News Releases

Oasis Petroleum Inc. Announces Quarter Ended September 30, 2018 Earnings

HOUSTON, Nov. 5, 2018 /PRNewswire/ -- Oasis Petroleum Inc. (NYSE: OAS) ("Oasis" or the "Company") today announced financial results for the quarter ended September 30, 2018 and provided an operational update.

Recent Highlights:

  • Produced 65.9 thousand barrels of oil per day ("MBopd") in the third quarter of 2018, which represents a 27% increase over third quarter 2017. Oil volumes increased by over 8.2 MBopd sequentially, adjusting for the impact of acquisitions and divestitures, and exceeded midpoint guidance for the third quarter by approximately 1%.
  • Delivered production during the third quarter of 2018 of 85.4 thousand barrels of oil equivalent per day ("MBoepd") with an oil cut of 77%. In August, Oasis Midstream Partner's ("OMP") first gas plant in Wild Basin experienced operational downtime for twelve days, which has since been fully resolved. Adjusting for this temporary gas plant outage, volumes would have been towards midpoint guidance on a BOE basis.
  • Improved oil differentials to $1.42 off of NYMEX West Texas Intermediate crude oil index price ("NYMEX WTI") in the third quarter of 2018, an approximate 22% decrease from the third quarter of 2017.
  • Lowered lease operating expenses ("LOE") per barrels of oil equivalent ("Boe") by over 17% to $6.18 per Boe in the third quarter of 2018 compared to $7.45 per Boe in the third quarter of 2017.
  • Completed and placed on production 37 gross (24.4 net) operated wells, including 35 gross (22.4 net) operated wells in the Williston Basin and 2 gross (2.0 net) operated wells in the Delaware Basin, in the third quarter of 2018. The Company continues to expect to complete approximately 110 gross operated wells in 2018 in the Williston Basin and 6 to 8 gross operated wells in the Delaware Basin.
  • Since the closing of the Permian Basin Acquisition, successfully closed various acquisitions in Loving and Ward Counties, adjacent to the Company's existing Delaware position. Combined, the acquisitions total to 1,600 net acres and approximately $20,000 per net acre, after backing out production value.
  • Closed previously announced non-core divestitures that resulted in net proceeds of approximately $331 million during the third quarter of 2018.
  • Delivered net cash provided by operating activities of $230.0 million and Adjusted EBITDA of $270.4 million for the third quarter of 2018. For a definition of Adjusted EBITDA and reconciliations of Adjusted EBITDA to net income (loss) including non-controlling interests and net cash provided by operating activities, see "Non-GAAP Financial Measures" below.

"Oasis delivered another solid quarter and remains on track to deliver capital efficient growth in 2018," said Thomas B. Nusz, Oasis' Chairman and Chief Executive Officer. "In the Williston, we continue to execute our development program, where extensive low-cost inventory differentiates us and supports high-returns growth for well over a decade. In the Delaware, well results continue to impress and our subsurface knowledge is building, moving us closer to full-field development. Oasis's diversified asset base provides deep, low-cost inventory which in combination with our integrated business model and world-class operating team puts us in an excellent position to generate attractive returns through the commodity cycle. Separately, Oasis Midstream Partners remains an important strategic asset for Oasis, and the startup of the second Wild Basin gas plant later this month puts us in a great position to capture and realize the full value of our gas production in North Dakota."

Financial and Operational Update

  • Continuing to see encouraging results from recent Painted Woods well and expect to complete two additional wells during the fourth quarter of 2018.
  • Delaware production during the third quarter of 2018 averaged 4.7 MBoepd, increasing 12% over the second quarter of 2018. Oasis plans a three well Wolfcamp A test in the fourth quarter of 2018, and will continue to delineate additional zones throughout 2019.
  • CapEx before acquisitions was $316.8 million in the third quarter of 2018.

OMP Update

OMP mechanically completed its new 200 MMscfpd natural gas processing plant in October and expects volumes to start flowing at the end of November. Upon completion of this gas plant, OMP will be the second largest natural gas processor in the Williston Basin. OMP expects approximately 60% utilization in January 2019, consisting largely of volumes from Oasis, before increasing to above 80% by year-end 2019, as third-party volumes become more significant. In October, OMP successfully signed additional third-party agreements, which resulted in increased expectations for OMP EBITDA for 2019. Gas processing remains tight in the Williston Basin, and OMP continues to pursue additional opportunities with third-parties to further increase the utilization of its gas plant infrastructure.

Key Operating Metrics and Guidance Update

Oasis has adjusted its completion timing during the fourth quarter of 2018 in order to minimize flaring in North Dakota and maximize capturing the value for gas volumes. Oasis now expects fourth quarter 2018 volumes to range between 87.5 and 90.0 MBoepd and its previously announced exit rates of 91 to 94 MBoepd remains intact. Oasis continues to anticipate volume growth of approximately 15% from exit 2018 to exit 2019, with no change to prior expectations surrounding the Delaware production exit guidance. Oasis continues to expect overall oil cuts of approximately 74% in 2019.

The following table presents actual results for the third quarter of 2018 as well as updated full year 2018 guidance for certain operating data:

Metric

3Q 2018 Actual


Prior
Full Year
Guidance


Updated
Full Year Guidance

Differential to NYMEX WTI ($ per Bbl)

$1.42


$1.50 - $2.50


$1.50 - $2.50

LOE ($ per Boe)

$6.18


$6.00 - $7.00


$6.00 - $6.75

Marketing, transportation and gathering expenses ("MT&G") ($ per Boe)(1)

$3.84


$2.75 - $3.25


$3.00 - $3.50

Production taxes (% of oil & gas revenue)

8.6%


8.5% - 8.7%


8.5% - 8.7%

General and administrative expenses ("G&A") ($ in millions)

$34.9


$105.0 - $115.0


$115.0 - $125.0

CapEx ($ in millions)






E&P CapEx



$900.0 - $930.0


$900.0 - $930.0

OMS and OWS CapEx



$290.0 - $305.0


$290.0 - $305.0

Other CapEx



$40.0


$40.0

___________________

(1)

Excludes non-cash valuation charges on pipeline imbalances. For the third quarter of 2018, MT&G increased approximately $0.69 per Boe relative to the second quarter of 2018, for barrels shipped on long-haul pipelines and sold at coastal markets.

Operational and Financial Update

The following table presents select operational and financial data for the periods presented:


Quarter Ended:


9/30/2018


6/30/2018


9/30/2017

Production data:






Oil (Bopd)

65,870



60,632



51,825


Natural gas (Mcfpd)

117,182



112,830



85,800


Total production (Boepd)

85,400



79,437



66,125


Percent Oil

77.1

%


76.3

%


78.4

%

Average sales prices:






Oil, without derivative settlements ($ per Bbl)

$

68.07



$

65.47



$

46.35


Differential to NYMEX WTI ($ per Bbl)

1.42



2.42



1.82


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

57.25



54.53



47.93


Oil derivative settlements - net cash receipts (payments) ($ in millions)(2)

(65.6)



(60.4)



7.5


Natural gas, without derivative settlements ($ per Mcf)(3)

3.72



3.38



3.50


Natural gas, with derivative settlements ($ per Mcf)(1)(2)(3)

3.76



3.43



3.58


Natural gas derivative settlements - net cash receipts ($ in millions)(2)

0.4



0.5



0.6


Selected financial data ($ in millions):






Revenues:






Oil revenues

$

412.5



$

361.3



$

221.0


Natural gas revenues

40.1



34.7



27.6


Purchased oil and gas sales

46.4



57.6



21.2


Midstream revenues

31.2



29.3



18.8


Well services revenues

16.3



18.5



16.1


Total revenues

$

546.5



$

501.4



$

304.7


Net cash provided by operating activities

230.0



303.7



88.9


Adjusted EBITDA

270.4



241.2



179.6


Select operating expenses:






LOE

$

48.5



$

44.1



$

45.3


Midstream operating expenses

8.7



7.7



4.3


Well services operating expenses(4)

11.4



13.6



10.3


MT&G(5)

30.1



23.1



15.2


Non-cash valuation charges

0.6



(0.2)



(0.2)


Purchased oil and gas expenses

46.1



57.2



21.7


Production taxes

38.7



34.0



21.1


Depreciation, depletion and amortization ("DD&A")

163.0



153.6



132.3


Total select operating expenses

$

347.1



$

333.1



$

250.0


Select operating expenses data:






LOE ($ per Boe)

$

6.18



$

6.11



$

7.45


MT&G ($ per Boe)(5)

3.84



3.19



2.50


DD&A ($ per Boe)

20.74



21.24



21.75


E&P G&A ($ per Boe)

3.88



3.25



2.93


Production taxes (% of oil and gas revenue)

8.6

%


8.6

%


8.5

%

___________________

(1)

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

(2)

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)

For the three and nine months ended September 30, 2017, well services operating expenses have been adjusted to include $1.2 million and $2.7 million, respectively, for certain well services direct field labor compensation expenses which were previously recognized in general and administrative expenses on the Company's Condensed Consolidated Statements of Operations.

(5)

Excludes non-cash valuation charges on pipeline imbalances.

G&A totaled $34.9 million in the third quarter of 2018, $21.4 million in the third quarter of 2017 and $28.2 million in the second quarter of 2018. Amortization of equity-based compensation, which is included in G&A, was $7.5 million, or $0.95 per Boe, in the third quarter of 2018 as compared to $6.6 million, or $1.09 per Boe, in the third quarter of 2017 and $7.4 million, or $1.02 per Boe, in the second quarter of 2018. G&A for the Company's E&P segment totaled $30.5 million in the third quarter of 2018, $17.8 million in the third quarter of 2017 and $23.5 million in the second quarter of 2018.

MT&G, excluding non-cash valuation charges on pipeline imbalances, increased $14.9 million to $30.1 million in the third quarter of 2018, as compared to $15.2 million in the third quarter of 2017, primarily attributable to higher oil gathering and transportation expenses related to an increase in volumes being transported on the Dakota Access Pipeline to market the Company's equity barrels, which resulted in improved price realizations. MT&G, excluding non-cash valuation charges on pipeline imbalances, increased $7.0 million as compared to $23.1 million in the second quarter of 2018 primarily due to the higher aforementioned costs.

There was no impairment loss in the third quarter of 2018. Impairment loss totaled $0.1 million in the third quarter of 2017 and $384.1 million in the second quarter of 2018.

Interest expense was $39.6 million for the third quarter of 2018 as compared to $37.4 million for the third quarter of 2017 and $40.9 million for the second quarter of 2018. Capitalized interest totaled $4.5 million for the third quarter of 2018, $3.1 million for the third quarter of 2017 and $4.2 million for the second quarter of 2018. Cash Interest totaled $39.4 million for the third quarter of 2018, $36.2 million for the third quarter of 2017 and $40.5 million for the second quarter of 2018. 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, 2018, the Company recorded an income tax expense of $24.8 million, resulting in a 27.2% effective tax rate as a percentage of its pre-tax income for the quarter. The Company recorded an income tax benefit of $101.0 million, resulting in a 24.2% effective tax rate as a percentage of its pre-tax loss for the three months ended June 30, 2018.

For the third quarter of 2018, the Company reported net income of $62.3 million, or $0.20 per diluted share, as compared to a net loss of $41.2 million, or $0.18 per diluted share, for the third quarter of 2017. Excluding certain non-cash items and their tax effect, Adjusted Net Income Attributable to Oasis (non-GAAP) was $25.6 million, or $0.08 per diluted share, in the third quarter of 2018, as compared to Adjusted Net Income Attributable to Oasis of $0.5 million, or $0.00 per diluted share, in the third quarter of 2017. For a definition of Adjusted Net Income (Loss) Attributable to Oasis and a reconciliation of net income (loss) attributable to Oasis to Adjusted Net Income (Loss) Attributable to Oasis, see "Non-GAAP Financial Measures" below. Adjusted EBITDA for the third quarter of 2018 was $270.4 million, as compared to Adjusted EBITDA of $179.6 million for the third quarter of 2017. For a definition of Adjusted EBITDA and a reconciliation of net income (loss) including non-controlling interests 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 2018


2Q 2018


3Q 2018


YTD - 3Q 2018


(In millions)

CapEx:








E&P

$

176.9



$

280.0



$

247.9



$

704.8


Well services

4.3



0.9



1.1



6.3


Other(1)

6.3



5.4



6.4



18.1


Total CapEx before acquisitions and midstream

187.5



286.3



255.4



729.2


Midstream(2)

88.8



68.6



61.4



218.8


Total CapEx before acquisitions

276.3



354.9



316.8



948.0


Acquisitions

890.9



3.6



55.6



950.1


Total CapEx(3)

$

1,167.2



$

358.5



$

372.4



$

1,898.1


___________________

(1)

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

(2)

Midstream CapEx attributable to OMP was $16.7 million and $85.3 million for the three and nine months ended September 30, 2018, respectively.

(3)

Total CapEx reflected in the table above differs from the amounts for capital expenditures and acquisitions shown in the statements 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 CapEx, while the amounts presented in the statements of cash flows is presented on a cash basis.

Hedging Activity

The Company's crude oil contracts will settle monthly based on the average NYMEX WTI for fixed price swaps and two-way and three-way costless collars. The Company's basis swaps for crude oil will either settle monthly based on the fixed basis differential from NYMEX WTI to Intercontinental Exchange, Inc. Brent crude oil index price ("ICE Brent") or Argus WTI Midland crude oil index price ("Midland") to NYMEX WTI. The Company's natural gas contracts will settle monthly based on the average NYMEX Henry Hub natural gas index price ("NYMEX HH") for fixed price swaps. The Company's basis swaps for natural gas will settle monthly based on the fixed basis differential from Inside FERC Northern Natural Gas Ventura ("IF NNG Ventura") to NYMEX HH. As of November 5, 2018, the Company had the following outstanding commodity derivative contracts:


Three Months Ending


Six Months Ending


September 30, 2018


December 31, 2018


June 30, 2019


December 31, 2019

Crude Oil (Volume in MBblpd)








Fixed Price Swaps








Volume

42.0



43.2



13.0



13.0


Price

$

53.14



$

53.95



$

53.47



$

53.47


Collars








Volume

3.0



8.5



11.0



11.0


Floor

$

48.67



$

62.47



$

58.18



$

58.18


Ceiling

$

53.07



$

68.40



$

77.65



$

77.65


3-Way








Volume





11.0



9.0


Sub-Floor

$



$



$

40.91



$

40.00


Floor

$



$



$

51.36



$

50.56


Ceiling

$



$



$

69.29



$

67.80


Total Crude Oil Volume

45.0



51.7



35.0



33.0


Basis Swaps (NYMEX WTI-ICE Brent)








Volume

1.0



2.0



2.0




Price

$

(10.50)



$

(9.68)



$

(9.68)



$


Basis Swaps (Midland-NYMEX WTI)








Volume



1.3



2.0




Price

$



$

(7.50)



$

(7.50)



$


Total Crude Oil Basis Volume

1.0



3.3



4.0












Natural Gas (Volume in MMBtupd)








Fixed Price Swaps








Volume

35,978



41,315



15,475



5,000


Price

$

3.02



$

3.03



$

2.91



$

2.82


Total Natural Gas Volume

35,978



41,315



15,475



5,000


Basis Swaps (IF NNG Ventura-NYMEX HH)








Volume

3,261



19,946



25,000




Price

$

(0.06)



$

0.01



$

0.02



$


Total Natural Gas Basis Volume

3,261



19,946



25,000




The September 2018 crude oil derivative contracts settled at a net $22.8 million paid in October 2018 and will be included in the Company's fourth quarter 2018 derivative settlements.

Conference Call Information

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

Date:


Tuesday, November 6, 2018

Time:


10:00 a.m. Central Time

Live Webcast:


https://www.webcaster4.com/Webcast/Page/1052/27747

Website:


www.oasispetroleum.com

Sell-side analysts with a question may use the following dial-in:

Dial-in:


888-317-6003

Intl. Dial in:


412-317-6061

Conference ID:


1584359

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 13, 2018 by dialing:

Replay dial-in:


877-344-7529

Intl. replay:


412-317-0088

Replay code:


10124917

The conference call will also be available for replay for approximately 30 days 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 in the United States. For more information, please visit the Company's website at www.oasispetroleum.com.

 

Oasis Petroleum Inc.

Condensed Consolidated Balance Sheets

(Unaudited)



September 30, 2018


December 31, 2017


(In thousands, except share data)

ASSETS




Current assets




Cash and cash equivalents

$

16,892



$

16,720


Accounts receivable, net

428,184



363,580


Inventory

31,409



19,367


Prepaid expenses

6,444



7,631


Derivative instruments



344


Intangible assets, net

375




Other current assets

192



193


Total current assets

483,496



407,835


Property, plant and equipment




Oil and gas properties (successful efforts method)

8,671,144



7,838,955


Other property and equipment

1,088,781



868,746


Less: accumulated depreciation, depletion, amortization and impairment

(2,859,788)



(2,534,215)


Total property, plant and equipment, net

6,900,137



6,173,486


Derivative instruments



9


Long-term inventory

12,610



12,200


Other assets

20,188



21,600


Total assets

$

7,416,431



$

6,615,130


LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities




Accounts payable

$

17,206



$

13,370


Revenues and production taxes payable

287,333



213,995


Accrued liabilities

307,526



236,480


Accrued interest payable

20,574



38,963


Derivative instruments

180,129



115,716


Advances from joint interest partners

3,878



4,916


Other current liabilities

40



40


Total current liabilities

816,686



623,480


Long-term debt

2,633,009



2,097,606


Deferred income taxes

230,504



305,921


Asset retirement obligations

51,357



48,511


Derivative instruments

33,017



19,851


Other liabilities

7,775



6,182


Total liabilities

3,772,348



3,101,551


Commitments and contingencies




Stockholders' equity




Common stock, $0.01 par value: 900,000,000 and 450,000,000 shares authorized at September 30, 2018 and December 31, 2017, respectively; 320,507,783 shares issued and 318,419,144 shares outstanding at September 30, 2018 and 270,627,014 shares issued and 269,295,466 shares outstanding at December 31, 2017

3,157



2,668


Treasury stock, at cost: 2,088,639 and 1,331,548 shares at September 30, 2018 and December 31, 2017, respectively

(28,985)



(22,179)


Additional paid-in capital

3,070,642



2,677,217


Retained earnings

460,712



717,985


Oasis share of stockholders' equity

3,505,526



3,375,691


Non-controlling interests

138,557



137,888


Total stockholders' equity

3,644,083



3,513,579


Total liabilities and stockholders' equity

$

7,416,431



$

6,615,130


 

Oasis Petroleum Inc.

Condensed Consolidated Statements of Operations

(Unaudited)



Three Months Ended September 30,


Nine Months Ended September 30,


2018


2017


2018


2017


(In thousands, except per share data)

Revenues








Oil and gas revenues

$

452,643



$

248,648



$

1,212,235



$

704,533


Purchased oil and gas sales

46,356



21,195



121,971



56,917


Midstream revenues

31,187



18,767



88,451



48,939


Well services revenues

16,262



16,138



46,344



33,566


Total revenues

546,448



304,748



1,469,001



843,955


Operating expenses








Lease operating expenses

48,534



45,334



137,456



133,871


Midstream operating expenses

8,652



4,301



24,325



10,891


Well services operating expenses

11,405



10,288



32,352



23,858


Marketing, transportation and gathering expenses

30,713



15,028



74,559



38,018


Purchased oil and gas expenses

46,088



21,701



121,251



57,683


Production taxes

38,722



21,052



103,748



60,322


Depreciation, depletion and amortization

162,984



132,289



465,819



384,246


Exploration expenses

22,315



854



23,701



4,010


Impairment



139



384,228



6,021


General and administrative expenses

34,859



21,368



91,029



67,170


Total operating expenses

404,272



272,354



1,458,468



786,090


Gain on sale of properties

36,869





38,823




Operating income

179,045



32,394



49,356



57,865


Other income (expense)








Net gain (loss) on derivative instruments

(48,544)



(54,310)



(239,945)



52,297


Interest expense, net of capitalized interest

(39,560)



(37,389)



(117,616)



(110,548)


Loss on extinguishment of debt

(47)





(13,698)




Other income (expense)

111



(605)



146



(755)


Total other expense

(88,040)



(92,304)



(371,113)



(59,006)


Income (loss) before income taxes

91,005



(59,910)



(321,757)



(1,141)


Income tax benefit (expense)

(24,782)



18,846



75,391



470


Net income (loss) including non-controlling interests

66,223



(41,064)



(246,366)



(671)


Less: Net income attributable to non-controlling interests

3,882



150



10,907



150


Net income (loss) attributable to Oasis

$

62,341



$

(41,214)



$

(257,273)



$

(821)


Earnings (loss) attributable to Oasis per share:








Basic

$

0.20



$

(0.18)



$

(0.84)



$

0.00


Diluted

0.20



(0.18)



(0.84)



0.00


Weighted average shares outstanding:








Basic

313,167



233,389



305,533



233,248


Diluted

316,387



233,389



305,533



233,248


 

Oasis Petroleum Inc.

Selected Financial and Operational Statistics

(Unaudited)



Three Months Ended September 30,


Nine Months Ended September 30,


2018


2017


2018


2017

Operating results (in thousands):








Revenues








Oil revenues

$

412,530



$

221,004



$

1,097,171



$

623,603


Natural gas revenues

40,113



27,644



115,064



80,930


Purchased oil and gas sales

46,356



21,195



121,971



56,917


Midstream revenues

31,187



18,767



88,451



48,939


Well services revenues

16,262



16,138



46,344



33,566


Total revenues

$

546,448



$

304,748



$

1,469,001



$

843,955


Production data:








Oil (MBbls)

6,060



4,768



16,862



13,552


Natural gas (MMcf)

10,781



7,894



30,825



23,131


Oil equivalents (MBoe)

7,857



6,083



21,999



17,408


Average daily production (Boe per day)

85,400



66,125



80,583



63,764


Average sales prices:








Oil, without derivative settlements (per Bbl)

$

68.07



$

46.35



$

65.07



$

46.02


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

57.25



47.93



55.40



45.90


Natural gas, without derivative settlements (per Mcf)(2)

3.72



3.50



3.73



3.50


Natural gas, with derivative settlements (per Mcf)(1)(2)

3.76



3.58



3.77



3.53


Costs and expenses (per Boe of production):








Lease operating expenses

$

6.18



$

7.45



$

6.25



$

7.69


MT&G(3)

3.84



2.50



3.36



2.16


Production taxes

4.93



3.46



4.72



3.47


Depreciation, depletion and amortization

20.74



21.75



21.17



22.07


G&A(4)

4.44



3.51



4.14



3.86


E&P G&A

3.88



2.93



3.52



3.32


___________________

(1)

Realized prices include gains or losses on cash settlements for commodity derivatives, which do not qualify for or 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.

(2)

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

(3)

Excludes non-cash valuation charges on pipeline imbalances.

(4)

For the three and nine months ended September 30, 2017, well services operating expenses have been adjusted to include $1.2 million and $2.7 million, respectively, for certain well services direct field labor compensation expenses which were previously recognized in general and administrative expenses on the Company's Condensed Consolidated Statements of Operations.

 

Oasis Petroleum Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)



Nine Months Ended September 30,


2018


2017


(In thousands)

Cash flows from operating activities:




Net loss including non-controlling interests

$

(246,366)



$

(671)


Adjustments to reconcile net loss including non-controlling interests to net cash provided by operating activities:




Depreciation, depletion and amortization

465,819



384,246


Loss on extinguishment of debt

13,698




Gain on sale of properties

(38,823)




Impairment

384,228



6,021


Deferred income taxes

(75,418)



(470)


Derivative instruments

239,945



(52,297)


Equity-based compensation expenses

21,586



20,451


Deferred financing costs amortization and other

20,074



12,666


Working capital and other changes:




Change in accounts receivable, net

(61,275)



(81,022)


Change in inventory

(12,076)



(235)


Change in prepaid expenses

1,196



823


Change in other current assets

1



276


Change in long-term inventory and other assets

(490)



(12,843)


Change in accounts payable, interest payable and accrued liabilities

50,308



32,282


Change in other current liabilities



(10,490)


Change in other liabilities

(406)




Net cash provided by operating activities

762,001



298,737


Cash flows from investing activities:




Capital expenditures

(841,088)



(443,649)


Acquisitions

(579,886)




Proceeds from sale of properties

333,029



4,000


Costs related to sale of properties

(2,707)




Derivative settlements

(162,013)



(804)


Advances from joint interest partners

(1,038)



(2,502)


Net cash used in investing activities

(1,253,703)



(442,955)


Cash flows from financing activities:




Proceeds from Revolving Credit Facilities

2,499,000



764,000


Principal payments on Revolving Credit Facilities

(1,959,000)



(732,000)


Repurchase of senior unsecured notes

(423,190)




Proceeds from issuance of senior unsecured notes

400,000




Deferred financing costs

(7,650)



(96)


Proceeds from sale of Oasis Midstream common units, net of offering costs



115,813


Purchases of treasury stock

(6,806)



(6,182)


Distributions to non-controlling interests

(10,393)




Other

(87)



(55)


Net cash provided by financing activities

491,874



141,480


Increase (decrease) in cash and cash equivalents

172



(2,738)


Cash and cash equivalents:




Beginning of period

16,720



11,226


End of period

$

16,892



$

8,488


Supplemental non-cash transactions:




Change in accrued capital expenditures

$

79,011



$

63,499


Change in asset retirement obligations

2,854



3,112


Issuance of shares in connection with the Permian Basin Acquisition

371,220




Installment notes from acquisition



4,875


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 and debt discounts 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,


2018


2017


2018


2017


(In thousands)

Interest expense

$

39,560



$

37,389



$

117,616



$

110,548


Capitalized interest

4,531



3,137



13,209



8,773


Amortization of deferred financing costs

(1,813)



(1,729)



(5,511)



(5,128)


Amortization of debt discount

(2,852)



(2,591)



(8,201)



(7,426)


Cash Interest

$

39,426



$

36,206



$

117,113



$

106,767


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 GAAP.

The following table presents reconciliations of the GAAP financial measures of net income (loss) including non-controlling interests 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,


2018


2017


2018


2017


(In thousands)

Net income (loss) including non-controlling interests

$

66,223



$

(41,064)



$

(246,366)



$

(671)


Gain on sale of properties

(36,869)





(38,823)




Loss on extinguishment of debt

47





13,698




Net (gain) loss on derivative instruments

48,544



54,310



239,945



(52,297)


Derivative settlements(1)

(65,190)



8,095



(162,013)



(804)


Interest expense, net of capitalized interest

39,560



37,389



117,616



110,548


Depreciation, depletion and amortization

162,984



132,289



465,819



384,246


Impairment



139



384,228



6,021


Exploration expenses

22,315



854



23,701



4,010


Equity-based compensation expenses

7,456



6,628



21,586



20,451


Income tax (benefit) expense

24,782



(18,846)



(75,391)



(470)


Other non-cash adjustments

574



(208)



557



491


Adjusted EBITDA

270,426



179,586



744,557



471,525


Adjusted EBITDA attributable to non-controlling interests

5,194



190



14,647



190


Adjusted EBITDA attributable to Oasis

265,232



179,396



729,910



471,335


Cash Interest

(39,426)



(36,206)



(117,113)



(106,767)


Capital expenditures(2)

(372,343)



(240,373)



(1,898,105)



(523,143)


Capitalized interest

4,531



3,137



13,209



8,773


Free Cash Flow

$

(142,006)



$

(94,046)



$

(1,272,099)



$

(149,802)










Net cash provided by operating activities

$

229,985



$

88,876



$

762,001



$

298,737


Derivative settlements(1)

(65,190)



8,095



(162,013)



(804)


Interest expense, net of capitalized interest

39,560



37,389



117,616



110,548


Exploration expenses

22,315



854



23,701



4,010


Deferred financing costs amortization and other

(9,556)



(3,795)



(20,074)



(12,666)


Current tax expense

(93)





27




Changes in working capital

52,831



48,375



22,742



71,209


Other non-cash adjustments

574



(208)



557



491


Adjusted EBITDA

270,426



179,586



744,557



471,525


Adjusted EBITDA attributable to non-controlling interests

5,194



190



14,647



190


Adjusted EBITDA attributable to Oasis

265,232



179,396



729,910



471,335


Cash Interest

(39,426)



(36,206)



(117,113)



(106,767)


Capital expenditures(2)

(372,343)



(240,373)



(1,898,105)



(523,143)


Capitalized interest

4,531



3,137



13,209



8,773


Free Cash Flow

$

(142,006)



$

(94,046)



$

(1,272,099)



$

(149,802)


___________________

(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)

Capital expenditures (including acquisitions) reflected in the table above differ from the amounts shown in the statements of cash flows in our condensed consolidated financial statements because amounts reflected in the table 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. Acquisitions totaled $55.6 million and $1.1 million for the three months ended September 30, 2018 and 2017, respectively, and $950.1 million and $5.9 million for the nine months ended September 30, 2018 and 2017, respectively.

The following tables present reconciliations of the GAAP financial measure of income (loss) before income taxes including non-controlling interests to the non-GAAP financial measure of Adjusted EBITDA for our 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,


2018


2017


2018


2017


(In thousands)

Income (loss) before income taxes including non-controlling interests

$

59,375



$

(88,835)



$

(423,470)



$

(71,999)


Gain on sale of properties

(46,459)





(48,413)




Loss on extinguishment of debt

47





13,698




Net (gain) loss on derivative instruments

48,544



54,310



239,945



(52,297)


Derivative settlements(1)

(65,190)



8,095



(162,013)



(804)


Interest expense, net of capitalized interest

39,398



37,369



117,009



110,528


Depreciation, depletion and amortization

158,630



129,626



453,083



376,818


Impairment



139



384,228



6,021


Exploration expenses

22,315



854



23,701



4,010


Equity-based compensation expenses

7,102



6,344



20,565



19,741


Other non-cash adjustments

574



(208)



557



491


Adjusted EBITDA

$

224,336



$

147,694



$

618,890



$

392,509


___________________

(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.

 

Midstream Services


Three Months Ended September 30,


Nine Months Ended September 30,


2018


2017


2018


2017


(In thousands)

Income before income taxes including non-controlling interests

$

30,959



$

25,179



$

100,754



$

69,046


Loss on sale of properties

9,590





9,590




Interest expense, net of capitalized interest

162



20



607



20


Depreciation, depletion and amortization

7,373



4,163



20,902



11,375


Equity-based compensation expenses

442



392



1,222



1,104


Adjusted EBITDA

$

48,526



$

29,754



$

133,075



$

81,545




Well Services


Three Months Ended September 30,


Nine Months Ended September 30,


2018


2017


2018


2017


(In thousands)

Income before income taxes including non-controlling interests

$

9,158



$

10,832



$

25,316



$

9,195


Depreciation, depletion and amortization

3,940



3,196



11,560



9,417


Equity-based compensation expenses

354



281



1,149



1,015


Adjusted EBITDA

$

13,452



$

14,309



$

38,025



$

19,627


Adjusted Net Income (Loss) Attributable to Oasis and Adjusted Diluted Earnings (Loss) Attributable to Oasis 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) Attributable to Oasis as net income (loss) after adjusting first for (1) the impact of certain non-cash items, including non-cash changes in the fair value of derivative instruments, impairment, and other similar non-cash charges, or non-recurring items, (2) the impact of net income attributable to non-controlling interests and (3) 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) Attributable to Oasis is not a measure of net income (loss) as determined by GAAP. The Company defines Adjusted Diluted Earnings (Loss) Attributable to Oasis Per Share as Adjusted Net Income (Loss) Attributable to Oasis divided by diluted weighted average shares outstanding.

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


Three Months Ended September 30,


Nine Months Ended September 30,


2018


2017


2018


2017


(In thousands, except per share data)

Net income (loss) attributable to Oasis

$

62,341



$

(41,214)



$

(257,273)



$

(821)


Gain on sale of properties

(36,869)





(38,823)




Loss on extinguishment of debt

47





13,698




Net (gain) loss on derivative instruments

48,544



54,310



239,945



(52,297)


Derivative settlements(1)

(65,190)



8,095



(162,013)



(804)


Impairment



139



384,228



6,021


Amortization of deferred financing costs

1,814



1,728



5,512



5,127


Amortization of debt discount

2,852



2,591



8,201



7,426


Other non-cash adjustments

574



(208)



557



491


Tax impact(2)

11,449



(24,941)



(107,140)



12,735


Adjusted Net Income (Loss) Attributable to Oasis

$

25,562



$

500



$

86,892



$

(22,122)










Diluted earnings (loss) attributable to Oasis per share

$

0.20



$

(0.18)



$

(0.84)



$

0.00


Gain on sale of properties

(0.12)





(0.13)




Loss on extinguishment of debt





0.04




Net (gain) loss on derivative instruments

0.15



0.23



0.78



(0.22)


Derivative settlements(1)

(0.21)



0.03



(0.52)




Impairment





1.24



0.03


Amortization of deferred financing costs

0.01



0.01



0.02



0.02


Amortization of debt discount

0.01



0.01



0.03



0.03


Other non-cash adjustments








Tax impact(2)

0.04



(0.10)



(0.34)



0.05


Adjusted Diluted Earnings (Loss) Attributable to Oasis Per Share

$

0.08



$

0.00



$

0.28



$

(0.09)










Diluted weighted average shares outstanding(3)

316,387



234,041



308,985



233,248










Effective tax rate applicable to adjustment items

23.7

%


37.4

%


23.7

%


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)

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

(3)

The Company included 3,220,000 and 3,452,000 of unvested stock awards for the three and nine months ended September 30, 2018, respectively, and 652,000 of unvested stock awards for the three months ended September 30, 2017 in computing Adjusted Diluted Income Attributable to Oasis Per Share due to the dilutive effect under the treasury stock method. No unvested stock awards were included in computing Adjusted Diluted Loss Attributable to Oasis Per Share for the nine months ended September 30, 2017 because the effect was anti-dilutive due to Adjusted Net Loss Attributable to Oasis.

 

SOURCE Oasis Petroleum Inc.

For further information: Oasis Petroleum Inc., Bob Bakanauskas, (281) 404-9600, Director, Investor Relations


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