News Releases

Oasis Petroleum Inc. Announces Quarter Ended September 30, 2016 Earnings

HOUSTON, Nov. 7, 2016 /PRNewswire/ -- Oasis Petroleum Inc. (NYSE: OAS) ("Oasis" or the "Company") today announced financial results for the quarter ended September 30, 2016 and provided an operational update.

Highlights include:

  • Produced 48,509 Boepd in the third quarter of 2016.
  • Total capital expenditures ("CapEx") were $78.5 million and $297.7 million for the three and nine months ended September 30, 2016, respectively, in line with the Company's 2016 CapEx plan.
  • Net cash provided by operating activities was $123.4 million for the three months ended September 30, 2016. Adjusted EBITDA for the Company was $104.4 million in the third quarter of 2016. For a definition of Adjusted EBITDA and a reconciliation of net income (loss) and net cash provided by (used in) operating activities to Adjusted EBITDA, see "Non-GAAP Financial Measures" below.

"Oasis continues to increase shareholder value by further improving capital efficiency and acquiring assets that allow us to best leverage our operating expertise," said Thomas B. Nusz, Oasis' Chairman and Chief Executive Officer. "With well costs of $5.2 million and Wild Basin type curves of 1,550 Mboe, we are positioned to grow volumes considerably across 2017 and 2018."

Operational and Financial Update

Select operational and financial statistics are in the following table:


Quarter Ended:


9/30/2016


6/30/2016


9/30/2015

Production data:






Oil (Bopd)

39,439



41,176



44,318


Natural gas (MMcfpd)

54,421



49,983



37,366


Total production (Boepd)

48,509



49,507



50,546


Percent Oil

81

%


83

%


88

%

Average sales prices:






Oil, without derivative settlements (per Bbl)(1)

$

40.54



$

40.81



$

41.61


Differential to NYMEX West Texas Intermediate crude oil index prices ("WTI") (per Bbl)

4.39



4.85



4.82


Oil, with derivative settlements (per Bbl)(1)(2)(3)

43.79



48.94



60.77


Derivative settlements - net cash receipts (in millions)(3)

11.8



30.5



78.1


Natural gas (per Mcf)(4)

1.84



1.42



1.63


Revenues ($ in millions):






Oil

$

149.0



$

152.9



$

169.7


Natural gas

9.2



6.4



5.6


Well services ("OWS")

10.6



12.8



15.4


Midstream services ("OMS")

8.5



6.9



6.6


Total revenues

$

177.3



$

179.0



$

197.2


OWS and OMS operating expenses ($ in millions):






OWS

$

5.5



$

7.1



$

8.5


OMS

2.6



1.7



1.5


Select operating expenses:






LOE ($ per Boe)

$

8.00



$

7.00



$

7.67


MT&G ($ per Boe)(5)

1.58



1.55



1.63


DD&A ($ per Boe)

25.08



27.19



26.61


Exploration and production ("E&P") general and administrative expenses ("G&A") ($ per Boe)

4.31



3.93



4.07


Production taxes (% of oil and gas revenue)

9.3

%


9.0

%


9.5

%













___________________

(1)

For the three months ended September 30, 2016, average sales prices for oil are calculated using total oil revenues, excluding bulk oil sales of $1.9 million, divided by oil production.

(2)

Realized prices include gains or losses on cash settlements for commodity derivatives, which do not qualify for and were not designated as hedging instruments for accounting purposes.

(3)

Cash settlements represent the cumulative gains and losses on the Company's derivative instruments for the periods presented and do not include a recovery of costs that were paid to acquire or modify the derivative instruments that were settled.

(4)

Natural gas prices include the value for natural gas and natural gas liquids.

(5)

Excludes non-cash valuation charges on pipeline imbalances and bulk oil purchases.

 

G&A totaled $22.8 million in the third quarter of 2016, $22.4 million in the third quarter of 2015 and $21.9 million in the second quarter of 2016. Amortization of stock-based compensation, which is included in G&A, was $5.8 million, or $1.30 per Boe, in the third quarter of 2016 as compared to $6.0 million, or $1.28 per Boe, in the third quarter of 2015 and $6.2 million, or $1.39 per Boe, in the second quarter of 2016. G&A for the Company's E&P segment totaled $19.2 million in the third quarter of 2016, $18.9 million in the third quarter of 2015 and $17.7 million in the second quarter of 2016.

Interest expense was $31.7 million for the third quarter of 2016 compared to $36.5 million for the third quarter of 2015 and $35.0 million for the second quarter of 2016. Capitalized interest totaled $4.4 million for the third quarter of 2016, $5.1 million for the third quarter of 2015 and $4.8 million for the second quarter of 2016. Cash Interest totaled $33.7 million for the third quarter of 2016, $40.0 million for the third quarter of 2015 and $37.8 million for the second quarter of 2016. For a definition of Cash Interest and a reconciliation of interest expense to Cash Interest, see "Non-GAAP Financial Measures" below.

For the three months ended September 30, 2016, the Company recorded an income tax benefit of $16.7 million, resulting in a 33.0% effective tax rate as a percentage of its pre-tax loss for the quarter. The Company recorded an income tax benefit of $52.5 million, resulting in a 36.9% effective tax rate as a percentage of its pre-tax income for the three months ended June 30, 2016.

For the third quarter of 2016, the Company reported a net loss of $33.9 million, or $0.19 per diluted share, as compared to a net income of $27.1 million, or $0.20 per diluted share, for the third quarter of 2015. Excluding certain non-cash and non-recurring items and their tax effect, Adjusted Net Loss (non-GAAP) was $29.3 million, or $0.17 per diluted share, in the third quarter of 2016, compared to Adjusted Net Income of $12.5 million, or $0.09 per diluted share, in the third quarter of 2015. For a definition of Adjusted Net Income (Loss) and a reconciliation of net income (loss) to Adjusted Net Income (Loss), see "Non-GAAP Financial Measures" below.

Adjusted EBITDA for the third quarter of 2016 was $104.4 million. For a definition of Adjusted EBITDA and a reconciliation of net income (loss) and net cash provided by (used in) operating activities to Adjusted EBITDA, see "Non-GAAP Financial Measures" below.

Capital Expenditures

The following table depicts the Company's total CapEx by category:


1Q 2016


2Q 2016


3Q 2016


YTD 2016

CapEx ($ in thousands):








E&P

$

47,734



$

73,125



$

31,333



$

152,192


OMS

35,039



52,842



42,085



129,966


OWS

650





29



679


Other(1)

4,532



5,320



5,007



14,859


Total CapEx(2)

$

87,955



$

131,287



$

78,454



$

297,696


___________________

(1)

Other CapEx includes such items as administrative capital and capitalized interest.

(2)

CapEx reflected in the table above differs from the amounts shown in the statement of cash flows in the Company's condensed consolidated financial statements because amounts reflected in the table above include changes in accrued liabilities from the previous reporting period for capital expenditures, while the amounts presented in the statement of cash flows are presented on a cash basis.

 

Hedging Activity

As of November 7, 2016, the Company had the following outstanding commodity derivative contracts, all of which are priced off of WTI and settle monthly:

Volume in Mbopd


4Q16


1H17


2H17


1H18


2H18

Swaps











Volume


33.0



16.0



14.0



4.0



3.0


Price


$

49.20



$

48.57



$

49.08



$

54.32



$

54.45


Collars











Volume




6.0



6.0






Floor




$

45.00



$

45.00






Ceiling




$

53.95



$

53.95






3-way











Volume




6.0



6.0






Sub Floor




$

31.67



$

31.67






Floor




$

45.83



$

45.83






Ceiling




$

59.94



$

59.94






Total Volume


33.0



28.0



26.0



4.0



3.0























 

Additionally, the Company has swaps priced off of NYMEX Natural Gas of 6,000 mmbtu/d at a weighted average price of $3.21 in 2017. The September 2016 contracts settled at $3.7 million and will be included in the Company's fourth quarter 2016 derivative settlements.

Conference Call Information

Investors, analysts and other interested parties are invited to listen to the conference call:

Date:


Tuesday, November 8, 2016

Time:


10:00 a.m. Central Time

Dial-in:


888-317-6003

Intl. Dial in:


412-317-6061

Conference ID:


6611124

Website:


www.oasispetroleum.com

A recording of the conference call will be available beginning at 12:00 p.m. Central Time on the day of the call and will be available until Tuesday, November 15, 2016 by dialing:

Replay dial-in:


877-344-7529

Intl. replay:


412-317-0088

Replay code:


10095010

The conference call will also be available for replay at www.oasispetroleum.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that the Company expects, believes or anticipates will or may occur in the future are forward-looking statements. Without limiting the generality of the foregoing, forward-looking statements contained in this press release specifically include the expectations of plans, strategies, objectives and anticipated financial and operating results of the Company, including the Company's drilling program, production, derivative instruments, capital expenditure levels and other guidance included in this press release. These statements are based on certain assumptions made by the Company based on management's experience and perception of historical trends, current conditions, anticipated future developments and other factors believed to be appropriate. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the Company, which may cause actual results to differ materially from those implied or expressed by the forward-looking statements. These include, but are not limited to, changes in oil and natural gas prices, weather and environmental conditions, the timing of planned capital expenditures, availability of acquisitions, uncertainties in estimating proved reserves and forecasting production results, operational factors affecting the commencement or maintenance of producing wells, the condition of the capital markets generally, as well as the Company's ability to access them, the proximity to and capacity of transportation facilities, and uncertainties regarding environmental regulations or litigation and other legal or regulatory developments affecting the Company's business and other important factors that could cause actual results to differ materially from those projected as described in the Company's reports filed with the SEC.

Any forward-looking statement speaks only as of the date on which such statement is made and the Company undertakes no obligation to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by applicable law.

About Oasis Petroleum Inc.

Oasis is an independent exploration and production company focused on the acquisition and development of unconventional oil and natural gas resources, primarily operating in the Williston Basin. For more information, please visit the Company's website at www.oasispetroleum.com.


Oasis Petroleum Inc.

Condensed Consolidated Balance Sheet

(Unaudited)



September 30, 2016


December 31, 2015


(In thousands, except share data)

ASSETS




Current assets




Cash and cash equivalents

$

13,776



$

9,730


Accounts receivable — oil and gas revenues

103,128



96,495


Accounts receivable — joint interest and other

77,903



100,914


Inventory

8,513



11,072


Prepaid expenses

6,093



7,328


Derivative instruments

9,142



139,697


Other current assets

4,290



50


Total current assets

222,845



365,286


Property, plant and equipment




Oil and gas properties (successful efforts method)

6,438,782



6,284,401


Other property and equipment

580,171



443,265


Less: accumulated depreciation, depletion, amortization and impairment

(1,866,280)



(1,509,424)


Total property, plant and equipment, net

5,152,673



5,218,242


Assets held for sale



26,728


Derivative instruments

194



15,776


Other assets

22,549



23,343


Total assets

$

5,398,261



$

5,649,375


LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities




Accounts payable

$

7,929



$

9,983


Revenues and production taxes payable

141,991



132,356


Accrued liabilities

98,926



167,669


Accrued interest payable

19,798



49,413


Derivative instruments

17,308




Advances from joint interest partners

5,191



4,647


Other current liabilities



6,500


Total current liabilities

291,143



370,568


Long-term debt

2,125,573



2,302,584


Deferred income taxes

546,202



608,155


Asset retirement obligations

37,092



35,338


Liabilities held for sale



10,228


Derivative instruments

7,755




Other liabilities

2,992



3,160


Total liabilities

3,010,757



3,330,033


Commitments and contingencies




Stockholders' equity




Common stock, $0.01 par value: 450,000,000 and 300,000,000 shares authorized at September 30, 2016 and December 31, 2015, respectively; 182,038,164 shares issued and 181,186,070 shares outstanding at September 30, 2016 and 139,583,990 shares issued and 139,076,064 shares outstanding at December 31, 2015

1,779



1,376


Treasury stock, at cost: 852,094 and 507,926 shares at September 30, 2016 and December 31, 2015, respectively

(15,895)



(13,620)


Additional paid-in capital

1,755,427



1,497,065


Retained earnings

646,193



834,521


Total stockholders' equity

2,387,504



2,319,342


Total liabilities and stockholders' equity

$

5,398,261



$

5,649,375


 


Oasis Petroleum Inc.

Condensed Consolidated Statement of Operations

(Unaudited)



Three Months Ended September 30,


Nine Months Ended September 30,


2016


2015


2016


2015


(In thousands, except per share data)

Revenues








Oil and gas revenues

$

158,183



$

175,270



$

434,835



$

563,239


Well services and midstream revenues

19,128



21,965



51,839



44,429


Total revenues

177,311



197,235



486,674



607,668


Operating expenses








Lease operating expenses

35,696



35,670



98,283



112,556


Well services and midstream operating expenses

8,165



10,023



21,429



19,370


Marketing, transportation and gathering expenses

8,856



8,465



23,899



23,313


Production taxes

14,638



16,676



39,758



53,915


Depreciation, depletion and amortization

111,948



123,734



356,885



361,430


Exploration expenses

489



327



1,192



2,252


Rig termination







3,895


Impairment

382



80



3,967



24,917


General and administrative expenses

22,845



22,358



69,087



67,190


Total operating expenses

203,019



217,333



614,500



668,838


Gain (loss) on sale of properties

6



172



(1,305)



172


Operating loss

(25,702)



(19,926)



(129,131)



(60,998)


Other income (expense)








Net gain (loss) on derivative instruments

20,847



103,637



(55,624)



111,285


Interest expense, net of capitalized interest

(31,726)



(36,513)



(105,444)



(112,702)


Gain (loss) on extinguishment of debt

(13,793)





4,865




Other income (expense)

(259)



249



188



370


Total other income (expense)

(24,931)



67,373



(156,015)



(1,047)


Income (loss) before income taxes

(50,633)



47,447



(285,146)



(62,045)


Income tax benefit (expense)

16,691



(20,392)



96,818



17,829


Net income (loss)

$

(33,942)



$

27,055



$

(188,328)



$

(44,216)


Earnings (loss) per share:








Basic

$

(0.19)



$

0.20



$

(1.09)



$

(0.35)


Diluted

(0.19)



0.20



(1.09)



(0.35)


Weighted average shares outstanding:








Basic

177,120



137,014



172,360



127,827


Diluted

177,120



137,014



172,360



127,827


 


Oasis Petroleum Inc.

Selected Financial and Operational Statistics

(Unaudited)



Three Months Ended September 30,


Nine Months Ended September 30,


2016


2015


2016


2015

Operating results (in thousands):








Revenues








Oil

$

148,962



$

169,672



$

413,068



$

542,049


Natural gas

9,221



5,598



21,767



21,190


Well services

10,641



15,381



29,459



27,308


Midstream

8,487



6,584



22,380



17,121


Total revenues

$

177,311



$

197,235



$

486,674



$

607,668


Production data:








Oil (MBbls)

3,628



4,077



11,245



12,107


Natural gas (MMcf)

5,007



3,438



13,809



9,940


Oil equivalents (MBoe)

4,463



4,650



13,547



13,764


Average daily production (Boe per day)

48,509



50,546



49,440



50,418


Average sales prices:








Oil, without derivative settlements (per Bbl)(1)

$

40.54



$

41.61



$

36.57



$

44.77


Oil, with derivative settlements (per Bbl)(1)(2)

43.79



60.77



46.85



68.84


Natural gas (per Mcf)(3)

1.84



1.63



1.58



2.13


Costs and expenses (per Boe of production):








Lease operating expenses

$

8.00



$

7.67



$

7.26



$

8.18


Marketing, transportation and gathering expenses(4)

1.58



1.63



1.58



1.64


Production taxes

3.28



3.59



2.93



3.92


Depreciation, depletion and amortization

25.08



26.61



26.35



26.26


General and administrative expenses ("G&A")

5.12



4.81



5.10



4.88


Exploration and production G&A

4.31



4.07



4.28



4.43


___________________

(1)

For both the three and nine months ended September 30, 2016, average sales prices for oil are calculated using total oil revenues, excluding bulk oil sales of $1.9 million, divided by oil production.

(2)

Realized prices include gains or losses on cash settlements for commodity derivatives, which do not qualify for and were not designated as hedging instruments for accounting purposes. Cash settlements represent the cumulative gains and losses on the Company's derivative instruments for the periods presented and do not include a recovery of costs that were paid to acquire or modify the derivative instruments that were settled.

(3)

Natural gas prices include the value for natural gas and natural gas liquids.

(4)

Excludes non-cash valuation charges on pipeline imbalances and bulk oil purchases.

 


Oasis Petroleum Inc.

Condensed Consolidated Statement of Cash Flows

(Unaudited) 



Nine Months Ended September 30,


2016


2015


(In thousands)

Cash flows from operating activities:




Net loss

$

(188,328)



$

(44,216)


Adjustments to reconcile net loss to net cash provided by operating activities:




Depreciation, depletion and amortization

356,885



361,430


Gain on extinguishment of debt

(4,865)




(Gain) loss on sale of properties

1,305



(172)


Impairment

3,967



24,917


Deferred income taxes

(96,818)



(17,829)


Derivative instruments

55,624



(111,285)


Stock-based compensation expenses

18,761



19,629


Deferred financing costs amortization and other

10,174



7,468


Working capital and other changes:




Change in accounts receivable

11,349



108,309


Change in inventory

2,559



8,425


Change in prepaid expenses

1,168



638


Change in other current assets

(240)



5,529


Change in other assets

(148)




Change in accounts payable, interest payable and accrued liabilities

(41,991)



(84,133)


Change in other current liabilities

(6,000)



1,655


Change in other liabilities

17



(28)


Net cash provided by operating activities

123,419



280,337


Cash flows from investing activities:




Capital expenditures

(340,314)



(740,633)


Proceeds from sale of properties

12,333



78


Costs related to sale of properties

(310)




Derivative settlements

115,576



291,436


Advances from joint interest partners

544



(1,239)


Net cash used in investing activities

(212,171)



(450,358)


Cash flows from financing activities:




Proceeds from revolving credit facility

835,000



618,000


Principal payments on revolving credit facility

(778,000)



(938,000)


Repurchase of senior unsecured notes

(435,907)




Proceeds from issuance of senior unsecured convertible notes

300,000




Deferred financing costs

(8,811)



(3,587)


Proceeds from sale of common stock

182,791



462,833


Purchases of treasury stock

(2,275)



(2,771)


Net cash provided by financing activities

92,798



136,475


Increase (decrease) in cash and cash equivalents

4,046



(33,546)


Cash and cash equivalents:




Beginning of period

9,730



45,811


End of period

$

13,776



$

12,265


Supplemental non-cash transactions:




Change in accrued capital expenditures

$

(49,177)



$

(233,913)


Change in asset retirement obligations

(8,083)



3,405


 

Non-GAAP Financial Measures

Cash Interest is a supplemental non-GAAP financial measure that is used by management and external users of the Company's financial statements, such as industry analysts, investors, lenders and rating agencies. The Company defines Cash Interest as interest expense plus capitalized interest less amortization and write-offs of deferred financing costs included in interest expense. Cash Interest is not a measure of interest expense as determined by United States generally accepted accounting principles, or GAAP.

The following table presents a reconciliation of the GAAP financial measure of interest expense to the non-GAAP financial measure of Cash Interest for the periods presented:


Three Months Ended September 30,


Nine Months Ended September 30,


2016


2015


2016


2015


(In thousands)

Interest expense

$

31,726



$

36,513



$

105,444



$

112,702


Capitalized interest

4,380



5,054



13,683



13,830


Amortization of deferred financing costs

(2,095)



(1,570)



(8,042)



(5,527)


Amortization of debt discount

(300)





(300)




Cash Interest

$

33,711



$

39,997



$

110,785



$

121,005


 

Adjusted EBITDA and Free Cash Flow are supplemental non-GAAP financial measures that are used by management and external users of the Company's financial statements, such as industry analysts, investors, lenders and rating agencies. The Company defines Adjusted EBITDA as earnings before interest expense, income taxes, depreciation, depletion, amortization, exploration expenses and other similar non-cash or non-recurring charges. The Company defines Free Cash Flow as Adjusted EBITDA less Cash Interest and CapEx, excluding capitalized interest. Adjusted EBITDA and Free Cash Flow are not measures of net income (loss) or cash flows as determined by United States generally accepted accounting principles, or GAAP.

The following table presents reconciliations of the GAAP financial measures of net income (loss) and net cash provided by (used in) operating activities to the non-GAAP financial measures of Adjusted EBITDA and Free Cash Flow for the periods presented:


Three Months Ended September 30,


Nine Months Ended September 30,


2016


2015


2016


2015


(In thousands)

Net income (loss)

$

(33,942)



$

27,055



$

(188,328)



$

(44,216)


(Gain) loss on sale of properties

(6)



(172)



1,305



(172)


(Gain) loss on extinguishment of debt

13,793





(4,865)




Net (gain) loss on derivative instruments

(20,847)



(103,637)



55,624



(111,285)


Derivative settlements(1)

11,786



78,100



115,576



291,436


Interest expense, net of capitalized interest

31,726



36,513



105,444



112,702


Depreciation, depletion and amortization

111,948



123,734



356,885



361,430


Impairment

382



80



3,967



24,917


Rig termination







3,895


Exploration expenses

489



327



1,192



2,252


Stock-based compensation expenses

5,782



5,966



18,761



19,629


Income tax (benefit) expense

(16,691)



20,392



(96,818)



(17,829)


Other non-cash adjustments

(26)



883



697



782


Adjusted EBITDA

104,394



189,241



369,440



643,541


Cash Interest

(33,711)



(39,997)



(110,785)



(121,005)


Capital expenditures(2)

(78,453)



(78,053)



(297,696)



(519,566)


Capitalized interest

4,380



5,054



13,683



13,830


Free Cash Flow

$

(3,390)



$

76,245



$

(25,358)



$

16,800










Net cash provided by operating activities

$

32,018



$

50,451



$

123,419



$

280,337


Derivative settlements(1)

11,786



78,100



115,576



291,436


Interest expense, net of capitalized interest

31,726



36,513



105,444



112,702


Rig termination







3,895


Exploration expenses

489



327



1,192



2,252


Deferred financing costs amortization and other

(3,622)



(2,409)



(10,174)



(7,468)


Changes in working capital

32,023



25,376



33,286



(40,395)


Other non-cash adjustments

(26)



883



697



782


Adjusted EBITDA

104,394



189,241



369,440



643,541


Cash Interest

(33,711)



(39,997)



(110,785)



(121,005)


Capital expenditures(2)

(78,453)



(78,053)



(297,696)



(519,566)


Capitalized interest

4,380



5,054



13,683



13,830


Free Cash Flow

$

(3,390)



$

76,245



$

(25,358)



$

16,800


___________________

(1)

Cash settlements represent the cumulative gains and losses on the Company's derivative instruments for the periods presented and do not include a recovery of costs that were paid to acquire or modify the derivative instruments that were settled.

(2)

CapEx reflected in the table above differs from the amounts shown in the statement of cash flows in the Company's condensed consolidated financial statements because amounts reflected in the table above include changes in accrued liabilities from the previous reporting period for capital expenditures, while the amounts presented in the statement of cash flows are presented on a cash basis.

 

The following tables present reconciliations of the GAAP financial measure of income (loss) before income taxes to the non-GAAP financial measure of Adjusted EBITDA for the Company's three reportable business segments on a gross basis for the periods presented:

Exploration and Production


Three Months Ended September 30,


Nine Months Ended September 30,


2016


2015


2016


2015


(In thousands)

Income (loss) before income taxes

$

(66,333)



$

29,070



$

(331,075)



$

(104,102)


(Gain) loss on sale of properties

(6)



(172)



1,663



(172)


(Gain) loss on extinguishment of debt

13,793





(4,865)




Net (gain) loss on derivative instruments

(20,847)



(103,637)



55,624



(111,285)


Derivative settlements(1)

11,786



78,100



115,576



291,436


Interest expense, net of capitalized interest

31,726



36,513



105,444



112,702


Depreciation, depletion and amortization

109,668



122,075



346,240



357,664


Impairment

382



80



1,536



24,917


Rig termination







3,895


Exploration expenses

489



327



1,192



2,252


Stock-based compensation expenses

5,570



5,761



17,495



19,276


Other non-cash adjustments

(26)



883



697



782


Adjusted EBITDA

$

86,202



$

169,000



$

309,527



$

597,365


___________________

(1)

Cash settlements represent the cumulative gains and losses on the Company's derivative instruments for the periods presented and do not include a recovery of costs that were paid to acquire or modify the derivative instruments that were settled.

 

Well Services


Three Months Ended September 30,


Nine Months Ended September 30,


2016


2015


2016


2015


(In thousands)

Income before income taxes

$

1,577



$

10,950



$

3,462



$

29,588


Depreciation, depletion and amortization

3,478



4,904



11,605



14,430


Stock-based compensation expenses

354



544



1,253



1,530


Adjusted EBITDA

$

5,409



$

16,398



$

16,320



$

45,548


 

Midstream Services


Three Months Ended September 30,


Nine Months Ended September 30,


2016


2015


2016


2015


(In thousands)

Income before income taxes

$

16,065



$

18,828



$

49,262



$

44,039


Gain on sale of properties





(358)




Depreciation, depletion and amortization

1,909



1,509



5,325



4,070


Impairment





2,431




Stock-based compensation expenses

218



206



661



529


Adjusted EBITDA

$

18,192



$

20,543



$

57,321



$

48,638


 

Adjusted Net Income (Loss) and Adjusted Diluted Earnings (Loss) Per Share are supplemental non-GAAP financial measures that are used by management and external users of the Company's financial statements, such as industry analysts, investors, lenders and rating agencies. The Company defines Adjusted Net Income (Loss) as net income (loss) after adjusting first for (1) the impact of certain non-cash and non-recurring items, including non-cash changes in the fair value of derivative instruments, impairment, and other similar non-cash and non-recurring charges, and then (2) the non-cash and non-recurring items' impact on taxes based on the Company's effective tax rate applicable to those adjusting items in the same period. Adjusted Net Income (Loss) is not a measure of net income (loss) as determined by GAAP. The Company defines Adjusted Diluted Earnings (Loss) Per Share as Adjusted Net Income (Loss) divided by diluted weighted average shares outstanding.

The following table presents reconciliations of the GAAP financial measure of net income (loss) to the non-GAAP financial measure of Adjusted Net Income (Loss) and the GAAP financial measure of diluted earnings (loss) per share to the non-GAAP financial measure of Adjusted Diluted Earnings (Loss) Per Share for the periods presented:


Three Months Ended September 30,


Nine Months Ended September 30,


2016


2015


2016


2015


(In thousands, except per share data)

Net income (loss)

$

(33,942)



$

27,055



$

(188,328)



$

(44,216)


(Gain) loss on sale of properties

(6)



(172)



1,305



(172)


(Gain) loss on extinguishment of debt

13,793





(4,865)




Net (gain) loss on derivative instruments

(20,847)



(103,637)



55,624



(111,285)


Derivative settlements(1)

11,786



78,100



115,576



291,436


Impairment

382



80



3,967



24,917


Rig termination







3,895


Amortization of deferred financing costs(2)

2,095



1,570



8,042



5,526


Amortization of debt discount

300





300




Other non-cash adjustments

(26)



883



697



782


Tax impact(3)

(2,798)



8,668



(67,598)



(80,447)


Adjusted Net Income (Loss)

$

(29,263)



$

12,547



$

(75,280)



$

90,436










Diluted loss per share

$

(0.19)



$

0.20



$

(1.09)



$

(0.35)


(Gain) loss on sale of properties





0.01




(Gain) loss on extinguishment of debt

0.08





(0.03)




Net (gain) loss on derivative instruments

(0.12)



(0.76)



0.32



(0.87)


Derivative settlements(1)

0.07



0.57



0.67



2.28


Impairment





0.02



0.19


Rig termination







0.03


Amortization of deferred financing costs(2)

0.01



0.01



0.05



0.04


Amortization of debt discount








Other non-cash adjustments



0.01





0.01


Tax impact(3)

(0.02)



0.06



(0.39)



(0.62)


Adjusted Diluted Earnings (Loss) Per Share

$

(0.17)



$

0.09



$

(0.44)



$

0.71










Diluted weighted average shares outstanding

177,120



137,014



172,360



127,827










Effective tax rate applicable to adjustment items

37.4

%


37.4

%


37.4

%


37.4

%

___________________

(1)

Cash settlements represent the cumulative gains and losses on the Company's derivative instruments for the periods presented and do not include a recovery of costs that were paid to acquire or modify the derivative instruments that were settled.

(2)

As of September 30, 2016, Adjusted Net Income (Loss) includes the non-cash adjustment for amortization of deferred financing costs. Comparative periods have been conformed. The amortization of deferred financing costs are included in interest expense on the Company's Condensed Consolidated Statement of Operations. For the nine months ended September 30, 2016 and 2015, the amortization of deferred financing costs included $1.8 million and $0.5 million, respectively, for unamortized deferred financing costs related to the revolving credit facility, which were written off in proportion to the decreases in the borrowing base.

(3)

The tax impact is computed utilizing the Company's effective tax rate applicable to the adjustments for certain non-cash and non-recurring items.

 

SOURCE Oasis Petroleum Inc.

For further information: Oasis Petroleum Inc., Taylor Mason, (281) 404-9600, Manager, Corporate Finance & Investor Relations


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