Oasis Midstream Partners Lp Announces Second Quarter 2021 Results, Increases Distribution And Updates Outlook

The following excerpt is from the company's SEC filing.
Houston, Texas — August 3, 2021 — Oasis Midstream Partners LP (NASDAQ: OMP) (“OMP” or the “Partnership”) today announced financial and operating results for the second quarter of 2021, declared its second quarter 2021 distribution, and updated its outlook.
2Q21 Operational and Financial Highlights:
Exceeded volumes guidance across almost all DevCos and commodities;
Increased cash distribution by $0.01/unit, declaring a distribution of $0.56/unit ($2.24/unit annualized);
Net income was $35.2MM and net cash from operating activities was $58.6MM;
Adjusted EBITDA
of $55.8MM was above high-end of gui dance ($52MM-$55MM);
Distributable Cash Flow
(“DCF”) was $43.0MM. DCF coverage of 1.6x exceeded guidance of 1.3x;
Free Cash Flow
was $5.1MM;
Commenced crude oil and water services to third-party producer in the Permian Basin following Oasis Petroleum’s divestiture of its Permian Basin E&P assets;
Received acreage dedication from Oasis Petroleum in the City of Williston project area;
Recently expanded third-party business in the Permian Basin, expanding opportunity set with pipeline to Wink;
ESG focus capturing approximately 99% of Oasis Petroleum’s gas volumes in Wild Basin.
(1) 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 financial measures under United States generally accepted accounting principles (“GAAP”).
Chief Executive Officer, Taylor Reid, commented, “Oasis Midstream Partners had an impressive second quarter as continued strong operational performance and cost control supported profitability and led the Partnership to exceed expectations. Additionally, OMP announced two major projects including City of Williston in the Bakken and a pipeline connection to Wink in the Delaware. These projects have compelling underlying economics which support strong EBITDA growth while increasing OMP’s footprint for additional third-party opportunities. Congratulations to the team for their exceptional efforts and continued success.”
City of Williston Project Dedication
Oasis Petroleum has approved a dedication to OMP for the City of Williston project area, which includes services for crude oil, natural gas, and produced water. The City of Williston is one of Oasis Petroleum’s top operating areas and is located in close proximity to Oasis Petroleum’s Indian Hills project area. Volumes under each services offering are expected to flow as soon as late 2022, driving significant EBITDA contribution in 2023. OMP has identified numerous third party opportunities in the area that could further enhance overall project economics.
OMP expects capital expenditures (“CapEx”) for City of Williston to range between $4MM and $6MM for 2021, as the Partnership begins capturing right-of-way, and to range between $37MM and $43MM for 2022. OMP expects to achieve an attractive build multiple on these assets and anticipates the project, along with other developments noted below, will support solid year-over-year EBITDA growth in 2023.
Operational and Financial Update
The following table presents select operational and financial data for the period presented:
(In millions)
Bighorn DevCo
Operating income
Depreciation and amortization
Total CapEx
Bobcat DevCo
Beartooth DevCo
Panther DevCo
Total OMP
DevCo operating income
Public company expenses
Partnership operating income
Equity-based compensation expense
Capitalized interest
Maintenance CapEx
Expansion CapEx
Updated Outlook
3Q21 EBITDA is expected to range between $56MM – $59MM, with the increase over 2Q21 driven by volumes from well completions in Wild Basin and the Permian Basin that occurred late in 2Q21;
4Q21 EBITDA is expected to decrease from 3Q21 levels by approximately $6MM, reflecting a planned gas plant
turnaround at the Partnership’s 200 MMscfpd gas plant in Wild Basin;
FY2021 EBITDA guidance range of $218MM - $224MM includes the impact from the gas plant turnaround. Excluding the gas plant turnaround, midpoint EBITDA guidance would have been approximately $1MM higher than prior guidance;
Distribution coverage is expected to approximate 1.4x in 3Q21;
As expected with Oasis Petroleum’s announcement of the acquisition of assets in the Williston Basin, Oasis Petroleum will be directing incremental activity on the Williston Basin assets in Beartooth DevCo, Indian Hills and in the newly dedicated City of Williston project area.
Additionally, OMP is investing capital to third-party business in the Permian Basin, including incremental activity to support the buyer of Oasis Petroleum’s Permian Basin E&P assets and to build a crude line to Wink for a separate third-party customer.
As a result of this additional activity, FY2021 CapEx is now expected to be $73MM - $78MM versus prior guidance of $53MM – $58MM;
3Q21 CapEx is expected to be $22MM – $27MM;
2021 maintenance CapEx as a percent of EBITDA is expected to range between 7% – 8% with 2H21 approximating 12%, which includes capital for the planned gas plant turnaround.
2022 and 2023
OMP is investing across its Williston Basin position in anticipation of future activity. Primary areas of focus include South Nesson (dedicated in February 2021), City of Williston (dedicated in July 2021), Painted Woods (OMP has ROFR), Indian Hills, Alger, Wild Basin, as well as third-party areas.
Additionally, OMP is investing in the Permian Basin given an acceleration of activity from its anchor customer and growing third-party business.
2022E EBITDA is expected to increase high-single-digits versus 2021, as the South Nesson project area volumes come online in 2022. 1Q22 EBITDA should be the lowest of the year and highest in 4Q22.
OMP expects to increase its capital spend in 2022 versus 2021, as the Partnership invests capital in South Nesson, Indian Hills, City of Williston, and the Permian Basin areas, which is expected to drive mid-teens growth in 2023.
The following table presents throughput volumes for the second quarter of 2021, as well as updated guidance for the third quarter of 2021 and full-year 2021:
Metric
2Q21 Actual
3Q21 Guidance
FY21 Guidance
Crude oil service volumes
25 - 27
25 - 26
Natural gas service volumes
185 - 195
183 - 188
20 - 23
19 - 20
230 - 237
228 - 232
Water service volumes
MBowpd
37 - 39
38 - 39
73 - 80
76 - 80
18 - 23
12 - 15
27 - 30
27 - 29
Liquidity
As of June 30, 2021, the Partnership had cash and cash equivalents of $9.7MM and $213.0MM of borrowings outstanding and $5.5MM of outstanding letters of credit under its revolving credit facility (the “Revolving Credit Facility). As of June 30, 2021, the aggregate commitments under the Revolving Credit Facility were $450.0MM, and the Partnership had an unused borrowing capacity of $231.5MM.
Quarterly Distribution
On August 3, 2021, the board of directors of OMP GP LLC (the “General Partner”) declared the quarterly cash distribution for the second quarter of 2021 of $0.56 per unit, payable on August 27, 2021 to unitholders of record as of August 16, 2021.
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 4, 2021
10:00 a.m. Central Time
Live Webcast:
https://www.webcaster4.com/Webcast/Page/1777/42273
Website:
www.oasismidstream.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:
1763540
A recording of the conference call will be available beginning at 12:00p.m. Central Time on the day of the call and will be available until Wednesday, August 11, 2021 by dialing:
Replay dial-in:
877-344-7529
Intl. replay:
412-317-0088
Replay code:
10159035
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, developments in the global economy, particularly the public health crisis related to the novel coronavirus 2019 (“COVID-19”) pandemic and the adverse impact thereof on demand for crude oil and natural gas and our customers’ demand for our services. Because considerable uncertainty exists with respect to the future pace and extent of a global economic recovery from the effects of the COVID-19 pandemic, we cannot predict whether or when economic activities will return to normalized levels.
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 leading 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)
December 31, 2020
(In thousands, except unit data)
ASSETS
Current assets
Cash and cash equivalents
9,711 
5,147 
Accounts receivable
3,434 
4,295 
Accounts receivable – Oasis Petroleum
84,179 
66,283 
Inventory
5,878 
6,986 
Prepaid expenses
2,277 
3,695 
Other current assets
Total current assets
105,619 
87,055 
Property, plant and equipment
1,194,224 
1,180,819 
Less: accumulated depreciation, amortization and impairment
(259,214)
(240,877)
Total property, plant and equipment, net
935,010 
939,942 
Operating lease right-of-use assets
1,161 
1,643 
Other assets
3,315 
2,053 
Total assets
1,045,105 
1,030,693 
LIABILITIES AND EQUITY
Current liabilities
Accounts payable
1,148 
2,226 
Accounts payable – Oasis Petroleum
30,308 
28,074 
Accrued liabilities
26,947 
17,931 
Accrued interest payable
9,518 
Current operating lease liabilities
Other current liabilities
Total current liabilities
69,355 
50,007 
Long-term debt
653,387 
450,000 
Asset retirement obligations
Operating lease liabilities
Other liabilities
5,285 
5,521 
Total liabilities
729,082 
507,035 
Limited partners
Common units (48,627,680 and 20,061,366 issued and outstanding at June 30, 2021 and December 31, 2020, respectively)
316,023 
193,536 
Subordinated units (None and 13,750,000 units issued and outstanding at June 30, 2021 and December 31, 2020, respectively)
44,030 
1,027 
Total partners’ equity
238,593 
Non-controlling interests
285,065 
Total equity
523,658 
Total liabilities and equity
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended June 30,
Six Months Ended June 30,
(In thousands, except per unit data)
Revenues
Midstream services – Oasis Petroleum
65,064 
56,946 
132,227 
138,939 
Midstream services – third parties
1,188 
5,242 
2,088 
9,088 
Product sales – Oasis Petroleum
28,992 
3,869 
61,273 
24,657 
Product sales – third parties
Total revenues
95,256 
66,063 
195,629 
172,690 
Operating expenses
Costs of product sales
19,152 
2,215 
41,928 
10,647 
Operating and maintenance
12,220 
14,508 
25,326 
31,348 
9,416 
11,881 
18,401 
22,078 
Impairment
101,983 
General and administrative
8,082 
9,286 
16,532 
17,737 
Total operating expenses
48,872 
38,106 
102,189 
183,793 
Operating income (loss)
46,384 
27,957 
93,440 
(11,103)
Other expenses
Interest expense, net of capitalized interest
(11,230)
(5,186)
(15,291)
(35,443)
Total other expense, net
(5,287)
(15,360)
(35,586)
Net income (loss)
35,154 
22,670 
78,080 
(46,689)
Less: Net income attributable to non-controlling interests
10,796 
17,025 
12,836 
Net income (loss) attributable to Oasis Midstream Partners LP
11,874 
61,055 
(59,525)
Less: Net income attributable to General Partner
2,034 
Net income (loss) attributable to limited partners
10,847 
(61,559)
Earnings (loss) per limited partner unit
Common units – basic
(1.82)
Common units – diluted
Weighted average number of limited partner units outstanding
48,611 
20,045 
35,407 
20,043 
48,620 
35,416 
Cash Interest, Adjusted EBITDA, DCF and FCF 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, operating income, net cash provided by operating activities or any other measures prepared under GAAP. Because Cash Interest, Adjusted EBITDA, DCF and FCF 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)
11,230 
5,186 
15,291 
35,443 
Amortization of deferred financing costs
(1,805)
10,758
13,486
35,218
Less: Cash Interest attributable to non-controlling interests
Cash Interest attributable to Oasis Midstream Partners LP
13,483
35,212
__________________
Prior to the closing of the Simplification on March 30, 2021.
Adjusted EBITDA is a supplemental non-GAAP financial measure that is used by management and external users of the Partnership’s financial statements, such as industry analysts, investors, lenders and rating agencies. The Partnership defines Adjusted EBITDA as earnings before interest expense (net of capitalized interest), income taxes, depreciation, amortization, equity-based compensation expenses and other similar non-cash adjustments. Adjusted EBITDA should not be considered an alternative to net income, net cash provided by operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. Management believes that the presentation of Adjusted EBITDA provides information useful to investors and analysts for assessing the Partnership’s results of operations, financial performance and its ability to generate cash from its business operations without regard to its financing methods or capital structure, coupled with the Partnership’s ability to maintain compliance with its debt covenants. The GAAP measures most directly comparable to Adjusted EBITDA are net income (loss) and net cash provided by (used in) operating activities.
Distributable Cash Flow (“DCF”) and Free Cash Flow (“FCF”)
DCF and FCF 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. The Partnership defines DCF as Adjusted EBITDA attributable to the Partnership less Cash Interest attributable to the Partnership and maintenance capital expenditures attributable to the Partnership. The Partnership defines FCF as DCF less expansion capital expenditures attributable to the Partnership and unitholder distributions. DCF and FCF should not be considered alternatives 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 and FCF provide information useful to investors and analysts for assessing the Partnership’s results of operations, financial performance and ability to generate cash from its business operations without regard to its financing methods or capital structure, coupled with the Partnerships ability to make distributions to its unitholders. The GAAP measures most directly comparable to DCF and FCF are net income (loss) and net cash provided by (used in) operating activities.
The following table presents reconciliations of the GAAP financial measures of net income (loss) and net cash provided by operating activities to the non-GAAP financial measures of Adjusted EBITDA, DCF and FCF for the periods presented:
Equity-based compensation expenses
55,818
40,020
112,277
112,948
Less: Adjusted EBITDA attributable to non-controlling interests
14,208 
20,572 
40,746 
Adjusted EBITDA attributable to Oasis Midstream Partners LP
25,812
91,705
72,202
Cash interest attributable to Oasis Midstream Partners LP
10,758 
4,980 
13,483 
35,212 
Maintenance capital expenditures attributable to Oasis Midstream Partners LP
2,109 
2,283 
1,893 
42,951
20,372
75,939
35,097
Expansion capital expenditures attributable to Oasis Midstream Partners LP
11,112 
1,748 
242,426 
17,314 
LP distributions
26,745 
18,258 
45,012 
36,516 
GP distributions
(212,526)
(20,767)
Net cash provided by operating activities
58,617 
51,479 
98,058 
113,145 
Changes in working capital
(13,571)
(16,375)
(35,099)
Other non-cash adjustments
(1,790)
Distributions declared
27,232 
53,977 
Incentive distribution rights
2,054 
Total distributions
19,285
38,570
DCF coverage ratio

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

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Other recent filings from the company include the following:

Entry into a Material Definitive - Oct. 8, 2021
Entry into a Material Definitive - Sept. 30, 2021

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