Condensed Consolidating Financial Statements

The Notes (see Note 9 — Long-Term Debt) 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



	December 31, 2014
	Parent/ Issuer		Combined Guarantor Subsidiaries			Intercompany Eliminations			Consolidated
	(In thousands, except share data)
ASSETS
Current assets
Cash and cash equivalents	$	776	$	45,035		$	—		$	45,811
Accounts receivable – oil and gas revenues	—		130,934			—			130,934
Accounts receivable – joint interest partners	—		175,537			—			175,537
Accounts receivable – affiliates	781		91,459			(92,240		)	—
Inventory	—		21,354			—			21,354
Prepaid expenses	297		13,976			—			14,273
Derivative instruments	—		302,159			—			302,159
Advances to joint interest partners	—		13			—			13
Other current assets	—		6,526			—			6,526
Total current assets	1,854		786,993			(92,240		)	696,607
Property, plant and equipment
Oil and gas properties (successful efforts method)	—		5,966,140			—			5,966,140
Other property and equipment	—		313,439			—			313,439
Less: accumulated depreciation, depletion, amortization and impairment	—		(1,092,793		)	—			(1,092,793		)
Total property, plant and equipment, net	—		5,186,786			—			5,186,786
Investments in and advances to subsidiaries	4,032,494		—			(4,032,494		)	—
Derivative instruments	—		13,348			—			13,348
Deferred income taxes	149,317		—			(149,317		)	—
Deferred costs and other assets	29,435		12,236			—			41,671
Total assets	$	4,213,100	$	5,999,363		$	(4,274,051	)	$	5,938,412
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	—	$	20,958		$	—		$	20,958
Accounts payable – affiliates	91,459		781			(92,240		)	—
Revenues and production taxes payable	—		209,890			—			209,890
Accrued liabilities	—		410,379			—			410,379
Accrued interest payable	49,340		446			—			49,786



Deferred income taxes	—			97,499		—			97,499
Advances from joint interest partners	—			6,616		—			6,616
Total current liabilities	140,799			746,569		(92,240		)	795,128
Long-term debt	2,200,000			500,000		—			2,700,000
Deferred income taxes	—			676,087		(149,317		)	526,770
Asset retirement obligations	—			42,097		—			42,097
Other liabilities	—			2,116		—			2,116
Total liabilities	2,340,799			1,966,869		(241,557		)	4,066,111
Stockholders’ equity
Capital contributions from affiliates	—			2,899,203		(2,899,203		)	—
Common stock, $0.01 par value: 300,000,000 shares authorized; 101,627,296 shares issued	1,001			—		—			1,001
Treasury stock, at cost: 285,677 shares	(10,671		)	—		—			(10,671		)
Additional paid-in-capital	1,007,202			8,743		(8,743		)	1,007,202
Retained earnings	874,769			1,124,548		(1,124,548		)	874,769
Total stockholders’ equity	1,872,301			4,032,494		(4,032,494		)	1,872,301
Total liabilities and stockholders’ equity	$	4,213,100		$	5,999,363	$	(4,274,051	)	$	5,938,412

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 shares 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



	Year Ended December 31, 2014
	Parent/ Issuer			Combined Guarantor Subsidiaries			Intercompany Eliminations			Consolidated
	(In thousands)
Revenues
Oil and gas revenues	$	—		$	1,304,004		$	—		$	1,304,004
Well services and midstream revenues	—			86,224			—			86,224
Total revenues	—			1,390,228			—			1,390,228
Expenses
Lease operating expenses	—			169,600			—			169,600
Well services and midstream operating expenses	—			50,252			—			50,252
Marketing, transportation and gathering expenses	—			29,133			—			29,133
Production taxes	—			127,648			—			127,648
Depreciation, depletion and amortization	—			412,334			—			412,334
Exploration expenses	—			3,064			—			3,064
Impairment of oil and gas properties	—			47,238			—			47,238
General and administrative expenses	23,528			68,778			—			92,306
Total expenses	23,528			908,047			—			931,575
Gain on sale of properties	—			186,999			—			186,999
Operating income (loss)	(23,528		)	669,180			—			645,652
Other income (expense)
Equity in earnings of subsidiaries	613,601			—			(613,601		)	—
Net gain on derivative instruments	—			327,011			—			327,011
Interest expense, net of capitalized interest	(147,230		)	(11,160		)	—			(158,390		)
Other income (expense)	5			190			—			195
Total other income (expense)	466,376			316,041			(613,601		)	168,816
Income before income taxes	442,848			985,221			(613,601		)	814,468
Income tax benefit (expense)	64,029			(371,620		)	—			(307,591		)
Net income	$	506,877		$	613,601		$	(613,601	)	$	506,877

Condensed Consolidating Statement of Operations



	Year Ended December 31, 2013
	Parent/ Issuer			Combined Guarantor Subsidiaries			Intercompany Eliminations			Consolidated
	(In thousands)
Revenues
Oil and gas revenues	$	—		$	1,084,412		$	—		$	1,084,412
Well services and midstream revenues	—			57,587			—			57,587
Total revenues	—			1,141,999			—			1,141,999
Expenses
Lease operating expenses	—			94,634			—			94,634
Well services and midstream operating expenses	—			30,713			—			30,713
Marketing, transportation and gathering expenses	—			25,924			—			25,924
Production taxes	—			100,537			—			100,537
Depreciation, depletion and amortization	—			307,055			—			307,055
Exploration expenses	—			2,260			—			2,260
Impairment of oil and gas properties	—			1,168			—			1,168
General and administrative expenses	14,044			61,266			—			75,310
Total expenses	14,044			623,557			—			637,601
Operating income (loss)	(14,044		)	518,442			—			504,398
Other income (expense)
Equity in earnings of subsidiaries	299,459			—			(299,459		)	—
Net loss on derivative instruments	—			(35,432		)	—			(35,432		)
Interest expense, net of capitalized interest	(99,663		)	(7,502		)	—			(107,165		)
Other income (expense)	(335		)	1,551			—			1,216
Total other income (expense)	199,461			(41,383		)	(299,459		)	(141,381		)
Income before income taxes	185,417			477,059			(299,459		)	363,017
Income tax benefit (expense)	42,542			(177,600		)	—			(135,058		)
Net income	$	227,959		$	299,459		$	(299,459	)	$	227,959

Condensed Consolidating Statement of Operations



	Year Ended December 31, 2012
	Parent/ Issuer			Combined Guarantor Subsidiaries			Intercompany Eliminations			Consolidated
	(In thousands)
Revenues
Oil and gas revenues	$	—		$	670,491		$	—		$	670,491
Well services revenues	—			16,177			—			16,177
Total revenues	—			686,668			—			686,668
Expenses
Lease operating expenses	—			54,924			—			54,924
Well services operating expense	—			11,774			—			11,774
Marketing, transportation and gathering expenses	—			9,257			—			9,257
Production taxes	—			62,965			—			62,965
Depreciation, depletion and amortization	—			206,734			—			206,734
Exploration expenses	—			3,250			—			3,250
Impairment of oil and gas properties	—			3,581			—			3,581
General and administrative expenses	12,591			44,599			—			57,190
Total expenses	12,591			397,084			—			409,675
Operating income (loss)	(12,591		)	289,584			—			276,993
Other income (expense)
Equity in earnings of subsidiaries	202,924			—			(202,924		)	—
Net gain on derivative instruments	—			34,164			—			34,164
Interest expense, net of capitalized interest	(67,651		)	(2,492		)	—			(70,143		)
Other income (expense)	1,118			3,742			—			4,860
Total other income (expense)	136,391			35,414			(202,924		)	(31,119		)
Income before income taxes	123,800			324,998			(202,924		)	245,874
Income tax benefit (expense)	29,588			(122,074		)	—			(92,486		)
Net income	$	153,388		$	202,924		$	(202,924	)	$	153,388

Condensed Consolidating Statement of Cash Flows



	Year Ended December 31, 2014
	Parent/ Issuer			Combined Guarantor Subsidiaries			Intercompany Eliminations			Consolidated
	(In thousands)
Cash flows from operating activities:
Net income	$	506,877		$	613,601		$	(613,601	)	$	506,877
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Equity in earnings of subsidiaries	(613,601		)	—			613,601			—
Depreciation, depletion and amortization	—			412,334			—			412,334
Gain on sale of properties	—			(186,999		)	—			(186,999		)
Impairment of oil and gas properties	—			47,238			—			47,238
Deferred income taxes	(64,029		)	371,486			—			307,457
Derivative instruments	—			(327,011		)	—			(327,011		)
Stock-based compensation expenses	20,701			601			—			21,302
Deferred financing costs amortization and other	4,549			6,479			—			11,028
Working capital and other changes:
Change in accounts receivable	(11		)	(65,657		)	82,370			16,702
Change in inventory	—			(3,776		)	—			(3,776		)
Change in prepaid expenses	21			(3,220		)	—			(3,199		)
Change in other current assets	—			(6,135		)	—			(6,135		)
Change in other assets	—			114			—			114
Change in accounts payable and accrued liabilities	84,044			75,049			(82,370		)	76,723
Change in other liabilities	—			(139		)	—			(139		)
Net cash provided by (used in) operating activities	(61,449		)	933,965			—			872,516
Cash flows from investing activities:
Capital expenditures	—			(1,354,281		)	—			(1,354,281		)
Acquisition of oil and gas properties	—			(46,247		)	—			(46,247		)
Proceeds from sale of properties	—			324,852			—			324,852
Costs related to sale of properties	—			(2,337		)	—			(2,337		)
Derivative settlements	—			6,774			—			6,774
Advances from joint interest partners	—			(6,213		)	—			(6,213		)
Net cash used in investing activities	—			(1,077,452		)	—			(1,077,452		)
Cash flows from financing activities:
Proceeds from revolving credit facility	—			620,000			—			620,000
Principal payments on revolving credit facility	—			(455,570		)	—			(455,570		)
Debt issuance costs	—			(99		)	—			(99		)
Purchases of treasury stock	(5,309		)	—			—			(5,309		)
Investment in / capital contributions from subsidiaries	33,433			(33,433		)	—			—
Other	(176		)	—			—			(176		)
Net cash provided by financing activities	27,948			130,898			—			158,846
Decrease in cash and cash equivalents	(33,501		)	(12,589		)	—			(46,090		)
Cash and cash equivalents at beginning of period	34,277			57,624			—			91,901
Cash and cash equivalents at end of period	$	776		$	45,035		$	—		$	45,811

Condensed Consolidating Statement of Cash Flows



	Year Ended December 31, 2013
	Parent/ Issuer			Combined Guarantor Subsidiaries			Intercompany Eliminations			Consolidated
	(In thousands)
Cash flows from operating activities:
Net income	$	227,959		$	299,459		$	(299,459	)	$	227,959
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Equity in earnings of subsidiaries	(299,459		)	—			299,459			—
Depreciation, depletion and amortization	—			307,055			—			307,055
Impairment of oil and gas properties	—			1,168			—			1,168
Deferred income taxes	(42,542		)	177,125			—			134,583
Derivative instruments	—			35,432			—			35,432
Stock-based compensation expenses	11,602			380			—			11,982
Deferred financing costs amortization and other	4,018			230			—			4,248
Working capital and other changes:
Change in accounts receivable	(460		)	(110,266		)	3,253			(107,473		)
Change in inventory	—			(13,941		)	—			(13,941		)
Change in prepaid expenses	(5		)	(8,186		)	—			(8,191		)
Change in other current assets	235			(291		)	—			(56		)
Change in other assets	—			(3,248		)	—			(3,248		)
Change in accounts payable and accrued liabilities	20,710			89,994			(3,253		)	107,451
Change in other current liabilities	—			887			—			887
Net cash provided by (used in) operating activities	(77,942		)	775,798			—			697,856
Cash flows from investing activities:
Capital expenditures	—			(893,524		)	—			(893,524		)
Acquisition of oil and gas properties	—			(1,560,072		)	—			(1,560,072		)
Derivative settlements	—			(8,133		)	—			(8,133		)
Redemptions of short-term investments	25,000			—			—			25,000
Advances from joint interest partners	—			(8,347		)	—			(8,347		)
Net cash provided by (used in) investing activities	25,000			(2,470,076		)	—			(2,445,076		)
Cash flows from financing activities:
Proceeds from issuance of senior notes	1,000,000			—			—			1,000,000
Proceeds from revolving credit facility	—			600,000			—			600,000
Principal payments on revolving credit facility	—			(264,430		)	—			(264,430		)
Debt issuance costs	(16,362		)	(6,548		)	—			(22,910		)
Proceeds from sale of common stock	314,580			—			—			314,580
Purchases of treasury stock	(1,566		)	—			—			(1,566		)
Investment in / capital contributions from subsidiaries	(1,343,230		)	1,343,230			—			—
Net cash provided by (used in) financing activities	(46,578		)	1,672,252			—			1,625,674
Decrease in cash and cash equivalents	(99,520		)	(22,026		)	—			(121,546		)
Cash and cash equivalents at beginning of period	133,797			79,650			—			213,447
Cash and cash equivalents at end of period	$	34,277		$	57,624		$	—		$	91,901

Condensed Consolidating Statement of Cash Flows



	Year Ended December 31, 2012
	Parent/ Issuer			Combined Guarantor Subsidiaries			Intercompany Eliminations			Consolidated
	(In thousands)
Cash flows from operating activities:
Net income	$	153,388		$	202,924		$	(202,924	)	$	153,388
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Equity in earnings of subsidiaries	(202,924		)	—			202,924			—
Depreciation, depletion and amortization	—			206,734			—			206,734
Impairment of oil and gas properties	—			3,581			—			3,581
Deferred income taxes	(29,588		)	122,067			—			92,479
Derivative instruments	—			(34,164		)	—			(34,164		)
Stock-based compensation expenses	10,219			114			—			10,333
Deferred financing costs amortization and other	2,277			533			—			2,810
Working capital and other changes:
Change in accounts receivable	(222		)	(94,106		)	4,225			(90,103		)
Change in inventory	—			(29,313		)	—			(29,313		)
Change in prepaid expenses	(4		)	350			—			346
Change in other current assets	(217		)	373			—			156
Change in other assets	25			(120		)	—			(95		)
Change in accounts payable and accrued liabilities	18,612			62,319			(4,225		)	76,706
Change in other current liabilities	—			(472		)	—			(472		)
Net cash provided by (used in) operating activities	(48,434		)	440,820			—			392,386
Cash flows from investing activities:
Capital expenditures	—			(1,051,365		)	—			(1,051,365		)
Derivative settlements	—			6,545			—			6,545
Purchases of short-term investments	(126,213		)	—			—			(126,213		)
Redemptions of short-term investments	120,316			—			—			120,316
Advances from joint interest partners	—			12,112			—			12,112
Net cash used in investing activities	(5,897		)	(1,032,708		)	—			(1,038,605		)
Cash flows from financing activities:
Proceeds from issuance of senior notes	400,000			—			—			400,000
Debt issuance costs	(7,307		)	(705		)	—			(8,012		)
Purchases of treasury stock	(3,194		)	—			—			(3,194		)
Investment in / capital contributions from subsidiaries	(644,853		)	644,853			—			—
Net cash provided by (used in) financing activities	(255,354		)	644,148			—			388,794
Increase (decrease) in cash and cash equivalents	(309,685		)	52,260			—			(257,425		)
Cash and cash equivalents at beginning of period	443,482			27,390			—			470,872
Cash and cash equivalents at end of period	$	133,797		$	79,650		$	—		$	213,447