Transactions with Affiliates

3 Months Ended

Mar. 31, 2020

Related Party Transactions [Abstract]

Transactions with Affiliates

Transactions with Affiliates

Revenues. The Partnership generates the majority of its revenues through 15-year, fee-based contractual arrangements with wholly-owned subsidiaries of Oasis Petroleum for midstream services as described in Note 1 — Organization and Nature of Operations. In addition, the Partnership sells the residue gas and NGLs recovered from its gas processing plants attributable to its third party natural gas purchase agreements to Oasis Petroleum to market and sell to non-affiliated purchasers.

Oasis Petroleum has expressed substantial doubt about its ability to continue to operate as a going concern, and financial distress at Oasis Petroleum could have a material adverse effect on the Partnership’s results of operations (see Note 2 — Summary of Significant Accounting Policies).

Expenses. Oasis Petroleum provides substantial labor and overhead support for the Partnership pursuant to a 15-year services and secondment agreement. Oasis Petroleum performs centralized corporate, general and administrative services for the Partnership, such as legal, corporate recordkeeping, planning, budgeting, regulatory, accounting, billing, business development, treasury, insurance administration and claims processing, risk management, health, safety and environmental, information technology, human resources, investor relations, cash management and banking, payroll, internal audit, tax and engineering. Oasis Petroleum has also seconded to the Partnership certain of its employees to operate, construct, manage and maintain its assets. The Partnership reimburses Oasis Petroleum for direct and allocated general and administrative expenses incurred by Oasis Petroleum for the provision of these services. The expenses of executive officers and non-executive employees of Oasis Petroleum are allocated to the Partnership based on the amount of time spent managing its business and operations. The Partnership’s general and administrative expenses include $7.6 million and $7.8 million from affiliate transactions with Oasis Petroleum for the three months ended March 31, 2020 and 2019, respectively.

Additionally, for the periods prior to the 2019 Delaware Acquisition, interest expense was recognized by the Delaware Predecessor related to its funding activity with Oasis Petroleum based on capital expenditures for the period using the weighted average effective interest rate for Oasis Petroleum’s long-term indebtedness. The Delaware Predecessor recognized an immaterial amount of interest expense, net of capitalized interest, during the three months ended March 31, 2019.