Business Context and Reporting Period
The source filing is Oasis Petroleum Inc.’s Form 10-K for the year ended December 31, 2021, not a Chord Energy filing and not a standalone fourth-quarter report. Oasis was an independent exploration and production company focused on the Williston Basin in North Dakota and Montana. The company reported 2021 as “Successor” after emerging from Chapter 11 bankruptcy on November 19, 2020 and adopting fresh-start accounting; prior periods are “Predecessor” and are not directly comparable.
Oasis operated 1,499 gross horizontal producing wells, held 492,355 net Williston Basin acres, and averaged 58,032 Boe per day in 2021, approximately 64% oil. Proved reserves totaled 250.9 MMBoe at year-end, 69% oil and 69% proved developed.
Key Financial Metrics
| Metric | 2021 |
|---|---|
| Total revenue | $1,579.9 million |
| Oil and gas revenue | $1,200.3 million |
| Net income attributable to Oasis | $319.6 million |
| Net income from continuing operations | $189.0 million |
| Income from discontinued operations attributable to Oasis | $130.6 million |
| Basic and diluted earnings per share | $16.15 and $15.48 |
| Net cash provided by operating activities | $914.1 million |
| Adjusted EBITDA from continuing operations | $550.7 million |
| Adjusted free cash flow | $363.2 million |
| E&P and other capital expenditures | $170.5 million |
| Cash and cash equivalents | $172.1 million |
| Available liquidity | $619.7 million |
| Net debt under continuing operations | $392.5 million carrying value, consisting of $400.0 million of senior notes net of deferred financing costs |
Average realized prices before derivative settlements were $67.49 per barrel for crude oil and $6.28 per Mcf for natural gas, including NGL value. Lease operating expense was $9.63 per Boe, gathering, processing and transportation expense was $5.79 per Boe, and production taxes were $3.63 per Boe.
Material Changes Versus Prior Comparable Period
- Crude oil and natural gas revenue increased $512.6 million, or 75%, primarily because of higher commodity prices, partly offset by lower production volumes.
- Average daily production declined by 6,685 Boe per day, principally because of the Permian Basin divestiture; the QEP Williston Basin assets contributed approximately 21,226 Boe per day from closing through year-end.
- Net cash from operating activities increased substantially, benefiting from higher commodity prices, lower interest expense and lower general and administrative costs.
- General and administrative expense declined $78.8 million to $80.7 million, while cash G&A declined to $2.18 per Boe.
- DD&A declined 56% to $126.4 million, primarily because of the lower post-fresh-start asset basis and lower production.
- Derivative instruments generated a $589.6 million net loss, including $319.5 million of unrealized losses and $270.1 million of realized losses. This materially reduced reported earnings and cash flow relative to unhedged commodity performance.
- Proved reserves increased 37% to 250.9 MMBoe from 182.5 MMBoe, primarily from the Williston Basin acquisition, positive revisions and additions, partly offset by the Permian divestiture and 2021 production.
Comparisons with 2020 should be interpreted cautiously because 2020 contains separate Successor and Predecessor periods, fresh-start accounting effects and a substantial 2020 impairment charge. The filing does not provide a fully comparable standalone 2020 annual Successor period.
Strategic Transactions and Capital Allocation
- Oasis acquired approximately 95,000 net Williston Basin acres from QEP for $585.8 million in cash.
- Oasis sold its Permian Basin upstream assets for $375.0 million of cash at closing, plus potential earn-outs of up to $75.0 million based on future WTI prices, and received $30.0 million from additional Permian asset sales.
- The OMP Merger closed on February 1, 2022. Oasis received $160.0 million in cash and approximately 21 million Crestwood common units, representing approximately 21.7% of Crestwood. OMP was classified as a discontinued operation.
- Oasis paid $112.3 million of regular and special dividends in 2021 and repurchased $100.0 million of common stock, or 871,018 shares.
- Management announced a plan to return approximately $280 million to shareholders over the following year through base dividends, variable dividends and repurchases. A new $150.0 million repurchase authorization replaced the completed 2021 program.
Debt, Liquidity and Outlook
- The Oasis Credit Facility had a $900.0 million borrowing base, $450.0 million of elected commitments, a May 2024 maturity and $447.6 million of unused capacity at year-end. There were no borrowings outstanding and $2.4 million of letters of credit.
- Oasis issued $400.0 million of 6.375% senior unsecured notes due June 2026, generating $391.6 million of net proceeds. The company reported compliance with credit-facility and senior-note covenants.
- Management expected 2022 E&P capital expenditures of approximately $295 million, two operated rigs and completion of approximately 40 to 42 gross operated wells at an average working interest of approximately 72%.
- Management stated that cash on hand, operating cash flow and available credit capacity should fund the 2022 capital plan and foreseeable obligations.
- The company expected approximately $54 million of cash distributions from Crestwood in 2022.
Risks, Contingencies and Unusual Items
- Commodity prices, production volumes, derivative settlements, inflation and access to transportation infrastructure remain the primary financial sensitivities.
- Oasis depends on Crestwood and other third parties for significant gathering, processing, transportation and water services following the OMP Merger. DAPL also remained subject to litigation and a federal environmental review that could affect Williston Basin transportation and price differentials.
- The company had estimated future volume commitments of approximately $547.7 million, including commitments for 45.8 MMBbl of crude oil, 603.3 Bcf of natural gas and 22.5 MMBbl of NGLs. It recorded an $11.9 million liability for unfavorable acquired contracts where minimum volumes were expected not to be met.
- The company had $2.4 million of letters of credit and $6.7 million of net surety bond exposure. Asset retirement obligations totaled $62.4 million.
- Approximately 31% of proved reserves were proved undeveloped. Management expected development within five years, but the plan depends on commodity prices, costs, liquidity and operational execution.
- Environmental, climate, methane, hydraulic-fracturing, tribal, water-disposal, pipeline-safety, cybersecurity and COVID-19 developments could increase costs or restrict operations.
- The filing discusses a significant MHA Nation title dispute involving certain minerals acquired from QEP. On February 4, 2022, the Department of the Interior issued an opinion stating that minerals beneath the Missouri River riverbed on the Fort Berthold Reservation belong to the MHA Nation rather than North Dakota.
- The company’s independent auditor issued unqualified opinions on the financial statements and internal control over financial reporting. The critical audit matter involved the effect of proved reserves estimates on oil and gas properties.
Facts an Investor Should Verify
- Confirm the requested issuer: the supplied filing is Oasis Petroleum Inc., whereas the metadata identifies Chord Energy Corp.
- Verify whether analysis should cover the full fiscal year ended December 31, 2021 or a separately reported fourth quarter; this filing is an annual report and does not present a complete standalone Q4 income statement.
- Reconcile continuing-operations results with discontinued OMP operations and account for the February 1, 2022 OMP Merger.
- Assess the cash impact and future price exposure of the $204.7 million net derivative liability and 2022–2024 hedge positions.
- Evaluate the economics and integration of the $585.8 million Williston Basin acquisition, including reserve revisions and well performance.
- Review the $295 million 2022 capital plan, planned shareholder returns and the company’s ability to fund both after commodity-price or cost changes.
- Investigate exposure to the MHA Nation title dispute, Crestwood midstream dependence, DAPL access and the $547.7 million of volume commitments.