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Commitments and Contingencies | 12 Months Ended
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Dec. 31, 2020
Commitments and Contingencies Disclosure [Abstract] |
Commitments and Contingencies | Commitments and Contingencies Included below is a discussion of various future commitments of the Company as of December 31, 2020. The commitments under these arrangements are not recorded in the accompanying Consolidated Balance Sheets. The amounts disclosed represent undiscounted cash flows on a gross basis and no inflation elements have been applied. As of December 31, 2020, the Company’s material off-balance sheet arrangements and transactions include $6.8 million in outstanding letters of credit issued under its Oasis Credit Facility and $49.0 million in net surety bond exposure issued as financial assurance on certain agreements. Volume commitment agreements. As of December 31, 2020, the Company had certain agreements with an aggregate requirement to deliver, transport or purchase a minimum quantity of approximately 46.6 MMBbl of crude oil, 704.1 Bcf of natural gas, 28.1 MMBbl of NGLs and 8.7 MMBbl of water, prior to any applicable volume credits, within specified timeframes, all of which are ten years or less, except for one agreement with a remaining term of approximately 24 years. These amounts are recognized as gathering, processing and transportation expense in the Company’s Consolidated Statements of Operations. The estimable future commitments under these volume commitment agreements as of December 31, 2020 are as follows:
| (In thousands)
2021 | $ | 89,118 |
2022 | 102,038 |
2023 | 96,174 |
2024 | 83,543 |
2025 | 69,287 |
Thereafter | 84,836 |
| $ | 524,996 |
The future commitments under certain agreements cannot be estimated and are therefore excluded from the table above as they are based on fixed differentials relative to a commodity index price under the agreements as compared to the differential relative to a commodity index price for the production month. The Company enters into long-term contracts to provide production flow assurance in oversupplied basins and/or areas with limited infrastructure. This strategic tactic provides for optimization of transportation and processing costs. As properties are undergoing development activities, the Company may experience temporary delivery or transportation shortfalls until production volumes grow to meet or exceed the minimum volume commitments. The Company recognizes any monthly deficiency payments in the period in which the underdelivery takes place and the related liability has been incurred. The table above does not include any such deficiency payments that may be incurred under the Company’s physical delivery contracts, since it cannot be predicted with accuracy the amount and timing of any such penalties incurred. Continuous development agreement. In connection with the closing of the 2018 Permian Acquisition, Forge Energy entered into and assigned to OP Permian a continuous development agreement (the “CDA”) with the Commissioner of the General Land Office, on behalf of the State of Texas (collectively, the “State”), as approved by the Board for Lease of University Lands (together with the State, “University Lands”). The CDA concerns certain leases covering a substantial portion of the acreage that the Company indirectly acquired from Forge Energy in the 2018 Permian Acquisition and under which University Lands is the lessor. Pursuant to the CDA, the tracts covered by these leases are pooled into a single development area for which the Company indirectly holds an eight-year initial term ending on December 31, 2025, with an additional five-year term for certain retained acreage at certain depths in the Delaware, Bone Spring and Wolfcamp formations. If OP Permian fails to meet certain drilling and development obligations, the CDA may be subject to early termination, in which case, the Company may be obligated to pay non-performance fees of up to approximately $100 million. Due to the extraordinary market conditions during 2020, the Company agreed with University Lands to pause operations, and on December 31, 2020, executed an amendment to the CDA reflecting that agreement. The amendment reduced or postponed certain drilling and development obligations for the year ended December 31, 2020 and did not result in the payment of any penalty. The Company’s current budget contemplates drilling activity which does not meet certain obligations under the CDA. The Company is currently in discussions with University Lands, similar to those held in 2020, in which it will seek an amendment for the reduction of its drilling obligations for 2021 similar to that previously received. The Company can provide no assurance that it will be successful in obtaining this amendment. Given the early stages of the Company’s discussions with University Lands on its drilling obligations for 2021 and the continuous flexibility the Company has with its drilling program to adjust as market and business conditions warrant, the Company cannot predict whether it will incur losses or estimate the amount of any potential loss. Litigation. The Company is party to various legal and/or regulatory proceedings from time to time arising in the ordinary course of business. When the Company determines that a loss is probable of occurring and is reasonably estimable, the Company accrues an undiscounted liability for such contingencies based on its best estimate using information available at the time. The Company discloses contingencies where an adverse outcome may be material, or in the judgment of management, the matter should otherwise be disclosed. Mirada litigation. On March 23, 2017, Mirada Energy, LLC, Mirada Wild Basin Holding Company, LLC and Mirada Energy Fund I, LLC (collectively, “Mirada”) filed a lawsuit against Oasis, OPNA and OMS, seeking monetary damages in excess of $100 million, declaratory relief, attorneys’ fees and costs (Mirada Energy, LLC, et al. v. Oasis Petroleum North America LLC, et al.; in the 334th Judicial District Court of Harris County, Texas; Case Number 2017-19911). Mirada asserts that it is a working interest owner in certain acreage owned and operated by the Company in Wild Basin. Specifically, Mirada asserts that the Company has breached certain agreements by: (1) failing to allow Mirada to participate in the Company’s midstream operations in Wild Basin; (2) refusing to provide Mirada with information that Mirada contends is required under certain agreements and failing to provide information in a timely fashion; (3) failing to consult with Mirada and failing to obtain Mirada’s consent prior to drilling more than one well at a time in Wild Basin; and (4) overstating the estimated costs of proposed well operations in Wild Basin. Mirada seeks a declaratory judgment that the Company be removed as operator in Wild Basin at Mirada’s election and that Mirada be allowed to elect a new operator; certain agreements apply to the Company and Mirada and Wild Basin with respect to this dispute; the Company be required to provide all information within its possession regarding proposed or ongoing operations in Wild Basin; and the Company not be permitted to drill, or propose to drill, more than one well at a time in Wild Basin without obtaining Mirada’s consent. Mirada also seeks a declaratory judgment with respect to the Company’s current midstream operations in Wild Basin. Specifically, Mirada seeks a declaratory judgment that Mirada has a right to participate in the Company’s Wild Basin midstream operations, consisting of produced and flowback water disposal, crude oil gathering and natural gas gathering and processing; that, upon Mirada’s election to participate, Mirada is obligated to pay its proportionate costs of the Company’s midstream operations in Wild Basin; and that Mirada would then be entitled to receive a share of revenues from the midstream operations and would not be charged any amount for its use of these facilities for production from the “Contract Area.” On June 30, 2017, Mirada amended its original petition to add a claim that the Company has breached certain agreements by charging Mirada for midstream services provided by its affiliates and to seek a declaratory judgment that Mirada is entitled to be paid its share of total proceeds from the sale of hydrocarbons received by OPNA or any affiliate of OPNA without deductions for midstream services provided by OPNA or its affiliates. On February 2, 2018 and February 16, 2018, Mirada filed a second and third amended petition, respectively. In these filings, Mirada alleged new legal theories for being entitled to enforce the underlying contracts and added Bighorn DevCo, Bobcat DevCo and Beartooth DevCo as defendants, asserting that these entities were created in bad faith in an effort to avoid contractual obligations owed to Mirada. On March 2, 2018, Mirada filed a fourth amended petition that described Mirada’s alleged ownership and assignment of interests in assets purportedly governed by agreements at issue in the lawsuit. On August 31, 2018, Mirada filed a fifth amended petition that added OMP as a defendant, asserting that it was created in bad faith in an effort to avoid contractual obligations owed to Mirada. On July 2, 2019, Oasis, OPNA, OMS, OMP, Bighorn DevCo, Bobcat DevCo and Beartooth DevCo LLC (collectively the “Oasis Entities”) counterclaimed against Mirada for a judgment declaring that Oasis Entities are not obligated to purchase, manage, gather, transport, compress, process, market, sell or otherwise handle Mirada’s proportionate share of oil and gas produced from OPNA-operated wells. The counterclaim also seeks attorney’s fees, costs and expenses. On November 1, 2019, Mirada filed a sixth amended petition that stated that Mirada seeks in excess of $200 million in damages and asserted that OMS is an agent of OPNA and OPNA, OMS, OMP, Bighorn DevCo, Bobcat DevCo and Beartooth DevCo are agents of Oasis. Mirada also changed its allegation that it may elect a new operator for the subject wells to instead allege that Mirada may remove Oasis as operator. On November 1, 2019, the Oasis Entities amended their counterclaim against Mirada for a judgment declaring that a provision in one of the agreements does not incorporate by reference any provisions in a certain participation agreement and joint operating agreement. The additional counterclaim also seeks attorney’s fees, costs and expenses. On the same day, the Oasis Entities filed an amended answer asserting additional defenses against Mirada’s claims. On March 13, 2020, Mirada filed a seventh amended petition that did not assert any new causes of action and did not add any new parties. Mirada did add an allegation that Oasis breached its implied duty of good faith and fair dealing with respect to certain contracts. On April 30, 2020, Mirada abandoned its prior claims related to overstating the estimated costs of proposed well operations in Wild Basin. On September 28, 2020, the Oasis Entities entered into a Settlement and Mutual Release Agreement (the “Mirada Settlement Agreement”) with Mirada. The Mirada Settlement Agreement provides for, among other things, payment by OPNA to certain Mirada related parties of $42.8 million ($20.0 million was paid on the effective date of the Plan, and the balance is due on or before 180 days after the effective date of the Plan) and mutual releases, including, without limitation, release of all claims asserted in the Mirada litigation against the Oasis Entities. The Company obtained approval of the Mirada Settlement Agreement by the Bankruptcy Court pursuant to the Plan and paid Mirada $20.0 million on the Emergence Date. The Company has an accrual for the $22.8 million balance due recorded in accrued liabilities on its Consolidated Balance Sheet as of December 31, 2020. Solomon litigation. On or about August 28, 2019, OP LLC, a wholly-owned subsidiary of the Company, was named as a defendant in the lawsuit styled Andrew Solomon, on behalf of himself and those similarly situated v. Oasis Petroleum, LLC, pending in the United States District Court for the District of North Dakota. The lawsuit alleged violations of the federal Fair Labor Standards Act and Title 29 of the North Dakota Century Code as the result of OP LLC’s alleged practice of paying the plaintiff and similarly situated current and former employees overtime at rates less than required by applicable law, or failing to pay for certain overtime hours worked. The lawsuit requested that: (i) its federal claims be advanced as a collective action, with a class of all operators, technicians and all other employees in substantially similar positions employed by OP LLC who were paid hourly for at least one week during the three year period prior to the commencement of the lawsuit, who worked 40 or more hours in at least one workweek and/or eight or more hours on at least one workday; and (ii) its state claims be advanced as a class action, with a class of all operators, technicians, and all other employees in substantially similar positions employed by OP LLC in North Dakota during the two year period prior to the commencement of the lawsuit, who worked 40 or more hours in at least one workweek and/or worked eight or more hours in a day on at least one workday. On September 14, 2020, OP LLC entered into a Settlement Agreement and Release of All Claims with Mr. Solomon which provides for, among other things, payment by OP LLC of $15,000 and a release by Mr. Solomon of claims against OP LLC and its affiliates, which includes, but is not limited to, all claims asserted, or which could have been asserted, against OP LLC and its affiliates arising out of or relating in any way to the Solomon litigation. On September 25, 2020, the Solomon litigation was dismissed with prejudice.

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