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Oasis Midstream Partners LP Announces Quarter Ended September 30, 2017 Earnings

HOUSTON, Nov. 7, 2017 /PRNewswire/ -- Oasis Midstream Partners LP (NYSE: OMP) (the "Partnership" or "OMP") today announced financial results for the quarter ended September 30, 2017 and provided an operational update.

Recent Highlights:

  • Completed initial public offering ("IPO" or the "Offering") of 8,625,000 common units, representing limited partnership interests in OMP, and received net proceeds of $137.2 million, of which $131.6 million was distributed to Oasis Petroleum Inc. ("Oasis"), OMP's sponsor.
  • Net cash provided by operating activities was $29.1 million for the three months ending September 30, 2017. Delivered gross Adjusted EBITDA of $29.6 million and net Adjusted EBITDA of $11.2 million for the entire third quarter of 2017. For the six-day post-IPO period from September 25, 2017 to September 30, 2017, generated net Adjusted EBITDA attributable to the Partnership of $0.7 million and Distributable Cash Flow ("DCF") of $0.6 million. For definitions of Adjusted EBITDA and DCF and reconciliations of Adjusted EBITDA and DCF to net income and net cash provided by operating activities, see "Non-GAAP Financial Measures" below.
  • Announced construction of second Wild Basin Gas Plant ("Gas Plant II") with total capacity of 200 million standard cubic feet per day ("MMscfpd") to service gas production from Oasis' highly economic inventory.

"We are excited for this new chapter in the Oasis story, as we successfully completed the OMP IPO," said Taylor Reid, Chief Executive Officer of OMP. "Volumes were solid in all areas and in line with our expectations for the third quarter. Continued growth in volumes are expected to generate growing EBITDA and DCF. The strength of our relationship with Oasis creates a foundation for peer leading future growth, as we plan to deliver 20% long-term annual distribution growth."

Mr. Reid added, "The new gas plant project offers OMP unitholders an attractive return and path to additional upside. The project enhances near-term EBITDA above the base forecast we provided in our IPO materials and is accretive to long-term EBITDA, distribution coverage, and distribution growth once the project is operational. Gas Plant II fits nicely with our strategy of funding opportunistic projects that are accretive to our unitholders, and we're excited to be a part of the project."

Gas Plant II Update

Oil and gas production from Oasis' Wild Basin wells continues to exceed expectations, primarily due to higher frac intensity in the core areas of the Williston Basin. The initial gas to oil ratio ("GOR") is generally higher in the core of the Williston Basin, including parts of McKenzie County, compared to the entire basin. The combined effect of these factors has resulted in record gas production levels in the Williston Basin and particularly in McKenzie County where much of the drilling since 2015 has occurred and which now produces approximately half of the gas production in North Dakota. Due to the increased production of gas in the Williston Basin, there is a need for incremental processing capacity in the basin.

Gas production in Wild Basin has already surpassed original design expectations for the Partnership's 80 MMscfpd gas plant, which is held by OMP's wholly-owned development company ("DevCo"), Bighorn DevCo LLC ("Bighorn DevCo"), and recently has averaged gross gas production in Wild Basin of approximately 100 MMscfpd. Oasis initially evaluated options to process the incremental gas that is being produced in and around Wild Basin and subsequently began the front end engineering and design process for a second gas plant and began ordering long lead time items. Oasis recently made the decision to proceed with the construction of Gas Plant II, and on November 6, 2017, Oasis agreed to assign the project to the Partnership. In exchange for the assignment of Gas Plant II into Bighorn DevCo, OMP agreed to reimburse Oasis for 100% of its capital spent-to-date and will fund 100% of the remaining project capital. OMP funded the reimbursement under its revolving credit facility (the "Revolving Credit Facility") and will have full rights to all cash flows generated from both gas plants held by Bighorn DevCo. For the nine months ended September 30, 2017, Oasis invested $57.0 million in Gas Plant II, and, on November 6, 2017, assigned $66.7 million of asset value to OMP, which included capital spent in October 2017. OMP expects to invest approximately $140.0 million for the entire Gas Plant II project and anticipates operations will begin in late 2018.

Additionally, temporary gas processing units with total capacity of 40 MMscfpd are being deployed in the coming weeks at the gas plant location to process gas volumes in excess of current processing capacity. Cash flows from these units will be attributed to Bighorn DevCo. The increase in EBITDA from these units will more than cover increased interest expense during construction of Gas Plant II. Once Gas Plant II is operational, distribution coverage is expected to further improve, and the runway for 20% annual distribution per unit growth is expected to be extended. Lastly, Oasis continues to expect to run two rigs in Wild Basin to develop this acreage position.

Quarterly Distribution

The Board of Directors of OMP's general partner will declare the first quarterly cash distribution for the Partnership after the end of the fourth quarter 2017. As stated in the prospectus for the OMP IPO, the Partnership will not make a distribution for the period prior to the closing of the Offering. The amount of the distribution declared with respect to the fourth quarter 2017 will be adjusted to reflect the additional six-day period from the closing of the Offering on September 25, 2017 to September 30, 2017.

Operational and Financial Update

Select operational and financial statistics are in the following table:



Quarter Ended:



9/30/2017


6/30/2017

Bighorn DevCo


(In millions, except throughput volumes)

Crude oil services volumes (Bopd)


35,930



27,909


Natural gas services volumes (Mscfpd)


60,034



58,544


Operating income


$

4.8



$

3.8


Depreciation and amortization


1.1



1.1


Bobcat DevCo





Crude oil services volumes (Bopd)


28,253



22,659


Natural gas services volumes (Mscfpd)


92,579



80,146


Water services volumes (Bowpd)


30,693



27,239


Operating income


$

13.5



$

11.0


Depreciation and amortization


1.3



1.0


Beartooth DevCo





Water services volumes (Bowpd)


98,361



72,623


Operating income


$

7.8



$

7.7


Depreciation and amortization


1.5



1.4


Net assets excluded from the Offering





Operating income (loss)


$

(1.0)



$

0.6


Depreciation and amortization


0.2



0.3


Capital Expenditures

Capital Expenditures ("CapEx") for the entire third quarter totaled $34.8 million gross and $7.9 million net. Net CapEx attributable to the Partnership from September 25, 2017 to September 30, 2017 totaled $0.5 million. Net maintenance CapEx for the entire third quarter was $1.3 million, of which $0.1 million was attributable to the Partnership from September 25, 2017 to September 30, 2017. The following table depicts total CapEx by each of OMP's development companies for the entire third quarter:


3Q 2017 CapEx ($ in millions)

DevCo

OMP Ownership

Gross

Net

Bighorn

100%

$

0.7


$

0.7


Bobcat

10%

21.7


2.2


Beartooth

40%

12.4


5.0


Total CapEx


$

34.8


$

7.9


Financial Position and Liquidity
As of September 30, 2017, OMP had no cash on hand, and an undrawn $200.0 million Revolving Credit Facility. Pro forma for the Gas Plant II assignment, OMP has $66.7 million drawn on its Revolving Credit Facility.

Conference Call Information

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

Date:


Wednesday, November 8, 2017

Time:


11:30 a.m. Central Time

Live Webcast:


https://www.webcaster4.com/Webcast/Page/1052/23144

OR:



Dial-in:


888-317-6003

Intl. Dial in:


412-317-6061

Conference ID:


1036919

Website:


www.oasismidstream.com

A recording of the conference call will be available beginning at 1:30 p.m. Central Time on the day of the call and will be available until Wednesday, November 15, 2017 by dialing:

Replay dial-in:


877-344-7529

Intl. replay:


412-317-0088

Replay code:


10113599

The conference call will also be available for replay for approximately 30 days at www.oasismidstream.com.

Contact:

Oasis Midstream Partners LP
Taylor Mason, (281) 404-9600
Manager, Corporate Finance & Investor Relations

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 Partnership 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 Partnership, including the Partnership's capital expenditure levels and other guidance included in this press release. These statements are based on certain assumptions made by the Partnership 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 Partnership, 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, the Partnership's ability to integrate acquisitions into its existing business, changes in oil and natural gas prices, weather and environmental conditions, the timing of planned capital expenditures, availability of acquisitions, uncertainties in the estimates of proved reserves and forecasted production results of the Partnership's customers, operational factors affecting the commencement or maintenance of producing wells, the condition of the capital markets generally, as well as the Partnership'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 Partnership's business and other important factors. Should one or more of these risks or uncertainties occur, or should underlying assumptions prove incorrect, the Partnership's actual results and plans could differ materially from those expressed in any forward-looking statements.

Any forward-looking statement speaks only as of the date on which such statement is made and the Partnership 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 Midstream Partners LP

Oasis Midstream Partners LP is a growth-oriented, fee-based master limited partnership formed by its sponsor, Oasis Petroleum Inc. to own, develop, operate and acquire a diversified portfolio of midstream assets in North America that are integral to the oil and natural gas operations of Oasis Petroleum Inc. and are strategically positioned to capture volumes from other producers. For more information, please visit the Partnership's website at www.oasismidstream.com.

OASIS MIDSTREAM PARTNERS LP

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)



September 30, 2017


December 31, 2016


(In thousands, except unit data)

ASSETS




Current assets




Accounts receivable

$

19



$

667


Accounts receivable from Oasis Petroleum

5,611



11,721


Insurance receivable



5,096


Prepaid expenses

29



1,006


Total current assets

5,659



18,490


Property, plant and equipment

522,098



453,695


Less: accumulated depreciation and amortization

(29,861)



(22,160)


Total property, plant and equipment, net

492,237



431,535


Other assets

1,948



3


Total assets

$

499,844



$

450,028


LIABILITIES AND EQUITY




Current liabilities




Accounts payable due to Oasis Petroleum

$

341



$

3,314


Accrued liabilities

5,790



32,179


Accrued interest payable

4




Current income taxes payable



41,063


Total current liabilities

6,135



76,556


Asset retirement obligation

1,257



1,713


Deferred income taxes



40,084


Total liabilities

7,392



118,353


Commitments and contingencies




Net parent investment / partners' capital




Net parent investment



331,675


Common units - public (7,511,766 units outstanding as of September 30, 2017)

115,963




Common units - Oasis Petroleum (5,125,000 units outstanding as of September 30, 2017)

39,455




Subordinated units - Oasis Petroleum (13,750,000 units outstanding as of September 30, 2017)

105,855




Non-controlling interests

231,179




Total net parent investment / partners' capital

492,452



331,675


Total liabilities and net parent investment / partners' capital

$

499,844



$

450,028



OASIS MIDSTREAM PARTNERS LP


CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


(UNAUDITED)





Three Months Ended September 30,


Nine Months Ended September 30,


2017



2016


2017


2016



(In thousands, except per unit data)

Revenues









Midstream services for Oasis Petroleum

$

47,002



$

29,062



$

123,777



$

87,691


Midstream services for third parties

379



215



1,556



339


Total revenues

47,381



29,277



125,333



88,030


Operating expenses









Direct operating

13,015



7,806



31,108



21,898


Depreciation and amortization

4,147



1,909



11,359



5,325


General and administrative

5,084



3,037



13,868



9,009


Total operating expenses

22,246



12,752



56,335



36,232


Operating income

25,135



16,525



68,998



51,798


Interest expense, net of capitalized interest

(2,733)



(2,128)



(6,965)



(3,950)


Other income (expense)

5



(460)



7



(462)


Total other income (expense)

(2,728)



(2,588)



(6,958)



(4,412)


Income before income taxes

22,407



13,937



62,040



47,386


Income tax expense

7,898



5,444



22,858



18,226


Net income

14,509



$

8,493



39,182



$

29,160


Less: Net Income Prior to the Offering

12,904





37,577




Net Income Subsequent to the Offering

1,605





1,605




Less: Net Income Attributable to Non-controlling Interests Subsequent to the Offering

1,079





1,079




Net Income Attributable to Oasis Midstream Partners LP

$

526





$

526




Net income subsequent to the offering September 25, 2017 per limited partner unit (basic and diluted)









Common units

$

0.02





$

0.02




Subordinated units

0.02





0.02




Weighted average number of limited partner units outstanding - Basic









Common units

12,625,000





12,625,000




Subordinated units

13,750,000





13,750,000




Weighted average number of limited partner units outstanding - Diluted










Common units

12,625,055





12,625,055




Subordinated units

13,750,000





13,750,000




Non-GAAP Financial Measures

Cash Interest is a supplemental non-GAAP financial measure that is used by management and external users of the Partnership's financial statements, such as industry analysts, investors, lenders and rating agencies. The Partnership 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,


2017


2016


2017


2016


(In thousands)

Interest expense

$

2,733



$

2,128



$

6,965



$

3,950


Capitalized interest(1)

436



1,181



658



4,130


Amortization of deferred financing costs(2)

(7)





(7)




Cash Interest

3,162



$

3,309



7,616



$

8,080


Less: Cash Interest prior to the Offering

3,149





7,603




Cash Interest attributable to Oasis Midstream Partners LP

$

13





$

13





___________________

(1) Represents capitalized interest allocated to the predecessor prior to the Offering. No capitalized interest was recorded by the Partnership subsequent to the Offering, as no amounts were drawn under its Revolving Credit Facility.


(2) Represents the amortization of deferred financing costs on the Partnership's Revolving Credit Facility subsequent to the Offering. No amounts of deferred financing costs were recorded and amortized by the predecessor prior to the Offering.

Adjusted EBITDA is supplemental non-GAAP financial measures that are used by management and external users of the Partnership's financial statements, such as industry analysts, investors, lenders and rating agencies. The Partnership defines Adjusted EBITDA as earnings before interest expense, income taxes, depreciation, amortization and other non-cash adjustments. Adjusted EBITDA is not measures of net income (loss) or cash flows as determined by GAAP.

The Partnership defines Distributable Cash Flow ("DCF") as Adjusted EBITDA attributable to OMP less cash paid for interest and maintenance capital expenditures. DCF should not be considered an alternative to net income, net cash provided by operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. Management believes that the presentation of Adjusted EBITDA and DCF provides information useful to investors and analysts for assessing results of operations, financial performance and OMP's ability to generate cash from business operations without regard to financing methods or capital structure, coupled with OMP's ability to make distributions to OMP unitholders. The GAAP measures most directly comparable to DCF are net income and net cash provided by operating activities, respectively.

The following table presents reconciliations of the GAAP financial measures of net income and net cash provided by operating activities to the non-GAAP financial measure of Adjusted EBITDA and DCF for the periods presented:


Three Months Ended September 30,


2017


2016


(In thousands)

Net income

$

14,509



$

8,493


Income tax expense

7,898



5,444


Depreciation and amortization

4,147



1,909


Interest expense, net of capitalized interest

2,733



2,128


Other non-cash adjustments

286



218


Adjusted EBITDA

29,573



$

18,192


Less: Adjusted EBITDA attributable to non-controlling interests(1)

19,074




Less: Adjusted EBITDA attributable to net assets excluded from the Offering(1)

(682)




Adjusted EBITDA attributable to Oasis Midstream Partners LP(1)

11,181




Maintenance capital expenditures(1)

1,293




Distributable Cash Flow attributable to Oasis Midstream Partners LP(1)

$

9,888








Net cash provided by operating activities

$

29,093



$

18,547


Current tax expense

6,042



4,761


Interest expense, net of capitalized interest

2,733



2,128


Changes in working capital

(8,288)



(7,244)


Other non-cash adjustments

(7)




Adjusted EBITDA

29,573



$

18,192


Less: Adjusted EBITDA attributable to non-controlling interests(1)

19,074




Less: Adjusted EBITDA attributable to net assets excluded from the Offering(1)

(682)




Adjusted EBITDA attributable to Oasis Midstream Partners LP(1)

11,181




Maintenance capital expenditures(1)

1,293




Distributable Cash Flow attributable to Oasis Midstream Partners LP(1)

$

9,888





___________________

(1) Amounts above calculated as if the Partnership's IPO occurred prior to the third quarter of 2017.


(2) Cash Interest attributable to the Partnership has been excluded from the above calculation of Distributable Cash Flow attributable to Oasis Midstream Partners LP. The Partnership entered into its Revolving Credit Facility on September 25, 2017 and no amounts were drawn under the Revolving Credit Facility during the period subsequent to the Offering. The unused portion of the Revolving Credit Facility is subject to a commitment fee ranging from 0.375% to 0.500%.


Three Months Ended
September 30,


Nine Months Ended
September 30,


2017


2016


2017


2016


(In thousands)

Net income

$

14,509



$

8,493



$

39,182



$

29,160


Income tax expense

7,898



5,444



22,858



18,226


Depreciation and amortization

4,147



1,909



11,359



5,325


Interest expense, net of capitalized interest

2,733



2,128



6,965



3,950


Other non-cash adjustments

286



218



999



661


Adjusted EBITDA

29,573



$

18,192



81,363



$

57,322


Less: Adjusted EBITDA prior to the Offering

27,694





79,484




Adjusted EBITDA subsequent to the Offering

1,879





1,879




Less: Adjusted EBITDA attributable to non-controlling interests

1,214





1,214




Adjusted EBITDA attributable to Oasis Midstream Partners LP

665





665




Cash Interest attributable to Oasis Midstream Partners LP

13





13




Maintenance capital expenditures

84





84




Distributable Cash Flow attributable to Oasis Midstream Partners LP

$

568





$

568












Net cash provided by operating activities

$

29,093



$

18,547



$

71,569



$

56,321


Current tax expense

6,042



4,761



17,618



15,741


Interest expense, net of capitalized interest

2,733



2,128



6,965



3,950


Changes in working capital

(8,288)



(7,244)



(14,782)



(18,690)


Other non-cash adjustments

(7)





(7)




Adjusted EBITDA

29,573



$

18,192



81,363



$

57,322


Less: Adjusted EBITDA prior to the Offering

27,694





79,484




Adjusted EBITDA subsequent to the Offering

1,879





1,879




Less: Adjusted EBITDA attributable to non-controlling interests

1,214





1,214




Adjusted EBITDA attributable to Oasis Midstream Partners LP

665





665




Cash Interest attributable to Oasis Midstream Partners LP

13





13




Maintenance capital expenditures

84





84




Distributable Cash Flow attributable to Oasis Midstream Partners LP

$

568





$

568




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SOURCE Oasis Midstream Partners LP