Equity-Based Compensation

Restricted stock awards. The Company has granted restricted stock awards to employees and directors under its Amended and Restated 2010 Long Term Incentive Plan, the majority of which vest over a three-year period. The maximum number of shares available for grant under the Amended and Restated 2010 Long Term Incentive Plan is 16,050,000. The fair value of restricted stock grants is based on the closing sales price of the Company’s common stock on the date of grant. Compensation expense is recognized ratably over the requisite service period.

The following table summarizes information related to restricted stock held by the Company’s employees and directors for the periods presented:



	Shares		Weighted Average Grant Date Fair Value per Share
Non-vested shares outstanding December 31, 2016	3,980,773		$	9.48
Granted	1,639,560		15.03
Vested	(1,676,735	)	11.81
Forfeited	(201,700	)	10.99
Non-vested shares outstanding December 31, 2017	3,741,898		$	10.78

Equity-based compensation expense recorded for restricted stock awards was $19.5 million, $20.0 million and $21.4 million, respectively, for each of the years ended December 31, 2017, 2016 and 2015, and is included in general and administrative expenses on the Company’s Consolidated Statements of Operations. The fair value of awards vested was $22.0 million, $6.9 million and $9.5 million for the years ended December 31, 2017, 2016 and 2015, respectively. The weighted average grant date fair value of restricted stock awards granted was $15.03 per share, $5.63 per share and $14.28 per share for the years ended December 31, 2017, 2016 and 2015, respectively. Unrecognized expense as of December 31, 2017 for all outstanding restricted stock awards was $23.2 million and will be recognized over a weighted average period of 1.9 years.

Performance share units. The Company has granted PSUs to officers of the Company under its Amended and Restated 2010 Long Term Incentive Plan. The PSUs are awards of restricted stock units, and each PSU that is earned represents the right to receive one share of the Company’s common stock.

The Company accounted for these PSUs as equity awards pursuant to the FASB’s authoritative guidance for share-based payments. The number of PSUs to be earned is subject to a market condition, which is based on a comparison of the total shareholder return (“TSR”) achieved with respect to shares of the Company’s common stock against the TSR achieved by a defined peer group at the end of the performance periods. Depending on the Company’s TSR performance relative to the defined peer group, award recipients will earn between 0% and 200% of the initial PSUs granted. All compensation expense related to the PSUs will be recognized if the requisite performance period is fulfilled, even if the market condition is not achieved.

The following table summarizes information related to PSUs held by the Company’s officers for the periods presented:



	Units		Weighted Average Grant Date Fair Value per Unit
Non-vested PSUs at December 31, 2016	1,387,619		$	9.52
Granted	509,800		16.89
Vested	—		—
Forfeited	(24,709	)	42.01
Non-vested PSUs at December 31, 2017	1,872,710		$	11.10

Equity-based compensation expense recorded for PSUs for the years ended December 31, 2017, 2016 and 2015 was $6.7 million, $4.2 million and $3.9 million, respectively, and is included in general and administrative expenses on the Company’s Consolidated Statements of Operations. The fair value of PSUs vested was $1.0 million and $0.8 million for the years ended December 31, 2016 and 2015, respectively. No PSUs vested during the year ended December 31, 2017. The weighted average grant date fair value of PSUs granted was $16.89 per share, $3.00 per share and $11.20 per share for the years ended December 31, 2017, 2016 and 2015, respectively. Unrecognized expense as of December 31, 2017 for all outstanding PSUs was $7.6 million and will be recognized over a weighted average period of 2.6 years.

The aggregate grant date fair value of the market-based awards was determined using a Monte Carlo simulation model. The Monte Carlo simulation model uses assumptions regarding random projections and must be repeated numerous times to achieve a probabilistic assessment. The key valuation assumptions for the Monte Carlo model are the forecast period, initial value, risk-free interest rate, volatility and correlation coefficients. The risk-free interest rate is the U.S. Treasury bond rate on the date of grant that corresponds to the total performance period. The initial value is the average of the volume weighted average prices for the 30 trading days prior to the start of the performance cycle for the Company and each of its peers. Volatility is the standard deviation of the average percentage change in stock price over a historical period for the Company and each of its peers. The correlation coefficients are measures of the strength of the linear relationship between and amongst the Company and its peers estimated based on historical stock price data.

The following assumptions were used for the Monte Carlo model to determine the grant date fair value and associated equity-based compensation expense of the PSUs granted during the periods presented:



	2017		2016		2015
Forecast period (years)	2 - 4		4		4
Risk-free interest rate	1.18% - 1.66%		1.25	%	0.99	%
Oasis stock price volatility	17.16	%	59.38	%	50.11	%

Associated tax benefit. For the years ended December 31, 2017, 2016 and 2015, the Company had an associated tax benefit of $6.3 million, $8.3 million and $8.7 million, respectively, related to all equity-based compensation.

OMP phantom unit awards. In September 2017, OMP GP adopted the Oasis Midstream Partners LP 2017 Long Term Incentive Plan (“OMP LTIP”). The OMP LTIP provides for the grant, from time to time at the discretion of the board of directors of OMP GP, of options, unit appreciation rights, restricted units, phantom units, unit awards, substitute awards, other unit-based awards or cash awards and includes any tandem distribution equivalent rights with respect to certain awards. The purpose of awards under the OMP LTIP is to provide additional incentive compensation to individuals providing services to OMP, and to align the economic interests of such individuals with the interests of OMP’s unitholders.

The aggregate number of common units that may be issued under the OMP LTIP is 1,842,500 common units, subject to a proportionate adjustment in the event of unit splits and similar events. On October 19, 2017 (the “Grant Date”), OMP granted awards under the OMP LTIP of 101,500 phantom units (collectively, the “Phantom Units,” and each a “Phantom Unit”) to certain employees of Oasis. Each Phantom Unit represents the right to receive, upon vesting of the award, a cash payment equal to the fair market value of one OMP common unit on the day prior to the date it vests (the “Vesting Date”). Award recipients are also entitled to Distribution Equivalent Rights (“DER”) with respect to each Phantom Unit received. Each DER represents the right to receive, upon vesting of the award, a cash payment equal to the value of the distributions paid on one OMP common unit between the Grant Date and the applicable Vesting Date. Each award of Phantom Units vests in equal amounts each year over a three-year period, and compensation expense will be recognized over the requisite service period.

The Phantom Units are accounted for as liability-classified awards since the awards will settle in cash, and equity-based compensation cost is accounted for under the fair value method in accordance with GAAP. Under the fair value method for liability-classified awards, compensation cost is remeasured each reporting period at fair value based upon the closing price of a publicly traded common unit. The Company will reimburse OMP for the cash settlement amount of these awards, which is included in general and administrative expenses on the Company’s Consolidated Statements of Operations. As of December 31, 2017, unrecognized compensation cost for all outstanding Phantom Units was $1.6 million, which is expected to be recognized over a weighted average period of 2.8 years.

The following table summarizes information related to Phantom Units held by certain employees of Oasis:



	Phantom Units		Weighted Average Grant Date Fair Value per Unit
Non-vested units outstanding December 31, 2016	—		$	—
Granted	101,500		16.40
Vested	—		—
Forfeited	(2,400	)	16.40
Non-vested units outstanding December 31, 2017	99,100		$	16.40

OMP restricted unit awards. In connection with the OMP IPO, certain directors of OMP were granted 11,766 restricted unit awards which vest over a one-year period. These awards are accounted for as equity-classified awards since the awards will settle in common units upon vesting. Equity-based compensation cost is accounted for under the fair value method in accordance with GAAP. Under the fair value method for equity-classified awards, compensation cost is measured at the grant date based on the fair value of the award and is recognized over the vesting period. Compensation cost associated with these awards was approximately $0.1 million for the year ended December 31, 2017 and is included in general and administrative expenses on the Company’s Consolidated Statements of Operations. Unrecognized expense as of December 31, 2017 for all outstanding restricted unit awards was $0.1 million, which is expected to be recognized over a weighted average period of 0.7 years.

The following table summarizes information related to restricted units held by certain directors of OMP:



	Restricted Units	Weighted Average Grant Date Fair Value per Unit
Non-vested units outstanding December 31, 2016	—	$	—
Granted	11,766	17.00
Vested	—	—
Forfeited	—	—
Non-vested units outstanding December 31, 2017	11,766	$	17.00