HOUSTON, Nov. 5, 2019 /PRNewswire/ -- Oasis Midstream Partners LP (NYSE: OMP) ("OMP" or the "Partnership") today announced financial and operating results for the third quarter of 2019.
Highlights
- Declared the quarterly cash distribution of $0.515 per unit for 3Q 2019, an approximate 5% increase from 2Q 2019.
- Net income was $55.3 million and net cash from operating activities was $58.1 million in 3Q 2019.
- Delivered $68.9 million of Adjusted EBITDA(1) and $42.0 million of net Adjusted EBITDA to the Partnership(1) in 3Q 2019.
- Generated $35.7 million of DCF(1) in 3Q 2019, resulting in distribution coverage of 2.0x. Distribution coverage exceeded the top-end of 3Q 2019 guidance of 1.8x to 1.9x.
- Continued to sign additional third-party agreements in the Delaware and Williston basins.
- Oasis Petroleum and OMP executed commercial agreements for Panther DevCo, with the assets assigned to OMP in November 2019.
- Water service volumes remain strong. Combined Bobcat and Beartooth water volumes of 198.4 MBowpd in 3Q 2019 increased 1% from 2Q 2019 and exceeded the top-end of 3Q 2019 guidance.
- Exceeded 3Q 2019 guidance related to natural gas processing volumes in Bighorn DevCo. Gas processing volumes increased 17% from 2Q 2019 to 236.0 MMscfpd in 3Q 2019. Third-party gas volumes were approximately 32% of total gas processing volumes and increased 28% from 2Q 2019 to 75.7 MMscfpd 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 financial measures under United States generally accepted accounting principles ("GAAP").
"Oasis Midstream Partners executed extremely well in the third quarter, with the continued ramp up of our gas complex driving record high EBITDA and distribution coverage," said Taylor Reid, Chief Executive Officer of OMP. "We exceeded guidance across most commodity streams and remain on track to deliver a strong fourth quarter of 2019, while growing the distribution 20% year over year. The team has done an exceptional job growing third-party business, which is approximately 20% of our third quarter EBITDA and is projected to be approximately 20% in the fourth quarter as well. Looking forward, OMP stands to benefit from its diversified asset base, growing third-party business and strong operational momentum heading into 2020."
Outlook Update
- Expect 2019 Adjusted EBITDA, net to the Partnership, to be $154 million to $158 million.
- Expect 4Q 2019 distribution coverage of 1.9x to 2.0x.
- Estimate gross Adjusted EBITDA by DevCo in 2019 – Bighorn DevCo: $72 million to $74 million, Bobcat DevCo: $124 million to $127 million, Beartooth DevCo: $64 million to $67 million, and Panther DevCo: less than $1 million due to the updated timing of the assignment.
- Updated 2019 CapEx plan to a range of $197 to $206 million, net to OMP, a 3% decrease compared to prior guidance of $203 million to $214 million. CapEx in 4Q 2019 is expected to increase compared to 3Q 2019 with the closing of the Panther DevCo assignment.
Operational and Financial Update
The following table presents select operational and financial data:
3Q 2019 | ||||||||
OMP | Gross | Net | ||||||
(In millions) | ||||||||
Bighorn DevCo | ||||||||
Operating income | 100 | % | $ | 17.1 | $ | 17.1 | ||
Depreciation and amortization | 100 | % | 3.1 | 3.1 | ||||
Total CapEx | 100 | % | 2.1 | 2.1 | ||||
Bobcat DevCo | ||||||||
Operating income | 34.4 | % | $ | 29.4 | $ | 9.8 | ||
Depreciation and amortization | 34.4 | % | 3.5 | 1.2 | ||||
Total CapEx(2) | 34.4 | % | 22.9 | 22.5 | ||||
Beartooth DevCo | ||||||||
Operating income | 70 | % | $ | 14.1 | $ | 9.9 | ||
Depreciation and amortization | 70 | % | 2.4 | 1.7 | ||||
Total CapEx | 70 | % | 4.1 | 2.8 | ||||
Total OMP | ||||||||
DevCo operating income | $ | 60.6 | $ | 36.8 | ||||
Public company expenses | 0.9 | 0.9 | ||||||
Partnership operating income | 59.7 | 35.9 | ||||||
Depreciation and amortization | 9.0 | 6.0 | ||||||
Equity-based compensation expense | 0.1 | 0.1 | ||||||
Capitalized interest | 0.2 | 0.2 | ||||||
Total CapEx(3) | 29.3 | 27.6 | ||||||
Maintenance CapEx | 2.7 | 1.8 | ||||||
Expansion CapEx | 26.6 | 25.9 | ||||||
__________________ |
(1) Represents OMP's ownership in each DevCo as of September 30, 2019. |
(2) Pursuant to the 2019 Capital Expenditures Arrangement, OMP is funding up to $80.0 million of expansion capital expenditures to Bobcat DevCo that Oasis Petroleum would otherwise be required to contribute during the 2019 calendar year. See "2019 Capital Expenditures Arrangement" below. |
(3) Includes capitalized interest recorded on OMP Operating LLC of $0.2 million for 3Q 2019. |
The following table shows actual volumes for 3Q 2019 and provides volumes guidance for 4Q 2019:
Metric | 3Q 2019 Actual | 4Q 2019 Guidance | ||||
Bighorn DevCo | ||||||
Crude oil service volumes | MBopd | 47.0 | 39 - 44 | |||
Natural gas service volumes | MMscfpd | 236.0 | 240 - 250 | |||
Bobcat DevCo | ||||||
Crude oil service volumes | MBopd | 36.9 | 34 - 36 | |||
Natural gas service volumes | MMscfpd | 277.7 | 280 - 295 | |||
Water service volumes | MBowpd | 54.5 | 48 - 50 | |||
Beartooth DevCo | ||||||
Water service volumes | MBowpd | 143.9 | 120 - 140 |
2019 Capital Expenditures Arrangement
On February 22, 2019, the Partnership entered into a capital expenditures arrangement with Oasis Petroleum (the "2019 Capital Expenditures Arrangement"). Pursuant to this arrangement, in exchange for increasing its percentage ownership interest in Bobcat DevCo, the Partnership will cover up to $80.0 million of the capital contributions that Oasis Petroleum would otherwise be required to contribute to Bobcat DevCo during the 2019 calendar year. This arrangement provides an opportunity for the Partnership to increase its scale in an accretive manner while lowering the capital requirements of its sponsor. During the nine months ended September 30, 2019, the Partnership made capital contributions to Bobcat DevCo pursuant to the 2019 Capital Expenditures Arrangement of $66.2 million, and the Partnership's ownership interest in Bobcat DevCo increased from 25% as of December 31, 2018 to 34.4% as of September 30, 2019. The Partnership's average ownership interest in Bobcat DevCo during the third quarter of 2019 was approximately 33%.
Liquidity and CapEx
As of September 30, 2019, the Partnership had cash and cash equivalents of $4.7 million, $431.0 million of borrowings outstanding under its revolving credit facility and an $8.2 million outstanding letter of credit. On August 16, 2019, the Partnership entered an amendment to the credit agreement governing its revolving credit facility to (i) increase the aggregate amount of commitments from $475.0 million to $575.0 million and (ii) provide for the ability to further increase commitments to $775.0 million. The Partnership's unused borrowing capacity as of September 30, 2019 was $135.8 million.
Quarterly Distribution
On August 28, 2019, the Partnership paid the quarterly cash distribution of $0.49 per unit related to the second quarter of 2019.
On November 5, 2019, the Board of Directors of the General Partner declared the quarterly cash distribution for the third quarter of 2019 of $0.515 per unit. This distribution will be payable on November 27, 2019 to unitholders of record as of November 15, 2019. In addition, the General Partner will receive a cash distribution of $0.7 million attributable to the incentive distribution rights related to the earnings for the third quarter of 2019.
Delaware Midstream Assets
Effective on November 1, 2019, Oasis Petroleum agreed to assign to Panther DevCo LLC ("Panther DevCo"), an indirect, wholly-owned subsidiary of the Partnership, certain crude oil gathering and produced water gathering and disposal assets (the "Delaware Midstream Assets") under development to support Oasis Petroleum's production in the Delaware Basin. The Partnership has agreed to reimburse Oasis Petroleum for all capital expenditures previously made with respect to the Delaware Midstream Assets, which the Partnership expects to fund with borrowings under its revolving credit facility. Also effective November 1, 2019, Panther DevCo entered into long-term commercial agreements with Oasis Petroleum, including a Crude Oil Gathering Agreement and a Produced Water Gathering and Disposal Agreement, for crude oil and produced water midstream services in the Delaware Basin, which generally contain terms similar to those contained in the existing commercial agreements between the Partnership and Oasis Petroleum for midstream services in the Williston Basin.
Qualified Notice
This release is intended to be a qualified notice under Treasury Regulation Section 1.1446-4(b). Brokers and nominees should treat one hundred percent (100.0%) of the Partnership's distributions to non-U.S. investors as being attributable to income that is effectively connected with a United States trade or business. Accordingly, the Partnership's distributions to non-U.S. investors are subject to federal income tax withholding at the highest applicable effective tax rate.
Conference Call Information
Investors, analysts and other interested parties are invited to listen to the webcast and call:
Date: | Wednesday, November 6, 2019 | |
Time: | 11:30 a.m. Central Time | |
Live Webcast: | ||
Website: |
Sell-side analysts with a question may use the following dial-in:
Dial-in: | 888-317-6003 | |
Intl. Dial in: | 412-317-6061 | |
Conference ID: | 1033646 |
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, November 13, 2019 by dialing:
Replay dial-in: | 877-344-7529 | |
Intl. replay: | 412-317-0088 | |
Replay code: | 10136377 |
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, the Partnership's ability to integrate acquisitions into its existing business, the ability to integrate the Delaware Midstream Assets and realize the anticipated benefits therefrom, changes in crude oil and natural gas prices, weather and environmental conditions, the timing of planned capital expenditures, availability of acquisitions, uncertainties in the estimates of proved reserves and forecasted production results of the Partnership's customers, operational factors affecting the commencement or maintenance of producing wells, the condition of the capital markets generally, as well as the Partnership's ability to access them, the proximity to and capacity of transportation facilities, and uncertainties regarding environmental regulations or litigation and other legal or regulatory developments affecting the Partnership's business and other important factors. Should one or more of these risks or uncertainties occur, or should underlying assumptions prove incorrect, the Partnership's actual results and plans could differ materially from those expressed in any forward-looking statements.
Any forward-looking statement speaks only as of the date on which such statement is made and the Partnership undertakes no obligation to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by applicable law.
About Oasis Midstream Partners LP
Oasis Midstream Partners LP is a growth-oriented, fee-based master limited partnership formed by its sponsor, Oasis Petroleum Inc. to own, develop, operate and acquire a diversified portfolio of midstream assets in North America that are integral to the crude oil and natural gas operations of Oasis Petroleum Inc. and are strategically positioned to capture volumes from other producers. For more information, please visit the Partnership's website at www.oasismidstream.com.
OASIS MIDSTREAM PARTNERS LP CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) | |||||
September 30, 2019 | December 31, 2018 | ||||
(In thousands, except unit data) | |||||
ASSETS | |||||
Current assets | |||||
Cash and cash equivalents | $ | 4,672 | $ | 6,649 | |
Accounts receivable | 7,793 | 2,481 | |||
Accounts receivable – Oasis Petroleum | 77,393 | 80,805 | |||
Prepaid expenses | 964 | 1,418 | |||
Other current assets | 1,810 | 22 | |||
Total current assets | 92,632 | 91,375 | |||
Property, plant and equipment | 1,089,696 | 933,155 | |||
Less: accumulated depreciation and amortization | (89,129) | (62,730) | |||
Total property, plant and equipment, net | 1,000,567 | 870,425 | |||
Operating lease right-of-use assets | 5,945 | — | |||
Other assets | 3,383 | 2,452 | |||
Total assets | $ | 1,102,527 | $ | 964,252 | |
LIABILITIES AND EQUITY | |||||
Current liabilities | |||||
Accounts payable | $ | 2,855 | $ | 2,180 | |
Accounts payable – Oasis Petroleum | 26,769 | 33,014 | |||
Accrued liabilities | 47,533 | 57,657 | |||
Accrued interest payable | 273 | 442 | |||
Current operating lease liabilities | 2,973 | — | |||
Other current liabilities | 9 | — | |||
Total current liabilities | 80,412 | 93,293 | |||
Long-term debt | 431,000 | 318,000 | |||
Asset retirement obligations | 1,596 | 1,514 | |||
Operating lease liabilities | 2,979 | — | |||
Other liabilities | 557 | — | |||
Total liabilities | 516,544 | 412,807 | |||
Equity | |||||
Limited partners | |||||
Common units (20,045,196 and 20,029,026 issued and outstanding at September 30, 2019 and December 31, 2018, respectively) | 213,468 | 192,581 | |||
Subordinated units (13,750,000 units issued and outstanding at September 30, 2019 and December 31, 2018) | 57,989 | 45,937 | |||
General Partner | 745 | 112 | |||
Total partners' equity | 272,202 | 238,630 | |||
Non-controlling interests | 313,781 | 312,815 | |||
Total equity | 585,983 | 551,445 | |||
Total liabilities and equity | $ | 1,102,527 | $ | 964,252 | |