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Equity-Based Compensation | 9 Months Ended
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Sep. 30, 2021
Share-based Payment Arrangement [Abstract] |
Equity-Based Compensation | Equity-Based Compensation Successor Equity-Based Compensation The Compensation Committee of the Board of Directors approved the grant of certain awards under the Company’s 2020 Long Term Incentive Plan (“2020 LTIP”), which consists of restricted stock units (“RSUs”), performance share units (“PSUs”) and leveraged stock units (“LSUs”). The Company accounts for RSUs, PSUs and LSUs as equity classified awards in accordance with the FASB’s authoritative guidance for share-based payments. Restricted stock units. RSUs are contingent shares that are scheduled to vest 25% each year over a four-year period to promote retention of key employees. The fair value is based on the closing price of the Company’s common stock on the date of grant or, if applicable, the date of modification. Compensation expense is recognized ratably over the requisite service period. During the nine months ended September 30, 2021, the Company granted 443,836 RSUs with a weighted average grant date per share value of $51.64. During the three and nine months ended September 30, 2021, the Company recorded equity-based compensation expense related to RSUs of $1.4 million and $3.5 million, respectively, in general and administrative expenses on its Condensed Consolidated Statements of Operations. Performance share units. PSUs are contingent shares that may be earned over three-year and four-year performance periods. 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 applicable performance periods, with 50% of the PSU awards eligible to be earned based on performance relative to a certain group of the Company’s oil and gas peers and 50% of the PSU awards eligible to be earned based on performance relative to the broad-based Russell 2000 index. Depending on the Company’s TSR performance relative to the defined peer group, award recipients may earn between 0% and 150% of target. During the nine months ended September 30, 2021, the Company granted 183,915 PSUs with a weighted average grant date per share value of $63.95. During the three and nine months ended September 30, 2021, the Company recorded equity-based compensation expense related to PSUs of $0.9 million and $2.2 million, respectively, in general and administrative expenses on its Condensed Consolidated Statements of Operations. Leveraged stock units. LSUs are contingent shares that may be earned over a three-year or four-year performance period. The number of LSUs to be earned is subject to a market condition, which is based on the TSR performance of the Company’s common stock measured against specific premium return objectives. Depending on the Company’s TSR performance, award recipients may earn between 0% and 300% of target; however, the number of shares delivered in respect to these awards during the grant cycle may not exceed ten times the fair value of the award on the grant date. During the nine months ended September 30, 2021, the Company granted 262,406 LSUs with a weighted average grant date per share value of $78.79. During the three and nine months ended September 30, 2021, the Company recorded equity-based compensation expense related to LSUs of $1.6 million and $4.0 million, respectively, in general and administrative expenses on its Condensed Consolidated Statements of Operations. Fair value assumptions. The aggregate grant date fair value of PSUs and LSUs was determined by a third-party valuation specialist using a Monte Carlo simulation model. The key valuation inputs were: (i) the forecast period, (ii) risk-free interest rate, (iii) implied equity volatility, (iv) stock price on the date of grant and, for PSUs, (v) correlation coefficient. The risk-free interest rates are the U.S. Treasury bond rates on the date of grant that correspond to each performance period. Implied equity volatility is derived by solving for an asset volatility and equity volatility based on the leverage of the Company and each of its peers. For the PSUs, the correlation coefficient measures the strength of the linear relationship between and amongst the Company and its peers based on historical stock price data. The following table summarizes the assumptions used in the Monte Carlo simulation model to determine the grant date fair value and associated equity-based compensation expenses by grant date:
Grant date | January 18, 2021 |  | February 11, 2021 |  | April 13, 2021
Forecast period (years) | 3 - 4 |  | 3 - 4 |  | 3 - 4
Risk-free interest rates | 0.2% - 0.3% |  | 0.2% - 0.3% |  | 0.3% - 0.6%
Implied equity volatility | 55% - 60% |  | 55% - 60% |  | 45% - 50%
Stock price on date of grant | $44.41 |  | $49.66 |  | $68.07
Restricted stock awards. The Company has granted restricted stock awards to its directors under the 2020 LTIP, which vest one-third annually over a three-year period subject to a service condition. The fair value of restricted stock awards is based on the closing price of the Company’s common stock on the date of grant or, if applicable, the date of modification. Compensation expense is recognized ratably over the requisite service period. During the three and nine months ended September 30, 2021, the Company recorded equity-based compensation expense for restricted stock awards of $0.3 million and $0.9 million, respectively, in general and administrative expenses on its Condensed Consolidated Statements of Operations. Class B Units in OMP GP OMP GP previously granted restricted Class B Units to certain employees, including OMP’s named executive officers, as consideration for services to the Company. On March 30, 2021, in connection with the Midstream Simplification, certain Class B Units representing membership interests in OMP GP that were previously issued to certain of OMP’s named executive officers were converted into and exchanged for the right to receive restricted common units in OMP, subject to the following vesting schedule: (i) 34% vested on March 30, 2021, (ii) 33% will vest on March 30, 2022 and (iii) 33% will vest on March 30, 2023. As of September 30, 2021, the unamortized grant date fair value related to the unvested OMP restricted common units was $0.4 million and will be recognized over a remaining life of approximately two years. Predecessor Equity-Based Compensation The Predecessor previously granted equity-classified restricted stock awards and PSUs under its Amended and Restated 2010 Long Term Incentive Plan (the “Predecessor 2010 LTIP”). For the three and nine months ended September 30, 2020, the Predecessor recorded equity-based compensation expense of $3.1 million and $10.6 million, respectively, related to restricted stock awards and $1.6 million and $5.7 million, respectively, related to PSUs in general and administrative expenses on its Condensed Consolidated Statements of Operations. On the Emergence Date and pursuant to the Company’s restructuring plan, all outstanding unvested restricted stock awards and PSUs granted under the Predecessor 2010 LTIP vested, and there were no outstanding Predecessor restricted stock awards and PSUs at September 30, 2021 or December 31, 2020. 2020 Incentive Compensation Program. In the second quarter of 2020, the board of directors of the Predecessor implemented a revised 2020 incentive compensation program pursuant to which all 2020 equity-based awards previously granted were forfeited and concurrently replaced with cash retention incentives. In connection with the 2020 cash incentive compensation program, the Predecessor recorded $5.9 million and $12.4 million in general and administrative expenses on its Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2020, respectively.

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