Oasis Petroleum Inc. Announces Quarter Ended March 31, 2018 Earnings
Oasis Petroleum Inc. Announces Quarter Ended March 31, 2018 Earnings
HOUSTON, May 7, 2018 /PRNewswire/ -- Oasis Petroleum Inc. (NYSE: OAS) ("Oasis" or the "Company") today announced financial results for the quarter ended March 31, 2018 and provided an operational update.
Recent Highlights:
-- Produced 76.8 thousand barrels of oil equivalent per day ("MBoepd") in
the first quarter of 2018, representing an increase of 22% over the
first quarter of 2017.
-- Completed and placed on production 17 gross (11.2 net) operated wells,
including 16 gross (10.2 net) operated wells in the Williston Basin and
1 gross (1.0 net) operated well in the Delaware Basin, in the first
quarter of 2018.
-- Oil differentials improved to $1.67 off of NYMEX West Texas Intermediate
crude oil index price ("WTI") in the first quarter of 2018,
approximately a 65% decrease over the first quarter of 2017.
-- Lease operating expenses ("LOE") per barrels of oil equivalent ("Boe")
decreased over 15% to $6.48 in the first quarter of 2018 compared to
$7.71 per Boe in the first quarter of 2017.
-- Exploration and production ("E&P") capital expenditures ("CapEx") were
$176.9 million for the three months ended March 31, 2018.
-- Closed on the Permian Basin Acquisition from Forge Energy on February
14, 2018, adding an average of approximately 3.6 MBoepd of production
and approximately 22,000 net undeveloped acres.
-- Delivered net cash provided by operating activities was $228.4 million
and Adjusted EBITDA of $232.9 million for the first quarter of 2018. For
a definition of Adjusted EBITDA and reconciliations of Adjusted EBITDA
to net income (loss) including non-controlling interests and net cash
provided by operating activities, see "Non-GAAP Financial Measures"
below.
"Oasis delivered a formidable start to the year by growing volumes to 76,800 Boe per day in the first quarter while maintaining top tier capital efficiency and recycle ratio," said Thomas B. Nusz, Oasis' Chairman and Chief Executive Officer. "Our strong start to the year enables the company to stand by its projection of being free cash flow positive on our E&P business for the year, while continuing to grow volumes 15% to 20% year over year. Internally controlled infrastructure through OMS supported flow assurance, reduced costs, and provided access to liquid marketing points. This combination resulted in reduced downtime and per barrel operating costs in spite of abnormally difficult winter conditions. Also, our access to liquid marketing points as a result of strategic investments in our integrated midstream infrastructure continue to help us realize improved price differentials. We closed the Permian Basin Acquisition on February 14, 2018 and we have now taken over operations. Expansion of our service partnerships developed in the Williston Basin has helped us secure critical services at market competitive prices. Continued positive results of our wells and offsets give us confidence in our plan. Our completion cadence is on track, if not a little ahead, and we have secured a second rig for the Permian which should spud by the end of May. We have increased our full year guidance to 81.0 to 84.0 MBoepd and expect production in the second quarter of 2018 to be 76.0 to 80.5 MBoepd, with the Williston being between 72.5 and 76.5 MBoepd and the Delaware being around 3.5 to 4.0 MBoepd."
Operating Guidance Update
The following table presents actual results for the first quarter of 2018 as well as updated full year 2018 guidance for certain operating data:
Metric 1Q 2018 Actual Prior Updated
Full Year Guidance Full Year Guidance
------------------ ------------------
Production (MBoepd) 76.8 80.0 - 83.0 81.0 - 84.0
Differential to WTI
($ per Bbl) $1.67 $1.50 - $2.00 $1.50 - $2.00
LOE ($ per Boe) $6.48 $7.00 - $7.50 $6.50 - $7.50
Marketing,
transportation and
gathering expenses
("MT&G") ($ per
Boe)(1) $3.01 $2.75 - $3.00 $2.75 - $3.00
Production taxes (%
of oil & gas
revenue) 8.5% 8.1% - 8.4% 8.2% - 8.5%
General and
administrative
expenses ("G&A") ($
in millions) $27.9 $105.0 - $115.0 $105.0 - $115.0
CapEx ($ in
millions)
E&P CapEx $176.9 $815.0 - $855.0 $815.0 - $855.0
OMS and OWS CapEx $93.1 $235.0 - $275.0 $235.0 - $275.0
Other CapEx $6.3 $40.0 $40.0
(1) Excludes non-cash valuation
charges on pipeline
imbalances.
Operational and Financial Update
The following table presents select operational and financial data for the periods presented:
Quarter Ended:
3/31/2018 12/31/2017 3/31/2017
--------- ---------- ---------
Production data:
Oil (Bopd) 58,713 57,238 49,281
Natural gas (MMcfpd) 108,635 95,812 83,470
Total production (Boepd) 76,819 73,207 63,192
Percent Oil 76.4% 78.2% 78.0%
Average sales prices:
Oil, without derivative
settlements ($ per Bbl) $61.20 $54.97 $47.03
Differential to WTI ($ per
Bbl) 1.67 0.50 4.88
Oil, with derivative
settlements ($ per
Bbl)(1)(2) 54.18 53.41 45.24
Oil derivative settlements -
net cash payments ($ in
millions)(2) (37.1) (8.2) (8.0)
Natural gas, without
derivative settlements ($
per Mcf)(3) 4.12 4.64 3.81
Natural gas, with derivative
settlements ($ per
Mcf)(1)(2)(3) 4.13 4.72 3.82
Natural gas derivative
settlements -net cash
receipts ($ in millions)(2) 0.1 0.7 -
Selected financial data ($
in millions):
Revenues:
Oil revenues $323.4 $289.5 $208.6
Natural gas revenues 40.3 40.9 28.7
Purchased oil and gas sales 18.0 31.1 27.6
Midstream revenues 27.9 23.8 14.6
Well services revenues 11.6 19.2 5.6
---- ---- ---
Total revenues $421.2 $404.5 $285.1
====== ====== ======
Net cash provided by
operating activities 228.4 209.1 107.8
Adjusted EBITDA 232.9 236.2 150.6
Select operating expenses:
LOE $44.8 $43.3 $43.9
Midstream operating expenses 8.0 6.7 3.3
Well services operating
expenses(5) 7.4 13.4 4.6
MT&G(4) 20.8 19.0 10.1
Non-cash valuation charges 0.2 (1.3) 0.9
Purchased oil and gas
expenses 18.0 31.6 28.0
Production taxes 31.0 27.8 20.3
Depreciation, depletion and
amortization ("DD&A") 149.3 146.6 126.7
Total select operating
expenses $279.5 $287.1 $237.8
====== ====== ======
Select operating expenses
data:
LOE ($ per Boe) $6.48 $6.42 $7.71
MT&G ($ per Boe)(4) 3.01 2.83 1.77
DD&A ($ per Boe) 21.59 21.76 22.27
E&P G&A ($ per Boe) 3.40 2.93 3.54
Production taxes (% of oil
and gas revenue) 8.5% 8.4% 8.6%
(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.
(5) For the three months ended March 31, 2017, well
services operating expenses have been adjusted to
include $0.7 million for certain well services direct
field labor compensation expenses which were
previously recognized in general and administrative
expenses on the Company's Condensed Consolidated
Statements of Operations.
G&A totaled $27.9 million in the first quarter of 2018, $23.2 million in the first quarter of 2017 and $24.6 million in the fourth quarter of 2017. Amortization of equity-based compensation, which is included in G&A, was $6.8 million, or $0.98 per Boe, in the first quarter of 2018 as compared to $6.7 million, or $1.18 per Boe, in the first quarter of 2017 and $6.1 million, or $0.90 per Boe, in the fourth quarter of 2017. G&A for the Company's E&P segment totaled $23.5 million in the first quarter of 2018, $20.1 million in the first quarter of 2017 and $19.7 million in the fourth quarter of 2017.
Interest expense was $37.1 million for the first quarter of 2018 as compared to $36.3 million for the first quarter of 2017 and $36.3 million for the fourth quarter of 2017. Capitalized interest totaled $4.5 million for the first quarter of 2018, $2.8 million for the first quarter of 2017 and $4.0 million for the fourth quarter of 2017. Cash Interest totaled $37.2 million for the first quarter of 2018, $35.1 million for the first quarter of 2017 and $35.9 million for the fourth quarter of 2017. For a definition of Cash Interest and a reconciliation of interest expense to Cash Interest, see "Non-GAAP Financial Measures" below.
For the three months ended March 31, 2018, the Company recorded an income tax expense of $0.8 million, resulting in an 18.2% effective tax rate as a percentage of its pre-tax income for the quarter. The Company recorded an income tax benefit of $202.8 million, resulting in a 271.5% effective tax rate as a percentage of its pre-tax loss for the three months ended December 31, 2017.
For the first quarter of 2018, the Company reported net income of $0.6 million, or $0.00 per diluted share, as compared to a net income of $23.8 million, or $0.10 per diluted share, for the first quarter of 2017. Excluding certain non-cash items and their tax effect, Adjusted Net Income Attributable to Oasis (non-GAAP) was $30.2 million, or $0.10 per diluted share, in the first quarter of 2018, as compared to Adjusted Net Loss Attributable to Oasis of $11.5 million, or $0.05 per diluted share, in the first quarter of 2017. 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. Adjusted EBITDA for the first quarter of 2018 was $232.9 million, as compared to Adjusted EBITDA of $150.6 million for the first quarter of 2017. For a definition of Adjusted EBITDA and a reconciliation of net income (loss) including non-controlling interests and net cash provided by (used in) operating activities to Adjusted EBITDA, see "Non-GAAP Financial Measures" below.
Capital Expenditures
The following table depicts the Company's total CapEx by category:
1Q 2018
-------
CapEx ($ in millions):
E&P $176.9
Well services 4.3
Other(1) 6.3
---
Total CapEx before acquisitions and
midstream 187.5
Midstream 88.8
----
Total CapEx before acquisitions 276.3
Acquisitions 890.9
-----
Total CapEx(2) $1,167.2
========
(1) Other CapEx includes such items as
administrative capital and
capitalized interest.
(2) Total CapEx reflected in the table
above differs from the amounts for
capital expenditures and
acquisitions shown in the
statements of cash flows in the
Company's condensed consolidated
financial statements because
amounts reflected in the table
above include changes in accrued
liabilities from the previous
reporting period for CapEx, while
the amounts presented in the
statements of cash flows is
presented on a cash basis.
The Company's CapEx totaled $1,167.2 million for the three months ended March 31, 2018, of which $890.9 million was related to acquisitions. Excluding acquisitions, Oasis continues to expect total CapEx to be approximately $1,090 million and $1,170 million for the full year 2018.
Hedging Activity
As of May 7, 2018, the Company had the following outstanding commodity derivative contracts, which settle monthly and are priced off of WTI for crude oil and NYMEX Henry Hub for natural gas:
Three Months Ending Six Months Ending
------------------- -----------------
June 30, 2018 December 31, 2018 June 30, 2019 December 31, 2019
------------- ----------------- ------------- -----------------
Crude oil
(Volume in
MBblpd)
Swaps
Volume 45.3 41.5 13.0 13.0
Price $52.80 $53.00 $53.47 $53.47
Collars
Volume 3.0 3.0 1.0 1.0
Floor $48.67 $48.67 $50.00 $50.00
Ceiling $53.07 $53.07 $71.00 $71.00
3-way
Volume - - 10.0 9.0
Sub-Floor $ - $ - $40.50 $40.00
Floor $ - $ - $51.00 $50.56
Ceiling $ - $ - $68.56 $67.80
--- --- --- --- ------ ------
Total Crude Oil
Volume 48.3 44.5 24.0 23.0
---- ---- ---- ----
Natural Gas
(Volume in
MMBtupd)
Swaps
Volume 23,000 29,000 3,000 -
Price $3.05 $3.02 $2.93 $ -
----- --- ---
Total Natural
Gas Volume 23,000 29,000 3,000 -
------ ------ ----- ---
The March 2018 crude oil derivative contracts settled at a net $15.0 million paid in April 2018 and will be included in the Company's second quarter 2018 derivative settlements.
Conference Call Information
Investors, analysts and other interested parties are invited to listen to the conference call:
Date: Tuesday, May 8, 2018
Time: 10:00 a.m. Central Time
Live Webcast: https://www.webcaster4.com/Webcast/Page/1052/25387
--------------------------------------------------
OR:
Dial-in: 888-317-6003
Intl. Dial in: 412-317-6061
Conference ID: 3184311
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 Tuesday, May 15, 2018 by dialing:
Replay dial-in: 877-344-7529
Intl. replay: 412-317-0088
Replay code: 10119291
The conference call will also be available for replay for approximately 30 days at www.oasispetroleum.com.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that the Company expects, believes or anticipates will or may occur in the future are forward-looking statements. Without limiting the generality of the foregoing, forward-looking statements contained in this press release specifically include the expectations of plans, strategies, objectives and anticipated financial and operating results of the Company, including the Company's drilling program, production, derivative instruments, capital expenditure levels and other guidance included in this press release. These statements are based on certain assumptions made by the Company based on management's experience and perception of historical trends, current conditions, anticipated future developments and other factors believed to be appropriate. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the Company, which may cause actual results to differ materially from those implied or expressed by the forward-looking statements. These include, but are not limited to, changes in oil and natural gas prices, weather and environmental conditions, the timing of planned capital expenditures, availability of acquisitions, uncertainties in estimating proved reserves and forecasting production results, operational factors affecting the commencement or maintenance of producing wells, the condition of the capital markets generally, as well as the Company's ability to access them, the proximity to and capacity of transportation facilities, and uncertainties regarding environmental regulations or litigation and other legal or regulatory developments affecting the Company's business and other important factors that could cause actual results to differ materially from those projected as described in the Company's reports filed with the SEC.
Any forward-looking statement speaks only as of the date on which such statement is made and the Company undertakes no obligation to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by applicable law.
About Oasis Petroleum Inc.
Oasis is an independent exploration and production company focused on the acquisition and development of unconventional oil and natural gas resources in the United States. For more information, please visit the Company's website at www.oasispetroleum.com.
Oasis Petroleum Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
March 31, 2018 December 31, 2017
-------------- -----------------
(In thousands, except share data)
ASSETS
Current assets
Cash and cash equivalents $17,735 $16,720
Accounts receivable, net 370,978 363,580
Inventory 23,039 19,367
Prepaid expenses 5,954 7,631
Derivative instruments - 344
Intangible assets, net 958 -
Other current assets 193 193
Total current assets 418,857 407,835
------- -------
Property, plant and equipment
Oil and gas properties (successful
efforts method) 8,911,096 7,838,955
Other property and equipment 963,871 868,746
Less: accumulated depreciation,
depletion, amortization and
impairment (2,688,361) (2,534,215)
---------- ----------
Total property, plant and equipment,
net 7,186,606 6,173,486
--------- ---------
Derivative instruments - 9
Long-term inventory 12,506 12,200
Other assets 20,961 21,600
------ ------
Total assets $7,638,930 $6,615,130
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $16,127 $13,370
Revenues and production taxes
payable 245,198 213,995
Accrued liabilities 233,422 236,480
Accrued interest payable 20,681 38,963
Derivative instruments 149,657 115,716
Advances from joint interest
partners 4,888 4,916
Other current liabilities 40 40
--- ---
Total current liabilities 670,013 623,480
------- -------
Long-term debt 2,696,534 2,097,606
Deferred income taxes 306,749 305,921
Asset retirement obligations 51,955 48,511
Derivative instruments 19,699 19,851
Other liabilities 7,822 6,182
----- -----
Total liabilities 3,752,772 3,101,551
--------- ---------
Commitments and contingencies
Stockholders' equity
Common stock, $0.01 par value:
450,000,000 shares authorized;
319,384,813 shares issued and
317,363,008 shares outstanding at
March 31, 2018 and 270,627,014
shares issued and 269,295,466
shares outstanding at December 31,
2017 3,154 2,668
Treasury stock, at cost: 2,021,805
and 1,331,548 shares at March 31,
2018 and December 31, 2017,
respectively (28,200) (22,179)
Additional paid-in capital 3,055,003 2,677,217
Retained earnings 718,575 717,985
Oasis share of stockholders' equity 3,748,532 3,375,691
Non-controlling interests 137,626 137,888
------- -------
Total stockholders' equity 3,886,158 3,513,579
--------- ---------
Total liabilities and stockholders'
equity $7,638,930 $6,615,130
========== ==========
Oasis Petroleum Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months Ended March 31,
2018 2017
---- ----
(In thousands, except per share data)
Revenues
Oil and
gas
revenues $363,671 $237,252
Purchased
oil and
gas sales 18,037 27,631
Midstream
revenues 27,922 14,606
Well
services
revenues 11,586 5,627
Total
revenues 421,216 285,116
------- -------
Operating expenses
Lease
operating
expenses 44,781 43,872
Midstream
operating
expenses 7,985 3,327
Well
services
operating
expenses 7,387 4,560
Marketing,
transportation
and
gathering
expenses 21,013 10,951
Purchased
oil and
gas
expenses 17,998 28,002
Production
taxes 31,000 20,299
Depreciation,
depletion
and
amortization 149,265 126,666
Exploration
expenses 769 1,489
Impairment 93 2,682
General
and
administrative
expenses 27,940 23,176
------ ------
Total
operating
expenses 308,231 265,024
------- -------
Operating
income 112,985 20,092
------- ------
Other income (expense)
Net gain
(loss)
on
derivative
instruments (71,116) 56,075
Interest
expense,
net of
capitalized
interest (37,146) (36,321)
Other
income
(expense) (183) 16
---- ---
Total
other
income
(expense) (108,445) 19,770
-------- ------
Income
before
income
taxes 4,540 39,862
Income
tax
expense (828) (16,037)
Net
income
including
non-
controlling
interests 3,712 23,825
Less: Net
income
attributable
to non-
controlling
interests 3,122 -
----- ---
Net
income
attributable
to Oasis $590 $23,825
==== =======
Earnings attributable to
Oasis per share:
Basic $0.00 $0.10
Diluted 0.00 0.10
Weighted average shares
outstanding:
Basic 290,105 233,068
Diluted 291,738 237,900
Oasis Petroleum Inc.
Selected Financial and Operational Statistics
(Unaudited)
Three Months Ended March 31,
2018 2017
---- ----
Operating results (in
thousands):
Revenues
Oil revenues $323,386 $208,594
Natural gas
revenues 40,285 28,658
Purchased oil
and gas sales 18,037 27,631
Midstream
revenues 27,922 14,606
Well services
revenues 11,586 5,627
------ -----
Total revenues $421,216 $285,116
-------- --------
Production data:
Oil (MBbls) 5,284 4,435
Natural gas
(MMcf) 9,777 7,512
Oil equivalents
(MBoe) 6,914 5,687
Average daily
production
(Boe per day) 76,819 63,192
Average sales prices:
Oil, without
derivative
settlements
(per Bbl) $61.20 $47.03
Oil, with
derivative
settlements
(per Bbl)(1) 54.18 45.24
Natural gas,
without
derivative
settlements
(per Mcf)(2) 4.12 3.81
Natural gas,
with
derivative
settlements
(per
Mcf)(1)(2) 4.13 3.82
Costs and expenses (per Boe of
production):
Lease operating
expenses $6.48 $7.71
MT&G(3) 3.01 1.77
Production
taxes 4.48 3.57
Depreciation,
depletion and
amortization 21.59 22.27
G&A(4) 4.04 4.08
E&P G&A 3.40 3.54
(1) Realized prices include gains or
losses on cash settlements for
commodity derivatives, which do not
qualify for or were not designated
as hedging instruments for
accounting purposes. Cash
settlements represent the
cumulative gains and losses on the
Company's derivative instruments
for the periods presented and do
not include a recovery of costs
that were paid to acquire or modify
the derivative instruments that
were settled.
(2) Natural gas prices include the value
for natural gas and natural gas
liquids.
(3) Excludes non-cash valuation charges
on pipeline imbalances.
(4) For the three months ended March 31,
2017, well services operating
expenses have been adjusted to
include $0.7 million for certain
well services direct field labor
compensation expenses which were
previously recognized in general
and administrative expenses on our
Condensed Consolidated Statements
of Operations.
Oasis Petroleum Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Three Months Ended March 31,
2018 2017
---- ----
(In thousands)
Cash flows from operating activities:
Net income including non-
controlling interests $3,712 $23,825
Adjustments to reconcile net income including non-
controlling interests to net cash provided by
operating activities:
Depreciation, depletion and
amortization 149,265 126,666
Impairment 93 2,682
Deferred income taxes 828 16,037
Derivative instruments 71,116 (56,075)
Equity-based compensation expenses 6,754 6,708
Deferred financing costs
amortization and other 5,475 4,940
Working capital and other changes:
Change in accounts receivable, net (5,708) (22,478)
Change in inventory (3,672) (3,679)
Change in prepaid expenses 492 282
Change in other current assets - (110)
Change in long-term inventory and
other assets (315) (4)
Change in accounts payable,
interest payable and accrued
liabilities (244) 6,060
Change in other current liabilities - 2,945
Change in other liabilities 563 -
--- ---
Net cash provided by operating
activities 228,359 107,799
------- -------
Cash flows from investing activities:
Capital expenditures (254,838) (96,047)
Acquisitions (520,728) -
Derivative settlements (36,974) (7,960)
Advances from joint interest
partners (28) (759)
--- ----
Net cash used in investing
activities (812,568) (104,766)
-------- --------
Cash flows from financing activities:
Proceeds from Revolving Credit
Facilities 1,470,000 246,000
Principal payments on Revolving
Credit Facilities (875,000) (241,000)
Deferred financing costs (215) -
Purchases of treasury stock (6,021) (5,419)
Distributions to non-controlling
interests (3,450) -
Other (90) (55)
Net cash provided by (used in)
financing activities 585,224 (474)
------- ----
Increase in cash and cash
equivalents 1,015 2,559
Cash and cash equivalents:
Beginning of period 16,720 11,226
------ ------
End of period $17,735 $13,785
======= =======
Supplemental non-cash transactions:
Change in accrued capital
expenditures $12,855 $8,396
Change in asset retirement
obligations 3,453 787
Issuance of shares in connection
with the Permian Basin Acquisition 371,220 -
Non-GAAP Financial Measures
Cash Interest is a supplemental non-GAAP financial measure that is used by management and external users of the Company's financial statements, such as industry analysts, investors, lenders and rating agencies. The Company defines Cash Interest as interest expense plus capitalized interest less amortization and write-offs of deferred financing costs and debt discounts included in interest expense. Cash Interest is not a measure of interest expense as determined by United States generally accepted accounting principles, or GAAP.
The following table presents a reconciliation of the GAAP financial measure of interest expense to the non-GAAP financial measure of Cash Interest for the periods presented:
Three Months Ended March 31,
2018 2017
---- ----
(In thousands)
Interest expense $37,146 $36,321
Capitalized interest 4,451 2,820
Amortization of
deferred financing
costs (1,761) (1,690)
Amortization of debt
discount (2,618) (2,355)
------ ------
Cash Interest $37,218 $35,096
======= =======
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 March 31,
2018 2017
---- ----
(In thousands)
Net income
including
non-
controlling
interests $3,712 $23,825
Net (gain)
loss on
derivative
instruments 71,116 (56,075)
Derivative
settlements(1) (36,974) (7,960)
Interest
expense, net
of
capitalized
interest 37,146 36,321
Depreciation,
depletion and
amortization 149,265 126,666
Impairment 93 2,682
Exploration
expenses 769 1,489
Equity-based
compensation
expenses 6,754 6,708
Income tax
expense 828 16,037
Other non-
cash
adjustments 209 912
Adjusted
EBITDA 232,918 150,605
Adjusted
EBITDA
attributable
to non-
controlling
interests 3,911 -
----- ---
Adjusted
EBITDA
attributable
to Oasis 229,007 150,605
------- -------
Cash Interest (37,218) (35,096)
Capital
expenditures(2) (1,167,228) (109,795)
Capitalized
interest 4,451 2,820
----- -----
Free Cash Flow $(970,988) $8,534
========= ======
Net cash
provided by
operating
activities $228,359 $107,799
Derivative
settlements(1) (36,974) (7,960)
Interest
expense, net
of
capitalized
interest 37,146 36,321
Exploration
expenses 769 1,489
Deferred
financing
costs
amortization
and other (5,475) (4,940)
Changes in
working
capital 8,884 16,984
Other non-
cash
adjustments 209 912
Adjusted
EBITDA 232,918 150,605
Adjusted
EBITDA
attributable
to non-
controlling
interests 3,911 -
----- ---
Adjusted
EBITDA
attributable
to Oasis 229,007 150,605
------- -------
Cash Interest (37,218) (35,096)
Capital
expenditures(2) (1,167,228) (109,795)
Capitalized
interest 4,451 2,820
----- -----
Free Cash Flow $(970,988) $8,534
========= ======
(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) Capital expenditures (including
acquisitions) reflected in the table
above differ from the amounts shown
in the statements of cash flows in
our condensed consolidated financial
statements because amounts reflected
in the table include changes in
accrued liabilities from the previous
reporting period for capital
expenditures, while the amounts
presented in the statement of cash
flows are presented on a cash basis.
Acquisitions totaled $891.0 million
and $2.6 million for the three months
ended March 31, 2018 and 2017,
respectively.
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 our three reportable business segments on a gross basis for the periods presented:
Exploration and Production
Three Months Ended March 31,
2018 2017
---- ----
(In thousands)
Income (loss) before income
taxes including non-
controlling interests $(28,184) $20,736
Gain on extinguishment of debt - (56,075)
Net loss on derivative
instruments 71,116 -
Derivative settlements(1) (36,974) (7,960)
Interest expense, net of
capitalized interest 36,884 36,321
Depreciation, depletion and
amortization 145,203 124,409
Impairment 93 2,682
Exploration expenses 769 1,489
Equity-based compensation
expenses 6,454 6,499
Other non-cash adjustments 209 912
--- ---
Adjusted EBITDA $195,570 $129,013
======== ========
(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 March 31,
2018 2017
---- ----
(In thousands)
Income before
income taxes
including non-
controlling
interests $31,979 $20,761
Interest expense,
net of capitalized
interest 262 -
Depreciation,
depletion and
amortization 6,629 3,458
Equity-based
compensation
expenses 370 348
Adjusted EBITDA $39,240 $24,567
======= =======
Well Services
Three Months Ended March 31,
2018 2017
---- ----
(In thousands)
Income (loss) before
income taxes
including non-
controlling
interests $8,107 $(3,588)
Depreciation,
depletion and
amortization 3,690 3,164
Equity-based
compensation
expenses 385 396
Adjusted EBITDA $12,182 $(28)
======= ====
Adjusted Net Income (Loss) Attributable to Oasis and Adjusted Diluted Earnings (Loss) Attributable to Oasis Per Share are supplemental non-GAAP financial measures that are used by management and external users of the Company's financial statements, such as industry analysts, investors, lenders and rating agencies. The Company defines Adjusted Net Income (Loss) Attributable to Oasis as net income (loss) after adjusting first for (1) the impact of certain non-cash items, including non-cash changes in the fair value of derivative instruments, impairment, and other similar non-cash charges, or non-recurring items, (2) the impact of net income attributable to non-controlling interests and (3) the non-cash and non-recurring items' impact on taxes based on the Company's effective tax rate applicable to those adjusting items in the same period. Adjusted Net Income (Loss) Attributable to Oasis is not a measure of net income (loss) as determined by GAAP. The Company defines Adjusted Diluted Earnings (Loss) Attributable to Oasis Per Share as Adjusted Net Income (Loss) Attributable to Oasis divided by diluted weighted average shares outstanding.
The following table presents reconciliations of the GAAP financial measure of net income (loss) attributable to Oasis to the non-GAAP financial measure of Adjusted Net Income (Loss) Attributable to Oasis and the GAAP financial measure of diluted earnings (loss) attributable to Oasis per share to the non-GAAP financial measure of Adjusted Diluted Earnings (Loss) Attributable to Oasis Per Share for the periods presented:
Three Months Ended March 31,
2018 2017
---- ----
(In thousands, except per share data)
Net
income
attributable
to
Oasis $590 $23,825
Net
(gain)
loss
on
derivative
instruments 71,116 (56,075)
Derivative
settlements(1) (36,974) (7,960)
Impairment 93 2,682
Amortization
of
deferred
financing
costs 1,761 1,690
Amortization
of
debt
discount 2,618 2,355
Other
non-
cash
adjustments 209 912
Tax
impact(2) (9,217) 21,103
------ ------
Adjusted
Net
Income
(Loss)
Attributable
to
Oasis $30,196 $(11,468)
======= ========
Diluted
earnings
attributable
to
Oasis
per
share $0.00 $0.10
Net
(gain)
loss
on
derivative
instruments 0.24 (0.24)
Derivative
settlements(1) (0.13) (0.03)
Impairment 0.00 0.01
Amortization
of
deferred
financing
costs 0.01 0.01
Amortization
of
debt
discount 0.01 0.01
Other
non-
cash
adjustments 0.00 0.00
Tax
impact(2) (0.03) 0.09
----- ----
Adjusted
Diluted
Earnings
(Loss)
Attributable
to
Oasis
Per
Share $0.10 $(0.05)
===== ======
Diluted
weighted
average
shares
outstanding(3) 291,738 233,068
Effective
tax
rate
applicable
to
adjustment
items 23.7% 37.4%
(1) Cash settlements represent the
cumulative gains and losses on the
Company's derivative instruments
for the periods presented and do
not include a recovery of costs
that were paid to acquire or modify
the derivative instruments that
were settled.
(2) The tax impact is computed utilizing
the Company's effective tax rate
applicable to the adjustments for
certain non-cash and non-
recurring items.
(3) No unvested stock awards were
included in computing Adjusted
Diluted Loss Attributable to Oasis
Per Share for the three months
ended March 31, 2017 because the
effect was anti-dilutive due to
adjusted net loss.
CONTACT: Richard Robuck, SVP Finance & Treasurer, Oasis Petroleum Inc., (281) 404-9600
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SOURCE Oasis Petroleum Inc.
