Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2022

Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of the Company have not been audited by the Company’s independent registered public accounting firm, except that the Condensed Consolidated Balance Sheet at December 31, 2021 is derived from audited financial statements. In the opinion of management, all adjustments, consisting of normal recurring adjustments necessary for the fair statement of the Company’s financial position, have been included. Management has made certain estimates and assumptions that affect reported amounts in the unaudited condensed consolidated financial statements and disclosures of contingencies. Actual results may differ from those estimates. The results for interim periods are not necessarily indicative of annual results.

These interim financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission regarding interim financial reporting. Certain disclosures have been condensed or omitted from these financial statements. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States of America (“GAAP”) for complete consolidated financial statements and should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 (“2021 Annual Report”).

Pending Merger

On March 7, 2022, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Whiting Petroleum Corporation, a Delaware corporation (“Whiting”), which provides for, among other things, the combination of the Company and Whiting in a merger of equals transaction (the “Merger”). Whiting is an independent oil and gas company engaged in the development, production and acquisition of crude oil, NGLs and natural gas primarily in the Rocky Mountains region of the United States. Under the terms of the Merger Agreement, Whiting shareholders will receive 0.5774 shares of Oasis common stock and $6.25 in cash (without interest) in exchange for each share of Whiting common stock. In connection with the closing of the Merger, Oasis shareholders will receive a special dividend of $15.00 per share. The Merger has been unanimously approved by the boards of directors of both companies. The closing of the Merger is subject to customary closing conditions, including, among others, receipt of the required approvals from each of Oasis’ shareholders and Whiting’s shareholders. The Merger is expected to close in the third quarter of 2022.

Discontinued Operations

On February 1, 2022, the Company completed the OMP Merger (defined in Note 9—Divestitures). The OMP Merger represented a strategic shift for the Company and qualified for reporting as a discontinued operation in accordance with Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) 205-20, Presentation of financial statements – Discontinued Operations (“ASC 205-20”). Accordingly, the results of operations of OMP for the period prior to closing on February 1, 2022 were classified as discontinued operations in the Condensed Consolidated Statement of Operations for the three months ended March 31, 2022. Prior periods have been recast so that the basis of presentation is consistent with that of the 2022 condensed consolidated financial statements. In addition, the assets and liabilities of OMP were classified as held for sale in the Condensed Consolidated Balance Sheet at December 31, 2021. The Condensed Consolidated Statements of Cash Flows were not required to be reclassified for discontinued operations for any period. See Note 10—Discontinued Operations for additional information.

Risks and Uncertainties

As a crude oil and natural gas producer, the Company’s revenue, profitability and future growth are substantially dependent upon the prevailing and future prices for crude oil and natural gas, which are dependent upon numerous factors beyond its control such as economic, political and regulatory developments and competition from other energy sources. The energy markets have historically been very volatile, and there can be no assurance that crude oil, natural gas or natural gas liquids (“NGLs”) prices will not be subject to wide fluctuations in the future. A substantial or extended decline in prices for crude oil and, to a lesser extent, natural gas and NGLs, could have a material adverse effect on the Company’s financial position, results

of operations, cash flows, the quantities of crude oil and natural gas reserves that may be economically produced and the Company’s access to capital.

Cash Equivalents

The Company may invest in certain money market funds, commercial paper and time deposits, all of which are stated at fair value or cost which approximates fair value due to the short-term maturity of these investments. The Company classifies all such investments with original maturity dates less than 90 days as cash equivalents. The Company may maintain balances of cash and cash equivalents in excess of amounts that are federally insured by the Federal Deposit Insurance Corporation. The Company invests with financial institutions that it believes are creditworthy and has not experienced any material losses in such accounts.

The following table provides a reconciliation of cash and cash equivalents reported within the Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Cash Flows:


	March 31, 2022		December 31, 2021

	(In thousands)
Cash and cash equivalents	$	410,174	$	172,114
Cash and cash equivalents classified as held for sale	—		2,669
Total cash and cash equivalents	$	410,174	$	174,783

Significant Accounting Policies

There have been no material changes to the Company’s critical accounting policies and estimates from those disclosed in the 2021 Annual Report, except as follows:

Investment in unconsolidated affiliate. On February 1, 2022, the Company completed the OMP Merger (defined in Note 9—Divestitures) and received $160.0 million in cash and 20,985,668 common units representing limited partner interests of Crestwood Equity Partners LP, a Delaware limited partnership (“Crestwood”), which represents approximately 21% of Crestwood’s issued and outstanding common units as of March 31, 2022. In addition, the Company and Crestwood executed a director nomination agreement pursuant to which Oasis appointed two directors to the Board of Directors of Crestwood Equity GP LLC, a Delaware limited liability company and the general partner of Crestwood (“Crestwood GP”). The Company has determined that it has the ability to exercise significant influence over Crestwood based upon its ownership in Crestwood and its representation on the Board of Directors of Crestwood GP. Accordingly, the Company has determined its investment in Crestwood is subject to the equity method of accounting and has elected to account for the investment using the fair value option under FASB ASC 825-10, Financial Instruments. The Company measures the carrying amount of its investment in Crestwood at fair value each reporting period, with changes in fair value recorded to income from investment in unconsolidated affiliate on the Condensed Consolidated Statement of Operations. In addition, cash distributions from Crestwood are recorded to income from investment in unconsolidated affiliate on the Condensed Consolidated Statement of Operations. See Note 6—Fair Value Measurements and Note 11—Investment in Unconsolidated Affiliate for additional information.

Recent Accounting Pronouncements

Reference rate reform. In March 2020, the FASB issued Accounting Standards Update 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”). ASU 2020-04 provides optional guidance for a limited time to ease the potential burden in accounting for reference rate reform, including optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. ASU 2020-04 applies only to contracts and hedging relationships that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued due to reference rate reform. ASU 2020-04 is effective immediately and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022. Amounts drawn under the Oasis Credit Facility (defined in Note 12—Long-Term Debt) bear interest rates in relation to LIBOR. The credit agreement governing the Oasis Credit Facility includes customary provisions to provide for replacement of LIBOR with the Secured Overnight Financing Rate, an index supported by short-term Treasury repurchase agreements, when LIBOR ceases to be available. The Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements and related disclosures.