Oasis Midstream Partners Lp Announces Quarter Ended June 30, 2019 Earnings

The following excerpt is from the company's SEC filing.

Houston, Texas — August 6, 2019 — Oasis Midstream Partners LP (NYSE: OMP) (“OMP” or the “Partnership”) today announced financial and operating results for the second quarter of 2019.

2Q 2019 Highlights:

Declared the quarterly cash distribution of $0.49 per unit, an approximate 5% increase from 1Q 2019.

Net income was $49.0 million and net cash from operating activities was $56.0 million.

Delivered $61.9 million of Adjusted EBITDA

and $36.1 million of net Adjusted EBITDA to the Partnership

Generated $28.8 million of DCF

, resulting in distribution coverage of 1.7x.

Experienced operational downtime at the Wild Basin gas processing complex, which was fully restored beginning mid-July. Crude oil and natural gas volumes were adversely impacted by the downtime, resulting in lower than anticipated Adjusted EBITDA, DCF and distribution coverage. Adjusting for downtime, OMP would have realized distribution coverage of approximately 1.9x.

Exceeded guidance related to water service volumes. Volumes increased 13% from 2Q 2018 to 52.4 MBowpd in Bobcat DevCo and 3% from 2Q 2018 to 143.7 MBowpd in Beartooth DevCo.

Increased third-party natural gas volumes in Bighorn DevCo by approximately 94% from 1Q 2019 to 59.3 MMscfpd (30% of total natural gas volumes of 201.6 MMscfpd).

Non-GAAP measure. See “Non-GAAP Financial Measures” below for definitions of all non-GAAP measures included herein and reconciliations to the most directly comparable measures under United States generally accepted accounting principles (“GAAP”).

“Oasis Midstream Partners remains on track to deliver our targeted 20% annual growth in distributions per unit while simultaneously increasing coverage in coming quarters,” said Taylor Reid, Chief Executive Officer of OMP. “We successfully delivered a strong second quarter performance, despite operational downtime at our gas complex. Our resilient financial results highlight the strength and diversity of our portfolio, with strong performance in most commodities offsetting transitory weakness in natural gas. Our coverage outlook remains strong and on track to range from 1.9x to 2.0x exiting 2019. We are ahead of schedule on most infrastructure projects and we continue to build out our Panther DevCo, which will support growth for years to come while maintaining strong coverage.”

Outlook Update

Estimate 2019 Adjusted EBITDA, net to the Partnership, to be $154 million to $161 million, including 2Q 2019 performance.

Estimate gross Adjusted EBITDA by DevCo in 2019 – Bighorn DevCo: $74 million to $76 million, Bobcat DevCo: $124 million to $127 million, Beartooth DevCo: $61 million to $64 million, and Panther DevCo: $1 million to $3 million.

Panther DevCo is expected to be assigned to OMP by September 1, 2019.

Anticipate distribution coverage for 3Q 2019 of 1.8x to 1.9x and 4Q 2019 of 1.9x to 2.0x, unchanged from last update.

Updated 2019 CapEx plan to a range of $203 million to $214 million, net to OMP. Incremental spending primarily relates to capturing third-party business, incremental plant costs, and an acceleration of certain gathering infrastructure from 2020 to 2019. CapEx in 3Q 2019 is expected to increase compared to 2Q 2019 with the closing of the Panther DevCo assignment.

Expect maintenance CapEx for full year 2019 to range between 6% of Adjusted EBITDA and 8% of Adjusted EBITDA, with 3Q 2019 around 10% of Adjusted EBITDA.

OMP continues to pursue incremental third-party business in both the Williston and Delaware basins.

Operational and Financial Update

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

Three Months Ended June 30, 2019

OMP Ownership

(In millions)

Operating income

Depreciation and amortization

Total CapEx

Total OMP

DevCo operating income

Public company expenses

Partnership operating income

Equity-based compensation expense

Capitalized interest

Maintenance CapEx

Expansion CapEx

__________________

(1) Represents OMP’s ownership in each DevCo as of June 30, 2019.

(2) Pursuant to the 2019 Capital Expenditures Arrangement, OMP is funding up to $80.0 million of expansion capital expenditures to Bobcat DevCo that Oasis Petroleum would otherwise be required to contribute to Bobcat DevCo during the 2019 calendar year. See "2019 Capital Expenditures Arrangement" below.

(3) Includes capitalized interest recorded on OMP Operating LLC of $0.2 million for the three months ended June 30, 2019.

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

Metric

2Q19 Actual

3Q19 Guidance

FY19 Guidance

Crude oil service volumes

43 - 48

46 - 49

Natural gas service volumes

201.6 

220 - 235

215 - 225

38 - 43

39 - 42

241.7 

270 - 290

260 - 270

Water service volumes

47 - 50

49 - 52

143.7 

110 - 120

120 - 130

2019 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. This 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 six months ended June 30, 2019, the Partnership made capital contributions to Bobcat DevCo pursuant to the 2019 Capital Expenditures Arrangement of $52.8 million, and the Partnership’s ownership interest in Bobcat DevCo increased from 25% as of December 31, 2018 to 32.5% as of June 30, 2019. The Partnership’s average ownership interest in Bobcat DevCo during the second quarter of 2019 was approximately 31.2%.

Liquidity and CapEx

As of June 30, 2019, the Partnership had cash and cash equivalents of $6.2 million, $408.0 million of borrowings outstanding under its revolving credit facility and an $8.2 million outstanding letter of credit under its revolving credit facility. The Partnership's unused borrowing capacity as of June 30, 2019 was $58.8 million.

Quarterly Distribution

On May 29, 2019, the Partnership paid the quarterly cash distribution of $0.47 per unit related to the first quarter of 2019.

On August 6, 2019, the Board of Directors of the General Partner declared the quarterly cash distribution for the second quarter of 2019 of $0.49 per unit. In addition, the General Partner will receive a cash distribution of $0.5 million attributable to the incentive distribution rights related to the earnings for the second quarter of 2019. These distributions will be payable on August 28, 2019 to unitholders of record as of August 16, 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:

Wednesday, August 7, 2019

11:30 a.m. Central Time

Live Webcast:

https://www.webcaster4.com/Webcast/Page/1777/31146

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:

5196987

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, August 14, 2019 by dialing:

Replay dial-in:

877-344-7529

Intl. replay:

412-317-0088

Replay code:

10133702 

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

Contact:

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)

(In thousands, except unit data)

ASSETS

Current assets

Cash and cash equivalents

6,246 

6,649 

Accounts receivable

6,010 

2,481 

Accounts receivable - Oasis Petroleum

80,088 

80,805 

Prepaid expenses

1,267 

1,418 

Other current assets

Total current assets

93,611 

91,375 

Property, plant and equipment

1,060,379 

933,155 

Less: accumulated depreciation and amortization

(80,160)

(62,730)

Total property, plant and equipment, net

980,219 

870,425 

Operating lease right-of-use assets

3,642 

Other assets

3,385 

2,452 

Total assets

1,080,857 

964,252 

LIABILITIES AND EQUITY

Current liabilities

Accounts payable

1,522 

2,180 

Accounts payable - Oasis Petroleum

34,873 

33,014 

Accrued liabilities

56,930 

57,657 

Accrued interest payable

Current operating lease liabilities

2,051 

Other current liabilities

Total current liabilities

96,279 

93,293 

Long-term debt

408,000 

318,000 

Asset retirement obligations

1,564 

1,514 

Operating lease liabilities

1,597 

Other liabilities

Total liabilities

507,993 

412,807 

Limited partners

Common units (20,045,196 and 20,029,026 issued and outstanding at June 30, 2019 and December 31, 2018, respectively)

205,009 

192,581 

Subordinated units (13,750,000 units issued and outstanding at June 30, 2019 and December 31, 2018)

52,233 

45,937 

Total partners’ equity

257,733 

238,630 

Non-controlling interests

315,131 

312,815 

Total equity

572,864 

551,445 

Total liabilities and equity

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Six Months Ended June 30,

(In thousands, except per unit data)

Revenues

Midstream services – Oasis Petroleum

71,452 

60,715 

146,314 

118,344 

Midstream services – third parties

1,825 

2,952 

Product sales – Oasis Petroleum

24,348 

3,909 

40,000 

7,393 

Product sales – third parties

1,271 

1,285 

Total revenues

97,644 

66,558 

189,295 

127,979 

Operating expenses

Costs of product sales

12,022 

1,641 

20,087 

2,761 

Operating and maintenance

16,003 

14,693 

34,853 

30,689 

8,562 

6,659 

17,491 

13,023 

General and administrative

7,809 

5,897 

16,529 

12,047 

Total operating expenses

44,396 

28,890 

88,960 

58,520 

53,248 

37,668 

100,335 

69,459 

Other expense

Interest expense, net of capitalized interest

(4,209)

(7,957)

Total other expense

(4,213)

(7,961)

49,035 

37,485 

92,374 

69,014 

Less: Net income attributable to non-controlling interests

22,837 

25,041 

44,633 

46,616 

Net income attributable to Oasis Midstream Partners LP

26,198 

12,444 

47,741 

22,398 

Less: Net income attributable to General Partner

Net income attributable to limited partners

25,707 

47,012 

Earnings per limited partner unit

Common units – basic and diluted

Weighted average number of limited partner units outstanding

20,024 

13,750 

20,020 

Common units – diluted

20,034 

13,761 

20,037 

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 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:

(In thousands)

4,209 

7,957 

1,362 

2,197 

Amortization of deferred financing costs

4,136 

1,428 

7,728 

2,409 

Less: Cash Interest attributable to non-controlling interests

Cash Interest attributable to Oasis Midstream Partners LP

4,133 

7,723 

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

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 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.

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.

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:

61,906 

44,430 

118,041 

82,648 

Less: Adjusted EBITDA attributable to non-controlling interests

25,836 

28,015 

50,483 

52,511 

36,070 

16,415 

67,558 

30,137 

Maintenance capital expenditures attributable to Oasis Midstream Partners LP

3,167 

4,834 

1,293 

Distributable Cash Flow attributable to Oasis Midstream Partners LP

28,770 

14,490 

55,001 

26,435 

Net cash provided by operating activities

56,043 

41,396 

112,093 

116,147 

Changes in working capital

1,880 

2,841 

(1,592)

(33,840)

Other non-cash adjustments

Distributions declared

16,560 

11,287 

32,443 

22,090 

Incentive distribution rights

Total distributions

17,051 

33,172 

DCF coverage ratio

The above information was disclosed in a filing to the SEC. To see the filing, click here.

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