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| 8-K - 8-K - Oasis Petroleum Inc. | oas-6302013pressrelease.htm |
Exhibit 99.1
Oasis Petroleum Inc. Announces Quarter Ending June 30, 2013 Earnings
Houston, Texas — August 6, 2013 — Oasis Petroleum Inc. (NYSE: OAS) (“Oasis” or the “Company”) today announced financial results for the quarter ended June 30, 2013.
Highlights for the second quarter of 2013, include:
• | Increased average daily production to 30,171 barrels of oil equivalent per day (“Boepd”), a 48% increase over the second quarter of 2012. Average daily production was relatively flat as compared to the first quarter of 2013 and within the Company’s guidance range of 29,000 to 31,000 Boepd. |
• | Increased revenue to $254.6 million in the second quarter of 2013, an increase of $105.5 million over the second quarter of 2012 and a sequential increase of $6.3 million over the first quarter of 2013. |
• | Completed and placed on production 20 gross (14.0 net) operated wells in the second quarter of 2013. |
• | Began pad drilling operations, which increased the number of gross operated wells waiting on completion to 37 as of the end of the second quarter of 2013. |
• | Grew Adjusted EBITDA to $185.5 million, an increase of $77.0 million over the second quarter of 2012 and a sequential decrease of $5.9 million over the first quarter of 2013. For a definition of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to net income and net cash provided by operating activities, see “Non-GAAP Financial Measures” below. |
“Oasis continues to deliver on expectations, as we managed the logistics of pad drilling operations and spring break up during the second quarter,” said Thomas B. Nusz. “We completed 20 gross operated wells with an average working interest of 70%, which is in line with what we projected. This allowed us to keep production relatively flat quarter over quarter. We completed 14.7 net operated and non-operated wells in the second quarter of 2013, while our backlog of wells waiting on completion grew significantly as we began pad drilling during the quarter. Through pad drilling and other operational efficiencies, we drove down operated well costs on the wells completed in the second quarter of 2013 to approximately $8.2 million, excluding the impact of Oasis Well Services (“OWS”). OWS reduced capital expenditures for the Company by $6.4 million in the second quarter of 2013, which equates to approximately $0.4 million per net operated well completed. We also recently picked up two additional drilling rigs and now have 11 rigs operating to capitalize on the efficiencies of pad development and favorable weather conditions.”
Mr. Nusz added, “Completion activity should increase in the third quarter as we work off the backlog of wells waiting on completion that resulted from pad drilling activities. We plan on completing 40 to 45 gross operated wells and expect production to range between 31,500 Boepd and 34,500 Boepd in the third quarter of 2013. We are also tightening our full year production guidance range to 31,500 Boepd to 33,500 Boepd. Lastly, based on encouraging data from our lower bench core work, we will spud two wells this quarter into the lower benches of the Three Forks - one in Indian Hills and one in North Cottonwood.”
Operational and Financial Update
Average daily production by project area is listed in the following table:
Quarter Ended: | |||||||||
6/30/2013 | 3/31/2013 | 6/30/2012 | |||||||
Average daily production (Boepd) | |||||||||
West Williston | 18,257 | 19,021 | 13,715 | ||||||
East Nesson | 9,312 | 8,384 | 4,494 | ||||||
Sanish | 2,602 | 2,748 | 2,144 | ||||||
Total | 30,171 | 30,153 | 20,353 | ||||||
Percent Oil | 90.6 | % | 91.5 | % | 90.8 | % | |||
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The following table describes the Company’s producing wells by project area in the Williston Basin as of June 30, 2013:
Bakken/Three Forks Producing Wells | ||||||||||||||||||||||||
West Williston | East Nesson | Sanish | Total Williston Basin | |||||||||||||||||||||
Gross | Net | Gross | Net | Gross | Net | Gross | Net | |||||||||||||||||
Producing on or before 3/31/2013: (1) | ||||||||||||||||||||||||
Operated | 177 | 143.1 | 84 | 70.5 | — | — | 261 | 213.6 | ||||||||||||||||
Non-Operated | 55 | 4.6 | 82 | 6.3 | 278 | 22.4 | 415 | 33.3 | ||||||||||||||||
Production started in Q2 2013: | ||||||||||||||||||||||||
Operated | 10 | 6.7 | 10 | 7.3 | — | — | 20 | 14.0 | ||||||||||||||||
Non-Operated | — | — | 8 | 0.4 | 12 | 0.3 | 20 | 0.7 | ||||||||||||||||
Total Producing Wells on 6/30/2013: | ||||||||||||||||||||||||
Operated | 187 | 149.8 | 94 | 77.8 | — | — | 281 | 227.6 | ||||||||||||||||
Non-Operated | 55 | 4.6 | 90 | 6.7 | 290 | 22.7 | 435 | 34.0 | ||||||||||||||||
(1) | Well counts include changes that occurred in the current reporting period for wells producing on or before March 31, 2013. |
Additionally, the Company also has a backlog of gross operated wells waiting on completion (“WOC”) and wells that were drilling as of June 30, 2013, as shown below:
Gross Operated Wells | ||||||
WOC | Drilling | |||||
West Williston | 18 | 5 | ||||
East Nesson | 19 | 6 | ||||
Total | 37 | 11 | ||||
The Company’s average price per barrel of oil, without realized derivatives, was $91.15 in the second quarter of 2013, compared to $82.36 in the second quarter of 2012 and $93.33 in the first quarter of 2013. The Company’s average price differential compared to NYMEX West Texas Intermediate (“WTI”) crude oil index prices was 3% in the second quarter of 2013, compared to 12% in the second quarter of 2012 and 1% in the first quarter of 2013. As the premium at coastal markets contracted each month during the second quarter of 2013, the Company's price differentials relative to WTI increased. More recently, as pricing on pipelines has become more attractive than pricing on rail, the Company has increased the volumes of its crude oil transported by pipeline.
The Company's revenues are detailed in the following table:
Quarter Ended: | ||||||||||||
6/30/2013 | 3/31/2013 | 6/30/2012 | ||||||||||
Revenues ($ in thousands): | ||||||||||||
Oil | $ | 226,848 | $ | 231,675 | $ | 138,559 | ||||||
Bulk oil sale | 5,777 | — | — | |||||||||
Natural gas | 9,217 | 9,976 | 6,644 | |||||||||
Well services (OWS) | 11,461 | 5,715 | 3,861 | |||||||||
Midstream (OMS) | 1,279 | 938 | — | |||||||||
Total revenues | $ | 254,582 | $ | 248,304 | $ | 149,064 | ||||||
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The Company's operating expenses are detailed in the following table:
Quarter Ended: | ||||||||||||
6/30/2013 | 3/31/2013 | 6/30/2012 | ||||||||||
Operating expenses ($ in thousands): | ||||||||||||
Lease operating expenses (LOE) | $ | 18,266 | $ | 19,489 | $ | 12,029 | ||||||
Well services (OWS) | 6,420 | 2,682 | 1,207 | |||||||||
Midstream (OMS) | 224 | 232 | — | |||||||||
Marketing, transportation and gathering expenses (1) | 4,977 | 3,340 | 1,970 | |||||||||
Bulk oil purchase | 5,777 | — | — | |||||||||
Non-cash valuation charge | 25 | 49 | — | |||||||||
Total operating expenses | $ | 35,689 | $ | 25,792 | $ | 15,206 | ||||||
Operating expenses ($ per Boe): | ||||||||||||
Lease operating expenses (LOE) | $ | 6.65 | $ | 7.18 | $ | 6.49 | ||||||
Marketing, transportation and gathering expenses (1) | $ | 1.82 | $ | 1.25 | $ | 1.06 | ||||||
(1) | Excludes bulk oil purchase and non-cash valuation charge. |
The sequential quarter-over-quarter decrease in lease operating expenses (“LOE”) per barrel of oil equivalent (“BOE”) was primarily due to additional cost savings from Oasis Midstream Services (“OMS”) in the second quarter of 2013. The formation of OMS in the first quarter of 2013 resulted in a portion of income related to salt water disposal activity being included in well services and midstream revenues, rather than as a reduction to LOE. Excluding the impact of OMS, LOE would have been $5.90 per Boe and $6.58 per Boe in the second and first quarter of 2013, respectively, compared to $6.49 per Boe in the second quarter of 2012.
The increase in marketing, transportation and gathering expenses from the first quarter of 2013 to the second quarter of 2013 is due to a $5.8 million bulk oil purchase coupled with higher operated volumes flowing through third party oil gathering pipelines in the second quarter of 2013. Currently, the Company is flowing approximately 85% of its gross operated oil production through these gathering systems. 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 our oil price differential for sales at the wellhead.
Production taxes as a percentage of oil and gas revenues were 9.1% in the second quarter of 2013, 9.5% in the second quarter of 2012 and 9.1% in the first quarter of 2013. The Company’s production tax rate decreased in the second quarter of 2013 compared to the second quarter of 2012, primarily as a result of additional new Montana wells subject to lower incentivized production tax rates.
Depreciation, depletion and amortization expenses (“DD&A”) totaled $66.8 million in the second quarter of 2013, $44.2 million in the second quarter of 2012 and $66.3 million in the first quarter of 2013. DD&A was $24.33 per Boe in the second quarter of 2013, $23.87 per Boe in the second quarter of 2012 and $24.42 per Boe in the first quarter of 2013.
General and administrative (“G&A”) expenses totaled $16.7 million in the second quarter of 2013, $13.5 million in the second quarter of 2012 and $13.9 million in the first quarter of 2013. The overall increase in G&A expenses from the first quarter of 2013 to the second quarter of 2013 was primarily due to increased employee compensation expenses due to our organizational growth and increased amortization of our restricted stock awards and performance share units. G&A expenses were $6.07 per Boe in the second quarter of 2013, $7.31 per Boe in the second quarter of 2012 and $5.10 per Boe in the first quarter of 2013. Amortization of stock-based compensation, which is included in the aggregate G&A expenses, was $3.1 million, or $1.12 per Boe, in the second quarter of 2013 as compared to $2.3 million, or $1.25 per Boe, in the second quarter of 2012 and $2.3 million, or $0.84 per Boe, in the first quarter of 2013.
The Company’s derivative activities are detailed in the following table:
Quarter Ended: | ||||||||||||
6/30/2013 | 3/31/2013 | 6/30/2012 | ||||||||||
Derivative activities (1) ($ in thousands) | ||||||||||||
Derivative settlements | $ | 1,246 | $ | 1,686 | $ | (1,174 | ) | |||||
Non-cash change in unrealized gain (loss) on derivative instruments | 11,345 | (16,298 | ) | 75,769 | ||||||||
Net gain (loss) on derivative instruments | $ | 12,591 | $ | (14,612 | ) | $ | 74,595 | |||||
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(1) | The Company's derivative instruments do not qualify for and were not designated as hedging instruments for accounting purposes. |
The Company recorded non-cash charges for the impairment of oil and natural gas properties of $0.2 million in the second quarter of 2013 related to unproved property leases that expired or have been forecasted to expire under current drilling plans, as compared to $2.2 million in the second quarter of 2012 and $0.5 million in the first quarter of 2013.
Interest expense increased $7.3 million to $21.4 million for the second quarter of 2013 compared to the second quarter of 2012 and decreased $0.2 million compared to the first quarter of 2013. The $7.3 million increase was the result of additional interest expense from the Company’s issuance of 6.875% senior unsecured notes in July 2012. Capitalized interest totaled $1.1 million for the second quarter of 2013 and $0.8 million for the second quarter of 2012.
Income tax expense was $37.8 million for the three months ended June 30, 2013, resulting in an effective tax rate of 36.0%. The Company’s income tax expense for the three months ended June 30, 2012 was recorded at 37.4% of pre-tax net income. The Company’s effective tax rate is expected to continue to closely approximate the statutory rate applicable to the U.S. and the blended rate for each of the states in which the Company conducts business.
Adjusted EBITDA for the second quarter of 2013 was $185.5 million, an increase of $77.0 million, or 71%, over the second quarter of 2012 of $108.5 million, and a 3% decrease from the first quarter of 2013 of $191.4 million. For a definition of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to net income and net cash provided by operating activities, see “Non-GAAP Financial Measures” below.
For the second quarter of 2013, the Company reported net income of $67.1 million, or $0.72 per diluted share, as compared to net income of $76.0 million, or $0.82 per diluted share, for the second quarter of 2012. The Company’s second quarter 2013 results were impacted by several non-cash items, including an $11.3 million unrealized gain on derivative instruments and a $0.2 million impairment of oil and gas properties. Excluding these items and their tax effect, the second quarter 2013 Adjusted Net Income (non-GAAP) was $60.1 million, or $0.65 per diluted share. Excluding similar non-cash items and their tax effect, Adjusted Net Income (non-GAAP) for the second quarter of 2012 was $30.0 million, or $0.33 per diluted share. For a definition of Adjusted Net Income and a reconciliation of net income to Adjusted Net Income, see “Non-GAAP Financial Measures” below.
Capital Expenditures
The following table depicts the Company’s exploration and production ("E&P") capital expenditures ("CapEx") by project area and total CapEx by category:
1Q 2013 | 2Q 2013 | YTD 2013 | |||||||||
CapEx ($ in thousands): | |||||||||||
E&P CapEx by Project Area | |||||||||||
West Williston | $ | 136,370 | $ | 85,939 | $ | 222,309 | |||||
East Nesson | 82,429 | 92,576 | 175,005 | ||||||||
Sanish | 19,943 | 5,577 | 25,520 | ||||||||
Total E&P CapEx (1) | 238,742 | 184,092 | 422,834 | ||||||||
OWS | 302 | 2,559 | 2,861 | ||||||||
Non E&P (2) | 1,303 | 2,340 | 3,643 | ||||||||
Total Company CapEx (3) | $ | 240,347 | $ | 188,991 | $ | 429,338 | |||||
(1) | Total E&P CapEx include $6.0 million for OMS, primarily related to salt water disposal systems. |
(2) | Non-E&P CapEx include such items as administrative capital and capitalized interest. |
(3) | CapEx reflected in the table above differ 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 accrued liabilities for capital expenditures, while the amounts presented in the statement of cash flows are presented on a cash basis. |
Liquidity
On June 30, 2013, Oasis had total cash and cash equivalents of $161.6 million and no short-term investments. As of June 30, 2013, the Company had no outstanding indebtedness and $2.2 million of outstanding letters of credit issued under its revolving credit facility, resulting in an unused borrowing base capacity of $897.8 million. On April 5, 2013, the Company entered into a
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second amended and restated credit agreement (the “Second Amended Credit Facility”) and completed its semi-annual redetermination of the Company’s borrowing base. Pursuant to the Second Amended Credit Facility, the Company’s borrowing base increased from $750 million to $1,250 million. However, the Company elected to limit the lenders’ aggregate commitment to $900 million. The lenders’ aggregate commitment can be increased to the full $1,250 million borrowing base by increasing the commitment of one or more lenders.
Hedging Activity
As of August 6, 2013, the Company had the following outstanding commodity derivative contracts, all of which are priced off of WTI and settle monthly:
Weighted Average Prices ($/Bbl) | Total | |||||||||||||||||||||||
Current Hedged Volumes | Remaining Term | Sub-Floor | Floor | Ceiling | Swaps | BOPD | Barrels | |||||||||||||||||
2013 | ||||||||||||||||||||||||
Swaps | 5 Months (Aug-Dec) | $ | 95.40 | 8,000 | 1,224,000 | |||||||||||||||||||
Two-way collars | 5 Months (Aug-Dec) | $ | 86.82 | $ | 97.75 | 5,500 | 841,500 | |||||||||||||||||
Three-way collars | 5 Months (Aug-Dec) | $ | 65.92 | $ | 92.45 | $ | 111.45 | 6,130 | 937,890 | |||||||||||||||
Put spread (no ceiling) | 5 Months (Aug-Dec) | $ | 71.03 | $ | 91.03 | 4,870 | 745,110 | |||||||||||||||||
Total 2013 hedges (weighted average) | $ | 68.18 | $ | 90.15 | $ | 104.97 | $ | 95.40 | 24,500 | 3,748,500 | ||||||||||||||
2014 | ||||||||||||||||||||||||
Partial Year | ||||||||||||||||||||||||
Swaps | 6 Months (Jan-Jun) | $ | 97.17 | 1,000 | 181,000 | |||||||||||||||||||
Three-way collars | 6 Months (Jan-Jun) | $ | 70.00 | $ | 90.00 | $ | 103.98 | 2,000 | 362,000 | |||||||||||||||
Full Year | ||||||||||||||||||||||||
Swaps | 12 Months (Jan-Dec) | $ | 93.07 | 3,500 | 1,277,500 | |||||||||||||||||||
Swaps with sub-floor | 12 Months (Jan-Dec) | $ | 70.00 | $ | 92.60 | 6,000 | 2,190,000 | |||||||||||||||||
Two-way collars | 12 Months (Jan-Dec) | $ | 90.00 | $ | 94.90 | 1,000 | 365,000 | |||||||||||||||||
Three-way collars | 12 Months (Jan-Dec) | $ | 70.59 | $ | 90.59 | $ | 105.25 | 8,500 | 3,102,500 | |||||||||||||||
Total 2014 hedges (weighted average) | $ | 70.32 | $ | 90.48 | $ | 104.14 | $ | 92.99 | 7,478,000 | |||||||||||||||
Implied total volume hedged (BOPD) for balance of 2014 | 20,488 | |||||||||||||||||||||||
Conference Call Information
Investors, analysts and other interested parties are invited to listen to the conference call:
Date: | Wednesday, August 7, 2013 | |
Time: | 10:00 a.m. Central Time | |
Dial-in: | 855-384-2828 | |
Intl. Dial in: | 706-634-0151 | |
Conference ID: | 18477148 | |
Website: | www.oasispetroleum.com | |
A recording of the conference call will be available beginning at 1:00 p.m. Central Time on the day of the call and will be available until Wednesday, August 14, 2013 by dialing:
Replay dial-in: | 855-859-2056 | |
Intl. replay: | 404-537-3406 | |
Conference ID: | 18477148 | |
The conference call will also be available for replay at www.oasispetroleum.com.
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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.
Contact:
Oasis Petroleum Inc.
Richard Robuck, (281) 404-9600
Director – Finance
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Oasis Petroleum Inc.
Condensed Consolidated Balance Sheet
(Unaudited)
June 30, 2013 | December 31, 2012 | ||||||
(In thousands, except share data) | |||||||
ASSETS | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 161,601 | $ | 213,447 | |||
Short-term investments | — | 25,891 | |||||
Accounts receivable — oil and gas revenues | 130,518 | 110,341 | |||||
Accounts receivable — joint interest partners | 92,785 | 99,194 | |||||
Inventory | 16,385 | 20,707 | |||||
Prepaid expenses | 6,121 | 1,770 | |||||
Advances to joint interest partners | 1,319 | 1,985 | |||||
Derivative instruments | 7,353 | 19,016 | |||||
Other current assets | 5 | 335 | |||||
Total current assets | 416,087 | 492,686 | |||||
Property, plant and equipment | |||||||
Oil and gas properties (successful efforts method) | 2,675,902 | 2,348,128 | |||||
Other property and equipment | 144,518 | 49,732 | |||||
Less: accumulated depreciation, depletion, amortization and impairment | (514,567 | ) | (391,260 | ) | |||
Total property, plant and equipment, net | 2,305,853 | 2,006,600 | |||||
Derivative instruments | 10,554 | 4,981 | |||||
Deferred costs and other assets | 25,650 | 24,527 | |||||
Total assets | $ | 2,758,144 | $ | 2,528,794 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities | |||||||
Accounts payable | $ | 30,682 | $ | 12,491 | |||
Advances from joint interest partners | 15,583 | 21,176 | |||||
Revenues and production taxes payable | 102,661 | 71,553 | |||||
Accrued liabilities | 180,988 | 189,863 | |||||
Accrued interest payable | 29,133 | 30,096 | |||||
Derivative instruments | — | 1,048 | |||||
Deferred income taxes | 1,030 | 4,558 | |||||
Other current liabilities | 688 | — | |||||
Total current liabilities | 360,765 | 330,785 | |||||
Long-term debt | 1,200,000 | 1,200,000 | |||||
Asset retirement obligations | 26,268 | 22,956 | |||||
Derivative instruments | 291 | 380 | |||||
Deferred income taxes | 249,172 | 177,671 | |||||
Other liabilities | 2,435 | 1,997 | |||||
Total liabilities | 1,838,931 | 1,733,789 | |||||
Commitments and contingencies | |||||||
Stockholders’ equity | |||||||
Common stock, $0.01 par value; 300,000,000 shares authorized; 93,693,829 issued and 93,554,121 outstanding at June 30, 2013; 93,432,712 issued and 93,303,298 outstanding at December 31, 2012 | 925 | 925 | |||||
Treasury stock, at cost; 139,708 and 129,414 shares at June 30, 2013 and December 31, 2012, respectively | (4,160 | ) | (3,796 | ) | |||
Additional paid-in-capital | 663,545 | 657,943 | |||||
Retained earnings | 258,903 | 139,933 | |||||
Total stockholders’ equity | 919,213 | 795,005 | |||||
Total liabilities and stockholders’ equity | $ | 2,758,144 | $ | 2,528,794 | |||
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Oasis Petroleum Inc.
Condensed Consolidated Statement of Operations
(Unaudited)
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
(In thousands, except per share data) | ||||||||||||||||
Revenues | ||||||||||||||||
Oil and gas revenues | $ | 241,842 | $ | 145,203 | $ | 483,493 | $ | 283,109 | ||||||||
Well services and midstream revenues | 12,740 | 3,861 | 19,393 | 4,521 | ||||||||||||
Total revenues | 254,582 | 149,064 | 502,886 | 287,630 | ||||||||||||
Expenses | ||||||||||||||||
Lease operating expenses | 18,266 | 12,029 | 37,755 | 21,845 | ||||||||||||
Well services and midstream operating expenses | 6,644 | 1,207 | 9,558 | 1,684 | ||||||||||||
Marketing, transportation and gathering expenses | 10,779 | 1,970 | 14,168 | 4,539 | ||||||||||||
Production taxes | 21,397 | 13,720 | 43,486 | 26,986 | ||||||||||||
Depreciation, depletion and amortization | 66,790 | 44,213 | 133,051 | 83,099 | ||||||||||||
Exploration expenses | 392 | — | 2,249 | 2,835 | ||||||||||||
Impairment of oil and gas properties | 208 | 2,203 | 706 | 2,571 | ||||||||||||
General and administrative expenses | 16,656 | 13,537 | 30,510 | 25,736 | ||||||||||||
Total expenses | 141,132 | 88,879 | 271,483 | 169,295 | ||||||||||||
Operating income | 113,450 | 60,185 | 231,403 | 118,335 | ||||||||||||
Other income (expense) | ||||||||||||||||
Net gain (loss) on derivative instruments | 12,591 | 74,595 | (2,021 | ) | 56,009 | |||||||||||
Interest expense, net of capitalized interest | (21,392 | ) | (14,074 | ) | (42,575 | ) | (27,973 | ) | ||||||||
Other income | 294 | 776 | 1,074 | 1,374 | ||||||||||||
Total other income (expense) | (8,507 | ) | 61,297 | (43,522 | ) | 29,410 | ||||||||||
Income before income taxes | 104,943 | 121,482 | 187,881 | 147,745 | ||||||||||||
Income tax expense | 37,824 | 45,439 | 68,911 | 55,261 | ||||||||||||
Net income | $ | 67,119 | $ | 76,043 | $ | 118,970 | $ | 92,484 | ||||||||
Earnings per share: | ||||||||||||||||
Basic | $ | 0.73 | $ | 0.82 | $ | 1.29 | $ | 1.00 | ||||||||
Diluted | 0.72 | 0.82 | 1.28 | 1.00 | ||||||||||||
Weighted average shares outstanding: | ||||||||||||||||
Basic | 92,399 | 92,176 | 92,387 | 92,153 | ||||||||||||
Diluted | 92,702 | 92,222 | 92,812 | 92,339 | ||||||||||||
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Oasis Petroleum Inc.
Selected Financial and Operational Statistics
(Unaudited)
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Operating results ($ in thousands): | ||||||||||||||||
Revenues | ||||||||||||||||
Oil | $ | 232,625 | $ | 138,559 | $ | 464,300 | $ | 269,935 | ||||||||
Natural gas | 9,217 | 6,644 | 19,193 | 13,174 | ||||||||||||
Well services and midstream | 12,740 | 3,861 | 19,393 | 4,521 | ||||||||||||
Total revenues | 254,582 | 149,064 | 502,886 | 287,630 | ||||||||||||
Production data: | ||||||||||||||||
Oil (MBbls) | 2,489 | 1,682 | 4,971 | 3,156 | ||||||||||||
Natural gas (MMcf) | 1,540 | 1,019 | 2,929 | 1,803 | ||||||||||||
Oil equivalents (MBoe) | 2,746 | 1,852 | 5,459 | 3,457 | ||||||||||||
Average daily production (Boe/d) | 30,171 | 20,353 | 30,162 | 18,993 | ||||||||||||
Average sales prices: | ||||||||||||||||
Oil, without realized derivatives (per Bbl) (1) | $ | 91.15 | $ | 82.36 | $ | 92.24 | $ | 85.04 | ||||||||
Oil, with realized derivatives (per Bbl) (1) (2) | 91.65 | 81.67 | 92.83 | 84.26 | ||||||||||||
Natural gas (per Mcf) (3) | 5.98 | 6.52 | 6.55 | 7.30 | ||||||||||||
Costs and expenses (per Boe of production): | ||||||||||||||||
Lease operating expenses (4) | $ | 6.65 | $ | 6.49 | $ | 6.92 | $ | 6.32 | ||||||||
Marketing, transportation and gathering expenses (5) | 1.82 | 1.06 | 1.54 | 1.31 | ||||||||||||
Production taxes | 7.79 | 7.41 | 7.97 | 7.81 | ||||||||||||
Depreciation, depletion and amortization | 24.33 | 23.87 | 24.37 | 24.04 | ||||||||||||
General and administrative expenses | 6.07 | 7.31 | 5.58 | 7.45 | ||||||||||||
(1) | Average sales prices for oil are calculated using total oil revenues, excluding bulk oil sales, divided by oil production. Bulk oil sales totaled $5.8 million for the three and six months ended June 30, 2013 and $1.5 million for the six months ended June 30, 2012. |
(2) | Realized prices include realized gains or losses on cash settlements for commodity derivatives, which do not qualify for and were not designated as hedging instruments for accounting purposes. |
(3) | Natural gas prices include the value for natural gas and natural gas liquids. |
(4) | For the three and six months ended June 30, 2012, lease operating expenses include midstream income and operating expenses, which are included in well services and midstream revenues and well services and midstream operating expenses, respectively, for the three and six months ended June 30, 2013. |
(5) | Excludes bulk oil purchase and non-cash valuation charge. |
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Oasis Petroleum Inc.
Condensed Consolidated Statement of Cash Flows
(Unaudited)
Six Months Ended June 30, | ||||||||
2013 | 2012 | |||||||
(In thousands) | ||||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 118,970 | $ | 92,484 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation, depletion and amortization | 133,051 | 83,099 | ||||||
Impairment of oil and gas properties | 706 | 2,571 | ||||||
Deferred income taxes | 67,974 | 55,161 | ||||||
Derivative instruments | 2,021 | (56,009 | ) | |||||
Stock-based compensation expenses | 5,371 | 3,898 | ||||||
Debt discount amortization and other | 1,753 | 1,265 | ||||||
Working capital and other changes: | ||||||||
Change in accounts receivable | (13,768 | ) | (26,840 | ) | ||||
Change in inventory | (4,200 | ) | (21,636 | ) | ||||
Change in prepaid expenses | (4,402 | ) | 1,500 | |||||
Change in other current assets | 330 | 490 | ||||||
Change in other assets | — | (7,365 | ) | |||||
Change in accounts payable and accrued liabilities | 48,701 | 40,022 | ||||||
Change in other current liabilities | 688 | 2,470 | ||||||
Change in other liabilities | 612 | 750 | ||||||
Net cash provided by operating activities | 357,807 | 171,860 | ||||||
Cash flows from investing activities: | ||||||||
Capital expenditures | (429,296 | ) | (440,781 | ) | ||||
Derivative settlements | 2,932 | (2,465 | ) | |||||
Redemptions of short-term investments | 25,000 | 19,994 | ||||||
Advances to joint interest partners | 666 | 1,978 | ||||||
Advances from joint interest partners | (5,593 | ) | 19,380 | |||||
Net cash used in investing activities | (406,291 | ) | (401,894 | ) | ||||
Cash flows from financing activities: | ||||||||
Purchases of treasury stock | (364 | ) | (1,206 | ) | ||||
Debt issuance costs | (2,998 | ) | (746 | ) | ||||
Net cash used in financing activities | (3,362 | ) | (1,952 | ) | ||||
Decrease in cash and cash equivalents | (51,846 | ) | (231,986 | ) | ||||
Cash and cash equivalents: | ||||||||
Beginning of period | 213,447 | 470,872 | ||||||
End of period | $ | 161,601 | $ | 238,886 | ||||
Supplemental non-cash transactions: | ||||||||
Change in accrued capital expenditures | $ | (6,085 | ) | $ | 104,486 | |||
Change in asset retirement obligations | 3,441 | 4,185 | ||||||
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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 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 tables present a reconciliation of the non-GAAP financial measure of Adjusted EBITDA to the GAAP financial measures of net income and net cash provided by operating activities, respectively.
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Adjusted EBITDA reconciliation to Net Income ($ in thousands): | ||||||||||||||||
Net income | $ | 67,119 | $ | 76,043 | $ | 118,970 | $ | 92,484 | ||||||||
Net (gain) loss on derivative instruments | (12,591 | ) | (74,595 | ) | 2,021 | (56,009 | ) | |||||||||
Derivative settlements | 1,246 | (1,174 | ) | 2,932 | (2,465 | ) | ||||||||||
Interest expense | 21,392 | 14,074 | 42,575 | 27,973 | ||||||||||||
Depreciation, depletion and amortization | 66,790 | 44,213 | 133,051 | 83,099 | ||||||||||||
Impairment of oil and gas properties | 208 | 2,203 | 706 | 2,571 | ||||||||||||
Exploration expenses | 392 | — | 2,249 | 2,835 | ||||||||||||
Stock-based compensation expenses | 3,082 | 2,307 | 5,371 | 3,898 | ||||||||||||
Income tax expense | 37,824 | 45,439 | 68,911 | 55,261 | ||||||||||||
Other non-cash adjustments | 25 | — | 74 | — | ||||||||||||
Adjusted EBITDA | $ | 185,487 | $ | 108,510 | $ | 376,860 | $ | 209,647 | ||||||||
Adjusted EBITDA reconciliation to Net Cash Provided by Operating Activities ($ in thousands): | ||||||||||||||||
Net cash provided by operating activities | $ | 187,260 | $ | 109,095 | $ | 357,807 | $ | 171,860 | ||||||||
Derivative settlements | 1,246 | (1,174 | ) | 2,932 | (2,465 | ) | ||||||||||
Interest expense | 21,392 | 14,074 | 42,575 | 27,973 | ||||||||||||
Exploration expenses | 392 | — | 2,249 | 2,835 | ||||||||||||
Debt discount amortization and other | (1,007 | ) | (617 | ) | (1,753 | ) | (1,265 | ) | ||||||||
Current tax expense | 837 | 100 | 937 | 100 | ||||||||||||
Changes in working capital | (24,658 | ) | (12,968 | ) | (27,961 | ) | 10,609 | |||||||||
Other non-cash adjustments | 25 | — | 74 | — | ||||||||||||
Adjusted EBITDA | $ | 185,487 | $ | 108,510 | $ | 376,860 | $ | 209,647 | ||||||||
Adjusted Net Income 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 Net Income as net income after adjusting first for (1) the impact of certain non-cash items, including changes in unrealized gains and losses on derivative instruments, impairment of oil and gas properties, and other similar non-cash charges, and then (2) the non-cash items’ impact on taxes based on the Company’s effective tax rates in the same period. Adjusted Net Income is not a measure of net income as determined by GAAP.
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The following table provides a reconciliation of net income (GAAP) to Adjusted Net Income (non-GAAP):
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
(In thousands, except per share amounts) | ||||||||||||||||
Net income | $ | 67,119 | $ | 76,043 | $ | 118,970 | $ | 92,484 | ||||||||
Net (gain) loss on derivative instruments | (12,591 | ) | (74,595 | ) | 2,021 | (56,009 | ) | |||||||||
Derivative settlements | 1,246 | (1,174 | ) | 2,932 | (2,465 | ) | ||||||||||
Impairment of oil and gas properties | 208 | 2,203 | 706 | 2,571 | ||||||||||||
Other non-cash adjustments | 25 | — | 74 | — | ||||||||||||
Tax impact (1) | 4,045 | 27,518 | (2,145 | ) | 20,912 | |||||||||||
Adjusted Net Income | $ | 60,052 | $ | 29,995 | $ | 122,558 | $ | 57,493 | ||||||||
Adjusted earnings per share: | ||||||||||||||||
Basic | $ | 0.65 | $ | 0.33 | $ | 1.33 | $ | 0.62 | ||||||||
Diluted | $ | 0.65 | $ | 0.33 | $ | 1.32 | $ | 0.62 | ||||||||
Weighted average shares outstanding: | ||||||||||||||||
Basic | 92,399 | 92,176 | 92,387 | 92,153 | ||||||||||||
Diluted | 92,702 | 92,222 | 92,812 | 92,339 | ||||||||||||
Effective Tax Rate | 36.0 | % | 37.4 | % | 36.7 | % | 37.4 | % | ||||||||
(1) | The tax impact is computed utilizing the Company’s effective tax rate on the adjustments for certain non-cash items. |
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