Attached files
| file | filename |
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| 8-K - 8-K - Oasis Petroleum Inc. | oas-6302015pressrelease8xk.htm |
Exhibit 99.1
Oasis Petroleum Inc. Announces Quarter Ended June 30, 2015 Earnings
Houston, Texas — August 4, 2015 — Oasis Petroleum Inc. (NYSE: OAS) (“Oasis” or the “Company”) today announced financial results for the quarter ended June 30, 2015 and provided an operational update.
Highlights include:
• | Exceeded production guidance range and increased average daily production to 50,261 barrels of oil equivalent per day (“Boepd”), a 15% increase over the second quarter of 2014. |
• | Completed and placed on production 21 gross (18.5 net) operated and 1.2 net non-operated wells in the second quarter of 2015. |
• | Total capital expenditures (“CapEx”) were $170.4 million, in line with the Company’s plan, for the three months ended June 30, 2015. |
• | Decreased lease operating expenses (“LOE”) per barrel of oil equivalent (“Boe”) to $8.26, a 19% decrease from the second quarter of 2014 and a 4% sequential quarter decrease. |
• | Grew Adjusted EBITDA by 17% to $245.4 million in the second quarter of 2015, up from $208.9 million in the first quarter of 2015. For a definition of Adjusted EBITDA and a reconciliation of net income and net cash provided by operating activities to Adjusted EBITDA, see “Non-GAAP Financial Measures” below. |
“Our team has exceeded all of our expectations during the first half of 2015, with production averaging over 50,000 Boepd and LOE trending below $8.50 per Boe year to date,” said Thomas B. Nusz, Oasis' Chairman and Chief Executive Officer. “Production is ahead of schedule as we continue to see excellent performance from our high intensity completions along with high volume lift systems and reduced downtime. Lease operating expenses on a per barrel basis improved again sequentially with the benefit of growth in critical infrastructure. Oasis Midstream Services (“OMS”) increased pipeline connections resulting in the amount of produced water flowing through our system to our disposal wells increasing significantly from 48% to 65% during the second quarter of 2015. Additionally, well costs continue to decrease as we optimize pad operations, improve drilling efficiency, and reduce the cost of source water with OMS infrastructure. Wells completed with slickwater in Indian Hills are now approximately $7.8 million, which is 13% lower than where they were in May 2015. Our team has done a tremendous job driving cost improvement through both efficiency gains and service cost reductions.”
“We released a rig at the end of the second quarter, dropping down to three rigs running, as the team increased drilling efficiencies throughout the first half of the year,” Mr. Nusz added. “By lowering drilling cycle times, we ended the second quarter with a backlog of wells drilled and not completed of 93, which was higher than originally planned. Given the current commodity backdrop, we have not changed our original completion plan of 79 gross (63.3 net) operated wells during 2015. With this pace of completions coupled with lower well costs, we are now planning on investing $670 million in CapEx during 2015 compared to our board approved budget of $705 million. Taking into consideration this completion program and improved operational performance, we are also increasing our production guidance range for the year from 46,000 to 49,000 Boepd up to 49,000 to 50,000 Boepd.”
Michael Lou, Oasis’ Chief Financial Officer also commented, “Based on operational performance and cost savings in the first half of 2015, we were cash flow positive in the second quarter and expect to be cash flow positive for the remainder of 2015. Our employees have done a great job of positioning Oasis to be able to grow within cash flow in the current pricing environment in the coming years.”
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Operational and Financial Update
The Company’s average daily production and revenues are detailed in the following table:
Quarter Ended: | |||||||||||
6/30/2015 | 3/31/2015 | 6/30/2014 | |||||||||
Production (Boepd) | 50,261 | 50,446 | 43,668 | ||||||||
Percent Oil | 87.6 | % | 88.6 | % | 89.1 | % | |||||
Average oil sales price, without derivative settlements (per Bbl) | $ | 52.04 | $ | 40.73 | $ | 94.48 | |||||
Revenues ($ in thousands): | |||||||||||
Oil | $ | 208,564 | $ | 163,813 | $ | 334,559 | |||||
Natural gas | 5,546 | 10,046 | 19,623 | ||||||||
Well services (OWS) | 9,219 | 2,708 | 14,878 | ||||||||
Midstream (OMS) | 6,717 | 3,820 | 3,318 | ||||||||
Total revenues | $ | 230,046 | $ | 180,387 | $ | 372,378 | |||||
Total revenues for the second quarter of 2015 increased by 28% compared to the first quarter of 2015, primarily due to higher oil prices in the second quarter of 2015. In the second quarter of 2015, as NYMEX West Texas Intermediate crude oil index prices (“WTI”) improved, the Company’s price differentials returned to approximately 10% as a percentage of WTI and continued to decrease in terms of the dollar per barrel discount to WTI to an average of $5.90 per barrel of oil compared to $7.85 per barrel of oil during the first quarter of 2015. The Company expects its price differential to WTI to range between $5.50 and $6.50 per Boe in the third quarter of 2015.
Well services revenues increased $6.5 million to $9.2 million for the second quarter of 2015 as compared to first quarter of 2015 primarily due to an increase in well completion activity as a result of completing over 50% more stages in the second quarter of 2015. Midstream revenues were $6.7 million for the three months ended June 30, 2015, which was a $2.9 million sequential quarter increase, primarily due to increased fresh water sales and increased water volumes flowing through OMS salt water disposal systems.
The Company’s operating expenses are detailed in the following table:
Quarter Ended: | |||||||||||
6/30/2015 | 3/31/2015 | 6/30/2014 | |||||||||
Operating expenses ($ in thousands): | |||||||||||
Lease operating expenses (LOE) | $ | 37,761 | $ | 39,125 | $ | 40,553 | |||||
Well services (OWS) | 5,343 | 1,054 | 7,200 | ||||||||
Midstream (OMS) | 2,052 | 898 | 1,569 | ||||||||
Marketing, transportation and gathering expenses (1) | 7,667 | 7,282 | 6,996 | ||||||||
Non-cash valuation charges | (97 | ) | (4 | ) | 118 | ||||||
Total operating expenses | $ | 52,726 | $ | 48,355 | $ | 56,436 | |||||
Operating expenses ($ per Boe): | |||||||||||
Lease operating expenses (LOE) | $ | 8.26 | $ | 8.62 | $ | 10.21 | |||||
Marketing, transportation and gathering expenses (1) | 1.68 | 1.60 | 1.76 | ||||||||
(1) | Excludes non-cash valuation charges on pipeline imbalances. |
The sequential quarter-over-quarter decrease in LOE per Boe was primarily due to more salt water disposal volumes going to OMS disposal wells, offset by higher water volumes produced.
Marketing, transportation and gathering expenses, excluding non-cash valuation charges, remained relatively flat across periods, totaling $7.7 million in the second quarter of 2015, $7.0 million in the second quarter of 2014 and $7.3 million in the first quarter of 2015. While transporting volumes through third-party oil gathering pipelines increases marketing, transportation and gathering expenses, it improves oil price realizations by reducing transportation costs included in the Company’s oil price differential for sales at the wellhead. Currently, the Company is flowing 79% of its gross operated oil production through these gathering systems.
Production taxes as a percentage of oil and gas revenues were 9.6% in both the second and first quarters of 2015 and 9.7% in the second quarter of 2014.
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Depreciation, depletion and amortization expenses (“DD&A”) totaled $119.2 million in the second quarter of 2015, $97.3 million in the second quarter of 2014 and $118.5 million in the first quarter of 2015. DD&A was $26.07 per Boe in the second quarter of 2015, $24.48 per Boe in the second quarter of 2014 and $26.10 per Boe in the first quarter of 2015. The increase in the 2015 DD&A rates were primarily due to increased exploratory and delineation drilling in the Three Forks formation, which has produced lower recoverable reserves in comparison to the Bakken formation.
General and administrative (“G&A”) expenses totaled $21.5 million in the second quarter of 2015, $20.8 million in the second quarter of 2014 and $23.3 million in the first quarter of 2015. G&A expenses were $4.70 per Boe in the second quarter of 2015, $5.22 per Boe in the second quarter of 2014 and $5.14 per Boe in the first quarter of 2015. Amortization of stock-based compensation, which is included in G&A expenses, was $6.1 million, or $1.32 per Boe, in the second quarter of 2015 as compared to $5.2 million, or $1.30 per Boe, in the second quarter of 2014 and $7.6 million, or $1.68 per Boe, in the first quarter of 2015.
As a result of its derivative activities and forward oil price changes, the Company incurred a $39.4 million net loss on derivative instruments, including net cash settlement receipts of $104.1 million, for the second quarter of 2015 and a $47.1 million net gain on derivative instruments, including net cash settlement receipts of $109.3 million, for the first quarter of 2015. The net cash settlement receipts from derivative instruments of $104.1 million in the second quarter of 2015 included $41.1 million, $33.3 million and $29.7 million from contract settlements in March 2015, April 2015 and May 2015, respectively. The Company’s derivative instruments do not qualify for and were not designated as hedging instruments for accounting purposes.
Interest expense was $37.4 million for the second quarter of 2015 compared to $39.0 million for the second quarter of 2014 and $38.8 million for the first quarter of 2015. The $1.4 million sequential quarter decrease was primarily due to an increase in capitalized interest in the second quarter of 2015 as a result of increased accumulated capital expenditures for assets not yet placed into production in the second quarter of 2015 as compared to the first quarter of 2015. Capitalized interest totaled $4.9 million for the second quarter of 2015, $2.3 million for the second quarter of 2014 and $3.9 million for the first quarter of 2015.
For the three months ended June 30, 2015, the Company recorded an income tax benefit of $30.8 million, resulting in a 36.7% effective tax rate as a percentage of its pre-tax loss for the quarter. The Company recorded an income tax benefit of $7.4 million, resulting in a 29.0% effective tax rate as a percentage of its pre-tax loss for the three months ended March 31, 2015. While the Company’s effective tax rate for the three months ended June 30, 2015 was consistent with the statutory tax rate applicable to the U.S. and the blended state rate for the states in which the Company conducts business, the effective tax rate for the three months ended March 31, 2015 was lower due to permanent differences between the compensation amounts expensed for book purposes versus the amounts deductible for income tax purposes.
Adjusted EBITDA for the second quarter of 2015 was $245.4 million, a 4% decrease from the second quarter of 2014 of $254.7 million, and a 17% increase from the first quarter of 2015 of $208.9 million. For a definition of Adjusted EBITDA and a reconciliation of net income and net cash provided by operating activities to Adjusted EBITDA, see “Non-GAAP Financial Measures” below.
For the second quarter of 2015, the Company reported a net loss of $53.2 million, or $0.39 per diluted share, as compared to net income of $38.8 million, or $0.39 per diluted share, for the second quarter of 2014. Excluding certain non-cash and non-recurring items and their tax effect in the second quarter of 2015 and 2014, Adjusted Net Income (non-GAAP) was $51.7 million, or $0.38 per diluted share, and $70.5 million, or $0.70 per diluted share, respectively. For a definition of Adjusted Net Income and a reconciliation of net income to Adjusted Net Income, see “Non-GAAP Financial Measures” below.
Capital Expenditures
The following table depicts the Company’s total CapEx by category:
1Q 2015 | 2Q 2015 | YTD 2015 | |||||||||
CapEx ($ in thousands): | |||||||||||
Exploration and production | $ | 225,499 | $ | 106,212 | $ | 331,711 | |||||
OMS | 35,778 | 39,369 | 75,147 | ||||||||
OWS | 2,023 | 19,663 | 21,686 | ||||||||
Other CapEx (1) | 7,805 | 5,164 | 12,969 | ||||||||
Total CapEx (2) | $ | 271,105 | $ | 170,408 | $ | 441,513 | |||||
(1) | Other CapEx includes such items as administrative capital and capitalized interest. |
(2) | CapEx reflected in the table above differs from the amounts shown in the statement of cash flows in the Company’s condensed consolidated financial statements because amounts reflected in the table above include changes in accrued |
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liabilities from the previous reporting period for capital expenditures, while the amounts presented in the statement of cash flows are presented on a cash basis.
Updated Outlook for 2015
The following table includes updates to the Company’s expectations:
Prior | Updated | ||
Production (Boepd) (Full Year) | 46,000 to 49,000 | 49,000 to 50,000 | |
Production (Boepd) (3Q15) | N/A | 48,000 to 50,000 | |
LOE ($/Boe) (Full Year) | $9.00 to $10.00 | $8.35 to $9.00 | |
Oil Differential (3Q15) | N/A | $5.50 to $6.50 | |
Liquidity
On June 30, 2015, Oasis had total cash and cash equivalents of $13.7 million. As of June 30, 2015, the Company had $155.0 million of borrowings and $5.2 million of outstanding letters of credit issued under its revolving credit facility, resulting in an unused borrowing base capacity of $1,364.8 million.
Hedging Activity
As of August 4, 2015, the Company had the following outstanding commodity derivative contracts, all of which are priced off of WTI and settle monthly:
Weighted Average Prices ($/Bbl) | |||||||||||
Floor | Ceiling | BOPD | |||||||||
Second Half 2015 | |||||||||||
Swaps | $ | 73.35 | $ | 73.35 | 23,000 | ||||||
Two-way collars | $ | 86.00 | $ | 103.42 | 5,000 | ||||||
Total 2H15 hedges (weighted average) | $ | 75.61 | $ | 78.72 | 28,000 | ||||||
First Half 2016 | |||||||||||
Swaps | $ | 63.20 | $ | 63.20 | 8,000 | ||||||
Total 1H16 hedges (weighted average) | $ | 63.20 | $ | 63.20 | 8,000 | ||||||
Second Half 2016 | |||||||||||
Swaps | $ | 63.94 | $ | 63.94 | 3,000 | ||||||
Total 2H16 hedges (weighted average) | $ | 63.94 | $ | 63.94 | 3,000 | ||||||
Conference Call Information
Investors, analysts and other interested parties are invited to listen to the conference call:
Date: | Wednesday, August 5, 2015 | |
Time: | 10:00 a.m. Central Time | |
Dial-in: | 888-317-6003 | |
Intl. Dial in: | 412-317-6061 | |
Conference ID: | 4014181 | |
Website: | www.oasispetroleum.com | |
A recording of the conference call will be available beginning at 3:00 p.m. Central Time on the day of the call and will be available until Wednesday, August 12, 2015 by dialing:
Replay dial-in: | 877-344-7529 | |
Intl. replay: | 412-317-0088 | |
Replay code: | 10069861 | |
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The conference call will also be available for replay at www.oasispetroleum.com.
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 Company 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 Company, including the Company’s drilling program, production, derivative instruments, capital expenditure levels and other guidance included in this press release. These statements are based on certain assumptions made by the Company 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 Company, 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, changes in oil and natural gas prices, weather and environmental conditions, the timing of planned capital expenditures, availability of acquisitions, uncertainties in estimating proved reserves and forecasting production results, operational factors affecting the commencement or maintenance of producing wells, the condition of the capital markets generally, as well as the Company’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 Company’s business and other important factors that could cause actual results to differ materially from those projected as described in the Company’s reports filed with the SEC.
Any forward-looking statement speaks only as of the date on which such statement is made and the Company 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 Petroleum Inc.
Oasis is an independent exploration and production company focused on the acquisition and development of unconventional oil and natural gas resources, primarily operating in the Williston Basin. For more information, please visit the Company’s website at www.oasispetroleum.com.
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Oasis Petroleum Inc.
Condensed Consolidated Balance Sheet
(Unaudited)
June 30, 2015 | December 31, 2014 | ||||||
(In thousands, except share data) | |||||||
ASSETS | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 13,684 | $ | 45,811 | |||
Accounts receivable — oil and gas revenues | 134,518 | 130,934 | |||||
Accounts receivable — joint interest partners | 96,275 | 175,537 | |||||
Inventory | 17,669 | 21,354 | |||||
Prepaid expenses | 5,764 | 14,273 | |||||
Derivative instruments | 108,742 | 302,159 | |||||
Other current assets | 1,001 | 6,539 | |||||
Total current assets | 377,653 | 696,607 | |||||
Property, plant and equipment | |||||||
Oil and gas properties (successful efforts method) | 6,278,726 | 5,966,140 | |||||
Other property and equipment | 416,417 | 313,439 | |||||
Less: accumulated depreciation, depletion, amortization and impairment | (1,338,486 | ) | (1,092,793 | ) | |||
Total property, plant and equipment, net | 5,356,657 | 5,186,786 | |||||
Derivative instruments | 1,077 | 13,348 | |||||
Deferred financing costs and other assets | 48,545 | 41,671 | |||||
Total assets | $ | 5,783,932 | $ | 5,938,412 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities | |||||||
Accounts payable | $ | 10,452 | $ | 20,958 | |||
Revenues and production taxes payable | 193,270 | 209,890 | |||||
Accrued liabilities | 259,066 | 410,379 | |||||
Accrued interest payable | 49,458 | 49,786 | |||||
Deferred income taxes | 26,808 | 97,499 | |||||
Advances from joint interest partners | 6,210 | 6,616 | |||||
Total current liabilities | 545,264 | 795,128 | |||||
Long-term debt | 2,355,000 | 2,700,000 | |||||
Deferred income taxes | 559,239 | 526,770 | |||||
Asset retirement obligations | 44,230 | 42,097 | |||||
Other liabilities | 3,267 | 2,116 | |||||
Total liabilities | 3,507,000 | 4,066,111 | |||||
Commitments and contingencies | |||||||
Stockholders’ equity | |||||||
Common stock, $0.01 par value: 300,000,000 shares authorized; 139,560,426 shares issued and 139,156,287 shares outstanding at June 30, 2015 and 101,627,296 shares issued and 101,341,619 shares outstanding at December 31, 2014 | 1,373 | 1,001 | |||||
Treasury stock, at cost: 404,139 and 285,677 shares at June 30, 2015 and December 31, 2014, respectively | (12,603 | ) | (10,671 | ) | |||
Additional paid-in capital | 1,484,664 | 1,007,202 | |||||
Retained earnings | 803,498 | 874,769 | |||||
Total stockholders’ equity | 2,276,932 | 1,872,301 | |||||
Total liabilities and stockholders’ equity | $ | 5,783,932 | $ | 5,938,412 | |||
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Oasis Petroleum Inc.
Condensed Consolidated Statement of Operations
(Unaudited)
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
(In thousands, except per share data) | ||||||||||||||||
Revenues | ||||||||||||||||
Oil and gas revenues | $ | 214,110 | $ | 354,182 | $ | 387,969 | $ | 686,029 | ||||||||
Well services and midstream revenues | 15,936 | 18,196 | 22,464 | 35,868 | ||||||||||||
Total revenues | 230,046 | 372,378 | 410,433 | 721,897 | ||||||||||||
Operating expenses | ||||||||||||||||
Lease operating expenses | 37,761 | 40,553 | 76,886 | 80,542 | ||||||||||||
Well services and midstream operating expenses | 7,395 | 8,769 | 9,347 | 19,689 | ||||||||||||
Marketing, transportation and gathering expenses | 7,570 | 7,114 | 14,848 | 12,300 | ||||||||||||
Production taxes | 20,618 | 34,493 | 37,239 | 66,296 | ||||||||||||
Depreciation, depletion and amortization | 119,218 | 97,276 | 237,696 | 188,548 | ||||||||||||
Exploration expenses | 1,082 | 475 | 1,925 | 855 | ||||||||||||
Rig termination | 2,815 | — | 3,895 | — | ||||||||||||
Impairment of oil and gas properties | 19,516 | 42 | 24,837 | 804 | ||||||||||||
General and administrative expenses | 21,508 | 20,751 | 44,832 | 44,271 | ||||||||||||
Total operating expenses | 237,483 | 209,473 | 451,505 | 413,305 | ||||||||||||
Gain on sale of properties | — | 3,640 | — | 187,033 | ||||||||||||
Operating income (loss) | (7,437 | ) | 166,545 | (41,072 | ) | 495,625 | ||||||||||
Other income (expense) | ||||||||||||||||
Net gain (loss) on derivative instruments | (39,424 | ) | (65,570 | ) | 7,648 | (83,173 | ) | |||||||||
Interest expense, net of capitalized interest | (37,405 | ) | (38,990 | ) | (76,189 | ) | (79,148 | ) | ||||||||
Other income (expense) | 191 | 135 | 121 | 288 | ||||||||||||
Total other income (expense) | (76,638 | ) | (104,425 | ) | (68,420 | ) | (162,033 | ) | ||||||||
Income (loss) before income taxes | (84,075 | ) | 62,120 | (109,492 | ) | 333,592 | ||||||||||
Income tax benefit (expense) | 30,845 | (23,287 | ) | 38,221 | (124,806 | ) | ||||||||||
Net income (loss) | $ | (53,230 | ) | $ | 38,833 | $ | (71,271 | ) | $ | 208,786 | ||||||
Earnings (loss) per share: | ||||||||||||||||
Basic | $ | (0.39 | ) | $ | 0.39 | $ | (0.58 | ) | $ | 2.10 | ||||||
Diluted | (0.39 | ) | 0.39 | (0.58 | ) | 2.08 | ||||||||||
Weighted average shares outstanding: | ||||||||||||||||
Basic | 136,859 | 99,663 | 123,157 | 99,612 | ||||||||||||
Diluted | 136,859 | 100,260 | 123,157 | 100,328 | ||||||||||||
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Oasis Petroleum Inc.
Selected Financial and Operational Statistics
(Unaudited)
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Operating results ($ in thousands): | |||||||||||||||
Revenues | |||||||||||||||
Oil | $ | 208,564 | $ | 334,559 | $ | 372,377 | $ | 643,790 | |||||||
Natural gas | 5,546 | 19,623 | 15,592 | 42,239 | |||||||||||
Well services and midstream | 15,936 | 18,196 | 22,464 | 35,868 | |||||||||||
Total revenues | $ | 230,046 | $ | 372,378 | $ | 410,433 | $ | 721,897 | |||||||
Production data: | |||||||||||||||
Oil (MBbls) | 4,008 | 3,541 | 8,030 | 6,990 | |||||||||||
Natural gas (MMcf) | 3,395 | 2,596 | 6,502 | 5,045 | |||||||||||
Oil equivalents (MBoe) | 4,574 | 3,974 | 9,114 | 7,831 | |||||||||||
Average daily production (Boe/d) | 50,261 | 43,668 | 50,353 | 43,264 | |||||||||||
Average sales prices: | |||||||||||||||
Oil, without derivative settlements (per Bbl) | $ | 52.04 | $ | 94.48 | $ | 46.37 | $ | 92.10 | |||||||
Oil, with derivative settlements (per Bbl) (1) | 78.01 | 91.26 | 72.94 | 90.15 | |||||||||||
Natural gas (per Mcf) (2) | 1.63 | 7.56 | 2.40 | 8.37 | |||||||||||
Costs and expenses (per Boe of production): | |||||||||||||||
Lease operating expenses | $ | 8.26 | $ | 10.21 | $ | 8.44 | $ | 10.29 | |||||||
Marketing, transportation and gathering expenses (3) | 1.68 | 1.76 | 1.64 | 1.65 | |||||||||||
Production taxes | 4.51 | 8.68 | 4.09 | 8.47 | |||||||||||
Depreciation, depletion and amortization | 26.07 | 24.48 | 26.08 | 24.08 | |||||||||||
General and administrative expenses | 4.70 | 5.22 | 4.92 | 5.65 | |||||||||||
(1) | Realized prices include gains or losses on cash settlements for commodity derivatives, which do not qualify for and were not designated as hedging instruments for accounting purposes. 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. |
(2) | Natural gas prices include the value for natural gas and natural gas liquids. |
(3) | Excludes non-cash valuation charges on pipeline imbalances. |
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Oasis Petroleum Inc.
Condensed Consolidated Statement of Cash Flows
(Unaudited)
Six Months Ended June 30, | |||||||
2015 | 2014 | ||||||
(In thousands) | |||||||
Cash flows from operating activities: | |||||||
Net income (loss) | $ | (71,271 | ) | $ | 208,786 | ||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||
Depreciation, depletion and amortization | 237,696 | 188,548 | |||||
Gain on sale of properties | — | (187,033 | ) | ||||
Impairment of oil and gas properties | 24,837 | 804 | |||||
Deferred income taxes | (38,221 | ) | 118,695 | ||||
Derivative instruments | (7,648 | ) | 83,173 | ||||
Stock-based compensation expenses | 13,663 | 9,678 | |||||
Deferred financing costs amortization and other | 5,059 | 3,220 | |||||
Working capital and other changes: | |||||||
Change in accounts receivable | 75,799 | (37,132 | ) | ||||
Change in inventory | 3,685 | 3,016 | |||||
Change in prepaid expenses | 3,394 | 1,284 | |||||
Change in other current assets | 5,538 | (30 | ) | ||||
Change in other assets | — | (1,477 | ) | ||||
Change in accounts payable and accrued liabilities | (22,624 | ) | 91,543 | ||||
Change in other current liabilities | — | 3,311 | |||||
Change in other liabilities | (21 | ) | (132 | ) | |||
Net cash provided by operating activities | 229,886 | 486,254 | |||||
Cash flows from investing activities: | |||||||
Capital expenditures | (586,661 | ) | (606,924 | ) | |||
Acquisition of oil and gas properties | (769 | ) | (8,116 | ) | |||
Proceeds from sale of properties | — | 324,888 | |||||
Costs related to sale of properties | — | (2,337 | ) | ||||
Derivative settlements | 213,336 | (13,644 | ) | ||||
Advances from joint interest partners | (406 | ) | (5,919 | ) | |||
Net cash used in investing activities | (374,500 | ) | (312,052 | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from sale of common stock | 463,010 | — | |||||
Proceeds from revolving credit facility | 320,000 | 100,000 | |||||
Principal payments on revolving credit facility | (665,000 | ) | (335,570 | ) | |||
Deferred financing costs | (3,591 | ) | (85 | ) | |||
Purchases of treasury stock | (1,932 | ) | (3,315 | ) | |||
Other | — | (176 | ) | ||||
Net cash provided by (used in) financing activities | 112,487 | (239,146 | ) | ||||
Decrease in cash and cash equivalents | (32,127 | ) | (64,944 | ) | |||
Cash and cash equivalents: | |||||||
Beginning of period | 45,811 | 91,901 | |||||
End of period | $ | 13,684 | $ | 26,957 | |||
Supplemental non-cash transactions: | |||||||
Change in accrued capital expenditures | $ | (156,368 | ) | $ | 51,129 | ||
Change in asset retirement obligations | 2,649 | 1,624 | |||||
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Non-GAAP Financial Measures
Adjusted EBITDA is a supplemental non-GAAP financial measure that is used by management and external users of the Company’s consolidated financial statements, such as industry analysts, investors, lenders and rating agencies. The Company defines Adjusted EBITDA as earnings before interest expense, income taxes, depreciation, depletion, amortization, exploration expenses and other similar non-cash or non-recurring charges. Adjusted EBITDA is not a measure of net income or cash flows as determined by United States generally accepted accounting principles, or GAAP.
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 measure of Adjusted EBITDA for the periods presented:
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
(In thousands) | |||||||||||||||
Net income (loss) | $ | (53,230 | ) | $ | 38,833 | $ | (71,271 | ) | $ | 208,786 | |||||
Gain on sale of properties | — | (3,640 | ) | — | (187,033 | ) | |||||||||
Net (gain) loss on derivative instruments | 39,424 | 65,570 | (7,648 | ) | 83,173 | ||||||||||
Derivative settlements (1) | 104,077 | (11,405 | ) | 213,336 | (13,644 | ) | |||||||||
Interest expense, net of capitalized interest | 37,405 | 38,990 | 76,189 | 79,148 | |||||||||||
Depreciation, depletion and amortization | 119,218 | 97,276 | 237,696 | 188,548 | |||||||||||
Impairment of oil and gas properties | 19,516 | 42 | 24,837 | 804 | |||||||||||
Rig termination | 2,815 | — | 3,895 | — | |||||||||||
Exploration expenses | 1,082 | 475 | 1,925 | 855 | |||||||||||
Stock-based compensation expenses | 6,057 | 5,173 | 13,663 | 9,678 | |||||||||||
Income tax (benefit) expense | (30,845 | ) | 23,287 | (38,221 | ) | 124,806 | |||||||||
Other non-cash adjustments | (97 | ) | 118 | (101 | ) | (628 | ) | ||||||||
Adjusted EBITDA | $ | 245,422 | $ | 254,719 | $ | 454,300 | $ | 494,493 | |||||||
Net cash provided by operating activities | $ | 141,525 | $ | 277,987 | $ | 229,886 | $ | 486,254 | |||||||
Derivative settlements (1) | 104,077 | (11,405 | ) | 213,336 | (13,644 | ) | |||||||||
Interest expense, net of capitalized interest | 37,405 | 38,990 | 76,189 | 79,148 | |||||||||||
Rig termination | 2,815 | — | 3,895 | — | |||||||||||
Exploration expenses | 1,082 | 475 | 1,925 | 855 | |||||||||||
Deferred financing costs amortization and other | (3,404 | ) | (1,733 | ) | (5,059 | ) | (3,220 | ) | |||||||
Current tax expense | — | 3,345 | — | 6,111 | |||||||||||
Changes in working capital | (37,981 | ) | (53,058 | ) | (65,771 | ) | (60,383 | ) | |||||||
Other non-cash adjustments | (97 | ) | 118 | (101 | ) | (628 | ) | ||||||||
Adjusted EBITDA | $ | 245,422 | $ | 254,719 | $ | 454,300 | $ | 494,493 | |||||||
(1) | 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. |
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The following tables present reconciliations of the GAAP financial measure of income before income taxes to the non-GAAP financial measure of Adjusted EBITDA for the Company’s three reportable business segments on a gross basis for the periods presented:
Exploration and Production | ||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
(In thousands) | ||||||||||||||||
Income (loss) before income taxes | $ | (99,164 | ) | $ | 49,221 | $ | (133,172 | ) | $ | 314,507 | ||||||
Gain on sale of properties | — | (3,640 | ) | — | (187,033 | ) | ||||||||||
Net (gain) loss on derivative instruments | 39,424 | 65,570 | (7,648 | ) | 83,173 | |||||||||||
Derivative settlements (1) | 104,077 | (11,405 | ) | 213,336 | (13,644 | ) | ||||||||||
Interest expense, net of capitalized interest | 37,405 | 38,990 | 76,189 | 79,148 | ||||||||||||
Depreciation, depletion and amortization | 118,049 | 96,477 | 235,589 | 186,705 | ||||||||||||
Impairment of oil and gas properties | 19,516 | 42 | 24,837 | 804 | ||||||||||||
Rig termination | 2,815 | — | 3,895 | — | ||||||||||||
Exploration expenses | 1,082 | 475 | 1,925 | 855 | ||||||||||||
Stock-based compensation expenses | 5,973 | 5,094 | 13,515 | 9,522 | ||||||||||||
Other non-cash adjustments | (97 | ) | 118 | (101 | ) | (628 | ) | |||||||||
Adjusted EBITDA | $ | 229,080 | $ | 240,942 | $ | 428,365 | $ | 473,409 | ||||||||
(1) | 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. |
Well Services | ||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
(In thousands) | ||||||||||||||||
Income before income taxes | $ | 9,030 | $ | 16,318 | $ | 18,638 | $ | 29,822 | ||||||||
Depreciation, depletion and amortization | 5,008 | 3,124 | 9,526 | 5,759 | ||||||||||||
Stock-based compensation expenses | 443 | 406 | 986 | 659 | ||||||||||||
Adjusted EBITDA | $ | 14,481 | $ | 19,848 | $ | 29,150 | $ | 36,240 | ||||||||
Midstream Services | ||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
(In thousands) | ||||||||||||||||
Income before income taxes | $ | 15,922 | $ | 6,096 | $ | 25,211 | $ | 10,728 | ||||||||
Depreciation, depletion and amortization | 1,375 | 883 | 2,561 | 1,734 | ||||||||||||
Stock-based compensation expenses | 119 | — | 323 | — | ||||||||||||
Adjusted EBITDA | $ | 17,416 | $ | 6,979 | $ | 28,095 | $ | 12,462 | ||||||||
Adjusted Net Income and Adjusted Diluted Earnings Per Share are supplemental non-GAAP financial measures that are used by management and external users of the Company’s consolidated financial statements, such as industry analysts, investors, lenders and rating agencies. The Company defines Adjusted Net Income as net income after adjusting first for (1) the impact of certain non-cash and non-recurring items, including non-cash changes in the fair value of derivative instruments, impairment of oil and gas properties, and other similar non-cash and non-recurring charges, and then (2) the non-cash and non-recurring items’ impact on taxes based on the Company’s effective tax rate in the same period. Adjusted Net Income is not a measure of net income as determined by GAAP. The Company defines Adjusted Diluted Earnings Per Share as Adjusted Net Income divided by diluted weighted average shares outstanding.
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The following table presents reconciliations of the GAAP financial measure of net income to the non-GAAP financial measure of Adjusted Net Income and the GAAP financial measure of diluted earnings per share to the non-GAAP financial measure of Adjusted Diluted Earnings Per Share for the periods presented:
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
(In thousands, except per share data) | |||||||||||||||
Net income (loss) | $ | (53,230 | ) | $ | 38,833 | $ | (71,271 | ) | $ | 208,786 | |||||
Gain on sale of properties | — | (3,640 | ) | — | (187,033 | ) | |||||||||
Net (gain) loss on derivative instruments | 39,424 | 65,570 | (7,648 | ) | 83,173 | ||||||||||
Derivative settlements (1) | 104,077 | (11,405 | ) | 213,336 | (13,644 | ) | |||||||||
Impairment of oil and gas properties | 19,516 | 42 | 24,837 | 804 | |||||||||||
Rig termination | 2,815 | — | 3,895 | — | |||||||||||
Other non-cash adjustments | (97 | ) | 118 | (101 | ) | (628 | ) | ||||||||
Tax impact (2) | (60,804 | ) | (19,000 | ) | (81,795 | ) | 43,896 | ||||||||
Adjusted Net Income | $ | 51,701 | $ | 70,518 | $ | 81,253 | $ | 135,354 | |||||||
Diluted earnings per share | $ | (0.39 | ) | $ | 0.39 | $ | (0.58 | ) | $ | 2.08 | |||||
Gain on sale of properties | — | (0.04 | ) | — | (1.86 | ) | |||||||||
Net (gain) loss on derivative instruments | 0.29 | 0.65 | (0.06 | ) | 0.83 | ||||||||||
Derivative settlements (1) | 0.76 | (0.11 | ) | 1.73 | (0.14 | ) | |||||||||
Impairment of oil and gas properties | 0.14 | — | 0.20 | 0.01 | |||||||||||
Rig termination | 0.02 | — | 0.03 | — | |||||||||||
Other non-cash adjustments | — | — | — | (0.01 | ) | ||||||||||
Tax impact (2) | (0.44 | ) | (0.19 | ) | (0.66 | ) | 0.44 | ||||||||
Adjusted Diluted Earnings Per Share | $ | 0.38 | $ | 0.70 | $ | 0.66 | $ | 1.35 | |||||||
Diluted weighted average shares outstanding | 136,859 | 100,260 | 123,157 | 100,328 | |||||||||||
Effective tax rate | 36.7 | % | 37.5 | % | 34.9 | % | 37.4 | % | |||||||
(1) | 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. |
(2) | The tax impact is computed utilizing the Company’s effective tax rate on the adjustments for certain non-cash and non-recurring items. |
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