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

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

Recent Highlights:

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

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

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

Gas Plant II Update

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

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

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

Quarterly Distribution

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

Operational and Financial Update

Select operational and financial statistics are in the following table:


                                     Quarter Ended:

                             9/30/2017               6/30/2017
                             ---------               ---------

    Bighorn DevCo            (In millions, except throughput
                                         volumes)
    -------------

    Crude oil services
     volumes (Bopd)             35,930                         27,909

    Natural gas services
     volumes (Mscfpd)           60,034                         58,544

    Operating income                         $4.8                      $3.8

    Depreciation and
     amortization                  1.1                            1.1

    Bobcat DevCo
    ------------

    Crude oil services
     volumes (Bopd)             28,253                         22,659

    Natural gas services
     volumes (Mscfpd)           92,579                         80,146

    Water services volumes
     (Bowpd)                    30,693                         27,239

    Operating income                        $13.5                     $11.0

    Depreciation and
     amortization                  1.3                            1.0

    Beartooth DevCo
    ---------------

    Water services volumes
     (Bowpd)                    98,361                         72,623

    Operating income                         $7.8                      $7.7

    Depreciation and
     amortization                  1.5                            1.4

    Net assets excluded from
     the Offering
    ------------------------

    Operating income (loss)                $(1.0)                     $0.6

    Depreciation and
     amortization                  0.2                            0.3

Capital Expenditures

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


                   3Q 2017 CapEx ($ in millions)

    DevCo            OMP Ownership               Gross    Net
    -----            -------------               -----    ---

    Bighorn        100%                     $0.7              $0.7

    Bobcat          10%           21.7                2.2

    Beartooth       40%           12.4                5.0

       Total CapEx                         $34.8              $7.9
                                           =====              ====

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

Conference Call Information

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


    Date:         Wednesday, November 8, 2017

    Time:         11:30 a.m. Central Time

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

    OR:

    Dial-in:      888-317-6003

    Intl. Dial
     in:          412-317-6061

    Conference
     ID:                                                                                 1036919

    Website:      www.oasismidstream.com
                  ----------------------

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


    Replay dial-in:                  877-344-7529

    Intl. replay:                    412-317-0088

    Replay code:                                                10113599

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

Contact:

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

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that the Partnership expects, believes or anticipates will or may occur in the future are forward-looking statements. Without limiting the generality of the foregoing, forward-looking statements contained in this press release specifically include the expectations of plans, strategies, objectives and anticipated financial and operating results of the Partnership, including the Partnership's capital expenditure levels and other guidance included in this press release. These statements are based on certain assumptions made by the Partnership based on management's experience and perception of historical trends, current conditions, anticipated future developments and other factors believed to be appropriate. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the Partnership, which may cause actual results to differ materially from those implied or expressed by the forward-looking statements. These include, but are not limited to, the Partnership's ability to integrate acquisitions into its existing business, changes in oil and natural gas prices, weather and environmental conditions, the timing of planned capital expenditures, availability of acquisitions, uncertainties in the estimates of proved reserves and forecasted production results of the Partnership's customers, operational factors affecting the commencement or maintenance of producing wells, the condition of the capital markets generally, as well as the Partnership's ability to access them, the proximity to and capacity of transportation facilities, and uncertainties regarding environmental regulations or litigation and other legal or regulatory developments affecting the Partnership's business and other important factors. Should one or more of these risks or uncertainties occur, or should underlying assumptions prove incorrect, the Partnership's actual results and plans could differ materially from those expressed in any forward-looking statements.

Any forward-looking statement speaks only as of the date on which such statement is made and the Partnership undertakes no obligation to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by applicable law.

About Oasis Midstream Partners LP

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


                                                    OASIS MIDSTREAM PARTNERS LP

                                               CONDENSED CONSOLIDATED BALANCE SHEETS

                                                            (UNAUDITED)


                                                        September 30, 2017                   December 31, 2016
                                                        ------------------                   -----------------

                                                                  (In thousands, except unit data)

                                   ASSETS

    Current assets

      Accounts receivable                                                            $19                              $667

      Accounts receivable from Oasis
       Petroleum                                                     5,611                                 11,721

      Insurance receivable                                               -                                 5,096

      Prepaid expenses                                                  29                                  1,006
                                                                       ---

    Total current assets                                             5,659                                 18,490
                                                                     -----                                 ------

    Property, plant and equipment                                  522,098                                453,695

    Less: accumulated depreciation
     and amortization                                             (29,861)                              (22,160)

    Total property, plant and
     equipment, net                                                492,237                                431,535
                                                                   -------                                -------

    Other assets                                                     1,948                                      3
                                                                     -----

    Total assets                                                                $499,844                          $450,028
                                                                                ========                          ========

                           LIABILITIES AND EQUITY

    Current liabilities

    Accounts payable due to Oasis
     Petroleum                                                                      $341                            $3,314

    Accrued liabilities                                              5,790                                 32,179

    Accrued interest payable                                             4                                      -

    Current income taxes payable                                         -                                41,063

    Total current liabilities                                        6,135                                 76,556
                                                                     -----                                 ------

    Asset retirement obligation                                      1,257                                  1,713

    Deferred income taxes                                                -                                40,084

    Total liabilities                                                7,392                                118,353
                                                                     -----                                -------

    Commitments and contingencies

    Net parent investment / partners' capital

    Net parent investment                                                -                               331,675

    Common units -public (7,511,766
     units outstanding as of
     September 30, 2017)                                           115,963                                      -

    Common units -Oasis Petroleum
     (5,125,000 units outstanding as
     of September 30, 2017)                                         39,455                                      -

    Subordinated units -Oasis
     Petroleum (13,750,000 units
     outstanding as of September 30,
     2017)                                                         105,855                                      -

    Non-controlling interests                                      231,179                                      -

    Total net parent investment /
     partners' capital                                             492,452                                331,675
                                                                   -------                                -------

    Total liabilities and net parent
     investment /partners' capital                                              $499,844                          $450,028
                                                                                ========                          ========


                                                                          OASIS MIDSTREAM PARTNERS LP

                                                                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                                                                                  (UNAUDITED)


                                                              Three Months Ended September 30,                     Nine Months Ended September 30,

                                                        2017                                      2016                      2017                   2016
                                                        ----                                      ----                      ----                   ----

                                                                                 (In thousands, except per unit data)

    Revenues

    Midstream services for Oasis Petroleum                   $47,002                                         $29,062                                    $123,777            $87,691

    Midstream services for third parties                 379                            215                                  1,556                            339

    Total revenues                                    47,381                         29,277                                125,333                         88,030
                                                      ------                         ------                                -------                         ------

    Operating expenses

    Direct operating                                  13,015                          7,806                                 31,108                         21,898

    Depreciation and amortization                      4,147                          1,909                                 11,359                          5,325

    General and administrative                         5,084                          3,037                                 13,868                          9,009

    Total operating expenses                          22,246                         12,752                                 56,335                         36,232
                                                      ------                         ------                                 ------                         ------

    Operating income                                  25,135                         16,525                                 68,998                         51,798

    Interest expense, net of capitalized interest    (2,733)                       (2,128)                                (6,965)                       (3,950)

    Other income (expense)                                 5                          (460)                                     7                          (462)

    Total other income (expense)                     (2,728)                       (2,588)                                (6,958)                       (4,412)

    Income before income taxes                        22,407                         13,937                                 62,040                         47,386

    Income tax expense                                 7,898                          5,444                                 22,858                         18,226

    Net income                                        14,509                                      $8,493                                39,182                      $29,160
                                                                                                 ======                                                           =======

    Less: Net Income Prior to the Offering            12,904                                                             37,577

    Net Income Subsequent to the Offering              1,605                                                              1,605

    Less: Net Income Attributable to Non-
     controlling Interests Subsequent to the
     Offering                                          1,079                                                                1,079

    Net Income Attributable to Oasis Midstream
     Partners LP                                                $526                                                                     $526
                                                                ====                                                                     ====

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

    Common units                                               $0.02                                                                    $0.02

    Subordinated units                                  0.02                                                               0.02

    Weighted average number of limited partner
     units outstanding -Basic

          Common units                            12,625,000                                                         12,625,000

          Subordinated units                      13,750,000                                                         13,750,000

    Weighted average number of limited partner
     units outstanding -Diluted

    Common units                                  12,625,055                                                         12,625,055

    Subordinated units                            13,750,000                                                         13,750,000

Non-GAAP Financial Measures

Cash Interest is a supplemental non-GAAP financial measure that is used by management and external users of the Partnership's financial statements, such as industry analysts, investors, lenders and rating agencies. The Partnership defines Cash Interest as interest expense plus capitalized interest less amortization and write-offs of deferred financing costs and debt discounts included in interest expense. Cash Interest is not a measure of interest expense as determined by United States generally accepted accounting principles, or GAAP.

The following table presents a reconciliation of the GAAP financial measure of interest expense to the non-GAAP financial measure of Cash Interest for the periods presented:


                              Three Months Ended September 30,             Nine Months Ended September 30,

                                    2017                   2016                    2017                 2016
                                    ----                   ----                    ----                 ----

                                                               (In thousands)

    Interest expense                        $2,733                                        $2,128                   $6,965         $3,950

    Capitalized interest(1)          436                            1,181                               658          4,130

    Amortization of deferred
     financing costs(2)              (7)                               -                              (7)             -
                                     ---                                                               ---

    Cash Interest                  3,162                                        $3,309                       7,616         $8,080
                                   -----                                        ======                       -----         ======

    Less: Cash Interest prior
     to the Offering               3,149                                                   7,603

    Cash Interest
     attributable to Oasis
     Midstream Partners LP                     $13                                                            $13
                                               ===                                                            ===


    ___________________

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


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

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

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

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


                       Three Months Ended September 30,

                        2017                    2016
                        ----                    ----

                                (In thousands)

    Net income                  $14,509                                 $8,493

    Income tax
     expense           7,898                             5,444

     Depreciation
     and
     amortization      4,147                             1,909

    Interest
     expense,
     net of
     capitalized
     interest          2,733                             2,128

    Other non-
     cash
     adjustments         286                               218

    Adjusted
     EBITDA           29,573                                   $18,192
                      ------                                   =======

    Less:
     Adjusted
     EBITDA
     attributable
     to non-
     controlling
     interests(1)     19,074

    Less:
     Adjusted
     EBITDA
     attributable
     to net
     assets
     excluded
     from the
     Offering(1)       (682)
                        ----

    Adjusted
     EBITDA
     attributable
     to Oasis
     Midstream
     Partners
     LP(1)            11,181
                      ------

    Maintenance
     capital
     expenditures(1)   1,293

     Distributable
     Cash Flow
     attributable
     to Oasis
     Midstream
     Partners
     LP(1)                       $9,888
                                 ======


    Net cash
     provided
     by
     operating
     activities                 $29,093                                $18,547

    Current tax
     expense           6,042                             4,761

    Interest
     expense,
     net of
     capitalized
     interest          2,733                             2,128

    Changes in
     working
     capital         (8,288)                          (7,244)

    Other non-
     cash
     adjustments         (7)                                -

    Adjusted
     EBITDA           29,573                                   $18,192
                      ------                                   =======

    Less:
     Adjusted
     EBITDA
     attributable
     to non-
     controlling
     interests(1)     19,074

    Less:
     Adjusted
     EBITDA
     attributable
     to net
     assets
     excluded
     from the
     Offering(1)       (682)
                        ----

    Adjusted
     EBITDA
     attributable
     to Oasis
     Midstream
     Partners
     LP(1)            11,181
                      ------

    Maintenance
     capital
     expenditures(1)   1,293

     Distributable
     Cash Flow
     attributable
     to Oasis
     Midstream
     Partners
     LP(1)                       $9,888
                                 ======


    ___________________

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


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


                                       Three Months Ended                                     Nine Months Ended
                                          September 30,                                         September 30,

                                  2017                   2016                    2017                2016
                                  ----                   ----                    ----                ----

                                                              (In thousands)

    Net income                           $14,509                                       $8,493                        $39,182          $29,160

    Income tax expense           7,898                            5,444                           22,858               18,226

    Depreciation and
     amortization                4,147                            1,909                           11,359                5,325

    Interest expense, net of
     capitalized interest        2,733                            2,128                            6,965                3,950

    Other non-cash adjustments     286                              218                              999                  661
                                   ---

    Adjusted EBITDA             29,573                                       $18,192                        81,363            $57,322
                                ------                                       =======                        ------            =======

    Less: Adjusted EBITDA
     prior to the Offering      27,694                                                 79,484

    Adjusted EBITDA subsequent
     to the Offering             1,879                                                  1,879

    Less: Adjusted EBITDA
     attributable to non-
     controlling interests       1,214                                                  1,214

    Adjusted EBITDA
     attributable to Oasis
     Midstream Partners LP         665                                                    665
                                   ---                                                    ---

    Cash Interest attributable
     to Oasis Midstream
     Partners LP                    13                                                     13

    Maintenance capital
     expenditures                   84                                                     84

    Distributable Cash Flow
     attributable to Oasis
     Midstream Partners LP                  $568                                                             $568
                                            ====                                                             ====


    Net cash provided by
     operating activities                $29,093                                      $18,547                        $71,569          $56,321

    Current tax expense          6,042                            4,761                           17,618               15,741

    Interest expense, net of
     capitalized interest        2,733                            2,128                            6,965                3,950

    Changes in working capital (8,288)                         (7,244)                         (14,782)            (18,690)

    Other non-cash adjustments     (7)                               -                             (7)

                                                                                                                         -

    Adjusted EBITDA             29,573                                       $18,192                        81,363            $57,322
                                ------                                       =======                        ------            =======

    Less: Adjusted EBITDA
     prior to the Offering      27,694                                                 79,484

    Adjusted EBITDA subsequent
     to the Offering             1,879                                                  1,879

    Less: Adjusted EBITDA
     attributable to non-
     controlling interests       1,214                                                  1,214

    Adjusted EBITDA
     attributable to Oasis
     Midstream Partners LP         665                                                    665

    Cash Interest attributable
     to Oasis Midstream
     Partners LP                    13                                                     13

    Maintenance capital
     expenditures                   84                                                     84

    Distributable Cash Flow
     attributable to Oasis
     Midstream Partners LP                  $568                                                             $568
                                            ====                                                             ====

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SOURCE Oasis Midstream Partners LP