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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2022
or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                  to                 
Commission file number: 1-34776
Oasis Petroleum Inc.
(Exact name of registrant as specified in its charter)
 
Delaware 80-0554627
(State or other jurisdiction of
incorporation or organization)
 (I.R.S. Employer
Identification No.)
1001 Fannin Street, Suite 1500
 
Houston, Texas
77002
(Address of principal executive offices) (Zip Code)
(281) 404-9500
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s) Name of each exchange on which registered
Common StockOAS The Nasdaq Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒   No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes ☒  No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. 
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐ 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  No ☒
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes  ý   No  ¨
Number of shares of the registrant’s common stock outstanding at April 29, 2022: 19,625,419 shares.



OASIS PETROLEUM INC.
FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 2022
TABLE OF CONTENTS
 Page
Condensed Consolidated Balance Sheets at March 31, 2022 and December 31, 2021
1Organization and Operations of the Company
10. Discontinued Operations
11. Investment in Unconsolidated Affiliate



PART I — FINANCIAL INFORMATION
Item 1. — Financial Statements (Unaudited)
Oasis Petroleum Inc.
Condensed Consolidated Balance Sheets (Unaudited)
March 31, 2022December 31, 2021
 (In thousands, except share data)
ASSETS
Current assets
Cash and cash equivalents$410,174 $172,114 
Accounts receivable, net504,436 377,202 
Inventory28,311 28,956 
Prepaid expenses6,564 6,016 
Derivative instruments1,284  
Other current assets1,396 1,836 
Current assets held for sale 1,029,318 
Total current assets952,165 1,615,442 
Property, plant and equipment
Oil and gas properties (successful efforts method)1,458,491 1,395,837 
Other property and equipment44,555 48,981 
Less: accumulated depreciation, depletion and amortization(166,705)(124,386)
Total property, plant and equipment, net1,336,341 1,320,432 
Derivative instruments61,760 44,865 
Investment in unconsolidated affiliate615,333  
Long-term inventory17,510 17,510 
Operating right-of-use assets13,235 15,782 
Other assets11,604 12,756 
Total assets$3,007,948 $3,026,787 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable$1,738 $2,136 
Revenues and production taxes payable284,205 270,306 
Accrued liabilities260,833 150,674 
Accrued interest payable9,085 2,150 
Derivative instruments314,466 89,447 
Advances from joint interest partners3,124 1,892 
Current operating lease liabilities7,649 7,893 
Other current liabilities19,887 1,046 
Current liabilities held for sale 699,653 
Total current liabilities900,987 1,225,197 
Long-term debt392,933 392,524 
Deferred income taxes 7 
Asset retirement obligations58,789 57,604 
Derivative instruments205,694 115,282 
Operating lease liabilities4,574 6,724 
Other liabilities3,008 7,876 
Total liabilities1,565,985 1,805,214 
1

Commitments and contingencies (Note 18)
Stockholders’ equity
Common stock, $0.01 par value: 60,000,000 shares authorized; 20,473,741 shares issued and 19,571,603 shares outstanding at March 31, 2022 and 20,147,199 shares issued and 19,276,181 shares outstanding at December 31, 2021
203 200 
Treasury stock, at cost: 902,138 shares at March 31, 2022 and 871,018 shares at December 31, 2021
(104,132)(100,000)
Additional paid-in capital883,273 863,010 
Retained earnings662,619 269,690 
Oasis share of stockholders' equity1,441,963 1,032,900 
Non-controlling interests 188,673 
Total stockholders' equity1,441,963 1,221,573 
Total liabilities and stockholders' equity$3,007,948 $3,026,787 

The accompanying notes are an integral part of these condensed consolidated financial statements.
2

Oasis Petroleum Inc.
Condensed Consolidated Statements of Operations (Unaudited)
(In thousands, except per share data)
Three Months Ended March 31,
 20222021
Revenues
Oil and gas revenues$493,502 $244,990 
Purchased oil and gas sales159,467 80,145 
Other services revenues 226 
Total revenues652,969 325,361 
Operating expenses
Lease operating expenses63,076 51,064 
Other services expenses111  
Gathering, processing and transportation expenses32,398 28,105 
Purchased oil and gas expenses161,627 78,938 
Production taxes35,858 16,280 
Depreciation, depletion and amortization44,673 30,770 
Exploration expenses510 423 
Impairment 3 
General and administrative expenses24,367 20,413 
Total operating expenses362,620 225,996 
Gain on sale of assets1,521 88 
Operating income291,870 99,453 
Other income (expense)
Net loss on derivative instruments(367,922)(181,515)
Income from investment in unconsolidated affiliate60,137  
Interest expense, net of capitalized interest(7,216)(4,865)
Other income1,754 485 
Total other expense, net(313,247)(185,895)
Loss from continuing operations before income taxes(21,377)(86,442)
Income tax benefit1,826 3,654 
Net loss from continuing operations(19,551)(82,788)
Income from discontinued operations attributable to Oasis, net of income tax485,554 39,196 
Net income (loss) attributable to Oasis$466,003 $(43,592)
Earnings (loss) attributable to Oasis per share:
Basic and diluted from continuing operations$(1.01)$(4.14)
Basic and diluted from discontinued operations25.15 1.96 
Basic and diluted total (Note 17)
$24.14 $(2.18)
Weighted average shares outstanding:
Basic and diluted (Note 17)
19,306 20,000 


The accompanying notes are an integral part of these condensed consolidated financial statements.
3

Oasis Petroleum Inc.
Condensed Consolidated Statements of Changes in Stockholders’ Equity
(Unaudited)
Attributable to Oasis
 Common StockTreasury StockAdditional
Paid-in Capital
Retained EarningsNon-controlling InterestsTotal
Stockholders’
Equity
SharesAmountSharesAmount
(In thousands)
Balance as of December 31, 202119,276 $200 871 $(100,000)$863,010 $269,690 $188,673 $1,221,573 
Equity-based compensation94  — — 4,800 — 48 4,848 
Modification of equity-based compensation awards— — — — (226)— — (226)
Dividends ($3.585 per share)
— — — — — (73,074)— (73,074)
Warrants exercised233 3 — — 15,689 — — 15,692 
Treasury stock - tax withholdings(31)— 31 (4,132)— — — (4,132)
Net income— — — — — 466,003 2,311 468,314 
OMP Merger— — — — — — (191,032)(191,032)
Balance as of March 31, 202219,572 $203 902 $(104,132)$883,273 $662,619 $ $1,441,963 


Attributable to Oasis
 Common StockTreasury StockAdditional
Paid-in Capital
Retained Earnings (Accumulated Deficit)Non-controlling InterestsTotal
Stockholders’
Equity
SharesAmountSharesAmount
(In thousands)
Balance as of December 31, 202020,093 $200  $ $965,654 $(49,912)$96,797 $1,012,739 
Equity-based compensation— — — — 1,709 — 489 2,198 
Dividends ($0.375 per share)
— — — — (7,535)— — (7,535)
Distributions to non-controlling interest owners— — — — — — (6,029)(6,029)
Midstream Simplification— — — — 2,358 — (2,358) 
Common control transaction costs— — — — (4,111)— — (4,111)
Other— — — — 6 — — 6 
Net income (loss)— — — — — (43,592)8,327 (35,265)
Balance as of March 31, 202120,093 $200  $ $958,081 $(93,504)$97,226 $962,003 

The accompanying notes are an integral part of these condensed consolidated financial statements.
4

Oasis Petroleum Inc.
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
Three Months Ended March 31,
 20222021
 (In thousands)
Cash flows from operating activities:
Net income (loss) including non-controlling interests$468,314 $(35,265)
Adjustments to reconcile net income (loss) including non-controlling interests to net cash provided by operating activities:
Depreciation, depletion and amortization44,673 39,990 
Gain on sale of properties(520,421)(88)
Impairment 3 
Deferred income taxes(7)(3,654)
Derivative instruments367,922 181,515 
Income from investment in unconsolidated affiliate(60,137) 
Equity-based compensation expenses4,848 2,198 
Deferred financing costs amortization and other3,433 2,320 
Working capital and other changes:
Change in accounts receivable, net(111,813)(60,542)
Change in inventory667 4,506 
Change in prepaid expenses(369)1,089 
Change in accounts payable, interest payable and accrued liabilities52,122 62,195 
Change in other assets and liabilities, net16,348 (3,854)
Net cash provided by operating activities265,580 190,413 
Cash flows from investing activities:
Capital expenditures(48,831)(21,958)
Proceeds from divestitures, net of OMP cash147,056 2,686 
Costs related to divestitures(11,368) 
Derivative settlements(70,670)(22,596)
Distributions from investment in unconsolidated affiliate13,116  
Net cash provided by (used in) investing activities29,303 (41,868)
Cash flows from financing activities:
Proceeds from revolving credit facilities15,000 159,500 
Principal payments on revolving credit facilities (635,500)
Proceeds from issuance of senior unsecured notes 450,000 
Deferred financing costs(9)(11,737)
Common control transaction costs (4,111)
Purchases of treasury stock(4,132) 
Dividends paid(70,579)(7,535)
Distributions to non-controlling interests (6,029)
Payments on finance lease liabilities(229)(311)
Proceeds from warrants exercised457  
Other 6 
Net cash used in financing activities(59,492)(55,717)
Increase in cash and cash equivalents235,391 92,828 
Cash and cash equivalents:
Beginning of period174,783 20,226 
End of period$410,174 $113,054 
Supplemental non-cash transactions:
5

Change in accrued capital expenditures$17,504 $6,909 
Change in asset retirement obligations(428)1,035 
Investment in unconsolidated affiliate568,312  
Note receivable from divestiture 2,900 

The accompanying notes are an integral part of these condensed consolidated financial statements.
6

Oasis Petroleum Inc.
Notes to Condensed Consolidated Financial Statements (Unaudited)
1. Organization and Operations of the Company
Oasis Petroleum Inc. (together with its consolidated subsidiaries, “Oasis” or the “Company”) is an independent exploration and production (“E&P”) company with quality and sustainable long-lived assets. Oasis Petroleum North America LLC (“OPNA”) conducts the Company’s E&P activities and owns its oil and gas properties located in the North Dakota and Montana regions of the Williston Basin.
2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of the Company have not been audited by the Company’s independent registered public accounting firm, except that the Condensed Consolidated Balance Sheet at December 31, 2021 is derived from audited financial statements. In the opinion of management, all adjustments, consisting of normal recurring adjustments necessary for the fair statement of the Company’s financial position, have been included. Management has made certain estimates and assumptions that affect reported amounts in the unaudited condensed consolidated financial statements and disclosures of contingencies. Actual results may differ from those estimates. The results for interim periods are not necessarily indicative of annual results.
These interim financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission regarding interim financial reporting. Certain disclosures have been condensed or omitted from these financial statements. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States of America (“GAAP”) for complete consolidated financial statements and should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 (“2021 Annual Report”).
Pending Merger
On March 7, 2022, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Whiting Petroleum Corporation, a Delaware corporation (“Whiting”), which provides for, among other things, the combination of the Company and Whiting in a merger of equals transaction (the “Merger”). Whiting is an independent oil and gas company engaged in the development, production and acquisition of crude oil, NGLs and natural gas primarily in the Rocky Mountains region of the United States. Under the terms of the Merger Agreement, Whiting shareholders will receive 0.5774 shares of Oasis common stock and $6.25 in cash (without interest) in exchange for each share of Whiting common stock. In connection with the closing of the Merger, Oasis shareholders will receive a special dividend of $15.00 per share. The Merger has been unanimously approved by the boards of directors of both companies. The closing of the Merger is subject to customary closing conditions, including, among others, receipt of the required approvals from each of Oasis’ shareholders and Whiting’s shareholders. The Merger is expected to close in the third quarter of 2022.
Discontinued Operations
On February 1, 2022, the Company completed the OMP Merger (defined in Note 9—Divestitures). The OMP Merger represented a strategic shift for the Company and qualified for reporting as a discontinued operation in accordance with Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) 205-20, Presentation of financial statements – Discontinued Operations (“ASC 205-20”). Accordingly, the results of operations of OMP for the period prior to closing on February 1, 2022 were classified as discontinued operations in the Condensed Consolidated Statement of Operations for the three months ended March 31, 2022. Prior periods have been recast so that the basis of presentation is consistent with that of the 2022 condensed consolidated financial statements. In addition, the assets and liabilities of OMP were classified as held for sale in the Condensed Consolidated Balance Sheet at December 31, 2021. The Condensed Consolidated Statements of Cash Flows were not required to be reclassified for discontinued operations for any period. See Note 10—Discontinued Operations for additional information.
Risks and Uncertainties
As a crude oil and natural gas producer, the Company’s revenue, profitability and future growth are substantially dependent upon the prevailing and future prices for crude oil and natural gas, which are dependent upon numerous factors beyond its control such as economic, political and regulatory developments and competition from other energy sources. The energy markets have historically been very volatile, and there can be no assurance that crude oil, natural gas or natural gas liquids (“NGLs”) prices will not be subject to wide fluctuations in the future. A substantial or extended decline in prices for crude oil and, to a lesser extent, natural gas and NGLs, could have a material adverse effect on the Company’s financial position, results
7

of operations, cash flows, the quantities of crude oil and natural gas reserves that may be economically produced and the Company’s access to capital.
Cash Equivalents
The Company may invest in certain money market funds, commercial paper and time deposits, all of which are stated at fair value or cost which approximates fair value due to the short-term maturity of these investments. The Company classifies all such investments with original maturity dates less than 90 days as cash equivalents. The Company may maintain balances of cash and cash equivalents in excess of amounts that are federally insured by the Federal Deposit Insurance Corporation. The Company invests with financial institutions that it believes are creditworthy and has not experienced any material losses in such accounts.
The following table provides a reconciliation of cash and cash equivalents reported within the Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Cash Flows:
March 31, 2022December 31, 2021
(In thousands)
Cash and cash equivalents$410,174 $172,114 
Cash and cash equivalents classified as held for sale 2,669 
Total cash and cash equivalents$410,174 $174,783 
Significant Accounting Policies
There have been no material changes to the Company’s critical accounting policies and estimates from those disclosed in the 2021 Annual Report, except as follows:
Investment in unconsolidated affiliate. On February 1, 2022, the Company completed the OMP Merger (defined in Note 9—Divestitures) and received $160.0 million in cash and 20,985,668 common units representing limited partner interests of Crestwood Equity Partners LP, a Delaware limited partnership (“Crestwood”), which represents approximately 21% of Crestwood’s issued and outstanding common units as of March 31, 2022. In addition, the Company and Crestwood executed a director nomination agreement pursuant to which Oasis appointed two directors to the Board of Directors of Crestwood Equity GP LLC, a Delaware limited liability company and the general partner of Crestwood (“Crestwood GP”). The Company has determined that it has the ability to exercise significant influence over Crestwood based upon its ownership in Crestwood and its representation on the Board of Directors of Crestwood GP. Accordingly, the Company has determined its investment in Crestwood is subject to the equity method of accounting and has elected to account for the investment using the fair value option under FASB ASC 825-10, Financial Instruments. The Company measures the carrying amount of its investment in Crestwood at fair value each reporting period, with changes in fair value recorded to income from investment in unconsolidated affiliate on the Condensed Consolidated Statement of Operations. In addition, cash distributions from Crestwood are recorded to income from investment in unconsolidated affiliate on the Condensed Consolidated Statement of Operations. See Note 6—Fair Value Measurements and Note 11—Investment in Unconsolidated Affiliate for additional information.
Recent Accounting Pronouncements
Reference rate reform. In March 2020, the FASB issued Accounting Standards Update 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”). ASU 2020-04 provides optional guidance for a limited time to ease the potential burden in accounting for reference rate reform, including optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. ASU 2020-04 applies only to contracts and hedging relationships that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued due to reference rate reform. ASU 2020-04 is effective immediately and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022. Amounts drawn under the Oasis Credit Facility (defined in Note 12—Long-Term Debt) bear interest rates in relation to LIBOR. The credit agreement governing the Oasis Credit Facility includes customary provisions to provide for replacement of LIBOR with the Secured Overnight Financing Rate, an index supported by short-term Treasury repurchase agreements, when LIBOR ceases to be available. The Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements and related disclosures.
8

3. Revenue Recognition
Revenues from contracts with customers for crude oil, natural gas and NGL sales and other services were as follows for the periods presented:
Three Months Ended March 31,
 20222021
 (In thousands)
Crude oil revenues$385,908 $185,818 
Purchased crude oil sales122,172 48,165 
Natural gas revenues107,594 59,172 
Purchased natural gas sales37,295 31,980 
Other services revenues 226 
Total revenues$652,969 $325,361 

The Company records revenue when the performance obligations under the terms of its customer contracts are satisfied. For sales of commodities, the Company records revenue in the month the production or purchased product is delivered to the purchaser. However, settlement statements and payments are typically not received for 20 to 60 days after the date production is delivered, and as a result, the Company is required to estimate the amount of production that was delivered to the purchaser and the price that will be received for the sale of the product. The Company uses knowledge of its properties, its properties’ historical performance, spot market prices and other factors as the basis for these estimates. The Company records the differences between estimates and the actual amounts received for product sales once payment is received from the purchaser. In certain cases, the Company is required to estimate these volumes during a reporting period and record any differences between the estimated volumes and actual volumes in the following reporting period. Differences between estimated and actual revenues have historically not been significant. For the three months ended March 31, 2022 and 2021, revenue recognized related to performance obligations satisfied in prior reporting periods was not material.
4. Inventory
The following table sets forth the Company’s inventory:
March 31, 2022December 31, 2021
 (In thousands)
Inventory
Equipment and materials$12,035 $12,175 
Crude oil inventory16,276 16,781 
Total inventory28,311 28,956 
Long-term inventory
Linefill in third party pipelines17,510 17,510 
Total long-term inventory17,510 17,510 
Total$45,821 $46,466 
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5. Additional Balance Sheet Information
The following table sets forth certain balance sheet amounts comprised of the following:
March 31, 2022December 31, 2021
 (In thousands)
Accounts receivable, net
Trade accounts$442,112 $309,756 
Joint interest accounts39,082 40,890 
Other accounts26,888 28,270 
Total accounts receivable508,082 378,916 
Less: allowance for credit losses(3,646)(1,714)
Total accounts receivable, net$504,436 $377,202 
Accrued liabilities
Accrued capital costs$53,285 $33,085 
Accrued lease operating expenses42,196 29,478 
Accrued oil and gas marketing120,430 35,211 
Accrued general and administrative expenses8,319 13,270 
Other accrued liabilities36,603 39,630 
Total accrued liabilities$260,833 $150,674 
6. Fair Value Measurements
In accordance with the FASB’s authoritative guidance on fair value measurements, the Company’s financial assets and liabilities are measured at fair value on a recurring basis. The Company’s financial instruments, including certain cash and cash equivalents, accounts receivable, accounts payable and other payables, are carried at cost, which approximates their respective fair market values due to their short-term maturities. The Company recognizes its non-financial assets and liabilities, such as asset retirement obligations (“ARO”) and properties acquired in a business combination or upon impairment, at fair value on a non-recurring basis.
As defined in the authoritative guidance, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). To estimate fair value, the Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated or generally unobservable.
The authoritative guidance establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (“Level 1” measurements) and the lowest priority to unobservable inputs (“Level 3” measurements). The three levels of the fair value hierarchy are as follows:
Level 1 — Unadjusted quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.
Level 2 — Pricing inputs, other than unadjusted quoted prices in active markets included in Level 1, are either directly or indirectly observable as of the reporting date. Level 2 includes those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors and current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument and can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace.
Level 3 — Pricing inputs are generally unobservable from objective sources, requiring internally developed valuation methodologies that result in management’s best estimate of fair value.
Financial Assets and Liabilities
Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input requires judgment and may affect the
10

valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels.
The following tables set forth by level, within the fair value hierarchy, the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis:
Fair value at March 31, 2022
Level 1Level 2Level 3Total
(In thousands)
Assets:
Commodity derivative instruments (see Note 7)
$ $1,284 $ $1,284 
Contingent consideration (see Note 7)
 61,760  61,760 
Investment in unconsolidated affiliate (see Note 11)
 615,333  615,333 
Total assets$ $678,377 $ $678,377 
Liabilities:
Commodity derivative instruments (see Note 7)
$ $520,160 $ $520,160 
Total liabilities$ $520,160 $ $520,160 
 Fair value at December 31, 2021
 Level 1Level 2Level 3Total
 (In thousands)
Assets:
Commodity derivative instruments (see Note 7)
$ $55 $ $55 
Contingent consideration (see Note 7)
 44,810  44,810 
Total assets$ $44,865 $ $44,865 
Liabilities:
Commodity derivative instruments (see Note 7)
$ $204,729 $ $204,729 
Total liabilities$ $204,729 $ $204,729 
Commodity derivative instruments. The fair value of the Company’s commodity derivative instruments is based upon a third-party preparer’s calculation using mark-to-market valuation reports provided by the Company’s counterparties for monthly settlement purposes to determine the valuation of its derivative instruments. The Company has the third-party preparer evaluate other readily available market prices for its derivative contracts, as there is an active market for these contracts. The third-party preparer performs its independent valuation using a moment matching method similar to Turnbull-Wakeman for Asian options. The significant inputs used are commodity prices, volatility, skew, discount rate and the contract terms of the derivative instruments. The Company does not have access to the specific proprietary valuation models or inputs used by its counterparties or the third-party preparer. The Company compares the third-party preparer’s valuation to counterparty valuation statements, investigating any significant differences, and analyzes monthly valuation changes in relation to movements in forward commodity price curves. The determination of the fair value for derivative instruments also incorporates a credit adjustment for non-performance risk, as required by GAAP. The Company calculates the credit adjustment for derivatives in a net asset position using current credit default swap values for each counterparty. The credit adjustment for derivatives in a net liability position is based on the market credit spread of the Company or similarly rated public issuers. The Company recorded an adjustment to reduce the fair value of its net derivative liability by $12.3 million and $5.3 million at March 31, 2022 and December 31, 2021, respectively. See Note 7 – Derivative Instruments for additional information.
Permian Basin Sale Contingent Consideration. Pursuant to the purchase and sale agreement entered into in connection with the Company’s divestiture of its E&P assets in the Permian Basin in 2021, the Company is entitled to receive up to three earn-out payments of $25.0 million per year for each of 2023, 2024 and 2025 if the average daily settlement price of NYMEX West Texas Intermediate crude oil price index (“NYMEX WTI”) crude oil exceeds $60 per barrel for such year (the “Permian Basin Sale Contingent Consideration”). If the NYMEX WTI crude oil price for calendar year 2023 or 2024 is less than $45 per barrel, then each calendar year thereafter the buyer’s obligation to make any remaining earn-out payments is terminated. The fair value of the Permian Basin Sale Contingent Consideration was determined by a third-party valuation specialist using a Monte Carlo simulation model and Ornstein-Uhlenbeck pricing process. The significant inputs include NYMEX WTI forward price curve, volatility, mean reversion rate and counterparty credit risk adjustment. The Company determined these were Level 2 fair value inputs that are substantially observable in active markets or can be derived from observable data. See Note 7 – Derivative Instruments for additional information.
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Investment in unconsolidated affiliate. The Company elected the fair value option to account for its equity method investment in Crestwood. The fair value of the investment in Crestwood was determined using Level 2 inputs based upon the quoted market price for Crestwood’s publicly traded common units, adjusted to reflect a value discount due to a restriction on the Company's ability to sell the investment 90 days from the closing date. See Note 11—Investment in Unconsolidated Affiliate for additional information.
Non-Financial Assets and Liabilities
The fair value of the Company’s non-financial assets measured at fair value on a non-recurring basis is determined using valuation techniques that include Level 3 inputs.
Asset retirement obligations. The initial measurement of ARO at fair value is recorded in the period in which the liability is incurred. Fair value is determined by calculating the present value of estimated future cash flows related to the liability. Estimating the future ARO requires management to make estimates and judgments regarding the timing and existence of a liability, as well as what constitutes adequate restoration when considering current regulatory requirements. Inherent in the fair value calculation are numerous assumptions and judgments, including the ultimate costs, inflation factors, credit-adjusted discount rates, timing of settlement and changes in the legal, regulatory, environmental and political environments.
7. Derivative Instruments
The Company utilizes derivative financial instruments to manage risks related to changes in crude oil and natural gas prices. The Company’s crude oil contracts settle monthly based on the average NYMEX WTI, and its natural gas contracts settle monthly based on the average NYMEX Henry Hub natural gas index price (“NYMEX HH”).
The Company primarily utilizes fixed price swaps and collars to reduce the volatility of crude oil and natural gas prices on future expected production. Swaps are designed to establish a fixed price for the volumes under contract, while collars are designed to establish a minimum price (floor) and a maximum price (ceiling) for the volumes under contract. The Company may, from time to time, restructure existing derivative contracts or enter into new transactions to effectively modify the terms of current contracts in order to improve the pricing parameters in existing contracts.
All derivative instruments are recorded on the Company’s Condensed Consolidated Balance Sheets as either assets or liabilities measured at fair value (see Note 6 – Fair Value Measurements). The Company has not designated any derivative instruments as hedges for accounting purposes and does not enter into such instruments for speculative trading purposes. If a derivative does not qualify as a hedge or is not designated as a hedge, the changes in fair value are recognized in the other income (expense) section of the Company’s Condensed Consolidated Statements of Operations as a net gain or loss on derivative instruments. Derivative settlements are reflected as investing activities on the Company’s Condensed Consolidated Statements of Cash Flows and represent net cash payments to or receipts from counterparties upon the maturity of a derivative contract.
At March 31, 2022, the Company had the following outstanding commodity derivative instruments:
CommoditySettlement
Period
Derivative
Instrument
VolumesWeighted Average PricesFair Value Liabilities
Fixed Price SwapsFloorCeiling
  (In thousands)
Crude oil2022Two-way collar3,728,000 Bbl$49.47 $66.56 $(108,005)
Crude oil2022Fixed price swaps5,349,000 Bbl$70.00 (132,397)
Crude oil2023Two-way collar4,380,000 Bbl$45.42 $65.05 (92,563)
Crude oil2023Fixed price swaps5,265,000 Bbl$52.24 (159,835)
Crude oil2024Two-way collar372,000 Bbl$45.00 $64.88 (6,560)
Crude oil2024Fixed price swaps434,000 Bbl$50.00 (12,053)
Natural gas2022Fixed price swaps2,730,000 MMBtu$2.82 (7,463)
$(518,876)
As of March 31, 2022, the estimated fair value of the Permian Basin Sale Contingent Consideration was $61.8 million, which was classified as a non-current derivative asset on the Condensed Consolidated Balance Sheet. See Note 6 – Fair Value
12

Measurements for additional information.
The following table summarizes the location and amounts of gains and losses from the Company’s derivative instruments recorded in the Company’s Condensed Consolidated Statements of Operations for the periods presented:
Three Months Ended March 31,
Derivative InstrumentStatements of Operations Location20222021
 (In thousands)
Commodity derivativesNet loss on derivative instruments$(384,872)$(181,515)
Contingent considerationNet loss on derivative instruments16,950  
In accordance with the FASB’s authoritative guidance on disclosures about offsetting assets and liabilities, the Company is required to disclose both gross and net information about instruments and transactions eligible for offset in the statement of financial position as well as instruments and transactions subject to an agreement similar to a master netting agreement. The Company’s derivative instruments are presented as assets and liabilities on a net basis by counterparty, as all counterparty contracts provide for net settlement. No margin or collateral balances are deposited with counterparties, and as such, gross amounts are offset to determine the net amounts presented in the Company’s Condensed Consolidated Balance Sheets. For additional information, see “Item 3.—Quantitative and Qualitative Disclosures about Market Risk—Counterparty and customer credit risk.”
The following table summarizes the location and fair value of all outstanding derivative instruments recorded in the Company’s Condensed Consolidated Balance Sheets:
March 31, 2022
Derivative InstrumentBalance Sheet LocationGross AmountGross Amount OffsetNet Amount
(In thousands)
Derivatives assets:
Commodity derivativesDerivative instruments — current assets$1,284 $ $1,284 
Contingent considerationDerivative instruments — non-current assets61,760  61,760 
Total derivatives assets$63,044 $ $63,044 
Derivatives liabilities:
Commodity derivativesDerivative instruments — current liabilities$317,349 $(2,883)$314,466 
Commodity derivativesDerivative instruments — non-current liabilities216,308 (10,614)205,694 
Total derivatives liabilities$533,657 $(13,497)$520,160 
December 31, 2021
Derivative InstrumentBalance Sheet LocationGross AmountGross Amount OffsetNet Amount
(In thousands)
Derivatives assets:
Contingent considerationDerivative instruments — current assets$44,810 $ $44,810 
Commodity derivativesDerivative instruments — non-current assets55  55 
Total derivatives assets$44,865 $ $44,865 
Derivatives liabilities:
Commodity derivativesDerivative instruments — current liabilities$96,172 $(6,725)$89,447 
Commodity derivativesDerivative instruments — non-current liabilities133,655 (18,373)115,282 
Total derivatives liabilities$229,827 $(25,098)$204,729 
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8. Property, Plant and Equipment
The following table sets forth the Company’s property, plant and equipment:
March 31, 2022December 31, 2021
 (In thousands)
Proved oil and gas properties
$1,455,003 $1,393,836 
Less: Accumulated depreciation, depletion and amortization(149,966)(107,277)
Proved oil and gas properties, net1,305,037 1,286,559 
Unproved oil and gas properties3,488 2,001 
Other property and equipment
44,555 48,981 
Less: Accumulated depreciation(16,739)(17,109)
Other property and equipment, net27,816 31,872 
Total property, plant and equipment, net$1,336,341 $1,320,432 
9. Divestitures
2022 Divestitures
In October 2021, Oasis Midstream Partners LP (“OMP”), a master limited partnership formed by the Company to own, develop, operate and acquire midstream assets in North America, and OMP GP LLC (“OMP GP”), the general partner of OMP, entered into an Agreement and Plan of Merger (the “OMP Merger Agreement”) with Crestwood and Crestwood GP. Pursuant to the OMP Merger Agreement, the Company agreed to merge OMP into a subsidiary of Crestwood and exchange all of its OMP common units and all of the limited liability company interests of OMP GP for $160.0 million in cash and 20,985,668 common units of Crestwood (the “OMP Merger”). The OMP Merger represented a strategic shift for the Company and qualified for reporting as a discontinued operation under ASC 205-20. See Note 10—Discontinued Operations.
On February 1, 2022, the Company completed the OMP Merger and received $160.0 million in cash and 20,985,668 common units of Crestwood. The Company recorded a pre-tax gain on sale of $518.9 million, which was reported within income from discontinued operations attributable to Oasis, net of income tax, on the Company’s Condensed Consolidated Statement of Operations for the three months ended March 31, 2022. The fair value of the Company’s retained investment in Crestwood as of February 1, 2022 was $568.3 million and was determined using Level 2 inputs based upon the quoted market price for Crestwood’s publicly traded common units adjusted to reflect a value discount due to a restriction on the Company's ability to sell the investment 90 days from the closing date. See Note 11—Investment in Unconsolidated Affiliate for additional information on the Company’s investment in Crestwood.
In connection with the closing of the OMP Merger, certain contracts were assigned to Crestwood for midstream services and the Company has continuing cash outflows to Crestwood for these services. The Company has determined that Crestwood is a related party. See Note 11—Investment in Unconsolidated Affiliate for additional information.
2021 Divestitures
On March 22, 2021, the Company completed the sale of certain well services equipment and inventory in connection with its 2020 exit from the well services business for total consideration of $5.5 million, comprised of cash proceeds of $2.6 million and a $2.9 million 6.6% promissory note.
Midstream Simplification. On March 30, 2021, the Company contributed to OMP its remaining 64.7% limited liability company interest in Bobcat DevCo LLC and 30.0% limited liability company interest in Beartooth DevCo LLC, as well as eliminated OMP’s incentive distribution rights, in exchange for a cash distribution of $231.5 million and 12,949,644 common units in OMP (the “Midstream Simplification”). The Midstream Simplification was accounted for as a transaction between entities under common control.
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10. Discontinued Operations
The OMP Merger represented a strategic shift for the Company and qualified as a discontinued operation in accordance with ASC 205-20.
Condensed Consolidated Statements of Operations
The results of operations reported as discontinued operations in connection with the OMP Merger were as follows for the periods presented (in thousands):

Three Months Ended March 31,
20222021
Revenues
Oil and gas revenues$ $471 
Purchased oil and gas sales (1)
(13,364)(31,685)
Midstream revenues23,271 61,312 
Total revenues9,907 30,098 
Operating expenses
Lease operating expenses (1)
(4,535)(15,804)
Midstream expenses13,224 27,898 
Gathering, processing and transportation expenses (1)
(3,555)(12,394)
Purchased oil and gas expenses (1)
(12,506)(30,528)
Depreciation, depletion and amortization 9,220 
General and administrative expenses (1)
3,314 324 
Total operating expenses