Summary of Significant Accounting Policies and Basis of Presentation | Summary of Significant Accounting Policies and Basis of Presentation Basis of Presentation The accompanying consolidated financial statements of the Partnership include the accounts of Oasis Midstream Partners LP and its subsidiaries. All significant intercompany transactions have been eliminated in consolidation. These statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Use of Estimates Preparation of the Partnership’s consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ significantly from those estimates. Management evaluates estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic and commodity price environment. Consolidation The Partnership’s consolidated financial statements include its accounts and the accounts of the DevCos, each of which is controlled by the general partner of the Partnership. All intercompany balances and transactions have been eliminated upon consolidation. Variable interest entities. With respect to Bobcat DevCo and Beartooth DevCo, management has determined that OMS’s equity at risk was established with non-substantive voting rights, making Bobcat DevCo and Beartooth DevCo variable interest entities (“VIEs”) under the rules of the Financial Accounting Standards Board (“FASB”). Through its 100% ownership interest in OMP Operating LLC (“OMP Operating”), which owns controlling interests in Bobcat DevCo and Beartooth DevCo, the Partnership has the authority to direct the activities that most significantly affect the economic performance of these entities and the obligation to absorb losses or the right to receive benefits that could be potentially significant to them. Therefore, the Partnership is considered the primary beneficiary of Bobcat DevCo and Beartooth DevCo and is required to consolidate these entities in its financial statements under the VIE consolidation model. The Partnership has determined that Bighorn DevCo is not a VIE due to OMP Operating’s 100% ownership interest in Bighorn DevCo, which is proportional to its voting rights through its controlling interest. The Partnership has a controlling financial interest in Bighorn DevCo, through its 100% ownership interest in OMP Operating, and is required to consolidate Bighorn DevCo in its financial statements under the voting interest consolidation model. Non-controlling interests. The non-controlling interests represent Oasis Petroleum’s retained ownership interest in Bobcat DevCo and Beartooth DevCo of 90% and 60% , respectively. Significant Accounting Policies Revenue recognition. The Partnership generates revenue primarily by charging fees for midstream services for (i) crude oil gathering, stabilization, blending, storage and transportation, (ii) natural gas gathering, gas lift, compression and processing, (iii) produced and flowback water gathering and disposal and (iv) freshwater supply and distribution. The Partnership recognizes revenue when services have been rendered, the prices are fixed or determinable, and collectability is reasonable assured. Cash and cash equivalents. The Partnership classifies all unrestricted cash on hand and investments with original maturity dates less than 90 days as cash equivalents. Transactions with affiliates. Transactions between Oasis Petroleum, its affiliates and the Partnership have been identified in the consolidated financial statements as transactions with affiliates. See Note 3 . Transactions with Affiliates . Property, plant and equipment. Property, plant and equipment consists primarily of pipelines, Gas Plant I, produced and flowback water facilities and compressor stations. Property, plant and equipment is stated at the lower of historical cost less accumulated depreciation, or fair value, if impaired. The Partnership capitalizes a portion of its interest expense incurred on its outstanding debt. The amount capitalized is determined by multiplying the capitalization rate by the average amount of eligible accumulated capital expenditures and is limited to actual interest costs incurred during the period. The accumulated capital expenditures included in the capitalized interest calculation begin when the first costs are incurred and end when the asset is either placed into production or written off. The Partnership capitalized $1.2 million , $4.4 million and $2.9 million of interest costs for the years ended December 31, 2017 , 2016 and 2015 , respectively. These amounts are amortized over the useful life of the related assets once the assets are placed in-service. When assets are placed into service, management makes estimates with respect to useful lives and salvage values that management believes are reasonable. However, subsequent events could cause a change in estimates, thereby impacting future depreciation amounts. Uncertainties that may impact these estimates include, among others, changes in laws and regulations relating to environmental matters, including air and water quality, restoration and abandonment requirements, economic conditions and supply and demand in the area. Depreciation is computed over the asset’s estimated useful life using the straight line method based on estimated useful lives and asset salvage values. The weighted average life of each of our pipelines, natural gas processing plant, produced and flowback water facilities, compressor stations, and other long-lived assets is 30 years. When properties are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts and any profit or loss on disposition is recognized as gain or loss. Impairment of long-lived assets. The Partnership evaluates the ability to recover the carrying amount of long-lived assets and determine whether such long-lived assets have been impaired. Impairment exists when the carrying amount of an asset exceeds estimates of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. An impairment analysis requires management to apply judgment in identifying impairment indicators and estimating future cash flows. When alternative courses of action to recover the carrying amount of a long-lived asset are under consideration, estimates of future undiscounted cash flows take into account possible outcomes and probabilities of their occurrence. If the carrying amount of the long-lived asset is not recoverable based on the estimated future undiscounted cash flows, the impairment loss is measured as the excess of the asset’s carrying amount over its estimated fair value, such that the asset’s carrying amount is adjusted to its estimated fair value with an offsetting charge to impairment expense. Fair value represents the estimated price between market participants to sell an asset in the principal or most advantageous market for the asset, based on assumptions a market participant would make. When warranted, management assesses the fair value of long-lived assets using commonly accepted techniques and may use more than one source in making such assessments. The factors used to determine fair value are subject to management’s judgment and expertise and include, but are not limited to, recent third-party comparable sales, internally developed discounted cash flow analysis and analysis from outside advisors. Significant changes, such as changes in contract rates or terms, the condition of an asset or management’s intent to utilize the asset, generally require management to reassess the cash flows related to long-lived assets. A reduction of the carrying value of fixed assets would represent a Level 3 fair value measurement. If actual results are not consistent with our assumptions and estimates or our assumptions and estimates change due to new information, we may be exposed to additional impairment charges. Ultimately, a prolonged period of lower commodity prices may adversely affect the estimate of future operating results through lower throughput volumes on the Partnership’s assets, which could result in future impairment charges due to the potential impact on operations and cash flows. Asset retirement obligations (“ARO”). The Partnership records the fair value of a liability for a legal obligation to retire an asset in the period in which the liability is incurred, with the corresponding cost capitalized by increasing the carrying amount of the related long-lived asset. For produced and flowback water disposal wells, this is the period in which the well is drilled or acquired. The ARO represents the estimated amount we will incur to plug, abandon and remediate the produced and flowback water properties at the end of their useful lives, in accordance with applicable state laws. The liability is accreted to its present value each period and the capitalized costs are depreciated using the straight-line method. The accretion expense is recorded as a component of depreciation and amortization in the Consolidated Statements of Operations. Some assets, including certain pipelines and the natural gas processing plant, have contractual or regulatory obligations to perform remediation and, in some instances, dismantlement and removal activities when the assets are abandoned. The Partnership is not able to reasonably estimate the fair value of the ARO for these assets because the settlement dates are indeterminable given the expected continued use of the assets with proper maintenance. The Partnership will record an ARO for these assets in the periods in which the settlement dates become reasonably determinable. The Partnership determines the ARO, which represents a non-financial liability which is measured at fair value on a non-recurring basis, by calculating the present value of estimated cash flows related to the liability. Estimating the future ARO requires management to make estimates and judgments regarding timing and existence of a liability, as well as what constitutes adequate restoration. 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. These assumptions represent Level 3 inputs. To the extent future revisions to these assumptions impact the fair value of the existing ARO liability, a corresponding adjustment is made to the related asset. Deferred financing costs. The Partnership capitalizes directly attributable costs incurred in connection with obtaining debt financing. These costs are amortized over the term of the related financing using the straight-line method, which approximates the interest method. The amortization expense is recorded as a component of interest expense in the Partnership’s Consolidated Statements of Operations. The deferred financing costs related to the Partnership’s Revolving Credit Facility are included in other assets on the Partnership’s Consolidated Balance Sheets. Unit-based compensation. The Partnership has granted phantom unit awards and restricted unit awards under the Oasis Midstream Partners LP 2017 Long Term Incentive Plan (“LTIP”). The Partnership accounts for phantom unit awards as liability-classified awards in accordance with GAAP, since the Partnership intends to settle these awards in cash. The Partnership will be reimbursed by Oasis Petroleum for the cash settlement amount of these awards. The Partnership accounts for restricted units granted to certain directors of the Partnership as equity-classified awards in accordance with GAAP, as the Partnership intends to settle these awards in common units. Income taxes. For the period subsequent to the Offering, the consolidated financial statements do not include a provision for income taxes as the Partnership is generally not subject to federal or state income tax. Generally, each partner is separately taxed on its share of taxable income. For periods prior to the Offering, the consolidated financial statements include a provision for income tax expense. Deferred federal and state income taxes were provided on temporary differences between the financial statement carrying amounts of recognized assets and liabilities and their respective tax bases as if the Partnership filed tax returns as a stand-alone entity. Business combinations. The Partnership accounts for business combinations under the acquisition method of accounting. An income, market or cost valuation method may be utilized to estimate the fair value of the assets acquired, liabilities assumed, and non-controlling interest, if any, in a business combination. Fair value is determined on the acquisition date. Acquisition-related costs are expensed as incurred in connection with each business combination. If the initial accounting for the business combination is incomplete by the end of the reporting period in which the acquisition occurs, an estimate will be recorded. Subsequent to the acquisition, and not later than one year from the acquisition date, the Partnership will record any material adjustments to the initial estimate based on new information obtained about facts and circumstances that existed as of the acquisition date. The Partnership makes various assumptions in estimating the fair values of assets acquired and liabilities assumed. As fair value is a market-based measurement, it is determined based on the assumptions that market participants would use. The income valuation method represents the present value of future cash flows over the life of the asset using discrete financial forecasts. Such discrete financial forecasts rely on estimates and assumptions made by management. The most significant assumptions relate to management’s estimates of throughput volumes, future operating and development costs, long-term growth rates and a market-based weighted average cost of capital. The market valuation method uses prices paid for a reasonably similar asset by other purchasers in the market, with adjustments relating to any differences between the assets. The cost valuation method is based on the replacement cost of a comparable asset at prices at the time of the acquisition reduced for depreciation of the asset. Any excess of the acquisition price over the estimated fair value of net assets acquired is recorded as goodwill. Any excess of the estimated fair value of net assets acquired over the acquisition price is recorded in current earnings as a gain on bargain purchase. Concentrations of Market and Credit Risk The Partnership has limited direct exposure to risks associated with fluctuating commodity prices due to the nature of its business and its long-term, fixed-fee arrangements with Oasis Petroleum. However, to the extent that the future contractual arrangements with Oasis Petroleum or third parties do not provide for fixed-fee structures, the Partnership may become subject to commodity price risk. Additionally, as substantially all of the Partnership’s revenues are derived from Oasis Petroleum, the Partnership is indirectly subject to risks associated with fluctuating commodity prices to the extent that lower commodity prices adversely affect Oasis Petroleum’s production, drilling schedule, financial condition, leverage, market reputation, liquidity, results of operations or cash flows. Recent Accounting Pronouncements Revenue Recognition In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”). The objective of ASU 2014-09 is greater consistency and comparability across industries by using a five-step model to recognize revenue from customer contracts. ASU 2014-09 also contains enhanced disclosure requirements under GAAP. In August 2015, the FASB issued Accounting Standards Update No. 2015-14, Deferral of the Effective Date (“ASU 2015-14”). ASU 2015-14 defers the effective date of the new revenue standard by one year, making it effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. In 2016 and 2017, the FASB issued additional accounting standards updates to clarify the implementation guidance of ASU 2014-09. During 2017, the Partnership completed its analysis of the impact of the standard on its contract types comprising each of its significant revenue streams, and it does not believe that the adoption of ASU 2014-09 has a material impact on its financial position, cash flows and results of operations but could impact certain disclosures. The Partnership has also modified current processes and controls to apply the requirements of the new standard and does not believe such modifications are material to its internal controls over financial reporting. Leases In February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases (“ASU 2016-02”), which requires a lessee to recognize lease payment obligations and a corresponding right-of-use asset to be measured at fair value on the balance sheet. ASU 2016-02 also requires certain qualitative and quantitative disclosures about the amount, timing and uncertainty of cash flows arising from leases. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those years. Also, in January 2018, the FASB issued Accounting Standards Update No. 2018-01, Land easement practical expedient for transition to Topic 842 (“ASU 2018-01”), which provides an optional transition practical expedient to not evaluate under Topic 842 existing or expired land easements that were not previously accounted for as leases under Topic 840, Leases. The Partnership plans to elect this practical expedient and is currently evaluating the effect that adopting the new lease guidance will have on its financial position, cash flows and results of operations. Statement of Cash Flows In August 2016, the FASB issued Accounting Standards Update No. 2016-15, Statement of Cash Flows (“ASU 2016-15”), which is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. ASU 2016-15 is effective for fiscal years beginning after December 15, 2017, including interim periods within those years, and is required to be applied under the retrospective method. The Partnership will adopt the new standard on the effective date of January 1, 2018. The Partnership does not expect the adoption of this guidance to have a material impact on its financial position, cash flows or results of operations. Income Taxes In October 2016, the FASB issued Accounting Standards Update No. 2016-16, Intra-Entity Transfers of Assets Other Than Inventory (“ASU 2016-16”), to improve the accounting for the income tax consequences of intra-entity transfers of assets other than inventory. ASU 2016-16 is effective for fiscal years beginning after December 15, 2017, including interim periods within those years, and is required to be applied on a modified retrospective basis. The Partnership will adopt the new standard on the effective date of January 1, 2018. The Partnership does not expect the adoption of this guidance to have a material impact on its financial position, cash flows or results of operations. Business Combinations In January 2017, the FASB issued Accounting Standards Update No. 2017-01, Clarifying the Definition of a Business (“ASU 2017-01”), which provides guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. ASU 2017-01 requires entities to use a screen test to determine when an integrated set of assets and activities is not a business or if the integrated set of assets and activities needs to be further evaluated against the framework. ASU 2017-01 is effective for fiscal years beginning after December 15, 2017, including interim periods within those years, and is required to be applied prospectively. The Partnership will adopt the new standard on the effective date of January 1, 2018. The Partnership does not expect the adoption of this guidance to have a material impact on its financial position, cash flows or results of operations. Equity-Based Compensation In May 2017, the FASB issued Accounting Standards Update No. 2017-09, Scope of Modification Accounting (“ASU 2017-09”), which provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. ASU 2017-09 is effective for annual periods beginning after December 15, 2017, including interim periods within those years, and is required to be applied prospectively. The Partnership will adopt the new standard on the effective date of January 1, 2018. The Partnership does not expect the adoption of this guidance to have a material impact on its financial position, cash flows or results of operations. |