Condensed Consolidating Financial Information

3 Months Ended

Mar. 31, 2014

Organization, Consolidation and Presentation of Financial Statements [Abstract]

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 (In thousands, except share data)

	March 31, 2014
	Parent/ Issuer			Combined Guarantor Subsidiaries			Intercompany Eliminations			Consolidated
ASSETS
Current assets
Cash and cash equivalents	$	936		$	55,362		$	—		$	56,298
Accounts receivable – oil and gas revenues	—			202,749			—			202,749
Accounts receivable – joint interest partners	—			134,553			—			134,553
Accounts receivable – affiliates	770			12,802			(13,572		)	—
Inventory	—			19,862			—			19,862
Prepaid expenses	159			24,291			—			24,450
Deferred income taxes	—			8,484			—			8,484
Derivative instruments	—			778			—			778
Advances to joint interest partners	—			214			—			214
Other current assets	—			420			—			420
Total current assets	1,865			459,515			(13,572		)	447,808
Property, plant and equipment
Oil and gas properties (successful efforts method)	—			4,820,902			—			4,820,902
Other property and equipment	—			200,158			—			200,158
Less: accumulated depreciation, depletion, amortization and impairment	—			(723,429		)	—			(723,429		)
Total property, plant and equipment, net	—			4,297,631			—			4,297,631
Investments in and advances to subsidiaries	3,621,362			—			(3,621,362		)	—
Derivative instruments	—			470			—			470
Deferred income taxes	101,341			—			(101,341		)	—
Deferred costs and other assets	32,862			13,313			—			46,175
Total assets	$	3,757,430		$	4,770,929		$	(3,736,275	)	$	4,792,084
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	—		$	24,516		$	—		$	24,516
Accounts payable – affiliates	12,802			770			(13,572		)	—
Revenues and production taxes payable	—			183,120			—			183,120
Accrued liabilities	119			282,905			—			283,024
Accrued interest payable	24,527			35			—			24,562
Derivative instruments	—			20,663			—			20,663
Advances from joint interest partners	—			10,931			—			10,931
Other current liabilities	—			2,766			—			2,766
Total current liabilities	37,448			525,706			(13,572		)	549,582
Long-term debt	2,200,000			60,000			—			2,260,000
Deferred income taxes	—			525,390			(101,341		)	424,049
Asset retirement obligations	—			35,790			—			35,790
Derivative instruments	—			679			—			679
Other liabilities	—			2,002			—			2,002
Total liabilities	2,237,448			1,149,567			(114,913		)	3,272,102
Stockholders’ equity
Capital contributions from affiliates	—			2,904,739			(2,904,739		)	—
Common stock, $0.01 par value: 300,000,000 shares authorized; 101,416,749 issued	999			—			—			999
Treasury stock, at cost: 238,453 shares	(8,387		)	—			—			(8,387		)
Additional paid-in capital	989,525			8,743			(8,743		)	989,525
Retained earnings	537,845			707,880			(707,880		)	537,845
Total stockholders’ equity	1,519,982			3,621,362			(3,621,362		)	1,519,982
Total liabilities and stockholders’ equity	$	3,757,430		$	4,770,929		$	(3,736,275	)	$	4,792,084

Condensed Consolidating Balance Sheet

(In thousands, except share data)



	December 31, 2013
	Parent/ Issuer			Combined Guarantor Subsidiaries			Intercompany Eliminations			Consolidated
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

(In thousands)



	Three Months Ended March 31, 2014
	Parent/ Issuer			Combined Guarantor Subsidiaries			Intercompany Eliminations			Consolidated
Revenues
Oil and gas revenues	$	—		$	331,847		$	—		$	331,847
Well services and midstream revenues	—			17,672			—			17,672
Total revenues	—			349,519			—			349,519
Expenses
Lease operating expenses	—			39,989			—			39,989
Well services and midstream operating expenses	—			10,920			—			10,920
Marketing, transportation and gathering expenses	—			5,186			—			5,186
Production taxes	—			31,803			—			31,803
Depreciation, depletion and amortization	—			91,272			—			91,272
Exploration expenses	—			380			—			380
Impairment of oil and gas properties	—			762			—			762
General and administrative expenses	5,612			17,908			—			23,520
Total expenses	5,612			198,220			—			203,832
Gain on sale of properties	—			183,393			—			183,393
Operating income (loss)	(5,612		)	334,692			—			329,080
Other income (expense)
Equity in earnings in subsidiaries	196,933			—			(196,933		)	—
Net loss on derivative instruments	—			(17,603		)	—			(17,603		)
Interest expense, net of capitalized interest	(37,424		)	(2,734		)	—			(40,158		)
Other income (expense)	3			150			—			153
Total other income (expense)	159,512			(20,187		)	(196,933		)	(57,608		)
Income before income taxes	153,900			314,505			(196,933		)	271,472
Income tax benefit (expense)	16,053			(117,572		)	—			(101,519		)
Net income	$	169,953		$	196,933		$	(196,933	)	$	169,953

Condensed Consolidating Statement of Operations

(In thousands)



	Three Months Ended March 31, 2013
	Parent/ Issuer			Combined Guarantor Subsidiaries			Intercompany Eliminations			Consolidated
Revenues
Oil and gas revenues	$	—		$	241,651		$	—		$	241,651
Well services and midstream revenues	—			6,653			—			6,653
Total revenues	—			248,304			—			248,304
Expenses
Lease operating expenses	—			19,489			—			19,489
Well services and midstream operating expenses	—			2,914			—			2,914
Marketing, transportation and gathering expenses	—			3,389			—			3,389
Production taxes	—			22,089			—			22,089
Depreciation, depletion and amortization	—			66,261			—			66,261
Exploration expenses	—			1,857			—			1,857
Impairment of oil and gas properties	—			498			—			498
General and administrative expenses	2,876			10,978			—			13,854
Total expenses	2,876			127,475			—			130,351
Operating income (loss)	(2,876		)	120,829			—			117,953
Other income (expense)
Equity in earnings in subsidiaries	66,243			—			(66,243		)	—
Net loss on derivative instruments	—			(14,612		)	—			(14,612		)
Interest expense, net of capitalized interest	(20,518		)	(665		)	—			(21,183		)
Other income (expense)	376			404			—			780
Total other income (expense)	46,101			(14,873		)	(66,243		)	(35,015		)
Income before income taxes	43,225			105,956			(66,243		)	82,938
Income tax benefit (expense)	8,626			(39,713		)	—			(31,087		)
Net income	$	51,851		$	66,243		$	(66,243	)	$	51,851

Condensed Consolidating Statement of Cash Flows

(In thousands)



	Three Months Ended March 31, 2014
	Parent/ Issuer			Combined Guarantor Subsidiaries			Intercompany Eliminations			Consolidated
Cash flows from operating activities:
Net income	$	169,953		$	196,933		$	(196,933	)	$	169,953
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Equity in earnings of subsidiaries	(196,933		)	—			196,933			—
Depreciation, depletion and amortization	—			91,272			—			91,272
Gain on sale of properties	—			(183,393		)				(183,393		)
Impairment of oil and gas properties	—			762			—			762
Deferred income taxes	(16,053		)	114,806			—			98,753
Derivative instruments	—			17,603			—			17,603
Stock-based compensation expenses	4,428			77			—			4,505
Debt discount amortization and other	1,123			364			—			1,487
Working capital and other changes:
Change in accounts receivable	—			(12,977		)	3,702			(9,275		)
Change in inventory	—			790			—			790
Change in prepaid expenses	159			(14,418		)	—			(14,259		)
Change in other current assets	—			(29		)	—			(29		)
Change in other assets	—			(1,593		)	—			(1,593		)
Change in accounts payable and accrued liabilities	(19,307		)	52,016			(3,702		)	29,007
Change in other current liabilities	—			2,766			—			2,766
Change in other liabilities	—			(82		)	—			(82		)
Net cash provided by (used in) operating activities	(56,630		)	264,897			—			208,267
Cash flows from investing activities:
Capital expenditures	—			(280,895		)	—			(280,895		)
Proceeds from sale of properties	—			321,943			—			321,943
Costs related to sale of properties	—			(2,010		)				(2,010		)
Derivative settlements	—			(2,239		)	—			(2,239		)
Advances from joint interest partners	—			(1,898		)	—			(1,898		)
Net cash provided by investing activities	—			34,901			—			34,901
Cash flows from financing activities:
Principal payments on revolving credit facility	—			(275,570		)	—			(275,570		)
Purchases of treasury stock	(3,025		)	—			—			(3,025		)
Investment in / capital contributions from affiliates	26,490			(26,490		)	—			—
Other	(176		)	—			—			(176		)
Net cash provided by (used in) financing activities	23,289			(302,060		)	—			(278,771		)
Decrease in cash and cash equivalents	(33,341		)	(2,262		)	—			(35,603		)
Cash and cash equivalents at beginning of period	34,277			57,624			—			91,901
Cash and cash equivalents at end of period	$	936		$	55,362		$	—		$	56,298

Condensed Consolidating Statement of Cash Flows

(In thousands)



	Three Months Ended March 31, 2013
	Parent/ Issuer			Combined Guarantor Subsidiaries			Intercompany Eliminations			Consolidated
Cash flows from operating activities:
Net income	$	51,851		$	66,243		$	(66,243	)	$	51,851
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Equity in earnings of subsidiaries	(66,243		)	—			66,243			—
Depreciation, depletion and amortization	—			66,261			—			66,261
Impairment of oil and gas properties	—			498			—			498
Deferred income taxes	(8,626		)	39,613			—			30,987
Derivative instruments	—			14,612			—			14,612
Stock-based compensation expenses	2,278			11			—			2,289
Debt discount amortization and other	644			102			—			746
Working capital and other changes:
Change in accounts receivable	11			(3,740		)	369			(3,360		)
Change in inventory	—			(8,407		)	—			(8,407		)
Change in prepaid expenses	157			136			—			293
Change in other current assets	(339		)	107			—			(232		)
Change in accounts payable and accrued liabilities	(8,286		)	23,664			(369		)	15,009
Net cash provided by (used in) operating activities	(28,553		)	199,100			—			170,547
Cash flows from investing activities:
Capital expenditures	—			(217,819		)	—			(217,819		)
Derivative settlements	—			1,686			—			1,686
Advances from joint interest partners	—			(1,691		)	—			(1,691		)
Net cash used in investing activities	—			(217,824		)	—			(217,824		)
Cash flows from financing activities:
Purchases of treasury stock	(156		)	—			—			(156		)
Debt issuance costs	—			(25		)	—			(25		)
Investment in / capital contributions from affiliates	(23,252		)	23,252			—			—
Net cash provided by (used in) financing activities	(23,408		)	23,227			—			(181		)
Increase (decrease) in cash and cash equivalents	(51,961		)	4,503			—			(47,458		)
Cash and cash equivalents at beginning of period	133,797			79,650			—			213,447
Cash and cash equivalents at end of period	$	81,836		$	84,153		$	—		$	165,989