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    J. Marshall Adkins

    Research Analyst at Raymond James

    J. Marshall Adkins's questions to UNIT (UNTC) leadership

    J. Marshall Adkins's questions to UNIT (UNTC) leadership • Q2 2019

    Question

    J. Marshall Adkins inquired about the company's free cash flow outlook for the second half of 2019 and into 2020, asking about the likelihood of being free cash flow positive and the strategy for capital allocation between reinvestment and debt reduction. He also asked about the contract length and payback period for the new BOSS rig.

    Answer

    Executive Larry Pinkston confirmed the company will be cash flow positive in the second half of the year due to minimal capital expenditures and expects to significantly pay down debt. He stated that the focus for 2020 will continue to be on debt reduction. Executive John Cromling added that the new BOSS rig has an 18-month contract, but extensions on two other rigs with the same operator create a combined 4.5 years of guaranteed income, which aligns with the rig's expected payout period.

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    J. Marshall Adkins's questions to UNIT (UNTC) leadership • Q1 2019

    Question

    J. Marshall Adkins inquired about the demand outlook for drilling rigs in Q2 and the second half of the year, and how E&P activity might evolve if oil prices remain in the $60-$65 range. He also asked about the company's current hedging position for 2019 and 2020, and whether the third-party plant shutdown that impacted the quarter was a one-off event.

    Answer

    John Cromling, an executive, stated that rig demand is expected to be similar to Q1 for the next quarter but hopes for an increase in the second half as new pipelines relieve gas differentials. Executive Larry Pinkston added that with stable crude prices around $60, he expects a stronger second half for oil-directed rigs. Executive Frank Young explained the plant shutdown was due to an unexpected equipment issue requiring fabrication and is not expected to recur, though routine maintenance is planned for. Executive George Austin disclosed that for the remainder of the year, the company is about 52% hedged on oil and 51% on natural gas, with no significant hedges for 2020.

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    J. Marshall Adkins's questions to UNIT (UNTC) leadership • Q4 2018

    Question

    J. Marshall Adkins inquired about the company's long-term strategy for free cash flow, asking if excess cash from potential commodity price increases would be used for debt reduction or shareholder returns. He also sought clarification on the geological differences between the Penn sands and SOHOT plays and questioned the strategy for upgrading older SCR rigs versus investing in new BOSS rigs.

    Answer

    Executive Larry Pinkston confirmed a shift in strategy towards spending within cash flow for moderate growth, with debt paydown and shareholder returns being considerations once a stable investment program is established. Executive Frank Young clarified that the Penn sands prospect targets multiple intervals, including the oily Red Fork, while the SOHOT play focuses specifically on the oily Marchand sand. Executive John Cromling stated that major refurbishments of older SCR rigs are unlikely, with capital being prioritized for new BOSS rigs, although minor upgrades to existing SCRs will continue as needed.

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