Oasis Petroleum Inc. Announces Quarter Ended March 31, 2014 Earnings

     Oasis Petroleum Inc. Announces Quarter Ended March 31, 2014 Earnings  PR Newswire  HOUSTON, May 5, 2014  HOUSTON, May5, 2014 /PRNewswire/ -- Oasis Petroleum Inc. (NYSE: OAS) ("Oasis" or the "Company") today announced financial results for the quarter ended March31, 2014 and provided an operational update.  Highlights include:    oCompleted the sale of certain non-operated properties in its Sanish     project area and other non-operated leases adjacent to its Sanish position     (the "Sanish Divestiture") for cash proceeds of approximately $321.9     million, on March 5, 2014.   oIncreased average daily production to 42,856 barrels of oil equivalent per     day ("Boepd"). Excluding production from Sanish in the fourth quarter of     2013 and the first quarter of 2014, Oasis grew production 5% quarter over     quarter.   oExpects production in the second quarter of 2014 to range between 43,000     and 46,000 Boepd.   oGrew Adjusted EBITDA to a record $239.8 million in the first quarter of     2014. 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.   oInvested capital expenditures ("CapEx") of $307.5 million in the first     quarter of 2014.   oLowered well costs to $7.2 million, including the impact of Oasis Well     Services ("OWS").   oPlans to completeover 20% of its wells during the second half of 2014     with slickwater, due to encouraging early production uplift of more than     25% in the areas tested and analyzed.  "Oasis continues to execute and deliver on expectations, as we produced in the middle of our production range and continued to drive down well costs in the first quarter in spite of harsh weather conditions," said Thomas B. Nusz, Oasis' Chairman and Chief Executive Officer. "Our first quarter well costs were approximately $7.2 million, including the CapEx savings of $0.4 million per well realized from OWS, as we completed approximately 80% of our wells from multi-well pads and continued to optimize drilling and completion costs by area across our significant acreage position."  Mr. Nusz added, "We picked up an additional rig during the quarter, and we anticipate asixteenth rig coming after the spring breakup season. The majority of our rigs will be operating on pads through the spring breakup season, and we expect to produce between 43,000 and 46,000 Boepd in the second quarter. In addition, we have been identifying and testing completion techniques outside of our base design. Specifically, early time results from slickwater completions point to greater than 25% production uplift in Indian Hills, Foreman Butte, and Red Bank.Based on encouraging results to date from slickwater tests and other completion technology, we intend to completeover 60% of our wells in the second half of 2014 with alternative completion techniques.We are focused on designs that may increase production or reduce costs, ultimately driving higher per well and per drilling spacing unit returns."  Operational and Financial Update  On March 5, 2014, the Company completed the Sanish Divestiture for cash proceeds of approximately $321.9 million, including, and subject to further, customary post close adjustments, and recognized a gain of $183.4 million.  Average daily production by project area is listed in the following table:                                    Quarter Ended:                                   3/31/2014  12/31/2013  3/31/2013 Average daily production (Boepd) West Williston                    28,227     28,067      19,021 East Nesson                       12,980     11,412      8,384 Sanish ^(1)                       1,649      2,627       2,748 Total                             42,856     42,106      30,153 Percent Oil                       89.4%      89.0%       91.5%  (1) Includes production from the Sanish Divestiture until March 1, 2014.  The following table describes the Company's producing wells by project area in the Williston Basin as of March31, 2014:                      Bakken/Three Forks Producing Wells                                                                  Total                     West Williston  East Nesson   Sanish         Williston                                                                  Basin                     Gross    Net    Gross  Net    Gross  Net     Gross  Net Producing on or before 12/31/2013: ^(1) Operated           311      240.6  145    115.2  —      —       456    355.8 Non-Operated       151      12.6   109    8.4    323    25.0    583    46.0 Production started in Q1 2014: Operated           28       20.3   12     9.6    —      —       40     29.9 Non-Operated       11       0.8    1      —      —      —       12     0.8 Divested/Adjusted in Q1 2014: Operated           (1)      (0.9)  1      0.9    —      —       —      — Non-Operated ^(2)  —        —      (12)   (1.3)  (323)  (25.0)  (335)  (26.3) Total Producing Wells on 3/31/2014: Operated           338      260.0  158    125.7  —      —       496    385.7 Non-Operated       162      13.4   98     7.1    —      —       260    20.5  (1) Well counts include changes that occurred in the current reporting period     for wells producing on or before December 31, 2013. (2) Includes the impact from the Sanish Divestiture.  Additionally, the Company had 15 rigs running and had a backlog of gross operated wells waiting on completion of 25 wells in West Williston and 22 wells in East Nesson as of March31, 2014.  The Company's average price per barrel of oil, without realized derivatives, was $89.66 in the first quarter of 2014, compared to $93.33 in the first quarter of 2013 and $85.87 in the fourth quarter of 2013. The Company's average price differential compared to NYMEX West Texas Intermediate ("WTI") crude oil index prices was 9% in the first quarter of 2014, compared to 1% in the first quarter of 2013 and 12% in the fourth quarter of 2013. At the beginning of the first quarter of 2014, the Company's price differentials to WTI increased due to the pipeline market continuing to weaken as a result of refinery down time and increased production from both the United States and Canada. More recently, the pipeline market has strengthened, and the Company's price differentials to WTI have decreased.  The Company's revenues are detailed in the following table:                              Quarter Ended:                             3/31/2014  12/31/2013  3/31/2013 Revenues ($ in thousands): Oil                         $ 309,231  $ 295,903   $ 231,675 Natural gas                 22,616     18,064      9,976 Well services (OWS)         15,827     17,579      5,715 Midstream (OMS)             1,845      2,069       938 Total revenues              $ 349,519  $ 333,615   $ 248,304  The Company's operating expenses are detailed in the following table:                                                Quarter Ended:                                               3/31/2014  12/31/2013  3/31/2013 Operating expenses ($ in thousands): Lease operating expenses (LOE)               $ 39,989   $ 35,048    $ 19,489 Well services (OWS)                          10,359     10,228      2,682 Midstream (OMS)                              561        608         232 Marketing, transportation and gathering      5,932      5,286       3,340 expenses ^(1) Non-cash valuation charge                    (746)      782         49 Total operating expenses                     $ 56,095   $ 51,952    $ 25,792 Operating expenses ($ per Boe): Lease operating expenses (LOE)               $  10.37  $  9.05   $  7.18 Marketing, transportation and gathering      1.53       1.36        1.23 expenses ^(1)  (1) Excludes non-cash valuation charges on pipeline imbalances.  The sequential quarter-over-quarter increase in lease operating expenses ("LOE") per barrel of oil equivalent ("Boe") was primarily due to additional workover costs related to restoring wells that were down due to winter weather conditions and costs to protect producing wells from offsetting wells that are being completed by the Company and other operators. The Company expects LOE to trend down over time, as it believes it will be able to drive down LOE to pre-acquisition levels. Despite first quarter performance, the Company expects that it will be able to keep LOE in the $7.50 to $9.00 per Boe range for the full year, albeit at the high end of that range.  The increase in marketing, transportation and gathering expenses from the fourth quarter of 2013 to the first quarter of 2014 is due to higher operated volumes flowing through third party oil gathering pipelines in the first quarter of 2014. Currently, the Company is flowing approximately 75% of its gross operated oil production through these gathering systems. While transporting volumes through third party oil gathering pipelines increases marketing, transportation and gathering expenses, it improves oil price realizations by reducing transportation costs included in the Company's oil price differential for sales at the wellhead.  Production taxes as a percentage of oil and gas revenues were 9.6% in the first quarter of 2014, 9.1% in the first quarter of 2013 and 9.6% in the fourth quarter of 2013. The Company's production tax rate increased in the first quarter of 2014 compared to the first quarter of 2013 due to the decreased weighting of oil revenues on certain new wells in Montana that are subject to lower incentivized production tax rates.  Depreciation, depletion and amortization expenses ("DD&A") totaled $91.3 million in the first quarter of 2014, $66.3 million in the first quarter of 2013 and $101.3 million in the fourth quarter of 2013. DD&A was $23.66 per Boe in the first quarter of 2014, $24.42 per Boe in the first quarter of 2013 and $26.14 per Boe in the fourth quarter of 2013. The decrease in the DD&A rate was a result of lower well costs for wells completed during 2013. In addition, during the first two months of 2014, the Company had production from the wells sold in the Sanish Divestiture, but these wells were not depreciated because the assets were held for sale, which lowered DD&A by $0.78 per Boe in the first quarter of 2014.  General and administrative ("G&A") expenses totaled $23.5 million in the first quarter of 2014, $13.9 million in the first quarter of 2013 and $28.1 million in the fourth quarter of 2013. The sequential quarter-over-quarter decrease in G&A expenses was primarily due to end-of-year compensation expenses and acquisition-related costs incurred in the fourth quarter of 2013. G&A expenses were $6.10 per Boe in the first quarter of 2014, $5.10 per Boe in the first quarter of 2013 and $7.25 per Boe in the fourth quarter of 2013. Amortization of stock-based compensation, which is included in the aggregate G&A expenses, was $4.5 million, or $1.17 per Boe, in the first quarter of 2014 as compared to $2.3 million, or $0.84 per Boe, in the first quarter of 2013 and $3.6 million, or $0.92 per Boe, in the fourth quarter of 2013.  The Company's derivative activities are detailed in the following table:                                              Quarter Ended:                                                                                                      12/31/2013  3/31/2013                                             3/31/2014 Derivative activities^(1)($ in thousands) Derivative settlements                      $ (2,239)   $ (2,998)   $ 1,686 Change in fair value of derivative          (15,364)    9,404       (16,298) instruments Net gain (loss) on derivative instruments   $ (17,603)  $ 6,406     $ (14,612)  (1) The Company's derivative instruments do not qualify for and were not     designated as hedging instruments for accounting purposes.  The Company recorded non-cash charges for the impairment of oil and natural gas properties of $0.8 million in the first quarter of 2014 related to unproved property leases that expired or have been forecasted to expire under current drilling plans, as compared to $0.5 million in the first quarter of 2013 and $0.4 million in the fourth quarter of 2013.  Interest expense was $40.2 million for the first quarter of 2014 compared to $21.2 million for the first quarter of 2013 and $41.7 million for the fourth quarter of 2013. The $1.5 million decrease from the fourth quarter of 2013 was primarily the result of less interest expense incurred due to lower borrowings under the Company's revolving credit facility during the three months ended March 31, 2014. Capitalized interest totaled $1.6 million for the first quarter of 2014, $0.8 million for the first quarter of 2013 and $1.4 million for the fourth quarter of 2013.  Income tax expense was $101.5 million for the three months ended March31, 2014, resulting in an effective tax rate of 37.4%. The Company's income tax expense for the three months ended March31, 2013 was recorded at 37.5% of pre-tax net income. The Company's effective tax rate is expected to continue to closely approximate the statutory rate applicable to the U.S. and the blended rate for each of the states in which the Company conducts business.  Adjusted EBITDA for the first quarter of 2014 was $239.8 million, a 25% increase over the first quarter of 2013 of $191.4 million, and a 6% increase from the fourth quarter of 2013 of $225.4 million. 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.  For the first quarter of 2014, the Company reported net income of$170.0 million, or$1.70per diluted share, as compared to net income of$51.9 million, or$0.56per diluted share, for the first quarter of 2013. The Company's first quarter 2014 results were impacted by several non-cash or non-recurring items, including a $183.4 million gain on sale of properties for the Sanish Divestiture and a$15.4 millionmark-to-market loss on derivative instruments. Excluding these items and their tax effect, the first quarter 2014 Adjusted Net Income (non-GAAP) was$64.8 million, or$0.65 per diluted share. Excluding similar non-cash items and their tax effect, Adjusted Net Income (non-GAAP) for the first quarter of 2013 was$62.4 million, or$0.67 per diluted share.For a definition of Adjusted Net Income and a reconciliation of net income to Adjusted Net Income, see "Non-GAAP Financial Measures" below.  Capital Expenditures  The following table depicts the Company's exploration and production ("E&P") CapEx by project area and total CapEx by category:                            1Q 2014 CapEx ($ in thousands): E&P CapEx by Project Area West Williston            $ 189,288 East Nesson               107,843 Total E&P CapEx ^(1)      297,131 OWS                       6,410 Non E&P ^(2)              3,957 Total Company CapEx^(3)   $ 307,498  (1) Total E&P CapEx include $3.1 million for OMS, primarily related to salt     water disposal systems. (2) Non-E&P CapEx include such items as administrative capital and capitalized     interest.     CapEx reflected in the table above differ from the amounts shown in the     statement of cash flows in the Company's condensed consolidated financial (3) statements because amounts reflected in the table above include accrued     liabilities for capital expenditures, while the amounts presented in the     statement of cash flows are presented on a cash basis.  Liquidity  On March 31, 2014, Oasis had total cash and cash equivalents of $56.3 million. As of March31, 2014, the Company had $60.0 million of LIBOR loans and $5.2 million of outstanding letters of credit issued under its revolving credit facility, resulting in an unused borrowing base capacity of $1,434.8 million. On March 27, 2014, the lenders under the revolving credit facility (the "Lenders") completed their regular semi-annual redetermination of the borrowing base, resulting in an increase to the borrowing base from $1,500.0 million to $1,750.0 million. However, the Company elected to limit the Lenders' aggregate commitment to $1,500.0 million. The overall senior secured line of credit under the revolving credit facility is $2,500.0 million as of March 31, 2014.  Hedging Activity  As of May5, 2014, the Company had the following outstanding commodity derivative contracts, all of which are priced off of WTI and settle monthly:                            Weighted Average Prices ($/Bbl)               Remaining   Sub-Floor  Floor  Ceiling   Swaps  BOPD    Total               Term                                                   Barrels 2014 Full Year Swaps        Apr - Dec                               $      9,500   2,612,500                                                       95.90 Swaps with   Apr - Dec   $ 70.00                     $      6,000   1,650,000 sub-floors                                            92.60 Two-way      Apr - Dec              $      $ 100.71         3,500   962,500 collars                              90.00 Three-way    Apr - Dec   $ 70.59    $      $ 105.25         8,500   2,337,500 collars                              90.59 First Half Swaps        Apr - June                              $      4,000   364,000                                                       99.42 Three-way    Apr - June  $ 70.00    $      $ 103.98         2,000   182,000 collars                              90.00 Total 2014 hedges                    $ 70.33    $      $ 103.93  $      29,485  8,108,500 (weighted                            90.39            95.00 average) Remaining                                                   33,500 1H14 Hedges Total 2H14                                                  27,500 Hedges 2015 Full Year Swaps        Jan - Dec                               $      8,000   2,920,000                                                       89.62 First Half Swaps        Jan - June                              $      8,000   1,448,000                                                       90.97 Total 2015 hedges                                                $      11,967  4,368,000 (weighted                                             90.06 average) Total 1H15                                                  16,000 Hedges Total 2H15                                                  8,000 Hedges  Conference Call Information  Investors, analysts and other interested parties are invited to listen to the conference call:    Date:           Tuesday, May 6, 2014 Time:           10:00 a.m. Central Time Dial-in:        877-621-0256 Intl. Dial in:  706-634-0151 ConferenceID:  31470336 Website:        www.oasispetroleum.com  A recording of the conference call will be available beginning at 1:00 p.m. Central Time on the day of the call and will be available until Tuesday, May 13, 2014 by dialing:  Replay dial-in:  855-859-2056 Intl. replay:    404-537-3406 ConferenceID:   31470336  The conference call will also be available for replay at www.oasispetroleum.com.  Forward-Looking Statements  This press release contains forward-looking statements within the meaning of Section27A of the Securities Act of 1933 and Section21E of the Securities Exchange Act of 1934. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that the Company expects, believes or anticipates will or may occur in the future are forward-looking statements. Without limiting the generality of the foregoing, forward-looking statements contained in this press release specifically include the expectations of plans, strategies, objectives and anticipated financial and operating results of the Company, including the Company's drilling program, production, derivative instruments, capital expenditure levels and other guidance included in this press release. These statements are based on certain assumptions made by the Company based on management's experience and perception of historical trends, current conditions, anticipated future developments and other factors believed to be appropriate. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the Company, which may cause actual results to differ materially from those implied or expressed by the forward-looking statements. These include, but are not limited to, 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 the Company's 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 the Company's business and other important factors that could cause actual results to differ materially from those projected as described in the Company's reports filed with the SEC.  Any forward-looking statement speaks only as of the date on which such statement is made and the Company undertakes no obligation to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by applicable law.  About Oasis Petroleum Inc.  Oasis is an independent exploration and production company focused on the acquisition and development of unconventional oil and natural gas resources, primarily operating in the Williston Basin. For more information, please visit the Company's website at www.oasispetroleum.com.  Contact: Oasis Petroleum Inc. Matt Ultis, (281)404-9600 Manager – Finance and Investor Relations  Oasis Petroleum Inc.  Condensed Consolidated Balance Sheet  (Unaudited)                                   March 31, 2014         December 31, 2013                                   (Inthousands,exceptsharedata) ASSETS Current assets Cash and cash equivalents        $       56,298  $                                                                    91,901 Accounts receivable— oil and    202,749                175,653 gas revenues Accounts receivable— joint      134,553                139,459 interest partners Inventory                        19,862                 20,652 Prepaid expenses                 24,450                 10,191 Deferred income taxes            8,484                  6,335 Derivative instruments           778                    2,264 Advances to joint interest       214                    760 partners Other current assets             420                    391 Total current assets             447,808                447,606 Property, plant and equipment Oil and gas properties           4,820,902              4,528,958 (successful efforts method) Other property and equipment     200,158                188,468 Less: accumulated depreciation, depletion, amortization and       (723,429)              (637,676) impairment Total property, plant and        4,297,631              4,079,750 equipment, net Assets held for sale              —                      137,066 Derivative instruments            470                    1,333 Deferred costs and other assets   46,175                 46,169 Total assets                     $    4,792,084     $                                                                 4,711,924 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable                 $       24,516   $                                                                    8,920 Revenues and production taxes    183,120                146,741 payable Accrued liabilities              283,024                241,830 Accrued interest payable         24,562                 47,910 Derivative instruments           20,663                 8,188 Advances from joint interest     10,931                 12,829 partners Other current liabilities        2,766                  — Total current liabilities        549,582                466,418 Long-term debt                    2,260,000              2,535,570 Deferred income taxes             424,049                323,147 Asset retirement obligations      35,790                 35,918 Derivative instruments            679                    139 Other liabilities                 2,002                  2,183 Total liabilities                3,272,102              3,363,375 Commitments and contingencies Stockholders' equity Common stock, $0.01 par value: 300,000,000 shares authorized;  101,416,749 and 100,866,589      999                    996 shares issued at March 31, 2014 and  December31, 2013, respectively Treasury stock, at cost: 238,453 and 167,155 shares at March31, 2014                              (8,387)                (5,362)  and December31, 2013, respectively Additional paid-in capital       989,525                985,023 Retained earnings                537,845                367,892 Total stockholders' equity       1,519,982              1,348,549 Total liabilities and            $    4,792,084     $        stockholders' equity                                     4,711,924    Oasis Petroleum Inc.  Condensed Consolidated Statement of Operations    (Unaudited)                                          Three Months Ended March 31,                                          2014                 2013                                          (In thousands, except per share data) Revenues Oil and gas revenues                    $ 331,847           $ 241,651 Well services and midstream revenues    17,672               6,653 Total revenues                          349,519              248,304 Expenses Lease operating expenses                39,989               19,489 Well services and midstream operating   10,920               2,914 expenses Marketing, transportation and           5,186                3,389 gathering expenses Production taxes                        31,803               22,089 Depreciation, depletion and             91,272               66,261 amortization Exploration expenses                    380                  1,857 Impairment of oil and gas properties    762                  498 General and administrative expenses     23,520               13,854 Total expenses                          203,832              130,351 Gain on sale of properties               183,393              — Operating income                         329,080              117,953 Other income (expense) Net loss on derivative instruments      (17,603)             (14,612) Interest expense, net of capitalized    (40,158)             (21,183) interest Other income (expense)                  153                  780 Total other income (expense)            (57,608)             (35,015) Income before income taxes               271,472              82,938 Income tax expense                       101,519              31,087 Net income                               $ 169,953           $  51,851 Earnings per share: Basic                                    $    1.71         $    0.56 Diluted                                  1.70                 0.56 Weighted average shares outstanding: Basic                                    99,560               92,375 Diluted                                  100,049              92,651    Oasis Petroleum Inc.  Selected Financial and Operational Statistics  (Unaudited)                                                   Three Months Ended March 31,                                                   2014          2013 Operating results ($ in thousands): Revenues Oil                                              $ 309,231    $ 231,675 Natural gas                                      22,616        9,976 Well services and midstream                      17,672        6,653 Total revenues                                   349,519       248,304 Production data: Oil (MBbls)                                       3,449         2,482 Natural gas (MMcf)                                2,448         1,388 Oil equivalents (MBoe)                            3,857         2,714 Average daily production (Boe/d)                  42,856        30,153 Average sales prices: Oil, without realized derivatives (per Bbl)       $   89.66  $   93.33 Oil, with realized derivatives (per Bbl)^(1)      89.01         94.01 Natural gas (per Mcf)^(2)                         9.24          7.18 Costs and expenses (per Boe of production): Lease operating expenses                         $   10.37  $     7.18 Marketing, transportation and gathering expenses  1.53          1.23 ^(3) Production taxes                                  8.25          8.14 Depreciation, depletion and amortization          23.66         24.42 General and administrative expenses               6.10          5.10      Realized prices include gains or losses on cash settlements for commodity (1) derivatives, which do not qualify for and were not designated as hedging     instruments for accounting purposes. (2) Natural gas prices include the value for natural gas and natural gas     liquids. (3) Excludes non-cash valuation charge.    Oasis Petroleum Inc.  Condensed Consolidated Statement of Cash Flows  (Unaudited)                                                       Three Months Ended                                                        March 31,                                                       2014         2013                                                       (In thousands) Cash flows from operating activities: Net income                                            $ 169,953   $  51,851 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, depletion and amortization             91,272       66,261 Gain on sale of properties                           (183,393)    — Impairment of oil and gas properties                 762          498 Deferred income taxes                                98,753       30,987 Derivative instruments                               17,603       14,612 Stock-based compensation expenses                    4,505        2,289 Debt discount amortization and other                 1,487        746 Working capital and other changes: Change in accounts receivable                        (9,275)      (3,360) Change in inventory                                  790          (8,407) Change in prepaid expenses                           (14,259)     293 Change in other current assets                       (29)         (232) Change in other assets                               (1,593)      — Change in accounts payable and accrued liabilities   29,007       15,009 Change in other current liabilities                  2,766        — Change in other liabilities                          (82)         — Net cash provided by operating activities            208,267      170,547 Cash flows from investing activities: Capital expenditures                                 (280,895)    (217,819) Proceeds from sale of properties                     321,943      — Costs related to sale of properties                  (2,010)      — Derivative settlements                               (2,239)      1,686 Advances from joint interest partners                (1,898)      (1,691) Net cash provided by (used in) investing activities  34,901       (217,824) Cash flows from financing activities: Principal payments on revolving credit facility      (275,570)    — Purchases of treasury stock                          (3,025)      (156) Debt issuance costs                                  —            (25) Other                                                (176)        — Net cash used in financing activities                (278,771)    (181) Decrease in cash and cash equivalents                 (35,603)     (47,458) Cash and cash equivalents: Beginning of period                                   91,901       213,447 End of period                                         $  56,298  $ 165,989 Supplemental non-cash transactions: Change in accrued capital expenditures                $  39,516  $  13,735 Change in asset retirement obligations                (128)        2,048  Non-GAAP Financial Measures  Adjusted EBITDA is a supplemental non-GAAP financial measure that is used by management and external users of the Company's consolidated financial statements, such as industry analysts, investors, lenders and rating agencies. The Company defines Adjusted EBITDA as earnings before interest expense, income taxes, depreciation, depletion, amortization, exploration expenses and other similar non-cash or non-recurring charges. Adjusted EBITDA is not a measure of net income or cash flows as determined by United States generally accepted accounting principles, or GAAP.  The following tables present a reconciliation of the non-GAAP financial measure of Adjusted EBITDA to the GAAP financial measures of net income and net cash provided by operating activities, respectively.                                                         Three Months Ended                                                         March 31,                                                        2014        2013                                                        (In thousands) Adjusted EBITDA reconciliation to Net Income: Net income                                            $ 169,953  $  51,851 Gain on sale of properties                            (183,393)   — Change in fair value of derivative instruments        15,364      16,298 Interest expense                                      40,158      21,183 Depreciation, depletion and amortization              91,272      66,261 Impairment of oil and gas properties                  762         498 Exploration expenses                                  380         1,857 Stock-based compensation expenses                     4,505       2,289 Income tax expense                                    101,519     31,087 Other non-cash adjustments                            (746)       49 Adjusted EBITDA                                        $ 239,774  $ 191,373 Adjusted EBITDA reconciliation to Net Cash Provided by Operating Activities: Net cash provided by operating activities             $ 208,267  $ 170,547 Derivative settlements                                (2,239)     1,686 Interest expense                                      40,158      21,183 Exploration expenses                                  380         1,857 Debt discount amortization and other                  (1,487)     (746) Current tax expense                                   2,766       100 Changes in working capital                            (7,325)     (3,303) Other non-cash adjustments                            (746)       49 Adjusted EBITDA                                        $ 239,774  $ 191,373  Adjusted Net Income is a supplemental non-GAAP financial measure that is used by management and external users of the Company's consolidated financial statements, such as industry analysts, investors, lenders and rating agencies. The Company defines Adjusted Net Income as net income after adjusting first for (1)the impact of certain non-cash and non-recurringitems, including changes in the fair value of derivative instruments, impairment of oil and gas properties, and other similar non-cash and non-recurringcharges, and then (2)the non-cash and non-recurringitems' impact on taxes based on the Company's effective tax rates in the same period. Adjusted Net Income is not a measure of net income as determined by GAAP.  The following table provides a reconciliation of net income (GAAP) to Adjusted Net Income (non-GAAP):                                           Three Months Ended                                           March 31,                                          2014                  2013                                          (Inthousands,exceptpersharedata) Net income                               $ 169,953            $ 51,851  Change in fair value of derivative     15,364                16,298 instruments  Gain on sale of properties             (183,393)             —  Impairment of oil and gas properties   762                   498  Other non-cash adjustments             (746)                 49  Tax impact ^(1)                      62,830                (6,314) Adjusted Net Income                      $  64,770           $ 62,382 Adjusted earnings per share: Basic                                   $    0.65          $   0.68 Diluted                                  0.65                  0.67 Weighted average shares outstanding: Basic                                    99,560                92,375 Diluted                                  100,049               92,651 Effective Tax Rate                       37.4%                 37.5%  (1) The tax impact is computed utilizing the Company's effective tax rate on     the adjustments for certain non-cash and non-recurringitems.  SOURCE Oasis Petroleum Inc.  Website: http://www.oasispetroleum.com  
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