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Derivative Instruments | 3 Months Ended
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Mar. 31, 2021
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 settle monthly based on the average NYMEX West Texas Intermediate crude oil index price (“NYMEX WTI”), and its natural gas contracts settle monthly based on the average NYMEX Henry Hub natural gas index price (“NYMEX HH”). The Company primarily utilizes fixed price swaps and collars to reduce the volatility of crude oil and natural gas prices on future expected production. Swaps are designed to establish a fixed price for the volumes under contract, while collars are designed to establish a minimum price (floor) and a maximum price (ceiling) for the volumes under contract. All derivative instruments are recorded on the Company’s Condensed Consolidated Balance Sheets as either assets or liabilities measured at their fair value (see Note 6—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 Condensed 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 Condensed Consolidated Statements of Cash Flows. On March 22, 2021, the Company entered into the Second Amendment to the Oasis Credit Facility (as defined in Note 10—Long-Term Debt) to, among other things, reduce the rolling hedging requirement and add incremental flexibility to allow for restructuring of existing hedge positions (see Note 10 — Long-Term Debt). At March 31, 2021 (Successor), the Company had the following outstanding commodity derivative instruments:
Commodity |  | Settlement Period |  | Derivative Instrument |  |  |  | Volumes |  | Weighted Average Prices |  | Fair Value Assets (Liabilities)
|  |  |  |  | Fixed Price Swaps |  |  | Floor | Ceiling |
|  |  |  |  |  |  |  |  |  |  |  |  | (In thousands)
Crude oil |  | 2021 |  | Fixed price swaps |  |  |  | 7,975,000 |  | Bbl |  | $ | 42.09 |  |  |  |  |  |  | $ | (130,125) |
Crude oil |  | 2021 |  | Two-way collar |  |  |  | 459,000 |  | Bbl |  |  |  |  | $ | 45.00 |  | $ | 63.82 |  |  | (614) |
Crude oil |  | 2022 |  | Fixed price swaps |  |  |  | 7,245,000 |  | Bbl |  | $ | 42.66 |  |  |  |  |  |  | (82,286) |
Crude oil |  | 2022 |  | Two-way collar |  |  |  | 636,000 |  | Bbl |  |  |  |  | $ | 45.00 |  | $ | 63.82 |  |  | (88) |
Crude oil |  | 2023 |  | Fixed price swaps |  |  |  | 5,265,000 |  | Bbl |  | $ | 43.57 |  |  |  |  |  |  | (39,027) |
Crude oil |  | 2024 |  | Fixed price swaps |  |  |  | 434,000 |  | Bbl |  | $ | 43.68 |  |  |  |  |  |  | (2,654) |
Natural gas |  | 2021 |  | Fixed price swaps |  |  |  | 11,000,000 |  | MMBtu |  | $ | 2.84 |  |  |  |  |  |  | 1,174 |
Natural gas |  | 2022 |  | Fixed price swaps |  |  |  | 5,430,000 |  | MMBtu |  | $ | 2.82 |  |  |  |  |  |  | 610 |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | $ | (253,010) |
Subsequent to March 31, 2021, the Company entered into additional collars for crude oil with a weighted average floor price of $48.21 per Bbl and weighted average ceiling price of $66.37 per Bbl. The commodity contracts included total notional amounts of 765,000 Bbls, 4,163,000 Bbls, 4,380,000 Bbls and 372,000 Bbls which settle in 2021, 2022, 2023 and 2024 respectively, based on NYMEX WTI. These derivative instruments do not qualify for or were not designated as hedging instruments for accounting purposes. The following table summarizes the location and amounts of gains and losses from the Company’s commodity derivative instruments recorded in the Company’s Condensed Consolidated Statements of Operations for the periods presented (in thousands):
|  | Successor |  |  | Predecessor |  |  |  |
|  | Three Months Ended March 31, 2021 |  |  | Three Months Ended March 31, 2020 |  |
Statements of Operations Location |  |  |  |  |  |  |
Net gain (loss) on derivative instruments |  | $ | (181,515) |  |  |  | $ | 285,322 |  |  |  |  |
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 Condensed Consolidated Balance Sheets. The following table summarizes the location and fair value of all outstanding commodity derivative instruments recorded in the Company’s Condensed Consolidated Balance Sheets:
|  |  |  | Successor
|  |  |  | March 31, 2021
Commodity |  | Balance Sheet Location |  | Gross Recognized Assets |  | Gross Amount Offset |  | Net Recognized Fair Value Assets
|  |  |  | (In thousands)
Derivatives liabilities: |  |  |  |  |  |  |  |
Commodity contracts |  | Derivative instruments — current liabilities |  | $ | 159,043 |  |  | $ | (2,593) |  |  | $ | 156,450 |
Commodity contracts |  | Derivative instruments — non-current liabilities |  | 98,861 |  |  | (2,301) |  |  | 96,560 |
Total derivatives liabilities |  | $ | 257,904 |  |  | $ | (4,894) |  |  | $ | 253,010 |
|  |  |  | 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 |

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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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