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Derivative Instruments
 12 Months Ended
Dec. 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 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”).
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. The Company may, from time to time, restructure existing derivative contracts or enter into new transactions to effectively modify the terms of current contracts in order to improve the pricing parameters in existing contracts.
All derivative instruments are recorded on the Company’s Consolidated Balance Sheets as either assets or liabilities measured at their fair value (see Note 10—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, modified or liquidated derivative contracts result in making a payment to or receiving a payment from a counterparty. Cash settlements are reflected as investing activities in the Company’s Consolidated Statements of Cash Flows.
2021 derivative contract modifications. During 2021, the Company entered into a series of transactions with derivative counterparties to modify the swap price of certain commodity derivative contracts. The Company modified the strike price of its 2022 crude oil swap contracts to $70.00 per barrel from a weighted average price of $40.89 per barrel and its 2023 crude oil swap contracts to $50.00 per barrel from a weighted average price of $43.68 per barrel. The commodity contracts modified included total notional volumes of 6,935 MBbl which settle in 2022 and 5,110 MBbl which settle in 2023. The Company paid $220.9 million to modify these commodity derivative contracts, which is reflected as a cash outflow from investing activities in the Consolidated Statement of Cash Flows for the year ended December 31, 2021 (Successor).
2020 liquidations. 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 Statement 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 14—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 Statement of Cash Flows during the Predecessor period from January 1, 2020 through November 19, 2020.
Minimum hedging requirements. 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. 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. On December 22, 2021, the Company entered into the Sixth Amendment to Credit Agreement to, among other things, remove the minimum hedging requirements under the Oasis Credit Facility.
At December 31, 2021, the Company had the following outstanding commodity derivative instruments:
CommoditySettlement
Period		Derivative
Instrument		VolumesWeighted Average PricesFair Value Assets (Liabilities)
Fixed Price SwapsFloorCeiling
  (In thousands)
Crude oil2021Two-way collar248,000 Bbl$51.25 $68.24 $(855)
Crude oil2021Fixed price swaps899,000 Bbl$42.09 (26,606)
Crude oil2022Two-way collar4,551,000 Bbl$49.40 $66.53 (41,719)
Crude oil2022Fixed price swaps6,346,000 Bbl$70.00 (15,753)
Crude oil2023Two-way collar4,380,000 Bbl$45.42 $65.05 (33,415)
Crude oil2023Fixed price swaps5,265,000 Bbl$52.24 (73,650)
Crude oil2024Two-way collar372,000 Bbl$45.00 $64.88 (2,269)
Crude oil2024Fixed price swaps434,000 Bbl$50.00 (5,892)
Natural gas2021Fixed price swaps930,000 MMBtu$2.82 (1,121)
Natural gas2022Fixed price swaps4,500,000 MMBtu$2.82 (3,394)
$(204,674)
Permian Basin Sale Contingent Consideration. Pursuant to the Primary Permian Basin Sale PSA (defined in Note 13 – Acquisitions and Divestitures), the Company is entitled to receive up to three earn-out payments of $25.0 million per year for each of 2023, 2024 and 2025 if the average daily settlement price of NYMEX WTI crude oil exceeds $60 per barrel for such year (the “Permian Basin Sale Contingent Consideration”). If the NYMEX WTI crude oil price for calendar year 2023 or 2024 is less than $45 per barrel, then each calendar year thereafter the buyer’s obligation to make any remaining earn-out payments is terminated. The Company determined that the Permian Basin Sale Contingent Consideration was an embedded derivative in accordance with the FASB ASC 815, Derivatives and Hedging. The Company bifurcated the Permian Basin Sale Contingent Consideration from the host contract and accounted for it separately at fair value. The fair value of the Permian Basin Sale Contingent Consideration was estimated to be $32.9 million as of the close date on June 29, 2021. The Permian Basin Sale Contingent Consideration is marked-to-market each reporting period, with changes in fair value recorded to net gain (loss) on derivative instruments on the Consolidated Statements of Operations. As of December 31, 2021, the estimated fair value of the Permian Basin Sale Contingent Consideration was $44.8 million, which was classified as a non-current derivative asset on the Consolidated Balance Sheet.
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):
SuccessorPredecessor
 Year Ended December 31, 2021Period from November 20, 2020 through
December 31, 2020		Period from January 1, 2020 through
November 19, 2020		Year Ended December 31, 2019
Derivative InstrumentStatement of Operations Location
Commodity derivative instrumentNet gain (loss) on 
derivative instruments		$(601,591)$(84,615)$233,565 $(106,314)
Contingent considerationNet gain (loss) on 
derivative instruments		11,950 — — — 
Contingent considerationGain on sale of properties32,860 — — — 
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:
December 31, 2021
Derivative InstrumentBalance Sheet LocationGross Recognized Assets/LiabilitiesGross Amount OffsetNet Recognized Fair Value Assets/Liabilities
(In thousands)
Derivatives assets:
Contingent considerationDerivative instruments — non-current assets$44,810 $— $44,810 
Commodity contractsDerivative instruments — non-current assets55 — 55 
Total derivatives assets$44,865 $— $44,865 
Derivatives liabilities:
Commodity contractsDerivative instruments — current liabilities$96,172 $(6,725)$89,447 
Commodity contractsDerivative instruments — non-current liabilities133,655 (18,373)115,282 
Total derivatives liabilities$229,827 $(25,098)$204,729 
December 31, 2020
Derivative InstrumentBalance Sheet LocationGross Recognized Assets/LiabilitiesGross Amount OffsetNet Recognized Fair Value Assets/Liabilities
(In thousands)
Derivatives assets:
Commodity contractsDerivative instruments — current assets$467 $— $467 
Commodity contractsDerivative instruments — non-current assets— — — 
Total derivatives assets$467 $— $467 
Derivatives liabilities:
Commodity contractsDerivative instruments — current liabilities$59,262 $(2,318)$56,944 
Commodity contractsDerivative instruments — non-current liabilities38,426 (812)37,614 
Total derivatives liabilities$97,688 $(3,130)$94,558