Oasis Petroleum Inc. Announces Quarter Ended June 30, 2019 Earnings

HOUSTON, Aug. 6, 2019 /PRNewswire/ -- Oasis Petroleum Inc. (NYSE: OAS) ("Oasis" or the "Company") today announced financial and operating results for the second quarter of 2019.

Recent Highlights:

  • Delivered net cash provided by operating activities of $214.0 million and Adjusted EBITDA(1) of $249.6 million for the second quarter of 2019.
  • Produced 84.5 MBoepd, an increase of 6.3% from the second quarter of 2018.
  • Temporary downtime in OMP's Wild Basin natural gas processing complex caused an estimated 3.0 MBoepd and $6 million in lost production and Adjusted EBITDA(1), respectively. July production averaged approximately 89 MBoepd.
  • Achieved positive free cash flow year to date and continues to expect to be free cash flow positive in 2019 for the E&P business(2).
  • Delaware Basin well costs are targeted at $9.6 million per ~10,000 foot lateral well.
  • LOE totaled $7.32 per Boe in the second quarter of 2019, within the Company's guidance of $7.00 to $7.75 per Boe.
  • Both total Company G&A expense and E&P Cash G&A(1) expense decreased 10% from the first quarter of 2019.
  • Improved crude oil differentials to $0.96 off of NYMEX WTI, a significant improvement from the fourth quarter of 2018.

 

(1) Non-GAAP measure. See "Non-GAAP Financial Measures" below for definitions of all non-GAAP measures included herein and reconciliations to the most directly comparable measures under United States generally accepted accounting principles ("GAAP").

(2) For more detail on E&P free cash flow, see pages six and seven of the Company's investor presentation on the Company's website at www.oasispetroleum.com.

"Oasis continues to execute its plan of harvesting Williston free cash flow to fund growth in the Delaware," said Thomas B. Nusz, Oasis' Chairman and Chief Executive Officer. "Our operational expertise and deep inventory in the Williston support full field development and we are expanding outside of Wild Basin with impressive results. In the Delaware, our learnings are advancing faster than expected, resulting in faster cycle times, lowered costs, and strong well performance. We are seeing strong performance from not only the Wolfcamp A wells, but also from recent Wolfcamp B and C wells. With assets focused in two of the best oil basins in the US, a team with a proven operating track record, and strong realizations in both basins, we are structured to succeed through volatile commodity markets."

Financial and Operational Update and Outlook

  • Production averaged 78.3 MBoepd (Williston Basin) and 6.2 MBoepd (Delaware Basin). Oasis expects production in the third quarter of 2019 to range between 87 and 90 MBoepd (approximately 71.5% oil).
  • Oasis updated its differential guidance to between $1.50 and $3.00 per barrel in 2019 as compared to between $1.50 and $3.50 per barrel previously.
  • CapEx of $295 million consisted of $206 million of E&P and other, $83 million of consolidated midstream and $6 million of acquisitions. The Company now expects 2019 E&P and other CapEx to be approximately $620 to $640 million. The increase primarily reflects 1) an adjustment to deflation expectations related to a lower budgeted crude oil price, 2) improved cycle times in the Delaware Basin resulting in increased spuds with the two rig program, and 3) increased non-operated spending and a number of operating wells with higher working interests.

 

Metric


2Q 2019 Actual


Prior

Full Year Guidance


Updated

Full Year Guidance

Production (MBoepd)


84.5


86.0 - 91.0


86.8 - 88.5

Differential to NYMEX WTI ($ per Bbl)


$0.96


$1.50 - $3.50


$1.50 - $3.00

Natural gas realized price (as a % of Henry Hub)


89%


N/A


85%

Lease operating expenses ($ per Boe)


$7.32


$7.00 - $7.75


$7.00 - $7.75

Marketing, transportation and gathering expenses ($ per Boe)(1)


$3.69


$3.50 - $4.50


$3.50 - $4.50

E&P Cash G&A ($ in millions)(2)


$17.2


$77 - $81


$77 - $81

Production taxes (as a % of oil and gas revenues)


7.9%


8.1% - 8.4%


8.1% - 8.4%

CapEx ($ in millions)







E&P & Other CapEx(3)


$206.4


$540 - $560


$620 - $640

Midstream CapEx


$82.6


$195 - $219


$219 - $230

Midstream CapEx attributable to Oasis (included in Midstream CapEx above)


$70.9


$11 - $13


$15 - $16

___________________

(1)

Marketing, transportation and gathering expenses ("MT&G") exclude the effect of non-cash valuation charges on pipeline imbalances.

(2)

E&P Cash G&A represents general and administrative ("G&A") expenses less non-cash equity-based compensation expenses included in the Company's exploration and production ("E&P") segment. Total 2019 cash G&A for Oasis is estimated at $92 to $96 million, which excludes non-cash amortization of equity-based compensation of approximately $41 to $45 million. See "Non-GAAP Financial Measures" below.

(3)

Other CapEx includes well services and administrative capital and excludes estimated capitalized interest of approximately $15 million for 2019.

Midstream Update

  • OMP continues to successfully secure third party volumes to feed the Wild Basin natural gas processing complex. In June, the complex experienced temporary operational downtime, which was resolved in early July. The gas complex has recently been processing above 280 MMscfpd with the second natural gas plant processing at times above its 200 MMscfpd design capacity.
  • Oasis continues to work with third parties for gas infrastructure in the Delaware Basin and expects to provide an update in the coming months on the outcome of the selection process.
  • Total Midstream CapEx is expected to range between $219 to $230 million for 2019, which reflects capturing additional third party business, incremental plant costs and an acceleration of spending from 2020 to 2019. Net CapEx from Oasis attributable to its retained interest is expected to range between $15 and $16 million.
  • More details on OMP's performance can be found in OMP's second quarter 2019 press release issued on August 6, 2019 available on OMP's website at www.oasismidstream.com.

Operational and Financial Update

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


Quarter Ended:


June 30, 2019


March 31, 2019


June 30, 2018

Production data:






Crude oil (Bopd)

61,224


66,046


60,632

Natural gas (Mcfpd)

139,380


154,005


112,830

Total production (Boepd)

84,454


91,714


79,437

Percent crude oil

72.5%


72.0%


76.3%

Average sales prices:






Crude oil, without derivative settlements ($ per Bbl)

$        58.87


$

53.52


$

65.82

Differential to NYMEX WTI ($ per Bbl)

0.96


1.30


2.07

Crude oil, with derivative settlements ($ per Bbl)(1)

56.79


55.79


54.88

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

(11.6)


13.5


(60.4)

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

2.29


3.66


3.38

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

2.43


3.65


3.43

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

1.8


(0.1)


0.5

Selected financial data ($ in millions):






Revenues:






Crude oil revenues(3)

$        328.0


$

318.1


$

363.2

Natural gas revenues

29.0


50.7


34.7

Purchased oil and gas sales(3)

109.4


148.5


128.1

Midstream revenues

51.6


48.0


29.3

Well services revenues

11.4


10.4


18.5

Total revenues

$         529.4


$

575.7


$

573.8

Net cash provided by operating activities

214.0


174.9


303.7

Adjusted EBITDA(4)

249.6


269.3


241.2

Select operating expenses:






Lease operating expenses

$           56.2


$

58.4


$

44.1

Midstream expenses

17.4


16.7


7.7

Well services expenses

8.5


7.0


13.6

MT&G(5)

28.4


32.7


23.1

Non-cash valuation charges

0.1


2.3


(0.2)

Purchased oil and gas expenses(3)

109.7


149.9


129.6

Production taxes

28.1


29.6


34.0

Depreciation, depletion and amortization

177.4


189.8


153.6

Total select operating expenses

$         425.8


$

486.4


$

405.5

Select operating expenses data:






Lease operating expense ($ per Boe)

$           7.32


$

7.08


$

6.11

MT&G ($ per Boe)(5)

3.69


3.96


3.19

Depreciation, depletion and amortization ($ per Boe)

23.08


23.00


21.24

E&P G&A ($ per Boe)

3.35


3.33


3.25

E&P Cash G&A ($ per Boe)(4)

2.24


2.30


2.28

Production taxes (as a % of oil and gas revenues)

7.9%


8.0%


8.6%

___________________

(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)

For the three and six months ended June 30, 2018, crude oil revenues, purchased oil and gas sales and purchased oil and gas expenses have been revised to correct errors related to the presentation of certain crude oil purchase and sale arrangements, which had no impact on reported net income (loss). The amounts presented herein reflect the impact of the revision.

(4)

Adjusted EBITDA and E&P Cash G&A represent non-GAAP measures. See "Non-GAAP Financial Measures" below for further information and reconciliations to the most directly comparable financial measures under GAAP.

(5)

Excludes non-cash valuation charges on pipeline imbalances.

G&A totaled $30.9 million in the second quarter of 2019, $28.2 million in the second quarter of 2018 and $34.5 million in the first quarter of 2019. Amortization of equity-based compensation, which is included in G&A, was $8.9 million, or $1.16 per barrel of oil equivalent ("Boe"), in the second quarter of 2019 as compared to $7.4 million, or $1.02 per Boe, in the second quarter of 2018 and $9.0 million, or $1.09 per Boe, in the first quarter of 2019. G&A for the Company's E&P segment totaled $25.8 million in the second quarter of 2019, $23.5 million in the second quarter of 2018 and $27.5 million in the first quarter of 2019.

MT&G, excluding non-cash valuation charges on pipeline imbalances, increased $5.3 million to $28.4 million in the second quarter of 2019, as compared to $23.1 million in the second quarter of 2018, primarily attributable to higher crude 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, decreased $4.3 million in the second quarter of 2019, as compared to $32.7 million in the first quarter of 2019 primarily due to lower production volumes.

Interest expense was $43.2 million for the second quarter of 2019 as compared to $40.9 million for the second quarter of 2018 and $44.5 million for the first quarter of 2019. Capitalized interest totaled $3.6 million for the second quarter of 2019, $4.2 million for the second quarter of 2018 and $2.8 million for the first quarter of 2019. Cash Interest totaled $42.0 million for the second quarter of 2019, $40.5 million for the second quarter of 2018 and $42.6 million for the first quarter of 2019. 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 June 30, 2019, the Company recorded an income tax expense of $12.2 million, resulting in a 19.3% effective tax rate as a percentage of its pre-tax income for the quarter. The Company recorded an income tax benefit of $3.7 million, resulting in a 3.3% effective tax rate as a percentage of its pre-tax loss for the three months ended March 31, 2019.

For the second quarter of 2019, the Company reported net income of $42.8 million, or $0.14 per diluted share, as compared to a net loss of $320.2 million, or $1.02 per diluted share, for the second quarter of 2018. Excluding certain non-cash items and their tax effect, Adjusted Net Income Attributable to Oasis was $11.0 million, or $0.03 per diluted share, in the second quarter of 2019, as compared to Adjusted Net Income Attributable to Oasis of $28.9 million, or $0.09 per diluted share, in the second quarter of 2018. Adjusted EBITDA for the second quarter of 2019 was $249.6 million, as compared to Adjusted EBITDA of $241.2 million for the second quarter of 2018. For definitions of Adjusted Net Income (Loss) Attributable to Oasis and Adjusted EBITDA and reconciliations to the most directly comparable GAAP measures, see "Non-GAAP Financial Measures" below.

Capital Expenditures and Completions

The following table depicts the Company's total capital expenditures ("CapEx") by category:


1Q 2019


2Q 2019


YTD - 2Q 2019




(In millions)



CapEx:






E&P

$     165.7


$

202.1


$

367.8

Well services

0.1



0.1

Other(1)

3.9


4.3


8.2

Total CapEx before midstream

169.7


206.4


376.1

Midstream(2)

57.1


82.6


139.7

 Total CapEx before acquisitions

226.8


289.0


515.8

Acquisitions


5.8


5.8

Total CapEx(3)

$     226.8


$

294.8


$

521.6

___________________

(1)

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

(2)

Midstream CapEx attributable to Oasis Midstream Partners ("OMP") was $45.2 million and $70.9 million for the three months ended March 31, 2019 and June 30, 2019, respectively.

(3)

Total CapEx (including acquisitions) reflected in the table above differs from the amounts 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.

Oasis completed and placed on production 27 gross (20.6 net) operated wells and 0.8 net non-operated wells during the second quarter of 2019. Completions included 24 gross (17.6 net) operated wells in the Williston Basin and 3 gross (3.0 net) operated wells in the Delaware Basin. The completions cadence was back weighted during the quarter with only 2 wells completed in April.

Liquidity and Balance Sheet

As of June 30, 2019, Oasis had cash and cash equivalents of $20.3 million, total elected commitments under the Oasis credit facility of $1,350.0 million and total elected commitments under the OMP credit facility of $475.0 million. In addition, Oasis had $531.0 million of borrowings and $14.0 million of outstanding letters of credit issued under the Oasis credit facility and $408.0 million of borrowings and $8.2 million of outstanding letters of credit under the OMP credit facility, resulting in a total unused borrowing capacity of $863.8 million for both revolving credit facilities as of June 30, 2019.

Hedging Activity

The Company's crude oil contracts will settle monthly based on the average NYMEX West Texas Intermediate crude oil index price ("NYMEX WTI") for fixed price swaps and two-way and three-way costless collars. The Company's basis swaps for crude oil will settle monthly based on the fixed basis differential from Argus WTI Houston crude oil index price ("Houston") 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. As of August 6, 2019, the Company had the following outstanding commodity derivative contracts:


Six Months Ending


December 31, 2019


June 30, 2020


December 31, 2020


June 30, 2021

Crude Oil (Volume in MBopd)








Fixed Price Swaps








Volume

23.8


10.0


3.0


Price

$

57.35


$

59.87


$

58.85


$

Two-Way Collars








Volume

14.0


5.0


2.0


Floor

$

58.07


$

51.50


$

50.50


$

Ceiling

$

74.64


$

61.76


$

60.70


$

Three-Way Collars








Volume

12.0


13.0


12.0


2.0

Sub-Floor

$

40.00


$

40.00


$

40.00


$

40.00

Floor

$

51.57


$

54.13


$

52.48


$

50.00

Ceiling

$

65.40


$

64.81


$

63.86


$

64.25

Total Crude Oil Volume

49.8


28.0


17.0


2.0

Basis Swaps (Houston-NYMEX WTI)








Volume

1.5




Price

$

4.55


$


$


$









Natural Gas (Volume in MMBtupd)








Fixed Price Swaps








Volume

30,000




Price

$

2.92


$


$


$

The June 2019 crude oil derivative contracts settled at a net $0.6 million received in July 2019 and will be included in the Company's third quarter 2019 derivative settlements.

Conference Call Information

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

Date:


Wednesday, August 7, 2019

Time:


10:00 a.m. Central Time

Live Webcast:


https://www.webcaster4.com/Webcast/Page/1052/31143

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:


2649196

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 Wednesday, August 14, 2019 by dialing:

Replay dial-in:


877-344-7529

Intl. replay:


412-317-0088

Replay code:


10133701

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 crude oil and natural gas prices, weather and environmental conditions, the timing of planned capital expenditures, availability of acquisitions, the ability to consummate the previously announced Delaware acreage from Oasis to OMP and realize the anticipated benefits therefrom, 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 Securities and Exchange Commission.

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 onshore, unconventional crude 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)



June 30, 2019


December 31, 2018


(In thousands, except share data)

ASSETS




Current assets




Cash and cash equivalents

$         20,258


$

22,190

Accounts receivable, net

396,104


387,602

Inventory

30,056


33,128

Prepaid expenses

6,018


10,997

Derivative instruments

19,089


99,930

Intangible assets, net


125

Other current assets

195


183

Total current assets

471,720


554,155

Property, plant and equipment




Oil and gas properties (successful efforts method)

9,283,462


8,912,189

Other property and equipment

1,301,835


1,151,772

Less: accumulated depreciation, depletion, amortization and impairment

(3,416,183)


(3,036,852)

Total property, plant and equipment, net

7,169,114


7,027,109

Derivative instruments

5,636


6,945

Long-term inventory

13,286


12,260

Operating right-of-use assets

20,054


Other assets

30,478


25,673

Total assets

$       7,710,288


$

7,626,142





LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities




Accounts payable

$            15,155


$

20,166

Revenues and production taxes payable

170,534


216,695

Accrued liabilities

315,450


331,651

Accrued interest payable

37,701


38,040

Derivative instruments

4,445


84

Advances from joint interest partners

4,076


5,140

Current operating lease liabilities

7,837


Other current liabilities

3,230


Total current liabilities

558,428


611,776

Long-term debt

2,896,524


2,735,276

Deferred income taxes 

308,672


300,055

Asset retirement obligations

55,228


52,384

Derivative instruments 


20

Operating lease liabilities

18,021


Other liabilities

6,957


7,751

Total liabilities

3,843,830


3,707,262

Commitments and contingencies




Stockholders' equity




Common stock, $0.01 par value: 900,000,000 shares authorized; 324,680,450 shares issued and 321,894,286 shares outstanding at June 30, 2019 and 320,469,049 shares issued and 318,377,161 shares outstanding at December 31, 2018

3,183


3,157

Treasury stock, at cost: 2,786,164 and 2,091,888 shares at June 30, 2019 and December 31, 2018, respectively

(33,330)


(29,025)

Additional paid-in capital

3,096,355


3,077,755

Retained earnings

610,564


682,689

Oasis share of stockholders' equity

3,676,772


3,734,576

Non-controlling interests

189,686


184,304

Total stockholders' equity

3,866,458


3,918,880

Total liabilities and stockholders' equity

$         7,710,288


$

7,626,142

 

Oasis Petroleum Inc.

Condensed Consolidated Statements of Operations

(Unaudited)



Three Months Ended June 30,


Six Months Ended June 30,


2019


2018


2019


2018


(In thousands, except per share data)

Revenues








Oil and gas revenues

$

357,004


$

397,849


$

725,786


$

764,444

Purchased oil and gas sales

109,389


128,064


257,860


195,773

Midstream revenues

51,573


29,342


99,594


57,264

Well services revenues

11,439


18,496


21,897


30,082

Total revenues

529,405


573,751


1,105,137


1,047,563

Operating expenses








Lease operating expenses

56,228


44,141


114,672


88,922

Midstream expenses

17,368


7,688


34,097


15,673

Well services expenses

8,474


13,560


15,444


20,947

Marketing, transportation and gathering expenses

28,488


22,833


63,438


43,846

Purchased oil and gas expenses

109,662


129,579


259,566


200,173

Production taxes

28,142


34,026


57,760


65,026

Depreciation, depletion and amortization

177,358


153,570


367,191


302,835

Exploration expenses

887


617


1,717


1,386

Impairment

24


384,135


653


384,228

General and administrative expenses

30,926


28,230


65,385


56,170

Total operating expenses

457,557


818,379


979,923


1,179,206

Gain (loss) on sale of properties

(276)


1,954


(3,198)


1,954

Operating income (loss)

71,572


(242,674)


122,016


(129,689)

Other income (expense)








Net gain (loss) on derivative instruments

34,749


(120,285)


(82,862)


(191,401)

Interest expense, net of capitalized interest

(43,186)


(40,910)


(87,654)


(78,056)

Loss on extinguishment of debt


(13,651)



(13,651)

Other income

279


218


233


35

Total other expense, net

(8,158)


(174,628)


(170,283)


(283,073)

Income (loss) before income taxes

63,414


(417,302)


(48,267)


(412,762)

Income tax benefit (expense)

(12,240)


101,001


(8,537)


100,173

Net income (loss) including non-controlling interests

51,174


(316,301)


(56,804)


(312,589)

Less: Net income attributable to non-controlling interests

8,417


3,903


15,321


7,025

Net income (loss) attributable to Oasis

$

42,757


$

(320,204)


$

(72,125)


$

(319,614)

Earnings (loss) attributable to Oasis per share:








Basic

$

0.14


$

(1.02)


$

(0.23)


$

(1.06)

Diluted

0.14


(1.02)


(0.23)


(1.06)

Weighted average shares outstanding:








Basic

314,982


313,072


314,724


301,652

Diluted

314,982


313,072


314,724


301,652

 

Oasis Petroleum Inc.

Selected Financial and Operational Statistics

(Unaudited)



Three Months Ended June 30,


Six Months Ended June 30,


2019


2018


2019


2018

Operating results (in thousands):








Revenues








Crude oil revenues(1)

$      327,977


$      363,183


$

646,098


$

689,493

Natural gas revenues

29,027


34,666


79,688


74,951

Purchased oil and gas sales(1)

109,389


128,064


257,860


195,773

Midstream revenues

51,573


29,342


99,594


57,264

Well services revenues

11,439


18,496


21,897


30,082

Total revenues

$      529,405


$      573,751


$

1,105,137


$

1,047,563

Production data:








Crude oil (MBbls)

5,571


5,517


11,515


10,802

Natural gas (MMcf)

12,684


10,268


26,544


20,045

Oil equivalents (MBoe)

7,685


7,229


15,940


14,142

Average daily production (Boe per day)

84,454


79,437


88,064


78,135

Average sales prices:








Crude oil, without derivative settlements (per Bbl)

$         58.87


$       65.82


$

56.11


$

63.83

Crude oil, with derivative settlements (per Bbl)(2)

56.79


54.88


56.27


54.81

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

2.29


3.38


3.00


3.74

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

2.43


3.43


3.07


3.77

Costs and expenses (per Boe of production):








Lease operating expenses

$          7.32


$       6.11


$

7.19


$

6.29

MT&G(4)

3.69


3.19


3.83


3.10

Production taxes

3.66


4.71


3.62


4.60

Depreciation, depletion and amortization

23.08


21.24


23.04


21.41

G&A

4.02


3.91


4.10


3.97

E&P G&A

3.35


3.25


3.34


3.32

___________________

(1)

For the three and six months ended June 30, 2018, crude oil revenues, purchased oil and gas sales and purchased oil and gas expenses have been revised to correct errors related to the presentation of certain crude oil purchase and sale arrangements, which had no impact on reported net income (loss). The amounts presented herein reflect the impact of the revision.

(2)

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.

(3)

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

(4)

Excludes non-cash valuation charges on pipeline imbalances.

 

Oasis Petroleum Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)



Six Months Ended June 30,


2019


2018


(In thousands)

Cash flows from operating activities:




Net loss including non-controlling interests

$

(56,804)


$

(312,589)

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




Depreciation, depletion and amortization

367,191


302,835

Loss on extinguishment of debt


13,651

(Gain) loss on sale of properties

3,198


(1,954)

Impairment

653


384,228

Deferred income taxes

8,617


(100,293)

Derivative instruments

82,862


191,401

Equity-based compensation expenses

17,924


14,130

Deferred financing costs amortization and other

12,245


10,518

Working capital and other changes:




Change in accounts receivable, net

(12,914)


(5,866)

Change in inventory

3,029


(4,721)

Change in prepaid expenses

3,918


573

Change in accounts payable, interest payable and accrued liabilities

(36,514)


40,849

Change in other assets and liabilities, net

(4,473)


(746)

Net cash provided by operating activities

388,932


532,016

Cash flows from investing activities:




Capital expenditures

(525,501)


(536,959)

Acquisitions

(5,781)


(524,255)

Proceeds from sale of properties


2,236

Derivative settlements

3,629


(96,823)

Other


(933)

Net cash used in investing activities

(527,653)


(1,156,734)

Cash flows from financing activities:




Proceeds from revolving credit facilities

1,178,000


1,933,000

Principal payments on revolving credit facilities

(1,025,000)


(1,265,000)

Repurchase of senior unsecured notes


(423,143)

Proceeds from issuance of senior unsecured notes


400,000

Deferred financing costs

(482)


(6,790)

Purchases of treasury stock

(4,305)


(6,064)

Distributions to non-controlling interests

(10,093)


(6,846)

Other

(1,331)


(87)

Net cash provided by financing activities

136,789


625,070

Increase (decrease) in cash and cash equivalents

(1,932)


352

Cash and cash equivalents:




Beginning of period

22,190


16,720

End of period

$

20,258


$

17,072

Supplemental non-cash transactions:




Change in accrued capital expenditures

$

(30,598)


$

90,040

Change in asset retirement obligations

3,840


5,407

Issuance of shares in connection with acquisition


371,220

Non-GAAP Financial Measures

E&P Cash G&A is defined as the total general and administrative expenses included in the Company's exploration and production segment less non-cash equity-based compensation expenses included in its exploration and production segment. E&P Cash G&A is not a measure of general and administrative expenses as determined by GAAP. Management believes that the presentation of E&P Cash G&A provides useful additional information to investors and analysts to assess the Company's operating costs in comparison to peers without regard to equity-based compensation programs, which can vary substantially from company to company.

The following table presents a reconciliation of the GAAP financial measure of general and administrative expenses included in its exploration and production segment to the non-GAAP financial measure of E&P Cash G&A for the periods presented:

Exploration and Production


Three Months Ended June 30,


Six Months Ended June 30,


2019


2018


2019


2018


(In thousands)

E&P general and administrative expenses

$

25,761


$

23,492


$

53,288


$

46,971

Equity-based compensation expenses

(8,522)


(7,012)


(17,102)


(13,463)

E&P Cash G&A

$

17,239


$

16,480


$

36,186


$

33,508

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 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 June 30,


Six Months Ended June 30,


2019


2018


2019


2018


(In thousands)

Interest expense

$

43,186


$

40,910


$

87,654


$

78,056

Capitalized interest

3,645


4,227


6,463


8,678

Amortization of deferred financing costs

(1,823)


(1,937)


(3,593)


(3,698)

Amortization of debt discount

(3,006)


(2,731)


(5,890)


(5,349)

Cash Interest

$

42,002


$

40,469


$

84,634


$

77,687

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 attributable to Oasis 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 June 30,


Six Months Ended June 30,


2019


2018


2019


2018


(In thousands)

Net income (loss) including non-controlling interests

$

51,174


$

(316,301)


$

(56,804)


$

(312,589)

(Gain) loss on sale of properties

276


(1,954)


3,198


(1,954)

Loss on extinguishment of debt


13,651



13,651

Net (gain) loss on derivative instruments

(34,749)


120,285


82,862


191,401

Derivative settlements(1)

(9,817)


(59,849)


3,629


(96,823)

Interest expense, net of capitalized interest

43,186


40,910


87,654


78,056

Depreciation, depletion and amortization

177,358


153,570


367,191


302,835

Impairment

24


384,135


653


384,228

Exploration expenses

887


617


1,717


1,386

Equity-based compensation expenses

8,911


7,376


17,924


14,130

Income tax (benefit) expense

12,240


(101,001)


8,537


(100,173)

Other non-cash adjustments

120


(226)


2,395


(17)

Adjusted EBITDA

249,610


241,213


518,956


474,131

Adjusted EBITDA attributable to non-controlling interests

11,693


5,148


21,896


9,452

Adjusted EBITDA attributable to Oasis

237,917


236,065


497,060


464,679

Cash Interest

(42,002)


(40,469)


(84,634)


(77,687)

Capital expenditures(2)

(294,875)


(358,534)


(521,668)


(1,525,762)

Capitalized interest

3,645


4,227


6,463


8,678

Free Cash Flow

$

(95,315)


$

(158,711)


$

(102,779)


$

(1,130,092)









Net cash provided by operating activities

$

214,006


$

303,657


$

388,932


$

532,016

Derivative settlements(1)

(9,817)


(59,849)


3,629


(96,823)

Interest expense, net of capitalized interest

43,186


40,910


87,654


78,056

Exploration expenses

887


617


1,717


1,386

Deferred financing costs amortization and other

(5,315)


(5,043)


(12,245)


(10,518)

Current tax (benefit) expense

76


120


(80)


120

Changes in working capital

6,467


(38,973)


46,954


(30,089)

Other non-cash adjustments

120


(226)


2,395


(17)

Adjusted EBITDA

249,610


241,213


518,956


474,131

Adjusted EBITDA attributable to non-controlling interests

11,693


5,148


21,896


9,452

Adjusted EBITDA attributable to Oasis

237,917


236,065


497,060


464,679

Cash Interest

(42,002)


(40,469)


(84,634)


(77,687)

Capital expenditures(2)

(294,875)


(358,534)


(521,668)


(1,525,762)

Capitalized interest

3,645


4,227


6,463


8,678

Free Cash Flow

$

(95,315)


$

(158,711)


$

(102,779)


$

(1,130,092)

___________________

(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 the Company's 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 statements of cash flows are presented on a cash basis. Acquisitions totaled $5.8 million for the three and six months ended June 30, 2019, and $3.5 million and $894.5 million for the three and six months ended June 30, 2018, 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 the Company's three reportable business segments on a gross basis for the periods presented:

Exploration and Production


Three Months Ended June 30,


Six Months Ended June 30,


2019


2018


2019


2018


(In thousands)

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

$

14,925


$

(454,662)


$

(141,533)


$

(482,847)

(Gain) loss on sale of properties

276


(1,954)


3,198


(1,954)

Loss on extinguishment of debt


13,651



13,651

Net (gain) loss on derivative instruments

(34,749)


120,285


82,862


191,401

Derivative settlements(1)

(9,817)


(59,849)


3,629


(96,823)

Interest expense, net of capitalized interest

38,977


40,727


79,697


77,611

Depreciation, depletion and amortization

172,687


149,250


357,506


294,454

Impairment

24


384,135


653


384,228

Exploration expenses

887


617


1,717


1,386

Equity-based compensation expenses

8,522


7,012


17,102


13,463

Other non-cash adjustments

120


(226)


2,395


(17)

Adjusted EBITDA

$

191,852


$

198,986


$

407,226


$

394,553

___________________

(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 June 30,


Six Months Ended June 30,


2019


2018


2019


2018


(In thousands)

Income before income taxes including non-controlling interests

$

51,016


$

37,815


$

97,074


$

69,796

Interest expense, net of capitalized interest

4,209


183


7,957


445

Depreciation, depletion and amortization

8,893


6,900


18,080


13,529

Equity-based compensation expenses

515


409


980


780

Adjusted EBITDA

$

64,633


$

45,307


$

124,091


$

84,550



Well Services


Three Months Ended June 30,


Six Months Ended June 30,


2019


2018


2019


2018


(In thousands)

Income before income taxes including non-controlling interests

$

1,499


$

8,051


$

2,319


$

16,158

Depreciation, depletion and amortization

3,358


3,930


7,287


7,619

Equity-based compensation expenses

527


409


1,088


795

Adjusted EBITDA

$

5,384


$

12,390


$

10,694


$

24,572

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 June 30,


Six Months Ended June 30,


2019


2018


2019


2018


(In thousands, except per share data)

Net income (loss) attributable to Oasis

$

42,757


$

(320,204)


$

(72,125)


$

(319,614)

(Gain) loss on sale of properties

276


(1,954)


3,198


(1,954)

Loss on extinguishment of debt


13,651



13,651

Net (gain) loss on derivative instruments

(34,749)


120,285


82,862


191,401

Derivative settlements(1)

(9,817)


(59,849)


3,629


(96,823)

Impairment

24


384,135


653


384,228

Amortization of deferred financing costs

1,823


1,937


3,593


3,698

Amortization of debt discount

3,006


2,731


5,890


5,349

Other non-cash adjustments

120


(226)


2,395


(17)

Tax impact(2)

7,565


(111,592)


14,273


(121,102)

Adjusted Net Income Attributable to Oasis

$

11,005


$

28,914


$

44,368


$

58,817









Diluted earnings (loss) attributable to Oasis per share

$

0.14


$

(1.02)


$

(0.23)


$

(1.06)

(Gain) loss on sale of properties


(0.01)


0.01


(0.01)

Loss on extinguishment of debt


0.04



0.04

Net (gain) loss on derivative instruments

(0.11)


0.38


0.26


0.63

Derivative settlements(1)

(0.03)


(0.19)


0.01


(0.32)

Impairment


1.23



1.26

Amortization of deferred financing costs

0.01


0.01


0.01


0.01

Amortization of debt discount

0.01


0.01


0.02


0.02

Other non-cash adjustments



0.01


Tax impact(2)

0.01


(0.36)


0.05


(0.38)

Adjusted Diluted Earnings Attributable to Oasis Per Share

$

0.03


$

0.09


$

0.14


$

0.19









Diluted weighted average shares outstanding(3)

314,982


315,664


316,081


304,859









Effective tax rate applicable to adjustment items

19.2%


24.2%


(14.0)%


24.2%

___________________

(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)

No unvested stock awards were included in computing Adjusted Diluted Earnings Attributable to Oasis Per Share for the three months ended June 30, 2019 because the effect was anti-dilutive under the treasury stock method. For the six months ended June 30, 2019 and the three and six months ended June 30, 2018, the Company included 1,357,000, 2,592,000 and 3,207,000, respectively, of unvested stock awards in computing Adjusted Diluted Earnings Attributable to Oasis Per Share due to the dilutive effect under the treasury stock method.

 

SOURCE Oasis Petroleum Inc.

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