Oasis Petroleum Inc. Announces Quarter Ended September 30, 2017 Earnings
HOUSTON, Nov. 7, 2017 /PRNewswire/ -- Oasis Petroleum Inc. (NYSE: OAS) ("Oasis" or the "Company") today announced financial results for the quarter ended September 30, 2017 and provided an operational update.
Recent Highlights:
-- Completed and placed on production 24 gross (15.1 net) operated wells in
the Williston Basin in the third quarter of 2017.
-- Produced 66.1 thousand barrels of oil equivalent per day ("MBoepd") in
the third quarter of 2017, representing an increase of 7% over the
second quarter of 2017, primarily driven by completion activity.
Production during the third quarter of 2017 increased 36% over the third
quarter of 2016.
-- Produced over 69 MBoepd in October 2017 and expect to produce between 69
MBoepd and 72 MBoepd in the fourth quarter of 2017. Oasis continues to
expect to hit an exit rate of 72 MBoepd, delivering 16% growth above the
2016 exit rate.
-- Oil differentials have improved to $1.82 off of NYMEX West Texas
Intermediate crude oil index price ("WTI") in the third quarter of 2017,
and Oasis expects differentials in the fourth quarter to range from
$1.25 to $2.00 off of WTI.
-- Delivered Adjusted EBITDA of $179.6 million for the third quarter of
2017. For definitions of Adjusted EBITDA and reconciliations of Adjusted
EBITDA to net income and net cash provided by operating activities, see
"Non-GAAP Financial Measures" below.
-- Commenced operations of its second Oasis Well Services ("OWS") frac crew
during the third quarter of 2017.
-- Oasis Midstream Partners LP ("OMP") sold 8,625,000 common units,
representing limited partner interests in an initial public offering
("IPO" or the "Offering") for net proceeds of $137.2 million, of which
$131.6 million was distributed to Oasis.
-- Announced investment in and assignment of second Wild Basin Gas Plant
("Gas Plant II") with a total capacity of 200 million standard cubic
feet per day ("MMscfpd") to service gas production from its highly
economic inventory.
-- Expects full year 2017 adjusted CapEx to total $620.0 million, in line
with prior guidance. See "Capital Expenditures" below for adjustments.
-- Including net proceeds distributed to Oasis from the OMP IPO and
adjustments for the Gas Plant II assignment, Oasis generated positive
free cash flow of $39.0 million for the nine months ended September 30,
2017.
"Oasis successfully delivered on production growth during the quarter in line with guidance, completed its IPO of OMP, and launched its second frac crew," said Thomas B. Nusz, Oasis' Chairman and Chief Executive Officer. "The team delivered another great quarter and has positioned Oasis to exit the year with 72 MBoepd of production. Well performance across our core acreage position, including Wild Basin, Indian Hills, and Alger, continues to deliver impressive results, and our wells remain highly economic in the current commodity price environment. The team has also further reduced operating costs while driving improved differentials benefiting from our integrated midstream infrastructure."
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, 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 OMP'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 OMP. In exchange for the assignment of Gas Plant II into Bighorn DevCo, OMP agreed to reimburse Oasis for 100% of the capital spent-to-date and will fund 100% of the remaining project capital. OMP funded the reimbursement under its 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.
Operational and Financial Update
Select operational and financial statistics are in the following table:
Quarter Ended:
9/30/2017 6/30/2017 9/30/2016
--------- --------- ---------
Production data:
Oil (Bopd) 51,825 47,795 39,439
Natural gas (Mcfpd) 85,800 84,890 54,421
Total production (Boepd) 66,125 61,943 48,509
Percent Oil 78% 77% 81%
Average sales prices:
Oil, without derivative
settlements (per Bbl) $46.35 $44.61 $40.54
Differential to WTI (per Bbl) 1.82 3.68 4.39
Natural gas (per Mcf)(1) 3.50 3.19 1.84
Revenues ($ in millions):
Oil $221.0 $194.0 $147.1
Natural gas 27.6 24.6 9.2
Bulk oil sales 21.2 8.1 1.9
Midstream revenues 18.8 15.6 8.5
Well services revenues 16.1 11.8 10.6
---- ---- ----
Total revenues $304.7 $254.1 $177.3
====== ====== ======
Midstream and well services
operating expenses ($ in
millions):
Midstream operating expenses $4.3 $3.3 $2.6
Well services operating
expenses 9.1 8.1 5.5
Select exploration and
production (E&P) operating
expenses:
LOE ($ per Boe) $7.45 $7.92 $8.00
MT&G ($ per Boe)(2) 2.50 2.14 1.58
DD&A ($ per Boe) 21.75 22.23 25.08
E&P general and administrative
expenses ("G&A") ($ per Boe) 2.93 3.52 4.31
Production taxes (% of oil and
gas revenues)(3) 8.5% 8.7% 9.4%
___________________
(1) Natural gas prices include the value
for natural gas and natural gas
liquids.
(2) Excludes non-cash valuation charges
on pipeline imbalances.
(3) Prior to the first quarter of 2017,
oil and gas revenues included bulk
oil sales related to blending at
the Company's crude oil terminal on
the Company's Condensed
Consolidated Statements of
Operations. Prior periods have been
adjusted retrospectively to reflect
these revenues in bulk oil sales on
the Company's Condensed
Consolidated Statements of
Operations.
G&A totaled $22.5 million in the third quarter of 2017, $22.8 million in the third quarter of 2016 and $23.5 million in the second quarter of 2017. Amortization of equity-based compensation, which is included in G&A, was $6.6 million, or $1.09 per Boe, in the third quarter of 2017 as compared to $5.8 million, or $1.30 per Boe, in the third quarter of 2016 and $7.1 million, or $1.26 per Boe, in the second quarter of 2017. G&A for the Company's E&P segment totaled $17.8 million in the third quarter of 2017, $19.2 million in the third quarter of 2016 and $19.8 million in the second quarter of 2017.
Interest expense was $37.4 million for the third quarter of 2017 compared to $31.7 million for the third quarter of 2016 and $36.8 million for the second quarter of 2017. Capitalized interest totaled $3.1 million for the third quarter of 2017, $4.4 million for the third quarter of 2016 and $2.8 million for the second quarter of 2017. Cash Interest totaled $36.2 million for the third quarter of 2017, $33.7 million for the third quarter of 2016 and $35.5 million for the second quarter of 2017. For a definition of Cash Interest and a reconciliation of interest expense to Cash Interest, see "Non-GAAP Financial Measures" below.
For the three months ended September 30, 2017, the Company recorded an income tax benefit of $18.8 million, resulting in a 31.5% effective tax rate as a percentage of its pre-tax loss for the quarter. The Company recorded an income tax expense of $2.3 million, resulting in a 12.4% effective tax rate as a percentage of its pre-tax income for the three months ended June 30, 2017.
For the third quarter of 2017, the Company reported net loss of $41.1 million, or $0.18 per diluted share, as compared to a net loss of $33.9 million, or $0.19 per diluted share, for the third quarter of 2016. Excluding certain non-cash items and their tax effect, Adjusted Net Income Attributable to Oasis (non-GAAP) was $0.5 million, or $0.00 per diluted share, in the third quarter of 2017, compared to Adjusted Net Loss Attributable to Oasis of $29.3 million, or $0.17 per diluted share, in the third quarter of 2016. For a definition of Adjusted Net Income (Loss) Attributable to Oasis and a reconciliation of net income (loss) to Adjusted Net Income (Loss) Attributable to Oasis, see "Non-GAAP Financial Measures" below. Adjusted EBITDA for the third quarter of 2017 was $179.6 million, compared to Adjusted EBITDA of $104.4 million for the third quarter of 2016. For a definition of Adjusted EBITDA and a reconciliation of net income (loss) including non-controlling interests and net cash provided by (used in) operating activities to Adjusted EBITDA, see "Non-GAAP Financial Measures" below.
Capital Expenditures
The following table depicts the Company's total CapEx by category:
1Q 2017 2Q 2017 3Q 2017 YTD 2017
------- ------- ------- --------
CapEx ($ in
millions):
E&P $90.8 $100.8 $149.9 $341.5
Midstream 13.1 66.1 79.6 158.9
Well services - 0.3 5.1 5.4
Other(1) 5.9 5.8 5.7 17.3
--- --- --- ----
Total CapEx(2) $109.8 $173.0 $240.3 $523.1
====== ====== ====== ======
___________________
(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.
The Company's CapEx totaled $523.1 million for the nine months ended September 30, 2017, of which $57.0 million was reimbursed by OMP with the assignment of Gas Plant II. Additionally, the Company acquired a freshwater intake facility from the Missouri River and a freshwater distribution system that it is expanding to service a portion of the Company's completion activity in Wild Basin (the "Freshwater Project"). The Freshwater Project costs for the nine months ended September 30, 2017, including the acquisition, have totaled approximately $23.0 million. At the time of the OMP IPO, the Freshwater Project was included in Beartooth DevCo LLC, which is 60% owned by Oasis. Excluding the Gas Plant II and the Freshwater Project, CapEx would have totaled $443.0 million for the nine months ended September 30, 2017, which is in line with the Company's CapEx plan for the nine months ended September 30, 2017. Excluding the Gas Plant II and the Freshwater Project for the full year 2017 CapEx, Oasis continues to expect adjusted CapEx to be approximately $620.0 million, which includes $15.0 million for activating the second frac spread for OWS.
Updated Guidance
Oasis is providing an update to its outlook for the full year 2017 in the following table:
Updated FY17 Prior FY17
Metric Low High Low High
------ --- ---- --- ----
Production
(MBoepd) 65.1 65.8 65.1 66.1
Differentials
($
per
Bbl) $2.80 $3.00 $3.00 $4.00
MT&G
($
per
Boe) $2.20 $2.30 $1.90 $2.20
LOE
($
per
Boe) $7.50 $7.70 $6.75 $7.75
G&A
($
in
millions) $92.5 $97.5 $95.0 $100.0
Production
Taxes
(%
of
oil
and
gas
revenue) 8.5% 8.6% 8.7% 9.0%
Hedging Activity
As of November 7, 2017, the Company had the following outstanding commodity derivative contracts, which settle monthly and are priced off of WTI for crude oil and NYMEX Henry Hub for natural gas:
Crude oil (Volume in Mbopd) 2H17 1H18 2H18 1H19
---- ---- ---- ----
Swaps
Volume 14.3 37.0 35.0 7.0
Price $50.03 $50.89 $50.84 $50.82
Collars
Volume 4.0 3.0 3.0 -
Floor $46.25 $48.67 $48.67 $ -
Ceiling $54.37 $53.07 $53.07 $ -
3-way
Volume 3.0 - - -
Sub-Floor $31.67 $ - $ - $ -
Floor $45.83 $ - $ - $ -
Ceiling $59.94 $ - $ - $ -
------ --- --- --- --- --- ---
Total Crude Oil Volume 21.3 40.0 38.0 7.0
---- ---- ---- ---
Natural Gas (Volume in MMBtupd)
Swaps
Volume 11.0 19.0 19.0 -
Price $3.30 $3.05 $3.05 $ -
Total Natural Gas Volume 11.0 19.0 19.0 -
---- ---- ---- ---
The September 2017 crude oil derivative contracts settled at a net $0.1 million paid in October 2017 and will be included in the Company's fourth quarter 2017 derivative settlements.
Conference Call Information
Investors, analysts and other interested parties are invited to listen to the conference call:
Date: Wednesday, November 8, 2017
Time: 10:00 a.m. Central Time
Live Webcast: https://www.webcaster4.com/Webcast/Page/1052/23152
--------------------------------------------------
OR:
Dial-in: 888-317-6003
Intl. Dial
in: 412-317-6061
Conference
ID: 2353150
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, November 15, 2017 by dialing:
Replay dial-in: 877-344-7529
Intl. replay: 412-317-0088
Replay code: 10113619
The conference call will also be available for replay for approximately 30 days at www.oasispetroleum.com.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that the Company expects, believes or anticipates will or may occur in the future are forward-looking statements. Without limiting the generality of the foregoing, forward-looking statements contained in this press release specifically include the expectations of plans, strategies, objectives and anticipated financial and operating results of the Company, including the Company's drilling program, production, derivative instruments, capital expenditure levels and other guidance included in this press release. These statements are based on certain assumptions made by the Company based on management's experience and perception of historical trends, current conditions, anticipated future developments and other factors believed to be appropriate. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the Company, which may cause actual results to differ materially from those implied or expressed by the forward-looking statements. These include, but are not limited to, changes in oil and natural gas prices, weather and environmental conditions, the timing of planned capital expenditures, availability of acquisitions, uncertainties in estimating proved reserves and forecasting production results, operational factors affecting the commencement or maintenance of producing wells, the condition of the capital markets generally, as well as the Company's ability to access them, the proximity to and capacity of transportation facilities, and uncertainties regarding environmental regulations or litigation and other legal or regulatory developments affecting the Company's business and other important factors that could cause actual results to differ materially from those projected as described in the Company's reports filed with the SEC.
Any forward-looking statement speaks only as of the date on which such statement is made and the Company undertakes no obligation to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by applicable law.
About Oasis Petroleum Inc.
Oasis is an independent exploration and production company focused on the acquisition and development of unconventional oil and natural gas resources, 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 Sheets
(Unaudited)
September 30, 2017 December 31, 2016
------------------ -----------------
(In thousands, except share data)
ASSETS
Current assets
Cash and cash equivalents $8,488 $11,226
Accounts receivable, net 285,383 204,335
Inventory 17,169 10,648
Prepaid expenses 10,647 7,623
Derivative instruments 692 362
Other current assets 65 4,355
--- -----
Total current assets 322,444 238,549
------- -------
Property, plant and equipment
Oil and gas properties (successful
efforts method) 7,640,785 7,296,568
Other property and equipment 783,542 618,790
Less: accumulated depreciation,
depletion, amortization and
impairment (2,388,709) (1,995,791)
---------- ----------
Total property, plant and equipment,
net 6,035,618 5,919,567
--------- ---------
Derivative instruments 703 -
Long-term inventory 10,885 -
Other assets 21,562 20,516
------ ------
Total assets $6,391,212 $6,178,632
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $16,348 $4,645
Revenues and production taxes
payable 169,361 139,737
Accrued liabilities 194,157 119,173
Accrued interest payable 20,325 39,004
Derivative instruments 16,412 60,469
Advances from joint interest
partners 5,095 7,597
Other current liabilities - 10,490
--- ------
Total current liabilities 421,698 381,115
------- -------
Long-term debt 2,340,613 2,297,214
Deferred income taxes 508,335 513,529
Asset retirement obligations 52,413 48,985
Derivative instruments 3,703 11,714
Other liabilities 5,805 2,918
----- -----
Total liabilities 3,332,567 3,255,475
--------- ---------
Commitments and contingencies
Stockholders' equity
Common stock, $0.01 par value:
450,000,000 shares authorized;
238,639,488 shares issued and
237,312,881 shares outstanding at
September 30, 2017 and 237,201,064
shares issued and 236,344,172
shares outstanding at December 31,
2016 2,348 2,331
Treasury stock, at cost: 1,326,607
and 856,892 shares at September 30,
2017 and December 31, 2016,
respectively (22,132) (15,950)
Additional paid-in capital 2,369,098 2,345,271
Retained earnings 593,368 591,505
Oasis share of stockholders' equity 2,942,682 2,923,157
Non-controlling interests 115,963 -
------- ---
Total stockholders' equity 3,058,645 2,923,157
--------- ---------
Total liabilities and stockholders'
equity $6,391,212 $6,178,632
========== ==========
Oasis Petroleum Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016
---- ---- ---- ----
(In thousands, except per share data)
Revenues
Oil and gas revenues $248,648 $156,316 $704,533 $432,968
Bulk oil sales 21,195 1,867 56,917 1,867
Midstream revenues 18,767 8,487 48,939 22,380
Well services revenues 16,138 10,641 33,566 29,459
Total revenues 304,748 177,311 843,955 486,674
------- ------- ------- -------
Operating expenses
Lease operating expenses 45,334 35,696 133,871 98,283
Midstream operating
expenses 4,301 2,617 10,891 6,095
Well services operating
expenses 9,125 5,548 21,115 15,334
Marketing, transportation
and gathering expenses 15,028 7,003 38,018 22,046
Bulk oil purchases 21,701 1,853 57,683 1,853
Production taxes 21,052 14,638 60,322 39,758
Depreciation, depletion and
amortization 132,289 111,948 384,246 356,885
Exploration expenses 854 489 4,010 1,192
Impairment 139 382 6,021 3,967
General and administrative
expenses 22,531 22,845 69,913 69,087
------ ------ ------ ------
Total operating expenses 272,354 203,019 786,090 614,500
------- ------- ------- -------
Gain (loss) on sale of
properties - 6 - (1,305)
--- --- --- ------
Operating income (loss) 32,394 (25,702) 57,865 (129,131)
------ ------- ------ --------
Other income (expense)
Net gain (loss) on
derivative instruments (54,310) 20,847 52,297 (55,624)
Interest expense, net of
capitalized interest (37,389) (31,726) (110,548) (105,444)
Gain (loss) on
extinguishment of debt - (13,793) - 4,865
Other income (expense) (605) (259) (755) 188
---- ---- ---- ---
Total other expense (92,304) (24,931) (59,006) (156,015)
------- ------- ------- --------
Loss before income taxes (59,910) (50,633) (1,141) (285,146)
Income tax benefit 18,846 16,691 470 96,818
Net loss including non-
controlling interests (41,064) (33,942) (671) (188,328)
Less: Net income
attributable to non-
controlling interests 150 - 150 -
--- --- --- ---
Net loss attributable to
Oasis $(41,214) $(33,942) $(821) $(188,328)
======== ======== ===== =========
Earnings (loss) attributable to Oasis per
share:
Basic $(0.18) $(0.19) $0.00 $(1.09)
Diluted (0.18) (0.19) 0.00 (1.09)
Weighted average shares outstanding:
Basic 233,389 177,120 233,248 172,360
Diluted 233,389 177,120 233,248 172,360
Oasis Petroleum Inc.
Selected Financial and Operational Statistics
(Unaudited)
Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
---- ---- ---- ----
Operating results (in thousands):
Revenues
Oil $221,004 $147,095 $623,603 $411,201
Natural gas 27,644 9,221 80,930 21,767
Bulk oil sales 21,195 1,867 56,917 1,867
Midstream 18,767 8,487 48,939 22,380
Well services 16,138 10,641 33,566 29,459
------ ------ ------ ------
Total revenues $304,748 $177,311 $843,955 $486,674
-------- -------- -------- --------
Production data:
Oil (MBbls) 4,768 3,628 13,552 11,245
Natural gas (MMcf) 7,894 5,007 23,131 13,809
Oil equivalents (MBoe) 6,083 4,463 17,408 13,547
Average daily production
(Boe per day) 66,125 48,509 63,764 49,440
Average sales prices:
Oil, without derivative
settlements (per Bbl) $46.35 $40.54 $46.02 $36.57
Oil, with derivative
settlements (per Bbl)(1) 43.50 43.79 41.70 46.85
Natural gas (per Mcf)(2) 3.50 1.84 3.50 1.58
Costs and expenses (per Boe of production):
Lease operating expenses $7.45 $8.00 $7.69 $7.26
Marketing, transportation
and gathering expenses(3) 2.50 1.58 2.16 1.58
Production taxes 3.46 3.28 3.47 2.93
Depreciation, depletion and
amortization 21.75 25.08 22.07 26.35
General and administrative
expenses ("G&A") 3.70 5.12 4.02 5.10
Exploration and production
G&A 2.93 4.31 3.32 4.28
___________________
(1) Realized prices include gains
or losses on cash settlements
for commodity derivatives,
which do not qualify for or
were not designated as hedging
instruments for accounting
purposes. Cash settlements
represent the cumulative gains
and losses on the Company's
derivative instruments for the
periods presented and do not
include a recovery of costs
that were paid to acquire or
modify the derivative
instruments that were settled.
(2) Natural gas prices include the
value for natural gas and
natural gas liquids.
(3) Excludes non-cash valuation
charges on pipeline
imbalances.
Oasis Petroleum Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Nine Months Ended September 30,
2017 2016
---- ----
(In thousands)
Cash flows from operating activities:
Net loss including non-controlling interests $(671) $(188,328)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation, depletion and amortization 384,246 356,885
Gain on extinguishment of debt - (4,865)
Loss on sale of properties - 1,305
Impairment 6,021 3,967
Deferred income taxes (470) (96,818)
Derivative instruments (52,297) 55,624
Equity-based compensation expenses 20,451 18,761
Deferred financing costs amortization and
other 12,666 10,174
Working capital and other changes:
Change in accounts receivable (81,022) 11,349
Change in inventory (235) 2,559
Change in prepaid expenses 823 1,168
Change in other current assets 276 (240)
Change in long-term inventory and other
assets (12,843) (148)
Change in accounts payable, interest payable
and accrued liabilities 32,282 (41,991)
Change in other current liabilities (10,490) (6,000)
Change in other liabilities - 17
--- ---
Net cash provided by operating activities 298,737 123,419
------- -------
Cash flows from investing activities:
Capital expenditures (443,649) (340,314)
Proceeds from sale of properties 4,000 12,333
Costs related to sale of properties - (310)
Derivative settlements (804) 115,576
Advances from joint interest partners (2,502) 544
------ ---
Net cash used in investing activities (442,955) (212,171)
-------- --------
Cash flows from financing activities:
Proceeds from revolving credit facility 764,000 835,000
Principal payments on revolving credit
facility (732,000) (778,000)
Repurchase of senior unsecured notes - (435,907)
Proceeds from issuance of senior unsecured
convertible notes - 300,000
Deferred financing costs (96) (8,811)
Proceeds from sale of common stock - 182,791
Proceeds from sale of OMP common units, net
of offering costs 115,813 -
Purchases of treasury stock (6,182) (2,275)
Other (55) -
Net cash provided by financing activities 141,480 92,798
------- ------
Increase (decrease) in cash and cash
equivalents (2,738) 4,046
Cash and cash equivalents:
Beginning of period 11,226 9,730
------ -----
End of period $8,488 $13,776
====== =======
Supplemental non-cash transactions:
Change in accrued capital expenditures $63,499 $(49,177)
Change in asset retirement obligations 3,112 (8,083)
Notes payable from acquisition 4,875 -
Non-GAAP Financial Measures
Cash Interest is a supplemental non-GAAP financial measure that is used by management and external users of the Company's financial statements, such as industry analysts, investors, lenders and rating agencies. The Company defines Cash Interest as interest expense plus capitalized interest less amortization and write-offs of deferred financing costs and debt discounts included in interest expense. Cash Interest is not a measure of interest expense as determined by United States generally accepted accounting principles, or GAAP.
The following table presents a reconciliation of the GAAP financial measure of interest expense to the non-GAAP financial measure of Cash Interest for the periods presented:
Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
---- ---- ---- ----
(In thousands)
Interest expense $37,389 $31,726 $110,548 $105,444
Capitalized interest 3,137 4,380 8,773 13,683
Amortization of deferred
financing costs (1,729) (2,095) (5,128) (8,042)
Amortization of debt
discount (2,591) (300) (7,426) (300)
------ ---- ------ ----
Cash Interest $36,206 $33,711 $106,767 $110,785
======= ======= ======== ========
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 charges. The Company defines Free Cash Flow as Adjusted EBITDA less Cash Interest and CapEx, excluding capitalized interest. Adjusted EBITDA and Free Cash Flow are not measures of net income (loss) or cash flows as determined by GAAP.
The following table presents reconciliations of the GAAP financial measures of net income (loss) including non-controlling interests and net cash provided by (used in) operating activities to the non-GAAP financial measures of Adjusted EBITDA and Free Cash Flow for the periods presented:
Three Months Ended September 30, Nine Months Ended September 30,
--------------------------------
2017 2016 2017 2016
---- ---- ---- ----
(In thousands)
Net loss including non-
controlling interests $(41,064) $(33,942) $(671) $(188,328)
(Gain) loss on sale of
properties - (6) - 1,305
(Gain) loss on extinguishment
of debt - 13,793 - (4,865)
Net (gain) loss on derivative
instruments 54,310 (20,847) (52,297) 55,624
Derivative settlements(1) 8,095 11,786 (804) 115,576
Interest expense, net of
capitalized interest 37,389 31,726 110,548 105,444
Depreciation, depletion and
amortization 132,289 111,948 384,246 356,885
Impairment 139 382 6,021 3,967
Exploration expenses 854 489 4,010 1,192
Equity-based compensation
expenses 6,628 5,782 20,451 18,761
Income tax benefit (18,846) (16,691) (470) (96,818)
Other non-cash adjustments (208) (26) 491 697
Adjusted EBITDA 179,586 104,394 471,525 369,440
Adjusted EBITDA attributable
to non-controlling interests 190 - 190 -
--- --- --- ---
Adjusted EBITDA attributable
to Oasis 179,396 104,394 471,335 369,440
------- ------- ------- -------
Cash Interest (36,206) (33,711) (106,767) (110,785)
Capital expenditures(2) (240,373) (78,453) (523,143) (297,696)
Capitalized interest 3,137 4,380 8,773 13,683
----- ----- ----- ------
Free Cash Flow $(94,046) $(3,390) $(149,802) $(25,358)
======== ======= ========= ========
Net cash provided by operating
activities $88,876 $32,018 $298,737 $123,419
Derivative settlements(1) 8,095 11,786 (804) 115,576
Interest expense, net of
capitalized interest 37,389 31,726 110,548 105,444
Exploration expenses 854 489 4,010 1,192
Deferred financing costs
amortization and other (3,795) (3,622) (12,666) (10,174)
Changes in working capital 48,375 32,023 71,209 33,286
Other non-cash adjustments (208) (26) 491 697
Adjusted EBITDA 179,586 104,394 471,525 369,440
Adjusted EBITDA attributable
to non-controlling interests 190 - 190 -
--- --- --- ---
Adjusted EBITDA attributable
to Oasis 179,396 104,394 471,335 369,440
------- ------- ------- -------
Cash Interest (36,206) (33,711) (106,767) (110,785)
Capital expenditures(2) (240,373) (78,453) (523,143) (297,696)
Capitalized interest 3,137 4,380 8,773 13,683
----- ----- ----- ------
Free Cash Flow $(94,046) $(3,390) $(149,802) $(25,358)
======== ======= ========= ========
___________________
(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 September 30, Nine Months Ended September 30,
2017 2016 2017 2016
---- ---- ---- ----
(In thousands)
Loss before income taxes
including non-controlling
interests $(88,835) $(66,333) $(71,999) $(331,075)
(Gain) loss on sale of
properties - (6) - 1,663
(Gain) loss on extinguishment
of debt - 13,793 - (4,865)
Net (gain) loss on derivative
instruments 54,310 (20,847) (52,297) 55,624
Derivative settlements(1) 8,095 11,786 (804) 115,576
Interest expense, net of
capitalized interest 37,369 31,726 110,528 105,444
Depreciation, depletion and
amortization 129,626 109,668 376,818 346,240
Impairment 139 382 6,021 1,536
Exploration expenses 854 489 4,010 1,192
Equity-based compensation
expenses 6,344 5,570 19,741 17,495
Other non-cash adjustments (208) (26) 491 697
---- --- --- ---
Adjusted EBITDA $147,694 $86,202 $392,509 $309,527
======== ======= ======== ========
___________________
(1) Cash settlements represent the
cumulative gains and losses
on the Company's derivative
instruments for the periods
presented and do not include
a recovery of costs that were
paid to acquire or modify the
derivative instruments that
were settled.
Midstream Services
Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
---- ---- ---- ----
(In thousands)
Income before income taxes
including non-controlling
interests $25,179 $16,065 $69,046 $49,262
Gain on sale of properties - - - (358)
Interest expense, net of
capitalized interest 20 - 20 -
Depreciation, depletion and
amortization 4,163 1,909 11,375 5,325
Impairment - - - 2,431
Equity-based compensation
expenses 392 218 1,104 661
--- --- ----- ---
Adjusted EBITDA $29,754 $18,192 $81,545 $57,321
======= ======= ======= =======
Well Services
Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
---- ---- ---- ----
(In thousands)
Income before income taxes
including non-controlling
interests $10,832 $1,577 $9,195 $3,462
Depreciation, depletion and
amortization 3,196 3,478 9,417 11,605
Equity-based compensation
expenses 281 354 1,015 1,253
--- --- ----- -----
Adjusted EBITDA $14,309 $5,409 $19,627 $16,320
======= ====== ======= =======
Adjusted Net Income (Loss) Attributable to Oasis and Adjusted Diluted Earnings (Loss) Attributable to Oasis Per Share are supplemental non-GAAP financial measures that are used by management and external users of the Company's financial statements, such as industry analysts, investors, lenders and rating agencies. The Company defines Adjusted Net Income (Loss) Attributable to Oasis as net income (loss) after adjusting first for (1) the impact of certain non-cash items, including non-cash changes in the fair value of derivative instruments, impairment, and other similar non-cash charges, or non-recurring items, (2) the impact of net income attributable to non-controlling interests and (3) the non-cash and non-recurring items' impact on taxes based on the Company's effective tax rate applicable to those adjusting items in the same period. Adjusted Net Income (Loss) Attributable to Oasis is not a measure of net income (loss) as determined by GAAP. The Company defines Adjusted Diluted Earnings (Loss) Attributable to Oasis Per Share as Adjusted Net Income (Loss) Attributable to Oasis divided by diluted weighted average shares outstanding.
The following table presents reconciliations of the GAAP financial measure of net income (loss) attributable to Oasis to the non-GAAP financial measure of Adjusted Net Income (Loss) Attributable to Oasis and the GAAP financial measure of diluted earnings (loss) attributable to Oasis per share to the non-GAAP financial measure of Adjusted Diluted Earnings (Loss) Attributable to Oasis Per Share for the periods presented:
Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
---- ---- ---- ----
(In thousands, except per share data)
Net loss attributable to Oasis $(41,214) $(33,942) $(821) $(188,328)
(Gain) loss on sale of
properties - (6) - 1,305
(Gain) loss on extinguishment
of debt - 13,793 - (4,865)
Net (gain) loss on derivative
instruments 54,310 (20,847) (52,297) 55,624
Derivative settlements(1) 8,095 11,786 (804) 115,576
Impairment 139 382 6,021 3,967
Amortization of deferred
financing costs 1,728 2,095 5,127 8,042
Amortization of debt discount 2,591 300 7,426 300
Other non-cash adjustments (208) (26) 491 697
Tax impact(2) (24,941) (2,798) 12,735 (67,598)
------- ------ ------ -------
Adjusted Net Income (Loss)
Attributable to Oasis $500 $(29,263) $(22,122) $(75,280)
==== ======== ======== ========
Diluted loss attributable to
Oasis per share $(0.18) $(0.19) $ - $(1.09)
Loss on sale of properties - - - 0.01
(Gain) loss on extinguishment
of debt - 0.08 - (0.03)
Net (gain) loss on derivative
instruments 0.23 (0.12) (0.22) 0.32
Derivative settlements(1) 0.03 0.07 - 0.67
Impairment - - 0.03 0.02
Amortization of deferred
financing costs 0.01 0.01 0.02 0.05
Amortization of debt discount 0.01 - 0.03 -
Tax impact(2) (0.10) (0.02) 0.05 (0.39)
----- ----- ---- -----
Non-GAAP Diluted Loss
Attributable to Oasis Per
Share $ - $(0.17) $(0.09) $(0.44)
=== === ====== ====== ======
Diluted weighted average
shares outstanding 233,389 177,120 233,248 172,360
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) The tax impact is computed
utilizing the Company's
effective tax rate applicable
to the adjustments for certain
non-cash and non-recurring
items.
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SOURCE Oasis Petroleum Inc.
