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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2020
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)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s)   Name of each exchange on which registered
Common Stock OAS   The Nasdaq Stock Market LLC
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  ☒   No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).    Yes ☒  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 Accelerated filer
Non-accelerated filer
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 ☒
Number of shares of the registrant’s common stock outstanding at July 31, 2020: 320,975,203 shares.



OASIS PETROLEUM INC.
FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 2020
TABLE OF CONTENTS
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PART I — FINANCIAL INFORMATION
Item 1. — Financial Statements (Unaudited)
Oasis Petroleum Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
June 30, 2020 December 31, 2019
  (In thousands, except share data)
ASSETS
Current assets
Cash and cash equivalents $ 77,408    $ 20,019   
Accounts receivable, net 201,514    371,181   
Inventory 36,920    35,259   
Prepaid expenses 15,901    10,011   
Derivative instruments 85,425    535   
Other current assets 1,667    346   
Total current assets 418,835    437,351   
Property, plant and equipment
Oil and gas properties (successful efforts method) 9,358,710    9,463,038   
Other property and equipment 1,314,870    1,279,653   
Less: accumulated depreciation, depletion, amortization and impairment (8,521,390)   (3,764,915)  
Total property, plant and equipment, net 2,152,190    6,977,776   
Assets held for sale, net 1,380    21,628   
Derivative instruments —    639   
Long-term inventory 14,173    13,924   
Operating right-of-use assets 15,232    18,497   
Other assets 23,816    29,438   
Total assets $ 2,625,626    $ 7,499,253   
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities
Accounts payable $ 5,131    $ 17,948   
Revenues and production taxes payable 110,791    233,090   
Accrued liabilities 143,263    281,079   
Accrued interest payable 92,963    37,388   
Derivative instruments —    19,695   
Advances from joint interest partners 4,284    4,598   
Current operating lease liabilities 3,435    6,182   
Other current liabilities 1,486    2,903   
Total current liabilities 361,353    602,883   
Long-term debt 2,761,673    2,711,573   
Deferred income taxes 10,042    267,357   
Asset retirement obligations 58,294    56,305   
Derivative instruments —    120   
Operating lease liabilities 17,109    17,915   
Other liabilities 7,066    6,019   
Total liabilities 3,215,537    3,662,172   
Commitments and contingencies (Note 16)
1

Stockholders’ equity (deficit)
Common stock, $0.01 par value: 900,000,000 shares authorized; 325,144,949 shares issued and 320,984,071 shares outstanding at June 30, 2020 and 324,198,057 shares issued and 321,231,319 shares outstanding at December 31, 2019
4,239    3,189   
Treasury stock, at cost: 4,160,878 and 2,966,738 shares at June 30, 2020 and December 31, 2019, respectively
(36,507)   (33,881)  
Additional paid-in capital 3,122,912    3,112,384   
Retained earnings (accumulated deficit) (3,849,768)   554,446   
Oasis share of stockholders’ equity (deficit) (759,124)   3,636,138   
Non-controlling interests 169,213    200,943   
Total stockholders’ equity (deficit) (589,911)   3,837,081   
Total liabilities and stockholders’ equity (deficit) $ 2,625,626    $ 7,499,253   

The accompanying notes are an integral part of these condensed consolidated financial statements.
2

Oasis Petroleum Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
  Three Months Ended June 30, Six Months Ended June 30,
  2020 2019 2020 2019
  (In thousands, except per share data)
Revenues
Oil and gas revenues $ 93,830    $ 357,004    $ 332,958    $ 725,786   
Purchased oil and gas sales 37,352    109,389    123,630    257,860   
Midstream revenues 34,774    51,573    91,185    99,594   
Other services revenues 396    11,439    6,377    21,897   
Total revenues 166,352    529,405    554,150    1,105,137   
Operating expenses
Lease operating expenses 29,608    56,228    79,377    114,672   
Midstream expenses 8,161    17,368    21,245    34,097   
Other services expenses 729    8,474    5,660    15,444   
Marketing, transportation and gathering expenses 23,765    28,488    53,229    63,438   
Purchased oil and gas expenses 33,180    109,662    118,383    259,566   
Production taxes 6,764    28,142    26,090    57,760   
Depreciation, depletion and amortization 33,130    177,358    236,885    367,191   
Exploration expenses 1,430    887    2,598    1,717   
Impairment 2,319    24    4,825,997    653   
General and administrative expenses 37,443    30,926    68,617    65,385   
Total operating expenses 176,529    457,557    5,438,081    979,923   
Gain (loss) on sale of properties (1,047)   (276)   10,179    (3,198)  
Operating income (loss) (11,224)   71,572    (4,873,752)   122,016   
Other income (expense)
Net gain (loss) on derivative instruments (37,187)   34,749    248,135    (82,862)  
Interest expense, net of capitalized interest (44,388)   (43,186)   (140,145)   (87,654)  
Gain on extinguishment of debt —    —    83,887    —   
Other income 837    279    900    233   
Total other income (expense), net (80,738)   (8,158)   192,777    (170,283)  
Income (loss) before income taxes (91,962)   63,414    (4,680,975)   (48,267)  
Income tax benefit (expense) 2,613    (12,240)   257,351    (8,537)  
Net income (loss) including non-controlling interests (89,349)   51,174    (4,423,624)   (56,804)  
Less: Net income (loss) attributable to non-controlling interests 3,594    8,417    (19,820)   15,321   
Net income (loss) attributable to Oasis $ (92,943)   $ 42,757    $ (4,403,804)   $ (72,125)  
Earnings (loss) attributable to Oasis per share:
Basic (Note 14)
$ (0.29)   $ 0.14    $ (13.90)   $ (0.23)  
Diluted (Note 14)
(0.29)   0.14    (13.90)   (0.23)  
Weighted average shares outstanding:
Basic (Note 14)
317,629    314,982    316,899    314,724   
Diluted (Note 14)
317,629    314,982    316,899    314,724   

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

3

Oasis Petroleum Inc.
Condensed Consolidated Statements of Changes in Stockholders’ Equity (Deficit)
(Unaudited)

Attributable to Oasis
  Common Stock Treasury Stock Additional
Paid-in Capital
Retained Earnings (Accumulated Deficit) Non-controlling Interests Total
Stockholders’
Equity (Deficit)
Shares Amount Shares Amount
(In thousands)
Balance as of December 31, 2019 321,231    $ 3,189    2,967    $ (33,881)   $ 3,112,384    $ 554,446    $ 200,943    $ 3,837,081   
Cumulative-effect adjustment for adoption of ASU 2016-13 (Note 2) —    —    —    —    —    (410)   —    (410)  
Equity-based compensation 3,836    32    —    —    7,007    —    66    7,105   
Distributions to non-controlling interest owners —    —    —    —    —    —    (6,028)   (6,028)  
Equity component of senior unsecured convertible notes, net —    —    —    —    (337)   —    —    (337)  
Treasury stock - tax withholdings (942)   —    942    (2,308)   —    —    —    (2,308)  
Net loss —    —    —    —    —    (4,310,861)   (23,414)   (4,334,275)  
Balance as of March 31, 2020 324,125    3,221    3,909    (36,189)   3,119,054    (3,756,825)   171,567    (499,172)  
Equity-based compensation (2,889)   1,018    —    —    3,858    —    66    4,942   
Distributions to non-controlling interest owners —    —    —    —    —    —    (6,014)   (6,014)  
Treasury stock - tax withholdings (252)   —    252    (318)   —    —    —    (318)  
Net income (loss) —    —    —    —    —    (92,943)   3,594    (89,349)  
Balance as of June 30, 2020 320,984    $ 4,239    4,161    $ (36,507)   $ 3,122,912    $ (3,849,768)   $ 169,213    $ (589,911)  

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 as of December 31, 2018 318,377    $ 3,157    2,092    $ (29,025)   $ 3,077,755    $ 682,689    $ 184,304    $ 3,918,880   
Equity-based compensation 4,360    25    —    —    9,462    —    119    9,606   
Distributions to non-controlling interest owners —    —    —    —    —    —    (4,937)   (4,937)  
Treasury stock - tax withholdings (686)   —    686    (4,261)   —    —    —    (4,261)  
Other —    —    —    —    (134)   —    (41)   (175)  
Net income (loss) —    —    —    —    —    (114,882)   6,904    (107,978)  
Balance as of March 31, 2019 322,051    3,182    2,778    (33,286)   3,087,083    567,807    186,349    3,811,135   
Equity-based compensation (149)     —    —    9,465    —    100    9,566   
Distributions to non-controlling interest owners —    —    —    —    —    —    (5,156)   (5,156)  
Treasury stock - tax withholdings (8)   —      (44)   —    —    —    (44)  
Other —    —    —    —    (193)   —    (24)   (217)  
Net income —    —    —    —    —    42,757    8,417    51,174   
Balance as of June 30, 2019 321,894    $ 3,183    2,786    $ (33,330)   $ 3,096,355    $ 610,564    $ 189,686    $ 3,866,458   

The accompanying notes are an integral part of these condensed consolidated financial statements.
4

Oasis Petroleum Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
  Six Months Ended June 30,
  2020 2019
  (In thousands)
Cash flows from operating activities:
Net loss including non-controlling interests $ (4,423,624)   $ (56,804)  
Adjustments to reconcile net loss including non-controlling interests to net cash provided by operating activities:
Depreciation, depletion and amortization 236,885    367,191   
Gain on extinguishment of debt (83,887)   —   
(Gain) loss on sale of properties (10,179)   3,198   
Impairment 4,825,997    653   
Deferred income taxes (257,315)   8,617   
Derivative instruments (248,135)   82,862   
Equity-based compensation expenses 11,697    17,924   
Deferred financing costs amortization and other 16,755    12,245   
Working capital and other changes:
Change in accounts receivable, net 167,871    (12,914)  
Change in inventory (8,739)   3,029   
Change in prepaid expenses (7,465)   3,918   
Change in accounts payable, interest payable and accrued liabilities (156,668)   (36,514)  
Change in other assets and liabilities, net (3,298)   (4,473)  
Net cash provided by operating activities 59,895    388,932   
Cash flows from investing activities:
Capital expenditures (270,283)   (525,501)  
Acquisitions —    (5,781)  
Proceeds from sale of properties 13,780    —   
Derivative settlements 144,069    3,629   
Net cash used in investing activities (112,434)   (527,653)  
Cash flows from financing activities:
Proceeds from Revolving Credit Facilities 577,000    1,178,000   
Principal payments on Revolving Credit Facilities (383,000)   (1,025,000)  
Repurchase of senior unsecured notes (68,040)   —   
Deferred financing costs (102)   (482)  
Purchases of treasury stock (2,626)   (4,305)  
Distributions to non-controlling interests (12,042)   (10,093)  
Payments on finance lease liabilities (1,262)   (941)  
Other —    (390)  
Net cash provided by financing activities 109,928    136,789   
Increase (decrease) in cash and cash equivalents 57,389    (1,932)  
Cash and cash equivalents:
Beginning of period 20,019    22,190   
End of period $ 77,408    $ 20,258   
Supplemental non-cash transactions:
Change in accrued capital expenditures $ (60,655)   $ (30,598)  
Change in asset retirement obligations 2,039    3,840   
The accompanying notes are an integral part of these condensed consolidated financial statements.
5

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”) is an independent exploration and production company focused on the acquisition and development of onshore, unconventional crude oil and natural gas resources in the United States. Oasis Petroleum North America LLC (“OPNA”) and Oasis Petroleum Permian LLC (“OP Permian”) conduct the Company’s exploration and production activities and own its crude oil and natural gas properties located in the Williston Basin and the Delaware Basin, respectively. In addition to its exploration and production segment, the Company also operates a midstream business segment through Oasis Midstream Partners LP (“OMP”) and Oasis Midstream Services LLC (“OMS”). OMP is a growth-oriented, fee-based master limited partnership that develops and operates a diversified portfolio of midstream assets.
2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited 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, 2019 is derived from audited financial statements. Certain reclassifications of prior year balances have been made to conform 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 unaudited 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, 2019 (“2019 Annual Report”).
Consolidation. The accompanying unaudited condensed consolidated financial statements of the Company include the accounts of Oasis, the accounts of wholly-owned subsidiaries and the accounts of OMP and its general partner, OMP GP LLC (“OMP GP”). 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, OMP is a variable interest entity. 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. All intercompany balances and transactions have been eliminated upon consolidation.
Risks and Uncertainties
As a crude oil and natural gas producer, the Company’s revenue, profitability and future growth are substantially dependent upon the prevailing and future prices for crude 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 crude oil and natural gas prices will not be subject to wide fluctuations in the future. If prices for crude oil, natural gas and natural gas liquids (“NGLs”) continue to decline or for an extended period of time remain at depressed levels, such commodity price environment could have a material adverse effect on the Company’s financial position, results of operations, cash flows, the quantities of crude oil and natural gas reserves that may be economically produced and the Company’s access to capital.
6

The Company considered the impact of the novel coronavirus 2019 (“COVID-19”) pandemic on the assumptions and estimates used by management in the unaudited condensed consolidated financial statements for the reporting periods presented. As a result of the significant decline in current and expected future commodity prices, the Company recognized material asset impairment charges during the six months ended June 30, 2020 (see Note 8 — Property, Plant and Equipment). Management’s estimates and assumptions were based on historical data and consideration of future market conditions. Given the uncertainty inherent in any projection, which is heightened by the possibility of unforeseen additional impacts from the COVID-19 pandemic, actual results may differ from the estimates and assumptions used, and conditions may change, which could materially affect amounts reported in the unaudited condensed consolidated financial statements in the near term.
Going Concern
Based on the current commodity price environment, the Company currently expects it will be unable to comply with the covenants under its revolving credit facility (the “Oasis Credit Facility”), as amended in April 2020, within the next twelve months, which raises substantial doubt about the Company’s ability to continue as a going concern within one year after the accompanying financial statements are issued. Failure to comply with a covenant, if not waived, would result in an event of default under the Oasis Credit Facility, the potential acceleration of outstanding debt thereunder and the potential liquidation of the collateral securing such debt. An acceleration under the Oasis Credit Facility could result in an event of default and an acceleration under the indentures for the Company’s senior unsecured notes and senior unsecured convertible notes (collectively, the “Notes”).
The Company is actively pursuing, with support from its Board of Directors, a variety of transactions and cost-cutting measures, including but not limited to, reduction in corporate discretionary expenditures, refinancing transactions, capital exchange transactions, asset divestitures, operational efficiencies and a reduction in 2020 capital expenditures by approximately 58% from the initial 2020 total capital expenditure plan announced in February 2020. Furthermore, the Company has engaged advisors to assist with the evaluation of strategic alternatives, including a recapitalization transaction with a third-party capital provider; restructuring of the Company’s existing debt either through an out-of-court process or under Chapter 11 of the Bankruptcy Code; or other strategic transaction. However, the Company cannot predict the extent to which any of these measures will be successful, if at all, and there can be no assurances that the Company will be able to successfully restructure its indebtedness, improve its financial position or complete any strategic transactions. The Company’s unaudited condensed consolidated financial statements have been prepared on a going concern basis and do not reflect any adjustments that might result if the Company is unable to continue as a going concern.
As a result of the foregoing liquidity concerns and the Company’s reduction in planned capital expenditures in 2020 in response to the depressed commodity price environment, the Company’s estimated quantity of proved reserves has decreased significantly from the previous estimate disclosed in its 2019 Annual Report. This decrease is primarily due to the removal of proved undeveloped reserves in contemplation of the ongoing market downturn and uncertainty regarding the Company’s ability to finance the development of such reserves within five years.
Dividends
The Company has not paid any cash dividends since its inception. Covenants contained in the Oasis Credit Facility and the indentures governing the Company’s senior notes restrict the payment of cash dividends on its common stock. The Company currently intends to retain all earnings for the development of its business and for repayment of outstanding debt, and the Company does not anticipate declaring or paying any cash dividends to holders of its common stock.
Significant Accounting Policies
There have been no material changes to the Company’s critical accounting policies and estimates from those disclosed in the 2019 Annual Report, other than as noted below.
Fair value measurement. In the first quarter of 2020, the Company adopted Accounting Standards Update No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”), which improves the effectiveness of the disclosure requirements for fair value measurements. The adoption of ASU 2018-13 did not result in a material impact to the Company’s financial position, cash flows or results of operations. See Note 6 — Fair Value Measurements for disclosures in accordance with ASU 2018-03.
7

Accounts receivable — credit losses. In the first quarter of 2020, the Company adopted Accounting Standards Update No. 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which replaces the incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information, including forecasts, to develop credit loss estimates. The Company’s exposure to credit losses is primarily related to its accounts receivable from crude oil and natural gas purchasers and joint interest owners on properties it operates. In accordance with ASU 2016-13, the Company estimates expected credit losses on its accounts receivable at each reporting date, which may result in earlier recognition of credit losses than under previous GAAP. These estimates are based on historical data, current and future economic and market conditions to determine expected collectability. Historically, the Company’s credit losses on joint interest and crude oil and natural gas sales receivables have been immaterial. The Company continually monitors the creditworthiness of its counterparties by reviewing credit ratings, financial statements and payment history. The adoption of ASU 2016-13 was applied using a modified retrospective approach by recognizing a cumulative-effect adjustment to retained earnings, and prior periods were not retrospectively adjusted. The adoption of ASU 2016-13 did not result in a material impact to the Company’s financial position, cash flows or results of operations (see Note 5 — Accounts Receivable).
Recent Accounting Pronouncements
Income taxes. In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which simplifies the accounting for income taxes by removing certain exceptions to the general principles and also simplification of areas such as separate entity financial statements and interim recognition of enactment of tax laws or rate changes. ASU 2019-12 is effective for fiscal years beginning after December 15, 2020, including interim reporting periods within those years. The Company is currently evaluating the effect of ASU 2019-12, but does not expect the adoption of this guidance to have a material impact on its financial position, cash flows or result of operations.
Reference rate reform. In March 2020, the FASB issued Accounting Standards Update 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”). The amendments provide optional guidance for a limited time to ease the potential burden in accounting for reference rate reform. The new guidance provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts and hedging relationships that reference the London Interbank Offered Rate or another reference rate expected to be discontinued due to reference rate reform. These amendments are effective immediately and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022. The Company is currently evaluating its contracts and the optional expedients provided by ASU 2020-04 and the impact the new standard will have on its condensed consolidated financial statements and related disclosures.
3. Revenue Recognition
Exploration and Production Revenues
Revenues associated with contracts with customers for crude oil, natural gas and NGL sales and other services were as follows for the three and six months ended June 30, 2020 and 2019:
Exploration and Production Revenues
  Three Months Ended June 30, Six Months Ended June 30,
  2020 2019 2020 2019
  (In thousands)
Crude oil revenues $ 81,059    $ 327,977    $ 293,852    $ 646,098   
Purchased crude oil sales 23,519    106,441    109,276    253,577   
Natural gas and NGL revenues 12,771    29,027    39,106    79,688   
Purchased natural gas sales 4,081    2,920    4,602    4,255   
Other services revenues(1)
396    11,439    6,377    21,897   
Total exploration and production revenues $ 121,826    $ 477,804    $ 453,213    $ 1,005,515   
__________________
(1)Represents revenues for equipment rentals and well services provided by the Company’s wholly-owned subsidiary, Oasis Well Services LLC (“OWS”), excluding intercompany revenues for services performed for the Company’s ownership interests, which are eliminated in consolidation and are therefore not included in consolidated exploration and production revenues.
8

Prior period performance obligations. For sales of commodities, the Company records revenue in the month production is delivered to the purchaser. However, settlement statements and payments are typically not received for 20 to 60 days after the date production is delivered, and as a result, the Company is required to estimate the amount of production that was delivered to the purchaser and the price that will be received for the sale of the product. The Company records the differences between estimates and the actual amounts received for product sales once payment is received from the purchaser. Such differences have historically not been significant. The Company uses knowledge of its properties, its properties’ historical performance, spot market prices and other factors as the basis for these estimates. For the three and six months ended June 30, 2020 and 2019, revenue recognized related to performance obligations satisfied in prior reporting periods was not material.
Midstream Revenues
Revenues associated with contracts with customers for midstream services under fee-based arrangements and midstream product sales from purchase arrangements were as follows for the three and six months ended June 30, 2020 and 2019:
Midstream Revenues(1)
  Three Months Ended June 30, Six Months Ended June 30,
  2020 2019 2020 2019
  (In thousands)
Midstream service revenues
Crude oil, natural gas and NGL revenues $ 22,898    $ 22,875    $ 49,584    $ 47,538   
Produced and flowback water revenues 7,247    9,473    18,499    18,506   
Total midstream service revenues $ 30,145    $ 32,348    $ 68,083    $ 66,044   
Midstream product revenues
Purchased crude oil sales $ 9,752    $ 28    $ 9,752    $ 28   
Crude oil, natural gas and NGL revenues 4,335    17,319    20,608    30,116   
Freshwater revenues 294    1,906    2,494    3,434   
Total midstream product revenues $ 14,381    $ 19,253    $ 32,854    $ 33,578   
Total midstream revenues $ 44,526    $ 51,601    $ 100,937    $ 99,622   
__________________
(1)Represents midstream revenues, excluding intercompany revenues for work performed by the midstream business segment for the Company’s ownership interests, which are eliminated in consolidation and are therefore not included in consolidated midstream revenues.
Prior period performance obligations. The Company records revenue for midstream services or product sales when the performance obligations under the terms of its customer contracts are satisfied. The Company measures the satisfaction of its performance obligations using the output method based upon the volume of crude oil, natural gas or water that flows through its systems. In certain cases, the Company is required to estimate these volumes during a reporting period and record any differences between the estimated volumes and actual volumes in the following reporting period. Such differences have historically not been significant. For the three and six months ended June 30, 2020 and 2019, revenue recognized related to performance obligations satisfied in prior reporting periods was not material.
Contract Balances
Contract balances are the result of timing differences between revenue recognition, billings and cash collections. Contract assets relate to revenue recognized for accrued deficiency fees associated with minimum volume commitments where the Company believes it is probable there will be a shortfall payment and that a significant reversal of revenue recognized will not occur once the related performance period is completed and the customer is billed. Revenue recognized for accrued deficiency fees associated with minimum volume commitments is included in midstream revenues on the Company’s Condensed Consolidated Statements of Operations. Contract liabilities relate to aid in construction payments received from customers which are recognized as revenue over the expected period of future benefit. The Company does not recognize contract assets or contract liabilities under its customer contracts for which invoicing occurs once the Company’s performance obligations have been satisfied and payment is unconditional. Contract balances are classified as current or long-term based on the timing of when the Company expects to receive cash for contract assets or recognize revenue for contract liabilities. Contract assets are included in other current assets on the Company’s Condensed Consolidated Balance Sheets, and contract liabilities are included in other current liabilities and other liabilities on the Company’s Condensed Consolidated Balance Sheets.
9

The following table summarizes the changes in the Company’s contract assets for the six months ended June 30, 2020:
(In thousands)
Balance as of December 31, 2019
$ —   
Revenues recognized 1,538   
Balance as of June 30, 2020
$ 1,538   
The following table summarizes the changes in the Company’s contract liabilities for the six months ended June 30, 2020:
(In thousands)
Balance as of December 31, 2019
$ 2,105   
Cash received 1,769   
Revenues recognized (234)  
Balance as of June 30, 2020
$ 3,640   
Remaining Performance Obligations
The following table presents estimated revenue allocated to remaining performance obligations for contracted revenues that are unsatisfied (or partially satisfied) as of June 30, 2020:
(In thousands)
2020 (excluding the six months ended June 30, 2020) $ 10,084   
2021 17,731   
2022 17,862   
2023 12,366   
2024 11,874   
Thereafter 2,768   
Total $ 72,685   
The partially and wholly unsatisfied performance obligations presented in the table above are generally limited to customer contracts which have fixed pricing and fixed volume terms and conditions, which generally include customer contracts with minimum volume commitment payment obligations.
The Company has elected practical expedients, pursuant to Accounting Standards Codification 606, Revenue from Contracts with Customers, to exclude from the presentation of remaining performance obligations: (i) contracts with index-based pricing or variable volume attributes in which such variable consideration is allocated entirely to a wholly unsatisfied performance obligation or to a wholly unsatisfied promise to transfer a distinct service that forms part of a series of distinct services and (ii) contracts with an original expected duration of one year or less.
4. Inventory
Crude oil inventory includes crude oil in tanks and linefill. Linefill that represents the minimum volume of product in a pipeline system that enables the system to operate is generally not available to be withdrawn from the pipeline system until the expiration of the transportation contract. Crude oil in tanks and linefill in third party pipelines that is expected to be withdrawn within one year is included in inventory on the Company’s Condensed Consolidated Balance Sheets, and crude oil linefill in third party pipelines that is not expected to be withdrawn within one year is included in long-term inventory on the Company’s Condensed Consolidated Balance Sheets.
Equipment and materials consist primarily of well equipment, tanks and tubular goods to be used in the Company’s exploration and production activities and spare parts and equipment for the Company’s midstream assets. Equipment and materials are included in inventory on the Company’s Condensed Consolidated Balance Sheets.
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Inventory, including long-term inventory, is stated at the lower of cost and net realizable value with cost determined on an average cost method. The 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 as well as the liquidation timing of the inventory. Changes in assumptions made as to the timing of a sale can materially impact net realizable value. Due to lower commodity and market prices, the Company recorded impairment losses for the Company’s crude oil inventory, long-term linefill inventory and equipment and materials inventory of $7.2 million, $1.3 million and $1.0 million, respectively, to adjust the carrying values of the inventory to their estimated net realizable values during the six months ended June 30, 2020.
The Company’s total inventory consists of the following:
June 30, 2020 December 31, 2019
  (In thousands)
Inventory
Crude oil inventory $ 8,400    $ 18,296   
Equipment and materials 28,520    16,963   
Total inventory $ 36,920    $ 35,259   
Long-term inventory
Linefill in third party pipelines $ 14,173    $ 13,924   
Total long-term inventory $ 14,173    $ 13,924   
Total $ 51,093    $ 49,183   

5. Accounts Receivable
The following table sets forth the Company’s accounts receivable, net:
June 30, 2020 December 31, 2019
  (In thousands)
Trade accounts $ 125,147    $ 276,629   
Joint interest accounts 65,222    82,112   
Other accounts 13,238    13,699   
Total 203,607    372,440   
Allowance for credit losses(1)
(2,093)   (1,259)  
Total accounts receivable, net $ 201,514    $ 371,181   
__________________
(1)Upon adoption of ASU 2016-13, the Company recognized a cumulative-effect adjustment to retained earnings (accumulated deficit) of $0.4 million to increase its allowance for expected credit losses. Prior period amounts are not adjusted and continue to be reported in accordance with the previous guidance.
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 oil and gas and other properties, 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.
11

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 unobservable from objective sources, requiring internally developed valuation methodologies that result in management’s best estimate of fair value.
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 June 30, 2020
Level 1 Level 2 Level 3 Total
(In thousands)
Assets:
Money market funds $ 35,014    $ —    $ —    $ 35,014   
Commodity derivative instruments (see Note 7)
—    85,425    —    85,425   
Total assets $ 35,014    $ 85,425    $ —    $ 120,439   

  Fair value at December 31, 2019
  Level 1 Level 2 Level 3 Total
  (In thousands)
Assets:
Money market funds $ 146    $ —    $ —    $ 146   
Commodity derivative instruments (see Note 7)
—    1,174    —    1,174   
Total assets $ 146    $ 1,174    $ —    $ 1,320   
Liabilities:
Commodity derivative instruments (see Note 7)
$ —    $ 19,815    $ —    $ 19,815   
Total liabilities $ —    $ 19,815    $ —    $ 19,815   
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 June 30, 2020 and December 31, 2019. 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.
12

The Level 2 instruments presented in the tables above consist of commodity derivative instruments, which include crude 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 and natural gas prices, volatility, skew, discount rate and the contract terms of the derivative instruments. The Company does not have access to the specific proprietary valuation models or inputs used by its counterparties or third-party preparer. 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 market credit spread of the Company or similarly rated public issuers. Based on these calculations, the Company recorded an adjustment to reduce the fair value of its net derivative asset by $0.1 million at June 30, 2020 and its net derivative liability by $0.5 million at December 31, 2019.
Non-Financial Assets and Liabilities
The fair value of the Company’s non-financial assets measured at fair value on a non-recurring basis is determined using valuation techniques that include Level 3 inputs.
Asset retirement obligations. The Company records the fair value of its ARO liability in the period in which the liability is incurred. Fair value is determined by calculating the present value of estimated future cash flows related to the liability. Estimating the future ARO requires management to make estimates and judgments regarding the timing and existence of a liability, as well as what constitutes adequate restoration when considering current regulatory requirements. Inherent in the fair value calculation are numerous assumptions and judgments, including the ultimate costs, inflation factors, credit-adjusted discount rates, timing of settlement and changes in the legal, regulatory, environmental and political environments. The fair value for ARO liabilities incurred as of June 30, 2020 was determined using an inflation factor of 2.5% and a credit-adjusted discount rate of 7.9% (see Note 11 — Asset Retirement Obligations).
Oil and gas and other properties. The Company records its oil and gas and other properties at fair value when acquired in a business combination or upon impairment for proved oil and gas properties and other properties. Fair value is determined using a discounted cash flow model. The inputs used are subject to management’s judgment and expertise and include, but are not limited to, estimates of crude oil and natural gas proved reserves, future commodity pricing, future rates of production, estimates of operating and development costs, risk-adjusted discount rates and estimates of throughput volumes for the Company’s midstream assets. These inputs are classified as Level 3 inputs, except the underlying commodity price assumptions are based on NYMEX forward strip prices (Level 1) and adjusted for price differentials. As a result of the significant decline in expected future commodity prices in the first quarter of 2020, the Company reviewed its proved oil and gas properties in both the Williston Basin and the Delaware Basin for impairment. At March 31, 2020, the underlying future commodity prices included in the Company’s estimated future cash flows of its proved oil and gas properties were determined using NYMEX forward strip prices for five years, escalating 2.5% per year thereafter. The estimated future cash flows also included a 2.5% inflation factor applied to the future operating and development costs after five years and every year thereafter. The estimated future cash flows for the Company’s proved oil and gas properties and midstream assets were discounted at market-based weighted average costs of capital of 12.7% and 10.4%, respectively (see Note 8 — Property, Plant and Equipment).
7. Derivative Instruments
The Company utilizes derivative financial instruments to manage risks related to changes in crude oil and natural gas prices. The Company’s crude oil contracts will settle monthly based on the average NYMEX West Texas Intermediate crude oil index price (“NYMEX WTI”), and its natural gas contracts will settle monthly based on the average NYMEX Henry Hub natural gas index price (“NYMEX HH”).
At June 30, 2020, the Company utilized fixed price swaps and two-way and three-way costless collars to reduce the volatility of crude oil prices on a significant portion of its future expected crude oil production. The Company’s fixed price swaps are comprised of 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 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.
13

All derivative instruments are recorded on the Company’s Condensed Consolidated Balance Sheets as either assets or liabilities measured at their 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 cash settlements on matured or liquidated derivative contracts result in making a payment to or receiving a payment from a 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.
During the three months ended June 30, 2020, following a decrease in crude oil commodity prices and the related increase in the fair value of derivative assets, the Company liquidated a portion of its crude oil three-way costless collar contracts prior to the expiration of their contractual maturities, resulting in cash proceeds of $25.3 million, which are reflected as investing activities in the Company’s Condensed Consolidated Statements of Cash Flows.
At June 30, 2020, the Company had the following outstanding commodity derivative instruments:
Commodity Settlement
Period
Derivative
Instrument
Volumes Weighted Average Prices Fair Value Assets
Fixed Price Swaps Sub-Floor Floor Ceiling
    (In thousands)
Crude oil 2020 Fixed price swaps 2,464,000    Bbl $ 56.66    $ 43,135   
Crude oil 2020 Two-way collar 1,494,000    Bbl $ 51.28    $ 59.50    18,194   
Crude oil 2020 Three-way collar 1,278,000    Bbl $ 40.70    $ 53.98    $ 63.22    14,393   
Crude oil 2021 Fixed price swaps 310,000    Bbl $ 56.01    5,004   
Crude oil 2021 Two-way collar 248,000    Bbl $ 51.38    $ 59.33    3,030   
Crude oil 2021 Three-way collar 186,000    Bbl $ 40.00    $ 53.29    $ 62.71    1,669   
$ 85,425   
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 June 30, Six Months Ended June 30,
Statements of Operations Location 2020 2019 2020 2019
  (In thousands)
Net gain (loss) on derivative instruments $ (37,187)   $ 34,749    $ 248,135    $ (82,862)  
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: 
June 30, 2020
Commodity Balance Sheet Location Gross Recognized Assets Gross Amount Offset Net Recognized Fair Value Assets
(In thousands)
Derivatives assets:
Commodity contracts Derivative instruments — current assets $ 91,361    $ (5,936)   $ 85,425   
Total derivatives assets $ 91,361    $ (5,936)   $ 85,425   
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December 31, 2019
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 $ 633    $ (98)   $ 535   
Commodity contracts Derivative instruments — non-current assets 3,295    (2,656)   639   
Total derivatives assets $ 3,928    $ (2,754)   $ 1,174   
Derivatives liabilities:
Commodity contracts Derivative instruments — current liabilities $ 33,812    $ (14,117)   $ 19,695   
Commodity contracts Derivative instruments — non-current liabilities 686    (566)   120   
Total derivatives liabilities $ 34,498    $ (14,683)   $ 19,815   

8. Property, Plant and Equipment
The following table sets forth the Company’s property, plant and equipment:
June 30, 2020 December 31, 2019
  (In thousands)
Proved oil and gas properties(1)
$ 9,015,068    $ 8,724,376   
Less: Accumulated depreciation, depletion, amortization and impairment (8,217,194)   (3,601,019)  
Proved oil and gas properties, net 797,874    5,123,357   
Unproved oil and gas properties 343,642    738,662   
Other property and equipment(2)
1,314,870    1,279,653   
Less: Accumulated depreciation and impairment (304,196)   (163,896)  
Other property and equipment, net 1,010,674    1,115,757   
Total property, plant and equipment, net $ 2,152,190    $ 6,977,776   
__________________
(1)Included in the Company’s proved oil and gas properties are estimates of future asset retirement costs of $42.3 million at both June 30, 2020 and December 31, 2019.
(2)Included in the Company’s other property and equipment are estimates of future asset retirement costs of $1.4 million at both June 30, 2020 and December 31, 2019.
Impairment
The Company reviews its long-lived assets for impairment by asset group whenever events and circumstances indicate that a decline in the recoverability of their carrying value may have occurred.
Proved oil and gas properties. As a result of the significant decline in expected future commodity prices coupled with liquidity concerns due to the Company’s current expectation that it will be unable to comply with the covenants under the Oasis Credit Facility within the next twelve months, and the resulting decrease in estimated proved reserves, the Company reviewed its proved oil and gas properties in both the Williston Basin and the Delaware Basin for impairment in the first quarter of 2020. During the six months ended June 30, 2020, the Company recorded impairment charges of $4.4 billion, including $3.8 billion related to the Williston Basin and $637.3 million related to the Delaware Basin, to reduce the carrying values of its proved oil and gas properties to their estimated fair values (see Note 6 — Fair Value Measurements). During the three and six months ended June 30, 2019, the Company did not record impairment charges on its proved oil and gas properties.
Unproved oil and gas properties. The Company assessed its unproved oil and gas properties for impairment and recorded impairment charges on its unproved oil and gas properties of $0.8 million and $292.1 million during the three and six months ended June 30, 2020, respectively, and $0.7 million during the six months ended June 30, 2019 as a result of leases expiring or expected to expire as well as drilling plan uncertainty on certain acreage of unproved properties. There were de minimis impairment charges on unproved oil and gas properties recorded during the three months ended June 30, 2019.
15

Other property and equipment. Due to the significant decline in expected future commodity prices during the first quarter of 2020, the Company and other crude oil and natural gas producers changed their development plans, which resulted in lower forecasted throughput volumes for the Company’s midstream assets. As a result, the Company reviewed its midstream assets, grouped by commodity for each basin, for impairment as of March 31, 2020. The carrying amounts exceeded the estimated undiscounted future cash flows for certain midstream asset groups in the Williston Basin and the Delaware Basin, and as a result, the Company recorded impairment charges of $108.3 million during the six months ended June 30, 2020 to reduce the carrying values of its midstream assets to the estimated fair values. In addition, the Company recorded an impairment charge of $0.6 million on prepaid midstream equipment during the three and six months ended June 30, 2020. No impairment charges were recorded on the Company’s midstream assets during the three and six months ended June 30, 2019.
9. Divestitures and Assets Held for Sale
Divestitures
The Company reviews portfolio opportunities on an ongoing basis and has engaged in various divestiture transactions over recent years. In January 2020, the Company completed the initial closing for the sale of certain oil and gas properties located in the Williston Basin for total cash proceeds of $10.4 million. The transaction had an effective date of October 1, 2019, and the final closing statement for the transaction will be completed in August 2020. During the three and six months ended June 30, 2020, the Company recognized a $0.2 million and $11.4 million net gain on sale of properties, respectively, which includes, and is subject to further, customary post-close adjustments, in its Condensed Consolidated Statements of Operations. The divested properties were included in the Company’s exploration and production segment.
Assets Held for Sale
During the fourth quarter of 2019, the Company decided to pursue an exit from the well services business (the “Well Services Exit”) and began an active program to locate buyers for certain well services inventory and equipment included within the Company’s well services business segment. The assets expected to be sold related to the Well Services Exit met the criteria for assets held for sale at December 31, 2019 and were classified as such.
During the three months ended March 31, 2020, the Company recorded an impairment charge of $14.5 million to write-off the net book value of certain well services equipment held for sale as of December 31, 2019 for which a sale was no longer probable to be completed within one year. In addition, the Company recorded an impairment charge of $1.4 million to adjust the carrying value of the remaining equipment held for sale to its estimated fair value less costs to sell. These impairment charges are included in impairment on the Company’s Condensed Consolidated Statements of Operations for the six months ended June 30, 2020. During the three months ended June 30, 2020, the Company recorded a non-cash adjustment of $1.5 million to adjust the carrying value of inventory held for sale to its net realizable value, which was included in other services expenses on the Company’s Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2020.
During the three months ended June 30, 2020, the Company completed various sale agreements for total cash proceeds of $1.4 million for the sales of certain well services equipment related to the Well Services Exit, recognizing a net loss on sale of properties of $0.5 million. In June 2020, the Company signed a purchase and sale agreement to sell certain well services inventory and equipment for total cash proceeds of $5.5 million and classified the book value of these assets of $1.4 million as held for sale as of June 30, 2020. The final closing for the transaction is expected to be completed in August 2020. The sale of assets related to the Well Services Exit does not represent a strategic shift that will have a major effect on the Company’s operations and financial results, and therefore, is not reported as discontinued operations.
The following table presents balance sheet data related to the assets held for sale related to the Well Services Exit as of June 30, 2020:
June 30, 2020
(In thousands)
Inventory $ 580   
Other property and equipment 67,617