Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 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”).

The Merger

On March 7, 2022, Oasis entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Whiting Petroleum Corporation (“Whiting”), which provided for, among other things, the combination of Oasis and Whiting in a merger of equals transaction (the “Merger”). Whiting was an independent oil and gas company engaged in the development, production and acquisition of crude oil, natural gas liquid (“NGL”) and natural gas primarily in the Rocky Mountains region of the United States.

In connection with the Merger, the Board of Directors of Oasis unanimously (i) determined the issuance of the shares of common stock, par value $0.01 per share, of Oasis (the “Oasis Stock Issuance”), and the amendment of Oasis’ restated certificate of incorporation to (a) increase the number of authorized shares of common stock from 60,000,000 shares of common stock to 120,000,000 shares of common stock and (b) change the name of the Company from Oasis Petroleum Inc. to Chord Energy Corporation (the “Oasis Charter Amendment”) are fair to, and in the best interests of, Oasis and the holders of its common stock, (ii) approved and declared advisable the Oasis Stock Issuance and the Oasis Charter Amendment and (iii) recommended that the holders of common stock approve the Oasis Stock Issuance and the Oasis Charter Amendment. On June 28, 2022, the shareholders of Oasis approved the Oasis Stock Issuance and Oasis Charter Amendment proposals.

On July 1, 2022, the Merger was completed and the Company issued 22,671,871 shares of common stock and paid $245.4 million of cash to Whiting shareholders. Under the terms of the Merger Agreement, each holder of common stock, par value $0.001 per share, of Whiting received 0.5774 shares of common stock, par value $0.01 per share, of the Company (the “Share Consideration”) and $6.25 in cash (the “Cash Consideration” and together with the Share Consideration the “Merger Consideration”) in exchange for each share of Whiting common stock.

In connection with the Merger, on June 16, 2022, the Board of Directors of Oasis declared a special dividend of $15.00 per share of Oasis common stock (the “Special Dividend”). The Special Dividend, which was subject to completion of the Merger, was paid on July 8, 2022 to holders of Oasis common stock of record as of June 29, 2022.

The Merger is being accounted for under the acquisition method of accounting in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 805, Business Combinations (“ASC 805”), with Oasis treated as the acquirer for accounting purposes. Under the acquisition method of accounting, the assets and liabilities of Whiting will be recorded at their respective fair values as of the acquisition date on July 1, 2022. The preliminary purchase price allocation is not complete as of the date of this report. The Company expects to finalize the purchase price allocation as soon as practicable, which will not extend beyond the one year measurement period provided under ASC 805. The determination of the acquisition date fair value of the assets and liabilities of Whiting requires the use of various estimates and assumptions. The most significant assumptions relate to the estimated fair values of proved and unproved oil and gas properties, which are measured using valuation techniques that convert future cash flows to a single discounted amount. Significant inputs to the valuation include estimates of reserves, future operating and development costs, future commodity prices and a market-based weighted average cost of capital. The Merger was structured as a tax-deferred reorganization for United States federal income tax purposes.

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 FASB ASC 205-20, Presentation of financial statements – Discontinued Operations (“ASC 205-20”). Accordingly, the results of operations of Oasis Midstream Partners LP (“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 and six months ended June 30, 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 producer of crude oil, NGLs and natural gas, the Company’s revenue, profitability and future growth are substantially dependent upon the prevailing and future prices for crude oil, NGLs 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 the prices for crude oil, NGLs or natural gas 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, NGLs and natural gas, could have a material adverse effect on the Company’s financial position, results of operations, cash flows, the quantities of crude oil, NGLs and natural gas reserves that may be economically produced and the Company’s access to capital.

Cash Equivalents

The Company invests 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:


	June 30, 2022		December 31, 2021

	(In thousands)
Cash and cash equivalents	$	571,114	$	172,114
Cash and cash equivalents classified as held for sale	—		2,669
Total cash and cash equivalents	$	571,114	$	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”). In addition, the Company and Crestwood executed a director nomination agreement pursuant to which the Company 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 net loss from investment in unconsolidated affiliate on the Condensed Consolidated Statement of Operations. In addition, cash distributions from Crestwood are recorded to net loss from investment in unconsolidated affiliate on the Condensed Consolidated Statement of Operations and distributions from investment in unconsolidated affiliate on the Condensed Consolidated Statement of Cash Flows. 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. On July 1, 2022, the Company entered into an amended and restated credit agreement to, among other things, provide for the replacement of LIBOR with the Secured Overnight Financing Rate (“SOFR”), an index supported by short-term Treasury repurchase agreements. The replacement of LIBOR with SOFR in the credit agreement is not expected to have a material impact on the Company’s consolidated financial statements and related disclosures. See Note 12—Long-Term Debt for additional information.