Consulatant mondial de l industrie petroliere
Oasis Petroleum Inc. Announces Quarter and Year Ending December 31, 2018 Earnings and Provides an Operational Update and 2019 Outlook

Oasis Petroleum Inc. Announces Quarter and Year Ending December 31, 2018 Earnings and Provides an Operational Update and 2019 Outlook

mars 1, 2019

HOUSTON, Feb. 26, 2019 /PRNewswire/ — Oasis Petroleum Inc. (NYSE: OAS) (« Oasis » or the « Company ») today announced financial and operational results for the quarter and year ended December 31, 2018 and provided its 2019 outlook.

Highlights

  • Increased production guidance twice in 2018, adjusted for divestitures. Production volumes averaged 88.3 thousand barrels of oil equivalent per day (« MBoepd ») (76.2% oil) in the fourth quarter of 2018, in-line with midpoint guidance. Production volumes averaged 82.5 MBoepd (76.5% oil) for the year ended December 31, 2018.
  • Lowered lease operating expenses (« LOE ») per barrels of oil equivalent (« Boe ») by over 12% year over year to $6.44 per Boe for the year ended December 31, 2018.
  • Completed and placed on production 121 gross (85.3 net) operated wells, including 114 gross (79.0 net) operated wells in the Williston Basin and 7 gross (6.3 net) operated wells in the Delaware Basin, while investing $942.2 million of exploration and production capital expenditures (« E&P CapEx »), which excludes acquisitions, other capital and midstream capital, during 2018.
  • Closed and integrated the acquisition of approximately 22,000 net core acres in the over-pressured oil window of the Delaware Basin (the « Permian Basin Acquisition »). Additionally, Oasis purchased adjacent acreage at attractive pricing, bringing its total position to over 23,000 net acres in the Delaware Basin.
  • Oasis’s midstream subsidiary, Oasis Midstream Partners LP (« OMP »), completed the construction and startup of a second natural gas plant in Wild Basin, making Oasis the second largest natural gas processor in North Dakota.
  • Successfully executed a divestiture « dropdown » of additional interests in midstream subsidiaries to OMP for $251.4 million, which increased Oasis’s holdings of OMP common units and reduced debt.
  • High-graded the portfolio since announcing the Permian Basin Acquisition including non-strategic divestitures of approximately $360 million, which helped reduce financial leverage.
  • Net cash provided by operating activities was $996.4 million for the year ended December 31, 2018 and $234.4 million for the fourth quarter of 2018. Adjusted EBITDA, a non-GAAP financial measure, was $958.7 million for the year ended December 31, 2018 and $214.1 million for the fourth quarter of 2018. For a definition of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to net income (loss) including non-controlling interests and net cash provided by operating activities, see « Non-GAAP Financial Measures » below.

« 2018 was a successful year for Oasis, » said Thomas B. Nusz, Oasis’s Chairman and Chief Executive Officer. « We focused on development of our core Williston asset, which drove full-year oil production up 20% vs. 2017, adjusted for the Delaware acquisitions and Bakken divestitures. Also in the Williston, OMP successfully started its new 200 million cubic feet per day plant in December which puts us in a great position to capture and realize the full value of our gas production in North Dakota. Separately, we continue to integrate our new Delaware asset and prepare for full-field development. Our technical learnings have validated the quality of this acreage, first year financial performance exceeded expectations, and we expect to realize exceptional returns and value creation in coming years. »

« Additionally, throughout 2018 we high-graded our asset base through a series of non-core divestitures. Operationally, our team continues to do a tremendous job optimizing our cost structure. On the resource delineation side, in the Williston Basin, several strong well results at Painted Woods and Montana in the west and Cottonwood in the east heighten our confidence in the competitive position of these areas. At year-end 2018, Oasis had over 2,000 gross operated locations in the Williston and Delaware with breakeven pricing below $45 per barrel WTI. At our current completions pace, this represents over 20 years of development. While prices have weakened considerably since 2018, we have the asset quality, inventory depth, financial strength, midstream capabilities, and services to succeed at low prices. »

« Oasis has an enviable asset base. We are in a formidable position to generate significant free cash flow in 2019 through prudent capital spending reductions and operating efficiencies. Free cash flow generation from the Williston is expected to fund growth at our core Delaware asset and reduce corporate debt. Consistent with our dedication to generating free cash flow, we entered into a capital expenditures arrangement with OMP for Bobcat DevCo’s 2019 expansion capital expenditures that permits us to minimize midstream spending at the Oasis level. We are poised to succeed in the current environment. Oasis has the strategic, operating, and financial capabilities to drive capital efficiency, generate strong free cash flow, and deliver for our shareholders. »

Midstream Update

OMP completed its new 200 MMscfpd natural gas processing plant in early December and has gradually ramped up volumes through February. OMP is now the second largest natural gas processor in the Williston Basin. OMP’s gas plant is currently running at approximately 60% utilization, and now expects utilization to increase to over 90% by year-end 2019 consisting of both Oasis and third-party volumes. In late 2018, OMP successfully signed additional third-party agreements, which diversifies the revenue base and provides financial resiliency. OMP continues to pursue additional opportunities with third-parties to further increase the utilization of its gas gathering and processing infrastructure.

On February 22, 2019, Oasis entered into a capital expenditures arrangement (the « Capital Expenditures Arrangement ») with OMP, allowing OMP to fund growth capital for Bobcat DevCo. As a result of this arrangement, Oasis’s ownership in Bobcat DevCo is expected to decline from 75% to between approximately 64% and 66% by the end of the 2019 calendar year. The Company believes this arrangement is mutually beneficial to both Oasis and OMP, as it significantly reduces Oasis’s midstream spending and OMP can accretively increase its leverage to Bobcat DevCo. Additionally, in 2019, Oasis is planning capital expenditures related to its retained interest in Williston Basin infrastructure of approximately $11 million to $13 million and midstream capital expenditures of approximately $8 million in the Delaware Basin.

The terms of the Capital Expenditures Arrangement were approved by the Board of Directors of the general partner of OMP following a unanimous recommendation for approval from the conflicts committee of the Board of Directors of the general partner of OMP, which consists entirely of independent directors. The conflicts committee was advised by Baird on financial matters and Richards, Layton & Finger, P.A. on legal matters. Oasis was advised by Vinson and Elkins L.L.P. on legal matters.

2019 Plan

Oasis constructed its 2019 plan based on being free cash flow positive at $50 WTI. In order to achieve this objective, the total E&P and Other CapEx plan has been reduced by approximately 40% year over year and is expected to range between $540 million and $560 million. Oasis is directing approximately 75% of its capital to the Williston Basin and approximately 25% to the Delaware Basin. The Company expects 85% of its E&P and Other CapEx to be invested in drilling and completions activities, including:

  • Completing approximately 70 gross operated wells with a working interest of approximately 65% in the Williston Basin;
  • Completing 9 to 11 gross operated wells with a working interest of approximately 90% in the Delaware Basin; and
  • Cash flow from the Williston asset is expected to fund a small Delaware outspend in 2019. Oasis produced 88.3 MBoepd in the fourth quarter of 2018, and expects first quarter production to be essentially flat quarter over quarter.

Metric

Range

Production (Boepd)(1)

Full Year 2019

86,000 to 91,000

Full Year Financial Metrics

LOE ($ per Boe)

$7.00 to $8.00

Marketing, transportation and gathering (« MT&G ») ($ per Boe)(2)

$1.50 to $3.50

E&P Cash G&A ($ in millions)(3)

$77 – $81

Production taxes (% of oil and gas revenue)

8.1% to 8.4%

2019 CapEx Plan ($ in millions)

E&P & Other CapEx(4)

$540 – $560

Midstream CapEx

150 – 170

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

19 – 21

__________________

(1)

Average oil production percentage of 72% in 2019.

(2)

Excludes the effect of non-cash valuation charges.

(3)

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

(4)

Other CapEx includes OWS and administrative capital and excludes capitalized interest of approximately $15 million.

Operational and Financial Update

Select operational and financial statistics are included in the following table for the periods presented:

Quarter Ended

Year Ended

12/31/2018

9/30/2018

12/31/2018

12/31/2017

Production data:

Oil (Bopd)

67,266

65,870

63,151

51,557

Natural gas (Mcfpd)

126,135

117,182

116,246

87,522

Total production (Boepd)

88,288

85,400

82,525

66,144

Percent Oil

76.2

%

77.1

%

76.5

%

77.9

%

Average sales prices:

Oil, without derivative settlements ($ per Bbl)

$

52.01

$

68.33

$

61.84

$

48.51

Differential to WTI ($ per Bbl)

6.79

1.16

2.88

2.62

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

44.14

57.50

52.65

47.99

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

(48.7)

(65.6)

(211.7)

(9.8)

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

4.27

3.72

3.88

3.81

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

4.02

3.76

3.84

3.86

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

(2.9)

0.4

(1.8)

1.5

Selected financial data ($ in millions):

Revenues:

Oil revenues(4)

$

321.8

$

414.1

$

1,425.4

$

912.8

Natural gas revenues

49.6

40.1

164.6

121.8

Purchased oil and gas sales(4)

183.1

173.0

551.8

133.5

Midstream revenues

30.6

31.2

119.0

72.8

Well services revenues

14.7

16.3

61.1

52.8

Total revenues

$

599.8

$

674.7

$

2,321.9

$

1,293.7

Net cash provided by operating activities

$

234.4

$

230.0

$

996.4

$

507.9

Adjusted EBITDA

$

214.1

$

270.4

$

958.7

$

707.7

Select operating expenses:

LOE

$

56.5

$

48.5

$

193.9

$

177.1

Midstream operating expenses

7.6

8.7

31.9

17.6

Well services operating expenses

8.8

11.4

41.2

37.2

MT&G(5)

28.9

30.1

102.9

56.6

Non-cash valuation charges

3.8

0.6

4.3

(0.8)

Purchased oil and gas expenses(4)

179.9

174.3

554.3

134.6

Production taxes

29.9

38.7

133.7

88.1

Depreciation, depletion and amortization (« DD&A »)

170.5

163.0

636.3

530.8

Total select operating expenses

$

485.9

$

475.3

$

1,698.5

$

1,041.2

Select operating expenses data:

LOE ($ per Boe)

$

6.95

$

6.18

$

6.44

$

7.34

MT&G ($ per Boe)(5)

3.55

3.84

3.41

2.34

DD&A ($ per Boe)

20.99

20.74

21.12

21.99

E&P G&A ($ per Boe)

3.08

3.88

3.40

3.21

E&P Cash G&A ($ per Boe)(6)

2.18

2.97

2.48

2.16

Production taxes (% of oil and gas revenue)

8.1

%

8.6

%

8.4

%

8.5

%

__________________

(1)

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

(2)

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

(3)

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

(4)

For the quarter ended September 30, 2018 and the year ended December 31, 2017, oil revenues, purchased oil and gas sales and purchased oil and gas expenses have been revised as described in Revision of Prior Period Financial Statements below.

(5)

Excludes non-cash valuation charges on pipeline imbalances of $3.8 million and $0.6 million for the quarters ended December 31, 2018 and September 30, 2018, respectively, and $4.3 million and a credit of $0.8 million for the years ended December 31, 2018 and 2017, respectively.

(6)

Cash E&P G&A, a non-GAAP measure, represents G&A expenses less non-cash equity-based compensation expense included in the Company’s exploration and production segment. See « Non-GAAP Financial Measures » below for a reconciliation of the Company’s E&P G&A to Cash E&P G&A.

G&A expenses for the fourth quarter of 2018 totaled $30.3 million, and for the year ended December 31, 2018, G&A totaled $121.3 million. Amortization of equity-based compensation, which is included in G&A expenses, was $7.7 million, or $0.95 per Boe, for the fourth quarter of 2018 and $29.3 million, or $0.97 per Boe, for the full year of 2018. G&A expenses for the Company’s E&P segment totaled $25.1 million for the fourth quarter of 2018 and $102.5 million for the full year of 2018. Total Cash E&P G&A expenses, excluding non-cash equity-based compensation expenses, were $2.18 per Boe for the fourth quarter of 2018 and $2.48 per Boe for the full year of 2018.

Interest expense was $41.5 million for the fourth quarter of 2018 and $159.1 million for the full year of 2018. Capitalized interest totaled $4.0 million for the fourth quarter of 2018 and $17.2 million for the full year of 2018. Cash Interest (non-GAAP) totaled $40.5 million for the fourth quarter of 2018 and $157.6 million for the full year of 2018. For a definition of Cash Interest and a reconciliation of interest expense to Cash Interest, see « Non-GAAP Financial Measures » below.

For the three months ended December 31, 2018, the Company recorded an income tax expense of $69.5 million, resulting in an effective tax rate of 23.5% as a percentage of its pre-tax income for the quarter. The Company’s income tax benefit for the year ended December 31, 2018 was recorded at $5.8 million, or 23.1% of its pre-tax loss.

The Company reported net income attributable to Oasis of $222.0 million in the fourth quarter of 2018. For the full year of 2018, Oasis reported net loss attributable to Oasis of $35.3 million. Excluding certain non-cash items and their tax effect in the fourth quarter of 2018, Adjusted Net Loss Attributable to Oasis (non-GAAP) was $7.3 million, or $0.02 per diluted share, and in the full year of 2018, Adjusted Net Income Attributable to Oasis (non-GAAP) was $79.6 million, or $0.26 per diluted share, respectively. For a definition of Adjusted Net Income (Loss) Attributable to Oasis and a reconciliation of net income (loss) attributable to Oasis to Adjusted Net Income (Loss) Attributable to Oasis, see « Non-GAAP Financial Measures » below.

The Company completed and placed on production 121 gross (85.3 net) operated wells during 2018 and 30 gross (21.7 net) operated wells during the fourth quarter of 2018.

The Company sells a significant amount of its crude oil production through gathering systems connected to multiple pipeline and rail facilities, which allows it to shift volumes between pipeline and rail markets in order to optimize price realizations. For the first three quarters of 2018, the Company’s oil price differentials improved to less than $2.00 per barrel discount to WTI. Purchased oil and gas sales, which consist primarily of the sale of crude oil purchased to optimize transportation costs or for blending at the Company’s crude oil terminal, increased $418.3 million to $551.8 million for the year ended December 31, 2018 as compared to the year ended December 31, 2017, primarily due to higher volumes purchased and sold driven by increased market opportunities in the Williston Basin and in the Delaware Basin. Purchased oil and gas expenses increased $419.7 million to $554.3 million for the year ended December 31, 2018 as compared to December 31, 2017.

Revision of Prior Period Financial Statements. In connection with the preparation of the Company’s consolidated financial statements for the year ended December 31, 2018, the Company identified errors in its previously issued 2017 annual consolidated financial statements and in each of the interim periods within 2018 and 2017. These prior period errors related to the presentation of certain crude oil purchase and sale arrangements. Specifically, although the Company previously presented the transactions on a net basis in oil and gas revenues, the Company was required to present these purchase and sale arrangements on a gross basis in purchased oil and gas expenses and purchased oil and gas sales. In addition, the Company identified certain assets and liabilities related to these arrangements that were reported on a net basis in accounts receivable on the balance sheet, but did not meet all of the criteria for a right of setoff. The correction of these errors had no effect on the reported consolidated net income (loss) attributable to Oasis or earnings (loss) attributable to Oasis per share data for the year ended December 31, 2017 or for any of the interim periods within 2018 and 2017 or to Oasis share of stockholders’ equity at December 31, 2017. Based on an analysis of quantitative and qualitative factors, the Company determined the related impact was not material to its consolidated financial statements, and therefore, amendments of previously filed reports are not required.

For the quarter ended December 31, 2017, the Company revised the Consolidated Statements of Operations by increasing purchased oil and gas sales and purchased oil and gas expenses by $30.5 million and $30.4 million, respectively, and decreasing oil and gas revenues by $0.1 million. For the year ended December 31, 2017, the Company revised the Consolidated Statements of Operations by increasing purchased oil and gas sales and purchased oil and gas expenses by $45.6 million and $45.3 million, respectively, and decreasing oil and gas revenues by $0.3 million. For the quarter ended September 30, 2018, the Company revised the Consolidated Statements of Operations by increasing oil and gas revenues, purchased oil and gas sales and purchased oil and gas expenses by $1.6 million, $126.6 million and $128.2 million, respectively. As of December 31, 2017, the Company revised the Consolidated Balance Sheets by increasing both accounts receivable and accrued liabilities by $7.8 million. The amounts presented herein reflect the impact of this revision.

As a result of the errors noted above, the Company has identified a material weakness in its internal control over financial reporting. Accordingly, management will disclose in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018 that its internal control over financial reporting and its disclosure controls and procedures are not effective as of December 31, 2018 and will receive an adverse opinion on internal control over financial reporting as of December 31, 2018 from PricewaterhouseCoopers LLP. In response to the material weakness identified, management has developed a plan to remediate the material weakness, and has begun working on that remediation plan. In addition, management performed additional analyses and procedures in order to conclude that the Company’s consolidated financial statements for the year ended December 31, 2018 are fairly presented, in all material respects, in accordance with generally accepted accounting principles.

Capital Expenditures

The following table depicts the Company’s CapEx for the year ended December 31, 2018:

2018

CapEx ($ in millions)

E&P (excluding acquisitions)

$

942.2

Well Services

7.8

Other(1)

24.0

Total CapEx before acquisitions and midstream

974.0

Midstream(2)

277.6

Total CapEx before acquisitions

1,251.6

Acquisitions

951.9

Total CapEx(3)

$

2,203.5

__________________

(1)

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

(2)

Midstream CapEx attributable to OMP was $116.6 million for the year ended December 31, 2018.

(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 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 are presented on a cash basis. In addition, for the year ended December 31, 2018, capital expenditures (including acquisitions) reflected in the table above includes consideration paid through the issuance of common stock in connection with the Permian Basin Acquisition.

Estimated Net Proved Reserves

The Company’s estimated net proved reserves and related PV-10 are based on reports prepared by DeGolyer and MacNaughton, independent reserve engineers. The table below summarizes the Company’s estimated net proved reserves and related PV-10 at December 31, 2018:

December 31, 2018

Net Estimated Reserves
(MMBoe)

PV-10(1)

(in millions)

Proved Developed

201.1

$

3,573.6

Undeveloped

119.4

1,100.7

Total Proved

320.5

$

4,674.3

__________________

(1)

PV-10 is a non-GAAP financial measure and generally differs from Standardized Measure, the most directly comparable GAAP financial measure, because it does not include the effect of income taxes on discounted future net cash flows.

Liquidity and Balance Sheet

As of December 31, 2018, Oasis had cash and cash equivalents of $22.2 million, total elected commitments under the Oasis Credit Facility of $1,350.0 million and a borrowing base under the OMP Credit Facility of $400.0 million. In addition, Oasis had $468.0 million of borrowings and $14.0 million of outstanding letters of credit issued under the Oasis Credit Facility and $318.0 million of borrowings under the OMP Credit Facility, resulting in an unused borrowing base capacity of $950.0 million for both revolving credit facilities as of December 31, 2018.

Hedging Activity

The Company’s crude oil contracts will settle monthly based on the average NYMEX WTI for fixed price swaps and two-way and three-way costless collars. The Company’s basis swaps for crude oil will either settle monthly based on the fixed basis differential from NYMEX WTI to Intercontinental Exchange, Inc. Brent crude oil index price (« ICE Brent ») or Argus WTI Midland crude oil index price (« Midland ») to NYMEX WTI or 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. The Company’s basis swaps for natural gas will settle monthly based on the fixed basis differential from Inside FERC Northern Natural Gas Ventura (« IF NNG Ventura ») to NYMEX HH. As of February 26, 2019, the Company had the following outstanding commodity derivative contracts:

Three Months Ending

Six Months Ending

December 31, 2018

June 30, 2019

December 31, 2019

June 30, 2020

Crude oil (Volume in MBopd)

Fixed Price Swaps

Volume

43.2

13.0

13.0

Price

$

53.95

$

53.47

$

53.47

$

Collars

Volume

8.5

13.0

12.0

Floor

$

62.47

$

57.46

$

58.08

$

Ceiling

$

68.40

$

74.49

$

76.05

$

3-way

Volume

12.0

12.0

3.0

Sub-Floor

$

$

40.83

$

40.00

$

40.00

Floor

$

$

51.25

$

51.57

$

57.24

Ceiling

$

$

68.59

$

65.40

$

58.04

Total Crude Oil Volume

51.7

38.0

37.0

3.0

Basis Swaps (NYMEX WTI-ICE Brent)

Volume

2.0

2.0

Price

$

(9.68)

$

(9.68)

$

$

Basis Swaps (Midland-NYMEX WTI)

Volume

1.3

3.8

Price

$

(7.50)

$

(6.77)

$

$

Basis Swaps (Houston-NYMEX WTI)

Volume

1.5

1.5

Price

$

$

4.55

$

4.55

$

Total Crude Oil Basis Volume

3.3

7.3

1.5

Natural Gas (Volume in MMBtupd)

Fixed Price Swaps

Volume

41,315

30,475

20,000

Price

$

3.03

$

3.20

$

2.90

$

Total Natural Gas Volume

41,315

30,475

20,000

Basis Swaps (IF NNG Ventura-NYMEX HH)

Volume

19,946

26,630

Price

$

0.01

$

0.05

$

$

Total Natural Gas Basis Volume

19,946

26,630

The December 2018 crude oil derivative contracts settled at a net $10.6 million received in January 2019 and will be included in the Company’s first quarter of 2019 derivative settlements.

Conference Call Information

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

Date:

Wednesday, February 27, 2019

Time:

10:00 a.m. Central Time

Live Webcast:

https://www.webcaster4.com/Webcast/Page/1052/29262

OR:

Dial-in:

888-317-6003

Intl. Dial in:

412-317-6061

Conference ID:

8270035

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 Wednesday, March 6, 2019 by dialing:

Replay dial-in:

877-344-7529

Intl. replay:

412-317-0088

Replay code:

10128589

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, derivatives activities, 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 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 onshore, unconventional oil and natural gas resources in the United States. For more information, please visit the Company’s website at www.oasispetroleum.com.

Oasis Petroleum Inc. Financial Statements

OASIS PETROLEUM INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

December 31,

2018

2017

(In thousands, except share data)

ASSETS

Current assets

Cash and cash equivalents

$

22,190

$

16,720

Accounts receivable, net

387,602

371,379

Inventory

33,128

19,367

Prepaid expenses

10,997

7,631

Derivative instruments

99,930

344

Intangible assets, net

125

Other current assets

183

193

Total current assets

554,155

415,634

Property, plant and equipment

Oil and gas properties (successful efforts method)

8,912,189

7,838,955

Other property and equipment

1,151,772

868,746

Less: accumulated depreciation, depletion, amortization and impairment

(3,036,852)

(2,534,215)

Total property, plant and equipment, net

7,027,109

6,173,486

Derivative instruments

6,945

9

Long-term inventory

12,260

12,200

Other assets

25,673

21,600

Total assets

$

7,626,142

$

6,622,929

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities

Accounts payable

$

20,166

$

13,370

Revenues and production taxes payable

216,695

213,995

Accrued liabilities

331,651

244,279

Accrued interest payable

38,040

38,963

Derivative instruments

84

115,716

Advances from joint interest partners

5,140

4,916

Other current liabilities

40

Total current liabilities

611,776

631,279

Long-term debt

2,735,276

2,097,606

Deferred income taxes

300,055

305,921

Asset retirement obligations

52,384

48,511

Derivative instruments

20

19,851

Other liabilities

7,751

6,182

Total liabilities

3,707,262

3,109,350

Commitments and contingencies

Stockholders’ equity

Common stock, $0.01 par value: 900,000,000 and 450,000,000 shares authorized at December 31, 2018 and December 31, 2017, respectively; 320,469,049 shares issued and 318,377,161 shares outstanding at December 31, 2018 and 270,627,014 shares issued and 269,295,466 shares outstanding at December 31, 2017

3,157

2,668

Treasury stock, at cost: 2,091,888 and 1,331,548 shares at December 31, 2018 and December 31, 2017, respectively

(29,025)

(22,179)

Additional paid-in capital

3,077,755

2,677,217

Retained earnings

682,689

717,985

Oasis share of stockholders’ equity

3,734,576

3,375,691

Non-controlling interests

184,304

137,888

Total stockholders’ equity

3,918,880

3,513,579

Total liabilities and stockholders’ equity

$

7,626,142

$

6,622,929

 

OASIS PETROLEUM INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

Three Months Ended December 31,

Year Ended December 31,

2018

2017

2018

2017

(In thousands, except per share data)

Revenues

Oil and gas revenues

$

371,385

$

330,290

$

1,590,024

$

1,034,634

Purchased oil and gas sales

183,050

61,547

551,808

133,542

Midstream revenues

30,589

23,813

119,040

72,752

Well services revenues

14,731

19,225

61,075

52,791

Total revenues

599,755

434,875

2,321,947

1,293,719

Operating expenses

Lease operating expenses

56,456

43,263

193,912

177,134

Midstream operating expenses

7,587

6,698

31,912

17,589

Well services operating expenses

8,848

13,370

41,200

37,228

Marketing, transportation and gathering expenses

32,634

17,722

107,193

55,740

Purchased oil and gas expenses

179,865

62,043

554,307

134,615

Production taxes

29,948

27,811

133,696

88,133

Depreciation, depletion and amortization

170,477

146,556

636,296

530,802

Exploration expenses

3,731

7,590

27,432

11,600

Impairment

866

384,228

6,887

General and administrative expenses

30,317

24,627

121,346

91,797

Total operating expenses

519,863

350,546

2,231,522

1,151,525

Gain (loss) on sale of properties

(10,236)

1,774

28,587

1,774

Operating income

69,656

86,103

119,012

143,968

Other income (expense)

Net gain (loss) on derivative instruments

268,402

(123,954)

28,457

(71,657)

Interest expense, net of capitalized interest

(41,469)

(36,289)

(159,085)

(146,837)

Loss on extinguishment of debt

(150)

(13,848)

Other income (expense)

(25)

(577)

121

(1,332)

Total other income (expense)

226,758

(160,820)

(144,355)

(219,826)

Income (loss) before income taxes

296,414

(74,717)

(25,343)

(75,858)

Income tax benefit (expense)

(69,548)

202,834

5,843

203,304

Net income (loss) including non-controlling interests

226,866

128,117

(19,500)

127,446

Less: Net income attributable to non-controlling interests

4,889

3,500

15,796

3,650

Net income (loss) attributable to Oasis

$

221,977

$

124,617

$

(35,296)

$

123,796

Earnings (loss) per share:

Basic

$

0.71

$

0.52

$

(0.11)

$

0.53

Diluted

0.70

0.52

(0.11)

0.52

Weighted average shares outstanding:

Basic

313,260

240,143

307,480

234,986

Diluted

315,098

241,960

307,480

237,875

 

OASIS PETROLEUM INC.

SELECTED FINANCIAL AND OPERATIONAL STATS

Three Months Ended December 31,

Year Ended December 31,

2018

2017

2018

2017

Operating results ($ in thousands):

Revenues

Oil revenues(1)

$

321,834

$

289,392

$

1,425,409

$

912,806

Natural gas revenues

49,551

40,898

164,615

121,828

Purchased oil and gas sales(1)

183,050

61,547

551,808

133,542

Midstream revenues

30,589

23,813

119,040

72,752

Well services revenues

14,731

19,225

61,075

52,791

Total revenues

$

599,755

$

434,875

$

2,321,947

$

1,293,719

Production data:

Oil (MBbls)

6,188

5,266

23,050

18,818

Natural gas (MMcf)

11,604

8,815

42,430

31,946

Oil equivalents (MBoe)

8,122

6,735

30,122

24,143

Average daily production (Boepd)

88,288

73,207

82,525

66,144

Average sales prices:

Oil, without derivative settlements (per Bbl)

$

52.01

$

54.95

$

61.84

$

48.51

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

44.14

53.40

52.65

47.99

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

4.27

4.64

3.88

3.81

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

4.02

4.72

3.84

3.86

Costs and expenses (per Boe of production):

Lease operating expenses

$

6.95

$

6.42

$

6.44

$

7.34

Marketing, transportation and gathering expenses(4)

3.55

2.83

3.41

2.34

Production taxes

3.69

4.13

4.44

3.65

Depreciation, depletion and amortization

20.99

21.76

21.12

21.99

General and administrative expenses

3.73

3.66

4.03

3.80

__________________

(1)

For the quarter and year ended December 31, 2017, oil revenues, purchased oil and gas sales and purchased oil and gas expenses have been revised. Refer to Revision of Prior Period Financial Statements for further details.

(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 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.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

Year Ended December 31,

2018

2017

(In thousands)

Cash flows from operating activities:

Net income (loss) including non-controlling interests

$

(19,500)

$

127,446

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

Depreciation, depletion and amortization

636,296

530,802

Loss on extinguishment of debt

13,848

Gain on sale of properties

(28,587)

(1,774)

Impairment

384,228

6,887

Deferred income taxes

(5,866)

(202,884)

Derivative instruments

(28,457)

71,657

Equity-based compensation expenses

29,273

26,534

Deferred financing costs amortization and other

29,057

18,311

Working capital and other changes:

Change in accounts receivable, net

(23,508)

(166,386)

Change in inventory

(14,346)

(2,501)

Change in prepaid expenses

(2,354)

(838)

Change in other current assets

10

148

Change in long-term inventory and other assets

(144)

(12,143)

Change in accounts payable, interest payable and accrued liabilities

26,116

123,107

Change in other current liabilities

(40)

(10,450)

Change in other liabilities

395

(40)

Net cash provided by operating activities

996,421

507,876

Cash flows from investing activities:

Capital expenditures

(1,148,961)

(647,349)

Acquisitions

(581,650)

(61,874)

Proceeds from sale of properties

333,229

5,774

Costs related to sale of properties

(2,850)

(366)

Derivative settlements

(213,528)

(8,264)

Advances from joint interest partners

224

(2,681)

Net cash used in investing activities

(1,613,536)

(714,760)

Cash flows from financing activities:

Proceeds from Revolving Credit Facilities

3,224,000

1,162,000

Principal payments on Revolving Credit Facilities

(2,586,000)

(1,377,000)

Repurchase of senior unsecured notes

(423,340)

Proceeds from issuance of senior unsecured notes

400,000

Deferred financing costs

(13,862)

(2,714)

Proceeds from sale of common stock, net of offering costs

302,191

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

44,503

134,185

Purchases of treasury stock

(6,846)

(6,229)

Distributions to non-controlling interests

(14,114)

Other

(1,756)

(55)

Net cash provided by financing activities

622,585

212,378

Increase in cash and cash equivalents

5,470

5,494

Cash and cash equivalents:

Beginning of period

16,720

11,226

End of period

$

22,190

$

16,720

Supplemental cash flow information:

Cash paid for interest, net of capitalized interest

$

141,196

$

129,463

Cash paid for income taxes

38

12

Cash received for income tax refunds

25

281

Supplemental non-cash transactions:

Change in accrued capital expenditures

$

68,946

$

83,508

Change in asset retirement obligations

3,880

(789)

Installment notes from acquisition

4,875

Issuance of shares in connection with the Permian Basin Acquisition

371,220

Non-GAAP Financial Measures

E&P Cash G&A Reconciliation

E&P Cash G&A 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 E&P Cash G&A as the total general and administrative expenses included in our exploration and production segment less non-cash equity-based compensation expense included in our exploration and production segment. E&P Cash G&A is not a measure of general and administrative expenses as determined by United States generally accepted accounting principles, or GAAP.

The following table presents a reconciliation of the GAAP financial measure of general and administrative expenses included in our 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 December 31,

Year Ended December 31,

2018

2017

2018

2017

(In thousands)

General and administrative expenses

$

25,057

$

19,739

$

102,482

$

77,560

Equity-based compensation expenses

(7,345)

(5,695)

(27,910)

(25,436)

E&P Cash G&A

$

17,712

$

14,044

$

74,572

$

52,124

Cash Interest Reconciliation

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 December 31,

Year Ended December 31,

2018

2017

2018

2017

(In thousands)

Interest expense

$

41,469

$

36,289

$

159,085

$

146,837

Capitalized interest

4,017

4,024

17,226

12,797

Amortization of deferred financing costs

(2,079)

(1,779)

(7,590)

(6,907)

Amortization of debt discount

(2,919)

(2,654)

(11,120)

(10,080)

Cash Interest

$

40,488

$

35,880

$

157,601

$

142,647

Adjusted EBITDA and Free Cash Flow Reconciliations

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

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

Three Months Ended December 31,

Year Ended December 31,

2018

2017

2018

2017

(In thousands)

Net income (loss) including non-controlling interests

$

226,866

$

128,117

$

(19,500)

$

127,446

(Gain) loss on sale of properties

10,236

(1,774)

(28,587)

(1,774)

Loss on extinguishment of debt

150

13,848

Net (gain) loss on derivative instruments

(268,402)

123,954

(28,457)

71,657

Derivative settlements(1)

(51,515)

(7,460)

(213,528)

(8,264)

Interest expense, net of capitalized interest

41,469

36,289

159,085

146,837

Depreciation, depletion and amortization

170,477

146,556

636,296

530,802

Impairment

866

384,228

6,887

Exploration expenses

3,731

7,590

27,432

11,600

Equity-based compensation expenses

7,687

6,083

29,273

26,534

Income tax (benefit) expense

69,548

(202,834)

(5,843)

(203,304)

Other non-cash adjustments

3,878

(1,236)

4,435

(745)

Adjusted EBITDA

214,125

236,151

958,682

707,676

Adjusted EBITDA attributable to non-controlling interests

7,094

3,714

21,703

3,904

Adjusted EBITDA attributable to Oasis

207,031

232,437

936,979

703,772

Cash Interest

(40,488)

(35,880)

(157,601)

(142,647)

Capital expenditures(2)

(305,348)

(313,060)

(2,203,453)

(836,204)

Capitalized interest

4,017

4,024

17,226

12,797

Free Cash Flow

$

(134,788)

$

(112,479)

$

(1,406,849)

$

(262,282)

Net cash provided by operating activities

$

234,420

$

209,139

$

996,421

$

507,876

Derivative settlements(1)

(51,515)

(7,460)

(213,528)

(8,264)

Interest expense, net of capitalized interest

41,469

36,289

159,085

146,837

Exploration expenses

3,731

7,590

27,432

11,600

Deferred financing costs amortization and other

(8,983)

(5,645)

(29,057)

(18,311)

Current tax expense

(4)

(421)

23

(421)

Changes in working capital

(8,871)

(2,105)

13,871

69,104

Other non-cash adjustments

3,878

(1,236)

4,435

(745)

Adjusted EBITDA

214,125

236,151

958,682

707,676

Adjusted EBITDA attributable to non-controlling interests

7,094

3,714

21,703

3,904

Adjusted EBITDA attributable to Oasis

207,031

232,437

936,979

703,772

Cash Interest

(40,488)

(35,880)

(157,601)

(142,647)

Capital expenditures(2)

(305,348)

(313,060)

(2,203,453)

(836,204)

Capitalized interest

4,017

4,024

17,226

12,797

Free Cash Flow

$

(134,788)

$

(112,479)

$

(1,406,849)

$

(262,282)

____________________

(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 (including acquisitions) reflected in the table above differs from the amounts shown in the statement of cash flows in the Company’s 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 statements of cash flows are presented on a cash basis. Acquisitions totaled $1.8 million and $951.9 million for the fourth quarter and full year 2018, respectively, and $48.2 million and $54.0 million for the fourth quarter and full year 2017, respectively. Additionally, CapEx (including acquisitions) reflected in the table includes consideration paid through the issuance of common stock in connection with the Permian Basin Acquisition for the year ended December 31, 2018.

Segment Adjusted EBITDA Reconciliations

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 December 31,

Year Ended December 31,

2018

2017

2018

2017

(In thousands)

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

$

256,177

$

(107,130)

$

(167,292)

$

(179,129)

(Gain) loss on sale of properties

10,226

(1,774)

(38,188)

(1,774)

Loss on extinguishment of debt

150

13,848

Net (gain) loss on derivative instruments

(268,402)

123,954

(28,457)

71,657

Derivative settlements(1)

(51,515)

(7,460)

(213,528)

(8,264)

Interest expense, net of capitalized interest

39,734

36,289

156,742

146,818

Depreciation, depletion and amortization

165,319

143,033

618,402

519,853

Impairment

866

384,228

6,887

Exploration expenses

3,731

7,590

27,432

11,600

Equity-based compensation expenses

7,345

5,695

27,910

25,436

Other non-cash adjustments

3,774

(1,303)

4,331

(812)

Adjusted EBITDA

$

166,539

$

199,760

$

785,428

$

592,272

____________________

(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 December 31,

Year Ended December 31,

2018

2017

2018

2017

(In thousands)

Income before income taxes including non-controlling interests

$

40,248

$

33,294

$

141,001

$

102,340

Loss on sale of properties

31

9,622

Interest expense, net of capitalized interest

1,735

2,343

19

Depreciation, depletion and amortization

8,380

4,625

29,282

15,999

Equity-based compensation expenses

325

357

1,547

1,461

Other non-cash adjustments

Adjusted EBITDA

$

50,719

$

38,276

$

183,795

$

119,819

 

Well Services

Three Months Ended December 31,

Year Ended December 31,

2018

2017

2018

2017

(In thousands)

Income before income taxes including non-controlling interests

$

5,708

$

5,897

$

31,023

$

15,091

Depreciation, depletion and amortization

4,138

3,522

15,698

12,939

Equity-based compensation expenses

439

249

1,588

1,264

Other non-cash adjustments

104

67

104

67

Adjusted EBITDA

$

10,389

$

9,735

$

48,413

$

29,361

Adjusted Net Income (Loss) Attributable to Oasis and Adjusted Diluted Earnings (Loss) Attributable to Oasis Per Share

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 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, (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, excluding net income attributable to non-controlling interests, 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. Adjusted Diluted Earnings (Loss) Attributable to Oasis Per Share is not a measure of diluted earnings (loss) as determined by GAAP.

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 December 31,

Year Ended December 31,

2018

2017

2018

2017

(In thousands, except per share data)

Net income (loss) attributable to Oasis

$

221,977

$

124,617

$

(35,296)

$

123,796

Tax reform rate change adjustments

(171,900)

(171,900)

(Gain) loss on sale of properties

10,236

(1,774)

(28,587)

(1,774)

Loss on extinguishment of debt

150

13,848

Net (gain) loss on derivative instruments

(268,402)

123,954

(28,457)

71,657

Derivative settlements(1)

(51,515)

(7,460)

(213,528)

(8,264)

Impairment

866

384,228

6,887

Amortization of deferred financing costs

2,079

1,779

7,591

6,907

Amortization of debt discount

2,919

2,654

11,120

10,080

Other non-cash adjustments

3,878

(1,236)

4,435

(745)

Tax impact(2)

71,365

(44,425)

(35,759)

(31,696)

Adjusted Net Income (Loss) Attributable to Oasis

$

(7,313)

$

27,075

$

79,595

$

4,948

Diluted earnings (loss) attributable to Oasis per share

$

0.70

$

0.52

$

(0.11)

$

0.52

Tax reform rate change adjustments

(0.71)

(0.72)

(Gain) loss on sale of properties

0.03

(0.01)

(0.09)

(0.01)

Loss on extinguishment of debt

0.04

Net (gain) loss on derivative instruments

(0.85)

0.51

(0.09)

0.30

Derivative settlements(1)

(0.16)

(0.03)

(0.69)

(0.03)

Impairment

1.24

0.03

Amortization of deferred financing costs

0.01

0.01

0.02

0.03

Amortization of debt discount

0.01

0.01

0.04

0.04

Other non-cash adjustments

0.01

(0.01)

0.01

Tax impact(2)

0.23

(0.17)

(0.11)

(0.14)

Adjusted Diluted Earnings (Loss) Attributable to Oasis Per Share

$

(0.02)

$

0.12

$

0.26

$

0.02

Diluted weighted average shares outstanding(3)

313,260

241,960

310,860

237,875

Effective tax rate applicable to adjustment items

23.7

%

37.4

%

23.7

%

37.4

%

____________________

(1)

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

(2)

The tax impact is computed utilizing the Company’s effective tax rate applicable to the adjustments for certain non-cash and non-recurring items. The tax impact was not computed for the tax reform rate change adjustments.

(3)

The Company included 3,379,000 of unvested stock awards for the year ended December 31, 2018 and 1,817,513 and 2,889,000 of unvested stock awards for the three months ended and the year ended December 31, 2017, respectively, in computing Adjusted Diluted Income Attributable to Oasis Per Share due to the dilutive effect under the treasury stock method. No unvested stock awards were included in computing Adjusted Diluted Loss Attributable to Oasis Per Share for the three months ended December 31, 2018 because the effect was anti-dilutive due to Adjusted Net Loss Attributable to Oasis.

 

Cision View original content:http://www.prnewswire.com/news-releases/oasis-petroleum-inc-announces-quarter-and-year-ending-december-31-2018-earnings-and-provides-an-operational-update-and-2019-outlook-300802735.html

SOURCE Oasis Petroleum Inc.

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