Oasis Petroleum Inc. (Form: 10-Q, Received: 08/09/2016 07:11:33)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



ý	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2016



¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 1-34776

Oasis Petroleum Inc.

(Exact name of registrant as specified in its charter)




Delaware		80-0554627
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1001 Fannin Street, Suite 1500 Houston, Texas		77002
(Address of principal executive offices)		(Zip Code)

(281) 404-9500

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer	ý	Accelerated filer	¨

Non-accelerated filer	o (Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No ý

Number of shares of the registrant’s common stock outstanding at August 5, 2016 : 180,430,785 shares.

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OASIS PETROLEUM INC.

FORM 10-Q

FOR THE QUARTER ENDED JUNE 30, 2016

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	Page
PART I — FINANCIAL INFORMATION	1
Item 1. — Financial Statements (Unaudited)	1
Condensed Consolidated Balance Sheet at June 30, 2016 and December 31, 2015	1
Condensed Consolidated Statement of Operations for the Three and Six Months Ended June 30, 2016 and 2015	2
Condensed Consolidated Statement of Changes in Stockholders’ Equity for the Six Months Ended June 30, 2016	3
Condensed Consolidated Statement of Cash Flows for the Six Months Ended June 30, 2016 and 2015	4
Notes to Condensed Consolidated Financial Statements	5
Item 2. — Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
Item 3. — Quantitative and Qualitative Disclosures About Market Risk	47
Item 4. — Controls and Procedures	48
PART II — OTHER INFORMATION	49
Item 1. — Legal Proceedings	49
Item 1A. — Risk Factors	49
Item 2. — Unregistered Sales of Equity Securities and Use of Proceeds	49
Item 6. — Exhibits	50
SIGNATURES	51
EXHIBIT INDEX	52

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PART I — FINANCIAL INFORMATION

Item 1. — Financial Statements (Unaudited)

Oasis Petroleum Inc. Condensed Consolidated Balance Sheet (Unaudited)

	June 30, 2016			December 31, 2015
	(In thousands, except share data)
ASSETS
Current assets
Cash and cash equivalents	$	6,475		$	9,730
Accounts receivable — oil and gas revenues	109,121			96,495
Accounts receivable — joint interest and other	81,291			100,914
Inventory	9,018			11,072
Prepaid expenses	5,838			7,328
Derivative instruments	10,330			139,697
Other current assets	4,164			50
Total current assets	226,237			365,286
Property, plant and equipment
Oil and gas properties (successful efforts method)	6,402,648			6,284,401
Other property and equipment	536,462			443,265
Less: accumulated depreciation, depletion, amortization and impairment	(1,752,376		)	(1,509,424		)
Total property, plant and equipment, net	5,186,734			5,218,242
Assets held for sale	—			26,728
Derivative instruments	64			15,776
Other assets	22,504			23,343
Total assets	$	5,435,539		$	5,649,375
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	10,357		$	9,983
Revenues and production taxes payable	138,451			132,356
Accrued liabilities	128,284			167,669
Accrued interest payable	47,671			49,413
Derivative instruments	20,891			—
Advances from joint interest partners	5,416			4,647
Other current liabilities	15,001			6,500
Total current liabilities	366,071			370,568
Long-term debt	2,127,361			2,302,584
Deferred income taxes	528,028			608,155
Asset retirement obligations	36,390			35,338
Liabilities held for sale	—			10,228
Derivative instruments	14,291			—
Other liabilities	3,043			3,160
Total liabilities	3,075,184			3,330,033
Commitments and contingencies (Note 15)
Stockholders’ equity
Common stock, $0.01 par value: 450,000,000 and 300,000,000 shares authorized at June 30, 2016 and December 31, 2015, respectively; 181,200,581 shares issued and 180,399,060 shares outstanding at June 30, 2016 and 139,583,990 shares issued and 139,076,064 shares outstanding at December 31, 2015	1,777			1,376
Treasury stock, at cost: 801,521 and 507,926 shares at June 30, 2016 and December 31, 2015, respectively	(15,140		)	(13,620		)
Additional paid-in capital	1,693,583			1,497,065
Retained earnings	680,135			834,521
Total stockholders’ equity	2,360,355			2,319,342
Total liabilities and stockholders’ equity	$	5,435,539		$	5,649,375

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Oasis Petroleum Inc.

Condensed Consolidated Statement of Operations

(Unaudited)



	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
	(In thousands, except per share data)
Revenues
Oil and gas revenues	$	159,337		$	214,110		$	276,652		$	387,969
Well services and midstream revenues	19,743			15,936			32,711			22,464
Total revenues	179,080			230,046			309,363			410,433
Operating expenses
Lease operating expenses	31,523			37,761			62,587			76,886
Well services and midstream operating expenses	8,875			7,395			13,264			9,347
Marketing, transportation and gathering expenses	6,491			7,570			15,043			14,848
Production taxes	14,367			20,618			25,120			37,239
Depreciation, depletion and amortization	122,488			119,218			244,937			237,696
Exploration expenses	340			1,082			703			1,925
Rig termination	—			2,815			—			3,895
Impairment	23			19,516			3,585			24,837
General and administrative expenses	21,876			21,508			46,242			44,832
Total operating expenses	205,983			237,483			411,481			451,505
Loss on sale of properties	(1,311		)	—			(1,311		)	—
Operating loss	(28,214		)	(7,437		)	(103,429		)	(41,072		)
Other income (expense)
Net gain (loss) on derivative instruments	(90,846		)	(39,424		)	(76,471		)	7,648
Interest expense, net of capitalized interest	(34,979		)	(37,405		)	(73,718		)	(76,189		)
Gain on extinguishment of debt	11,642			—			18,658			—
Other income (expense)	(32		)	191			447			121
Total other income (expense)	(114,215		)	(76,638		)	(131,084		)	(68,420		)
Loss before income taxes	(142,429		)	(84,075		)	(234,513		)	(109,492		)
Income tax benefit	52,498			30,845			80,127			38,221
Net loss	$	(89,931	)	$	(53,230	)	$	(154,386	)	$	(71,271	)
Loss per share:
Basic (Note 13)	$	(0.51	)	$	(0.39	)	$	(0.91	)	$	(0.58	)
Diluted (Note 13)	(0.51		)	(0.39		)	(0.91		)	(0.58		)
Weighted average shares outstanding:
Basic (Note 13)	176,984			136,859			169,953			123,157
Diluted (Note 13)	176,984			136,859			169,953			123,157

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Oasis Petroleum Inc.

Condensed Consolidated Statement of Changes in Stockholders’ Equity

(Unaudited)



	Common Stock				Treasury Stock				Additional Paid-in Capital			Retained Earnings			Total Stockholders’ Equity
	Shares		Amount		Shares	Amount			Additional Paid-in Capital			Retained Earnings			Total Stockholders’ Equity
	(In thousands)
Balance at December 31, 2015	139,076		$	1,376	508	$	(13,620	)	$	1,497,065		$	834,521		$	2,319,342
Issuance of common stock	39,100		391		—	—			182,562			—			182,953
Stock-based compensation	2,517		—		—	—			13,966			—			13,966
Vesting of restricted shares	—		10		—	—			(10		)	—			—
Treasury stock – tax withholdings	(294	)	—		294	(1,520		)	—			—			(1,520		)
Net loss	—		—		—	—			—			(154,386		)	(154,386		)
Balance at June 30, 2016	180,399		$	1,777	802	$	(15,140	)	$	1,693,583		$	680,135		$	2,360,355

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Oasis Petroleum Inc.

Condensed Consolidated Statement of Cash Flows

(Unaudited)



	Six Months Ended June 30,
	2016			2015
	(In thousands)
Cash flows from operating activities:
Net loss	$	(154,386	)	$	(71,271	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation, depletion and amortization	244,937			237,696
Gain on extinguishment of debt	(18,658		)	—
Loss on sale of properties	1,311			—
Impairment	3,585			24,837
Deferred income taxes	(80,127		)	(38,221		)
Derivative instruments	76,471			(7,648		)
Stock-based compensation expenses	12,979			13,663
Deferred financing costs amortization and other	6,552			5,059
Working capital and other changes:
Change in accounts receivable	4,297			75,799
Change in inventory	2,054			3,685
Change in prepaid expenses	1,423			3,394
Change in other current assets	(114		)	5,538
Change in other assets	100			—
Change in accounts payable, interest payable and accrued liabilities	(18,034		)	(22,624		)
Change in other current liabilities	9,001			—
Change in other liabilities	10			(21		)
Net cash provided by operating activities	91,401			229,886
Cash flows from investing activities:
Capital expenditures	(231,341		)	(587,430		)
Proceeds from sale of properties	11,679			—
Costs related to sale of properties	(310		)	—
Derivative settlements	103,790			213,336
Advances from joint interest partners	769			(406		)
Net cash used in investing activities	(115,413		)	(374,500		)
Cash flows from financing activities:
Proceeds from revolving credit facility	359,000			320,000
Principal payments on revolving credit facility	(462,000		)	(665,000		)
Repurchase of senior unsecured notes	(56,925		)	—
Deferred financing costs	(751		)	(3,591		)
Proceeds from sale of common stock	182,953			463,010
Purchases of treasury stock	(1,520		)	(1,932		)
Net cash provided by financing activities	20,757			112,487
Decrease in cash and cash equivalents	(3,255		)	(32,127		)
Cash and cash equivalents:
Beginning of period	9,730			45,811
End of period	$	6,475		$	13,684
Supplemental non-cash transactions:
Change in accrued capital expenditures	$	(17,015	)	$	(156,368	)
Change in asset retirement obligations	(8,785		)	2,649

The accompanying notes are an integral part of these condensed consolidated financial statements.

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OASIS PETROLEUM INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

1. Organization and Operations of the Company

Oasis Petroleum Inc. (together with its consolidated subsidiaries, “Oasis” or the “Company”) was originally formed in 2007 and was incorporated pursuant to the laws of the State of Delaware in 2010. The Company is an independent exploration and production company focused on the acquisition and development of unconventional oil and natural gas resources in the North Dakota and Montana regions of the Williston Basin. Oasis Petroleum North America LLC (“OPNA”) conducts the Company’s exploration and production activities and owns its proved and unproved oil and natural gas properties. The Company also operates a well services business through Oasis Well Services LLC (“OWS”) and a midstream services business through Oasis Midstream Services LLC (“OMS”), both of which are separate reportable business segments that are complementary to its primary development and production activities.

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying condensed consolidated financial statements of the Company include the accounts of Oasis and its wholly-owned subsidiaries. All significant intercompany transactions have been eliminated in consolidation. The accompanying 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, 2015 is derived from audited financial statements. Certain reclassifications of prior year balances have been made to conform such amounts to current year classifications. These reclassifications have no impact on net income. In the opinion of management, all adjustments, consisting of normal recurring adjustments necessary for the fair statement, have been included. Management has made certain estimates and assumptions that affect reported amounts in the 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 (“SEC”) 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, 2015 (“ 2015 Annual Report”).

Risks and Uncertainties

As an oil and natural gas producer, the Company’s revenue, profitability and future growth are substantially dependent upon the prevailing and future prices for 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 oil and natural gas prices will not be subject to wide fluctuations in the future. Oil and natural gas prices have declined significantly since mid-2014. As a result of sustained lower commodity prices, the Company decreased its 2016 capital expenditures as compared to 2015 and continues to concentrate its drilling activities in certain areas that are the most economic in the Williston Basin. An extended period of low prices for oil and, to a lesser extent, natural gas could have a material adverse effect on the Company’s financial position, results of operations, cash flows and quantities of oil and natural gas reserves that may be economically produced.

Significant Accounting Policies

There have been no material changes to the Company’s critical accounting policies and estimates from those disclosed in the 2015 Annual Report.

Recent Accounting Pronouncements

Revenue recognition. In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”). The objective of ASU 2014-09 is greater consistency and comparability across industries by using a five-step model to recognize revenue from customer contracts. ASU 2014-09 also contains some new disclosure requirements under GAAP. In August 2015, the FASB issued Accounting Standards Update No. 2015-14, Deferral of the Effective Date (“ASU 2015-14”). ASU 2015-14 defers the effective date of the new revenue standard by one year, making it effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. In 2016, the FASB issued additional accounting standards updates to clarify the

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implementation guidance of ASU 2014-09. The Company is currently evaluating the effect that adopting this guidance will have on its financial position, cash flows and results of operations.

Going concern. In August 2014, the FASB issued Accounting Standards Update No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU 2014-15”). ASU 2014-15 codifies in GAAP management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. ASU 2014-15 is effective for the annual reporting period ending after December 15, 2016 and for annual periods and interim periods thereafter. The adoption of this guidance will not impact the Company’s financial position, cash flows or results of operations but could result in additional disclosures.

Inventory. In July 2015, the FASB issued Accounting Standards Update No. 2015-11, Simplifying the Measurement of Inventory (“ASU 2015-11”). ASU 2015-11 changes the inventory measurement principle from lower of cost or market to lower of cost and net realizable value for entities using the first-in, first-out (FIFO) or average cost methods. ASU 2015-11 is effective for fiscal years beginning after December 15, 2016, including interim periods within those years. The Company is currently evaluating the effect that adopting this guidance will have on its financial position, cash flows and results of operations.

Financial instruments. In January 2016, the FASB issued Accounting Standards Update No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”), which requires that most equity instruments be measured at fair value with subsequent changes in fair value recognized in net income. ASU 2016-01 also impacts financial liabilities under the fair value option and the presentation and disclosure requirements for financial instruments. ASU 2016-01 does not apply to equity method investments or investments in consolidated subsidiaries. ASU 2016-01 is effective for fiscal years beginning after December 15, 2017, including interim periods within those years. The Company is currently evaluating the effect that adopting this guidance will have on its financial position, cash flows and results of operations.

Leases. In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases (“ASU 2016-02”), which requires a lessee to recognize lease payment obligations and a corresponding right-of-use asset to be measured at fair value on the balance sheet. ASU 2016-02 also requires certain qualitative and quantitative disclosures about the amount, timing and uncertainty of cash flows arising from leases. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those years. The Company is currently evaluating the effect that adopting this guidance will have on its financial position, cash flows and results of operations.

Embedded derivatives. In March 2016, the FASB issued Accounting Standards Update No. 2016-06, Contingent Put and Call Options in Debt Instruments (“ASU 2016-06”), which clarifies what steps are required when assessing whether the economic characteristics and risks of call (put) options are clearly and closely related to the economic characteristics and risks of their debt hosts, which is one of the criteria for bifurcating an embedded derivative. ASU 2016-06 is effective for fiscal years beginning after December 15, 2016, including interim periods within those years. The Company does not expect the adoption of this guidance to have a material impact on its financial position, cash flows or results of operations.

Stock-based compensation. In March 2016, the FASB issued Accounting Standards Update No. 2016-09, Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”), which updates several aspects of the accounting for share-based payment transactions, including recognition of excess tax benefits and deficiencies, the classification of those excess tax benefits on the statement of cash flows, an accounting policy election for forfeitures, the amount an employer can withhold to cover income taxes and still qualify for equity classification and the classification of those taxes paid on the statement of cash flows. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016, including interim periods within those years. The Company is currently evaluating the effect that adopting this guidance will have on its financial position, cash flows and results of operations.

3. Inventory

Crude oil inventory includes oil in tank and linefill. Equipment and materials consist primarily of proppant, chemicals, tubular goods, well equipment to be used in future drilling or repair operations and well fracturing equipment. Inventory is stated at the lower of cost or market value with cost determined on an average cost method. Inventory consists of the following:



	June 30, 2016		December 31, 2015
	(In thousands)
Crude oil inventory	$	5,430	$	6,152
Equipment and materials	3,588		4,920
Total inventory	$	9,018	$	11,072

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4. Fair Value Measurements

In accordance with the FASB’s authoritative guidance on fair value measurements, the Company’s financial assets and liabilities are measured at fair value on a recurring basis. The Company recognizes its non-financial assets and liabilities, such as asset retirement obligations (“ARO”) and proved oil and natural gas properties upon impairment, at fair value on a non-recurring basis.

As defined in the authoritative guidance, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). To estimate fair value, the Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated or generally unobservable.

The authoritative guidance establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (“Level 1” measurements) and the lowest priority to unobservable inputs (“Level 3” measurements). The three levels of the fair value hierarchy are as follows:

Level 1 — Unadjusted quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2 — Pricing inputs, other than unadjusted quoted prices in active markets included in Level 1, are either directly or indirectly observable as of the reporting date. Level 2 includes those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors and current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument and can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace.

Level 3 — Pricing inputs are generally less observable from objective sources, requiring internally developed valuation methodologies that result in management’s best estimate of fair value.

Financial Assets and Liabilities

Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input requires judgment and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels. The following tables set forth by level within the fair value hierarchy the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis:



	Fair value at June 30, 2016
	Level 1		Level 2		Level 3		Total
	(In thousands)
Assets:
Money market funds	$	54	$	—	$	—	$	54
Commodity derivative instruments (see Note 5)	—		10,394		—		10,394
Total assets	$	54	$	10,394	$	—	$	10,448
Liabilities:
Commodity derivative instruments (see Note 5)	$	—	$	35,182	$	—	$	35,182
Total liabilities	$	—	$	35,182	$	—	$	35,182

	Fair value at December 31, 2015
	Level 1		Level 2		Level 3		Total
	(In thousands)
Assets:
Money market funds	$	742	$	—	$	—	$	742
Commodity derivative instruments (see Note 5)	—		155,473		—		155,473
Total assets	$	742	$	155,473	$	—	$	156,215

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The Level 1 instruments presented in the tables above consist of money market funds included in cash and cash equivalents on the Company’s Condensed Consolidated Balance Sheet at June 30, 2016 and December 31, 2015 . The Company’s money market funds represent cash equivalents backed by the assets of high-quality major banks and financial institutions. The Company identifies the money market funds as Level 1 instruments because the money market funds have daily liquidity, quoted prices for the underlying investments can be obtained, and there are active markets for the underlying investments.

The Level 2 instruments presented in the tables above consist of commodity derivative instruments, which include oil collars and swaps. The fair values of the Company’s commodity derivative instruments are based upon a third-party preparer’s calculation using mark-to-market valuation reports provided by the Company’s counterparties for monthly settlement purposes to determine the valuation of its derivative instruments. The Company has the third-party preparer evaluate other readily available market prices for its derivative contracts, as there is an active market for these contracts. The third-party preparer performs its independent valuation using a moment matching method similar to Turnbull-Wakeman for Asian options. The significant inputs used are crude oil prices, volatility, skew, discount rate and the contract terms of the derivative instruments. However, the Company does not have access to the specific proprietary valuation models or inputs used by its counterparties or third-party preparer. The Company compares the third-party preparer’s valuation to counterparty valuation statements, investigating any significant differences, and analyzes monthly valuation changes in relation to movements in crude oil forward price curves. The determination of the fair value for derivative instruments also incorporates a credit adjustment for non-performance risk, as required by GAAP. The Company calculates the credit adjustment for derivatives in a net asset position using current credit default swap values for each counterparty. The credit adjustment for derivatives in a net liability position is based on the Company’s market credit spread. Based on these calculations, the Company recorded an adjustment to reduce the fair value of its net derivative liability by $2.4 million at June 30, 2016 and an adjustment to reduce the fair value of its net derivative asset by $0.3 million at December 31, 2015 .

There were no transfers between fair value levels during the six months ended June 30, 2016 and 2015 .

Fair Value of Other Financial Instruments

The Company’s financial instruments, including certain cash and cash equivalents, accounts receivable and accounts payable, are carried at cost, which approximates fair value due to the short-term maturity of these instruments. At June 30, 2016 , the Company’s cash equivalents were all Level 1 assets.

The carrying amount of the Company’s long-term debt reported in the Condensed Consolidated Balance Sheet at June 30, 2016 was $2,127.4 million , which included $2,123.4 million of senior unsecured notes, $35.0 million of borrowings under the revolving credit facility and a $31.0 million reduction for deferred financing costs on the senior unsecured notes (see Note 8 – Long-Term Debt). The fair value of the Company’s senior unsecured notes, which are publicly traded and therefore categorized as Level 1 liabilities, was $1,965.2 million at June 30, 2016 .

Non-Financial Assets and Liabilities

Asset retirement obligations. The carrying amount of ARO in the Company’s Condensed Consolidated Balance Sheet at June 30, 2016 was $37.1 million (see Note 9 – Asset Retirement Obligations). The Company determines its ARO by calculating the present value of estimated cash flows related to the liability. Estimating the future ARO requires management to make estimates and judgments regarding the timing and existence of a liability, as well as what constitutes adequate restoration when considering current regulatory requirements. Inherent in the fair value calculation are numerous assumptions and judgments, including the ultimate costs, inflation factors, credit adjusted discount rates, timing of settlement and changes in the legal, regulatory, environmental and political environments. These assumptions represent Level 3 inputs. To the extent future revisions to these assumptions impact the fair value of the existing ARO liability, a corresponding adjustment is made to the related asset.

Impairment. The Company reviews its proved oil and natural gas properties for impairment whenever events and circumstances indicate that a decline in the recoverability of their carrying value may have occurred. The Company estimates the expected undiscounted future cash flows of its proved oil and natural gas properties and then compares such undiscounted future cash flows to the carrying amount of the proved oil and natural gas properties to determine if the carrying amount is recoverable. If the carrying amount exceeds the estimated undiscounted future cash flows, the Company will adjust the carrying amount of the proved oil and natural gas properties to the fair value. The factors used to determine fair value are subject to management’s judgment and expertise and include, but are not limited to, recent sales prices of comparable properties, the present value of future cash flows, net of estimated operating and development costs, using estimates of proved reserves, future commodity pricing, future production estimates, anticipated capital expenditures and various discount rates commensurate with the risk and current market conditions associated with realizing the expected cash flows projected. These assumptions represent Level 3 inputs.

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On April 1, 2016, the Company sold certain proved oil and natural gas properties and other midstream properties (see Note 7 – Divestiture). For the six months ended June 30, 2016 , the Company recorded an impairment charge of $3.6 million , of which $2.4 million was included in its midstream services segment and $1.2 million was included in its exploration and production segment, to adjust the current carrying value of these assets, net of the associated ARO liabilities, to their estimated fair value. For the year ended December 31, 2015, the Company recorded an impairment charge of $9.4 million to adjust its net assets held for sale to their estimated fair value in its exploration and production segment. The fair value was determined based on the expected sales price, less costs to sell. No other impairment charges on proved oil and natural gas properties were recorded for the six months ended June 30, 2016 . No impairment charges on proved oil and natural gas properties were recorded for the three months ended June 30, 2016 and the three and six months ended June 30, 2015 .

In addition, as a result of expiring leases, the Company recorded non-cash impairment charges on its unproved oil and natural gas properties of $23,000 and $25,000 for the three and six months ended June 30, 2016 , respectively, and $0.4 million and $4.5 million for the three and six months ended June 30, 2015 , respectively. As a result of periodic assessments of unproved properties, the Company recorded non-cash impairment charges on its unproved oil and natural gas properties of $19.1 million and $20.3 million for the three and six months ended June 30, 2015 , respectively, related to acreage expiring in future periods because there were no current plans to drill or extend the leases prior to their expiration. For the three and six months ended June 30, 2016 , the Company did not record similar impairment charges.

5. Derivative Instruments

The Company utilizes derivative financial instruments to manage risks related to changes in oil prices. At June 30, 2016 , the Company utilized two-way and three-way costless collar options and swaps to reduce the volatility of oil prices on a significant portion of its future expected oil production. A two-way collar is a combination of options: a sold call and a purchased put. The purchased put establishes a minimum price (floor) and the sold call establishes a maximum price (ceiling) the Company will receive for the volumes under contract. A three-way collar is a combination of options: a sold call, a purchased put and a sold put. The purchased put establishes a minimum price (floor), unless the market price falls below the sold put (sub-floor), at which point the minimum price would be the NYMEX West Texas Intermediate crude oil index price (“WTI”) plus the difference between the purchased put and the sold put strike price. The sold call establishes a maximum price (ceiling) the Company will receive for the volumes under contract. A swap is a sold call and a purchased put established at the same price (both ceiling and floor).

All derivative instruments are recorded on the Company’s Condensed Consolidated Balance Sheet as either assets or liabilities measured at fair value (see Note 4 – 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 Condensed Consolidated Statement of Operations as a net gain or loss on derivative instruments. The Company’s cash flow is only impacted when the actual settlements under the derivative contracts result in making a payment to or receiving a payment from the counterparty. These cash settlements represent the cumulative gains and losses on the Company’s derivative instruments and do not include a recovery of costs that were paid to acquire or modify the derivative instruments that were settled. Cash settlements are reflected as investing activities in the Company’s Condensed Consolidated Statement of Cash Flows.

At June 30, 2016 , the Company had the following outstanding commodity derivative instruments, all of which settle monthly based on the average WTI:



Settlement Period	Derivative Instrument	Total Notional Amount of Oil	Weighted Average Prices								Fair Value Asset (Liability)
Settlement Period	Derivative Instrument	Total Notional Amount of Oil	Swap		Sub-Floor		Floor		Ceiling		Fair Value Asset (Liability)
		(Barrels)	($/Barrel)								(In thousands)
2016	Swaps	5,886,000	$	49.64							$	1,157
2017	Swaps	4,694,000	$	47.79							(18,429		)
2017	Two-way collars	668,000					$	40.00	$	47.58	(4,427		)
2017	Three-way collars	1,336,000			$	30.00	$	45.00	$	59.39	(923		)
2018	Swaps	310,000	$	47.68							(1,519		)
2018	Two-way collars	62,000					$	40.00	$	47.58	(453		)
2018	Three-way collars	124,000			$	30.00	$	45.00	$	59.39	(194		)
											$	(24,788	)

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The following table summarizes the location and fair value of all outstanding commodity derivative instruments recorded in the Company’s Condensed Consolidated Balance Sheet:



		Fair Value Asset (Liability)
Commodity	Balance Sheet Location	June 30, 2016			December 31, 2015
		(In thousands)
Crude oil	Derivative instruments — current assets	$	10,330		$	139,697
Crude oil	Derivative instruments — non-current assets	64			15,776
Crude oil	Derivative instruments — current liabilities	(20,891		)	—
Crude oil	Derivative instruments — non-current liabilities	(14,291		)	—
Total derivative instruments		$	(24,788	)	$	155,473

The following table summarizes the location and amounts of gains and losses from the Company’s commodity derivative instruments recorded in the Company’s Condensed Consolidated Statement of Operations for the periods presented:



	Three Months Ended June 30,						Six Months Ended June 30,
Statement of Operations Location	2016			2015			2016			2015
	(In thousands)
Net gain (loss) on derivative instruments	$	(90,846	)	$	(39,424	)	$	(76,471	)	$	7,648

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 Condensed Consolidated Balance Sheet.

The following tables summarize gross and net information about the Company’s commodity derivative instruments:



Offsetting of Derivative Assets	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Balance Sheet			Net Amounts of Assets Presented in the Balance Sheet
	(In thousands)
At June 30, 2016	$	24,900	$	(14,506	)	$	10,394
At December 31, 2015	155,473		—			155,473



Offsetting of Derivative Liabilities	Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Balance Sheet			Net Amounts of Liabilities Presented in the Balance Sheet
	(In thousands)
At June 30, 2016	$	49,688	$	(14,506	)	$	35,182
At December 31, 2015	—		—			—

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6. Property, Plant and Equipment

The following table sets forth the Company’s property, plant and equipment:



	June 30, 2016			December 31, 2015
	(In thousands)
Proved oil and gas properties ⁽¹⁾	$	5,774,121		$	5,655,759
Less: accumulated depreciation, depletion, amortization and impairment	(1,657,641		)	(1,428,427		)
Proved oil and gas properties, net	4,116,480			4,227,332
Unproved oil and gas properties	628,527			628,642
Other property and equipment	536,462			443,265
Less: accumulated depreciation	(94,735		)	(80,997		)
Other property and equipment, net	441,727			362,268
Total property, plant and equipment, net	$	5,186,734		$	5,218,242

__________________


(1)	Included in the Company’s proved oil and gas properties are estimates of future asset retirement costs of $31.3 million and $30.7 million at June 30, 2016 and December 31, 2015 , respectively.

7. Divestiture

On April 1, 2016, the Company completed the sale of certain legacy wells that have been producing from conventional reservoirs such as the Madison, Red River and other formations in the Williston Basin other than the Bakken or Three Forks formations for cash proceeds of approximately $12.2 million , which includes, and is subject to further, customary post close adjustments, and a $4.0 million 10% secured promissory note due within one year. These sold assets primarily consisted of oil and gas properties in the Company’s exploration and production segment and included certain other property and equipment in the Company’s midstream segment.

For the six months ended June 30, 2016 and the year ended December 31, 2015, the Company recorded impairment charges of $3.6 million and $9.4 million , respectively, which were included in impairment on the Company’s Condensed Consolidated Statement of Operations, to adjust the carrying value of these assets to their estimated fair value, determined based on the expected sales price, less costs to sell. There were no similar charges recorded during the three months ended June 30, 2016 and three and six months ended June 30, 2015 . For the three and six months ended June 30, 2016 , customary post close adjustments were included in the loss on sale of properties on the Company’s Condensed Consolidated Statement of Operations.

8. Long-Term Debt

The Company’s long-term debt consists of the following:



	June 30, 2016			December 31, 2015
	(In thousands)
Senior secured revolving line of credit	$	35,000		$	138,000
Senior unsecured notes
7.25% senior unsecured notes due February 1, 2019	399,000			400,000
6.5% senior unsecured notes due November 1, 2021	397,697			400,000
6.875% senior unsecured notes due March 15, 2022	940,500			1,000,000
6.875% senior unsecured notes due January 15, 2023	386,200			400,000
Less: deferred financing costs related to senior unsecured notes	(31,036		)	(35,416		)
Total long-term debt	$	2,127,361		$	2,302,584

Senior secured revolving line of credit. The Company has a senior secured revolving line of credit (the “Credit Facility”) of $2,500.0 million as of June 30, 2016 , which has a maturity date of April 13, 2020. The Credit Facility is restricted to a borrowing base, which is reserve-based and subject to semi-annual redeterminations on April 1 and October 1 of each year. On February 23, 2016, the lenders under the Credit Facility completed their regular semi-annual redetermination of the borrowing base scheduled for April 1, 2016, resulting in a decrease in the borrowing base and aggregate elected commitment from $1,525.0 million to $1,150.0 million .

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As of June 30, 2016 , the Company had $35.0 million of LIBOR loans and $14.2 million of outstanding letters of credit issued under the Credit Facility, resulting in an unused borrowing base committed capacity of $1,100.8 million . The weighted average interest rate on borrowings outstanding under the Credit Facility was 2.0% and 1.9% as of June 30, 2016 and December 31, 2015 , respectively. On a quarterly basis, the Company also pays a 0.375% (as of June 30, 2016 ) annualized commitment fee on the average amount of borrowing base capacity not utilized during the quarter and fees calculated on the average amount of letter of credit balances outstanding during the quarter.

The Company was in compliance with the financial covenants of the Credit Facility as of June 30, 2016 .

Senior unsecured notes. At June 30, 2016 , the Company had $2,123.4 million principal amount of senior unsecured notes outstanding with maturities ranging from February 2019 to January 2023 and coupons ranging from 6.5% to 7.25% (the “Notes”). Interest on the Notes is payable semi-annually in arrears. The Notes are guaranteed on a senior unsecured basis by the Company, along with its material subsidiaries (the “Guarantors”), which are 100% owned by the Company. These guarantees are full and unconditional and joint and several among the Guarantors, subject to certain customary release provisions. The indentures governing the Notes contain customary events of default as well as covenants that place restrictions on the Company and certain of its subsidiaries.

Prior to certain dates, the Company has certain options to redeem up to 35% of the Notes at a certain redemption price based on a percentage of the principal amount, plus accrued and unpaid interest to the redemption date, with the proceeds of certain equity offerings so long as the redemption occurs within 180 days of completing such equity offering and at least 65% of the aggregate principal amount of the Notes remains outstanding after such redemption. Prior to certain dates, the Company has the option to redeem some or all of the Notes for cash at certain redemption prices equal to a certain percentage of their principal amount plus an applicable make-whole premium and accrued and unpaid interest to the redemption date. The Company estimates that the fair value of these redemption options is immaterial at June 30, 2016 and December 31, 2015 .

During the six months ended June 30, 2016 , the Company repurchased an aggregate principal amount of $76.6 million of its outstanding Notes, consisting of $1.0 million principal amount of its 7.25% senior unsecured notes due February 2019, $2.3 million principal amount of its 6.5% senior unsecured notes due November 2021, $59.5 million principal amount of its 6.875% senior unsecured notes due March 2022 and $13.8 million principal amount of its 6.875% senior unsecured notes due January 2023, for an aggregate cost of $56.9 million , including accrued interest and fees. For the three and six months ended June 30, 2016 , the Company recognized pre-tax gains of $11.6 million and $18.7 million , respectively, related to these repurchases, which were net of unamortized deferred financing costs write-offs of $0.5 million and $1.0 million , respectively, and are reflected in gain on extinguishment of debt in the Company’s Condensed Consolidated Statement of Operations.

Deferred financing costs. At June 30, 2016 , the Company had $36.7 million of deferred financing costs related to the Notes and the Credit Facility. Deferred financing costs of $31.0 million related to the Notes are included in long-term debt on the Company’s Condensed Consolidated Balance Sheet at June 30, 2016 , and are being amortized over the respective terms of the Notes. Deferred financing costs of $5.7 million related to the Credit Facility are included in other assets on the Company’s Condensed Consolidated Balance Sheet at June 30, 2016 , and are being amortized over the term of the Credit Facility. Amortization of deferred financing costs recorded was $2.0 million and $4.1 million for the three and six months ended June 30, 2016 , respectively, and $1.9 million and $3.5 million for the three and six months ended June 30, 2015 , respectively. These costs are included in interest expense on the Company’s Condensed Consolidated Statement of Operations. For the six months ended June 30, 2016 and 2015 , the Company’s interest expense also included $1.8 million and $0.5 million charges for unamortized deferred financing costs related to the Credit Facility, which were written off in proportion to the decreases in the borrowing base. No deferred financing costs related to the Credit Facility were written off during the three months ended June 30, 2016 . Aforementioned, the gain on extinguishment of debt in the Company’s Condensed Consolidated Statement of Operations included unamortized deferred financing costs write-offs of $0.5 million and $1.0 million related to the repurchased Notes for the three and six months ended June 30, 2016 , respectively. No deferred financing costs related to the Notes were written off during the three and six months ended June 30, 2015 .

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9. Asset Retirement Obligations

The following table reflects the changes in the Company’s ARO during the six months ended June 30, 2016 :



	(In thousands)
Balance at December 31, 2015	$	35,812
Liabilities incurred during period	248
Liabilities settled during period ⁽¹⁾	(443		)
Accretion expense during period ⁽²⁾	940
Revisions to estimates	571
Balance at June 30, 2016	$	37,128

___________________


(1)	Liabilities settled during the six months ended June 30, 2016 included ARO related to the sold properties (see Note 7 – Divestiture).


(2)	Included in depreciation, depletion and amortization on the Company’s Condensed Consolidated Statement of Operations.

At June 30, 2016 , the current portion of the total ARO balance was approximately $0.7 million and was included in accrued liabilities on the Company’s Condensed Consolidated Balance Sheet.

10. Income Taxes

The Company’s effective tax rate for the three and six months ended June 30, 2016 was 36.9% and 34.2% , respectively. The Company’s effective tax rate for the three and six months ended June 30, 2015 was 36.7% and 34.9% , respectively. The effective tax rates for both the six months ended June 30, 2016 and 2015 were lower than the combined federal statutory rate and the statutory rates for the states in which the Company conducts business due to the impact of permanent differences on pre-tax loss for each period. The permanent differences were primarily between amounts expensed for book purposes versus the amounts deductible for income tax purposes related to stock-based compensation vesting during the six months ended June 30, 2016 and 2015 at stock prices lower than the grant date values.

While the Company is in an overall deferred tax liability position, the Company had deferred tax assets for its federal and state tax net operating losses and other tax carryforwards recorded in deferred income taxes at June 30, 2016 . Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. During the six months ended June 30, 2016 , the Company recorded a valuation allowance of $0.9 million and $0.6 million for Montana net operating losses and for federal charitable contribution carryovers, respectively, based on management’s assessment that it is more likely than not that these net deferred tax assets will not be realized prior to their expiration due to their short carryover periods, current economic conditions and expectations for the future. Management determined that a valuation allowance was not required for its U.S. federal tax net operating loss carryforwards as they are expected to be fully utilized before their expiration. However, the amount of deferred tax assets considered realizable could be reduced in the future if subjective positive evidence, such as projections of future growth, become limited by objective negative evidence, such as projected cumulative losses incurred over a three-year period. Management’s estimates of future taxable income are significantly affected by changes in commodity prices, the timing and amount of future production and future operating and capital costs.

At June 30, 2016 , the Company did not have any uncertain tax positions requiring adjustments to its tax liability.

11. Common Stock

On February 2, 2016, the Company completed a public offering of 39,100,000 shares of its common stock (including 5,100,000 shares issued pursuant to the underwriters’ option to purchase additional common stock) at an offering price of $4.685 per share. Net proceeds from the offering were $183.0 million , after deducting underwriting discounts and commissions and offering expenses, of which $0.4 million is included in common stock and $182.6 million is included in additional paid-in capital on the Company’s Condensed Consolidated Balance Sheet at June 30, 2016 . The Company used the net proceeds for general corporate purposes. The offering was made pursuant to an effective shelf registration statement on Form S-3 filed with the SEC on July 15, 2014.

12. Stock-Based Compensation

Restricted stock awards. The Company has granted restricted stock awards to employees and directors under its Amended and Restated 2010 Long Term Incentive Plan, the majority of which vest over a three -year period. The fair value of restricted

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stock grants is based on the closing sales price of the Company’s common stock on the date of grant. Compensation expense is recognized ratably over the requisite service period. For the six months ended June 30, 2016 , the Company assumed annual forfeiture rates by employee group ranging from 0% to 20.0% based on the Company’s forfeiture history for this type of award.

During the six months ended June 30, 2016 , employees and non-employee directors of the Company were granted restricted stock awards equal to 2,573,950 shares of common stock with a $ 4.34 weighted average grant date per share value. Stock-based compensation expense recorded for restricted stock awards for the three and six months ended June 30, 2016 was $4.9 million and $10.7 million , respectively, and $5.1 million and $11.8 million for the three and six months ended June 30, 2015 , respectively. Stock-based compensation expense is included in general and administrative expenses on the Company’s Condensed Consolidated Statement of Operations.

Performance share units. The Company has granted performance share units (“PSUs”) to officers of the Company under its Amended and Restated 2010 Long Term Incentive Plan. The PSUs are awards of restricted stock units, and each PSU that is earned represents the right to receive one share of the Company’s common stock. For the six months ended June 30, 2016 , the Company assumed annual forfeiture rates by employee group ranging from 3.3% to 4.6% based on the Company’s forfeiture history for the officer employee groups receiving PSUs.

During the six months ended June 30, 2016 , officers of the Company were granted 910,000 PSUs with a $ 3.00 weighted average grant date per share value. Stock-based compensation expense recorded for PSUs for the three and six months ended June 30, 2016 was $1.3 million and $2.2 million , respectively, and $1.0 million and $1.9 million for the three and six months ended June 30, 2015 , respectively. Stock-based compensation expense is included in general and administrative expenses on the Company’s Condensed Consolidated Statement of Operations.

The Company accounted for these PSUs as equity awards pursuant to the FASB’s authoritative guidance for share-based payments. 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 performance periods. Depending on the Company’s TSR performance relative to the defined peer group, award recipients will earn between 0% and 200% of the initial PSUs granted. The grant date fair value for each grant of PSUs is recognized on a straight-line basis over a four-year total performance period. All compensation expense related to the PSUs will be recognized if the requisite performance period is fulfilled, even if the market condition is not achieved.

The aggregate grant date fair value of the market-based awards was determined using a Monte Carlo simulation model, which results in an expected percentage of PSUs earned. The Monte Carlo simulation model uses assumptions regarding random projections and must be repeated numerous times to achieve a probabilistic assessment. The key valuation assumptions for the Monte Carlo model are the forecast period, initial value, risk-free interest rate, volatility and correlation coefficients. The risk-free interest rate is the U.S. Treasury bond rate on the date of grant that corresponds to the total performance period. The initial value is the average of the volume weighted average prices for the 30 trading days prior to the start of the performance cycle for the Company and each of its peers. Volatility is the standard deviation of the average percentage change in stock price over a historical period for the Company and each of its peers. The correlation coefficients are measures of the strength of the linear relationship between and amongst the Company and its peers estimated based on historical stock price data.

The following assumptions were used for the Monte Carlo model to determine the grant date fair value and associated stock-based compensation expense of the PSUs granted during the six months ended June 30, 2016 :



Forecast period (years)	4.00
Risk-free interest rate	1.25	%
Oasis stock price volatility	59.38	%

For the PSUs granted during the six months ended June 30, 2016 , the Monte Carlo simulation model resulted in approximately 69% of PSUs expected to be earned.

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13. Earnings (Loss) Per Share

Basic earnings (loss) per share is computed by dividing the earnings (loss) attributable to common stockholders by the weighted average number of shares outstanding for the periods presented. The calculation of diluted earnings (loss) per share includes the impact of potentially dilutive non-vested restricted shares and PSUs outstanding during the periods presented, unless their effect is anti-dilutive. There are no adjustments made to the earnings (loss) attributable to common stockholders in the calculation of diluted earnings (loss) per share.

The following is a calculation of the basic and diluted weighted average shares outstanding for the three and six months ended June 30, 2016 and 2015 :



	Three Months Ended June 30,		Six Months Ended June 30,
	2016	2015	2016	2015
	(In thousands)
Basic weighted average common shares outstanding	176,984	136,859	169,953	123,157
Dilution effect of stock awards at end of period ⁽¹⁾	—	—	—	—
Diluted weighted average common shares outstanding	176,984	136,859	169,953	123,157
Anti-dilutive stock-based compensation awards	4,920	2,993	4,794	3,012

___________________


(1)	No unvested stock awards were included in computing loss per share for the three and six months ended June 30, 2016 and 2015 because the effect was anti-dilutive.

14. Business Segment Information

The Company’s exploration and production segment is engaged in the acquisition and development of oil and natural gas properties. Revenues for the exploration and production segment are derived from the sale of oil and natural gas production. The Company’s well services business segment (OWS) performs services for the Company’s oil and natural gas wells operated by OPNA. Revenues for the well services segment are derived from providing well services, product sales and equipment rentals. The Company’s midstream services business segment (OMS) performs salt water gathering and disposal and other midstream services for the Company’s oil and natural gas wells operated by OPNA. Revenues for the midstream segment are primarily derived from salt water pipeline transport, salt water disposal and fresh water sales. The revenues and expenses related to work performed by OWS and OMS for OPNA’s working interests are eliminated in consolidation, and only the revenues and expenses related to non-affiliated working interest owners are included in the Company’s Condensed Consolidated Statement of Operations. These segments represent the Company’s three operating units, each offering different products and services. The Company’s corporate activities have been allocated to the supported business segments accordingly.

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Management evaluates the performance of the Company’s business segments based on operating income, which is defined as segment operating revenues less operating expenses, including depreciation, depletion and amortization. The following table summarizes financial information for the Company’s three business segments for the periods presented:



	Exploration and Production			Well Services			Midstream Services			Eliminations			Consolidated
	(In thousands)
Three months ended June 30, 2016:
Revenues from non-affiliates	$	159,337		$	12,834		$	6,909		$	—		$	179,080
Inter-segment revenues	—			8,301			22,026			(30,327		)	—
Total revenues	159,337			21,135			28,935			(30,327		)	179,080
Operating income (loss)	(44,748		)	(2,173		)	18,056			651			(28,214		)
Other income (expense)	(114,230		)	31			(16		)	—			(114,215		)
Income (loss) before income taxes	$	(158,978	)	$	(2,142	)	$	18,040		$	651		$	(142,429	)

Three months ended June 30, 2015:
Revenues from non-affiliates	$	214,110		$	9,219		$	6,717		$	—		$	230,046
Inter-segment revenues	—			49,469			21,944			(71,413		)	—
Total revenues	214,110			58,688			28,661			(71,413		)	230,046
Operating income (loss)	(22,529		)	9,008			15,947			(9,863		)	(7,437		)
Other income (expense)	(76,635		)	22			(25		)	—			(76,638		)
Income (loss) before income taxes	$	(99,164	)	$	9,030		$	15,922		$	(9,863	)	$	(84,075	)

Six months ended June 30, 2016:
Revenues from non-affiliates	$	276,652		$	18,818		$	13,893		$	—		$	309,363
Inter-segment revenues	—			33,205			44,860			(78,065		)	—
Total revenues	276,652			52,023			58,753			(78,065		)	309,363
Operating income (loss)	(133,625		)	1,848			33,200			(4,852		)	(103,429		)
Other income (expense)	(131,119		)	37			(2		)	—			(131,084		)
Income (loss) before income taxes	$	(264,744	)	$	1,885		$	33,198		$	(4,852	)	$	(234,513	)

Six months ended June 30, 2015:
Revenues from non-affiliates	$	387,969		$	11,927		$	10,537		$	—		$	410,433
Inter-segment revenues	—			97,666			35,766			(133,432		)	—
Total revenues	387,969			109,593			46,303			(133,432		)	410,433
Operating income (loss)	(64,776		)	18,618			25,255			(20,169		)	(41,072		)
Other income (expense)	(68,396		)	20			(44		)	—			(68,420		)
Income (loss) before income taxes	$	(133,172	)	$	18,638		$	25,211		$	(20,169	)	$	(109,492	)

At June 30, 2016:
Property, plant and equipment, net	$	4,951,972		$	53,926		$	351,116		$	(170,280	)	$	5,186,734
Total assets ⁽¹⁾	5,191,725			57,482			356,612			(170,280		)	5,435,539
At December 31, 2015:
Property, plant and equipment, net	$	5,057,311		$	61,402		$	264,956		$	(165,427	)	$	5,218,242
Total assets ⁽¹⁾⁽²⁾	5,478,439			66,952			269,411			(165,427		)	5,649,375

___________________


(1)	Intercompany receivables (payables) for all segments were reclassified to capital contributions from (distributions to) parent and not included in total assets.


(2)	At December 31, 2015, total assets included assets held for sale of $26.7 million in the exploration and production segment related to the assets sold as of April 1, 2016 (see Note 7 – Divestiture).

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15. Commitments and Contingencies

Included below is a discussion of the Company’s various future commitments as of June 30, 2016 . The commitments under these arrangements are not recorded in the accompanying Condensed Consolidated Balance Sheet. The amounts disclosed represent undiscounted cash flows on a gross basis, and no inflation elements have been applied.

Lease obligations. The Company’s total rental commitments under leases for office space and other property and equipment as of June 30, 2016 were $22.6 million .

Volume commitment agreements. As of June 30, 2016 , the Company had certain agreements with an aggregate requirement to deliver or transport a minimum quantity of approximately 30.5 MMBbl of crude oil, 23.0 MMBbl of natural gas liquids and 220.6 Bcf of natural gas, prior to any applicable volume credits, within specified timeframes, all of which are ten years or less. The future commitments under certain agreements cannot be estimated as they are based on fixed differentials relative to WTI under the agreements as compared to the differential relative to WTI for the Williston Basin for the production month. The estimable future commitments under these agreements were approximately $442.0 million as of June 30, 2016 .

Purchase agreements . As of June 30, 2016 , the Company had certain agreements for the purchase of fresh water with an aggregate future commitment of approximately $38.8 million .

Litigation. The Company is party to various legal and/or regulatory proceedings from time to time arising in the ordinary course of business. While the ultimate outcome and impact to the Company cannot be predicted with certainty, the Company believes that all such matters are without merit and involve amounts which, if resolved unfavorably, either individually or in the aggregate, will not have a material adverse effect on its financial condition, results of operations or cash flows. When the Company determines that a loss is probable of occurring and is reasonably estimable, the Company accrues an undiscounted liability for such contingencies based on its best estimate using information available at the time. The Company discloses contingencies where an adverse outcome may be material, or in the judgment of management, the matter should otherwise be disclosed.

16. Condensed Consolidating Financial Information

The Notes (see Note 8 – Long-Term Debt) are guaranteed on a senior unsecured basis by the Guarantors, which are 100% owned by the Company. These guarantees are full and unconditional and joint and several among the Guarantors. Certain of the Company’s immaterial wholly-owned subsidiaries do not guarantee the Notes (“Non-Guarantor Subsidiaries”).

The following financial information reflects consolidating financial information of the parent company, Oasis Petroleum Inc. (“Issuer”), and its Guarantors on a combined basis, prepared on the equity basis of accounting. The Non-Guarantor Subsidiaries are immaterial and, therefore, not presented separately. The information is presented in accordance with the requirements of Rule 3-10 under the SEC’s Regulation S-X. The financial information may not necessarily be indicative of results of operations, cash flows or financial position had the Guarantors operated as independent entities. The Company has not presented separate financial and narrative information for each of the Guarantors because it believes such financial and narrative information would not provide any additional information that would be material in evaluating the sufficiency of the Guarantors.

Table of Contents

Condensed Consolidating Balance Sheet



	June 30, 2016
	Parent/ Issuer			Combined Guarantor Subsidiaries			Intercompany Eliminations			Consolidated
	(In thousands)
ASSETS
Current assets
Cash and cash equivalents	$	85		$	6,390		$	—		$	6,475
Accounts receivable – oil and gas revenues	—			109,121			—			109,121
Accounts receivable – joint interest and other	—			81,291			—			81,291
Accounts receivable – affiliates	1,348			198,702			(200,050		)	—
Inventory	—			9,018			—			9,018
Prepaid expenses	—			5,838			—			5,838
Derivative instruments	—			10,330			—			10,330
Other current assets	—			4,164			—			4,164
Total current assets	1,433			424,854			(200,050		)	226,237
Property, plant and equipment
Oil and gas properties (successful efforts method)	—			6,402,648			—			6,402,648
Other property and equipment	—			536,462			—			536,462
Less: accumulated depreciation, depletion, amortization and impairment	—			(1,752,376		)	—			(1,752,376		)
Total property, plant and equipment, net	—			5,186,734			—			5,186,734
Investments in and advances to subsidiaries	4,474,390			—			(4,474,390		)	—
Derivative instruments	—			64			—			64
Deferred income taxes	223,269			—			(223,269		)	—
Other assets	—			22,504			—			22,504
Total assets	$	4,699,092		$	5,634,156		$	(4,897,709	)	$	5,435,539
LIABILITIES AND EQUITY
Current liabilities
Accounts payable	$	—		$	10,357		$	—		$	10,357
Accounts payable – affiliates	198,702			1,348			(200,050		)	—
Revenues and production taxes payable	—			138,451			—			138,451
Accrued liabilities	31			128,253			—			128,284
Accrued interest payable	47,643			28			—			47,671
Derivative instruments	—			20,891			—			20,891
Advances from joint interest partners	—			5,416			—			5,416
Other current liabilities	—			15,001			—			15,001
Total current liabilities	246,376			319,745			(200,050		)	366,071
Long-term debt	2,092,361			35,000			—			2,127,361
Deferred income taxes	—			751,297			(223,269		)	528,028
Asset retirement obligations	—			36,390			—			36,390
Derivative instruments	—			14,291			—			14,291
Other liabilities	—			3,043			—			3,043
Total liabilities	2,338,737			1,159,766			(423,319		)	3,075,184
Stockholders’ equity
Capital contributions from affiliates	—			3,380,427			(3,380,427		)	—
Common stock, $0.01 par value: 450,000,000 shares authorized; 181,200,581 shares issued and 180,399,060 shares outstanding	1,777			—			—			1,777
Treasury stock, at cost: 801,521 shares	(15,140		)	—			—			(15,140		)
Additional paid-in-capital	1,693,583			8,743			(8,743		)	1,693,583
Retained earnings	680,135			1,085,220			(1,085,220		)	680,135
Total stockholders’ equity	2,360,355			4,474,390			(4,474,390		)	2,360,355
Total liabilities and stockholders’ equity	$	4,699,092		$	5,634,156		$	(4,897,709	)	$	5,435,539

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Condensed Consolidating Balance Sheet



	December 31, 2015
	Parent/ Issuer			Combined Guarantor Subsidiaries			Intercompany Eliminations			Consolidated
	(In thousands)
ASSETS
Current assets
Cash and cash equivalents	$	777		$	8,953		$	—		$	9,730
Accounts receivable – oil and gas revenues	—			96,495			—			96,495
Accounts receivable – joint interest and other	15			100,899			—			100,914
Accounts receivable – affiliates	1,248			247,488			(248,736		)	—
Inventory	—			11,072			—			11,072
Prepaid expenses	278			7,050			—			7,328
Derivative instruments	—			139,697			—			139,697
Other current assets	—			50			—			50
Total current assets	2,318			611,704			(248,736		)	365,286
Property, plant and equipment
Oil and gas properties (successful efforts method)	—			6,284,401			—			6,284,401
Other property and equipment	—			443,265			—			443,265
Less: accumulated depreciation, depletion, amortization and impairment	—			(1,509,424		)	—			(1,509,424		)
Total property, plant and equipment, net	—			5,218,242			—			5,218,242
Assets held for sale	—			26,728			—			26,728
Investments in and advances to subsidiaries	4,573,172			—			(4,573,172		)	—
Derivative instruments	—			15,776			—			15,776
Deferred income taxes	205,174			—			(205,174		)	—
Other assets	100			23,243			—			23,343
Total assets	$	4,780,764		$	5,895,693		$	(5,027,082	)	$	5,649,375
LIABILITIES AND EQUITY
Current liabilities
Accounts payable	$	—		$	9,983		$	—		$	9,983
Accounts payable – affiliates	247,488			1,248			(248,736		)	—
Revenue and production taxes payable	—			132,356			—			132,356
Accrued liabilities	10			167,659			—			167,669
Accrued interest payable	49,340			73			—			49,413
Advances from joint interest partners	—			4,647			—			4,647
Other current liabilities	—			6,500			—			6,500
Total current liabilities	296,838			322,466			(248,736		)	370,568
Long-term debt	2,164,584			138,000			—			2,302,584
Deferred income taxes	—			813,329			(205,174		)	608,155
Asset retirement obligations	—			35,338			—			35,338
Liabilities held for sale	—			10,228			—			10,228
Other liabilities	—			3,160			—			3,160
Total liabilities	2,461,422			1,322,521			(453,910		)	3,330,033
Stockholders’ equity
Capital contributions from affiliates	—			3,369,895			(3,369,895		)	—
Common stock, $0.01 par value: 300,000,000 shares authorized; 139,583,990 shares issued and 139,076,064 shares outstanding	1,376			—			—			1,376
Treasury stock, at cost: 507,926 shares	(13,620		)	—			—			(13,620		)
Additional paid-in-capital	1,497,065			8,743			(8,743		)	1,497,065
Retained earnings	834,521			1,194,534			(1,194,534		)	834,521
Total stockholders’ equity	2,319,342			4,573,172			(4,573,172		)	2,319,342
Total liabilities and stockholders’ equity	$	4,780,764		$	5,895,693		$	(5,027,082	)	$	5,649,375

Table of Contents

Condensed Consolidating Statement of Operations



	Three Months Ended June 30, 2016
	Parent/ Issuer			Combined Guarantor Subsidiaries			Intercompany Eliminations		Consolidated
	(In thousands)
Revenues
Oil and gas revenues	$	—		$	159,337		$	—	$	159,337
Well services and midstream revenues	—			19,743			—		19,743
Total revenues	—			179,080			—		179,080
Operating expenses
Lease operating expenses	—			31,523			—		31,523
Well services and midstream operating expenses	—			8,875			—		8,875
Marketing, transportation and gathering expenses	—			6,491			—		6,491
Production taxes	—			14,367			—		14,367
Depreciation, depletion and amortization	—			122,488			—		122,488
Exploration expenses	—			340			—		340
Impairment	—			23			—		23
General and administrative expenses	6,395			15,481			—		21,876
Total operating expenses	6,395			199,588			—		205,983
Loss on sale of properties	—			(1,311		)	—		(1,311		)
Operating loss	(6,395		)	(21,819		)	—		(28,214		)
Other income (expense)
Equity in loss of subsidiaries	(71,987		)	—			71,987		—
Net loss on derivative instruments	—			(90,846		)	—		(90,846		)
Interest expense, net of capitalized interest	(33,190		)	(1,789		)	—		(34,979		)
Gain on extinguishment of debt	11,642			—			—		11,642
Other income (expense)	—			(32		)	—		(32		)
Total other income (expense)	(93,535		)	(92,667		)	71,987		(114,215		)
Loss before income taxes	(99,930		)	(114,486		)	71,987		(142,429		)
Income tax benefit	9,999			42,499			—		52,498
Net loss	$	(89,931	)	$	(71,987	)	$	71,987	$	(89,931	)

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Condensed Consolidating Statement of Operations



	Three Months Ended June 30, 2015
	Parent/ Issuer			Combined Guarantor Subsidiaries			Intercompany Eliminations		Consolidated
	(In thousands)
Revenues
Oil and gas revenues	$	—		$	214,110		$	—	$	214,110
Well services and midstream revenues	—			15,936			—		15,936
Total revenues	—			230,046			—		230,046
Operating expenses
Lease operating expenses	—			37,761			—		37,761
Well services and midstream operating expenses	—			7,395			—		7,395
Marketing, transportation and gathering expenses	—			7,570			—		7,570
Production taxes	—			20,618			—		20,618
Depreciation, depletion and amortization	—			119,218			—		119,218
Exploration expenses	—			1,082			—		1,082
Rig termination	—			2,815			—		2,815
Impairment	—			19,516			—		19,516
General and administrative expenses	6,325			15,183			—		21,508
Total operating expenses	6,325			231,158			—		237,483
Operating loss	(6,325		)	(1,112		)	—		(7,437		)
Other income (expense)
Equity in loss of subsidiaries	(34,249		)	—			34,249		—
Net loss on derivative instruments	—			(39,424		)	—		(39,424		)
Interest expense, net of capitalized interest	(34,194		)	(3,211		)	—		(37,405		)
Other income	5			186			—		191
Total other income (expense)	(68,438		)	(42,449		)	34,249		(76,638		)
Loss before income taxes	(74,763		)	(43,561		)	34,249		(84,075		)
Income tax benefit	21,533			9,312			—		30,845
Net loss	$	(53,230	)	$	(34,249	)	$	34,249	$	(53,230	)

Table of Contents

Condensed Consolidating Statement of Operations



	Six Months Ended June 30, 2016
	Parent/ Issuer			Combined Guarantor Subsidiaries			Intercompany Eliminations		Consolidated
	(In thousands)
Revenues
Oil and gas revenues	$	—		$	276,652		$	—	$	276,652
Well services and midstream revenues	—			32,711			—		32,711
Total revenues	—			309,363			—		309,363
Operating expenses
Lease operating expenses	—			62,587			—		62,587
Well services and midstream operating expenses	—			13,264			—		13,264
Marketing, transportation and gathering expenses	—			15,043			—		15,043
Production taxes	—			25,120			—		25,120
Depreciation, depletion and amortization	—			244,937			—		244,937
Exploration expenses	—			703			—		703
Rig termination	—			—			—		—
Impairment	—			3,585			—		3,585
General and administrative expenses	13,846			32,396			—		46,242
Total operating expenses	13,846			397,635			—		411,481
Loss on sale of properties	—			(1,311		)	—		(1,311		)
Operating loss	(13,846		)	(89,583		)	—		(103,429		)
Other income (expense)
Equity in loss of subsidiaries	(109,314		)	—			109,314		—
Net loss on derivative instruments	—			(76,471		)	—		(76,471		)
Interest expense, net of capitalized interest	(68,022		)	(5,696		)	—		(73,718		)
Gain on extinguishment of debt	18,658			—			—		18,658
Other income	43			404			—		447
Total other income (expense)	(158,635		)	(81,763		)	109,314		(131,084		)
Loss before income taxes	(172,481		)	(171,346		)	109,314		(234,513		)
Income tax benefit	18,095			62,032			—		80,127
Net loss	$	(154,386	)	$	(109,314	)	$	109,314	$	(154,386	)

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Condensed Consolidating Statement of Operations



	Six Months Ended June 30, 2015
	Parent/ Issuer			Combined Guarantor Subsidiaries			Intercompany Eliminations		Consolidated
	(In thousands)
Revenues
Oil and gas revenues	$	—		$	387,969		$	—	$	387,969
Well services and midstream revenues	—			22,464			—		22,464
Total revenues	—			410,433			—		410,433
Operating expenses
Lease operating expenses	—			76,886			—		76,886
Well services and midstream operating expenses	—			9,347			—		9,347
Marketing, transportation and gathering expenses	—			14,848			—		14,848
Production taxes	—			37,239			—		37,239
Depreciation, depletion and amortization	—			237,696			—		237,696
Exploration expenses	—			1,925			—		1,925
Rig termination	—			3,895			—		3,895
Impairment	—			24,837			—		24,837
General and administrative expenses	14,944			29,888			—		44,832
Total operating expenses	14,944			436,561			—		451,505
Operating loss	(14,944		)	(26,128		)	—		(41,072		)
Other income (expense)
Equity in loss of subsidiaries	(21,630		)	—			21,630		—
Net gain on derivative instruments	—			7,648			—		7,648
Interest expense, net of capitalized interest	(69,415		)	(6,774		)	—		(76,189		)
Other income	4			117			—		121
Total other income (expense)	(91,041		)	991			21,630		(68,420		)
Loss before income taxes	(105,985		)	(25,137		)	21,630		(109,492		)
Income tax benefit	34,714			3,507			—		38,221
Net loss	$	(71,271	)	$	(21,630	)	$	21,630	$	(71,271	)

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Condensed Consolidating Statement of Cash Flows



	Six Months Ended June 30, 2016
	Parent/ Issuer			Combined Guarantor Subsidiaries			Intercompany Eliminations			Consolidated
	(In thousands)
Cash flows from operating activities:
Net loss	$	(154,386	)	$	(109,314	)	$	109,314		$	(154,386	)
Adjustments to reconcile net loss to cash provided by (used in) operating activities:
Equity in loss of subsidiaries	109,314			—			(109,314		)	—
Depreciation, depletion and amortization	—			244,937			—			244,937
Gain on extinguishment of debt	(18,658		)	—			—			(18,658		)
Loss on sale of properties	—			1,311			—			1,311
Impairment	—			3,585			—			3,585
Deferred income taxes	(18,095		)	(62,032		)	—			(80,127		)
Derivative instruments	—			76,471			—			76,471
Stock-based compensation expenses	12,624			355			—			12,979
Deferred financing costs amortization and other	3,360			3,192			—			6,552
Working capital and other changes:
Change in accounts receivable	(85		)	53,068			(48,686		)	4,297
Change in inventory	—			2,054			—			2,054
Change in prepaid expenses	278			1,145			—			1,423
Change in other current assets	—			(114		)	—			(114		)
Change in other assets	100			—			—			100
Change in accounts payable, interest payable and accrued liabilities	(50,462		)	(16,258		)	48,686			(18,034		)
Change in other current liabilities	—			9,001			—			9,001
Change in other liabilities	—			10			—			10
Net cash provided by (used in) operating activities	(116,010		)	207,411			—			91,401
Cash flows from investing activities:
Capital expenditures	—			(231,341		)	—			(231,341		)
Proceeds from sale of properties	—			11,679			—			11,679
Costs related to sale of properties	—			(310		)	—			(310		)
Derivative settlements	—			103,790			—			103,790
Advances from joint interest partners	—			769			—			769
Net cash used in investing activities	—			(115,413		)	—			(115,413		)
Cash flows from financing activities:
Repurchase of senior unsecured notes	(56,925		)	—			—			(56,925		)
Proceeds from revolving credit facility	—			359,000			—			359,000
Principal payments on revolving credit facility	—			(462,000		)	—			(462,000		)
Deferred financing costs	—			(751		)	—			(751		)
Proceeds from sale of common stock	182,953			—			—			182,953
Purchases of treasury stock	(1,520		)	—			—			(1,520		)
Investment in / capital contributions from subsidiaries	(9,190		)	9,190			—			—
Net cash provided by (used in) financing activities	115,318			(94,561		)	—			20,757
Decrease in cash and cash equivalents	(692		)	(2,563		)	—			(3,255		)
Cash and cash equivalents at beginning of period	777			8,953			—			9,730
Cash and cash equivalents at end of period	$	85		$	6,390		$	—		$	6,475

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Condensed Consolidating Statement of Cash Flows



	Six Months Ended June 30, 2015
	Parent/ Issuer			Combined Guarantor Subsidiaries			Intercompany Eliminations			Consolidated
	(In thousands)
Cash flows from operating activities:
Net loss	$	(71,271	)	$	(21,630	)	$	21,630		$	(71,271	)
Adjustments to reconcile net loss to cash provided by (used in) operating activities:
Equity in loss of subsidiaries	21,630			—			(21,630		)	—
Depreciation, depletion and amortization	—			237,696			—			237,696
Impairment	—			24,837			—			24,837
Deferred income taxes	(34,714		)	(3,507		)	—			(38,221		)
Derivative instruments	—			(7,648		)	—			(7,648		)
Stock-based compensation expenses	13,515			148			—			13,663
Deferred financing costs amortization and other	2,255			2,804			—			5,059
Working capital and other changes:
Change in accounts receivable	(256		)	9,890			66,165			75,799
Change in inventory	—			3,685			—			3,685
Change in prepaid expenses	297			3,097			—			3,394
Change in other current assets	—			5,538			—			5,538
Change in accounts payable, interest payable and accrued liabilities	65,933			(22,392		)	(66,165		)	(22,624		)
Change in other liabilities	—			(21		)	—			(21		)
Net cash provided by (used in) operating activities	(2,611		)	232,497			—			229,886
Cash flows from investing activities:
Capital expenditures	—			(587,430		)	—			(587,430		)
Derivative settlements	—			213,336			—			213,336
Advances from joint interest partners	—			(406		)	—			(406		)
Net cash used in investing activities	—			(374,500		)	—			(374,500		)
Cash flows from financing activities:
Proceeds from revolving credit facility	—			320,000			—			320,000
Principal payments on revolving credit facility	—			(665,000		)	—			(665,000		)
Deferred financing costs	—			(3,591		)	—			(3,591		)
Proceeds from sale of common stock	463,010			—			—			463,010
Purchases of treasury stock	(1,932		)	—			—			(1,932		)
Investment in / capital contributions from subsidiaries	(458,465		)	458,465			—			—
Net cash provided by financing activities	2,613			109,874			—			112,487
Increase (decrease) in cash and cash equivalents	2			(32,129		)	—			(32,127		)
Cash and cash equivalents at beginning of period	776			45,035			—			45,811
Cash and cash equivalents at end of period	$	778		$	12,906		$	—		$	13,684

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17. Subsequent Events

The Company has evaluated the period after the balance sheet date, noting no subsequent events or transactions that required recognition or disclosure in the financial statements, other than as noted below.

Derivative instruments . In July 2016, the Company entered into a three-way costless collar agreement with a floor price of $45.00 per barrel for total notional amounts of 334,000 barrels and 31,000 barrels, which settle in 2017 and 2018, respectively, based on WTI. These derivative instruments do not qualify for and were not designated as hedging instruments for accounting purposes.

Credit facility amendment. On August 8, 2016, the Company entered into its sixth amendment to its Credit Facility (the “Sixth Amendment”), which provides the Company with more flexibility in raising new capital and refinancing its existing Notes. The Sixth Amendment did not change the Company’s current borrowing base and aggregate elected commitment of $1,150.0 million . The next regular semi-annual redetermination of the borrowing base is scheduled for October 1, 2016.

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Item 2. — Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in our Annual Report on Form 10-K for the year ended December 31, 2015 (“ 2015 Annual Report”), as well as the unaudited condensed consolidated financial statements and notes thereto included in this Quarterly Report on Form 10-Q.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond our control. All statements, other than statements of historical fact included in this Quarterly Report on Form 10-Q, regarding our strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management are forward-looking statements. When used in this Quarterly Report on Form 10-Q, the words “could,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “may,” “continue,” “predict,” “potential,” “project” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. In particular, the factors discussed below and detailed under Item 1A. “Risk Factors” in our 2015 Annual Report could affect our actual results and cause our actual results to differ materially from expectations, estimates, or assumptions expressed in, forecasted in, or implied in such forward-looking statements.

Forward-looking statements may include statements about:


•	our business strategy;


•	estimated future net reserves and present value thereof;


•	timing and amount of future production of oil and natural gas;


•	drilling and completion of wells;


•	estimated inventory of wells remaining to be drilled and completed;


•	costs of exploiting and developing our properties and conducting other operations;


•	availability of drilling, completion and production equipment and materials;


•	availability of qualified personnel;


•	owning and operating a well services company;


•	owning, operating and developing a midstream company;


•	infrastructure for salt water disposal;


•	gathering, transportation and marketing of oil and natural gas, both in the Williston Basin and other regions in the United States;


•	property acquisitions;


•	integration and benefits of property acquisitions or the effects of such acquisitions on our cash position and levels of indebtedness;


•	the amount, nature and timing of capital expenditures;


•	availability and terms of capital;


•	our financial strategy, budget, projections, execution of business plan and operating results;


•	cash flows and liquidity;


•	oil and natural gas realized prices;


•	general economic conditions;


•	operating environment, including inclement weather conditions;


•	effectiveness of risk management activities;


•	competition in the oil and natural gas industry;


•	counterparty credit risk;


•	environmental liabilities;


•	governmental regulation and the taxation of the oil and natural gas industry;


•	developments in oil-producing and natural gas-producing countries;


•	technology;


•	uncertainty regarding future operating results; and


•	plans, objectives, expectations and intentions contained in this report that are not historical.

All forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. We disclaim any obligation to update or revise these statements unless required by securities law, and you should not place undue reliance on these forward-looking statements. Although we believe that our plans, intentions and expectations reflected in or suggested by the forward-looking statements we make in this Quarterly Report on Form 10-Q are reasonable, we can give no assurance that

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these plans, intentions or expectations will be achieved. Some of the key factors which could cause actual results to vary from our expectations include changes in oil and natural gas prices, weather and environmental conditions, the timing of planned capital expenditures, availability of acquisitions, uncertainties in estimating proved reserves and forecasting production results, operational factors affecting the commencement or maintenance of producing wells, the condition of the capital markets generally, as well as our ability to access them, the proximity to and capacity of transportation facilities, and uncertainties regarding environmental regulations or litigation and other legal or regulatory developments affecting our business, as well as those factors discussed below and elsewhere in this Quarterly Report on Form 10-Q, all of which are difficult to predict. In light of these risks, uncertainties and assumptions, the forward-looking events discussed may not occur. These cautionary statements qualify all forward-looking statements attributable to us or persons acting on our behalf.

Overview

We are an independent exploration and production (“E&P”) company focused on the acquisition and development of unconventional oil and natural gas resources primarily in the North Dakota and Montana regions of the Williston Basin. Since our inception, we have acquired properties that provide current production and significant upside potential through further development. Our drilling activity is primarily directed toward projects that we believe can provide us with repeatable successes in the Bakken and Three Forks formations. Oasis Petroleum North America LLC (“OPNA”) conducts our domestic oil and natural gas E&P activities. We also operate a well services business through Oasis Well Services LLC (“OWS”) and a midstream services business through Oasis Midstream Services LLC (“OMS”), both of which are separate reportable business segments that are complementary to our primary development and production activities. The revenues and expenses related to work performed by OWS and OMS for OPNA’s working interests are eliminated in consolidation and, therefore, do not directly contribute to our consolidated results of operations.

Our use of capital for acquisitions and development allows us to direct our capital resources to what we believe to be the most attractive opportunities as market conditions evolve. We have historically acquired properties that we believe will meet or exceed our rate of return criteria. We built our Williston Basin assets through acquisitions and development activities, which were financed with a combination of capital from private investors, borrowings under our revolving credit facility, cash flows provided by operating activities, proceeds from our senior unsecured notes, proceeds from our public equity offerings, the sale of certain non-core oil and gas properties and cash settlements of derivative contracts. For acquisitions of properties with additional development, exploitation and exploration potential, we have focused on acquiring properties that we expect to operate so that we can control the timing and implementation of capital spending. In some instances, we have acquired non-operated property interests at what we believe to be attractive rates of return either because they provided an entry into a new area of interest or complemented our existing operations. We intend to continue to acquire both operated and non-operated properties to the extent we believe they meet our return objectives. In addition, the acquisition of non-operated properties in new areas provides us with geophysical and geologic data that may lead to further acquisitions in the same area, whether on an operated or non-operated basis.

Due to the geographic concentration of our oil and natural gas properties in the Williston Basin, we believe the primary sources of opportunities, challenges and risks related to our business for both the short and long-term are:


•	commodity prices for oil and natural gas;


•	transportation capacity;


•	availability and cost of services; and


•	availability of qualified personnel.

Our revenue, profitability and future growth rate depend substantially on factors beyond our control, such as economic, political and regulatory developments as well as competition from other sources of energy. Prices for oil and natural gas can fluctuate widely in response to relatively minor changes in the global and regional supply of and demand for oil and natural gas, as well as market uncertainty, economic conditions and a variety of additional factors. Since the inception of our oil and natural gas activities, commodity prices have experienced significant fluctuations, and may fluctuate widely in the future. The current global oversupply of crude oil has caused a sharp decline in oil prices since mid-2014. As a result of sustained low oil prices, we have decreased our planned 2016 capital expenditures as compared to 2015, and we are continuing to concentrate our drilling activities in certain areas that are the most economic in the Williston Basin. Extended periods of low prices for oil or natural gas could materially and adversely affect our financial position, our results of operations, the quantities of oil and natural gas reserves that we can economically produce and our access to capital.

In an effort to improve price realizations from the sale of our oil and natural gas, we manage our commodities marketing activities in-house, which enables us to market and sell our oil and natural gas to a broader array of potential purchasers. We enter into crude oil sales contracts with purchasers who have access to crude oil transportation capacity, utilize derivative financial instruments to manage our commodity price risk and enter into physical delivery contracts to manage our price differentials. Due to the availability of other markets and pipeline connections, we do not believe that the loss of any single oil or natural gas customer would have a material adverse effect on our results of operations or cash flows. Additionally, we sell a

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significant amount of our crude oil production through gathering systems connected to multiple pipeline and rail facilities. These gathering systems, which originate at the wellhead, reduce the need to transport barrels by truck from the wellhead. As of June 30, 2016 , we were flowing 83% of our gross operated oil production through these gathering systems.

Our market optionality on the crude oil gathering systems allows us to shift volumes between pipeline and rail markets in order to optimize price realizations. Crude oil produced and sold in the Williston Basin has historically sold at a discount to the NYMEX West Texas Intermediate crude oil index prices (“WTI”) due to transportation costs and takeaway capacity. In the past, there have been periods when this discount has substantially increased due to oil production in the area increasing to a point that it temporarily surpassed the available pipeline transportation, rail transportation and refining capacity in the area. Expansions of both rail and pipeline facilities have reduced the prior constraint on oil transportation out of the Williston Basin and improved our price differentials received at the lease. In 2015, our price differentials relative to WTI strengthened as new pipelines opened to eastern Canada and U.S. markets and transportation on rail gradually declined. Since the third quarter of 2015, our price differentials have remained less than $5.00 per barrel discount to WTI on a quarterly basis. Even as WTI improved in the first half of 2016, our price differentials averaged $4.85 per barrel of oil.

Forward commodity prices and estimates of future production play a significant role in determining impairment of proved oil and natural gas properties. As a result of lower commodity prices and their impact on our estimated future cash flows, we have continued to monitor our proved oil and natural gas properties for impairment. For the six months ended June 30, 2016 , we recorded an impairment charge of $3.6 million to further write down our properties held for sale to their fair value, as determined by the sales price on April 1, 2016, less costs to sell. No other proved impairment charges were recorded during the six months ended June 30, 2016 . In addition, the excess of our expected undiscounted future cash flows over the carrying value of our proved oil and natural gas properties in the Bakken and Three Forks formations has increased to $1,978.3 million as of June 30, 2016 , an increase of approximately 56% as compared to an excess of $1,264.8 million at December 31, 2015. The underlying commodity prices embedded in our expected undiscounted cash flows were determined using NYMEX forward strip prices for five years, escalating 3% per year thereafter. Our expected undiscounted estimated cash flows also included a 3% inflation factor applied to the future operating and development costs after five years. If expected future oil prices decline by approximately 20% as compared to June 30, 2016 , holding all other factors constant, the expected undiscounted cash flows may not exceed the carrying value of our proved oil and natural gas properties in the Bakken and Three Forks formations. As a result, we may recognize additional proved impairment charges in the future, and such impairment charges could exceed $2.3 billion assuming a discount rate of 10%.

Changes in commodity prices may significantly impact our estimates of oil and natural gas reserves, which are estimated and reported as of December 31 of each calendar year. Our estimated net proved reserves at December 31, 2015 were prepared using SEC pricing, calculated as the unweighted arithmetic average first-day-of-the-month prices for the prior twelve months of $50.16 per barrel for oil and $2.63 per MMBtu for natural gas. The current forward commodity price curve is lower than the year-end 2015 SEC pricing; therefore, the following sensitivity table is provided to illustrate the estimated impact of this price decrease on our estimated proved reserves, PV-10 and Standardized Measure. In addition to the different price assumptions, the sensitivity case below includes assumed capital and expense reductions we expect to realize at lower commodity prices. The reduction in proved developed reserves is attributable to reaching the economic limit sooner. The reduction in proved undeveloped reserves is a result of well locations no longer meeting our investment criteria as well as reaching the economic limit sooner. This sensitivity case is only to demonstrate the impact that a lower price and cost environment would have had on estimated proved reserves, PV-10 and Standardized Measure as of December 31, 2015, holding all other factors constant. There is no assurance that these prices or assumed cost savings will actually be achieved. Our estimated net proved reserves, PV-10 and Standardized Measure were determined using prices for oil and natural gas, without giving effect to derivative transactions, which were held constant throughout the life of the properties. The prices were adjusted by lease for quality, transportation fees, geographical differentials, marketing bonuses or deductions and other factors affecting the price received at the wellhead.

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	Actual at December 31, 2015 ⁽¹⁾		Sensitivity Case ⁽²⁾
Oil price (per Bbl)	$	50.16	$	44.19
Natural gas price (per MMBtu)	2.63		2.52

Capital expenditure reduction	n/a		15%
Operating expense reduction	n/a		16%

Estimated proved developed reserves (MMBoe)	147.6		149.6
Estimated proved undeveloped reserves (MMBoe)	70.7		71.4
Total estimated proved reserves (MMBoe)	$	218.2	$	221.0

PV-10 (in millions) ⁽³⁾	$	2,022.7	$	1,866.4
Present value of future income taxes discounted at 10% (in millions)	108.4		60.1
Standardized Measure of discounted future net cash flows (in millions) ⁽⁴⁾	$	1,914.3	$	1,806.3

__________________


(1)	The actual reserve estimates at December 31, 2015 were prepared using SEC pricing, calculated as the unweighted arithmetic average first-day-of-the-month prices for the prior twelve months, which was $50.16 per barrel for oil and $2.63 per MMBtu for natural gas for the year ended December 31, 2015.


(2)	The sensitivity case prices represent potential SEC pricing based on actual prices for each of the six months ended June 30, 2016 and forward commodity prices as of June 30, 2016 for the remaining months of 2016.

(3)

PV-10 is a non-GAAP financial measure and generally differs from Standardized Measure, the most directly comparable financial measure under accounting principles generally accepted in the United States of America (“GAAP”), because it does not include the effect of income taxes on discounted future net cash flows. Neither PV-10 nor Standardized Measure represents an estimate of the fair market value of our oil and natural gas reserves. The oil and gas industry uses PV-10 as a measure to compare the relative size and value of proved reserves held by companies without regard to the specific tax characteristics of such entities.


(4)	Standardized Measure represents the present value of estimated future net cash flows from proved oil and natural gas reserves, less estimated future development, production, plugging and abandonment costs and income tax expenses, discounted at 10% per annum to reflect timing of future cash flows.

Second Quarter 2016 Highlights:


•	Average daily production was 49,507 Boe per day during the three months ended June 30, 2016 ;


•	We completed and placed on production 13 gross ( 8.7 net) operated wells in the Williston Basin during the three months ended June 30, 2016 ;


•	For the three months ended June 30, 2016 , total capital expenditures were $131.3 million ;


•	At June 30, 2016 , we had $6.5 million of cash and cash equivalents and had total liquidity of $1,107.3 million , including the availability under our revolving credit facility;


•	Net cash provided by operating activities was $91.4 million for the three months ended June 30, 2016 . Adjusted EBITDA, a non-GAAP financial measure, was $132.2 million for the three months ended June 30, 2016 . For a definition of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to net loss and net cash provided by operating activities, see “Non-GAAP Financial Measures” below.

Results of Operations

Revenues

Our oil and gas revenues are derived from the sale of oil and natural gas production. These revenues do not include the effects of derivative instruments and may vary significantly from period to period as a result of changes in volumes of production sold or changes in commodity prices. Our well services and midstream revenues are primarily derived from well services, product sales, equipment rentals, salt water pipeline transport, salt water disposal and fresh water sales for third-party working interest owners in OPNA’s operated wells. Intercompany revenues for work performed by OWS and OMS for OPNA’s working interests are eliminated in consolidation.

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The following table summarizes our revenues and production data for the periods presented:



	Three Months Ended June 30,							Six Months Ended June 30,
	2016		2015		Change			2016		2015		Change
Operating results (in thousands):
Revenues
Oil	$	152,900	$	208,564	$	(55,664	)	$	264,106	$	372,377	$	(108,271	)
Natural gas	6,437		5,546		891			12,546		15,592		(3,046		)
Well services	12,833		9,219		3,614			18,818		11,927		6,891
Midstream	6,910		6,717		193			13,893		10,537		3,356
Total revenues	$	179,080	$	230,046	$	(50,966	)	$	309,363	$	410,433	$	(101,070	)
Production data:
Oil (MBbls)	3,747		4,008		(261		)	7,617		8,030		(413		)
Natural gas (MMcf)	4,549		3,395		1,154			8,802		6,502		2,300
Oil equivalents (MBoe)	4,505		4,574		(69		)	9,084		9,114		(30		)
Average daily production (Boe per day)	49,507		50,261		(754		)	49,911		50,353		(442		)
Average sales prices:
Oil, without derivative settlements (per Bbl)	$	40.81	$	52.04	$	(11.23	)	$	34.67	$	46.37	$	(11.70	)
Oil, with derivative settlements (per Bbl) ⁽¹⁾	48.94		78.01		(29.07		)	48.30		72.94		(24.64		)
Natural gas (per Mcf) ⁽²⁾	1.42		1.63		(0.21		)	1.43		2.40		(0.97		)

____________________

(1)

Realized prices include gains or losses on cash settlements for commodity derivatives, which do not qualify for and were not designated as hedging instruments for accounting purposes. Cash settlements represent the cumulative gains and losses on our derivative instruments for the periods presented and do not include a recovery of costs that were paid to acquire or modify the derivative instruments that were settled.


(2)	Natural gas prices include the value for natural gas and natural gas liquids.

Three months ended June 30, 2016 as compared to three months ended June 30, 2015

Total revenues. Our total revenues decreased $51.0 million , or 22% , to $179.1 million during the three months ended June 30, 2016 as compared to the three months ended June 30, 2015 , primarily due to lower realized oil sales prices. Our average realized prices for oil decreased by 22% during the three months ended June 30, 2016 as compared to the three months ended June 30, 2015 .

Oil and gas revenues . Our primary revenues are a function of oil and natural gas production volumes sold and average sales prices received for those volumes. Average daily production sold decreased by 754 Boe per day to 49,507 Boe per day during the three months ended June 30, 2016 as compared to the three months ended June 30, 2015 . The decrease in average daily production sold was primarily a result of the natural decline in production in wells that were producing as of June 30, 2015 coupled with the divestiture completed on April 1, 2016 (see Note 7 to our condensed consolidated financial statements), offset by our 48.4 total net well completions in the Williston Basin during the twelve months ended June 30, 2016 . The divestiture resulted in a decrease in average daily production of approximately 671 Boe per day during the three months ended June 30, 2016 . Average oil sales prices, without derivative settlements, decreased by $11.23 per barrel to an average of $40.81 per barrel, and average natural gas sales prices, which include the value for natural gas and natural gas liquids, decreased by $0.21 per Mcf to an average of $1.42 per Mcf for the three months ended June 30, 2016 as compared to the three months ended June 30, 2015 . The lower oil and natural gas sales prices decreased revenues by $45.8 million, coupled with lower total production amounts sold, which decreased revenues by $9.0 million during the three months ended June 30, 2016 as compared to the three months ended June 30, 2015 . Extended low commodity prices could result in a significant decrease in our oil and gas volumes and revenues in the future.

Well services and midstream revenues. In response to the low commodity price environment, we decreased the pace of our well completions and reduced OWS to one fracturing fleet during the first quarter of 2016. While our well completion activity decreased, our well services revenues increased by $3.6 million to $12.8 million for the three months ended June 30, 2016 as compared to the three months ended June 30, 2015 primarily due to a $3.5 million increase in well completion revenues as a result of OWS completing OPNA wells with a higher average third-party working interest during the three months ended June 30, 2016 . Midstream revenues remained relatively consistent at $6.9 million and $6.7 million for the three months ended June 30, 2016 and 2015 , respectively.

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Six months ended June 30, 2016 as compared to six months ended June 30, 2015

Our total revenues decreased $101.1 million , or 25% , to $309.4 million during the six months ended June 30, 2016 as compared to the six months ended June 30, 2015 , primarily due to lower realized oil and natural gas sales prices. Our average realized prices for oil and natural gas decreased by 25% and 40%, respectively, during the six months ended June 30, 2016 as compared to the six months ended June 30, 2015 .

Oil and gas revenues . Our primary revenues are a function of oil and natural gas production volumes sold and average sales prices received for those volumes. Average daily production sold decreased by 442 Boe per day, or 1% , to 49,911 Boe per day during the six months ended June 30, 2016 as compared to the six months ended June 30, 2015 . The decrease in average daily production sold was primarily a result of the decline in production in wells that were producing as of June 30, 2015 coupled with the divestiture completed on April 1, 2016 (see Note 7 to our condensed consolidated financial statements), offset by our 48.4 total net well completions in the Williston Basin during the twelve months ended June 30, 2016 . The divestiture resulted in a decrease in average daily production of approximately 438 Boe per day during the six months ended June 30, 2016 . Average oil sales prices, without derivatives settlements, decreased by $11.70 per barrel to an average of $34.67 per barrel, and average natural gas sales prices, which include the value for natural gas and natural gas liquids, decreased by $0.97 per Mcf to an average of $1.43 per Mcf for the six months ended June 30, 2016 as compared to the six months ended June 30, 2015 . The lower oil and natural gas sales prices decreased revenues by $100.3 million, coupled with lower total production amounts sold, which decreased revenues by $11.1 million during the six months ended June 30, 2016 as compared to the six months ended June 30, 2015 .

Well services and midstream revenues . In response to the low commodity price environment, we decreased the pace of our well completions and reduced OWS to one fracturing fleet during the first quarter of 2016. While our well completion activity decreased, our well services revenues increased $6.9 million to $18.8 million for the six months ended June 30, 2016 as compared to the six months ended June 30, 2015 primarily due to an increase of $9.0 million in well completion revenue as a result of OWS completing OPNA wells with a higher average third-party working interest, offset by a $1.5 million decrease in well completion product sales to third parties as a result of OWS completing all of OPNA’s operated wells during the six months ended June 30, 2016 . Midstream revenues were $13.9 million for the six months ended June 30, 2016 , which was a $3.4 million increase period over period, primarily due to increased water volumes flowing through our salt water disposal systems, offset by decreased fresh water sales.

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Expenses and other income

The following table summarizes our operating expenses and other income and expenses for the periods presented:



	Three Months Ended June 30,									Six Months Ended June 30,
	2016			2015			Change			2016			2015			Change
	(In thousands, except per Boe of production)
Operating expenses:
Lease operating expenses	$	31,523		$	37,761		$	(6,238	)	$	62,587		$	76,886		$	(14,299	)
Well services and midstream operating expenses	8,875			7,395			1,480			13,264			9,347			3,917
Marketing, transportation and gathering expenses	6,491			7,570			(1,079		)	15,043			14,848			195
Production taxes	14,367			20,618			(6,251		)	25,120			37,239			(12,119		)
Depreciation, depletion and amortization	122,488			119,218			3,270			244,937			237,696			7,241
Exploration expenses	340			1,082			(742		)	703			1,925			(1,222		)
Rig termination	—			2,815			(2,815		)	—			3,895			(3,895		)
Impairment	23			19,516			(19,493		)	3,585			24,837			(21,252		)
General and administrative expenses	21,876			21,508			368			46,242			44,832			1,410
Total operating expenses	205,983			237,483			(31,500		)	411,481			451,505			(40,024		)
Loss on sale of properties	(1,311		)	—			(1,311		)	(1,311		)	—			(1,311		)
Operating loss	(28,214		)	(7,437		)	(20,777		)	(103,429		)	(41,072		)	(62,357		)
Other income (expense):
Net gain (loss) on derivative instruments	(90,846		)	(39,424		)	(51,422		)	(76,471		)	7,648			(84,119		)
Interest expense, net of capitalized interest	(34,979		)	(37,405		)	2,426			(73,718		)	(76,189		)	2,471
Gain on extinguishment of debt	11,642			—			11,642			18,658			—			18,658
Other income (expense)	(32		)	191			(223		)	447			121			326
Total other income (expense)	(114,215		)	(76,638		)	(37,577		)	(131,084		)	(68,420		)	(62,664		)
Loss before income taxes	(142,429		)	(84,075		)	(58,354		)	(234,513		)	(109,492		)	(125,021		)
Income tax benefit	52,498			30,845			21,653			80,127			38,221			41,906
Net loss	$	(89,931	)	$	(53,230	)	$	(36,701	)	$	(154,386	)	$	(71,271	)	$	(83,115	)
Costs and expenses (per Boe of production):
Lease operating expenses	$	7.00		$	8.26		$	(1.26	)	$	6.89		$	8.44		$	(1.55	)
Marketing, transportation and gathering expenses	1.44			1.66			(0.22		)	1.66			1.63			0.03
Production taxes	3.19			4.51			(1.32		)	2.77			4.09			(1.32		)
Depreciation, depletion and amortization	27.19			26.07			1.12			26.96			26.08			0.88
General and administrative expenses	4.86			4.70			0.16			5.09			4.92			0.17

Three months ended June 30, 2016 as compared to three months ended June 30, 2015

Lease operating expenses . Lease operating expenses decreased $6.2 million to $31.5 million for the three months ended June 30, 2016 as compared to the three months ended June 30, 2015 . This decrease was primarily due to an increase in salt water disposal volumes being transported on OMS pipelines and injected in OMS salt water disposal wells coupled with a decrease in our net well count as a result of the divestiture completed on April 1, 2016 (see Note 7 to our condensed consolidated financial statements). Lease operating expenses decreased from $8.26 per Boe for the three months ended June 30, 2015 to $7.00 per Boe for the three months ended June 30, 2016 .

Well services and midstream operating expenses . Well services and midstream operating expenses represent third-party working interest owners’ share of service costs, cost of goods sold and operating expenses incurred by OWS and OMS. The $1.5 million increase for the three months ended June 30, 2016 as compared to the three months ended June 30, 2015 was primarily attributable to a $1.8 million increase in well completion costs as a result of OWS completing OPNA wells with a higher average third-party working interest. This increase was offset by a decrease in midstream operating expenses of $0.3

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million during the three months ended June 30, 2016 as compared to the three months ended June 30, 2015 due to decreased fresh water purchases.

Marketing, transportation and gathering expenses . The $1.1 million decrease in marketing, transportation and gathering expenses for the three months ended June 30, 2016 as compared to the three months ended June 30, 2015 was primarily attributable to a $0.5 million decrease in oil transportation costs and a $0.4 million decrease in our pipeline imbalance.

Production taxes . Our production taxes as a percentage of oil and natural gas sales were 9.0% and 9.6% , respectively, for the three months ended June 30, 2016 and 2015 . The production tax rate decreased period over period primarily due to the reduction in the North Dakota oil extraction tax rate, partially offset by an increased weighting of production in North Dakota, which has a higher average production tax rate as compared to Montana. For the three months ended June 30, 2016 and 2015 , the percentage of our total production located in North Dakota was 92% and 87%, respectively. In 2015, North Dakota had a crude oil tax structure based on a 5% production tax and a 6.5% oil extraction tax, resulting in a combined tax rate of 11.5% of crude oil revenues. In 2016, the North Dakota oil extraction tax was reduced to 5%, resulting in a combined tax rate of 10% of crude oil revenues.

Depreciation, depletion and amortization (“DD&A”). DD&A expense increased $3.3 million to $122.5 million for the three months ended June 30, 2016 as compared to the three months ended June 30, 2015 . This increase in DD&A expense for the three months ended June 30, 2016 was a result of an increase in the DD&A rate, offset by a decrease in total production during the six months ended June 30, 2016 . The DD&A rate for the three months ended June 30, 2016 was $27.19 per Boe compared to $26.07 per Boe for the three months ended June 30, 2015 . The increase in the DD&A rate was primarily due to lower proved reserves as a result of lower oil and natural gas prices.

Impairment . For the three months ended June 30, 2016 and 2015 , we recorded non-cash impairment charges of $23,000 and $0.4 million , respectively, for unproved properties due to leases that expired in the period. As a result of periodic assessments of unproved properties not held-by-production, we recorded non-cash impairment charges on our unproved oil and natural gas properties of $19.1 million for the three months ended June 30, 2015 related to acreage expiring in future periods because there were no current plans to drill or extend the leases prior to their expiration. During the year ended December 31, 2015, we recorded similar non-cash impairment charges of $4.7 million related to leases that expired during the three months ended June 30, 2016 as a result of periodic assessments of unproved properties. Consequently, lower impairment charges for unproved properties were recorded during the three months ended June 30, 2016 as most leases that expired during the period had been previously impaired. No impairment charges of proved oil and gas properties were recorded for the three months ended June 30, 2016 and 2015 .

General and administrative expenses (“G&A”) . Our G&A increased $0.4 million to $21.9 million for the three months ended June 30, 2016 as compared to the three months ended June 30, 2015 . G&A for our OWS segment increased by $2.6 million for the three months ended June 30, 2016 as compared to the three months ended June 30, 2015 . The increase in OWS G&A was due to OWS completing OPNA wells with a higher average third-party working interest during the three months ended June 30, 2016 as compared to the three months ended June 30, 2015 . Excluding our intercompany elimination, gross OWS G&A decreased $2.8 million. E&P G&A was $17.7 million and $19.8 million for the three months ended June 30, 2016 and 2015 , respectively. These decreases in gross OWS and E&P G&A were primarily due to lower compensation expenses due to a decrease in employee headcount. Our total company full-time employee headcount decreased to 453 at June 30, 2016 from 567 at June 30, 2015 .

Derivative instruments . As a result of entering into derivative contracts and the effect of the forward strip oil price changes, we incurred a $90.8 million net loss on derivative instruments, including net cash settlement receipts of $30.5 million , for the three months ended June 30, 2016 , and a $39.4 million net loss on derivative instruments, including net cash settlement receipts of $104.1 million , for the three months ended June 30, 2015 . Cash settlements represent the cumulative gains and losses on our derivative instruments for the periods presented and do not include recovery of costs that were paid to acquire or modify the derivative instruments that were settled.

Interest expense . Interest expense decreased $2.4 million from $37.4 million for the three months ended June 30, 2015 to $35.0 million for the three months ended June 30, 2016 due to a decrease in interest expense incurred on our senior unsecured notes and revolving credit facility during the three months ended June 30, 2016 . In 2016, we repurchased an aggregate principal amount of $76.6 million of outstanding senior unsecured notes, which resulted in a decrease of $1.5 million in interest expense for the three months ended June 30, 2016 . For the three months ended June 30, 2016 and 2015 , the weighted average debt outstanding under our revolving credit facility was $82.7 million and $184.7 million, respectively. The weighted average interest rate incurred on the outstanding borrowings under our revolving credit facility was 2.0% and 1.7% for the three months ended June 30, 2016 and June 30, 2015 , respectively. Interest capitalized during the three months ended June 30, 2016 and 2015 was $4.8 million and $4.9 million , respectively.

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Gain on extinguishment of debt . In April 2016, we repurchased an aggregate principal amount of $46.8 million of our outstanding senior unsecured notes for an aggregate cost of $34.6 million , including accrued interest and fees. For the three months ended June 30, 2016 , we recognized a pre-tax gain related to the repurchase of $11.6 million , which included unamortized deferred financing costs write-offs of $0.5 million . For the three months ended June 30, 2015 , we did not repurchase any portion of our outstanding senior unsecured notes.

Income taxes. The income tax benefit for the three months ended June 30, 2016 and 2015 was recorded at 36.9% and 36.7% of pre-tax net income, respectively. Our effective tax rates for the three months ended June 30, 2016 and 2015 approximate the combined federal statutory tax rate and the statutory rates for the states in which we conduct business.

Six months ended June 30, 2016 as compared to six months ended June 30, 2015

Lease operating expense. Lease operating expenses decreased $14.3 million to $62.6 million for the six months ended June 30, 2016 as compared to the six months ended June 30, 2015 . The decrease was primarily due to an increase in salt water disposal volumes being transported on OMS pipelines and injected in OMS salt water disposal wells. Lease operating expenses decreased from $8.44 per Boe for the six months ended June 30, 2015 to $6.89 per Boe for the six months ended June 30, 2016 .

Well services and midstream operating expenses. Well services and midstream operating expenses represent third-party working interest owners’ share of service costs, cost of goods sold and operating expenses incurred by OWS and OMS. The $3.9 million increase for the six months ended June 30, 2016 as compared to the six months ended June 30, 2015 was attributable to a $3.4 million increase due to OWS completing OPNA wells with a higher average third-party working interest in the six months ended June 30, 2016 as compared to the six months ended June 30, 2015 . This increase was coupled with a $0.5 million increase in midstream operating expenses related to an increase in salt water disposal wells and pipelines in service.

Marketing, transportation and gathering expenses. The $0.2 million increase in marketing, transportation and gathering expenses for the six months ended June 30, 2016 as compared to the six months ended June 30, 2015 was primarily attributable to a $0.8 million increase in the pipeline imbalance, offset by a $0.9 million decrease in oil transportation costs.

Production taxes. Our production taxes as a percentage of oil and natural gas sales were 9.1% and 9.6% , respectively, for the six months ended June 30, 2016 and 2015 . The production tax rate decreased period over period primarily due to the reduction in the North Dakota oil extraction tax rate, partially offset by an increased weighting of production in North Dakota, which has a higher average production tax rate as compared to Montana. For the six months ended June 30, 2016 and 2015 , the percentage of our total production located in North Dakota was 91% and 87%, respectively. In 2015, North Dakota had a crude oil tax structure based on a 5% production tax and a 6.5% oil extraction tax, resulting in a combined tax rate of 11.5% of crude oil revenues. In 2016, the North Dakota oil extraction tax was reduced to 5%, resulting in a combined tax rate of 10% of crude oil revenues.

Depreciation, depletion, and amortization. DD&A expense increased $7.2 million to $244.9 million for the six months ended June 30, 2016 as compared to the six months ended June 30, 2015 . The increase in DD&A expense for the six months ended June 30, 2016 was a result of an increase in the DD&A rate during the six months ended June 30, 2016 . The DD&A rate for the six months ended June 30, 2016 was $26.96 per Boe compared to $26.08 per Boe for the six months ended June 30, 2015 . The increase in the DD&A rate was primarily due to lower recoverable reserves related to lower oil and natural gas prices.

Impairment. During the six months ended June 30, 2016 , we recorded an impairment charge of $3.6 million to further adjust the carrying value of our properties held for sale during the first quarter of 2016 to their estimated fair value, determined based on the expected sales price, less costs to sell. No impairment charges of proved oil and gas properties were recorded for the six months ended June 30, 2015 . For the six months ended June 30, 2016 and 2015 , we recorded non-cash impairment charges of $25,000 and $4.5 million , respectively, for unproved properties due to leases that expired during the period. As a result of periodic assessments of unproved properties not held-by-production, we recorded additional impairment charges of $20.3 million for the six months ended June 30, 2015 related to acreage expiring in future periods because there were no current plans to drill or extend the leases prior to their expiration. During the year ended December 31, 2015, we recorded similar non-cash impairment charges of $9.8 million related to leases that expired during the six months ended June 30, 2016 as a result of periodic assessments of unproved properties. Consequently, lower impairment charges for unproved properties were recorded during the six months ended June 30, 2016 as most leases that expired during the period had been previously impaired.

General and administrative expenses. Our G&A expenses increased $1.4 million for the six months ended June 30, 2016 from $44.8 million for the six months ended June 30, 2015 . OWS G&A increased by $4.6 million primarily due to OWS completing OPNA wells with a higher average third-party working interest in the six months ended June 30, 2016 as compared

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to the six months ended June 30, 2015 . Excluding our intercompany elimination, gross OWS G&A decreased $5.4 million. E&P G&A was $38.8 million and $42.1 million for the six months ended June 30, 2016 and 2015 , respectively. These decreases in gross OWS and E&P G&A were primarily due to lower compensation expenses due to a decrease in employee headcount. Our total company full-time employee headcount decreased to 453 at June 30, 2016 from 567 at June 30, 2015 .

Derivative instruments. As a result of entering into derivative contracts and the effect of the forward strip oil price changes, we incurred a $76.5 million net loss on derivative instruments, including net cash settlement receipts of $103.8 million , for the six months ended June 30, 2016 , and a $7.6 million net gain on derivative instruments, including net cash settlement receipts of $213.3 million for the six months ended June 30, 2015 . Cash settlements represent the cumulative gains and losses on our derivative instruments for the periods presented and do not include recovery of costs that were paid to acquire or modify the derivative instruments that were settled.

Interest expense. Interest expense decreased $2.5 million to $73.7 million for the six months ended June 30, 2016 as compared to the six months ended June 30, 2015 . The decrease was primarily the result of a decrease in the interest expense incurred on borrowings under our revolving credit facility and senior unsecured notes, offset by an increase of $1.3 million due to the unamortized deferred financing costs write-off related to the decrease in the borrowing base under our revolving credit facility during the six months ended June 30, 2016 . In 2016, we repurchased an aggregate principal amount of $76.6 million of outstanding senior unsecured notes, which resulted in a decrease of $1.8 million in interest expense for the six months ended June 30, 2016 . For the six months ended June 30, 2016 and 2015 , the weighted average debt outstanding under our revolving credit facility was $94.8 million and $318.8 million, respectively, and the weighted average interest rate incurred on the outstanding borrowings was 1.9% and 1.8%, respectively. Interest capitalized during the six months ended June 30, 2016 and 2015 was $9.3 million and $8.8 million, respectively. The increase in interest capitalized period over period was due to increased work in progress assets, including the natural gas processing plant and other midstream infrastructure we are constructing in Wild Basin.

Gain on extinguishment of debt . During the six months ended June 30, 2016 , we repurchased an aggregate principal amount of $76.6 million of our outstanding senior unsecured notes for an aggregate cost of $56.9 million, including accrued interest and fees. For the six months ended June 30, 2016 , we recognized a pre-tax gain related to the repurchase of $18.7 million , which included unamortized deferred financing costs write-offs of $1.0 million. During the six months ended June 30, 2015 , we did not repurchase any portion of our outstanding senior unsecured notes.

Income taxes. Income tax expense for the six months ended June 30, 2016 and 2015 was recorded at 34.2% and 34.9% of pre-tax net income, respectively. The effective tax rates for both periods were lower than the combined federal statutory rate and the statutory rates for the states in which we conduct business due to the impact of permanent differences on our pre-tax loss. The permanent differences were primarily for compensation amounts expensed for book purposes versus the amounts deductible for income tax purposes related to stock-based compensation vesting during the six months ended June 30, 2016 and 2015 at stock prices lower than the grant date values. In addition, during the six months ended June 30, 2016 , we recorded a valuation allowance of $0.9 million and $0.6 million for Montana net operating losses and federal charitable contribution carryovers, respectively, based on management’s assessment that it is more likely than not that these net deferred tax assets will not be realized prior to their expiration due to their short carryover periods, current economic conditions and expectations for the future.

Liquidity and Capital Resources

Our primary sources of liquidity as of the date of this report have been proceeds from our senior unsecured notes, borrowings under our revolving credit facility, proceeds from public equity offerings, cash flows from operations, the sale of certain non-core oil and gas properties and cash settlements of derivative contracts. Our primary uses of capital have been for the acquisition and development of oil and natural gas properties. We continually monitor potential capital sources, including equity and debt financings and potential asset monetizations, in order to enhance liquidity and decrease leverage. Our future success in growing proved reserves and production will be highly dependent on our ability to access outside sources of capital.

Our cash flows for the six months ended June 30, 2016 and 2015 are presented below:



	Six Months Ended June 30,
	2016			2015
	(In thousands)
Net cash provided by operating activities	$	91,401		$	229,886
Net cash used in investing activities	(115,413		)	(374,500		)
Net cash provided by financing activities	20,757			112,487
Decrease in cash and cash equivalents	$	(3,255	)	$	(32,127	)

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Our cash flows depend on many factors, including the price of oil and natural gas and the success of our development and exploration activities as well as future acquisitions. We actively manage our exposure to commodity price fluctuations by executing derivative transactions to mitigate the change in oil prices on a portion of our production, thereby mitigating our exposure to oil price declines, but these transactions may also limit our cash flow in periods of rising oil prices. Prices for oil have declined significantly since mid-2014, which has substantially decreased our cash flows provided by operating activities. The decline in operating cash flows caused by lower oil prices is partially offset by cash flows from our derivative contracts. On February 2, 2016, we completed a public equity offering resulting in net proceeds of $183.0 million , after deducting underwriting discounts and commissions and offering expenses, which we used for general corporate purposes. Our existing revolving credit facility provides additional liquidity, with a current borrowing base and elected commitment amount of $1,150.0 million. The next redetermination of the borrowing base is scheduled for October 1, 2016. We believe we have adequate liquidity to fund planned 2016 capital expenditures and to meet our near-term future obligations. For additional information on the impact of changing prices on our financial position, see Item 3. “Quantitative and Qualitative Disclosures about Market Risk” below.

Cash flows provided by operating activities

Net cash provided by operating activities was $91.4 million and $229.9 million for the six months ended June 30, 2016 and 2015 , respectively. The change in cash flows from operating activities for the period ended June 30, 2016 as compared to 2015 was primarily the result of lower realized oil and natural gas sales prices.

Working capital. Our working capital fluctuates primarily as a result of changes in commodity pricing and production volumes, capital spending to fund our exploratory and development initiatives and acquisitions, and the impact of our outstanding derivative instruments. We had a working capital deficit of $139.8 million at June 30, 2016 due to decreases in our current assets, primarily due to the impact of increases in the forward commodity price curve on our short-term derivative instruments. As of June 30, 2016 , we had $1,107.3 million of liquidity available, including $6.5 million in cash and cash equivalents and $1,100.8 million of unused borrowing base committed capacity available under our revolving credit facility. At June 30, 2015 , we had a working capital deficit of $167.6 million.

Cash flows used in investing activities

Net cash used in investing activities was $115.4 million and $374.5 million during the six months ended June 30, 2016 and 2015 , respectively. Net cash used in investing activities during the six months ended June 30, 2016 was primarily attributable to $231.3 million in capital expenditures primarily for drilling and development costs, partially offset by $103.8 million of derivative settlements received as a result of lower commodity prices. Net cash used in investing activities during the six months ended June 30, 2015 was primarily attributable to $586.7 million in capital expenditures primarily for drilling and development costs, partially offset by $213.3 million of derivative settlements received as a result of lower crude oil pricing.

Our capital expenditures are summarized in the following table:



	Six Months Ended June 30, 2016
	(In thousands)
Capital expenditures:
E&P	$	120,859
OMS	87,882
OWS	650
Other capital expenditures ⁽¹⁾	9,852
Total capital expenditures ⁽²⁾	$	219,243

___________________


(1)	Other capital expenditures include such items as administrative capital and capitalized interest.


(2)	Capital expenditures reflected in the table above differ from the amounts shown in the statement of cash flows in our condensed consolidated financial statements because amounts reflected in the table above include changes in accrued liabilities from the previous reporting period for capital expenditures, while the amounts presented in the statement of cash flows are presented on a cash basis.

Our total 2016 capital expenditure budget is $400 million, which includes $340 million for E&P capital expenditures and $60 million for non-E&P capital expenditures, including OWS, administrative capital and capitalized interest. Our planned E&P capital expenditures includ e $200 millio n of drilling and completion capital expenditures for operated and non-operated wells (including expected savings from services provided by OWS and OMS) and $140 million of OMS capital expenditures (including Wild Basin infrastructure).

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While we have budgeted $400 million for these purposes, the ultimate amount of capital we will expend may fluctuate materially based on market conditions and the success of our drilling and operations results as the year progresses. Additionally, if we acquire additional acreage, our capital expenditures may be higher than budgeted. We believe that cash on hand, cash flows from operating activities, proceeds from cash settlements under our derivative contracts and availability under our revolving credit facility should be sufficient to fund our 2016 capital expenditure budget. However, because the operated wells funded by our 2016 drilling plan represent only a small percentage of our potential drilling locations, we will be required to generate or raise multiples of this amount of capital to develop our entire inventory of potential drilling locations should we elect to do so.

Our capital budget may be adjusted as business conditions warrant. The amount, timing and allocation of capital expenditures is largely discretionary and within our control. If oil prices remain low for an extended period of time or continue to decline, we could defer a significant portion of our budgeted capital expenditures until later periods to prioritize capital projects that we believe have the highest expected returns and potential to generate near-term cash flows. We routinely monitor and adjust our capital expenditures in response to changes in prices, availability of financing, drilling and acquisition costs, industry conditions, the timing of regulatory approvals, the availability of rigs, success or lack of success in drilling activities, contractual obligations, internally generated cash flows and other factors both within and outside our control. We actively review acquisition opportunities on an ongoing basis. Our ability to make significant acquisitions for cash would require us to obtain additional equity or debt financing, which we may not be able to obtain on terms acceptable to us or at all.

Cash flows provided by financing activities

Net cash provided by financing activities was $20.8 million and $112.5 million for the six months ended June 30, 2016 and 2015 , respectively. For the six months ended June 30, 2016 , cash provided by financing activities was primarily due to proceeds from borrowings under our revolving credit facility and net proceeds from the issuance of our common stock, partially offset by principal payments on our revolving credit facility and the repurchase of a portion of our outstanding senior unsecured notes. Net cash provided by financing activities during the six months ended June 30, 2015 was primarily due to net proceeds from the issuance of our common stock and proceeds from borrowings under our revolving credit facility, partially offset by principal payments on our revolving credit facility. For both the six months ended June 30, 2016 and 2015 , cash was used in financing activities for the purchases of treasury stock for shares that employees surrendered back to us to pay tax withholdings upon the vesting of restricted stock awards.

Sale of common stock. On February 2, 2016, we completed a public offering of 39,100,000 shares of our common stock at an offering price of $4.685 per share. We used the net proceeds from the offering of $183.0 million , after deducting underwriting discounts and commissions and offering expenses, for general corporate purposes.

Senior secured revolving line of credit . We have a revolving credit facility (the “Credit Facility”) with an overall senior secured line of credit of $2,500.0 million as of June 30, 2016 . The Credit Facility is restricted to the borrowing base, which is reserve-based and subject to semi-annual redeterminations on April 1 and October 1 of each year. The maturity date of the Credit Facility is April 13, 2020, provided that our 7.25% senior unsecured notes due February 1, 2019 (the “2019 Notes”) are retired or refinanced 90 days prior to their maturity date. On February 23, 2016, the lenders under the Credit Facility (the “Lenders”) completed their regular semi-annual redetermination of the borrowing base scheduled for April 1, 2016, resulting in a decrease in the borrowing base and aggregate elected commitment from $1,525.0 million to $1,150.0 million. The next redetermination of the borrowing base is scheduled for October 1, 2016.

At June 30, 2016 , we had $35.0 million of borrowings at a weighted average interest rate of 2.0% and $14.2 million of outstanding letters of credit issued under the Credit Facility. At June 30, 2016 , we had an unused borrowing base committed capacity of $1,100.8 million .

The Credit Facility contains covenants that include, among others:


•	a prohibition against incurring debt, subject to permitted exceptions;


•	a prohibition against making dividends, distributions and redemptions, subject to permitted exceptions;


•	a prohibition against making investments, loans and advances, subject to permitted exceptions;


•	restrictions on creating liens and leases on our assets and our subsidiaries, subject to permitted exceptions;


•	restrictions on merging and selling assets outside the ordinary course of business;


•	restrictions on use of proceeds, investments, transactions with affiliates or change of principal business;


•	a provision limiting oil and natural gas derivative financial instruments;

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•	a requirement that we maintain a ratio of consolidated EBITDAX (as defined in the Credit Facility) to consolidated Interest Expense (as defined in the Credit Facility) of no less than 2.5 to 1.0 for the four quarters ended on the last day of each quarter; and


•	a requirement that we maintain a Current Ratio (as defined in the Credit Facility) of consolidated current assets (including unused borrowing base committed capacity and with exclusions as described in the Credit Facility) to consolidated current liabilities (with exclusions as described in the Credit Facility) of no less than 1.0 to 1.0 as of the last day of any fiscal quarter.

The Credit Facility contains customary events of default. If an event of default occurs and is continuing, the Lenders may declare all amounts outstanding under the Credit Facility to be immediately due and payable. We were in compliance with the financial covenants of the Credit Facility at June 30, 2016 . At June 30, 2016 , our consolidated EBITDAX was $631.0 million and our consolidated Interest Expense was $157.1 million, resulting in a ratio of 4.0 as compared to a minimum required ratio of 2.5. In addition, as of June 30, 2016 , our consolidated current assets and consolidated current liabilities (as described above) were $1,316.7 million and $345.2 million, respectively, resulting in a Current Ratio of 3.8 as compared to a minimum required ratio of 1.0. Given the extended decline in commodity prices, we continue to closely monitor our financial covenants and do not anticipate a covenant violation in the next twelve months.

Senior unsecured notes. As of June 30, 2016 , our long-term debt includes outstanding senior unsecured note obligations of $2,123.4 million , including $399.0 million of the 2019 Notes, $397.7 million of 6.5% senior unsecured notes due November 1, 2021 (the “2021 Notes”), $940.5 million of 6.875% senior unsecured notes due March 15, 2022 (the “2022 Notes”) and $386.2 million of 6.875% senior unsecured notes due January 15, 2023 (the “2023 Notes,” and together with the 2019 Notes, the 2021 Notes and the 2022 Notes, the “Notes”). Interest on the Notes is payable semi-annually in arrears.

Prior to certain dates, we have certain options to redeem up to 35% of the Notes at a certain redemption price based on a percentage of the principal amount, plus accrued and unpaid interest to the redemption date, with the proceeds of certain equity offerings so long as the redemption occurs within 180 days of completing such equity offering and at least 65% of the aggregate principal amount of the Notes remains outstanding after such redemption. Prior to certain dates, we have the option to redeem some or all of the Notes for cash at certain redemption prices equal to a certain percentage of their principal amount plus an applicable make-whole premium and accrued and unpaid interest to the redemption date. We may from time to time seek to retire or purchase our outstanding Notes through cash purchases and/or exchanges for other debt or equity securities, in open market purchases, privately negotiated transactions or otherwise. Such repurchases or exchanges, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.

The Notes are guaranteed on a senior unsecured basis by our material subsidiaries. The indentures governing the Notes restrict our ability and the ability of certain of our subsidiaries to: (i) incur additional debt or enter into sale and leaseback transactions; (ii) pay distributions on, redeem or repurchase equity interests; (iii) make certain investments; (iv) incur liens; (v) enter into transactions with affiliates; (vi) merge or consolidate with another company; and (vii) transfer and sell assets. These covenants are subject to a number of important exceptions and qualifications. If at any time when our Notes are rated investment grade by both Moody’s Investors Service, Inc. and Standard & Poor’s Ratings Services and no default (as defined in the indentures) has occurred and is continuing, many of such covenants will terminate and we will cease to be subject to such covenants.

In March and April 2016, we repurchased an aggregate principal amount of $76.6 million of our outstanding Notes, consisting of $1.0 million principal amount of our 2019 Notes, $2.3 million principal amount of our 2021 Notes, $59.5 million principal amount of our 2022 Notes and $13.8 million principal amount of our 2023 Notes, for an aggregate cost of $56.9 million, including accrued interest and fees. As a result of these repurchases, we recognized pre-tax gains of $11.6 million and $18.7 million , which were net of unamortized deferred financing costs write-offs of $0.5 million and $1.0 million , respectively, and are reflected in gain on extinguishment of debt in the Company’s Condensed Consolidated Statement of Operations for the three and six months ended June 30, 2016 , respectively.

Obligations and commitments

We have the following contractual obligations and commitments as of June 30, 2016 :

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	Payments due by period
Contractual obligations	Total		Within 1 year		1-3 years		3-5 years		More than 5 years
	(In thousands)
Senior unsecured notes ⁽¹⁾	$	2,123,397	$	—	$	399,000	$	—	$	1,724,397
Interest payments on senior unsecured notes ⁽¹⁾	802,774		145,988		291,977		234,122		130,687
Borrowings under revolving credit facility ⁽¹⁾	35,000		—		—		35,000		—
Interest payments on borrowings under revolving credit facility ⁽¹⁾	44		44		—		—		—
Asset retirement obligations ⁽²⁾	37,128		738		1,493		635		34,262
Operating leases ⁽³⁾	22,598		6,499		9,863		6,236		—
Volume commitment agreements ⁽³⁾	441,999		19,563		99,433		108,632		214,371
Purchase agreements ⁽³⁾	38,821		4,847		16,874		16,700		400
Total contractual cash obligations	$	3,501,761	$	177,679	$	818,640	$	401,325	$	2,104,117

__________________


(1)	See Note 8 to our unaudited condensed consolidated financial statements for a description of our senior unsecured notes, revolving credit facility and related interest payments. As of June 30, 2016 , we had $35.0 million of borrowings and $14.2 million of outstanding letters of credit issued under our revolving credit facility.

(2)

Amounts represent our estimate of future asset retirement obligations. Because these costs typically extend many years into the future, estimating these future costs requires management to make estimates and judgments that are subject to future revisions based upon numerous factors, including the rate of inflation, changing technology and the political and regulatory environment. See Note 9 to our unaudited condensed consolidated financial statements.


(3)	See Note 15 to our unaudited condensed consolidated financial statements for a description of our operating leases, volume commitment agreements and purchase agreements.

Non-GAAP Financial Measures

Cash Interest, Adjusted EBITDA, Free Cash Flow, Adjusted Net Income (Loss) and Adjusted Diluted Earnings (Loss) Per Share are supplemental non-GAAP financial measures that are used by management and external users of our financial statements, such as industry analysts, investors, lenders and rating agencies. These non-GAAP measures should not be considered in isolation or as a substitute for interest expense, net income (loss), operating income (loss), net cash provided by (used in) operating activities, earnings (loss) per share or any other measures prepared under GAAP. Because Cash Interest, Adjusted EBITDA, Free Cash Flow, Adjusted Net Income (Loss) and Adjusted Diluted Earnings (Loss) Per Share exclude some but not all items that affect net income (loss) and may vary among companies, the amounts presented may not be comparable to similar metrics of other companies.

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Cash Interest

We define Cash Interest as interest expense plus capitalized interest less amortization and write-offs of deferred financing costs included in interest expense. Cash Interest is not a measure of interest expense as determined by United States generally accepted accounting principles, or GAAP. Management believes that the presentation of Cash Interest provides useful additional information to investors and analysts for assessing the interest charges incurred on our debt, excluding non-cash amortization, and our ability to maintain compliance with our debt covenants.

The following table presents a reconciliation of the GAAP financial measure of interest expense to the non-GAAP financial measure of Cash Interest for the periods presented:



	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
	(In thousands)
Interest expense	$	34,979		$	37,405		$	73,718		$	76,189
Capitalized interest	4,835			4,851			9,303			8,776
Amortization of deferred financing costs ⁽¹⁾	(2,030		)	(2,368		)	(5,947		)	(3,956		)
Cash Interest	$	37,784		$	39,888		$	77,074		$	81,009

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(1)	Amortization of deferred financing costs included write-offs of unamortized deferred financing costs of $1.8 million for the six months ended June 30, 2016 and $0.5 million for the three and six months ended June 30, 2015. In each period, the unamortized deferred financing costs were written off in proportion to the decreases in our Credit Facility borrowing base.

Adjusted EBITDA and Free Cash Flow

We define Adjusted EBITDA as earnings (loss) before interest expense, income taxes, DD&A, exploration expenses and other similar non-cash or non-recurring charges. Adjusted EBITDA is not a measure of net income (loss) or cash flows as determined by GAAP. Management believes that the presentation of Adjusted EBITDA provides useful additional information to investors and analysts for assessing our results of operations, financial performance and our ability to generate cash from our business operations.

We define Free Cash Flow as Adjusted EBITDA less Cash Interest and capital expenditures, excluding capitalized interest. Free Cash Flow is not a measure of net income (loss) or cash flows as determined by GAAP. Management believes that the presentation of Free Cash Flow provides useful additional information to investors and analysts for assessing our financial performance and our ability to generate cash from our business operations after interest and capital spending.

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The following table presents reconciliations of the GAAP financial measures of net income (loss) and net cash provided by (used in) operating activities to the non-GAAP financial measures of Adjusted EBITDA and Free Cash Flow for the periods presented:



	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
	(In thousands)
Net loss	$	(89,931	)	$	(53,230	)	$	(154,386	)	$	(71,271	)
Loss on sale of properties	1,311			—			1,311			—
Gain on extinguishment of debt	(11,642		)	—			(18,658		)	—
Net (gain) loss on derivative instruments	90,846			39,424			76,471			(7,648		)
Derivative settlements ⁽¹⁾	30,477			104,077			103,790			213,336
Interest expense, net of capitalized interest	34,979			37,405			73,718			76,189
Depreciation, depletion and amortization	122,488			119,218			244,937			237,696
Impairment	23			19,516			3,585			24,837
Rig termination	—			2,815			—			3,895
Exploration expenses	340			1,082			703			1,925
Stock-based compensation expenses	6,249			6,057			12,979			13,663
Income tax benefit	(52,498		)	(30,845		)	(80,127		)	(38,221		)
Other non-cash adjustments	(484		)	(97		)	723			(101		)
Adjusted EBITDA	132,158			245,422			265,046			454,300
Cash Interest	(37,784		)	(39,888		)	(77,074		)	(81,009		)
Capital expenditures ⁽²⁾	(131,288		)	(170,408		)	(219,243		)	(441,513		)
Capitalized interest	4,835			4,851			9,303			8,776
Free Cash Flow	$	(32,079	)	$	39,977		$	(21,968	)	$	(59,446	)

Net cash provided by operating activities	$	137,452		$	141,525		$	91,401		$	229,886
Derivative settlements ⁽¹⁾	30,477			104,077			103,790			213,336
Interest expense, net of capitalized interest	34,979			37,405			73,718			76,189
Rig termination	—			2,815			—			3,895
Exploration expenses	340			1,082			703			1,925
Deferred financing costs amortization and other	(1,486		)	(3,404		)	(6,552		)	(5,059		)
Changes in working capital	(69,120		)	(37,981		)	1,263			(65,771		)
Other non-cash adjustments	(484		)	(97		)	723			(101		)
Adjusted EBITDA	132,158			245,422			265,046			454,300
Cash Interest	(37,784		)	(39,888		)	(77,074		)	(81,009		)
Capital expenditures ⁽²⁾	(131,288		)	(170,408		)	(219,243		)	(441,513		)
Capitalized interest	4,835			4,851			9,303			8,776
Free Cash Flow	$	(32,079	)	$	39,977		$	(21,968	)	$	(59,446	)

___________________


(1)	Cash settlements represent the cumulative gains and losses on our derivative instruments for the periods presented and do not include a recovery of costs that were paid to acquire or modify the derivative instruments that were settled.


(2)	Capital expenditures reflected in the table above differ from the amounts shown in the statement of cash flows in our condensed consolidated financial statements because amounts reflected in the table above include changes in accrued liabilities from the previous reporting period for capital expenditures, while the amounts presented in the statement of cash flows are presented on a cash basis.

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The following tables present reconciliations of the GAAP financial measure of income (loss) before income taxes to the non-GAAP financial measure of Adjusted EBITDA for our three reportable business segments on a gross basis for the periods presented:



Exploration and Production
	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
	(In thousands)
Loss before income taxes	$	(158,978	)	$	(99,164	)	$	(264,744	)	$	(133,172	)
Loss on sale of properties	1,669			—			1,669			—
Gain on extinguishment of debt	(11,642		)	—			(18,658		)	—
Net (gain) loss on derivative instruments	90,846			39,424			76,471			(7,648		)
Derivative settlements ⁽¹⁾	30,477			104,077			103,790			213,336
Interest expense, net of capitalized interest	34,979			37,405			73,718			76,189
Depreciation, depletion and amortization	120,039			118,049			240,881			235,589
Impairment	23			19,516			1,154			24,837
Rig termination	—			2,815			—			3,895
Exploration expenses	340			1,082			703			1,925
Stock-based compensation expenses	6,077			5,973			12,625			13,515
Other non-cash adjustments	(484		)	(97		)	723			(101		)
Adjusted EBITDA	$	113,346		$	229,080		$	228,332		$	428,365

___________________


(1)	Cash settlements represent the cumulative gains and losses on our derivative instruments for the periods presented and do not include a recovery of costs that were paid to acquire or modify the derivative instruments that were settled.



Well Services
	Three Months Ended June 30,					Six Months Ended June 30,
	2016			2015		2016		2015
	(In thousands)
Income (loss) before income taxes	$	(2,142	)	$	9,030	$	1,885	$	18,638
Depreciation, depletion and amortization	3,895			5,008		8,127		9,526
Stock-based compensation expenses	235			443		899		986
Adjusted EBITDA	$	1,988		$	14,481	$	10,911	$	29,150



Midstream Services
	Three Months Ended June 30,					Six Months Ended June 30,
	2016			2015		2016			2015
	(In thousands)
Income before income taxes	$	18,040		$	15,922	$	33,198		$	25,211
Gain on sale of properties	(358		)	—		(358		)	—
Depreciation, depletion and amortization	1,732			1,375		3,415			2,561
Impairment	—			—		2,431			—
Stock-based compensation expenses	224			119		443			323
Adjusted EBITDA	$	19,638		$	17,416	$	39,129		$	28,095

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Adjusted Net Income (Loss) and Adjusted Diluted Earnings (Loss) Per Share

We define Adjusted Net Income (Loss) as net income (loss) after adjusting first for (1) the impact of certain non-cash and non-recurring items, including non-cash changes in the fair value of derivative instruments, impairment and other similar non-cash and non-recurring charges, and then (2) the non-cash and non-recurring items’ impact on taxes based on our effective tax rate applicable to those adjusting items in the same period. Adjusted Net Income (Loss) is not a measure of net income (loss) as determined by GAAP. We define Adjusted Diluted Earnings (Loss) Per Share as Adjusted Net Income (Loss) divided by diluted weighted average shares outstanding. Management believes that the presentation of Adjusted Net Income (Loss) and Adjusted Diluted Earnings (Loss) Per Share provides useful additional information to investors and analysts for evaluating our operational trends and performance.

The following table presents reconciliations of the GAAP financial measure of net income (loss) to the non-GAAP financial measure of Adjusted Net Income (Loss) and the GAAP financial measure of diluted earnings (loss) per share to the non-GAAP financial measure of Adjusted Diluted Earnings (Loss) Per Share for the periods presented:



	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
	(In thousands, except per share data)
Net loss	$	(89,931	)	$	(53,230	)	$	(154,386	)	$	(71,271	)
Loss on sale of properties	1,311			—			1,311			—
Gain on extinguishment of debt	(11,642		)	—			(18,658		)	—
Net (gain) loss on derivative instruments	90,846			39,424			76,471			(7,648		)
Derivative settlements ⁽¹⁾	30,477			104,077			103,790			213,336
Impairment	23			19,516			3,585			24,837
Rig termination	—			2,815			—			3,895
Amortization of deferred financing costs ⁽²⁾	2,030			2,368			5,947			3,956
Other non-cash adjustments	(484		)	(97		)	723			(101		)
Tax impact ⁽³⁾	(42,075		)	(62,871		)	(64,731		)	(89,115		)
Adjusted Net Income (Loss)	$	(19,445	)	$	52,002		$	(45,948	)	$	77,889

Diluted loss per share	$	(0.51	)	$	(0.39	)	$	(0.91	)	$	(0.58	)
Loss on sale of properties	0.01			—			0.01			—
Gain on extinguishment of debt	(0.07		)	—			(0.11		)	—
Net (gain) loss on derivative instruments	0.51			0.29			0.45			(0.06		)
Derivative settlements ⁽¹⁾	0.17			0.76			0.61			1.73
Impairment	—			0.14			0.02			0.20
Rig termination	—			0.02			—			0.03
Amortization of deferred financing costs ⁽²⁾	0.01			0.02			0.03			0.03
Other non-cash adjustments	—			—			—			—
Tax impact ⁽³⁾	(0.23		)	(0.46		)	(0.37		)	(0.72		)
Adjusted Diluted Earnings (Loss) Per Share	$	(0.11	)	$	0.38		$	(0.27	)	$	0.63

Diluted weighted average shares outstanding	176,984			136,859			169,953			123,157

Effective tax rate applicable to adjustment items	37.4		%	37.4		%	37.4		%	37.4		%

___________________


(1)	Cash settlements represent the cumulative gains and losses on our derivative instruments for the periods presented and do not include a recovery of costs that were paid to acquire or modify the derivative instruments that were settled.

(2)

As of June 30, 2016 , Adjusted Net Income (Loss) includes the non-cash adjustment for amortization of deferred financing costs. Comparative periods have been conformed. The amortization of deferred financing costs is included in interest expense on our Condensed Consolidated Statement of Operations. Amortization of deferred financing costs included write-offs of unamortized deferred financing costs of $1.8 million for the six months ended June 30, 2016 and $0.5 million for the three and six months ended June 30, 2015. In each period, the unamortized deferred financing costs were written off in proportion to the decreases in our Credit Facility borrowing base.


(3)	The tax impact is computed utilizing our effective tax rate applicable to the adjustments for certain non-cash and non-recurring items.

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Fair Value of Financial Instruments

See Note 4 to our unaudited condensed consolidated financial statements for a discussion of our money market funds and derivative instruments and their related fair value measurements. See also Item 3. “Quantitative and Qualitative Disclosures About Market Risk” below.

Critical Accounting Policies and Estimates

There have been no material changes in our critical accounting policies and estimates from those disclosed in our 2015 Annual Report.

Recent accounting pronouncements

Going concern. In August 2014, the FASB issued Accounting Standards Update No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU 2014-15”). ASU 2014-15 codifies in GAAP management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. ASU 2014-15 is effective for the annual reporting period ending after December 15, 2016 and for annual periods and interim periods thereafter. The adoption of this guidance will not impact our financial position, cash flows or results of operations but could result in additional disclosures.

Inventory. In July 2015, the FASB issued Accounting Standards Update No. 2015-11, Simplifying the Measurement of Inventory (“ASU 2015-11”). ASU 2015-11 changes the inventory measurement principle from lower of cost or market to lower of cost and net realizable value for entities using the first-in, first-out (FIFO) or average cost methods. ASU 2015-11 is effective for fiscal years beginning after December 15, 2016, including interim periods within those years. We are currently evaluating the effect that adopting this guidance will have on our financial position, cash flows and results of operations.

Financial instruments. In January 2016, the FASB issued Accounting Standards Update No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”), which requires that most equity instruments be measured at fair value with subsequent changes in fair value recognized in net income. ASU 2016-01 also impacts financial liabilities under the fair value option and the presentation and disclosure requirements for financial instruments. ASU 2016-01 does not apply to equity method investments or investments in consolidated subsidiaries. ASU 2016-01 is effective for fiscal years beginning after December 15, 2017, including interim periods within those years. We are currently evaluating the effect that adopting this guidance will have on our financial position, cash flows and results of operations.

Leases. In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases (“ASU 2016-02”), which requires a lessee to recognize lease payment obligations and a corresponding right-of-use asset to be measured at fair value on the balance sheet. ASU 2016-02 also requires certain qualitative and quantitative disclosures about the amount, timing and uncertainty of cash flows arising from leases. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those years. We are currently evaluating the effect that adopting this guidance will have on our financial position, cash flows and results of operations.

Embedded derivatives. In March 2016, the FASB issued Accounting Standards Update No. 2016-06, Contingent Put and Call Options in Debt Instruments (“ASU 2016-06”), which clarifies what steps are required when assessing whether the economic characteristics and risks of call (put) options are clearly and closely related to the economic characteristics and risks of their debt hosts, which is one of the criteria for bifurcating an embedded derivative. ASU 2016-06 is effective for fiscal years beginning after December 15, 2016, including interim periods within those years. We do not expect the adoption of this guidance to have a material impact on our financial position, cash flows or results of operations.

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flows. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016, including interim periods within those years. We are currently evaluating the effect that adopting this guidance will have on our financial position, cash flows and results of operations.

Off-Balance Sheet Arrangements

Currently, we do not have any off-balance sheet arrangements as defined by the SEC. In the ordinary course of business, we enter into various commitment agreements and other contractual obligations, some of which are not recognized in our consolidated financial statements in accordance with GAAP. See Note 15 to our unaudited condensed consolidated financial statements for a description of our commitments and contingencies.

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Item 3. — Quantitative and Qualitative Disclosures About Market Risk

The following market risk disclosures should be read in conjunction with the quantitative and qualitative disclosures about market risk contained in our 2015 Annual Report, as well as with the unaudited condensed consolidated financial statements and notes thereto included in this Quarterly Report on Form 10-Q.

We are exposed to a variety of market risks, including commodity price risk, interest rate risk and counterparty and customer risk. We address these risks through a program of risk management, including the use of derivative instruments.

Commodity price exposure risk. We are exposed to market risk as the prices of oil and natural gas fluctuate as a result of changes in supply and demand and other factors. To partially reduce price risk caused by these market fluctuations, we have entered into derivative instruments in the past and expect to enter into derivative instruments in the future to cover a significant portion of our future production.

We utilize derivative financial instruments to manage risks related to changes in oil prices. As of June 30, 2016 , we utilized two-way and three-way costless collar options and swaps to reduce the volatility of oil prices on a significant portion of our future expected oil production. A two-way collar is a combination of options: a sold call and a purchased put. The purchased put establishes a minimum price (floor) and the sold call establishes a maximum price (ceiling) we will receive for the volumes under contract. A three-way collar is a combination of options: a sold call, a purchased put and a sold put. The purchased put establishes a minimum price (floor), unless the market price falls below the sold put (sub-floor), at which point the minimum price would be WTI crude oil index price plus the difference between the purchased put and the sold put strike price. The sold call establishes a maximum price (ceiling) we will receive for the volumes under contract. A swap is a sold call and a purchased put established at the same price (both ceiling and floor).

We recognize all derivative instruments at fair value. The credit standing of our counterparties is analyzed and factored into the fair value amounts recognized on the balance sheet. Derivative assets and liabilities arising from our derivative contracts with the same counterparty are also reported on a net basis, as all counterparty contracts provide for net settlement.

The following is a summary of our derivative contracts as of June 30, 2016 :




Settlement Period	Derivative Instrument	Total Notional Amount of Oil	Weighted Average Prices								Fair Value Asset (Liability)
Settlement Period	Derivative Instrument	Total Notional Amount of Oil	Swap		Sub-Floor		Floor		Ceiling		Fair Value Asset (Liability)
		(Barrels)	($/Barrel)								(In thousands)
2016	Swaps	5,886,000	$	49.64							$	1,157
2017	Swaps	4,694,000	$	47.79							(18,429		)
2017	Two-way collars	668,000					$	40.00	$	47.58	(4,427		)
2017	Three-way collars	1,336,000			$	30.00	$	45.00	$	59.39	(923		)
2018	Swaps	310,000	$	47.68							(1,519		)
2018	Two-way collars	62,000					$	40.00	$	47.58	(453		)
2018	Three-way collars	124,000			$	30.00	$	45.00	$	59.39	(194		)
											$	(24,788	)

A 10% increase in crude oil prices would decrease the fair value of our derivative position by approximately $58.9 million, while a 10% decrease in crude oil prices would increase the fair value by approximately $58.0 million.

Interest rate risk. We had (i) $399.0 million of senior unsecured notes at a fixed cash interest rate of 7.25% per annum, (ii) $397.7 million of senior unsecured notes at a fixed cash interest rate of 6.5% per annum and (iii) $1,326.7 million of senior unsecured notes at a fixed cash interest rate of 6.875% per annum outstanding at June 30, 2016 . At June 30, 2016 , we had $35.0 million of borrowings and $14.2 million letters of credit outstanding under our Credit Facility, which were subject to varying rates of interest based on (1) the total outstanding borrowings (including the value of all outstanding letters of credit) in relation to the borrowing base and (2) whether the loan is a LIBOR loan or a domestic bank prime interest rate loan (defined in the Credit Facility as an Alternate Based Rate or “ABR” loan). At June 30, 2016 , the outstanding borrowings under our Credit Facility bore interest at LIBOR plus a 1.5% margin. We do not currently, but may in the future, utilize interest rate derivatives to alter interest rate exposure in an attempt to reduce interest rate expense related to debt issued under our Credit Facility. Interest rate derivatives would be used solely to modify interest rate exposure and not to modify the overall leverage of the debt portfolio.

Counterparty and customer credit risk. Joint interest receivables arise from billing entities which own partial interest in the wells we operate. These entities participate in our wells primarily based on their ownership in leases on which we choose to drill. We have limited ability to control participation in our wells. We are also subject to credit risk due to concentration of our

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oil and natural gas receivables with several significant customers. The inability or failure of our significant customers to meet their obligations to us or their insolvency or liquidation may adversely affect our financial results.

In addition, our oil and natural gas derivative arrangements expose us to credit risk in the event of nonperformance by counterparties. However, in order to mitigate the risk of nonperformance, we only enter into derivative contracts with counterparties that are high credit-quality financial institutions, most of which are Lenders under our Credit Facility. This risk is also managed by spreading our derivative exposure across several institutions and limiting the volumes placed under individual contracts. We are likely to enter into future derivative instruments with these or other Lenders under our Credit Facility, which also carry investment grade ratings. Furthermore, the agreements with each of the counterparties on our derivative instruments contain netting provisions. As a result of these netting provisions, our maximum amount of loss due to credit risk is limited to the net amounts due to and from the counterparties under the derivative contracts. We had a net derivative liability position of $24.8 million at June 30, 2016 .

While we do not require all of our customers to post collateral and we do not have a formal process in place to evaluate and assess the credit standing of our significant customers for oil and natural gas receivables and the counterparties on our derivative instruments, we do evaluate the credit standing of such counterparties as we deem appropriate under the circumstances. This evaluation may include reviewing a counterparty’s credit rating, latest financial information and, in the case of a customer with which we have receivables, their historical payment record, the financial ability of the customer’s parent company to make payment if the customer cannot and undertaking the due diligence necessary to determine credit terms and credit limits. Several of our significant customers for oil and natural gas receivables have a credit rating below investment grade or do not have rated debt securities. In these circumstances, we have considered the lack of investment grade credit rating in addition to the other factors described above.

We may, from time to time, purchase commercial paper instruments from high credit quality counterparties. These counterparties may include issuers in a variety of industries including the domestic and foreign financial sector. Our investment policy requires that our counterparties have minimum credit ratings thresholds and provides maximum counterparty exposure values. Although we do not anticipate any of our commercial paper issuers being unable to pay us upon maturity, we take a risk in purchasing the commercial paper instruments available in the marketplace. If a commercial paper issuer is unable to return investment proceeds to us at the maturity date, it could take a significant amount of time to recover all or a portion of the assets originally invested. Our commercial paper balance was $36,000 at June 30, 2016 .

Item 4. — Controls and Procedures

Evaluation of disclosure controls and procedures. As required by Rule 13a-15(b) of the Exchange Act, we have evaluated, under the supervision and with the participation of our management, including our Chief Executive Officer (“CEO”), our principal executive officer, and our Chief Financial Officer (“CFO”), our principal financial officer, the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of June 30, 2016 . Our disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our CEO and CFO as appropriate, to allow timely decisions regarding required disclosure. Based on this evaluation, our CEO and CFO have concluded that our disclosure controls and procedures were effective at June 30, 2016 .

Changes in internal control over financial reporting. There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during the three months ended June 30, 2016 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II — OTHER INFORMATION

Item 1. — Legal Proceedings

See Part I, Item 1, Note 15 to our unaudited condensed consolidated financial statements entitled “Commitments and Contingencies,” which is incorporated in this item by reference.

Item 1A. — Risk Factors

Our business faces many risks. Any of the risks discussed elsewhere in this Form 10-Q and our other SEC filings could have a material impact on our business, financial position or results of operations. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also impair our business operations.

For a discussion of our potential risks and uncertainties, see the information in Item 1A. “Risk Factors” in our 2015 Annual Report. There have been no material changes in our risk factors from those described in our 2015 Annual Report.

Item 2. — Unregistered Sales of Equity Securities and Use of Proceeds

Unregistered sales of securities. There were no sales of unregistered equity securities during the period covered by this report.

Issuer purchases of equity securities. The following table contains information about our acquisition of equity securities during the three months ended June 30, 2016 :



Period	Total Number of Shares Exchanged ⁽¹⁾	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number (or Approximate Dollar Value) of Shares that May Be Purchased Under the Plans or Programs
April 1 - April 30, 2016	23,293	$	7.08	—	—
May 1 - May 31, 2016	32,354	9.69		—	—
June 1 - June 30, 2016	30,728	9.36		—	—
Total	86,375	8.87		—	—

___________________


(1)	Represent shares that employees surrendered back to us to pay tax withholdings upon the vesting of restricted stock awards. These repurchases were not part of a publicly announced program to repurchase shares of our common stock, nor do we have a publicly announced program to repurchase shares of our common stock.

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Item 6. — Exhibits



Exhibit No.		Description of Exhibit

3.1(a)*		Conformed version of Amended and Restated Certificate of Incorporation of Oasis Petroleum Inc., as amended by amendment filed on June 30, 2016.

10.1		Second Amendment to the Amended and Restated 2010 Long Term Incentive Plan of Oasis Petroleum Inc. (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K on May 10, 2016 and incorporated herein by reference).

10.2(a)		Sixth Amendment to Second Amended and Restated Credit Agreement dated as of August 8, 2016 among Oasis Petroleum Inc., as Parent, Oasis Petroleum North America LLC, as Borrower, the Other Credit Parties party thereto, Wells Fargo Bank, N.A., as Administrative Agent and the Lenders party thereto.

31.1(a)		Sarbanes-Oxley Section 302 certification of Principal Executive Officer.

31.2(a)		Sarbanes-Oxley Section 302 certification of Principal Financial Officer.

32.1(b)		Sarbanes-Oxley Section 906 certification of Principal Executive Officer.

32.2(b)		Sarbanes-Oxley Section 906 certification of Principal Financial Officer.

101.INS (a)		XBRL Instance Document.

101.SCH (a)		XBRL Schema Document.

101.CAL (a)		XBRL Calculation Linkbase Document.

101.DEF (a)		XBRL Definition Linkbase Document.

101.LAB (a)		XBRL Labels Linkbase Document.

101.PRE (a)		XBRL Presentation Linkbase Document.

___________________


(a)	Filed herewith.


(b)	Furnished herewith.

* This exhibit is being filed pursuant to Item 601(b)(3)(i) of Regulation S-K which requires a conformed version of our charter reflecting all amendments in one document. The exhibit reflects our Amended and Restated Certificate of Incorporation as filed with the Delaware Secretary of State on June 22, 2010, revised for the amendment filed on June 30, 2016, which changed the first sentence of Article Four by increasing the total number of authorized shares from 350,000,000 to 500,000,000 and the total authorized common shares from 300,000,000 to 450,000,000, as approved by shareholders on May 4, 2016.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.




			OASIS PETROLEUM INC.

Date:	August 9, 2016	By:	/s/ Thomas B. Nusz
			Thomas B. Nusz
			Chairman and Chief Executive Officer (Principal Executive Officer)






					By:		/s/ Michael H. Lou
							Michael H. Lou
							Executive Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

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EXHIBIT INDEX



Exhibit No.		Description of Exhibit

3.1(a)*		Conformed version of Amended and Restated Certificate of Incorporation of Oasis Petroleum Inc., as amended by amendment filed on June 30, 2016.

10.1		Second Amendment to the Amended and Restated 2010 Long Term Incentive Plan of Oasis Petroleum Inc. (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K on May 10, 2016 and incorporated herein by reference).

10.2(a)		Sixth Amendment to Second Amended and Restated Credit Agreement dated as of August 8, 2016 among Oasis Petroleum Inc., as Parent, Oasis Petroleum North America LLC, as Borrower, the Other Credit Parties party thereto, Wells Fargo Bank, N.A., as Administrative Agent and the Lenders party thereto.

31.1(a)		Sarbanes-Oxley Section 302 certification of Principal Executive Officer.

31.2(a)		Sarbanes-Oxley Section 302 certification of Principal Financial Officer.

32.1(b)		Sarbanes-Oxley Section 906 certification of Principal Executive Officer.

32.2(b)		Sarbanes-Oxley Section 906 certification of Principal Financial Officer.

101.INS (a)		XBRL Instance Document.

101.SCH (a)		XBRL Schema Document.

101.CAL (a)		XBRL Calculation Linkbase Document.

101.DEF (a)		XBRL Definition Linkbase Document.

101.LAB (a)		XBRL Labels Linkbase Document.

101.PRE (a)		XBRL Presentation Linkbase Document.

___________________


(a)	Filed herewith.


(b)	Furnished herewith.

EXHIBIT 3.1

Explanatory Note: This exhibit is being filed pursuant to Item 601(b)(3)(i) of Regulation S-K which requires a conformed version of our charter reflecting all amendments in one document. Therefore, the document below reflects the Amended and Restated Certificate of Incorporation of Oasis Petroleum Inc. as filed with the Delaware Secretary of State on June 22, 2010 revised for the amendment filed on June 30, 2016, which changed the first sentence of Article Fourth by increasing the total number of authorized shares from 350,000,000 to 500,000,000 and the total authorized common shares from 300,000,000 to 450,000,000 as approved by shareholders on May 4, 2016.

CONFORMED VERSION OF

AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION

OASIS PETROLEUM INC.

AS AMENDED BY AMENDMENT

FILED ON JUNE 30, 2016

The original Certificate of Incorporation of Oasis Petroleum Inc. (the “ Corporation ”) was filed with the Secretary of State of the State of Delaware on February 25, 2010.

This Certificate of Incorporation has been declared advisable by the board of directors of the Corporation (the “ Board ”), duly adopted by the stockholders of the Corporation and duly executed and acknowledged by the officers of the Corporation in accordance with Sections 103, 228, 242 and 245 of the General Corporation Law of the State of Delaware (the “ DGCL ”).

The text of the Certificate of Incorporation of the Corporation is hereby amended and restated to read in its entirety as follows:

FIRST: The name of the corporation is Oasis Petroleum Inc. (the “ Corporation ”).

SECOND: The address of its registered office in the State of Delaware is Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801 in New Castle County, Delaware. The name of its registered agent at such address is The Corporation Trust Company.

THIRD: The nature of the business or purposes to be conducted or promoted by the Corporation is to engage in any lawful act or activity for which corporations may be organized under the Delaware General Corporation Law.

FOURTH: The total number of shares of stock which the Corporation shall have authority to issue is 500,000,000 shares of capital stock, classified as (i) 50,000,000 shares of preferred stock, par value $0.01 per share (“ Preferred Stock ”), and (ii) 450,000,000 shares of common stock, par value $0.01 per share (“ Common Stock ”).

The designations and the powers, preferences, rights, qualifications, limitations and restrictions of the Preferred Stock and Common Stock are as follows:

1. Provisions Relating to the Preferred Stock.

(a) The Preferred Stock may be issued from time to time in one or more classes or series, the shares of each class or series to have such designations and powers, preferences, and rights,

and qualifications, limitations, and restrictions thereof, as are stated and expressed herein and in the resolution or resolutions providing for the issue of such class or series adopted by the board of directors of the Corporation as hereafter prescribed (a “ Preferred Stock Designation ”).

(b) Authority is hereby expressly granted to and vested in the board of directors of the Corporation to authorize the issuance of the Preferred Stock from time to time in one or more classes or series, and with respect to each class or series of the Preferred Stock, to fix and state by the resolution or resolutions from time to time adopted providing for the issuance thereof the designation and the powers, preferences, rights, qualifications, limitations and restrictions relating to each class or series of the Preferred Stock, including, but not limited to, the following:

(i) whether or not the class or series is to have voting rights, full, special or limited, or is to be without voting rights, and whether or not such class or series is to be entitled to vote as a separate class either alone or together with the holders of one or more other classes or series of stock;

(ii) the number of shares to constitute the class or series and the designations thereof;

(iii) the preferences, and relative, participating, optional or other special rights, if any, and the qualifications, limitations or restrictions thereof, if any, with respect to any class or series;

(iv) whether or not the shares of any class or series shall be redeemable at the option of the Corporation or the holders thereof or upon the happening of any specified event, and, if redeemable, the redemption price or prices (which may be payable in the form of cash, notes, securities or other property), and the time or times at which, and the terms and conditions upon which, such shares shall be redeemable and the manner of redemption;

(v) whether or not the shares of a class or series shall be subject to the operation of retirement or sinking funds to be applied to the purchase or redemption of such shares for retirement, and, if such retirement or sinking fund or funds are to be established, the annual amount thereof, and the terms and provisions relative to the operation thereof;

(vi) the dividend rate, whether dividends are payable in cash, stock of the Corporation or other property, the conditions upon which and the times when such dividends are payable, the preference to or the relation to the payment of dividends payable on any other class or classes or series of stock, whether or not such dividends shall be cumulative or noncumulative, and if cumulative, the date or dates from which such dividends shall accumulate;

(vii) the preferences, if any, and the amounts thereof which the holders of any class or series thereof shall be entitled to receive upon the voluntary or involuntary dissolution of, or upon any distribution of the assets of, the Corporation;

(viii) whether or not the shares of any class or series, at the option of the Corporation or the holder thereof or upon the happening of any specified event, shall be convertible into or exchangeable for, the shares of any other class or classes or of any other series of the same or any other class or classes of stock, securities or other property of the Corporation and the conversion price or prices or ratio or ratios or the rate or rates at which such exchange may be made, with such adjustments, if any, as shall be stated and expressed or provided for in such resolution or resolutions; and

(ix) such other special rights and protective provisions with respect to any class or series as may to the board of directors of the Corporation seem advisable.

(c) The shares of each class or series of the Preferred Stock may vary from the shares of any other class or series thereof in any or all of the foregoing respects. The board of directors of the Corporation may increase the number of shares of the Preferred Stock designated for any existing class or series by a resolution adding to such class or series authorized and unissued shares of the Preferred Stock not designated for any other class or series. The board of directors of the Corporation may decrease the number of shares of the Preferred Stock designated for any existing class or series by a resolution subtracting from such class or series authorized and unissued shares of the Preferred Stock designated for such existing class or series, and the shares so subtracted shall become authorized, unissued, and undesignated shares of the Preferred Stock.

2. Provisions Relating to the Common Stock.

(a) Each share of Common Stock of the Corporation shall have identical rights and privileges in every respect. The Common Stock shall be subject to the express terms of the Preferred Stock and any series thereof. Except as may otherwise be provided in this Certificate of Incorporation, in a Preferred Stock Designation or by applicable law, the holders of shares of Common Stock shall be entitled to one vote for each such share upon all questions presented to the stockholders, the holders of shares of Common Stock shall have the exclusive right to vote for the election of directors and for all other purposes, and the holders of Preferred Stock shall not be entitled to vote at or receive notice of any meeting of stockholders.

(b) Notwithstanding the foregoing, except as otherwise required by law, holders of Common Stock, as such, shall not be entitled to vote on any amendment to this Certificate of Incorporation (including any certificate of designations relating to any series of Preferred Stock) that relates solely to the terms of one or more outstanding series of Preferred Stock if the holders of such affected series are entitled, either separately or together with the holders of one or more other such series, to vote thereon pursuant to this Certificate of Incorporation (including any certificate of designations relating to any series of Preferred Stock) or pursuant to the General Corporation Law of the State of Delaware.

(c) Subject to the prior rights and preferences, if any, applicable to shares of the Preferred Stock or any series thereof, the holders of shares of the Common Stock shall be entitled to receive such dividends (payable in cash, stock or otherwise) as may be declared thereon by the board of directors at any time and from time to time out of any funds of the Corporation legally available therefor.

(d) In the event of any voluntary or involuntary liquidation, dissolution or winding-up of the Corporation, after distribution in full of the preferential amounts, if any, to be distributed to the holders of shares of the Preferred Stock or any class or series thereof, the holders of shares of the Common Stock shall be entitled to receive all of the remaining assets of the Corporation available for distribution to its stockholders, ratably in proportion to the number of shares of the Common Stock held by them. A liquidation, dissolution or winding-up of the Corporation, as such terms are used in this Paragraph (d), shall not be deemed to be occasioned by or to include any consolidation or merger of the Corporation with or into any other corporation or corporations or other entity or a sale, lease, exchange or conveyance of all or a part of the assets of the Corporation.

3. General

(a) Subject to the foregoing provisions of this Certificate of Incorporation and any then-existing Preferred Stock Designation, the Corporation may issue shares of its Preferred Stock and Common Stock from time to time for such consideration (not less than the par value thereof) as may be fixed by the board of directors of the Corporation, which is expressly authorized to fix the same in its absolute and uncontrolled discretion subject to the foregoing conditions. Shares so issued for which the consideration shall have been paid or delivered to the Corporation shall be deemed fully paid stock and shall not be liable to any further call or assessment thereon, and the holders of such shares shall not be liable for any further payments in respect of such shares.

(b) The Corporation shall have authority to create and issue rights and options entitling their holders to purchase shares of the Corporation's capital stock of any class or series or other securities of the Corporation, and such rights and options shall be evidenced by instrument(s) approved by the board of directors of the Corporation. The board of directors of the Corporation shall be empowered to set the exercise price, duration, times for exercise, and other terms of such options or rights; provided, however , that the consideration to be received for any shares of capital stock subject thereto shall not be less than the par value thereof.

(c) The Corporation shall be entitled to treat the person in whose name any share of its stock is registered as the owner thereof for all purposes and shall not be bound to recognize any equitable or other claim to, or interest in, such share on the part of any other person, whether or not the Corporation shall have notice thereof, except as expressly provided by applicable law.

FIFTH:

(a) Prior to the 2010 annual meeting of stockholders of the Corporation, all of the directors shall be elected annually at the annual meeting of stockholders.

(b) Commencing with the 2010 annual meeting of stockholders of the Corporation, the directors, other than those who may be elected by the holders of any series of Preferred Stock specified in the related Preferred Stock Designation, shall be divided, with respect to the time for which they severally hold office, into three classes, as nearly equal in number as is reasonably possible, with the term of office of the first class to expire at the 2011 annual meeting of stockholders, the term of office of the second class to expire at the 2012 annual meeting of stockholders and the term of office of the third class to expire at the 2013 annual meeting of stockholders, with each director to hold office until his or her successor shall have been duly elected and qualified. At each annual meeting of stockholders, commencing with the 2011 annual meeting, (i) directors elected to succeed those directors whose terms then expire shall be elected for a term of office to expire at the third succeeding annual meeting of stockholders after their election, with each director to hold office until his or her successor shall have been duly elected and qualified, and (ii) if authorized by a resolution of the Board of Directors, directors may be elected to fill any vacancy on the Board of Directors, regardless of how such vacancy shall have been created.

The number of directors of the Corporation shall be as specified in, or determined in the manner provided in, the bylaws of the Corporation. Unless and except to the extent that the bylaws of the Corporation so provide, the election of directors need not be by written ballot.

SIXTH: Special meetings of stockholders of the Corporation may be called only by the Chairman of the Board, the Chief Executive Officer or the Board of Directors pursuant to a resolutions adopted

by a majority of the total number of directors which the Corporation would have if there were no vacancies; provided , however , that prior to the Trigger Date, special meetings of the stockholders of the Corporation may also be called by the holders of a majority of the outstanding shares of the Corporation entitled to vote. The person or persons authorized to call special meetings of the Board of Directors may fix the place and time of the meetings.

SEVENTH: In furtherance of, and not in limitation of, the powers conferred by the laws of the State of Delaware, the Board of Directors of the Corporation is expressly authorized to adopt, amend or repeal the bylaws of the Corporation by a majority vote of the total number of directors which the Corporation would have if there were no vacancies, subject to the power of the stockholders of the Corporation to alter or repeal any bylaw whether adopted by them or otherwise ; provided, however , that, the provisions of this Seventh Article notwithstanding, bylaws shall not be adopted, altered, amended or repealed by the stockholders of the Corporation except by the vote of holders of not less than (i) a majority in voting power of the then-outstanding shares of stock entitled to vote generally in the election of directors (considered for this purpose as one class) at any time prior to the Trigger Date or (ii) 66⅔% in voting power of the then-outstanding shares of stock entitled to vote generally in the election of directors (considered for this purpose as one class) at any time on or after the Trigger Date.

EIGHTH: Whenever a compromise or arrangement is proposed between the Corporation and its creditors or any class of them and/or between the Corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of the Corporation or of any creditor or stockholder thereof or on the application of any receiver or receivers appointed for the Corporation under the provisions of Section 291 of Title 8 of the Delaware Code or on the application of trustees in dissolution or of any receiver or receivers appointed for the Corporation under the provisions of Section 279 of Title 8 of the Delaware Code order a meeting of the creditors or class of creditors, and/or of the stockholders or class of stockholders of the Corporation, as the case may be, to be summoned in such manner as the said court directs. If a majority in number representing three-fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of the Corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of the Corporation as a consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of creditors, and/or on all the stockholders or class of stockholders, of the Corporation, as the case may be, and also on the Corporation.

NINTH: No director of the Corporation shall be liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director’s duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived an improper personal benefit. In addition to the circumstances in which a director of the Corporation is not personally liable as set forth in the preceding sentence, a director of the Corporation shall not be liable to the fullest extent permitted by any amendment to the Delaware General Corporation Law hereafter enacted that further limits the liability of a director.

The Corporation shall indemnify each director or officer to the fullest extent permitted by Delaware law.

Any amendment, repeal or modification of this Ninth Article shall be prospective only and shall not affect any limitation on liability of a director for acts or omissions occurring prior to the date of such amendment, repeal or modification.

TENTH: To the fullest extent permitted by applicable law, the Corporation, on behalf of itself and its subsidiaries, renounces any interest or expectancy of the Corporation and its subsidiaries in, or in being offered an opportunity to participate in, business opportunities that are from time to time presented to EnCap Investments, L.P. or any private fund that it manages or advises (the “ Sponsor ”) or any of its officers, directors, agents, shareholders, members, partners, affiliates and subsidiaries (other than the Corporation and its subsidiaries) (each, a “ Specified Party ”) or are business opportunities in which a Specified Party participates or desires to participate, even if the opportunity is one that the Corporation or its subsidiaries might reasonably be deemed to have pursued or had the ability or desire to pursue if granted the opportunity to do so and each such Specified Party shall have no duty to communicate or offer such business opportunity to the Corporation and, to the fullest extent permitted by applicable law, shall not be liable to the Corporation or any of its subsidiaries or any stockholder for breach of any fiduciary or other duty, as a director or officer or controlling stockholder or otherwise, by reason of the fact that such Specified Party pursues or acquires such business opportunity, directs such business opportunity to another person or fails to present such business opportunity, or information regarding such business opportunity, to the Corporation or its subsidiaries. Notwithstanding the foregoing, a Specified Party who is a director or officer of the Corporation and who is offered a business opportunity in his or her capacity as a director or officer of the Corporation (a “ Directed Opportunity ”) shall be obligated to communicate such Directed Opportunity to the Corporation, provided , however , that all of the protections of this Tenth Article shall otherwise apply to the Specified Parties with respect to such Directed Opportunity, including, without limitation, the ability of the Specified Parties to pursue or acquire such Directed Opportunity or to direct such Directed Opportunity to another person.

Neither the amendment nor repeal of this Tenth Article, nor the adoption of any provision of this Certificate of Incorporation or the bylaws of the Corporation, nor, to the fullest extent permitted by Delaware Law, any modification of law, shall adversely affect any right or protection of any person granted pursuant hereto existing at, or arising out of or related to any event, act or omission that occurred prior to, the time of such amendment, repeal, adoption or modification (regardless of when any proceeding (or part thereof) relating to such event, act or omission arises or is first threatened, commenced or completed).

If any provision or provisions of this Tenth Article shall be held to be invalid, illegal or unenforceable as applied to any circumstance for any reason whatsoever: (a) the validity, legality and enforceability of such provisions in any other circumstance and of the remaining provisions of this Tenth Article (including, without limitation, each portion of any paragraph of this Tenth Article containing any such provision held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and (b) to the fullest extent possible, the provisions of this Tenth Article (including, without limitation, each such portion of any paragraph of this Tenth Article containing any such provision held to be invalid, illegal or unenforceable) shall be construed so as to permit the Corporation to protect its directors, officers, employees and agents from personal liability in respect of their good faith service to or for the benefit of the Corporation to the fullest extent permitted by law.

This Tenth Article shall not limit any protections or defenses available to, or indemnification rights of, any director or officer of the Corporation under this Certificate of Incorporation or applicable law. Any person or entity purchasing or otherwise acquiring any interest in any securities of the Corporation shall be deemed to have notice of and to have consented to the provisions of this Tenth Article.

ELEVENTH: Prior to the first date on which Oasis Holdings LLC and its Affiliates (as such term is defined in Rule 12b-2 promulgated under the Securities Exchange Act of 1934) no longer own

more than 50% of the outstanding shares of Common Stock of the Corporation (the “ Trigger Date ”), any action required or permitted to be taken by the stockholders of the Corporation may be taken without a meeting if a consent in writing, setting forth the action so taken, is signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. On and after the Trigger Date, subject to the rights of holders of any series of Preferred Stock with respect to such series of Preferred Stock, any action required or permitted to be taken by the stockholders of the Corporation must be taken at a duly held annual or special meeting of stockholders and may not be taken by any consent in writing of such stockholders.

TWELFTH: The Corporation shall have the right, subject to any express provisions or restrictions contained in this Certificate of Incorporation or bylaws of the Corporation, from time to time, to amend this Certificate of Incorporation or any provision hereof in any manner now or hereafter provided by law, and all rights and powers of any kind conferred upon a director or stockholder of the Corporation by this Certificate of Incorporation or any amendment hereof are subject to such right of the Corporation.

THIRTEENTH: Notwithstanding any other provision of this Certificate of Incorporation or the bylaws of the Corporation (and in addition to any other vote that may be required by law, this Certificate of Incorporation or the bylaws), from and after the Trigger Date, the affirmative vote of the holders of at least 66⅔% in voting power of the outstanding shares of stock of the Corporation entitled to vote generally in the election of directors (considered for this purpose as one class) shall be required to amend, alter or repeal any provision of this Certificate of Incorporation.

[Remainder of Page Intentionally Left Blank]

IN WITNESS WHEREOF, the undersigned has executed this Amended and Restated Certificate of Incorporation as of this 22nd day of June, 2010.

OASIS PETROLEUM INC.

By: / s/ Thomas B. Nusz___________

Name: Thomas B. Nusz

Title: President and Chief Executive Officer

SIXTH AMENDMENT

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

Dated as of August 8, 2016

AMONG

OASIS PETROLEUM NORTH AMERICA LLC,

AS BORROWER,

THE GUARANTORS PARTY HERETO,

WELLS FARGO BANK, N.A.,

AS ADMINISTRATIVE AGENT,

AND

THE LENDERS PARTY HERETO

SIXTH AMENDMENT TO

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

THIS SIXTH AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT (this “ Sixth Amendment ”) dated as of August 8, 2016, is among OASIS PETROLEUM NORTH AMERICA LLC, a Delaware limited liability company (the “ Borrower ”); the Guarantors party hereto (the “ Guarantors ” and collectively with the Borrower, the “ Credit Parties ”); each of the lenders party to the Credit Agreement referred to below (collectively, the “ Lenders ”) party hereto; and WELLS FARGO BANK, N.A., as administrative agent for the Lenders (in such capacity, together with its successors in such capacity, the “ Administrative Agent ”) and as the issuing bank (in such capacity, the “ Issuing Bank ”).

R E C I T A L S

A. Parent, OP LLC, the Borrower, the Administrative Agent and the Lenders are parties to that certain Second Amended and Restated Credit Agreement dated as of April 5, 2013, as amended by that certain First Amendment to Second Amended and Restated Credit Agreement dated as of September 3, 2013, that certain Second Amendment to Second Amended and Restated Credit Agreement dated as of September 30, 2014, that certain Third Amendment to Second Amended and Restated Credit Agreement dated as of April 13, 2015, that certain Fourth Amendment to Second Amended and Restated Credit Agreement dated as of November 13, 2015 and that certain Fifth Amendment to Second Amended and Restated Credit Agreement dated as of February 23, 2016 (the “ Credit Agreement ”), pursuant to which the Lenders have made certain credit available to and on behalf of the Borrower.

B. The Borrower, the Guarantors, the Administrative Agent and the Lenders party hereto desire to amend certain provisions of the Credit Agreement as set forth herein effective as of the Sixth Amendment Effective Date (as defined below).

C. Furthermore, the Administrative Agent and the Required Lenders desire to maintain the Borrowing Base at $1,150,000,000 after giving effect to the amendments contained in this Sixth Amendment.

NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

Section 1. Defined Terms . Each capitalized term used herein but not otherwise defined herein has the meaning given such term in the Credit Agreement, as amended by this Sixth Amendment. Unless otherwise indicated, all section references in this Sixth Amendment refer to sections of the Credit Agreement.

Section 2. Amendments to Credit Agreement .

2.1 Amendments to Section 1.02 .

(a) The following definitions are hereby amended and restated as follows:

“ Agreement ” means this Second Amended and Restated Credit Agreement, as amended by the First Amendment, the Second Amendment, the Third Amendment, the Fourth Amendment, the Fifth Amendment and the Sixth Amendment and as the same may be further amended or supplemented from time to time.

“ Investment ” means, for any Person: (a) the acquisition (whether for cash, Property, services or securities or otherwise) of Equity Interests of any other Person or any agreement to make any such acquisition (including, without limitation, any “short sale” or any sale of any securities at a time when such securities are not owned by the Person entering into such short sale); (b) the making of any deposit with, or advance, loan or capital contribution to, the assumption of Debt of, the purchase or other acquisition of any other Debt of or equity participation or interest in, or other extension of credit to, any other Person (including the purchase of Property from another Person subject to an understanding or agreement, contingent or otherwise, to resell such Property to such Person, but excluding any such advance, loan or extension of credit having a term not exceeding ninety (90) days representing the purchase price of inventory, material, equipment or supplies sold by such Person in the ordinary course of business); (c) the purchase or acquisition (in one or a series of transactions) of Property of another Person that constitutes a business unit or (d) the entering into of any guarantee of, or other contingent obligation (including the deposit of any Equity Interests to be sold) with respect to, Debt or other liability of any other Person and (without duplication) any amount committed to be advanced, lent or extended to such Person; provided that in no event shall any Permitted Bond Hedge Transactions or any Permitted Warrant Transaction be considered an “Investment” for purposes of this Agreement.

“ Senior Notes ” means any unsecured senior or senior subordinated Debt securities (whether registered or privately placed) issued pursuant to a Senior Notes Indenture including, for the avoidance of doubt, any Convertible Notes.

“ Senior Notes Indenture ” means any indenture among the Parent, as issuer, the subsidiary guarantors party thereto and the trustee named therein, pursuant to which the Senior Notes are issued, as the same may be amended or supplemented in accordance with Section 9.04(b), including, for the avoidance of doubt, any Convertible Note Indenture.

(b) The following definitions are hereby added where alphabetically appropriate to read as follows:

“ Call Spread Counterparties ” means one or more financial institutions selected by the Parent to sell the options contemplated by the Permitted Bond Hedge Transaction(s) and purchase the warrants contemplated by the Permitted Warrant Transaction(s).

“ Convertible Notes ” means any unsecured senior or senior subordinated Debt securities (whether registered or privately placed) convertible into Equity Interests of the Parent (other than Disqualified Capital Stock) incurred pursuant to a Convertible Notes Indenture.

“ Convertible Notes Indenture ” means any indenture among the Parent, as issuer, the subsidiary guarantors party thereto and the trustee named therein, pursuant to which the Convertibles Notes are issued, as the same may be amended or supplemented in accordance with Section 9.04(b).

“ Permitted Bond Hedge Transaction(s) ” means the bond hedge or capped call options purchased by the Parent or any other Credit Party from the Call Spread Counterparties to hedge the Parent’s payment and/or delivery obligations due upon conversion of the Convertible Notes.

“ Permitted Refinancing Debt ” means Senior Notes issued or incurred by the Parent or any other Credit Party, and Debt constituting guarantees thereof by other Credit Parties, incurred or issued in exchange for, or the net proceeds of which are used to extend, refinance, repay, renew, replace (whether or not contemporaneously), defease, discharge, refund or otherwise Redeem outstanding Senior Notes, in whole or in part from time to time; provided that the principal amount of such Permitted Refinancing Debt (or if such Permitted Refinancing Debt is issued at a discount, the initial issuance price of such Permitted Refinancing Debt) does not exceed the then outstanding principal amount of the Senior Notes so exchanged for, extended, refinanced, repaid, renewed, replaced, defeased, discharged, refunded or otherwise Redeemed (plus the amount of any premiums and accrued interest paid and fees and expenses incurred in connection therewith).

“ Permitted Warrant Transaction(s) ” means one or more net share or cash settled warrants sold by the Credit Parties to the Call Spread Counterparties, concurrently with the purchase by the Parent of the Permitted Bond Hedge Transactions, to offset the cost to the Parent of the Permitted Bond Hedge Transactions.

“ Qualified Convertible Notes Offering ” means an issuance of Convertible Notes which satisfies the following conditions: (a) such Convertible Notes have a per annum interest rate less than or equal to 5%, (b) at the time thereof and after giving effect to any adjustment of the Borrowing Base in connection therewith, the Total Commitments Utilization Percentage is less than or equal to 50% and (c) after giving pro forma effect to such issuance, the Borrower is in compliance with the financial covenants contained in Section 9.01(a) and Section 9.01(b).

“ Sixth Amendment ” means that certain Sixth Amendment to Second Amended and Restated Credit Agreement, dated as of August 8, 2016, among the Borrower, the Guarantors, the Administrative Agent and the Lenders party thereto.

2.2 Amendment to Section 2.07(e)(i) . Section 2.07(e)(i) of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

(i) Subject to Section 2.07(e)(ii) below, (x) if the Parent issues any Senior Notes (including any Convertible Notes and any Permitted Refinancing Debt) (“ New Debt ”) during the period between Scheduled Redetermination Dates and not in conjunction with an Interim Redetermination, then on the Reduction Date (as defined below), the Borrowing Base then in effect shall be reduced by an amount equal to the product of 0.25 multiplied by an amount equal to the difference between (1) the stated principal amount of such New Debt minus (2) the stated principal amount of previously outstanding Senior Notes to the extent such previously outstanding principal amount was Redeemed with the proceeds of such New Debt, and (y) the Borrowing Base as so reduced shall become the new Borrowing Base immediately upon the Reduction Date, effective and applicable to the Borrower, the Agents, the Issuing Bank and the Lenders on such date until the next redetermination or modification thereof hereunder. As used herein, the term “ Reduction Date ” means (A) if such New Debt has been issued pursuant to a Qualified Convertible Notes Offering and the Borrower has delivered notice pursuant to Section 8.01(r) that it intends to use a portion of the proceeds of New Debt to Redeem existing Senior Notes, the earlier of (x) the date on which the Redemption of such Senior Notes is consummated and (y) ninety days following such issuance of New Debt, and (B) otherwise, the date of the issuance of such New Debt. For purposes of this Section 2.07(e), if any such Debt is issued at a discount or otherwise sold for less than “par”, the reduction shall be calculated based upon the stated principal amount without reference to such discount.

2.3 Amendment to Section 8.01(r) . Section 8.01(r) of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

(r) Issuance of Senior Notes and Permitted Refinancing Debt . In the event the Parent decides to issue Senior Notes (including any Convertible Notes) or any Permitted Refinancing Debt as contemplated by Section 9.02(j), three (3) Business Days prior written notice of such offering therefor, the amount thereof and the anticipated date of closing and a copy of the preliminary offering memorandum (if any) and the final offering memorandum (if any) and any other material documents relating to such offering of Senior Notes or such Permitted Refinancing Debt and whether such issuance of Debt is intended to Redeem any Senior Notes.

2.4 Amendment to Section 8.14(a) . Section 8.14(a) of the Credit Agreement is hereby amended by deleting the reference to “Section 8.12(c)(iv)” and replacing it with a reference to “Section 8.12(c)(vi)”.

2.5 Amendment to Section 9.02(j) . Section 9.02(j) of the Credit Agreement is hereby amended and restated in its entirety as follows:

(j) unsecured Senior Notes of the Parent and any guarantees thereof and any unsecured Permitted Refinancing Debt and any guarantees thereof; provided that (i) the Borrower shall have complied with Section 8.01(r), (ii) at the time of incurring such Senior Notes or Permitted Refinancing Debt (A) no Default has occurred and is then continuing and (B) no Default would result from the incurrence of such Senior Notes or Permitted Refinancing Debt, as applicable, after giving effect on a pro forma basis to the incurrence of such Senior Notes or Permitted Refinancing Debt (and any concurrent repayment of Debt with the proceeds of such incurrence, if any), (iii) on the same day as the incurrence of such Debt (or in the case of Permitted Refinancing Debt, on the Reduction Date), the Borrowing Base shall be adjusted to the extent required by Section 2.07(e) and prepayment is made to the extent required by Section 3.04(c)(iv) and no Borrowing Base Deficiency would then exist after giving effect to such adjustment and prepayment, (iv) such Senior Notes or Permitted Refinancing Debt, as applicable, do not have any scheduled principal amortization prior to the date which is one year after the Maturity Date, (v) such Senior Notes or Permitted Refinancing Debt does not mature sooner than the date which is one year after the Maturity Date, (vi) such Senior Notes or Permitted Refinancing Debt and any guarantees thereof are on terms, taken as a whole, at least as favorable to the Borrower and the Guarantors as market terms for issuers of similar size and credit quality given the then prevailing market conditions as determined by the Administrative Agent and (vii) such Senior Notes or Permitted Refinancing Debt do not have any mandatory prepayment or redemption provisions (other than customary change of control or asset sale tender offer provisions) which would require a mandatory prepayment or redemption in priority to the Indebtedness; provided that if such Senior Notes are issued to finance all or a portion of a direct or indirect acquisition of Oil and Gas Properties, such Senior Notes may contain mandatory prepayment or redemption provisions providing for the repayment or redemption of such Senior Notes in the event that such acquisition is not consummated by a certain date in an amount not to exceed the principal amount of such Senior Notes and any accrued interest thereon through the prepayment or redemption date.

2.6 Amendment to Section 9.04(a) . Section 9.04(a) of the Credit Agreement is hereby amended and restated in its entirety as follows:

(a) Restricted Payments . The Parent, OP LLC and the Borrower will not, and will not permit any of their respective Subsidiaries to, declare or make, or agree to pay or make, directly or indirectly, any Restricted Payment, return any capital or make any distribution of its Property to its Equity Interest holders, except (i) the Parent and OP LLC may declare and pay dividends with respect to its Equity Interests payable solely in additional shares of its Equity Interests (other than Disqualified Capital Stock), (ii) Subsidiaries of the Parent may declare and pay dividends ratably with respect to their Equity Interests, (iii) the Parent and OP LLC may make Restricted Payments pursuant to and in accordance with stock option plans or other benefit plans for management or employees of the Borrower and its Subsidiaries, (iv) the Parent, OP LLC and the Borrower may make payments to

former employees in connection with the termination of such former employee’s employment in an aggregate amount not to exceed $250,000 in any calendar year for the purpose of repurchasing Equity Interests in any member of the Parent, OP LLC or the Borrower, as applicable, issued to such former employee pursuant to stock option plans or other benefit plans for management or employees of the Borrower and its Subsidiaries, (v) the Parent may pay the purchase price for any Permitted Bond Hedge Transaction(s), (vi) the Parent may pay cash and/or deliver common stock upon the settlement, termination or redemption of any Permitted Warrant Transaction(s), and (vii) the Parent may pay cash and/or deliver common stock in satisfaction of the Parent’s obligations in respect of the Convertible Notes whether upon conversion of such securities, upon the occurrence of a change of control (or similar event, however so defined by the terms of such securities) or other customary mandatory prepayment or redemption event permitted by Section 9.02(j)(vii), upon repurchase of such securities pursuant to a Redemption thereof otherwise permitted by this Agreement or at maturity of such securities.

2.7 Amendment to Section 9.04(b) . Section 9.04(b) of the Credit Agreement is hereby amended and restated in its entirety as follows:

(b) Repayment of Senior Notes, Permitted Refinancing Debt and Convertible Notes; Amendment to Terms of Senior Notes, Permitted Refinancing Debt and Convertible Notes . The Parent, OP LLC and the Borrower will not, and will not permit any of their respective Subsidiaries to, prior to the date that is ninety-one (91) days after the Maturity Date: (i) call, make or offer to make any optional or voluntary Redemption of or otherwise optionally or voluntarily Redeem (whether in whole or in part) the Senior Notes, Permitted Refinancing Debt or the Convertible Notes; provided that (A) the Parent may Redeem the Senior Notes, Permitted Refinancing Debt or Convertible Notes in one or more transactions in an aggregate amount not to exceed the net cash proceeds of any sale of Equity Interests (other than Disqualified Capital Stock) of the Parent to the extent that (x) such Redemption is consummated within 180 days of the consummation of such sale of Equity Interest (or, with respect to any Equity Interests sold pursuant to that certain Underwriting Agreement dated as of January 28, 2016, between the Parent and Citigroup Global Markets Inc., within 270 days of such sale) and (y) after giving pro forma effect to such Redemption, no Default, Event of Default or Borrowing Base Deficiency shall have occurred and be continuing, (B) the Parent may Redeem the Senior Notes, Permitted Refinancing Debt or Convertible Notes in one more transactions to the extent that (x) the Specified Redemption Test is satisfied at the time of such Redemption, (y) the amount paid in respect of any Senior Note, Permitted Refinancing Debt or Convertible Note does not exceed 60% of the stated principal amount of such Senior Note and (z) the aggregate cash consideration paid by the Parent in respect of all Redemptions of Senior Notes, Permitted Refinancing Debt or Convertible Note pursuant to this Section 9.04(b)(i)(B) shall not exceed $175,000,000, and (C) the Parent may Redeem the Senior Notes or Permitted Refinancing Debt with the proceeds of any Permitted Refinancing Debt substantially

concurrently with the incurrence of such Permitted Refinancing Debt, provided that in the case of Permitted Refinancing Debt incurred pursuant to a Qualified Convertible Notes Offering, such Redemption must be consummated within ninety days of the incurrence of such Permitted Refinancing Debt, or (ii) amend, modify, waive or otherwise change, consent or agree to any amendment, modification, waiver or other change to, any of the terms of the Senior Notes or the Senior Notes Indenture or the terms of any Permitted Refinancing Debt and the agreements governing any Permitted Refinancing Debt or the terms of the Convertible Notes or the Convertible Notes Indenture if (A) the effect thereof would be to shorten its maturity or average life or increase the amount of any payment of principal thereof or increase the rate or shorten any period for payment of interest thereon or (B) such action requires the payment of a consent fee (howsoever described), provided that the foregoing shall not prohibit the execution of supplemental indentures associated with the incurrence of additional Senior Notes or Permitted Refinancing Debt to the extent permitted by Section 9.02(j) or the execution of supplemental indentures to add guarantors if required by the terms of any Senior Notes Indenture, any Convertible Notes Indenture or any agreement governing any Permitted Refinancing Debt provided such Person complies with Section 8.14(b) or (C) with respect to Senior Notes, Convertible Notes or Permitted Refinancing Debt that are subordinated to the Indebtedness or any other Debt, designate any Debt (other than obligations of the Borrower and the Subsidiaries pursuant to the Loan Documents) as “Specified Senior Indebtedness” or “Specified Guarantor Senior Indebtedness” or give any such other Debt any other similar designation for the purposes of any Senior Notes Indenture, Convertible Notes Indenture or any agreement governing any Permitted Refinancing Debt that are subordinated to the Indebtedness or any other Debt.

2.8 Amendment to Section 9.18(a) . The first sentence of Section 9.18(a) of the Credit Agreement is hereby amended by deleting the word “and” immediately prior to clause (ii) thereof, and adding the following at the end of such sentence:

(iii) any Permitted Bond Hedge Transaction(s), and (iv) any Permitted Warrant Transaction.

2.9 Amendment to Section 9.18(b) . Section 9.18(b) of the Credit Agreement is hereby amended by inserting the words “in respect of commodities” immediately following the words “hedge position”.

2.10 Amendment to Section 10.01(g) . Section 10.01(g) of the Credit Agreement is hereby amended by inserting the words “, the Convertible Notes Indenture or any agreement governing any Permitted Refinancing Debt” immediately following the words “Senior Note Indenture”.

Section 3. Borrowing Base . The Administrative Agent and the Required Lenders agree that for the period from and including the Sixth Amendment Effective Date to but excluding the next Redetermination Date to maintain the amount of the Borrowing Base at $1,150,000,000. Notwithstanding the foregoing, the Borrowing Base may be subject to adjustments from time to

time pursuant to Section 2.07(e), Section 8.13(c) or Section 9.12(d). For the avoidance of doubt, the reaffirmation of the Borrowing Base contained in this Section 3 shall not constitute either a Scheduled Redetermination or an Interim Redetermination.

Section 4. Conditions Precedent . This Sixth Amendment shall become effective as of the date when each of the following conditions is satisfied (or waived in accordance with Section 12.02 of the Credit Agreement) (the “ Sixth Amendment Effective Date ”):

4.1 The Administrative Agent shall have received from the Borrower, each Guarantor and the Required Lenders counterparts (in such number as may be requested by the Administrative Agent) of this Sixth Amendment signed on behalf of such Person.

4.2 No Default shall have occurred and be continuing as of the date hereof after giving effect to the terms of this Sixth Amendment.

4.3 The Administrative Agent shall have received such other documents as the Administrative Agent or its special counsel may reasonably require.

4.4 The Administrative Agent shall have received all fees and other amounts due and payable on or prior to the date hereof, including those fees and other amounts payable pursuant to the Fee Letter dated as of the date hereof.

The Administrative Agent is hereby authorized and directed to declare this Sixth Amendment to be effective when it has received documents confirming or certifying, to the satisfaction of the Administrative Agent, compliance with the conditions set forth in this Section 4 or the waiver of such conditions as permitted hereby. Such declaration shall be final, conclusive and binding upon all parties to the Credit Agreement for all purposes.

Section 5. Miscellaneous .

5.1 Confirmation and Effect . The provisions of the Credit Agreement, as amended by this Sixth Amendment, shall remain in full force and effect following the effectiveness of this Sixth Amendment. Each reference in the Credit Agreement to “this Agreement”, “hereunder”, “hereof”, “herein” or any other word or words of similar import shall mean and be a reference to the Credit Agreement as amended hereby, and each reference in any other Loan Document to the Credit Agreement or any word or words of similar import shall be and mean a reference to the Credit Agreement as amended hereby.

5.2 No Waiver . Neither the execution by the Administrative Agent or the Lenders of this Sixth Amendment, nor any other act or omission by the Administrative Agent or the Lenders or their officers in connection herewith, shall be deemed a waiver by the Administrative Agent or the Lenders of any Defaults or Events of Default which may exist, which may have occurred prior to the date of the effectiveness of this Sixth Amendment or which may occur in the future under the Credit Agreement and/or the other Loan Documents. Similarly, nothing contained in this Sixth Amendment shall directly or indirectly in any way whatsoever either: (a) impair, prejudice or otherwise adversely affect the Administrative

Agent’s or the Lenders’ right at any time to exercise any right, privilege or remedy in connection with the Loan Documents with respect to any Default or Event of Default, (b) except as expressly provided herein, amend or alter any provision of the Credit Agreement, the other Loan Documents, or any other contract or instrument, or (c) constitute any course of dealing or other basis for altering any obligation of the Borrower or any right, privilege or remedy of the Administrative Agent or the Lenders under the Credit Agreement, the other Loan Documents, or any other contract or instrument.

5.3 Ratification and Affirmation; Representations and Warranties . Each Credit Party hereby (a) acknowledges the terms of this Sixth Amendment; (b) ratifies and affirms its obligations under, and acknowledges its continued liability under, each Loan Document to which it is a party and agrees that each Loan Document to which it is a party remains in full force and effect as expressly amended hereby and (c) represents and warrants to the Lenders that as of the date hereof, after giving effect to the terms of this Sixth Amendment: (i) all of the representations and warranties contained in each Loan Document to which it is a party are true and correct in all material respects (or, if already qualified by materiality, Material Adverse Effect or a similar qualification, true and correct in all respects), except to the extent any such representations and warranties are expressly limited to an earlier date, in which case, such representations and warranties shall continue to be true and correct in all material respects (or, if already qualified by materiality, Material Adverse Effect or a similar qualification, true and correct in all respects) as of such specified earlier date, (ii) no Default or Event of Default has occurred and is continuing and (iii) no event or events have occurred which individually or in the aggregate could reasonably be expected to have a Material Adverse Effect.

5.4 Counterparts . This Sixth Amendment may be executed by one or more of the parties hereto in any number of separate counterparts, and all of such counterparts taken together shall be deemed to constitute one and the same instrument. Delivery of this Sixth Amendment by facsimile or email transmission shall be effective as delivery of a manually executed counterpart hereof.

5.5 No Oral Agreement . This Sixth Amendment, the Credit Agreement and the other Loan Documents executed in connection herewith and therewith represent the final agreement between the parties and may not be contradicted by evidence of prior, contemporaneous, or unwritten oral agreements of the parties. There are no subsequent oral agreements between the parties.

5.6 GOVERNING LAW . THIS SIXTH AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

5.7 Payment of Expenses . In accordance with Section 12.03 of the Credit Agreement, the Borrower agrees to pay or reimburse the Administrative Agent for all of its reasonable out-of-pocket costs and reasonable expenses incurred in connection with this Sixth Amendment, any other documents prepared in connection herewith and the transactions contemplated hereby, including, without limitation, the reasonable fees and disbursements of counsel to the Administrative Agent.

5.8 Severability . Any provision of this Sixth Amendment which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

5.9 Successors and Assigns . This Sixth Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

5.10 Loan Document . This Sixth Amendment shall constitute a “Loan Document” under and as defined in Section 1.02 of the Credit Agreement.

[SIGNATURES BEGIN NEXT PAGE]

IN WITNESS WHEREOF, the parties hereto have caused this Sixth Amendment to be duly executed as of the date first written above.



BORROWER:	OASIS PETROLEUM NORTH
	AMERICA LLC


	By:	/s/ Michael Lou
	Name:	Michael Lou
	Title:	Executive Vice President and Chief
		Financial Officer










GUARANTORS:	OASIS PETROLEUM INC.
	OASIS PETROLEUM LLC
	OASIS PETROLEUM MARKETING LLC
	OASIS WELL SERVICES LLC
	OASIS MIDSTREAM SERVICES LLC


	By:	/s/ Michael Lou
	Name:	Michael Lou
	Title:	Executive Vice President and Chief
		Financial Officer