Press Releases

Oasis Midstream Partners LP Announces Year Ended December 31, 2018 Earnings

HOUSTON, Feb. 26, 2019 /PRNewswire/ -- Oasis Midstream Partners LP (NYSE: OMP) (the "Partnership" or "OMP") today announced financial results for the quarter and year ended December 31, 2018 and updated its 2019 outlook.

Recent Highlights:

  • Declared the quarterly cash distribution for the fourth quarter of 2018 of $0.45 per unit, an approximate 5% increase from the cash distribution declared for the third quarter of 2018 and in line with the Partnership's 20% annualized distribution growth target.
  • Net income was $146.4 million and net cash provided by operating activities was $205.0 million for the year ended December 31, 2018. Net income was $38.6 million and net cash provided by operating activities was $48.1 million for the quarter ended December 31, 2018.
  • Adjusted EBITDA was $48.6 million and net Adjusted EBITDA attributable to the Partnership was $22.1 million for the quarter ended December 31, 2018. Adjusted EBITDA is a non-GAAP financial measure. See "Non-GAAP Financial Measures" below.
  • Distributable Cash Flow ("DCF") was $18.5 million for the quarter ended December 31, 2018, resulting in fourth quarter DCF coverage of 1.21x. Pro forma for OMP's acquisition of additional ownership interests in Bobcat DevCo LLC ("Bobcat DevCo") and Beartooth DevCo LLC ("Beartooth DevCo"), including a full quarter of cash interest on new debt associated with the dropdown acquisition, DCF coverage approximated 1.43x for the fourth quarter. DCF is a non-GAAP financial measure. See "Non-GAAP Financial Measures" below.
  • Successfully commenced operations at OMP's new 200 MMscfpd natural gas processing plant in Wild Basin ("Gas Plant II") in early December, and began servicing third party natural gas volumes during the fourth quarter of 2018.
  • Completed the acquisition from Oasis Petroleum of an additional 15% ownership interest in Bobcat DevCo and an additional 30% ownership interest in Beartooth DevCo for total consideration of approximately $251.4 million, consisting of $172.4 million in cash and $79.0 million in common units.
  • During the year ended 2018, OMP successfully signed multiple third party agreements across all three development companies and has commenced services pursuant to these arrangements to provide its full suite of midstream services for third party volumes.
  • Increased water volumes in Beartooth DevCo to 151.1 thousand barrels of water per day ("Mbwpd"), a 53% increase compared to the fourth quarter of 2017. Approximately two-thirds of the increase was related to Oasis Petroleum's produced water growth and approximately one-third was associated with increased freshwater volumes, which was largely driven by third party sales.

"Fourth quarter results mark a strong end to an impressive year at Oasis Midstream Partners," said Taylor Reid, Chief Executive Officer of OMP. "During the quarter, we successfully started our new 200 MMscfpd gas plant and executed additional third-party deals in Wild Basin. Fourth quarter pro forma coverage of 1.43x exceeded our expectations. Additionally, OMP successfully completed its first drop as a public company, improving our scale, liquidity, and financial outlook. As we look to 2019, our sponsor's Wild Basin centered program insulates OMP's financial profile, and we are in a position to deliver our EBITDA, growth, and coverage outlook despite the decline in commodity prices. OMP exceeded expectations in 2018, and we look forward to executing our business and continuing to increase the value of our partners' investment in 2019 and beyond."

Gas Plant II Update:
OMP finished construction on Gas Plant II and began processing volumes in early December. With 320 MMscfpd of natural gas processing capacity, OMP is the second largest natural gas processor in the Williston Basin. Utilization of Gas Plant II approximated 60% through the first three weeks of February. OMP expects to run at 60% utilization in the beginning of 2019, and with additional third party deals, utilization is now expected to increase to above 90% by year end 2019 (vs. over 80% at the November 2018 update). Third party volumes are expected to account for approximately 30% to 40% of Gas Plant II's throughput by the fourth quarter of 2019.

2019 Capital Spending and Outlook:
On February 22, 2019, OMP entered into a capital expenditures arrangement (the "Capital Expenditures Arrangement") with Oasis Petroleum. Pursuant to this arrangement, in exchange for increasing its percentage ownership interest in Bobcat DevCo, OMP will cover up to $80 million of the capital contributions that Oasis Petroleum would otherwise be required to contribute to Bobcat DevCo during the 2019 calendar year. The arrangement provides an opportunity for OMP to increase its scale in an accretive manner while lowering the capital requirements of its sponsor. Based on current market values, OMP's ownership interest in Bobcat DevCo is expected to increase from 25% as of December 31, 2018 to between approximately 34% and 36% by year end 2019. Increasing ownership in Bobcat DevCo is expected to drive EBITDA and coverage higher throughout 2019. Capital expenditures guidance and highlights for 2019 provided below includes the Capital Expenditures Arrangement for all of 2019.

The terms of the Capital Expenditures Arrangement were approved by the Board of Directors of OMP GP LLC (the "General Partner") following a unanimous recommendation for approval from the conflicts committee of the Board of Directors of the General Partner, which consists entirely of independent directors. The conflicts committee was advised by Baird on financial matters and Richards, Layton & Finger, P.A. on legal matters. Oasis Petroleum was advised by Vinson and Elkins L.L.P. on legal matters.

The following table depicts our full year 2019 guidance for capital expenditures ("CapEx"):





2019 CapEx

DevCo


OMP Ownership(1)


Gross


Net(2)





(In millions)

Bighorn DevCo


100%


$25 - 30


$25 - 30

Bobcat DevCo


30% - 31%


100 - 110


94 - 104

Beartooth DevCo


70%


17 - 22


12 - 15

Total CapEx




$142 - 162


$131 - 149

___________________

(1) OMP ownership reflects average estimated ownership during 2019.

(2) Net CapEx range reflects 100% of estimated expansion CapEx for Bobcat DevCo pursuant to the Capital Expenditures Arrangement. Maintenance CapEx remains split by ownership.

Highlights for 2019 include:

  • Growing distributions per unit approximately 5% each quarter — 20% annualized rate;
  • Expecting first quarter 2019 limited partner distribution coverage of approximately 1.5x and anticipate limited partner distribution coverage increasing to 1.8x - 2.0x as the year progresses;
  • Maintenance CapEx of approximately 6% to 8% of Adjusted EBITDA, which is included in total CapEx estimate;
  • Cash Interest of approximately $15 million in 2019; and
  • Adjusted EBITDA attributable to OMP of approximately $148 million to $157 million in 2019 (an increase from the November 2018 update primarily due to the Capital Expenditures Arrangement).

Operational and Financial Update

Select operational and financial statistics are in the following table:




Three Months Ended
December 31, 2018


Year Ended December 31,
2018


OMP
Ownership(1)


Gross


Net


Gross


Net




(In millions)

Bighorn DevCo










Operating income

100%


$

6.0



$

6.0



$

22.1



$

22.1


Depreciation and amortization

100%


3.3



3.3



11.4



11.4


Total CapEx

100%


19.2



19.2



78.2



78.2


Bobcat DevCo










Operating income

25%


$

19.9



$

3.4



$

74.3



$

8.9


Depreciation and amortization

25%


2.7



0.5



9.0



1.1


Total CapEx

25%


23.7



3.5



142.6



15.4


Beartooth DevCo










Operating income

70%


$

15.1



$

8.2



$

55.3



$

24.3


Depreciation and amortization

70%


2.2



1.2



8.0



3.5


Total CapEx

70%


15.2



8.6



51.3



23.0


Total OMP










DevCo operating income



$

40.9



$

17.6



$

151.7



$

55.4


Public company expenses



0.6



0.6



3.0



3.0


OMP operating income



40.3



17.0



148.8



52.4


Depreciation and amortization



8.2



5.0



28.4



16.0


Equity-based compensation expense



0.1



0.1



0.4



0.4


Total CapEx(2)



58.1



31.3



272.1



116.6


Maintenance CapEx



1.6



1.0



6.9



2.7


Expansion CapEx



56.5



30.3



265.1



113.8


___________________

(1) OMP ownership interest as of December 31, 2018. On November 19, 2018, OMP acquired an additional 15% ownership interest in Bobcat DevCo and an additional 30% ownership interest in Beartooth DevCo. Net amounts attributable to OMP were recorded prospectively from the closing date of the dropdown acquisition on November 19, 2018.

(2) Excludes expansion capital expenditures of approximately $172.4 million for the acquisition of additional ownership interests in Bobcat DevCo and Beartooth DevCo on November 19, 2018.

The following table shows gross volumes for the full year 2018, fourth quarter 2018 actuals compared to fourth quarter 2018 guidance, and depicts OMP's gross volumes guidance for the first quarter 2019 and full year 2019.


Metric


FY18
Actual


4Q18
Actual


4Q18
Guidance


1Q19
Guidance


FY19
Guidance

Bighorn DevCo












Crude oil service volumes

Mbopd


43.6


45.1


40 - 46


41 - 46


44 - 48

Natural gas service volumes

MMscfpd


102.8


113.0


125 - 140


160 - 190


200 - 240

Bobcat DevCo












Crude oil service volumes

Mbopd


36.1


36.9


35 - 40


37 - 40


38 - 42

Natural gas service volumes

MMscfpd


147.7


166.8


175 - 195


220 - 240


270 - 290

Water service volumes

Mbwpd


49.4


53.9


48 - 53


47 - 50


50 - 55

Beartooth DevCo












Water service volumes

Mbwpd


137.7


151.1


105 - 120


95 - 115


95 - 115

Liquidity and CapEx

As of December 31, 2018, OMP had cash and cash equivalents of $6.6 million and $318.0 million of borrowings outstanding under its revolving credit facility with an unused borrowing capacity of $82.0 million. OMP has the flexibility to expand the aggregate commitment amount under its revolving credit facility from $400 million to $600 million, subject to certain conditions. Expansion capital expenditures attributable to OMP during the fourth quarter of 2018 of $30.3 million, which excludes expansion capital expenditures of approximately $172.4 million for OMP's acquisition of additional ownership interests in Bobcat DevCo and Beartooth DevCo, were also in-line with expectations.

Quarterly Distribution

On February 5, 2019, the Board of Directors of the General Partner declared the quarterly distribution for the fourth quarter of 2018 of $0.45 per unit, a 20% increase from the fourth quarter of 2017 and 20% above the minimum quarterly distribution. In addition, the General Partner will receive a cash distribution of $0.1 million attributable to its incentive distribution rights related to earnings for the fourth quarter of 2018. These distributions will be paid on February 28, 2019 to unitholders of record as of February 15, 2019.

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:


Wednesday, February 27, 2019

Time:


11:30 a.m. Central Time

Live Webcast:


https://www.webcaster4.com/Webcast/Page/1777/29263

Website:


www.oasismidstream.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:


5081699

A recording of the conference call will be available beginning at 1:30 p.m. Central Time on the day of the call and will be available until Wednesday, March 6, 2019 by dialing:

Replay dial-in:


877-344-7529

Intl. replay:


412-317-0088

Replay code:


10128591

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 crude 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 crude 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

CONSOLIDATED BALANCE SHEETS

(Unaudited)



December 31, 2018


December 31, 2017


(In thousands)

ASSETS




Current assets




Cash and cash equivalents

$

6,649



$

883


Accounts receivable

2,481



834


Accounts receivable - Oasis Petroleum

80,805



85,818


Prepaid expenses

1,418



778


Other current assets

22




Total current assets

91,375



88,313


Property, plant and equipment

933,155



653,928


Less: accumulated depreciation and amortization

(62,730)



(34,348)


Total property, plant and equipment, net

870,425



619,580


Other assets

2,452



2,013


Total assets

$

964,252



$

709,906


LIABILITIES AND EQUITY




Current liabilities




Accounts payable

$

2,180



$


Accounts payable - Oasis Petroleum

33,014



11,638


Accrued liabilities

57,657



58,818


Accrued interest payable

442



114


Total current liabilities

93,293



70,570


Long-term debt

318,000



78,000


Asset retirement obligations

1,514



1,316


Total liabilities

412,807



149,886


Partners' Equity




Limited Partners




Common units (20,029 and 13,762 units issued and outstanding at December 31, 2018 and 2017, respectively)

192,581



167,401


Subordinated units (13,750 units issued and outstanding at December 31, 2018 and 2017)

45,937



79,173


General Partner

112




Total partners' equity

238,630



246,574


Non-controlling interests

312,815



313,446


Total equity

551,445



560,020


Total liabilities and equity

$

964,252



$

709,906


 

OASIS MIDSTREAM PARTNERS LP

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)



Three Months Ended December 31,


Year Ended December 31,


2018


2017


2018


2017


(In thousands, except per unit data)

Revenues








Midstream services – Oasis Petroleum

$

64,115



$

52,453



$

248,216



$

168,205


Midstream services – third parties

1,164



458



2,604



1,973


Product sales – Oasis Petroleum

6,884



3,620



17,476



11,644


Product sales – third parties

14



352



3,327



394


Total revenues

72,177



56,883



271,623



182,216


Operating expenses








Costs of product sales

1,968



1,874



7,433



6,085


Operating and maintenance

15,322



12,544



63,123



39,441


Depreciation and amortization

8,192



4,371



28,404



15,730


General and administrative

6,401



4,729



23,897



18,597


Total operating expenses

31,883



23,518



122,857



79,853


Operating Income

40,294



33,365



148,766



102,363


Other income (expense)








Interest expense, net of capitalized interest

(1,735)





(2,343)



(6,965)


Other income (expense)

1





(14)



7


Total other expense

(1,734)





(2,357)



(6,958)


Income before income taxes

38,560



33,365



146,409



95,405


Income tax expense







(22,858)


Net income

38,560



33,365



146,409



72,547


Less: Net income prior to initial public offering







37,577


Net income subsequent to initial public offering

38,560



33,365



146,409



34,970


Less: Net income attributable to non-controlling interests subsequent to initial public offering

23,279



22,253



96,354



23,332


Net income attributable to Oasis Midstream Partners LP

15,281



11,112



50,055



11,638


Less: Net income attributable to General Partner

112





112




Net income attributable to limited partners

$

15,169



$

11,112



$

49,943



$

11,638


Earnings per limited partner unit








Common units - Basic and diluted

$

0.54



$

0.41



$

1.82



$

0.43


Weighted average number of limited partners units outstanding








Common units - Basic

16,740



13,628



14,504



13,566


Common units - Diluted

16,751



13,630



14,519



13,568


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
December 31,


Year Ended December 31,


2018


2017


2018


2017


(In thousands)

Interest expense, net of capitalized interest

$

1,735



$



$

2,343



$

6,965


Capitalized interest

965



562



4,870



1,220


Amortization of deferred financing costs

(164)



(119)



(525)



(126)


Cash Interest

$

2,536



$

443



$

6,688



$

8,059


Less: Cash Interest prior to the initial public offering







7,603


Cash Interest attributable to Oasis Midstream Partners LP

$

2,536



$

443



$

6,688



$

456


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.

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.

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 measures of Adjusted EBITDA and DCF for the periods presented:


Three Months Ended
December 31,


Year Ended December 31,


2018


2017


2018


2017


(In thousands)

Net income

$

38,560



$

33,365



$

146,409



$

72,547


Income tax expense







22,858


Depreciation and amortization

8,192



4,371



28,404



15,730


Equity-based compensation expenses

76



53



356



1,052


Interest expense, net of capitalized interest

1,735





2,343



6,965


Adjusted EBITDA

48,563



37,789



177,512



119,152


Less: Adjusted EBITDA prior to the initial public offering







79,484


Adjusted EBITDA subsequent to the initial public offering

48,563



37,789



177,512



39,668


Less: Adjusted EBITDA attributable to non-controlling interests

26,504



24,740



108,754



25,955


Adjusted EBITDA attributable to Oasis Midstream Partners LP

22,059



13,049



68,758



13,713


Cash Interest attributable to Oasis Midstream Partners LP

2,536



443



6,688



456


Maintenance capital expenditures

1,036



1,098



2,747



1,183


Distributable Cash Flow attributable to Oasis Midstream Partners LP

$

18,487



$

11,508



$

59,323



$

12,074










Net cash provided by operating activities

$

48,112



$

8,274



$

205,012



$

79,843


Current tax expense







17,618


Interest expense, net of capitalized interest

1,735





2,343



6,965


Changes in working capital

(2,038)



29,635



(30,362)



14,853


Other non-cash adjustments

754



(120)



519



(127)


Adjusted EBITDA

48,563



37,789



177,512



119,152


Less: Adjusted EBITDA prior to the initial public offering







79,484


Adjusted EBITDA subsequent to the initial public offering

48,563



37,789



177,512



39,668


Less: Adjusted EBITDA attributable to non-controlling interests

26,504



24,740



108,754



25,955


Adjusted EBITDA attributable to Oasis Midstream Partners LP

22,059



13,049



68,758



13,713


Cash Interest attributable to Oasis Midstream Partners LP

2,536



443



6,688



456


Maintenance capital expenditures

1,036



1,098



2,747



1,183


Distributable Cash Flow attributable to Oasis Midstream Partners LP

$

18,487



$

11,508



$

59,323



$

12,074










Distributions Declared








Limited partners

$

15,208



$

10,317



$

49,135



$

10,991


Incentive distribution rights

112





112




Total distributions

$

15,320



$

10,317



$

49,247



$

10,991










DCF coverage ratio

1.21x



1.12x



1.20x



1.10x


 

SOURCE Oasis Midstream Partners LP