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| 8-K - 8-K - Oasis Midstream Partners LP | omp-20210503.htm |
Exhibit 99.1
Oasis Midstream Partners LP Announces First Quarter 2021 Results, Increases Distribution and Updates 2021 Outlook
Houston, Texas — May 3, 2021 — Oasis Midstream Partners LP (NASDAQ: OMP) (“OMP” or the “Partnership”) today announced financial and operating results for the first quarter of 2021, declared its first quarter 2021 distribution and updated its 2021 outlook.
1Q21 Operational and Financial Highlights:
•Acquired remaining interests in Bobcat DevCo and Beartooth DevCo from Oasis Petroleum and eliminated IDRs (the “Simplification”);
•Completed private placement of $450.0MM in aggregate principal amount of 8.00% senior unsecured notes due 2029;
•Recently signed multiple incremental third-party contracts and continue to work a robust pipeline of new opportunities in the Williston and Permian Basins;
•Strong operational performance and recent acquisition lead to 1Q21 results above expectations and first distribution increase since 4Q19 - declaring $0.55 per unit cash distribution;
•Net income was $42.9MM and net cash from operating activities was $39.4MM;
•Adjusted EBITDA(1) was $56.5MM and distributable cash flow(1) (“DCF”) was $33.0MM. Pro forma for the Simplification, DCF would have been approximately $45.2MM, resulting in coverage of 1.7x(1);
•Margins improved sequentially leading to better profitability across commodity streams;
•ESG focus capturing approximately 99% of Oasis Petroleum’s gas volumes in Wild Basin.
(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 financial measures under United States generally accepted accounting principles (“GAAP”). Pro forma calculations can be found within the appendix of the Partnership’s investor presentation on its website: www.oasismidstream.com
Chief Executive Officer, Taylor Reid, commented, “Oasis Midstream Partners had an impressive first quarter as cost control and efficiencies improved profitability and led the company to exceed expectations. Additionally, OMP simplified its financial structure while improving its scale and financial outlook through the purchase of remaining interests in the Bobcat and Beartooth DevCos. This accretive transaction combined with a strong sponsor program and third party opportunities positioned OMP to increase its distribution for the first time since 2019. Congratulations to the team for their exceptional efforts which supports our continued success. OMP is in a strong competitive position which supports our outlook for years to come.”
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Operational and Financial Update
The following table presents select operational and financial data for the three months ended March 31, 2021:
OMP Ownership(1) | Gross | Net | |||||||||||||||
| (In millions) | |||||||||||||||||
| Bighorn DevCo | |||||||||||||||||
| Operating income | 100% | $ | 16.9 | $ | 16.9 | ||||||||||||
| Depreciation and amortization | 100% | 2.5 | 2.5 | ||||||||||||||
| Total CapEx | 100% | 0.1 | 0.1 | ||||||||||||||
| Bobcat DevCo | |||||||||||||||||
| Operating income | 35.3% | $ | 23.5 | $ | 8.3 | ||||||||||||
| Depreciation and amortization | 35.3% | 4.0 | 1.4 | ||||||||||||||
| Total CapEx | 35.3% | 0.5 | 0.2 | ||||||||||||||
| Beartooth DevCo | |||||||||||||||||
| Operating income | 70% | $ | 7.1 | $ | 5.0 | ||||||||||||
| Depreciation and amortization | 70% | 2.3 | 1.6 | ||||||||||||||
Total CapEx(2) | 70% | (0.4) | (0.3) | ||||||||||||||
| Panther DevCo | |||||||||||||||||
| Operating income | 100% | $ | 1.2 | $ | 1.2 | ||||||||||||
| Depreciation and amortization | 100% | 0.2 | 0.2 | ||||||||||||||
Total CapEx(2) | 100% | (0.1) | (0.1) | ||||||||||||||
| Total OMP | |||||||||||||||||
| DevCo operating income | $ | 48.7 | $ | 31.4 | |||||||||||||
| Public company expenses | 1.6 | 1.6 | |||||||||||||||
| Partnership operating income | 47.1 | 29.8 | |||||||||||||||
| Depreciation and amortization | 9.0 | 5.7 | |||||||||||||||
| Equity-based compensation expense | 0.5 | 0.5 | |||||||||||||||
| Maintenance CapEx | 0.3 | 0.2 | |||||||||||||||
Expansion CapEx(3) | 231.4 | 231.3 | |||||||||||||||
| Total CapEx | 231.7 | 231.5 | |||||||||||||||
__________________
(1)Ownership interest prior to the closing of the Simplification on March 30, 2021.
(2)Negative amounts reflect differences between the estimated capital expenditures accrued in a reporting period and actual capital expenditures recognized in a subsequent reporting period.
(3)Includes $231.5MM cash distribution to Oasis Petroleum associated with the Simplification composed of the following: (i) $229.0MM cash component of the purchase price, (ii) $10.1MM upward adjustment to the purchase price related to the expanded project dedication to OMP in South Nesson and (iii) $7.6MM downward adjustment to the purchase price related to activity between the effective date of January 1, 2021 and the close date of March 30, 2021.
Updated 2021 EBITDA and CapEx Outlook
•Raising FY2021 EBITDA guidance to $220MM – $232MM to reflect our strong performance in 1Q21 (assuming Simplification occurred on January 1, 2021);
•2Q21 EBITDA is expected to range between $52MM – $55MM, consistent with prior expectations and in line with Oasis Petroleum’s volume forecast;
•FY2021 CapEx is expected to be $53MM – $58MM, with the reduction from prior guidance reflecting approximately $10.1MM of 1Q21 capital expenditures which were settled in the Simplification purchase price;
•2Q21 CapEx is expected to be $12MM – $15MM;
•FY2021 maintenance CapEx as a percent of EBITDA is expected to range 7% – 8%;
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•Distribution coverage is expected to approximate 1.3x in 2Q21.
•Oasis’s Williston acquisition announced on May 3, 2021 provides additional optionality for Oasis Midstream Partners and Oasis does not intend to slow development in OMP dedicated areas.
The following table presents throughput volumes for the first quarter of 2021, as well as updated guidance for the second quarter of 2021 and full-year 2021:
| Metric | 1Q21 Actual | 2Q21 Guidance | FY21 Guidance | |||||||||||||||||||||||
| Bighorn DevCo | ||||||||||||||||||||||||||
| Crude oil service volumes | MBopd | 27.6 | 23 - 25 | 27 - 29 | ||||||||||||||||||||||
| Natural gas service volumes | MMscfpd | 205.7 | 180 - 190 | 185 - 195 | ||||||||||||||||||||||
| Bobcat DevCo | ||||||||||||||||||||||||||
| Crude oil service volumes | MBopd | 19.7 | 14 - 17 | 19 - 21 | ||||||||||||||||||||||
| Natural gas service volumes | MMscfpd | 248.0 | 225 - 235 | 235 - 245 | ||||||||||||||||||||||
| Water service volumes | MBowpd | 43.0 | 33 - 35 | 36 - 38 | ||||||||||||||||||||||
| Beartooth DevCo | ||||||||||||||||||||||||||
| Water service volumes | MBowpd | 71.3 | 75 - 80 | 70 - 74 | ||||||||||||||||||||||
| Panther DevCo | ||||||||||||||||||||||||||
| Crude oil service volumes | MBopd | 9.1 | 9 - 11 | 12 - 15 | ||||||||||||||||||||||
| Water service volumes | MBowpd | 28.5 | 25 - 27 | 28 - 30 | ||||||||||||||||||||||
Simplification
On March 30, 2021, OMP successfully closed the acquisition of all remaining interests in Bobcat DevCo LLC (“Bobcat DevCo”) and Beartooth DevCo LLC (“Beartooth DevCo”) from Oasis Petroleum Inc. (“Oasis Petroleum”), as well as eliminated the Partnership’s incentive distribution rights (“IDRs”) in exchange for total consideration of $512.5MM, consisting of $231.5MM cash and 14.8MM common units. The Simplification also included a right of first refusal in favor of OMP with respect to midstream opportunities in the Painted Woods and City of Williston operating areas of Oasis Petroleum.
Liquidity
As of March 31, 2021, the Partnership had cash and cash equivalents of $7.2MM and $234.0MM of borrowings outstanding and $5.5MM of outstanding letters of credit under its revolving credit facility (the “Revolving Credit Facility”). At March 31, 2021, the aggregate commitments under the Revolving Credit Facility were $450.0MM, and the Partnership had an unused borrowing capacity of $210.5MM.
Quarterly Distribution
On May 3, 2021, the board of directors of OMP GP LLC (the “General Partner”) declared the quarterly cash distribution for the first quarter of 2021 of $0.55 per unit, payable on May 27, 2021 to unitholders of record as of May 17, 2021.
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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: | Tuesday, May 4, 2021 | |||||||
| Time: | 11:30 a.m. Central Time | |||||||
| Live Webcast: | https://www.webcaster4.com/Webcast/Page/1777/41194 | |||||||
| Website: | www.oasismidstream.com | |||||||
Or:
| Dial-in: | 888-317-6003 | |||||||
| Intl. Dial in: | 412-317-6061 | |||||||
| Conference ID: | 1930450 | |||||||
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, May 12, 2021 by dialing:
| Replay dial-in: | 877-344-7529 | |||||||
| Intl. replay: | 412-317-0088 | |||||||
| Replay code: | 10156063 | |||||||
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. 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, developments in the global economy, particularly the public health crisis related to the novel coronavirus 2019 (“COVID-19”) pandemic and the adverse impact thereof on demand for crude oil and natural gas and our customers’ demand for our services. Because considerable uncertainty exists with respect to the future pace and extent of a global economic recovery from the effects of the COVID-19 pandemic, we cannot predict whether or when economic activities will return to normalized levels.
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.
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About Oasis Midstream Partners LP
Oasis Midstream Partners LP is a leading 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.
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OASIS MIDSTREAM PARTNERS LP
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
| March 31, 2021 | December 31, 2020 | ||||||||||
| (In thousands, except unit data) | |||||||||||
| ASSETS | |||||||||||
| Current assets | |||||||||||
| Cash and cash equivalents | $ | 7,158 | $ | 5,147 | |||||||
| Accounts receivable | 3,658 | 4,295 | |||||||||
| Accounts receivable – Oasis Petroleum | 82,732 | 66,283 | |||||||||
| Inventory | 6,986 | 6,986 | |||||||||
| Prepaid expenses | 4,565 | 3,695 | |||||||||
| Other current assets | 140 | 649 | |||||||||
| Total current assets | 105,239 | 87,055 | |||||||||
| Property, plant and equipment | 1,181,003 | 1,180,819 | |||||||||
| Less: accumulated depreciation, amortization and impairment | (249,838) | (240,877) | |||||||||
| Total property, plant and equipment, net | 931,165 | 939,942 | |||||||||
| Operating lease right-of-use assets | 1,403 | 1,643 | |||||||||
| Other assets | 3,514 | 2,053 | |||||||||
| Total assets | $ | 1,041,321 | $ | 1,030,693 | |||||||
| LIABILITIES AND EQUITY | |||||||||||
| Current liabilities | |||||||||||
| Accounts payable | $ | 1,021 | $ | 2,226 | |||||||
| Accounts payable – Oasis Petroleum | 27,264 | 28,074 | |||||||||
| Accrued liabilities | 22,344 | 17,931 | |||||||||
| Accrued interest payable | 496 | 360 | |||||||||
| Current operating lease liabilities | 954 | 945 | |||||||||
| Other current liabilities | 471 | 471 | |||||||||
| Total current liabilities | 52,550 | 50,007 | |||||||||
| Long-term debt | 674,238 | 450,000 | |||||||||
| Asset retirement obligations | 791 | 774 | |||||||||
| Operating lease liabilities | 491 | 733 | |||||||||
| Other liabilities | 5,403 | 5,521 | |||||||||
| Total liabilities | 733,473 | 507,035 | |||||||||
| Equity | |||||||||||
| Limited partners | |||||||||||
Common units (48,627,680 and 20,061,366 issued and outstanding at March 31, 2021 and December 31, 2020, respectively) | 307,848 | 193,536 | |||||||||
Subordinated units (Zero units issued and outstanding at March 31, 2021 and 13,750,000 units issued and outstanding at December 31, 2020) | — | 44,030 | |||||||||
| General Partner | — | 1,027 | |||||||||
| Total partners’ equity | 307,848 | 238,593 | |||||||||
| Non-controlling interests | — | 285,065 | |||||||||
| Total equity | 307,848 | 523,658 | |||||||||
| Total liabilities and equity | $ | 1,041,321 | $ | 1,030,693 | |||||||
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OASIS MIDSTREAM PARTNERS LP
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
| Three Months Ended March 31, | |||||||||||
| 2021 | 2020 | ||||||||||
| (In thousands, except per unit data) | |||||||||||
| Revenues | |||||||||||
| Midstream services – Oasis Petroleum | $ | 67,163 | $ | 81,993 | |||||||
| Midstream services – third parties | 900 | 3,846 | |||||||||
| Product sales – Oasis Petroleum | 32,281 | 20,788 | |||||||||
| Product sales – third parties | 29 | — | |||||||||
| Total revenues | 100,373 | 106,627 | |||||||||
| Operating expenses | |||||||||||
| Costs of product sales | 22,776 | 8,432 | |||||||||
| Operating and maintenance | 13,106 | 16,840 | |||||||||
| Depreciation and amortization | 8,985 | 10,197 | |||||||||
| Impairment | — | 101,767 | |||||||||
| General and administrative | 8,450 | 8,451 | |||||||||
| Total operating expenses | 53,317 | 145,687 | |||||||||
| Operating income (loss) | 47,056 | (39,060) | |||||||||
| Other expenses | |||||||||||
| Interest expense, net of capitalized interest | (4,061) | (30,257) | |||||||||
| Other expense | (69) | (42) | |||||||||
| Total other expense, net | (4,130) | (30,299) | |||||||||
| Net income (loss) | 42,926 | (69,359) | |||||||||
| Less: Net income attributable to non-controlling interests | 17,025 | 2,040 | |||||||||
| Net income (loss) attributable to Oasis Midstream Partners LP | 25,901 | (71,399) | |||||||||
| Less: Net income attributable to General Partner | — | 1,008 | |||||||||
| Net income (loss) attributable to limited partners | $ | 25,901 | $ | (72,407) | |||||||
| Earnings (loss) per limited partner unit | |||||||||||
| Common units – basic | $ | 0.72 | $ | (2.14) | |||||||
| Common units – diluted | 0.72 | (2.14) | |||||||||
| Weighted average number of limited partner units outstanding | |||||||||||
| Common units – basic | 22,052 | 20,041 | |||||||||
| Common units – diluted | 22,056 | 20,041 | |||||||||
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Non-GAAP Financial Measures
Cash Interest, Adjusted EBITDA and DCF are supplemental non-GAAP financial measures that are used by management and external users of the Partnership’s financial statements, such as industry analysts, investors, lenders and rating agencies. These non-GAAP financial measures should not be considered in isolation or as a substitute for interest expense, net income, operating income, net cash provided by operating activities or any other measures prepared under GAAP. Because Cash Interest, Adjusted EBITDA and DCF exclude some but not all items that affect interest expense, net income and net cash provided by operating activities and may vary among companies, the amounts presented may not be comparable to similar metrics of other companies.
Cash Interest
Cash Interest is defined 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 GAAP. Management believes that the presentation of Cash Interest provides useful additional information to investors and analysts for assessing the interest charges incurred on the Partnership’s debt, excluding non-cash amortization, and the Partnership’s ability to maintain compliance with its 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 March 31, | |||||||||||
| 2021 | 2020 | ||||||||||
| (In thousands) | |||||||||||
| Interest expense, net of capitalized interest | $ | 4,061 | $ | 30,257 | |||||||
| Capitalized interest | — | 249 | |||||||||
| Amortization of deferred financing costs | (1,333) | (271) | |||||||||
| Cash Interest | $ | 2,728 | $ | 30,235 | |||||||
Less: Cash Interest attributable to non-controlling interests(1) | (3) | (3) | |||||||||
| Cash Interest attributable to Oasis Midstream Partners LP | $ | 2,725 | $ | 30,232 | |||||||
__________________
(1)Prior to the closing of the Simplification on March 30, 2021.
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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”) and Free Cash Flow (“FCF”)
DCF and FCF are supplemental non-GAAP financial measures that are 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. The Partnership defines FCF as DCF less expansion capital expenditures attributable to the Partnership and unitholder distributions. DCF and FCF should not be considered alternatives 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 and FCF provide 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 and FCF are net income and net cash provided by operating activities.
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The following table presents reconciliations of the GAAP financial measures of net income (loss) and net cash provided by operating activities to the non-GAAP financial measures of Adjusted EBITDA, DCF and FCF for the periods presented:
| Three Months Ended March 31, | |||||||||||
| 2021 | 2020 | ||||||||||
| (In thousands) | |||||||||||
| Net income (loss) | $ | 42,926 | $ | (69,359) | |||||||
| Depreciation and amortization | 8,985 | 10,197 | |||||||||
| Impairment | — | 101,767 | |||||||||
| Equity-based compensation expenses | 487 | 66 | |||||||||
| Interest expense, net of capitalized interest | 4,061 | 30,257 | |||||||||
| Adjusted EBITDA | 56,459 | 72,928 | |||||||||
Less: Adjusted EBITDA attributable to non-controlling interests(1) | 20,572 | 26,538 | |||||||||
| Adjusted EBITDA attributable to Oasis Midstream Partners LP | 35,887 | 46,390 | |||||||||
| Cash interest attributable to Oasis Midstream Partners LP | 2,725 | 30,232 | |||||||||
| Maintenance capital expenditures attributable to Oasis Midstream Partners LP | 174 | 1,433 | |||||||||
| Distributable Cash Flow | 32,988 | 14,725 | |||||||||
| Expansion capital expenditures attributable to Oasis Midstream Partners LP | 231,314 | 15,566 | |||||||||
| LP distributions | 18,267 | 18,258 | |||||||||
| GP distributions | 1,027 | 1,027 | |||||||||
| Free Cash Flow | $ | (217,620) | $ | (20,126) | |||||||
| Net cash provided by operating activities | $ | 39,441 | $ | 61,665 | |||||||
| Interest expense, net of capitalized interest | 4,061 | 30,257 | |||||||||
| Changes in working capital | 14,290 | (18,723) | |||||||||
| Other non-cash adjustments | (1,333) | (271) | |||||||||
| Adjusted EBITDA | 56,459 | 72,928 | |||||||||
Less: Adjusted EBITDA attributable to non-controlling interests(1) | 20,572 | 26,538 | |||||||||
| Adjusted EBITDA attributable to Oasis Midstream Partners LP | 35,887 | 46,390 | |||||||||
| Cash interest attributable to Oasis Midstream Partners LP | 2,725 | 30,232 | |||||||||
| Maintenance capital expenditures attributable to Oasis Midstream Partners LP | 174 | 1,433 | |||||||||
| Distributable Cash Flow | 32,988 | 14,725 | |||||||||
| Expansion capital expenditures attributable to Oasis Midstream Partners LP | 231,314 | 15,566 | |||||||||
| LP distributions | 18,267 | 18,258 | |||||||||
| GP distributions | 1,027 | 1,027 | |||||||||
| Free Cash Flow | $ | (217,620) | $ | (20,126) | |||||||
| Distributions declared | |||||||||||
| Limited partners | $ | 26,745 | $ | 18,258 | |||||||
| Incentive distribution rights | — | 1,027 | |||||||||
| Total distributions | $ | 26,745 | $ | 19,285 | |||||||
| DCF coverage ratio | 1.2 | x | 0.8 | x | |||||||
__________________
(1)Prior to the closing of the Simplification on March 30, 2021.
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