Item 1.01 Entry into a Material Definitive Agreement.
Indenture for 6.375% Senior Notes due 2026
On June 9, 2021, Oasis Petroleum Inc. (the “Company”) completed its offering of $400 million in aggregate principal amount of its 6.375% senior unsecured notes due 2026 (the “Notes”), which are fully and unconditionally guaranteed on a senior unsecured basis by certain of the Company’s subsidiaries (collectively, the “Guarantors”): Oasis Midstream Services LLC, Oasis Petroleum LLC, Oasis Petroleum North America LLC, Oasis Well Services LLC, Oasis Petroleum Permian LLC, Oasis Petroleum Marketing LLC, OMP GP LLC and OMS Holdings LLC. The terms of the Notes are governed by the indenture dated as of June 9, 2021 (the “Indenture”), among the Company, the Guarantors and Regions Bank, as trustee (the “Trustee”). The Notes will mature on June 1, 2026, and interest is payable on the Notes on each June 1 and December 1, commencing on December 1, 2021.
The net proceeds of the Notes will be used to fund a portion of the consideration for the Company’s previously announced acquisition of certain assets from QEP Energy Company, a wholly-owned subsidiary of Diamondback Energy, Inc., pursuant to that certain Purchase and Sale Agreement, dated May 3, 2021 (the “Acquisition Agreement”). In addition to the redemption provisions described in the following paragraph, in the event that (a) the acquisition is not consummated on or prior to September 27, 2021 (or such later date that is the “Outside Date” as defined in and under the Acquisition Agreement) or (b) at any time prior to September 27, 2021 (or such later date that is the “Outside Date” as defined in and under the Acquisition Agreement), the Acquisition Agreement is terminated without the acquisition being consummated, the Company will redeem all of the Notes at a price equal to 100% of the issue price plus accrued and unpaid interest to, but excluding, the date of redemption. The foregoing description of the Acquisition Agreement is a summary only and is qualified in its entirety by reference to the complete text of the Acquisition Agreement, which was previously filed as Exhibit 2.2(a) to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2021, and incorporated herein by reference.
At any time prior to June 1, 2023, the Company may redeem up to 40% of the Notes at a redemption price of 106.375% of the principal amount, plus accrued and unpaid interest to the redemption date, in an amount not greater than the net proceeds of certain equity offerings. In addition, prior to June 1, 2023, the Company may redeem some or all of the Notes for cash at a redemption price equal to 100% of the principal amount thereof plus an applicable make-whole premium and accrued and unpaid interest to the redemption date. The Company must offer to repurchase the Notes if it experiences specific kinds of changes of control or sells assets under certain circumstances. On and after June 1, 2023, the Company may redeem some or all of the Notes at redemption prices (expressed as percentages of principal amount) equal to 103.188% for the twelve-month period beginning on June 1, 2023, 101.594% for the twelve-month period beginning June 1, 2024, and 100.000% beginning on June 1, 2025, plus accrued and unpaid interest to the redemption date.
The Notes are the Company’s senior unsecured obligations, rank equally in right of payment with all of the Company’s existing and future senior debt and rank senior in right of payment to all of the Company’s future subordinated debt. The Notes are effectively subordinated to all of the Company’s existing and future secured debt to the extent of the value of the collateral securing such indebtedness.
The Indenture restricts the Company’s ability and the ability of certain of its subsidiaries to: (i) make investments; (ii) incur additional indebtedness or issue preferred stock; (iii) create liens; (iv) sell assets; (v) enter into agreements that restrict dividends or other payments by restricted subsidiaries; (vi) consolidate, merge or transfer all or substantially all of the assets of the Company; (vii) engage in transactions with affiliates; (viii) pay dividends or make other distributions on capital stock or
prepay subordinated indebtedness; and (ix) create unrestricted subsidiaries. These covenants are subject to a number of important exceptions and qualifications. If at any time when the Notes are rated investment grade from two of three ratings agencies and no Default (as defined in the Indenture) has occurred and is continuing, many of such covenants will terminate and the Company and its subsidiaries will cease to be subject to such covenants.
The Indenture contains customary events of default, including:
•default for 30 days in the payment when due of interest on the Notes;
•default in the payment when due of the principal of, or premium, if any, on the Notes;
•failure by the Company to comply with its other obligations under the Indenture, in certain cases subject to notice and grace periods;
•payment defaults and accelerations with respect to other indebtedness of the Company and its Restricted Subsidiaries (as defined in the Indenture) in the aggregate principal amount of $50.0 million or more;
•failure by the Company or any Significant Subsidiary (as defined in the Indenture) or group of Restricted Subsidiaries that, taken together, would constitute a Significant Subsidiary to pay certain final judgments aggregating in excess of $50.0 million, which judgments are not paid, discharged or stayed for a period of 60 days;
•certain events of bankruptcy, insolvency or reorganization of the Company or a Significant Subsidiary or group of Restricted Subsidiaries that, taken together, would constitute a Significant Subsidiary; and
•any guarantee of the Notes by a Guarantor ceases to be in full force and effect, is declared null and void in a judicial proceeding or is denied or disaffirmed by its maker.
The foregoing description of the Indenture is a summary only and is qualified in its entirety by reference to the complete text of the Indenture, which is filed as Exhibit 4.1 to this Form 8-K and incorporated herein by reference.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information included in Item 1.01 of this Current Report on Form 8-K under the caption “Indenture for 6.375% Senior Notes due 2026” is incorporated by reference into this Item 2.03 of this Current Report on Form 8-K.