Condensed Consolidating Financial Information

9 Months Ended

Sep. 30, 2014

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Condensed Consolidating Financial Information

Condensed Consolidating Financial Information

The Notes (see Note 8) are guaranteed on a senior unsecured basis by the Guarantors, which are 100% owned by the Company. These guarantees are full and unconditional and joint and several among the Guarantors. Certain of the Company’s immaterial wholly-owned subsidiaries do not guarantee the Notes (“Non-Guarantor Subsidiaries”).

The following financial information reflects consolidating financial information of the parent company, Oasis Petroleum Inc. (“Issuer”), and its Guarantors on a combined basis, prepared on the equity basis of accounting. The Non-Guarantor Subsidiaries are immaterial and, therefore, not presented separately. The information is presented in accordance with the requirements of Rule 3-10 under the SEC’s Regulation S-X. The financial information may not necessarily be indicative of results of operations, cash flows or financial position had the Guarantors operated as independent entities. The Company has not presented separate financial and narrative information for each of the Guarantors because it believes such financial and narrative information would not provide any additional information that would be material in evaluating the sufficiency of the Guarantors.

Condensed Consolidating Balance Sheet
	September 30, 2014
	Parent/ Issuer			Combined Guarantor Subsidiaries			Intercompany Eliminations			Consolidated
	(In thousands, except share data)
ASSETS
Current assets
Cash and cash equivalents	$	777		$	66,417		$	—		$	67,194
Accounts receivable – oil and gas revenues	—			191,711			—			191,711
Accounts receivable – joint interest partners	—			197,929			—			197,929
Accounts receivable – affiliates	781			78,053			(78,834		)	—
Inventory	—			24,648			—			24,648
Prepaid expenses	445			13,808			—			14,253
Derivative instruments	—			33,874			—			33,874
Advances to joint interest partners	—			97			—			97
Other current assets	—			1,972			—			1,972
Total current assets	2,003			608,509			(78,834		)	531,678
Property, plant and equipment
Oil and gas properties (successful efforts method)	—			5,546,424			—			5,546,424
Other property and equipment	—			261,665			—			261,665
Less: accumulated depreciation, depletion, amortization and impairment	—			(933,237		)	—			(933,237		)
Total property, plant and equipment, net	—			4,874,852			—			4,874,852
Investments in and advances to subsidiaries	3,826,612			—			(3,826,612		)	—
Derivative instruments	—			6,422			—			6,422
Deferred income taxes	133,526			—			(133,526		)	—
Deferred costs and other assets	30,582			13,941			—			44,523
Total assets	$	3,992,723		$	5,503,724		$	(4,038,972	)	$	5,457,475
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	—		$	39,550		$	—		$	39,550
Accounts payable – affiliates	78,053			781			(78,834		)	—
Revenues and production taxes payable	—			248,272			—			248,272
Accrued liabilities	55			340,425			—			340,480
Accrued interest payable	24,528			374			—			24,902
Deferred income taxes	—			9,625			—			9,625
Advances from joint interest partners	—			6,776			—			6,776
Total current liabilities	102,636			645,803			(78,834		)	669,605
Long-term debt	2,200,000			350,000			—			2,550,000
Deferred income taxes	—			638,261			(133,526		)	504,735
Asset retirement obligations	—			41,052			—			41,052
Other liabilities	—			1,996			—			1,996
Total liabilities	2,302,636			1,677,112			(212,360		)	3,767,388
Stockholders’ equity
Capital contributions from affiliates	—			2,896,147			(2,896,147		)	—
Common stock, $0.01 par value: 300,000,000 shares authorized; 101,614,588 issued	1,000			—			—			1,000
Treasury stock, at cost: 283,249 shares	(10,602		)	—			—			(10,602		)
Additional paid-in capital	1,001,424			8,743			(8,743		)	1,001,424
Retained earnings	698,265			921,722			(921,722		)	698,265
Total stockholders’ equity	1,690,087			3,826,612			(3,826,612		)	1,690,087
Total liabilities and stockholders’ equity	$	3,992,723		$	5,503,724		$	(4,038,972	)	$	5,457,475

Condensed Consolidating Balance Sheet

	December 31, 2013
	Parent/ Issuer			Combined Guarantor Subsidiaries			Intercompany Eliminations			Consolidated
	(In thousands, except share data)
ASSETS
Current assets
Cash and cash equivalents	$	34,277		$	57,624		$	—		$	91,901
Accounts receivable – oil and gas revenues	—			175,653			—			175,653
Accounts receivable – joint interest partners	—			139,459			—			139,459
Accounts receivable – affiliates	770			9,100			(9,870		)	—
Inventory	—			20,652			—			20,652
Prepaid expenses	318			9,873			—			10,191
Deferred income taxes	—			6,335			—			6,335
Derivative instruments	—			2,264			—			2,264
Advances to joint interest partners	—			760			—			760
Other current assets	—			391			—			391
Total current assets	35,365			422,111			(9,870		)	447,606
Property, plant and equipment
Oil and gas properties (successful efforts method)	—			4,528,958			—			4,528,958
Other property and equipment	—			188,468			—			188,468
Less: accumulated depreciation, depletion, amortization and impairment	—			(637,676		)	—			(637,676		)
Total property, plant and equipment, net	—			4,079,750			—			4,079,750
Assets held for sale	—			137,066			—			137,066
Investments in and advances to subsidiaries	3,450,668			—			(3,450,668		)	—
Derivative instruments	—			1,333			—			1,333
Deferred income taxes	85,288			—			(85,288		)	—
Deferred costs and other assets	33,983			12,186			—			46,169
Total assets	$	3,605,304		$	4,652,446		$	(3,545,826	)	$	4,711,924
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	—		$	8,920		$	—		$	8,920
Accounts payable – affiliates	9,100			770			(9,870		)	—
Revenues and production taxes payable	—			146,741			—			146,741
Accrued liabilities	33			241,797			—			241,830
Accrued interest payable	47,622			288			—			47,910
Derivative instruments	—			8,188			—			8,188
Advances from joint interest partners	—			12,829			—			12,829
Total current liabilities	56,755			419,533			(9,870		)	466,418
Long-term debt	2,200,000			335,570			—			2,535,570
Deferred income taxes	—			408,435			(85,288		)	323,147
Asset retirement obligations	—			35,918			—			35,918
Derivative instruments	—			139			—			139
Other liabilities	—			2,183			—			2,183
Total liabilities	2,256,755			1,201,778			(95,158		)	3,363,375
Stockholders’ equity
Capital contributions from affiliates	—			2,930,978			(2,930,978		)	—
Common stock, $0.01 par value: 300,000,000 shares authorized; 100,866,589 issued	996			—			—			996
Treasury stock, at cost: 167,155 shares	(5,362		)	—			—			(5,362		)
Additional paid-in capital	985,023			8,743			(8,743		)	985,023
Retained earnings	367,892			510,947			(510,947		)	367,892
Total stockholders’ equity	1,348,549			3,450,668			(3,450,668		)	1,348,549
Total liabilities and stockholders’ equity	$	3,605,304		$	4,652,446		$	(3,545,826	)	$	4,711,924

Condensed Consolidating Statement of Operations

	Three Months Ended September 30, 2014
	Parent/ Issuer			Combined Guarantor Subsidiaries			Intercompany Eliminations			Consolidated
	(In thousands)
Revenues
Oil and gas revenues	$	—		$	344,706		$	—		$	344,706
Well services and midstream revenues	—			23,953			—			23,953
Total revenues	—			368,659			—			368,659
Expenses
Lease operating expenses	—			44,361			—			44,361
Well services and midstream operating expenses	—			14,922			—			14,922
Marketing, transportation and gathering expenses	—			7,306			—			7,306
Production taxes	—			34,584			—			34,584
Depreciation, depletion and amortization	—			106,972			—			106,972
Exploration expenses	—			1,100			—			1,100
Impairment of oil and gas properties	—			1,439			—			1,439
General and administrative expenses	6,373			17,542			—			23,915
Total expenses	6,373			228,226			—			234,599
Gain on sale of properties	—			43			—			43
Operating income (loss)	(6,373		)	140,476			—			134,103
Other income (expense)
Equity in earnings in subsidiaries	148,357			—			(148,357		)	—
Net gain on derivative instruments	—			103,426			—			103,426
Interest expense, net of capitalized interest	(36,724		)	(2,696		)	—			(39,420		)
Other income (expense)	—			(38		)	—			(38		)
Total other income (expense)	111,633			100,692			(148,357		)	63,968
Income before income taxes	105,260			241,168			(148,357		)	198,071
Income tax benefit (expense)	16,327			(92,811		)	—			(76,484		)
Net income	$	121,587		$	148,357		$	(148,357	)	$	121,587

Condensed Consolidating Statement of Operations

	Three Months Ended September 30, 2013
	Parent/ Issuer			Combined Guarantor Subsidiaries			Intercompany Eliminations			Consolidated
	(In thousands)
Revenues
Oil and gas revenues	$	—		$	286,952		$	—		$	286,952
Well services and midstream revenues	—			18,546			—			18,546
Total revenues	—			305,498			—			305,498
Expenses
Lease operating expenses	—			21,831			—			21,831
Well services and midstream operating expenses	—			10,319			—			10,319
Marketing, transportation and gathering expenses	—			5,688			—			5,688
Production taxes	—			26,823			—			26,823
Depreciation, depletion and amortization	—			72,728			—			72,728
Exploration expenses	—			463			—			463
Impairment of oil and gas properties	—			56			—			56
General and administrative expenses	3,746			12,982			—			16,728
Total expenses	3,746			150,890			—			154,636
Operating income (loss)	(3,746		)	154,608			—			150,862
Other income (expense)
Equity in earnings in subsidiaries	70,118			—			(70,118		)	—
Net loss on derivative instruments	—			(39,817		)	—			(39,817		)
Interest expense, net of capitalized interest	(21,277		)	(1,577		)	—			(22,854		)
Other income (expense)	15			8			—			23
Total other income (expense)	48,856			(41,386		)	(70,118		)	(62,648		)
Income before income taxes	45,110			113,222			(70,118		)	88,214
Income tax benefit (expense)	9,389			(43,104		)	—			(33,715		)
Net income	$	54,499		$	70,118		$	(70,118	)	$	54,499

Condensed Consolidating Statement of Operations

	Nine Months Ended September 30, 2014
	Parent/ Issuer			Combined Guarantor Subsidiaries			Intercompany Eliminations			Consolidated
	(In thousands)
Revenues
Oil and gas revenues	$	—		$	1,030,735		$	—		$	1,030,735
Well services and midstream revenues	—			59,821			—			59,821
Total revenues	—			1,090,556			—			1,090,556
Expenses
Lease operating expenses	—			124,903			—			124,903
Well services and midstream operating expenses	—			34,611			—			34,611
Marketing, transportation and gathering expenses	—			19,606			—			19,606
Production taxes	—			100,880			—			100,880
Depreciation, depletion and amortization	—			295,520			—			295,520
Exploration expenses	—			1,955			—			1,955
Impairment of oil and gas properties	—			2,243			—			2,243
General and administrative expenses	17,790			50,396			—			68,186
Total expenses	17,790			630,114			—			647,904
Gain on sale of properties	—			187,076			—			187,076
Operating income (loss)	(17,790		)	647,518			—			629,728
Other income (expense)
Equity in earnings in subsidiaries	410,775			—			(410,775		)	—
Net gain on derivative instruments	—			20,253			—			20,253
Interest expense, net of capitalized interest	(110,853		)	(7,715		)	—			(118,568		)
Other income (expense)	3			247			—			250
Total other income (expense)	299,925			12,785			(410,775		)	(98,065		)
Income before income taxes	282,135			660,303			(410,775		)	531,663
Income tax benefit (expense)	48,238			(249,528		)	—			(201,290		)
Net income	$	330,373		$	410,775		$	(410,775	)	$	330,373

Condensed Consolidating Statement of Operations
	Nine Months Ended September 30, 2013
	Parent/ Issuer			Combined Guarantor Subsidiaries			Intercompany Eliminations			Consolidated
	(In thousands)
Revenues
Oil and gas revenues	$	—		$	770,445		$	—		$	770,445
Well services and midstream revenues	—			37,939			—			37,939
Total revenues	—			808,384			—			808,384
Expenses
Lease operating expenses	—			59,586			—			59,586
Well services and midstream operating expenses	—			19,877			—			19,877
Marketing, transportation and gathering expenses	—			19,856			—			19,856
Production taxes	—			70,309			—			70,309
Depreciation, depletion and amortization	—			205,779			—			205,779
Exploration expenses	—			2,712			—			2,712
Impairment of oil and gas properties	—			762			—			762
General and administrative expenses	10,146			37,092			—			47,238
Total expenses	10,146			415,973			—			426,119
Operating income (loss)	(10,146		)	392,411			—			382,265
Other income (expense)
Equity in earnings in subsidiaries	218,869			—			(218,869		)	—
Net loss on derivative instruments	—			(41,838		)	—			(41,838		)
Interest expense, net of capitalized interest	(61,955		)	(3,474		)	—			(65,429		)
Other income (expense)	(348		)	1,445			—			1,097
Total other income (expense)	156,566			(43,867		)	(218,869		)	(106,170		)
Income before income taxes	146,420			348,544			(218,869		)	276,095
Income tax benefit (expense)	27,049			(129,675		)	—			(102,626		)
Net income	$	173,469		$	218,869		$	(218,869	)	$	173,469

Condensed Consolidating Statement of Cash Flows

	Nine Months Ended September 30, 2014
	Parent/ Issuer			Combined Guarantor Subsidiaries			Intercompany Eliminations			Consolidated
	(In thousands)
Cash flows from operating activities:
Net income	$	330,373		$	410,775		$	(410,775	)	$	330,373
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Equity in earnings of subsidiaries	(410,775		)	—			410,775			—
Depreciation, depletion and amortization	—			295,520			—			295,520
Gain on sale of properties	—			(187,076		)				(187,076		)
Impairment of oil and gas properties	—			2,243			—			2,243
Deferred income taxes	(48,238		)	245,786			—			197,548
Derivative instruments	—			(20,253		)	—			(20,253		)
Stock-based compensation expenses	15,398			357			—			15,755
Deferred financing costs amortization and other	3,400			1,809			—			5,209
Working capital and other changes:
Change in accounts receivable	(11		)	(131,523		)	68,953			(62,581		)
Change in inventory	—			(4,089		)	—			(4,089		)
Change in prepaid expenses	(127		)	(3,052		)	—			(3,179		)
Change in other current assets	—			(1,581		)	—			(1,581		)
Change in other assets	—			(3,069		)	—			(3,069		)
Change in accounts payable and accrued liabilities	45,881			131,860			(68,953		)	108,788
Change in other liabilities	—			(116		)	—			(116		)
Net cash provided by (used in) operating activities	(64,099		)	737,591			—			673,492
Cash flows from investing activities:
Capital expenditures	—			(972,763		)	—			(972,763		)
Acquisition of oil and gas properties	—			(26,126		)	—			(26,126		)
Proceeds from sale of properties	—			324,938			—			324,938
Costs related to sale of properties	—			(2,337		)				(2,337		)
Derivative settlements	—			(24,773		)	—			(24,773		)
Advances from joint interest partners	—			(6,053		)	—			(6,053		)
Net cash used in investing activities	—			(707,114		)	—			(707,114		)
Cash flows from financing activities:
Proceeds from revolving credit facility	—			370,000			—			370,000
Principal payments on revolving credit facility	—			(355,570		)	—			(355,570		)
Debt issuance costs	—			(99		)	—			(99		)
Purchases of treasury stock	(5,240		)	—			—			(5,240		)
Investment in / capital contributions from affiliates	36,015			(36,015		)	—			—
Other	(176		)	—			—			(176		)
Net cash provided by (used in) financing activities	30,599			(21,684		)	—			8,915
Increase (decrease) in cash and cash equivalents	(33,500		)	8,793			—			(24,707		)
Cash and cash equivalents at beginning of period	34,277			57,624			—			91,901
Cash and cash equivalents at end of period	$	777		$	66,417		$	—		$	67,194

Condensed Consolidating Statement of Cash Flows

	Nine Months Ended September 30, 2013
	Parent/ Issuer			Combined Guarantor Subsidiaries			Intercompany Eliminations			Consolidated
	(In thousands)
Cash flows from operating activities:
Net income	$	173,469		$	218,869		$	(218,869	)	$	173,469
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Equity in earnings of subsidiaries	(218,869		)	—			218,869			—
Depreciation, depletion and amortization	—			205,779			—			205,779
Impairment of oil and gas properties	—			762			—			762
Deferred income taxes	(27,049		)	129,293			—			102,244
Derivative instruments	—			41,838			—			41,838
Stock-based compensation expenses	8,196			215			—			8,411
Deferred financing costs amortization and other	2,850			(157		)	—			2,693
Working capital and other changes:
Change in accounts receivable	(460		)	(69,614		)	2,587			(67,487		)
Change in inventory	—			(8,820		)	—			(8,820		)
Change in prepaid expenses	(164		)	(5,011		)	—			(5,175		)
Change in other current assets	233			(371		)	—			(138		)
Change in other assets	—			(63		)	—			(63		)
Change in accounts payable and accrued liabilities	(4,758		)	89,591			(2,587		)	82,246
Change in other liabilities	—			922			—			922
Net cash provided by (used in) operating activities	(66,552		)	603,233			—			536,681
Cash flows from investing activities:
Capital expenditures	—			(654,175		)	—			(654,175		)
Acquisitions of oil and gas properties	—			(133,061		)	—			(133,061		)
Increase in restricted cash	(986,210		)	—			—			(986,210		)
Derivative settlements	—			(5,135		)	—			(5,135		)
Redemptions of short-term investments	25,000			—			—			25,000
Advances from joint interest partners	—			(7,965		)	—			(7,965		)
Net cash used in investing activities	(961,210		)	(800,336		)	—			(1,761,546		)
Cash flows from financing activities:
Proceeds from issuance of senior notes	1,000,000			—			—			1,000,000
Proceeds from revolving credit facility	—			160,000			—			160,000
Debt issuance costs	(15,340		)	(6,378		)	—			(21,718		)
Purchases of treasury stock	(1,424		)	—			—			(1,424		)
Investment in / capital contributions from affiliates	(56,316		)	56,316			—			—
Net cash provided by financing activities	926,920			209,938			—			1,136,858
Increase (decrease) in cash and cash equivalents	(100,842		)	12,835			—			(88,007		)
Cash and cash equivalents at beginning of period	133,797			79,650			—			213,447
Cash and cash equivalents at end of period	$	32,955		$	92,485		$	—		$	125,440