Press Releases

Oasis Midstream Partners LP Announces Quarter Ended March 31, 2019 Earnings

HOUSTON, May 7, 2019 /PRNewswire/ -- Oasis Midstream Partners LP (NYSE: OMP) (the "Partnership" or "OMP") today announced financial results for the quarter ended March 31, 2019 and provided an operational update.

Recent Highlights:

  • Declared the quarterly cash distribution for the first quarter of 2019 of $0.47 per unit, an approximate 5% increase from the cash distribution declared for the fourth quarter of 2018, in line with the Partnership's 20% annualized distribution growth target.
  • Net income was $43.3 million for the three months ended March 31, 2019, and net cash from operating activities was $56.1 million for the three months ended March 31, 2019.
  • Adjusted EBITDA was $56.1 million for the three months ended March 31, 2019, and net Adjusted EBITDA to the Partnership was $31.5 million for the three months ended March 31, 2019. See "Non-GAAP Financial Measures" below.
  • Distributable Cash Flow ("DCF") was $26.2 million for the three months ended March 31, 2019, resulting in distribution coverage of 1.6x, which is above OMP's first quarter guidance of 1.5x. See "Non-GAAP Financial Measures" below.
  • Exceeded volume guidance on all services in the first quarter of 2019 and increased full year expectations across most services.
  • Continued to increase natural gas volumes, increasing Bighorn DevCo LLC ("Bighorn DevCo") natural gas volumes by 71% from the fourth quarter of 2018, up to 193 million standard cubic feet per day ("MMscfpd") in the first quarter of 2019, and Bobcat DevCo LLC ("Bobcat DevCo") natural gas volumes by 45% from the fourth quarter of 2018, up to 241 MMscfpd, in the first quarter of 2019. Third party natural gas volumes represented over 15% of the volumes processed in Bighorn DevCo in the first quarter of 2019.
  • Announced a new midstream project in the Delaware Basin with Oasis Petroleum Inc. ("Oasis Petroleum"). See "Delaware Midstream Opportunity" below.

"Oasis Midstream Partners delivered another record quarter, topping all expectations while spending below our plan during the first quarter," said Taylor Reid, Chief Executive Officer of OMP. "The team delivered volumes that exceeded guidance, which resulted in EBITDA outpacing our guidance by approximately $2 million. Our distribution coverage of 1.6x surpassed our first quarter guidance of 1.5x. We continue to expect distribution coverage to grow rapidly this year to 1.75x to 1.9x in the second quarter of 2019, and to 1.9x to 2.0x in the fourth quarter of 2019, which is an increase to our February 2019 outlook. Our new 200 MMscfpd and our original 80 MMscfpd gas processing plants are running extremely well, as the overall complex services both Oasis Petroleum and third party volumes."

Delaware Midstream Opportunity

  • The Boards of Directors of Oasis Petroleum and OMP GP LLC, our general partner (the "General Partner"), have approved entering into acreage dedications and midstream services arrangements on terms similar to the existing commercial arrangements between Oasis Petroleum and OMP in the Williston Basin (the "Delaware Midstream Opportunity"). Final agreements have not been executed.
  • We anticipate that Oasis Petroleum will dedicate to OMP certain acreage representing areas in and around Oasis Petroleum's position in the Delaware Basin which is currently undedicated for crude oil and produced water infrastructure development. OMP expects to spend an additional $53 million to $57 million in 2019 on such infrastructure build-out, including purchases from Oasis Petroleum for existing midstream assets in the Delaware Basin.
  • OMP Operating LLC ("OMP Operating"), the Partnership's wholly owned subsidiary, will form a new development company ("DevCo") called Panther DevCo LLC ("Panther DevCo"), which will be 100% owned by OMP Operating.
  • OMP expects 2019 EBITDA for the Panther DevCo to range between $1 million and $3 million, which is included in OMP's updated total EBITDA estimates.
  • On May 6, 2019, the Partnership entered into an amendment to its revolving credit facility to (i) increase the aggregate amount of commitments from $400.0 million to $475.0 million; (ii) provide for the ability to further increase commitments to $675.0 million; and (iii) add a new lender to the bank group. OMP believes that it will have ample debt capacity to finance the Delaware Basin infrastructure build-out related to the Delaware Midstream Opportunity, while managing leverage below 3.0x debt to current quarter annualized EBITDA and exiting 2019 with leverage below 2.5x.
  • Cumulative capital expenditures ("CapEx") net to OMP is expected to approximate $150 million through 2022-2023. Build multiples are expected to approximate 4 to 5 times.

Mr. Reid added, "Our teams at Oasis Petroleum and OMP have worked diligently to create a mutually beneficial outcome for both parties in the development of the midstream assets in the Delaware Basin. Oasis Petroleum's highly-economic position in the heart of the over-pressured oil window is a coveted asset from both an upstream and a midstream perspective. The infrastructure development plan is extremely capital efficient for OMP, as capital is spread out over time and produces very competitive build multiples in a few years as cash flows quickly ramp based on Oasis Petroleum's drilling schedule. The robust inventory life of the Oasis Petroleum asset, coupled with the opportunity to capitalize on third party business make this investment the right next step in the evolution and growth of OMP."

Outlook Update (including Delaware Midstream)

  • OMP is increasing its 2019 EBITDA estimate to $158 million - $166 million, compared to $148 million - $157 million as of the February 2019 update and $65 million at the time of OMP's initial public offering.
  • Expects gross EBITDA in 2019, before public company expenses, to be split between the four DevCos accordingly: Bighorn DevCo $81 million to $84 million, Bobcat DevCo $133 million to $136 million, Beartooth DevCo LLC ("Beartooth DevCo") $54 million to $57 million, and Panther DevCo $1 million to $3 million.
  • Anticipates second quarter 2019 distribution coverage of approximately 1.75x to 1.9x and fourth quarter 2019 distribution coverage of approximately 1.9x to 2.0x.
  • The full year CapEx plan for the Williston Basin remains unchanged from February 2019 guidance, although capital is biased to the high end of the range due to incremental spend to capture third party volumes. With the additional spend in the Panther DevCo, net CapEx attributable to OMP in 2019 is now expected to range between $184 million and $206 million.

Operational and Financial Update

Select operational and financial statistics are in the following table:


Three Months Ended March 31, 2019


OMP
Ownership(1)


Gross


Net

Bighorn DevCo



(In millions)

Operating income

100

%


$

10.6



$

10.6


Depreciation and amortization

100

%


3.7



3.7


Total CapEx

100

%


7.0



7.0


Bobcat DevCo






Operating income

27.4

%


$

23.9



$

6.2


Depreciation and amortization

27.4

%


2.9



0.8


Total CapEx

27.4

%


34.5



32.0


Beartooth DevCo






Operating income

70

%


$

13.5



$

9.5


Depreciation and amortization

70

%


2.3



1.6


Total CapEx

70

%


9.0



6.3


Total OMP






DevCo operating income



$

48.0



$

26.3


Public company expenses



0.9



0.9


Partnership operating income



47.1



25.4


Depreciation and amortization



8.9



6.1


Equity-based compensation expense



0.1



0.1


Total CapEx



50.5



45.3


Maintenance CapEx



4.4



1.7


Expansion CapEx



46.1



43.6


__________________

(1) Represents OMP's ownership in each DevCo as of March 31, 2019.

The following table shows actual volumes for the first quarter of 2019, provides volumes guidance for the second quarter of 2019 and updates volumes guidance for the full year 2019:



Metric


1Q19 Actual


2Q19 Guidance


FY19 Guidance

Bighorn DevCo









Crude oil service volumes


Mbopd


50.6



45 - 50


45 - 50

Natural gas service volumes


MMscfpd


193.0



230 - 250


220 - 245

Bobcat DevCo









Crude oil service volumes


Mbopd


42.5



40 - 43


40 - 43

Natural gas service volumes


MMscfpd


241.0



270 - 290


270 - 290

Water service volumes


Mbowpd


51.2



47 - 50


49 - 52

Beartooth DevCo









Water service volumes


Mbowpd


133.1



115 - 125


115 - 125

2019 Bobcat Capital Expenditures Arrangement

On February 22, 2019, the Partnership entered into a capital expenditures arrangement with Oasis Petroleum (the "2019 Capital Expenditures Arrangement"). Pursuant to this arrangement, in exchange for increasing its percentage ownership interest in Bobcat DevCo, the Partnership will cover up to $80.0 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 the Partnership to increase its scale in an accretive manner while lowering the capital requirements of its sponsor. During the three months ended March 31, 2019, the Partnership made capital contributions to Bobcat DevCo pursuant to the 2019 Capital Expenditures Arrangement of $17.1 million, and the Partnership's ownership interest in Bobcat DevCo increased from 25% as of December 31, 2018 to 27.4% as of March 31, 2019. The Partnership's average ownership interest in Bobcat DevCo during the first quarter of 2019 was approximately 26%.

Liquidity and CapEx

As of March 31, 2019, the Partnership had cash and cash equivalents of $5.3 million and had $345.0 million of borrowings outstanding under its revolving credit facility, with an unused borrowing capacity of $55.0 million. Expansion CapEx attributable to OMP during the first quarter of 2019 of $43.6 million was below OMP's first quarter plan.

Quarterly Distribution

On February 28, 2019, the Partnership paid the quarterly cash distribution of $0.45 per unit related to the fourth quarter of 2018. On May 7, 2019, the Board of Directors of the General Partner declared the quarterly cash distribution for the first quarter of 2019 of $0.47 per unit. In addition, the General Partner will receive a cash distribution of $0.2 million attributable to the incentive distribution rights related to the earnings for the first quarter of 2019. These distributions will be payable on May 29, 2019 to unitholders of record as of May 17, 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, May 8, 2019

Time:


11:30 a.m. Central Time

Live Webcast:


https://www.webcaster4.com/Webcast/Page/1777/30384

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:


0411301

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, May 15, 2019 by dialing:

Replay dial-in:


877-344-7529

Intl. replay:


412-317-0088

Replay code:


10131114

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. 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, the ability to consummate the Delaware Midstream Opportunity and realize the anticipated benefits therefrom, 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

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)



March 31, 2019


December 31, 2018


(In thousands, except unit data)

ASSETS




Current assets




Cash and cash equivalents

$

5,259



$

6,649


Accounts receivable

3,419



2,481


Accounts receivable - Oasis Petroleum

79,659



80,805


Prepaid expenses

1,366



1,418


Other current assets

272



22


Total current assets

89,975



91,375


Property, plant and equipment

983,632



933,155


Less: accumulated depreciation and amortization

(71,637)



(62,730)


Total property, plant and equipment, net

911,995



870,425


Operating lease right-of-use assets

3,102




Other assets

2,680



2,452


Total assets

$

1,007,752



$

964,252


LIABILITIES AND EQUITY




Current liabilities




Accounts payable

$

557



$

2,180


Accounts payable - Oasis Petroleum

32,871



33,014


Accrued liabilities

63,698



57,657


Accrued interest payable

624



442


Current operating lease liabilities

2,339




Other current liabilities

16




Total current liabilities

100,105



93,293


Long-term debt

345,000



318,000


Asset retirement obligations

1,533



1,514


Operating lease liabilities

785




Other liabilities

311




Total liabilities

447,734



412,807


Partners' equity




Limited partners




Common units (20,045,196 and 20,029,026 issued and outstanding at March 31, 2019 and December 31, 2018, respectively)

199,191



192,581


Subordinated units (13,750,000 units issued and outstanding at March 31, 2019 and December 31, 2018)

48,345



45,937


General Partner

238



112


Total partners' equity

247,774



238,630


Non-controlling interests

312,244



312,815


Total equity

560,018



551,445


Total liabilities and equity

$

1,007,752



$

964,252


 

OASIS MIDSTREAM PARTNERS LP

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)



Three Months Ended March 31,


2019


2018


(In thousands, except per unit data)

Revenues




Midstream services – Oasis Petroleum

$

74,862



$

57,360


Midstream services – third parties

1,127



563


Product sales – Oasis Petroleum

15,652



3,493


Product sales – third parties

10



5


Total revenues

91,651



61,421


Operating expenses




Costs of product sales

8,065



1,120


Operating and maintenance

18,850



15,996


Depreciation and amortization

8,929



6,364


General and administrative

8,720



6,150


Total operating expenses

44,564



29,630


Operating income

47,087



31,791


Other expense




Interest expense, net of capitalized interest

(3,748)



(262)


Net income

43,339



31,529


Less: Net income attributable to non-controlling interests

21,796



21,575


Net income attributable to Oasis Midstream Partners LP

21,543



9,954


Less: Net income attributable to General Partner

238




Net income attributable to limited partners

$

21,305



$

9,954


Earnings per limited partner unit




Common units – basic and diluted

$

0.63



$

0.36


Weighted average number of limited partner units outstanding




Common units – basic

20,016



13,750


Common units – diluted

20,033



13,754


Non-GAAP Financial Measures

Cash Interest, Adjusted EBITDA and Distributable Cash Flow are supplemental non-GAAP financial measures that are used by management and external users of the Partnership's financial statements, such as industry analysts, investors, lenders and rating agencies. These non-GAAP financial measures should not be considered in isolation or as a substitute for interest expense, net income (loss), operating income (loss), net cash provided by (used in) operating activities or any other measures prepared under United States generally accepted accounting principles, or GAAP. Because Cash Interest, Adjusted EBITDA and Distributable Cash Flow exclude some but not all items that affect interest expense, net income and net cash provided by operating activities and may vary among companies, the amounts presented may not be comparable to similar metrics of other companies.

Cash Interest

Cash Interest is defined 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 GAAP. Management believes that the presentation of Cash Interest provides useful additional information to investors and analysts for assessing the interest charges incurred on the Partnership's debt, excluding non-cash amortization, and the Partnership's ability to maintain compliance with its 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 March 31,


2019


2018


(In thousands)

Interest expense, net of capitalized interest

$

3,748



$

262


Capitalized interest

35



835


Amortization of deferred financing costs

(191)



(116)


Cash Interest

3,592



981


Less: Cash Interest attributable to non-controlling interests(1)

(2)




Cash Interest attributable to Oasis Midstream Partners LP

$

3,590



$

981


__________________

(1) Amount represents Cash Interest attributable to non-controlling interests associated with finance leases.

Adjusted EBITDA

Adjusted EBITDA is defined 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 attributable to Oasis Midstream Partners LP is defined as Adjusted EBITDA less Adjusted EBITDA attributable to Oasis Petroleum's retained interests in two of the Partnership's DevCos, Bobcat DevCo and Beartooth DevCo. 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 the Partnership's results of operations, financial performance and the Partnership's ability to generate cash from its business operations without regard to the Partnership's 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 defined as Adjusted EBITDA attributable to Oasis Midstream Partners LP less Cash Interest attributable to Oasis Midstream Partners LP and maintenance capital expenditures attributable to Oasis Midstream Partners LP. 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 the Partnership's ability to generate cash from its business operations without regard to the Partnership's financing methods or capital structure, coupled with the Partnership's 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 measures of Adjusted EBITDA and DCF for the periods presented:


Three Months Ended March 31,


2019


2018


(In thousands)

Net income

$

43,339



$

31,529


Depreciation and amortization

8,929



6,364


Equity-based compensation expense

119



63


Interest expense, net of capitalized interest

3,748



262


Adjusted EBITDA

56,135



38,218


Less: Adjusted EBITDA attributable to non-controlling interests

24,647



24,496


Adjusted EBITDA attributable to Oasis Midstream Partners LP

31,488



13,722


Less:




Cash Interest attributable to Oasis Midstream Partners LP

3,590



981


Maintenance capital expenditures attributable to Oasis Midstream Partners LP

1,667



796


Distributable Cash Flow attributable to Oasis Midstream Partners LP

$

26,231



$

11,945






Net cash provided by operating activities

$

56,050



$

74,751


Interest expense, net of capitalized interest

3,748



262


Changes in working capital

(3,472)



(36,681)


Other non-cash adjustments

(191)



(114)


Adjusted EBITDA

56,135



38,218


Less: Adjusted EBITDA attributable to non-controlling interests

24,647



24,496


Adjusted EBITDA attributable to Oasis Midstream Partners LP

31,488



13,722


Less:




Cash Interest attributable to Oasis Midstream Partners LP

3,590



981


Maintenance capital expenditures attributable to Oasis Midstream Partners LP

1,667



796


Distributable Cash Flow attributable to Oasis Midstream Partners LP

$

26,231



$

11,945






Distributions Declared




Limited partners

$

15,884



$

10,803


Incentive distribution rights

238




Total distributions

$

16,122



$

10,803






DCF coverage ratio

1.6

x


1.1

x

 

SOURCE Oasis Midstream Partners LP