Oasis Petroleum Inc. Announces Quarter Ended September 30, 2019 Earnings
HOUSTON, Nov. 5, 2019 /PRNewswire/ -- Oasis Petroleum Inc. (NYSE: OAS) ("Oasis" or the "Company") today announced financial and operating results for 3Q 2019.
Recent Highlights:
-- Delivered net cash provided by operating activities of $251.0 million
and Adjusted EBITDA((1) )of $256.6 million in 3Q 2019.
-- Achieved positive free cash flow during the quarter and year to date and
continue to expect to be free cash flow positive in 2019 for the E&P
business((2)).
-- Reduced debt under the Oasis credit facility by $125.0 million during
the quarter to $406.0 million as of September 30, 2019.
-- LOE per Boe decreased 15.8% to $6.16 per Boe in 3Q 2019 compared to
$7.32 per Boe in 2Q 2019.
-- Crude oil differentials remained strong at $1.30 off of NYMEX WTI in 3Q
2019.
-- Produced 88.7 MBoepd in 3Q 2019, which included the impact of divested
volumes of approximately 330 Boepd. Volumes grew by 5% in 3Q 2019 (3%
oil) as compared to 2Q 2019.
-- Divested upstream assets in various packages in the Williston Basin,
which resulted in approximately $41.0 million in cash proceeds.
Transactions closed late in 3Q 2019.
(1)
Non-GAAP measure. See "Non-GAAP
Financial Measures" below for definitions of all non-GAAP
measures included herein and reconciliations to the most
directly comparable measures under United States generally
accepted accounting principles ("GAAP").
(2)
For more detail on E&P free cash
flow, see pages six and seven of the Company's investor
presentation on the Company's website at
www.oasispetroleum.com.
"Oasis delivered a strong quarter across several fronts," said Thomas B. Nusz, Oasis' Chairman and Chief Executive Officer. "As expected, Williston production rebounded strongly compared to the second quarter, driven by Oasis's prolific well results and industry-leading infrastructure. In the Delaware, we reached our year-end 2019 volume target, driven by high-return wells. Efficiency is improving rapidly, with Williston well costs expected to improve to $7.2 million vs. $7.6 million by year end and Delaware cycle times continuing to fall. E&P free cash generation during the quarter was supplemented by strong asset sale proceeds, both of which led to a meaningful reduction in net debt. We remain focused on driving additional operating efficiencies and reducing leverage further."
Financial and Operational Update and Outlook
-- Production averaged 80.2 MBoepd (Williston Basin) and 8.5 MBoepd
(Delaware Basin) in 3Q 2019.
-- Oasis expects 4Q 2019 production to range between 83.3 to 85.3 MBoepd
(70.5% oil cut), which is in line with the Company's pre-divestiture
prior midpoint guidance of 86 MBoepd (71% oil cut). The anticipated
impact from divested volumes in 2020 is approximately 1.1 MBoepd.
-- In 3Q 2019, Oasis dropped down to one OWS crew and reduced company-wide
headcount by 87, representing 12% of the workforce, resulting in a
one-time G&A charge of approximately $2.4 million. The Company now
expects 2019 G&A to range between $125 to $131 million, excluding $20
million of litigation contingency expenses, and the run-rate impact of
the reduced headcount to be approximately $10 million. Oasis continues
to focus on cost control measures across its businesses.
-- CapEx in 3Q 2019 of $187 million consisted of $148 million of E&P and
other (including $3 million of capitalized interest), $37 million of
consolidated midstream and $3 million of acquisitions. The Company's
2019 E&P and other CapEx guidance remains unchanged from the August
range of $620 to $640 million, which excludes capitalized interest
charges of approximately $12 million. Total 2019 midstream CapEx is now
expected to be $212 to $222 million, which is below the August guidance
range of $219 to $230 million.
The following table provides select actual metrics from 3Q 2019 and the associated guidance for 4Q 2019:
Metric
3Q 2019 Actual
4Q 2019 Guidance
Production
(MBoepd) 88.7
83.3 - 85.3
Differential to
NYMEX WTI ($ per
Bbl) $1.30
$3.00 - $4.00
Natural gas
realized price
(as a % of Henry
Hub) 76% 70% - 80%
Lease operating
expenses ($ per
Boe) $6.16
$6.75 - $7.50
Marketing,
transportation
and gathering
expenses ($ per
Boe)(1) $4.01
$3.75 - $4.50
E&P Cash G&A ($
in millions)(2) $18.1
$15.5 - $17.0
Production taxes
(as a % of oil
and gas
revenues) 8.3% 8.2%
___________________
(1) Marketing, transportation and gathering expenses
("MT&G") exclude the effect of non-cash valuation
charges on pipeline imbalances.
(2) E&P Cash G&A represents general and administrative
("G&A") expenses less non-cash equity-based
compensation expenses and other non-cash charges
included in the Company's exploration and production
("E&P") segment. Total 2019 cash G&A for Oasis is
estimated at $92 to $96 million, which excludes non-
cash amortization of equity-based compensation of
approximately $33 to $35 million and litigation
contingency expenses of $20 million. See "Non-GAAP
Financial Measures" below.
The following table presents select operational and financial data for the periods presented:
3Q 2019 2Q 2019 3Q 2018
Production data:
Crude oil (Bopd) 62,816 61,224 65,870
Natural gas (Mcfpd) 155,391 139,380 117,182
Total production (Boepd) 88,715 84,454 85,400
Percent crude oil 70.8% 72.5% 77.1%
Average sales prices:
Crude oil, without
derivative settlements ($
per Bbl) $
55.12 $
58.87 $
68.33
Differential to NYMEX WTI
($ per Bbl) 1.30 0.96 1.16
Crude oil, with derivative
settlements ($ per Bbl)(1) 56.03 56.79 57.50
Crude oil derivative
settlements -net cash
receipts (payments) ($ in
millions)(2) 5.2 (11.6) (65.6)
Natural gas, without
derivative settlements ($
per Mcf)(3) 1.81 2.29 3.72
Natural gas, with
derivative settlements ($
per Mcf)(1)(3) 1.95 2.43 3.76
Natural gas derivative
settlements -net cash
receipts ($ in
millions)(2) 1.9 1.8 0.4
Selected financial data ($
in millions):
Revenues:
Crude oil revenues(4) $
318.6 $
328.0 $
414.1
Natural gas revenues 25.9 29.0 40.1
Purchased oil and gas
sales(4) 79.4 109.4 173.0
Midstream revenues 50.0 51.6 31.2
Well services revenues 8.9 11.4 16.3
Total revenues $
482.8 $
529.4 $
674.7
Net cash provided by
operating activities 251.0 214.0 230.0
Adjusted EBITDA(5) 256.6 249.6 270.4
Select operating expenses:
Lease operating expenses $
50.3 $
56.2 $
48.5
Midstream expenses 13.0 17.4 8.7
Well services expenses 6.2 8.5 11.4
MT&G, including non-cash
valuation charges 32.7 28.5 30.7
Non-cash valuation charges (0.1) 0.1 0.6
Purchased oil and gas
expenses(4) 78.7 109.7 174.3
Production taxes 28.5 28.1 38.7
Depreciation, depletion and
amortization 210.8 177.4 163.0
Total select operating
expenses $
420.2 $
425.8 $
475.3
Select operating expenses
data:
Lease operating expense ($
per Boe) $
6.16 $
7.32 $
6.18
MT&G ($ per Boe)(6) 4.01 3.69 3.84
Depreciation, depletion and
amortization ($ per Boe) 25.83 23.08 20.74
E&P G&A ($ per Boe)(7) 5.68 3.35 3.88
E&P Cash G&A ($ per Boe)(5) 2.22 2.24 2.97
Production taxes (as a % of
oil and gas revenues) 8.3% 7.9% 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) For the three and nine months ended September 30,
2018, crude oil revenues, purchased oil and gas
sales and purchased oil and gas expenses have
been revised to correct errors related to the
presentation of certain crude oil purchase and
sale arrangements, which had no impact on
reported net income (loss). The amounts
presented herein reflect the impact of the
revision.
(5) Adjusted EBITDA and E&P Cash G&A represent non-
GAAP measures. See "Non-GAAP Financial
Measures" below for further information and
reconciliations to the most directly comparable
financial measures under GAAP.
(6) Excludes non-cash valuation charges on pipeline
imbalances.
(7) Includes $20 million of litigation contingency
expenses in 3Q 2019. Excluding this accrual, E&P
G&A per Boe would have been $3.23 in 3Q 2019.
G&A totaled $52.9 million in 3Q 2019, $34.9 million in 3Q 2018 and $30.9 million in 2Q 2019. In 3Q 2019, a loss accrual was recorded in the amount of $20 million, which the Company believes is the estimable amount of loss that could potentially be incurred from the Company's pending legal proceedings based upon currently available information. Amortization of equity-based compensation, which is included in G&A, was $8.4 million, or $1.03 per barrel of oil equivalent ("Boe"), in 3Q 2019 as compared to $7.5 million, or $0.95 per Boe, in 3Q 2018 and $8.9 million, or $1.16 per Boe, in 2Q 2019. G&A for the Company's E&P segment totaled $46.4 million in 3Q 2019, $30.5 million in 3Q 2018 and $25.8 million in 2Q 2019.
MT&G, excluding non-cash valuation charges on pipeline imbalances, increased $2.6 million to $32.7 million in 3Q 2019, as compared to $30.1 million in 3Q 2018, primarily attributable to higher natural gas gathering and processing expenses due to additional well connections on the Company's midstream infrastructure and the Company's second natural gas processing plant. MT&G, excluding non-cash valuation charges on pipeline imbalances, increased $4.3 million in 3Q 2019, as compared to $28.4 million in 2Q 2019 primarily due to higher crude oil gathering and transportation expenses related to an increase in volumes being transported on the Dakota Access Pipeline to market the Company's equity barrels, which resulted in improved price realizations.
Depreciation, depletion and amortization ("DD&A") expenses increased $47.8 million to $210.8 million in 3Q 2019 as compared to 3Q 2018. This increase was a result of increased production during 3Q 2019, coupled with an increase in the DD&A rate to $25.83 per Boe for 3Q 2019 as compared to $20.74 per Boe for 3Q 2018. The increase in the DD&A rate was primarily due to lower recoverable reserves in the Williston Basin and Delaware Basin, coupled with higher well costs in the Delaware Basin.
Interest expense was $43.9 million in 3Q 2019 as compared to $39.6 million in 3Q 2018 and $43.2 million in 2Q 2019. Capitalized interest totaled $3.0 million in 3Q 2019, $4.5 million in 3Q 2018 and $3.6 million in 2Q 2019. Cash Interest totaled $41.9 million in 3Q 2019, $39.4 million in 3Q 2018 and $42.0 million in 2Q 2019. For a definition of Cash Interest and a reconciliation of interest expense to Cash Interest, see "Non-GAAP Financial Measures" below.
The Company's income tax benefit for the nine months ended September 30, 2019 was recorded at 25.0% of pre-tax loss. In 3Q 2019, the Company recorded an income tax benefit of $17.4 million, resulting in a (134.3)% effective tax rate as a percentage of its pre-tax income for the quarter. In 2Q 2019, the Company recorded an income tax expense of $12.2 million, resulting in a 19.3% effective tax rate as a percentage of its pre-tax income for the quarter.
In 3Q 2019, the Company reported net income of $20.3 million, or $0.06 per diluted share, as compared to net income of $62.3 million, or $0.20 per diluted share, in 3Q 2018. Excluding certain non-cash items and their tax effect, Adjusted Net Loss Attributable to Oasis was $16.0 million, or $0.05 per diluted share, in 3Q 2019, as compared to Adjusted Net Income Attributable to Oasis of $26.3 million, or $0.08 per diluted share, in 3Q 2018. Adjusted EBITDA in 3Q 2019 was $256.6 million, as compared to Adjusted EBITDA of $270.4 million in 3Q 2018. For definitions of Adjusted Net Income (Loss) Attributable to Oasis and Adjusted EBITDA and reconciliations to the most directly comparable GAAP measures, see "Non-GAAP Financial Measures" below.
Capital Expenditures and Completions
The following table depicts the Company's total capital expenditures ("CapEx") by category:
1Q 2019 2Q 2019 3Q 2019 YTD -3Q 2019
(In millions)
CapEx:
E&P $
165.7 $
202.1 $
143.5 $
511.3
Well services 0.1 0.2 0.3
Other(1) 3.9 4.3 4.2 12.4
Total E&P & other CapEx 169.7 206.4 147.9 524.0
Midstream(2) 57.1 82.6 36.9 176.6
Total CapEx before
acquisitions 226.8 289.0 184.8 700.6
Acquisitions 5.8 2.5 8.3
Total CapEx(3) $
226.8 $
294.8 $
187.3 $
708.9
___________________
(1) Other CapEx includes such items as
administrative capital and capitalized
interest. Capitalized interest totaled
$3.0 million and $9.5 million for the
three and nine months ended September 30,
2019, respectively.
(2) Midstream CapEx attributable to Oasis
Midstream Partners ("OMP") was $45.2
million, $70.9 million and $27.6 million
for 1Q 2019, 2Q 2019 and 3Q 2019,
respectively.
(3) Total CapEx (including acquisitions)
reflected in the table above differs from
the amounts 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.
Oasis completed and placed on production 22 gross (16.8 net) operated wells and 3.4 net non-operated wells during 3Q 2019. Completions included 17 gross (11.9 net) operated wells in the Williston Basin and 5 gross (4.9 net) operated wells in the Delaware Basin.
Liquidity and Balance Sheet
As of September 30, 2019, Oasis had cash and cash equivalents of $19.4 million, total elected commitments under the Oasis credit facility of $1,350.0 million and total elected commitments under the OMP credit facility of $575.0 million. In addition, Oasis had $406.0 million of borrowings and $14.0 million of outstanding letters of credit issued under the Oasis credit facility and $431.0 million of borrowings and $8.2 million of outstanding letters of credit under the OMP credit facility, resulting in a total unused borrowing capacity of $1,065.8 million for both revolving credit facilities as of September 30, 2019.
On November 4, 2019, Oasis completed its fall redetermination of its borrowing base under the Oasis credit facility. As a result, Oasis's borrowing base decreased to $1,300.0 million. The next redetermination is scheduled for April 1, 2020. Additionally, Oasis entered into an amendment to the Oasis credit facility, which decreased the aggregate elected commitment to $1,100.0 million.
Hedging Activity
The Company's crude oil contracts will settle monthly based on the average NYMEX West Texas Intermediate crude oil index price ("NYMEX WTI") for fixed price swaps and two-way and three-way costless collars. The Company's natural gas contracts will settle monthly based on the average NYMEX Henry Hub natural gas index price ("NYMEX HH") for fixed price swaps. As of November 4, 2019, the Company had the following outstanding commodity derivative contracts:
Three Months Ending
Six Months Ending
December 31, 2019 June 30, 2020 December 31, 2020 June 30, 2021
Crude Oil (Volume
in MBopd)
Fixed Price Swaps
Volume 25.0 18.0 3.0
Price $
57.42 $
57.68 $
58.85
$
Two-Way Collars
Volume 14.0 9.0 2.0
Floor $
58.07 $
50.83 $
50.50
$
Ceiling $
74.64 $
60.31 $
60.70
$
Three-Way
Collars
Volume 12.0 13.0 12.0 2.0
Sub-Floor $
40.00 $
40.00 $
40.00 $
40.00
Floor $
51.57 $
54.13 $
52.48 $
50.00
Ceiling $
65.40 $
64.81 $
63.86 $
64.25
Total Crude Oil
Volume 51.0 40.0 17.0 2.0
Natural Gas
(Volume in
MMBtupd)
Fixed Price Swaps
Volume 30,000
Price $
2.92
$
$
$
The September 2019 crude oil derivative contracts settled at a net $1.4 million received in October 2019 and will be included in the Company's 4Q 2019 derivative settlements.
Conference Call Information
Investors, analysts and other interested parties are invited to listen to the conference call:
Date:
Wednesday, November 6, 2019
Time:
10:00 a.m. Central Time
Live Webcast:
https://www.webcaster4.com/Webcast/Page/1052/32112
Website:
www.oasispetroleum.com
Sell-side analysts with a question may use the following dial-in:
Dial-in:
888-317-6003
Intl. Dial in:
412-317-6061
Conference ID: 2649560
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, November 13, 2019 by dialing:
Replay dial-in:
877-344-7529
Intl. replay:
412-317-0088
Replay code: 10136374
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 crude oil and natural gas prices, weather and environmental conditions, the timing of planned capital expenditures, availability of acquisitions, the ability to realize the anticipated benefits from the previously announced Delaware midstream assets assignment from Oasis to OMP, 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 Securities and Exchange Commission.
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 crude 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)
September 30, 2019 December 31, 2018
(In thousands, except share data)
ASSETS
Current assets
Cash and cash equivalents $
19,425 $
22,190
Accounts receivable, net 381,617 387,602
Inventory 36,758 33,128
Prepaid expenses 5,302 10,997
Derivative instruments 52,180 99,930
Intangible assets, net - 125
Other current assets 332 183
Total current assets 495,614 554,155
Property, plant and equipment
Oil and gas properties (successful
efforts method) 9,374,506 8,912,189
Other property and equipment 1,339,268 1,151,772
Less: accumulated depreciation,
depletion, amortization and
impairment (3,624,164) (3,036,852)
Total property, plant and equipment,
net 7,089,610 7,027,109
Assets held for sale, net 6,700
Derivative instruments 9,729 6,945
Long-term inventory 14,395 12,260
Operating right-of-use assets 21,255
Other assets 29,674 25,673
Total assets $
7,666,977 $
7,626,142
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $
18,003 $
20,166
Revenues and production taxes payable 213,773 216,695
Accrued liabilities 325,445 331,651
Accrued interest payable 21,329 38,040
Derivative instruments 830 84
Advances from joint interest partners 3,649 5,140
Current operating lease liabilities 8,050
Other current liabilities 2,782
Total current liabilities 593,861 611,776
Long-term debt 2,798,859 2,735,276
Deferred income taxes 291,215 300,055
Asset retirement obligations 55,502 52,384
Liabilities held for sale 6,700
Derivative instruments - 20
Operating lease liabilities 19,095
Other liabilities 2,084 7,751
Total liabilities 3,767,316 3,707,262
Commitments and contingencies
Stockholders' equity
Common stock, $0.01 par value:
900,000,000 shares authorized;
324,235,047 shares issued and
321,343,995 shares outstanding at
September 30, 2019 and 320,469,049
shares issued and 318,377,161 shares
outstanding at December 31, 2018 3,186 3,157
Treasury stock, at cost: 2,891,052
and 2,091,888 shares at September
30, 2019 and December 31, 2018,
respectively (33,650) (29,025)
Additional paid-in capital 3,104,938 3,077,755
Retained earnings 630,852 682,689
Oasis share of stockholders' equity 3,705,326 3,734,576
Non-controlling interests 194,335 184,304
Total stockholders' equity 3,899,661 3,918,880
Total liabilities and stockholders'
equity $
7,666,977 $
7,626,142
===
Oasis Petroleum Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months Ended September 30, Nine Months Ended September 30,
2019 2018 2019 2018
(In thousands, except per share data)
Revenues
Oil and gas revenues $
344,470 $
454,195 $
1,070,256 $
1,218,639
Purchased oil and gas sales 79,352 172,985 337,212 368,758
Midstream revenues 50,023 31,187 149,617 88,451
Well services revenues 8,898 16,262 30,795 46,344
Total revenues 482,743 674,629 1,587,880 1,722,192
Operating expenses
Lease operating expenses 50,313 48,534 164,985 137,456
Midstream expenses 12,967 8,652 47,064 24,325
Well services expenses 6,151 11,405 21,595 32,352
Marketing, transportation and
gathering expenses 32,659 30,713 96,097 74,559
Purchased oil and gas
expenses 78,655 174,269 338,221 374,442
Production taxes 28,461 38,722 86,221 103,748
Depreciation, depletion and
amortization 210,832 162,984 578,023 465,819
Exploration expenses 652 22,315 2,369 23,701
Impairment - 653 384,228
General and administrative
expenses 52,860 34,859 118,245 91,029
Total operating expenses 473,550 532,453 1,453,473 1,711,659
Gain (loss) on sale of
properties (752) 36,869 (3,950) 38,823
Operating income 8,441 179,045 130,457 49,356
Other income (expense)
Net gain (loss) on derivative
instruments 47,922 (48,544) (34,940) (239,945)
Interest expense, net of
capitalized interest (43,897) (39,560) (131,551) (117,616)
Loss on extinguishment of
debt - (47) (13,698)
Other income 473 111 706 146
Total other income (expense),
net 4,498 (88,040) (165,785) (371,113)
Income (loss) before income
taxes 12,939 91,005 (35,328) (321,757)
Income tax benefit (expense) 17,372 (24,782) 8,835 75,391
Net income (loss) including
non-controlling interests 30,311 66,223 (26,493) (246,366)
Less: Net income attributable
to non-controlling
interests 10,023 3,882 25,344 10,907
Net income (loss)
attributable to Oasis $
20,288 $
62,341 $
(51,837) $
(257,273)
Earnings (loss) attributable to Oasis per
share:
Basic $
0.06 $
0.20 $
(0.16) $
(0.84)
Diluted 0.06 0.20 (0.16) (0.84)
Weighted average shares outstanding:
Basic 315,135 313,167 314,863 305,533
Diluted 315,135 316,387 314,863 305,533
Oasis Petroleum Inc.
Selected Financial and Operational Statistics
(Unaudited)
Three Months Ended September 30, Nine Months Ended September 30,
2019 2018 2019 2018
Operating results (in thousands):
Revenues
Crude oil revenues(1) $
318,564 $
414,082 $
964,662 $
1,103,575
Natural gas revenues 25,906 40,113 105,594 115,064
Purchased oil and gas sales(1) 79,352 172,985 337,212 368,758
Midstream revenues 50,023 31,187 149,617 88,451
Well services revenues 8,898 16,262 30,795 46,344
Total revenues $
482,743 $
674,629 $
1,587,880 $
1,722,192
Production data:
Crude oil (MBbls) 5,779 6,060 17,294 16,862
Natural gas (MMcf) 14,296 10,781 40,840 30,825
Oil equivalents (MBoe) 8,162 7,857 24,101 21,999
Average daily production (Boe
per day) 88,715 85,400 88,283 80,583
Average sales prices:
Crude oil, without derivative
settlements (per Bbl) $
55.12 $
68.33 $
55.78 $
65.45
Crude oil, with derivative
settlements (per Bbl)(2) 56.03 57.50 56.19 55.78
Natural gas, without
derivative settlements (per
Mcf)(3) 1.81 3.72 2.59 3.73
Natural gas, with derivative
settlements (per Mcf)(2)(3) 1.95 3.76 2.67 3.77
Costs and expenses (per Boe of production):
Lease operating expenses $
6.16 $
6.18 $
6.85 $
6.25
MT&G(4) 4.01 3.84 3.89 3.36
Production taxes 3.49 4.93 3.58 4.72
Depreciation, depletion and
amortization 25.83 20.74 23.98 21.17
G&A(5) 6.48 4.44 4.91 4.14
E&P G&A(5) 5.68 3.88 4.14 3.52
___________________
(1) For the three and nine months ended September 30,
2018, crude oil revenues, purchased oil and gas
sales and purchased oil and gas expenses have
been revised to correct errors related to the
presentation of certain crude oil purchase and
sale arrangements, which had no impact on
reported net income (loss). The amounts
presented herein reflect the impact of the
revision.
(2) 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.
(3) Natural gas prices include the value for natural
gas and natural gas liquids.
(4) Excludes non-cash valuation charges on pipeline
imbalances.
(5) Includes $20 million of litigation contingency
expenses in 3Q 2019. Excluding this accrual, G&A
per Boe would have been $4.03 and E&P G&A per
Boe would have been $3.23 in 3Q 2019.
Oasis Petroleum Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Nine Months Ended September 30,
2019 2018
(In thousands)
Cash flows from operating activities:
Net loss including non-controlling
interests $
(26,493) $
(246,366)
Adjustments to reconcile net loss including non-
controlling interests to net cash provided by
operating activities:
Depreciation, depletion and
amortization 578,023 465,819
Loss on extinguishment of debt - 13,698
(Gain) loss on sale of properties 3,950 (38,823)
Impairment 653 384,228
Deferred income taxes (8,840) (75,418)
Derivative instruments 34,940 239,945
Equity-based compensation expenses 26,370 21,586
Deferred financing costs amortization
and other 18,190 20,074
Working capital and other changes:
Change in accounts receivable, net 1,555 (61,275)
Change in inventory (3,676) (12,076)
Change in prepaid expenses 4,153 1,196
Change in accounts payable, interest
payable and accrued liabilities 22,280 50,308
Change in other assets and liabilities,
net (11,211) (895)
Net cash provided by operating
activities 639,894 762,001
Cash flows from investing activities:
Capital expenditures (714,270) (841,088)
Acquisitions (8,337) (579,886)
Proceeds from sale of properties 41,039 333,029
Costs related to sale of properties - (2,707)
Derivative settlements 10,752 (162,013)
Other - (1,038)
Net cash used in investing activities (670,816) (1,253,703)
Cash flows from financing activities:
Proceeds from revolving credit
facilities 1,651,000 2,499,000
Principal payments on revolving credit
facilities (1,600,000) (1,959,000)
Repurchase of senior unsecured notes - (423,190)
Proceeds from issuance of senior
unsecured notes - 400,000
Deferred financing costs (852) (7,650)
Purchases of treasury stock (4,625) (6,806)
Distributions to non-controlling
interests (15,551) (10,393)
Payments on finance lease liabilities (1,423)
Other (392) (87)
Net cash provided by financing
activities 28,157 491,874
Increase (decrease) in cash and cash
equivalents (2,765) 172
Cash and cash equivalents:
Beginning of period 22,190 16,720
End of period $
19,425 $
16,892
Supplemental non-cash transactions:
Change in accrued capital expenditures $
(42,751) $
79,011
Change in asset retirement obligations 4,114 2,854
Issuance of shares in connection with
acquisition - 371,220
Non-GAAP Financial Measures
E&P Cash G&A is defined as the total general and administrative expenses included in the Company's exploration and production segment less non-cash equity-based compensation expenses and other non-cash charges included in its exploration and production segment. E&P Cash G&A is not a measure of general and administrative expenses as determined by GAAP. Management believes that the presentation of E&P Cash G&A provides useful additional information to investors and analysts to assess the Company's operating costs in comparison to peers without regard to equity-based compensation programs, which can vary substantially from company to company.
The following table presents a reconciliation of the GAAP financial measure of general and administrative expenses included in its exploration and production segment to the non-GAAP financial measure of E&P Cash G&A for the periods presented:
Exploration and Production
Three Months Ended September 30, Nine Months Ended September 30,
2019 2018 2019 2018
(In thousands)
E&P general and administrative
expenses $
46,377 $
30,454 $
99,665 $
77,425
Equity-based compensation
expenses (8,246) (7,102) (25,348) (20,565)
Litigation contingency
expenses(1) (20,000) (20,000)
E&P Cash G&A $
18,131 $
23,352 $
54,317 $
56,860
___________________
(1) In 3Q 2019, the Company incurred a charge
to establish a loss accrual of $20
million, which the Company believes is
the estimable amount of loss that could
potentially be incurred from the
Company's pending legal proceedings based
upon currently available information.
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 GAAP.
The following table presents a reconciliation of the GAAP financial measure of interest expense to the non-GAAP financial measure of Cash Interest for the periods presented:
Three Months Ended September 30, Nine Months Ended September 30,
2019 2018 2019 2018
(In thousands)
Interest expense $
43,897 $
39,560 $
131,551 $
117,616
Capitalized interest 3,001 4,531 9,464 13,209
Amortization of deferred
financing costs (1,861) (1,813) (5,454) (5,511)
Amortization of debt
discount (3,137) (2,852) (9,027) (8,201)
Cash Interest $
41,900 $
39,426 $
126,534 $
117,113
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 attributable to Oasis 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 September 30, Nine Months Ended September 30,
2019 2018 2019 2018
(In thousands)
Net income (loss) including non-
controlling interests $
30,311 $
66,223 $
(26,493) $
(246,366)
(Gain) loss on sale of
properties 752 (36,869) 3,950 (38,823)
Loss on extinguishment of debt 47 13,698
Net (gain) loss on derivative
instruments (47,922) 48,544 34,940 239,945
Derivative settlements(1) 7,123 (65,190) 10,752 (162,013)
Interest expense, net of
capitalized interest 43,897 39,560 131,551 117,616
Depreciation, depletion and
amortization 210,832 162,984 578,023 465,819
Impairment 653 384,228
Exploration expenses 652 22,315 2,369 23,701
Equity-based compensation
expenses 8,446 7,456 26,370 21,586
Income tax (benefit) expense (17,372) 24,782 (8,835) (75,391)
Litigation contingency
expenses(2) 20,000 20,000
Other non-cash adjustments (79) 574 2,316 557
Adjusted EBITDA 256,640 270,426 775,596 744,557
Adjusted EBITDA attributable to
non-controlling interests 13,606 5,194 35,501 14,647
Adjusted EBITDA attributable to
Oasis 243,034 265,232 740,095 729,910
Cash Interest (41,900) (39,426) (126,534) (117,113)
Capital expenditures(3) (187,216) (372,343) (708,884) (1,898,105)
Capitalized interest 3,001 4,531 9,464 13,209
Free Cash Flow $
16,919 $
(142,006) $
(85,859) $
(1,272,099)
Net cash provided by operating
activities $
250,962 $
229,985 $
639,894 $
762,001
Derivative settlements(1) 7,123 (65,190) 10,752 (162,013)
Interest expense, net of
capitalized interest 43,897 39,560 131,551 117,616
Exploration expenses 652 22,315 2,369 23,701
Deferred financing costs
amortization and other (5,945) (9,556) (18,190) (20,074)
Current tax (benefit) expense 84 (93) 5 27
Changes in working capital (60,054) 52,831 (13,101) 22,742
Litigation contingency
expenses(2) 20,000 20,000
Other non-cash adjustments (79) 574 2,316 557
Adjusted EBITDA 256,640 270,426 775,596 744,557
Adjusted EBITDA attributable to
non-controlling interests 13,606 5,194 35,501 14,647
Adjusted EBITDA attributable to
Oasis 243,034 265,232 740,095 729,910
Cash Interest (41,900) (39,426) (126,534) (117,113)
Capital expenditures(3) (187,216) (372,343) (708,884) (1,898,105)
Capitalized interest 3,001 4,531 9,464 13,209
Free Cash Flow $
16,919 $
(142,006) $
(85,859) $
(1,272,099)
___________________
(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) In 3Q 2019, the Company incurred a charge
to establish a loss accrual of $20
million, which the Company believes is
the estimable amount of loss that could
potentially be incurred from the
Company's pending legal proceedings based
upon currently available information.
(3) Capital expenditures (including
acquisitions) reflected in the table
above differ from the amounts shown in
the statements of cash flows in the
Company's 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 statements of cash flows are
presented on a cash basis. Acquisitions
totaled $2.5 million and $8.3 million for
the three and nine months ended September
30, 2019, respectively, and $55.6 million
and $950.1 million for the three and nine
months ended September 30, 2018,
respectively. In addition, capital
expenditures (including acquisitions)
reflected in the table above includes
consideration paid through the issuance
of common stock in connection with an
acquisition for the nine months ended
September 30, 2018.
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 September 30, Nine Months Ended September 30,
2019 2018 2019 2018
(In thousands)
Income (loss) before income
taxes including non-
controlling interests $
(42,605) $
59,375 $
(184,138) $
(423,470)
(Gain) loss on sale of
properties 752 (46,459) 3,950 (48,413)
Loss on extinguishment of debt 47 13,698
Net (gain) loss on derivative
instruments (47,922) 48,544 34,940 239,945
Derivative settlements(1) 7,123 (65,190) 10,752 (162,013)
Interest expense, net of
capitalized interest 39,385 39,398 119,082 117,009
Depreciation, depletion and
amortization 205,902 158,630 563,408 453,083
Impairment 653 384,228
Exploration expenses 652 22,315 2,369 23,701
Equity-based compensation
expenses 8,246 7,102 25,348 20,565
Litigation contingency
expenses(2) 20,000 20,000
Other non-cash adjustments (79) 574 2,316 557
Adjusted EBITDA $
191,454 $
224,336 $
598,680 $
618,890
___________________
(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) In 3Q 2019, the Company incurred a charge
to establish a loss accrual of $20
million, which the Company believes is
the estimable amount of loss that could
potentially be incurred from the
Company's pending legal proceedings based
upon currently available information.
Midstream Services
Three Months Ended September 30, Nine Months Ended September 30,
2019 2018 2019 2018
(In thousands)
Income before income taxes
including non-controlling
interests $
59,787 $
30,959 $
156,861 $
100,754
Loss on sale of properties 9,590 9,590
Interest expense, net of
capitalized interest 4,512 162 12,469 607
Depreciation, depletion and
amortization 9,340 7,373 27,420 20,902
Equity-based compensation
expenses 383 442 1,363 1,222
Adjusted EBITDA $
74,022 $
48,526 $
198,113 $
133,075
Well Services
Three Months Ended September 30, Nine Months Ended September 30,
2019 2018 2019 2018
(In thousands)
Income before income taxes
including non-controlling
interests $
375 $
9,158 $
2,694 $
25,316
Depreciation, depletion and
amortization 3,206 3,940 10,493 11,560
Equity-based compensation
expenses 42 354 1,130 1,149
Adjusted EBITDA $
3,623 $
13,452 $
14,317 $
38,025
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 September 30, Nine Months Ended September 30,
2019 2018 2019 2018
(In thousands, except per share data)
Net income (loss) attributable
to Oasis $
20,288 $
62,341 $
(51,837) $
(257,273)
(Gain) loss on sale of
properties 752 (36,869) 3,950 (38,823)
Loss on extinguishment of debt 47 13,698
Net (gain) loss on derivative
instruments (47,922) 48,544 34,940 239,945
Derivative settlements(1) 7,123 (65,190) 10,752 (162,013)
Impairment 653 384,228
Amortization of deferred
financing costs 1,861 1,814 5,454 5,512
Amortization of debt discount 3,137 2,852 9,027 8,201
Litigation contingency
expenses(2) 20,000 20,000
Other non-cash adjustments (79) 574 2,316 557
Tax impact(3) (21,173) 12,214 (28,026) (108,028)
Adjusted Net Income (Loss)
Attributable to Oasis $
(16,013) $
26,327 $
7,229 $
86,004
Diluted earnings (loss)
attributable to Oasis per share $
0.06 $
0.20 $
(0.16) $
(0.84)
(Gain) loss on sale of
properties (0.12) 0.01 (0.13)
Loss on extinguishment of debt 0.04
Net (gain) loss on derivative
instruments (0.15) 0.15 0.11 0.78
Derivative settlements(1) 0.02 (0.21) 0.03 (0.52)
Impairment 1.24
Amortization of deferred
financing costs 0.01 0.01 0.02 0.02
Amortization of debt discount 0.01 0.01 0.03 0.03
Litigation contingency
expenses(2) 0.06 0.06
Other non-cash adjustments 0.01
Tax impact(3) (0.06) 0.04 (0.09) (0.34)
Adjusted Diluted Earnings (Loss)
Attributable to Oasis Per Share $
(0.05) $
0.08 $
0.02 $
0.28
Diluted weighted average shares
outstanding(4) 315,135 316,387 315,944 308,985
Effective tax rate applicable to (140.0) 25.3 32.2 23.9
adjustment items % % % %
___________________
(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) In 3Q 2019, the Company incurred a charge
to establish a loss accrual of $20
million, which the Company believes is
the estimable amount of loss that could
potentially be incurred from the
Company's pending legal proceedings based
upon currently available information.
(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.
(4) No unvested stock awards were included in
computing Adjusted Diluted Loss
Attributable to Oasis Per Share for the
three months ended September 30, 2019
because the effect was anti-dilutive due
to the Adjusted Net Loss Attributable to
Oasis. For the nine months ended
September 30, 2019 and three and nine
months ended September 30, 2018, the
Company included 1,081,000, 3,220,000 and
3,452,000, respectively, of unvested
stock awards in computing Adjusted
Diluted Earnings Attributable to Oasis
Per Share due to the dilutive effect
under the treasury stock method.
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SOURCE Oasis Petroleum Inc.
