Equity-Based Compensation

12 Months Ended

Dec. 31, 2023

Share-Based Payment Arrangement [Abstract]

The Company has granted equity-based compensation awards under the 2020 LTIP. In accordance with the FASB’s authoritative guidance for share-based payments, the Company accounts for awards that settle in shares of common stock as equity-classified awards and awards that settle in cash as liability-classified awards.

Equity-based compensation expense from continuing operations is recognized in general and administrative expenses on the Company’s Consolidated Statements of Operations, and equity-based compensation expense from discontinued operations is recognized in discontinued operations, net of income tax on the Company’s Consolidated Statements of Operations. The Company recognized $46.1 million, $61.2 million and $14.7 million in equity-based compensation expenses related to equity-classified awards that were attributable to continued operations during the years ended December 31, 2023, 2022 and 2021, respectively. Equity-based compensation expenses related to liability-classified awards that were attributable to continued operations were $3.4 million, $4.9 million and $0.5 million during the years ended December 31, 2023, 2022 and 2021, respectively. Stock-based compensation expense related to equity-classified awards that was attributable to discontinued operations was immaterial during the years ended December 31, 2023, 2022 and 2021.

Merger impacts. Pursuant to the Merger Agreement, at the effective time of the Merger, the Company assumed the Whiting Equity Incentive Plan and the outstanding restricted stock units (“RSUs”) and performance share units (“PSUs”) granted under the Whiting Equity Incentive Plan. Accordingly, (i) all shares remaining available for issuance under the Whiting Equity Incentive Plan as of the Merger were automatically converted into shares of the Company’s common stock, available for issuance under the Whiting Equity Incentive Plan and (ii) all Whiting RSUs and PSUs were automatically converted into RSUs and PSUs of the Company, respectively, that, to the extent earned, will be settled in shares of the Company’s common stock, subject to appropriate adjustments to the number of shares subject to each award, resulting in the following as of July 1, 2022: (x) 1,611,725 shares of the Company’s common stock remaining available for issuance to eligible participants under the Whiting Equity Incentive Plan, (y) 335,386 shares of the Company’s common stock subject to RSUs assumed under the Whiting Equity Incentive Plan and (z) 275,310 shares of the Company’s common stock subject to PSUs assumed under the Whiting Equity Incentive Plan. The number of PSUs assumed by the Company was determined based upon the change-in-control provisions contained in the original award agreement at the greater of (i) the target number of PSUs subject to such award and (ii) the actual achievement of the performance criteria measured based on the truncated performance period ending immediately prior to the effective time of the Merger. Following completion of the Merger, the Whiting RSUs and PSUs are subject to time-based vesting criteria. The fair value of the RSU and PSU awards assumed by the Company was $73.3 million, including $27.4 million that was attributable to pre-Merger services and recorded as a part of the consideration transferred and $45.9 million that is attributable to post-Merger services that will be recognized as equity-based compensation expense in the post-combination period. The Company previously granted restricted stock awards (“RSAs”) to non-employee directors. RSAs are legally issued shares which were scheduled to vest over a three-year period subject to a service condition. The Company measured the awards at fair value on the date of grant, which was based on the closing price of the Company’s common stock. Pursuant to the award agreements governing the RSAs, each outstanding RSA became fully vested upon completion of the Merger due to a “change in control” (as defined in the award agreement). As a result, 64,920 outstanding RSAs became fully vested on July 1, 2022 and the Company recognized the remaining unrecognized compensation expense immediately.

Restricted stock units. The Company has granted RSUs to employees and non-employee directors. RSUs are contingent shares with a service-based vesting condition. The RSUs granted to employees vest following a graded vesting schedule and vest ratably each year over a three-year or four-year period. The RSUs granted to non-employee directors vest over a one-year period. 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. The Company recognizes compensation expense under the straight-line method over the requisite service period.

The following table summarizes information related to RSUs held by employees and non-employee directors of the Company:


	Shares	Weighted Average Grant Date Fair Value per Share
Non-vested shares outstanding December 31, 2022	421,583	$	88.26
Granted	161,875	137.43

Vested	(310,683)	104.24
Forfeited	(9,716)	107.65
Non-vested shares outstanding December 31, 2023	263,059	$	98.94

The fair value of awards vested was $42.4 million and $62.3 million for the years ended December 31, 2023 and 2022, respectively. The weighted average grant date fair value of RSUs was $137.43 per share and $144.16 per share for the years

ended December 31, 2023 and 2022, respectively. Unrecognized expense as of December 31, 2023 for all outstanding RSUs was $15.3 million and will be recognized over a weighted average period of approximately 1.9 years.

Performance share units. The Company has granted PSUs to certain employees. PSUs are contingent shares that may be earned over three-year and four-year performance periods subject to market-based and service-based vesting conditions. The number of PSUs to be earned was initially subject to a market condition that was based on a comparison of the total stockholder 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 could earn between 0% and 150% of target. Pursuant to the PSU award agreements, the number of PSUs earned was certified at the greater of (i) target performance and (ii) actual achievement of the performance criteria measured based on the truncated performance period ending immediately prior to the effective time of a “change in control.” The completion of the Merger on July 1, 2022 represented a “change in control” such that 250,016 PSUs were earned by legacy Oasis award recipients subject to a service-based vesting condition, including 183,915 PSUs that were outstanding at December 31, 2021 and an incremental 66,101 PSUs that were earned based upon the achievement of the performance criteria described above.

The following table summarizes information related to PSUs held by employees of the Company:


	Shares	Weighted Average Grant Date Fair Value per Share
Non-vested shares outstanding December 31, 2022	373,141	$	92.53
Granted	—	—

Vested	(283,925)	98.28
Forfeited	(10,273)	109.30
Non-vested shares outstanding December 31, 2023	78,943	$	69.67

The fair value of awards vested was $46.3 million and $16.6 million for the years ended December 31, 2023 and 2022, respectively. No PSUs were granted during the years ended December 31, 2023 and 2022. Unrecognized expense as of December 31, 2023 for all outstanding PSUs was $1.1 million and will be recognized over a weighted average period of approximately 1.2 years.

Leveraged stock units. The Company has granted leveraged stock units (“LSUs”) to certain employees. LSUs are contingent shares that may be earned over a three-year or four-year performance period subject to market-based and service-based vesting conditions. The number of LSUs to be earned was initially subject to a market condition that was 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 could earn between 0% and 300% of target; however, the number of shares delivered in respect to these awards during the grant cycle could not exceed ten times the fair value of the award on the grant date. Pursuant to LSU award agreements, the number of LSUs earned was certified at the greater of (i) target performance and (ii) actual achievement of the performance criteria measured based on the truncated performance period ending immediately prior to the effective time of a “change in control.” The completion of the Merger on July 1, 2022 represented a “change in control” such that 787,218 LSUs were earned by award recipients subject to a service-based vesting condition.

The following table summarizes information related to LSUs held by employees of the Company:


	Shares	Weighted Average Grant Date Fair Value per Share
Non-vested shares outstanding December 31, 2022	497,037	$	84.59
Granted	—	—

Vested	—	—
Forfeited	—	—
Non-vested shares outstanding December 31, 2023	497,037	$	84.59

No awards vested for the year ended December 31, 2023. The fair value of awards vested was $31.5 million for the year ended December 31, 2022. No LSUs were granted during the years ended December 31, 2023 and 2022. Unrecognized expense as of December 31, 2023 for all outstanding LSUs was $2.0 million and will be recognized over a weighted average period of approximately 1.0 year.

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

Phantom unit awards. The Company has granted phantom unit awards to certain employees. Phantom unit awards represent the right to receive, upon vesting of the award, a cash payment equal to the fair market value of one share of common stock. The phantom unit awards are subject to a service-based vesting condition and generally vest in equal installments each year over a three-year period from the date of grant. Compensation expense is recognized over the requisite service period.

The following table summarizes information related to phantom unit awards held by employees of the Company:


	Phantom Unit Awards	Weighted Average Grant Date Fair Value per Share
Non-vested phantom unit awards outstanding December 31, 2022	7,868	$	135.91
Granted	9,919	166.23
Vested	(7,100)	149.26
Forfeited	(644)	156.38
Non-vested phantom unit awards outstanding December 31, 2023	10,043	$	165.87

The fair value of vested phantom unit awards was $1.1 million and $2.0 million for the years ended December 31, 2023 and 2022, respectively. Unrecognized expense as of December 31, 2023 for all outstanding phantom unit awards was $1.2 million and will be recognized over a weighted average period of approximately 2.1 years