Acquisitions

12 Months Ended

Dec. 31, 2019

Permian Basin Acquisition. On February 14, 2018, the Company and OP Permian, a wholly owned subsidiary of the Company, acquired from Forge Energy, LLC (“Forge Energy”) approximately 22,000 net acres in the Delaware Basin (the “Permian Basin Acquisition”) for aggregate consideration consisting of approximately $549.8 million in cash, inclusive of a $47.3 million deposit paid to Forge Energy in December 2017, and 46,000,000 shares of the Company’s common stock (the “Purchase Price”), including customary post close adjustments. In connection with the closing of the Permian Basin Acquisition, the Company and Forge Energy entered into a Registration Rights Agreement that granted the equity holders of Forge Energy certain customary registration rights for the stock portion of the Purchase Price. The Company funded the cash portion of the Purchase Price with borrowings under a senior secured revolving line of credit among OPNA, as Borrower, Wells Fargo Bank, N.A., as administrative agent and the lenders party thereto (the “Oasis Credit Facility,” and, together with the OMP Credit Facility, the “Revolving Credit Facilities”), and proceeds from the Company’s December 2017 issuance of its common stock.

The Permian Basin Acquisition represents the Company’s initial entry into the Delaware Basin. The assets underlying the Permian Basin Acquisition are primarily located in the Bone Spring and Wolfcamp formations of the Delaware sub-basin, across Ward, Winkler, Loving and Reeves Counties, Texas.

The Permian Basin Acquisition qualified as a business combination. As such, the Company estimated the fair value of the assets acquired and liabilities assumed as of the February 14, 2018 acquisition date. The fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). Fair value measurements also utilize assumptions of market participants. The Company used a discounted cash flow model and made market assumptions as to future commodity prices, projections of estimated quantities of oil and gas reserves, expectations for timing and amount of future development and operating costs, projections of future rates of production, expected recovery rates and risk adjusted discount rates. These assumptions represent Level 3 inputs, as further discussed under Note 7 — Fair Value Measurements. The Company recorded the assets acquired and liabilities assumed in the Permian Basin Acquisition at their estimated fair value of $921.0 million, which the Company considers to be representative of the price paid by a typical market participant. This measurement resulted in no goodwill or bargain purchase being recognized. The Permian Basin Acquisition is considered a taxable transaction; therefore, no deferred tax amounts were recognized at the acquisition date as the tax basis of the assets acquired and liabilities assumed were also recorded at fair value.

The following table summarizes the consideration paid for the Company’s acquisition and the fair value of the assets acquired and liabilities assumed as of the acquisition date.


	At February 14, 2018
	(In thousands)
Consideration paid to Forge Energy:
Cash	$	549,770
Common stock: 46,000,000 shares issued	371,220
	$	920,990
Recognized amounts of identifiable assets acquired and liabilities assumed:
Proved developed properties	$	110,325
Proved undeveloped properties	166,552
Unproved lease acquisition costs	645,068
Inventory	293
Intangible assets	1,000
Asset retirement obligations	(2,248)
	$	920,990

The results of operations for the Permian Basin Acquisition have been included in the Company’s consolidated financial statements since the February 14, 2018 closing date, including $71.7 million of total revenue and $15.6 million of operating income for the year ended December 31, 2018.

The Company also recorded a $1.0 million finite-lived intangible asset on the Company’s Consolidated Balance Sheets for a non-compete agreement with a one-year life. Intangible assets are amortized on a straight-line basis over the useful life, and the Company includes the amortization in depreciation, depletion and amortization expenses on the Company’s Consolidated Statements of Operations. For the years ended December 31, 2018 and 2019, amortization expense recognized for this non-compete agreement was approximately $0.9 million and $0.1 million, respectively.

Summarized below are the consolidated results of operations for the year ended December 31, 2018, on an unaudited pro forma basis, as if the acquisition and related financing had occurred on January 1, 2017. The unaudited pro forma financial information was derived from the historical consolidated statements of operations of the Company and the statement of revenues and direct operating expenses for the Permian Basin Acquisition properties, which were derived from the historical accounting records of Forge Energy. The unaudited pro forma financial information does not purport to be indicative of results of operations that would have occurred had the acquisition and related financing occurred on the basis assumed above, nor is such information indicative of the Company’s expected future results of operations.


	Year Ended December 31,
	2018		2017

	(In thousands)
	Unaudited
Revenues	$	2,327,476	$	1,337,468
Net income (loss) attributable to Oasis	(30,754)		159,838

Net income (loss) attributable to Oasis per share:
Basic	$	(0.10)	$	0.57
Diluted	(0.10)		0.56

Other Delaware Acquisition. On September 12, 2018, the Company completed the initial closing with undisclosed sellers to acquire certain exploration and production assets adjacent to the Company’s existing Delaware position (the “Other Delaware Acquisition”) for total cash consideration of $59.5 million. The final closing statement was finalized in January 2019, subsequent to the year ended December 31, 2018. Based on the FASB’s authoritative guidance, the acquisition qualified as a business combination, and as such, the Company estimated the fair value of the assets acquired as of the acquisition date. The Company recorded the oil and gas properties acquired at their estimated fair value of $59.5 million, which the Company considers to be representative of the price paid by a typical market participant. This measurement resulted in no goodwill or bargain purchase being recognized.

The results of operations for the Other Delaware Acquisition have been included in the Company’s consolidated financial statements since the closing date. Pro forma information is not presented as the pro forma results would not be materially different from the information presented in the Company’s Consolidated Statement of Operations.

Acquisitions. The Company actively reviews acquisition opportunities on an ongoing basis and acquires additional acreage and producing assets to supplement its existing operations. In addition to the Permian Basin Acquisition and Other Delaware Acquisition in 2018, the Company spent $21.0 million and $18.7 million to purchase certain acreage and producing assets through multiple transactions during the years ended December 31, 2019 and 2018, respectively. Based on the FASB’s authoritative guidance, these transactions were considered asset acquisitions, and as such, the Company recorded the properties based on the fair value of the total cash consideration transferred on the acquisition dates.