Quantitative and Qualitative Disclosures about Market Risk
−Removed: We are exposed to a variety of market risks including commodity price risk, interest rate risk and counterparty and customer risk.
+Added: We are exposed to a variety of market risks including commodity price risk, interest rate risk, counterparty and customer risk and inflation risk.
We address these risks through a program of risk management, including the use of derivative instruments.
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We are exposed to market risk as the prices of crude oil, natural gas and NGLs fluctuate as a result of a variety of factors, including changes in supply and demand and the macroeconomic environment, all of which are typically beyond our control.
−Removed: The markets for crude oil, natural gas and NGLs have been volatile, especially over the last several months and years.
−Removed: During 2020, crude oil and NGL prices have weakened to historic lows as a result of the impacts of the actions of Saudi Arabia and Russia and the global COVID-19 pandemic.
−Removed: These prices will likely continue to be volatile in the future.
+Added: The markets for crude oil, natural gas and NGLs have been volatile, especially over the last several years and these prices will likely continue to be volatile in the future.
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.
+Added: In addition, entering into derivative instruments could limit the benefit we would receive from increases in the prices for crude oil and natural gas.
We recognize all derivative instruments at fair value.
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Financial Statements and Supplementary Data—Note 11 — Derivative Instruments” and “—Note 10—Fair Value Measurements” for additional information regarding our commodity derivative contracts.
−Removed: The fair value of our derivative instruments was a net liability of $94.1 million at December 31, 2020.
+Added: The fair value of our commodity derivative instruments was a net liability of $204.7 million at December 31, 2021.
A 10% increase in crude oil prices would decrease the fair value of our derivative position by approximately $137.6 million, while a 10% decrease in crude oil prices would increase the fair value by approximately $133.0 million, prior to credit risk adjustments.
−Removed: As further described in “Item 7.
−Removed: Management’s Discussion and Analysis of Financial Condition and Results of Operations—Recent Developments” and “—Commodity Prices,” the commodity price environment has been recently depressed due to oversupply and decreasing demand, and we cannot predict future impacts to crude oil production and global economic activity.
−Removed: Please see “Part I, Item 1A.
−Removed: Risk Factors” for more information regarding commodity price risks.
Interest rate risk.
−Removed: At December 31, 2020, we had $260.0 million of borrowings and $6.8 million of outstanding letters of credit issued under the Oasis Credit Facility, which were subject to varying rates of interest based on (i) the total outstanding borrowings (including the value of all outstanding letters of credit) in relation to the borrowing base and (ii) whether the loan is a London interbank offered rate (“LIBOR”) loan (defined in the Oasis Credit Facility as a Eurodollar loan) or a domestic bank prime interest rate loan (defined in the Oasis Credit Facility as an Alternate Based Rate or “ABR” loan).
+Added: At December 31, 2021, we had $400.0 million of senior unsecured notes at a fixed cash interest rate of 6.375% per annum.
+Added: At December 31, 2021, we had no borrowings and $2.4 million of outstanding letters of credit issued under the Oasis Credit Facility, which were subject to varying rates of interest based on (i) the total outstanding borrowings (including the value of all outstanding letters of credit) in relation to the borrowing base and (ii) whether the loan is a London interbank offered rate (“LIBOR”) loan (defined in the Oasis Credit Facility as a Eurodollar loan) or a domestic bank prime interest rate loan (defined in the Oasis Credit Facility as an Alternate Based Rate or “ABR” loan).
At December 31, 2021, the outstanding borrowings under the Oasis Credit Facility bore interest at LIBOR (including a 0.25% LIBOR floor) plus a 3.00% margin.
The unused borrowing base capacity is subject to a commitment fee of 0.5%.
−Removed: At December 31, 2020, OMP had $450.0 million of borrowings and a de minimis outstanding letter of credit issued under the OMP Credit Facility, which were subject to varying rates of interest based on (i) OMP’s most recently calculated consolidated total leverage ratio and (ii) whether the loan is a LIBOR loan (defined in the OMP Credit Facility as a Eurodollar loan) or a domestic bank prime interest rate loan (defined in the OMP Credit Facility as an ABR loan).
−Removed: At December 31, 2020, the outstanding borrowings under the OMP Credit Facility bore interest at LIBOR plus a 2.00% margin.
−Removed: The unused portion of the OMP Credit Facility is subject to a commitment fee ranging from 0.375% to 0.500%.
−Removed: We do not currently, but may in the future, utilize interest rate derivatives to mitigate 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.
+Added: We do not currently, but may in the future, utilize interest rate derivatives to mitigate interest rate exposure in an attempt to reduce interest rate expense related to debt issued under the Oasis 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.
+Added: LIBOR transition.
+Added: Amounts drawn under the Oasis Credit Facility bear interest rates in relation to LIBOR.
+Added: In July 2017, the Financial Conduct Authority in the U.K.
+Added: announced a desire to phase out LIBOR as a benchmark by the end of 2021.
+Added: The Alternative Reference Rates Committee, a steering committee consisting of large U.S.
+Added: financial institutions convened by the U.S.
+Added: Federal Reserve Board and the Federal Reserve Bank of New York, has recommended replacing LIBOR with the Secured Overnight Financing Rate (“SOFR”), an index supported by short-term Treasury repurchase agreements.
+Added: The credit agreement governing the Oasis Credit Facility includes customary provisions to provide for replacement of LIBOR with SOFR when LIBOR ceases to be available.
Counterparty and customer credit risk.
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We have not generally required our counterparties to provide collateral to secure crude
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oil and natural gas sales receivables owed to us.
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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.
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+Added: Impact of Inflation .
+Added: The impact of inflation has been minor in recent years and generally has not had a material impact on our historical results of operations for the periods presented in this report;
+Added: however, inflation has become a significant factor in the United States economy and we have recently observed inflationary pressure on our well costs and operating costs.
+Added: See “Part I, Item 1A.—Risk Factors—Our profitability may be negatively impacted by inflation in the cost of labor, materials and services.”
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.