HOUSTON, Feb. 27, 2018 /PRNewswire/ -- Oasis Petroleum Inc. (NYSE: OAS) ("Oasis" or the "Company") today announced financial and operational results for the quarter and year ended December 31, 2017 and provided its 2018 outlook.
Highlights
- Exceeded average daily production exit target for 2017 with 73,207 barrels of oil equivalent per day ("Boepd") in the fourth quarter of 2017 and produced 66,144 Boepd for the year ended December 31, 2017.
- Decreased lease operating expenses per Boe to $6.42 per Boe for the quarter ended December 31, 2017.
- Completed and placed on production 88 gross (58.3 net) operated wells while investing $517.3 million of E&P capital expenditures ("E&P CapEx"), which excludes acquisitions, other capital and midstream capital, during 2017.
- Acquired approximately 22,000 net acres in the over-pressured oil window of the Delaware Basin. The acquisition was announced in late 2017 and subsequently closed on February 14, 2018.
- More than doubled core net inventory from 483 net undeveloped locations at December 31, 2016 to 1,092 net undeveloped locations at December 31, 2017, due to the expansion of the Company's core footprint in the Williston Basin into much of Painted Woods and its entry in the Delaware Basin.
- Oasis Midstream Partners LP ("OMP") completed its initial public offering resulting in net proceeds distributed to Oasis of $132.1 million.
- Commenced investment in second Wild Basin gas plant with a total capacity of 200 million standard cubic feet per day to service gas production from its highly economic inventory. OMP invested $94.7 million of capital in the second gas plant and $105.6 million of total capital expenditures in 2017. The Company invested $235.1 million in capital expenditures in midstream assets ("Midstream CapEx") in 2017, including the $105.6 million attributable to OMP.
- Successfully launched operations with second Oasis Well Services fracturing crew.
- Net cash provided by operating activities was $507.9 million for the year ended December 31, 2017 and $209.1 million for the fourth quarter of 2017. Adjusted EBITDA, a non-GAAP financial measure, was $707.7 million for the year ended December 31, 2017 and $236.2 million for the fourth quarter of 2017. For a definition of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to net income (loss) including non-controlling interests and net cash provided by operating activities, see "Non-GAAP Financial Measures" below.
"2017 was a tremendous year for Oasis. We successfully grew production 31% while spending within cash flow on the E&P side of the business," said Thomas B. Nusz, Oasis' Chairman and Chief Executive Officer. "Our Williston Basin position continues to generate top-in-class cash margins, which drives strong corporate level returns. We have supplemented our highly economic Williston Basin asset with the Forge acquisition located in the best part of the Delaware Basin. The depth of our core inventory increased organically in the Bakken and through our accretive Permian acquisition. We now have approximately 18 years of core and extended core inventory at our 2018 completion pace, which is economic at or below a $45 WTI oil price. In 2018 and 2019, we expect this capital efficient inventory to drive 15-20% production growth within cash flow on the E&P business."
"Our well services and midstream businesses continue to be critical complements of our E&P operations. We introduced a second fracturing crew midyear 2017 and successfully completed the IPO of OMP in September," added Nusz. "Oasis funded its Midstream CapEx in 2017 through OMP IPO proceeds of $132.1 million distributed to Oasis and capital spent at OMP of $105.6 million. Our midstream business has numerous highly attractive midstream investment opportunities in 2018, both in the Williston and potentially in the Delaware, all of which we expect will generate strong returns and will be built within 4-5x EBITDA multiples. Oasis plans to invest $235 million to $275 million in Midstream CapEx in 2018, of which $72 million to $90 million will be funded by OMP in 2018, and the balance is expected to be funded over time through OMP via drops."
Inventory and Leasehold Update
Oasis' total inventory increased to 2,578 net locations, of which 1,092 net locations are considered core. Core net undeveloped locations increased by 126%, from 483 net undeveloped locations at December 31, 2016 to 1,092 net undeveloped locations currently. Of the Company's 1,092 core net locations, 585 are in the Williston Basin and 507 are in the Delaware Basin.
Oasis ended the year with a leasehold position of approximately 503,000 net acres in the Williston Basin, and, as of February 14, 2018, with a leasehold position in the Delaware Basin of approximately 22,000 net acres.
2018 Plan
Highlights for 2018 include:
- Total E&P CapEx plan of approximately $815 million to $855 million, excluding acquisitions.
- Williston Basin - $700 million to $730 million
- Delaware Basin - $115 million to $125 million
- Completing approximately 100 to 110 gross operated wells with a working interest of approximately 73% in the Williston Basin and approximately six to eight gross operated wells with high working interest in the Delaware Basin in 2018.
|
Metric |
Range |
|
Production (Boepd) |
|
|
Full Year 2018 |
80,000 to 83,000 |
|
1st Quarter 2018 |
75,000 to 77,000 |
|
Full Year Financial Metrics |
|
|
LOE ($ per Boe) |
$7.00 to $7.50 |
|
Marketing, transportation and gathering ("MT&G") ($ per Boe)(1) |
$2.75 to $3.00 |
|
General and administrative ("G&A") ($ in millions)(2) |
$105 to $115 |
|
Production taxes (% of oil and gas revenue) |
8.1% to 8.4% |
|
2018 CapEx Plan ($ in millions) |
|
|
E&P CapEx |
$815 - $855 |
|
Midstream CapEx |
235 - 275 |
|
Other(3) |
40 |
|
(1) |
Excludes the effect of non-cash valuation charges. | |||||||||
|
(2) |
Includes non-cash amortization of restricted stock of approximately $30 to $32 million. | |||||||||
|
(3) |
Includes capitalized interest, OWS and administrative capital. | |||||||||
Operational and Financial Update
Select operational and financial statistics are included in the following table for the periods presented:
|
Quarter Ended: |
Year Ended: | ||||||||||||||
|
12/31/2017 |
9/30/2017 |
12/31/2017 |
12/31/2016 | ||||||||||||
|
Production data: |
|||||||||||||||
|
Oil (Bopd) |
57,238 |
51,825 |
51,557 |
41,459 |
|||||||||||
|
Natural gas (MMcfpd) |
95,812 |
85,800 |
87,522 |
53,478 |
|||||||||||
|
Total production (Boepd) |
73,207 |
66,125 |
66,144 |
50,372 |
|||||||||||
|
Percent Oil |
78.2 |
% |
78.4 |
% |
77.9 |
% |
82.3 |
% | |||||||
|
Average sales prices: |
|||||||||||||||
|
Oil, without derivative settlements ($ per Bbl) |
$ |
54.97 |
$ |
46.35 |
$ |
48.52 |
$ |
38.64 |
|||||||
|
Differential to NYMEX West Texas Intermediate crude oil index prices ("WTI") ($ per Bbl) |
0.50 |
1.82 |
2.60 |
4.76 |
|||||||||||
|
Oil, with derivative settlements ($ per Bbl)(1)(2) |
53.41 |
47.93 |
48.00 |
46.68 |
|||||||||||
|
Oil derivative settlements - net cash receipts (payments) ($ in millions)(2) |
(8.2) |
7.5 |
(9.8) |
122.0 |
|||||||||||
|
Natural gas, without derivative settlements ($ per Mcf)(3) |
4.64 |
3.50 |
3.81 |
1.99 |
|||||||||||
|
Natural gas, with derivative settlements ($ per Mcf)(1)(2)(3) |
4.72 |
3.58 |
3.86 |
1.99 |
|||||||||||
|
Natural gas derivative settlements - net cash receipts ($ in millions)(2) |
0.7 |
0.6 |
1.5 |
— |
|||||||||||
|
Selected financial data ($ in millions): |
|||||||||||||||
|
Revenues: |
|||||||||||||||
|
Oil |
$ |
289.5 |
$ |
221.0 |
$ |
913.1 |
$ |
586.3 |
|||||||
|
Natural gas |
40.9 |
27.6 |
121.8 |
38.9 |
|||||||||||
|
Purchased oil and gas sales |
31.1 |
21.2 |
88.0 |
10.3 |
|||||||||||
|
Midstream revenues |
23.8 |
18.8 |
72.8 |
35.4 |
|||||||||||
|
Well services revenues |
19.2 |
16.1 |
52.8 |
33.8 |
|||||||||||
|
Total revenues |
$ |
404.5 |
$ |
304.7 |
$ |
1,248.5 |
$ |
704.7 |
|||||||
|
Net cash provided by operating activities |
$ |
209.1 |
$ |
88.9 |
$ |
507.9 |
$ |
228.0 |
|||||||
|
Adjusted EBITDA |
$ |
236.2 |
$ |
179.6 |
$ |
707.7 |
$ |
500.3 |
|||||||
|
Select operating expenses: |
|||||||||||||||
|
LOE |
$ |
43.3 |
$ |
45.3 |
$ |
177.1 |
$ |
135.4 |
|||||||
|
Midstream operating expenses |
6.7 |
4.3 |
17.6 |
9.0 |
|||||||||||
|
Well services operating expenses(5) |
13.4 |
10.3 |
37.2 |
20.7 |
|||||||||||
|
MT&G(4) |
19.0 |
15.2 |
56.6 |
29.5 |
|||||||||||
|
Non-cash valuation charges |
(1.3) |
(0.2) |
(0.8) |
0.6 |
|||||||||||
|
Purchased oil and gas expenses |
31.6 |
21.7 |
89.3 |
10.3 |
|||||||||||
|
Production taxes |
27.8 |
21.1 |
88.1 |
56.6 |
|||||||||||
|
Depreciation, depletion and amortization ("DD&A") |
146.6 |
132.3 |
530.8 |
476.3 |
|||||||||||
|
Total select operating expenses |
$ |
287.1 |
$ |
250.0 |
$ |
995.9 |
$ |
738.4 |
|||||||
|
Select operating expenses data: |
|||||||||||||||
|
LOE ($ per Boe) |
$ |
6.42 |
$ |
7.45 |
$ |
7.34 |
$ |
7.35 |
|||||||
|
MT&G ($ per Boe)(4) |
2.83 |
2.50 |
2.34 |
1.60 |
|||||||||||
|
DD&A ($ per Boe) |
21.76 |
21.75 |
21.99 |
25.84 |
|||||||||||
|
E&P G&A ($ per Boe) |
2.93 |
2.93 |
3.21 |
4.28 |
|||||||||||
|
Production taxes (% of oil and gas revenue) |
8.4 |
% |
8.5 |
% |
8.5 |
% |
9.1 |
% | |||||||
|
(1) |
Realized prices include gains or losses on cash settlements for commodity derivatives, which do not qualify for or were not designated as hedging instruments for accounting purposes. | |||||||||
|
(2) |
Cash settlements represent the cumulative gains and losses on the Company's derivative instruments for the periods presented and do not include a recovery of costs that were paid to acquire or modify the derivative instruments that were settled. | |||||||||
|
(3) |
Natural gas prices include the value for natural gas and natural gas liquids. | |||||||||
|
(4) |
Excludes non-cash valuation charges on pipeline imbalances and purchased oil and gas expenses. | |||||||||
|
(5) |
For the year ended December 31, 2017, certain well services direct field labor compensation expenses are included in well services operating expenses on our Consolidated Statements of Operations, which were previously recognized in general and administrative expenses on our Consolidated Statements of Operations. For the years ended December 31, 2016 and 2015, well services operating expenses have been adjusted to include $2.9 million and $3.7 million, respectively, which were previously recognized in general and administrative expenses on our Consolidated Statements of Operations. | |||||||||
G&A expenses for the fourth quarter of 2017 totaled $24.6 million, and for the year ended December 31, 2017, G&A totaled $91.8 million. G&A expenses for the Company's E&P segment totaled $19.7 million for the fourth quarter of 2017 and $77.6 million for the full year of 2017. E&P G&A expenses were $2.93 per Boe for the fourth quarter of 2017 and $3.21 per Boe for the full year of 2017. Amortization of equity-based compensation, which is included in G&A expenses, was $6.1 million, or $0.90 per Boe, for the fourth quarter of 2017 and $26.5 million, or $1.10 per Boe, for the full year of 2017.
Interest expense was $36.3 million for the fourth quarter of 2017 and $146.8 million for the full year of 2017. Capitalized interest totaled $4.0 million for the fourth quarter of 2017 and $12.8 million for the full year of 2017. Cash interest totaled $35.9 million for the fourth quarter of 2017 and $142.6 million for the full year of 2017. For a definition of Cash Interest and a reconciliation of interest expense to Cash Interest, see "Non-GAAP Financial Measures" below.
For the three months ended December 31, 2017, the Company recorded an income tax benefit of $202.8 million, resulting in an effective tax rate of 271.5% as a percentage of its pre-tax loss for the quarter. The Company's income tax benefit for the year ended December 31, 2017 was recorded at $203.3 million, or 268.0% of its pre-tax loss. Fourth quarter 2017 results included a benefit of $171.9 million related to the re-measurement of the Company's net deferred tax liabilities due to the recently enacted Tax Cuts and Jobs Act.
The Company reported net income attributable to Oasis of $124.6 million in the fourth quarter of 2017. For the full year of 2017, Oasis reported net income attributable to Oasis of $123.8 million. Excluding certain non-cash items and their tax effect in the fourth quarter of 2017 and the full year of 2017, Adjusted Net Income Attributable to Oasis (non-GAAP) was $27.1 million, or $0.12 per diluted share, and $4.9 million, or $0.02 per diluted share, respectively. For a definition of Adjusted Net Income (Loss) Attributable to Oasis and a reconciliation of net income (loss) attributable to Oasis to Adjusted Net Income (Loss) Attributable to Oasis, see "Non-GAAP Financial Measures" below.
The Company completed and placed on production 88 gross (58.3 net) operated wells during 2017 and 36 gross (22.4 net) during the fourth quarter of 2017.
Capital Expenditures
The following table depicts the Company's CapEx for the year ended December 31, 2017:
|
2017 | |||
|
CapEx ($ in millions) |
|||
|
E&P (excluding acquisitions) |
$ |
517.3 |
|
|
Well Services |
12.5 |
||
|
Other(1) |
17.3 |
||
|
Total CapEx before acquisitions and midstream |
547.1 |
||
|
Midstream |
235.1 |
||
|
Total CapEx before acquisitions |
782.2 |
||
|
Acquisitions |
54.0 |
||
|
Total CapEx(2) |
$ |
836.2 |
|
|
(1) |
Other CapEx includes such items as administrative capital and capitalized interest. | |||||||||
|
(2) |
CapEx (including acquisitions and midstream) reflected in the table above differs from the amounts shown in the statement of cash flows in the Company's consolidated financial statements because amounts reflected in the table above include changes in accrued liabilities from the previous reporting period for CapEx, while the amounts presented in the statement of cash flows are presented on a cash basis. | |||||||||
Estimated Net Proved Reserves
The Company's estimated net proved reserves and related PV-10 are based on reports prepared by DeGolyer and MacNaughton, independent reserve engineers. The table below summarizes the Company's estimated net proved reserves and related PV-10 at December 31, 2017:
|
December 31, 2017 | |||||||
|
Net Estimated |
PV-10(1) (in millions) | ||||||
|
Proved Developed |
200.8 |
$ |
2,600.4 |
||||
|
Undeveloped |
111.4 |
1,083.3 |
|||||
|
Total Proved |
312.2 |
$ |
3,683.7 |
||||
|
(1) |
PV-10 is a non-GAAP financial measure and generally differs from Standardized Measure, the most directly comparable GAAP financial measure, because it does not include the effect of income taxes on discounted future net cash flows. | ||||||||
Liquidity and Balance Sheet
As of December 31, 2017, Oasis had cash and cash equivalents of $16.7 million. In addition, Oasis had $70.0 million of borrowings and $10.5 million of outstanding letters of credit issued under the Oasis credit facility and $78.0 million of borrowings under the OMP credit facility, resulting in an unused borrowing base capacity of $1,191.5 million for both revolving credit facilities as of December 31, 2017.
On December 13, 2017, the Company completed a public offering resulting in net proceeds of $302.6 million, after deducting underwriting discounts and commissions and offering expenses, which was raised to fund a portion of its acquisition in the Delaware Basin, but was initially used to repay borrowings from the Oasis credit facility. On February 14, 2018, the Company borrowed $502.0 million under the Oasis credit facility to fund cash due at closing of the acquisition.
On February 26, 2018, the Company entered into an amendment to the Oasis credit facility, resulting in the aggregate elected commitment being increased from $1,150.0 million to $1,350.0 million. The next redetermination of the borrowing base for the Oasis credit facility is scheduled for April 1, 2018. The OMP credit facility has a current borrowing capacity of $200.0 million.
Hedging Activity
As of February 27, 2018, the Company had the following outstanding commodity derivative contracts, all of which are priced relative to WTI crude oil index prices and settle monthly: