Table of Contents

 
 
 
 
 
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 September 30, 2017
or
¨
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, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth 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
¨
 
 
 
 
 
 
Emerging growth company
¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   ¨  
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 November 3, 2017 : 237,315,583 shares.
 
 
 
 
 


Table of Contents

OASIS PETROLEUM INC.
FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 2017
TABLE OF CONTENTS
 
 
Page

Table of Contents

PART I — FINANCIAL INFORMATION
Item 1. — Financial Statements (Unaudited)
Oasis Petroleum Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
 
September 30, 2017
 
December 31, 2016
 
(In thousands, except share data)
ASSETS
 
 
 
Current assets
 
 
 
Cash and cash equivalents
$
8,488

 
$
11,226

Accounts receivable, net
285,383

 
204,335

Inventory
17,169

 
10,648

Prepaid expenses
10,647

 
7,623

Derivative instruments
692

 
362

Other current assets
65

 
4,355

Total current assets
322,444

 
238,549

Property, plant and equipment
 
 
 
Oil and gas properties (successful efforts method)
7,640,785

 
7,296,568

Other property and equipment
783,542

 
618,790

Less: accumulated depreciation, depletion, amortization and impairment
(2,388,709
)
 
(1,995,791
)
Total property, plant and equipment, net
6,035,618

 
5,919,567

Derivative instruments
703

 
—

Long-term inventory
10,885

 
—

Other assets
21,562

 
20,516

Total assets
$
6,391,212

 
$
6,178,632

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
Current liabilities
 
 
 
Accounts payable
$
16,348

 
$
4,645

Revenues and production taxes payable
169,361

 
139,737

Accrued liabilities
194,157

 
119,173

Accrued interest payable
20,325

 
39,004

Derivative instruments
16,412

 
60,469

Advances from joint interest partners
5,095

 
7,597

Other current liabilities
—

 
10,490

Total current liabilities
421,698

 
381,115

Long-term debt
2,340,613

 
2,297,214

Deferred income taxes
508,335

 
513,529

Asset retirement obligations
52,413

 
48,985

Derivative instruments
3,703

 
11,714

Other liabilities
5,805

 
2,918

Total liabilities
3,332,567

 
3,255,475

Commitments and contingencies (Note 15)

 

Stockholders’ equity
 
 
 
Common stock, $0.01 par value: 450,000,000 shares authorized; 238,639,488 shares issued and 237,312,881 shares outstanding at September 30, 2017 and 237,201,064 shares issued and 236,344,172 shares outstanding at December 31, 2016
2,348

 
2,331

Treasury stock, at cost: 1,326,607 and 856,892 shares at September 30, 2017 and December 31, 2016, respectively
(22,132
)
 
(15,950
)
Additional paid-in capital
2,369,098

 
2,345,271

Retained earnings
593,368

 
591,505

Oasis share of stockholders’ equity
2,942,682

 
2,923,157

Non-controlling interests
115,963

 
—

Total stockholders’ equity
3,058,645

 
2,923,157

Total liabilities and stockholders’ equity
$
6,391,212

 
$
6,178,632


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

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Oasis Petroleum Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2017
 
2016
 
2017
 
2016
 
(In thousands, except per share data)
Revenues
 
 
 
 
 
 
 
Oil and gas revenues
$
248,648

 
$
156,316

 
$
704,533

 
$
432,968

Bulk oil sales
21,195

 
1,867

 
56,917

 
1,867

Midstream revenues
18,767

 
8,487

 
48,939

 
22,380

Well services revenues
16,138

 
10,641

 
33,566

 
29,459

Total revenues
304,748

 
177,311

 
843,955

 
486,674

Operating expenses
 
 
 
 
 
 
 
Lease operating expenses
45,334

 
35,696

 
133,871

 
98,283

Midstream operating expenses
4,301

 
2,617

 
10,891

 
6,095

Well services operating expenses
9,125

 
5,548

 
21,115

 
15,334

Marketing, transportation and gathering expenses
15,028

 
7,003

 
38,018

 
22,046

Bulk oil purchases
21,701

 
1,853

 
57,683

 
1,853

Production taxes
21,052

 
14,638

 
60,322

 
39,758

Depreciation, depletion and amortization
132,289

 
111,948

 
384,246

 
356,885

Exploration expenses
854

 
489

 
4,010

 
1,192

Impairment
139

 
382

 
6,021

 
3,967

General and administrative expenses
22,531

 
22,845

 
69,913

 
69,087

Total operating expenses
272,354

 
203,019

 
786,090

 
614,500

Gain (loss) on sale of properties
—

 
6

 
—

 
(1,305
)
Operating income (loss)
32,394

 
(25,702
)
 
57,865

 
(129,131
)
Other income (expense)
 
 
 
 
 
 
 
Net gain (loss) on derivative instruments
(54,310
)
 
20,847

 
52,297

 
(55,624
)
Interest expense, net of capitalized interest
(37,389
)
 
(31,726
)
 
(110,548
)
 
(105,444
)
Gain (loss) on extinguishment of debt
—

 
(13,793
)
 
—

 
4,865

Other income (expense)
(605
)
 
(259
)
 
(755
)
 
188

Total other expense
(92,304
)
 
(24,931
)
 
(59,006
)
 
(156,015
)
Loss before income taxes
(59,910
)
 
(50,633
)
 
(1,141
)
 
(285,146
)
Income tax benefit
18,846

 
16,691

 
470

 
96,818

Net loss including non-controlling interests
(41,064
)
 
(33,942
)
 
(671
)
 
(188,328
)
Less: Net income attributable to non-controlling interests
150

 
—

 
150

 
—

Net loss attributable to Oasis
$
(41,214
)
 
$
(33,942
)
 
$
(821
)
 
$
(188,328
)
Earnings (loss) attributable to Oasis per share:
 
 
 
 
 
 
 
Basic (Note 13)
$
(0.18
)
 
$
(0.19
)
 
$
0.00

 
$
(1.09
)
Diluted (Note 13)
(0.18
)
 
(0.19
)
 
0.00

 
(1.09
)
Weighted average shares outstanding:
 
 
 
 
 
 
 
Basic (Note 13)
233,389

 
177,120

 
233,248

 
172,360

Diluted (Note 13)
233,389

 
177,120

 
233,248

 
172,360


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)
 
Attributable to Oasis
 
 
 
 
 
Common Stock
 
Treasury Stock
 
Additional
Paid-in Capital
 
Retained Earnings
 
Non-controlling Interests
 
Total
Stockholders’
Equity
Shares
 
Amount
 
Shares
 
Amount
 
 
(In thousands)
Balance at December 31, 2016
236,344

 
$
2,331

 
857

 
$
(15,950
)
 
$
2,345,271

 
$
591,505

 
$
—

 
$
2,923,157

Cumulative-effect adjustment for adoption of ASU 2016-09 (Note 2)
—

 
—

 
—

 
—

 
2,040

 
2,684

 
—

 
4,724

Fees (2016 issuance of common stock)
—

 
—

 
—

 
—

 
(55
)
 
—

 
—

 
(55
)
Equity-based compensation
1,439

 
17

 
—

 
—

 
21,842

 
—

 
—

 
21,859

Issuance of Oasis Midstream common units, net of offering costs
—

 
—

 
—

 
—

 
—

 
—

 
115,813

 
115,813

Treasury stock - tax withholdings
(470
)
 
—

 
470

 
(6,182
)
 
—

 
—

 
—

 
(6,182
)
Net income (loss)
—

 
—

 
—

 
—

 
—

 
(821
)
 
150

 
(671
)
Balance at September 30, 2017
237,313

 
$
2,348

 
1,327

 
$
(22,132
)
 
$
2,369,098

 
$
593,368

 
$
115,963

 
$
3,058,645


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


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O asis Petroleum Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
 
Nine Months Ended September 30,
 
2017
 
2016
 
(In thousands)
Cash flows from operating activities:
 
 
 
Net loss including non-controlling interests
$
(671
)
 
$
(188,328
)
Adjustments to reconcile net loss to net cash provided by operating activities:
 
 
 
Depreciation, depletion and amortization
384,246

 
356,885

Gain on extinguishment of debt
—

 
(4,865
)
Loss on sale of properties
—

 
1,305

Impairment
6,021

 
3,967

Deferred income taxes
(470
)
 
(96,818
)
Derivative instruments
(52,297
)
 
55,624

Equity-based compensation expenses
20,451

 
18,761

Deferred financing costs amortization and other
12,666

 
10,174

Working capital and other changes:
 
 
 
Change in accounts receivable
(81,022
)
 
11,349

Change in inventory
(235
)
 
2,559

Change in prepaid expenses
823

 
1,168

Change in other current assets
276

 
(240
)
Change in long-term inventory and other assets
(12,843
)
 
(148
)
Change in accounts payable, interest payable and accrued liabilities
32,282

 
(41,991
)
Change in other current liabilities
(10,490
)
 
(6,000
)
Change in other liabilities
—

 
17

Net cash provided by operating activities
298,737

 
123,419

Cash flows from investing activities:
 
 
 
Capital expenditures
(443,649
)
 
(340,314
)
Proceeds from sale of properties
4,000

 
12,333

Costs related to sale of properties
—

 
(310
)
Derivative settlements
(804
)
 
115,576

Advances from joint interest partners
(2,502
)
 
544

Net cash used in investing activities
(442,955
)
 
(212,171
)
Cash flows from financing activities:
 
 
 
Proceeds from revolving credit facility
764,000

 
835,000

Principal payments on revolving credit facility
(732,000
)
 
(778,000
)
Repurchase of senior unsecured notes
—

 
(435,907
)
Proceeds from issuance of senior unsecured convertible notes
—

 
300,000

Deferred financing costs
(96
)
 
(8,811
)
Proceeds from sale of common stock
—

 
182,791

Proceeds from sale of Oasis Midstream common units, net of offering costs
115,813

 
—

Purchases of treasury stock
(6,182
)
 
(2,275
)
Other
(55
)
 
—

Net cash provided by financing activities
141,480

 
92,798

Increase (decrease) in cash and cash equivalents
(2,738
)
 
4,046

Cash and cash equivalents:
 
 
 
Beginning of period
11,226

 
9,730

End of period
$
8,488

 
$
13,776

Supplemental non-cash transactions:
 
 
 
Change in accrued capital expenditures
$
63,499

 
$
(49,177
)
Change in asset retirement obligations
3,112

 
(8,083
)
Notes payable from acquisition
4,875

 
—


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 midstream services business through OMS Holdings LLC (“ OMS ”) and a well services business through Oasis Well Services LLC (“OWS”), 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 have not been audited by the Company’s independent registered public accounting firm, except that the Condensed Consolidated Balance Sheet at December 31, 2016 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 of the Company’s financial position, 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, 2016 (“ 2016 Annual Report”).
In the third quarter of 2017 , Oasis Midstream Partners LP (“ OMP ” or “ Oasis Midstream ”), a subsidiary of OMS , completed its initial public offering (“IPO”) of common units representing limited partner interests. As a result, the Company’s consolidated financial statements present a non-controlling interest section, which represents the public’s ownership in OMP . See Note 3 – Oasis Midstream Partners LP for further discussion of the OMP IPO.
Consolidation.  The accompanying condensed consolidated financial statements of the Company include the accounts of Oasis, the accounts of wholly-owned subsidiaries, and the accounts of OMP, which is considered a variable interest entity (“ VIE ”) for which the Company is the primary beneficiary. All significant intercompany balances and transactions have been eliminated upon consolidation.
Consolidated VIE . The Company has determined that the partners with equity at risk in OMP lack the authority, through voting rights or similar rights, to direct the activities that most significantly impact OMP ’s economic performance. Therefore, as the limited partners of OMP do not have substantive kick-out or substantive participating rights over OMP GP LLC (“ OMP GP ”), the general partner to OMP , OMP is a VIE . Through the Company’s ownership interest in OMP GP , the Company has the authority to direct the activities that most significantly affect economic performance and the right to receive benefits that could be potentially significant to OMP . Therefore, the Company is considered the primary beneficiary and consolidates OMP and records a non-controlling interest for the interest owned by the public as of September 30, 2017 .
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. 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.

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Significant Accounting Policies
There have been no material changes to the Company’s critical accounting policies and estimates from those disclosed in the 2016 Annual Report, other than as noted below.
Equity-based compensation. In the first quarter of 2017, the Company adopted 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. In accordance with the new guidance, the Company recorded a $2.7 million cumulative-effect adjustment to retained earnings on the Company’s Condensed Consolidated Balance Sheet as of September 30, 2017 , which included recognition of excess tax benefits and deficiencies and the removal of the estimated forfeiture rate. ASU 2016-09 was applied on a modified retrospective basis and prior periods were not retrospectively adjusted.
Inventory. In the first quarter of 2017, the Company adopted Accounting Standards Update No. 2015-11, Simplifying the Measurement of Inventory (“ASU 2015-11”), which 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 or average cost methods. ASU 2015-11 was applied on a prospective basis and prior periods were not retrospectively adjusted. There was no material impact as a result of adoption as of September 30, 2017 .
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 and 2017, the FASB issued additional accounting standards updates to clarify the implementation guidance of ASU 2014-09. In order to evaluate the impact that the adoption of ASU 2014-09 will have on the Company’s financial position, cash flows and results of operations, the Company has initiated a comprehensive review of the significant revenue streams across all reportable segments. The Company has formed an implementation team, completed training on the new standard and is assessing the impact of the five-step model of the new standard on its contracts with customers. Currently, the Company cannot reasonably estimate the impact the application of ASU 2014-09 will have upon its consolidated financial statements, but the Company expects to adopt ASU 2014-09 using the modified retrospective approach as permitted by the FASB. The Company continues to assess the impact of ASU 2014-09, along with industry trends and additional interpretive guidance, on its core revenue streams, and as a result of the continued assessment, the Company may modify its plan of adoption accordingly.
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.
Statement of cash flows. In August 2016, the FASB issued Accounting Standards Update No. 2016-15, Statement of Cash Flows (“ASU 2016-15”), which is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. ASU 2016-15 is effective for fiscal years beginning after December 15, 2017, including interim periods within those years. The adoption of this guidance will not impact the Company’s financial position or results of operations, but could result in presentation changes on the Company’s statement of cash flows.

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Income taxes. In October 2016, the FASB issued Accounting Standards Update No. 2016-16,  Intra-Entity Transfers of Assets Other Than Inventory (“ASU 2016-16”), to improve the accounting for the income tax consequences of intra-entity transfers of assets other than inventory. ASU 2016-16 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.
Business combinations.  In January 2017, the FASB issued Accounting Standards Update No. 2017-01,  Clarifying the Definition of a Business  (“ASU 2017-01”), which provides guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. ASU 2017-01 requires entities to use a screen test to determine when an integrated set of assets and activities is not a business or if the integrated set of assets and activities needs to be further evaluated against the framework. ASU 2017-01 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.
Equity-based compensation. In May 2017, the FASB issued Accounting Standards Update No. 2017-09, Scope of Modification Accounting (“ASU 2017-09”), which provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The adoption of ASU 2017-09 will become effective for annual periods beginning after December 15, 2017, and the Company is currently evaluating the impact that it will have on its financial position, cash flows and results of operations.
3 . Oasis Midstream Partners LP
Oasis Midstream Partners LP 
OMP is a growth-oriented, fee-based master limited partnership formed by the Company to own, develop, operate and acquire a diversified portfolio of midstream assets in North America that are inte gral to the oil and natural gas operations of Oasis and are strategically positioned to capture volumes from other producers.
Initial Public Offering of Oasis Midstream Partners LP 
On  September 25, 2017 , O MP completed its IPO of  7,500,000  common units representing limited partner interests in OMP at a price to the public of  $17.00  per common unit ( $15.98  pe r common unit, net of underwriting discounts and commisions). OMP received net proceeds from the IPO of approximately $115.8 million after deducting underwriting discounts, structuring fees and estimated offering expenses and distributed $113.7 million of the net proceeds to Oasis during the third quarter of 2017 . Pursuant to the underwriting agreement, OMP granted the underwriters a 30 -day option to purchase up to an aggregate of 1,125,000 additi onal common units (the “Underwriters’ Option”) on the same terms, which was exercised in full on October 10, 2017 and resulted in additional net proceeds of approxi mately $17.9 million after deducting underwriting discounts and structuring fees. OMP distributed the additional net proceeds of approximately $17.9 million from the Underwriters’ Option to Oasis on October 10, 2017 . The common units are traded on the New York Stock Exchange under the symbol OMP.
In exchange for contributed assets, Oasis received 5,125,000  common units and 13,750,000  subordinated units, representing a limited partner interest in OMP and the right to receive cash distributions from OMP. In addition to and concurrent with the closing of the IPO, OMP GP retained a non-economic general partnership interest and was issued incentive distribution rights in OMP.
Class B Units in OMP General Partner LLC
On May 22, 2017, OMP GP granted restricted Class B Units to certain employees, including OMP’s executive officers, as consideration for services to Oasis, OMP GP, and OMP, which vest over a ten -year period. The restricted Class B Units represent 10% of the outstanding units of OMP GP. Compensation expense is recognized ratably over the requisite service period.

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Contractual Arrangements
In connection with the OMP IPO, the Company entered into several 15 -year, fee-based contractual arrangements with OMP for midstream services, including (i) gas gathering, compression, processing and gas lift services; (ii) crude gathering, stabilization, blending, storage and transportation services; (iii) produced and flowback water gathering and disposal services; and (iv) freshwater supply and distribution services. In addition, the Company provides substantial labor and overhead support for OMP. Upon completion of the OMP IPO, the Company entered into a 15 -year services and secondment agreement with OMP pursuant to which the Company provides all personnel, equipment, electricity, chemicals and services (including third-party services) required for OMP to operate such assets, and OMP reimburses the Company for its share of the actual costs of operating such assets. In addition, pursuant to the services and secondment agreement, the Company performs centralized corporate, general and administrative services for OMP, such as legal, corporate recordkeeping, planning, budgeting, regulatory, accounting, billing, business development, treasury, insurance administration and claims processing, risk management, health, safety and environmental, information technology, human resources, investor relations, cash management and banking, payroll, internal audit, taxes and engineering. The Company has also seconded to OMP certain of its employees to operate, construct, manage and maintain its assets, and OMP reimburses the Company for direct general and administrative expenses incurred by the Company for the provision of the above services. The expenses of executive officers and non-executive employees are allocated to OMP based on the amount of time spent managing its business and operations.
4. Inventory
Crude oil inventory includes oil in tank. 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. Crude oil inventory and equipment and materials are included in Inventory on the Company’s Condensed Consolidated Balance Sheets.
The minimum volume of product in a pipeline system that enables the system to operate is known as linefill and is generally not available to be withdrawn from the pipeline system until the expiration of the transportation contract. The Company owns oil linefill in third-party pipelines, which is included in Long-term inventory on the Company’s Condensed Consolidated Balance Sheets.
Inventory , including long-term inventory, is stated at the lower of cost and net realizable value with cost determined on an average cost method. T he Company assesses the carrying value of inventory and uses estimates and judgment when making any adjustments necessary to reduce the carrying value to net realizable value. Among the uncertainties that impact the Company’s estimates are the applicable quality and location differentials to include in the Company’s net realizable value analysis. Additionally, the Company estimates the upcoming liquidation timing of the inventory. Changes in assumptions made as to the timing of a sale can materially impact net realizable value.
Total inventory consists of the following:
 
September 30, 2017
 
December 31, 2016
 
(In thousands)
Inventory
 
 
 
Crude oil inventory
$
6,934

 
$
7,086

Equipment and materials
10,235

 
3,562

Total inventory
$
17,169

 
$
10,648

 
 
 
 
Long-term inventory
 
 
 
Linefill in third-party pipelines
$
10,885

 
$
—

Long-term inventory
$
10,885

 
$
—

 
 
 
 
Total
$
28,054

 
$
10,648


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5. Accounts Receivable, Net
The following table sets forth the Company’s accounts receivable, net:
 
September 30, 2017
 
December 31, 2016
 
(In thousands)
Accounts receivable, net
 
 
 
Trade accounts
$
166,516

 
$
137,065

Joint interest accounts
75,175

 
40,322

Other accounts
44,638

 
28,257

Total
286,329

 
205,644

Allowance for doubtful accounts
(946
)
 
(1,309
)
Total accounts receivable, net
$
285,383

 
$
204,335

6 . 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’s financial instruments, including certain cash and cash equivalents, accounts receivable, accounts payable and other payables, are carried at cost, which approximates their respective fair market values due to their short-term maturities. 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.

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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 September 30, 2017
 
Level 1
 
Level 2
 
Level 3
 
Total
 
(In thousands)
Assets:
 
 
 
 
 
 
 
Money market funds
$
142

 
$
—

 
$
—

 
$
142

Commodity derivative instruments (see Note 7)
—

 
1,395

 
—

 
1,395

Total assets
$
142

 
$
1,395

 
$
—

 
$
1,537

Liabilities:
 
 
 
 
 
 
 
Commodity derivative instruments (see Note 7)
$
—

 
$
20,115

 
$
—

 
$
20,115

Total liabilities
$
—

 
$
20,115

 
$
—

 
$
20,115

 
Fair value at December 31, 2016
 
Level 1
 
Level 2
 
Level 3
 
Total
 
(In thousands)
Assets:
 
 
 
 
 
 
 
Money market funds
$
141

 
$
—

 
$
—

 
$
141

Commodity derivative instruments (see Note 7)
—

 
362

 
—

 
362

Total assets
$
141

 
$
362

 
$
—

 
$
503

Liabilities:
 
 
 
 
 
 
 
Commodity derivative instruments (see Note 7)
$
—

 
$
72,183

 
$
—

 
$
72,183

Total liabilities
$
—

 
$
72,183

 
$
—

 
$
72,183

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 Sheets at September 30, 2017 and December 31, 2016 . 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 and natural gas swaps and collars. 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. 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 and natural gas 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 $0.5 million at September 30, 2017 and an adjustment to reduce the fair value of its net derivative liability by $2.0 million at December 31, 2016 .
There were no transfers between fair value levels during the nine months ended September 30, 2017 and 2016 .

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7. Derivative Instruments
The Company utilizes derivative financial instruments to manage risks related to changes in oil and natural gas prices. The Company’s crude oil and natural gas contracts will settle monthly based on the average NYMEX West Texas Intermediate crude oil index price (“WTI”) and the average NYMEX Henry Hub natural gas index price (“Henry Hub”), respectively. At September 30, 2017 , the Company utilized swaps and two-way and three-way costless collar options to reduce the volatility of oil and natural gas prices on a significant portion of its future expected oil and natural gas production. A swap is a sold call and a purchased put established at the same price (both ceiling and floor), which the Company will receive for the volumes under contract. 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 index price 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.
All derivative instruments are recorded on the Company’s Condensed Consolidated Balance Sheets as either assets or liabilities measured at fair value (see Note  6  – 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 Statements 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 Statements of Cash Flows.
At September 30, 2017 , the Company had the following outstanding commodity derivative instruments:
Commodity

Settlement
Period

Derivative
Instrument

Volumes

Weighted Average Prices

Fair Value
Asset (Liability)




Swap

Sub-Floor

Floor

Ceiling



 

 






(In thousands)
Crude oil

2017

Swaps

2,428,000

 Bbl

$
49.98

 
 
 
 
 
 

$
(3,220
)
Crude oil

2017

Two-way collar

728,000

 Bbl

 
 
 
 
$
46.25

 
$
54.37


(576
)
Crude oil

2017

Three-way collar

546,000

 Bbl

 
 
$
31.67

 
$
45.83

 
$
59.94


42

Crude oil

2018

Swaps

12,951,000

 Bbl

$
50.81

 
 
 
 
 
 

(13,746
)
Crude oil

2018

Two-way collar

1,250,000

 Bbl

 
 
 
 
$
48.19

 
$
53.33


(927
)
Crude oil

2018

Three-way collar

186,000

 Bbl

 
 
$
31.67

 
$
45.83

 
$
59.94


51

Crude oil

2019

Swaps

3,423,000

 Bbl

$
50.83

 
 
 
 
 
 

(846
)
Crude oil

2019

Two-way collar

93,000

 Bbl

 
 
 
 
$
48.67

 
$
53.07


(25
)
Crude oil
 
2020
 
Swaps
 
217,000

 Bbl
 
$
50.82

 
 
 
 
 
 
 
28

Natural gas
 
2017
 
Swaps
 
2,024,000

 Mmbtu
 
$
3.30

 
 
 
 
 
 
 
502

Natural gas
 
2018
 
Swaps
 
6,205,000

 Mmbtu
 
$
3.05

 
 
 
 
 
 
 
(3
)












 

 


$
(18,720
)
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 Statements of Operations for the periods presented:
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
Statement of Operations Location
 
2017
 
2016
 
2017
 
2016
 
 
(In thousands)
Net gain (loss) on derivative instruments
 
$
(54,310
)
 
$
20,847

 
$
52,297

 
$
(55,624
)

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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 Sheets.
The following table summarizes the location and fair value of all outstanding commodity derivative instruments recorded in the Company’s Condensed Consolidated Balance Sheets:  
 
 
 
 
September 30, 2017
Commodity
 
Balance Sheet Location
 
Gross Recognized Assets/Liabilities
 
Gross Amount Offset
 
Net Recognized Fair Value Assets/Liabilities
 
 
 
 
(In thousands)
Derivatives assets:
 
 
 
 
 
 
 
 
Commodity contracts
 
Derivative instruments — current assets
 
$
971

 
$
(279
)
 
$
692

Commodity contracts
 
Derivative instruments — non-current assets
 
2,197

 
(1,494
)
 
703

Total derivatives assets
 
$
3,168

 
$
(1,773
)
 
$
1,395

Derivatives liabilities:
 
 
 
 
 
 
 
 
Commodity contracts
 
Derivative instruments — current liabilities
 
$
24,590

 
$
(8,178
)
 
$
16,412

Commodity contracts
 
Derivative instruments — non-current liabilities
 
5,284

 
(1,581
)
 
3,703

Total derivatives liabilities
 
$
29,874

 
$
(9,759
)
 
$
20,115

 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2016
Commodity
 
Balance Sheet Location
 
Gross Recognized Asset/Liabilities
 
Gross Amount Offset
 
Net Recognized Fair Value Asset/Liabilities
 
 
 
 
(In thousands)
Derivatives assets:
 
 
 
 
 
 
 
 
Commodity contracts
 
Derivative instruments — current assets
 
$
482

 
$
(120
)
 
$
362

Total derivatives assets
 
$
482

 
$
(120
)
 
$
362

Derivatives liabilities:
 
 
 
 
 
 
 
 
Commodity contracts
 
Derivative instruments — current liabilities
 
$
66,838

 
$
(6,369
)
 
$
60,469

Commodity contracts
 
Derivative instruments — non-current liabilities
 
14,164

 
(2,450
)
 
11,714

Total derivatives liabilities
 
$
81,002

 
$
(8,819
)
 
$
72,183


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8 . Property, Plant and Equipment
The following table sets forth the Company’s property, plant and equipment:
 
September 30, 2017
 
December 31, 2016
 
(In thousands)
Proved oil and gas properties (1)
$
6,828,758

 
$
6,476,833

Less: accumulated depreciation, depletion, amortization and impairment
(2,258,203
)
 
(1,886,732
)
Proved oil and gas properties, net
4,570,555

 
4,590,101

Unproved oil and gas properties
812,027

 
819,735

Other property and equipment
783,542

 
618,790

Less: accumulated depreciation
(130,506
)
 
(109,059
)
Other property and equipment, net
653,036

 
509,731

Total property, plant and equipment, net
$
6,035,618

 
$
5,919,567

__________________
(1)
Included in the Company’s proved oil and gas properties are estimates of future asset retirement costs of $44.0 million and $42.9 million at September 30, 2017 and December 31, 2016 , respectively.
Midstream assets acquisition. On April 25, 2017, the Company completed purchase and sale agreements with two undisclosed private sellers to acquire certain midstream assets in McKenzie County, North Dakota for total consideration of $12.7 million , which includes $4.9 million of installment notes payable. Based on the FASB’s authoritative guidance, the acquisition qualified as a business combination, and as such, the Company estimated the fair value of the assets acquired as of the acquisition date. The Company recorded the assets acquired at their estimated fair value of $12.7 million , which the Company considers to be representative of the price paid by a typical market participant. This measurement resulted in no goodwill or bargain purchase being recognized.
The results of operations for the acquisition have been included in the Company’s condensed consolidated financial statements since the closing date. Pro forma information is not presented as the pro forma results would not be materially different from the information presented in the Company’s Condensed Consolidated Statement of Operations.
9 . Long-Term Debt
The Company’s long-term debt consists of the following:
 
September 30, 2017
 
December 31, 2016
 
(In thousands)
Senior secured revolving line of credit
$
395,000

 
$
363,000

OMP revolving line of credit
—

 
—

Senior unsecured notes
 
 
 
7.25% senior unsecured notes due February 1, 2019
54,275

 
54,275

6.5% senior unsecured notes due November 1, 2021
395,501

 
395,501

6.875% senior unsecured notes due March 15, 2022
937,080

 
937,080

6.875% senior unsecured notes due January 15, 2023
366,094

 
366,094

2.625% senior unsecured convertible notes due September 15, 2023
300,000

 
300,000

Total principal of senior unsecured notes
2,052,950

 
2,052,950

Less: unamortized deferred financing costs on senior unsecured notes
(24,295
)
 
(28,268
)
Less: unamortized debt discount on senior unsecured convertible notes
(83,042
)
 
(90,468
)
Total long-term debt
$
2,340,613

 
$
2,297,214

The carrying amount of the Company’s long-term debt reported in the Condensed Consolidated Balance Sheet at September 30, 2017 was $2,340.6 million , which included $2,053.0 million of senior unsecured notes, a reduction for the unamortized debt discount related to the equity component of the senior unsecured convertible notes and a reduction for the unamortized deferred financing costs on the senior unsecured notes of $83.0 million and $24.3 million , respectively, and $395.0 million of borrowings under the senior secured revolving line of credit (the “ Oasis Credit Facility ”). The Company’s revolving credit facility is recorded at a value that approximates its fair value since its variable interest rate is tied to current market rates. The fair value of the Company’s senior unsecured notes, which are publicly traded and therefore categorized as Level 1 liabilities, was $2,109.1 million at September 30, 2017 .

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Senior secured revolving line of credit. The Company has the Oasis Credit Facility of $2,500.0 million as of September 30, 2017 , which has a maturity date of April 13, 2020, provided that the  7.25%  senior unsecured notes due February 1, 2019 (the “2019 Notes”), of which  $54.3 million  is outstanding, are retired or refinanced  90 days prior to their maturity. The Oasis 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 April 10, 2017 , the lenders under the Oasis Credit Facility (the “Lenders”) completed their regular semi-annual redetermination of the borrowing base scheduled for April 1, 2017, resulting in an increase in the borrowing base from $1,150.0 million to $1,600.0 million ; however, the Company elected to limit the Lenders’ aggregate commitment to $1,150.0 million . On September 25, 2017, the Company entered into the ninth amendment to the Oasis Credit Facility to permit the transactions and agreements entered into in connection with the OMP IPO.
At September 30, 2017 , the Company had $395.0 million of LIBOR loans at a weighted average interest rate of 3.0% and $10.0 million of outstanding letters of credit issued under the Oasis Credit Facility , resulting in an unused borrowing base committed capacity of $745.0 million . On a quarterly basis, the Company also pays a 0.375% (as of September 30, 2017 ) 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 Oasis Credit Facility as of September 30, 2017 .
OMP Operating LLC revolving line of credit. On September 25, 2017, OMP entered into a credit agreement (the “ OMP Credit Agreement ”) for a $200.0 million revolving credit facility with OMP Operating LLC, a subsidiary of OMP (see Note 3 – Oasis Midstream Partners LP ), as borrower (the “ OMP Credit Facility ”), which has a maturity date of September 25, 2022. The OMP Credit Facility is available to fund working capital and to finance acquisitions and other capital expenditures of OMP. The OMP Credit Facility includes a letter of credit sublimit of $10.0 million  and a swingline loans sublimit of $10.0 million . The borrowing capacity on the OMP Credit Facility may be increased up to $400.0 million , subject to certain conditions. No amounts were outstanding under the OMP Credit Facility at September 30, 2017 .
Borrowings under the OMP Credit Facility bear interest at a rate per annum equal to the applicable margin (as described below) plus (i) with respect to Eurodollar Loans, the Adjusted LIBO Rate (as defined in the OMP Credit Agreement ) or (ii) with respect to ABR Loans, the greatest of (A) the Prime Rate in effect on such day, (B) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1.00% or (C) the Adjusted LIBO Rate for a one-month interest period on such day plus 1.00% (each as defined in the OMP Credit Agreement ). The applicable margin for borrowings under the OMP Credit Facility varies from (a) in the case of Eurodollar Loans, 1.75% to 2.75% , and (b) in the case of ABR Loans or swingline loans, 0.75% to 1.75% . The unused portion of the OMP Credit Facility is subject to a commitment fee ranging from 0.375% to 0.500% .
The OMP Credit Facility includes certain financial covenants as of the end of each fiscal quarter, including a (1) consolidated leverage ratio, (2) consolidated secured leverage ratio and (3) consolidated interest coverage ratio (each covenant as described in the OMP Credit Facility ). All obligations of OMP Operating LLC, as the borrower under the OMP Credit Facility , are guaranteed by OMP and all wholly-owned material subsidiaries of OMP. OMP Operating LLC was in compliance with the financial covenants of the OMP Credit Facility at September 30, 2017 .
Senior unsecured notes. At September 30, 2017 , the Company had $1,753.0 million principal amount of senior unsecured notes outstanding with maturities ranging from February 2019 to January 2023 and coupons ranging from 6.50% to 7.25% (the “Senior Notes”). Prior to certain dates, the Company has the option to redeem some or all of the Senior 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 2019 Notes are currently redeemable for cash at a redemption price equal to par plus accrued and unpaid interest to the redemption date.

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Senior unsecured convertible notes. In September 2016, the Company issued $300.0 million of 2.625% senior unsecured convertible notes due September 2023 (the “Senior Convertible Notes”). The Company has the option to settle conversions of these notes with cash, shares of common stock or a combination of cash and common stock at its election. The Company’s intent is to settle the principal amount of the Senior Convertible Notes in cash upon conversion. Prior to March 15, 2023, the Senior Convertible Notes will be convertible only under the following circumstances: (i) during any calendar quarter (and only during such calendar quarter), if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (ii) during the five business day period after any five consecutive trading day period (the “measurement period”) in which the trading price per $1,000 principal amount of the Senior Convertible Notes for each trading day of the measurement period is less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate on each such trading day; or (iii) upon the occurrence of specified corporate events, including certain distributions or a fundamental change. On or after March 15, 2023, the Senior Convertible Notes will be convertible at any time until the second scheduled trading day immediately preceding their September 15, 2023 maturity date. The Senior Convertible Notes will be convertible at an initial conversion rate of 76.3650 shares of the Company’s common stock per $1,000 principal amount of the Senior Convertible Notes, which is equivalent to an initial conversion price of approximately $13.10 . The conversion rate will be subject to adjustment in some events but will not be adjusted for any accrued and unpaid interest. In addition, following certain corporate events that occur prior to the maturity date or a notice of redemption, the Company will increase the conversion rate for a holder who elects to convert its Senior Convertible Notes in connection with such corporate event or redemption in certain circumstances. As of September 30, 2017 , none of the contingent conditions allowing holders of the Senior Convertible Notes to convert these notes had been met.
Upon issuance, the Company separately accounted for the liability and equity components of the Senior Convertible Notes in accordance with Accounting Standards Codification 470-20. The liability component was recorded at the estimated fair value of a similar debt instrument without the conversion feature. The difference between the principal amount of the Senior Convertible Notes and the estimated fair value of the liability component was recorded as a debt discount and will be amortized to interest expense over the term of the notes using the effective interest method, with an effective interest rate of 8.97% per annum. The fair value of the Senior Convertible Notes as of the issuance date was estimated at $206.8 million , resulting in a debt discount at inception of $93.2 million . The equity component, representing the value of the conversion option, was computed by deducting the fair value of the liability component from the initial proceeds of the Senior Convertible Notes issuance. This equity component was recorded, net of deferred taxes and issuance costs, in additional paid-in capital and will not be remeasured as long as it continues to meet the conditions for equity classification. 
Interest on the Senior Notes and the Senior Convertible Notes (collectively, 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.
10 . Asset Retirement Obligations
The following table reflects the changes in the Company’s ARO during the nine months ended September 30, 2017 :
 
(In thousands)
Balance at December 31, 2016
$
49,687

Liabilities incurred during period
1,333

Liabilities settled during period
(103
)
Accretion expense during period (1)
1,998

Revisions to estimates
(215
)
Balance at September 30, 2017
$
52,700

___________________
(1)
Included in depreciation, depletion and amortization on the Company’s Condensed Consolidated Statements of Operations.

At September 30, 2017 , the current portion of the total ARO balance was approximately $0.3 million and was included in accrued liabilities on the Company’s Condensed Consolidated Balance Sheet.

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11. Income Taxes
The Company’s effective tax rate for the three and nine months ended September 30, 2017 was 31.5% and 41.2% , respectively. For the three months ended September 30, 2017 , the effective tax rate was lower than the combined federal statutory rate and the statutory rates for the states in which the Company conducts business due to the portion of OMP’s earnings allocated to the non-controlling public limited partners, which are not subject to tax for the Company, and the permanent differences related to amounts expensed for book purposes versus the amounts deductible for income tax purposes related to equity-based compensation vesting at prices lower than the grant date values. For the nine months ended September 30, 2017 , the effective tax rate was higher than the combined federal statutory rate and the statutory rates for the states in which the Company conducts business due to the permanent differences related to amounts expensed for book purposes versus the amounts deductible for income tax purposes related to equity-based compensation vesting at prices higher than the grant date values and non-deductible compensation, offset by the portion of OMP’s earnings allocated to the non-controlling public limited partners, which are not subject to tax for the Company.
The Company’s effective tax rate for the three and nine months ended September 30, 2016 was 33.0% and 34.0% , respectively. For the three and nine months ended September 30, 2016 , the effective tax rates 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 these periods. The permanent differences for these periods were primarily between amounts expensed for book purposes versus the amounts deductible for income tax purposes related to equity-based compensation vesting at prices lower than the grant date values during the  three and nine months ended September 30, 2016 .
12. Equity-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 stock awards 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.
During the nine months ended September 30, 2017 , employees and non-employee directors of the Company were granted restricted stock awards equal to 1,624,810 shares of common stock with a $15.08 weighted average grant date per share value. Equity-based compensation expense recorded for restricted stock awards for the three and nine months ended September 30, 2017 was $4.9 million and $15.2 million , respectively, and $4.8 million and $15.5 million for the three and nine months ended September 30, 2016 , respectively. Equity-based compensation expense is included in general and administrative expenses on the Company’s Condensed Consolidated Statements 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.
During the nine months ended September 30, 2017 , officers of the Company were granted 509,800 PSUs with a $16.89 weighted average grant date per share value. Equity-based compensation expense recorded for PSUs for the three and nine months ended September 30, 2017 was $1.6 million and $5.1 million , respectively, and $1.0 million and $3.2 million for the three and nine months ended September 30, 2016 , respectively. Equity-based compensation expense is included in general and administrative expenses on the Company’s Condensed Consolidated Statements 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. 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. 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 rates are the U.S. Treasury bond rates on the date of grant that correspond to each 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 was calculated from the daily historical returns of 30 -day volume weighted average stock prices 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.

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The following assumptions were used for the Monte Carlo model to determine the grant date fair value and associated equity-based compensation expense of the PSUs granted during the nine months ended September 30, 2017 :
Risk-free interest rate
1.18% - 1.66%

Oasis volatility
17.16
%
OMP unit-based compensation. In September 2017, OMP GP adopted the Oasis Midstream Partners LP 2017 Long Term Incentive Plan (“ OMP LTIP ”). The OMP LTIP provides for the grant, from time to time at the discretion of the board of directors of OMP GP , of options, unit appreciation rights, restricted units, phantom units, unit awards, substitute awards, other unit-based awards or cash awards and includes any tandem distribution equivalent rights with respect to certain awards. The purpose of awards under the OMP LTIP is to provide additional incentive compensation to individuals providing services to OMP , and to align the economic interests of such individuals with the interests of OMP ’s unitholders.
The aggregate number of common units that may be issued pursuant to any and all awards under the OMP LTIP shall initially be equal to 1,842,500 common units, subject to proportionate adjustment in the event of unit splits and similar events. Additionally, each year, the total number of common units that may be issued pursuant to the OMP LTIP shall increase by 1% of the number of common units outstanding on a fully diluted basis (calculated by adding to the number of common units outstanding, all outstanding securities convertible into common units on such date on an as-converted basis). Common units subject to awards that are canceled, forfeited, withheld to satisfy exercise prices or tax withholding obligations or otherwise terminated without delivery of common units will be available for delivery pursuant to other awards.
In connection with the OMP IPO, certain directors of OMP were granted 11,766 restricted unit awards which vest over a one -year period with a weighted average grant date fair value of $17.00 per common unit. OMP accounted for these restricted unit awards as equity awards, pursuant to the FASB’s authoritative guidance for share-based payments. Equity-based compensation expense is recognized ratably over the requisite service period. Equity-based compensation expense recorded for restricted unit awards for the three and nine months ended September 30, 2017 is included in general and administrative expenses on the the Company’s Condensed Consolidated Statements of Operations.
13. Earnings (Loss) Per Share
Basic earnings (loss) per share is computed by dividing the earnings (loss) attributable to Oasis common stockholders by the weighted average number of shares outstanding for the periods presented. The calculation of diluted earnings (loss) per share includes the potential dilutive impact of unvested restricted stock awards and contingently issuable shares related to PSUs and senior convertible notes during the periods presented, unless their effect is anti-dilutive. There are no adjustments made to the income (loss) attributable to Oasis available 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 nine months ended September 30, 2017 and 2016 :  
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2017
 
2016
 
2017
 
2016
 
(In thousands)
Basic weighted average common shares outstanding
233,389

 
177,120

 
233,248

 
172,360

Dilutive effect of restricted stock awards and PSUs
—

 
—

 
—

 
—

Diluted weighted average common shares outstanding
233,389

 
177,120

 
233,248

 
172,360

During the  three and nine months ended September 30, 2017 and 2016 , the Company incurred a net loss and therefore the diluted loss per share calculation for those periods excludes the anti-dilutive effect of unvested stock awards. The following is a calculation of weighted average common shares excluded from diluted earnings (loss) per share due to the anti-dilutive effect:
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2017
 
2016
 
2017
 
2016
 
(In thousands)
Restricted stock awards and PSUs
5,841

 
5,140

 
5,988

 
4,935


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The Company issued its Senior Convertible Notes in September 2016 (see Note 9 – Long-Term Debt). The Company has the option to settle conversions of its Senior Convertible Notes with cash, shares of common stock or a combination of cash and common stock at its election. The Company’s intent is to settle the principal amount of the Senior Convertible Notes in cash upon conversion. As a result, only the amount by which the conversion value exceeds the aggregate principal amount of the notes (conversion spread) is considered in the diluted earnings per share computation under the treasury stock method. As of the three and nine months ended September 30, 2017 , the conversion value did not exceed the principal amount of the notes, and accordingly, there was no impact to diluted earnings per share for the three and nine months ended September 30, 2017 .
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 midstream services business segment ( OMS ) performs produced and flowback water gathering and disposal services, fresh water services, natural gas gathering and processing and crude oil gathering and transportation 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 produced and flowback water pipeline transport, produced and flowback water disposal, fresh water sales, natural gas gathering and processing and crude oil gathering, blending, stabilization and transportation. The Company’s well services business segment (OWS) performs completion 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 revenues and expenses related to work performed by OMS and OWS 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 Statements 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. The following table summarizes financial information for the Company’s three business segments for the periods presented:
 
 
Exploration and
Production
 
Midstream Services
 
Well Services
 
Eliminations
 
Consolidated
 
(In thousands)
Three months ended September 30, 2017:
 
Revenues from non-affiliates
$
269,843

 
$
18,767

 
$
16,138

 
$
—

 
$
304,748

Inter-segment revenues
—

 
28,893

 
31,025

 
(59,918
)
 
—

Total revenues
269,843

 
47,660

 
47,163

 
(59,918
)
 
304,748

Operating income
3,484

 
25,194

 
10,802

 
(7,086
)
 
32,394

Other income (expense)
(92,319
)
 
(15
)
 
30

 
—

 
(92,304
)
Income (loss) before income taxes including non-controlling interests
$
(88,835
)
 
$
25,179

 
$
10,832

 
$
(7,086
)
 
$
(59,910
)
 
 
Three months ended September 30, 2016:
 
Revenues from non-affiliates
$
158,183

 
$
8,487

 
$
10,641

 
$
—

 
$
177,311

Inter-segment revenues
—

 
20,790

 
11,818

 
(32,608
)
 
—

Total revenues
158,183

 
29,277

 
22,459

 
(32,608
)
 
177,311

Operating income (loss)
(41,857
)
 
16,525

 
1,572

 
(1,942
)
 
(25,702
)
Other income (expense)
(24,476
)
 
(460
)
 
5

 
—

 
(24,931
)
Income (loss) before income taxes
$
(66,333
)
 
$
16,065

 
$
1,577

 
$
(1,942
)
 
$
(50,633
)
 
 
Nine months ended September 30, 2017:
 
Revenues from non-affiliates
$
761,450

 
$
48,939

 
$
33,566

 
$
—

 
$
843,955

Inter-segment revenues
—

 
76,674

 
68,028

 
(144,702
)
 
—

Total revenues
761,450

 
125,613

 
101,594

 
(144,702
)
 
843,955

Operating income (loss)
(12,972
)
 
69,059

 
9,161

 
(7,383
)
 
57,865

Other income (expense)
(59,027
)
 
(13
)
 
34

 
—

 
(59,006
)
Income (loss) before income taxes including non-controlling interests
$
(71,999
)
 
$
69,046

 
$
9,195

 
$
(7,383
)
 
$
(1,141
)
 
 
Nine months ended September 30, 2016:
 
Revenues from non-affiliates
$
434,835

 
$
22,380

 
$
29,459

 
$
—

 
$
486,674

Inter-segment revenues
—

 
65,650

 
45,023

 
(110,673
)
 
—

Total revenues
434,835

 
88,030

 
74,482

 
(110,673
)
 
486,674

Operating income (loss)
(175,480
)
 
49,724

 
3,420

 
(6,795
)
 
(129,131
)
Other income (expense)
(155,595
)
 
(462
)
 
42

 
—

 
(156,015
)
Income (loss) before income taxes
$
(331,075
)
 
$
49,262

 
$
3,462

 
$
(6,795
)
 
$
(285,146
)
 
 
At September 30, 2017:
 
Property, plant and equipment, net
$
5,595,611

 
$
577,883

 
$
43,175

 
$
(181,051
)
 
$
6,035,618

Total assets (1)
5,930,040

 
589,506

 
52,717

 
(181,051
)
 
6,391,212

At December 31, 2016:
 
 
 
 
 
 
 
 
 
Property, plant and equipment, net
$
5,620,558

 
$
424,197

 
$
47,189

 
$
(172,377
)
 
$
5,919,567

Total assets (1)
5,868,747

 
431,095

 
51,167

 
(172,377
)
 
6,178,632

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

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15 . Commitments and Contingencies
The Company has various contractual obligations in the normal course of its operations. As of  September 30, 2017 , there have been no material changes to the Company’s future commitments as disclosed in Note 16 in the Company’s 2016 Annual Report.
Litigation. The Company is party to various legal and/or regulatory proceedings from time to time arising in the ordinary course of business. 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.
Mirada litigation. On March 23, 2017, Mirada Energy, LLC, Mirada Wild Basin Holding Company, LLC and Mirada Energy Fund I, LLC (collectively, “Mirada”) filed a lawsuit against Oasis, OPNA and Oasis Midstream Services LLC, seeking monetary damages in excess of $100 million , declaratory relief, attorneys’ fees and costs (Mirada Energy, LLC, et al. v. Oasis Petroleum North America LLC, et al.; in the 334th Judicial District Court of Harris County, Texas; Case Number 2017-19911). Mirada asserts that it is a working interest owner in certain acreage owned and operated by the Company in Wild Basin. Specifically, Mirada asserts that the Company has breached certain agreements by: (1) failing to allow Mirada to participate in the Company’s midstream operations in Wild Basin; (2) refusing to provide Mirada with information that Mirada contends is required under certain agreements and failing to provide information in a timely fashion; (3) failing to consult with Mirada and failing to obtain Mirada’s consent prior to drilling more than one well at a time in Wild Basin; and (4) by overstating the estimated costs of proposed well operations in Wild Basin. Mirada seeks a declaratory judgment that the Company be removed as operator in Wild Basin at Mirada’s election and that Mirada be allowed to elect a new operator; certain agreements apply to the Company and Mirada and Wild Basin with respect to this dispute; the Company be required to provide all information within its possession regarding proposed or ongoing operations in Wild Basin; and the Company not be permitted to drill, or propose to drill, more than one well at a time in Wild Basin without obtaining Mirada’s consent. Mirada also seeks a declaratory judgment with respect to the Company’s current midstream operations in Wild Basin. Specifically, Mirada seeks a declaratory judgment that Mirada has a right to participate in the Company’s Wild Basin midstream operations, consisting of produced water disposal, crude oil gathering and gas gathering and processing; that, upon Mirada’s election to participate, Mirada is obligated to pay its proportionate costs of the Company’s midstream operations in Wild Basin; and that Mirada would then be entitled to receive a share of revenues from the midstream operations and would not be charged any amount for its use of these facilities for production from the “Contract Area.”
On June 30, 2017, Mirada amended its original petition to add a claim that the Company has breached certain agreements by charging Mirada for midstream services provided by its affiliates and to seek a declaratory judgment that Mirada is entitled to be paid its share of total proceeds from the sale of hydrocarbons received by OPNA or any affiliate of OPNA without deductions for midstream services provided by OPNA or its affiliates.
The Company believes that Mirada’s claims are without merit, that the Company has complied with its obligations under the applicable agreements and that some of Mirada’s claims are grounded in agreements which do not apply to the Company. The Company filed an answer denying Mirada’s claims on April 21, 2017, and intends to vigorously defend against Mirada’s claims. Discovery is ongoing, and trial is currently scheduled for July 2018. However, the Company cannot predict or guarantee the ultimate outcome or resolution of such matter. If such matter were to be determined adversely to the Company’s interests, or if the Company were forced to settle such matter for a significant amount, such resolution or settlement could have a material adverse effect on the Company’s business, results of operations and financial condition. Such an adverse determination could materially impact the Company’s ability to operate its properties in Wild Basin or develop its identified drilling locations in Wild Basin on its current development schedule. A determination that Mirada has a right to participate in the Company’s midstream operations could materially reduce the interests of the Company in their current assets and future midstream opportunities and related revenues in Wild Basin.

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16. Condensed Consolidating Financial Information
The Notes (see Note 9 – 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 operating units , including OMP (see Note 3 – Oasis Midstream Partners LP ), wh ich is accounted for on a consolidated basis, do not guarantee the Notes (“Non-Guarantor Subsidiaries”).
The following financial information reflects consolidating financial information of the parent company, Oasis Petroleum Inc. (“Issuer”), its Guarantors on a combined basis and the Non-Guarantor Subsidiaries on a combined basis, prepared on the equity basis of accoun ting. The information is presented in accordance with the requirements of Rule 3-10 under the SEC’s Regulation S-X. The financial inform ation 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.

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Condensed Consolidating Balance Sheet
 
September 30, 2017
 
Parent/
Issuer
 
Combined
Guarantor
Subsidiaries
 
Non-Guarantor Subsidiaries
 
Intercompany
Eliminations
 
Consolidated
 
(In thousands)
ASSETS
 
 
 
 
 
 
 
 
 
Current assets
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$
178

 
$
8,310

 
$
—

 
$
—

 
$
8,488

Accounts receivable, net
—

 
285,325

 
58

 
—

 
285,383

Accounts receivable - affiliates
136,004

 
34,226

 
5,611

 
(175,841
)
 
—

Inventory
—

 
17,169

 
—

 
—

 
17,169

Prepaid expenses
465

 
10,153

 
29

 
—

 
10,647

Derivative instruments
—

 
692

 
—

 
—

 
692

Other current assets
—

 
65

 
—

 
—

 
65

Total current assets
136,647

 
355,940

 
5,698

 
(175,841
)
 
322,444

Property, plant and equipment


 


 
 
 


 


Oil and gas properties (successful efforts method)
—

 
7,640,785

 
—

 
—

 
7,640,785

Other property and equipment
—

 
261,444

 
522,098

 
—

 
783,542

Less: accumulated depreciation, depletion, amortization and impairment
—

 
(2,358,848
)
 
(29,861
)
 
—

 
(2,388,709
)
Total property, plant and equipment, net
—

 
5,543,381

 
492,237

 
—

 
6,035,618

Investments in and advances to subsidiaries
4,535,693

 
376,528

 
—

 
(4,912,221
)
 
—

Derivative instruments
—

 
703

 
—

 
—

 
703

Deferred income taxes
269,704

 
—

 
—

 
(269,704
)
 
—

Long-term inventory
—

 
10,885

 
—

 
—

 
10,885

Other assets
—

 
19,614

 
1,948

 
—

 
21,562

Total assets
$
4,942,044

 
$
6,307,051

 
$
499,883

 
$
(5,357,766
)
 
$
6,391,212

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
 
 
 
 
 
 
Current liabilities
 
 
 
 
 
 
 
 
 
Accounts payable
$
—

 
$
16,348

 
$
—

 
$
—

 
$
16,348

Accounts payable - affiliates
33,885

 
141,615

 
341

 
(175,841
)
 
—

Revenues and production taxes payable
—

 
169,361

 
—

 
—

 
169,361

Accrued liabilities
(8
)
 
188,375

 
5,790

 
—

 
194,157

Accrued interest payable
19,872

 
449

 
4

 
—

 
20,325

Derivative instruments
—

 
16,412

 
—

 
—

 
16,412

Advances from joint interest partners
—

 
5,095

 
—

 
—

 
5,095

Total current liabilities
53,749

 
537,655

 
6,135

 
(175,841
)
 
421,698

Long-term debt
1,945,613

 
395,000

 
—

 
—

 
2,340,613

Deferred income taxes
—

 
778,039

 
—

 
(269,704
)
 
508,335

Asset retirement obligations
—

 
51,156

 
1,257

 
—

 
52,413

Derivative instruments
—

 
3,703

 
—

 
—

 
3,703

Other liabilities
—

 
5,805

 
—

 
—

 
5,805

Total liabilities
1,999,362

 
1,771,358

 
7,392

 
(445,545
)
 
3,332,567

Stockholders’ equity
 
 
 
 
 
 
 
 
 
Capital contributions from affiliates
—

 
3,282,946

 
261,312

 
(3,544,258
)
 
—

Common stock, $0.01 par value: 450,000,000 shares authorized; 238,639,488 shares issued and 237,312,881 shares outstanding
2,348

 
—

 
—

 
—

 
2,348

Treasury stock, at cost: 1,326,607 shares
(22,132
)
 
—

 
—

 
—

 
(22,132
)
Additional paid-in-capital
2,369,098

 
8,849

 
—

 
(8,849
)
 
2,369,098

Retained earnings
593,368

 
1,127,935

 
—

 
(1,127,935
)
 
593,368

Oasis share of stockholders’ equity
2,942,682

 
4,419,730

 
261,312

 
(4,681,042
)
 
2,942,682

Non-controlling interests
—

 
115,963

 
231,179

 
(231,179
)
 
115,963


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Total stockholders’ equity
2,942,682

 
4,535,693

 
492,491

 
(4,912,221
)
 
3,058,645

Total liabilities and stockholders’ equity
$
4,942,044

 
$
6,307,051

 
$
499,883

 
$
(5,357,766
)
 
$
6,391,212


23
Table of Contents

Condensed Consolidating Balance Sheet
 
December 31, 2016
 
Parent/
Issuer
 
Combined
Guarantor
Subsidiaries
 
Intercompany
Eliminations
 
Consolidated
 
(In thousands)
ASSETS
 
 
 
 
 
 
 
Current assets
 
 
 
 
 
 
 
Cash and cash equivalents
$
166

 
$
11,060

 
$
—

 
$
11,226

Accounts receivable, net
—

 
204,335

 
—

 
204,335

Accounts receivable - affiliates
252,000

 
27,619

 
(279,619
)
 
—

Inventory
—

 
10,648

 
—

 
10,648

Prepaid expenses
275

 
7,348

 
—

 
7,623

Derivative instruments
—

 
362

 
—

 
362

Other current assets
—

 
4,355

 
—

 
4,355

Total current assets
252,441

 
265,727

 
(279,619
)
 
238,549

Property, plant and equipment


 


 


 


Oil and gas properties (successful efforts method)
—

 
7,296,568

 
—

 
7,296,568

Other property and equipment
—

 
618,790

 
—

 
618,790

Less: accumulated depreciation, depletion, amortization and impairment
—

 
(1,995,791
)
 
—

 
(1,995,791
)
Total property, plant and equipment, net
—

 
5,919,567

 
—

 
5,919,567

Investments in and advances to subsidiaries
4,451,192

 
—

 
(4,451,192
)
 
—

Deferred income taxes
220,058

 
—

 
(220,058
)
 
—

Other assets
—

 
20,516

 
—

 
20,516

Total assets
$
4,923,691

 
$
6,205,810

 
$
(4,950,869
)
 
$
6,178,632

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
 
 
 
 
Current liabilities
 
 
 
 
 
 
 
Accounts payable
$
—

 
$
4,645

 
$
—

 
$
4,645

Accounts payable - affiliates
27,619

 
252,000

 
(279,619
)
 
—

Revenues and production taxes payable
—

 
139,737

 
—

 
139,737

Accrued liabilities
12

 
119,161

 
—

 
119,173

Accrued interest payable
38,689

 
315

 
—

 
39,004

Derivative instruments
—

 
60,469

 
—

 
60,469

Advances from joint interest partners
—

 
7,597

 
—

 
7,597

Other current liabilities
—

 
10,490

 
—

 
10,490

Total current liabilities
66,320

 
594,414

 
(279,619
)
 
381,115

Long-term debt
1,934,214

 
363,000

 
—

 
2,297,214

Deferred income taxes
—

 
733,587

 
(220,058
)
 
513,529

Asset retirement obligations
—

 
48,985

 
—

 
48,985

Derivative instruments
—

 
11,714

 
—

 
11,714

Other liabilities
—

 
2,918

 
—

 
2,918

Total liabilities
2,000,534

 
1,754,618

 
(499,677
)
 
3,255,475

Stockholders’ equity
 
 
 
 
 
 
 
Capital contributions from affiliates
—

 
3,388,893

 
(3,388,893
)
 
—

Common stock, $0.01 par value: 450,000,000 shares authorized; 237,201,064 shares issued and 236,344,172 shares outstanding
2,331

 
—

 
—

 
2,331

Treasury stock, at cost: 856,892 shares
(15,950
)
 
—

 
—

 
(15,950
)
Additional paid-in-capital
2,345,271

 
8,743

 
(8,743
)
 
2,345,271

Retained earnings
591,505

 
1,053,556

 
(1,053,556
)
 
591,505

Total stockholders’ equity
2,923,157

 
4,451,192

 
(4,451,192
)
 
2,923,157

Total liabilities and stockholders’ equity
$
4,923,691

 
$
6,205,810

 
$
(4,950,869
)
 
$
6,178,632


24
Table of Contents


Condensed Consolidating Statement of Operations
 
Three Months Ended September 30, 2017
 
Parent/
Issuer
 
Combined
Guarantor
Subsidiaries
 
Combined Non-Guarantor Subsidiaries
 
Intercompany
Eliminations
 
Consolidated
 
(In thousands)
Revenues
 
 
 
 
 
 
 
 
 
Oil and gas revenues
$
—

 
$
248,648

 
$
—

 
$
—

 
$
248,648

Bulk oil sales
—

 
21,195

 
—

 
—

 
21,195

Midstream revenues
—

 
15,828

 
2,939

 
—

 
18,767

Well services revenues
—

 
16,138

 
—

 
—

 
16,138

Total revenues
—

 
301,809

 
2,939

 
—

 
304,748

Operating expenses
 
 
 
 
 
 
 
 
 
Lease operating expenses
—

 
45,334

 
—

 
—

 
45,334

Midstream operating expenses
—

 
3,621

 
680

 
—

 
4,301

Well services operating expenses
—

 
9,125

 
—

 
—

 
9,125

Marketing, transportation and gathering expenses
—

 
15,028

 
—

 
—

 
15,028

Bulk oil purchases
—

 
21,701

 
—

 
—

 
21,701

Production taxes
—

 
21,052

 
—

 
—

 
21,052

Depreciation, depletion and amortization
—

 
132,035

 
254

 
—

 
132,289

Exploration expenses
—

 
854

 
—

 
—

 
854

Impairment
—

 
139

 
—

 
—

 
139

General and administrative expenses
6,775

 
15,375

 
381

 
—

 
22,531

Total operating expenses
6,775

 
264,264

 
1,315

 
—

 
272,354

Operating income (loss)
(6,775
)
 
37,545

 
1,624

 
—

 
32,394

Other income (expense)
 
 
 
 
 
 
 
 
 
Equity in earnings (loss) of subsidiaries
(13,599
)
 
1,605

 
—

 
11,994

 
—

Net loss on derivative instruments
—

 
(54,310
)
 
—

 
—

 
(54,310
)
Interest expense, net of capitalized interest
(32,894
)
 
(4,476
)
 
(19
)
 
—

 
(37,389
)
Other income (expense)
2

 
(607
)
 
—

 
—

 
(605
)
Total other expense
(46,491
)
 
(57,788
)
 
(19
)
 
11,994

 
(92,304
)
Income (loss) before income taxes
(53,266
)
 
(20,243
)
 
1,605

 
11,994

 
(59,910
)
Income tax benefit
12,052

 
6,794

 
—

 
—

 
18,846

Net income (loss) including non-controlling interests
(41,214
)
 
(13,449
)
 
1,605

 
11,994

 
(41,064
)
Less: Net income attributable to non-controlling interests
—

 
150

 
1,112

 
(1,112
)
 
150

Net income (loss) attributable to Oasis
$
(41,214
)
 
$
(13,599
)
 
$
493

 
$
13,106

 
$
(41,214
)

25
Table of Contents

Condensed Consolidating Statement of Operations
 
Three Months Ended September 30, 2016
 
Parent/
Issuer
 
Combined
Guarantor
Subsidiaries
 
Intercompany
Eliminations
 
Consolidated
 
(In thousands)
Revenues
 
 
 
 
 
 
 
Oil and gas revenues
$
—

 
$
156,316

 
$
—

 
$
156,316

Bulk oil sales
—

 
1,867

 
—

 
1,867

Midstream revenues
—

 
8,487

 
—

 
8,487

Well services revenues
—

 
10,641

 
—

 
10,641

Total revenues
—

 
177,311

 
—

 
177,311

Operating expenses
 
 
 
 
 
 
 
Lease operating expenses
—

 
35,696

 
—

 
35,696

Midstream operating expenses
—

 
2,617

 
—

 
2,617

Well services operating expenses
—

 
5,548

 
—

 
5,548

Marketing, transportation and gathering expenses
—

 
7,003

 
—

 
7,003

Bulk oil purchases
—

 
1,853

 
—

 
1,853

Production taxes
—

 
14,638

 
—

 
14,638

Depreciation, depletion and amortization
—

 
111,948

 
—

 
111,948

Exploration expenses
—

 
489

 
—

 
489

Impairment
—

 
382

 
—

 
382

General and administrative expenses
5,930

 
16,915

 
—

 
22,845

Total operating expenses
5,930

 
197,089

 
—

 
203,019

Gain on sale of properties
—

 
6

 
—

 
6

Operating loss
(5,930
)
 
(19,772
)
 
—

 
(25,702
)
Other income (expense)
 
 
 
 
 
 
 
Equity in loss of subsidiaries
(1,140
)
 
—

 
1,140

 
—

Net gain on derivative instruments
—

 
20,847

 
—

 
20,847

Interest expense, net of capitalized interest
(29,876
)
 
(1,850
)
 
—

 
(31,726
)
Loss on extinguishment of debt
(13,793
)
 
—

 
—

 
(13,793
)
Other income (expense)
1

 
(260
)
 
—

 
(259
)
Total other income (expense)
(44,808
)
 
18,737

 
1,140

 
(24,931
)
Loss before income taxes
(50,738
)
 
(1,035
)
 
1,140

 
(50,633
)
Income tax benefit (expense)
16,796

 
(105
)
 
—

 
16,691

Net loss
$
(33,942
)
 
$
(1,140
)
 
$
1,140

 
$
(33,942
)


26
Table of Contents

Condensed Consolidating Statement of Operations
 
Nine Months Ended September 30, 2017
 
Parent/
Issuer
 
Combined
Guarantor
Subsidiaries
 
Combined Non-Guarantor Subsidiaries
 
Intercompany
Eliminations
 
Consolidated
 
(In thousands)
Revenues
 
 
 
 
 
 
 
 
 
Oil and gas revenues
$
—

 
$
704,533

 
$
—

 
$
—

 
$
704,533

Bulk oil sales
—

 
56,917

 
—

 
—

 
56,917

Midstream revenues
—

 
46,000

 
2,939

 
—

 
48,939

Well services revenues
—

 
33,566

 
—

 
—

 
33,566

Total revenues
—

 
841,016

 
2,939

 
—

 
843,955

Operating expenses
 
 
 
 
 
 
 
 
 
Lease operating expenses
—

 
133,871

 
—

 
—

 
133,871

Midstream operating expenses
—

 
10,211

 
680

 
—

 
10,891

Well services operating expenses
—

 
21,115

 
—

 
—

 
21,115

Marketing, transportation and gathering expenses
—

 
38,018

 
—

 
—

 
38,018

Bulk oil purchases
—

 
57,683

 
—

 
—

 
57,683

Production taxes
—

 
60,322

 
—

 
—

 
60,322

Depreciation, depletion and amortization
—

 
383,992

 
254

 
—

 
384,246

Exploration expenses
—

 
4,010

 
—

 
—

 
4,010

Impairment
—

 
6,021

 
—

 
—

 
6,021

General and administrative expenses
21,374

 
48,158

 
381

 
—

 
69,913

Total operating expenses
21,374

 
763,401

 
1,315

 
—

 
786,090

Operating income (loss)
(21,374
)
 
77,615

 
1,624

 
—

 
57,865

Other income (expense)
 
 
 
 
 
 
 
 
 
Equity in earnings of subsidiaries
74,379

 
1,605

 
—

 
(75,984
)
 
—

Net gain on derivative instruments
—

 
52,297

 
—

 
—

 
52,297

Interest expense, net of capitalized interest
(98,751
)
 
(11,778
)
 
(19
)
 
—

 
(110,548
)
Other income (expense)
2

 
(757
)
 
—

 
—

 
(755
)
Total other income (expense)
(24,370
)
 
41,367

 
(19
)
 
(75,984
)
 
(59,006
)
Income (loss) before income taxes
(45,744
)
 
118,982

 
1,605

 
(75,984
)
 
(1,141
)
Income tax benefit (expense)
44,923

 
(44,453
)
 
—

 
—

 
470

Net income (loss) including non-controlling interests
(821
)
 
74,529

 
1,605

 
(75,984
)
 
(671
)
Less: Net income attributable to non-controlling interests
—

 
150

 
1,112

 
(1,112
)
 
150

Net income (loss) attributable to Oasis
$
(821
)
 
$
74,379

 
$
493

 
$
(74,872
)
 
$
(821
)

27
Table of Contents

Condensed Consolidating Statement of Operations
 
Nine Months Ended September 30, 2016
 
Parent/
Issuer
 
Combined
Guarantor
Subsidiaries
 
Intercompany
Eliminations
 
Consolidated
 
(In thousands)
Revenues
 
 
 
 
 
 
 
Oil and gas revenues
$
—

 
$
432,968

 
$
—

 
$
432,968

Bulk oil sales
—

 
1,867

 
—

 
1,867

Midstream revenues
—

 
22,380

 
—

 
22,380

Well services revenues
—

 
29,459

 
—

 
29,459

Total revenues
—

 
486,674

 
—

 
486,674

Operating expenses
 
 
 
 
 
 
 
Lease operating expenses
—

 
98,283

 
—

 
98,283

Midstream operating expenses
—

 
6,095

 
—

 
6,095

Well services operating expenses
—

 
15,334

 
—

 
15,334

Marketing, transportation and gathering expenses
—

 
22,046

 
—

 
22,046

Bulk oil purchases
—

 
1,853

 
—

 
1,853

Production taxes
—

 
39,758

 
—

 
39,758

Depreciation, depletion and amortization
—

 
356,885

 
—

 
356,885

Exploration expenses
—

 
1,192

 
—

 
1,192

Impairment
—

 
3,967

 
—

 
3,967

General and administrative expenses
19,776

 
49,311

 
—

 
69,087

Total operating expenses
19,776

 
594,724

 
—

 
614,500

Loss on sale of properties
—

 
(1,305
)
 
—

 
(1,305
)
Operating loss
(19,776
)
 
(109,355
)
 
—

 
(129,131
)
Other income (expense)
 
 
 
 
 
 
 
Equity in loss of subsidiaries
(110,454
)
 
—

 
110,454

 
—

Net loss on derivative instruments
—

 
(55,624
)
 
—

 
(55,624
)
Interest expense, net of capitalized interest
(97,898
)
 
(7,546
)
 
—

 
(105,444
)
Gain on extinguishment of debt
4,865

 
—

 
—

 
4,865

Other income
44

 
144

 
—

 
188

Total other expense
(203,443
)
 
(63,026
)
 
110,454

 
(156,015
)
Loss before income taxes
(223,219
)
 
(172,381
)
 
110,454

 
(285,146
)
Income tax benefit
34,891

 
61,927

 
—

 
96,818

Net loss
$
(188,328
)
 
$
(110,454
)
 
$
110,454

 
$
(188,328
)


28
Table of Contents

Condensed Consolidating Statement of Cash Flows
 
Nine Months Ended September 30, 2017
 
Parent/
Issuer
 
Combined
Guarantor
Subsidiaries
 
Combined Non-Guarantor Subsidiaries
 
Intercompany
Eliminations
 
Consolidated
 
(In thousands)
Cash flows from operating activities:
 
 
 
 
 
 
 
 
 
Net income (loss) including non-controlling interests
$
(821
)
 
$
74,529

 
$
1,605

 
$
(75,984
)
 
$
(671
)
Adjustments to reconcile net income (loss) including non-controlling interests to net cash provided by (used in) operating activities:
 
 
 
 
 
 
 
 
 
Equity in earnings of subsidiaries
(74,379
)
 
(1,605
)
 
—

 
75,984

 
—

Depreciation, depletion and amortization
—

 
383,992

 
254

 
—

 
384,246

Impairment
—

 
6,021

 
—

 
—

 
6,021

Deferred income taxes
(44,923
)
 
44,453

 
—

 
—

 
(470
)
Derivative instruments
—

 
(52,297
)
 
—

 
—

 
(52,297
)
Equity-based compensation expenses
19,740

 
711

 
—

 
—

 
20,451

Deferred financing costs amortization and other
11,399

 
1,260

 
7

 
—

 
12,666

Working capital and other changes:
 
 
 
 


 
 
 
 
Change in accounts receivable
115,996

 
(87,610
)
 
(5,630
)
 
(103,778
)
 
(81,022
)
Change in inventory
—

 
(235
)
 
—

 
—

 
(235
)
Change in prepaid expenses
(190
)
 
1,013

 
—

 
—

 
823

Change in other current assets
—

 
276

 
—

 
—

 
276

Change in long-term inventory and other assets
—

 
(12,843
)
 
—

 
—

 
(12,843
)
Change in accounts payable, interest payable and accrued liabilities
(12,571
)
 
(62,542
)
 
3,617

 
103,778

 
32,282

Change in other current liabilities
—

 
(10,490
)
 
—

 
—

 
(10,490
)
Net cash provided by (used in) operating activities
14,251

 
284,633

 
(147
)
 
—

 
298,737

Cash flows from investing activities:
 
 
 
 
 
 
 
 
 
Capital expenditures
—

 
(443,649
)
 
—

 
—

 
(443,649
)
Proceeds from sale of properties
—

 
4,000

 
—

 
—

 
4,000

Derivative settlements
—

 
(804
)
 
—

 
—

 
(804
)
Advances from joint interest partners
—

 
(2,502
)
 
—

 
—

 
(2,502
)
Net cash used in investing activities
—

 
(442,955
)
 
—

 
—

 
(442,955
)
Cash flows from financing activities:
 
 
 
 
 
 
 
 
 
Proceeds from revolving credit facility
—

 
764,000

 
—

 
—

 
764,000

Principal payments on revolving credit facility
—

 
(732,000
)
 
—

 
—

 
(732,000
)
Deferred financing costs
—

 
1,858

 
(1,954
)
 
—

 
(96
)
Proceeds from issuance of Oasis Midstream common units, net of offering costs
—

 
—

 
115,813

 
—

 
115,813

Purchases of treasury stock
(6,182
)
 
—

 
—

 
—

 
(6,182
)
Investment in subsidiaries / capital contributions from parent
(8,002
)
 
121,714

 
(113,712
)
 
—

 
—

Other
(55
)
 
—

 
—

 
—

 
(55
)
Net cash provided by (used in) financing activities
(14,239
)
 
155,572

 
147

 
—

 
141,480

Increase (decrease) in cash and cash equivalents
12

 
(2,750
)
 
—

 
—

 
(2,738
)
Cash and cash equivalents at beginning of period
166

 
11,060

 
—

 
—

 
11,226

Cash and cash equivalents at end of period
$
178

 
$
8,310

 
$
—

 
$
—

 
$
8,488


29
Table of Contents

Condensed Consolidating Statement of Cash Flows
 
Nine Months Ended September 30, 2016
 
Parent/
Issuer
 
Combined
Guarantor
Subsidiaries
 
Intercompany
Eliminations
 
Consolidated
 
(In thousands)
Cash flows from operating activities:
 
 
 
 
 
 
 
Net loss
$
(188,328
)
 
$
(110,454
)
 
$
110,454

 
$
(188,328
)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
 
 
 
 
 
 
 
Equity in loss of subsidiaries
110,454

 
—

 
(110,454
)
 
—

Depreciation, depletion and amortization
—

 
356,885

 
—

 
356,885

Gain on extinguishment of debt
(4,865
)
 
—

 
—

 
(4,865
)
Loss on sale of properties
—

 
1,305

 
—

 
1,305

Impairment
—

 
3,967

 
—

 
3,967

Deferred income taxes
(34,891
)
 
(61,927
)
 
—

 
(96,818
)
Derivative instruments
—

 
55,624

 
—

 
55,624

Equity-based compensation expenses
18,195

 
566

 
—

 
18,761

Deferred financing costs amortization and other
5,371

 
4,803

 
—

 
10,174

Working capital and other changes:
 
 
 
 
 
 
 
Change in accounts receivable
(85
)
 
(88,509
)
 
99,943

 
11,349

Change in inventory
—

 
2,559

 
—

 
2,559

Change in prepaid expenses
(135
)
 
1,303

 
—

 
1,168

Change in other current assets
—

 
(240
)
 
—

 
(240
)
Change in long-term inventory and other assets
100

 
(248
)
 
—

 
(148
)
Change in accounts payable, interest payable and accrued liabilities
70,285

 
(12,333
)
 
(99,943
)
 
(41,991
)
Change in other current liabilities
—

 
(6,000
)
 
—

 
(6,000
)
Change in other liabilities
—

 
17

 
—

 
17

Net cash provided by (used in) operating activities
(23,899
)
 
147,318

 
—

 
123,419

Cash flows from investing activities:
 
 
 
 
 
 
 
Capital expenditures
—

 
(340,314
)
 
—

 
(340,314
)
Proceeds from sale of properties
—

 
12,333

 
—

 
12,333

Costs related to sale of properties
—

 
(310
)
 
—

 
(310
)
Derivative settlements
—

 
115,576

 
—

 
115,576

Advances from joint interest partners
—

 
544

 
—

 
544

Net cash used in investing activities
—

 
(212,171
)
 
—

 
(212,171
)
Cash flows from financing activities:
 
 
 
 
 
 
 
Proceeds from revolving credit facility
—

 
835,000

 
—

 
835,000

Principal payments on revolving credit facility
—

 
(778,000
)
 
—

 
(778,000
)
Repurchase of senior unsecured notes
(435,907
)
 
—

 
—

 
(435,907
)
Proceeds from issuance of senior unsecured convertible notes
300,000

 
—

 
—

 
300,000

Deferred financing costs
(7,880
)
 
(931
)
 
—

 
(8,811
)
Proceeds from sale of common stock
182,791

 
—

 
—

 
182,791

Purchases of treasury stock
(2,275
)
 
—

 
—

 
(2,275
)
Investment in subsidiaries / capital contributions from parent
(13,517
)
 
13,517

 
—

 
—

Net cash provided by financing activities
23,212

 
69,586

 
—

 
92,798

Increase (decrease) in cash and cash equivalents
(687
)
 
4,733

 
—

 
4,046

Cash and cash equivalents at beginning of period
777

 
8,953

 
—

 
9,730

Cash and cash equivalents at end of period
$
90

 
$
13,686

 
$
—

 
$
13,776


30
Table of Contents

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 previously disclosed or noted below.
Derivative instruments. In October 2017, the Company entered into a new swap for natural gas which settles based on Henry Hub. The commodity contract included a total notional amount of 730,000  MMBtu with a weighted average floor price of $3.07 per MMBtu which settles in 2018 . This derivative instrument does not qualify for and was not designated as hedging instruments for accounting purposes .
Lease obligations. On October 1, 2017 , the Company executed an amendment to its office space lease agreement to extend its term to March 31, 2029 and to lease an additional 8,915 square feet of space within its current office building. This amendment increased the Company’s total future minimum rental commitments under non-cancelable leases for office space to $33.3 million . Under the terms of the amendment, the Company’s rental obligation for the new premises will begin upon occupancy of such premises for the purpose of conducting business therefrom, which is projected to be in April 2018 or earlier.
Credit facility borrowing base.  On October 17, 2017 , the Lenders completed their regular semi-annual redetermination of the borrowing base of the Second Amended Credit Facility, resulting in the borrowing base and the aggregate elected commitment reaffirmed at $1,600.0 million and  $1,150.0 million , respectively. The next redetermination of the Company’s borrowing base is scheduled for April 1, 2018.
OMP LTIP phantom unit grant. On October 19, 2017 (the “ Grant Date ”), OMP granted awards under the OMP LTIP of 101,500 phantom units (collectively, the “ Phantom Units ,” and each a “ Phantom Unit ”) to certain employees of Oasis. Each Phantom Unit represents the right to receive, upon vesting of the award, a cash payment equal to the fair market value of one OMP common unit on the day prior to the date it vests (the “Vesting Date”). Award recipients are also entitled to Distribution Equivalent Rights (a “ DER ”) with respect to each Phantom Unit received. Each DER represents the right to receive, upon vesting of the award, a cash payment equal to the value of the distributions paid on one OMP common unit between the Grant Date and the applicable Vesting Date. Each award of Phantom Units vests in equal amounts each year over a three -year period, and compensation expense will be recognized over the requisite service period.
Consent and Tenth Amendment to Second Amended and Restated Credit Agreement.  On November 6, 2017, the Company entered into the Tenth Amendment (the “Amendment”) to the Oasis Credit Facility , pursuant to which the Lenders consented to (i) the termination of the limited recourse guaranty agreements by and between each of Beartooth DevCo LLC and Bobcat DevCo LLC (collectively, the “DevCos,” and each a “DevCo”) and Wells Fargo Bank, N.A., as administrative agent (the “Administrative Agent”), under the Oasis Credit Facility and (ii) the termination and release of each DevCo’s DevCo Mortgage (as defined in the Amendment). Further, OMS, in its capacity as the majority owner of each of the DevCos, entered into the Undertaking Agreements with the Administrative Agent pursuant to which OMS agreed to limitations on the activities of each DevCo, including, but not limited to, the incurrence of indebtedness, asset acquisitions or dispositions, investments, mergers, issuance of additional equity interests, creation of liens on any DevCo assets or entry into any agreement that would restrict or prohibit the granting of liens on any DevCo assets, loans or advances to other persons, entry into any transaction with an affiliate, formation of a subsidiary and entry into any swap or similar derivative transaction (the “DevCo Covenants”). OMS further agreed to cause corresponding amendments to the Limited Liability Company Agreement of each DevCo to implement the DevCo Covenants and to require unanimous member approval for any amendment to the DevCo Covenants.
Assignment of contract for construction of natural gas processing plant. On November 6, 2017, OMS agreed to assign to Bighorn DevCo LLC an indirect, wholly-owned subsidiary of OMP , the construction of a second gas processing plant to support Oasis’s production. Pursuant to this assignment, Bighorn DevCo LLC has agreed to assume (i) a fixed price agreement for engineering, procurement and construction of a 200 million standard cubic feet per day natural gas processing plant (the “EPC Agreement” and “ Gas Plant II ,” respectively), (ii) title to Gas Plant II and the ancillary equipment being constructed under the EPC Agreement, and (iii) a master service agreement and work orders pursuant to which the contractor has agreed to provide mechanical refrigeration units to support Gas Plant II ’s operation. In addition, OMP has agreed to reimburse OMS for all capital expenditures previously made under the EPC Agreement or otherwise in respect of Gas Plant II . Finally, the Gas Gathering, Compression, Processing, and Gas Lift Agreement by and among OPNA, OPM, OMS, and OMP, dated as of September 25, 2017, was amended to reflect the Gas Plant II ’s additional processing capacity. OMP currently estimates that it will reimburse OMS approximately $66.7 million in connection with Gas Plant II . 

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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, 2016 (“ 2016 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 Part II, Item 1A. “Risk Factors” in our 2016 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 midstream company, including ownership interests in a master limited partnership;
•
owning and operating a well services company;
•
infrastructure for produced and flowback water gathering and disposal;
•
gathering, transportation and marketing of oil and natural gas, both in the Williston Basin and other regions in the United States;
•
property acquisitions, including our recent acquisition of oil and gas properties in the Williston Basin;
•
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;

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•
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 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 midstream services business through OMS Holdings LLC (“ OMS ”) and a well services business through Oasis Well Services LLC (“OWS”), 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 OMS and OWS 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 the s enior secured revolving line of credit (the “ Oasis 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. 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. We intend to continue to acquire both operated and non-operated properties to the extent we believe they meet our return objectives.
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.

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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. 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 and natural gas sales contracts with purchasers who have access to 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 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. Currently, 90% of our gross operated oil production and substantially all of our gross operated natural gas production are connected to these gathering systems, and our crude oil price differentials have improved to less than $2.00 per barrel primarily due to the additional takeaway capacity of the Dakota Access Pipeline of over 450,000 barrels per day.
Highlights:
•
We produced 66,125 barrels of oil equivalent per day (“ Boepd ”) in the third quarter of 2017 ;
•
We completed and placed on production 24 gross ( 15.1 net) operated wells in the Williston Basin in the third quarter of 2017 and ended the quarter with 82 gross operated wells waiting on completion;
•
Our oil differentials have improved to $1.82 off of NYMEX West Texas Intermediate crude oil index price (“WTI”) in the third quarter of 2017 ;
•
We commenced operations of our second Oasis Well Services (“OWS”) fracturing crew during the third quarter of 2017 ;
•
Oasis Midstream Partners LP (“ OMP ” or “ Oasis Midstream ”) completed its initial public offering (“IPO”) of 8,625,000 common units, which includes 1,125,000 common units issued pursuant to the underwriters’ exercise of their option on October 10, 2017 . This resulted in net proceeds of approximately $137.2 million, after deducting underwriting discounts and structuring fees, of which $131.6 million was distributed to Oasis;
•
We announced investment in and assignment of second Wild Basin Gas Plant (“ Gas Plant II ”) with a total capacity of 200 million standard cubic feet per day to service gas production from its highly economic inventory;
•
Total capital expenditures were $240.4 million and $523.1 million for the three and nine months ended September 30, 2017 , respectively. We expect full year 2017 adjusted capital expenditures to total $620.0 million , in line with prior guidance. See “Liquidity and Capital Resources” below;
•
At September 30, 2017 , we had $8.5 million of cash and cash equivalents and had total liquidity of $953.5 million , including the availability under the Oasis Credit Facility and the OMP Operating LLC revolving line of credit (collectively, our “ Revolving Credit Facilities ”);
•
Net cash provided by operating activities was $88.9 million for the three months ended September 30, 2017 . Adjusted EBITDA, a non-GAAP financial measure, was $179.6 million for the three months ended September 30, 2017 . For a definition of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to net income and net cash provided by operating activities, see “Non-GAAP Financial Measures” below.

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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 bulk oil sales are derived from the sale of oil purchased through our marketing activities primarily for blending. Our midstream revenues are primarily derived from produced and flowback water pipeline transport, produced and flowback water disposal, natural gas gathering and processing, fresh water sales and crude oil gathering and transportation. Our well services revenues are derived from well services, product sales and equipment rentals. Substantially all of our midstream revenues and well services revenues are from services for third-party working interest owners in OPNA’s operated wells. Intercompany revenues for work performed by OMS and OWS for OPNA’s working interests are eliminated in consolidation and are therefore not included in midstream and well services revenues.
The following table summarizes our revenues and production data for the periods presented:
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2017
 
2016
 
Change
 
2017
 
2016
 
Change
Operating results (in thousands):
 
 
 
 
 
 
 
 
 
 
 
Revenues
 
 
 
 
 
 
 
 
 
 
 
Oil
$
221,004

 
$
147,095

 
$
73,909

 
$
623,603

 
$
411,201

 
$
212,402

Natural gas
27,644

 
9,221

 
18,423

 
80,930

 
21,767

 
59,163

Bulk oil sales
21,195

 
1,867

 
19,328

 
56,917

 
1,867

 
55,050

Midstream
18,767

 
8,487

 
10,280

 
48,939

 
22,380

 
26,559

Well services
16,138

 
10,641

 
5,497

 
33,566

 
29,459

 
4,107

Total revenues
$
304,748

 
$
177,311

 
$
127,437

 
$
843,955

 
$
486,674

 
$
357,281

Production data:
 
 
 
 
 
 
 
 
 
 
 
Oil (MBbls)
4,768

 
3,628

 
1,140

 
13,552

 
11,245

 
2,307

Natural gas (MMcf)
7,894

 
5,007

 
2,887

 
23,131

 
13,809

 
9,322

Oil equivalents (MBoe)
6,083

 
4,463

 
1,620

 
17,408

 
13,547

 
3,861

Average daily production (Boepd)
66,125

 
48,509

 
17,616

 
63,764

 
49,440

 
14,324

Average sales prices:

 

 
 
 
 
 
 
 
 
Oil, without derivative settlements (per Bbl)
$
46.35

 
$
40.54

 
$
5.81

 
$
46.02

 
$
36.57

 
$
9.45

Oil, with derivative settlements (per Bbl) (1)
43.50

 
43.79

 
(0.29
)
 
41.70

 
46.85

 
(5.15
)
Natural gas (per Mcf) (2)
3.50

 
1.84

 
1.66

 
3.50

 
1.58

 
1.92

____________________
(1)
Realized prices include gains or losses on cash settlements for commodity derivatives, which do not qualify for or 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.

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Three months ended September 30, 2017 as compared to three months ended September 30, 2016
Oil and gas revenues . Our oil and gas revenues increased   $92.3 million , or  59% , to  $248.6 million  during the three months ended September 30, 2017  as compared to the three months ended September 30, 2016 . The higher oil and natural gas production amounts sold increased revenues by $62.9 million coupled with a $29.4 million increase due to the higher oil and natural gas sales prices during the three months ended September 30, 2017  as compared to the three months ended September 30, 2016 . Average oil sales prices, without derivative settlements, increased by $5.81  per barrel to an average of  $46.35  per barrel, and average natural gas sales prices, which includes the value for natural gas and natural gas liquids, increased by  $1.66  per thousand cubic feet (“ Mcf ”) to an average of  $3.50  per Mcf for the three months ended September 30, 2017  as compared to the three months ended September 30, 2016 . Average daily product ion sold increased by 17,616 Boepd to 66,125 Boepd during the three months ended September 30, 2017 as compared to the three months ended September 30, 2016 . The increase in average daily production sold was primarily a result of our acq uisition completed on December 1, 2016 of approximately 55,000 net acres in the Williston Basin (the “Williston Basin Acquisition”) and our 48.2 total net well completions in the Williston Basin during the twelve months ended September 30, 2017 .
Bulk oil sales . Bulk oil sales, which represent the sale of crude oil purchased primarily for blending at our crude oil terminal that began in late 2016, increased $19.3 million to $21.2 million for the three months ended September 30, 2017 as compared to the three months ended September 30, 2016 .
Midstream revenues . Midstream revenues increased   $10.3 million to $18.8 million  during the  three months ended September 30, 2017 as compared to the three months ended September 30, 2016 . This increase was driven by a $7.2 million increase primarily related to higher natural gas volumes gathered, compressed and processed coupled with a $2.9 million increase related to higher oil volumes gathered, stabilized and transported as a result of the start up of our natural gas processing plant and our oil gathering system in the second half of 2016, respectively.
Well services revenues. Our well services revenues increased by 52% to $16.1 million for the three months ended September 30, 2017 as compared to the three months ended September 30, 2016 , primarily due to increased well completion product sales coupled with an increase in well completion activity as a result of adding a second fracturing fleet during the three months ended September 30, 2017 .
Nine months ended September 30, 2017 as compared to nine months ended September 30, 2016
Oil and gas revenues . Our oil and gas revenues increased   $271.6 million , or  63% , to  $704.5 million  during the nine months ended September 30, 2017  as compared to the nine months ended September 30, 2016 . The higher oil and natural gas production amounts sold increased revenues by $138.8 million coupled with a $132.8 million increase due to higher oil and natural gas sales prices during the nine months ended September 30, 2017  as compared to the nine months ended September 30, 2016 . Average oil sales prices, without derivative settlements, increased by $9.45  per barrel to an average of  $46.02  per barrel, and average natural gas sales prices, which include the value for natural gas and natural gas liquids, increased by  $1.92  per Mcf to an average of  $3.50  per Mcf for the nine months ended September 30, 2017  as compared to the nine months ended September 30, 2016 . Average daily production sold increased by 14,324 Boepd to 63,764 Boepd period over period. The increase in average daily production sold was primarily a result of the Williston Basin Acquisition completed on December 1, 2016 of approximately 55,000 net acres.
Bulk oil sales . Bulk oil sales increased $55.0 million to $56.9 million for the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016 , which represents the sale of crude oil purchased primarily for blending at our crude oil terminal that began in late 2016.
Midstream revenues . Midstream revenues increased   $26.6 million to $48.9 million  during the  nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016 . This increase w as driven by a $20.8 million increase primarily related to higher natural gas volumes gathered, compressed and processed coupled with a $7.2 million increase related to higher oil volumes gathered, stabilized and transported as a result of the start up of our natural gas processing plant and our oil gathering system in the second half of 2016, respectively. These increases were offset by a decrease of $1.5 million related to produced and flowback water disposal revenues.
Well services reven ues. We increased the pace of our well completions in 2017 and added a second fracturing fleet during the third quarter of 2017. Our well services revenues increased by 14% to $33.6 million for the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016 , primarily due to an increase in well completion product sales and well completion activity, offset by OWS completing OPNA wells with a lower average third-party working interest period over period.


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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 September 30,
 
Nine Months Ended September 30,
 
2017
 
2016
 
Change
 
2017
 
2016
 
Change
 
(In thousands, except per Boe of production)
Operating expenses:
 
 
 
 
 
 
 
 
 
 
 
Lease operating expenses
$
45,334

 
$
35,696

 
$
9,638

 
$
133,871

 
$
98,283

 
$
35,588

Midstream operating expenses
4,301

 
2,617

 
1,684

 
10,891

 
6,095

 
4,796

Well services operating expenses
9,125

 
5,548

 
3,577

 
21,115

 
15,334

 
5,781

Marketing, transportation and gathering expenses
15,028

 
7,003

 
8,025

 
38,018

 
22,046

 
15,972

Bulk oil purchases
21,701

 
1,853

 
19,848

 
57,683

 
1,853

 
55,830

Production taxes
21,052

 
14,638

 
6,414

 
60,322

 
39,758

 
20,564

Depreciation, depletion and amortization
132,289

 
111,948

 
20,341

 
384,246

 
356,885

 
27,361

Exploration expenses
854

 
489

 
365

 
4,010

 
1,192

 
2,818

Impairment
139

 
382

 
(243
)
 
6,021

 
3,967

 
2,054

General and administrative expenses
22,531

 
22,845

 
(314
)
 
69,913

 
69,087

 
826

Total operating expenses
272,354

 
203,019

 
69,335

 
786,090

 
614,500

 
171,590

Gain (loss) on sale of properties
—

 
6

 
(6
)
 
—

 
(1,305
)
 
1,305

Operating income (loss)
32,394

 
(25,702
)
 
58,096

 
57,865

 
(129,131
)
 
186,996

Other income (expense)
 
 
 
 
 
 
 
 
 
 
 
Net gain (loss) on derivative instruments
(54,310
)
 
20,847

 
(75,157
)
 
52,297

 
(55,624
)
 
107,921

Interest expense, net of capitalized interest
(37,389
)
 
(31,726
)
 
(5,663
)
 
(110,548
)
 
(105,444
)
 
(5,104
)
Gain (loss) on extinguishment of debt
—

 
(13,793
)
 
13,793

 
—

 
4,865

 
(4,865
)
Other income (expense)
(605
)
 
(259
)
 
(346
)
 
(755
)
 
188

 
(943
)
Total other income (expense)
(92,304
)
 
(24,931
)
 
(67,373
)
 
(59,006
)
 
(156,015
)
 
97,009

Loss before income taxes
(59,910
)
 
(50,633
)
 
(9,277
)
 
(1,141
)
 
(285,146
)
 
284,005

Income tax benefit
18,846

 
16,691

 
2,155

 
470

 
96,818

 
(96,348
)
Net loss including non-controlling interests
(41,064
)
 
(33,942
)
 
(7,122
)
 
(671
)
 
(188,328
)
 
187,657

Less: Net income attributable to non-controlling interests (2)
150

 
—

 
150

 
150

 
—

 
150

Net loss attributable to Oasis
$
(41,214
)
 
$
(33,942
)
 
$
(7,272
)
 
$
(821
)
 
$
(188,328
)
 
$
187,507

Costs and expenses (per Boe of production):
 
 
 
 
 
 
 
 
 
 
 
Lease operating expenses
$
7.45

 
$
8.00

 
$
(0.55
)
 
$
7.69

 
$
7.26

 
$
0.43

Marketing, transportation and gathering expenses (1)
2.47

 
1.57

 
0.90

 
2.18

 
1.63

 
0.55

Production taxes
3.46

 
3.28

 
0.18

 
3.47

 
2.93

 
0.54

Depreciation, depletion and amortization
21.75

 
25.08

 
(3.33
)
 
22.07

 
26.35

 
(4.28
)
General and administrative expenses
3.70

 
5.12

 
(1.42
)
 
4.02

 
5.10

 
(1.08
)
____________________
(1)
Prior to the first quarter of 2017, marketing, transportation and gathering expenses included bulk purchase costs related to blending at our crude oil terminal on our Condensed Consolidated Statements of Operations. Prior periods have been adjusted retrospectively to reflect these expenses in bulk oil purchases on our Condensed Consolidated Statements of Operations.
(2)
As OMP completed its IPO on  September 25, 2017 , the net income attributable to non-controlling interests represents the interest owned by the public for the six days ended September 30, 2017 .

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Three months ended September 30, 2017 as compared to three months ended September 30, 2016
Lease operating expenses . Lease operating e xpenses increased $9.6 million to $45.3 million for the three months ended September 30, 2017 as compared to the three months ended September 30, 2016 . The increase was primarily due to higher costs associated with operating an increased number of producing wells as a result of our well completions and the Williston Basin Acquisition coupled with an increase in workover costs during the three months ended September 30, 2017 . Lease operating expenses decreased quarter over quarter from $8.00 per Boe to $7.45 per Boe.
Midstream operating expenses . Midstream operating expenses represent operating expenses incurred by OMS associated with volumes for third-party working interest owners. The  $1.7 million increase  quarter over quarter was primarily related to the start up of our natural gas processing plant and our oil gathering system during 2016 coupled with an increase in freshwater purchases.
Well services operating expenses . Well services operating expenses represent operating expenses incurred by OWS for third-party working interest owners’ share of completion services. The $3.6 million increase quarter over quarter was primarily attributable t o an increase in well completion product sales, maintenance and trucking costs and higher well completion activity.
Marketing, transportation and gathering expenses . Marketing, transportation and gathering expenses increased $8.0 million , or $0.90 per Boe, for the three months ended September 30, 2017 as compared to the three months ended September 30, 2016 , which was primarily attributable to higher oil gathering and transportation expenses related to the start up of the Dakota Access Pipeline in 2017 and the start up of our oil gathering system in the second half of 2016. In addition, natural gas gathering and processing expenses increased due to additional well connections on OMS infrastructure and the start up of our natural gas processing plant in the second half of 2016. Exc luding non-cash valuation adjustments, our marketing, transportation and gathering expenses on a per Boe basis increased to $2.50 during the three months ended September 30, 2017 as compared to $1.58 during the three months ended September 30, 2016 primarily due to the higher aforementioned costs.
Bulk oil purchases . Bulk purchases, which represent the crude oil purchased primarily for blending at our crude oil terminal that began in late 2016, increased $19.8 million to $21.7 million for the three months ended September 30, 2017 as compared to the three months ended September 30, 2016 .
Production taxes . Our production taxes as a percentage of oil and natural gas sales were 8.5% and 9.4% for the three months ended September 30, 2017 and 2016 , respecti vely. The production tax rate decreased period over period primarily due to a lower oil production mix. North Dakota’s natural gas production tax is $0.0555 per Mcf.
Depreciation, depletion and amortization (“DD&A”). DD&A ex pense increased $20.3 million to $132.3 million for the three months ended September 30, 2017 as compared to the three months ended September 30, 2016 . This increase in DD&A expense for the three months ended September 30, 2017 was a result of production increases from our wells completed during the three months ended September 30, 2017 coupled with the Williston Basin Acquisition, o ffset by a decrease in the DD&A rate to $21.75 per Boe for the three months ended September 30, 2017 as compared to $25.08 per Boe for the three months ended September 30, 2016 . The decrease in the DD&A rate was primarily due to lower well costs for wells completed during the second half of 2016 and the first half of 2017 .
Impairment . As a result of periodic assessments of our unproved properties not held-by-production, we recorded an impairment loss on our unproved oil and natural gas properties of $0.1 million and $0.2 million for the three months ended September 30, 2017 and 2016 , 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 months ended September 30, 2016 , we also recorded an impairment loss on our unproved oil and natural gas properties of $0.2 million due to leases that expired in the period. No impairment charges of proved oil and gas or other properties were recorded for the three months ended September 30, 2017 and 2016 .
General and administrative expenses (“G&A”) . Our G&A decreased $0.3 million to $22.5 million for the three months ended September 30, 2017 as compared to the three months ended September 30, 2016 . E&P G&A decreased $1.4 million quarter over quarter primarily d ue to $1.8 million of bad debt expense recorded during the three months ended September 30, 2016 . OWS G&A decreased $0.3 million to $2.9 million for the three months ended September 30, 2017 as compared to the three months ended September 30, 2016 . OMS G&A increased $1.3 million quarter over quarter primarily due to increased employee compensation expenses as a result of organizational growth due to increased activity and the start up of our natural gas processing plant in the third quarter of 2016.

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Derivative instruments . As a result of entering into derivative contracts and the effect of the forward strip oil changes, we incurred a $54.3 million net loss on derivative instruments, including net cash settlement receipts of $8.1 million , for the three months ended September 30, 2017 , and a $20.8 million net gain on derivative instruments, including net cash settlement receipts of $11.8 million for the three months ended September 30, 2016 . 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 increased $5.7 million from $31.7 million for the three months ended September 30, 2016 to $37.4 million for the three months ended September 30, 2017 primarily due to interest expense related to our senior unsecured convertible notes issued in September 2016, which includes debt discount amortization, and the Oasis Credit Facility coupled with a decrease in capitalized interest due to lower costs for work in progress assets as a result of the completion of our natural gas processing plant in the third quarter of 2016. These increases were offset by the repurchase of an aggregate principal amount of $447.0 million of outstanding senior unsecured notes in 2016, which resulted in a $2.1 million decrease in interest costs. Fo r the three months ended September 30, 2017 and 2016 , the weighted average debt outstanding under the Oasis Credit Facility was $484.9 million and $84.3 million , respectively. The weighted average interest rate incurred on the outstanding borrowings under the Oasis Credit Facility was 3.0% and 2.1% for the three months ended September 30, 2017 and 2016 , respectively. I nterest capitalized during the three months ended September 30, 2017 and 2016 was $3.1 million and $4.4 million , respectively.
Gain on extinguishment of debt . For the three months ended September 30, 2017 , we did not repurchase any portion of our outstanding senior unsecured notes. During the three months ended September 30, 2016 , we repurchased an aggregate principal amount of $370.4 million of our outstanding senior unsecured notes for an aggregate cost of $379.0 million, including accrued interest and fees. For the three months ended September 30, 2016 , we recognized a pre-tax loss related to the repurchase of $13.8 million of our outstanding senior unsecured notes, which included unamortized deferred financing costs write-offs of $5.3 million.
Income taxes. The income tax benefit for the three months ended September 30, 2017 and 2016 was recorded at 31.5% and 33.0% of pre-tax loss, respectively. The Company’s effective tax rate for the three months ended September 30, 2017 was lower than the effective tax rate for the three months ended September 30, 2016 primarily due to the portion of OMP’s earnings allocated to the non-controlling public limited partners, which are not subject to tax for the Company.
Nine months ended September 30, 2017 as compared to nine months ended September 30, 2016
Lease operating expenses . Lease operating expenses increased $35.6 million to $133.9 million for the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016 . The increase was primarily due to higher costs associated with operating an increased number of producing wells as a result of our well completions and the Williston Basin Acquisition coupled with an increase in workover costs during the nine months ended September 30, 2017 . Lease operating expenses increased from $7.26 per Boe for the nine months ended September 30, 2016 to $7.69 per Boe for the nine months ended September 30, 2017 .
Midstream operating expenses . Midstream operating expenses represent operating expenses incurred by OMS associated with third-party working interest owners’ share of volumes. The  $4.8 million increase  for the nine months ended September 30, 2017  as compared to the nine months ended September 30, 2016  was primarily related to the start up of our natural gas processing plant and our oil gathering system during 2016.
Well services operating expenses . Well services operating expenses represent operating expenses incurred by OWS for third-party working interest owners’ share of completion services. The $5.8 million increase period over period was primarily attributable to increased well completion product sales, coupled with increased trucking costs and increased well completion activity due to the addition of a second fracturing fleet during the third quarter of 2017, offset by OWS completing OPNA wells with a lower average third-party working interest period over period.
Marketing, transportation and gathering expenses . Marketing, transportation and gathering expenses increased $16.0 million , or $0.55 per Boe, for the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016 , which was primarily attributable to an increase in natural gas gathering and processing expenses related to additional well connections on OMS infrastructure and the start up of our natural gas processing plant in the second half of 2016. In addition, oil gathering and transportation expenses increased due to the start up of the Dakota Access Pipeline in 2017 and the start up of our oil gathering system in the second half of 2016. Excluding non-cash valuation adjustments, our marketing, transportation and gathering expenses on a per Boe basis increased to $2.16 during the nine months ended September 30, 2017 as compared to $1.58 during the nine months ended September 30, 2016 primarily due to the higher aforementioned costs.
Bulk oil purchases . Bulk oil purchases, which represent the crude oil purchased primarily for blending at our crude oil terminal that began in late 2016, increased $55.8 million to $57.7 million for the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016 .

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Production taxes . Our production taxes as a percentage of oil and natural gas sales were 8.6% and 9.2% for the nine months ended September 30, 2017 an d 2016 , respectively. The production tax rate decreased period over period primarily due to a lower oil production mix. North D akota’s natural gas production tax is $0.0555 per Mcf.
Depreciation, depletion and amortization. DD&A expe nse increased $27.4 million to $384.2 million for the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016 . This increase in DD&A expense period over period was a result of production increases from our wells completed during the nine months ended September 30, 2017 coupled with the Williston Basin Acquisition, off set by a decrease in the DD&A rate to $22.07 per Boe for the nine months ended September 30, 2017 as compared to $26.35 per Boe for the nine months ended September 30, 2016 . The decrease in the DD&A rate was primarily due to lower well costs for wells completed during the second half of 2016 and the first half of 2017 .
Impairment . As a result of periodic assessments of our unproved properties not held-by-production, we recorded an impairment loss on our unproved oil and natural gas properties of $6.0 million and $0.2 million for the nine months ended September 30, 2017 and 2016 , 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 nine months ended September 30, 2016 , we also recorded an impairment loss of  $3.6 million to further adjust the carrying value of our properties held for sale to their estimated fair value, determined based on the expected sales price less costs to sell, and non-cash impairment charges of $0.2 million for unproved properties due to leases that expired during the period. No impairment charges of proved oil and gas or other properties were recorded for the nine months ended September 30, 2017 .
General and administrative expenses . Our G&A increased $0.8 million to $69.9 million for the nine months ended September 30, 2017 as compared to the nine months ended September 30, 2016 . OMS G&A increased $3.0 million period over period primarily due to increased employee compensation as a result of organizational growth within this segment due to the start up of our natural gas processing plant in the third quarter of 2016. OWS G&A decreased $2.0 million primarily due to OWS completing OPNA wells with a lower average third-party working interest period over period coupled with a decrease in rental expenses, offset by an increase in compensation expense due to the addition of the second fracturing fleet in the third quarter of 2017. E&P G&A was $57.8 million and $58.0 million for the nine months ended September 30, 2017  and  2016 , respectively.
Derivative instruments . As a result of entering into derivative contracts and the effect of the forward strip oil price changes, we incurred a $52.3 million net gain on derivative instruments, including net cash settlement payments of $0.8 million , for the nine months ended September 30, 2017 , and a $55.6 million net loss on derivative instruments, including net cash settlement receipts of $115.6 million , for the nine months ended September 30, 2016 . 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 increased $5.1 million from $105.4 million for the nine months ended September 30, 2016 to $110.5 million for the nine months ended September 30, 2017 primarily due to interest expense related to our senior unsecured convertible notes issued in September 2016, which includes debt discount amortization, and the Oasis Credit Facility coupled with a decrease in capitalized interest due to lower costs for work in progress assets as a result of the completion of our natural gas processing plant in the third quarter of 2016. These increases were offset by the repurchase of an aggregate principal amount of $447.0 million of outstanding senior unsecured notes in 2016, which resulted in a $16.4 million decrease in interest costs. For the nine months ended September 30, 2017 and 2016 , the weighted average debt outstanding under the Oasis Credit Facility was $436.2 million and $91.2 million , respectively. The weighted average interest rate incurred on the outstanding borrowings under the Oasis Credit Facility was 2.8% and 2.0% for the nine months ended September 30, 2017 and 2016 , respectively. Interest capitalized during the nine months ended September 30, 2017 and 2016 was $8.8 million and $13.7 million , respectively.
Gain on extinguishment of debt . For the nine months ended September 30, 2017 , we did not repurchase any portion of our outstanding senior unsecured notes. During the nine months ended September 30, 2016 , we repurchased an aggregate principal amount of $447.0 million of our outstanding senior unsecured notes for an aggregate cost of $435.9 million, including accrued interest and fees. For the nine months ended September 30, 2016 , we recognized a pre-tax gain related to the repurchase of $4.9 million , which included unamortized deferred financing costs write-offs of $6.3 million.
Income taxes. The incom e tax benefit for the nine months ended September 30, 2017 and 2016 was recorded at 41.2% and 34.0% of pre-tax loss, respectively. The Company’s effective tax rate for the nine months ended September 30, 2017 was higher than the effective tax rate for the nine months ended September 30, 2016 primarily due to the impact of amounts expensed for book purposes versus the amounts deductible for income tax purposes related to equity-based compensation vesting at prices higher than the grant date values and non-deductible compensation, offset by the portion of OMP’s earnings allocated to the non-controlling public limited partners, which are not subject to tax for the Company.

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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 Facilities , 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 and midstream infrastructure, payment of operating and general and administrative costs, interest payments on outstanding debt and repurchases of our senior unsecured notes. 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 nine months ended September 30, 2017 and 2016 are presented below:
 
Nine Months Ended September 30,
 
2017
 
2016
 
(In thousands)
Net cash provided by operating activities
$
298,737

 
$
123,419

Net cash used in investing activities
(442,955
)
 
(212,171
)
Net cash provided by financing activities
141,480

 
92,798

Increase (decrease) in cash and cash equivalents
$
(2,738
)
 
$
4,046

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 and natural gas prices on a portion of our production, thereby mitigating our exposure to oil and natural gas price declines, but these transactions may also limit our cash flow in periods of rising oil and natural gas prices. 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 $298.7 million and $123.4 million for the nine months ended September 30, 2017 and 2016 , respectively. The change in cash flows from operating activities for the period ended September 30, 2017 as compared to 2016 was primarily the result of higher oil production amounts sold and higher realized oil 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  $99.3 million  at September 30, 2017 primarily due to increases in our current liabilities, including accrued liabilities for drilling and development costs. As of  September 30, 2017 , we had  $953.5 million  of liquidity available, including  $8.5 million in cash and cash equivalents and  $945.0 million  of unused borrowing base committed capacity available under our Revolving Credit Facilities . At September 30, 2016 , we had a working capital deficit of $68.3 million .

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Cash flows used in investing activities
Net cash used in investing activities was $443.0 million and $212.2 million during the nine months ended September 30, 2017 and 2016 , respectively. Net cash used in investing activities during the nine months ended September 30, 2017 was primarily attributable to $443.6 million in capital expenditures primarily for drilling and development costs. N et cash used in investing activities during the nine months ended September 30, 2016 was primarily attributable to $340.3 million in capital expenditures primarily for drilling and development costs, partially offset by $115.6 million of derivative settlements received as a result of lower commodity prices and  $12.3 million  in proceeds received from the sale of certain legacy wells.
Our capital expenditures are summarized in the following table:
 
Three Months Ended
 
Nine Months Ended September 30, 2017
 
March 31, 2017
 
June 30, 2017
 
September 30, 2017
 
 
(In thousands)
Capital expenditures:
 
 
 
 
 
 
 
E&P
$
90,780

 
$
100,822

 
$
149,912

 
$
341,514

OMS
13,144

 
66,118

 
79,624

 
158,886

OWS
—

 
268

 
5,142

 
5,410

Other capital expenditures (1)
5,871

 
5,767

 
5,695

 
17,333

Total capital expenditures (2)
$
109,795

 
$
172,975

 
$
240,373

 
$
523,143

___________________
(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 2017 capital expenditure budget is $620.0 million , which includes  $410.0 million  of drilling and completion capital expenditures (including expected savings from services provided by OMS and OWS),  $110.0 million  for midstream infrastructure and $100.0 million  of other capital expenditures, including other E&P capital, capitalized interest, OWS and administrative capital.
While we have budgeted $620.0 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. Furthermore, if we acquire additional acreage, our capital expenditures may be higher than budgeted. We believe that cash on hand, including cash flows from operating activities and availability under our Revolving Credit Facilities should be sufficient to fund our  2017  capital expenditure budget and to meet our future obligations. However, because the operated wells funded by our  2017  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 expenditures totaled $523.1 million for the nine months ended September 30, 2017 , of which $57.0 million was reimbursed by OMP with the assignment of Gas Plant II . Additionally, we acquired a freshwater intake facility from the Missouri River and a freshwater distribution system that it is expanding to service a portion of the our completion activity in Wild Basin (collectively, the “ Freshwater Project ”). The Freshwater Project costs for the nine months ended September 30, 2017 , including the acquisition, totaled approximately $23.0 million. At the time of the OMP IPO, the Freshwater Project was included in Beartooth DevCo LLC, which is 60% owned by Oasis. Excluding the Gas Plant II and the Freshwater Project , our capital expenditures would have totaled $443.0 million for the nine months ended September 30, 2017 , which is in line with the Company’s capital expenditure plan for the nine months ended September 30, 2017 . Excluding the Gas Plant II and the Freshwater Project for the full year 2017 capital expenditures , we continue to expect adjusted capital expenditures to be approximately $620.0 million , which includes $15.0 million for activating the second fracturing spread for OWS.
Our capital budget may further be adjusted as business conditions warrant. The amount, timing and allocation of capital expenditures is largely discretionary and within our control. If oil prices decline for an extended period of time, 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.

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Cash flows provided by financing activ ities
Net cash provided by financing activities was $141.5 million and $92.8 million for the nine months ended September 30, 2017 and 2016 , respectively. For the nine months ended September 30, 2017 , cash provided by financing activities was primarily due to proceeds from the borrowings under our Oasis Credit Facility coupled with proceeds from the sale of OMP common units (see Note 3 – Oasis Midstream Partners LP ), net of offering costs, partially offset by principal payments on our Oasis Credit Facility . Net ca sh provided by financing activities during the nine months ended September 30, 2016 was primarily due to proceeds from the borrowings under our Oasis Credit Facility and net proceeds from the issuance of our senior unsecured convertible notes and common stock, partially offset by principal payments on our Oasis Credit Facility and the repurchase of a portion of our outstanding senior unsecured not es. For both the  nine months ended September 30, 2017  and  2016 , 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.
Senior secured revolving line of credit . We have the Oasis Credit Facility with an overall senior secured line of credit of $2,500.0 million as of September 30, 2017 . The Oasis 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 Oasis Credit Facility is April 13, 2020, provided that the 7.25% senior unsecured notes due February 2019 (the “2019 Notes”) are retired or refinanced 90 days prior to their maturity date. On April 10, 2017 , the lenders under the Oasis Credit Facility (the “Lenders”) completed their regular semi-annual redetermination of the borrowing base scheduled for April 1, 2017, resulting in an increase in the borrowing base from $1,150.0 million to $1,600.0 million ; however, we elected to limit the Lenders’ aggregate commitment to $1,150.0 million . On September 25, 2017, we entered into the ninth amendment to the Oasis Credit Facility to permit the transactions and agreements entered into in connection with the OMP IPO. On October 17, 2017 , the Lenders completed their regular semi-annual redetermination of the borrowing base of the Second Amended Credit Facility, resulting in the borrowing base and the aggregate elected commitment reaffirmed at  $1,600.0 million and $1,150.0 million , respectively. The next redetermination of the borrowing base is scheduled for April 1, 2018.
On November 6, 2017, we entered into the Tenth Amendment (the “Amendment”) to the Oasis Credit Facility , pursuant to which the Lenders consented to (i) the termination of the limited recourse guaranty agreements by and between each of Beartooth DevCo LLC and Bobcat DevCo LLC (collectively, the “DevCos,” and each a “DevCo”) and Wells Fargo Bank, N.A., as administrative agent (the “Administrative Agent”), under the Oasis Credit Facility and (ii) the termination and release of each DevCo’s DevCo Mortgage (as defined in the Amendment). Further, OMS, in its capacity as the majority owner of each of the DevCos, entered into the Undertaking Agreements with the Administrative Agent pursuant to which OMS agreed to limitations on the activities of each DevCo, including, but not limited to, the incurrence of indebtedness, asset acquisitions or dispositions, investments, mergers, issuance of additional equity interests, creation of liens on any DevCo assets or entry into any agreement that would restrict or prohibit the granting of liens on any DevCo assets, loans or advances to other persons, entry into any transaction with an affiliate, formation of a subsidiary and entry into any swap or similar derivative transaction (the “DevCo Covenants”). OMS further agreed to cause corresponding amendments to the Limited Liability Company Agreement of each DevCo to implement the DevCo Covenants and to require unanimous member approval for any amendment to the DevCo Covenants.
At September 30, 2017 , we had $395.0 million of borrowings at a weighted average interest rate of 3.0% and $10.0 million of outstanding letters of credit issued under the Oasis Credit Facility , resulting in an unused borrowing base committed capacity of $745.0 million .
The Oasis 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;
•
a requirement that we maintain a ratio of consolidated EBITDAX (as defined in the Oasis Credit Facility ) to consolidated Interest Expense (as defined in the Oasis Credit Facility ) of no less than 2.5 to 1.0 for the four quarters ended on the last day of each quarter; and

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•
a requirement that we maintain a Current Ratio (as defined in the Oasis Credit Facility ) of consolidated current assets (including unused borrowing base committed capacity and with exclusions as described in the Oasis Credit Facility) to consolidated current liabilities (with exclusions as described in the Oasis Credit Facility ) of no less than 1.0 to 1.0 as of the last day of any fiscal quarter.
The Oasis 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 Oasis Credit Facility to be immediately due and payable. We were in compliance with the financial covenants of the Oasis Credit Facility at September 30, 2017 . At September 30, 2017 , our consolidated EBITDAX was $602.4 million and our consolidated Interest Expense was $140.7 million , resulting in a ratio of 4.3 as compared to a minimum required ratio of 2.5. In addition, as of September 30, 2017 , our consolidated current assets and consolidated current liabilities (as described above) were $1,066.8 million and $405.3 million , respectively, resulting in a Current Ratio of 2.6 as compared to a minimum required ratio of 1.0. Given the possible fluctuation in commodity prices, we continue to closely monitor our financial covenants and do not anticipate a covenant violation in the next twelve months.
OMP Operating LLC revolving line of credit. On September 25, 2017, OMP entered into a credit agreement (the “ OMP Credit Agreement ”) for a $200.0 million revolving credit facility with OMP Operating LLC, a subsidiary of OMP, as borrower (the “ OMP Credit Facility ”), which has a maturity date of September 25, 2022. The OMP Credit Facility is available to fund working capital and to finance acquisitions and other capital expenditures of OMP. The OMP Credit Facility includes a letter of credit sublimit of  $10.0 million  and a swingline loans sublimit of $10.0 million . The borrowing capacity on the OMP Credit Facility may be increased up to $400.0 million , subject to certain conditions. No amounts were outstanding under the OMP Credit Facility at September 30, 2017 .
Borrowings under the OMP Credit Facility bear interest at a rate per annum equal to the applicable margin (as described below) plus (i) with respect to Eurodollar Loans, the Adjusted LIBO Rate (as defined in the OMP Credit Agreement ) or (ii) with respect to ABR Loans, the greatest of (A) the Prime Rate in effect on such day, (B) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1.00% or (C) the Adjusted LIBO Rate for a one-month interest period on such day plus 1.00% (each as defined in the OMP Credit Agreement ). The applicable margin for borrowings under the OMP Credit Facility varies from (a) in the case of Eurodollar Loans, 1.75% to 2.75% , and (b) in the case of ABR Loans or swingline loans, 0.75% to 1.75% . The unused portion of the OMP Credit Facility is subject to a commitment fee ranging from 0.375% to 0.500% .
The OMP Credit Facility requires OMP to maintain the following financial covenants as of the end of each fiscal quarter: (1) consolidated total leverage ratio, (2) consolidated senior secured leverage ratio and (3) consolidated interest coverage ratio (each covenant as described in the OMP Credit Facility ). All obligations of OMP Operating LLC, as the borrower under the OMP Credit Facility , are guaranteed by OMP and all wholly-owned material subsidiaries of OMP. OMP Operating LLC was in compliance with the financial covenants of the OMP Credit Facility at September 30, 2017 .
Senior unsecured notes. At September 30, 2017 , our long-term debt includes outstanding obligations of $1,753.0 million for senior unsecured notes (the “Senior Notes”), including $54.3 million of the 2019 Notes, $395.5 million of the 6.5% senior unsecured notes due November 2021 (the “2021 Notes”), $937.1 million of the 6.875% senior unsecured notes due March 2022 (the “2022 Notes”) and $366.1 million of the 6.875% senior unsecured notes due January 2023 (the “2023 Notes”).
Prior to certain dates, we have the option to redeem some or all of the Senior 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 2019 Notes are currently redeemable for cash at a redemption price equal to par plus accrued and unpaid interest to the redemption date. We may from time to time seek to retire or purchase our outstanding Senior 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 indentures governing the Senior 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 Senior 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. We were in compliance with the terms of the indentures for the Senior Notes as of September 30, 2017 .

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Senior unsecured convertible notes. In September 2016, we issued $300.0 million of 2.625% Senior Convertible Notes due September 2023. We have the option to settle conversions of these notes with cash, shares of common stock or a combination of cash and common stock at our election. Our intent is to settle the principal amount of the Senior Convertible Notes in cash upon conversion. Prior to March 15, 2023, the Senior Convertible Notes will be convertible only under the following circumstances: (i) during any calendar quarter (and only during such calendar quarter), if the last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (ii) during the five business day period after any five consecutive trading day period (the “measurement period”) in which the trading price per $1,000 principal amount of the Senior Convertible Notes for each trading day of the measurement period is less than 98% of the product of the last reported sale price of our common stock and the conversion rate on each such trading day; or (iii) upon the occurrence of specified corporate events. On or after March 15, 2023, the Senior Convertible Notes will be convertible at any time until the second scheduled trading day immediately preceding the September 15, 2023 maturity date. The Senior Convertible Notes will be convertible at an initial conversion rate of 76.3650 shares of our common stock per $1,000 principal amount of the notes, which is equivalent to an initial conversion price of approximately $13.10 . The conversion rate will be subject to adjustment in some events but will not be adjusted for any accrued and unpaid interest. In addition, following certain corporate events that occur prior to the maturity date or a notice of redemption, we will increase the conversion rate for a holder who elects to convert the Senior Convertible Notes in connection with such corporate event or redemption in certain circumstances. As of September 30, 2017 , none of the contingent conditions allowing holders of the Senior Convertible Notes to convert these notes had been met. In addition, we were in compliance with the terms of the indentures for the Senior Convertible Notes as of September 30, 2017 .
Interest on the Senior Notes and the Senior Convertible Notes (collectively, the “Notes”) is payable semi-annually in arrears. The Notes are guaranteed on a senior unsecured basis by our material subsidiaries.
Non-GAAP Financial Measures
Cash Interest, Adjusted EBITDA, Free Cash Flow, Adjusted Net Income (Loss) Attributable to Oasis and Adjusted Diluted Earnings (Loss) Attributable to Oasis 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) Attributable to Oasis and Adjusted Diluted Earnings (Loss) Attributable to Oasis 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.
Cash Interest
We define Cash Interest as interest expense plus capitalized interest less amortization and write-offs of deferred financing costs and debt discounts included in interest expense. Cash Interest is not a measure of interest expense as determined by 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 September 30,
 
Nine Months Ended September 30,
 
2017
 
2016
 
2017
 
2016
 
(In thousands)
Interest expense
$
37,389

 
$
31,726

 
$
110,548

 
$
105,444

Capitalized interest
3,137

 
4,380

 
8,773

 
13,683

Amortization of deferred financing costs
(1,729
)
 
(2,095
)
 
(5,128
)
 
(8,042
)
Amortization of debt discount
(2,591
)
 
(300
)
 
(7,426
)
 
(300
)
Cash Interest
$
36,206

 
$
33,711

 
$
106,767

 
$
110,785


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Table of Contents

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 nonrecurring 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 without regard to our financing methods or capital structure coupled with our ability to maintain compliance with our debt covenants.
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 as compared to our peers and our ability to generate cash from our business operations after interest and capital spending. In addition, Free Cash Flow excludes changes in operating assets and liabilities that relate to the timing of cash receipts and disbursements, which we may not control, and changes in operating assets and liabilities may not relate to the period in which the operating activities occurred.

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The following table presents reconciliations of the GAAP financial measures of net income (loss) including non-controlling interests 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 September 30,
 
Nine Months Ended September 30,
 
2017
 
2016
 
2017
 
2016
 
(In thousands)
Net loss including non-controlling interests
$
(41,064
)
 
$
(33,942
)
 
$
(671
)
 
$
(188,328
)
(Gain) loss on sale of properties
—

 
(6
)
 
—

 
1,305

(Gain) loss on extinguishment of debt
—

 
13,793

 
—

 
(4,865
)
Net (gain) loss on derivative instruments
54,310

 
(20,847
)
 
(52,297
)
 
55,624

Derivative settlements (1)
8,095

 
11,786

 
(804
)
 
115,576

Interest expense, net of capitalized interest
37,389

 
31,726

 
110,548

 
105,444

Depreciation, depletion and amortization
132,289

 
111,948

 
384,246

 
356,885

Impairment
139

 
382

 
6,021

 
3,967

Exploration expenses
854

 
489

 
4,010

 
1,192

Equity-based compensation expenses
6,628

 
5,782

 
20,451

 
18,761

Income tax benefit
(18,846
)
 
(16,691
)
 
(470
)
 
(96,818
)
Other non-cash adjustments
(208
)
 
(26
)
 
491

 
697

Adjusted EBITDA
179,586

 
104,394

 
471,525

 
369,440

Adjusted EBITDA attributable to non-controlling interests
190

 
—

 
190

 
—

Adjusted EBITDA attributable to Oasis
179,396

 
104,394

 
471,335

 
369,440

Cash Interest
(36,206
)
 
(33,711
)
 
(106,767
)
 
(110,785
)
Capital expenditures (2)
(240,373
)
 
(78,453
)
 
(523,143
)
 
(297,696
)
Capitalized interest
3,137

 
4,380

 
8,773

 
13,683

Free Cash Flow
$
(94,046
)
 
$
(3,390
)
 
$
(149,802
)

$
(25,358
)
 
 
 
 
 



Net cash provided by operating activities
$
88,876

 
$
32,018

 
$
298,737

 
$
123,419

Derivative settlements (1)  
8,095

 
11,786

 
(804
)
 
115,576

Interest expense, net of capitalized interest
37,389

 
31,726

 
110,548

 
105,444

Exploration expenses
854

 
489

 
4,010

 
1,192

Deferred financing costs amortization and other
(3,795
)
 
(3,622
)
 
(12,666
)
 
(10,174
)
Changes in working capital
48,375

 
32,023

 
71,209

 
33,286

Other non-cash adjustments
(208
)
 
(26
)
 
491

 
697

Adjusted EBITDA
179,586

 
104,394

 
471,525

 
369,440

Adjusted EBITDA attributable to non-controlling interests
190

 
—

 
190

 
—

Adjusted EBITDA attributable to Oasis
179,396

 
104,394

 
471,335

 
369,440

Cash Interest
(36,206
)
 
(33,711
)
 
(106,767
)
 
(110,785
)
Capital expenditures (2)
(240,373
)
 
(78,453
)
 
(523,143
)
 
(297,696
)
Capitalized interest
3,137

 
4,380

 
8,773

 
13,683

Free Cash Flow
$
(94,046
)
 
$
(3,390
)
 
$
(149,802
)

$
(25,358
)
___________________
(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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Table of Contents

The following tables present reconciliations of the GAAP financial measure of income (loss) before income taxes including non-controlling interests 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 September 30,
 
Nine Months Ended September 30,
 
2017
 
2016
 
2017
 
2016
 
(In thousands)
Loss before income taxes including non-controlling interests
$
(88,835
)
 
$
(66,333
)
 
$
(71,999
)
 
$
(331,075
)
(Gain) loss on sale of properties
—

 
(6
)
 
—

 
1,663

(Gain) loss on extinguishment of debt
—

 
13,793

 
—

 
(4,865
)
Net (gain) loss on derivative instruments
54,310

 
(20,847
)
 
(52,297
)
 
55,624

Derivative settlements (1)  
8,095

 
11,786

 
(804
)
 
115,576

Interest expense, net of capitalized interest
37,369

 
31,726

 
110,528

 
105,444

Depreciation, depletion and amortization
129,626

 
109,668

 
376,818

 
346,240

Impairment
139

 
382

 
6,021

 
1,536

Exploration expenses
854

 
489

 
4,010

 
1,192

Equity-based compensation expenses
6,344

 
5,570

 
19,741

 
17,495

Other non-cash adjustments
(208
)
 
(26
)
 
491

 
697

Adjusted EBITDA
$
147,694


$
86,202

 
$
392,509

 
$
309,527

___________________
(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.
Midstream Services
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2017
 
2016
 
2017
 
2016
 
(In thousands)
Income before income taxes including non-controlling interests
$
25,179

 
$
16,065

 
$
69,046

 
$
49,262

Gain on sale of properties
—

 
—

 
—

 
(358
)
Interest expense, net of capitalized interest
20

 
—

 
20

 
—

Depreciation, depletion and amortization
4,163

 
1,909

 
11,375

 
5,325

Impairment
—

 
—

 
—

 
2,431

Equity-based compensation expenses
392

 
218

 
1,104

 
661

Adjusted EBITDA
$
29,754

 
$
18,192

 
$
81,545

 
$
57,321

Well Services
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2017
 
2016
 
2017
 
2016
 
(In thousands)
Income before income taxes including non-controlling interests
$
10,832

 
$
1,577

 
$
9,195

 
$
3,462

Depreciation, depletion and amortization
3,196

 
3,478

 
9,417

 
11,605

Equity-based compensation expenses
281

 
354

 
1,015

 
1,253

Adjusted EBITDA
$
14,309

 
$
5,409

 
$
19,627

 
$
16,320


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Table of Contents

Adjusted Net Income (Loss) Attributable to Oasis and Adjusted Diluted Earnings (Loss) Attributable to Oasis Per Share
We define Adjusted Net Income (Loss) Attributable to Oasis as net income (loss) after adjusting for (1) the impact of certain non-cash items, including non-cash changes in the fair value of derivative instruments, impairment and other similar non-cash charges, or non-recurring items, (2) the impact of net income attributable to non-controlling interests and (3) the non-cash and non-recurring items’ impact on taxes based on our effective tax rate applicable to those adjusting items, excluding net income attributable to non-controlling interests, in the same period. Adjusted Net Income (Loss) Attributable to Oasis is not a measure of net income (loss) as determined by GAAP. We define Adjusted Diluted Earnings (Loss) Attributable to Oasis Per Share as Adjusted Net Income (Loss) Attributable to Oasis divided by diluted weighted average shares outstanding. Management believes that the presentation of Adjusted Net Income (Loss) Attributable to Oasis and Adjusted Diluted Earnings (Loss) Attributable to Oasis Per Share provides useful additional information to investors and analysts for evaluating our operational trends and performance in comparison to our peers. This measure is more comparable to earnings estimates provided by securities analysts, and charges or amounts excluded cannot be reasonably estimated and are excluded from guidance provided by the Company.
The following table presents reconciliations of the GAAP financial measure of net income (loss) attributable to Oasis to the non-GAAP financial measure of Adjusted Net Income (Loss) Attributable to Oasis and the GAAP financial measure of diluted earnings (loss) attributable to Oasis per share to the non-GAAP financial measure of Adjusted Diluted Earnings (Loss) Attributable to Oasis Per Share for the periods presented:
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2017
 
2016
 
2017
 
2016
 
(In thousands, except per share data)
Net loss attributable to Oasis
$
(41,214
)
 
$
(33,942
)
 
$
(821
)
 
$
(188,328
)
(Gain) loss on sale of properties
—

 
(6
)
 
—

 
1,305

(Gain) loss on extinguishment of debt
—

 
13,793

 
—

 
(4,865
)
Net (gain) loss on derivative instruments
54,310

 
(20,847
)
 
(52,297
)
 
55,624

Derivative settlements (1)
8,095

 
11,786

 
(804
)
 
115,576

Impairment
139

 
382

 
6,021

 
3,967

Amortization of deferred financing costs
1,728

 
2,095

 
5,127

 
8,042

Amortization of debt discount
2,591

 
300

 
7,426

 
300

Other non-cash adjustments
(208
)
 
(26
)
 
491

 
697

Tax impact (2)
(24,941
)
 
(2,798
)
 
12,735

 
(67,598
)
Adjusted Net Income (Loss) Attributable to Oasis
$
500


$
(29,263
)
 
$
(22,122
)
 
$
(75,280
)
 





 
 
 
 
Diluted loss attributable to Oasis per share
$
(0.18
)
 
$
(0.19
)
 
$
0.00

 
$
(1.09
)
(Gain) loss on sale of properties
—

 
—

 
—

 
0.01

(Gain) loss on extinguishment of debt
—

 
0.08

 
—

 
(0.03
)
Net (gain) loss on derivative instruments
0.23

 
(0.12
)
 
(0.22
)
 
0.32

Derivative settlements (1)
0.03

 
0.07

 
—

 
0.67

Impairment
—

 
—

 
0.03

 
0.02

Amortization of deferred financing costs
0.01

 
0.01

 
0.02

 
0.05

Amortization of debt discount
0.01

 
—

 
0.03

 
—

Other non-cash adjustments
—

 
—

 
—

 
—

Tax impact (2)
(0.10
)
 
(0.02
)
 
0.05

 
(0.39
)
Adjusted Diluted Loss Attributable to Oasis Per Share
$
0.00


$
(0.17
)
 
$
(0.09
)
 
$
(0.44
)
 



 
 
 
 
Diluted weighted average shares outstanding
233,389

 
177,120

 
233,248

 
172,360

 
 
 
 
 
 
 
 
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)
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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Table of Contents

Fair Value of Financial Instruments
See Note 6 – Fair Value Measurements 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 2016 Annual Report. See Note 2 – Summary of Significant Accounting Policies to our unaudited condensed consolidated financial statements for a discussion of additional accounting policies and estimates made by management.
Item 3. — Quantitative and Qualitative Disclosures About Market Risk
The primary objective of the following information is to provide forward-looking quantitative and qualitative information about our potential exposure to market risk. The term “market risk” refers to the risk of loss arising from adverse changes in prices for oil, natural gas and natural gas liquids, and interest rates.  The disclosures are not meant to be precise indicators of expected future losses, but rather indicators of reasonably possible losses. This forward-looking information provides indicators of how we view and manage our ongoing market risk exposures. All of our market risk sensitive instruments were entered into for hedging purposes, rather than for speculative trading. The following market risk disclosures should be read in conjunction with the quantitative and qualitative disclosures about market risk contained in our 2016 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 and natural gas prices. Our crude oil and natural gas contracts will settle monthly based on the average WTI and the average NYMEX Henry Hub natural gas index price, respectively. As of September 30, 2017 , we utilized swaps and two-way and three-way costless collar options to reduce the volatility of oil and natural gas prices on a significant portion of our future expected oil and natural gas production. A swap is a sold call and a purchased put established at the same price (both ceiling and floor), which we will receive for the volumes under contract. 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 the NYMEX 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.
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.

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Table of Contents

The following is a summary of our derivative contracts as of September 30, 2017 :
Commodity
 
Settlement
Period
 
Derivative
Instrument
 
Volumes
 
Weighted Average Prices
 
Fair Value
Asset (Liability)
 
 
 
 
Swap
 
Sub-Floor
 
Floor
 
Ceiling
 

 
 
 
 
 


 

 
(In thousands)
Crude oil
 
2017
 
Swaps
 
2,428,000

 Bbl
 
$
49.98

 
 
 
 
 
 
 
$
(3,220
)
Crude oil
 
2017
 
Two-way collar
 
728,000

 Bbl
 
 
 
 
 
$
46.25

 
$
54.37

 
(576
)
Crude oil
 
2017
 
Three-way collar
 
546,000

 Bbl
 
 
 
$
31.67

 
$
45.83

 
$
59.94

 
42

Crude oil
 
2018
 
Swaps
 
12,951,000

 Bbl
 
$
50.81

 
 
 
 
 
 
 
(13,746
)
Crude oil
 
2018
 
Two-way collar
 
1,250,000

 Bbl
 
 
 
 
 
$
48.19

 
$
53.33

 
(927
)
Crude oil
 
2018
 
Three-way collar
 
186,000

 Bbl
 
 
 
$
31.67

 
$
45.83

 
$
59.94

 
51

Crude oil
 
2019
 
Swaps
 
3,423,000

 Bbl
 
$
50.83

 
 
 
 
 
 
 
(846
)
Crude oil
 
2019
 
Two-way collar
 
93,000

 Bbl
 
 
 
 
 
$
48.67

 
$
53.07

 
(25
)
Crude oil
 
2020
 
Swaps
 
217,000

 Bbl
 
$
50.82

 
 
 
 
 
 
 
28

Natural gas
 
2017
 
Swaps
 
2,024,000

 Mmbtu
 
$
3.30

 
 
 
 
 
 
 
502

Natural gas
 
2018
 
Swaps
 
6,205,000

 Mmbtu
 
$
3.05

 
 
 
 
 
 
 
(3
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
(18,720
)
A 10% increase in crude oil prices would decrease the fair value of our derivative position by approximately $103.8 million , while a 10% decrease in crude oil prices would increase the fair value by approximately $103.2 million .
Interest rate risk. We had (i)  $54.3 million of senior unsecured notes at a fixed cash interest rate of 7.25%  per annum, (ii)  $395.5 million of senior unsecured notes at a fixed cash interest rate of 6.5%  per annum, (iii)  $1,303.2 million of senior unsecured notes at a fixed cash interest rate of 6.875%  per annum and (iv) $300.0 million of senior unsecured convertible notes as a fixed cash interest rate of 2.625% per annum outstanding at September 30, 2017 . At September 30, 2017 , we had $395.0 million of borrowings and $10.0 million letters of credit outstanding under the Oasis 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 Oasis Credit Facility as an Alternate Based Rate or “ABR” loan). At September 30, 2017 , the outstanding borrowings under the Oasis Credit Facility bore interest at LIBOR plus a 1.5% margin. At September 30, 2017 , no amounts were outstanding under the OMP Credit Facility . 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 the Oasis Credit Facility or the OMP 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. No bad debt expense was recorded during the three and nine months ended September 30, 2017 . We are also subject to credit risk due to concentration of our 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.
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.

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Table of Contents

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 the Oasis 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 the Oasis 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 $18.7 million at September 30, 2017 .
As permitted under our investments policy, we may 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. This risk is managed by our investment policy including minimum credit ratings thresholds and maximum counterparty exposure values. Although we do not anticipate any of our commercial paper issuers failing to pay us upon maturity, we take a risk in purchasing the commercial paper instruments available in the marketplace. If an issuer fails to repay us at maturity from commercial paper proceeds, it could take a significant amount of time to recover a portion of or all of the assets originally invested. Our commercial paper balance was  $36,000  at September 30, 2017 .
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 September 30, 2017 . 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 September 30, 2017 .
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 September 30, 2017 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
Mirada litigation. On March 23, 2017, Mirada Energy, LLC, Mirada Wild Basin Holding Company, LLC and Mirada Energy Fund I, LLC (collectively, “Mirada”) filed a lawsuit against Oasis Petroleum Inc., OPNA and Oasis Midstream Services LLC, seeking monetary damages in excess of $100 million , declaratory relief, attorneys’ fees and costs (Mirada Energy, LLC, et al. v. Oasis Petroleum North America LLC, et al.; in the 334th Judicial District Court of Harris County, Texas; Case Number 2017-19911). Mirada asserts that it is a working interest owner in certain acreage owned and operated by the Company in Wild Basin. Specifically, Mirada asserts that the Company has breached certain agreements by: (1) failing to allow Mirada to participate in the Company’s midstream operations in Wild Basin; (2) refusing to provide Mirada with information that Mirada contends is required under certain agreements and failing to provide information in a timely fashion; (3) failing to consult with Mirada and failing to obtain Mirada’s consent prior to drilling more than one well at a time in Wild Basin; and (4) by overstating the estimated costs of proposed well operations in Wild Basin. Mirada seeks a declaratory judgment that the Company be removed as operator in Wild Basin at Mirada’s election and that Mirada be allowed to elect a new operator; certain agreements apply to the Company and Mirada and Wild Basin with respect to this dispute; the Company be required to provide all information within its possession regarding proposed or ongoing operations in Wild Basin; and the Company not be permitted to drill, or propose to drill, more than one well at a time in Wild Basin without obtaining Mirada’s consent. Mirada also seeks a declaratory judgment with respect to the Company’s current midstream operations in Wild Basin. Specifically, Mirada seeks a declaratory judgment that Mirada has a right to participate in the Company’s Wild Basin midstream operations, consisting of produced water disposal, crude oil gathering and gas gathering and processing; that, upon Mirada’s election to participate, Mirada is obligated to pay its proportionate costs of the Company’s midstream operations in Wild Basin; and that Mirada would then be entitled to receive a share of revenues from the midstream operations and would not be charged any amount for its use of these facilities for production from the “Contract Area”.
On June 30, 2017, Mirada amended its original petition to add a claim that the Company has breached certain agreements by charging Mirada for midstream services provided by its affiliates and to seek a declaratory judgment that Mirada is entitled to be paid its share of total proceeds from the sale of hydrocarbons received by OPNA or any affiliate of OPNA without deductions for midstream services provided by OPNA or its affiliates.
The Company believes that Mirada’s claims are without merit, that the Company has complied with its obligations under the applicable agreements and that some of Mirada’s claims are grounded in agreements which do not apply to the Company. The Company filed an answer denying Mirada’s claims on April 21, 2017, and intends to vigorously defend against Mirada’s claims. Discovery is ongoing, and trial is currently scheduled for July 2018. However, the Company cannot predict or guarantee the ultimate outcome or resolution of such matter. If such matter were to be determined adversely to the Company’s interests, or if the Company were forced to settle such matter for a significant amount, such resolution or settlement could have a material adverse effect on the Company’s business, results of operations and financial condition. Such an adverse determination could materially impact the Company’s ability to operate its properties in Wild Basin or develop its identified drilling locations in Wild Basin on its current development schedule. A determination that Mirada has a right to participate in the Company’s midstream operations could materially reduce the interests of the Company in their current assets and future midstream opportunities and related revenues in Wild Basin.
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 2016 Annual Report. There have been no material changes in our risk factors from those described in our 2016 Annual Report.

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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 September 30, 2017 :
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
July 1 - July 31, 2017
 
1,549

 
$
8.05

 
—

 
—

August 1 - August 31, 2017
 
71,779

 
7.51

 
—

 
—

September 1 - September 30, 2017
 
21,076

 
8.51

 
—

 
—

Total
 
94,404

 
$
7.74

 
—

 
—

___________________ 
(1)
Represents 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 a nnounced program to repurchase shares of our common stock.
Item 5. — Other Information
On November 6, 2017, we entered into the Tenth Amendment (the “Amendment”) to the Oasis Credit Facility , pursuant to which the Lenders consented to (i) the termination of the limited recourse guaranty agreements by and between each of Beartooth DevCo LLC and Bobcat DevCo LLC (collectively, the “DevCos,” and each a “DevCo”) and Wells Fargo Bank, N.A., as administrative agent (the “Administrative Agent”), under the Oasis Credit Facility and (ii) the termination and release of each DevCo’s DevCo Mortgage (as defined in the Amendment). Further, OMS, in its capacity as the majority owner of each of the DevCos, entered into the Undertaking Agreements with the Administrative Agent pursuant to which OMS agreed to limitations on the activities of each DevCo, including, but not limited to, the incurrence of indebtedness, asset acquisitions or dispositions, investments, mergers, issuance of additional equity interests, creation of liens on any DevCo assets or entry into any agreement that would restrict or prohibit the granting of liens on any DevCo assets, loans or advances to other persons, entry into any transaction with an affiliate, formation of a subsidiary and entry into any swap or similar derivative transaction (the “DevCo Covenants”). OMS further agreed to cause corresponding amendments to the Limited Liability Company Agreement of each DevCo to implement the DevCo Covenants and to require unanimous member approval for any amendment to the DevCo Covenants.
Item 6. — Exhibits
Exhibit
No.
 
Description of Exhibit
 
 
 
 
Contribution Agreement, dated as of September 25, 2017, by and among Oasis Midstream Partners LP, Oasis Petroleum LLC, OMS Holdings LLC, Oasis Midstream Services LLC, OMP GP LLC and OMP Operating LLC (filed as Exhibit 10.1 to the Company's Current Report on Form 8-K on September 29, 2017, and incorporated herein by reference).
 
 
 
 
Omnibus Agreement, dated as of September 25, 2017, by and among Oasis Midstream Partners LP, the Company, Oasis Petroleum LLC, OMS Holdings LLC, Oasis Midstream Services LLC, OMP GP LLC and OMP Operating LLC (filed as Exhibit 10.2 to the Company's Current Report on Form 8-K on September 29, 2017, and incorporated herein by reference).
 
 
 
 
Ninth Amendment to Second Amended and Restated Credit Agreement, dated as of September 25, 2017, by and among Oasis Petroleum North America LLC, as borrower, the guarantors party thereto, Wells Fargo Bank, N.A., as administrative agent, and the lenders party thereto (filed as Exhibit 10.3 to the Company’s Current Report on Form 8-K on September 29, 2017, and incorporated herein by reference).
 
 
 
 
Services and Secondment Agreement, dated as of September 25, 2017, by and between Oasis Midstream Partners LP and the Company (filed as Exhibit 10.4 to the Company's Current Report on Form 8-K on September 29, 2017 and incorporated herein by reference).
 
 
 
 
Tenth Amendment to Second Amended and Restated Credit Agreement, dated as of November 7, 2017, by and among Oasis Petroleum North America LLC, as borrower, the guarantors party thereto, Wells Fargo Bank, N.A., as administrative agent, and the lenders party thereto.
 
 
 

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Sarbanes-Oxley Section 302 certification of Principal Executive Officer.
 
 
 
Sarbanes-Oxley Section 302 certification of Principal Financial Officer.
 
 
 
Sarbanes-Oxley Section 906 certification of Principal Executive Officer.
 
 
 
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.



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Table of Contents

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:
November 8, 2017
 
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)


56


EXHIBIT 10.5

Execution Version

CONSENT AND TENTH AMENDMENT TO
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
THIS CONSENT AND TENTH AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT (this “ Tenth Amendment ”) dated as of November 7, 2017, is among OASIS PETROLEUM NORTH AMERICA LLC, a Delaware limited liability company (the “ Borrower ”); the Guarantors listed on the signature pages hereto; each of the Lenders party hereto; and WELLS FARGO BANK, N.A. (individually, “ Wells Fargo Bank ”), 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, that certain Fifth Amendment to Second Amended and Restated Credit Agreement dated as of February 23, 2016, that certain Sixth Amendment to Amended and Restated Credit Agreement dated as of August 8, 2016, that certain Seventh Amendment to Second Amended and Restated Credit Agreement dated as of October 14, 2016, that certain Eighth Amendment to Credit Agreement dated as of April 10, 2017 and that certain Ninth Amendment to Second Amended and Restated Credit Agreement (the “ Ninth Amendment ”) dated as of September 25, 2017 (the “ Credit Agreement ”), pursuant to which the Lenders have made certain credit available to and on behalf of the Borrower.
B.    Oasis Midstream Services LLC, a Delaware limited liability company (“ OMS ”), is a Guarantor under the Credit Agreement, and OMS and OMP Operating LLC, a Delaware limited liability company (“ OMP ”), collectively own all of the Equity Interests in each DevCo.
C.    As conditions precedent to the effectiveness of the Ninth Amendment, (i) each DevCo entered into a DevCo Guaranty Agreement dated as of September 25, 2017 (each, a “ DevCo RBL Guaranty Agreement ”) with the Administrative Agent, pursuant to which such DevCo guaranteed to the Administrative Agent, the Lenders and the other Secured Parties the payment and performance by the Borrower and the Guarantors of the Borrower Obligations referred to therein and (ii) each DevCo entered into a Mortgage-Collateral Real Estate Mortgage, Deed of Trust, Security Agreement and Financing Statement dated effective as of September 25, 2017 (each, a “ DevCo RBL Mortgage ”) for the benefit of the Administrative Agent, the Lenders and the holders of the other Obligations referred to therein, pursuant to which such DevCo granted a lien on certain of its real and personal property to secure the payment and performance of such Obligations.
D.    Concurrently with the effectiveness of the Ninth Amendment, OMP, as borrower, entered into that certain Credit Agreement dated as of September 25, 2017 (the “ Midstream Credit Agreement ”) with Wells Fargo Bank, as administrative agent (in such capacity, the “ Midstream Agent ”), the lenders party thereto and the other parties thereto, pursuant to which the lenders thereunder have made certain credit available to and on behalf of OMP.
E.    As conditions precedent to the effectiveness of the Midstream Credit Agreement, (i) each DevCo entered into a guaranty agreement dated as of September 25, 2017 with the Midstream Agent, pursuant to which such DevCo guaranteed to the Midstream Agent and the other parties referred to therein the payment and performance by OMP and the guarantors under the Midstream Credit Agreement of the obligations referred to therein and (ii) each DevCo entered into a mortgage dated effective as of September 25, 2017 for the benefit of the Midstream Agent and the other parties referred to therein, pursuant to which such DevCo granted a lien on certain of its real and personal property to secure the payment and performance of the obligations referred to therein.
F.    In connection with the guaranty agreements and mortgages executed by each DevCo pursuant to the Ninth Amendment and the Midstream Credit Agreement, respectively, the Administrative Agent, the Midstream Agent, each DevCo and the other Grantors referred to therein entered into that certain Pari Passu Intercreditor Agreement dated as of September 25, 2017 (the “ Original Intercreditor Agreement ”).




G.    The Borrower has requested that the Administrative Agent and the Lenders (i) consent to the (A) termination of each DevCo RBL Guaranty Agreement and the release of the applicable DevCo from any obligations therein (collectively, the “ DevCo RBL Guaranty Release ”) and (B) release and termination of each DevCo RBL Mortgage and all liens, security interests and other rights created thereby encumbering any DevCo Collateral (collectively, the “ DevCo RBL Mortgage Release ” and, together with the DevCo RBL Guaranty Release, the “ DevCo RBL Release ”) and (ii) amend certain provisions of the Credit Agreement as provided herein, and the Lenders party hereto, constituting at least the Majority Lenders, are willing to consent to the DevCo RBL Release and to agree to such amendments on the terms and conditions set forth herein.
H.    Furthermore, in connection with the DevCo RBL Release, the Borrower has requested that the Administrative Agent and the Lenders consent to the amendment and restatement of the Original Intercreditor Agreement and enter into the Amended and Restated Intercreditor Agreement, the form of which is attached hereto as Exhibit A (the “ Amended and Restated Intercreditor Agreement ”) pursuant to which the Midstream Agent will be required under certain circumstances to apply a portion of the proceeds of the collateral granted by a DevCo in favor of the Midstream Agent to OMS.
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 Tenth Amendment. Unless otherwise indicated, all section references in this Tenth Amendment refer to sections of the Credit Agreement.
Section 2.     Consent to DevCo RBL Release and Amended and Restated Intercreditor Agreement . In reliance on the representations, warranties, covenants and agreements contained in this Tenth Amendment, and subject to the conditions precedent set forth in Section 4 hereof, effective as of the Tenth Amendment Effective Date (a) the Lenders party hereto consent to each of the DevCo RBL Guaranty Release and the DevCo RBL Mortgage Release and (b) consent to, and authorize the Administrative Agent to enter into on behalf of the Lenders, the Amended and Restated Intercreditor Agreement.
Section 3.     Amendments to Credit Agreement . In reliance on the representations, warranties, covenants and agreements contained in this Tenth Amendment, and subject to the conditions precedent contained in Section 4 hereof, the Credit Agreement shall be amended effective as of the date hereof in the manner provided in this Section 3 .
3.1     Amendments to Section 1.02 (Certain Defined Terms) .
(a)    The following definitions contained in Section 1.02 of the Credit Agreement 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, the Sixth Amendment, the Seventh Amendment, the Eighth Amendment, the Ninth Amendment and Tenth Amendment and as the same may be further amended or supplemented from time to time.
“ DevCo Collateral ” means the Property of a DevCo subject to (or required to be subject to) the Liens and security interests created by any DevCo Mortgage executed by such DevCo; provided that there shall be no DevCo Collateral from and after the Tenth Amendment Effective Date.
“ Intercreditor Agreement ” means (a) the Amended and Restated Intercreditor Agreement dated as of the Tenth Amendment Effective Date among the DevCos, OMS, the Administrative Agent, and Wells Fargo Bank, N.A. (or any successor administrative agent), as administrative agent under the OMP Credit Facility, and (b) if the OMP Credit Facility is refinanced or replaced in accordance with the terms of the Intercreditor Agreement, any successor intercreditor agreement entered into in connection therewith, in each case as the same may be amended, modified, supplemented or restated from time to time.
“ Loan Documents ” means this Agreement, the Intercreditor Agreement, the Notes, the Letter of Credit Agreements, the Letters of Credit, the Security Instruments and each DevCo Parent Undertaking.
“ Security Instruments ” means the Guaranty and Security Agreement, the Intercreditor Agreement, mortgages, deeds of trust, and other agreements, instruments or certificates described or referred to in Exhibit E-1, and any and all other agreements, instruments, consents or certificates now or hereafter executed and delivered by the Parent, OP LLC, the Borrower, any other Guarantor or any other Person (other than Secured Swap Agreements or participation or similar

2


agreements between any Lender and any other lender or creditor with respect to any Indebtedness pursuant to this Agreement) as security for the payment or performance of the Indebtedness, the Notes, this Agreement, or reimbursement obligations under the Letters of Credit, as such agreements may be amended, modified, supplemented or restated from time to time.
(b)    The following definitions are hereby added to Section 1.02 of the Credit Agreement where alphabetically appropriate to read as follows:
“ DevCo Parent Undertaking ” means either of the DevCo Parent Undertaking Agreement in respect of a DevCo, dated as of November 7, 2017, between OMS and the Administrative Agent, as the same may be amended, modified, supplemented or restated from time to time.
“ Tenth Amendment ” means that certain Consent and Tenth Amendment to Second Amended and Restated Credit Agreement, dated as of November 7, 2017 among the Borrower, the Guarantors, the Administrative Agent, the Issuing Bank and the Lenders party thereto.
“ Tenth Amendment Effective Date ” means November 7, 2017.
3.2     Amendment to Section 8.19 (DevCo Parent Undertaking) . Section 8.19 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:
Section 8.19      DevCo Parent Undertaking . Each of the Parent, OP LLC and the Borrower shall cause OMS (and any other Credit Party that holds Equity Interests in any DevCo) to comply with the covenants contained in each DevCo Parent Undertaking, and shall cause any Credit Party that owns Equity Interests in a DevCo to become party to the applicable DevCo Parent Undertaking.
3.3     Amendment to Section 9.05(n) (Investments, Loans and Advances) . Section 9.05(n) of the Credit Agreement is hereby amended and restated in its entirety to read as follows:
(n)     Investments made by the Credit Parties in any DevCo (other than any Investment in the form of the purchase of Equity Interests in such DevCo from OMP or one of its subsidiaries); provided that for any Investment in any DevCo made after the Tenth Amendment Effective Date (i) no Default or Event of Default exists or results therefrom, (ii) before and after giving effect to such Investment, the current total Revolving Credit Exposures shall not exceed 80% of the total Commitments ( i.e. , the least of (x) the Aggregate Maximum Credit Amounts, (y) the then effective Borrowing Base and (z) the Aggregate Elected Commitment Amounts) at such time, (iii) after giving pro forma effect to such Investment, the Borrower is in compliance with the financial covenants contained in Section 9.01(a), Section 9.01(b) and Section 9.01(c) as of the last date of the most recently completed fiscal quarter, (iv) such Investments shall be made solely for the purposes of funding Capital Expenditures of such DevCo in midstream projects that were disclosed in that certain Prospectus filed by the Midstream MLP with the U.S. Securities & Exchange Commission on September 22, 2017, which expenditures the Borrower reasonably expects to be made within ninety (90) days following the date of such Investment, and (v) the amount of any such Investment shall not exceed, at the time made, the product of  the DevCo Ownership Percentage with respect to such DevCo as of the date of such Investment multiplied by  the total amount of such Capital Expenditures described in the foregoing clause (iv).
3.4     Amendment to Section 9.21 (Changes to Organizational Documents of General Partner) .
(a)    The heading of Section 9.21 of the Credit Agreement is hereby amended and restated in its entirety to read as follows: “ Changes to Organizational Documents of General Partner and DevCos .”
(b)    Section 9.21 of the Credit Agreement is hereby amended to add the following sentence at the end thereof:
The Parent, OP LLC and the Borrower shall not permit OMS or any DevCo to amend, supplement or otherwise modify its certificate of formation, limited liability company agreement or any other organic document of any DevCo in any manner that would (a) be adverse to the Lenders or (b) permit any DevCo to take any action that would violate the DevCo Parent Undertaking without the consent of OMS and any other Credit Party that owns Equity Interests in such DevCo.
Section 4.     Conditions Precedent . This Tenth 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 “ Tenth Amendment Effective Date ”):

3


4.1     Executed Counterparts of Tenth Amendment . The Administrative Agent shall have received from the Borrower, each Guarantor and the Majority Lenders counterparts (in such number as may be requested by the Administrative Agent) of this Tenth Amendment signed on behalf of such Person.
4.2     Executed Counterparts of Other Documents . The Administrative Agent shall have received from each party thereto duly executed counterparts (in such number as may be requested by the Administrative Agent) of (a) the Amended and Restated Intercreditor Agreement, (b) each DevCo Parent Undertaking, (c) releases of each DevCo RBL Guaranty Agreement and (d) releases of each DevCo RBL Mortgage, in each case, in form and substance satisfactory to the Administrative Agent.
4.3     Amendment to DevCos’ Company Agreements . The Administrative Agent shall have received an executed amendment to each DevCo’s limited liability company agreement prohibiting any amendment, supplement or other modification to such DevCo’s certificate of formation, limited liability company agreement or any other organic document of such DevCo in any manner that would permit such DevCo to take any action that would violate the applicable DevCo Parent Undertaking without the prior written consent of the owners of 100% of such DevCo’s Equity Interests and otherwise in form and substance satisfactory to the Administrative Agent and, in each case, certified as being true and complete by the Secretary or an Assistant Secretary of such DevCo.
4.4     No Default . No Default shall have occurred and be continuing as of the date hereof prior to and after giving effect to the terms of this Tenth Amendment.
4.5     Consent Fee . The Administrative Agent shall have received, for the account of the Lenders executing this Tenth Amendment on or prior to the Tenth Amendment Effective Date (the “ Consenting Lenders ”), a consent fee in an amount of $10,000 for each Consenting Lender.
4.6     Further Assurances . The Administrative Agent shall have received such other documents as the Administrative Agent or its special counsel may reasonably require.
The Administrative Agent is hereby authorized and directed to declare this Tenth 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 Tenth Amendment, shall remain in full force and effect following the effectiveness of this Tenth 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 Tenth 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 Tenth Amendment or which may occur in the future under the Credit Agreement and/or the other Loan Documents. Similarly, nothing contained in this Tenth 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 Tenth 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 Tenth 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

4


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 Tenth 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 Tenth Amendment by facsimile or email transmission shall be effective as delivery of a manually executed counterpart hereof.
5.5     No Oral Agreement . This Tenth 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 TENTH 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 Tenth 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 Tenth 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 Tenth 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 Tenth Amendment shall constitute a “Loan Document” under and as defined in Section 1.02 of the Credit Agreement.
5.11     No Novation . The parties hereto agree that this Tenth Amendment does not in any way constitute a novation of the existing Credit Agreement, but is an amendment of the Credit Agreement.
[ Signatures Begin Next Page ]




5


IN WITNESS WHEREOF, the parties hereto have caused this Tenth 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
OMS HOLDINGS LLC

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

OMP GP LLC

By:     /s/ Michael Lou    
Name:    Michael Lou
Title:    President






Signature Page to
Consent and Tenth Amendment to Second Amended and Restated Credit Agreement
(Oasis Petroleum North America LLC)



ADMINISTRATIVE AGENT,
ISSUING BANK AND LENDER:
WELLS FARGO BANK, N.A.,
as Administrative Agent, Issuing Bank and as a Lender


By:     /s/ Edward Pak    
Name:    Edward Pak
Title:    Director


Signature Page to
Consent and Tenth Amendment to Second Amended and Restated Credit Agreement
(Oasis Petroleum North America LLC)



LENDERS:
CITIBANK, N.A. , as a Lender


By:     /s/ Cliff Vaz    
Name:    Cliff Vaz
Title:    Vice President


Signature Page to
Consent and Tenth Amendment to Second Amended and Restated Credit Agreement
(Oasis Petroleum North America LLC)



JPMORGAN CHASE BANK, N.A.,
as a Lender


By:     /s/ Anson Williams    
Name:    Anson Williams
Title:    Authorized Officer


Signature Page to
Consent and Tenth Amendment to Second Amended and Restated Credit Agreement
(Oasis Petroleum North America LLC)



ROYAL BANK OF CANADA , as a Lender


By:     /s/ Jay T. Sartain    
Name:    Jay T. Sartain
Title:    Authorized Signatory


Signature Page to
Consent and Tenth Amendment to Second Amended and Restated Credit Agreement
(Oasis Petroleum North America LLC)



CAPITAL ONE, NATIONAL ASSOCIATION ,
as a Lender


By:     /s/ Christopher Kuna    
Name:    Christopher Kuna
Title:    Vice President


Signature Page to
Consent and Tenth Amendment to Second Amended and Restated Credit Agreement
(Oasis Petroleum North America LLC)



COMPASS BANK , as a Lender


By:     /s/ Kari McDaniel    
Name:    Kari McDaniel
Title:    Vice President


Signature Page to
Consent and Tenth Amendment to Second Amended and Restated Credit Agreement
(Oasis Petroleum North America LLC)



CANADIAN IMPERIAL BANK OF
COMMERCE, NEW YORK BRANCH ,
as a Lender


By:     /s/ Trudy Nelson    
Name:    Trudy Nelson
Title:    Authorized Signatory


By:     /s/ Richard Antl    
Name:    Richard Antl
Title:    Authorized Signatory


Signature Page to
Consent and Tenth Amendment to Second Amended and Restated Credit Agreement
(Oasis Petroleum North America LLC)




DEUTSCHE BANK AG NEW YORK BRANCH ,
as a Lender


By:     /s/ Dusan Lazarov    
Name:    Dusan Lazarov
Title:    Director


By:     /s/ Mary Kay Coyle    
Name:    Mary Kay Coyle
Title:    Managing Director


Signature Page to
Consent and Tenth Amendment to Second Amended and Restated Credit Agreement
(Oasis Petroleum North America LLC)



ING CAPITAL LLC , as a Lender


By:     /s/ Juli Bieser    
Name:    Juli Bieser
Title:    Managing Director


By:     /s/ Charles Hall    
Name:    Charles Hall
Title:    Managing Director


Signature Page to
Consent and Tenth Amendment to Second Amended and Restated Credit Agreement
(Oasis Petroleum North America LLC)



CITIZENS BANK, N.A. , as a Lender


By:     /s/ Scott Donaldson    
Name:    Scott Donaldson
Title:    Senior Vice President


Signature Page to
Consent and Tenth Amendment to Second Amended and Restated Credit Agreement
(Oasis Petroleum North America LLC)




U.S. BANK NATIONAL ASSOCIATION ,
as a Lender


By:     /s/ John C. Lozano    
Name:    John C. Lozano
Title:    Vice President


Signature Page to
Consent and Tenth Amendment to Second Amended and Restated Credit Agreement
(Oasis Petroleum North America LLC)



ZB, N.A. DBA AMEGY BANK , as a Lender


By:     /s/ John Moffitt    
Name:    John Moffitt
Title:    Vice President


Signature Page to
Consent and Tenth Amendment to Second Amended and Restated Credit Agreement
(Oasis Petroleum North America LLC)



BOKF, NA dba Bank of Texas , as a Lender


By:     /s/ Marisol Salazar    
Name:    Marisol Salazar
Title:    Senior Vice President


Signature Page to
Consent and Tenth Amendment to Second Amended and Restated Credit Agreement
(Oasis Petroleum North America LLC)



BRANCH BANKING AND TRUST COMPANY ,
as a Lender


By:     /s/ Ryan K. Michael    
Name:    Ryan K. Michael
Title:    Senior Vice President


Signature Page to
Consent and Tenth Amendment to Second Amended and Restated Credit Agreement
(Oasis Petroleum North America LLC)



COMERICA BANK , as a Lender


By:     /s/ William B. Robinson    
Name:    William B. Robinson
Title:    Senior Vice President


Signature Page to
Consent and Tenth Amendment to Second Amended and Restated Credit Agreement
(Oasis Petroleum North America LLC)



CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH ,
as a Lender


By:     /s/ Nupur Kumar    
Name:    Nupur Kumar
Title:    Authorized Signatory


By:     /s/ Christopher Zybrick    
Name:    Christopher Zybrick
Title:    Authorized Signatory


Signature Page to
Consent and Tenth Amendment to Second Amended and Restated Credit Agreement
(Oasis Petroleum North America LLC)



REGIONS BANK , as a Lender


By:     /s/ William A Philipp    
Name:    William A Philipp
Title:    Managing Director


Signature Page to
Consent and Tenth Amendment to Second Amended and Restated Credit Agreement
(Oasis Petroleum North America LLC)



IBERIABANK , as a Lender


By:     /s/ Stacy Goldstein    
Name:    Stacy Goldstein
Title:    Senior Vice President



Signature Page to
Consent and Tenth Amendment to Second Amended and Restated Credit Agreement
(Oasis Petroleum North America LLC)



Exhibit A

[See attached]


Execution Version

AMENDED AND RESTATED INTERCREDITOR AGREEMENT
DATED AS OF
NOVEMBER 7, 2017
AMONG
WELLS FARGO BANK, N.A.,
AS THE MIDSTREAM AGENT,
AND
WELLS FARGO BANK, N.A.,
AS THE RBL AGENT,
AND ACKNOWLEDGED AND AGREED TO BY
THE GRANTORS REFERRED TO HEREIN






TABLE OF CONTENTS
Page
Article I
Definitions
Section 1.1 Certain Defined Terms      2
Section 1.2 Rules of Construction      9
Article II
Agreements With Respect to Collateral
Section 2.1 Application of Proceeds      9
Section 2.2 Actions with Respect to Collateral; Prohibition on Contesting Liens      10
Section 2.3 No Interference; Payment Over; Exculpatory Provisions     11
Section 2.4 Automatic Termination of Grantor Status     12
Section 2.5 Certain Agreements with Respect to Bankruptcy or Insolvency Proceedings     12
Section 2.6 Reinstatement     12
Section 2.7 Refinancings     12
Article III
[INTENTIONALLY OMITTED]
Article IV
The Agents
Section 4.1 Authority     13
Article V
Miscellaneous
Section 5.1 Integration/Conflicts     14
Section 5.2 Effectiveness; Continuing Nature of this Agreement; Severability     14
Section 5.3 Amendments; Waivers     14
Section 5.4 Information Concerning Financial Condition of the Grantors and their Subsidiaries     15
Section 5.5 Submission to Jurisdiction; Certain Waivers     15
Section 5.6 WAIVER OF JURY TRIAL     16
Section 5.7 Notices     16
Section 5.8 Further Assurances     17
Section 5.9 Agency Capacities     17
Section 5.10 GOVERNING LAW     17
Section 5.11 Binding on Successors and Assigns     17

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Section 5.12 Section Headings     17
Section 5.13 Counterparts     17
Section 5.14 Replacement and Refinancing of Obligations     17
Section 5.15 Authorization     18
Section 5.16 No Third Party Beneficiaries/ Provisions Solely to Define Relative Rights     18
Section 5.17 No Indirect Actions     19
Section 5.18 Additional Grantors     19
Section 5.19 Grantors as Signatories     19



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EXHIBITS
Exhibit A    -    Form of Joinder Agreement (Replacement Credit Agreement)
Exhibit B     -    Form of Replacement Credit Agreement Designation
Exhibit C    -    Form of Joinder Agreement (Additional Grantors)



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This AMENDED AND RESTATED INTERCREDITOR AGREEMENT (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, this “ Agreement ”) dated as of November 7, 2017, among Wells Fargo Bank, N.A., as administrative agent for the Midstream Credit Agreement Claimholders (in such capacity and together with its successors from time to time in such capacity, the “ Midstream Agent ”), Wells Fargo Bank, N.A., as administrative agent for the RBL Credit Agreement Claimholders (in such capacity and together with its successors from time to time in such capacity, the “ RBL Agent ”), and acknowledged and agreed to by Beartooth DevCo LLC, a Delaware limited liability company (“ Beartooth ”), Bobcat DevCo LLC, a Delaware limited liability company (“ Bobcat ”), the other Grantors and the DevCo Parent (as defined below). Capitalized terms used in this Agreement have the meanings assigned to them in Article I below.
Reference is made to the Second Amended and Restated Credit Agreement dated as of April 5, 2013 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “ RBL Credit Agreement ”), among Oasis Petroleum North America LLC, a Delaware limited liability company (“ OPNA ”) as borrower, the lenders party thereto from time to time (the “ RBL Lenders ”), the RBL Agent and the other parties named therein.
Reference is made to the Credit Agreement dated as of September 25, 2017 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “ Midstream Credit Agreement ”), among OMP Operating LLC, a Delaware limited liability company (“ OMP ”) as borrower, the lenders party thereto from time to time (the “ Midstream Lenders ”), the Midstream Agent and the other parties named therein.
Reference is made to the Pari Passu Intercreditor Agreement dated as of September 25, 2017 (the “ Original Intercreditor Agreement ”) among the Midstream Agent, the RBL Agent and the Grantors party thereto.
Prior to the date hereof, each of Beartooth and Bobcat had severally agreed to (a) guarantee the RBL Credit Agreement Obligations and the Midstream Credit Agreement Obligations pursuant to certain limited recourse guaranty agreements (such guarantees in respect of the RBL Credit Agreement Obligations, the “ RBL DevCo Guarantees ” and such guarantees in respect of the Midstream Credit Agreement Obligations, the “ Midstream DevCo Guarantees ”) and (b) grant Liens on their respective Property to secure each of the RBL Credit Agreement Obligations and the Midstream Credit Agreement Obligations;
Pursuant to that certain Consent and Tenth Amendment to Credit Agreement dated as of the date hereof (the “ RBL Tenth Amendment ”) among OPNA, the RBL Agent, the guarantors party thereto and the RBL Lenders party thereto, RBL Agent (on behalf of itself and the other RBL Credit Agreement Claimholders) has agreed (a) to release the RBL DevCo Guarantees and to terminate the Liens encumbering the Property of Bobcat and Beartooth securing the RBL Credit Agreement Obligations and (b) that each of Bobcat and Beartooth may continue to guarantee the Midstream Credit Agreement Obligations pursuant to the Midstream DevCo Guarantees and that the Liens on their respective Property may continue to secure the Midstream Credit Agreement Obligations;
In order to induce the RBL Agent (on behalf itself and the other RBL Credit Agreement Claimholders) to permit the continuance of the Midstream DevCo Guarantees and the Liens on the Property of Bobcat and Beartooth securing the Midstream Credit Agreement Obligations (notwithstanding the release of the RBL DevCo Guarantees and the termination of the Liens on the Property of Bobcat and Beartooth securing the RBL Credit Agreement Obligations), the Midstream Agent has agreed (on behalf of itself and the other Midstream Credit Agreement Claimholders) to enter into this Agreement amending and restating the Original Intercreditor Agreement and setting forth certain limitations with respect to the Collateral and the application of the proceeds of any Collateral;
Furthermore, it is a condition precedent to the effectiveness of the RBL Tenth Amendment and to the RBL Agent’s agreement to amend and restate the Original Intercreditor Agreement that the Grantors and the DevCo Parent acknowledge and agree to the terms and conditions of this Agreement;
In consideration of the foregoing, the mutual covenants and obligations herein set forth and for other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, each of the RBL Agent (for itself and on behalf of each other RBL Credit Agreement Claimholder) and the Midstream Agent (for itself and on behalf of each other Midstream Credit Agreement Claimholder), intending to be legally bound, hereby agrees to amend and restate the Original Intercreditor Agreement in its entirety as follows:

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Article I
Definitions
Section 1.1     Certain Defined Terms. Capitalized terms used and not otherwise defined herein shall have the meanings set forth in the Midstream Credit Agreement (whether or not then in effect). As used in this Agreement, the following terms have the meanings specified below:
“ Agent ” means (a)  in the case of any Midstream Credit Agreement Obligations, the Midstream Agent and (a)  in the case of the RBL Credit Agreement Obligations, the RBL Agent, and in each case, any successor to such Agent in accordance with the terms of this Agreement.
“ Agreement ” has the meaning set forth in the introductory paragraph hereto.
“ Bankruptcy Case ” has the meaning set forth in Section 2.5(b).
“ Bankruptcy Code ” means Title 11 of the United States Code, as amended.
“ Bankruptcy Law ” means the Bankruptcy Code and any similar Federal, state or foreign law for the relief of debtors.
“ Beartooth ” has the meaning set forth in the preamble.
“ Beartooth DevCo Parent Undertaking ” means the DevCo Parent Undertaking Agreement Regarding Beartooth dated as of the date hereof among the RBL Agent, and Oasis Midstream Services LLC, as such agreement may be amended, supplemented or otherwise modified from time to time.
“ Bobcat ” has the meaning set forth in the preamble.
“ Bobcat DevCo Parent Undertaking ” means the DevCo Parent Undertaking Agreement Regarding Bobcat dated as of the date hereof among the RBL Agent and Oasis Midstream Services LLC, as such agreement may be amended, supplemented or otherwise modified from time to time.
“ Business Day ” means any day that is not a Saturday, Sunday or other day on which commercial banks in New York City or Houston, Texas are authorized or required by law to remain closed.
“ Claimholders ” means collectively (a)  the Midstream Credit Agreement Claimholders and (a)  the RBL Credit Agreement Claimholders; provided that neither Agent acting in its capacity as an Agent shall be deemed to be a Claimholder.
“ Collateral ” means all assets and properties subject to, or purported to be subject to, Liens created pursuant to any Midstream DevCo Collateral Document and shall include any property or assets subject to replacement Liens or adequate protection Liens in favor of any Midstream DevCo Collateral Document. For the avoidance of doubt, in no event shall any Property of any “Credit Party” under the Midstream Credit Agreement or any Property of any “Credit Party” under the RBL Credit Agreement be deemed to be Collateral for purposes of this Agreement.
“ Credit Agreement Documents ” means collectively (a)  the Midstream Credit Agreement Documents and (a)  the RBL Credit Agreement Documents.
“ DevCo Ownership Percentage ” means with respect to any DevCo at any time of determination 1) with respect to payments made to the Midstream Agent pursuant to Section 2.1(a), the aggregate percentage of Equity Interests in the applicable DevCo owned directly or indirectly at such time by OMP and 1) with respect to payments made to the applicable DevCo Parent pursuant to Section 2.1(a), the aggregate percentage of Equity Interests in the applicable DevCo owned directly or indirectly at such time by OPNA (excluding any Equity Interests in such DevCo held directly or indirectly by OMP).
“ DevCo Parent ” means, with respect to each Grantor, the “Credit Party” (as defined in the RBL Credit Agreement) that is party to the DevCo Parent Undertaking in respect of the applicable Grantor.
“ DevCo Parent Undertaking ” means each of the Beartooth DevCo Parent Undertaking and the Bobcat DevCo Parent Undertaking, as the context requires.
“ DIP Financing ” has the meaning set forth in Section 2.5(b).

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“ DIP Financing Liens ” has the meaning set forth in Section 2.5(b).
“ DIP Lenders ” has the meaning set forth in Section 2.5(b).
“ Discharge ” means, with respect to any Series of Obligations, that such Series of Obligations has been indefeasibly repaid in full in cash. The term “ Discharged ” shall have a corresponding meaning.
“ Discharge of Midstream Credit Agreement ” means, except to the extent otherwise provided in Section 2.6, the Discharge of the Midstream Credit Agreement Obligations; provided that the Discharge of Midstream Credit Agreement shall be deemed not to have occurred if a Replacement Credit Agreement is entered into in respect of the Midstream Credit Agreement until, subject to Section 2.6, such Replacement Credit Agreement Obligations shall have been Discharged.
“ Discharge of RBL Credit Agreement ” means the earlier of (a)  except to the extent otherwise provided in Section 2.6, the Discharge of the RBL Credit Agreement Obligations; provided that the Discharge of RBL Credit Agreement shall be deemed not to have occurred if a Replacement Credit Agreement is entered into in respect of the RBL Credit Agreement until, subject to Section 2.6, such Replacement Credit Agreement Obligations shall have been Discharged and (a)  the date on which each Grantor has become a Wholly-Owned Subsidiary (as defined in the Midstream Credit Agreement).
“ Event of Default ” means an “Event of Default” (or similarly defined term) as defined in any Credit Agreement Document.
“ Foreclosure Remedies ” means the taking of any action to enforce or realize upon any Lien, including the institution of any foreclosure proceedings (judicially or non-judicially) or the noticing of any public or private sale pursuant to Article 9 of the UCC, or taking any action to sell or otherwise dispose of (whether publicly or privately) Collateral or taking any action to enforce any right or power to repossess, replevy, attach, garnish or levy upon any Collateral.
“ Grantors ” means Beartooth, Bobcat and any other entity designated as a DevCo pursuant to the terms of the Midstream Credit Agreement.
“ Insolvency or Liquidation Proceeding ” means:
(a)     any voluntary or involuntary case or proceeding under the Bankruptcy Code with respect to any Grantor;
(b)     any other voluntary or involuntary insolvency, reorganization or bankruptcy case or proceeding, or any receivership, liquidation, reorganization or other similar case or proceeding with respect to any Grantor or with respect to a material portion of its assets;
(c)     any liquidation, dissolution, reorganization or winding up of any Grantor whether voluntary or involuntary and whether or not involving insolvency or bankruptcy; or
(d)     any assignment for the benefit of creditors or any other marshaling of assets and liabilities of any Grantor.
“ Lien ” means any interest in Property securing an obligation owed to, or a claim by, a Person other than the owner of the Property, whether such interest is based on the common law, statute or contract, and whether such obligation or claim is fixed or contingent, and including but not limited to the lien or security interest arising from a mortgage, encumbrance, pledge, security agreement, conditional sale or trust receipt or a lease, consignment or bailment for security purposes.
“ Midstream Agent ” has the meaning set forth in the preamble.
“ Midstream Credit Agreement ” has the meaning set forth in the preamble.
“ Midstream Credit Agreement Claimholders ” means the holders of any Midstream Credit Agreement Obligations, including the “Secured Parties” as defined in the Midstream Credit Agreement.
“ Midstream Credit Agreement Documents ” means the Midstream Credit Agreement, each Midstream DevCo Collateral Document and the other Loan Documents (as defined in the Midstream Credit Agreement), and each of the other agreements, documents and instruments providing for or evidencing any other Midstream Credit Agreement Obligation, as each may be amended, restated, amended and restated, supplemented or otherwise modified from time to time.

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“ Midstream Credit Agreement Obligations ” means:
(a)     all amounts owing to any Secured Party (as defined in the Midstream Credit Agreement) pursuant to the terms and conditions of any Midstream Credit Agreement Document, including all amounts in respect of any principal, premium, interest (including any Post-Petition Interest), Secured Swap Indebtedness (as defined in the Midstream Credit Agreement), amounts owed to any Bank Products Provider (as defined in the Midstream Credit Agreement) in respect of Bank Products (as defined in the Midstream Credit Agreement), penalties, fees, expenses, indemnifications, reimbursements, damages and other liabilities, reimbursement obligations in respect of letters of credit issued pursuant to the Midstream Credit Agreement and guarantees of the foregoing amounts; and
(b)     to the extent any payment with respect to any Midstream Credit Agreement Obligation (whether as proceeds of security, enforcement of any right of setoff or otherwise) is declared to be a fraudulent conveyance or a preference in any respect, set aside or required to be paid to a debtor in possession, receiver or similar Person, then the obligation or part thereof originally intended to be satisfied shall, for the purposes of this Agreement and the rights and obligations of the Midstream Credit Agreement Claimholders and the RBL Credit Agreement Claimholders, be deemed to be reinstated and outstanding as if such payment had not occurred. To the extent that any interest, fees, expenses or other charges (including Post-Petition Interest) to be paid pursuant to the Midstream Credit Agreement Documents are disallowed by order of any court, including by order of a court of competent jurisdiction presiding over an Insolvency or Liquidation Proceeding, such interest, fees, expenses and charges (including Post-Petition Interest) shall, as between the Midstream Credit Agreement Claimholders and the RBL Credit Agreement Claimholders, be deemed to continue to accrue and be added to the amount to be calculated as the “Midstream Credit Agreement Obligations”.
“ Midstream DevCo Collateral Documents ” means the DevCo Mortgages (as defined in the Midstream Credit Agreement) and any other agreement, document or instrument entered into for the purpose of granting a Lien to secure any Midstream DevCo Guarantee or to perfect such Lien (as each may be amended, restated, amended and restated, supplemented or otherwise modified from time to time).
“ Midstream DevCo Guarantees ” has the meaning set forth in the preamble.
“ Midstream Lenders ” has the meaning set forth in the preamble.
“ Midstream Majority Lenders ” means the “Majority Lenders” as defined in the Midstream Credit Agreement.
“ Midstream Triggering Event ” means the occurrence and continuance of a breach by (a) OMP, (b) any other “Credit Party” under and as defined in the Midstream Credit Agreement and/or (c) any DevCo of such Person’s obligations to OPNA and/or its Subsidiaries pursuant to any OPNA Midstream Services Contract to the extent that the occurrence of such breach gives the counterparty to such OPNA Midstream Services Contract the right to terminate such contract.
“ Obligations ” means collectively (a)  the Midstream Credit Agreement Obligations and (a)  the RBL Credit Agreement Obligations.
“ OMP ” has the meaning set forth in the preamble.
“ OPNA ” has the meaning set forth in the preamble.
“ OPNA Midstream Services Contract ” means any contract regarding the provision of midstream services (including, without limitation, transportation, gathering, compressing, treating, processing, distributing or marketing) provided by OMP, any “Credit Party” under the Midstream Credit Agreement and/or any DevCo to OPNA and/or its Subsidiaries.
“ Post-Petition Interest ” means interest, fees, expenses and other charges that pursuant to any Credit Agreement Document that continue to accrue after the commencement of any Insolvency or Liquidation Proceeding, whether or not such interest, fees, expenses and other charges are allowed or allowable under the Bankruptcy Law or in any such Insolvency or Liquidation Proceeding.
“ Proceeds ” has the meaning set forth in Section 2.1(a).
“ RBL Agent ” has the meaning set forth in the preamble.
“ RBL Credit Agreement ” has the meaning set forth in the preamble.

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“ RBL Credit Agreement Claimholders ” means the holders of any RBL Credit Agreement Obligations, including the “Secured Parties” as defined in the RBL Credit Agreement.
“ RBL Credit Agreement Documents ” means the RBL Credit Agreement and the other Loan Documents (as defined in the RBL Credit Agreement), and each of the other agreements, documents and instruments providing for or evidencing any other RBL Credit Agreement Obligation, as each may be amended, restated, amended and restated, supplemented or otherwise modified from time to time.
“ RBL Credit Agreement Obligations ” means:
(a)     all amounts owing to any Secured Party (as defined in the RBL Credit Agreement) pursuant to the terms and conditions of any RBL Credit Agreement Document, including all amounts in respect of any principal, premium, interest (including any Post-Petition Interest), Secured Swap Indebtedness (as defined in the RBL Credit Agreement), amounts owed to any Bank Products Provider (as defined in the RBL Credit Agreement) in respect of Bank Products (as defined in the RBL Credit Agreement), penalties, fees, expenses, indemnifications, reimbursements, damages and other liabilities, reimbursement obligations in respect of letters of credit issued pursuant to the RBL Credit Agreement and guarantees of the foregoing amounts; and
(b)     to the extent any payment with respect to any RBL Credit Agreement Obligation (whether as proceeds of security, enforcement of any right of setoff or otherwise) is declared to be a fraudulent conveyance or a preference in any respect, set aside or required to be paid to a debtor in possession, receiver or similar Person, then the obligation or part thereof originally intended to be satisfied shall, for the purposes of this Agreement and the rights and obligations of the RBL Credit Agreement Claimholders and the Midstream Credit Agreement Claimholders, be deemed to be reinstated and outstanding as if such payment had not occurred. To the extent that any interest, fees, expenses or other charges (including Post-Petition Interest) to be paid pursuant to the RBL Credit Agreement Documents are disallowed by order of any court, including by order of a court of competent jurisdiction presiding over an Insolvency or Liquidation Proceeding, such interest, fees, expenses and charges (including Post-Petition Interest) shall, as between the Midstream Credit Agreement Claimholders and the RBL Credit Agreement Claimholders, be deemed to continue to accrue and be added to the amount to be calculated as the “RBL Credit Agreement Obligations”.
“ RBL DevCo Guarantees ” has the meaning set forth in the preamble.
“ RBL Lenders ” has the meaning set forth in the preamble.
“ Refinance ” means, in respect of either the Midstream Credit Agreement Obligations or the RBL Credit Agreement Obligations, to refinance, extend, renew, defease, amend, modify, supplement, restructure, replace, refund or repay, or to issue other indebtedness in exchange or replacement for, such indebtedness in whole or in part and regardless of whether the principal amount of such Refinancing indebtedness is the same, greater than or less than the principal amount of the Refinanced indebtedness. “ Refinanced ” and “ Refinancing ” shall have correlative meanings.
“ Replacement Agent ” means, in respect of any Replacement Credit Agreement, the administrative agent or person serving in similar capacity under the Replacement Credit Agreement.
“ Replacement Credit Agreement ” means any loan agreement, indenture or other agreement that (a)  Refinances either the RBL Credit Agreement Obligations or the Midstream Credit Agreement Obligations in accordance with Section 2.7 hereof and (a)  becomes either the Midstream Credit Agreement or the RBL Credit Agreement hereunder by designation as such pursuant to Section 5.14.
“ Replacement Credit Agreement Claimholders ” means the holders of any Replacement Credit Agreement Obligations, including the “ Secured Parties ” as defined in such Replacement Credit Agreement or in the Replacement Credit Agreement Documents and the Replacement Agent.
“ Replacement Credit Agreement Documents ” means the Replacement Credit Agreement and the other “ Loan Documents ” (as defined in the Replacement Credit Agreement) or similar term, and each of the other agreements, documents and instruments providing for or evidencing any other Replacement Credit Agreement Obligation, as each may be amended, restated, amended and restated, supplemented or otherwise modified from time to time.
“ Replacement Credit Agreement Obligations ” means:
(a)     all amounts owing to any secured party pursuant to the terms and conditions of any Replacement Credit Agreement Document, including all amounts in respect of any principal, premium, interest (including any Post-Petition Interest),

5



penalties, fees, expenses, indemnifications, reimbursements, damages and other liabilities, and guarantees of the foregoing amounts; and
(b)     to the extent any payment with respect to any Replacement Credit Agreement Obligation (whether by or on behalf of any Grantor, as proceeds of security, enforcement of any right of setoff or otherwise) is declared to be a fraudulent conveyance or a preference in any respect, set aside or required to be paid to a debtor in possession, any Claimholder, receiver or similar Person, then the obligation or part thereof originally intended to be satisfied shall, for the purposes of this Agreement and the rights and obligations of the Replacement Credit Agreement Claimholders and the other Claimholders, be deemed to be reinstated and outstanding as if such payment had not occurred. To the extent that any interest, fees, expenses or other charges (including Post-Petition Interest) to be paid pursuant to the Replacement Credit Agreement Documents are disallowed by order of any court, including by order of a court of competent jurisdiction presiding over an Insolvency or Liquidation Proceeding, such interest, fees, expenses and charges (including Post-Petition Interest) shall, as between the Replacement Credit Agreement Claimholders and the other Claimholders, be deemed to continue to accrue and be added to the amount to be calculated as the “Replacement Credit Agreement Obligations”.
“ Series ” means either the Midstream Credit Agreement Obligations or the RBL Credit Agreement Obligations, as the context requires.
“ Subsidiary ” of a Person (the “ parent ”) means any Person of which at least a majority of the outstanding Equity Interests having by the terms thereof ordinary voting power to elect a majority of the board of directors, manager or other governing body of such Person (irrespective of whether or not at the time Equity Interests of any other class or classes of such Person shall have or might have voting power by reason of the happening of any contingency) is at the time directly or indirectly owned or controlled by the parent.
“ UCC ” means the Uniform Commercial Code as in effect from time to time in the State of New York; provided , however , that in the event that, by reason of mandatory provisions of law, any or all of the perfection or priority of, or remedies with respect to, any Collateral is governed by the Uniform Commercial Code as enacted and in effect in a jurisdiction other than the State of New York, the term “ UCC ” shall mean the Uniform Commercial Code as enacted and in effect in such other jurisdiction solely for purposes of the provisions hereof relating to such perfection, priority or remedies.
Section 1.2     Rules of Construction. The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”. The word “will” shall be construed to have the same meaning and effect as the word “shall”. Unless the context requires otherwise (a)  any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented, restated or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b)  any reference herein to any law shall be construed as referring to such law as amended, modified, codified or reenacted, in whole or in part, and in effect from time to time, (c)  any reference herein to any Person shall be construed to include such Person’s successors and assigns (subject to the restrictions contained herein), (d)  the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (e)  with respect to the determination of any time period, the word “from” means “from and including” and the word “to” means “to and including” and (f)  any reference herein to Articles, Sections, Annexes, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Annexes, Exhibits and Schedules to, this Agreement.
Article II
Agreements With Respect to Collateral
Section 2.1     Application of Proceeds.
(a)     Anything contained herein or in any of the RBL Credit Agreement Documents and the Midstream RBL Credit Agreement Documents to the contrary notwithstanding, if the Midstream Agent is taking action to enforce rights in respect of any Collateral (whether under the Midstream DevCo Collateral Documents or at law or otherwise) which results in the receipt of any proceeds, or any distribution is made in respect of any Collateral in any Bankruptcy Case of any Grantor or any Midstream Credit Agreement Claimholder receives any payment with respect to any Collateral (other than pursuant to a distribution by a Grantor in respect of its equity interests prior to an Event of Default under the Midstream Credit Agreement Documents), the proceeds of any sale, collection or other liquidation of any Collateral or other distribution otherwise received with respect to such Collateral and proceeds of any such distribution by the Midstream Agent or any Midstream Credit Agreement Claimholder (subject, in the case of any such distribution, to the sentence immediately following clause THIRD below) (all proceeds of any sale, collection

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or other liquidation of any Collateral and all proceeds of any such distribution and any proceeds of any insurance covering the Collateral received by the Midstream Agent and not returned to any Grantor under any Midstream Credit Agreement Document being collectively referred to as “ Proceeds ”), shall be applied by the Midstream Agent in the following order (in each case, subject to compliance with any binding order from an applicable Governmental Authority, including without limitation, any binding order in connection with an Insolvency or Liquidation Proceeding):
(i)     FIRST, to the payment of all amounts owing to the Midstream Agent (in its capacity as such) secured by such Collateral, including all reasonable costs and expenses incurred by the Midstream Agent (in its capacity as such) in connection with such collection or sale or otherwise in connection with this Agreement, any Midstream DevCo Collateral Document or any Midstream DevCo Guaranty, including all court costs and the reasonable fees and expenses of its agents and legal counsel, and any other reasonable costs or expenses incurred in connection with the exercise of any right or remedy hereunder or thereunder and all fees and indemnities owing to the Midstream Agent hereunder or thereunder (provided that the amount of such costs, expenses, fees and indemnities shall be determined by the Midstream Agent in its reasonable discretion);
(ii)     SECOND, to the extent Proceeds remain after the application pursuant to preceding clause (i) , to each of (x) the Midstream Agent for the payment of the other Midstream Credit Agreement Obligations and (y) the applicable DevCo Parent, in each case pro rata in accordance with the DevCo Ownership Percentage of the applicable DevCo; and
(iii)     THIRD, any balance of such Proceeds remaining after the application pursuant to preceding clauses (i) and (ii) , to the Grantors, their successors or assigns from time to time, or to whomever may be lawfully entitled to receive the same.
If, despite the provisions of this Section 2.1(a), any Midstream Credit Agreement Claimholder shall receive any payment or other recovery in respect of the Collateral in excess of its portion of payments on account of the Midstream Credit Agreement Obligations to which it is then entitled in accordance with this Section 2.1(a), such Claimholder shall hold such payment or recovery in trust for the benefit of all Claimholders for distribution in accordance with this Section 2.1(a). In furtherance of the priorities set forth in this Section 2.1(a), each Grantor irrevocably authorizes and directs the Midstream Agent to pay any amounts payable to such Grantor pursuant to this Section 2.1(a) to the DevCo Parent on behalf of such Grantor. For the avoidance of doubt, (x) in no event shall any amounts paid by the Midstream Agent to the DevCo Parent or to the Grantors pursuant to clauses (ii) or (iii) above be deemed to be in satisfaction of any portion of the Midstream Credit Agreement Obligations and (y) each of the Parties hereto expressly agree and acknowledge that the Liens created by Midstream DevCo Collateral Documents only secure the Midstream Credit Agreement Obligations and the amount that may be realized by the Midstream Credit Agreement Claimholders in respect of the Liens granted by the Midstream DevCo Collateral Documents is limited to the aggregate proceeds from the liquidation of the Collateral granted by the applicable Grantor multiplied by the DevCo Ownership Percentage of the applicable DevCo. Furthermore, each of the Parties acknowledges and agrees that the Midstream Agent shall have no liability for not paying any amounts to the DevCo Parent or to the Grantor pursuant to this Section 2.1(a) to the extent that the Midstream Agent is precluded from making such payment pursuant to any binding order from an applicable Governmental Authority, including without limitation, any binding order in connection with an Insolvency or Liquidation Proceeding.
(b)     It is acknowledged that each of the RBL Credit Agreement Obligations and the Midstream Credit Agreement Obligations may, subject to any limitations set forth in this Agreement, be increased, extended, renewed, replaced, restated, supplemented, restructured, repaid, refunded, Refinanced or otherwise amended or modified from time to time, all without affecting the priorities set forth in Section 2.1(a) or the provisions of this Agreement defining the relative rights of the Claimholders.
Section 2.2     Actions with Respect to Collateral; Prohibition on Contesting Liens.
(a)     Each of the Agents (on behalf of themselves and on behalf of the Claimholders represented by such Agent) acknowledge and agree that (i) only the Midstream Agent shall act or refrain from acting with respect to Collateral and (ii) no other Claimholder shall or shall instruct the Midstream Agent to exercise any Foreclosure Remedies in respect of, Collateral, whether under applicable law or otherwise, it being agreed that only the Midstream Agent, acting in accordance with the Midstream DevCo Collateral Documents, shall be entitled to take any such actions or exercise any Foreclosure Remedies with respect to such Collateral at such time.
(b)     The Midstream Agent agrees that it will not accept any Lien on any Collateral other than pursuant to the Midstream DevCo Collateral Documents, and the RBL Agent agrees that it will not accept any Lien on any Collateral. Each Agent agrees that, by executing this Agreement, each such Agent and Claimholders for which it is acting hereunder agree to be bound by the provisions of this Agreement.

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(c)     Notwithstanding anything else to the contrary in this Agreement, the Midstream Agent may not exercise Foreclosure Remedies with respect to any Collateral unless (i) an “Event of Default” as defined in the Midstream Credit Agreement has occurred and is continuing and (ii) a Midstream Triggering Event has occurred and is continuing; provided that such limitation on the exercise of Foreclosure Remedies shall not limit the right of the Midstream Agent to take any other remedies provided for under the applicable Midstream Credit Agreement Documents or at law in respect of the Collateral.
Section 2.3     No Interference; Payment Over; Exculpatory Provisions.
(a)     Each Claimholder agrees that (1) it will not challenge or question or support any other Person in challenging or questioning in any proceeding the validity or enforceability of any Obligations or any Midstream DevCo Collateral Document or the validity, attachment, perfection or priority of any Lien under any Midstream DevCo Collateral Document or the validity or enforceability of the priorities, rights or duties established by this Agreement; (2) it will not take or cause to be taken any action the purpose or intent of which is, or could be, to interfere, hinder or delay, in any manner, whether by judicial proceedings or otherwise, any sale, transfer or other disposition of the Collateral by the Midstream Agent, (3) it shall have no right to and shall not otherwise (a) direct the Midstream Agent or any other Midstream Credit Agreement Claimholder to exercise any right, remedy or power with respect to any Collateral or (b) consent to, or object to, the exercise by, or any forbearance from exercising by, the Midstream Agent or any other Midstream Credit Agreement Claimholder represented by it of any right, remedy or power with respect to any Collateral, (4) it will not institute any suit or assert in any suit or Insolvency or Liquidation Proceeding any claim against the Midstream Agent or any other Midstream Credit Agreement Claimholder represented by it seeking damages from or other relief by way of specific performance, instructions or otherwise with respect to any Collateral and (5) it will not attempt, directly or indirectly, whether by judicial proceedings or otherwise, to challenge the enforceability of any provision of this Agreement; provided that nothing in this Agreement shall be construed to prevent or impair the rights of either Agent or any other Claimholder to enforce this Agreement.
(b)     Each Midstream Credit Agreement Claimholder hereby agrees that if it shall obtain possession of any Collateral or shall realize any Proceeds or payment in respect of any Collateral, pursuant to any Midstream DevCo Collateral Document or by the exercise of any rights available to it under applicable law or in any Insolvency or Liquidation Proceeding or through any other exercise of remedies, at any time prior to the Discharge of each Series of Obligations, then it shall hold such Collateral, proceeds or payment in trust for the other Claimholders and promptly transfer any such Collateral, proceeds or payment, as the case may be, to the Midstream Agent to be distributed by the Midstream Agent in accordance with the provisions of Section 2.1(a) hereof.
(c)     The Midstream Agent shall not be liable for any action taken or omitted to be taken by the Midstream Agent with respect to any Collateral in accordance with the provisions of this Agreement.
Section 2.4     Automatic Termination of Grantor Status. Upon any Grantor becoming a direct or indirect Wholly-Owned Subsidiary of OMP or the occurrence of the Discharge of RBL Credit Agreement, such Grantor shall automatically (and without further action by any Person) cease to be a Grantor under this Agreement and the Property of such Grantor shall no longer be deemed to be Collateral for purposes of this Agreement.
Section 2.5     Certain Agreements with Respect to Bankruptcy or Insolvency Proceedings.
(a)     This Agreement shall continue in full force and effect notwithstanding the commencement of any Insolvency or Liquidation Proceeding by or against any Grantor or any of its subsidiaries.
(b)     If any Grantor shall become subject to a case (a “ Bankruptcy Case ”) under the Bankruptcy Code and shall, as debtor(s)-in-possession, move for approval of financing (“ DIP Financing ”) to be provided by one or more lenders (the “ DIP Lenders ”) under Section 364 of the Bankruptcy Code or the use of cash collateral under Section 363 of the Bankruptcy Code, each Claimholder agrees that it will not raise any objection to any such financing or to the Liens on the Collateral securing the same (“ DIP Financing Liens ”) or to any use of cash collateral that constitutes Collateral, unless the Midstream Agent acting at the direction of the Midstream Majority Lenders shall then oppose or object to such DIP Financing or such DIP Financing Liens or use of cash collateral, in each case so long as (a) if any amount of such DIP Financing or cash collateral is applied in respect of the Midstream Credit Agreement Obligations, such amount is applied pursuant to Section 2.1(a) of this Agreement and (b) if any Midstream Credit Agreement Claimholders are granted adequate protection with respect to the Midstream Credit Agreement Obligations subject hereto, including in the form of periodic payments, in connection with such use of cash collateral, the proceeds of such adequate protection are applied pursuant to Section 2.1(a) of this Agreement.
Section 2.6     Reinstatement. In the event that any of the Obligations shall be paid in full and such payment or any part thereof shall subsequently, for whatever reason (including an order or judgment for disgorgement of a preference under Title 11

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of the Bankruptcy Code, or any similar law, or the settlement of any claim in respect thereof), be required to be returned or repaid, the terms and conditions of this Agreement shall be fully applicable thereto until all such Obligations shall again have been paid in full in cash. This Section 2.6 shall survive termination of this Agreement.
Section 2.7     Refinancings. The Obligations of any Series may, subject to Section 5.14, be Refinanced, in whole or in part, in each case, without notice to, or the consent (except to the extent a consent is otherwise required to permit the Refinancing transaction under any Credit Agreement Document) of any Claimholder of any other Series, all without affecting the priorities provided for herein or the other provisions hereof; provided that the Replacement Agent of the holders of any such Refinancing indebtedness shall have executed a Joinder Agreement on behalf of the holders of such Refinancing indebtedness.
Article III
[INTENTIONALLY OMITTED]
Article IV
The Agents
Section 4.1     Authority.
(a)     Notwithstanding any other provision of this Agreement, nothing herein shall be construed to impose any fiduciary or other duty on the Midstream Agent to any RBL Credit Agreement Claimholder or to the DevCo Parent or give any RBL Credit Agreement Claimholder or the DevCo Parent the right to direct the Midstream Agent, except that the Midstream Agent shall be obligated to distribute proceeds of any Collateral in accordance with Section 2.1(a) hereof.
(b)     In furtherance of the foregoing, each RBL Credit Agreement Claimholder and the DevCo Parent acknowledge and agree that the Midstream Agent shall be entitled, for the benefit of the Midstream Credit Agreement Claimholders, to sell, transfer or otherwise dispose of or deal with any Collateral as provided herein and in the Midstream DevCo Collateral Documents, as applicable, subject to compliance with the provisions of Section 2.1(a) hereof. Without limiting the foregoing, each RBL Credit Agreement Claimholder and the DevCo Parent agree that neither the Midstream Agent nor any other Midstream Credit Agreement Claimholder shall have any duty or obligation first to marshal or realize upon any type of Collateral, or to sell, dispose of or otherwise liquidate all or any portion of such Collateral, in any manner that would maximize the return to the DevCo Parent hereunder, notwithstanding that the order and timing of any such realization, sale, disposition or liquidation may affect the amount of proceeds actually received by the DevCo Parent hereunder from such realization, sale, disposition or liquidation. Each of the RBL Credit Agreement Claimholders and the DevCo Parent waive any claim it may now or hereafter have against the Midstream Agent or any other Midstream Credit Agreement Claimholder arising out of (1)  any actions which the Midstream Agent or any Midstream Credit Agreement Claimholder represented by it take or omit to take (including actions with respect to the creation, perfection or continuation of Liens securing the Midstream Credit Agreement Obligations on any Collateral, actions with respect to the foreclosure upon, sale, release or depreciation of, or failure to realize upon, any of the Collateral and actions with respect to the collection of any claim for all or any part of the Midstream Credit Agreement Obligations from any account debtor, guarantor or any other party) in accordance with the Midstream DevCo Collateral Documents or any other agreement related thereto or in connection with the collection of the Midstream Credit Agreement Obligations or the valuation, use, protection or release of any security for the Midstream Credit Agreement Obligations, provided that nothing in this clause (1) shall be construed to prevent or impair the rights of either Agent to enforce this Agreement, (1)  any election by any holders of Midstream Credit Agreement Obligations, in any proceeding instituted under the Bankruptcy Code, of the application of Section 1111(b) of the Bankruptcy Code or (1)  subject to Section 2.5, any borrowing, or grant of a security interest or administrative expense priority under Section 364 of the Bankruptcy Code or any equivalent provision of any other Bankruptcy Law, by any Grantor, as debtor-in-possession. Notwithstanding any other provision of this Agreement, the Midstream Agent shall not (1) accept any Collateral in full or partial satisfaction of any Midstream Credit Agreement Obligations pursuant to Section 9-620 of the Uniform Commercial Code of any jurisdiction, without the consent of each Agent representing holders of Obligations or (1) “credit bid” for or purchase (other than for cash) Collateral at any public, private or judicial foreclosure upon such Collateral, without the consent of each Agent representing holders of Obligations.
Article V
Miscellaneous
Section 5.1     Integration/Conflicts. This Agreement, together with the other Credit Agreement Documents and the Midstream DevCo Collateral Documents, represents the entire agreement of each of the Grantors, the DevCo Parent, the Agents and the Claimholders with respect to the subject matter hereof and thereof and supersedes any and all previous agreements and understandings, oral or written, relating to the subject matter hereof and thereof. There are no promises, undertakings, representations or warranties by any Agent or Claimholder relative to the subject matter hereof and thereof not expressly set forth

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or referred to herein or therein. In the event of any conflict between the provisions of this Agreement and the provisions of the Credit Agreement Documents, the provisions of this Agreement shall govern and control.
Section 5.2     Effectiveness; Continuing Nature of this Agreement; Severability. This Agreement shall become effective when executed and delivered by the parties hereto. This is a continuing agreement and the Claimholders of each Series may continue, at any time and without notice to any Claimholder of the other Series, to extend credit and other financial accommodations and lend monies to or for the benefit of the Grantors constituting Obligations in reliance hereon. Each Agent, on behalf of itself and each Claimholder represented by it, hereby waives any right it may have under applicable law to revoke this Agreement or any of the provisions of this Agreement. The terms of this Agreement shall survive, and shall continue in full force and effect, in any Insolvency or Liquidation Proceeding. Any provision of this Agreement that 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. The parties hereto shall endeavor in good-faith negotiations to replace any invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to those of the invalid, illegal or unenforceable provisions. All references to any Grantor shall include such Grantor as debtor and debtor in possession and any receiver, trustee or similar person for such Grantor in any Insolvency or Liquidation Proceeding. This Agreement shall terminate and be of no further force and effect with respect to any Agent and the Claimholders represented by such Agent and their Obligations, on the date on which all Obligations of such Claimholders are Discharged, subject to the rights of the Claimholders under Section 2.6; provided , however , that such termination shall not relieve any such party of its obligations incurred hereunder prior to the date of such termination. Upon the occurrence of the Discharge of RBL Credit Agreement Obligations (other than in connection with a Replacement Credit Agreement), the RBL Agent shall deliver prompt notice thereof to the Midstream Agent.
Section 5.3     Amendments; Waivers. No amendment, modification or waiver of any of the provisions of this Agreement shall be deemed to be made unless the same shall be in writing signed on behalf of each party hereto or its authorized agent and each waiver, if any, shall be a waiver only with respect to the specific instance involved and shall in no way impair the rights of the parties making such waiver or the obligations of the other parties to such party in any other respect or at any other time. Notwithstanding the foregoing, the Grantors and the DevCo Parent shall not have any right to consent to or approve any amendment, modification or waiver of any provision of this Agreement except to the extent their rights are adversely affected.
Section 5.4     Information Concerning Financial Condition of the Grantors and their Subsidiaries. The Agent and the Claimholders of each Series shall each be responsible for keeping themselves informed of  the financial condition of the Grantors and their Subsidiaries and all endorsers and/or guarantors of the Obligations and  all other circumstances bearing upon the risk of nonpayment of the Obligations. The Agent and the Claimholders of each Series shall have no duty to advise the Agent or Claimholders of any other Series of information known to it or them regarding such condition or any such circumstances or otherwise. In the event the Agent or any of the Claimholders of a Series, in its or their sole discretion, undertakes at any time or from time to time to provide any such information to the Agent or Claimholders of any other Series, it or they shall be under no obligation:
(a)     to make, and such Agent and such Claimholders shall not make, any express or implied representation or warranty, including with respect to the accuracy, completeness, truthfulness or validity of any such information so provided;
(b)     to provide any additional information or to provide any such information on any subsequent occasion;
(c)     to undertake any investigation; or
(d)     to disclose any information, which pursuant to accepted or reasonable commercial finance practices, such party wishes to maintain confidential or is otherwise required to maintain confidential.
Section 5.5     Submission to Jurisdiction; Certain Waivers. Each Grantor, the DevCo Parent and each Agent, on behalf of itself and each other Claimholder represented by it, hereby irrevocably and unconditionally:
(a)     submits for itself and its property in any legal action or proceeding relating to this Agreement (whether arising in contract, tort or otherwise) to which it is a party, or for recognition and enforcement of any judgment in respect thereof, to the general jurisdiction of the courts of the State of New York sitting in the Borough of Manhattan, the courts of the United States for the Southern District of New York sitting in the Borough of Manhattan, and appellate courts from any thereof;
(b)     agrees that all claims in respect of any such action or proceeding shall be heard and determined in such New York state court or, to the fullest extent permitted by applicable law, in such federal court;

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(c)     agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law;
(d)     waives, to the fullest extent permitted by applicable law, any objection that it may now or hereafter have to the laying of venue of any action or proceeding arising out of or relating to this Agreement in any court referred to in Section 5.5(a) (and irrevocably waives to the fullest extent permitted by applicable law the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court);
(e)     consents to service of process in any such proceeding in any such court by registered or certified mail, return receipt requested, to the applicable party at its address provided in accordance with Section 5.7 (and agrees that nothing in this Agreement will affect the right of any party hereto to serve process in any other manner permitted by applicable law);
(f)     agrees that service as provided in Section 5.5(e) above is sufficient to confer personal jurisdiction over the applicable party in any such proceeding in any such court, and otherwise constitutes effective and binding service in every respect; and
(g)     waives, to the maximum extent not prohibited by law, any right it may have to claim or recover any special, exemplary, punitive or consequential damages.
Section 5.6     WAIVER OF JURY TRIAL. EACH PARTY HERETO, THE DEVCO PARENT AND EACH GRANTOR HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER CREDIT AGREEMENT DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT, BREACH OF DUTY, COMMON LAW, STATUTE OR ANY OTHER THEORY). EACH PARTY HERETO, THE DEVCO PARENT AND THE GRANTORS (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT EACH SUCH PARTY HERETO, THE DEVCO PARENT AND THE GRANTORS HAVE BEEN INDUCED TO ENTER INTO OR ACKNOWLEDGE THIS AGREEMENT AND THE OTHER CREDIT AGREEMENT DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION. EACH PARTY HERETO, THE DEVCO PARENT AND THE GRANTORS FURTHER REPRESENTS AND WARRANTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.
Section 5.7     Notices. Unless otherwise specifically provided herein, any notice hereunder shall be in writing and may be personally served or sent by facsimile, electronic mail or United States mail or courier service and shall be deemed to have been given when delivered in person or by courier service and signed for against receipt thereof, upon receipt of facsimile or electronic mail, or three Business Days after depositing it in the United States mail with postage prepaid and properly addressed. For the purposes hereof, the addresses of the parties hereto shall be as set forth below each party’s name on the signature pages hereto or, as to each party, at such other address as may be designated by such party in a written notice to all of the other parties.
Section 5.8     Further Assurances. Each Agent, on behalf of itself and each Claimholder represented by it, the DevCo Parent and each Grantor, agree that each of them shall take such further action and shall execute and deliver such additional documents and instruments (in recordable form, if requested) as any Agent may reasonably request to effectuate the terms of this Agreement.
Section 5.9     Agency Capacities. Except as expressly provided herein,  Wells Fargo Bank, N.A. is acting in the capacity of RBL Agent solely for the RBL Credit Agreement Claimholders and  Wells Fargo Bank, N.A. is acting in the capacity of Midstream Agent solely for the Midstream Credit Agreement Claimholders.
Section 5.10     GOVERNING LAW. THIS AGREEMENT, AND ANY DISPUTE, CLAIM OR CONTROVERSY ARISING OUT OF OR RELATING TO THIS AGREEMENT (WHETHER ARISING IN CONTRACT, TORT OR OTHERWISE) SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAW RULES THAT WOULD RESULT IN THE APPLICATION OF A DIFFERENT GOVERNING LAW (OTHER THAN ANY MANDATORY PROVISIONS OF THE UCC RELATING TO THE LAW GOVERNING PERFECTION AND THE EFFECT OF PERFECTION OR PRIORITY OF THE SECURITY INTERESTS).

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Section 5.11     Binding on Successors and Assigns. This Agreement shall be binding upon each Agent, the Claimholders, the DevCo Parent and the Grantors, and their respective successors and assigns from time to time. If any of the Agents resigns or is replaced pursuant to the applicable Credit Agreement Documents, its successor shall be deemed to be a party to this Agreement and shall have all the rights of, and be subject to all the obligations of, this Agreement.
Section 5.12     Section Headings. Section headings and the Table of Contents used in this Agreement are for convenience of reference only and are not to affect the construction hereof or be taken into consideration in the interpretation hereof.
Section 5.13     Counterparts. This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts (including by facsimile or other electronic imaging means), and all of said counterparts taken together shall be deemed to constitute one and the same instrument. Delivery of an executed signature page of this Agreement by facsimile or other electronic transmission (e.g., “pdf” or “tif” format) shall be effective as delivery of a manually executed counterpart hereof.
Section 5.14     Replacement and Refinancing of Obligations.
(a)     OPNA or OMP may consummate a Refinancing after the date hereof that is subject to the terms of this Agreement. Each Replacement Credit Agreement and any Replacement Credit Agreement Documents executed in connection therewith shall have the benefit of, and shall be subject to, this Agreement on the same terms that applied to the Credit Agreement Documents replaced as part of such Refinancing, if, and subject to the condition that, the agent under any such Replacement Credit Agreement, acting on behalf of the holders of such obligations under such Replacement Credit Agreement becomes a party to this Agreement by satisfying the conditions set forth in Section 5.14(b).
(b)     In order for a Replacement Agent to become a party to this Agreement,
(i)     such Replacement Agent shall have executed and delivered an instrument substantially in the form of Exhibit A (with such changes as may be reasonably approved by each Agent and such Replacement Agent) pursuant to which such Replacement Agent becomes an Agent hereunder, and the obligations incurred pursuant to such Replacement Credit Agreement become subject hereto and bound hereby;
(ii)     the Grantors shall have delivered to each Agent:
(A)     true and complete copies of each Replacement Credit Agreement and the Replacement Credit Agreement Documents for such Series, certified as being true and correct by a Responsible Officer of the Grantors;
(B)     a designation substantially in the form of Exhibit B pursuant to which the Grantors shall (i) identify the Replacement Credit Agreement Obligations, and the initial aggregate principal amount or committed amount thereof, (ii) specify the name and address of the Replacement Agent, (iii) certify that such Refinancing is permitted by each Credit Agreement Document and that the conditions set forth in this Section 5.14 are satisfied with respect to such Refinancing and (iv) expressly state that such agreement giving rise to the new indebtedness satisfies the requirements of a Replacement Credit Agreement; and
(iii)     the Replacement Credit Agreement Documents relating to such Refinancing shall provide, in a manner reasonably satisfactory to each Agent, that each claimholder with respect to such Replacement Credit Agreement will be subject to and bound by the provisions of this Agreement in its capacity as a holder of such obligations.
(c)     Upon the execution and delivery of a Joinder Agreement by a Replacement Agent, in accordance with this Section 5.14, the other Agent shall acknowledge such receipt thereof by countersigning a copy thereof, subject to the terms of this Section 5.14; provided that the failure of any Agent to so acknowledge shall not affect the status of such debt as being bound by this Agreement if the other requirements of this Section 5.14 are complied with.
Section 5.15     Authorization. By its signature, each Person executing this Agreement, on behalf of such party or Grantor but not in his or her personal capacity as a signatory, represents and warrants to the other parties hereto that it is duly authorized to execute this Agreement.
Section 5.16     No Third Party Beneficiaries/ Provisions Solely to Define Relative Rights. The provisions of this Agreement are and are intended solely for the purpose of defining the relative rights of the Claimholders in relation to one another.

12



No Grantor nor any other creditor thereof shall have any rights or obligations hereunder and no such Person is an intended beneficiary or third party beneficiary hereof, except, in each case, as expressly provided in this Agreement, and no Grantor may rely on the terms hereof (other than Sections 2.1(a)(iii),  2.4 and 2.7 and Article V, in each case with respect to which each Grantor is an intended beneficiary); provided that the DevCo Parent is an intended beneficiary of, and may rely upon, Section 2.1(a)(ii). Nothing in this Agreement is intended to or shall impair the obligations of any Grantor, which are absolute and unconditional, to pay the Midstream Credit Agreements Obligations under the Midstream DevCo Guarantees in accordance with their terms. Without limitation of any other provisions of this Agreement, each Grantor and DevCo Parent hereby  acknowledges that it has read this Agreement and consents hereto,  agrees that it will not take any action that would be contrary to the express provisions of this Agreement and  agrees to abide by the requirements expressly applicable to it under this Agreement.
Section 5.17     No Indirect Actions. Unless otherwise expressly stated, if a party may not take an action under this Agreement, then it may not take that action indirectly, or support any other Person in taking that action directly or indirectly. “ Taking an action indirectly ” means taking an action that is not expressly prohibited for the party but is intended to have substantially the same effects as the prohibited action.
Section 5.18     Additional Grantors. Any Grantor formed after the date hereof or that is otherwise required to become party to this Agreement shall confirm that it is a Grantor hereunder pursuant to a joinder agreement substantially in the form attached hereto as Exhibit C .
Section 5.19     Grantors as Signatories. The parties hereto acknowledge that the Grantors have executed this Agreement solely (a) to give effect to the amendment and restatement of the Original Intercreditor Agreement pursuant to Section 5.3 of the Original Intercreditor Agreement and (b) in compliance with, and in furtherance of, the obligations of the Grantors under the Midstream DevCo Guarantees and the Midstream DevCo Collateral Documents.
[Remainder of this page intentionally left blank]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.

WELLS FARGO BANK, N.A. ,
as Midstream Agent


By:     /s/ Edward Pak    
Name: Edward Pak
Title: Director

NOTICE ADDRESS:

1000 Louisiana, Suite 900,
Houston, Texas, 77002
Attention: Andrew Ostrov
Facsimile No. (866) 620-0623
E-mail Address: andrew.ostrov@wellsfargo.com


With a copy to WLS Charlotte Agency Services
1525 W. WT Harris Blvd.,
Charlotte, NC 28262
Facsimile No. (704) 590-2782
Email Address: Donna.Verworld@wellsfargo.com



13





WELLS FARGO BANK, N.A.,
as RBL Agent


By:     /s/ Edward Pak    
Name: Edward Pak
Title: Director

NOTICE ADDRESS:

1000 Louisiana, Suite 900,
Houston, Texas, 77002
Attention: Ed Pak
Facsimile No. (713) 651-8101
E-mail Address: Edward.Pak@wellsfargo.com


With a copy to WLS Charlotte Agency Services
1525 W. WT Harris Blvd.,
Charlotte, NC 28262
Facsimile No. (704) 590-2782
Email Address: Donna.Verworld@wellsfargo.com



SIGNATURE PAGE TO
    AMENDED AND RESTATED INTERCREDITOR AGREEMENT



Acknowledged and Agreed to by:

OASIS MIDSTREAM SERVICES LLC, as DevCo Parent


By:     /s/ Richard Robuck    
Name: Richard Robuck
Title: Senior Vice President, Finance and Treasurer

NOTICE ADDRESS:

1001 Fannin, Suite 1500
Houston, Texas 77002
Attention: Richard Robuck
Senior Vice President
Telephone: 281-404-9602
Fax: 281-404-9609

BEARTOOTH DEVCO LLC, as a Grantor


By:     /s/ Richard Robuck    
Name: Richard Robuck
Title: Senior Vice President and Chief Financial Officer

NOTICE ADDRESS:

Same as above.

BOBCAT DEVCO LLC, as a Grantor

By:     /s/ Richard Robuck    
Name: Richard Robuck
Title: Senior Vice President and Chief Financial Officer

NOTICE ADDRESS:

Same as above.



SIGNATURE PAGE TO
    AMENDED AND RESTATED INTERCREDITOR AGREEMENT


Exhibit A
TO AMENDED AND RESTATED INTERCREDITOR AGREEMENT
FORM OF JOINDER AGREEMENT
JOINDER NO. [       ] dated as of [              ], 20[   ] (this “ Joinder Agreement ”) to the AMENDED AND RESTATED INTERCREDITOR AGREEMENT dated as of November 7, 2017, (the “ Intercreditor Agreement ”), among Wells Fargo Bank, N.A., as Midstream Agent, Wells Fargo Bank, N.A., as RBL Agent, and acknowledged and agreed to by the Grantors and DevCo Parent signatory thereto.
A.    Capitalized terms used herein but not otherwise defined herein shall have the meanings assigned to such terms in the Intercreditor Agreement.
B.    As a condition to the ability of the Grantors to guarantee Replacement Credit Agreement Obligations under the Replacement Credit Agreement and to secure such Replacement Credit Agreement Obligations with the liens and security interests created by the Replacement Credit Agreement Documents (to the extent that such Replacement Credit Agreement Refinances the Midstream Credit Agreement Obligations), the Replacement Agent in respect thereof is required to become an Agent and the Claimholders in respect thereof are required to become subject to and bound by, the Intercreditor Agreement. Section 5.14 of the Intercreditor Agreement provides that such Replacement Agent may become an Agent and such Claimholders may become subject to and bound by the Intercreditor Agreement, pursuant to the execution and delivery by the Replacement Agent of an instrument in the form of this Joinder Agreement and the satisfaction of the other conditions set forth in Section 5.14 of the Intercreditor Agreement. The undersigned Replacement Agent (the “ New Agent ”) is executing this Joinder Agreement in accordance with the requirements of the Intercreditor Agreement.
Accordingly, the New Agent agrees as follows:
SECTION 1.     In accordance with Section 5.14 of the Intercreditor Agreement, (i) the New Agent by its signature below becomes an Agent under, and the related claimholders become subject to and bound by, the Intercreditor Agreement with the same force and effect as if the New Agent had originally been named therein as an Agent and hereby agrees to all the terms and provisions of the Intercreditor Agreement applicable to it as an Agent.
SECTION 2.     The New Agent represents and warrants to the other Agent that (a)  it has full power and authority to enter into this Joinder Agreement, in its capacity as agent, (a)  this Joinder Agreement has been duly authorized, executed and delivered by it and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally or by equitable principles relating to enforceability, and (a)  the Credit Agreement Documents relating to such Replacement Credit Agreement provide that, upon the New Agent’s entry into this Joinder Agreement, the claimholders represented by them will be subject to and bound by the provisions of the Intercreditor Agreement.
SECTION 3.     This Joinder Agreement may be executed in counterparts, each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Joinder Agreement shall become effective when the other Agent shall have received a counterpart of this Joinder Agreement that bears the signatures of the New Agent. Delivery of an executed signature page to this Joinder Agreement by facsimile transmission or other electronic means shall be effective as delivery of a manually signed counterpart of this Joinder Agreement.
SECTION 4.     Except as expressly supplemented hereby, the Intercreditor Agreement shall remain in full force and effect.
SECTION 5.      THIS JOINDER AGREEMENT, AND ANY DISPUTE, CLAIM OR CONTROVERSY ARISING OUT OF OR RELATING TO THIS JOINDER AGREEMENT (WHETHER ARISING IN CONTRACT, TORT OR OTHERWISE) SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT

Exhibit A – Page 1



REGARD TO CONFLICTS OF LAW RULES THAT WOULD RESULT IN THE APPLICATION OF A DIFFERENT GOVERNING LAW (OTHER THAN ANY MANDATORY PROVISIONS OF THE UCC RELATING TO THE LAW GOVERNING PERFECTION AND THE EFFECT OF PERFECTION OR PRIORITY OF THE SECURITY INTERESTS).
SECTION 6.     Any provision of this Joinder Agreement that 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 in the Intercreditor Agreement, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. The parties hereto shall endeavor in good-faith negotiations to replace any invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to those of the invalid, illegal or unenforceable provisions.
SECTION 7.     All communications and notices hereunder shall be in writing and given as provided in Section 5.7 of the Intercreditor Agreement. All communications and notices hereunder to the New Agent shall be given to it at their respective addresses set forth below its signature hereto.
[Remainder of this page intentionally left blank]

Exhibit A – Page 2




IN WITNESS WHEREOF, the New Agent have duly executed this Joinder Agreement to the Intercreditor Agreement as of the day and year first above written.
[NAME OF NEW AGENT], as
[          ] for the holders of [                        ],


By:        
Name:
Title:

Address for notices:

    
    
attention of:     
Telecopy:    

Exhibit A – Page 3




Receipt acknowledged by:

WELLS FARGO BANK, N.A. ,
as Midstream Agent


By:        
Name:
Title:

1000 Louisiana, Suite 900
Houston, Texas, 77002
Attention of Andrew Ostrov
Facsimile No. (866) 620-0623
e-mail address: andrew.ostrov@wellsfargo.com


WELLS FARGO BANK, N.A. ,
as RBL Agent


By:        
Name:
Title:

1000 Louisiana, Suite 900
Houston, Texas, 77002
Attention of Ed Pak
Facsimile No. (713) 651-8101
e-mail address: Edward.Pak@wellsfargo.com


Exhibit A – Page 4



Exhibit B
TO AMENDED AND RESTATED INTERCREDITOR AGREEMENT
[FORM OF]
DEBT DESIGNATION
Reference is made to the Amended and Restated Intercreditor Agreement dated as of November 7, 2017 (as amended, restated, supplemented or otherwise modified from time to time, the “ Intercreditor Agreement ”) among Wells Fargo Bank, N.A., as Midstream Agent, Wells Fargo Bank, N.A., as RBL Agent, and acknowledged and agreed to by the Grantors signatory thereto. Capitalized terms used but not otherwise defined herein have the meanings assigned to them in the Intercreditor Agreement. This Debt Designation is being executed and delivered in order to designate Replacement Credit Agreement Obligations entitled to the benefit and subject to the terms of the Intercreditor Agreement.
The undersigned, the duly appointed [ specify title ] of the Grantors hereby certifies on behalf of the Grantors that:
(a)    the Grantors intend to guarantee debt in the initial aggregate [principal/committed amount] of [            ] arising under the following agreement: [ describe [Replacement Credit Agreement (“ New Agreement ”)] which will be Replacement Credit Agreement Obligations;
(b)    the name and address of the Replacement Agent for the Replacement Credit Agreement is:
_____________________________
_____________________________
Telephone: ____________________
Fax:__________________________
and
(c)    the New Agreement satisfies the requirements of a Replacement Credit Agreement and is hereby designated as a Replacement Credit Agreement].

Exhibit B – Page 1




IN WITNESS WHEREOF, the Grantors have caused this Debt Designation to be duly executed by the undersigned officer as of ___________________, 20____.
[GRANTORS]


By:        
Name:
Title:



Exhibit B – Page 2



Exhibit C
TO AMENDED AND RESTATED INTERCREDITOR AGREEMENT
FORM OF GRANTOR JOINDER AGREEMENT
GRANTOR JOINDER AGREEMENT NO. [ ] (this “ Grantor Joinder Agreement ”) dated as of [      ], 20[  ] to the AMENDED AND RESTATED INTERCREDITOR AGREEMENT dated as of November 7, 2017 (the “ Intercreditor Agreement ”), among Wells Fargo Bank, N.A., as Midstream Agent, Wells Fargo Bank, N.A., as RBL Agent, and acknowledged and agreed to by the Grantors signatory thereto.
Capitalized terms used herein but not otherwise defined herein shall have the meanings assigned to such terms in the Intercreditor Agreement.
The undersigned, [______________], a [________________], (the “ New Grantor ”) wishes to acknowledge and agree to the Intercreditor Agreement and become a party thereto to the limited extent contemplated by Section 5.16 thereof and to acquire and undertake the rights and obligations of a Grantor thereunder.
Accordingly, the New Grantor agrees as follows for the benefit of the Agents and the Claimholders:
SECTION 1.      Accession to the Intercreditor Agreement . The New Grantor (a)  acknowledges and agrees to, and becomes a party to the Intercreditor Agreement as a Grantor to the limited extent contemplated by Section 5.16 thereof, (a)  agrees to all the terms and provisions of the Intercreditor Agreement and (a)  shall have all the rights and obligations of a Grantor under the Intercreditor Agreement. This Grantor Joinder Agreement supplements the Intercreditor Agreement and is being executed and delivered by the New Grantor pursuant to Section 5.18 of the Intercreditor Agreement.
SECTION 2.      Representations, Warranties and Acknowledgement of the New Grantor . The New Grantor represents and warrants to each Agent and to the Claimholders that (a)  it has full power and authority to enter into this Grantor Joinder Agreement, in its capacity as Grantor and (a)  this Grantor Joinder Agreement has been duly authorized, executed and delivered by it and constitutes its legal, valid and binding obligation, enforceable against it in accordance with the terms of this Grantor Joinder Agreement except as such enforceability may be limited by Debtor Relief Laws and by general principles of equity.
SECTION 3.      Counterparts . This Grantor Joinder Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. Delivery of an executed counterpart of a signature page of this Grantor Joinder Agreement or any document or instrument delivered in connection herewith by telecopy or other electronic means shall be effective as delivery of a manually executed counterpart of this Grantor Joinder Agreement or such other document or instrument, as applicable.
SECTION 4.      Section Headings . Section heading used in this Grantor Joinder Agreement are for convenience of reference only and are not to affect the construction hereof or to be taken in consideration in the interpretation hereof.
SECTION 5.      Benefit of Agreement . The agreements set forth herein or undertaken pursuant hereto are for the benefit of, and may be enforced by, any party to the Intercreditor Agreement subject to any limitations set forth in the Intercreditor Agreement with respect to the Grantors.
SECTION 6.      Governing Law . THIS GRANTOR JOINDER AGREEMENT, AND ANY DISPUTE, CLAIM OR CONTROVERSY ARISING OUT OF OR RELATING TO THIS AGREEMENT (WHETHER ARISING IN CONTRACT, TORT OR OTHERWISE) SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAW RULES THAT WOULD RESULT IN THE APPLICATION OF A DIFFERENT GOVERNING LAW (OTHER THAN ANY MANDATORY PROVISIONS OF THE UCC

Exhibit C – Page 1



RELATING TO THE LAW GOVERNING PERFECTION AND THE EFFECT OF PERFECTION OR PRIORITY OF THE SECURITY INTERESTS).
SECTION 7.      Severability . In case any one or more of the provisions contained in this Grantor Joinder Agreement should be held invalid, illegal or unenforceable in any respect, none of the parties hereto shall be required to comply with such provision for so long as such provision is held to be invalid, illegal or unenforceable, but the validity, legality and enforceability of the remaining provisions contained herein and in the Intercreditor Agreement shall not in any way be affected or impaired. The parties hereto shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.
SECTION 8.      Notices . All communications and notices hereunder shall be in writing and given as provided in Section 5.7 of the Intercreditor Agreement. All communications and notices hereunder to the New Grantor shall be given to it at the address set forth under its signature hereto, which information supplements Section 5.7 of the Intercreditor Agreement.

Exhibit C – Page 2




IN WITNESS WHEREOF, the New Grantor has duly executed this Grantor Joinder Agreement to the Intercreditor Agreement as of the day and year first above written.
[    ]


By        
Name:
Title:

Address:    
        
        



Exhibit C – Page 3



EXHIBIT 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO RULE 13A-14(A) AND RULE 15D-14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
I, Thomas B. Nusz, certify that:
1.
I have reviewed this quarterly report on Form 10-Q of Oasis Petroleum Inc. (the “registrant”);
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
 
 
 
 
 
 
 
 
Date:
November 8, 2017
 
 
 
 
/s/ Thomas B. Nusz
 
 
 
 
 
 
Thomas B. Nusz
 
 
 
 
 
 
Chairman and Chief Executive Officer
 
 
 
 
 
 
(Principal Executive Officer)


EXHIBIT 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO RULE 13A-14(A) AND RULE 15D-14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
I, Michael H. Lou, certify that:
1.
I have reviewed this quarterly report on Form 10-Q of Oasis Petroleum Inc. (the “registrant”);
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 
 
 
 
 
 
 
Date:
November 8, 2017
 
 
 
 
/s/ Michael H. Lou
 
 
 
 
 
 
Michael H. Lou
 
 
 
 
 
 
Executive Vice President and Chief Financial Officer
 
 
 
 
 
 
(Principal Financial Officer and Principal Accounting Officer)




EXHIBIT 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the quarterly report of Oasis Petroleum Inc. (the “Company”) on Form 10-Q for the quarter ended September 30, 2017 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Thomas B. Nusz, Chairman and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1)
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
 
 
 
 
 
 
 
Date:
November 8, 2017
 
 
 
 
/s/ Thomas B. Nusz
 
 
 
 
 
 
Thomas B. Nusz
 
 
 
 
 
 
Chairman and Chief Executive Officer
 
 
 
 
 
 
(Principal Executive Officer)




EXHIBIT 32.2
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the quarterly report of Oasis Petroleum Inc. (the “Company”) on Form 10-Q for the quarter ended September 30, 2017 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael H. Lou, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1)
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
 
 
 
 
 
 
 
Date:
November 8, 2017
 
 
 
 
/s/ Michael H. Lou
 
 
 
 
 
 
Michael H. Lou
 
 
 
 
 
 
Executive Vice President and Chief Financial Officer
 
 
 
 
 
 
(Principal Financial Officer and Principal Accounting Officer)