Company Quick10K Filing
Oasis Midstream Partners
Price1.00 EPS-186,236,000
Shares-0 P/E-0
MCap-0 P/FCF-0
Net Debt426 EBIT199
TEV426 TEV/EBIT2
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-03-31 Filed 2020-05-18
10-K 2019-12-31 Filed 2020-02-27
10-Q 2019-09-30 Filed 2019-11-06
10-Q 2019-06-30 Filed 2019-08-08
10-Q 2019-03-31 Filed 2019-05-08
10-K 2018-12-31 Filed 2019-03-01
10-Q 2018-09-30 Filed 2018-11-06
10-Q 2018-06-30 Filed 2018-08-07
10-Q 2018-03-31 Filed 2018-05-08
10-K 2017-12-31 Filed 2018-02-28
10-Q 2017-09-30 Filed 2017-11-09
8-K 2020-05-18
8-K 2020-05-11
8-K 2020-02-25
8-K 2020-01-30
8-K 2019-12-12
8-K 2019-11-05
8-K 2019-08-16
8-K 2019-08-06
8-K 2019-05-07
8-K 2019-02-28
8-K 2019-02-26
8-K 2019-02-05
8-K 2018-11-20
8-K 2018-11-09
8-K 2018-11-07
8-K 2018-11-05
8-K 2018-10-30
8-K 2018-08-27
8-K 2018-08-06
8-K 2018-07-11
8-K 2018-05-07
8-K 2018-02-27
8-K 2018-02-02

OMP 10Q Quarterly Report

Part I - Financial Information
Item 1. - Financial Statements (Unaudited)
Item 2. - Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. - Quantitative and Qualitative Disclosures About Market Risk
Item 4. - Controls and Procedures
Part II - Other Information
Item 1. - Legal Proceedings
Item 1A. - Risk Factors
Item 6. - Exhibits
EX-31.1 ex311-ompq120201q20mas.htm
EX-31.2 ex312-ompq120201q20mas.htm
EX-32.1 ex321-ompq120201q20mas.htm
EX-32.2 ex322-ompq120201q20mas.htm

Oasis Midstream Partners Earnings 2020-03-31

Balance SheetIncome StatementCash Flow
1.21.00.70.50.20.02017201820192020
Assets, Equity
0.20.20.10.10.00.02017201820192020
Rev, G Profit, Net Income
0.20.10.0-0.0-0.1-0.22017201820192020
Ops, Inv, Fin

omp-20200331
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Table of Contents

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, 2020
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: 001-38212

Oasis Midstream Partners LP
(Exact name of registrant as specified in its charter)

Delaware 47-1208855
(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 units representing limited partner interestsOMPThe 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. 


Table of Contents
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller 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 

At May 14, 2020, there were 33,811,366 units representing limited partner interests (consisting of 20,061,366 common units and 13,750,000 subordinated units) outstanding.




OASIS MIDSTREAM PARTNERS LP
TABLE OF CONTENTS
 Page




Table of Contents
PART I — FINANCIAL INFORMATION
Item 1. — Financial Statements (Unaudited)
OASIS MIDSTREAM PARTNERS LP
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
March 31, 2020December 31, 2019
(In thousands, except unit data)
ASSETS
Current assets
Cash and cash equivalents$23,901  $4,168  
Accounts receivable8,429  5,969  
Accounts receivable – Oasis Petroleum74,380  77,571  
Inventory5,267    
Prepaid expenses2,320  1,923  
Other current assets137  138  
Total current assets114,434  89,769  
Property, plant and equipment1,180,191  1,155,503  
Less: accumulated depreciation, amortization and impairment(210,918) (98,982) 
Total property, plant and equipment, net969,273  1,056,521  
Operating lease right-of-use assets4,462  5,207  
Other assets2,894  3,172  
Total assets$1,091,063  $1,154,669  
LIABILITIES AND EQUITY
Current liabilities
Accounts payable$3,168  $2,478  
Accounts payable – Oasis Petroleum29,549  27,139  
Accrued liabilities37,852  50,210  
Accrued interest payable26,375  508  
Current operating lease liabilities3,036  3,005  
Other current liabilities600  594  
Total current liabilities100,580  83,934  
Long-term debt487,500  458,500  
Asset retirement obligations1,767  1,747  
Operating lease liabilities1,445  2,216  
Other liabilities3,498  3,644  
Total liabilities594,790  550,041  
Equity
Limited partners
Common units (20,061,366 and 20,045,196 issued and outstanding at March 31, 2020 and December 31, 2019, respectively)
171,625  225,339  
Subordinated units (13,750,000 units issued and outstanding at March 31, 2020 and December 31, 2019)
29,120  66,005  
General Partner1,027  1,026  
Total partners’ equity
201,772  292,370  
Non-controlling interests294,501  312,258  
Total equity496,273  604,628  
Total liabilities and equity$1,091,063  $1,154,669  
The accompanying notes are an integral part of these condensed consolidated financial statements.
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OASIS MIDSTREAM PARTNERS LP
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended March 31,
2020
2019(1)
(In thousands, except per unit data)
Revenues
Midstream services – Oasis Petroleum$81,993  $77,063  
Midstream services – third parties3,846  1,127  
Product sales – Oasis Petroleum20,788  15,652  
Product sales – third parties  10  
Total revenues106,627  93,852  
Operating expenses
Costs of product sales8,432  8,065  
Operating and maintenance16,840  19,690  
Depreciation and amortization10,197  8,991  
Impairment101,767    
General and administrative8,451  8,723  
Total operating expenses145,687  45,469  
Operating income (loss)(39,060) 48,383  
Other expenses
Interest expense, net of capitalized interest(30,257) (3,969) 
Other income (expense)(42)   
Total other expenses, net(30,299) (3,969) 
Net income (loss)(69,359) 44,414  
Less: Net income attributable to Delaware Predecessor  1,075  
Less: Net income attributable to non-controlling interests2,040  21,796  
Net income (loss) attributable to Oasis Midstream Partners LP(71,399) 21,543  
Less: Net income attributable to General Partner1,008  238  
Net income (loss) attributable to limited partners$(72,407) $21,305  
Earnings (loss) per limited partner unit (Note 12)
Common units – basic$(2.14) $0.63  
Common units – diluted(2.14) 0.63  
Weighted average number of limited partners units outstanding (Note 12)
Common units – basic20,041  20,016  
Common units – diluted20,041  20,033  
__________________
(1)Retrospectively adjusted for the transfer of net assets between entities under common control. See Note 2 to our unaudited condensed consolidated financial statements.





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

Table of Contents
OASIS MIDSTREAM PARTNERS LP
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(UNAUDITED)
Partnership
Delaware PredecessorCommon UnitsSubordinated UnitsGeneral PartnerNon-controlling InterestsTotal
(In thousands)
Balance as of December 31, 2019$  $225,339  $66,005  $1,026  $312,258  $604,628  
Contributions from non-controlling interests—  —  —  —  6,167  6,167  
Distributions to non-controlling interests—  (25,964) (25,964) 
Distributions to unitholders—  (10,833) (7,425) (1,007) —  (19,265) 
Equity-based compensation—  66  —  —  —  66  
Net income (loss)—  (42,947) (29,460) 1,008  2,040  (69,359) 
Balance as of March 31, 2020$  $171,625  $29,120  $1,027  $294,501  $496,273  
Balance as of December 31, 2018$6,227  $192,581  $45,937  $112  $312,815  $557,672  
Delaware Predecessor capital contributions, net4,902  —  —  —  —  4,902  
Contributions from non-controlling interests—  —  —  —  2,532  2,532  
Distributions to non-controlling interests—  —  —  —  (21,922) (21,922) 
Distributions to unitholders—  (9,020) (6,188) (112) —  (15,320) 
Equity-based compensation—  119  —  —  —  119  
Other—  2,881  (79) —  (2,977) (175) 
Net income1,075  12,630  8,675  238  21,796  44,414  
Balance as of March 31, 2019$12,204  $199,191  $48,345  $238  $312,244  $572,222  


















The accompanying notes are an integral part of these condensed consolidated financial statements.
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Table of Contents
OASIS MIDSTREAM PARTNERS LP
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended March 31,
2020
2019(1)
(In thousands)
Cash flows from operating activities:
Net income (loss)$(69,359) $44,414  
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization10,197  8,991  
Impairment101,767    
Equity-based compensation expenses66  119  
Deferred financing costs amortization and other271  191  
Working capital and other changes:
Change in accounts receivable732  (444) 
Change in inventory(5,267)   
Change in prepaid expenses(397) 52  
Change in accounts payable and accrued liabilities23,732  3,997  
Change in other assets and liabilities, net(77) (227) 
Net cash provided by operating activities61,665  57,093  
Cash flows from investing activities:
Capital expenditures(31,811) (55,403) 
Net cash used in investing activities(31,811) (55,403) 
Cash flows from financing activities:
Capital contributions from Delaware Predecessor, net  4,902  
Capital contributions from non-controlling interests6,167  2,532  
Distributions to non-controlling interests(25,964) (21,922) 
Distributions to unitholders(19,265) (15,320) 
Deferred financing costs  (43) 
Proceeds from revolving credit facility29,000  32,000  
Principal payments on revolving credit facility  (5,000) 
Other(59) (229) 
Net cash used in financing activities(10,121) (3,080) 
Increase (decrease) in cash and cash equivalents19,733  (1,390) 
Cash:
Beginning of period4,168  6,649  
End of period$23,901  $5,259  
Supplemental non-cash transactions:
Change in accrued capital expenditures$(7,123) $766  
Change in asset retirement obligations20  17  
__________________
(1)Retrospectively adjusted for the transfer of net assets between entities under common control. See Note 2 to our unaudited condensed consolidated financial statements.


The accompanying notes are an integral part of these condensed consolidated financial statements.
5

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OASIS MIDSTREAM PARTNERS LP
Notes to Condensed Consolidated Financial Statements (Unaudited)
1. Organization and Nature of Operations
Organization. Oasis Midstream Partners LP (the “Partnership”) is a growth-oriented, fee-based master limited partnership formed by its sponsor, Oasis Petroleum Inc. (together with its wholly-owned subsidiaries, “Oasis Petroleum”) to own, develop, operate and acquire a diversified portfolio of midstream assets in North America that are integral to the crude oil and natural gas operations of Oasis Petroleum and are strategically positioned to capture volumes from other producers.
The Partnership conducts its business through its ownership of development companies: Bighorn DevCo LLC (“Bighorn DevCo”), Bobcat DevCo LLC (“Bobcat DevCo”), Beartooth DevCo LLC (“Beartooth DevCo”) and Panther DevCo LLC (“Panther DevCo” and collectively with Bighorn DevCo, Bobcat DevCo and Beartooth DevCo, the “DevCos”). Bobcat DevCo and Beartooth DevCo are jointly-owned with Oasis Petroleum through its wholly-owned subsidiary Oasis Midstream Services LLC (“OMS”).
As of March 31, 2020, the Partnership’s assets and ownership interests in the DevCos were as follows:
DevCosAreas ServedService LinesPartnership Ownership
Bighorn DevCoWild Basin
Natural gas processing
Crude oil stabilization
Crude oil blending
Crude oil and natural gas liquids storage
Crude oil transportation
100.0%
Bobcat DevCoWild Basin
Natural gas gathering
Natural gas compression
Gas lift
Crude oil gathering
Produced and flowback water gathering
Produced and flowback water disposal
35.3%
Beartooth DevCoAlger
Cottonwood
Hebron
Indian Hills
Red Bank
Wild Basin
Produced and flowback water gathering
Produced and flowback water disposal
Freshwater supply and distribution
70.0%
Panther DevCoDelaware Basin
Crude oil gathering
Produced and flowback water gathering
Produced and flowback water disposal

100%
Nature of business. The Partnership generates the majority of its revenues through 15-year, fee-based contractual arrangements with Oasis Petroleum for midstream services. These services include (i) gas gathering, compression, processing, gas lift and natural gas liquids (“NGLs”) storage services; (ii) crude oil gathering, stabilization, blending, storage and transportation services; (iii) produced and flowback water gathering and disposal services; and (iv) freshwater supply and distribution services. The revenue earned from these services is generally directly related to the volume of natural gas, crude oil, produced and flowback water and freshwater that flows through the Partnership’s systems.
The Partnership’s operations are supported by significant acreage dedications from Oasis Petroleum. In addition, the Partnership is party to a number of third-party agreements across all of its DevCos in which the Partnership has the right to provide its full suite of midstream services to support existing and future third-party volumes.
The Partnership is not a taxable entity for United States federal income tax purposes and is not subject to income tax in the majority of states in which the Partnership operates. As taxes are generally borne by its partners through the allocation of taxable income, the Partnership does not record deferred taxes related to the aggregate difference in the basis of its assets for financial and tax reporting purposes. Beginning in the fourth quarter of 2019, the Partnership is subject to a Texas margin tax due to its operations in the Delaware Basin. The Partnership recorded a de minimis state income tax provision for the three months ended March 31, 2020.
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2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying condensed consolidated financial statements of the Partnership have not been audited by the Partnership’s independent registered public accounting firm, except that the Condensed Consolidated Balance Sheet at December 31, 2019 is derived from audited financial statements. In the opinion of management, all adjustments, consisting of normal recurring adjustments necessary for fair statement of the Partnership’s financial position have been included. Management has made certain estimates and assumptions that affect reported amounts in the 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 (“SEC”) 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 Partnership’s audited consolidated financial statements and notes thereto included in the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2019 (“2019 Annual Report”).
2019 Delaware Acquisition. On November 1, 2019, the Partnership entered into an agreement with Oasis Petroleum, pursuant to which Oasis Petroleum, through OMS (the “Delaware Predecessor”), agreed to assign to Panther DevCo, certain crude oil gathering and produced and flowback water gathering and disposal assets in the Delaware Basin (the “2019 Delaware Acquisition”). The 2019 Delaware Acquisition was accounted for as a transfer of net assets between entities under common control. As a result, the unaudited condensed consolidated financial statements for the period prior to the effective date of November 1, 2019 have been recast. These unaudited condensed consolidated financial statements include the results of the Delaware Predecessor for the three months ended March 31, 2019, which was prepared from Oasis Petroleum’s historical cost-basis accounts and may not necessarily be indicative of the actual results had the Partnership owned the assets during the reported period.
Consolidation
The Partnership’s condensed consolidated financial statements include its accounts and the accounts of the DevCos, each of which is controlled by OMP GP LLC (the “General Partner”). All intercompany balances and transactions have been eliminated upon consolidation.
Variable interest entity. The Partnership determined that Bobcat DevCo is a variable interest entity (“VIE”), since OMS’s equity at risk was established with non-substantive voting rights. As the Partnership has the authority to direct the activities that most significantly affect the economic performance of Bobcat DevCo, the Partnership is considered the primary beneficiary and consolidates Bobcat DevCo in its financial statements under the VIE consolidation model.
The Partnership determined that Bighorn DevCo, Beartooth DevCo and Panther DevCo are not VIEs and consolidates these entities in its financial statements under the voting interest consolidation model.
Non-controlling interests. The non-controlling interests represent OMS’s retained ownership interests in Bobcat DevCo and Beartooth DevCo of 64.7% and 30%, respectively, as of March 31, 2020.
Risks and Uncertainties
Concentrations of market and credit risk. The Partnership has limited direct exposure to risks associated with fluctuating commodity prices due to the nature of its business and its long-term, fixed-fee contractual arrangements with its existing customers, including Oasis Petroleum. However, to the extent that the Partnership’s future contractual arrangements with customers, including Oasis Petroleum or third parties, do not provide for fixed-fee structures, the Partnership may become subject to more substantial direct commodity price risk. In addition, in response to a prolonged low commodity price environment, the Partnership’s customers could seek to amend existing contractual arrangements to reduce the volumetric fees the Partnership charges.
Additionally, as a substantial majority of the Partnership’s revenues are derived from Oasis Petroleum, the Partnership is indirectly subject to risks associated with fluctuating commodity prices to the extent that lower commodity prices adversely affect Oasis Petroleum’s production, drilling schedule or financial condition. The markets for crude oil, natural gas and NGLs have been volatile, especially over the last several months and years. In recent weeks, crude oil and NGL prices have weakened to historical lows as a result of the impacts of the recent actions of Saudi Arabia and Russia and the global novel coronavirus 2019 (“COVID-19”) pandemic. Based on the current commodity price environment, Oasis Petroleum has expressed substantial doubt about its ability to continue to operate as a going concern. The Partnership is largely dependent on Oasis Petroleum as its
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most significant customer, and financial distress at Oasis Petroleum could have a material adverse effect on the Partnership’s results of operations.
COVID-19. The Partnership considered the impact of the COVID-19 pandemic on the assumptions and estimates used by management in the unaudited condensed consolidated financial statements for the reporting periods presented. As a result of lower forecasted throughput volumes driven by the significant decline in commodity prices, the Partnership recognized material asset impairment charges as of March 31, 2020 (see Note 6 — Property, Plant and Equipment). Management’s estimates and assumptions were based on historical data and consideration of future market conditions. Given the uncertainty inherent in any projection, heightened by the possibility of unforeseen additional impacts from COVID-19, actual results may differ from the estimates and assumptions used, or conditions may change, which could affect amounts reported in the financial statements in the near term.
Significant Accounting Policies
There have been no material changes to the Partnership’s critical accounting policies and estimates from those disclosed in the 2019 Annual Report, other than as noted below.
Financial Instruments - Credit Losses. On January 1, 2020, the Partnership adopted Accounting Standards Update No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which replaces the incurred loss impairment methodology with a methodology that reflects estimated credit losses expected over the life of an exposure and requires consideration of historical data, current market conditions and reasonable and supportable forecasts to develop credit loss estimates. In accordance with ASU 2016-13, the Partnership uses the expected credit loss methodology to measure impairment of financial instruments, including accounts receivable, which may result in earlier recognition of credit losses than under previous GAAP. ASU 2016-13 does not apply to receivables between entities under common control. The adoption of ASU 2016-13 did not have a material impact on the Partnership's financial position, cash flows or results of operations.
Recent Accounting Pronouncements
Reference Rate Reform. In March 2020, the Financial Accounting Standards Board 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”). The amendments provide optional guidance for a limited time to ease the potential burden in accounting for reference rate reform. The new guidance provides optional expedients and exceptions for applying GAAP guidance to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts and hedging relationships that reference the London Interbank Offered Rate or another reference rate expected to be discontinued due to reference rate reform. These amendments are effective immediately and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022. The Partnership is currently evaluating its contracts and the optional expedients provided by ASU 2020-04 and the impact the new standard will have on its condensed consolidated financial statements and related disclosures.
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3. Revenue Recognition
Disaggregation of revenues
The following table presents revenues associated with contracts with customers for the periods presented:
Three Months Ended March 31,
2020
2019(1)
(In thousands)
Service revenues
Crude oil and natural gas revenues$53,977  $48,617  
Produced and flowback water revenues31,862  29,572  
Total service revenues85,839  78,189  
Product revenues
Natural gas and NGL revenues14,436  10,218  
Freshwater revenues6,352  5,445  
Total product revenues20,788  15,663  
Total revenues$106,627  $93,852  
___________________
(1)Retrospectively adjusted for the transfer of net assets between entities under common control.
Prior period performance obligations
The Partnership records revenue when the performance obligations under the terms of its customer contracts are satisfied. The Partnership measures the satisfaction of its performance obligations using the output method based upon the volume of crude oil, natural gas or water that flows through its systems. In certain cases, the Partnership 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. Such differences have historically not been significant. For the three months ended March 31, 2020 and 2019, revenue recognized related to performance obligations satisfied in prior reporting periods was not material.
Contract balances
Contract balances are the result of timing differences between revenue recognition, billings and cash collections. Contract liabilities are recorded for consideration received from customers primarily related to (i) temporary deficiency quantities under minimum volume commitments which are recognized as revenue when the customer makes up the volumes or the deficiency makeup period expires and (ii) aid in construction payments received from customers which are recognized as revenue over the expected period of future benefit. The Partnership does not recognize contract assets or contract liabilities under its customer contracts for which invoicing occurs once the Partnership’s performance obligations have been satisfied and payment is unconditional. Contract liabilities are classified as current or long-term based on the timing of when the Partnership expects to recognize revenue.
The following table summarizes the changes in contract liabilities for the three months ended March 31, 2020:

(In thousands)
Balance at December 31, 2019
$3,681  
Cash received  
Revenue recognized(147) 
Balance at March 31, 2020
$3,534  
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Remaining performance obligations
The following table presents estimated revenue allocated to remaining performance obligations for contracted revenues that are unsatisfied (or partially satisfied) as of March 31, 2020:
(In thousands)
2020 (excluding three months ended March 31, 2020)
$12,403  
202118,580  
202218,301  
202312,624  
202411,874  
Thereafter2,768  
Total$76,550  
The partially and wholly unsatisfied performance obligations presented in the table above are generally limited to customer contracts which have fixed pricing and fixed volume terms and conditions, which generally include customer contracts with minimum volume commitment payment obligations.
The Partnership has elected practical expedients, pursuant to Accounting Standards Codification 606, Revenue from Contracts with Customers, to exclude from the presentation of remaining performance obligations: (i) contracts with index-based pricing or variable volume attributes in which such variable consideration is allocated entirely to a wholly unsatisfied performance obligation or to a wholly unsatisfied promise to transfer a distinct service that forms part of a series of distinct services and (ii) contracts with an original expected duration of one year or less.
4. Transactions with Affiliates
Revenues. The Partnership generates the majority of its revenues through 15-year, fee-based contractual arrangements with wholly-owned subsidiaries of Oasis Petroleum for midstream services as described in Note 1 — Organization and Nature of Operations. In addition, the Partnership sells the residue gas and NGLs recovered from its gas processing plants attributable to its third party natural gas purchase agreements to Oasis Petroleum to market and sell to non-affiliated purchasers.
Oasis Petroleum has expressed substantial doubt about its ability to continue to operate as a going concern, and financial distress at Oasis Petroleum could have a material adverse effect on the Partnership’s results of operations (see Note 2 — Summary of Significant Accounting Policies).
Expenses. Oasis Petroleum provides substantial labor and overhead support for the Partnership pursuant to a 15-year services and secondment agreement. Oasis Petroleum performs centralized corporate, general and administrative services for the Partnership, such as legal, corporate recordkeeping, planning, budgeting, regulatory, accounting, billing, business development, treasury, insurance administration and claims processing, risk management, health, safety and environmental, information technology, human resources, investor relations, cash management and banking, payroll, internal audit, tax and engineering. Oasis Petroleum has also seconded to the Partnership certain of its employees to operate, construct, manage and maintain its assets. The Partnership reimburses Oasis Petroleum for direct and allocated general and administrative expenses incurred by Oasis Petroleum for the provision of these services. The expenses of executive officers and non-executive employees of Oasis Petroleum are allocated to the Partnership based on the amount of time spent managing its business and operations. The Partnership’s general and administrative expenses include $7.6 million and $7.8 million from affiliate transactions with Oasis Petroleum for the three months ended March 31, 2020 and 2019, respectively.
Additionally, for the periods prior to the 2019 Delaware Acquisition, interest expense was recognized by the Delaware Predecessor related to its funding activity with Oasis Petroleum based on capital expenditures for the period using the weighted average effective interest rate for Oasis Petroleum’s long-term indebtedness. The Delaware Predecessor recognized an immaterial amount of interest expense, net of capitalized interest, during the three months ended March 31, 2019.
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5. Accrued Liabilities
Accrued liabilities consist of the following:
March 31, 2020December 31, 2019
(In thousands)
Accrued capital costs$25,982  $33,105  
Accrued operating expenses11,629  12,149  
Other accrued liabilities241  4,956  
Total accrued liabilities$37,852  $50,210  

6. Property, Plant and Equipment
Property, plant and equipment consists of the following:
March 31, 2020December 31, 2019
(In thousands)
Pipelines$535,689  $523,576  
Natural gas processing plants298,918  296,609  
Produced and flowback water facilities123,886  121,797  
Compressor stations158,681  143,276  
Other property and equipment34,505  34,231  
Construction in progress28,512  36,014  
Total property, plant and equipment1,180,191  1,155,503  
Less: accumulated depreciation, amortization and impairment(210,918) (98,982) 
Total property, plant and equipment, net$969,273  $1,056,521  
Long-lived asset impairment. Property, plant and equipment is stated at the lower of historical cost less accumulated depreciation or fair value if impaired. The Partnership routinely evaluates the existence of triggering events which could indicate the carrying amount of its property, plant and equipment may not be recoverable. Impairment indicators include, but are not limited to, sustained decreases in commodity prices, a decline in customer well results and lower throughput forecasts, changes in customer development plans and/or increases in construction or operating costs. The Partnership determined that lower forecasted throughput volumes, resulting from changes to customers’ development plans due to expected sustained significant decreases in commodity prices, which began during the first quarter of 2020, was an impairment indicator that required an assessment of the carrying amount of its asset groups for recoverability.
As of March 31, 2020, the Partnership completed a Step 1 impairment analysis by comparing the undiscounted future cash flows to the carrying amounts for each of its crude oil, natural gas, freshwater and produced and flowback water asset groups in the Williston Basin and the Delaware Basin. The Partnership determined the carrying amounts of its crude oil and freshwater asset groups in the Williston Basin and its crude oil and produced and flowback water asset groups in the Delaware Basin were not recoverable. Accordingly, the Partnership recorded impairment charges of $101.8 million. In the Williston Basin, the Partnership recorded an impairment charge of $35.8 million related to its crude oil asset group and $33.1 million related to its freshwater asset group. In the Delaware Basin, the Partnership recorded an impairment charge of $17.9 million related to its crude oil asset group and $15.0 million related to its produced and flowback water asset group. If commodity prices continue to decline or remain at depressed levels for a prolonged period of time, if there are shut-ins of production from the Partnership’s customers’ existing producing wells or if there are significant changes in the future development plans of the Partnership’s customers, including Oasis Petroleum, to the extent they affect the Partnership’s operations, such circumstances may necessitate assessment of the carrying amount of the Partnership’s affected assets for recoverability and may result in additional impairment charges in the future. If the United States oil and gas industry continues to experience an imbalance of supply and demand as it endured during the first quarter of 2020, it is likely that the Partnership’s operations will be so affected and future impairment charges will be incurred.
Fair value measurements. Impairment expense was measured as the excess of the asset group’s carrying amount over its estimated fair value. Fair value was measured using a discounted cash flow model using Level 3 inputs. The inputs used are subject to management’s judgment and expertise and include, but are not limited to, estimated throughput volumes, estimated fixed and variable operating costs, estimated capital costs, estimated useful life of the asset group and discount rate. The estimated future cash flows were discounted at a market-based weighted average cost of capital of 10.4%. Fair value
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determinations require considerable judgment and are sensitive to changes in underlying assumptions and factors. As a result, there can be no assurance that the estimates and assumptions made for purposes of the impairment analysis will prove to be an accurate prediction of the future.
7. Long-Term Debt
The Partnership has a revolving credit facility among OMP Operating LLC (“OMP Operating”) as borrower, Wells Fargo Bank, N.A., as Administrative Agent (the “Administrative Agent”) and the lenders party thereto (as amended, the “Revolving Credit Facility”), which matures on September 25, 2022. The Revolving Credit Facility is available to fund working capital and to finance acquisitions and other capital expenditures of the Partnership. As of March 31, 2020, the aggregate commitments under the Revolving Credit Facility were $575.0 million.
At March 31, 2020, the Partnership had $487.5 million of borrowings outstanding under the Revolving Credit Facility, at a weighted average interest rate of 2.9%, excluding impacts of an additional interest charge pursuant to the Limited Waiver (defined below), and an outstanding letter of credit of $1.7 million, resulting in unused borrowing capacity of $85.8 million. At December 31, 2019, the Partnership had $458.5 million of borrowings outstanding under the Revolving Credit Facility, at a weighted average interest rate of 3.8%, and an outstanding letter of credit of $1.7 million.
The unused portion of the Revolving Credit Facility is subject to a commitment fee ranging from 0.375% to 0.500%. The fair value of the Revolving Credit Facility approximates book value since borrowings under the Revolving Credit Facility bear interest at rates which are tied to current market rates.
The Partnership was in compliance with the covenants under the Revolving Credit Facility at March 31, 2020, except as follows. As a result of ongoing internal oversight processes, the Partnership identified that a Control Agreement (as defined in the Revolving Credit Facility) had not been executed for a certain bank account (the “JPM Account”) held at JPMorgan Chase Bank, N.A. (“JPMorgan”), who is a lender under the Revolving Credit Facility. The Control Agreement serves to establish a lien in favor of the lenders under the Revolving Credit Facility with respect to the JPM Account. On May 11, 2020, the Partnership executed a Control Agreement with both the Administrative Agent and JPMorgan, thereby completing the documentation required under the Revolving Credit Facility. Despite the Control Agreement’s execution, the failure to have had it in place before the JPM Account was initially funded with cash represents a past Event of Default (as defined in the Revolving Credit Facility). On May 15, 2020, the Partnership entered into a limited waiver (the “Limited Waiver”) of this past Event of Default with the Majority Lenders (as defined in the Revolving Credit Facility), which provides forbearance of additional interest owed arising from this past Event of Default until the earlier of (i) November 10, 2020 and (ii) an Event of Default. Pursuant to the Limited Waiver, the Partnership recorded an additional interest charge of $25.9 million in the unaudited condensed consolidated financial statements as of March 31, 2020.
8. Inventory
Inventory consists primarily of spare parts and equipment related to midstream infrastructure. Inventory is stated at the lower of cost and net realizable value with cost determined on an average cost method. The Partnership assesses the carrying value of inventory and uses estimates and judgment when making any adjustments necessary to reduce the carrying value to net realizable value. The carrying value of the Partnership’s inventory was $5.3 million at March 31, 2020. The Partnership had no inventory at December 31, 2019.
9. Commitments and Contingencies
The Partnership has various contractual obligations in the normal course of its operations. Included below is a description of the Partnership’s various future commitments as of March 31, 2020.
Volume commitment agreements. As of March 31, 2020, the Partnership had certain agreements with an aggregate requirement to either deliver or purchase a minimum quantity of approximately 9.9 million barrels of water, prior to any applicable volume credits, within specified timeframes, all of which are ten years or less. The estimable future commitments under these agreements were approximately $6.1 million as of March 31, 2020. The commitments under these arrangements are not recorded in the accompanying Condensed Consolidated Balance Sheet as of March 31, 2020.
Subsequent to March 31, 2020, the Partnership entered into new agreements to deliver, transport or purchase crude oil volumes within specified timeframes, all of which are ten years or less. The estimable future commitments under these volume commitment agreements were approximately $13.2 million.
Litigation. The Partnership is party to various legal and/or regulatory proceedings from time to time arising in the ordinary course of business. When the Partnership determines that a loss is probable of occurring and is reasonably estimable, the Partnership accrues an undiscounted liability for such contingencies based on its best estimate using information available at the time. The Partnership discloses contingencies where an adverse outcome may be material, or where in the judgment of management, the matter should otherwise be disclosed.
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Mirada litigation. On March 23, 2017, Mirada Energy, LLC, Mirada Wild Basin Holding Company, LLC and Mirada Energy Fund I, LLC (collectively, “Mirada”) filed a lawsuit against Oasis Petroleum, Oasis Petroleum North America LLC (“OPNA”), and OMS, seeking monetary damages in excess of $100 million, declaratory relief, attorneys’ fees and costs (Mirada Energy, LLC, et al. v. Oasis Petroleum North America LLC, et al.; in the 334th Judicial District Court of Harris County, Texas; Case Number 2017-19911). Mirada asserts that it is a working interest owner in certain acreage owned and operated by Oasis Petroleum in Wild Basin. Specifically, Mirada asserts that Oasis Petroleum has breached certain agreements by: (1) failing to allow Mirada to participate in Oasis Petroleum’s midstream operations in Wild Basin; (2) refusing to provide Mirada with information that Mirada contends is required under certain agreements and failing to provide information in a timely fashion; (3) failing to consult with Mirada and failing to obtain Mirada’s consent prior to drilling more than one well at a time in Wild Basin; and (4) overstating the estimated costs of proposed well operations in Wild Basin. Mirada seeks a declaratory judgment that Oasis Petroleum be removed as operator in Wild Basin at Mirada’s election and that Mirada be allowed to elect a new operator; certain agreements apply to Oasis Petroleum and Mirada and Wild Basin with respect to this dispute; Oasis Petroleum be required to provide all information within its possession regarding proposed or ongoing operations in Wild Basin; and Oasis Petroleum not be permitted to drill, or propose to drill, more than one well at a time in Wild Basin without obtaining Mirada’s consent. Mirada also seeks a declaratory judgment with respect to Oasis Petroleum’s current midstream operations in Wild Basin. Specifically, Mirada seeks a declaratory judgment that Mirada has a right to participate in Oasis Petroleum’s Wild Basin midstream operations, consisting of produced and flowback water disposal, crude oil gathering and natural gas gathering and processing; that, upon Mirada’s election to participate, Mirada is obligated to pay its proportionate costs of Oasis Petroleum’s midstream operations in Wild Basin; and that Mirada would then be entitled to receive a share of revenues from the midstream operations and would not be charged any amount for its use of these facilities for production from the “Contract Area.”
On June 30, 2017, Mirada amended its original petition to add a claim that Oasis Petroleum has breached certain agreements by charging Mirada for midstream services provided by its affiliates and to seek a declaratory judgment that Mirada is entitled to be paid its share of total proceeds from the sale of hydrocarbons received by OPNA or any affiliate of OPNA without deductions for midstream services provided by OPNA or its affiliates.
On February 2, 2018 and February 16, 2018, Mirada filed a second and third amended petition, respectively. In these filings, Mirada alleged new legal theories for being entitled to enforce the underlying contracts, and added Bighorn DevCo, Bobcat DevCo and Beartooth DevCo as defendants, asserting that these entities were created in bad faith in an effort to avoid contractual obligations owed to Mirada.
On March 2, 2018, Mirada filed a fourth amended petition that described Mirada’s alleged ownership and assignment of interests in assets purportedly governed by agreements at issue in the lawsuit. On August 31, 2018, Mirada filed a fifth amended petition that added the Partnership as a defendant, asserting that it was created in bad faith in an effort to avoid contractual obligations owed to Mirada.
On July 2, 2019, Oasis Petroleum, OPNA, OMS, the Partnership, Bighorn DevCo, Bobcat DevCo and Beartooth DevCo (collectively “Oasis Entities”) counterclaimed against Mirada for a judgment declaring that Oasis Entities are not obligated to purchase, manage, gather, transport, compress, process, market, sell or otherwise handle Mirada’s proportionate share of oil and gas produced from OPNA-operated wells. The counterclaim also seeks attorney’s fees, costs and expenses.
On November 1, 2019, Mirada filed a sixth amended petition that stated that Mirada seeks in excess of $200 million in damages and asserted that OMS is an agent of OPNA and OPNA, OMS, the Partnership, Bighorn DevCo, Bobcat DevCo and Beartooth DevCo are agents of Oasis Petroleum. Mirada also changed its allegation that it may elect a new operator for the subject wells to instead allege that Mirada may remove Oasis Petroleum as operator.
On November 1, 2019, the Oasis Entities amended their counterclaim against Mirada for a judgment declaring that a provision in one of the agreements does not incorporate by reference any provisions in a certain participation agreement and joint operating agreement. The additional counterclaim also seeks attorney’s fees, costs and expenses. On the same day, the Oasis Entities filed an amended answer asserting additional defenses against Mirada’s claims.
On March 13, 2020, Mirada filed a seventh amended petition that did not assert any new causes of action and did not add any new parties. Mirada did add an allegation that Oasis Petroleum breached its implied duty of good faith and fair dealing with respect to certain contracts.
On April 30, 2020, Mirada abandoned its prior claims related to overstating the estimated costs of proposed well operations in Wild Basin. At this point, it is unclear what impact this has on damages because Mirada asserts that its information and failure to consult and obtain consent claims result in the same damages as its abandoned estimated costs claim.
Oasis Petroleum and the Partnership believe that Mirada’s claims are without merit, that Oasis Petroleum has complied with its obligations under the applicable agreements and that some of Mirada’s claims are grounded in agreements that do not apply to Oasis Petroleum. Oasis Petroleum filed answers denying all of Mirada’s claims and intends and continues to vigorously defend against Mirada’s claims.
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Discovery is ongoing, and each of the parties has made a number of procedural filings and motions, and additional filings and motions can be expected over the course of the claim. Trial is scheduled for October 2020. Neither the Partnership nor Oasis Petroleum can predict or guarantee the ultimate outcome or resolution of such matter. If such matter were to be determined adversely to the Partnership’s or Oasis Petroleum’s interests, or if the Partnership or Oasis Petroleum were forced to settle such matter for a significant amount, such resolution or settlement could have a material adverse effect on the Partnership's business, financial condition, results of operations and cash flows. Such an adverse determination could materially impact Oasis Petroleum’s ability to operate its properties in Wild Basin or develop its identified drilling locations in Wild Basin on its current development schedule. A determination that Mirada has a right to participate in Oasis Petroleum’s midstream operations could materially reduce the interests of Oasis Petroleum and the Partnership in the Partnership’s current assets and future midstream opportunities and related revenues in Wild Basin. Under the Omnibus Agreement the Partnership entered into with Oasis Petroleum in connection with the closing of the initial public offering, Oasis Petroleum agreed to indemnify the Partnership for any losses resulting from this litigation. However, the Partnership cannot guarantee that such indemnity will fully protect the Partnership from the adverse consequences of any adverse ruling.
Solomon litigation. On or about August 28, 2019, Oasis Petroleum LLC, a wholly-owned subsidiary of Oasis Petroleum (“OP LLC”), was named as a defendant in the lawsuit styled Andrew Solomon, on behalf of himself and those similarly situated vs. Oasis Petroleum, LLC, pending in the United States District Court for the District of North Dakota. The lawsuit alleged violations of the federal Fair Labor Standards Act (the “FLSA”) and Title 29 of the North Dakota Century Code (“Title 29”) as the result of OP LLC’s alleged practice of paying the plaintiff and similarly situated current and former employees overtime at rates less than required by applicable law, or failing to pay for certain overtime hours worked. The lawsuit requested that: (i) its federal claims be advanced as a collective action, with a class of all operators, technicians and all other employees in substantially similar positions employed by OP LLC who were paid hourly for at least one week during the three year period prior to the commencement of the lawsuit, who worked 40 or more hours in at least one workweek and/or eight or more hours on at least one workday; and (ii) its state claims be advanced as a class action, with a class of all operators, technicians, and all other employees in substantially similar positions employed by OP LLC in North Dakota during the two year period prior to the commencement of the lawsuit, who worked 40 or more hours in at least one workweek and/or worked eight or more hours in a day on at least one workday. No motion has been filed for class certification, and the Partnership cannot predict whether such motion will be filed or a class certified.
Oasis Petroleum believes that Mr. Solomon’s claims are without merit and that OP LLC has complied with its obligations under the FLSA and Title 29. OP LLC has filed an answer denying all of Mr. Solomon’s claims and intends to vigorously defend against the claims. The Partnership cannot predict or guarantee the ultimate outcome or resolutions of such matter. If such matter were to be determined adversely to Oasis Petroleum’s interests, or if Oasis Petroleum were forced to settle such matter for a significant amount, such resolution or settlement could have a material adverse effect on the Partnership’s business, financial condition, results of operations or cash flows.
10. Equity-Based Compensation
The Oasis Midstream Partners LP 2017 Long Term Incentive Plan (“LTIP”) provides for the grant, at the discretion of the Board of Directors of the General Partner, of options, unit appreciation rights, restricted units, phantom units, and other unit or cash-based awards. The purpose of awards under the LTIP is to provide additional incentive compensation to individuals providing services to the Partnership and to align the economic interests of such individuals with the interests of the Partnership’s unitholders. As of March 31, 2020, the aggregate number of common units that may be issued pursuant to any and all awards under the LTIP was equal to 2,793,360 common units.
Restricted unit awards. The Partnership has granted to independent directors of the General Partner restricted unit awards under the LTIP, which vest over a one year period. These awards are accounted for as equity-classified awards since the awards will settle in common units upon vesting. Equity-based compensation expense is accounted for under the fair value method in accordance with GAAP. Under the fair value method for equity-classified awards, equity-based compensation expense is measured at the grant date based on the fair value of the award and is recognized over the vesting period.
During the three months ended March 31, 2020, the Partnership granted 16,170 restricted unit awards to certain independent directors at a weighted-average grant date fair value of $16.69 per common unit, which vest over a one year period. The Partnership recorded equity-based compensation expense of $0.1 million for each of the three months ended March 31, 2020 and 2019, which is included in general and administrative expenses on the Partnership’s Condensed Consolidated Statements of Operations. As of March 31, 2020, unrecognized equity-based compensation expense for outstanding restricted unit awards was $0.2 million, which is expected to be recognized over a weighted average period of 0.8 years.
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11. Partnership Equity and Distributions
The following table details the distributions paid in respect of each period in which the distributions were earned for the following periods:
Distributions
Limited PartnersGeneral Partner
PeriodRecord DateDistribution DateDistribution per limited partner unitCommon unitsSubordinated unitsIDRs
(In thousands)
Q1 2019May 17, 2019May 29, 2019$0.470$9,421  $6,463  $238  
Q2 2019August 16, 2019August 28, 2019$0.4909,822  6,738  463  
Q3 2019November 15, 2019November 27, 2019$0.51510,323  7,081  745  
Q4 2019February 13, 2020February 27, 2020$0.54010,833  7,425  1,027  
Cash distributions. On May 18, 2020, the Board of Directors of the General Partner declared the quarterly cash distribution for the first quarter of 2020 of $0.540 per unit. This distribution will be payable on June 8, 2020, to unitholders of record as of May 28, 2020. In addition, the General Partner will receive a cash distribution of $1.0 million attributable to the incentive distribution rights (“IDRs”) related to the earnings for the first quarter of 2020.
Incentive distribution rights. The General Partner owns all of the Partnership’s IDRs, which will entitle it to increasing percentages, up to a maximum of 50.0%, of the cash the Partnership distributes in excess of $0.4313 per unit per quarter. The maximum distribution of 50.0% does not include any distributions that Oasis Petroleum may receive on common units or subordinated units that it owns.
12. Earnings (Loss) Per Limited Partner Unit
Earnings (loss) per limited partner unit is computed by dividing the respective limited partners’ interest in earnings (loss) attributable to the Partnership by the weighted average number of common and subordinated units outstanding. Because there is more than one class of participating securities, the Partnership uses the two-class method when calculating earnings (loss) per limited partner unit. The classes of participating securities include common units, subordinated units and IDRs.
Diluted earnings (loss) per limited partner unit reflects the potential dilution that could occur if securities or agreements to issue common units, such as awards under the LTIP, were exercised, settled or converted into common units. When it is determined that potential common units should be included in diluted net income (loss) per limited partner unit calculation, the impact is reflected by applying the treasury stock method. There are no adjustments made to net income (loss) attributable to Oasis Midstream Partners LP in the calculation of diluted earnings (loss) per unit. Diluted weighted average limited partner units outstanding includes the dilutive effect of unvested restricted unit awards (see Note 10 — Equity-Based Compensation). For the three months ended March 31, 2020, the Partnership incurred a net loss, and therefore the diluted loss per share calculation for the period excludes the anti-dilutive effect of unvested restricted unit awards.
The following is a calculation of the basic and diluted weighted average units outstanding for the periods presented:
Three Months Ended March 31,
20202019
(In thousands)
Basic weighted average common units outstanding20,041  20,016  
Dilutive effect of restricted awards  17  
Diluted weighted average common units outstanding20,041  20,033  
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The following tables present the calculation of earnings (loss) per limited partner unit under the two-class method for each period presented:
Three Months Ended March 31, 2020
General PartnerLimited Partners
IDRsCommon unitsSubordinated unitsTotal
(In thousands, except per unit data)
Net income (loss) attributable to Oasis Midstream Partners LP
Distribution declared$1,027  $10,833  $7,425  $19,285  
Undistributed loss attributable to Oasis Midstream Partners LP  (53,784) (36,900) (90,684) 
Net income (loss) attributable to Oasis Midstream Partners LP$1,027  $(42,951) $(29,475) $(71,399) 
Weighted average limited partners units outstanding
Basic20,041  
Diluted20,041  
Net loss attributable to Oasis Midstream Partners LP per limited partner unit
Basic$(2.14) 
Diluted(2.14) 
Anti-dilutive restricted units10  

Three Months Ended March 31, 2019
General PartnerLimited Partners
IDRsCommon unitsSubordinated unitsTotal