Chord Energy (CHRD) - 2021 Q1 - Quarterly Report

PART I — FINANCIAL INFORMATION Item 1. — Financial Statements (Unaudited) The unaudited condensed consolidated financial statements and accompanying notes detail the company's financial position and performance Condensed Consolidated Balance Sheets The balance sheets reflect an increase in total assets driven by cash and a rise in total liabilities from derivative instruments | Metric | March 31, 2021 (thousands) | December 31, 2020 (thousands) | | :--- | :--- | :--- | | Cash and cash equivalents | $113,054 | $15,856 | | Total current assets | $422,523 | $271,617 | | Total assets | $2,297,178 | $2,159,037 | | Derivative instruments (current liabilities) | $156,450 | $56,944 | | Total liabilities | $1,335,175 | $1,146,298 | | Total stockholders' equity | $962,003 | $1,012,739 | Condensed Consolidated Statements of Operations Operating income improved and net loss was reduced in Q1 2021 compared to Q1 2020, driven by lower impairment charges | Metric | Three Months Ended March 31, 2021 (Successor, thousands) | Three Months Ended March 31, 2020 (Predecessor, thousands) | | :--- | :--- | :--- | | Total revenues | $355,459 | $387,798 | | Operating income (loss) | $150,835 | $(4,862,528) | | Impairment | $3 | $4,823,678 | | Net loss attributable to Oasis | $(43,592) | $(4,310,861) | | Basic (Loss) Per Share | $(2.18) | $(13.61) | | Diluted (Loss) Per Share | $(2.18) | $(13.61) | Condensed Consolidated Statements of Changes in Stockholders' Equity (Deficit) Total equity decreased for the Successor period due to net loss and dividends, contrasting with a large deficit in the Predecessor period | Metric | As of December 31, 2020 (Successor, thousands) | As of March 31, 2021 (Successor, thousands) | | :--- | :--- | :--- | | Total Stockholders' Equity | $1,012,739 | $962,003 | | Net income (loss) | N/A | $(35,265) | | Dividends to shareholders | N/A | $(7,535) | | Metric | As of December 31, 2019 (Predecessor, thousands) | As of March 31, 2020 (Predecessor, thousands) | | :--- | :--- | :--- | | Total Stockholders' Equity | $3,837,081 | $(499,172) | | Net loss | N/A | $(4,334,275) | Condensed Consolidated Statements of Cash Flows Net cash from operating activities increased significantly while cash used in investing activities decreased in Q1 2021 | Metric | Three Months Ended March 31, 2021 (Successor, thousands) | Three Months Ended March 31, 2020 (Predecessor, thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $190,413 | $107,775 | | Net cash used in investing activities | $(41,868) | $(130,768) | | Net cash provided by (used in) financing activities | $(55,717) | $136,976 | | Increase in cash and cash equivalents | $92,828 | $113,983 | Notes to Condensed Consolidated Financial Statements These notes detail the company's business, accounting policies, revenue, debt, equity, and the Williston Acquisition 1. Organization and Operations of the Company Oasis Petroleum is an E&P company focused on unconventional oil and gas in the Williston and Permian Basins - Oasis Petroleum Inc. is an independent E&P company focused on onshore, unconventional crude oil and natural gas resources in the United States, specifically in the Williston Basin and Permian Basin[23] - The Company also operates a midstream business segment through Oasis Midstream Partners LP (OMP), a consolidated subsidiary[23] 2. Summary of Significant Accounting Policies Fresh start accounting post-bankruptcy emergence affects comparability, and the Midstream Simplification was completed in March 2021 - The unaudited condensed consolidated financial statements are not comparable to prior periods due to the adoption of fresh start accounting on November 19, 2020[24][26] - On March 30, 2021, the Company completed the Midstream Simplification, contributing its remaining interests in Bobcat DevCo and Beartooth DevCo to OMP[24] - As a result of the Midstream Simplification, the Company now owns approximately 77% limited partner interest in OMP[24] Risks and Uncertainties Financial performance is highly dependent on volatile crude oil and natural gas prices influenced by external factors - The Company's revenue, profitability, and future growth are substantially dependent upon volatile crude oil and natural gas prices[27] Cash Equivalents and Restricted Cash Cash and cash equivalents increased significantly to $113.1 million, while restricted cash was reduced to zero | Metric | March 31, 2021 (thousands) | December 31, 2020 (thousands) | | :--- | :--- | :--- | | Cash and cash equivalents | $113,054 | $15,856 | | Restricted cash | $— | $4,370 | Significant Accounting Policies No material changes were made to critical accounting policies and estimates from the 2020 Annual Report - No material changes to the Company's critical accounting policies and estimates from those disclosed in the 2020 Annual Report[29] Recent Accounting Pronouncements The company is evaluating the impact of ASU 2020-04, Reference Rate Reform, related to the discontinuation of LIBOR - The Company is evaluating ASU 2020-04, Reference Rate Reform, for its impact on financial statements and disclosures related to the discontinuation of LIBOR[30] 3. Revenue Recognition This note details revenue recognition for E&P and midstream segments, including contract liabilities and performance obligations E&P Revenues | Metric | Three Months Ended March 31, 2021 (Successor, thousands) | Three Months Ended March 31, 2020 (Predecessor, thousands) | | :--- | :--- | :--- | | Crude oil revenues | $185,818 | $212,793 | | Natural gas and NGL revenues | $59,643 | $26,335 | | Total E&P revenues | $282,698 | $331,387 | Midstream Revenues | Metric | Three Months Ended March 31, 2021 (Successor, thousands) | Three Months Ended March 31, 2020 (Predecessor, thousands) | | :--- | :--- | :--- | | Total midstream service revenues | $29,635 | $38,172 | | Total midstream product revenues | $43,126 | $18,239 | | Total midstream revenues | $72,761 | $56,411 | Contract Liabilities | Metric | As of December 31, 2020 (Successor, thousands) | As of March 31, 2021 (Successor, thousands) | | :--- | :--- | :--- | | Balance | $3,966 | $3,884 | - Remaining performance obligations for fixed pricing and fixed volume contracts totaled $54.8 million as of March 31, 2021[38] 4. Inventory Total inventory, valued at the lower of cost and net realizable value, decreased slightly from year-end 2020 | Metric | March 31, 2021 (thousands) | December 31, 2020 (thousands) | | :--- | :--- | :--- | | Equipment and materials | $23,713 | $25,103 | | Crude oil inventory | $5,710 | $8,826 | | Total inventory | $29,423 | $33,929 | | Linefill in third party pipelines | $15,805 | $14,522 | | Total | $45,228 | $48,451 | 5. Accounts Receivable Total net accounts receivable increased to $268.8 million, primarily driven by an increase in trade accounts | Metric | March 31, 2021 (thousands) | December 31, 2020 (thousands) | | :--- | :--- | :--- | | Trade accounts | $221,594 | $161,519 | | Joint interest accounts | $33,665 | $31,920 | | Other accounts | $13,684 | $13,206 | | Total accounts receivable | $268,943 | $206,645 | | Less: allowance for credit losses | $(125) | $(106) | | Total accounts receivable, net | $268,818 | $206,539 | 6. Fair Value Measurements The company measures financial assets and liabilities at fair value, primarily classifying commodity derivatives as Level 2 Commodity Derivative Instruments (Liabilities) | Metric | March 31, 2021 (thousands) | December 31, 2020 (thousands) | | :--- | :--- | :--- | | Total liabilities | $253,010 | $94,558 | - The fair values of commodity derivative instruments are primarily classified as Level 2 measurements, based on third-party valuations using observable market data[46] - A credit adjustment was applied to reduce the fair value of net derivative liability by $10.2 million at March 31, 2021, and $4.3 million at December 31, 2020[46] 7. Derivative Instruments The company uses swaps and collars to manage commodity price risks, recognizing a significant net loss on derivatives in Q1 2021 - The Company utilizes fixed price swaps and collars to manage risks related to changes in crude oil and natural gas prices, with all derivative instruments recorded at fair value[49] Net Gain (Loss) on Derivative Instruments | Metric | Three Months Ended March 31, 2021 (Successor, thousands) | Three Months Ended March 31, 2020 (Predecessor, thousands) | | :--- | :--- | :--- | | Net gain (loss) on derivative instruments | $(181,515) | $285,322 | Outstanding Commodity Derivative Instruments (March 31, 2021) | Commodity | Settlement Period | Derivative Instrument | Volumes | | :--- | :--- | :--- | :--- | | Crude oil | 2021 | Fixed price swaps | 7,975,000 Bbl | | Crude oil | 2021 | Two-way collar | 459,000 Bbl | | Crude oil | 2022 | Fixed price swaps | 7,245,000 Bbl | | Crude oil | 2022 | Two-way collar | 636,000 Bbl | | Crude oil | 2023 | Fixed price swaps | 5,265,000 Bbl | | Crude oil | 2024 | Fixed price swaps | 434,000 Bbl | | Natural gas | 2021 | Fixed price swaps | 11,000,000 MMBtu | | Natural gas | 2022 | Fixed price swaps | 5,430,000 MMBtu | 8. Property, Plant and Equipment Net property, plant and equipment remained stable at $1.72 billion, with proved oil and gas properties as a major component | Metric | March 31, 2021 (thousands) | December 31, 2020 (thousands) | | :--- | :--- | :--- | | Proved oil and gas properties, net | $760,538 | $757,714 | | Other property and equipment, net | $918,751 | $930,862 | | Total property, plant and equipment, net | $1,719,549 | $1,728,787 | 9. Divestitures The sale of well services equipment in March 2021 resulted in a net loss of $0.1 million - On March 22, 2021, the Company completed the sale of certain well services equipment and inventory for cash proceeds of $2.6 million and a $2.9 million promissory note[55] - A net loss on sale of properties of $0.1 million was recognized for the three months ended March 31, 2021 (Successor)[55] - For the three months ended March 31, 2020 (Predecessor), a net gain on sale of properties of $11.5 million was recognized[55] 10. Long-Term Debt Total long-term debt decreased to $674.2 million, with changes to credit facilities and the issuance of OMP Senior Notes | Metric | March 31, 2021 (thousands) | December 31, 2020 (thousands) | | :--- | :--- | :--- | | Oasis Credit Facility | $— | $260,000 | | OMP Credit Facility | $234,000 | $450,000 | | OMP Senior Notes | $450,000 | $— | | Total long-term debt | $674,238 | $710,000 | - The Oasis Credit Facility's borrowing base decreased from $575.0 million to $500.0 million, and aggregate lender commitments decreased from $575.0 million to $450.0 million[57] - OMP issued $450.0 million of 8.00% senior unsecured notes due April 1, 2029, on March 30, 2021[62] 11. Asset Retirement Obligations Asset Retirement Obligations increased slightly to $49.6 million due to accretion expense | Metric | As of December 31, 2020 (Successor, thousands) | As of March 31, 2021 (Successor, thousands) | | :--- | :--- | :--- | | Balance | $48,594 | $49,630 | | Accretion expense | N/A | $1,032 | 12. Income Taxes The effective tax rate for Q1 2021 was 9.4%, impacted by a valuation allowance against deferred tax assets | Metric | Three Months Ended March 31, 2021 (Successor) | Three Months Ended March 31, 2020 (Predecessor) | | :--- | :--- | :--- | | Effective tax rate | 9.4% | 5.6% | - The valuation allowance increased by $4.9 million, from $565.4 million at December 31, 2020, to $570.3 million at March 31, 2021[67] 13. Equity-Based Compensation The company granted various equity-based awards under its 2020 LTIP and converted OMP GP Class B Units - During Q1 2021, the Company granted 399,861 RSUs, 139,935 PSUs, and 187,822 LSUs under its 2020 Long Term Incentive Plan[68][70] - Equity-based compensation expense for Q1 2021 included $0.6 million for RSUs, $0.3 million for PSUs, $0.4 million for LSUs, and $0.3 million for restricted stock awards[68][70] - On March 30, 2021, Class B Units in OMP GP were converted into restricted common units in OMP, with 34% vesting immediately and the remainder vesting over two years[71] 14. Stockholders' Equity The company declared a dividend and authorized a $100.0 million share-repurchase program in Q1 2021 - A dividend of $0.375 per share ($7.5 million) was declared on February 24, 2021, and paid on March 22, 2021[75] - The Board of Directors authorized a $100.0 million share-repurchase program in March 2021; no shares were purchased under this program during Q1 2021[75] - As of March 31, 2021, there were 1,621,538 warrants outstanding, exercisable at $94.57 per warrant until November 19, 2024[75] 15. Earnings (Loss) Per Share Basic and diluted weighted average shares were 20.0 million for Q1 2021, with a corrected loss per share of $(2.18) | Metric | Three Months Ended March 31, 2021 (Successor, thousands) | Three Months Ended March 31, 2020 (Predecessor, thousands) | | :--- | :--- | :--- | | Basic and diluted weighted average common shares outstanding | 20,000 | 316,828 | | Anti-dilutive weighted average common shares | 2,265 | 11,166 | - Basic and diluted loss per share for the three months ended March 31, 2021 (Successor) was corrected to $(2.18) from a previously reported $(2.20)[79] 16. Business Segment Information The E&P segment generated $103.2 million in operating income, while the midstream segment generated $48.7 million Successor (Three Months Ended March 31, 2021) | Metric | E&P (thousands) | Midstream (thousands) | | :--- | :--- | :--- | | Revenues from non-affiliates | $282,698 | $72,761 | | Operating income | $103,180 | $48,667 | Predecessor (Three Months Ended March 31, 2020) | Metric | E&P (thousands) | Midstream (thousands) | | :--- | :--- | :--- | | Revenues from non-affiliates | $331,387 | $56,411 | | Operating loss | $(4,817,255) | $(42,226) | 17. Commitments and Contingencies Material off-balance sheet arrangements include letters of credit and surety bonds, with an accrued litigation settlement - Material off-balance sheet arrangements include $6.8 million in outstanding letters of credit and $7.2 million in net surety bond exposure[83] - An accrual of $22.8 million remains for the Mirada litigation settlement as of March 31, 2021, following an initial $20.0 million payment[83] 18. Subsequent Events The company agreed to acquire 95,000 net acres in the Williston Basin for $745.0 million after the quarter ended - On May 3, 2021, the Company entered into an agreement to acquire approximately 95,000 net acres in the Williston Basin for $745.0 million cash[84] - The acquisition is expected to be financed through cash on hand, borrowings under the Oasis Credit Facility, and a $500.0 million fully-committed underwritten Bridge Facility[84] - The Oasis Credit Facility was amended on May 3, 2021, to allow for bridge loans, second liens, and remove certain restrictions to facilitate acquisitions[86] Item 2. — Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial performance, liquidity, capital resources, and recent developments for Q1 2021 CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This section warns that forward-looking statements are subject to risks like commodity price volatility and COVID-19 impacts - The report contains forward-looking statements subject to numerous risks and uncertainties, including commodity prices, global economic conditions, and the COVID-19 pandemic[90] - The Company disclaims any obligation to update or revise these statements unless required by securities law[92] Overview Oasis Petroleum is an independent E&P company operating in the Williston and Permian Basins with a midstream business - Oasis Petroleum Inc. is an independent E&P company focused on onshore, unconventional crude oil and natural gas resources in the Williston and Permian Basins[94] - The Company operates a midstream business through Oasis Midstream Partners LP (OMP), owning approximately 77% of OMP, and derives significant cash flows from this segment[94] Recent Developments Key developments include the Williston Acquisition agreement, a CEO change, and the completed Midstream Simplification - On May 3, 2021, Oasis agreed to acquire approximately 95,000 net acres in the Williston Basin for $745.0 million cash, with closing expected in July 2021[95] - Daniel E. Brown was appointed Chief Executive Officer on April 14, 2021[96] - The Midstream Simplification was completed on March 30, 2021, for $512.5 million consideration[98] - In response to COVID-19 impacts, the Company reduced its workforce by 15% during Q1 2021[99] Highlights Q1 2021 highlights include midstream simplification, a dividend declaration, a share-repurchase program, and strong operating cash flow - Completed simplification of midstream business and declared a Q1 2021 dividend of $0.375 per share[102] - Authorized a $100.0 million share-repurchase program[102] Q1 2021 Operational & Financial Highlights | Metric | Value | | :--- | :--- | | Production volumes (Boepd) | 57,205 (64% oil) | | E&P and other capital expenditures | $28.6 million | | E&P lease operating expense (LOE) | $9.92 per Boe | | Crude oil differentials | $1.58 discount to NYMEX WTI | | Net cash provided by operating activities | $190.4 million | | Adjusted EBITDA attributable to Oasis | $126.0 million | Results of Operations This section analyzes financial performance for Q1 2021, highlighting the impact of fresh start accounting and commodity prices Comparability Financial statements after November 19, 2020, are not comparable to prior periods due to fresh start accounting - Financial statements on or after November 19, 2020 are not comparable to prior periods due to the adoption of fresh start accounting[104] Revenues Total revenues were $355.5 million, with higher commodity prices offsetting lower production volumes compared to prior periods Total Revenues | Metric | Three Months Ended March 31, 2021 (Successor, thousands) | Three Months Ended March 31, 2020 (Predecessor, thousands) | | :--- | :--- | :--- | | Total revenues | $355,459 | $387,798 | Average Daily Production & Sales Prices | Metric | Three Months Ended March 31, 2021 (Successor) | Three Months Ended March 31, 2020 (Predecessor) | | :--- | :--- | :--- | | Total average daily production (Boepd) | 57,205 | 80,066 | | Average crude oil sales price (per Bbl) | $56.09 | $43.22 | | Average natural gas sales price (per Mcf) | $5.41 | $1.86 | - Crude oil and natural gas revenues increased $68.0 million quarter-over-quarter (Q1 2021 vs Q4 2020), primarily due to higher sales prices[109] - Compared to Q1 2020, crude oil and natural gas revenues increased $6.4 million, driven by higher sales prices offsetting lower production volumes[112] Expenses and other income (expenses) Total operating expenses were significantly lower than Q1 2020 due to reduced impairment, G&A, and DD&A expenses Operating Expenses and Other Income (Expenses) | Metric | Three Months Ended March 31, 2021 (Successor, thousands) | Three Months Ended March 31, 2020 (Predecessor, thousands) | | :--- | :--- | :--- | | Total operating expenses | $204,712 | $5,261,552 | | Operating income (loss) | $150,835 | $(4,862,528) | | Net gain (loss) on derivative instruments | $(181,515) | $285,322 | | Impairment | $3 | $4,823,678 | | General and administrative expenses | $20,737 | $31,174 | | Interest expense, net | $(8,697) | $(95,757) | - General and administrative (G&A) expenses decreased $20.9 million quarter-over-quarter (Q1 2021 vs Q4 2020) due to reduced compensation and a 15% decrease in headcount[119] - Compared to Q1 2020, G&A expenses decreased $10.4 million due to a 30% decrease in employee headcount[125] - Depreciation, depletion and amortization (DD&A) expenses decreased $163.8 million to $40.0 million compared to Q1 2020, due to a lower DD&A rate resulting from asset write-downs[123] Liquidity and Capital Resources Liquidity is driven by operating cash flows and debt issuance, with $772.3 million available as of March 31, 2021 - Primary sources of liquidity are cash flows from operations and the issuance of OMP Senior Notes[129] - As of March 31, 2021, the Company had $772.3 million of liquidity available, including $113.1 million in cash and $659.3 million of unused borrowing capacity[132] - The Oasis Credit Facility had $448.7 million in unused borrowing capacity, and the OMP Credit Facility had $210.5 million in unused borrowing capacity[132][133] - OMP issued $450.0 million of 8.00% senior unsecured notes due April 1, 2029, on March 30, 2021[133] Cash flows Net cash from operating activities increased to $190.4 million, while financing activities used $55.7 million for debt repayments Cash Flow Summary | Metric | Three Months Ended March 31, 2021 (Successor, thousands) | Three Months Ended March 31, 2020 (Predecessor, thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $190,413 | $107,775 | | Net cash used in investing activities | $(41,868) | $(130,768) | | Net cash provided by (used in) financing activities | $(55,717) | $136,976 | | Increase in cash and cash equivalents | $92,828 | $113,983 | - Net cash provided by operating activities increased primarily due to lower interest, operating, and administrative expenses[136] - Net cash used in financing activities was $55.7 million, driven by net principal repayments on credit facilities, partially offset by the issuance of OMP Senior Notes[138] Capital expenditures Total capital expenditures for Q1 2021 were $29.3 million, with the majority allocated to E&P activities Capital Expenditures (Three Months Ended March 31, 2021) | Category | Amount (thousands) | | :--- | :--- | | E&P | $28,595 | | Other capital expenditures | $414 | | Midstream | $259 | | Total capital expenditures | $29,268 | Dividends The company paid a $0.375 per share dividend in March 2021 and declared another for payment in May 2021 - A dividend of $0.375 per share ($7.5 million) was paid on March 22, 2021[142] - Another dividend of $0.375 per share was declared on May 3, 2021, payable on May 31, 2021[142] Non-GAAP Financial Measures This section defines and reconciles non-GAAP measures used by management to assess performance, such as Adjusted EBITDA and Free Cash Flow E&P Adjusted Gas Revenue E&P Adjusted Gas Revenue adjusts total natural gas revenues for benefits from the midstream segment | Metric | Three Months Ended March 31, 2021 (Successor, thousands) | Three Months Ended March 31, 2020 (Predecessor, thousands) | | :--- | :--- | :--- | | Natural gas and NGL revenues | $59,643 | $26,335 | | Intercompany impacts from midstream segment | $(10,585) | $(11,239) | | E&P Adjusted Gas Revenue | $49,058 | $15,096 | Cash GPT and E&P GPT Cash GPT and E&P GPT are non-GAAP measures used to assess the cash costs of marketing and transporting commodities | Metric | Three Months Ended March 31, 2021 (Successor, thousands) | Three Months Ended March 31, 2020 (Predecessor, thousands) | | :--- | :--- | :--- | | GPT | $15,711 | $29,464 | | Pipeline imbalances | $1,847 | $(245) | | Cash GPT | $17,558 | $29,219 | | Intercompany impacts from midstream segment | $1,810 | $2,012 | | E&P GPT | $19,368 | $31,231 | E&P Cash G&A E&P Cash G&A excludes non-cash and non-E&P G&A to provide a comparable view of operating costs | Metric | Three Months Ended March 31, 2021 (Successor, thousands) | Three Months Ended March 31, 2020 (Predecessor, thousands) | | :--- | :--- | :--- | | General and administrative expenses | $20,737 | $31,174 | | Equity-based compensation expenses | $(1,688) | $(6,621) | | G&A expenses attributable to midstream and other services | $(5,062) | $(7,888) | | E&P Cash G&A | $13,987 | $16,665 | Cash Interest and E&P Cash Interest Cash Interest and E&P Cash Interest adjust GAAP interest expense for non-cash items | Metric | Three Months Ended March 31, 2021 (Successor, thousands) | Three Months Ended March 31, 2020 (Predecessor, thousands) | | :--- | :--- | :--- | | Interest expense | $8,697 | $95,757 | | Capitalized interest | $418 | $2,287 | | Amortization of deferred financing costs | $(3,471) | $(1,699) | | Amortization of debt discount | $— | $(2,839) | | Cash Interest | $5,644 | $93,506 | | Cash Interest attributable to OMP | $(2,728) | $(30,232) | | E&P Cash Interest | $2,916 | $63,274 | Adjusted EBITDA and Adjusted EBITDA attributable to Oasis Adjusted EBITDA was $169.2 million, and Adjusted EBITDA attributable to Oasis was $126.0 million in Q1 2021 | Metric | Three Months Ended March 31, 2021 (Successor, thousands) | Three Months Ended March 31, 2020 (Predecessor, thousands) | | :--- | :--- | :--- | | Adjusted EBITDA | $169,200 | $166,982 | | Adjusted EBITDA attributable to Oasis | $126,007 | $133,826 | E&P Adjusted EBITDA and E&P Free Cash Flow E&P Adjusted EBITDA was $111.8 million, and E&P Free Cash Flow was $93.5 million in Q1 2021 | Metric | Three Months Ended March 31, 2021 (Successor, thousands) | Three Months Ended March 31, 2020 (Predecessor, thousands) | | :--- | :--- | :--- | | E&P Adjusted EBITDA | $111,790 | $98,885 | | E&P Free Cash Flow | $93,549 | $(83,400) | Adjusted Net Income (Loss) Attributable to Oasis and Adjusted Diluted Earnings (Loss) Attributable to Oasis Per Share Adjusted Net Income was $86.2 million, and Adjusted Diluted Earnings Per Share was $4.31 in Q1 2021 | Metric | Three Months Ended March 31, 2021 (Successor, thousands) | Three Months Ended March 31, 2020 (Predecessor, thousands) | | :--- | :--- | :--- | | Adjusted Net Income (Loss) Attributable to Oasis | $86,219 | $(62,804) | | Metric | Three Months Ended March 31, 2021 (Successor) | Three Months Ended March 31, 2020 (Predecessor) | | :--- | :--- | :--- | | Adjusted Diluted Earnings (Loss) Attributable to Oasis Per Share | $4.31 | $(0.20) | - Adjusted Diluted Earnings per Share for Q1 2021 (Successor) was corrected to $4.31 from a previously reported $4.34[161] Fair Value of Financial Instruments This section refers to Note 6 for a detailed discussion of derivative instruments and their fair value measurements - Refer to Note 6 — Fair Value Measurements for a discussion of derivative instruments and their related fair value measurements[162] Critical Accounting Policies and Estimates No material changes were made to critical accounting policies and estimates from those in the 2020 Annual Report - No material changes in critical accounting policies and estimates from those disclosed in the 2020 Annual Report[163] Item 3. — Quantitative and Qualitative Disclosures About Market Risk The company is exposed to commodity price, interest rate, and counterparty credit risks, managed via derivatives and other policies - The Company is exposed to commodity price risk, interest rate risk, and counterparty and customer credit risk[163] - Commodity price risk is managed through derivative instruments, which resulted in a net derivative liability position of $253.0 million at March 31, 2021[165] - A 10% increase in crude oil prices would decrease the fair value of the derivative position by approximately $117.8 million[165] - Counterparty credit risk for derivative arrangements is mitigated by contracting only with high credit-quality financial institutions[168] Item 4. — Controls and Procedures Management concluded that disclosure controls and procedures were effective, with no material changes in internal controls Evaluation of disclosure controls and procedures The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of March 31, 2021 - The CEO and CFO concluded that the Company's disclosure controls and procedures were effective as of March 31, 2021[169] Changes in internal control over financial reporting No material changes occurred in the company's internal control over financial reporting during Q1 2021 - No material changes in internal control over financial reporting occurred during the quarter ended March 31, 2021[170] PART II — OTHER INFORMATION Item 1. — Legal Proceedings This section refers to Note 17 of the financial statements for a discussion of material legal proceedings - Refer to Note 17 — Commitments and Contingencies in Part I, Item 1 for a discussion of material legal proceedings[173] Item 1A. — Risk Factors No material changes were made to the company's risk factors from those described in its 2020 Annual Report - No material changes in risk factors from those described in the 2020 Annual Report[174] Item 2. — Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities or share repurchases occurred during the three months ended March 31, 2021 - No sales of unregistered equity securities occurred during the period covered by this report[176] - No common stock was purchased under the share-repurchase program during the three months ended March 31, 2021[176] Item 5.— Other Information This section discloses details on the Williston Acquisition agreement, credit facility amendments, and related bridge financing Purchase and Sale Agreement The company agreed to acquire 95,000 net acres in the Williston Basin for $745.0 million cash - On May 3, 2021, Oasis Petroleum North America LLC entered into a Purchase and Sale Agreement to acquire approximately 95,000 net acres in the Williston Basin for a cash purchase price of $745.0 million[178] - The effective date for the Acquisition is April 1, 2021, and closing is expected in July 2021[178] - The Purchase Price is expected to be financed through cash on hand, borrowings under the Oasis Credit Facility, and a $500.0 million Bridge Facility[178] Amendment to Credit Facility The credit agreement was amended to allow for bridge loans and remove certain restrictions to facilitate acquisitions - The Third Amendment to the Credit Agreement, dated May 3, 2021, provides the ability to incur loans pursuant to a customary bridge loan facility and adds terms for second liens[183] - It also eliminates restrictions on making cash deposits for acquisitions and removes limitations on capital expenditures[183] Bridge Facility A $500.0 million bridge facility was committed to finance the Williston Acquisition, expected to be replaced by high-yield debt - A $500.0 million senior secured second lien Bridge Facility was committed by J.P. Morgan Chase Bank, N.A., Wells Fargo Bank, N.A., and Wells Fargo Securities, LLC on May 3, 2021[184] - The Bridge Facility is intended to finance the Williston Acquisition and is expected to be replaced by an issuance of high-yield debt financing[184] Item 6. — Exhibits This section lists all exhibits filed with the report, including various agreements, contracts, and certifications - The exhibits include the Contribution and Simplification Agreement, Purchase and Sale Agreement, Employment Agreements, Notices of Grant for equity awards, Credit Agreement Amendments, Commitment Letter, and Sarbanes-Oxley certifications[185][187] SIGNATURES Signatures The report was duly signed by the Chief Executive Officer and Chief Financial Officer on May 6, 2021 - The report was signed on May 6, 2021, by Daniel E. Brown, Chief Executive Officer, and Michael H. Lou, Executive Vice President and Chief Financial Officer[192]