Oasis Petroleum Inc. Announces Quarter Ended June 30, 2014 Earnings

     Oasis Petroleum Inc. Announces Quarter Ended June 30, 2014 Earnings  PR Newswire  HOUSTON, Aug. 5, 2014  HOUSTON, Aug.5, 2014 /PRNewswire/ --Oasis Petroleum Inc. (NYSE: OAS) ("Oasis" or the "Company") today announced financial results for the quarter ended June30, 2014 and provided an operational update.  Highlights include:    oIncreased average daily production to 43,668 barrels of oil equivalent per     day ("Boepd"), a 45% increase over the second quarter of 2013 and a 6%     sequential quarter increase, excluding production from Sanish.   oGrew Adjusted EBITDA to $254.7 million in the second quarter of 2014, an     increase of $69.2 million over the second quarter of 2013 and a sequential     increase of $14.9 million over 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 $351.8 million in the second     quarter of 2014.   oCompleted and placed on production 41 gross (30.8 net) operated wells in     the second quarter of 2014.   oStarted operating Oasis Well Services' ("OWS") second fracturing fleet.  "Oasis continues to execute on its full-year plan to enhance shareholder value through completion technique changes and resource expansion initiatives," said Thomas B. Nusz, Oasis' Chairman and Chief Executive Officer. "Our first slickwater wells in Indian Hills have continued to produce well above our type curve. In addition, early production results fromour first Three Forks slickwater well in Red Bank and a slickwater Bakken well in Montana are expanding the completion technique's applicability across more of our inventory.Both of these Oasis wells are producing 35% or more over comparable wells completed with our base completion design."  Mr. Nusz added, "Even as we move to completing 70% of our wells with different technology than our base design, our expectation of investing a total of $1.25 billion for drilling and completions during 2014 remains unchanged.Our base design well cost of $7.3 million in the first half of 2014, which includes the beneficial impact of OWS, provides us the ability to complete more intense frac jobs while remaining within our budget. While completions were pushed back a bit and we completed six fewer wells than planned, we were able to grow production 6% over the sequential quarter. We expect production to range between 47,000 and 49,000 Boepd in the third quarter of 2014. In addition, we have increased both frac spreads and cleanout crews, which will support the additional work we are doing in the second half of the year."  Operational and Financial Update  The Company's average daily production by project area is listed in the following table:                                   Quarter Ended:                                  6/30/2014  3/31/2014  6/30/2013 Average daily production (Boepd) West Williston                   30,381     28,227     18,257 East Nesson                      13,287     12,980     9,312 Sanish ^ (1)                     —          1,649      2,602 Total                            43,668     42,856     30,171 Percent Oil                      89.1%      89.4%      90.6%      Includes production from certain non-operated properties in the Company's (1) Sanish project area and other non-operated leases adjacent to its Sanish     position until March 1, 2014. These properties were sold on March 5, 2014     (the "Sanish Divestiture").  The following table describes the Company's producing wells by project area in the Williston Basin as of June30, 2014:                            Bakken/Three Forks Producing Wells                           West Williston  East Nesson    TotalWillistonBasin                           Gross   Net     Gross  Net     Gross        Net Producing on or before 3/31/2014: ^(1) Operated                  338     260.1   158    125.0   496          385.1 Non-Operated              162     13.3    98     7.1     260          20.4 Production started in Q2 2014: Operated                  26      20.0    15     10.8    41           30.8 Non-Operated              14      0.9     3      0.1     17           1.0 Total Producing Wells on 6/30/2014: Operated                  364     280.1   173    135.8   537          415.9 Non-Operated              176     14.2    101    7.2     277          21.4  (1) Well counts include changes that occurred in the current reporting period     for wells producing on or before March 31, 2014.  Additionally, the Company had approximately 16 rigs running during the second quarter of 2014,and as of June 30, 2014, had an inventory of gross operated wells waiting on completion of 35 wells in West Williston and 32 wells in East Nesson.  The Company's average price per barrel of oil, without derivative settlements, was $94.48 in the second quarter of 2014, compared to $91.15 in the second quarter of 2013 and $89.66 in the first quarter of 2014. The Company's average price differential compared to NYMEX West Texas Intermediate ("WTI") crude oil index prices was 8% in the second quarter of 2014, compared to 3% in the second quarter of 2013 and 9% in the first quarter of 2014.  The Company's revenues are detailed in the following table:                             Quarter Ended:                            6/30/2014   3/31/2014   6/30/2013 Revenues ($ in thousands): Oil                        $ 334,559   $ 309,231   $ 226,848 Bulk oil sale              —           —           5,777 Natural gas                19,623      22,616      9,217 Well services (OWS)        14,878      15,827      11,461 Midstream (OMS)            3,318       1,845       1,279 Total revenues             $ 372,378   $ 349,519   $ 254,582  The Company's operating expenses are detailed in the following table:                                                 Quarter Ended:                                                6/30/2014  3/31/2014  6/30/2013 Operating expenses ($ in thousands): Lease operating expenses (LOE)                 $ 40,553   $ 39,989   $ 18,266 Well services (OWS)                            7,200      10,359     6,420 Midstream (OMS)                                1,569      561        224 Marketing, transportation and gathering        6,996      5,932      4,977 expenses (1) Bulk oil purchase                              —          —          5,777 Non-cash valuation charges                     118        (746)      25 Total operating expenses                       $ 56,436   $ 56,095   $ 35,689 Operating expenses ($ per Boe): Lease operating expenses (LOE)                 $ 10.21    $ 10.37    $ 6.65 Marketing, transportation and gathering        1.76       1.53       1.82 expenses (1)  (1) Excludes bulk oil purchase and non-cash valuation charges on pipeline     imbalances.  The sequential quarter-over-quarter decrease in lease operating expenses ("LOE") per barrel of oil equivalent ("Boe") was primarily due to higher workover costs in the first quarter of 2014 related to restoring wells that were down due to winter weather conditions.  The increase in marketing, transportation and gathering expenses from the first quarter of 2014 to the second quarter of 2014 is primarily due to higher operated volumes flowing through third-party oil gathering pipelines in the second 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 9.7% in the second quarter of 2014, 9.1% in the second quarter of 2013 and 9.6% in the first quarter of 2014. The Company's production tax rate increased in the second quarter of 2014 compared to the second quarter of 2013 due to the increased weighting of production in North Dakota compared to Montana, which has lower production tax rates.  Depreciation, depletion and amortization expenses ("DD&A") totaled $97.3 million in the second quarter of 2014, $66.8 million in the second quarter of 2013 and $91.3 million in the first quarter of 2014. DD&A was $24.48 per Boe in the second quarter of 2014, $24.33 per Boe in the second quarter of 2013 and $23.66 per Boe in the first quarter of 2014. 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 $20.8 million in the second quarter of 2014, $16.7 million in the second quarter of 2013 and $23.5 million in the first quarter of 2014. The sequential quarter-over-quarter decrease in G&A expenses was primarily due to lower consolidated OWS G&A expenses in the second quarter of 2014 compared to the first quarter of 2014. G&A expenses were $5.22 per Boe in the second quarter of 2014, $6.07 per Boe in the second quarter of 2013 and $6.10 per Boe in the first quarter of 2014. Amortization of stock-based compensation, which is included in G&A expenses, was $5.2 million, or $1.30 per Boe, in the second quarter of 2014 as compared to $3.1 million, or $1.12 per Boe, in the second quarter of 2013 and $4.5 million, or $1.17 per Boe, in the first quarter of 2014. The sequential increase in amortization of stock-based compensation is primarily due to growth in headcount.  The Company's derivative activities are detailed in the following table:                                             Quarter Ended:                                            6/30/2014    3/31/2014    6/30/2013 Derivative activities ^(1) ($ in thousands) Derivative settlements                     $ (11,405)   $ (2,239)    $ 1,246 Non-cash change in fair value of           (54,165)     (15,364)     11,345 derivative instruments Net gain (loss) on derivative instruments  $ (65,570)   $ (17,603)   $ 12,591  (1) The Company's derivative instruments do not qualify for and were not     designated as hedging instruments for accounting purposes.  Interest expense was $39.0 million for the second quarter of 2014 compared to $21.4 million for the second quarter of 2013 and $40.2 million for the first quarter of 2014. The $1.2 million decrease from the first quarter of 2014 was primarily due to lower weighted average borrowings under the Company's revolving credit facility coupled with an increase in capitalized interest in the second quarter of 2014. Capitalized interest totaled $2.3 million for the second quarter of 2014, $1.1 million for the second quarter of 2013 and $1.6 million for the first quarter of 2014.  Income tax expense was $23.3 million for the three months ended June30, 2014, resulting in an effective tax rate of 37.5%. The Company's income tax expense for the three months ended June30, 2013 was recorded at 36.0% 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 second quarter of 2014 was $254.7 million, a 37% increase over the second quarter of 2013 of $185.5 million, and an increase of 6% from the first quarter of 2014 of $239.8 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 second quarter of 2014, the Company reported net income of$38.8 million, or$0.39per diluted share, as compared to net income of$67.1 million, or$0.72per diluted share, for the second quarter of 2013. The Company's second quarter 2014 results were impacted by several non-cash items, including a$54.2 millionnon-cash mark-to-market loss on derivative instruments. Excluding these items and their tax effect, the second quarter 2014 Adjusted Net Income (non-GAAP) was$70.5 million, or$0.70 per diluted share. Excluding similar non-cash items and their tax effect, Adjusted Net Income (non-GAAP) for the second quarter of 2013 was$60.1 million, or$0.65 per diluted share.For a definition of Adjusted Net Income and a reconciliation of net income to Adjusted Net Income, see "Non-GAAP Financial Measures" below.  Capital Expenditures  The following table depicts the Company's exploration and production ("E&P") CapEx by project area and total CapEx by category:                                          1Q 2014     2Q 2014     YTD 2014 CapEx ($ in thousands): E&P CapEx by Project Area West Williston                          $ 189,288   $ 223,526   $ 412,814 East Nesson                             107,843     103,370     211,213 Total E&P CapEx ^(1)                    297,131     326,896     624,027 OWS                                     6,410       18,903      25,313 Non E&P ^ (2)                           3,957       6,036       9,993 Total Company CapEx ^(3) $ 307,498   $ 351,835   $ 659,333      Year-to-date total E&P CapEx includes $12.5 million for Oasis Midstream (1) Services ("OMS"), primarily related to pipelines and salt water disposal     systems. (2) Non-E&P CapEx includes such items as administrative capital and     capitalized interest.     CapEx reflected in the table above differs 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 June 30, 2014, Oasis had total cash and cash equivalents of $27.0 million. As of June30, 2014, the Company had $100.0 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 $1,394.8 million.  Update to Outlook for Operating Metrics  Oasis is updating its full year 2014 guidance range for LOE to $8.50 to $10.00 per Boe and production taxes to 9.7% to 10.2%.  Hedging Activity  As of August5, 2014, the Company had the following outstanding commodity derivative contracts, all of which are priced off of WTI and settle monthly:                           Weighted Average Prices ($/Bbl)               Remaining  Sub-Floor  Floor     Ceiling    Swaps     BOPD     Total               Term                                                          Barrels 2014 Full Year Swaps         Jul - Dec                                  $ 95.90   9,500    1,738,500 Swaps with    Jul - Dec  $  70.00                        $ 92.60   6,000    1,098,000 sub-floors Two-way       Jul - Dec             $ 95.22   $ 106.39             11,500   2,104,500 collars Three-way     Jul - Dec  $  70.59   $ 90.59   $ 105.25             8,500    1,555,500 collars Total 2014 hedges        $  70.34   $ 93.25   $ 105.91   $ 94.62   35,500   6,496,500 (weighted average) 2015 Full Year Swaps         Jan - Dec                                  $ 90.15   10,000   3,650,000 Two-way       Jan - Dec             $ 86.00   $ 103.42             5,000    1,825,000 collars First Half Swaps         Jan -                                      $ 91.26   9,000    1,629,000               June Deferred      Jan -                 $ 90.00                        6,000    1,086,000 premiumputs  June Two-way       Jan -                 $ 90.00   $ 99.10              2,000    362,000 collars       June Total 2015 hedges                   $ 87.77   $ 102.70   $ 90.49   23,430   8,552,000 (weighted average) Total 1H15 hedges                                                  32,000 Total 2H15 hedges                                                  15,000  Conference Call Information  Investors, analysts and other interested parties are invited to listen to the conference call:  Date:           Wednesday, August 6, 2014 Time:           9:00 a.m. Central Time Dial-in:        877-621-0256 Intl. Dial in:  706-634-0151 ConferenceID:  74680357 Website:        www.oasispetroleum.com  A recording of the conference call will be available beginning at 12:00 p.m. Central Time on the day of the call and will be available until Wednesday, August 13, 2014 by dialing:  Replay dial-in:  855-859-2056 Intl. replay:    404-537-3406 ConferenceID:   74680357  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)                                              June 30, 2014   December 31, 2013                                              (Inthousands,exceptsharedata) ASSETS Current assets Cash and cash equivalents                    $   26,957      $   91,901 Accounts receivable— oil and gas revenues   216,764         175,653 Accounts receivable— joint interest         147,056         139,459 partners Inventory                                    17,636          20,652 Prepaid expenses                             8,907           10,191 Deferred income taxes                        25,390          6,335 Derivative instruments                       —               2,264 Advances to joint interest partners          97              760 Other current assets                         421             391 Total current assets                         443,228         447,606 Property, plant and equipment Oil and gas properties (successful efforts   5,141,582       4,528,958 method) Other property and equipment                 231,129         188,468 Less: accumulated depreciation, depletion,   (823,500)       (637,676) amortization and impairment Total property, plant and equipment, net     4,549,211       4,079,750 Assets held for sale                         —               137,066 Derivative instruments                       —               1,333 Deferred costs and other assets              44,540          46,169 Total assets                                 $   5,036,979   $   4,711,924 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable                             $   32,402      $   8,920 Revenues and production taxes payable        217,414         146,741 Accrued liabilities                          288,813         241,830 Accrued interest payable                     49,444          47,910 Derivative instruments                       62,415          8,188 Advances from joint interest partners        6,910           12,829 Other current liabilities                    3,311           — Total current liabilities                    660,709         466,418 Long-term debt                               2,300,000       2,535,570 Deferred income taxes                        460,897         323,147 Asset retirement obligations                 37,542          35,918 Derivative instruments                       11,844          139 Other liabilities                            1,963           2,183 Total liabilities                            3,472,955       3,363,375 Commitments and contingencies Stockholders' equity Common stock, $0.01 par value: 300,000,000 shares authorized; 101,396,597 and           999             996 100,866,589 shares issued at June 30, 2014 and December31, 2013, respectively Treasury stock, at cost: 244,729 and 167,155 shares at June30, 2014 and December31,     (8,677)         (5,362) 2013, respectively Additional paid-in capital                   995,024         985,023 Retained earnings                            576,678         367,892 Total stockholders' equity                   1,564,024       1,348,549 Total liabilities and stockholders' equity   $   5,036,979   $   4,711,924    Oasis Petroleum Inc. Condensed Consolidated Statement of Operations (Unaudited)                         Three Months Ended June 30,  Six Months Ended June 30,                         2014            2013         2014           2013                         (In thousands, except per share data) Revenues Oil and gas revenues    $  354,182      $  241,842   $  686,029     $ 483,493 Well services and       18,196          12,740       35,868         19,393 midstream revenues Total revenues          372,378         254,582      721,897        502,886 Expenses Lease operating         40,553          18,266       80,542         37,755 expenses Well services and midstream operating     8,769           6,644        19,689         9,558 expenses Marketing, transportation and      7,114           10,779       12,300         14,168 gathering expenses Production taxes        34,493          21,397       66,296         43,486 Depreciation, depletion and           97,276          66,790       188,548        133,051 amortization Exploration expenses    475             392          855            2,249 Impairment of oil and   42              208          804            706 gas properties General and administrative          20,751          16,656       44,271         30,510 expenses Total expenses          209,473         141,132      413,305        271,483 Gain on sale of         3,640           —            187,033        — properties Operating income        166,545         113,450      495,625        231,403 Other income (expense) Net gain (loss) on      (65,570)        12,591       (83,173)       (2,021) derivative instruments Interest expense, net of capitalized          (38,990)        (21,392)     (79,148)       (42,575) interest Other income (expense)  135             294          288            1,074 Total other income      (104,425)       (8,507)      (162,033)      (43,522) (expense) Income before income    62,120          104,943      333,592        187,881 taxes Income tax expense      23,287          37,824       124,806        68,911 Net income              $  38,833       $  67,119    $  208,786     $ 118,970 Earnings per share: Basic                   $  0.39         $  0.73      $  2.10        $ 1.29 Diluted                 0.39            0.72         2.08           1.28 Weighted average shares outstanding: Basic                   99,663          92,399       99,612         92,387 Diluted                 100,260         92,702       100,328        92,812    Oasis Petroleum Inc. Selected Financial and Operational Statistics (Unaudited)                         Three Months Ended June 30,  Six Months Ended June 30,                         2014            2013         2014           2013 Operating results ($ in thousands): Revenues Oil                     $  334,559      $  232,625   $  643,790     $ 464,300 Natural gas             19,623          9,217        42,239         19,193 Well services and       18,196          12,740       35,868         19,393 midstream Total revenues          372,378         254,582      721,897        502,886 Production data: Oil (MBbls)             3,541           2,489        6,990          4,971 Natural gas (MMcf)      2,596           1,540        5,045          2,929 Oil equivalents (MBoe)  3,974           2,746        7,831          5,459 Average daily           43,668          30,171       43,264         30,162 production (Boe/d) Average sales prices: Oil, without derivative settlements (per Bbl)   $  94.48        $  91.15     $  92.10       $ 92.24 ^(1) Oil, with derivative settlements (per Bbl)   91.26           91.65        90.15          92.83 ^(1) (2) Natural gas (per Mcf)   7.56            5.98         8.37           6.55 ^(3) Costs and expenses (per Boe of production): Lease operating         $  10.21        $  6.65      $  10.29       $ 6.92 expenses Marketing, transportation and      1.76            1.82         1.65           1.54 gathering expenses ^(4) Production taxes        8.68            7.79         8.47           7.97 Depreciation, depletion 24.48           24.33        24.08          24.37 and amortization General and             5.22            6.07         5.65           5.58 administrative expenses      For the three and six months ended June 30, 2013, average sales prices for (1) oil are calculated using total oil revenues, excluding bulk oil sales of     $5.8 million, divided by oil production.     Realized prices include gains or losses on cash settlements for commodity (2) derivatives, which do not qualify for and were not designated as hedging     instruments for accounting purposes. (3) Natural gas prices include the value for natural gas and natural gas     liquids. (4) Excludes bulk oil purchase and non-cash valuation charges on pipeline     imbalances.    Oasis Petroleum Inc. Condensed Consolidated Statement of Cash Flows (Unaudited)                                                      Six Months Ended June 30,                                                      2014           2013                                                      (In thousands) Cash flows from operating activities: Net income                                           $  208,786     $ 118,970 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, depletion and amortization             188,548        133,051 Gain on sale of properties                           (187,033)      — Impairment of oil and gas properties                 804            706 Deferred income taxes                                118,695        67,974 Derivative instruments                               83,173         2,021 Stock-based compensation expenses                    9,678          5,371 Debt discount amortization and other                 3,220          1,753 Working capital and other changes: Change in accounts receivable                        (37,132)       (13,768) Change in inventory                                  3,016          (4,200) Change in prepaid expenses                           1,284          (4,402) Change in other current assets                       (30)           330 Change in other assets                               (1,477)        — Change in accounts payable and accrued liabilities   91,543         48,701 Change in other current liabilities                  3,311          688 Change in other liabilities                          (132)          612 Net cash provided by operating activities            486,254        357,807 Cash flows from investing activities: Capital expenditures                                 (606,924)      (428,630) Acquisition of oil and gas properties                (8,116)        — Proceeds from sale of properties                     324,888        — Costs related to sale of properties                  (2,337)        — Redemptions of short-term investments                —              25,000 Derivative settlements                               (13,644)       2,932 Advances from joint interest partners                (5,919)        (5,593) Net cash used in investing activities                (312,052)      (406,291) Cash flows from financing activities: Proceeds from revolving credit facility              100,000        — Principal payments on revolving credit facility      (335,570)      — Purchases of treasury stock                          (3,315)        (364) Debt issuance costs                                  (85)           (2,998) Other                                                (176)          — Net cash used in financing activities                (239,146)      (3,362) Decrease in cash and cash equivalents                (64,944)       (51,846) Cash and cash equivalents: Beginning of period                                  91,901         213,447 End of period                                        $  26,957      $ 161,601 Supplemental non-cash transactions: Change in accrued capital expenditures               $  51,129      $ (6,085) Change in asset retirement obligations               1,624          3,441  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 table presents reconciliations 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 June 30,  Six Months Ended June 30,                         2014            2013         2014           2013                         (In thousands) Adjusted EBITDA reconciliation to net income: Net income              $  38,833       $  67,119    $  208,786     $ 118,970 Gain on sale of         (3,640)         —            (187,033)      — properties Non-cash change in fair value of derivative     54,165          (11,345)     69,529         4,953 instruments Interest expense        38,990          21,392       79,148         42,575 Depreciation, depletion 97,276          66,790       188,548        133,051 and amortization Impairment of oil and   42              208          804            706 gas properties Exploration expenses    475             392          855            2,249 Stock-based             5,173           3,082        9,678          5,371 compensation expenses Income tax expense      23,287          37,824       124,806        68,911 Other non-cash          118             25           (628)          74 adjustments Adjusted EBITDA         $  254,719      $  185,487   $  494,493     $ 376,860 Adjusted EBITDA reconciliation to net cash provided by operating activities: Net cash provided by    $  277,987      $  187,260   $  486,254     $ 357,807 operating activities Derivative settlements  (11,405)        1,246        (13,644)       2,932 Interest expense        38,990          21,392       79,148         42,575 Exploration expenses    475             392          855            2,249 Debt discount           (1,733)         (1,007)      (3,220)        (1,753) amortization and other Current tax expense     3,345           837          6,111          937 Changes in working      (53,058)        (24,658)     (60,383)       (27,961) capital Other non-cash          118             25           (628)          74 adjustments Adjusted EBITDA         $  254,719      $  185,487   $  494,493     $ 376,860  Adjusted Net Income and Adjusted Diluted Earnings Per Share are supplemental non-GAAP financial measures that are 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-recurring items, including non-cash changes in the fair value of derivative instruments, impairment of oil and gas properties, and other similar non-cash and non-recurring charges, and then (2)the non-cash and non-recurring items' impact on taxes based on the Company's effective tax rate in the same period. Adjusted Net Income is not a measure of net income as determined by GAAP. The Company defines Adjusted Diluted Earnings Per Share as Adjusted Net Income divided by diluted weighted average shares outstanding.  The following table provides reconciliations of net income (GAAP) to Adjusted Net Income (non-GAAP) and diluted earnings per share (GAAP) to Adjusted Diluted Earnings Per Share (non-GAAP):                          Three Months Ended June 30,  Six Months Ended June 30,                         2014            2013         2014          2013                         (Inthousands,exceptpersharedata) Net income              $  38,833       $  67,119    $  208,786    $ 118,970 Non-cash change in fair value of           54,165          (11,345)     69,529        4,953 derivative instruments Gain on sale of         (3,640)         —            (187,033)     — properties Impairment of oil and   42              208          804           706 gas properties Other non-cash          118             25           (628)         74 adjustments Tax impact ^(1)    (19,000)        4,045        43,896        (2,145) Adjusted Net Income     $  70,518       $  60,052    $  135,354    $ 122,558 Diluted earnings per    $  0.39         $  0.72      $  2.08       $ 1.28 share Non-cash change in fair value of           0.54            (0.12)       0.69          0.05 derivative instruments Gain on sale of         (0.04)          —            (1.86)        — properties Impairment of oil and   —               —            0.01          0.01 gas properties Other non-cash          —               —            (0.01)        — adjustments Tax impact ^(1)    (0.19)          0.05         0.44          (0.02) Adjusted Diluted        $  0.70         $  0.65      $  1.35       $ 1.32 Earnings Per Share Diluted weighted average shares          100,260         92,702       100,328       92,812 outstanding Effective tax rate      37.5       %    36.0      %  37.4       %  36.7      %  (1) The tax impact is computed utilizing the Company's effective tax rate on     the adjustments for certain non-cash and non-recurring items.    SOURCE Oasis Petroleum Inc.  Website: http://www.oasispetroleum.com  
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