Oasis Midstream Partners LP Announces Quarter Ended September 30, 2018 Earnings
HOUSTON, Nov. 5, 2018 /PRNewswire/ -- Oasis Midstream Partners LP (NYSE: OMP) (the "Partnership" or "OMP") today announced financial results for the quarter ended September 30, 2018 and provided an operational update.
Recent Highlights:
-- Declared the quarterly cash distribution for the third quarter of 2018
of $0.43 per unit, an approximate 5% increase from the cash distribution
declared for the second quarter of 2018, in line with the Partnership's
20% annualized distribution growth target.
-- Net income was $38.8 million for the three months ended September 30,
2018 and net cash from operating activities was $40.8 million for the
three months ended September 30, 2018.
-- Adjusted EBITDA was $46.3 million for the three months ended September
30, 2018 and net Adjusted EBITDA to the Partnership was $16.6 million
for the three months ended September 30, 2018. See "Non-GAAP Financial
Measures" below.
-- Distributable Cash Flow ("DCF") was $14.4 million for the three months
ended September 30, 2018, resulting in distribution coverage of 1.22x.
See "Non-GAAP Financial Measures" below.
-- OMP's 80 million cubic feet per day ("MMscfpd") natural gas processing
plant in Wild Basin ("Gas Plant I") experienced operational downtime
lasting twelve days in August. Plant operations have successfully been
restored and the plant has been running smoothly, at full capacity,
since the team brought the plant back online. Crude oil and natural gas
volumes in Wild Basin were adversely impacted by the downtime, which
resulted in lower than anticipated EBITDA, DCF and distribution
coverage. Adjusting for the impact of the downtime, OMP would have seen
distribution coverage of approximately 1.3x during the third quarter of
2018.
-- Increased water volumes in Beartooth DevCo LLC ("Beartooth DevCo") to
151.3 thousand barrels of water per day ("Mbwpd"), a 54% increase
compared to the third quarter of 2017. Approximately 75% of the increase
was related to Oasis Petroleum produced water growth and approximately
25% was associated with increased freshwater volumes, which was largely
driven by third-party sales.
"Oasis Midstream Partners remains on track to deliver our targeted 20% annual growth in distributions per unit while simultaneously increasing coverage in coming quarters," said Taylor Reid, Chief Executive Officer of OMP. "We successfully delivered a strong third quarter, navigating some operational downtime at Gas Plant I in August. Our distribution coverage was within our third quarter guidance range, and looking forward coverage remains strong, now on track to exceed 1.7x exiting 2019 while concurrently delivering 20% distribution growth. Our new 200 MMscfpd gas plant is expected to move product this month, and we successfully signed additional third-party deals to further increase utilization. Third-party deals in conjunction with high activity levels in the Williston Basin put us in a great position to grow distributions per unit 20% per year past 2021 while maintaining strong coverage. Our 2019 EBITDA estimate increased by approximately 68% from what we originally projected during the IPO just over a year ago, and we continue to see significant growth opportunities ahead."
Gas Plant II Update:
OMP mechanically completed its new 200 MMscfpd natural gas processing plant ("Gas Plant II") in October and expects volumes to start flowing at the end of November. Upon completion of the gas plant, OMP will be the second largest natural gas processor in the Williston Basin. OMP expects approximately 60% utilization in January 2019, consisting largely of volumes from Oasis Petroleum, before increasing to above 80% by year-end 2019, as third-party volumes become more significant. In October, OMP successfully signed additional third-party agreements, which resulted in increased expectations for EBITDA at OMP for 2019. Gas processing remains tight in the Williston Basin, and OMP continues to pursue additional opportunities with third parties to further increase the utilization of its gas plant infrastructure.
Outlook Update:
-- OMP is increasing its 2019 EBITDA estimate to $106 - $112 million,
compared to $102 - $108 million as of the August update and $65 million
at the time of OMP's IPO. OMP has increased expectations on distribution
coverage, entering 2019 around 1.4x and quickly increasing to 1.6x-1.7x
for the remainder of 2019 (prior coverage was 1.4x and then 1.5x-1.7x).
-- Expects net EBITDA in 2019, before public company expenses, to be split
between the three DevCos accordingly: Bighorn ~68%, Bobcat ~12%, and
Beartooth ~20%.
-- Anticipates fourth quarter 2018 distribution coverage of approximately
1.2x based on current assumptions surrounding Gas Plant II start-up
timing.
Operational and Financial Update
Select operational and financial statistics are in the following table:
Three Months Ended September 30, 2018
OMP Gross Net
Ownership
Bighorn DevCo (In millions)
---
Operating income 100
% $
5.3 $
5.3
Depreciation and 100
amortization % 2.8 2.8
Total CapEx 100
% 7.9 7.9
Bobcat DevCo
---
Operating income 10
% $
19.0 $
1.9
Depreciation and 10
amortization % 2.2 0.2
Total CapEx 10
% 43.3 4.3
Beartooth DevCo
---
Operating income 40
% $
15.6 $
6.3
Depreciation and 40
amortization % 2.1 0.8
Total CapEx 40
% 11.1 4.4
Total OMP
---
DevCo operating income $
40.0 $
13.5
Public company expenses 1.0 1.0
OMP operating income 39.0 12.5
Depreciation and
amortization 7.1 3.9
Equity-based compensation
expense 0.1 0.1
Total CapEx 62.4 16.7
Maintenance CapEx 0.8 0.4
Expansion CapEx 61.6 16.3
The following table provides an update of actual volumes compared to guidance and updates quarterly volumes for the remainder of the year:
Metric 3Q18 Actual
3Q18 Guidance
4Q18 Guidance
Bighorn DevCo
---
Crude oil
service
volumes
Mbopd 42.5
43 - 46
40 - 46
Natural gas
service
volumes
MMscfpd 96.0
102 - 106
125 - 140
Bobcat DevCo
---
Crude oil
service
volumes
Mbopd 35.8
37 - 40
35 - 40
Natural gas
service
volumes
MMscfpd 141.2
150 - 155
175 - 195
Water service
volumes
Mbwpd 54.3
46 - 50
48 - 53
Beartooth
DevCo
---
Water service
volumes
Mbwpd 151.3
120 - 135
105 - 120
Liquidity and CapEx
As of September 30, 2018, OMP had cash and cash equivalents of $5.0 million and $166.0 million of borrowings outstanding under its revolving credit facility with an unused borrowing capacity of $84.0 million. On August 27, 2018, the Partnership entered into an amendment to its revolving credit facility to (i) increase the aggregate amount of commitments from $200.0 million to $250.0 million; (ii) provide for the ability to further increase commitments to $400.0 million; and (iii) add six new lenders to the bank group. Expansion CapEx attributable to OMP during the third quarter of 2018 of $16.3 million was also in-line with expectations.
Quarterly Distribution
On August 28, 2018, the Partnership paid the quarterly cash distribution of $0.41 per unit for the second quarter of 2018.
On October 30, 2018, the Board of Directors of OMP GP LLC, the general partner of the Partnership, declared the quarterly cash distribution of $0.43 per unit for the third quarter of 2018. The distribution will be payable on November 27, 2018 to unitholders of record as of November 9, 2018.
Qualified Notice
This release is intended to be a qualified notice under Treasury Regulation Section 1.1446-4(b). Brokers and nominees should treat one hundred percent (100.0%) of the Partnership's distributions to non-U.S. investors as being attributable to income that is effectively connected with a United States trade or business. Accordingly, the Partnership's distributions to non-U.S. investors are subject to federal income tax withholding at the highest applicable effective tax rate.
Conference Call Information
Investors, analysts and other interested parties are invited to listen to the webcast and call:
Date:
Tuesday, November 6, 2018
Time:
11:30 a.m. Central Time
Live
Webcast:
https://www.webcaster4.com/Webcast/Page/1777/27749
Website:
www.oasismidstream.com
Sell-side analysts wishing to ask a question may use the following dial-in:
Dial-in:
888-317-6003
Intl. Dial in:
412-317-6061
Conference ID: 6637480
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 Tuesday, November 13, 2018 by dialing:
Replay dial-in:
877-344-7529
Intl. replay:
412-317-0088
Replay code: 10124920
The conference call will also be available for replay for approximately 30 days at www.oasismidstream.com.
Contact:
Oasis Midstream Partners LP
Bob Bakanauskas, (281) 404-9600
Director, Investor Relations
Forward-Looking Statements
This press release contains forward-looking statements 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, 2018 December 31, 2017
---
(In thousands)
ASSETS
Current assets
Cash and cash equivalents $
4,990 $
883
Accounts receivable 5,054 834
Accounts receivable from Oasis
Petroleum 72,896 85,818
Prepaid expenses 96 778
Total current assets 83,036 88,313
Property, plant and equipment 876,534 653,928
Less: accumulated depreciation
and amortization (54,555) (34,348)
Total property, plant and
equipment, net 821,979 619,580
Other assets 1,981 2,013
Total assets $
906,996 $
709,906
LIABILITIES AND EQUITY
Current liabilities
Accounts payable $
460
$
Accounts payable to Oasis
Petroleum 24,940 11,638
Accrued liabilities 59,373 58,818
Accrued interest payable 172 114
Total current liabilities 84,945 70,570
Long-term debt 166,000 78,000
Asset retirement obligations 1,497 1,316
Total liabilities 252,442 149,886
Partners' Equity
Limited Partner
Common units (13,779 and 13,762
units issued and outstanding
at September 30, 2018 and
December 31, 2017,
respectively) 168,387 167,401
Subordinated units (13,750
units issued and outstanding
at September 30, 2018 and
December 31, 2017) 80,033 79,173
General Partner -
Total partners' equity 248,420 246,574
Non-controlling interests 406,134 313,446
Total equity 654,554 560,020
Total liabilities and equity $
906,996 $
709,906
OASIS MIDSTREAM PARTNERS LP
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended September 30, Nine Months Ended September 30,
2018 2017 2018 2017
---
(In thousands, except per unit data)
Revenues
Midstream services for
Oasis Petroleum $
68,863 $
47,002 $
194,694 $
123,777
Midstream services for
third parties 2,604 379 4,752 1,556
Total revenues 71,467 47,381 199,446 125,333
Operating expenses
Direct operating 19,816 13,015 53,266 31,108
Depreciation and
amortization 7,189 4,147 20,212 11,359
General and
administrative 5,449 5,084 17,496 13,868
Total operating expenses 32,454 22,246 90,974 56,335
Operating income 39,013 25,135 108,472 68,998
Other income (expense)
Interest expense, net of
capitalized interest (163) (2,733) (608) (6,965)
Other income (expense) (15) 5 (15) 7
Total other income
(expense) (178) (2,728) (623) (6,958)
Income before income
taxes 38,835 22,407 107,849 62,040
Income tax expense - 7,898 22,858
Net income 38,835 14,509 107,849 39,182
Less: Net income prior to
the initial public
offering - 12,904 37,577
Net income subsequent to
the initial public
offering 38,835 1,605 107,849 1,605
Less: Net income
attributable to non-
controlling interests
subsequent to the
initial public offering 26,459 1,079 73,075 1,079
Net income attributable
to Oasis Midstream
Partners LP $
12,376 $
526 $
34,774 $
526
Earnings per limited partner unit
Common units -Basic $
0.45 $
0.02 $
1.27 $
0.02
Common units -Diluted 0.45 0.02 1.26 0.02
Weighted average number of limited
partner units outstanding
Common units -Basic 13,751 12,625 13,750 12,625
Common units -Diluted 13,769 12,625 13,764 12,625
Non-GAAP Financial Measures
Cash Interest
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 of deferred financing costs included in interest expense. Cash Interest is not a measure of interest expense as determined by United States generally accepted accounting principles, or GAAP. Management believes that the presentation of Cash Interest provides useful additional information to investors and analysts for assessing the interest charges incurred on our debt, excluding non-cash amortization, and our ability to maintain compliance with our debt covenants.
The following table presents a reconciliation of the GAAP financial measure of interest expense, net of capitalized interest, to the non-GAAP financial measure of Cash Interest for the periods presented:
Three Months Ended Nine Months Ended
September 30, September 30,
2018 2017 2018 2017
(In thousands)
Interest expense, net of
capitalized interest $
163 $
2,733 $
608 $
6,965
Capitalized interest 1,708 436 3,905 658
Amortization of deferred
financing costs (128) (7) (361) (7)
Cash Interest 1,743 3,162 4,152 7,616
Less: Cash Interest prior
to the initial offering 3,149 7,603
Cash Interest
attributable to Oasis
Midstream Partners LP $
1,743 $
13 $
4,152 $
13
Adjusted EBITDA
Adjusted EBITDA 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 Adjusted EBITDA as earnings before interest expense (net of capitalized interest), income taxes, depreciation, amortization, equity-based compensation expenses and other similar non-cash adjustments. Adjusted EBITDA should not be considered an alternative to net income, net cash provided by operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. Management believes that the presentation of Adjusted EBITDA provides information useful to investors and analysts for assessing the Partnership's results of operations, financial performance and its ability to generate cash from its business operations without regard to its financing methods or capital structure, coupled with the Partnership's ability to maintain compliance with its debt covenants. The GAAP measures most directly comparable to Adjusted EBITDA are net income and net cash provided by operating activities, respectively.
Distributable Cash Flow ("DCF")
DCF 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 DCF as Adjusted EBITDA attributable to the Partnership less Cash Interest and maintenance capital expenditures attributable to the Partnership. Maintenance capital expenditures are cash expenditures (including expenditures for the construction or development of new capital assets or the replacement, improvement or expansion of existing capital assets) made to maintain, over the long term, system operating capacity, operating income or revenue. DCF should not be considered an alternative to net income, net cash provided by operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. Management believes that the presentation of DCF provides information useful to investors and analysts for assessing the Partnership's results of operations, financial performance and ability to generate cash from its business operations without regard to its financing methods or capital structure, coupled with the Partnerships ability to make distributions to its unitholders. The GAAP measures most directly comparable to DCF are net income and net cash provided by operating activities, 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 Nine Months Ended
September 30, September 30,
2018 2017 2018 2017
(In thousands)
Net income $
38,835 $
14,509 $
107,849 $
39,182
Income tax expense 7,898 22,858
Depreciation and
amortization 7,189 4,147 20,212 11,359
Equity-based compensation
expense 114 280
Interest expense, net of
capitalized interest 163 2,733 608 6,965
Other non-cash adjustments 286 999
Adjusted EBITDA 46,301 29,573 128,949 81,363
Less: Adjusted EBITDA prior
to the initial public
offering 27,694 79,484
Adjusted EBITDA subsequent
to the initial public
offering 46,301 1,879 128,949 1,879
Less: Adjusted EBITDA
attributable to non-
controlling interests 29,739 1,214 82,250 1,214
Adjusted EBITDA attributable
to Oasis Midstream Partners
LP 16,562 665 46,699 665
Cash Interest attributable
to Oasis Midstream Partners
LP 1,743 13 4,152 13
Maintenance capital
expenditures 418 84 1,711 84
Distributable Cash Flow
attributable to Oasis
Midstream Partners LP $
14,401 $
568 $
40,836 $
568
Net cash provided by
operating activities $
40,753 $
29,093 $
156,900 $
71,569
Current tax expense 6,042 17,618
Interest expense, net of
capitalized interest 163 2,733 608 6,965
Changes in working capital 5,516 (8,288) (28,324) (14,782)
Other non-cash adjustments (131) (7) (235) (7)
Adjusted EBITDA 46,301 29,573 128,949 81,363
Less: Adjusted EBITDA prior
to the initial public
offering 27,694 79,484
Adjusted EBITDA subsequent
to the initial public
offering 46,301 1,879 128,949 1,879
Less: Adjusted EBITDA
attributable to non-
controlling interests 29,739 1,214 82,250 1,214
Adjusted EBITDA attributable
to Oasis Midstream Partners
LP 16,562 665 46,699 665
Cash Interest attributable
to Oasis Midstream Partners
LP 1,743 13 4,152 13
Maintenance capital
expenditures 418 84 1,711 84
Distributable Cash Flow
attributable to Oasis
Midstream Partners LP $
14,401 $
568 $
40,836 $
568
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SOURCE Oasis Midstream Partners LP
