Condensed Consolidating Financial Information

6 Months Ended

Jun. 30, 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)

	June 30, 2014
	Parent/ Issuer			Combined Guarantor Subsidiaries			Intercompany Eliminations			Consolidated
ASSETS
Current assets
Cash and cash equivalents	$	1,603		$	25,354		$	—		$	26,957
Accounts receivable – oil and gas revenues	—			216,764			—			216,764
Accounts receivable – joint interest partners	—			147,056			—			147,056
Accounts receivable – affiliates	781			13,416			(14,197		)	—
Inventory	—			17,636			—			17,636
Prepaid expenses	—			8,907			—			8,907
Deferred income taxes	—			25,390			—			25,390
Advances to joint interest partners	—			97			—			97
Other current assets	—			421			—			421
Total current assets	2,384			455,041			(14,197		)	443,228
Property, plant and equipment
Oil and gas properties (successful efforts method)	—			5,141,582			—			5,141,582
Other property and equipment	—			231,129			—			231,129
Less: accumulated depreciation, depletion, amortization and impairment	—			(823,500		)	—			(823,500		)
Total property, plant and equipment, net	—			4,549,211			—			4,549,211
Investments in and advances to subsidiaries	3,675,495			—			(3,675,495		)	—
Deferred income taxes	117,199			—			(117,199		)	—
Deferred costs and other assets	31,726			12,814			—			44,540
Total assets	$	3,826,804		$	5,017,066		$	(3,806,891	)	$	5,036,979
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	—		$	32,402		$	—		$	32,402
Accounts payable – affiliates	13,416			781			(14,197		)	—
Revenues and production taxes payable	—			217,414			—			217,414
Accrued liabilities	24			288,789			—			288,813
Accrued interest payable	49,340			104			—			49,444
Derivative instruments	—			62,415			—			62,415
Advances from joint interest partners	—			6,910			—			6,910
Other current liabilities	—			3,311			—			3,311
Total current liabilities	62,780			612,126			(14,197		)	660,709
Long-term debt	2,200,000			100,000			—			2,300,000
Deferred income taxes	—			578,096			(117,199		)	460,897
Asset retirement obligations	—			37,542			—			37,542
Derivative instruments	—			11,844			—			11,844
Other liabilities	—			1,963			—			1,963
Total liabilities	2,262,780			1,341,571			(131,396		)	3,472,955
Stockholders’ equity
Capital contributions from affiliates	—			2,893,387			(2,893,387		)	—
Common stock, $0.01 par value: 300,000,000 shares authorized; 101,396,597 issued	999			—			—			999
Treasury stock, at cost: 244,729 shares	(8,677		)	—			—			(8,677		)
Additional paid-in capital	995,024			8,743			(8,743		)	995,024
Retained earnings	576,678			773,365			(773,365		)	576,678
Total stockholders’ equity	1,564,024			3,675,495			(3,675,495		)	1,564,024
Total liabilities and stockholders’ equity	$	3,826,804		$	5,017,066		$	(3,806,891	)	$	5,036,979

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 June 30, 2014
	Parent/ Issuer			Combined Guarantor Subsidiaries			Intercompany Eliminations			Consolidated
Revenues
Oil and gas revenues	$	—		$	354,182		$	—		$	354,182
Well services and midstream revenues	—			18,196			—			18,196
Total revenues	—			372,378			—			372,378
Expenses
Lease operating expenses	—			40,553			—			40,553
Well services and midstream operating expenses	—			8,769			—			8,769
Marketing, transportation and gathering expenses	—			7,114			—			7,114
Production taxes	—			34,493			—			34,493
Depreciation, depletion and amortization	—			97,276			—			97,276
Exploration expenses	—			475			—			475
Impairment of oil and gas properties	—			42			—			42
General and administrative expenses	5,805			14,946			—			20,751
Total expenses	5,805			203,668			—			209,473
Gain on sale of properties	—			3,640			—			3,640
Operating income (loss)	(5,805		)	172,350			—			166,545
Other income (expense)
Equity in earnings in subsidiaries	65,485			—			(65,485		)	—
Net loss on derivative instruments	—			(65,570		)	—			(65,570		)
Interest expense, net of capitalized interest	(36,705		)	(2,285		)	—			(38,990		)
Other income (expense)	—			135			—			135
Total other income (expense)	28,780			(67,720		)	(65,485		)	(104,425		)
Income before income taxes	22,975			104,630			(65,485		)	62,120
Income tax benefit (expense)	15,858			(39,145		)	—			(23,287		)
Net income	$	38,833		$	65,485		$	(65,485	)	$	38,833

Condensed Consolidating Statement of Operations

(In thousands)



	Three Months Ended June 30, 2013
	Parent/ Issuer			Combined Guarantor Subsidiaries			Intercompany Eliminations			Consolidated
Revenues
Oil and gas revenues	$	—		$	241,842		$	—		$	241,842
Well services and midstream revenues	—			12,740			—			12,740
Total revenues	—			254,582			—			254,582
Expenses
Lease operating expenses	—			18,266			—			18,266
Well services and midstream operating expenses	—			6,644			—			6,644
Marketing, transportation and gathering expenses	—			10,779			—			10,779
Production taxes	—			21,397			—			21,397
Depreciation, depletion and amortization	—			66,790			—			66,790
Exploration expenses	—			392			—			392
Impairment of oil and gas properties	—			208			—			208
General and administrative expenses	3,524			13,132			—			16,656
Total expenses	3,524			137,608			—			141,132
Operating income (loss)	(3,524		)	116,974			—			113,450
Other income (expense)
Equity in earnings in subsidiaries	82,506			—			(82,506		)	—
Net gain on derivative instruments	—			12,591			—			12,591
Interest expense, net of capitalized interest	(20,159		)	(1,233		)	—			(21,392		)
Other income (expense)	(738		)	1,032			—			294
Total other income (expense)	61,609			12,390			(82,506		)	(8,507		)
Income before income taxes	58,085			129,364			(82,506		)	104,943
Income tax benefit (expense)	9,034			(46,858		)	—			(37,824		)
Net income	$	67,119		$	82,506		$	(82,506	)	$	67,119

Condensed Consolidating Statement of Operations

(In thousands)



	Six Months Ended June 30, 2014
	Parent/ Issuer			Combined Guarantor Subsidiaries			Intercompany Eliminations			Consolidated
Revenues
Oil and gas revenues	$	—		$	686,029		$	—		$	686,029
Well services and midstream revenues	—			35,868			—			35,868
Total revenues	—			721,897			—			721,897
Expenses
Lease operating expenses	—			80,542			—			80,542
Well services and midstream operating expenses	—			19,689			—			19,689
Marketing, transportation and gathering expenses	—			12,300			—			12,300
Production taxes	—			66,296			—			66,296
Depreciation, depletion and amortization	—			188,548			—			188,548
Exploration expenses	—			855			—			855
Impairment of oil and gas properties	—			804			—			804
General and administrative expenses	11,417			32,854			—			44,271
Total expenses	11,417			401,888			—			413,305
Gain on sale of properties	—			187,033			—			187,033
Operating income (loss)	(11,417		)	507,042			—			495,625
Other income (expense)
Equity in earnings in subsidiaries	262,418			—			(262,418		)	—
Net loss on derivative instruments	—			(83,173		)	—			(83,173		)
Interest expense, net of capitalized interest	(74,129		)	(5,019		)	—			(79,148		)
Other income (expense)	3			285			—			288
Total other income (expense)	188,292			(87,907		)	(262,418		)	(162,033		)
Income before income taxes	176,875			419,135			(262,418		)	333,592
Income tax benefit (expense)	31,911			(156,717		)	—			(124,806		)
Net income	$	208,786		$	262,418		$	(262,418	)	$	208,786




Condensed Consolidating Statement of Operations (In thousands)

	Six Months Ended June 30, 2013
	Parent/ Issuer			Combined Guarantor Subsidiaries			Intercompany Eliminations			Consolidated
Revenues
Oil and gas revenues	$	—		$	483,493		$	—		$	483,493
Well services and midstream revenues	—			19,393			—			19,393
Total revenues	—			502,886			—			502,886
Expenses
Lease operating expenses	—			37,755			—			37,755
Well services and midstream operating expenses	—			9,558			—			9,558
Marketing, transportation and gathering expenses	—			14,168			—			14,168
Production taxes	—			43,486			—			43,486
Depreciation, depletion and amortization	—			133,051			—			133,051
Exploration expenses	—			2,249			—			2,249
Impairment of oil and gas properties	—			706			—			706
General and administrative expenses	6,400			24,110			—			30,510
Total expenses	6,400			265,083			—			271,483
Operating income (loss)	(6,400		)	237,803			—			231,403
Other income (expense)
Equity in earnings in subsidiaries	148,751			—			(148,751		)	—
Net loss on derivative instruments	—			(2,021		)	—			(2,021		)
Interest expense, net of capitalized interest	(40,678		)	(1,897		)	—			(42,575		)
Other income (expense)	(363		)	1,437			—			1,074
Total other income (expense)	107,710			(2,481		)	(148,751		)	(43,522		)
Income before income taxes	101,310			235,322			(148,751		)	187,881
Income tax benefit (expense)	17,660			(86,571		)	—			(68,911		)
Net income	$	118,970		$	148,751		$	(148,751	)	$	118,970

Condensed Consolidating Statement of Cash Flows

(In thousands)



	Six Months Ended June 30, 2014
	Parent/ Issuer			Combined Guarantor Subsidiaries			Intercompany Eliminations			Consolidated
Cash flows from operating activities:
Net income	$	208,786		$	262,418		$	(262,418	)	$	208,786
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Equity in earnings of subsidiaries	(262,418		)	—			262,418			—
Depreciation, depletion and amortization	—			188,548			—			188,548
Gain on sale of properties	—			(187,033		)				(187,033		)
Impairment of oil and gas properties	—			804			—			804
Deferred income taxes	(31,911		)	150,606			—			118,695
Derivative instruments	—			83,173			—			83,173
Stock-based compensation expenses	9,522			156			—			9,678
Debt discount amortization and other	2,255			965			—			3,220
Working capital and other changes:
Change in accounts receivable	(11		)	(41,448		)	4,327			(37,132		)
Change in inventory	—			3,016			—			3,016
Change in prepaid expenses	318			966			—			1,284
Change in other current assets	—			(30		)	—			(30		)
Change in other assets	—			(1,477		)	—			(1,477		)
Change in accounts payable and accrued liabilities	6,025			89,845			(4,327		)	91,543
Change in other current liabilities	—			3,311			—			3,311
Change in other liabilities	—			(132		)	—			(132		)
Net cash provided by (used in) operating activities	(67,434		)	553,688			—			486,254
Cash flows from investing activities:
Capital expenditures	—			(606,924		)	—			(606,924		)
Acquisition of oil and gas properties	—			(8,116		)	—			(8,116		)
Proceeds from sale of properties	—			324,888			—			324,888
Costs related to sale of properties	—			(2,337		)				(2,337		)
Derivative settlements	—			(13,644		)	—			(13,644		)
Advances from joint interest partners	—			(5,919		)	—			(5,919		)
Net cash used in investing activities	—			(312,052		)	—			(312,052		)
Cash flows from financing activities:
Proceeds from revolving credit facility	—			100,000			—			100,000
Principal payments on revolving credit facility	—			(335,570		)	—			(335,570		)
Purchases of treasury stock	(3,315		)	—			—			(3,315		)
Debt issuance costs	—			(85		)	—			(85		)
Investment in / capital contributions from affiliates	38,251			(38,251		)	—			—
Other	(176		)	—			—			(176		)
Net cash provided by (used in) financing activities	34,760			(273,906		)	—			(239,146		)
Decrease in cash and cash equivalents	(32,674		)	(32,270		)	—			(64,944		)
Cash and cash equivalents at beginning of period	34,277			57,624			—			91,901
Cash and cash equivalents at end of period	$	1,603		$	25,354		$	—		$	26,957

Condensed Consolidating Statement of Cash Flows

(In thousands)



	Six Months Ended June 30, 2013
	Parent/ Issuer			Combined Guarantor Subsidiaries			Intercompany Eliminations			Consolidated
Cash flows from operating activities:
Net income	$	118,970		$	148,751		$	(148,751	)	$	118,970
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Equity in earnings of subsidiaries	(148,751		)	—			148,751			—
Depreciation, depletion and amortization	—			133,051			—			133,051
Impairment of oil and gas properties	—			706			—			706
Deferred income taxes	(17,660		)	85,634			—			67,974
Derivative instruments	—			2,021			—			2,021
Stock-based compensation expenses	5,263			108			—			5,371
Debt discount amortization and other	2,189			(436		)	—			1,753
Working capital and other changes:
Change in accounts receivable	(461		)	(13,972		)	665			(13,768		)
Change in inventory	—			(4,200		)	—			(4,200		)
Change in prepaid expenses	313			(4,715		)	—			(4,402		)
Change in other current assets	232			98			—			330
Change in accounts payable and accrued liabilities	(388		)	49,754			(665		)	48,701
Change in other current liabilities	—			688			—			688
Change in other liabilities	—			612			—			612
Net cash provided by (used in) operating activities	(40,293		)	398,100			—			357,807
Cash flows from investing activities:
Capital expenditures	—			(428,630		)	—			(428,630		)
Derivative settlements	—			2,932			—			2,932
Redemptions of short-term investments	25,000			—			—			25,000
Advances from joint interest partners	—			(5,593		)	—			(5,593		)
Net cash provided by (used in) investing activities	25,000			(431,291		)	—			(406,291		)
Cash flows from financing activities:
Purchases of treasury stock	(364		)	—			—			(364		)
Debt issuance costs	—			(2,998		)	—			(2,998		)
Investment in / capital contributions from affiliates	(34,370		)	34,370			—			—
Net cash provided by (used in) financing activities	(34,734		)	31,372			—			(3,362		)
Decrease in cash and cash equivalents	(50,027		)	(1,819		)	—			(51,846		)
Cash and cash equivalents at beginning of period	133,797			79,650			—			213,447
Cash and cash equivalents at end of period	$	83,770		$	77,831		$	—		$	161,601