August 6, 2018 - 4:30 PM EDT
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Oasis Petroleum Inc. Announces Quarter Ended June 30, 2018 Earnings

HOUSTON, Aug. 6, 2018 /PRNewswire/ -- Oasis Petroleum Inc. (NYSE: OAS) ("Oasis" or the "Company") today announced financial results for the quarter ended June 30, 2018 and provided an operational update.

Recent Highlights:

  • Produced 79.4 thousand barrels of oil equivalent per day ("MBoepd") in the second quarter of 2018, representing an increase of 28% over the second quarter of 2017. Expect third quarter of 2018 production to range between 85.0 to 88.0 MBoepd, which accounts for divestitures closing during the third quarter.

  • Increased full year 2018 production guidance 4%, including the impact from divestitures. Additionally, increased 2018 exit rate 10% and 2019 exit rate 6% from last guidance, including the impact from divestitures. Additional details provided in the Financial and Operational Update and Outlook below. 
     
  • Completed and placed on production 37 gross (27.8 net) operated wells, including 35 gross (25.8 net) operated wells in the Williston Basin and 2 gross (2.0 net) operated wells in the Delaware Basin, in the second quarter of 2018. The Company now expects to complete approximately 110 gross operated wells in 2018 in the Williston Basin and 6 to 8 gross operated wells in the Delaware Basin.

  • Oil differentials improved to $2.42 off of NYMEX West Texas Intermediate crude oil index price ("NYMEX WTI") in the second quarter of 2018, an approximate 34% decrease from the second quarter of 2017.

  • Lease operating expenses ("LOE") per barrels of oil equivalent ("Boe") decreased over 23% to $6.11 per Boe in the second quarter of 2018 compared to $7.92 per Boe in the second quarter of 2017.

  • Entered into or closed numerous agreements to sell non-core assets since December 2017 for total proceeds of $360 million, which represent approximately 5.0 MBoepd of net production and approximately 80,000 net acres.

  • Delivered net cash provided by operating activities of $303.7 million and Adjusted EBITDA of $241.2 million for the second quarter of 2018. For a definition of Adjusted EBITDA and reconciliations of Adjusted EBITDA to net income (loss) including non-controlling interests and net cash provided by operating activities, see "Non-GAAP Financial Measures" below.

"Oasis delivered another strong quarter and has taken steps to position itself for an impressive exit to 2018," said Thomas B. Nusz, Oasis' Chairman and Chief Executive Officer. "Our full field development activities in the Williston are on plan and we are expanding outside of Wild Basin with impressive results. The team executed on a program to divest non-core assets which improved the balance sheet and allowed us to capture incremental value by drilling our core inventory in the Williston Basin, as evidenced by our increased guidance across the board. The measured approach to our Delaware operational plan has played out as expected, and well results are exceeding expectations. With assets focused on two of the best oil basins in the US, a team with a proven operating track record, and exceptional realizations in the Williston Basin, Oasis expects to be free cash flow positive on its E&P business in 2018 and in 2019."

Financial and Operational Update and Outlook

  • Delivered production during the second quarter of 2018 of 79.4 MBoepd with an oil cut of 76%. Production trended towards the top end of the guided range and oil cut was in-line with the first quarter of 2018 and with guidance provided in May 2018. 

  • Increased full year 2018 production guidance to 83.0 to 84.5 MBoepd, representing a 4% increase at the midpoint from previous guidance of 79.0 to 82.0 MBoepd, which has been adjusted to reflect the full year impact from divestitures of approximately 2.0 MBoepd. The Company is forecasting oil cut to range between 75 to 76% during the full year of 2018.

  • Expect fourth quarter 2018 production to range between 91.0 to 94.0 MBoepd, which at the midpoint, is 10% higher than prior guidance adjusted for divestitures. Production exiting 2019 is projected to increase approximately 15% above the 2018 exit rate, which is 6% higher than prior guidance adjusted for divestitures. Oasis is forecasting an oil cut of 74% for 2019.

  • Grew Delaware production during the second quarter of 2018 to 4.2 MBoepd and increased fourth quarter 2018 guidance by 20% from 5.0 MBoepd up to 6.0 MBoepd.

  • Oasis has increased 2018 CapEx by approximately $80 million focused on the Williston Basin, as infrastructure in the Williston Basin is yielding attractive realized oil and gas pricing. With approximately 95% of the Company's volumes produced from the Williston Basin during the second quarter of 2018, Oasis is well positioned to capture value during a period of tightness in takeaway capacity in the Delaware Basin.  

  • Oasis announced capacity of 10,000 barrels of oil per day on the Gray Oak Pipeline system. The Gray Oak Pipeline will provide crude oil transportation from West Texas to destinations in the Corpus Christi and Sweeny/Freeport markets. The Company continues to have a prudent development program in the Delaware Basin that is sculpted to deliver increased growth once long haul oil pipe is constructed and in-service.

Operating Guidance Update

The following table presents actual results for the second quarter of 2018 as well as updated full year 2018 guidance for certain operating data:

Metric

2Q 2018 Actual


Prior

Full Year Guidance


Updated

Full Year Guidance

Differential to NYMEX WTI ($ per Bbl)

$2.42


$1.50 - $2.00


$1.50 - $2.50

LOE ($ per Boe)

$6.11


$6.50 - $7.50


$6.00 - $7.00

Marketing, transportation and gathering expenses ("MT&G")($ per Boe)(1)

$3.19


$2.75 - $3.00


$2.75 - $3.25

Production taxes (% of oil & gas revenue)

8.6%


8.2% - 8.5%


8.5% - 8.7%

General and administrative expenses ("G&A") ($ in millions)

$28.2


$105.0 - $115.0


$105.0 - $115.0

CapEx ($ in millions)






E&P CapEx(2)



$815.0 - $855.0


$900.0 - $930.0

OMS and OWS CapEx(3)



$290.0 - $305.0


$290.0 - $305.0

Other CapEx



$40.0


$40.0







(1)

Excludes non-cash valuation charges on pipeline imbalances.

(2)

Updated guidance incorporates increased completions in Williston Basin funded by divestitures. Increased activity reflected in increased production expectations for 2018 and 2019.

(3)

Prior guidance for OMS and OWS CapEx incorporates Oasis Midstream Partners LP's ("OMP") update provided on June 18, 2018 to fund third party growth opportunities and Oasis volume growth. Full year CapEx guidance includes $100.5 to $108.0 million attributable to OMP. See OMP press release issued on August 6, 2018 for more detail.

Oasis Midstream Update

Oasis continues to create shareholder value for both its and OMP investors. Oasis owns approximately 69% of OMP and 90% of OMP GP LLC ("OMP GP"), the general partner of OMP. Because Oasis has internally controlled infrastructure through OMP, the Company has numerous competitive advantages in the Williston Basin, which is being highlighted in the current tight gas processing market in North Dakota. OMP is constructing a 200 MMscfpd gas plant in Wild Basin, which remains scheduled to be online in November 2018. This incremental processing capacity is expected to provide Oasis flow assurance for its highly prolific wells in Wild Basin and has allowed OMP to contract third-party volumes as well. OMP provided updated guidance around these and other opportunities in June 2018. OMP announced today that it has updated expected EBITDA in 2018 from $61 to $65 million to $64 to $68 million and in 2019 from $94 to 97 million to $102 to $108 million. OMP expects to organically grow cash distributions per unit by 20% past 2021, which is an extended runway from prior guidance. This growth drives value to Oasis through its ownership stake in both OMP and OMP GP, which owns 100% of OMP's incentive distribution rights.

Operational and Financial Update

The following table presents select operational and financial data for the periods presented:


Quarter Ended:


6/30/2018


3/31/2018


6/30/2017

Production data:






Oil (Bopd)

60,632



58,713



47,795


Natural gas (MMcfpd)

112,830



108,635



84,890


Total production (Boepd)

79,437



76,819



61,943


Percent Oil

76.3

%


76.4

%


77.2

%

Average sales prices:






Oil, without derivative settlements ($ per Bbl)

$

65.47



$

61.20



$

44.61


Differential to NYMEX WTI ($ per Bbl)

2.42



1.67



3.68


Oil, with derivative settlements ($ per Bbl)(1)(2)

54.53



54.18



44.35


Oil derivative settlements - net cash payments ($ in millions)(2)

(60.4)



(37.1)



(1.1)


Natural gas, without derivative settlements ($ per Mcf)(3)

3.38



4.12



3.19


Natural gas, with derivative settlements ($ per Mcf)(1)(2)(3)

3.43



4.13



3.21


Natural gas derivative settlements - net cash receipts ($ in millions)(2)

0.5



0.1



0.2


Selected financial data ($ in millions):






Revenues:






Oil revenues

$

361.3



$

323.4



$

194.0


Natural gas revenues

34.7



40.3



24.6


Purchased oil and gas sales

57.6



18.0



8.1


Midstream revenues

29.3



27.9



15.6


Well services revenues

18.5



11.6



11.8


Total revenues

$

501.4



$

421.2



$

254.1


Net cash provided by operating activities

303.7



228.4



102.1


Adjusted EBITDA

241.2



232.9



141.3


Select operating expenses:






LOE

$

44.1



$

44.8



$

44.7


Midstream operating expenses

7.7



8.0



3.3


Well services operating expenses(4)

13.6



7.4



9.0


MT&G(5)

23.1



20.8



12.2


Non-cash valuation charges

(0.2)



0.2



(0.2)


Purchased oil and gas expenses

57.2



18.0



8.0


Production taxes

34.0



31.0



19.0


Depreciation, depletion and amortization ("DD&A")

153.6



149.3



125.3


Total select operating expenses

$

333.1



$

279.5



$

221.3


Select operating expenses data:






LOE ($ per Boe)

$

6.11



$

6.48



$

7.92


      MT&G ($ per Boe)(5)

3.19



3.01



2.14


DD&A ($ per Boe)

21.24



21.59



22.23


E&P G&A ($ per Boe)

3.25



3.40



3.52


Production taxes (% of oil and gas revenue)

8.6

%


8.5

%


8.7

%










(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 six months ended June 30, 2017, well services operating expenses have been adjusted to include $0.9 million and $1.6 million, respectively, for certain well services direct field labor compensation expenses which were previously recognized in general and administrative expenses on the Company's Condensed Consolidated Statements of Operations.

(5)

Excludes non-cash valuation charges on pipeline imbalances.

G&A totaled $28.2 million in the second quarter of 2018, $22.6 million in the second quarter of 2017 and $27.9 million in the first quarter of 2018. Amortization of equity-based compensation, which is included in G&A, was $7.4 million, or $1.02 per Boe, in the second quarter of 2018 as compared to $7.1 million, or $1.26 per Boe, in the second quarter of 2017 and $6.8 million, or $0.98 per Boe, in the first quarter of 2018. G&A for the Company's E&P segment totaled $23.5 million in the second quarter of 2018, $19.8 million in the second quarter of 2017 and $23.5 million in the first quarter of 2018.

Impairment loss totaled $384.1 million in the second quarter of 2018 primarily due to an impairment loss of $383.4 million associated with the assets held for sale for the Foreman Butte Divestiture to adjust the carrying value to the estimated fair value less selling costs. Impairment loss totaled $3.2 million in the second quarter of 2017 and $0.1 million in the first quarter of 2018.

Interest expense was $40.9 million for the second quarter of 2018 as compared to $36.8 million for the second quarter of 2017 and $37.1 million for the first quarter of 2018. Capitalized interest totaled $4.2 million for the second quarter of 2018, $2.8 million for the second quarter of 2017 and $4.5 million for the first quarter of 2018. Cash Interest totaled $40.5 million for the second quarter of 2018, $35.5 million for the second quarter of 2017 and $37.2 million for the first quarter of 2018. For a definition of Cash Interest and a reconciliation of interest expense to Cash Interest, see "Non-GAAP Financial Measures" below.

For the three months ended June 30, 2018, the Company recorded an income tax benefit of $101.0 million, resulting in a 24.2% effective tax rate as a percentage of its pre-tax loss for the quarter. The Company recorded an income tax expense of $0.8 million, resulting in an 18.2% effective tax rate as a percentage of its pre-tax income for the three months ended March 31, 2018.

For the second quarter of 2018, the Company reported net loss of $320.2 million, or $1.02 per diluted share, as compared to a net income of $16.6 million, or $0.07 per diluted share, for the second quarter of 2017. Excluding certain non-cash items and their tax effect, Adjusted Net Income Attributable to Oasis (non-GAAP) was $31.2 million, or $0.10 per diluted share, in the second quarter of 2018, as compared to Adjusted Net Loss Attributable to Oasis of $11.2 million, or $0.05 per diluted share, in the second quarter of 2017. For a definition of Adjusted Net Income (Loss) Attributable to Oasis and a reconciliation of net income (loss) attributable to Oasis to Adjusted Net Income (Loss) Attributable to Oasis, see "Non-GAAP Financial Measures" below. Adjusted EBITDA for the second quarter of 2018 was $241.2 million, as compared to Adjusted EBITDA of $141.3 million for the second quarter of 2017. For a definition of Adjusted EBITDA and a reconciliation of net income (loss) including non-controlling interests and net cash provided by (used in) operating activities to Adjusted EBITDA, see "Non-GAAP Financial Measures" below.

Capital Expenditures

The following table depicts the Company's total CapEx by category:


1Q 2018


2Q 2018


YTD - 2Q 2018


(In millions)

CapEx:






E&P

$

176.9



$

280.0



$

456.9


Well services

4.3



0.9



5.2


Other(1)

6.3



5.4



11.7


Total CapEx before acquisitions and midstream

187.5



286.3



473.8


Midstream(2)

88.8



68.6



157.4


Total CapEx before acquisitions

276.3



354.9



631.2


Acquisitions

890.9



3.6



894.5


Total CapEx(2)


$

1,167.2



$

358.5



$

1,525.7















(1)

Other CapEx includes such items as administrative capital and capitalized interest.

(2)

Midstream CapEx attributable to OMP was $19.1 million and $68.6 million for the three and six months ended June 30, 2018, respectively.

(3)

Total CapEx reflected in the table above differs from the amounts for capital expenditures and acquisitions shown in the statements of cash flows in the Company's condensed consolidated financial statements because amounts reflected in the table above include changes in accrued liabilities from the previous reporting period for CapEx, while the amounts presented in the statements of cash flows is presented on a cash basis.

Hedging Activity

The Company's crude oil contracts will settle monthly based on the average NYMEX WTI for fixed price swaps and two-way and three-way costless collars. The Company's basis swaps for crude oil will settle monthly based on the fixed basis differential from NYMEX WTI to Intercontinental Exchange, Inc. Brent crude oil index price ("ICE Brent"). 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. The Company's basis swaps for natural gas will settle monthly based on the fixed basis differential from Northern Natural Gas Ventura to NYMEX HH. As of August 6, 2018, the Company had the following outstanding commodity derivative contracts:



Three Months Ending


Six Months Ending



June 30, 2018


December 31, 2018


June 30, 2019


December 31, 2019

Crude Oil (Volume in MBblpd)









Fixed Price Swaps









Volume


44.2



41.5



13.0



13.0


Price


$

52.50



$

53.00



$

53.47



$

53.47


Collars









Volume


3.0



3.0



2.0



2.0


Floor


$

48.67



$

48.67



$

52.50



$

52.50


Ceiling


$

53.07



$

53.07



$

71.25



$

71.25


3-Way









Volume






11.0



9.0


Sub-Floor


$



$



$

40.91



$

40.00


Floor


$



$



$

51.36



$

50.56


Ceiling


$



$



$

69.29



$

67.80


Total Crude Oil Volume


47.2



44.5



26.0



24.0


Basis Swaps









Volume




1.0



1.0




Price


$



$

(10.50)



$

(10.50)



$


Total Crude Oil Basis Volume




1.0



1.0













Natural Gas (Volume in MMBtupd)









Fixed Price Swaps









Volume


22,657



35,000



7,475




Price


$

3.05



$

3.02



$

2.96



$


Total Natural Gas Volume


22,657



35,000



7,475




Basis Swaps









Volume




6,630



10,000




Price


$



$

(0.06)



$

(0.06)



$


Total Natural Gas Basis Volume




6,630



10,000





The June 2018 crude oil derivative contracts settled at a net $21.1 million paid in July 2018 and will be included in the Company's third quarter 2018 derivative settlements.

Conference Call Information

Investors, analysts and other interested parties are invited to listen to the conference call:

Date:


Tuesday, August 7, 2018

Time:


10:00 a.m. Central Time

Live Webcast:


https://www.webcaster4.com/Webcast/Page/1052/26757

Website:


www.oasispetroleum.com

Sell-side analysts wishing to ask a question may use the following dial-in:

Dial-in:


888-317-6003

Intl. Dial in:


412-317-6061

Conference ID:


5291635

A recording of the conference call will be available beginning at 12:00 p.m. Central Time on the day of the call and will be available until Tuesday, August 14, 2018 by dialing:

Replay dial-in:


877-344-7529

Intl. replay:


412-317-0088

Replay code:


10122703

The conference call will also be available for replay for approximately 30 days at www.oasispetroleum.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that the Company expects, believes or anticipates will or may occur in the future are forward-looking statements. Without limiting the generality of the foregoing, forward-looking statements contained in this press release specifically include the expectations of plans, strategies, objectives and anticipated financial and operating results of the Company, including the Company's drilling program, production, derivative instruments, capital expenditure levels and other guidance included in this press release. These statements are based on certain assumptions made by the Company based on management's experience and perception of historical trends, current conditions, anticipated future developments and other factors believed to be appropriate. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the Company, which may cause actual results to differ materially from those implied or expressed by the forward-looking statements. These include, but are not limited to, changes in oil and natural gas prices, weather and environmental conditions, the timing of planned capital expenditures, availability of acquisitions, uncertainties in estimating proved reserves and forecasting production results, operational factors affecting the commencement or maintenance of producing wells, the condition of the capital markets generally, as well as the Company's ability to access them, the proximity to and capacity of transportation facilities, and uncertainties regarding environmental regulations or litigation and other legal or regulatory developments affecting the Company's business and other important factors that could cause actual results to differ materially from those projected as described in the Company's reports filed with the SEC.

Any forward-looking statement speaks only as of the date on which such statement is made and the Company undertakes no obligation to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by applicable law.

About Oasis Petroleum Inc.

Oasis is an independent exploration and production company focused on the acquisition and development of unconventional oil and natural gas resources in the United States. For more information, please visit the Company's website at www.oasispetroleum.com.


 

Oasis Petroleum Inc.

Condensed Consolidated Balance Sheets

(Unaudited)






June 30, 2018


December 31, 2017


(In thousands, except share data)

ASSETS




Current assets




Cash and cash equivalents

$

17,072



$

16,720


Accounts receivable, net

378,080



363,580


Inventory

23,222



19,367


Prepaid expenses

5,874



7,631


Derivative instruments



344


Intangible assets, net

625




Other current assets

82



193


Total current assets

424,955



407,835


Property, plant and equipment




Oil and gas properties (successful efforts method)

8,424,834



7,838,955


Other property and equipment

1,024,104



868,746


Less: accumulated depreciation, depletion, amortization and impairment

(2,691,697)



(2,534,215)


Total property, plant and equipment, net

6,757,241



6,173,486


Assets held for sale, net

250,118




Derivative instruments

25



9


Long-term inventory

12,505



12,200


Other assets

20,491



21,600


Total assets

$

7,465,335



$

6,615,130


LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities




Accounts payable

$

29,988



$

13,370


Revenues and production taxes payable

246,215



213,995


Accrued liabilities

320,508



236,480


Accrued interest payable

36,971



38,963


Derivative instruments

194,810



115,716


Advances from joint interest partners

3,983



4,916


Other current liabilities

40



40


Total current liabilities

832,515



623,480


Long-term debt

2,757,481



2,097,606


Deferred income taxes

205,628



305,921


Asset retirement obligations

49,743



48,511


Liabilities held for sale

4,181




Derivative instruments

35,007



19,851


Other liabilities

6,529



6,182


Total liabilities

3,891,084



3,101,551


Commitments and contingencies




Stockholders' equity




Common stock, $0.01 par value: 450,000,000 shares authorized; 320,010,534 shares issued and 317,985,056 shares outstanding at June 30, 2018 and 270,627,014 shares issued and 269,295,466 shares outstanding at December 31, 2017

3,154



2,668


Treasury stock, at cost: 2,025,478 and 1,331,548 shares at June 30, 2018 and December 31, 2017, respectively

(28,243)



(22,179)


Additional paid-in capital

3,062,861



2,677,217


Retained earnings

398,371



717,985


Oasis share of stockholders' equity

3,436,143



3,375,691


Non-controlling interests

138,108



137,888


Total stockholders' equity

3,574,251



3,513,579


Total liabilities and stockholders' equity

$

7,465,335



$

6,615,130


 

Oasis Petroleum Inc.

Condensed Consolidated Statements of Operations

(Unaudited)







Three Months Ended June 30,


Six Months Ended June 30,


2018


2017


2018


2017


(In thousands, except per share data)

Revenues








Oil and gas revenues

$

395,921



$

218,633



$

759,592



$

455,885


Purchased oil and gas sales

57,578



8,091



75,615



35,722


Midstream revenues

29,342



15,566



57,264



30,172


Well services revenues

18,496



11,801



30,082



17,428


Total revenues

501,337



254,091



922,553



539,207


Operating expenses








Lease operating expenses

44,141



44,665



88,922



88,537


Midstream operating expenses

7,688



3,263



15,673



6,590


Well services operating expenses

13,560



9,010



20,947



13,570


Marketing, transportation and gathering expenses

22,833



12,039



43,846



22,990


Purchased oil and gas expenses

57,165



7,980



75,163



35,982


Production taxes

34,026



18,971



65,026



39,270


Depreciation, depletion and amortization

153,570



125,291



302,835



251,957


Exploration expenses

617



1,667



1,386



3,156


Impairment

384,135



3,200



384,228



5,882


General and administrative expenses

28,230



22,626



56,170



45,802


Total operating expenses

745,965



248,712



1,054,196



513,736


Gain on sale of properties

1,954





1,954




Operating income (loss)

(242,674)



5,379



(129,689)



25,471


Other income (expense)








Net gain (loss) on derivative instruments

(120,285)



50,532



(191,401)



106,607


Interest expense, net of capitalized interest

(40,910)



(36,838)



(78,056)



(73,159)


Loss on extinguishment of debt

(13,651)





(13,651)




Other income (expense)

218



(166)



35



(150)


Total other income (expense)

(174,628)



13,528



(283,073)



33,298


Income (loss) before income taxes

(417,302)



18,907



(412,762)



58,769


Income tax benefit (expense)

101,001



(2,339)



100,173



(18,376)


Net income (loss) including non-controlling interests

(316,301)



16,568



(312,589)



40,393


Less: Net income attributable to non-controlling interests

3,903





7,025




Net income (loss) attributable to Oasis

$

(320,204)



$

16,568



$

(319,614)



$

40,393


Earnings (loss) attributable to Oasis per share:








Basic

$

(1.02)



$

0.07



$

(1.06)



$

0.17


Diluted

(1.02)



0.07



(1.06)



0.17


Weighted average shares outstanding:








Basic

313,072



233,283



301,652



233,176


Diluted

313,072



234,917



301,652



236,281



 

Oasis Petroleum Inc.

Selected Financial and Operational Statistics

(Unaudited)






Three Months Ended June 30,


Six Months Ended June 30,


2018


2017


2018


2017

Operating results (in thousands):








Revenues








Oil revenues

$

361,255



$

194,005



$

684,641



$

402,599


Natural gas revenues

34,666



24,628



74,951



53,286


Purchased oil and gas sales

57,578



8,091



75,615



35,722


Midstream revenues

29,342



15,566



57,264



30,172


Well services revenues

18,496



11,801



30,082



17,428


Total revenues

$

501,337



$

254,091



$

922,553



$

539,207


Production data:








Oil (MBbls)

5,517



4,349



10,802



8,785


Natural gas (MMcf)

10,268



7,725



20,045



15,237


Oil equivalents (MBoe)

7,229



5,637



14,142



11,324


Average daily production (Boe per day)

79,437



61,943



78,135



62,564


Average sales prices:








Oil, without derivative settlements (per Bbl)

$

65.47



$

44.61



$

63.38



$

45.83


Oil, with derivative settlements (per Bbl)(1)

54.53



44.35



54.36



44.79


Natural gas, without derivative settlements (per Mcf)(2)

3.38



3.19



3.74



3.50


Natural gas, with derivative settlements (per Mcf)(1)(2)

3.43



3.21



3.77



3.51


Costs and expenses (per Boe of production):








Lease operating expenses

$

6.11



$

7.92



$

6.29



$

7.82


MT&G(3)

3.19



2.17



3.10



1.97


Production taxes

4.71



3.37



4.60



3.47


Depreciation, depletion and amortization

21.24



22.23



21.41



22.25


G&A(4)

3.91



4.01



3.97



4.04


E&P G&A

3.25



3.52



3.32



3.53














(1)

Realized prices include gains or losses on cash settlements for commodity derivatives, which do not qualify for or were not designated as hedging instruments for accounting purposes. Cash settlements represent the cumulative gains and losses on the Company's derivative instruments for the periods presented and do not include a recovery of costs that were paid to acquire or modify the derivative instruments that were settled.

(2)

Natural gas prices include the value for natural gas and natural gas liquids.

(3)

Excludes non-cash valuation charges on pipeline imbalances.

(4)

For the three and six months ended June 30, 2018, well services operating expenses have been adjusted to include $0.9 million and $1.6 million, respectively, for certain well services direct field labor compensation expenses which were previously recognized in general and administrative expenses on the Company's Condensed Consolidated Statements of Operations.


 

Oasis Petroleum Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)




Six Months Ended June 30,


2018


2017


(In thousands)

Cash flows from operating activities:




Net income (loss) including non-controlling interests

$

(312,589)



$

40,393


Adjustments to reconcile net income (loss) including non-controlling interests to net cash provided by operating activities:




Depreciation, depletion and amortization

302,835



251,957


Loss on extinguishment of debt

13,651




Gain on sale of properties

(1,954)




Impairment

384,228



5,882


Deferred income taxes

(100,293)



18,376


Derivative instruments

191,401



(106,607)


Equity-based compensation expenses

14,130



13,823


Deferred financing costs amortization and other

10,518



8,871


Working capital and other changes:




Change in accounts receivable, net

(5,866)



(13,743)


Change in inventory

(4,721)



(1,007)


Change in prepaid expenses

573



(264)


Change in other current assets

111



280


Change in long-term inventory and other assets

(381)



(8,768)


Change in accounts payable, interest payable and accrued liabilities

40,849



11,158


Change in other current liabilities



(10,490)


Change in other liabilities

(476)




Net cash provided by operating activities

532,016



209,861


Cash flows from investing activities:




Capital expenditures

(536,959)



(252,461)


Acquisitions

(524,255)




Proceeds from sale of properties

2,236



4,000


Derivative settlements

(96,823)



(8,899)


Advances from joint interest partners

(933)



(1,781)


Net cash used in investing activities

(1,156,734)



(259,141)


Cash flows from financing activities:




Proceeds from Revolving Credit Facilities

1,933,000



484,000


Principal payments on Revolving Credit Facilities

(1,265,000)



(429,000)


Repurchase of senior unsecured notes

(423,143)




Proceeds from issuance of senior unsecured notes

400,000




Deferred financing costs

(6,790)




Purchases of treasury stock

(6,064)



(5,451)


Distributions to non-controlling interests

(6,846)




Other

(87)



(55)


Net cash provided by financing activities

625,070



49,494


Increase in cash and cash equivalents

352



214


Cash and cash equivalents:




Beginning of period

16,720



11,226


End of period

$

17,072



$

11,440


Supplemental non-cash transactions:




Change in accrued capital expenditures

$

90,040



$

19,017


Change in asset retirement obligations

5,407



1,759


Issuance of shares in connection with the Permian Basin Acquisition

371,220




Installment notes from acquisition



4,875


Non-GAAP Financial Measures

Cash Interest is a supplemental non-GAAP financial measure that is used by management and external users of the Company's financial statements, such as industry analysts, investors, lenders and rating agencies. The Company defines Cash Interest as interest expense plus capitalized interest less amortization and write-offs of deferred financing costs and debt discounts included in interest expense. Cash Interest is not a measure of interest expense as determined by United States generally accepted accounting principles, or GAAP.

The following table presents a reconciliation of the GAAP financial measure of interest expense to the non-GAAP financial measure of Cash Interest for the periods presented:


Three Months Ended June 30,


Six Months Ended June 30,


2018


2017


2018


2017


(In thousands)

Interest expense

$

40,910



$

36,838



$

78,056



$

73,159


Capitalized interest

4,227



2,816



8,678



5,636


Amortization of deferred financing costs

(1,937)



(1,709)



(3,698)



(3,399)


Amortization of debt discount

(2,731)



(2,480)



(5,349)



(4,835)


Cash Interest

$

40,469



$

35,465



$

77,687



$

70,561


Adjusted EBITDA and Free Cash Flow are supplemental non-GAAP financial measures that are used by management and external users of the Company's financial statements, such as industry analysts, investors, lenders and rating agencies. The Company defines Adjusted EBITDA as earnings before interest expense, income taxes, depreciation, depletion, amortization, exploration expenses and other similar non-cash or non-recurring charges. The Company defines Free Cash Flow as Adjusted EBITDA less Cash Interest and CapEx, excluding capitalized interest. Adjusted EBITDA and Free Cash Flow are not measures of net income (loss) or cash flows as determined by GAAP.

The following table presents reconciliations of the GAAP financial measures of net income (loss) including non-controlling interests and net cash provided by (used in) operating activities to the non-GAAP financial measures of Adjusted EBITDA and Free Cash Flow for the periods presented:


Three Months Ended June 30,


Six Months Ended June 30,


2018


2017


2018


2017


(In thousands)

Net income (loss) including non-controlling interests

$

(316,301)



$

16,568



$

(312,589)



$

40,393


Gain on sale of properties

(1,954)





(1,954)




Loss on extinguishment of debt

13,651





13,651




Net (gain) loss on derivative instruments

120,285



(50,532)



191,401



(106,607)


Derivative settlements(1)

(59,849)



(939)



(96,823)



(8,899)


Interest expense, net of capitalized interest

40,910



36,838



78,056



73,159


Depreciation, depletion and amortization

153,570



125,291



302,835



251,957


Impairment

384,135



3,200



384,228



5,882


Exploration expenses

617



1,667



1,386



3,156


Equity-based compensation expenses

7,376



7,115



14,130



13,823


Income tax (benefit) expense

(101,001)



2,339



(100,173)



18,376


Other non-cash adjustments

(226)



(213)



(17)



699


Adjusted EBITDA

241,213



141,334



474,131



291,939


Adjusted EBITDA attributable to non-controlling interests

5,148





9,452




Adjusted EBITDA attributable to Oasis

236,065



141,334



464,679



291,939


Cash Interest

(40,469)



(35,465)



(77,687)



(70,561)


Capital expenditures(2)

(358,534)



(172,975)



(1,525,762)



(282,770)


Capitalized interest

4,227



2,816



8,678



5,636


Free Cash Flow

$

(158,711)



$

(64,290)



$

(1,130,092)



$

(55,756)










Net cash provided by operating activities

$

303,657



$

102,062



$

532,016



$

209,861


Derivative settlements(1)

(59,849)



(939)



(96,823)



(8,899)


Interest expense, net of capitalized interest

40,910



36,838



78,056



73,159


Exploration expenses

617



1,667



1,386



3,156


Deferred financing costs amortization and other

(5,043)



(3,931)



(10,518)



(8,871)


Current tax expense

120





120




Changes in working capital

(38,973)



5,850



(30,089)



22,834


Other non-cash adjustments

(226)



(213)



(17)



699


Adjusted EBITDA

241,213



141,334



474,131



291,939


Adjusted EBITDA attributable to non-controlling interests

5,148





9,452




Adjusted EBITDA attributable to Oasis

236,065



141,334



464,679



291,939


Cash Interest

(40,469)



(35,465)



(77,687)



(70,561)


Capital expenditures(2)

(358,534)



(172,975)



(1,525,762)



(282,770)


Capitalized interest

4,227



2,816



8,678



5,636


Free Cash Flow

$

(158,711)



$

(64,290)



$

(1,130,092)



$

(55,756)


















(1)

Cash settlements represent the cumulative gains and losses on the Company's derivative instruments for the periods presented and do not include a recovery of costs that were paid to acquire or modify the derivative instruments that were settled.

(2)

Capital expenditures (including acquisitions) reflected in the table above differ from the amounts shown in the statements of cash flows in our condensed consolidated financial statements because amounts reflected in the table include changes in accrued liabilities from the previous reporting period for capital expenditures, while the amounts presented in the statement of cash flows are presented on a cash basis. Acquisitions totaled $3.5 million and $2.2 million for the three months ended June 30, 2018 and 2017, respectively, and $894.5 million and $4.8 million for the six months ended June 30, 2018 and 2017, respectively.

The following tables present reconciliations of the GAAP financial measure of income (loss) before income taxes including non-controlling interests to the non-GAAP financial measure of Adjusted EBITDA for our three reportable business segments on a gross basis for the periods presented:

Exploration and Production


Three Months Ended June 30,


Six Months Ended June 30,


2018


2017


2018


2017


(In thousands)

Income (loss) before income taxes including non-controlling interests

$

(454,662)



$

(3,900)



$

(482,847)



$

16,836


Gain on sale of properties

(1,954)





(1,954)




Loss on extinguishment of debt

13,651





13,651




Net (gain) loss on derivative instruments

120,285



(50,532)



191,401



(106,607)


Derivative settlements(1)

(59,849)



(939)



(96,823)



(8,899)


Interest expense, net of capitalized interest

40,727



36,838



77,611



73,159


Depreciation, depletion and amortization

149,250



122,785



294,454



247,193


Impairment

384,135



3,200



384,228



5,882


Exploration expenses

617



1,667



1,386



3,156


Equity-based compensation expenses

7,012



6,897



13,463



13,395


Other non-cash adjustments

(226)



(213)



(17)



699


Adjusted EBITDA

$

198,986



$

115,803



$

394,553



$

244,814



















(1)

Cash settlements represent the cumulative gains and losses on the Company's derivative instruments for the periods presented and do not include a recovery of costs that were paid to acquire or modify the derivative instruments that were settled.

Midstream Services


Three Months Ended June 30,


Six Months Ended June 30,


2018


2017


2018


2017


(In thousands)

Income before income taxes including non-controlling interests

$

37,815



$

23,106



$

69,796



$

43,867


Interest expense, net of capitalized interest

183





445




Depreciation, depletion and amortization

6,900



3,753



13,529



7,211


Equity-based compensation expenses

409



365



780



713


Adjusted EBITDA

$

45,307



$

27,224



$

84,550



$

51,791


 

Well Services


Three Months Ended June 30,


Six Months Ended June 30,


2018


2017


2018


2017


(In thousands)

Income (loss) before income taxes including non-controlling interests

$

8,051



$

1,950



$

16,158



$

(1,637)


Depreciation, depletion and amortization

3,930



3,057



7,619



6,222


Equity-based compensation expenses

409



338



795



734


Adjusted EBITDA

$

12,390



$

5,345



$

24,572



$

5,319



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 June 30,


Six Months Ended June 30,


2018


2017


2018


2017


(In thousands, except per share data)

Net income (loss) attributable to Oasis

$

(320,204)



$

16,568



$

(319,614)



$

40,393


Gain on sale of properties

(1,954)





(1,954)




Loss on extinguishment of debt

13,651





13,651




Net (gain) loss on derivative instruments

120,285



(50,532)



191,401



(106,607)


Derivative settlements(1)

(59,849)



(939)



(96,823)



(8,899)


Impairment

384,135



3,200



384,228



5,882


Amortization of deferred financing costs

1,937



1,709



3,698



3,399


Amortization of debt discount

2,731



2,480



5,349



4,835


Other non-cash adjustments

(226)



(213)



(17)



699


Tax impact(2)

(109,356)



16,575



(118,571)



37,679


Adjusted Net Income (Loss) Attributable to Oasis

$

31,150



$

(11,152)



$

61,348



$

(22,619)










Diluted earnings (loss) attributable to Oasis per share

$

(1.02)



$

0.07



$

(1.06)



$

0.20


Gain on sale of properties

(0.01)





(0.01)




Loss on extinguishment of debt

0.04





0.04




Net (gain) loss on derivative instruments

0.38



(0.22)



0.63



(0.46)


Derivative settlements(1)

(0.19)





(0.32)



(0.04)


Impairment

1.23



0.01



1.26



0.03


Amortization of deferred financing costs

0.01



0.01



0.01



0.01


Amortization of debt discount

0.01



0.01



0.02



0.02


Other non-cash adjustments








Tax impact(2)

(0.35)



0.07



(0.37)



0.16


Adjusted Diluted Earnings (Loss) Attributable to Oasis Per Share

$

0.10



$

(0.05)



$

0.20



$

(0.08)










Diluted weighted average shares outstanding(3)

315,664



233,283



304,859



233,176










Effective tax rate applicable to adjustment items

23.7

%


37.4

%


23.7

%


37.4

%













(1)

Cash settlements represent the cumulative gains and losses on the Company's derivative instruments for the periods presented and do not include a recovery of costs that were paid to acquire or modify the derivative instruments that were settled.

(2)

The tax impact is computed utilizing the Company's effective tax rate applicable to the adjustments for certain non-cash and non-recurring items.

(3)

No unvested stock awards were included in computing Adjusted Diluted Loss Attributable to Oasis Per Share for the three and six months ended June 30, 2017 because the effect was anti-dilutive due to Adjusted Net Loss. For the three and six months ended June 30, 2018, the Company included 2,592,000 and 3,207,000 of unvested stock awards in computing Adjusted Diluted Income Attributable to Oasis Per Share for the three and six months ended June 30, 2018, respectively, due to the dilutive effect under the treasury stock method.

 

 

Cision View original content:http://www.prnewswire.com/news-releases/oasis-petroleum-inc-announces-quarter-ended-june-30-2018-earnings-300692621.html

SOURCE Oasis Petroleum Inc.


Source: PR Newswire (August 6, 2018 - 4:30 PM EDT)

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