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Oasis Midstream Partners LP Announces Year Ended December 31, 2019 Earnings

HOUSTON, Feb. 25, 2020 /PRNewswire/ -- Oasis Midstream Partners LP (Nasdaq: OMP) (the "Partnership" or "OMP") today announced financial results for the quarter and year ended December 31, 2019 and updated its 2020 outlook.

2019 Highlights:

  • Net income was $63.5 million(1) and net cash from operating activities was $77.0 million(1) in 4Q19.
  • 4Q19 Adjusted EBITDA was $77.7 million(1) and net Adjusted EBITDA to the Partnership was $49.4 million. Adjusted EBITDA is a non-GAAP financial measure. See "Non-GAAP Financial Measures" below.
  • Distributable Cash Flow ("DCF") was $43.2 million in 4Q19, resulting in distribution coverage of 2.2x. DCF is a non-GAAP financial measure.
  • Exceeded the high-end of 4Q19 volumes guidance ranges across most commodity streams.
  • Capital expenditures net to OMP were $198.6 million in 2019(2).
  • OMP began executing services to Oasis Petroleum and third parties in the Delaware Basin effective November 1, 2019. Concurrent with the assignment, OMP reimbursed Oasis Petroleum approximately $24.9 million and assumed approximately $10.0 million of liabilities incurred by Oasis Petroleum prior to the effective date.

(1) Recast for assignment of Delaware Basin assets to Panther DevCo LLC ("Panther DevCo") for the transfer of net assets between entities under common control in accordance with GAAP.
(2) Excludes $9.4 million of capital expenditures incurred in 2018 which were reimbursed to Oasis Petroleum in 4Q19 as part of the assignment of Delaware Basin assets to Panther DevCo. Delaware Basin capital expenditures incurred in 2018 were recast to the 2018 consolidated financial statements in accordance with GAAP.

"Fourth quarter results exceeded expectations for both operating and financial performance," said Taylor Reid, Chief Executive Officer of OMP. "It's been over a year since we commissioned our second gas plant at the Wild Basin complex and progress has been substantial. The gas processing complex ran at a high utilization in the fourth quarter and third-party volumes averaged over 30% of throughput. This strong performance along with continued success across water and oil led OMP to exceed EBITDA expectations, as well as coverage expectations.  OMP is now operating in both the Williston and Delaware Basins, where we continue to benefit from our relationships with our anchor tenant, Oasis, and numerous third parties across both positions. The team looks forward to capitalizing on the diversified asset base across two top oil plays in the U.S. and across numerous commodity streams, while delivering additional value to our unitholders."

2020 Capital Spending and Outlook:

The following table depicts our full-year 2020 guidance for capital expenditures ("CapEx"):





2020 CapEx

DevCo


OMP Ownership


Gross


Net





(In millions)

Bighorn DevCo


100%


$7 – 9


$7 – 9

Bobcat DevCo


35.3%


62 – 66


22 – 24

Beartooth DevCo


70%


7 – 9


5 – 6

Total Williston CapEx




76 – 84


34 – 39

Panther DevCo


100%


34 – 36


34 – 36

Total CapEx




$110 – 120


$68 – 75

2020 highlights include:

  • Adjusted EBITDA attributable to OMP of approximately $175 million$186 million in 2020. OMP has not included incremental third party volumes above and beyond what is contracted in its Adjusted EBITDA estimates, and the Partnership continues to believe its strong pipeline of new opportunities will yield upside to its current plans.
  • 1Q20 volumes are expected to step down due to lower activity from Oasis Petroleum during 4Q19. Volumes exiting 1Q20 are expected to increase as Oasis Petroleum volumes increase throughout the year.
  • Expect 1Q20 limited partner distribution coverage of 1.6x – 1.7x, inclusive of distribution per limited partner unit growth of approximately 5% over 4Q19.
  • Maintenance CapEx of approximately 6% to 8% of Adjusted EBITDA, which is included in the total CapEx estimate.
  • Cash Interest of approximately $18 million$20 million in 2020.

Throughput Volumes:

The following table shows gross volumes for 4Q19 compared to guidance, as well as volumes guidance for 1Q20 and full-year 2020.



Metric


4Q19
Actual


4Q19
Guidance




1Q20
Guidance


FY20
Guidance

Bighorn DevCo













Crude oil service volumes


Mbopd


47.5


39 – 44




40 – 44


43 – 47

Natural gas service volumes


MMscfpd


254.9


240 – 250




225 – 230


240 – 245

Bobcat DevCo













Crude oil service volumes


Mbopd


36.1


34 – 36




31 – 33


36 – 38

Natural gas service volumes


MMscfpd


302.1


280 – 295




250 – 260


275 – 285

Water service volumes


Mbwpd


55.4


48 – 50




51 – 54


49 – 52

Beartooth DevCo













Water service volumes


Mbwpd


125.4


120 – 140




120 – 130


100 – 110

Operational and Financial Update

Select financial statistics are presented in the following table for the periods presented:




Three Months Ended
December 31, 2019


Year Ended
December 31, 2019


OMP
Ownership(1)


Gross


Net


Gross


Net




(In millions)

Bighorn DevCo










Operating income

100%


$

21.8



$

21.8



$

62.7



$

62.7


Depreciation and amortization

100%


3.2



3.2



13.0



13.0


Bobcat DevCo










Operating income

35.3%


$

31.2



$

10.8



$

110.6



$

34.4


Depreciation and amortization

35.3%


3.5



1.2



13.2



4.1


Beartooth DevCo










Operating income

70%


$

14.1



$

9.8



$

56.6



$

39.6


Depreciation and amortization

70%


2.4



1.7



9.4



6.6


Panther DevCo










Operating income

100%


$

1.3



$

1.3



$

5.8



$

5.8


Depreciation and amortization

100%


0.3



0.3



0.7



0.7


Total OMP










DevCo operating income



$

68.3



$

43.7



$

235.6



$

138.0


Public company expenses



0.3



0.3



2.9



2.9


OMP operating income



68.1



43.5



232.8



135.1



___________________

(1) OMP ownership interest as of December 31, 2019.

Liquidity and Capital Expenditures

As of December 31, 2019, OMP had cash and cash equivalents of $4.2 million and $458.5 million of borrowings outstanding under its revolving credit facility with an unused borrowing capacity of $114.8 million. OMP has the flexibility to expand the aggregate commitment amount under its revolving credit facility from $575.0 million to $775.0 million, subject to certain conditions.

The following tables depict the Partnership's CapEx for the periods presented:


1Q 2019 - 3Q 2019


4Q 2019


Year Ended December 31, 2019


(In millions)

Capital expenditures

Gross


Net


Gross


Net


Gross


Net

Maintenance CapEx

$

14.3



$

6.6



$

3.3



$

1.8



$

17.6



$

8.4


Expansion CapEx

162.0



156.9



32.4



32.4



194.4



189.3


Capitalized interest

0.6



0.6



0.3



0.3



0.9



0.9


Total(1)

$

176.9



$

164.1



$

36.0



$

34.5



$

212.9



$

198.6



___________________

(1) Retrospectively adjusted for transfer of net assets between entities under common control in accordance with GAAP. Excludes $9.4 million of capital expenditures incurred in 2018 which were reimbursed to Oasis Petroleum in 4Q19 as part of the assignment of Delaware Basin assets to Panther DevCo. Delaware Basin capital expenditures incurred in 2018 were recast to the 2018 consolidated financial statements in accordance with GAAP.

 




Year Ended December 31, 2019



(In millions)

DevCo

OMP Ownership


Gross


Net

Bighorn DevCo

100%


$

17.9



$

17.9


Bobcat DevCo

35.3%


134.5



126.1


Beartooth DevCo

70%


19.6



13.7


Panther DevCo(1)

100%


40.0



40.0


OMP Operating(2)

100%


0.9



0.9


Total



$

212.9



$

198.6



___________________

(1) Retrospectively adjusted for transfer of net assets between entities under common control in accordance with GAAP. Excludes $9.4 million of capital expenditures incurred in 2018 which were reimbursed to Oasis Petroleum in 4Q19 as part of the assignment of Delaware Basin assets to Panther DevCo. Delaware Basin capital expenditures incurred in 2018 were recast to the 2018 consolidated financial statements in accordance with GAAP.

(2) Amounts represent capitalized interest related to borrowings under the OMP revolving credit facility.

Quarterly Distribution

On January 30, 2020, the Board of Directors of the General Partner declared the quarterly distribution for 4Q19 of $0.54 per unit. In addition, the General Partner will receive a cash distribution of $1.0 million attributable to its incentive distribution rights related to earnings for 4Q19. These distributions will be paid on February 27, 2020 to unitholders of record as of February 13, 2020.

Qualified Notice

This release is intended to be a qualified notice under Treasury Regulation Section 1.1446-4(b). Brokers and nominees should treat one hundred percent (100.0%) of the Partnership's distributions to non-U.S. investors as being attributable to income that is effectively connected with a United States trade or business. Accordingly, the Partnership's distributions to non-U.S. investors are subject to federal income tax withholding at the highest applicable effective tax rate.

Conference Call Information

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

Date:


Wednesday, February 26, 2020

Time:


11:30 a.m. Central Time

Live Webcast:


https://www.webcaster4.com/Webcast/Page/1777/32924

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:


7445441

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, March 4, 2020 by dialing:

Replay dial-in:


877-344-7529

Intl. replay:


412-317-0088

Replay code:


10138756

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

Contact:

Oasis Midstream Partners LP
Bob Bakanauskas, (281) 404-9600
Director, Investor Relations

Forward-Looking Statements

This press release contains forward-looking statements 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 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, 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

CONSOLIDATED BALANCE SHEETS

(Unaudited)



December 31,


2019


2018(1)


(In thousands)

ASSETS




Current assets




Cash and cash equivalents

$

4,168



$

6,649


Accounts receivable

5,969



2,481


Accounts receivable – Oasis Petroleum

77,571



81,022


Prepaid expenses

1,923



1,418


Other current assets

138



22


Total current assets

89,769



91,592


Property, plant and equipment

1,155,503



942,578


Less: accumulated depreciation and amortization

(98,982)



(62,730)


Total property, plant and equipment, net

1,056,521



879,848


Operating lease right-of-use assets

5,207




Other assets

3,172



2,452


Total assets

$

1,154,669



$

973,892


LIABILITIES AND EQUITY




Current liabilities




Accounts payable

$

2,478



$

2,180


Accounts payable – Oasis Petroleum

27,139



33,014


Accrued liabilities

50,210



60,954


Accrued interest payable

508



442


Current operating lease liabilities

3,005




Other current liabilities

594




Total current liabilities

83,934



96,590


Long-term debt

458,500



318,000


Asset retirement obligations

1,747



1,630


Operating lease liabilities

2,216




Other liabilities

3,644




Total liabilities

550,041



416,220


Equity




Limited partners




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

225,339



192,581


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

66,005



45,937


General Partner

1,026



112


Total partners' equity

292,370



238,630


Non-controlling interests

312,258



312,815


Delaware Predecessor



6,227


Total equity

604,628



557,672


Total liabilities and equity

$

1,154,669



$

973,892



___________________

(1) Retrospectively adjusted for transfer of net assets between entities under common control.


 

OASIS MIDSTREAM PARTNERS LP

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)



Three Months Ended
December 31,


Year Ended December 31,


2019(1)


2018(1)


2019(1)


2018(1)


(In thousands, except per unit data)

Revenues








Midstream services – Oasis Petroleum

$

84,615



$

64,804



$

317,072



$

250,363


Midstream services – third parties

1,739



1,164



6,531



2,604


Product sales – Oasis Petroleum

26,025



6,884



86,543



17,476


Product sales – third parties

7



14



45



3,327


Total revenues

112,386



72,866



410,191



273,770


Operating expenses








Costs of product sales

8,738



1,968



35,826



7,433


Operating and maintenance

19,251



15,473



74,226



63,685


Depreciation and amortization

9,533



8,194



36,358



28,409


General and administrative

6,787



6,401



31,009



23,897


Total operating expenses

44,309



32,036



177,419



123,424


Operating income

68,077



40,830



232,772



150,346


Other income (expense)








Interest expense, net of capitalized interest

(4,627)



(1,877)



(17,538)



(2,580)


Other income (expense)

1



1



(3)



(14)


Total other expense, net

(4,626)



(1,876)



(17,541)



(2,594)


Net income

63,451



38,954



215,231



147,752


Less: Net income attributable to Delaware Predecessor

360



394



4,464



1,343


Less: Net income attributable to non-controlling interests

24,612



23,279



93,111



96,354


Net income attributable to OMP LP

38,479



15,281



117,656



50,055


Less: Net income attributable to General Partner

998



112



2,472



112


Net income attributable to limited partners

$

37,481



$

15,169



$

115,184



$

49,943


Earnings per limited partner unit








Common units – basic and diluted

$

1.11



$

0.54



$

3.41



$

1.82


Weighted average number of limited partners units outstanding








Common units – basic

20,029



16,740



20,024



14,504


Common units – diluted

20,040



16,751



20,032



14,519



___________________

(1) Retrospectively adjusted for transfer of net assets between entities under common control.


Non-GAAP Financial Measures

Cash Interest

Cash Interest 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 Cash Interest 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 United States generally accepted accounting principles, or GAAP. Management believes that the presentation of Cash Interest provides useful additional information to investors and analysts for assessing the interest charges incurred on our debt, excluding non-cash amortization, and our ability to maintain compliance with our debt covenants.

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


Three Months Ended
December 31,


Year Ended December 31,


2019(1)


2018(1)


2019(1)


2018(1)


(In thousands)

Interest expense, net of capitalized interest

$

4,627



$

1,877



$

17,538



$

2,580


Capitalized interest

272



965



905



4,870


Amortization of deferred financing costs

(287)



(164)



(946)



(525)


Cash Interest

$

4,612



$

2,678



$

17,497



$

6,925


Less: Cash Interest attributable to Delaware Predecessor

(160)



(142)



(813)



(237)


Less: Cash Interest attributable to non-controlling interests

(3)





(11)




Cash Interest attributable to OMP LP

$

4,449



$

2,536



$

16,673



$

6,688



___________________

(1) Retrospectively adjusted for transfer of net assets between entities under common control.

Adjusted EBITDA

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 and net cash provided by operating activities.

Distributable Cash Flow ("DCF")

DCF 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 DCF as Adjusted EBITDA attributable to the Partnership less Cash Interest attributable to the Partnership and maintenance capital expenditures attributable to the Partnership. Maintenance capital expenditures are cash expenditures (including expenditures for the construction or development of new capital assets or the replacement, improvement or expansion of existing capital assets) made to maintain, over the long term, system operating capacity, operating income or revenue. 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 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 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:


Three Months Ended
December 31,


Year Ended December 31,


2019(1)


2018(1)


2019(1)


2018(1)


(In thousands)

Net income

$

63,451



$

38,954



$

215,231



$

147,752


Depreciation and amortization

9,533



8,194



36,358



28,409


Equity-based compensation expenses

75



76



378



356


Interest expense, net of capitalized interest

4,627



1,877



17,538



2,580


Adjusted EBITDA

77,686



49,101



269,505



179,097


Less: Adjusted EBITDA attributable to Delaware Predecessor

613



538



5,510



1,585


Less: Adjusted EBITDA attributable to non-controlling interests

27,657



26,504



105,053



108,754


Adjusted EBITDA attributable to OMP LP

49,416



22,059



158,942



68,758


Cash Interest attributable to OMP LP

4,449



2,536



16,673



6,688


Maintenance capital expenditures attributable to OMP LP

1,752



1,036



8,346



2,747


Distributable Cash Flow attributable to OMP LP

$

43,215



$

18,487



$

133,923



$

59,323










Net cash provided by operating activities

$

76,961



$

48,590



$

252,539



$

206,344


Interest expense, net of capitalized interest

4,627



1,877



17,538



2,580


Changes in working capital

(3,615)



(2,120)



374



(30,346)


Other non-cash adjustments

(287)



754



(946)



519


Adjusted EBITDA

77,686



49,101



269,505



179,097


Less: Adjusted EBITDA attributable to Delaware Predecessor

613



538



5,510



1,585


Less: Adjusted EBITDA attributable to non-controlling interests

27,657



26,504



105,053



108,754


Adjusted EBITDA attributable to OMP LP

49,416



22,059



158,942



68,758


Cash Interest attributable to OMP LP

4,449



2,536



16,673



6,688


Maintenance capital expenditures attributable to OMP LP

1,752



1,036



8,346



2,747


Distributable Cash Flow attributable to OMP LP

$

43,215



$

18,487



$

133,923



$

59,323










Distributions Declared








Limited partners

$

18,258



$

15,208



$

68,106



$

49,135


General partner

1,027



112



2,472



112


Total distributions

$

19,285



$

15,320



$

70,578



$

49,247










DCF coverage ratio

2.2x



1.2x



1.9x



1.2x



___________________

(1) Retrospectively adjusted for transfer of net assets between entities under common control.

 

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SOURCE Oasis Midstream Partners LP