2)  Exploratory Wells......    0    0    0    0      0      0     0     0
Empl.    Development Wells......   53    7   38    8   1.24    .27   .76   .21
                                   --   --   --   --  -----  -----  ----  ----
         Total..................   53    7   38    8   1.24    .27   .76   .21


                                       52
<PAGE>

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

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

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

1999(2)  Exploratory Wells.......   0    0    0    0      0      0     0     0
Empl.    Development Wells.......  51    1   42    8   1.09    .02   .87   .20
                                   --   --   --   --  -----  -----  ----  ----
         Total...................  51    1   42    8   1.09    .02   .87   .20

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

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

2002     Exploratory Wells.......   6    0    2    4    .03      0   .02   .01
Empl.    Development Wells.......  91    4   63   24   1.18    .05   .74   .39
                                   --   --   --   --  -----  -----  ----  ----
         Total...................  97    4   65   28   1.21    .05   .76   .40

Period of January 1, 2003
To September 30, 2003

2003     Exploratory Wells.......   2    1    1    0    .03    .01   .02     0
Empl.    Development Wells.......  96    4   77   15    .92    .05   .64   .23
                                   --   --   --   --  -----  -----  ----  ----
         Total...................  98    5   78   15    .95    .06   .66   .23
---------------

         (1)      Effective December 31, 1993 this Program was merged with and
                  into the Consolidated Program.

         (2)      Effective December 31, 2002 this Program was merged with and
                  into the Consolidated Program.



                                       53
<PAGE>


                        GENERAL PARTNERS' PAYOUT TABLE(1)

                            As of September 30, 2003

                                                 Total
                                  Total         Revenues      Total Revenues
                              Expenditures       Before      Before Deducting
                                Including      Deducting      Operating Costs
                                Operating      Operating     for 3 Months Ended
Program                          Costs(2)        Costs       September 30, 2003
-------                          -----           -----       ------------------

1979(***)....................  $8,781,728    $10,846,983                 -
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.........................   2,545,708      2,271,101             31,366
1984 Employee(*).............       1,542          1,745                 -
1985 Employee(*).............       2,820          1,808                 -
1986 Energy Income Fund(**)..   1,799,248      1,851,505             24,619
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(****)..........   2,352,323      3,046,177             47,494
1992 Employee(****)..........     241,577        400,556              6,509
1993 Employee(****)..........     496,051        717,460              7,427
1994 Employee(****)..........   1,435,412      1,841,119             31,186
1995 Employee(****)..........     476,082        599,485              9,519
1996 Employee(****)..........     901,692        869,473             12,412
1997 Employee(****)..........   1,296,424      1,165,747             28,779
1998 Employee(****)..........   1,180,292      1,083,527             39,295
1999 Employee(****)..........     953,718      1,314,469             46,747
Consolidated Program.........      10,210         22,568              2,074
2000 Employee................   1,941,548      2,062,871             78,569
2001 Employee................     936,046        502,248             58,651
2002 Employee................     948,069        449,315             92,208
2003 Employee................     733,182        113,087             89,262
---------------

(*) 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.

(***) Effective July 1, 2003 this program was dissolved.

(****) Effective December 31, 2002 this Program was merged with and into the
Consolidated Program.


                                       54
<PAGE>


                        LIMITED PARTNERS' PAYOUT TABLE(1)

                            As of September 30, 2003

                                                 Total
                                  Total        Revenues        Total Revenues
                               Expenditures     Before        Before Deducting
                                Including      Deducting      Operating Costs
                                Operating      Operating     for 3 Months Ended
       Program                   Costs(2)        Costs       September 30, 2003
       -------                   --------        -----       ------------------

1979(***)...................  $14,729,990    $18,839,040                 -
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........................    3,179,316      2,365,703             31,366
1984 Employee(*)............      120,942        171,540                 -
1985 Employee(*)............      277,901        178,984                 -
1986 Energy Income Fund(**).    2,809,277      3,897,003             36,929
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(****).........      620,136        811,871                 -
1992 Employee(****).........      622,697      1,033,805                 -
1993 Employee(****).........      451,551        664,349                 -
1994 Employee(****).........      582,274        754,012                 -
1995 Employee(****).........      762,211        941,188                 -
1996 Employee(****).........      549,125        534,519                 -
1997 Employee(****).........      605,116        524,732                 -
1998 Employee(****).........      613,890        551,342                 -
1999 Employee(****).........      289,622        392,633                 -
Consolidated Program........      849,185      2,230,915            205,659
2000 Employee...............      271,226        281,428             10,713
2001 Employee...............      419,708        225,648             26,350
2002 Employee...............      489,134        231,466             47,501
2003 Employee...............      150,170         23,162             18,283
---------------

(*) 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.

(***) Effective July 1, 2003, this program was dissolved.

(****) Effective December 31, 2002 this Program was merged with and into the
Consolidated Program.


                                       55
<PAGE>


                      GENERAL PARTNERS' NET CASH TABLE (1)

                            As of September 30, 2003

                                               Total
                                             Revenues
                                               Less                     Total
                                             Operating                Revenues
                      Total         Total    Costs for               Distributed
                  Expenditures   Revenues    3 Months               for 3 Months
                      Less         Less        Ended       Total       Ended
                   Operating     Operating   Sept. 30,   Revenues    Sept. 30,
      Program       Costs(2)       Costs        2003    Distributed     2003
      -------       --------       -----        ----    -----------     ----

1979(***)..........$2,805,917   $4,871,172     $    -     $3,961,014    $    -
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...............   934,572      659,965       8,981       984,834     27,550
1984 Employee(*)...       874        1,077          -          1,000         -
1985 Employee(*)...     2,300        1,288          -          1,035         -
1986 Energy
Income Fund(**).....  177,078      229,335       5,455       472,865         -
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(****).1,056,956    1,750,810          -      1,618,020         -
1992 Employee(****).   99,250      258,229          -        230,839         -
1993 Employee(****).  311,650      533,059          -        472,480         -
1994 Employee(****).  856,390    1,262,097          -      1,076,708         -
1995 Employee(****).  330,617      454,020          -        350,504         -
1996 Employee(****).  681,656      649,437          -        450,383         -
1997 Employee(****).1,057,002      926,325          -        695,477         -
1998 Employee(****).  920,862      824,096          -        638,218         -
1999 Employee(****).  706,281    1,067,032          -        796,578         -
Consolidated Program.   1,796       14,154       1,397        14,697      1,500
2000 Employee.......1,544,520    1,665,843      48,545       997,669     72,500
2001 Employee.......  857,480      423,682      49,713       223,000     56,000
2002 Employee.......  887,879      389,124      78,220       123,000    103,000
2003 Employee.......  720,838      100,743      78,752            -          -
---------------

(*) 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.

(***) Effective July 1, 2003, this program was dissolved.

(****) Effective December 31, 2002 this Program was merged with and into the
Consolidated Program.


                                       56
<PAGE>


                       LIMITED PARTNERS' NET CASH TABLE(1)

                            As of September 30, 2003

                                                  Total
                                                Revenues                Total
                                                  Less                Revenues
                                                Operating            Distributed
                            Total      Total     Costs for              for 3
                        Expenditures  Revenues   3 Months               Months
                             Less       Less       Ended     Total      Ended
             Capital      Operating  Operating  Sept. 30,  Revenues    Sept. 30,
 Program   Contributed     Costs(2)    Costs      2003    Distributed    2003
 -------   -----------     --------    -----      ----    -----------    ----

1979(***).. $3,000,000    $6,085,402 $10,194,451  $  -    6,198,801    $   -
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     2,036,778   1,223,164  18,312    952,286    27,720(5)
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   2,075,841   8,184  1,952,500    10,400(6)
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       275,590     467,325     -      438,947        -
1992
Employee(****).240,000       256,030     667,138     -      626,888        -
1993
Employee(****).245,000       281,201     493,998     -      459,375        -
1994
Employee(****).284,000       345,243     516,980     -      433,668        -
1995
Employee(****).454,000       493,337     672,314     -      572,524        -
1996
Employee(****).437,000       419,615     405,010     -      382,812        -
1997
Employee(****).413,000       495,786     415,402     -      348,159        -
1998
Employee(****).471,000       486,317     423,769     -      398,937        -
1999
Employee(****).141,000       214,376     317,387     -      288,204        -
Consolidated...      -        41,812   1,423,542  36,867  1,388,859  203,856 (7)
2000
Employee.......199,000       210,969     221,171   6,626    202,781   12,537 (8)
2001
Employee.......370,000       384,418     190,358  22,336    134,680   28,860 (9)
2002
Employee.......457,000       457,392     199,723  40,292    133,444  60,781 (10)
2003
Employee.......284,000       147,642      20,634  16,130          -        -
---------------

(*) 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.

(***) Effective July 1, 2003, this program was dissolved.

(****) Effective December 31, 2002 this Program was merged with and into the
Consolidated Program.

     (1) Amounts reflect the accrual method of accounting.


                                       57
<PAGE>

     (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.

     (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 2003 the 1984 Program made a distribution of $22,680 to
that program's limited partners.

     (6) In November 2003 the 1986 Program made a distribution of $9,700 to that
program's limited partners.

     (7) In November 2003 the Consolidated Employee Program made a distribution
of $142,432 to that program's limited partners.

     (8) In November 2003 the 2000 Employee Program made a distribution of
$8,756 to that program's limited partners.

     (9) In November 2003 the 2001 Employee Program made a distribution of
$21,460 to that program's limited partners.

     (10) In November 2003 the 2002 Employee Program made a distribution of
$31,990 to that program's limited partners.


                        federal income tax considerations

     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. 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. 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. Thus,
there can be no assurance that all of the anticipated tax benefits of an
investment in the Partnership will be realized.


                                       58
<PAGE>

     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 could render the conclusions in the opinion
inapplicable.

     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 federal
income tax opinions rendered by Conner & Winters in Exhibit B.

     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."

     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 2004. 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 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");

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

     Facts and Representations: In rendering its opinion, Conner & Winters
relied upon certain representations made to it by the General Partner, including
the following:


                                       59
<PAGE>

     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
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,
2004. 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.


                                       60
<PAGE>

     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
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

     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.


                                       61
<PAGE>

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 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 of 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.


                                       62
<PAGE>

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.

     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 for
deductibility of the Partnership's IDC in 2004, no assurance can be given that
the Service will not successfully contend that the IDC of a Partnership well
which is not completed until 2005 is not deductible in whole or in part until
2005. 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

                                       63
<PAGE>

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.

     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.

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.

                                       64
<PAGE>


     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
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.


                                       65
<PAGE>

     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.

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.

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

                                       66
<PAGE>

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.

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.

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 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.


                                       67
<PAGE>

     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.

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.


                                       68
<PAGE>

                       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 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.


                                       69
<PAGE>

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 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.


                                       70
<PAGE>

     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
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

                                       71
<PAGE>

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.

     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

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<PAGE>

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 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

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<PAGE>

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 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.


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<PAGE>

     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.

     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.


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<PAGE>

                  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 2005. 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, 2034 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 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.


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<PAGE>

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 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'

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<PAGE>

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
2004 (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.

     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.


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<PAGE>

     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
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

                                       79
<PAGE>

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
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.


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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; o 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 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.


81
<PAGE>

Termination

     The Partnership will terminate automatically on December 31, 2034. 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 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

                                       82
<PAGE>

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.

     (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.


                                       83
<PAGE>

     (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,
2004, 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, 2004, if any, minus (iii) the amount, if any, of the
unexpended Aggregate Subscription at December 31, 2004.

     (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, 2004 and December 15, 2004, respectively, or
(ii) if an employee so elects, through equal deductions from 2004 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;

         (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;


                                       84
<PAGE>

         (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.

     (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.


                                       85
<PAGE>

     (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 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.


                                       86
<PAGE>

     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,
2003 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, 2003.


                                       87
<PAGE>


                      Unit Petroleum Company and Subsidiary
                           Consolidated Balance Sheet
                                 (In Thousands)
                                                                October 31, 2003
                                                                  (Unaudited)
                             Assets
                             ------
Current Assets:
         Cash and cash equivalents                                 $        555
         Trade accounts receivable                                       15,857
         Materials and supplies, at lower of cost or market               4,014
         Other                                                              455
                                                                   ------------
                      Total current assets                               20,881
                                                                   ------------

Property and Equipment:
         Oil and natural gas properties, on the full cost method        527,944
         Other                                                              424
                                                                   ------------
                                                                        528,368

         Less accumulated depreciation, depletion,
              amortization and impairment                               235,621
                                                                   ------------
                      Net property and equipment                        292,747
                                                                   ------------

Other Assets                                                                 43
                                                                   ------------

Total Assets                                                       $    313,671
                                                                   ============

              Liabilities and Shareholders' Equity
              -------------------------------------
Current Liabilities:
         Current portion of long-term liabilities                           392
         Accounts payable                                                 7,431
         Accounts payable to parent                                      16,268
         Contract advances                                                  858
         Accrued liabilities                                              1,345
                                                                   ------------
                      Total current liabilities                          26,294
                                                                   ------------

Other Long-Term Liabilities                                              12,308
                                                                   ------------

Deferred Income Taxes                                                    73,595
                                                                   ------------

Shareholders' Equity:
         Common stock, $1.00 par value, 500 shares
              authorized and outstanding                                      1
         Capital in excess of par value                                  31,543
         Retained earnings                                              169,930
                                                                   ------------
                      Total shareholders' Equity                        201,474
                                                                   ------------

Total Liabilities and Shareholders' Equity                         $    313,671
                                                                   ============

                                       88
<PAGE>











                                    EXHIBIT A




               UNIT 2004 EMPLOYEE OIL AND GAS LIMITED PARTNERSHIP


                        AGREEMENT OF LIMITED PARTNERSHIP

























<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 2004 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 2004 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 7130 South Lewis, Suite
1000, 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,
2034, 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, 2004, 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, 2004, minus (iii) the amount, if
     any, of the unexpended Aggregate Subscription at December 31, 2004.

          (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
     be

                                      A-8

<PAGE>
     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, 2004, June 15, 2004,
September 15, 2004, and December 15, 2004, respectively, or (ii) by employees so
electing, through equal deductions from 2004 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 2004 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

                                      A-15

<PAGE>
          Partner's capital account and would have thereupon caused or
          increased a deficit balance in such Limited 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 2004 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, 2004 or the
Effective Date through December 31, 2004 (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 2004 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 2004 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 2004 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, 2005, 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, 2034,
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, 2034, 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 7130 South Lewis, Suite 1000, 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, 2004 but effective as of the Effective Date.


                                                       "General Partner"
                                                    UNIT PETROLEUM COMPANY
Attest:



By___________________________________    By___________________________________
         Mark E. Schell, Secretary              Larry D. Pinkston, President

































                                      A-33

<PAGE>

                   LIMITED PARTNER SUBSCRIPTION AGREEMENT AND
                              SUITABILITY STATEMENT

                (ALL INFORMATION WILL BE TREATED CONFIDENTIALLY)


Unit 2004 Employee Oil and Gas Limited Partnership
c/o Unit Petroleum Company
7130 South Lewis Avenue, Suite 1000
Tulsa, Oklahoma 74136

                                   RE:   Unit 2004 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 2004 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
January 8, 2004 of the Unit 2004 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.

     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.


                                      I-1
<PAGE>
     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 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


                                      I-2

<PAGE>
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

          (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

                                      I-3
<PAGE>

     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 2004 has been set at $40,000 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 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


                                      I-4
<PAGE>

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 2004 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 2004 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, 2004, June 15, 2004,
September 15, 2004 and December 15, 2004, respectively; or

_______ (b) through equal deductions from 2004 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 __________________, 2004.

UNIT 2004 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 2004 Employee Oil
and Gas Limited Partnership, Attention Mark E. Schell, 7130 South Lewis Avenue,
Suite 1000, Tulsa, Oklahoma 74136. The General Partner, after acceptance, will
return a copy of the accepted Subscription Agreement to the Limited Partner.




















                                      I-6
<PAGE>
                        [CONNER & WINTERS LETTERHEAD]


                                       January 8, 2004

Unit Petroleum Company
1000 Kensington Tower I
7130 South Lewis
Tulsa, Oklahoma 74136

     Re: Unit 2004 Employee Oil and Gas Limited Partnership

Dear Sirs:

     We have acted as counsel for Unit Petroleum Company, an Oklahoma
corporation (the "General Partner"), which will be the General Partner in the
Unit 2004 Employee Oil and Gas Limited Partnership, a proposed Oklahoma limited
partnership (the "Partnership"). You have requested our opinions regarding
certain federal income tax matters concerning the Partnership.

     We have reviewed and relied upon the accuracy of the facts and information
set forth in the Private Offering Memorandum dated January 8, 2004 (the
"Memorandum"), covering the offer and sale of units of limited partnership
interest ("Units") in the Partnership, the Agreement of Limited Partnership
included as Exhibit A to the Memorandum (the "Partnership Agreement"), the
consolidated balance sheet of the General Partner dated November 30, 2003, and
such other documents and matters as we have considered necessary in order to
render this opinion. Capitalized terms used herein have the meaning assigned to
them in the Memorandum, except as otherwise specifically indicated.

     In our examination we have assumed the authenticity of original documents,
the accuracy of copies and the genuineness of signatures. We have relied upon
the representations and statements of the General Partner of the Partnership
with respect to the factual determinations underlying the legal conclusions set
forth herein. We have not attempted to verify independently such representations
and statements.

     Please note that we are opining only as to the matters expressly set forth
herein, and no opinion should be inferred as to any other matters. We are unable
to render opinions as to a number of federal income tax issues relating to an
investment in Units and the operations of the



<PAGE>
CONNER & WINTERS, P.C.

Unit Petroleum Company
January 8, 2004
Page 2

Partnership. Finally, we are not expressing any opinion with respect to the
amount of allowable losses or credits that may be generated by the Partnership
or the amount of each Partner's share of allowable losses or credits from the
Partnership's activities.

     The following opinion and statements are based upon the provisions of the
Internal Revenue Code of 1986, as amended (the "Code"), existing and proposed
regulations thereunder, current administrative rulings, and court decisions. The
federal income tax law is uncertain as to many of the tax matters material to an
investment in the Partnership, and it is not possible to predict with certainty
how the law will develop or how the courts will decide various issues if they
are litigated. While this opinion fairly states our views concerning the tax
aspects of an investment in the Partnership, both the Internal Revenue Service
(the "Service") and the courts may disagree with our position on certain issues.

     Moreover, uncertainty exists concerning some of the federal income tax
aspects of the transactions being undertaken by the Partnership. Some of the tax
positions to be taken by the Partnership may be challenged by the Service and
there is no assurance that any such challenge will not be successful. Thus,
there can be no assurance that all of the anticipated tax benefits of an
investment in the Partnership will be realized.

     Our opinions are based upon the transactions described in the Memorandum
(the "Transaction") and upon facts as they have been represented to us or
determined by us as of the date of the opinion. Any alteration of the facts may
adversely affect the opinions rendered. In our opinion, the preponderance of the
material tax benefits, in the aggregate, will be realized by the Partners. It is
possible, however, that some of the tax benefits will be 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 us with respect to the Federal Income Tax Considerations discussed
herein. TO BE FULLY UNDERSTOOD, THE COMPLETE DISCUSSION OF THESE MATTERS SHOULD
BE READ BY EACH PROSPECTIVE PARTNER.

     1. The material federal income tax benefits in the aggregate from an
investment in the Partnership will be realized.
<PAGE>
CONNER & WINTERS, P.C.

Unit Petroleum Company
January 8, 2004
Page 3

     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."ion, an association taxable as a corporation or a
"publicly traded partnership."

     3. To the extent the Partnership's wells are timely drilled and amounts are
timely paid, the Partners will be entitled to their pro rata shares of the
Partnership's IDC paid in 2004.

     4. Limited Partners' interests will be considered 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.

     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.

     6. The Partnership will not be required to register with the Service as a
tax shelter.

     No opinion expressed: Due to the lack of authority, or the essentially
factual nature of the question, we express no opinion on the following:

     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.

     2. 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. Due to the inherently factual nature of such a determination, we are
unable to render an opinion as to the availability of percentage depletion.

     3. 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 and
local tax.

     Our opinions are also based upon the facts described in the Memorandum and
upon certain representations made to us by the General Partner for the purpose
of permitting us to render our opinions, including the following representations
with respect to the Partnership:

     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

<PAGE>
CONNER & WINTERS, P.C.

Unit Petroleum Company
January 8, 2004
Page 4

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 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 the
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 Intangible Drilling and Development Costs.

     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,
2004. The entire amount to be paid under any drilling and under the operating
agreements entered into by the Partnership will be attributable to Intangible
Drilling and Development Costs.

     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 greater than two to one.
Further, the General Partner has represented that the deductions and credits
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 thereunder, 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.
<PAGE>
CONNER & WINTERS, P.C.

Unit Petroleum Company
January 8, 2004
Page 5

     9. 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 or the substantial equivalent thereof.

     10. There is not now pending nor, to the knowledge of the General Partner
or UNIT, threatened any action, suit or proceeding by the Internal Revenue
Service under Sections 6700 or 7408 of the Internal Revenue Code relating to the
promoter penalty referred to in Section 6700 of the Code with respect to any
partnerships sponsored by the General Partner or UNIT. Neither the General
Partner, UNIT, nor, to the knowledge of either of them, any participant in such
partnerships has received any pre-filing notifications referred to in Revenue
Procedure 83-73 with respect to such partnerships or the Partnership from the
Internal Revenue Service.

     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
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.

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

     13. No election will be made under the Regulations for the Partnership to
be treated as a corporation.

     Our opinions are also subject to all the assumptions, qualifications, and
limitations set forth in the following discussion, 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 counsel represents only such counsel's best judgment.
THERE CAN BE NO ASSURANCE THAT THE SERVICE WILL NOT SUCCESSFULLY ASSERT
POSITIONS WHICH ARE INCONSISTENT WITH OUR OPINIONS SET FORTH IN THIS DISCUSSION
OR IN THE TAX REPORTING POSITIONS TAKEN BY THE PARTNERS OR THE PARTNERSHIP. EACH
PROSPECTIVE INVESTOR SHOULD

<PAGE>
CONNER & WINTERS, P.C.

Unit Petroleum Company
January 8, 2004
Page 6

CONSULT HIS OWN TAX ADVISOR TO DETERMINE THE EFFECT
OF THE TAX ISSUES DISCUSSED HEREIN ON HIS INDIVIDUAL TAX SITUATION.

                               PARTNERSHIP STATUS

     The Partnership will be formed as a limited partnership pursuant to the
Partnership Agreement and the laws of the State of Oklahoma. The
characterization of the Partnership as a partnership by state or local law,
however, will not be determinative of the status of the Partnership for federal
income tax purposes. The availability of any federal income tax benefits to an
investor is dependent upon classification of the Partnership as a partnership
rather than as a corporation or as an association taxable as a corporation for
federal income tax purposes.

     We are of the opinion that 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." However, there can
be no assurance that the Service will not attempt to treat the Partnership as a
corporation or as an association taxable as a corporation for federal income tax
purposes. If the Service were to prevail on this issue, the tax benefits
associated with taxation as a partnership would not be available to the
Partners.

     Although the Partnership will be validly organized as a limited partnership
under the laws of the state of Oklahoma and will be subject to the Act, whether
it will be treated for federal income tax purposes as a partnership or as a
corporation or as an association taxable as a corporation will be determined
under the Code rather than local law. As discussed below, our opinion that the
Partnership will not be classified a corporation or as an association taxable as
a corporation is based in part on entity classification regulations promulgated
in 1996 and in part on the fact that in our opinion the Partnership will not
constitute a "publicly traded partnership."

A. Association Taxable as a Corporation

     Our opinion that the Partnership will not be treated as an association
taxable as a corporation is based on regulations issued by the Internal Revenue
Service on December 17, 1996, generally effective as of January 1, 1997,
regarding the tax classification of certain business organizations (the "Check
the Box Regulations").

     Under the Check the Box Regulations, in general, a business entity that is
not otherwise required to be treated as a corporation under such regulations
will be classified as a partnership if it has two or more members, unless the
business entity elects to be treated as a corporation. The Partnership is not
required under the Check the Box Regulations to be treated as a corporation and
the General Partner has represented that it will not elect that the Partnership
be treated as a corporation. Accordingly, in our opinion the Partnership will
not be treated as an association taxable as a corporation.
<PAGE>
CONNER & WINTERS, P.C.

Unit Petroleum Company
January 8, 2004
Page 7

B. Publicly Traded Partnerships

     The Revenue Act of 1987 (the "1987 Act") added Code Section 7704, "Certain
Publicly Traded Partnerships Treated as Corporations." In treating certain
"publicly traded partnerships" ("PTPs") as corporations for federal income tax
purposes, Congress defined a PTP as any partnership, interests in which are
either traded on an established securities market or readily tradable on a
secondary market (or the substantial equivalent thereof). Code Section 7704(b).
Proposed Regulation 1.7704-1(b) provides that an "established securities market"
includes a national securities exchange registered under Section 6 of the
Securities Exchange Act of 1934 (the "1934 Act"), a national securities exchange
exempt under the 1934 Act because of the limited volume of transactions, certain
foreign security laws, regional or local exchanges, and an interdealer quotation
system that regularly disseminates firm buy or sell quotations by identified
brokers or dealers. The General Partner has represented that the Units will not
be traded on an established securities market.

     Notwithstanding the above general treatment of PTPs, Code Section 7704(c)
creates an exception to the treatment of PTPs as corporations for any taxable
year if 90% or more of the gross income of the partnership for such taxable year
consists of "qualifying income." Code Section 7704(c)(2). For this purpose,
qualifying income is defined to include, inter alia, "income and gains derived
from the exploration, development, mining or production, processing, refining...
or the marketing of any mineral or natural resource..." Code
Section 7704(d)(1)(E). The General Partner has represented that for all taxable
years of the Partnership, 90% or more of the Partnership's gross income will
consist of such qualifying income.

     Regarding the definition of PTPs contained in the Code, the Committee
Reports to the 1987 Act provide that PTPs include entities with respect to
which, inter alia, (i) "the holder of an interest has a readily available,
regular and ongoing opportunity to sell or exchange his interest through a
public means of obtaining or providing information of offers to buy, sell or
exchange interests," (ii) "prospective buyers and sellers have the opportunity
to buy, sell or exchange interests in a time frame and with the regularity and
continuity that the existence of a market maker would provide," and (iii) there
exists a "regular plan of redemptions or repurchases" or similar acquisitions of
interests in the partnership such that holders of interests have readily
available, regular and ongoing opportunities to dispose of their interests."

     The Service issued Regulation Section 1.7704-1 to clarify when partnership
interests that are not traded on an established securities market will be
treated as readily tradable on a secondary market or the substantial equivalent
thereof. Essentially, the Regulation provides that such a situation occurs if
partners are readily able to buy, sell, or exchange their partnership interests
in a manner that is comparable, economically, to trading on an established
securities market. In addition, Notice 88-76 and the Regulation provide limited
safe harbors from the definition of a PTP in advance of the issuance of final
regulations. It is unclear whether the limited safe harbors provided in the
Notice and Regulation would result in the Units being

<PAGE>
CONNER & WINTERS, P.C.

Unit Petroleum Company
January 8, 2004
Page 8

treated as not publicly traded and we express no opinion regarding this matter.
However, the General Partner's obligation to purchase Units pursuant to the
right or presentment described in the Memorandum is conditioned upon the receipt
by the Partnership from its counsel of an opinion that such offers or
obligations to offer will not cause the Partnership to be treated as "publicly
traded."


     Due to the presence of the opinion of counsel condition, the Partnership,
in our opinion, will not be treated as a PTP prior to any purchases of Units
pursuant to the right of presentment. Accordingly, the Partnership, in our
opinion, will not be treated as a corporation for federal income tax purposes
under Code Section 7704 in the absence of the Partnership's interests being
"readily tradable on a secondary market (or the substantial equivalent
thereof)."

     Notwithstanding the above, the Service may promulgate regulations or
release announcements which take the position that interests in partnerships
such as the Partnership are readily tradable on a secondary market or the
substantial equivalent thereof. However, treatment of the Partnership as a PTP
should not result in its treatment as a corporation for federal income tax
purposes due to the exception contained in Code Section 7704(c) relating to PTPs
meeting the 90% of gross income test so long as such gross income test is
satisfied.

C. Summary

     Based on the above, in our opinion the Partnership will not be treated as
an association taxable as corporation for federal income tax purposes by reason
of the Check the Box Regulations. Further, since any obligation of the General
Partner to purchase Units is conditioned upon the receipt of an opinion of
counsel that the Partnership will not be treated as a PTP, and assuming the
Partnership satisfies the 90% gross income test of Code Section 7704, the
Partnership, in our opinion, will not be treated as a corporation for federal
income tax purposes. Accordingly, the Partnership in our opinion will be treated
as partnership for federal income tax purposes. If challenged by the Service on
this issue, the Partners should prevail on the merits, and each Partner should
be required to report his proportionate share of the Partnership's items of
income and deductions on his individual federal income tax return.

     If in any taxable year the Partnership were to be treated for federal
income tax purposes as a corporation or as an association taxable as a
corporation, the Partnership income, gain, loss, deductions, and credits would
be reflected only on its "corporate" tax return rather than being passed though
to the Partners. In such event, the Partnership would be required to pay income
tax at corporate rates on its net income, thereby reducing the amount of cash
available to be distributed to the Partners. Additionally, all or a portion of
any distribution made to Partners would be taxable as dividends, which would not
be deductible by the Partnership and which would generally be treated as
ordinary portfolio income to the Partners, regardless of the source from which
such distributions were generated.
<PAGE>
CONNER & WINTERS, P.C.

Unit Petroleum Company
January 8, 2004
Page 9

     The discussion that follows is based on the assumption that the Partnership
will be classified as a partnership for federal income tax purposes.

                       FEDERAL TAXATION OF THE PARTNERSHIP

     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 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 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.

     A partnership anti-abuse regulation promulgated under Reg. Section 1.701-2
authorizes the Service to recharacterize a partnership transaction if (1) a
partnership is formed or availed of in connection with a transaction a principal
purpose of which is to reduce substantially the present value of the partners'
aggregate federal income tax liability, and (2)the transaction is inconsistent
with the intent of the Subchapter K partnership provisions. Additionally, the
regulation permits the Service to treat a partnership as an aggregate of its
partners, in whole or in part, as appropriate, to carry out the purpose of any
provision of the Code or the regulations. The scope of this regulation is
unclear at this time. Accordingly, we are unable to express an opinion as to its
effect, if any, on the Partnership.

                          REGISTRATION AS A TAX SHELTER

     The Code provides that certain investments must be registered as tax
shelters with the Service. Registration numbers for such tax shelters must be
supplied to investors who are required to report the numbers on their personal
tax returns. Any organizer of a "potentially abusive tax shelter" and any person
selling an interest in such shelter are required to maintain a list of investors
in such tax shelter to whom interests were sold (together with other identifying
information) and to make the list available to the Service upon request. Any tax
shelter which is required to be registered and any other plan or arrangement
which is of a type determined by the Treasury Regulations as having a potential
for tax avoidance or evasion is considered a potentially abusive tax shelter for
this purpose.

     The registration requirements apply only to an investment with respect to
which any person could reasonably infer from the representations made, or to be
made, in connection with the offering for sale of interests in the investment
that the "tax shelter ratio" for any investor is greater than two to one as of
the close of any of the first five years ending after the date on which such
investment is offered for sale.
<PAGE>
CONNER & WINTERS, P.C.

Unit Petroleum Company
January 8, 2004
Page 10

     The General Partner has represented that, (i) based upon its experience
with its oil and gas partnerships and upon the intended operations of the
Partnership, it does not believe that the Partnership will have a tax shelter
ratio greater than two to one, (ii) the deductions and credits that are or will
be represented as potentially allowable to an investor will not result in any
Partnership having a tax shelter ratio greater than two to one, and (iii) based
upon a review of the economics of its similar oil and gas partnerships for the
past several years, it has determined that none of those partnerships has
resulted in a tax shelter ratio greater than two to one. Accordingly, the
General Partner does not intend to cause the Partnership to register with the
Service as a tax shelter. Based on the foregoing representations, we are of the
opinion that the Partnership will not be required to register with the Service
as a tax shelter.

     If it is subsequently determined that the Partnership was required to be
registered with the Service as a tax shelter, the Partnership would be subject
to certain penalties under Code Section 6707, including a penalty ranging from
$500 to 1% of the aggregate amount invested in Units for failing to register and
$100 for each failure to furnish to a Partner a tax shelter registration number,
and each Partner would be liable for a $250 penalty for failure to include the
tax registration number on his tax return, unless such failure was due to
reasonable cause. A Partner also would be liable for a penalty of $100 for
failing to furnish the tax shelter registration number to any transferee of his
Partnership interest. We can give no assurance that, if the Partnership is
determined to be a tax shelter which must be registered with the Service, the
above penalties will not apply.

                       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 on behalf of
the Partnership. That agency agreement will reflect that the Nominee's
acquisition of Partnership Properties is on behalf of the Partnership. For
various cost and procedural reasons, the assignments of all oil and gas
interests acquired by the Nominee on behalf of the Partnership to the
Partnership 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
<PAGE>
CONNER & WINTERS, P.C.

Unit Petroleum Company
January 8, 2004
Page 11

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 would result in the treatment of the
Nominee as the tax owner of the Partnership Properties. For the foregoing
reasons, we have not expressed an opinion on this issue, but we 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 the Partnership
Properties, then our conclusions with respect to 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

     Under Code Section 263(a), taxpayers are denied deductions for capital
expenditures, which expenditures are those that generally result in the creation
of an asset having a useful life which extends substantially beyond the close of
the taxable year. See also Treas. Reg. Section 1.461-1(a)(2). In Indopco,
Inc. v. Commissioner, 92-1 USTC paragraph 50,113 (1992), the Supreme Court
seemed to further limit the capitalization criteria by stating that the costs
should be capitalized when they provide benefits that extend beyond one tax
year. Notwithstanding these statutory and judicial general rules, Congress has
granted to the Secretary of the Treasury the authority to prescribe regulations
that would allow taxpayers the option of deducting, rather than capitalizing,
intangible drilling and development costs ("IDC"). Code Section

<PAGE>
CONNER & WINTERS, P.C.

Unit Petroleum Company
January 8, 2004
Page 12

263. The Secretary's rules are embodied in Treas. Reg. Section 1.612-4 and 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.

     With respect to IDC incurred by a partnership, Code Section 703 and Treas.
Reg. Section 1.703-1(b) provide that the option to deduct such costs is to be
exercised at the partnership level and in the year in which the deduction is to
be taken. All partners are bound by the partnership's election. The General
Partner has represented that the Partnership will elect to deduct IDC in
accordance with Treas. Reg. Section 1.612-4. In this regard, subject to such
provision, Limited Partners will be entitled to deduct IDC against passive
income in the year in which the investment is made, provided wells are spudded
within the first ninety days of the following year.

A. Classification of Costs

     In general, IDC consists of those costs which in and of themselves have no
salvage value. Treas. Reg. Section 1.612-4(a) provides examples of items to
which the option to deduct IDC applies, including all amounts paid for labor,
fuel, repairs, hauling, and supplies, or any of them, which are used (i) in the
drilling, shooting, and cleaning of wells, (ii) in such clearing of ground,
draining, road making, surveying, and geological works as are necessary in the
preparation for the drilling of wells, and (iii) in the construction of such
derricks, tanks, pipelines, and other physical structures as are necessary for
the drilling of wells and the preparation of wells for the production of oil or
gas. The Service, in Rev. Rul. 70-414, 1970-2 C.B. 132, set forth further
classifications of items subject to the option and those considered capital in
nature. The ruling provides that the following items are not subject to the
election of Treas. Reg. Section 1.612-4(a): (i) oil well pumps (upon initial
completion of the well), including the necessary housing structures; (ii) oil
well pumps (after the well has flowed for a time), including the necessary
housing structures; (iii) oil well separators, including the necessary housing
structures; (iv) pipelines from the wellhead to oil storage tanks on the
producing lease; (v) oil storage tanks on the producing lease; (vi) salt water
disposal equipment, including any necessary pipelines; (vii) pipelines from the
mouth of a gas well to the first point of control, such as a common carrier
pipeline, natural gasoline plant, or carbon black plant; (viii) recycling
equipment, including any necessary pipelines; and (ix) pipelines from oil
storage tanks on the producing leasehold to a common carrier pipeline.

     A partnership's classification of a cost as IDC is not binding on the
government, which might reclassify an item labeled as IDC as a cost which must
be capitalized. In Bernuth v. Commissioner, 57 T.C. 225 (1971), aff'd, 470 F.2d
710 (2nd Cir. 1972), the Tax Court denied taxpayers a deduction for that portion
of a turnkey drilling contract price that was in excess of a reasonable cost for
drilling the wells in question under a turnkey contract, holding that the amount
specified in the turnkey contract was not controlling. Similarly, the Service,
in Rev. Rul. 73-211, 1973-1 C.B. 303, concluded that excessive turnkey costs are
not deductible as IDC:
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CONNER & WINTERS, P.C.

Unit Petroleum Company
January 8, 2004
Page 13

     [o]nly that portion of the amount of the taxpayer's total investment that
     is attributable to intangible drilling and development costs that would
     have been incurred in an arm's-length transaction with an unrelated
     drilling contractor (in accordance with the economic realities of the
     transaction) is deductible [as IDC].

     To the extent the Partnership's prices meet the reasonable price standards
imposed by Bernuth, supra, and Rev. Rul73-211, supra, and to the extent such
amounts are not allocable to tangible property, leasehold costs, and the like,
the amounts paid to the General Partner or its affiliates under drilling
contracts should qualify as IDC and should be deductible at the time described
below under "B.  Timing of Deductions." That portion of the amount paid to the
General Partner or its affiliates that is in excess of the amount that would be
charged by an independent driller under similar conditions will not qualify as
IDC and will be required to be capitalized.

     We are unable to express an opinion regarding the reasonableness or proper
characterization of the payments under the drilling contracts, since the
determination of whether the amounts are reasonable or excessive is inherently
factual in nature. No assurance can be given that the Service will not
characterize a portion of the amount paid to the General Partner or its
affiliates as an excessive payment, to be capitalized as a leasehold cost,
assignment fee, syndication fee, organization fee, or other cost, and not
deductible as IDC. To the extent not deductible such amounts will be included in
the Partners' bases in their interests in the Partnership.

B. Timing of Deductions

     As described above, Code Section 263(c) and Treas. Reg. Section 1.612-4
allow the Partnership to expense IDC as opposed to capitalizing such amounts.
Even if the Partnership elects to expense the IDC, assuming a taxpayer is
otherwise entitled to such a deduction, the taxpayer may elect to capitalize all
or a part of the IDC and amortize the same on a straight-line basis over a sixty
month period, beginning with the taxable month in which such expenditure is
made. Code Section 59(e)(1) and (2)(c).

     For taxpayers entitled to deduct IDC, the timing of such deduction can
vary, depending, in part, upon the taxpayer's method of accounting. The General
Partner has represented that the Partnership will use the accrual method of
accounting. Under the accrual method, income is recognized when all the events
have occurred which fix the right to receive such income and the amount thereof
can be determined with reasonable accuracy. Treas. Reg. Section 1.451-1(a). With
respect to deductions, recognition results when all events which establish
liability have occurred and the amount thereof can be determined with reasonable
accuracy. Treas. Reg. Section 1.461-1(a)(2). Regarding deductions, Code
Section 461(h)(1) provides that ". . . the all

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CONNER & WINTERS, P.C.

Unit Petroleum Company
January 8, 2004
Page 14

events test shall not be treated as met any earlier than when economic
performance with respect to such item occurs."

     Code Section 461(i)(2), provides that, in the case of a "tax shelter,"
economic performance with respect to the act of drilling an oil or gas well will
". . . be treated as having occurred within a taxable year if drilling of the
well commences before the close of the 90th day after the close of the taxable
year." The Code Section 461 definition of a "tax shelter" is expansive and would
include the Partnership. However, with respect to a tax shelter which is a
partnership, the maximum deduction that would be allowable for any prepaid
expenses under this exception would be limited to the partner's "cash basis" in
the partnership. Code Section 461(i)(2)(B)(i). Such "cash basis equals the
partner's adjusted basis in the partnership, determined without regard to
(i) any liability of the partnership and (ii) any amount borrowed by the partner
with respect to the partnership which (I) was arranged by the partnership or by
any person who participated in the organization, sale, or management of the
partnership (or any person related to such person within the meaning of Code
Section 465(b)(3)(C)) or (II) was secured by any assets of the partnership".
Code Section 461(i)(2)(C). The General Partner has represented that drilling
operations for Partnership wells will commence by the spudding of each well on
or before December 31, 2004. If completion is warranted, each well will be
completed with due diligence thereafter. Further the General Partner has
represented that, in any event, the Partnership will not have any such liability
referred to in Code Section 461(i)(2)(C), and the Partners will not so incur any
such debt so as to result in application of the limiting provisions contained in
Code Section 461(i)(2)(B)(i).

     Notwithstanding the above, the deductibility of any prepaid IDC will be
subject to the limitations of case law. These limitations provide that prepaid
IDC is deductible when paid if (i) the expenditure constitutes a payment that is
not merely a deposit, (ii) the payment is made for a business purpose, and
(iii) deductions attributable to such outlay do not result in a material
distortion of income. See Keller v. Commissioner, 79 T.C. 7 (1982), aff'd, 725
F.2d 1173 (8th Cir. 1984), Rev. Rul. 71-252, 1971-1 C.B. 146, Pauley v. U.S.,
63-1 U.S.T.C. paragraph 9280 (S.D. Cal. 1963), Rev. Rul. 80-71, 1980-1 C.B. 106,
Jolley v. Commissioner, 47 T.C.M. 1082 (1984), Dillingham v. U.S., 81-2 U.S.T.C.
paragraph 9601 (W.D. Okla. 1981), and Stradlings Building Materials, Inc. v.
Commissioner, 76 T.C. 84 (1981). Generally, these requirements may be met by a
showing of a legally binding obligation (i.e., the payment was not merely a
deposit), of a legitimate business purpose for the payment, that performance of
the services was required within a reasonable time, and of an arm's-length
price. Similar requirements apply to cash basis taxpayers seeking to deduct
prepaid IDC.

     The General Partner is unable to represent that all of the Partnership's
wells will be completed in 2004; however, the General Partner has represented
that any such well that is not completed in 2004 will be spudded by not later
than December 31, 2004.
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CONNER & WINTERS, P.C.

Unit Petroleum Company
January 8, 2004
Page 15

     The Service has challenged the timing of the deduction of IDC when the
wells giving rise to such deduction have been completed in a year subsequent to
the year of prepayment. The decisions noted above hold that prepayments of IDC
by a cash basis taxpayer are, under certain circumstances, deductible in the
year of prepayment if some work is performed in the year of prepayment even
though the well is not completed that year.

     In Keller v. Commissioner, supra, the Eighth Circuit Court of Appeals
applied a three-part test for determining the current deductibility of prepaid
IDC by a cash basis taxpayer, namely whether (i) the expenditure was a payment
or a mere deposit, (ii) the payment was made for a valid business purpose and
(iii) the prepayment resulted in a material distortion of income. The facts in
that case dealt with two different forms of drilling contracts: footage or
day-work contracts and turnkey contracts. Under the turnkey contracts, the
prepayments were not refundable in any event, but in the event work was stopped
on one well the remaining unused amount would be applied to another well to be
drilled on a turnkey basis. Contrary to the Service's argument that this
substitution feature rendered the payment a mere deposit, the court in Keller
concluded that the prepayments were indeed "payments" because the taxpayer could
not compel a refund. The court further found that the deduction clearly
reflected income because under the unique characteristics of the turnkey
contract the taxpayer locked in the price and shifted the drilling risk to the
contractor, for a premium, effectively getting its bargained for benefit in the
year of payment. Therefore, the court concluded that the cash basis taxpayers in
that case properly could deduct turnkey payments in the year of payment. With
respect to the prepayments under the footage or day-work contracts, however, the
court found that the payments were mere deposits on the facts of the case,
because the partnership had the power to compel a refund. The court was also
unconvinced as to the business purpose for prepayment under the footage or
day-work contracts, primarily because the testimony indicated that the drillers
would have provided the required services with or without prepayment.

     Under the terms of drilling and operating agreements to be entered into by
and between the Partnership and the General Partners or its affiliates, if
amounts paid by the Partnership prior to the commencement of drilling exceed
amounts due the General Partner or its affiliates thereunder, the General
Partner or its affiliates will not refund any portion of amounts paid by the
Partnership, but rather will create a credit once the actual costs incurred by
the General Partner or its affiliates are compared to the amounts paid.

     The Service has adopted the position that the relationship between the
parties may provide evidence that the drilling contract between the parties
requiring prepayment may not be a bona fide arm's-length transaction, in which
case a portion of the prepayment may be disallowed as being a "non-required
payment." Section 4236, Internal Revenue Service Examination Tax Shelters
Handbook (6-27-85). A similar position is taken by the Service in the Tax
Shelter Audit Technique Guidelines. Internal Revenue Service Examination Tax
Shelter Handbook.
<PAGE>
CONNER & WINTERS, P.C.

Unit Petroleum Company
January 8, 2004
Page 16

     The Service has formally applied its position on prepayments to related
parties in Revenue Ruling 80-71. 1980-1 C.B. 106. In this ruling, a subsidiary
corporation, which was a general partner in an oil and gas limited partnership,
prepaid the partnership's drilling and completion costs under a turnkey contract
entered into with the corporate parent of the general partner. The agreement did
not provide for any date for commencing drilling operations and the contractor,
which did not own any drilling equipment, was to arrange for the drilling
equipment for the wells through subcontractors. Revenue Ruling 71-252, supra,
was factually distinguished on the grounds of the business purpose of the
transaction, immediate expenditure of prepaid receipts, and completion of the
wells within two and one-half months. Rev. Rul. 80-71 found that the prepayment
was not made in accordance with customary business practice and held on the
facts that the payment was deductible in the tax year that the related general
contractor paid the independent subcontractor.

     However, in Tom B. Dillingham v. United States, 1981-2 USTC paragraph 9601
(D.C. Okla. 1981), the court held that, on the facts before it, a contract
between related parties requiring a prepaid IDC did give rise to a deduction in
the year paid. In that case, Basin Petroleum Corp. ("Basin") was the general
partner of several drilling partnerships and also served as the partnership
operator and general contractor. As general contractor, Basin was to conduct the
drilling of the wells at a fixed price on a turnkey basis under an agreement
that required payment prior to the end of the year in question. The stated
reason for the prepayment was to provide Basin with working capital for the
drilling of the wells and to temporarily provide funds to Basin for other
operations. The agreement required drilling to commence within a reasonable
period of time, and all wells were completed within the following year. Some of
the wells were drilled by Basin with its own rigs and some were drilled by
subcontractors. The court stated:

     The fact that the owner and contractor is the general partner of the
partnership-owner does not change this result where, as here, the Plaintiffs
have shown that prepayment was required for a legitimate business purpose and
the transaction was not a sham to merely permit Plaintiff to control the timing
of the deduction. IRC, Sec. 707(a). Plaintiffs were entitled to rely upon
Revenue Ruling 71-252 by reason of Income Tax Regulations 26 C.F.R.
Section 601.601(d)(2)(v)(e) . . .

     Notwithstanding the foregoing, 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 challenge, the
Partners' deductions for IDC would be deferred to later years.
<PAGE>
CONNER & WINTERS, P.C.

Unit Petroleum Company
January 8, 2004
Page 17

     The timing of the deductibility of prepaid IDC is inherently a factual
determination which is to a large extent predicated on future events. The
General Partner has represented that the drilling and operating agreements to be
entered into with an affiliate of the General Partner by the Partnership will be
duly executed by and delivered to such affiliate, the Partnership and the
General Partner as attorney-in-fact for the Partners and will govern the
drilling, and, if warranted, the completion of each of the Partnership's wells.
Based upon this representation and others included within the opinion and
assuming that the drilling and operating agreements will be performed in
accordance with their terms, we are of the opinion that the payment for IDC
under the drilling and operating agreements, if made in 2004, will be allowable
as a deduction in 2004, subject to the other limitations discussed in this
opinion. Although the General Partner will attempt to satisfy each requirement
of the Service and judicial authority for deductibility of IDC in 2004, no
assurance can be given that the Service will not successfully contend that the
IDC of a well which is not completed until 2005 are not deductible in whole or
in part until 2005.

C. Recapture of IDC

     IDC which has been deducted is subject to recapture as ordinary income upon
certain dispositions (other than by abandonment, gift, death, or tax-free
exchange) of an interest in an oil or gas property. IDC previously deducted that
is allocable to the property (directly or through the ownership of an interest
in a partnership) and which would have been included in the adjusted basis of
the property is recaptured 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).
Treas. Reg. Section 1.1254-5(b). 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. Treas. Reg. Section 1.1254-1(c).

                              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. Code Section 613A(c)(7)(D). Notwithstanding
this requirement, however, the Partnership, pursuant to Section 3.01(d)(i) of
the Partnership Agreement, will compute a "simulated depletion allowance" at the
Partnership level, solely for the purposes of maintaining Capital Accounts. Code
Sections 613A(d)(2) and 613A(d)(4).
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CONNER & WINTERS, P.C.

Unit Petroleum Company
January 8, 2004
Page 18

     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 of the mineral interest and the denominator
of which is the estimated recoverable units of reserve available as of the
beginning of the depletion period. See Treas. Reg. Section 1.611-2(a). In no
event can the cost depletion exceed the adjusted basis of the property to which
it relates.

     Percentage depletion is generally available only with respect to the
domestic oil and gas production of certain "independent producers." In order to
qualify as an independent producer, the taxpayer, either directly or through
certain related parties, may not be involved in the refining of more 50,000
barrels of oil (or equivalent of gas) on any day during the taxable year or in
the retail marketing of oil and gas products exceeding $5 million per year in
the aggregate.

     In general, (i) component members of a controlled group of corporations,
(ii) corporations, trusts, or estates under common control by the same or
related persons and (iii) members of the same family (an individual, his spouse
and minor children) are aggregated and treated as one taxpayer in determining
the quantity of production (barrels of oil or cubic feet of gas per day)
qualifying for percentage depletion under the independent producer's exemption.
Code Section 613A(c)(8). No aggregation is required among partners or between a
partner and a partnership. An individual taxpayer is related to an entity
engaged in refining or retail marketing if he owns 5% or more of such entity.
Code Section 613A(d)(3).

     Percentage depletion is a statutory allowance pursuant to which, under
current law, a minimum deduction equal to 15% of the taxpayer's gross income
from the property is allowed in any taxable year, not to exceed (i) 100% of the
taxpayer's taxable income from the property (computed without the allowance for
depletion) or (ii) 65% of the taxpayer's taxable income for the year (computed
without regard to percentage depletion and net operating loss and capital loss
carrybacks). Code Sections 613(a) and 613A(d)(1). The rate of the percentage
depletion deduction will vary with the price of oil. In the case of production
from marginal properties, the percentage depletion rate may be increased.
Section 613A(c)(6). For purposes of computing the percentage depletion
deduction, "gross income from the property" does not include any lease bonus,
advance royalty, or other amount payable without regard to production from the
property. Code Section 613A(d)(5). Depletion deductions reduce the taxpayer's
adjusted basis in the property. However, unlike cost depletion, deductions under
percentage depletion 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.

     Percentage depletion will be available, if at all, only to the extent that
a taxpayer's average daily production of domestic crude oil or domestic natural
gas does not exceed the taxpayer's depletable oil quantity or depletable natural
gas quantity, respectively. Generally, the taxpayer's depletable oil quantity
equals 1,000 barrels and depletable natural gas quantity equals 6,000,000 cubic
feet. Code Section 613A(c)(3) and (4). In computing his individual limitation, a
Partner will be required to aggregate his share of the Partnership's oil and gas
production with

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CONNER & WINTERS, P.C.

Unit Petroleum Company
January 8, 2004
Page 19

his share of production from all other oil and gas investments. Code Section
613A(c). Taxpayers who have both oil and gas production may allocate the
deduction limitation between the two types of production.

     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. For properties
placed in service after 1986, depletion deductions, to the extent they reduce
the basis of an oil and gas property, are subject to recapture under
Section 1254.

     SINCE THE AVAILABILITY OF PERCENTAGE DEPLETION FOR A PARTNER IS DEPENDENT
UPON THE STATUS OF THE PARTNER AS AN INDEPENDENT PRODUCER, WE ARE UNABLE TO
RENDER ANY OPINION AS TO THE AVAILABILITY OF PERCENTAGE DEPLETION. EACH
PROSPECTIVE INVESTOR IS URGED TO CONSULT WITH HIS PERSONAL TAX ADVISOR TO
DETERMINE WHETHER PERCENTAGE DEPLETION WOULD BE AVAILABLE TO HIM.

                             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 tangible personal property placed in service after December 31,
1986, 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.




<PAGE>
CONNER & WINTERS, P.C.

Unit Petroleum Company
January 8, 2004
Page 20

                               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 (employees of
Unit Corporation and its subsidiaries may elect payroll withholding). In no
event will the Partnership accept notes in exchange for a Partnership interest.
Nevertheless, without any assistance of the General Partner or any of its
affiliates, some Partners may choose to borrow the funds necessary to acquire a
Unit and may incur interest expense in connection with those loans. Based upon
the purely factual nature of any such loans, we are unable to express an opinion
with respect to the deductibility of any interest paid or incurred thereon.

                                TRANSACTION FEES

     The Partnership may classify a portion of the fees or expense reimbursement
payments (the "Fees") to be paid to third parties and to the General Partner or
its affiliates 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 we express no opinion with respect to the allocation of the
Fees 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
(as defined in Code Section 709(b)(2) and in Treas. Reg. Section 1.709-2(a))
ratably over a period of not less than 60 months commencing with the month the
partnership begins business. Organizational expenses are expenses which (i) are
incident to the creation of the partnership, (ii) are chargeable to capital
account, and (iii) are of a character which, if expended incident to the
creation of a partnership having an ascertainable life, would (but for Code
Section 709(a)) be amortized over such life. Id. 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. Treas. Reg. Section 1.709-2(a).

     Under Code Section 709, 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 Memorandum or private placement memorandum for
securities law purposes, printing costs, and other selling or promotional
material. These costs must be capitalized. Treas. Reg. Section 1.709-2(b).
Payments for services performed in connection with the acquisition of capital
assets must be amortized over the useful life of such assets. Code Section 263.
<PAGE>
CONNER & WINTERS, P.C.

Unit Petroleum Company
January 8, 2004
Page 21

     Under Code Section 195, 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. Start-up expenditures are defined as
amounts (i) paid or incurred in connection with (A) investigating the creation
or acquisition of an active trade or business, (B) creating an active trade or
business, or (C) any activity engaged in for profit and for the production of
income before the day on which the active trade or business begins, in
anticipation of such activity becoming an active trade or business, and
(ii) which, if paid or incurred in connection with the operation of an existing
active trade or business (in the same field as the trade or business referred to
in (i) above), would be allowable as a deduction for the taxable year in which
paid or incurred. Code Section 195(c)(1).

     The Partnership intends to make expense reimbursement payments to the
General Partner, as described in the Memorandum. To be deductible, compensation
paid to a general partner must be for services rendered by the partner other
than in his capacity as a partner or for compensation determined without regard
to partnership income. Fees which are not deductible because they fail to meet
this test may be treated as special allocations of income to the recipient
partner (see Pratt v. Commissioner, 550 F.2d 1023 (5th Cir. 1977)), and thereby
decrease the net loss or increase the net income among all partners.

     To the extent these expenditures described in the Memorandum are considered
syndication costs, they will be nondeductible by the Partnership. To the extent
attributable to organization fees (such as the amounts paid for legal services
incident to the organization of the Partnership), the expenditures may be
amortizable over a period of not less than 60 months, commencing with the month
the Partnership begins business, if the Partnership so elects; if no election is
made, no deduction is available. Finally, to the extent any portion of the
expenditures would be treated as "start-up," they could be amortized over a
60 month or longer period, provided the proper election was made.

     Due to the inherently factual nature of the proper allocation of expenses
among nondeductible syndication expenses, amortizable organization expenses,
amortizable "start-up" expenditures, and currently deductible items, and because
the issues involve questions concerning both the nature of the services
performed and to be performed and the reasonableness of amounts charged, we are
unable to express an opinion regarding such treatment. 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 not be allowed as a deduction
to the extent such share exceeds the amount of the Partner's adjusted tax basis
in his Units. A Partner's initial adjusted tax basis in his Units will generally
be equal to the cash he has invested to purchase his

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CONNER & WINTERS, P.C.

Unit Petroleum Company
January 8, 2004
Page 22

Units. Such adjusted tax basis will generally be increased by (i) additional
amounts invested in the Partnership, including his share of net income, (ii)
additional capital contributions, if any, and (iii) his share of Partnership
borrowings, if any, based on the extent of his economic risk of loss for such
borrowings. Such adjusted tax basis will generally be reduced, but not below
zero by (i) his share of loss, (ii) his depletion deductions on his share of oil
and gas income (until such deductions exhaust his share of the basis of property
subject to depletion), (iii) the amount of cash and the adjusted basis of
property other than cash distributed to him, and (iv) his share of reduction in
the amount of indebtedness previously included in his basis.

     In addition, Code Section 465 provides, in part, that, if an individual or
a closely held C (i.e., regularly taxed) corporation engages in any activity to
which Code Section 465 applies, any loss from that activity is allowed only to
the extent of the aggregate amount with respect to which the taxpayer is "at
risk" for such activity at the close of the taxable year. Code
Section 465(a)(1). A closely held C corporation is a corporation more than fifty
percent (50%) of the stock of which is owned, directly or indirectly, at any
time during the last half of the taxable year by or for not more than five (5)
individuals. Code Sections 465(a)(1)(B), 542(a)(2). For purposes of Code
Section 465, a loss is defined as the excess of otherwise allowable deductions
attributable to an activity over the income received or accrued from that
activity. Code Section 465(d). Any such loss disallowed by Code Section 465
shall be treated as a deduction allocable to the activity in the first
succeeding taxable year. Code Section 465(a)(2).

     Code Section 465(b)(1) provides that a taxpayer will be considered as being
"at risk" for an activity with respect to amounts including (i) the amount of
money and the adjusted basis of other property contributed by the taxpayer to
the activity, and (ii) amounts borrowed with respect to such activity to the
extent that the taxpayer (A) is personally liable for the repayment of such
amounts, or (B) has pledged property, other than property used in the activity,
as security for such borrowed amounts (to the extent of the net fair market
value of the taxpayer's interest in such property). No property can be taken
into account as security if such property is directly or indirectly financed by
indebtedness that is secured by property used in the activity. Code
Section 465(b)(2). Further, amounts borrowed by the taxpayer shall not be taken
into account if such amounts are borrowed (i) from any person who has an
interest (other than an interest as a creditor) in such activity, or (ii) from a
related person to a person (other than the taxpayer) having such an interest.
Code Section 465(b)(3).

     Related persons for purposes of Code Section 465(b)(3) are defined to
include related persons within the meaning of Code Section 267(b) (which
describes relationships between family members, corporations and shareholders,
trusts and their grantors, beneficiaries and fiduciaries, and similar
relationships), Code Section 707(b)(1) (which describes relationships between
partnerships and their partners) and Code Section 52 (which describes
relationships between persons engaged in businesses under common control). Code
Section 465(b)(3)(C).
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Unit Petroleum Company
January 8, 2004
Page 23

     Finally, no taxpayer is considered at risk with respect to amounts for
which the taxpayer is protected against loss through nonrecourse financing,
guarantees, stop loss agreements, or other similar arrangements. Code
Section 465(b)(4).

     The Code provides that a taxpayer must recognize taxable income to the
extent that his "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 Treasury has published proposed regulations relating to the at risk
provisions of Code Section 465. These proposed regulations provide that a
taxpayer's at risk amount will include "personal funds" contributed by the
taxpayer to an activity. Prop. Treas. Reg. Section 1.465-22(a). "Personal funds"
and "personal assets" are defined in Prop. Treas. Reg. Section 1.465-9(f) as
funds and assets which (i) are owned by the taxpayer, (ii) are not acquired
through borrowing, and (iii) have a basis equal to their fair market value.

     In addition to a taxpayer's amount at risk being increased by the amount of
personal funds contributed to the activity, the excess of the taxpayer's share
of all items of income received or accrued from an activity during a taxable
year over the taxpayer's share of allowable deductions from the activity for the
year will also increase the amount at risk. Prop. Treas. Reg. Section 1.465-22.
A taxpayer's amount at risk will be decreased by (i) the amount of money
withdrawn from the activity by or on behalf of the taxpayer, including
distributions from a partnership, and (ii) the amount of loss from the activity
allowed as a deduction under Code Section 465(a). Id.

     The Partners will purchase Units by tendering cash (or payroll deductions)
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. To the extent the cash contributed constitutes "personal
funds," in our opinion, neither the at risk rules nor the adjusted basis rules
will limit the deductibility of losses generated from the Partnership.

                       PASSIVE LOSS AND CREDIT LIMITATIONS

A. Introduction

     Code Section 469 provides that 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. Code
Section 469(a)(2).
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Unit Petroleum Company
January 8, 2004
Page 24

     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." Code Section 469(c). Notwithstanding this general
rule, however, the term "passive activity" does not include "any working
interest in any oil or gas property which the taxpayer holds directly or through
an entity which does not limit the liability of the taxpayer with respect to
such interest." Code Section 469(c)(3)(4).

     A passive activity loss ("PAL") is defined as the amount (if any) by which
the aggregate losses from all passive activities for the taxable year exceed the
aggregate income from all passive activities for such year. Code
Section 469(d)(1).

     Classification of an activity as passive will result in the income and
expenses generated therefrom being treated as "passive" except to the extent
that any of the income is "portfolio" income and except as otherwise provided in
regulations. Code Section 469(e)(1)(A). Portfolio income is income from, inter
alia, interest, dividends. and royalties not derived in the ordinary course of a
trade or business. Income that is neither passive nor portfolio is "net active
income." Code Section 469(e)(2)(B).

     With respect to the deductibility of PALs, individuals and personal service
corporations will be entitled to deduct such amounts 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 income. Code Section 469(a)(1), (e)(2). In calculating
passive income and loss, however, all activities of the taxpayer are aggregated.
Code Section 469(d)(1). 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. Code
Section 469(b).

     Upon the disposition of an entire interest in a passive activity in a fully
taxable transaction not involving a related party, any passive loss that was
suspended by the provisions of the Code Section 469 passive activity rules is
deductible from either passive or non-passive income. The deduction must be
reduced, however, by the amount of income or gain realized from the activity in
previous years.

     As noted above, a passive activity includes an activity 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. Code Section 469(h)(1). With respect to the determination as
to whether a taxpayer's participation in an activity is material, temporary
regulations issued by the Service provide that, except for limited partners in a
limited partnership, an individual will be treated as materially participating
in an activity if and only if (i) the individual participates in the activity
for more than 500 hours during such year, (ii) the individual's participation in
the activity for the taxable year constitutes substantially all of the
participation in such activity of all

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Unit Petroleum Company
January 8, 2004
Page 25

individuals for such year, (iii) the individual participates in the activity for
more than 100 hours during the taxable year, and such individual's participation
in such activity is not less than the participation in the activity of any other
individual for such year, (iv) the activity is a trade or business activity of
the individual, the individual participates in the activity for more than 100
hours during such year, and the individual's aggregate participation in all
significant participation activities of this type during the year exceeds 500
hours, (v) the individual materially participated in the activity for 5 of the
last 10 years, or (vi) the activity is a personal service activity and the
individual materially participated in the activity for any 3 preceding years.
Temp. Treas. Reg. Section 1.469-5T(a).

     Notwithstanding the above, and except as may be provided in regulations,
Code Section 469(h)(2) provides that no limited partnership interest will be
treated as an interest with respect to which a taxpayer materially participates.
The temporary regulations create several exceptions to this rule and provide
that a limited partner will not be treated as not materially participating in an
activity of the partnership of which he is a limited partner if the limited
partner would be treated as materially participating for the taxable year under
paragraph (a)(1), (5), or (6) of Treas. Reg. Section 1.469-5T (as described in
(i), (v), and (vi) of the above paragraph) if the individual were not a limited
partner for such taxable year. Temp. Treas. Reg. Section 1.469-5T(e). For
purposes of this rule, a partnership interest of an individual will not be
treated as a limited partnership interest for the taxable year if the individual
is an Additional General Partner in the partnership at all times during the
partnership's taxable year ending with or within the individual's taxable year.
Id.

B. Limited Partner Interests

     If an investor invests in the Partnership as a Limited Partner, in our
opinion, his distributive share of the Partnership's losses will be treated as
PALs, the availability of which will be limited to his passive income thereon.
If the Limited Partner does not have sufficient passive income to utilize the
PALs, the disallowed PALs will be suspended and may be carried forward (but not
back) to be deducted against passive income arising in future years. Further,
upon the complete disposition of the interest to an unrelated party in a fully
taxable transaction, such suspended losses will be available, as described
above.

     Regarding Partnership income, Limited Partners should generally be entitled
to offset their distributive shares of such income with deductions from other
passive activities, except to the extent such Partnership income is portfolio
income. Since gross income from interest, dividends, annuities, and royalties
not derived in the ordinary course of a trade or business is not passive income,
a Limited Partner's share of income from royalties, income from the investment
of the Partnership's working capital, and other items of portfolio income will
not be treated as passive income. In addition, Code Section 469(1)(3) grants the
Secretary of the Treasury the authority to prescribe regulations requiring net
income or gain from a limited partnership or other passive activity to be
treated as not from a passive activity.
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Unit Petroleum Company
January 8, 2004
Page 26

C. Publicly Traded Partnerships

     Notwithstanding the above, Code Section 469(k) treats net income from PTPs
as portfolio income under the PAL rules. Further each partner in a PTP is
required to treat any losses from a PTP as separate from income and loss from
any other PTP and also as separate from any income or loss from passive
activities. Id. Losses attributable to an interest in a PTP that are not allowed
under the passive activity rules are suspended and carried forward, as described
above. Further, upon a complete taxable disposition of an interest in a PTP, any
suspended losses are allowed (as described above with respect to the passive
loss rules). As noted above, we have opined that the Partnership will not be a
PTP.

     In the event the Partnership were treated as a PTP, any net income would be
treated as portfolio income and each Partner's loss therefrom would be treated
as separate from income and loss from any other PTP and also as separate from
any income or loss from passive activities. Since the Partnership should not be
treated as a PTP, the provisions of Code Section 469(k), in our opinion, will
not apply to the Partners in the manner outlined above prior to the time that
such Partnership becomes a PTP. However, unlike the PTP rules of Code
Section 7704, the passive activity rules of Code Section 469 do not provide an
exception for partnerships that pass the 90% test of Code Section 7704.
Accordingly, if the Partnership were to be treated as a PTP under the passive
activity rules, passive losses could be used only to offset passive income from
the Partnership.

                             ALTERNATIVE MINIMUM TAX

     Code Section 55 imposes on noncorporate taxpayers a two-tiered, graduated
rate schedule for alternative minimum tax ("AMT") equal to the sum of (i) 26% of
so much of the "taxable excess" as does not exceed $175,000, plus (ii) 28% of so
much of the "taxable excess" as exceeds $175,000. Code Section 55(b)(1)(A)(i).
"Taxable excess" is defined as so much of the alternative minimum taxable income
("AMTI") for the taxable year as exceeds the exemption amount. Code
Section 55(b)(1)(A)(ii). AMTI is generally defined as the taxpayer's taxable
income, increased or decreased by certain adjustments and items of tax
preference. Code Section 55(b)(2).

     The exemption amount for noncorporate taxpayers is (i) $58,000 in the case
of a joint return or a surviving spouse, (ii) $40,250 in the case of an
individual who is not a married individual or a surviving spouse, and
(iii) $29,000 in the case of a married individual who files a separate return or
an estate or trust. Such amounts are phased out as a taxpayer's AMTI increases
above certain levels. Code Section 55(d)(1) and (3). Individuals subject to the
AMT are generally allowed a credit, equal to the portion of the AMT imposed by
Code Section 55 arising as a result of deferral preferences for use against the
taxpayer's future regular tax liability (but not the minimum tax liability).
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Unit Petroleum Company
January 8, 2004
Page 27

     Under the AMT provisions, adjustments and items of tax preference that may
arise from a Partner's acquisition of an interest in the Partnership include the
following:

          1. For taxable years beginning after December 31, 1992, taxpayers
     which do not meet the definition of an integrated oil company as defined in
     Code Section 291(b)(4) are not subject to the preference item for "excess
     IDC." Code Section 57(a)(2)(E)(i). The benefit of the elimination of the
     preference is limited in any taxable year to an amount equal to 40 percent
     of the alternative minimum taxable income for the year computed as if the
     prior law "excess IDC" preference item has not been eliminated. Code
     Section 57(a)(2)(E)(ii). Excess IDC is defined as the excess of (i) IDC
     paid or incurred (other than costs incurred in drilling a nonproductive
     well) with respect to which a deduction is allowable under Code
     Section 263(c) for the taxable year over (ii) the amount which would have
     been allowable for the taxable year if such costs had been capitalized and
     (I) amortized over a 120 month period beginning with the month in which
     production from such well begins or (II) recovered through cost depletion.
     Code Section 57(a)(2)(B). However, any portion of the IDC to which an
     election under Code Section 59(e) applies will not be treated as an item of
     tax preference under Code Section 57(a). Code Section 59(e)(6). With
     respect to IDC paid or incurred, corporate and individual taxpayers are
     allowed to make the Code Section 59(e) election and, for regular tax and
     AMT purposes, deduct such expenditures over the 60 month period beginning
     with the month in which such expenditure is paid or incurred. Code
     Section 59(e)(1).

          2. For taxable years beginning after December 31, 1992, the preference
     item for excess depletion is repealed for other than integrated oil
     companies. Code Section 57(a)(1).

          3. Each Partner's AMTI will be increased (or decreased) by the amount
     by which the depreciation deductions allowable under Code Sections 167 and
     168 with respect to such property exceeds (or is less than) the
     depreciation determined under the alternative depreciation system using the
     one hundred fifty percent (150%) declining balance method switching to the
     straight-line method, when that produces a greater deduction, in lieu of
     the straight-line method otherwise prescribed by the ADS. Code
     Section 56(a)(1).

     Due to the inherently factual nature of the applicability of the AMT to a
Partner, we are unable to express an opinion with respect to such issues. Due to
the potentially significant impact of a purchase of Units on an investor's tax
liability, investors should discuss the implications of an investment in the
Partnership on their regular and AMT liabilities with their tax advisors prior
to acquiring Units.
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Unit Petroleum Company
January 8, 2004
Page 28

                       GAIN OR LOSS ON SALE OF PROPERTIES

     Gain from the sale or other disposition of property is realized to the
extent of the excess of the amount realized therefrom over the property's
adjusted basis; conversely, loss is realized in an amount equal to the excess of
the property's adjusted basis over the amount realized from such a disposition.
Code Section 1001(a). The amount realized is defined as the sum of any money
received plus the fair market value of the property (other than money) received.
Code Section 1001(b). Accordingly, upon the sale or other disposition of the
Partnership properties, the Partners will realize gain or loss to the extent of
their pro rata share of the difference between the Partnership's adjusted basis
in the property at the time of disposition and the amount realized upon
disposition. In the absence of nonrecognition provisions, any gain or loss
realized will be recognized for federal income tax purposes.

     Gain or loss recognized upon the disposition of property used in a trade or
business and held for more than eighteen months will be treated as long term
capital gain or as ordinary loss. Code Section 1231(a). Notwithstanding the
above, any gain realized may be taxed as ordinary income under one of several
"recapture" provisions of the Code or under the characterization rules relating
to "dealers" in personal property.

     Code Section 1254 generally provides for the recapture of capital gains,
arising from the sale of property which was placed in service after 1986, as
ordinary income to the extent of the lesser of (i) the gain realized upon sale
of the property, or (ii) the sum of (A) all IDC previously deducted and (B) all
depletion deductions that reduced the property's basis. Code Section 1254(a)(1).

     Ordinary income may also result from the recapture, pursuant to Code
Section 1245, of depreciation on the Partnership properties. Such recapture is
the amount by which (i) the lower of (A) the recomputed basis of the property,
or (B) the amount realized on the sale of the property exceeds (ii) the
property's adjusted basis. Code Section 1245(a)(1). Recomputed basis is
generally the property's adjusted basis increased by depreciation and
amortization deductions previously claimed with respect to the property. Code
Section 1245(a)(2).



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Unit Petroleum Company
January 8, 2004
Page 29

                          GAIN OR LOSS ON SALE OF UNITS

     It the Units are capital assets in the hands of the Partners, gain or loss
realized by any such holders on the sale or other disposition of a Unit will be
characterized as capital gain or capital loss. Code Section 1221. Such gain or
loss will be a long term capital gain or loss if the Unit is held for more than
one year, or a short term capital gain or loss if held for one year or less.
However, the portion of the amount realized by a Partner in exchange for a Unit
that is attributable to the Partner's share of the Partnership's "unrealized
receivables" or "substantially appreciated inventory items" will be treated as
an amount realized from the sale or exchange of property other than a capital
asset. Code Section 751.

     Unrealized receivables are defined in Code Section 751(c) to include
" . . . oil [or] gas . . . property . . . to the extent of the amount which
would be treated as gain to which section . . . 1245(a) . . . or 1254(a) would
apply if . . . such property had been sold by the partnership at its fair market
value." A sale by the Partnership of the Partnership's properties could give
rise to treatment of the gain thereunder as ordinary income as a result of Code
Sections 1245(a) or 1254(a). Accordingly, gain recognized by a Partner on the
sale of a Unit would be taxed as ordinary income to the Partner to the extent of
his share of the Partnership's gain on property that would be recaptured, upon
sale, under those statutes.

     Substantially appreciated inventory items are those "inventory items" noted
below, the fair market value of which exceeds 120% of the adjusted basis to the
partnership of such property, excluding any such inventory property acquired
with a principal purpose of avoiding Section 751. Code Section 751(d)(1).
Property treated as an "inventory item" for purposes of Code Section 751
includes (i) stock in trade of the partnership or other property of a kind which
would properly be included in its inventory if on hand at the end of the taxable
year, (ii) property held by the partnership primarily for sale to customers in
the ordinary course of its trade or business, and (iii) any other partnership
property which would constitute neither a capital asset nor property used in a
trade or business under Code Section 1231. Code Sections 751(d)(2) and 1221(1).

     Under the aforementioned provisions, a Partner would recognize ordinary
income with respect to any deemed sale of assets under Code Section 751;
further, this ordinary income may be recognized even if the total amount
realized on the sale of a Unit is equal to or less than the Partner's basis in
the Unit.

     Any partner who sells or exchanges interests in a partnership holding
unrealized receivables (which include IDC recapture and other items) or certain
inventory items must notify the partnership of such transaction in accordance
with Regulations under Code Section 6050K and must attach a statement to his tax
return reflecting certain facts regarding the sale or exchange. Regulations
promulgated by the Service provide that such notice to the partnership

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Unit Petroleum Company
January 8, 2004
Page 30

must be given in writing within 30 days of the sale or exchange (or, if earlier,
by January 15 of the calendar year following the calendar year in which the
exchange occurred), and must include names, addresses, and taxpayer
identification numbers (if known) of the transferor and transferee and the date
of the exchange. Code Section 6721 provides that persons who fail to furnish
this information to the partnership will be penalized $50 for each such failure,
or, if such failure is due to intentional disregard to the filing requirement,
the person will be penalized the greater of (i) $100 or (ii) 10% of the
aggregate amount to be reported. Furthermore, a partnership is required to
notify the Service of any sale or exchange of interests of which it has notice,
and to report the names and addresses of the transferee and the transferor,
along with all other required information. The partnership also is required to
provide copies of the information it provides to the Service to the transferor
and the transferee.

     The tax consequences to an assignee purchaser of a Unit from a Partner are
not described herein. Any assignor of a Unit should advise his assignee to
consult his own tax advisor regarding the tax consequences of such assignment.

                            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 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 of money to the
partner by the partnership. Code Section 752(a), (b).

     The Partners' adjusted bases in their Units will initially consist of the
cash they contribute to the Partnership. Their bases will be increased by their
share of Partnership income and additional contributions and decreased by their
share of Partnership losses and distributions. To the extent that such actual or
constructive distributions are in excess of a Partner's adjusted basis in his
Partnership interest (after adjustment for contributions and his 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, substantially appreciated inventory or, in some cases,
Code Section 731(c) marketable securities, i.e., actively traded financial
instruments, foreign currencies or interests in certain defined properties.


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Unit Petroleum Company
January 8, 2004
Page 31

                             PARTNERSHIP ALLOCATIONS

     Allocations--General. Generally, a partner's taxable income is increased or
decreased by his ratable share of partnership income or loss. Code Section 701.
However, the availability of these losses may be limited by the at risk rules of
Code Section 465, the passive activity rules of Code Section 469, and the
adjusted basis provisions of Code Section 704(d).

     Code Section 704(b) provides that if a partnership agreement does not
provide for the allocation of each partner's distributive share of partnership
income, gain, loss, deduction, or credit, or if the allocation of such items
under the partnership agreement lacks "substantial economic effect," then each
partner's share of those items must be allocated "in accordance with the
partner's interest in the partnership."

     As discussed below, regulations under Code Section 704(b) define
substantial economic effect and prescribe the manner in which partners' capital
accounts must be maintained in order for the allocations contained in a
partnership agreement to be respected. Notwithstanding these provisions, special
rules apply with respect to nonrecourse deductions since, under the Treasury
Regulations, allocations of losses or deductions attributable to nonrecourse
liabilities cannot have economic effect.

     The Service may 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. We are of the opinion that, to the extent
provided herein, if challenged by the Service on this matter, the Partners'
distributive shares of Partnership income, gain, loss, deduction, or credit will
be determined and allocated substantially in accordance with the terms of the
Partnership Agreement and have substantial economic effect.

     Substantial Economic Effect. Although a partner's share of partnership
income, gain, loss, deduction, and credit is generally determined in accordance
with the partnership agreement, this share will be determined in accordance with
the partner's interest in the partnership (determined by taking into account all
facts and circumstances) and not by the partnership agreement if the partnership
allocations do not have "substantial economic effect" and if the allocations are
not respected under the nonrecourse deduction provisions of the regulations.
Code Section 704(b); Treas. Reg. Sections 1.704-1(b)(2)(i), 1.704-2.

     Treasury regulations provide that:

          In order for an allocation to have economic effect, it must be
     consistent with the underlying economic arrangement of the partners. This
     means that in the event there is an economic benefit or economic burden
     that corresponds to an

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Unit Petroleum Company
January 8, 2004
Page 32

     allocation, the partner to whom the allocation is made must receive such
     economic benefit or bear such economic burden.

     Treas. Reg. Section 1.704-1(b)(2)(ii). The Regulations further provide that
an allocation will have economic effect only if, throughout the full term of the
partnership, the partnership agreement provides (i) for the determination and
maintenance of partner's capital accounts in accordance with specified rules
contained therein, (ii) upon liquidation of the partnership or a partner's
interest in the partnership, liquidating distributions are required to be made
in accordance with the positive capital account balances of the partners after
taking into account all capital account adjustments for the taxable year of the
liquidation, and (iii) either (A) a partner with a deficit balance in his
capital account following the liquidation is unconditionally obligated to
restore the amount of such deficit balance to the partnership by the end of the
taxable year of liquidation, or (B) the partnership agreement contains a
qualified income offset ("QIO") provision as provided in Treas. Reg.
Section 1.714-1(b)(2)(ii)(d). Treas. Reg. Sections 1.704-1(b)(2)(ii)(b) and
1.704-1(b)(2)(ii)(d).

     The capital account maintenance rules generally mandate that each partner's
capital account be increased by (i) money contributed by the partner to the
partnership, (ii) the fair market value (net of liabilities) of property
contributed by the partner to the partnership, and (iii) allocations to the
partner of partnership income and gain. Further, such capital account must be
decreased by (i) money distributed to the partner from the partnership, (ii) the
fair market value (net of liabilities) of property distributed to the partner
from the partnership, and (iii) allocations to the partner of partnership losses
and deductions. Treas. Reg. Section 1.704-1(b)(2)(iv).

     Treas. Reg. Section 1.714-1(b)(2)(iii) provides that an economic effect of
an allocation is "substantial" if there is a reasonable possibility that the
allocation will affect substantially the dollar amounts to be received by the
partners from the partnership, independent of tax consequences. The economic
effect of an allocation is not substantial if:

     at the time the allocation becomes part of the partnership agreement,
     (1) the after-tax economic consequences of at least one partner may, in
     present value terms, be enhanced compared to such consequences if the
     allocation (or allocations) were not contained in the partnership
     agreement, and (2) there is a strong likelihood that the after-tax economic
     consequences of no partner will, in present value terms, be substantially
     diminished compared to such consequences if the allocation (or allocations)
     were not contained in the partnership agreement. In determining the
     after-tax economic benefit or detriment to a partner, tax consequences that
     result from the interaction of the allocation with such partner's tax
     attributes that are unrelated to the partnership will be taken into
     account.
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Unit Petroleum Company
January 8, 2004
Page 33

Treas. Reg. 1.704-1(b)(2)(iii)(a).

     While the Service stated that it will not rule on whether an allocation
provision in a partnership agreement has substantial economic effect, several
Technical Advice Memoranda ("TAMs") shed light on the Service's position on such
matter. Notwithstanding the potential similarity between TAMs and a taxpayer's
particular fact pattern, it should be noted that TAMs may not be used or cited
as precedent. Code Section 6110(j)(3), Treas. Reg. Sections 301.6110-2(a) and
-7(b). Nevertheless, TAMs do serve to illustrate the Service's position on
certain specific cases. The TAMs relating to substantial economic effect focus
on the tax avoidance purpose of any such above-described allocations and on the
partnership plan for distributions upon liquidation. Illustrative of the
Service's approach is TAM 8008054, in which the Service concluded that an
allocation to the partners solely of items that the partnership had elected to
expense (IDC) had as its principal purpose tax avoidance. The Service suggested
that, had the allocation affected the parties' liquidation rights, the
allocation would have had substantial economic effect: "In general, substantial
economic effect has been found where all allocations of items of income, gain,
loss, deduction or credit increase or decrease the respective capital accounts
of the partners and distribution of assets made upon liquidation is made in
accordance with capital accounts." The ruling noted that the investors "should
have been allocated their share of costs over the intangible drilling costs."
Id. The question whether economic effect is "substantial" is one of fact which
may depend in part on the timing of income and deductions and on consideration
of the investors' tax attributes unrelated to their investment in Units, and
thus is not a question upon which a legal opinion can ordinarily be expressed.
However, to the extent the tax brackets of all Partners do not differ at the
time the allocation becomes part of the partnership agreement, the economic
effect of the allocation provisions should be considered to be substantial.

     Code Section 613A(c)(7)(D) requires that the basis of oil and gas
properties owned by a partnership be allocated to the partners in accordance
with their interests in the capital or income of the partnership. Final
Regulations issued under Code Section 613A(c)(7)(D) indicate that such basis
must be allocated in accordance with the partners' interests in the capital of
the partnership if their interests in partnership income vary over the life of
the partnership for any reason other than for reasons such as the admission of a
new partner. Reg. Section 1.613A-3(e)(2). The terms "capital" and "income" are
not defined in the Code or in the Regulations under Section 613A. The Treasury
Regulations under Code Section 704 indicate that if all partnership allocations
of income, gain, loss, and deduction (or items thereof) have substantial
economic effect, an allocation of the adjusted basis of an oil or gas property
among the partners will be deemed to be made in accordance with the partners'
interests in partnership capital or income and will accordingly be recognized.

     Pursuant to the Partnership Agreement, (i) allocations will be made as
mandated by the Treasury Regulations, (ii) liquidating distributions will be
made in accordance with positive

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Unit Petroleum Company
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capital account balances, and (iii) a "qualified income offset" provision
applies. However, while capital will be ultimately owned by the Limited Partners
in the Limited Partners' Percentage and by the General Partner in the General
Partner's Percentage, IDC and other tax items will be allocated 99% to the
Limited Partners and 1% to the General Partner until the Limited Partner Capital
Contributions are entirely expended and thereafter 100% to the General Partner.
Except with respect to those excess allocations, under the Partnership
Agreement, the basis in oil and gas properties will be allocated in proportion
to each Partner's respective share of the costs which entered into the
Partnership's adjusted basis for each depletable property. Such allocations of
basis appear reasonable and in compliance with the Treasury Regulations under
Section 704. Nevertheless, the Service may contend that the allocation to the
Limited Partners of a percentage of Partnership IDC in excess of the Limited
Partners' Percentage or the allocation to the General Partner of other tax items
in excess of the General Partner's Percentage is invalid and may reallocate such
excess IDC or other items to the other Partners. Any such reallocation could
increase a Limited Partner's tax liability. However, no assurance can be given,
and we are unable to express an opinion, as to whether any special allocation of
an item which is dependent upon basis in an oil and gas property will be
recognized by the Service.

     Nonrecourse Deductions. As noted above, an allocation of loss or deduction
attributable to nonrecourse liabilities of a partnership cannot have economic
effect because only the creditor bears the economic burden that corresponds to
such an allocation. Nevertheless the Temporary Regulations provide a test under
which certain allocations of nonrecourse deductions will be deemed to be in
accordance with the partners' interests in the partnership.

     Nonrecourse deduction allocations will be deemed to be made in accordance
with partners partnership interests if, and only if, four requirements are
satisfied. First, the partners' capital accounts must be maintained properly and
the distribution of liquidation proceeds must be in accordance with the
partners' capital account balances. Second, beginning in the first taxable year
in which there are nonrecourse deductions, and thereafter throughout the full
term of the partnership, the partnership agreement must provide for allocation
of nonrecourse deductions among the partners in a manner that is reasonably
consistent with allocations which have substantial economic effect of some other
significant partnership item attributable to the property securing nonrecourse
liabilities of the partnership. Third, beginning in the first taxable year of
the partnership in which the partnership has nonrecourse deductions or makes a
distribution of proceeds of a nonrecourse liability that are allocable to an
increase in minimum gain, and thereafter throughout the full term of the
partnership, the partnership agreement must contain a "minimum gain chargeback."
A partnership agreement contains a "minimum gain chargeback" if, and only if, it
provides that, subject to certain exceptions, in the event there is a net
decrease in partnership minimum gain during a partnership taxable year, the
partners must be allocated items of partnership income and gain for that year
equal to each partner's share of the net decrease in partnership minimum gain
during such year. A partner's share of the net decrease in partnership minimum
gain is the amount of the total net decrease multiplied by the partner's
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Unit Petroleum Company
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percentage share of the partnership's minimum gain at the end of the immediately
preceding taxable year. A partner's share of any decrease in partnership minimum
gain resulting from a revaluation of partnership property (which would not cause
a minimum gain chargeback) equals the increase in the partner's capital account
attributable to the revaluation to the extent the reduction in minimum gain is
caused by such revaluation. Similar rules apply with regard to partner
nonrecourse liabilities and associated deductions. The fourth requirement of the
nonrecourse allocation test provides that all other material allocations and
capital account adjustments under the partnership agreement must be recognized
under the general allocation requirements of the regulations under IRC
Section 704(b).

     Under the Treasury Regulations, partners generally share nonrecourse
liabilities in accordance with their interests in partnership profits. However,
the Treasury Regulations generally require that nonrecourse liabilities be
allocated among the partners first to reflect the partners' share of minimum
gain and Code Section 704(c) minimum gain. Any remaining nonrecourse liabilities
are generally to be allocated in proportion to the partners' interests in
partnership profits.

     The Partnership Agreement contains a minimum gain chargeback. Further, the
Partnership Agreement provides for the allocation of nonrecourse liabilities and
deductions attributable thereto among the Partners first, in accordance with
their respective shares of partnership minimum gain (within the meaning of
Regulation Section 1.704-2(b)(2)); second, to the extent of each such Partner's
gain under Code Section 704(c) if the Partnership were to dispose of (in a
taxable transaction) all Partnership property subject to one or more nonrecourse
liabilities of the Partnership in full satisfaction of such liabilities and for
no other consideration; and third, in accordance with the Partners'
proportionate shares in the Partnership's profits. Regulation Section 1.752-3.
For this purpose, the Partnership Agreement provides for the allocation of
excess nonrecourse deductions in the Limited Partners' Percentage to the Limited
Partners and in the General Partner's Percentage to the General Partner.

     Retroactive Allocations. To prevent retroactive allocations of partnership
tax attributes to partners entering into a partnership late in the tax year,
Code Section 706(d) provides that a partner's distributive share of such
attributes is to be determined by the use of methods prescribed by the Secretary
of the Treasury which take into account the varying interests of the partners
during the taxable year. The Partnership Agreement provides that each Partner's
allocation of tax items other than "allocable cash basis items" is to be
determined under a method permitted by Code Section 706(d) and the regulations
thereunder.
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Unit Petroleum Company
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Page 36

                                   TAX AUDITS

     Subchapter C of Chapter 63 of the Code provides that administrative
proceedings for the assessment and collection of tax deficiencies attributable
to a partnership must be conducted at the partnership, rather than the partner,
level. Partners will be required to treat Partnership items of income, gain,
loss, deduction, and credit in a manner consistent with the treatment of each
such item on the Partnership's returns unless such Partner files a statement
with the Service identifying the inconsistency. If the Partnership is audited,
the tax treatment of each item will be determined at the Partnership level in a
unified partnership proceeding. Conforming adjustments to the Partners' own
returns will then occur unless such partner can establish a basis for
inconsistent treatment (subject to waiver by the Service).

     The General Partner will be designated the "tax matters partner" ("TMP")
for the Partnership and will receive notice of the commencement of a Partnership
proceeding and notice of any administrative adjustments of Partnership items.
The TMP is entitled to invoke judicial review of administrative determinations
and to extend the period of limitations for assessment of adjustments
attributable to Partnership items. Each Partner will receive notice of the
administrative proceedings from the TMP and will have the right to participate
in the administrative proceeding pursuant to tax requirements of Treasury
Regulation Section 301.6223(g) unless the Partner waives such rights.

     The Code provides that, subject to waiver, partners will receive notice of
the administrative proceedings from the Service and will have the right to
participate in the administrative proceedings. However, the Code also provides
that if a partnership has 100 or more partners, the partners with less than a 1%
profits interest will not be entitled to receive notice from the Service or
participate in the proceedings unless they are members of a "notice group" (a
group of partners having in the aggregate a 5% or more profits interest in the
partnership that requires the Service to send notice to the group and that
designates one of their members to receive notice). Any settlement agreement
entered into between the Service and one or more of the partners will be binding
on such partners but will not be binding on the other partners, except that
settlement by the TMP may be binding on certain partners, as described below.
The Service must, on request, offer consistent settlement terms to the partners
who had not entered into the earlier settlement agreement. If a partnership has
more than 100 partners, the TMP is empowered under the Code to enter into
binding settlement agreements on behalf of the partners with a less than 1%
profits interest unless the partner is a member of a notice group or notifies
the Service that the TMP does not have the authority to bind the partner in such
a settlement.

     The costs incurred by a Partner in responding to an administrative
proceeding will be borne solely by such Partner.
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                                    PENALTIES

     Under IRC Section 6662, a taxpayer will be assessed a penalty equal to
twenty percent (20%) of the portion of an underpayment of tax attributable to
negligence, disregard of a rule or regulation or a substantial understatement of
tax. "Negligence" includes any failure to make a reasonable attempt to comply
with the tax laws. IRC Section 6662(c). The regulations further provide that a
position with respect to an item is attributable to negligence if it lacks a
reasonable basis. Treas. Reg. Section 1.6662-3(b)(1). Negligence is strongly
indicated where, for example, a partner fails to comply with the requirements of
IRC Section 6662, which requires that a partner treat partnership items on its
return in a manner that is consistent with the treatment of such items on the
partnership return. Treas. Reg. Section 1.6662-3(b)(1)(iii). The term
"disregard" includes any careless, reckless or intentional disregard of rules or
regulations. Treas. Reg. Section 1.6662-3(b)(2). A taxpayer who takes a position
contrary to a revenue ruling or a notice will be subject to a penalty for
intentional disregard if the contrary position fails to possess a realistic
possibility of being sustained on its merits. Treas. Reg.
Section 1.6562-3(b)(2). An "understatement" is defined as the excess of the
amount of tax required to be shown on the return of the taxable year over the
amount of the tax imposed that is actually shown on the return, reduced by any
rebate. IRC Section 6662(d)(2)(A). An understatement is "substantial" if it
exceeds the greater of ten percent (10%) of the tax required to be shown on the
return for the taxable year or $5,000 ($10,000 in the case of certain
corporations). IRC Section 6662(d)(1)(A) and (B).

     Generally, for tax returns with due dates (determined without regard to
extensions) after December 31, 1993, the amount of an understatement is reduced
by the portion thereof attributable to (i) the tax treatment of any item by the
taxpayer if there is or was substantial authority for such treatment, or (ii)
any item if the relevant facts affecting the item's tax treatment are adequately
disclosed in the return or in a statement attached to the return, and there is a
reasonable basis for the tax treatment of such item by the taxpayer. IRC Section
6662(d). Disclosure will generally be adequate if made on a properly completed
Form 8275 (Disclosure Statement) or Form 8275R (Regulation Disclosure
Statement). Treas. Reg. Section 1.6662-4(f). However, in the case of "tax
shelters," there will be a reduction of the understatement only to the extent it
is attributable to the treatment of an item by the taxpayer with respect to
which there is or was substantial authority for such treatment and only if the
taxpayer reasonably believed that the treatment of such item by the taxpayer was
more likely than not the proper treatment. Moreover, under the Uruguay Round
Table Agreements Act, a corporation must generally satisfy a higher standard to
avoid a substantial understatement penalty in the case of a tax shelter. IRC
Section 6662(d)(2)(C)(ii). The term "tax shelter" is defined for purposes of
Code Section 6662 as a partnership or other entity, any investment plan or
arrangement, or any other plan or arrangement, the principal purpose of which is
the avoidance or evasion of federal income tax. IRC Section 6662(d)(2)(C)(ii).
It is important to note that this definition of "tax shelter" differs from that
contained in Code Sections 461 and 6111, as discussed above. A tax shelter item
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Unit Petroleum Company
January 8, 2004
Page 38

includes an item of income, gain, loss, deduction, or credit that is directly or
indirectly attributable to a partnership that is formed for the principal
purpose of avoiding or evading federal income tax.

     The existence of substantial authority is determined as of the time the
taxpayer's return is filed or on the last day of the taxable year to which the
return relates and not when the investment is made. Treas. Reg.
Section 1.6662-4(d)(3)(iv)(C). Substantial authority exists if the weight of
authorities supporting a position is substantial compared with the weight of
authorities supporting contrary treatment. Treas. Reg.
Section 1.6662-4(d)(3)(i). Relevant authorities include statutes, Regulations,
court cases, revenue rulings and procedures, and Congressional intent. However,
among other things, conclusions reached in legal opinions are not considered
authority. Treas. Reg. Section 1.6662-4(d)(3)(iii). The Secretary may waive all
or a portion of the penalty imposed under Code Section 6662 upon a showing by
the taxpayer that there was reasonable cause for the understatement and that the
taxpayer acted in good faith. IRC Section 6664(d).

     Although not anticipated by the General Partner, there may not be
substantial authority for one or more reporting positions that the Partnership
may take in its federal income tax returns. In such event, if the Partnership
does not disclose or if it fails to adequately disclose any such position, or if
such disclosure is deemed adequate but it is determined that there was no
reasonable basis for the tax treatment of such a partnership item, the penalty
will be imposed with respect to any substantial understatement determined to
have been made, unless the provisions of the Treasury Regulations pertaining to
waiver of the penalty become final and the Partnership is able to show
reasonable cause and good faith in making the understatement as specified in
such provisions. If the Partnership makes a disclosure for the purposes of
avoiding the penalty, the disclosure is likely to result in an audit of such
return and a challenge by the Service of such position taken.

     If it were determined that a Partner had underpaid tax for any taxable
year, such Partner would have to pay the amount of underpayment plus interest on
the underpayment from the date the tax was originally due. The interest rate on
underpayments is determined by the Service based upon the federal short term
rate of interest (as defined in Code Section 1274(d)) plus 3%, or 5% for large
corporate underpayments, and is compounded daily. The rate of interest is
adjusted monthly. In addition, Temporary Regulations provide that tax motivated
transactions include, among other items, certain overstatements of the value of
property on a return, losses disallowed by reason of the at-risk limitation any
use of an accounting method that may result in a substantial distortion of
income for any period, and any deduction disallowed for an activity not entered
into for profit. Although definitive Treasury Regulations have not been
promulgated the determination of those transactions to be considered
"tax-motivated transactions" is to be made by taking into account the ratio of
tax benefits to cash invested, the method of promoting the transaction, and
other relevant transactions. Thus, in the event an audit of the Partnership's or

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Unit Petroleum Company
January 8, 2004
Page 39

of a Partner's tax return results in a substantial underpayment of tax by such
Partner due to an investment in the Units, such Partner may be required to pay
interest on such underpayment determined at the higher interest rate.

     A partnership, for federal income tax purposes, is required to file an
annual informational tax return. The failure to properly file such a return in a
timely fashion, or the failure to show on such return all information under the
Code to be shown on such return, unless such failure is due to reasonable cause,
subjects the partnership to civil penalties under the Code in an amount equal to
$50 per month multiplied by the number of partners in the partnership, up to a
maximum of $250 per partner per year. In addition, upon any willful failure to
file a partnership information return, a fine or other criminal penalty may be
imposed on the party responsible for filing the return.

                         ACCOUNTING METHODS AND PERIODS

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

     As discussed above, a taxpayer using the accrual method of accounting will
recognize income when all events have occurred which fix the right to receive
such income and the amount thereof can be determined with reasonable accuracy.
Deductions will be recognized when all events which establish liability have
occurred and the amount thereof can be determined with reasonable accuracy.
However, all events which establish liability are not treated as having occurred
prior to the time that economic performance occurs. Code Section 461(h).

     All partnerships are required to conform their tax years to those of their
owners; i.e., unless the partnership establishes a business purpose for a
different tax year, the tax year of a partnership must be (i) the taxable year
of one or more of its partners who have an aggregate interest in partnership
profits and capital of greater than 50%, (ii) if there is no taxable year so
described, the taxable year of all partners having interests of 5% or more in
partnership profits or capital, or (iii) if there is no taxable year described
in (i) or (ii), the calendar year. Code Section 706. Until the taxable years of
the Partners can be identified, no assurance can be given that the Service will
permit the Partnership to adopt a calendar year.

                              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. Investors are urged to
consult their tax advisors regarding the impact of state and local laws on an
investment in the Partnership.
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January 8, 2004
Page 40

                      PROPOSED LEGISLATION AND REGULATIONS

     There can be no assurances that subsequent changes in the tax laws (through
new legislation, court decisions, Service pronouncements, Treasury regulations,
or otherwise) will or will not occur that may have an impact, adverse or
positive, on the tax effect and consequences of this Transaction, as described
above.

     We express no opinion as to any federal income tax issue or other matter
except those set forth or confirmed above.

     We hereby consent to the filing of this opinion as Exhibit B to the
Memorandum and to all references to our firm in the Memorandum.

                                            Sincerely,


                                            Conner & Winters, P.C.