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

HOUSTON, Aug. 3, 2016 /PRNewswire/ -- Oasis Petroleum Inc. (NYSE: OAS) ("Oasis" or the "Company") today announced financial results for the quarter ended June 30, 2016 and provided an operational update.

Highlights include:

  • Produced 49,507 Boepd in the second quarter of 2016.
  • Completed and placed on production 13 gross (8.7 net) operated wells in the second quarter of 2016. As of June 30, 2016, the Company had 83 gross operated wells waiting on completion.
  • Total capital expenditures ("CapEx") were $131.3 million for the three months ended June 30, 2016, a 23% decrease from the second quarter of 2015. CapEx was $219.2 million for the six months ended June, 30, 2016, in line with the Company's 2016 CapEx plan.
  • Reduced lease operating expenses ("LOE") per barrel of oil equivalent ("Boe") to $7.00, a 15% decrease from the second quarter of 2015.
  • Net cash provided by operating activities was $91.4 million for the three months ended June 30, 2016. Adjusted EBITDA for the Company was $132.2 million in the second 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.
  • Income before income taxes for midstream services ("OMS") increased to $18.0 million in the second quarter of 2016, a 19% increase from the first quarter of 2016. OMS Adjusted EBITDA was $19.6 million in the second quarter of 2016.

"Oasis delivered another strong quarter with production remaining basically flat for the seventh consecutive quarter in a row," said Thomas B. Nusz, Oasis' Chairman and Chief Executive Officer. "We are now increasing our full year production guidance to 48,500 to 49,500 Boepd. We finished our scheduled completion program in Indian Hills during the second quarter and began completing wells in Wild Basin at the end of the quarter. Our infrastructure project in Wild Basin continues to be developed on budget, and we continue to expect the project to be fully operational this fall."

Mr. Nusz added, "The team has further reduced our cost structure, driving down our current well costs from $6.5 million to $5.9 million and LOE from $7.84 per Boe for the year 2015 to $6.89 per Boe for the first six months of 2016. We believe that well costs still have a bias downward through further efficiency gains by the team, and we are lowering our full year LOE guidance to $6.75 to $7.50 per Boe. Our continually improved capital and operational efficiency coupled with our strong well performance in our core acreage continues to improve the trajectory of returns for Oasis. As a result, we now plan to complete 53 gross (34.3 net) wells in 2016, while continuing to operate two rigs and one frac spread and remaining within our original guidance of $200 million of drilling and completion capital. Lastly, we further reduced borrowings under our revolver from $65 million at the end of the first quarter of 2016 to $35 million at the end of the second quarter of 2016."

Operational and Financial Update

Select operational and financial statistics are in the following table:

 


Quarter Ended:


6/30/2016


3/31/2016


6/30/2015

Production data:






Oil (Bopd)

41,176



42,525



44,043


Natural gas (MMcfpd)

49,983



46,740



37,306


Total production (Boepd)

49,507



50,315



50,261


Percent Oil

83

%


85

%


88

%

Average sales prices:






Oil, without derivative settlements (per Bbl)

$

40.81



$

28.74



$

52.04


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

4.85



4.85



5.90


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

48.94



47.68



78.01


Derivative settlements - net cash receipts (in millions)(2)

30.5



73.3



104.1


Natural gas (per Mcf)(3)

1.42



1.44



1.63


Revenues ($ in millions):






Oil

$

152.9



$

111.2



$

208.6


Natural gas

6.4



6.1



5.5


Well services ("OWS")

12.8



6.0



9.2


OMS

6.9



7.0



6.7


Total revenues

$

179.0



$

130.3



$

230.0


OWS and OMS operating expenses ($ in millions):






OWS

$

7.1



$

2.7



$

5.3


OMS

1.7



1.7



2.1


Select operating expenses:






LOE ($ per Boe)

$

7.00



$

6.78



$

8.26


      MT&G ($ per Boe)(4)

1.55



1.60



1.68


DD&A ($ per Boe)

27.19



26.74



26.07


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

3.93



4.61



4.34


Production taxes (% of oil and gas revenue)

9.0

%


9.2

%


9.6

%



















(1)

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.

(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)

Excludes non-cash valuation charges on pipeline imbalances.

 

G&A totaled $21.9 million in the second quarter of 2016, $21.5 million in the second quarter of 2015 and $24.4 million in the first quarter of 2016. Amortization of stock-based compensation, which is included in G&A, was $6.2 million, or $1.39 per Boe, in the second quarter of 2016 as compared to $6.1 million, or $1.32 per Boe, in the second quarter of 2015 and $6.7 million, or $1.47 per Boe, in the first quarter of 2016. G&A for the Company's E&P segment totaled $17.7 million in the second quarter of 2016, $19.8 million in the second quarter of 2015 and $21.1 million in the first quarter of 2016.

Interest expense was $35.0 million for the second quarter of 2016 compared to $37.4 million for the second quarter of 2015 and $38.7 million for the first quarter of 2016. Capitalized interest totaled $4.8 million for the second quarter of 2016, $4.9 million for the second quarter of 2015 and $4.5 million for the first quarter of 2016. Cash Interest totaled $37.8 million for the second quarter of 2016, $39.9 million for the second quarter of 2015 and $39.3 million for the first 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 June 30, 2016, 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 loss for the quarter. The Company recorded an income tax benefit of $27.6 million, resulting in a 30.0% effective tax rate as a percentage of its pre-tax income for the three months ended March 31, 2016.

For the second quarter of 2016, the Company reported a net loss of $89.9 million, or $0.51 per diluted share, as compared to a net loss of $53.2 million, or $0.39 per diluted share, for the second quarter of 2015. Excluding certain non-cash and non-recurring items and their tax effect, Adjusted Net Loss (non-GAAP) was $19.4 million, or $0.11 per diluted share, in the second quarter of 2016, compared to Adjusted Net Income of $52.0 million, or $0.38 per diluted share, in the second 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 second quarter of 2016 was $132.2 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


YTD 2016

CapEx ($ in thousands):






E&P

$

47,734



$

73,125



$

120,859


OMS

35,039



52,843



87,882


OWS

650





650


Other(1)

4,532



5,320



9,852


Total CapEx(2)

$

87,955



$

131,288



$

219,243




(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.

 

Liquidity

In April 2016, the Company repurchased an aggregate principal amount of $46.8 million of its outstanding senior unsecured notes for an aggregate cost of $34.6 million, including accrued interest and fees. For the three months ended June 30, 2016, the Company recognized a pre-tax gain of $11.6 million related to these repurchases, which was net of the $0.5 million write-off of unamortized deferred financing costs.

As of June 30, 2016, Oasis had total cash and cash equivalents of $6.5 million. In addition, Oasis had $35.0 million of borrowings and $14.2 million of outstanding letters of credit issued under its revolving credit facility, resulting in an unused borrowing base capacity of $1,100.8 million as of June 30, 2016.

Hedging Activity

As of August 3, 2016, the Company had the following outstanding commodity derivative contracts, all of which are priced off of WTI and settle monthly:

 



Weighted Average Prices ($/Bbl)



Type


Sub-Floor


Floor


Ceiling


BOPD

2016 Swaps









Second Half (July - Dec)




$

49.15



$

49.15



32,000


2017 Swaps









Full Year Swaps




$

47.68



$

47.68



10,000


First Half (Jan - June)




$

45.00



$

45.00



2,000


2017 Collars









Full Year Two-way Collars




$

40.00



$

47.58



2,000


Full Year Three-way Collars


$

30.00



$

45.00



$

60.11



5,000


















 

The June 2016 contracts settled at $3.2 million and will be included in the Company's third quarter 2016 derivative settlements.

Conference Call Information

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

Date:


Thursday, August 4, 2016

Time:


10:00 a.m. Central Time

Dial-in:


888-317-6003

Intl. Dial in:


412-317-6061

Conference ID:


9978735

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 Thursday, August 11, 2016 by dialing:

Replay dial-in:


877-344-7529

Intl. replay:


412-317-0088

Replay code:


10090445

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)



June 30, 2016


December 31, 2015


(In thousands, except share data)

ASSETS




Current assets




Cash and cash equivalents

$

6,475



$

9,730


Accounts receivable — oil and gas revenues

109,121



96,495


Accounts receivable — joint interest and other

81,291



100,914


Inventory

9,018



11,072


Prepaid expenses

5,838



7,328


Derivative instruments

10,330



139,697


Other current assets

4,164



50


Total current assets

226,237



365,286


Property, plant and equipment




Oil and gas properties (successful efforts method)

6,402,648



6,284,401


Other property and equipment

536,462



443,265


Less: accumulated depreciation, depletion, amortization and impairment

(1,752,376)



(1,509,424)


Total property, plant and equipment, net

5,186,734



5,218,242


Assets held for sale



26,728


Derivative instruments

64



15,776


Other assets

22,504



23,343


Total assets

$

5,435,539



$

5,649,375


LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities




Accounts payable

$

10,357



$

9,983


Revenues and production taxes payable

138,451



132,356


Accrued liabilities

128,284



167,669


Accrued interest payable

47,671



49,413


Derivative instruments

20,891




Advances from joint interest partners

5,416



4,647


Other current liabilities

15,001



6,500


Total current liabilities

366,071



370,568


Long-term debt

2,127,361



2,302,584


Deferred income taxes

528,028



608,155


Asset retirement obligations

36,390



35,338


Liabilities held for sale



10,228


Derivative instruments

14,291




Other liabilities

3,043



3,160


Total liabilities

3,075,184



3,330,033


Commitments and contingencies




Stockholders' equity




Common stock, $0.01 par value: 450,000,000 and 300,000,000 shares authorized at June 30, 2016 and December 31, 2015, respectively; 181,200,581 shares issued and 180,399,060 shares outstanding at June 30, 2016 and 139,583,990 shares issued and 139,076,064 shares outstanding at December 31, 2015

1,777



1,376


Treasury stock, at cost: 801,521 and 507,926 shares at June 30, 2016 and December 31, 2015, respectively

(15,140)



(13,620)


Additional paid-in capital

1,693,583



1,497,065


Retained earnings

680,135



834,521


Total stockholders' equity

2,360,355



2,319,342


Total liabilities and stockholders' equity

$

5,435,539



$

5,649,375


 

Oasis Petroleum Inc.

Condensed Consolidated Statement of Operations

(Unaudited)



Three Months Ended June 30,


Six Months Ended June 30,


2016


2015


2016


2015


(In thousands, except per share data)

Revenues








Oil and gas revenues

$

159,337



$

214,110



$

276,652



$

387,969


Well services and midstream revenues

19,743



15,936



32,711



22,464


Total revenues

179,080



230,046



309,363



410,433


Operating expenses








Lease operating expenses

31,523



37,761



62,587



76,886


Well services and midstream operating expenses

8,875



7,395



13,264



9,347


Marketing, transportation and gathering expenses

6,491



7,570



15,043



14,848


Production taxes

14,367



20,618



25,120



37,239


Depreciation, depletion and amortization

122,488



119,218



244,937



237,696


Exploration expenses

340



1,082



703



1,925


Rig termination



2,815





3,895


Impairment

23



19,516



3,585



24,837


General and administrative expenses

21,876



21,508



46,242



44,832


Total operating expenses

205,983



237,483



411,481



451,505


Loss on sale of properties

(1,311)





(1,311)




Operating loss

(28,214)



(7,437)



(103,429)



(41,072)


Other income (expense)








Net gain (loss) on derivative instruments

(90,846)



(39,424)



(76,471)



7,648


Interest expense, net of capitalized interest

(34,979)



(37,405)



(73,718)



(76,189)


Gain on extinguishment of debt

11,642





18,658




Other income (expense)

(32)



191



447



121


Total other income (expense)

(114,215)



(76,638)



(131,084)



(68,420)


Loss before income taxes

(142,429)



(84,075)



(234,513)



(109,492)


Income tax benefit

52,498



30,845



80,127



38,221


Net loss

$

(89,931)



$

(53,230)



$

(154,386)



$

(71,271)


Loss per share:








Basic

$

(0.51)



$

(0.39)



$

(0.91)



$

(0.58)


Diluted

(0.51)



(0.39)



(0.91)



(0.58)


Weighted average shares outstanding:








Basic

176,984



136,859



169,953



123,157


Diluted

176,984



136,859



169,953



123,157


 

Oasis Petroleum Inc.

Selected Financial and Operational Statistics

(Unaudited)



Three Months Ended June 30,


Six Months Ended June 30,


2016


2015


2016


2015

Operating results (in thousands):








Revenues








Oil

$

152,900



$

208,564



$

264,106



$

372,377


Natural gas

6,437



5,546



12,546



15,592


Well services

12,833



9,219



18,818



11,927


Midstream

6,910



6,717



13,893



10,537


Total revenues

$

179,080



$

230,046



$

309,363



$

410,433


Production data:








Oil (MBbls)

3,747



4,008



7,617



8,030


Natural gas (MMcf)

4,549



3,395



8,802



6,502


Oil equivalents (MBoe)

4,505



4,574



9,084



9,114


Average daily production (Boe/d)

49,507



50,261



49,911



50,353


Average sales prices:








Oil, without derivative settlements (per Bbl)

$

40.81



$

52.04



$

34.67



$

46.37


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

48.94



78.01



48.30



72.94


Natural gas (per Mcf)(2)

1.42



1.63



1.43



2.40


Costs and expenses (per Boe of production):








Lease operating expenses

$

7.00



$

8.26



$

6.89



$

8.44


Marketing, transportation and gathering expenses(3)

1.55



1.68



1.58



1.64


Production taxes

3.19



4.51



2.77



4.09


Depreciation, depletion and amortization

27.19



26.07



26.96



26.08


General and administrative expenses ("G&A")

4.86



4.70



5.09



4.92


Exploration and production G&A

3.93



4.34



4.27



4.62




(1)

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.

(2)

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

(3)

Excludes non-cash valuation charges on pipeline imbalances.

 


Oasis Petroleum Inc.

Condensed Consolidated Statement of Cash Flows

(Unaudited)



Six Months Ended June 30,


2016


2015


(In thousands)

Cash flows from operating activities:




Net loss

$

(154,386)



$

(71,271)


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




Depreciation, depletion and amortization

244,937



237,696


Gain on extinguishment of debt

(18,658)




Loss on sale of properties

1,311




Impairment

3,585



24,837


Deferred income taxes

(80,127)



(38,221)


Derivative instruments

76,471



(7,648)


Stock-based compensation expenses

12,979



13,663


Deferred financing costs amortization and other

6,552



5,059


Working capital and other changes:




Change in accounts receivable

4,297



75,799


Change in inventory

2,054



3,685


Change in prepaid expenses

1,423



3,394


Change in other current assets

(114)



5,538


Change in other assets

100




Change in accounts payable, interest payable and accrued liabilities

(18,034)



(22,624)


Change in other current liabilities

9,001




Change in other liabilities

10



(21)


Net cash provided by operating activities

91,401



229,886


Cash flows from investing activities:




Capital expenditures

(231,341)



(587,430)


Proceeds from sale of properties

11,679




Costs related to sale of properties

(310)




Derivative settlements

103,790



213,336


Advances from joint interest partners

769



(406)


Net cash used in investing activities

(115,413)



(374,500)


Cash flows from financing activities:




Proceeds from revolving credit facility

359,000



320,000


Principal payments on revolving credit facility

(462,000)



(665,000)


Repurchase of senior unsecured notes

(56,925)




Deferred financing costs

(751)



(3,591)


Proceeds from sale of common stock

182,953



463,010


Purchases of treasury stock

(1,520)



(1,932)


Net cash provided by financing activities

20,757



112,487


Decrease in cash and cash equivalents

(3,255)



(32,127)


Cash and cash equivalents:




Beginning of period

9,730



45,811


End of period

$

6,475



$

13,684


Supplemental non-cash transactions:




Change in accrued capital expenditures

$

(17,015)



$

(156,368)


Change in asset retirement obligations

(8,785)



2,649


 

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 June 30,


Six Months Ended June 30,


2016


2015


2016


2015


(In thousands)

Interest expense

$

34,979



$

37,405



$

73,718



$

76,189


Capitalized interest

4,835



4,851



9,303



8,776


Amortization of deferred financing costs

(2,030)



(2,368)



(5,947)



(3,956)


Cash Interest

$

37,784



$

39,888



$

77,074



$

81,009


 

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 June 30,


Six Months Ended June 30,


2016


2015


2016


2015


(In thousands)

Net loss

$

(89,931)



$

(53,230)



$

(154,386)



$

(71,271)


Loss on sale of properties

1,311





1,311




Gain on extinguishment of debt

(11,642)





(18,658)




Net (gain) loss on derivative instruments

90,846



39,424



76,471



(7,648)


Derivative settlements(1)

30,477



104,077



103,790



213,336


Interest expense, net of capitalized interest

34,979



37,405



73,718



76,189


Depreciation, depletion and amortization

122,488



119,218



244,937



237,696


Impairment

23



19,516



3,585



24,837


Rig termination



2,815





3,895


Exploration expenses

340



1,082



703



1,925


Stock-based compensation expenses

6,249



6,057



12,979



13,663


Income tax benefit

(52,498)



(30,845)



(80,127)



(38,221)


Other non-cash adjustments

(484)



(97)



723



(101)


Adjusted EBITDA

132,158



245,422



265,046



454,300


Cash Interest

(37,784)



(39,888)



(77,074)



(81,009)


CapEx(2)

(131,288)



(170,408)



(219,243)



(441,513)


Capitalized interest

4,835



4,851



9,303



8,776


Free Cash Flow

$

(32,079)



$

39,977



$

(21,968)



$

(59,446)










Net cash provided by operating activities

$

137,452



$

141,525



$

91,401



$

229,886


Derivative settlements(1)

30,477



104,077



103,790



213,336


Interest expense, net of capitalized interest

34,979



37,405



73,718



76,189


Rig termination



2,815





3,895


Exploration expenses

340



1,082



703



1,925


Deferred financing costs amortization and other

(1,486)



(3,404)



(6,552)



(5,059)


Changes in working capital

(69,120)



(37,981)



1,263



(65,771)


Other non-cash adjustments

(484)



(97)



723



(101)


Adjusted EBITDA

132,158



245,422



265,046



454,300


Cash Interest

(37,784)



(39,888)



(77,074)



(81,009)


CapEx(2)

(131,288)



(170,408)



(219,243)



(441,513)


Capitalized interest

4,835



4,851



9,303



8,776


Free Cash Flow

$

(32,079)



$

39,977



$

(21,968)



$

(59,446)




(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 June 30,


Six Months Ended June 30,


2016


2015


2016


2015


(In thousands)

Loss before income taxes

$

(158,978)



$

(99,164)


$

(264,744)



$

(133,172)


Loss on sale of properties

1,669




1,669




Gain on extinguishment of debt

(11,642)




(18,658)




Net (gain) loss on derivative instruments

90,846



39,424


76,471



(7,648)


Derivative settlements (1)

30,477



104,077


103,790



213,336


Interest expense, net of capitalized interest

34,979



37,405


73,718



76,189


Depreciation, depletion and amortization

120,039



118,049


240,881



235,589


Impairment

23



19,516


1,154



24,837


Rig termination



2,815




3,895


Exploration expenses

340



1,082


703



1,925


Stock-based compensation expenses

6,077



5,973


12,625



13,515


Other non-cash adjustments

(484)



(97)


723



(101)


Adjusted EBITDA

$

113,346



$

229,080


$

228,332



$

428,365




(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 June 30,


Six Months Ended June 30,


2016


2015


2016


2015


(In thousands)

Income (loss) before income taxes

$

(2,142)



$

9,030



$

1,885



$

18,638


Depreciation, depletion and amortization

3,895



5,008



8,127



9,526


Stock-based compensation expenses

235



443



899



986


Adjusted EBITDA

$

1,988



$

14,481



$

10,911



$

29,150


 


Midstream Services


Three Months Ended June 30,


Six Months Ended June 30,


2016


2015


2016


2015


(In thousands)

Income before income taxes

$

18,040



$

15,922



$

33,198



$

25,211


Gain on sale of properties

(358)





(358)




Depreciation, depletion and amortization

1,732



1,375



3,415



2,561


Impairment





2,431




Stock-based compensation expenses

224



119



443



323


Adjusted EBITDA

$

19,638



$

17,416



$

39,129



$

28,095


 

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 June 30,


Six Months Ended June 30,


2016


2015


2016


2015


(In thousands, except per share data)

Net loss

$

(89,931)



$

(53,230)



$

(154,386)



$

(71,271)


Loss on sale of properties

1,311





1,311




Gain on extinguishment of debt

(11,642)





(18,658)




Net (gain) loss on derivative instruments

90,846



39,424



76,471



(7,648)


Derivative settlements(1)

30,477



104,077



103,790



213,336


Impairment

23



19,516



3,585



24,837


Rig termination



2,815





3,895


Amortization of deferred financing costs(2)

2,030



2,368



5,947



3,956


Other non-cash adjustments

(484)



(97)



723



(101)


Tax impact(3)

(42,075)



(62,871)



(64,731)



(89,115)


Adjusted Net Income (Loss)

$

(19,445)



$

52,002



$

(45,948)



$

77,889










Diluted loss per share

$

(0.51)



$

(0.39)



$

(0.91)



$

(0.58)


Loss on sale of properties

0.01





0.01




Gain on extinguishment of debt

(0.07)





(0.11)




Net (gain) loss on derivative instruments

0.51



0.29



0.45



(0.06)


Derivative settlements(1)

0.17



0.76



0.61



1.73


Impairment



0.14



0.02



0.20


Rig termination



0.02





0.03


Amortization of deferred financing costs(2)

0.01



0.02



0.03



0.03


Other non-cash adjustments








Tax impact(3)

(0.23)



(0.46)



(0.37)



(0.72)


Adjusted Diluted Earnings (Loss) Per Share

$

(0.11)



$

0.38



$

(0.27)



$

0.63










Diluted weighted average shares outstanding

176,984



136,859



169,953



123,157










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 June 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 six months ended June 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