Oasis Midstream Partners LP Announces Quarter Ended June 30, 2019 Earnings
HOUSTON, Aug. 6, 2019 /PRNewswire/ -- Oasis Midstream Partners LP (NYSE: OMP) ("OMP" or the "Partnership") today announced financial and operating results for the second quarter of 2019.
2Q 2019 Highlights:
-- Declared the quarterly cash distribution of $0.49 per unit, an
approximate 5% increase from 1Q 2019.
-- Net income was $49.0 million and net cash from operating activities was
$56.0 million.
-- Delivered $61.9 million of Adjusted EBITDA((1)) and $36.1 million of net
Adjusted EBITDA to the Partnership((1)).
-- Generated $28.8 million of DCF((1)), resulting in distribution coverage
of 1.7x.
-- Experienced operational downtime at the Wild Basin gas processing
complex, which was fully restored beginning mid-July. Crude oil and
natural gas volumes were adversely impacted by the downtime, resulting
in lower than anticipated Adjusted EBITDA, DCF and distribution
coverage. Adjusting for downtime, OMP would have realized distribution
coverage of approximately 1.9x.
-- Exceeded guidance related to water service volumes. Volumes increased
13% from 2Q 2018 to 52.4 MBowpd in Bobcat DevCo and 3% from 2Q 2018 to
143.7 MBowpd in Beartooth DevCo.
-- Increased third-party natural gas volumes in Bighorn DevCo by
approximately 94% from 1Q 2019 to 59.3 MMscfpd (30% of total natural gas
volumes of 201.6 MMscfpd).
((1) )Non-GAAP measure. See "Non-GAAP Financial Measures" below for definitions of all non-GAAP measures included herein and reconciliations to the most directly comparable measures under United States generally accepted accounting principles ("GAAP").
"Oasis Midstream Partners remains on track to deliver our targeted 20% annual growth in distributions per unit while simultaneously increasing coverage in coming quarters," said Taylor Reid, Chief Executive Officer of OMP. "We successfully delivered a strong second quarter performance, despite operational downtime at our gas complex. Our resilient financial results highlight the strength and diversity of our portfolio, with strong performance in most commodities offsetting transitory weakness in natural gas. Our coverage outlook remains strong and on track to range from 1.9x to 2.0x exiting 2019. We are ahead of schedule on most infrastructure projects and we continue to build out our Panther DevCo, which will support growth for years to come while maintaining strong coverage."
Outlook Update
-- Estimate 2019 Adjusted EBITDA, net to the Partnership, to be $154
million to $161 million, including 2Q 2019 performance.
-- Estimate gross Adjusted EBITDA by DevCo in 2019 - Bighorn DevCo: $74
million to $76 million, Bobcat DevCo: $124 million to $127 million,
Beartooth DevCo: $61 million to $64 million, and Panther DevCo: $1
million to $3 million.
-- Panther DevCo is expected to be assigned to OMP by September 1, 2019.
-- Anticipate distribution coverage for 3Q 2019 of 1.8x to 1.9x and 4Q 2019
of 1.9x to 2.0x, unchanged from last update.
-- Updated 2019 CapEx plan to a range of $203 million to $214 million, net
to OMP. Incremental spending primarily relates to capturing third-party
business, incremental plant costs, and an acceleration of certain
gathering infrastructure from 2020 to 2019. CapEx in 3Q 2019 is expected
to increase compared to 2Q 2019 with the closing of the Panther DevCo
assignment.
-- Expect maintenance CapEx for full year 2019 to range between 6% of
Adjusted EBITDA and 8% of Adjusted EBITDA, with 3Q 2019 around 10% of
Adjusted EBITDA.
-- OMP continues to pursue incremental third-party business in both the
Williston and Delaware basins.
Operational and Financial Update
The following table presents select operational and financial data for the periods presented:
Three Months Ended June 30, 2019
OMP Gross Net
Ownership(1)
(In millions)
Bighorn DevCo
---
Operating income 100
% $
13.1 $
13.1
Depreciation and 100
amortization % 3.0 3.0
Total CapEx 100
% 5.8 5.8
Bobcat DevCo
---
Operating income 32.5
% $
26.0 $
7.6
Depreciation and 32.5
amortization % 3.2 1.0
Total CapEx(2) 32.5
% 63.7 60.0
Beartooth DevCo
---
Operating income 70
% $
15.0 $
10.5
Depreciation and 70
amortization % 2.4 1.6
Total CapEx 70
% 7.0 4.9
Total OMP
---
DevCo operating income $
54.1 $
31.2
Public company expenses 0.8 0.8
Partnership operating
income 53.3 30.4
Depreciation and
amortization 8.6 5.6
Equity-based compensation
expense 0.1 0.1
Capitalized interest 0.2 0.2
Total CapEx(3) 76.7 70.9
Maintenance CapEx 7.2 3.2
Expansion CapEx 69.5 67.7
__________________
(1) Represents OMP's ownership in each DevCo as of
June 30, 2019.
(2) Pursuant to the 2019 Capital Expenditures
Arrangement, OMP is funding up to $80.0 million of
expansion capital expenditures to Bobcat DevCo that
Oasis Petroleum would otherwise be required to
contribute to Bobcat DevCo during the 2019 calendar
year. See "2019 Capital Expenditures Arrangement"
below.
(3) Includes capitalized interest recorded on OMP
Operating LLC of $0.2 million for the three months
ended June 30, 2019.
The following table shows actual volumes for the second quarter of 2019, provides volumes guidance for the third quarter of 2019 and updates volumes guidance for the full year 2019:
Metric 2Q19 Actual
3Q19 Guidance
FY19 Guidance
Bighorn
DevCo
---
Crude oil
service
volumes
MBopd 51.8
43 - 48
46 - 49
Natural gas
service
volumes
MMscfpd 201.6
220 - 235
215 - 225
Bobcat DevCo
---
Crude oil
service
volumes
MBopd 41.3
38 - 43
39 - 42
Natural gas
service
volumes
MMscfpd 241.7
270 - 290
260 - 270
Water
service
volumes
MBowpd 52.4
47 - 50
49 - 52
Beartooth
DevCo
---
Water
service
volumes
MBowpd 143.7
110 - 120
120 - 130
2019 Capital Expenditures Arrangement
On February 22, 2019, the Partnership entered into a capital expenditures arrangement with Oasis Petroleum (the "2019 Capital Expenditures Arrangement"). Pursuant to this arrangement, in exchange for increasing its percentage ownership interest in Bobcat DevCo, the Partnership will cover up to $80.0 million of the capital contributions that Oasis Petroleum would otherwise be required to contribute to Bobcat DevCo during the 2019 calendar year. This arrangement provides an opportunity for the Partnership to increase its scale in an accretive manner while lowering the capital requirements of its sponsor. During the six months ended June 30, 2019, the Partnership made capital contributions to Bobcat DevCo pursuant to the 2019 Capital Expenditures Arrangement of $52.8 million, and the Partnership's ownership interest in Bobcat DevCo increased from 25% as of December 31, 2018 to 32.5% as of June 30, 2019. The Partnership's average ownership interest in Bobcat DevCo during the second quarter of 2019 was approximately 31.2%.
Liquidity and CapEx
As of June 30, 2019, the Partnership had cash and cash equivalents of $6.2 million, $408.0 million of borrowings outstanding under its revolving credit facility and an $8.2 million outstanding letter of credit under its revolving credit facility. The Partnership's unused borrowing capacity as of June 30, 2019 was $58.8 million.
Quarterly Distribution
On May 29, 2019, the Partnership paid the quarterly cash distribution of $0.47 per unit related to the first quarter of 2019. On August 6, 2019, the Board of Directors of the General Partner declared the quarterly cash distribution for the second quarter of 2019 of $0.49 per unit. In addition, the General Partner will receive a cash distribution of $0.5 million attributable to the incentive distribution rights related to the earnings for the second quarter of 2019. These distributions will be payable on August 28, 2019 to unitholders of record as of August 16, 2019.
Qualified Notice
This release is intended to be a qualified notice under Treasury Regulation Section 1.1446-4(b). Brokers and nominees should treat one hundred percent (100.0%) of the Partnership's distributions to non-U.S. investors as being attributable to income that is effectively connected with a United States trade or business. Accordingly, the Partnership's distributions to non-U.S. investors are subject to federal income tax withholding at the highest applicable effective tax rate.
Conference Call Information
Investors, analysts and other interested parties are invited to listen to the webcast and call:
Date:
Wednesday, August 7, 2019
Time:
11:30 a.m. Central Time
Live
Webcast:
https://www.webcaster4.com/Webcast/Page/1777/31146
Website:
www.oasismidstream.com
Sell-side analysts with a question may use the following dial-in:
Dial-in:
888-317-6003
Intl. Dial in:
412-317-6061
Conference ID: 5196987
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, August 14, 2019 by dialing:
Replay dial-in:
877-344-7529
Intl. replay:
412-317-0088
Replay code: 10133702
The conference call will also be available for replay for approximately 30 days at www.oasismidstream.com.
Contact:
Oasis Midstream Partners LP
Bob Bakanauskas, (281) 404-9600
Director, Investor Relations
Forward-Looking Statements
This press release contains forward-looking statements. 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, the ability to consummate the Delaware Midstream Opportunity and realize the anticipated benefits therefrom, changes in crude 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 crude 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)
June 30, 2019 December 31, 2018
(In thousands, except unit data)
ASSETS
Current assets
Cash and cash equivalents $
6,246 $
6,649
Accounts receivable 6,010 2,481
Accounts receivable -Oasis
Petroleum 80,088 80,805
Prepaid expenses 1,267 1,418
Other current assets - 22
Total current assets 93,611 91,375
Property, plant and equipment 1,060,379 933,155
Less: accumulated depreciation
and amortization (80,160) (62,730)
Total property, plant and
equipment, net 980,219 870,425
Operating lease right-of-use
assets 3,642
Other assets 3,385 2,452
Total assets $
1,080,857 $
964,252
LIABILITIES AND EQUITY
Current liabilities
Accounts payable $
1,522 $
2,180
Accounts payable -Oasis
Petroleum 34,873 33,014
Accrued liabilities 56,930 57,657
Accrued interest payable 293 442
Current operating lease
liabilities 2,051
Other current liabilities 610
Total current liabilities 96,279 93,293
Long-term debt 408,000 318,000
Asset retirement obligations 1,564 1,514
Operating lease liabilities 1,597
Other liabilities 553
Total liabilities 507,993 412,807
Equity
Limited partners
Common units (20,045,196 and
20,029,026 issued and
outstanding at June 30, 2019
and December 31, 2018,
respectively) 205,009 192,581
Subordinated units (13,750,000
units issued and outstanding
at June 30, 2019 and December
31, 2018) 52,233 45,937
General Partner 491 112
Total partners' equity 257,733 238,630
Non-controlling interests 315,131 312,815
Total equity 572,864 551,445
Total liabilities and equity $
1,080,857 $
964,252
===
OASIS MIDSTREAM PARTNERS LP
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended June 30, Six Months Ended June 30,
2019 2018 2019 2018
(In thousands, except per unit data)
Revenues
Midstream services -
Oasis Petroleum $
71,452 $
60,715 $
146,314 $
118,344
Midstream services -
third parties 1,825 663 2,952 957
Product sales - Oasis
Petroleum 24,348 3,909 40,000 7,393
Product sales - third
parties 19 1,271 29 1,285
Total revenues 97,644 66,558 189,295 127,979
Operating expenses
Costs of product sales 12,022 1,641 20,087 2,761
Operating and
maintenance 16,003 14,693 34,853 30,689
Depreciation and
amortization 8,562 6,659 17,491 13,023
General and
administrative 7,809 5,897 16,529 12,047
Total operating expenses 44,396 28,890 88,960 58,520
Operating income 53,248 37,668 100,335 69,459
Other expense
Interest expense, net of
capitalized interest (4,209) (183) (7,957) (445)
Other expense (4) (4) -
Total other expense (4,213) (183) (7,961) (445)
Net income 49,035 37,485 92,374 69,014
Less: Net income
attributable to non-
controlling interests 22,837 25,041 44,633 46,616
Net income attributable
to Oasis Midstream
Partners LP 26,198 12,444 47,741 22,398
Less: Net income
attributable to General
Partner 491 729 -
Net income attributable
to limited partners $
25,707 $
12,444 $
47,012 $
22,398
Earnings per limited partner unit
Common units - basic and
diluted $
0.76 $
0.45 $
1.39 $
0.81
Weighted average number of limited partner
units outstanding
Common units - basic 20,024 13,750 20,020 13,750
Common units - diluted 20,034 13,761 20,037 13,761
Non-GAAP Financial Measures
Cash Interest, Adjusted EBITDA and Distributable Cash Flow are 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. These non-GAAP financial measures should not be considered in isolation or as a substitute for interest expense, net income (loss), operating income (loss), net cash provided by (used in) operating activities or any other measures prepared under United States generally accepted accounting principles, or GAAP. Because Cash Interest, Adjusted EBITDA and Distributable Cash Flow exclude some but not all items that affect interest expense, net income and net cash provided by operating activities and may vary among companies, the amounts presented may not be comparable to similar metrics of other companies.
Cash Interest
Cash Interest is defined as interest expense plus capitalized interest less amortization of deferred financing costs included in interest expense. Cash Interest is not a measure of interest expense as determined by GAAP. Management believes that the presentation of Cash Interest provides useful additional information to investors and analysts for assessing the interest charges incurred on the Partnership's debt, excluding non-cash amortization, and the Partnership's ability to maintain compliance with its debt covenants.
The following table presents a reconciliation of the GAAP financial measure of interest expense, net of capitalized interest, to the non-GAAP financial measure of Cash Interest for the periods presented:
Three Months Ended June 30, Six Months Ended June 30,
2019 2018 2019 2018
(In thousands)
Interest expense, net of
capitalized interest $
4,209 $
183 $
7,957 $
445
Capitalized interest 153 1,362 188 2,197
Amortization of deferred
financing costs (226) (117) (417) (233)
Cash Interest 4,136 1,428 7,728 2,409
Less: Cash Interest
attributable to non-
controlling interests(1) (3) (5)
Cash Interest
attributable to Oasis
Midstream Partners LP $
4,133 $
1,428 $
7,723 $
2,409
__________________
(1) Amounts represent Cash Interest attributable to
non-controlling interests associated with finance
leases.
Adjusted EBITDA
Adjusted EBITDA is defined as earnings before interest expense (net of capitalized interest), income taxes, depreciation, amortization, equity-based compensation expenses and other similar non-cash adjustments. Adjusted EBITDA attributable to Oasis Midstream Partners LP is defined as Adjusted EBITDA less Adjusted EBITDA attributable to Oasis Petroleum's retained interests in two of the Partnership's DevCos, Bobcat DevCo and Beartooth DevCo. Adjusted EBITDA 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 provides information useful to investors and analysts for assessing the Partnership's results of operations, financial performance and the Partnership's ability to generate cash from its business operations without regard to the Partnership's financing methods or capital structure, coupled with the Partnership's ability to maintain compliance with its debt covenants. The GAAP measures most directly comparable to Adjusted EBITDA are net income and net cash provided by operating activities.
Distributable Cash Flow ("DCF")
DCF is defined as Adjusted EBITDA attributable to Oasis Midstream Partners LP less Cash Interest attributable to Oasis Midstream Partners LP and maintenance capital expenditures attributable to Oasis Midstream Partners LP. 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 DCF provides information useful to investors and analysts for assessing the Partnership's results of operations, financial performance and the Partnership's ability to generate cash from its business operations without regard to the Partnership's financing methods or capital structure, coupled with the Partnership's ability to make distributions to its unitholders. The GAAP measures most directly comparable to DCF are net income and net cash provided by operating activities.
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 measures of Adjusted EBITDA and DCF for the periods presented:
Three Months Ended June 30, Six Months Ended June 30,
2019 2018 2019 2018
(In thousands)
Net income $
49,035 $
37,485 $
92,374 $
69,014
Depreciation and
amortization 8,562 6,659 17,491 13,023
Equity-based compensation
expense 100 103 219 166
Interest expense, net of
capitalized interest 4,209 183 7,957 445
Adjusted EBITDA 61,906 44,430 118,041 82,648
Less: Adjusted EBITDA
attributable to non-
controlling interests 25,836 28,015 50,483 52,511
Adjusted EBITDA attributable
to Oasis Midstream Partners
LP 36,070 16,415 67,558 30,137
Less:
Cash Interest attributable
to Oasis Midstream Partners
LP 4,133 1,428 7,723 2,409
Maintenance capital
expenditures attributable
to Oasis Midstream Partners
LP 3,167 497 4,834 1,293
Distributable Cash Flow
attributable to Oasis
Midstream Partners LP $
28,770 $
14,490 $
55,001 $
26,435
Net cash provided by
operating activities $
56,043 $
41,396 $
112,093 $
116,147
Interest expense, net of
capitalized interest 4,209 183 7,957 445
Changes in working capital 1,880 2,841 (1,592) (33,840)
Other non-cash adjustments (226) 10 (417) (104)
Adjusted EBITDA 61,906 44,430 118,041 82,648
Less: Adjusted EBITDA
attributable to non-
controlling interests 25,836 28,015 50,483 52,511
Adjusted EBITDA attributable
to Oasis Midstream Partners
LP 36,070 16,415 67,558 30,137
Less:
Cash Interest attributable
to Oasis Midstream Partners
LP 4,133 1,428 7,723 2,409
Maintenance capital
expenditures attributable
to Oasis Midstream Partners
LP 3,167 497 4,834 1,293
Distributable Cash Flow
attributable to Oasis
Midstream Partners LP $
28,770 $
14,490 $
55,001 $
26,435
Distributions declared
Limited partners $
16,560 $
11,287 $
32,443 $
22,090
Incentive distribution
rights 491 729
Total distributions $
17,051 $
11,287 $
33,172 $
22,090
DCF coverage ratio 1.7 1.3 1.7 1.2
x x x x
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SOURCE Oasis Midstream Partners LP
