Oasis Petroleum Inc. Announces Quarter and Year Ending December 31, 2017 Earnings and Provides an Operational Update and 2018 Outlook
HOUSTON, Feb. 27, 2018 /PRNewswire/ -- Oasis Petroleum Inc. (NYSE: OAS) ("Oasis" or the "Company") today announced financial and operational results for the quarter and year ended December 31, 2017 and provided its 2018 outlook.
Highlights
-- Exceeded average daily production exit target for 2017 with 73,207
barrels of oil equivalent per day ("Boepd") in the fourth quarter of
2017 and produced 66,144 Boepd for the year ended December 31, 2017.
-- Decreased lease operating expenses per Boe to $6.42 per Boe for the
quarter ended December 31, 2017.
-- Completed and placed on production 88 gross (58.3 net) operated wells
while investing $517.3 million of E&P capital expenditures ("E&P
CapEx"), which excludes acquisitions, other capital and midstream
capital, during 2017.
-- Acquired approximately 22,000 net acres in the over-pressured oil window
of the Delaware Basin. The acquisition was announced in late 2017 and
subsequently closed on February 14, 2018.
-- More than doubled core net inventory from 483 net undeveloped locations
at December 31, 2016 to 1,092 net undeveloped locations at December 31,
2017, due to the expansion of the Company's core footprint in the
Williston Basin into much of Painted Woods and its entry in the Delaware
Basin.
-- Oasis Midstream Partners LP ("OMP") completed its initial public
offering resulting in net proceeds distributed to Oasis of $132.1
million.
-- Commenced investment in second Wild Basin gas plant with a total
capacity of 200 million standard cubic feet per day to service gas
production from its highly economic inventory. OMP invested $94.7
million of capital in the second gas plant and $105.6 million of total
capital expenditures in 2017. The Company invested $235.1 million in
capital expenditures in midstream assets ("Midstream CapEx") in 2017,
including the $105.6 million attributable to OMP.
-- Successfully launched operations with second Oasis Well Services
fracturing crew.
-- Net cash provided by operating activities was $507.9 million for the
year ended December 31, 2017 and $209.1 million for the fourth quarter
of 2017. Adjusted EBITDA, a non-GAAP financial measure, was $707.7
million for the year ended December 31, 2017 and $236.2 million for the
fourth quarter of 2017. For a definition of Adjusted EBITDA and a
reconciliation of Adjusted EBITDA to net income (loss) including
non-controlling interests and net cash provided by operating activities,
see "Non-GAAP Financial Measures" below.
"2017 was a tremendous year for Oasis. We successfully grew production 31% while spending within cash flow on the E&P side of the business," said Thomas B. Nusz, Oasis' Chairman and Chief Executive Officer. "Our Williston Basin position continues to generate top-in-class cash margins, which drives strong corporate level returns. We have supplemented our highly economic Williston Basin asset with the Forge acquisition located in the best part of the Delaware Basin. The depth of our core inventory increased organically in the Bakken and through our accretive Permian acquisition. We now have approximately 18 years of core and extended core inventory at our 2018 completion pace, which is economic at or below a $45 WTI oil price. In 2018 and 2019, we expect this capital efficient inventory to drive 15-20% production growth within cash flow on the E&P business."
"Our well services and midstream businesses continue to be critical complements of our E&P operations. We introduced a second fracturing crew midyear 2017 and successfully completed the IPO of OMP in September," added Nusz. "Oasis funded its Midstream CapEx in 2017 through OMP IPO proceeds of $132.1 million distributed to Oasis and capital spent at OMP of $105.6 million. Our midstream business has numerous highly attractive midstream investment opportunities in 2018, both in the Williston and potentially in the Delaware, all of which we expect will generate strong returns and will be built within 4-5x EBITDA multiples. Oasis plans to invest $235 million to $275 million in Midstream CapEx in 2018, of which $72 million to $90 million will be funded by OMP in 2018, and the balance is expected to be funded over time through OMP via drops."
Inventory and Leasehold Update
Oasis' total inventory increased to 2,578 net locations, of which 1,092 net locations are considered core. Core net undeveloped locations increased by 126%, from 483 net undeveloped locations at December 31, 2016 to 1,092 net undeveloped locations currently. Of the Company's 1,092 core net locations, 585 are in the Williston Basin and 507 are in the Delaware Basin.
Oasis ended the year with a leasehold position of approximately 503,000 net acres in the Williston Basin, and, as of February 14, 2018, with a leasehold position in the Delaware Basin of approximately 22,000 net acres.
2018 Plan
Highlights for 2018 include:
-- Total E&P CapEx plan of approximately $815 million to $855 million,
excluding acquisitions.
-- Williston Basin - $700 million to $730 million
-- Delaware Basin - $115 million to $125 million
-- Completing approximately 100 to 110 gross operated wells with a working
interest of approximately 73% in the Williston Basin and approximately
six to eight gross operated wells with high working interest in the
Delaware Basin in 2018.
Metric Range
-----
Production (Boepd)
Full Year 2018 80,000 to 83,000
1st Quarter 2018 75,000 to 77,000
Full Year Financial Metrics
LOE ($ per Boe) $7.00 to $7.50
Marketing, transportation and gathering
("MT&G") ($ per Boe)(1) $2.75 to $3.00
General and administrative ("G&A") ($ in
millions)(2) $105 to $115
Production taxes (% of oil and gas
revenue) 8.1% to 8.4%
2018 CapEx Plan ($ in millions)
E&P CapEx $815 - $855
Midstream CapEx 235 - 275
Other(3) 40
(1) Excludes the effect of non-cash
valuation charges.
(2) Includes non-cash amortization of
restricted stock of approximately
$30 to $32 million.
(3) Includes capitalized interest, OWS
and administrative capital.
Operational and Financial Update
Select operational and financial statistics are included in the following table for the periods presented:
Quarter Ended: Year Ended:
12/31/2017 9/30/2017 12/31/2017 12/31/2016
---------- --------- ---------- ----------
Production data:
Oil (Bopd) 57,238 51,825 51,557 41,459
Natural gas (MMcfpd) 95,812 85,800 87,522 53,478
Total production (Boepd) 73,207 66,125 66,144 50,372
Percent Oil 78.2% 78.4% 77.9% 82.3%
Average sales prices:
Oil, without derivative
settlements ($ per Bbl) $54.97 $46.35 $48.52 $38.64
Differential to NYMEX West
Texas Intermediate crude
oil index prices ("WTI") ($
per Bbl) 0.50 1.82 2.60 4.76
Oil, with derivative
settlements ($ per
Bbl)(1)(2) 53.41 47.93 48.00 46.68
Oil derivative settlements -
net cash receipts
(payments) ($ in
millions)(2) (8.2) 7.5 (9.8) 122.0
Natural gas, without
derivative settlements ($
per Mcf)(3) 4.64 3.50 3.81 1.99
Natural gas, with derivative
settlements ($ per
Mcf)(1)(2)(3) 4.72 3.58 3.86 1.99
Natural gas derivative
settlements -net cash
receipts ($ in millions)(2) 0.7 0.6 1.5 -
Selected financial data ($
in millions):
Revenues:
Oil $289.5 $221.0 $913.1 $586.3
Natural gas 40.9 27.6 121.8 38.9
Purchased oil and gas sales 31.1 21.2 88.0 10.3
Midstream revenues 23.8 18.8 72.8 35.4
Well services revenues 19.2 16.1 52.8 33.8
Total revenues $404.5 $304.7 $1,248.5 $704.7
====== ====== ======== ======
Net cash provided by
operating activities $209.1 $88.9 $507.9 $228.0
Adjusted EBITDA $236.2 $179.6 $707.7 $500.3
Select operating expenses:
LOE $43.3 $45.3 $177.1 $135.4
Midstream operating expenses 6.7 4.3 17.6 9.0
Well services operating
expenses(5) 13.4 10.3 37.2 20.7
MT&G(4) 19.0 15.2 56.6 29.5
Non-cash valuation charges (1.3) (0.2) (0.8) 0.6
Purchased oil and gas
expenses 31.6 21.7 89.3 10.3
Production taxes 27.8 21.1 88.1 56.6
Depreciation, depletion and
amortization ("DD&A") 146.6 132.3 530.8 476.3
Total select operating
expenses $287.1 $250.0 $995.9 $738.4
====== ====== ====== ======
Select operating expenses
data:
LOE ($ per Boe) $6.42 $7.45 $7.34 $7.35
MT&G ($ per Boe)(4) 2.83 2.50 2.34 1.60
DD&A ($ per Boe) 21.76 21.75 21.99 25.84
E&P G&A ($ per Boe) 2.93 2.93 3.21 4.28
Production taxes (% of oil
and gas revenue) 8.4% 8.5% 8.5% 9.1%
(1) Realized prices include gains or
losses on cash settlements for
commodity derivatives, which do not
qualify for or were not designated
as hedging instruments for
accounting purposes.
(2) Cash settlements represent the
cumulative gains and losses on the
Company's derivative instruments
for the periods presented and do
not include a recovery of costs
that were paid to acquire or modify
the derivative instruments that
were settled.
(3) Natural gas prices include the value
for natural gas and natural gas
liquids.
(4) Excludes non-cash valuation charges
on pipeline imbalances and
purchased oil and gas expenses.
(5) For the year ended December 31,
2017, certain well services direct
field labor compensation expenses
are included in well services
operating expenses on our
Consolidated Statements of
Operations, which were previously
recognized in general and
administrative expenses on our
Consolidated Statements of
Operations. For the years ended
December 31, 2016 and 2015, well
services operating expenses have
been adjusted to include $2.9
million and $3.7 million,
respectively, which were previously
recognized in general and
administrative expenses on our
Consolidated Statements of
Operations.
G&A expenses for the fourth quarter of 2017 totaled $24.6 million, and for the year ended December 31, 2017, G&A totaled $91.8 million. G&A expenses for the Company's E&P segment totaled $19.7 million for the fourth quarter of 2017 and $77.6 million for the full year of 2017. E&P G&A expenses were $2.93 per Boe for the fourth quarter of 2017 and $3.21 per Boe for the full year of 2017. Amortization of equity-based compensation, which is included in G&A expenses, was $6.1 million, or $0.90 per Boe, for the fourth quarter of 2017 and $26.5 million, or $1.10 per Boe, for the full year of 2017.
Interest expense was $36.3 million for the fourth quarter of 2017 and $146.8 million for the full year of 2017. Capitalized interest totaled $4.0 million for the fourth quarter of 2017 and $12.8 million for the full year of 2017. Cash interest totaled $35.9 million for the fourth quarter of 2017 and $142.6 million for the full year 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 December 31, 2017, the Company recorded an income tax benefit of $202.8 million, resulting in an effective tax rate of 271.5% as a percentage of its pre-tax loss for the quarter. The Company's income tax benefit for the year ended December 31, 2017 was recorded at $203.3 million, or 268.0% of its pre-tax loss. Fourth quarter 2017 results included a benefit of $171.9 million related to the re-measurement of the Company's net deferred tax liabilities due to the recently enacted Tax Cuts and Jobs Act.
The Company reported net income attributable to Oasis of $124.6 million in the fourth quarter of 2017. For the full year of 2017, Oasis reported net income attributable to Oasis of $123.8 million. Excluding certain non-cash items and their tax effect in the fourth quarter of 2017 and the full year of 2017, Adjusted Net Income Attributable to Oasis (non-GAAP) was $27.1 million, or $0.12 per diluted share, and $4.9 million, or $0.02 per diluted share, respectively. For a definition of Adjusted Net Income (Loss) Attributable to Oasis and a reconciliation of net income (loss) attributable to Oasis to Adjusted Net Income (Loss) Attributable to Oasis, see "Non-GAAP Financial Measures" below.
The Company completed and placed on production 88 gross (58.3 net) operated wells during 2017 and 36 gross (22.4 net) during the fourth quarter of 2017.
Capital Expenditures
The following table depicts the Company's CapEx for the year ended December 31, 2017:
2017
----
CapEx ($ in millions)
E&P (excluding acquisitions) $517.3
Well Services 12.5
Other(1) 17.3
Total CapEx before acquisitions and midstream 547.1
Midstream 235.1
-----
Total CapEx before acquisitions 782.2
Acquisitions 54.0
Total CapEx(2) $836.2
======
(1) Other CapEx includes such items as
administrative capital and
capitalized interest.
(2) CapEx (including acquisitions and
midstream) reflected in the table
above differs from the amounts
shown in the statement of cash
flows in the Company's consolidated
financial statements because
amounts reflected in the table
above include changes in accrued
liabilities from the previous
reporting period for CapEx, while
the amounts presented in the
statement of cash flows are
presented on a cash basis.
Estimated Net Proved Reserves
The Company's estimated net proved reserves and related PV-10 are based on reports prepared by DeGolyer and MacNaughton, independent reserve engineers. The table below summarizes the Company's estimated net proved reserves and related PV-10 at December 31, 2017:
December 31, 2017
Net Estimated PV-10(1) (in
millions)
Reserves (MMBoe)
---------------
Proved Developed 200.8 $2,600.4
Undeveloped 111.4 1,083.3
----- -------
Total Proved 312.2 $3,683.7
===== ========
(1) PV-10 is a non-GAAP financial
measure and generally differs
from Standardized Measure, the
most directly comparable GAAP
financial measure, because it
does not include the effect of
income taxes on discounted
future net cash flows.
Liquidity and Balance Sheet
As of December 31, 2017, Oasis had cash and cash equivalents of $16.7 million. In addition, Oasis had $70.0 million of borrowings and $10.5 million of outstanding letters of credit issued under the Oasis credit facility and $78.0 million of borrowings under the OMP credit facility, resulting in an unused borrowing base capacity of $1,191.5 million for both revolving credit facilities as of December 31, 2017.
On December 13, 2017, the Company completed a public offering resulting in net proceeds of $302.6 million, after deducting underwriting discounts and commissions and offering expenses, which was raised to fund a portion of its acquisition in the Delaware Basin, but was initially used to repay borrowings from the Oasis credit facility. On February 14, 2018, the Company borrowed $502.0 million under the Oasis credit facility to fund cash due at closing of the acquisition.
On February 26, 2018, the Company entered into an amendment to the Oasis credit facility, resulting in the aggregate elected commitment being increased from $1,150.0 million to $1,350.0 million. The next redetermination of the borrowing base for the Oasis credit facility is scheduled for April 1, 2018. The OMP credit facility has a current borrowing capacity of $200.0 million.
Hedging Activity
As of February 27, 2018, the Company had the following outstanding commodity derivative contracts, all of which are priced relative to WTI crude oil index prices and settle monthly:
Crude
oil
(Volume
in
Mbopd) 1H18 2H18 1H19 2H19
---- ---- ---- ----
Swaps
Volume 43.5 37.0 13.0 13.0
Price $52.31 $51.45 $53.47 $53.47
Collars
Volume 3.0 3.0 - -
Floor $48.67 $48.67 $ - $ -
Ceiling $53.07 $53.07 $ - $ -
3-way
Volume - - 3.0 3.0
Sub-
Floor $ - $ - $40.00 $40.00
Floor $ - $ - $50.00 $50.00
Ceiling $ - $ - $63.50 $63.50
--- --- --- --- ------ ------
Total
Crude
Oil
Volume 46.5 40.0 16.0 16.0
---- ---- ---- ----
Natural
Gas
(Volume
in
MMBtupd)
Swaps
Volume 22.7 23.0 - -
Price $3.05 $3.05 $ - $ -
----- ----- --- --- --- ---
Total
Natural
Gas
Volume 22.7 23.0 - -
---- ---- --- ---
The December 2017 crude oil derivative contracts settled at $8.1 million and will be included in the Company's first quarter of 2018 derivative settlements.
Conference Call Information
Investors, analysts and other interested parties are invited to listen to the conference call:
Date: Wednesday, February 28, 2018
Time: 10:00 a.m. Central Time
Live
Webcast: https://www.webcaster4.com/Webcast/Page/1052/24637
--------------------------------------------------
OR:
Dial-in: 888-317-6003
Intl. Dial
in: 412-317-6061
Conference
ID: 0228614
Website: www.oasispetroleum.com
----------------------
A recording of the conference call will be available beginning at 12:00 p.m. Central Time on the day of the call and will be available until Wednesday, March 7, 2018 by dialing:
Replay dial-in: 877-344-7529
Intl. replay: 412-317-0088
Replay code: 10117251
The conference call will also be available for replay for approximately 30 days at www.oasispetroleum.com.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that the Company expects, believes or anticipates will or may occur in the future are forward-looking statements. Without limiting the generality of the foregoing, forward-looking statements contained in this press release specifically include the expectations of plans, strategies, objectives and anticipated financial and operating results of the Company, including the Company's drilling program, production, derivatives activities, capital expenditure levels and other guidance included in this press release. These statements are based on certain assumptions made by the Company based on management's experience and perception of historical trends, current conditions, anticipated future developments and other factors believed to be appropriate. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the Company, which may cause actual results to differ materially from those implied or expressed by the forward-looking statements. These include changes in oil and natural gas prices, weather and environmental conditions, the timing of planned capital expenditures, availability of acquisitions, uncertainties in estimating proved reserves and forecasting production results, operational factors affecting the commencement or maintenance of producing wells, the condition of the capital markets generally, as well as the Company's ability to access them, the proximity to and capacity of transportation facilities, and uncertainties regarding environmental regulations or litigation and other legal or regulatory developments affecting the Company's business and other important factors that could cause actual results to differ materially from those projected as described in the Company's reports filed with the SEC.
Any forward-looking statement speaks only as of the date on which such statement is made and the Company undertakes no obligation to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by applicable law.
About Oasis Petroleum Inc.
Oasis is an independent exploration and production company focused on the acquisition and development of onshore unconventional oil and natural gas resources in the United States. For more information, please visit the Company's website at www.oasispetroleum.com.
Oasis Petroleum Inc. Financial Statements
OASIS PETROLEUM INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
December 31,
2017 2016
---- ----
(In thousands, except share data)
ASSETS
Current assets
Cash and cash equivalents $16,720 $11,226
Accounts receivable, net 363,580 204,335
Inventory 19,367 10,648
Prepaid expenses 7,631 7,623
Derivative instruments 344 362
Other current assets 193 4,355
--- -----
Total current assets 407,835 238,549
------- -------
Property, plant and equipment
Oil and gas properties (successful
efforts method) 7,838,955 7,296,568
Other property and equipment 868,746 618,790
Less: accumulated depreciation,
depletion, amortization and
impairment (2,534,215) (1,995,791)
Total property, plant and equipment,
net 6,173,486 5,919,567
--------- ---------
Derivative instruments 9 -
Long-term inventory 12,200 -
Other assets 21,600 20,516
Total assets $6,615,130 $6,178,632
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $13,370 $4,645
Revenues and production taxes
payable 213,995 139,737
Accrued liabilities 236,480 119,173
Accrued interest payable 38,963 39,004
Derivative instruments 115,716 60,469
Advances from joint interest
partners 4,916 7,597
Other current liabilities 40 10,490
--- ------
Total current liabilities 623,480 381,115
------- -------
Long-term debt 2,097,606 2,297,214
Deferred income taxes 305,921 513,529
Asset retirement obligations 48,511 48,985
Derivative instruments 19,851 11,714
Other liabilities 6,182 2,918
----- -----
Total liabilities 3,101,551 3,255,475
--------- ---------
Commitments and contingencies
Stockholders' equity
Common stock, $0.01 par value:
450,000,000 shares authorized;
270,627,014 shares issued and
269,295,466 shares outstanding at
December 31, 2017 and 237,201,064
shares issued and 236,344,172
shares outstanding at December 31,
2016 2,668 2,331
Treasury stock, at cost: 1,331,548
and 856,892 shares at December 31,
2017 and December 31, 2016,
respectively (22,179) (15,950)
Additional paid-in capital 2,677,217 2,345,271
Retained earnings 717,985 591,505
Oasis share of stockholders' equity 3,375,691 2,923,157
Non-controlling interests 137,888 -
Total stockholders' equity 3,513,579 2,923,157
--------- ---------
Total liabilities and stockholders'
equity $6,615,130 $6,178,632
========== ==========
OASIS PETROLEUM INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended December 31, Year Ended December 31,
2017 2016 2017 2016
---- ---- ---- ----
(In thousands, except per share data)
Revenues
Oil and gas revenues $330,359 $192,265 $1,034,892 $625,233
Purchased oil and gas sales 31,072 8,405 87,989 10,272
Midstream revenues 23,813 13,026 72,752 35,406
Well services revenues 19,225 4,295 52,791 33,754
------ ----- ------ ------
Total revenues 404,469 217,991 1,248,424 704,665
------- ------- --------- -------
Operating expenses
Lease operating expenses 43,263 37,161 177,134 135,444
Midstream operating expenses 6,698 2,908 17,589 9,003
Well services operating
expenses 13,370 2,569 37,228 20,675
Marketing, transportation and
gathering expenses 17,722 8,062 55,740 30,108
Purchased oil and gas expenses 31,637 8,405 89,320 10,258
Production taxes 27,811 16,807 88,133 56,565
Depreciation, depletion and
amortization 146,556 119,446 530,802 476,331
Exploration expenses 7,590 593 11,600 1,785
Impairment 866 717 6,887 4,684
General and administrative
expenses 24,627 23,027 91,797 89,342
------ ------ ------ ------
Total operating expenses 320,140 219,695 1,106,230 834,195
------- ------- --------- -------
Gain (loss) on sale of
properties 1,774 2 1,774 (1,303)
----- --- ----- ------
Operating income (loss) 86,103 (1,702) 143,968 (130,833)
------ ------ ------- --------
Other income (expense)
Net loss on derivative
instruments (123,954) (49,693) (71,657) (105,317)
Interest expense, net of
capitalized interest (36,289) (34,861) (146,837) (140,305)
Gain (loss) on extinguishment
of debt - (124) - 4,741
Other income (expense) (577) (28) (1,332) 160
---- --- ------ ---
Total other expense (160,820) (84,706) (219,826) (240,721)
-------- ------- -------- --------
Loss before income taxes (74,717) (86,408) (75,858) (371,554)
Income tax benefit 202,834 31,720 203,304 128,538
-------
Net income (loss) including
non-controlling interests 128,117 (54,688) 127,446 (243,016)
Less: Net income attributable
to non-controlling interests 3,500 - 3,650 -
Net income (loss) attributable
to Oasis $124,617 $(54,688) $123,796 $(243,016)
======== ======== ======== =========
Earnings (loss) per share:
Basic $0.52 $(0.25) $0.53 $(1.32)
Diluted 0.52 (0.25) 0.52 (1.32)
Weighted average shares
outstanding:
Basic 240,143 217,332 234,986 183,615
Diluted 241,960 217,332 237,875 183,615
OASIS PETROLEUM INC.
SELECTED FINANCIAL AND OPERATIONAL STATS
Three Months Ended December 31, Year Ended December 31,
2017 2016 2017 2016
---- ---- ---- ----
Operating results ($ in thousands):
Revenues
Oil $289,461 $175,107 $913,064 $586,308
Natural gas 40,898 17,158 121,828 38,925
Purchased oil and gas sales 31,072 8,405 87,989 10,272
Midstream revenues 23,813 13,026 72,752 35,406
Well services revenues 19,225 4,295 52,791 33,754
------ ----- ------ ------
Total revenues $404,469 $217,991 $1,248,424 $704,665
-------- -------- ---------- --------
Production data:
Oil (MBbls) 5,266 3,929 18,818 15,174
Natural gas (MMcf) 8,815 5,764 31,946 19,573
Oil equivalents (MBoe) 6,735 4,890 24,143 18,436
Average daily production (Boepd) 73,207 53,150 66,144 50,372
Average sales prices:
Oil, without derivative settlements
(per Bbl) $54.97 $44.57 $48.52 $38.64
Oil, with derivative settlements
(per Bbl)(1) 53.41 46.20 48.00 46.68
Natural gas, without derivative
settlements (per Mcf)(2) 4.64 2.98 3.81 1.99
Natural gas, with derivative
settlements (per Mcf)(1)(2) 4.72 2.98 3.86 1.99
Costs and expenses (per Boe of
production):
Lease operating expenses $6.42 $7.60 $7.34 $7.35
Marketing, transportation and
gathering expenses(3) 2.83 1.66 2.34 1.60
Production taxes 4.13 3.44 3.65 3.07
Depreciation, depletion and
amortization 21.76 24.43 21.99 25.84
General and administrative
expenses(4) 3.66 4.71 3.80 4.85
(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 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
and purchased oil and gas
expenses.
(4) For the year ended December 31,
2017, certain well services
direct field labor compensation
expenses are included in well
services operating expenses on
our Consolidated Statements of
Operations, which were
previously recognized in
general and administrative
expenses on our Consolidated
Statements of Operations. For
the years ended December 31,
2016 and 2015, well services
operating expenses have been
adjusted to include $2.9
million and $3.7 million,
respectively, which were
previously recognized in
general and administrative
expenses on our Consolidated
Statements of Operations.
OASIS PETROLEUM INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Year Ended December 31,
2017 2016
---- ----
(In thousands)
Cash flows from operating activities:
Net income (loss) including non-
controlling interests $127,446 $(243,016)
Adjustments to reconcile net income (loss) including non-
controlling interests to net cash provided by operating
activities:
Depreciation, depletion and amortization 530,802 476,331
Gain on extinguishment of debt - (4,741)
(Gain) loss on sale of properties (1,774) 1,303
Impairment 6,887 4,684
Deferred income taxes (202,884) (128,538)
Derivative instruments 71,657 105,317
Equity-based compensation expenses 26,534 24,103
Deferred financing costs amortization and
other 18,311 14,334
Working capital and other changes:
Change in accounts receivable, net (158,587) (11,923)
Change in inventory (2,501) 254
Change in prepaid expenses (838) (295)
Change in other current assets 148 (305)
Change in long-term inventory and other
assets (12,143) (151)
Change in accounts payable, interest
payable and accrued liabilities 115,308 (13,839)
Change in other current liabilities (10,450) 4,490
Change in other liabilities (40) 10
--- ---
Net cash provided by operating activities 507,876 228,018
------- -------
Cash flows from investing activities:
Capital expenditures (647,349) (426,256)
Acquisitions (61,874) (781,522)
Proceeds from sale of properties 5,774 12,333
Costs related to sale of properties (366) (310)
Derivative settlements (8,264) 121,977
Advances from joint interest partners (2,681) 2,950
------ -----
Net cash used in investing activities (714,760) (1,070,828)
-------- ----------
Cash flows from financing activities:
Proceeds from Revolving Credit Facilities 1,162,000 1,407,000
Principal payments on Revolving Credit
Facilities (1,377,000) (1,182,000)
Repurchase of senior unsecured notes - (435,907)
Proceeds from issuance of senior unsecured
convertible notes - 300,000
Deferred financing costs (2,714) (9,127)
Proceeds from sale of common stock 302,191 766,670
Proceeds from sale of Oasis Midstream
common units, net of offering costs 134,185 -
Purchases of treasury stock (6,229) (2,330)
Other (55) -
--- ---
Net cash provided by financing activities 212,378 844,306
------- -------
Increase in cash and cash equivalents 5,494 1,496
Cash and cash equivalents:
Beginning of period 11,226 9,730
------ -----
End of period $16,720 $11,226
======= =======
Supplemental cash flow information:
Cash paid for interest, net of capitalized
interest $154,980 $138,248
Cash paid for taxes 12 -
Cash received for income tax refunds 281 5
Supplemental non-cash transactions:
Change in accrued capital expenditures $83,508 $(43,415)
Change in asset retirement obligations (789) 3,810
Note receivable from divestiture - 4,000
Installment notes from acquisition 4,875 -
Non-GAAP Financial Measures
Cash Interest Reconciliation
Cash Interest is a supplemental non-GAAP financial measure that is used by management and external users of the Company's financial statements, such as industry analysts, investors, lenders and rating agencies. The Company defines Cash Interest as interest expense plus capitalized interest less amortization and write-offs of deferred financing costs and debt discounts included in interest expense. Cash Interest is not a measure of interest expense as determined by 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 December 31, Year Ended December 31,
2017 2016 2017 2016
---- ---- ---- ----
(In thousands)
Interest expense $36,289 $34,861 $146,837 $140,305
Capitalized interest 4,024 3,165 12,797 16,848
Amortization of deferred
financing costs (1,779) (1,715) (6,907) (9,757)
Amortization of debt
discount (2,654) (2,409) (10,080) (2,709)
Cash Interest $35,880 $33,902 $142,647 $144,687
======= ======= ======== ========
Adjusted EBITDA and Free Cash Flow Reconciliations
Adjusted EBITDA and Free Cash Flow are supplemental non-GAAP financial measures that are used by management and external users of the Company's financial statements, such as industry analysts, investors, lenders and rating agencies. The Company defines Adjusted EBITDA as earnings before interest expense, income taxes, depreciation, depletion, amortization, exploration expenses and other similar non-cash or non-recurring charges. The Company defines Free Cash Flow as Adjusted EBITDA less Cash Interest and CapEx, excluding capitalized interest. Adjusted EBITDA and Free Cash Flow are not measures of net income (loss) or cash flows as determined by GAAP.
The following table presents reconciliations of the GAAP financial measures of net income (loss) including non-controlling interests and net cash provided by (used in) operating activities to the non-GAAP financial measures of Adjusted EBITDA and Free Cash Flow for the periods presented:
Three Months Ended December 31, Year Ended December 31,
2017 2016 2017 2016
---- ---- ---- ----
(In thousands)
Net income (loss) including
non-controlling interests $128,117 $(54,688) $127,446 $(243,016)
(Gain) loss on sale of
properties (1,774) (2) (1,774) 1,303
(Gain) loss on extinguishment
of debt - 124 - (4,741)
Net loss on derivative
instruments 123,954 49,693 71,657 105,317
Derivative settlements(1) (7,460) 6,401 (8,264) 121,977
Interest expense, net of
capitalized interest 36,289 34,861 146,837 140,305
Depreciation, depletion and
amortization 146,556 119,446 530,802 476,331
Impairment 866 717 6,887 4,684
Exploration expenses 7,590 593 11,600 1,785
Equity-based compensation
expenses 6,083 5,342 26,534 24,103
Income tax benefit (202,834) (31,720) (203,304) (128,538)
Other non-cash adjustments (1,236) 93 (745) 790
Adjusted EBITDA 236,151 130,860 707,676 500,300
Adjusted EBITDA attributable
to non-controlling interests 3,714 - 3,904 -
----- --- ----- ---
Adjusted EBITDA attributable
to Oasis 232,437 130,860 703,772 500,300
------- ------- ------- -------
Cash Interest (35,880) (33,902) (142,647) (144,687)
Capital expenditures(2) (313,060) (883,831) (836,204) (1,181,527)
Capitalized interest 4,024 3,165 12,797 16,848
Free Cash Flow $(112,479) $(783,708) $(262,282) $(809,066)
========= ========= ========= =========
Net cash provided by operating
activities $209,139 $104,599 $507,876 $228,018
Derivative settlements(1) (7,460) 6,401 (8,264) 121,977
Interest expense, net of
capitalized interest 36,289 34,861 146,837 140,305
Exploration expenses 7,590 593 11,600 1,785
Deferred financing costs
amortization and other (5,645) (4,160) (18,311) (14,334)
Current tax expense (421) - (421) -
Changes in working capital (2,105) (11,527) 69,104 21,759
Other non-cash adjustments (1,236) 93 (745) 790
------ ---
Adjusted EBITDA 236,151 130,860 707,676 500,300
Adjusted EBITDA attributable
to non-controlling interests 3,714 - 3,904 -
Adjusted EBITDA attributable
to Oasis 232,437 130,860 703,772 500,300
------- ------- ------- -------
Cash Interest (35,880) (33,902) (142,647) (144,687)
Capital expenditures(2) (313,060) (883,831) (836,204) (1,181,527)
Capitalized interest 4,024 3,165 12,797 16,848
----- -----
Free Cash Flow $(112,479) $(783,708) $(262,282) $(809,066)
========= ========= ========= =========
(1) Cash settlements represent the
cumulative gains and losses on the
Company's derivative instruments
for the periods presented and do
not include a recovery of costs
that were paid to acquire or modify
the derivative instruments that
were settled.
(2) CapEx (including acquisitions)
reflected in the table above
differs from the amounts shown in
the statement of cash flows in the
Company's consolidated financial
statements because amounts
reflected in the table above
include changes in accrued
liabilities from the previous
reporting period for capital
expenditures, while the amounts
presented in the statements of cash
flows are presented on a cash
basis. Acquisitions totaled $48.2
million and $54.0 million for the
fourth quarter and full year 2017,
respectively, and $768.0 million
and $781.5 million for the fourth
quarter and full year 2016,
respectively.
Segment Adjusted EBITDA Reconciliations
The following tables present reconciliations of the GAAP financial measure of income (loss) before income taxes including non-controlling interests to the non-GAAP financial measure of Adjusted EBITDA for the Company's three reportable business segments on a gross basis for the periods presented:
Exploration and Production
Three Months Ended December 31, Year Ended December 31,
2017 2016 2017 2016
---- ---- ---- ----
(In thousands)
Loss before income taxes
including non-controlling
interests $(107,130) $(105,395) $(179,129) $(436,469)
(Gain) loss on sale of
properties (1,774) (2) (1,774) 1,661
(Gain) loss on extinguishment
of debt - 124 - (4,741)
Net loss on derivative
instruments 123,954 49,693 71,657 105,317
Derivative settlements(1) (7,460) 6,401 (8,264) 121,977
Interest expense, net of
capitalized interest 36,289 34,861 146,818 140,305
Depreciation, depletion and
amortization 143,033 117,346 519,853 467,894
Impairment 866 717 6,887 2,253
Exploration expenses 7,590 593 11,600 1,785
Equity-based compensation
expenses 5,695 5,152 25,436 23,346
Other non-cash adjustments (1,303) 21 (812) 718
------ --- ---- ---
Adjusted EBITDA $199,760 $109,511 $592,272 $424,046
======== ======== ======== ========
(1) Cash settlements represent the
cumulative gains and losses on the
Company's derivative instruments
for the periods presented and do
not include a recovery of costs
that were paid to acquire or modify
the derivative instruments that
were settled.
Midstream Services
Three Months Ended December 31, Year Ended December 31,
2017 2016 2017 2016
---- ---- ---- ----
(In thousands)
Income before income taxes
including non-controlling
interests $33,294 $19,132 $102,340 $68,394
Gain on sale of properties - - - (358)
Interest expense, net of
capitalized interest - - 19 -
Depreciation, depletion and
amortization 4,625 3,200 15,999 8,525
Impairment - - - 2,431
Equity-based compensation
expenses 357 249 1,461 911
Other non-cash adjustments - 10 - 10
--- --- ---
Adjusted EBITDA $38,276 $22,591 $119,819 $79,913
======= ======= ======== =======
Well Services
Three Months Ended December 31, Year Ended December 31,
2017 2016 2017 2016
---- ---- ---- ----
(In thousands)
Income before income taxes
including non-controlling
interests $5,897 $10 $15,091 $3,471
Depreciation, depletion and
amortization 3,522 3,287 12,939 14,892
Equity-based compensation
expenses 249 262 1,264 1,515
Other non-cash adjustments 67 62 67 62
--- --- --- ---
Adjusted EBITDA $9,735 $3,621 $29,361 $19,940
====== ====== ======= =======
Adjusted Net Income (Loss) Attributable to Oasis and Adjusted Diluted Earnings (Loss) Attributable to Oasis Per Share
Adjusted Net Income (Loss) Attributable to Oasis and Adjusted Diluted Earnings (Loss) Attributable to Oasis Per Share are supplemental non-GAAP financial measures that are used by management and external users of the Company's financial statements, such as industry analysts, investors, lenders and rating agencies. The Company defines Adjusted Net Income (Loss) Attributable to Oasis as net income (loss) after adjusting for (1) the impact of certain non-cash and non-recurring items, including non-cash changes in the fair value of derivative instruments, impairment, and other similar non-cash and non-recurring charges, (2) the impact of net income attributable to non-controlling interests and (3) the non-cash and non-recurring items' impact on taxes based on the Company's effective tax rate applicable to those adjusting items, excluding net income attributable to non-controlling interests, in the same period. Adjusted Net Income (Loss) Attributable to Oasis is not a measure of net income (loss) as determined by GAAP. The Company defines Adjusted Diluted Earnings (Loss) Attributable to Oasis Per Share as Adjusted Net Income (Loss) Attributable to Oasis divided by diluted weighted average shares outstanding.
The following table presents reconciliations of the GAAP financial measure of net income (loss) attributable to Oasis to the non-GAAP financial measure of Adjusted Net Income (Loss) Attributable to Oasis and the GAAP financial measure of diluted earnings (loss) attributable to Oasis per share to the non-GAAP financial measure of Adjusted Diluted Earnings (Loss) Attributable to Oasis Per Share for the periods presented:
Three Months Ended December 31, Year Ended December 31,
2017 2016 2017 2016
---- ---- ---- ----
(In thousands, except per share data)
Net income (loss) attributable
to Oasis $124,617 $(54,688) $123,796 $(243,016)
Tax reform rate change
adjustments (171,900) - (171,900) -
(Gain) loss on sale of
properties (1,774) (2) (1,774) 1,303
(Gain) loss on extinguishment
of debt - 124 - (4,741)
Net loss on derivative
instruments 123,954 49,693 71,657 105,317
Derivative settlements(1) (7,460) 6,401 (8,264) 121,977
Impairment 866 717 6,887 4,684
Amortization of deferred
financing costs(2) 1,779 1,715 6,907 9,757
Amortization of debt discount 2,654 2,409 10,080 2,709
Other non-cash adjustments (1,236) 93 (745) 790
Tax impact(3) (44,425) (22,882) (31,696) (90,480)
------- ------- ------- -------
Adjusted Net Income (Loss)
Attributable to Oasis $27,075 $(16,420) $4,948 $(91,700)
======= ======== ====== ========
Diluted earnings (loss)
attributable to Oasis per
share $0.52 $(0.25) $0.52 $(1.32)
Tax reform rate change
adjustments (0.71) - (0.72) -
(Gain) loss on sale of
properties (0.01) - (0.01) 0.01
(Gain) loss on extinguishment
of debt - - - (0.03)
Net loss on derivative
instruments 0.51 0.23 0.30 0.57
Derivative settlements(1) (0.03) 0.03 (0.03) 0.66
Impairment - - 0.03 0.03
Amortization of deferred
financing costs(2) 0.01 0.01 0.03 0.05
Amortization of debt discount 0.01 0.01 0.04 0.01
Other non-cash adjustments (0.01) - - -
Tax impact(3) (0.17) (0.11) (0.14) (0.48)
----- ----- ----- -----
Adjusted Diluted Earnings
(Loss) Attributable to Oasis
Per Share $0.12 $(0.08) $0.02 $(0.50)
===== ====== ===== ======
Diluted weighted average
shares outstanding 241,960 217,332 237,875 183,615
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) As of December 31, 2016,
Adjusted Net Income (Loss)
Attributable to Oasis includes
the non-cash adjustment for
amortization of deferred
financing costs. Comparative
periods have been conformed.
The amortization of deferred
financing costs is included in
interest expense on the
Company's Consolidated
Statements of Operations.
(3) The tax impact is computed
utilizing the Company's
effective tax rate applicable
to the adjustments for certain
non-cash and non-recurring
items. The tax impact was not
computed for the tax reform
rate change adjustments.
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SOURCE Oasis Petroleum Inc.
