Equity-Based Compensation

The LTIP provides for the grant, at the discretion of the Board of Directors of the General Partner, of options, unit appreciation rights, restricted units, phantom units, and other unit or cash-based awards. The purpose of awards under the LTIP is to provide additional incentive compensation to individuals providing services to the Partnership, and to align the economic interests of such individuals with the interests of the Partnership’s unitholders.

As of December 31, 2018, the aggregate number of common units that may be issued pursuant to any and all awards under the LTIP is equal to 2,117,618 common units, subject to adjustment due to recapitalization or reorganization, or related to forfeitures or expiration of awards, as provided under the LTIP. On January 1 of each calendar year following the adoption and prior to the expiration of the LTIP, the total number of common units that may be issued pursuant to the LTIP automatically increases by a number of common units equal to one percent of the number of common units outstanding on a fully diluted basis as of the close of business on the immediately preceding December 31 (calculated by adding to the number of common units outstanding, all outstanding securities convertible into common units on such date on an as converted basis). As a result of this adjustment, an additional 337,790 common units were reserved for issuance pursuant to awards under the LTIP on January 1, 2019.

Phantom unit awards. On October 19, 2017, the Partnership granted under its LTIP 101,500 phantom unit awards to certain employees of Oasis Petroleum who are non-employees of the Partnership. Each phantom unit represents the right to receive a cash payment equal to the fair market value of one common unit on the day prior to the date it vests. Award recipients are also entitled to distribution equivalent rights, which represent the right to receive a cash payment equal to the value of the distributions paid on one common unit between the grant date and the vesting date. The phantom units vest in equal amounts each year over a three-year period. The phantom units are accounted for as liability-classified awards since the awards will settle in cash. Under the fair value method for liability-classified awards, compensation expense is remeasured each reporting period at fair value based upon the closing price of a publicly traded common unit. Oasis Petroleum reimburses the Partnership for the cash settlement amount of these awards.

The following table summarizes information related to phantom units issued under the LTIP and held by certain employees of Oasis Petroleum for the periods presented:



	Phantom Units		Weighted Average Grant Date Fair Value per Unit
Non-vested units outstanding at December 31, 2017	99,100		$	16.40
Granted	—		—
Vested	(29,254	)	16.40
Forfeited	(11,467	)	16.40
Non-vested units outstanding at December 31, 2018	58,379		$	16.40

Equity-based compensation recorded for phantom unit awards was $0.1 million and $0.2 million as of December 31, 2018 and 2017, respectively, and is included on the Consolidated Balance Sheets in Accounts Receivable from Oasis Petroleum, for the portion reimbursed from Oasis Petroleum, and Accrued Liabilities, for the portion owed to award holders. The Partnership did not record any equity-based compensation expense related to these awards for the year ended December 31, 2016 because these awards were first granted during the fourth quarter of 2017. The fair value of awards vested was $0.6 million for the year ended December 31, 2018. No awards vested during the year ended December 31, 2017. The weighted average grant date fair value of phantom units granted was $16.40 per unit for the year ended December 31, 2017. No phantom units were granted under the LTIP for the year ended December 31, 2018. Unrecognized equity-based compensation as of December 31, 2018 for all outstanding phantom unit awards was $0.9 million and will be recognized over a weighted average period of 1.9 years.

Restricted unit awards. The Partnership has granted to independent directors of the General Partner restricted unit awards under the LTIP, which vest over a one-year period. These awards are accounted for as equity-classified awards since the awards will settle in common units upon vesting. Under the fair value method for equity-classified awards, equity-based compensation expense is measured at the grant date based on the fair value of the award and is recognized over the service period.

The following table summarizes information related to restricted units issued under the LTIP and held by certain directors of the General Partner for the periods presented:



	Restricted Units		Weighted Average Grant Date Fair Value per Unit
Non-vested units outstanding at December 31, 2017	11,766		$	17.00
Granted	17,260		17.55
Vested	(11,766	)	17.00
Forfeited	—		—
Non-vested units outstanding at December 31, 2018	17,260		$	17.55

Equity-based compensation expense recorded for restricted unit awards was $0.4 million and $0.1 million for the years ended December 31, 2018 and 2017, respectively, and is included in general and administrative expenses on the Consolidated Statements of Operations. The fair value of awards vested was $0.3 million for the year ended December 31, 2018. No awards vested during the year ended December 31, 2017. The weighted average grant date fair value of restricted unit awards granted was $17.55 per unit and $17.00 per unit for the years ended December 31, 2018 and 2017, respectively. Unrecognized equity-based compensation as of December 31, 2018 for all outstanding restricted unit awards was $0.1 million and will be recognized over a weighted average period of 0.4 years.

Restricted stock awards (Predecessor). Prior to the initial public offering on September 25, 2017, certain employees of Oasis Petroleum were granted restricted stock awards under its Amended and Restated 2010 Long Term Incentive Plan, the majority of which vest over a three-year period. Oasis Petroleum accounts for these awards as equity-classified awards, in accordance with GAAP. The value of restricted stock grants is based on the closing sales price of Oasis Petroleum’s common stock on the date of grant, and compensation expense is recognized ratably over the requisite service period.

In accordance with its indirect shared service expense allocation from Oasis Petroleum, the Predecessor recorded equity-based compensation expense associated with these awards of approximately $1.0 million and $0.9 million for the year ended December 31, 2017 and 2016, respectively, and is included in general and administrative expenses on the Consolidated Statements of Operations. The fair value of awards vested was $0.8 million and $0.2 million for the years ended December 31, 2017 and 2016, respectively. The weighted average grant date fair value of restricted stock awards granted was $14.95 per share and $6.63 per share for the years ended December 31, 2017 and 2016, respectively. At December 31, 2018, there was no unrecognized expense associated with these awards attributable to the Partnership.