HOUSTON, Feb. 26, 2019 /PRNewswire/ -- Oasis Midstream Partners LP (NYSE: OMP) (the "Partnership" or "OMP") today announced financial results for the quarter and year ended December 31, 2018 and updated its 2019 outlook.
Recent Highlights:
- Declared the quarterly cash distribution for the fourth quarter of 2018 of $0.45 per unit, an approximate 5% increase from the cash distribution declared for the third quarter of 2018 and in line with the Partnership's 20% annualized distribution growth target.
- Net income was $146.4 million and net cash provided by operating activities was $205.0 million for the year ended December 31, 2018. Net income was $38.6 million and net cash provided by operating activities was $48.1 million for the quarter ended December 31, 2018.
- Adjusted EBITDA was $48.6 million and net Adjusted EBITDA attributable to the Partnership was $22.1 million for the quarter ended December 31, 2018. Adjusted EBITDA is a non-GAAP financial measure. See "Non-GAAP Financial Measures" below.
- Distributable Cash Flow ("DCF") was $18.5 million for the quarter ended December 31, 2018, resulting in fourth quarter DCF coverage of 1.21x. Pro forma for OMP's acquisition of additional ownership interests in Bobcat DevCo LLC ("Bobcat DevCo") and Beartooth DevCo LLC ("Beartooth DevCo"), including a full quarter of cash interest on new debt associated with the dropdown acquisition, DCF coverage approximated 1.43x for the fourth quarter. DCF is a non-GAAP financial measure. See "Non-GAAP Financial Measures" below.
- Successfully commenced operations at OMP's new 200 MMscfpd natural gas processing plant in Wild Basin ("Gas Plant II") in early December, and began servicing third party natural gas volumes during the fourth quarter of 2018.
- Completed the acquisition from Oasis Petroleum of an additional 15% ownership interest in Bobcat DevCo and an additional 30% ownership interest in Beartooth DevCo for total consideration of approximately $251.4 million, consisting of $172.4 million in cash and $79.0 million in common units.
- During the year ended 2018, OMP successfully signed multiple third party agreements across all three development companies and has commenced services pursuant to these arrangements to provide its full suite of midstream services for third party volumes.
- Increased water volumes in Beartooth DevCo to 151.1 thousand barrels of water per day ("Mbwpd"), a 53% increase compared to the fourth quarter of 2017. Approximately two-thirds of the increase was related to Oasis Petroleum's produced water growth and approximately one-third was associated with increased freshwater volumes, which was largely driven by third party sales.
"Fourth quarter results mark a strong end to an impressive year at Oasis Midstream Partners," said Taylor Reid, Chief Executive Officer of OMP. "During the quarter, we successfully started our new 200 MMscfpd gas plant and executed additional third-party deals in Wild Basin. Fourth quarter pro forma coverage of 1.43x exceeded our expectations. Additionally, OMP successfully completed its first drop as a public company, improving our scale, liquidity, and financial outlook. As we look to 2019, our sponsor's Wild Basin centered program insulates OMP's financial profile, and we are in a position to deliver our EBITDA, growth, and coverage outlook despite the decline in commodity prices. OMP exceeded expectations in 2018, and we look forward to executing our business and continuing to increase the value of our partners' investment in 2019 and beyond."
Gas Plant II Update:
OMP finished construction on Gas Plant II and began processing volumes in early December. With 320 MMscfpd of natural gas processing capacity, OMP is the second largest natural gas processor in the Williston Basin. Utilization of Gas Plant II approximated 60% through the first three weeks of February. OMP expects to run at 60% utilization in the beginning of 2019, and with additional third party deals, utilization is now expected to increase to above 90% by year end 2019 (vs. over 80% at the November 2018 update). Third party volumes are expected to account for approximately 30% to 40% of Gas Plant II's throughput by the fourth quarter of 2019.
2019 Capital Spending and Outlook:
On February 22, 2019, OMP entered into a capital expenditures arrangement (the "Capital Expenditures Arrangement") with Oasis Petroleum. Pursuant to this arrangement, in exchange for increasing its percentage ownership interest in Bobcat DevCo, OMP will cover up to $80 million of the capital contributions that Oasis Petroleum would otherwise be required to contribute to Bobcat DevCo during the 2019 calendar year. The arrangement provides an opportunity for OMP to increase its scale in an accretive manner while lowering the capital requirements of its sponsor. Based on current market values, OMP's ownership interest in Bobcat DevCo is expected to increase from 25% as of December 31, 2018 to between approximately 34% and 36% by year end 2019. Increasing ownership in Bobcat DevCo is expected to drive EBITDA and coverage higher throughout 2019. Capital expenditures guidance and highlights for 2019 provided below includes the Capital Expenditures Arrangement for all of 2019.
The terms of the Capital Expenditures Arrangement were approved by the Board of Directors of OMP GP LLC (the "General Partner") following a unanimous recommendation for approval from the conflicts committee of the Board of Directors of the General Partner, which consists entirely of independent directors. The conflicts committee was advised by Baird on financial matters and Richards, Layton & Finger, P.A. on legal matters. Oasis Petroleum was advised by Vinson and Elkins L.L.P. on legal matters.
The following table depicts our full year 2019 guidance for capital expenditures ("CapEx"):
2019 CapEx | ||||||
DevCo | OMP Ownership(1) | Gross | Net(2) | |||
(In millions) | ||||||
Bighorn DevCo | 100% | $25 - 30 | $25 - 30 | |||
Bobcat DevCo | 30% - 31% | 100 - 110 | 94 - 104 | |||
Beartooth DevCo | 70% | 17 - 22 | 12 - 15 | |||
Total CapEx | $142 - 162 | $131 - 149 | ||||
___________________ |
(1) OMP ownership reflects average estimated ownership during 2019. |
(2) Net CapEx range reflects 100% of estimated expansion CapEx for Bobcat DevCo pursuant to the Capital Expenditures Arrangement. Maintenance CapEx remains split by ownership. |
Highlights for 2019 include:
- Growing distributions per unit approximately 5% each quarter — 20% annualized rate;
- Expecting first quarter 2019 limited partner distribution coverage of approximately 1.5x and anticipate limited partner distribution coverage increasing to 1.8x - 2.0x as the year progresses;
- Maintenance CapEx of approximately 6% to 8% of Adjusted EBITDA, which is included in total CapEx estimate;
- Cash Interest of approximately $15 million in 2019; and
- Adjusted EBITDA attributable to OMP of approximately $148 million to $157 million in 2019 (an increase from the November 2018 update primarily due to the Capital Expenditures Arrangement).
Operational and Financial Update
Select operational and financial statistics are in the following table:
Three Months Ended | Year Ended December 31, | ||||||||||||||||
OMP | Gross | Net | Gross | Net | |||||||||||||
(In millions) | |||||||||||||||||
Bighorn DevCo | |||||||||||||||||
Operating income | 100% | $ | 6.0 | $ | 6.0 | $ | 22.1 | $ | 22.1 | ||||||||
Depreciation and amortization | 100% | 3.3 | 3.3 | 11.4 | 11.4 | ||||||||||||
Total CapEx | 100% | 19.2 | 19.2 | 78.2 | 78.2 | ||||||||||||
Bobcat DevCo | |||||||||||||||||
Operating income | 25% | $ | 19.9 | $ | 3.4 | $ | 74.3 | $ | 8.9 | ||||||||
Depreciation and amortization | 25% | 2.7 | 0.5 | 9.0 | 1.1 | ||||||||||||
Total CapEx | 25% | 23.7 | 3.5 | 142.6 | 15.4 | ||||||||||||
Beartooth DevCo | |||||||||||||||||
Operating income | 70% | $ | 15.1 | $ | 8.2 | $ | 55.3 | $ | 24.3 | ||||||||
Depreciation and amortization | 70% | 2.2 | 1.2 | 8.0 | 3.5 | ||||||||||||
Total CapEx | 70% | 15.2 | 8.6 | 51.3 | 23.0 | ||||||||||||
Total OMP | |||||||||||||||||
DevCo operating income | $ | 40.9 | $ | 17.6 | $ | 151.7 | $ | 55.4 | |||||||||
Public company expenses | 0.6 | 0.6 | 3.0 | 3.0 | |||||||||||||
OMP operating income | 40.3 | 17.0 | 148.8 | 52.4 | |||||||||||||
Depreciation and amortization | 8.2 | 5.0 | 28.4 | 16.0 | |||||||||||||
Equity-based compensation expense | 0.1 | 0.1 | 0.4 | 0.4 | |||||||||||||
Total CapEx(2) | 58.1 | 31.3 | 272.1 | 116.6 | |||||||||||||
Maintenance CapEx | 1.6 | 1.0 | 6.9 | 2.7 | |||||||||||||
Expansion CapEx | 56.5 | 30.3 | 265.1 | 113.8 | |||||||||||||
___________________ |
(1) OMP ownership interest as of December 31, 2018. On November 19, 2018, OMP acquired an additional 15% ownership interest in Bobcat DevCo and an additional 30% ownership interest in Beartooth DevCo. Net amounts attributable to OMP were recorded prospectively from the closing date of the dropdown acquisition on November 19, 2018. |
(2) Excludes expansion capital expenditures of approximately $172.4 million for the acquisition of additional ownership interests in Bobcat DevCo and Beartooth DevCo on November 19, 2018. |
The following table shows gross volumes for the full year 2018, fourth quarter 2018 actuals compared to fourth quarter 2018 guidance, and depicts OMP's gross volumes guidance for the first quarter 2019 and full year 2019.
Metric | FY18 | 4Q18 | 4Q18 | 1Q19 | FY19 | ||||||
Bighorn DevCo | |||||||||||
Crude oil service volumes | Mbopd | 43.6 | 45.1 | 40 - 46 | 41 - 46 | 44 - 48 | |||||
Natural gas service volumes | MMscfpd | 102.8 | 113.0 | 125 - 140 | 160 - 190 | 200 - 240 | |||||
Bobcat DevCo | |||||||||||
Crude oil service volumes | Mbopd | 36.1 | 36.9 | 35 - 40 | 37 - 40 | 38 - 42 | |||||
Natural gas service volumes | MMscfpd | 147.7 | 166.8 | 175 - 195 | 220 - 240 | 270 - 290 | |||||
Water service volumes | Mbwpd | 49.4 | 53.9 | 48 - 53 | 47 - 50 | 50 - 55 | |||||
Beartooth DevCo | |||||||||||
Water service volumes | Mbwpd | 137.7 | 151.1 | 105 - 120 | 95 - 115 | 95 - 115 |
Liquidity and CapEx
As of December 31, 2018, OMP had cash and cash equivalents of $6.6 million and $318.0 million of borrowings outstanding under its revolving credit facility with an unused borrowing capacity of $82.0 million. OMP has the flexibility to expand the aggregate commitment amount under its revolving credit facility from $400 million to $600 million, subject to certain conditions. Expansion capital expenditures attributable to OMP during the fourth quarter of 2018 of $30.3 million, which excludes expansion capital expenditures of approximately $172.4 million for OMP's acquisition of additional ownership interests in Bobcat DevCo and Beartooth DevCo, were also in-line with expectations.
Quarterly Distribution
On February 5, 2019, the Board of Directors of the General Partner declared the quarterly distribution for the fourth quarter of 2018 of $0.45 per unit, a 20% increase from the fourth quarter of 2017 and 20% above the minimum quarterly distribution. In addition, the General Partner will receive a cash distribution of $0.1 million attributable to its incentive distribution rights related to earnings for the fourth quarter of 2018. These distributions will be paid on February 28, 2019 to unitholders of record as of February 15, 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:
Date: | Wednesday, February 27, 2019 | |
Time: | 11:30 a.m. Central Time | |
Live Webcast: | ||
Website: |
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: | 5081699 |
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 6, 2019 by dialing:
Replay dial-in: | 877-344-7529 | |
Intl. replay: | 412-317-0088 | |
Replay code: | 10128591 |
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.