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Derivative Instruments | 12 Months Ended
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Dec. 31, 2020
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivative Instruments | Derivative Instruments The Company utilizes derivative financial instruments to manage risks related to changes in crude oil and natural gas prices. The Company’s crude oil contracts will settle monthly based on the average NYMEX WTI. The Company’s natural gas contracts will settle monthly based on the average NYMEX Henry Hub natural gas index price (“NYMEX HH”). At December 31, 2020 (Successor), the Company utilized fixed price swaps to reduce the volatility of crude oil and natural gas prices on a significant portion of its future expected crude oil and natural gas production. The Company’s fixed price swaps are comprised of a sold call and a purchased put established at the same price (both ceiling and floor), which the Company will receive for the volumes under contract. All derivative instruments are recorded on the Company’s Consolidated Balance Sheets as either assets or liabilities measured at their fair value (see Note 9—Fair Value Measurements). The Company has not designated any derivative instruments as hedges for accounting purposes and does not enter into such instruments for speculative trading purposes. If a derivative does not qualify as a hedge or is not designated as a hedge, the changes in fair value are recognized in the other income (expense) section of the Company’s Consolidated Statements of Operations as a net gain or loss on derivative instruments. The Company’s cash flow is only impacted when cash settlements on matured or liquidated derivative contracts result in making a payment to or receiving a payment from a counterparty. These cash settlements represent the cumulative gains and losses on the Company’s derivative instruments and do not include a recovery of costs that were paid to acquire or modify the derivative instruments that were settled. Cash settlements are reflected as investing activities in the Company’s Consolidated Statements of Cash Flows. In June 2020, following a decrease in crude oil commodity prices and the related increase in the fair value of derivative assets, the Company liquidated a portion of its crude oil three-way costless collar contracts prior to the expiration of their contractual maturities, resulting in cash proceeds of $25.3 million, which are reflected as investing activities in the Company’s Consolidated Statements of Cash Flows during the Predecessor period from January 1, 2020 through November 19, 2020. On September 15, 2020, the Company entered into a Direction Letter and Specified Swap Liquidation Agreement (the “Letter Agreement”), which, among other things, amended its Predecessor Credit Facility. Pursuant to the Letter Agreement, beginning on September 15, 2020 and ending on the earlier of (1) October 15, 2020 and (2) the occurrence of an event of default under the Predecessor Credit Facility, the Company was required to use commercially reasonable efforts with respect to each of its swap agreements, to either (x) terminate such swap agreement or (y) reset such swap agreement to current market terms in existence at the time of such reset in exchange for a lump-sum cash payment substantially similar to the payment it would have received in respect of a termination of such swap agreement (each a “Specified Swap Liquidation”). The Letter Agreement also contained an agreement by the Company to apply the proceeds of any such Specified Swap Liquidation to prepayment of its loans under the Predecessor Credit Facility. Each Specified Swap Liquidation reduced the borrowing base and the aggregate elected commitment amounts under the Predecessor Credit Facility by an amount equal to any prepayment of the loans using the proceeds of such Specified Swap Liquidation (see Note 15—Long-Term Debt). During the period from September 15, 2020 through the Petition Date of the Chapter 11 Cases, which constituted an event of default under the Predecessor Credit Facility, the Company liquidated its outstanding swap agreements and received cash proceeds of $37.4 million for Specified Swap Liquidations, which are reflected as investing activities in the Company’s Consolidated Statements of Cash Flows during the Predecessor period from January 1, 2020 through November 19, 2020. In order to secure exit financing upon emerging from the Chapter 11 Cases, the Oasis Credit Facility included certain conditions that were required before closing, including minimum hedge volumes and prices. In the event the actual hedge prices were less than the target hedge prices, the borrowing base could have been subject to an availability block, set based on the shortfall. Specifically, OPNA, as borrower, was required to enter into hedges covering minimum hedge volumes of (i) 10,303 MBbl for the first year after the closing date, (ii) 6,761 MBbl for the second year after the closing date and (iii) 4,945 MBbl for the third year after the closing date; provided that, two-thirds of such hedging shall be entered into on the closing date of the Oasis Credit Facility, with the remainder to be entered into 30 days after the closing date. The target pricing for the hedges shall not be less than (i) $43.04 per barrel for the first year after the closing date, (ii) $43.94 per barrel for the second year after the closing date and (iii) $44.79 per barrel for the third year after the closing date. The Company had met the minimum hedging requirements as of the Emergence Date. At December 31, 2020 (Successor), the Company had the following outstanding commodity derivative instruments:
Commodity |  | Settlement Period |  | Derivative Instrument |  | Index |  | Volumes |  | Weighted Average Prices |  | Fair Value Assets (Liabilities)
|  |  |  |  |  |  |  |  |  |  |  |  |  | (In thousands)
Crude oil |  | 2021 |  | Fixed price swaps |  | NYMEX WTI |  | 9,748,000 |  |  | Bbl |  | $ | 42.09 |  |  |  |  |  |  |  |  |  |  | $ | (59,262) |
Crude oil |  | 2022 |  | Fixed price swaps |  | NYMEX WTI |  | 7,245,000 |  |  | Bbl |  | $ | 42.66 |  |  |  |  |  |  |  |  |  |  | (27,759) |
Crude oil |  | 2023 |  | Fixed price swaps |  | NYMEX WTI |  | 5,265,000 |  |  | Bbl |  | $ | 43.57 |  |  |  |  |  |  |  |  |  |  | (10,054) |
Crude oil |  | 2024 |  | Fixed price swaps |  | NYMEX WTI |  | 434,000 |  |  | Bbl |  | $ | 43.68 |  |  |  |  |  |  |  |  |  |  | (613) |
Natural gas |  | 2021 |  | Fixed price swaps |  | NYMEX HH |  | 14,600,000 |  |  | MMBtu |  | $ | 2.84 |  |  |  |  |  |  |  |  |  |  | 2,785 |
Natural gas |  | 2022 |  | Fixed price swaps |  | NYMEX HH |  | 5,430,000 |  |  | MMBtu |  | $ | 2.82 |  |  |  |  |  |  |  |  |  |  | 812 |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | $ | (94,091) |
Subsequent to December 31, 2020, the Company entered into new two-way costless collar options for crude oil with a weighted average floor price of $45.00 per barrel. The commodity contracts included total notional amounts of 459,000 barrels and 636,000 barrels which settle in 2021 and 2022, respectively, based on NYMEX WTI. The following table summarizes the location and amounts of gains and losses from the Company’s commodity derivative instruments recorded in the Company’s Consolidated Statements of Operations for the periods presented (in thousands):
|  | Successor |  |  | Predecessor
|  | Period from November 20, 2020 through December 31, 2020 |  |  | Period from January 1, 2020 through November 19, 2020 |  | Year Ended December 31,
Statement of Operations Location |  |  |  |  | 2019 |  | 2018
Net gain (loss) on derivative instruments |  | $ | (84,615) |  |  |  | $ | 233,565 |  |  | $ | (106,314) |  |  | $ | 28,457 |
In accordance with the FASB’s authoritative guidance on disclosures about offsetting assets and liabilities, the Company is required to disclose both gross and net information about instruments and transactions eligible for offset in the statement of financial position as well as instruments and transactions subject to an agreement similar to a master netting agreement. The Company’s derivative instruments are presented as assets and liabilities on a net basis by counterparty, as all counterparty contracts provide for net settlement. No margin or collateral balances are deposited with counterparties, and as such, gross amounts are offset to determine the net amounts presented in the Company’s Consolidated Balance Sheets. The following tables summarize the location and fair value of all outstanding commodity derivative instruments recorded in the Company’s Consolidated Balance Sheets:
|  |  |  | Successor
|  |  |  | December 31, 2020
Commodity |  | Balance Sheet Location |  | Gross Recognized Assets/Liabilities |  | Gross Amount Offset |  | Net Recognized Fair Value Assets/Liabilities
|  |  |  | (In thousands)
Derivatives assets: |  |  |  |  |  |  |  |
Commodity contracts |  | Derivative instruments — current assets |  | $ | 467 |  |  | $ | — |  |  | $ | 467 |
Commodity contracts |  | Derivative instruments — non-current assets |  | — |  |  | — |  |  | — |
Total derivatives assets |  |  |  | $ | 467 |  |  | $ | — |  |  | $ | 467 |
Derivatives liabilities: |  |  |  |  |  |  |  |
Commodity contracts |  | Derivative instruments — current liabilities |  | $ | 59,262 |  |  | $ | (2,318) |  |  | $ | 56,944 |
Commodity contracts |  | Derivative instruments — non-current liabilities |  | 38,426 |  |  | (812) |  |  | 37,614 |
Total derivatives liabilities |  | $ | 97,688 |  |  | $ | (3,130) |  |  | $ | 94,558 |
|  |  |  | Predecessor
|  |  |  | December 31, 2019
Commodity |  | Balance Sheet Location |  | Gross Recognized Assets/Liabilities |  | Gross Amount Offset |  | Net Recognized Fair Value Assets/Liabilities
|  |  |  | (In thousands)
Derivatives assets: |  |  |  |  |  |  |  |
Commodity contracts |  | Derivative instruments — current assets |  | $ | 633 |  |  | $ | (98) |  |  | $ | 535 |
Commodity contracts |  | Derivative instruments — non-current assets |  | 3,295 |  |  | (2,656) |  |  | 639 |
Total derivatives assets |  |  |  | $ | 3,928 |  |  | $ | (2,754) |  |  | $ | 1,174 |
Derivatives liabilities: |  |  |  |  |  |  |  |
Commodity contracts |  | Derivative instruments — current liabilities |  | $ | 33,812 |  |  | $ | (14,117) |  |  | $ | 19,695 |
Commodity contracts |  | Derivative instruments — non-current liabilities |  | 686 |  |  | (566) |  |  | 120 |
Total derivatives liabilities |  | $ | 34,498 |  |  | $ | (14,683) |  |  | $ | 19,815 |

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- Definition The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -URI http://asc.fasb.org/topic&trid=2229140 + Details
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