HOUSTON, Nov. 5, 2019 /PRNewswire/ -- Oasis Petroleum Inc. (NYSE: OAS) ("Oasis" or the "Company") today announced financial and operating results for 3Q 2019.
Recent Highlights:
- Delivered net cash provided by operating activities of $251.0 million and Adjusted EBITDA(1) of $256.6 million in 3Q 2019.
- Achieved positive free cash flow during the quarter and year to date and continue to expect to be free cash flow positive in 2019 for the E&P business(2).
- Reduced debt under the Oasis credit facility by $125.0 million during the quarter to $406.0 million as of September 30, 2019.
- LOE per Boe decreased 15.8% to $6.16 per Boe in 3Q 2019 compared to $7.32 per Boe in 2Q 2019.
- Crude oil differentials remained strong at $1.30 off of NYMEX WTI in 3Q 2019.
- Produced 88.7 MBoepd in 3Q 2019, which included the impact of divested volumes of approximately 330 Boepd. Volumes grew by 5% in 3Q 2019 (3% oil) as compared to 2Q 2019.
- Divested upstream assets in various packages in the Williston Basin, which resulted in approximately $41.0 million in cash proceeds. Transactions closed late in 3Q 2019.
(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 measures under United States generally accepted accounting principles ("GAAP"). |
(2) For more detail on E&P free cash flow, see pages six and seven of the Company's investor presentation on the Company's website at www.oasispetroleum.com. |
"Oasis delivered a strong quarter across several fronts," said Thomas B. Nusz, Oasis' Chairman and Chief Executive Officer. "As expected, Williston production rebounded strongly compared to the second quarter, driven by Oasis's prolific well results and industry-leading infrastructure. In the Delaware, we reached our year-end 2019 volume target, driven by high-return wells. Efficiency is improving rapidly, with Williston well costs expected to improve to $7.2 million vs. $7.6 million by year end and Delaware cycle times continuing to fall. E&P free cash generation during the quarter was supplemented by strong asset sale proceeds, both of which led to a meaningful reduction in net debt. We remain focused on driving additional operating efficiencies and reducing leverage further."
Financial and Operational Update and Outlook
- Production averaged 80.2 MBoepd (Williston Basin) and 8.5 MBoepd (Delaware Basin) in 3Q 2019.
- Oasis expects 4Q 2019 production to range between 83.3 to 85.3 MBoepd (70.5% oil cut), which is in line with the Company's pre-divestiture prior midpoint guidance of 86 MBoepd (71% oil cut). The anticipated impact from divested volumes in 2020 is approximately 1.1 MBoepd.
- In 3Q 2019, Oasis dropped down to one OWS crew and reduced company-wide headcount by 87, representing 12% of the workforce, resulting in a one-time G&A charge of approximately $2.4 million. The Company now expects 2019 G&A to range between $125 to $131 million, excluding $20 million of litigation contingency expenses, and the run-rate impact of the reduced headcount to be approximately $10 million. Oasis continues to focus on cost control measures across its businesses.
- CapEx in 3Q 2019 of $187 million consisted of $148 million of E&P and other (including $3 million of capitalized interest), $37 million of consolidated midstream and $3 million of acquisitions. The Company's 2019 E&P and other CapEx guidance remains unchanged from the August range of $620 to $640 million, which excludes capitalized interest charges of approximately $12 million. Total 2019 midstream CapEx is now expected to be $212 to $222 million, which is below the August guidance range of $219 to $230 million.
The following table provides select actual metrics from 3Q 2019 and the associated guidance for 4Q 2019:
Metric | 3Q 2019 Actual | 4Q 2019 Guidance | ||
Production (MBoepd) | 88.7 | 83.3 - 85.3 | ||
Differential to NYMEX WTI ($ per Bbl) | $1.30 | $3.00 - $4.00 | ||
Natural gas realized price (as a % of Henry Hub) | 76% | 70% - 80% | ||
Lease operating expenses ($ per Boe) | $6.16 | $6.75 - $7.50 | ||
Marketing, transportation and gathering expenses ($ per Boe)(1) | $4.01 | $3.75 - $4.50 | ||
E&P Cash G&A ($ in millions)(2) | $18.1 | $15.5 - $17.0 | ||
Production taxes (as a % of oil and gas revenues) | 8.3% | 8.2% |
___________________ | ||
(1) | Marketing, transportation and gathering expenses ("MT&G") exclude the effect of non-cash valuation charges on pipeline imbalances. | |
(2) | E&P Cash G&A represents general and administrative ("G&A") expenses less non-cash equity-based compensation expenses and other non-cash charges included in the Company's exploration and production ("E&P") segment. Total 2019 cash G&A for Oasis is estimated at $92 to $96 million, which excludes non-cash amortization of equity-based compensation of approximately $33 to $35 million and litigation contingency expenses of $20 million. See "Non-GAAP Financial Measures" below. | |
The following table presents select operational and financial data for the periods presented:
3Q 2019 | 2Q 2019 | 3Q 2018 | |||||||||
Production data: | |||||||||||
Crude oil (Bopd) | 62,816 | 61,224 | 65,870 | ||||||||
Natural gas (Mcfpd) | 155,391 | 139,380 | 117,182 | ||||||||
Total production (Boepd) | 88,715 | 84,454 | 85,400 | ||||||||
Percent crude oil | 70.8% | 72.5% | 77.1% | ||||||||
Average sales prices: | |||||||||||
Crude oil, without derivative settlements ($ per Bbl) | $ | 55.12 | $ | 58.87 | $ | 68.33 | |||||
Differential to NYMEX WTI ($ per Bbl) | 1.30 | 0.96 | 1.16 | ||||||||
Crude oil, with derivative settlements ($ per Bbl)(1) | 56.03 | 56.79 | 57.50 | ||||||||
Crude oil derivative settlements - net cash receipts (payments) ($ in millions)(2) | 5.2 | (11.6) | (65.6) | ||||||||
Natural gas, without derivative settlements ($ per Mcf)(3) | 1.81 | 2.29 | 3.72 | ||||||||
Natural gas, with derivative settlements ($ per Mcf)(1)(3) | 1.95 | 2.43 | 3.76 | ||||||||
Natural gas derivative settlements - net cash receipts ($ in millions)(2) | 1.9 | 1.8 | 0.4 | ||||||||
Selected financial data ($ in millions): | |||||||||||
Revenues: | |||||||||||
Crude oil revenues(4) | $ | 318.6 | $ | 328.0 | $ | 414.1 | |||||
Natural gas revenues | 25.9 | 29.0 | 40.1 | ||||||||
Purchased oil and gas sales(4) | 79.4 | 109.4 | 173.0 | ||||||||
Midstream revenues | 50.0 | 51.6 | 31.2 | ||||||||
Well services revenues | 8.9 | 11.4 | 16.3 | ||||||||
Total revenues | $ | 482.8 | $ | 529.4 | $ | 674.7 | |||||
Net cash provided by operating activities | 251.0 | 214.0 | 230.0 | ||||||||
Adjusted EBITDA(5) | 256.6 | 249.6 | 270.4 | ||||||||
Select operating expenses: | |||||||||||
Lease operating expenses | $ | 50.3 | $ | 56.2 | $ | 48.5 | |||||
Midstream expenses | 13.0 | 17.4 | 8.7 | ||||||||
Well services expenses | 6.2 | 8.5 | 11.4 | ||||||||
MT&G, including non-cash valuation charges | 32.7 | 28.5 | 30.7 | ||||||||
Non-cash valuation charges | (0.1) | 0.1 | 0.6 | ||||||||
Purchased oil and gas expenses(4) | 78.7 | 109.7 | 174.3 | ||||||||
Production taxes | 28.5 | 28.1 | 38.7 | ||||||||
Depreciation, depletion and amortization | 210.8 | 177.4 | 163.0 | ||||||||
Total select operating expenses | $ | 420.2 | $ | 425.8 | $ | 475.3 | |||||
Select operating expenses data: | |||||||||||
Lease operating expense ($ per Boe) | $ | 6.16 | $ | 7.32 | $ | 6.18 | |||||
MT&G ($ per Boe)(6) | 4.01 | 3.69 | 3.84 | ||||||||
Depreciation, depletion and amortization ($ per Boe) | 25.83 | 23.08 | 20.74 | ||||||||
E&P G&A ($ per Boe)(7) | 5.68 | 3.35 | 3.88 | ||||||||
E&P Cash G&A ($ per Boe)(5) | 2.22 | 2.24 | 2.97 | ||||||||
Production taxes (as a % of oil and gas revenues) | 8.3% | 7.9% | 8.6% | ||||||||
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(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) | For the three and nine months ended September 30, 2018, crude oil revenues, purchased oil and gas sales and purchased oil and gas expenses have been revised to correct errors related to the presentation of certain crude oil purchase and sale arrangements, which had no impact on reported net income (loss). The amounts presented herein reflect the impact of the revision. |
(5) | Adjusted EBITDA and E&P Cash G&A represent non-GAAP measures. See "Non-GAAP Financial Measures" below for further information and reconciliations to the most directly comparable financial measures under GAAP. |
(6) | Excludes non-cash valuation charges on pipeline imbalances. |
(7) | Includes $20 million of litigation contingency expenses in 3Q 2019. Excluding this accrual, E&P G&A per Boe would have been $3.23 in 3Q 2019. |
G&A totaled $52.9 million in 3Q 2019, $34.9 million in 3Q 2018 and $30.9 million in 2Q 2019. In 3Q 2019, a loss accrual was recorded in the amount of $20 million, which the Company believes is the estimable amount of loss that could potentially be incurred from the Company's pending legal proceedings based upon currently available information. Amortization of equity-based compensation, which is included in G&A, was $8.4 million, or $1.03 per barrel of oil equivalent ("Boe"), in 3Q 2019 as compared to $7.5 million, or $0.95 per Boe, in 3Q 2018 and $8.9 million, or $1.16 per Boe, in 2Q 2019. G&A for the Company's E&P segment totaled $46.4 million in 3Q 2019, $30.5 million in 3Q 2018 and $25.8 million in 2Q 2019.
MT&G, excluding non-cash valuation charges on pipeline imbalances, increased $2.6 million to $32.7 million in 3Q 2019, as compared to $30.1 million in 3Q 2018, primarily attributable to higher natural gas gathering and processing expenses due to additional well connections on the Company's midstream infrastructure and the Company's second natural gas processing plant. MT&G, excluding non-cash valuation charges on pipeline imbalances, increased $4.3 million in 3Q 2019, as compared to $28.4 million in 2Q 2019 primarily due to higher crude oil gathering and transportation expenses related to an increase in volumes being transported on the Dakota Access Pipeline to market the Company's equity barrels, which resulted in improved price realizations.
Depreciation, depletion and amortization ("DD&A") expenses increased $47.8 million to $210.8 million in 3Q 2019 as compared to 3Q 2018. This increase was a result of increased production during 3Q 2019, coupled with an increase in the DD&A rate to $25.83 per Boe for 3Q 2019 as compared to $20.74 per Boe for 3Q 2018. The increase in the DD&A rate was primarily due to lower recoverable reserves in the Williston Basin and Delaware Basin, coupled with higher well costs in the Delaware Basin.
Interest expense was $43.9 million in 3Q 2019 as compared to $39.6 million in 3Q 2018 and $43.2 million in 2Q 2019. Capitalized interest totaled $3.0 million in 3Q 2019, $4.5 million in 3Q 2018 and $3.6 million in 2Q 2019. Cash Interest totaled $41.9 million in 3Q 2019, $39.4 million in 3Q 2018 and $42.0 million in 2Q 2019. For a definition of Cash Interest and a reconciliation of interest expense to Cash Interest, see "Non-GAAP Financial Measures" below.
The Company's income tax benefit for the nine months ended September 30, 2019 was recorded at 25.0% of pre-tax loss. In 3Q 2019, the Company recorded an income tax benefit of $17.4 million, resulting in a (134.3)% effective tax rate as a percentage of its pre-tax income for the quarter. In 2Q 2019, the Company recorded an income tax expense of $12.2 million, resulting in a 19.3% effective tax rate as a percentage of its pre-tax income for the quarter.
In 3Q 2019, the Company reported net income of $20.3 million, or $0.06 per diluted share, as compared to net income of $62.3 million, or $0.20 per diluted share, in 3Q 2018. Excluding certain non-cash items and their tax effect, Adjusted Net Loss Attributable to Oasis was $16.0 million, or $0.05 per diluted share, in 3Q 2019, as compared to Adjusted Net Income Attributable to Oasis of $26.3 million, or $0.08 per diluted share, in 3Q 2018. Adjusted EBITDA in 3Q 2019 was $256.6 million, as compared to Adjusted EBITDA of $270.4 million in 3Q 2018. For definitions of Adjusted Net Income (Loss) Attributable to Oasis and Adjusted EBITDA and reconciliations to the most directly comparable GAAP measures, see "Non-GAAP Financial Measures" below.
Capital Expenditures and Completions
The following table depicts the Company's total capital expenditures ("CapEx") by category:
1Q 2019 | 2Q 2019 | 3Q 2019 | YTD - 3Q 2019 | ||||||||
(In millions) | |||||||||||
CapEx: | |||||||||||
E&P | $ | 165.7 | $ | 202.1 | $ | 143.5 | $ | 511.3 | |||
Well services | 0.1 | — | 0.2 | 0.3 | |||||||
Other(1) | 3.9 | 4.3 | 4.2 | 12.4 | |||||||
Total E&P & other CapEx | 169.7 | 206.4 | 147.9 | 524.0 | |||||||
Midstream(2) | 57.1 | 82.6 | 36.9 | 176.6 | |||||||
Total CapEx before acquisitions | 226.8 | 289.0 | 184.8 | 700.6 | |||||||
Acquisitions | — | 5.8 | 2.5 | 8.3 | |||||||
Total CapEx(3) | $ | 226.8 | $ | 294.8 | $ | 187.3 | $ | 708.9 | |||
___________________ | |
(1) | Other CapEx includes such items as administrative capital and capitalized interest. Capitalized interest totaled $3.0 million and $9.5 million for the three and nine months ended September 30, 2019, respectively. |
(2) | Midstream CapEx attributable to Oasis Midstream Partners ("OMP") was $45.2 million, $70.9 million and $27.6 million for 1Q 2019, 2Q 2019 and 3Q 2019, respectively. |
(3) | Total CapEx (including acquisitions) reflected in the table above differs from the amounts shown in the statements of cash flows in the Company's condensed 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 statements of cash flows is presented on a cash basis. |
Oasis completed and placed on production 22 gross (16.8 net) operated wells and 3.4 net non-operated wells during 3Q 2019. Completions included 17 gross (11.9 net) operated wells in the Williston Basin and 5 gross (4.9 net) operated wells in the Delaware Basin.
Liquidity and Balance Sheet
As of September 30, 2019, Oasis had cash and cash equivalents of $19.4 million, total elected commitments under the Oasis credit facility of $1,350.0 million and total elected commitments under the OMP credit facility of $575.0 million. In addition, Oasis had $406.0 million of borrowings and $14.0 million of outstanding letters of credit issued under the Oasis credit facility and $431.0 million of borrowings and $8.2 million of outstanding letters of credit under the OMP credit facility, resulting in a total unused borrowing capacity of $1,065.8 million for both revolving credit facilities as of September 30, 2019.
On November 4, 2019, Oasis completed its fall redetermination of its borrowing base under the Oasis credit facility. As a result, Oasis's borrowing base decreased to $1,300.0 million. The next redetermination is scheduled for April 1, 2020. Additionally, Oasis entered into an amendment to the Oasis credit facility, which decreased the aggregate elected commitment to $1,100.0 million.
Hedging Activity
The Company's crude oil contracts will settle monthly based on the average NYMEX West Texas Intermediate crude oil index price ("NYMEX WTI") for fixed price swaps and two-way and three-way costless collars. The Company's natural gas contracts will settle monthly based on the average NYMEX Henry Hub natural gas index price ("NYMEX HH") for fixed price swaps. As of November 4, 2019, the Company had the following outstanding commodity derivative contracts:
Three Months Ending | Six Months Ending | |||||||||||
December 31, 2019 | June 30, 2020 | December 31, 2020 | June 30, 2021 | |||||||||
Crude Oil (Volume in MBopd) | ||||||||||||
Fixed Price Swaps | ||||||||||||
Volume | 25.0 | 18.0 | 3.0 | — | ||||||||
Price | $ | 57.42 | $ | 57.68 | $ | 58.85 | $ | — | ||||
Two-Way Collars | ||||||||||||
Volume | 14.0 | 9.0 | 2.0 | — | ||||||||
Floor | $ | 58.07 | $ | 50.83 | $ | 50.50 | $ | — | ||||
Ceiling | $ | 74.64 | $ | 60.31 | $ | 60.70 | $ | — | ||||
Three-Way Collars | ||||||||||||
Volume | 12.0 | 13.0 | 12.0 | 2.0 | ||||||||
Sub-Floor | $ | 40.00 | $ | 40.00 | $ | 40.00 | $ | 40.00 | ||||
Floor | $ | 51.57 | $ | 54.13 | $ | 52.48 | $ | 50.00 | ||||
Ceiling | $ | 65.40 | $ | 64.81 | $ | 63.86 | $ | 64.25 | ||||
Total Crude Oil Volume | 51.0 | 40.0 | 17.0 | 2.0 | ||||||||
Natural Gas (Volume in MMBtupd) | ||||||||||||
Fixed Price Swaps | ||||||||||||
Volume | 30,000 | — | — | — | ||||||||
Price | $ | 2.92 | $ | — | $ | — | $ | — | ||||
The September 2019 crude oil derivative contracts settled at a net $1.4 million received in October 2019 and will be included in the Company's 4Q 2019 derivative settlements.
Conference Call Information
Investors, analysts and other interested parties are invited to listen to the conference call:
Date: | Wednesday, November 6, 2019 | |
Time: | 10:00 a.m. Central Time | |
Live Webcast: | ||
Website: |
Sell-side analysts with a question may use the following dial-in: