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.”
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
Depreciation and amortization
DevCo operating income
Public company expenses
Partnership operating income
Equity-based compensation expense
(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:
Crude oil service volumes
43 - 48
46 - 49
Natural gas service volumes
220 - 235
215 - 225
38 - 43
39 - 42
270 - 290
260 - 270
Water service volumes
47 - 50
49 - 52
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.
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.
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
Sell-side analysts with a question may use the following dial-in:
Intl. Dial in:
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:
The conference call will also be available for replay for approximately 30 days at www.oasismidstream.com.
Bob Bakanauskas, (281) 404-9600
Director, Investor Relations
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
(In thousands, except unit data)
Cash and cash equivalents
Accounts receivable - Oasis Petroleum
Other current assets
Total current assets
Property, plant and equipment
Less: accumulated depreciation and amortization
Total property, plant and equipment, net
Operating lease right-of-use assets
LIABILITIES AND EQUITY
Accounts payable - Oasis Petroleum
Accrued interest payable
Current operating lease liabilities
Other current liabilities
Total current liabilities
Asset retirement obligations
Operating lease liabilities
Common units (20,045,196 and 20,029,026 issued and outstanding at June 30, 2019 and December 31, 2018, respectively)
Subordinated units (13,750,000 units issued and outstanding at June 30, 2019 and December 31, 2018)
Total partners’ equity
Total liabilities and equity
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Six Months Ended June 30,
(In thousands, except per unit data)
Midstream services – Oasis Petroleum
Midstream services – third parties
Product sales – Oasis Petroleum
Product sales – third parties
Costs of product sales
Operating and maintenance
General and administrative
Total operating expenses
Interest expense, net of capitalized interest
Total other expense
Less: Net income attributable to non-controlling interests
Net income attributable to Oasis Midstream Partners LP
Less: Net income attributable to General Partner
Net income attributable to limited partners
Earnings per limited partner unit
Common units – basic and diluted
Weighted average number of limited partner units outstanding
Common units – diluted
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:
Amortization of deferred financing costs
Less: Cash Interest attributable to non-controlling interests
Cash Interest attributable to Oasis Midstream Partners LP
(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:
Less: Adjusted EBITDA attributable to non-controlling interests
Maintenance capital expenditures attributable to Oasis Midstream Partners LP
Distributable Cash Flow attributable to Oasis Midstream Partners LP
Net cash provided by operating activities
Changes in working capital
Other non-cash adjustments
Incentive distribution rights
DCF coverage ratio
The above information was disclosed in a filing to the SEC. To see the filing, click here.
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