Attached files
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| 8-K - 8-K - Oasis Petroleum Inc. | oas-6302014pressrelease.htm |
Exhibit 99.1
Oasis Petroleum Inc. Announces Quarter Ended June 30, 2014 Earnings
Houston, Texas — August 5, 2014 — Oasis Petroleum Inc. (NYSE: OAS) (“Oasis” or the “Company”) today announced financial results for the quarter ended June 30, 2014 and provided an operational update.
Highlights include:
• | Increased average daily production to 43,668 barrels of oil equivalent per day (“Boepd”), a 45% increase over the second quarter of 2013 and a 6% sequential quarter increase, excluding production from Sanish. |
• | Grew Adjusted EBITDA to $254.7 million in the second quarter of 2014, an increase of $69.2 million over the second quarter of 2013 and a sequential increase of $14.9 million over the first quarter of 2014. 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. |
• | Invested capital expenditures (“CapEx”) of $351.8 million in the second quarter of 2014. |
• | Completed and placed on production 41 gross (30.8 net) operated wells in the second quarter of 2014. |
• | Started operating Oasis Well Services’ (“OWS”) second fracturing fleet. |
“Oasis continues to execute on its full-year plan to enhance shareholder value through completion technique changes and resource expansion initiatives,” said Thomas B. Nusz, Oasis’ Chairman and Chief Executive Officer. “Our first slickwater wells in Indian Hills have continued to produce well above our type curve. In addition, early production results from our first Three Forks slickwater well in Red Bank and a slickwater Bakken well in Montana are expanding the completion technique’s applicability across more of our inventory. Both of these Oasis wells are producing 35% or more over comparable wells completed with our base completion design.”
Mr. Nusz added, “Even as we move to completing 70% of our wells with different technology than our base design, our expectation of investing a total of $1.25 billion for drilling and completions during 2014 remains unchanged. Our base design well cost of $7.3 million in the first half of 2014, which includes the beneficial impact of OWS, provides us the ability to complete more intense frac jobs while remaining within our budget. While completions were pushed back a bit and we completed six fewer wells than planned, we were able to grow production 6% over the sequential quarter. We expect production to range between 47,000 and 49,000 Boepd in the third quarter of 2014. In addition, we have increased both frac spreads and cleanout crews, which will support the additional work we are doing in the second half of the year.”
Operational and Financial Update
The Company’s average daily production by project area is listed in the following table:
Quarter Ended: | ||||||||
6/30/2014 | 3/31/2014 | 6/30/2013 | ||||||
Average daily production (Boepd) | ||||||||
West Williston | 30,381 | 28,227 | 18,257 | |||||
East Nesson | 13,287 | 12,980 | 9,312 | |||||
Sanish (1) | — | 1,649 | 2,602 | |||||
Total | 43,668 | 42,856 | 30,171 | |||||
Percent Oil | 89.1 | % | 89.4 | % | 90.6 | % | ||
(1) | Includes production from certain non-operated properties in the Company’s Sanish project area and other non-operated leases adjacent to its Sanish position until March 1, 2014. These properties were sold on March 5, 2014 (the “Sanish Divestiture”). |
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The following table describes the Company’s producing wells by project area in the Williston Basin as of June 30, 2014:
Bakken/Three Forks Producing Wells | |||||||||||||||||
West Williston | East Nesson | Total Williston Basin | |||||||||||||||
Gross | Net | Gross | Net | Gross | Net | ||||||||||||
Producing on or before 3/31/2014: (1) | |||||||||||||||||
Operated | 338 | 260.1 | 158 | 125.0 | 496 | 385.1 | |||||||||||
Non-Operated | 162 | 13.3 | 98 | 7.1 | 260 | 20.4 | |||||||||||
Production started in Q2 2014: | |||||||||||||||||
Operated | 26 | 20.0 | 15 | 10.8 | 41 | 30.8 | |||||||||||
Non-Operated | 14 | 0.9 | 3 | 0.1 | 17 | 1.0 | |||||||||||
Total Producing Wells on 6/30/2014: | |||||||||||||||||
Operated | 364 | 280.1 | 173 | 135.8 | 537 | 415.9 | |||||||||||
Non-Operated | 176 | 14.2 | 101 | 7.2 | 277 | 21.4 | |||||||||||
(1) | Well counts include changes that occurred in the current reporting period for wells producing on or before March 31, 2014. |
Additionally, the Company had approximately 16 rigs running during the second quarter of 2014, and as of June 30, 2014, had an inventory of gross operated wells waiting on completion of 35 wells in West Williston and 32 wells in East Nesson.
The Company’s average price per barrel of oil, without derivative settlements, was $94.48 in the second quarter of 2014, compared to $91.15 in the second quarter of 2013 and $89.66 in the first quarter of 2014. The Company’s average price differential compared to NYMEX West Texas Intermediate (“WTI”) crude oil index prices was 8% in the second quarter of 2014, compared to 3% in the second quarter of 2013 and 9% in the first quarter of 2014.
The Company’s revenues are detailed in the following table:
Quarter Ended: | |||||||||||
6/30/2014 | 3/31/2014 | 6/30/2013 | |||||||||
Revenues ($ in thousands): | |||||||||||
Oil | $ | 334,559 | $ | 309,231 | $ | 226,848 | |||||
Bulk oil sale | — | — | 5,777 | ||||||||
Natural gas | 19,623 | 22,616 | 9,217 | ||||||||
Well services (OWS) | 14,878 | 15,827 | 11,461 | ||||||||
Midstream (OMS) | 3,318 | 1,845 | 1,279 | ||||||||
Total revenues | $ | 372,378 | $ | 349,519 | $ | 254,582 | |||||
The Company’s operating expenses are detailed in the following table:
Quarter Ended: | |||||||||||
6/30/2014 | 3/31/2014 | 6/30/2013 | |||||||||
Operating expenses ($ in thousands): | |||||||||||
Lease operating expenses (LOE) | $ | 40,553 | $ | 39,989 | $ | 18,266 | |||||
Well services (OWS) | 7,200 | 10,359 | 6,420 | ||||||||
Midstream (OMS) | 1,569 | 561 | 224 | ||||||||
Marketing, transportation and gathering expenses (1) | 6,996 | 5,932 | 4,977 | ||||||||
Bulk oil purchase | — | — | 5,777 | ||||||||
Non-cash valuation charges | 118 | (746 | ) | 25 | |||||||
Total operating expenses | $ | 56,436 | $ | 56,095 | $ | 35,689 | |||||
Operating expenses ($ per Boe): | |||||||||||
Lease operating expenses (LOE) | $ | 10.21 | $ | 10.37 | $ | 6.65 | |||||
Marketing, transportation and gathering expenses (1) | 1.76 | 1.53 | 1.82 | ||||||||
(1) | Excludes bulk oil purchase and non-cash valuation charges on pipeline imbalances. |
2
The sequential quarter-over-quarter decrease in lease operating expenses (“LOE”) per barrel of oil equivalent (“Boe”) was primarily due to higher workover costs in the first quarter of 2014 related to restoring wells that were down due to winter weather conditions.
The increase in marketing, transportation and gathering expenses from the first quarter of 2014 to the second quarter of 2014 is primarily due to higher operated volumes flowing through third-party oil gathering pipelines in the second quarter of 2014. Currently, the Company is flowing approximately 75% 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 the Company’s oil price differential for sales at the wellhead.
Production taxes as a percentage of oil and gas revenues were 9.7% in the second quarter of 2014, 9.1% in the second quarter of 2013 and 9.6% in the first quarter of 2014. The Company’s production tax rate increased in the second quarter of 2014 compared to the second quarter of 2013 due to the increased weighting of production in North Dakota compared to Montana, which has lower production tax rates.
Depreciation, depletion and amortization expenses (“DD&A”) totaled $97.3 million in the second quarter of 2014, $66.8 million in the second quarter of 2013 and $91.3 million in the first quarter of 2014. DD&A was $24.48 per Boe in the second quarter of 2014, $24.33 per Boe in the second quarter of 2013 and $23.66 per Boe in the first quarter of 2014. During the first two months of 2014, the Company had production from the wells sold in the Sanish Divestiture, but these wells were not depreciated because the assets were held for sale, which lowered DD&A by $0.78 per Boe in the first quarter of 2014.
General and administrative (“G&A”) expenses totaled $20.8 million in the second quarter of 2014, $16.7 million in the second quarter of 2013 and $23.5 million in the first quarter of 2014. The sequential quarter-over-quarter decrease in G&A expenses was primarily due to lower consolidated OWS G&A expenses in the second quarter of 2014 compared to the first quarter of 2014. G&A expenses were $5.22 per Boe in the second quarter of 2014, $6.07 per Boe in the second quarter of 2013 and $6.10 per Boe in the first quarter of 2014. Amortization of stock-based compensation, which is included in G&A expenses, was $5.2 million, or $1.30 per Boe, in the second quarter of 2014 as compared to $3.1 million, or $1.12 per Boe, in the second quarter of 2013 and $4.5 million, or $1.17 per Boe, in the first quarter of 2014. The sequential increase in amortization of stock-based compensation is primarily due to growth in headcount.
The Company’s derivative activities are detailed in the following table:
Quarter Ended: | |||||||||||
6/30/2014 | 3/31/2014 | 6/30/2013 | |||||||||
Derivative activities (1) ($ in thousands) | |||||||||||
Derivative settlements | $ | (11,405 | ) | $ | (2,239 | ) | $ | 1,246 | |||
Non-cash change in fair value of derivative instruments | (54,165 | ) | (15,364 | ) | 11,345 | ||||||
Net gain (loss) on derivative instruments | $ | (65,570 | ) | $ | (17,603 | ) | $ | 12,591 | |||
(1) | The Company’s derivative instruments do not qualify for and were not designated as hedging instruments for accounting purposes. |
Interest expense was $39.0 million for the second quarter of 2014 compared to $21.4 million for the second quarter of 2013 and $40.2 million for the first quarter of 2014. The $1.2 million decrease from the first quarter of 2014 was primarily due to lower weighted average borrowings under the Company’s revolving credit facility coupled with an increase in capitalized interest in the second quarter of 2014. Capitalized interest totaled $2.3 million for the second quarter of 2014, $1.1 million for the second quarter of 2013 and $1.6 million for the first quarter of 2014.
Income tax expense was $23.3 million for the three months ended June 30, 2014, resulting in an effective tax rate of 37.5%. The Company’s income tax expense for the three months ended June 30, 2013 was recorded at 36.0% 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 2014 was $254.7 million, a 37% increase over the second quarter of 2013 of $185.5 million, and an increase of 6% from the first quarter of 2014 of $239.8 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 2014, the Company reported net income of $38.8 million, or $0.39 per diluted share, as compared to net income of $67.1 million, or $0.72 per diluted share, for the second quarter of 2013. The Company’s second quarter 2014
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results were impacted by several non-cash items, including a $54.2 million non-cash mark-to-market loss on derivative instruments. Excluding these items and their tax effect, the second quarter 2014 Adjusted Net Income (non-GAAP) was $70.5 million, or $0.70 per diluted share. Excluding similar non-cash items and their tax effect, Adjusted Net Income (non-GAAP) for the second quarter of 2013 was $60.1 million, or $0.65 per diluted share. For a definition of Adjusted Net Income and a reconciliation of net income to Adjusted Net Income, see “Non-GAAP Financial Measures” below.
Capital Expenditures
The following table depicts the Company’s exploration and production (“E&P”) CapEx by project area and total CapEx by category:
1Q 2014 | 2Q 2014 | YTD 2014 | |||||||||
CapEx ($ in thousands): | |||||||||||
E&P CapEx by Project Area | |||||||||||
West Williston | $ | 189,288 | $ | 223,526 | $ | 412,814 | |||||
East Nesson | 107,843 | 103,370 | 211,213 | ||||||||
Total E&P CapEx (1) | 297,131 | 326,896 | 624,027 | ||||||||
OWS | 6,410 | 18,903 | 25,313 | ||||||||
Non E&P (2) | 3,957 | 6,036 | 9,993 | ||||||||
Total Company CapEx (3) | $ | 307,498 | $ | 351,835 | $ | 659,333 | |||||
(1) | Year-to-date total E&P CapEx includes $12.5 million for Oasis Midstream Services (“OMS”), primarily related to pipelines and salt water disposal systems. |
(2) | Non-E&P CapEx includes such items as administrative capital and capitalized interest. |
(3) | 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 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, 2014, Oasis had total cash and cash equivalents of $27.0 million. As of June 30, 2014, the Company had $100.0 million of LIBOR loans and $5.2 million of outstanding letters of credit issued under its revolving credit facility, resulting in an unused borrowing base capacity of $1,394.8 million.
Update to Outlook for Operating Metrics
Oasis is updating its full year 2014 guidance range for LOE to $8.50 to $10.00 per Boe and production taxes to 9.7% to 10.2%.
Hedging Activity
As of August 5, 2014, the Company had the following outstanding commodity derivative contracts, all of which are priced off of WTI and settle monthly:
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Weighted Average Prices ($/Bbl) | ||||||||||||||||||||||||
Remaining Term | Sub-Floor | Floor | Ceiling | Swaps | BOPD | Total Barrels | ||||||||||||||||||
2014 | ||||||||||||||||||||||||
Full Year | ||||||||||||||||||||||||
Swaps | Jul - Dec | $ | 95.90 | 9,500 | 1,738,500 | |||||||||||||||||||
Swaps with sub-floors | Jul - Dec | $ | 70.00 | $ | 92.60 | 6,000 | 1,098,000 | |||||||||||||||||
Two-way collars | Jul - Dec | $ | 95.22 | $ | 106.39 | 11,500 | 2,104,500 | |||||||||||||||||
Three-way collars | Jul - Dec | $ | 70.59 | $ | 90.59 | $ | 105.25 | 8,500 | 1,555,500 | |||||||||||||||
Total 2014 hedges (weighted average) | $ | 70.34 | $ | 93.25 | $ | 105.91 | $ | 94.62 | 35,500 | 6,496,500 | ||||||||||||||
2015 | ||||||||||||||||||||||||
Full Year | ||||||||||||||||||||||||
Swaps | Jan - Dec | $ | 90.15 | 10,000 | 3,650,000 | |||||||||||||||||||
Two-way collars | Jan - Dec | $ | 86.00 | $ | 103.42 | 5,000 | 1,825,000 | |||||||||||||||||
First Half | ||||||||||||||||||||||||
Swaps | Jan - June | $ | 91.26 | 9,000 | 1,629,000 | |||||||||||||||||||
Deferred premium puts | Jan - June | $ | 90.00 | 6,000 | 1,086,000 | |||||||||||||||||||
Two-way collars | Jan - June | $ | 90.00 | $ | 99.10 | 2,000 | 362,000 | |||||||||||||||||
Total 2015 hedges (weighted average) | $ | 87.77 | $ | 102.70 | $ | 90.49 | 23,430 | 8,552,000 | ||||||||||||||||
Total 1H15 hedges | 32,000 | |||||||||||||||||||||||
Total 2H15 hedges | 15,000 | |||||||||||||||||||||||
Conference Call Information
Investors, analysts and other interested parties are invited to listen to the conference call:
Date: | Wednesday, August 6, 2014 | |
Time: | 9:00 a.m. Central Time | |
Dial-in: | 877-621-0256 | |
Intl. Dial in: | 706-634-0151 | |
Conference ID: | 74680357 | |
Website: | www.oasispetroleum.com | |
A recording of the conference call will be available beginning at 12:00 p.m. Central Time on the day of the call and will be available until Wednesday, August 13, 2014 by dialing:
Replay dial-in: | 855-859-2056 | |
Intl. replay: | 404-537-3406 | |
Conference ID: | 74680357 | |
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.
Matt Ultis, (281) 404-9600
Manager – Finance and Investor Relations
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Oasis Petroleum Inc.
Condensed Consolidated Balance Sheet
(Unaudited)
June 30, 2014 | December 31, 2013 | ||||||
(In thousands, except share data) | |||||||
ASSETS | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 26,957 | $ | 91,901 | |||
Accounts receivable — oil and gas revenues | 216,764 | 175,653 | |||||
Accounts receivable — joint interest partners | 147,056 | 139,459 | |||||
Inventory | 17,636 | 20,652 | |||||
Prepaid expenses | 8,907 | 10,191 | |||||
Deferred income taxes | 25,390 | 6,335 | |||||
Derivative instruments | — | 2,264 | |||||
Advances to joint interest partners | 97 | 760 | |||||
Other current assets | 421 | 391 | |||||
Total current assets | 443,228 | 447,606 | |||||
Property, plant and equipment | |||||||
Oil and gas properties (successful efforts method) | 5,141,582 | 4,528,958 | |||||
Other property and equipment | 231,129 | 188,468 | |||||
Less: accumulated depreciation, depletion, amortization and impairment | (823,500 | ) | (637,676 | ) | |||
Total property, plant and equipment, net | 4,549,211 | 4,079,750 | |||||
Assets held for sale | — | 137,066 | |||||
Derivative instruments | — | 1,333 | |||||
Deferred costs and other assets | 44,540 | 46,169 | |||||
Total assets | $ | 5,036,979 | $ | 4,711,924 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities | |||||||
Accounts payable | $ | 32,402 | $ | 8,920 | |||
Revenues and production taxes payable | 217,414 | 146,741 | |||||
Accrued liabilities | 288,813 | 241,830 | |||||
Accrued interest payable | 49,444 | 47,910 | |||||
Derivative instruments | 62,415 | 8,188 | |||||
Advances from joint interest partners | 6,910 | 12,829 | |||||
Other current liabilities | 3,311 | — | |||||
Total current liabilities | 660,709 | 466,418 | |||||
Long-term debt | 2,300,000 | 2,535,570 | |||||
Deferred income taxes | 460,897 | 323,147 | |||||
Asset retirement obligations | 37,542 | 35,918 | |||||
Derivative instruments | 11,844 | 139 | |||||
Other liabilities | 1,963 | 2,183 | |||||
Total liabilities | 3,472,955 | 3,363,375 | |||||
Commitments and contingencies | |||||||
Stockholders’ equity | |||||||
Common stock, $0.01 par value: 300,000,000 shares authorized; 101,396,597 and 100,866,589 shares issued at June 30, 2014 and December 31, 2013, respectively | 999 | 996 | |||||
Treasury stock, at cost: 244,729 and 167,155 shares at June 30, 2014 and December 31, 2013, respectively | (8,677 | ) | (5,362 | ) | |||
Additional paid-in capital | 995,024 | 985,023 | |||||
Retained earnings | 576,678 | 367,892 | |||||
Total stockholders’ equity | 1,564,024 | 1,348,549 | |||||
Total liabilities and stockholders’ equity | $ | 5,036,979 | $ | 4,711,924 | |||
7
Oasis Petroleum Inc.
Condensed Consolidated Statement of Operations
(Unaudited)
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
(In thousands, except per share data) | ||||||||||||||||
Revenues | ||||||||||||||||
Oil and gas revenues | $ | 354,182 | $ | 241,842 | $ | 686,029 | $ | 483,493 | ||||||||
Well services and midstream revenues | 18,196 | 12,740 | 35,868 | 19,393 | ||||||||||||
Total revenues | 372,378 | 254,582 | 721,897 | 502,886 | ||||||||||||
Expenses | ||||||||||||||||
Lease operating expenses | 40,553 | 18,266 | 80,542 | 37,755 | ||||||||||||
Well services and midstream operating expenses | 8,769 | 6,644 | 19,689 | 9,558 | ||||||||||||
Marketing, transportation and gathering expenses | 7,114 | 10,779 | 12,300 | 14,168 | ||||||||||||
Production taxes | 34,493 | 21,397 | 66,296 | 43,486 | ||||||||||||
Depreciation, depletion and amortization | 97,276 | 66,790 | 188,548 | 133,051 | ||||||||||||
Exploration expenses | 475 | 392 | 855 | 2,249 | ||||||||||||
Impairment of oil and gas properties | 42 | 208 | 804 | 706 | ||||||||||||
General and administrative expenses | 20,751 | 16,656 | 44,271 | 30,510 | ||||||||||||
Total expenses | 209,473 | 141,132 | 413,305 | 271,483 | ||||||||||||
Gain on sale of properties | 3,640 | — | 187,033 | — | ||||||||||||
Operating income | 166,545 | 113,450 | 495,625 | 231,403 | ||||||||||||
Other income (expense) | ||||||||||||||||
Net gain (loss) on derivative instruments | (65,570 | ) | 12,591 | (83,173 | ) | (2,021 | ) | |||||||||
Interest expense, net of capitalized interest | (38,990 | ) | (21,392 | ) | (79,148 | ) | (42,575 | ) | ||||||||
Other income (expense) | 135 | 294 | 288 | 1,074 | ||||||||||||
Total other income (expense) | (104,425 | ) | (8,507 | ) | (162,033 | ) | (43,522 | ) | ||||||||
Income before income taxes | 62,120 | 104,943 | 333,592 | 187,881 | ||||||||||||
Income tax expense | 23,287 | 37,824 | 124,806 | 68,911 | ||||||||||||
Net income | $ | 38,833 | $ | 67,119 | $ | 208,786 | $ | 118,970 | ||||||||
Earnings per share: | ||||||||||||||||
Basic | $ | 0.39 | $ | 0.73 | $ | 2.10 | $ | 1.29 | ||||||||
Diluted | 0.39 | 0.72 | 2.08 | 1.28 | ||||||||||||
Weighted average shares outstanding: | ||||||||||||||||
Basic | 99,663 | 92,399 | 99,612 | 92,387 | ||||||||||||
Diluted | 100,260 | 92,702 | 100,328 | 92,812 | ||||||||||||
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Oasis Petroleum Inc.
Selected Financial and Operational Statistics
(Unaudited)
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Operating results ($ in thousands): | |||||||||||||||
Revenues | |||||||||||||||
Oil | $ | 334,559 | $ | 232,625 | $ | 643,790 | $ | 464,300 | |||||||
Natural gas | 19,623 | 9,217 | 42,239 | 19,193 | |||||||||||
Well services and midstream | 18,196 | 12,740 | 35,868 | 19,393 | |||||||||||
Total revenues | 372,378 | 254,582 | 721,897 | 502,886 | |||||||||||
Production data: | |||||||||||||||
Oil (MBbls) | 3,541 | 2,489 | 6,990 | 4,971 | |||||||||||
Natural gas (MMcf) | 2,596 | 1,540 | 5,045 | 2,929 | |||||||||||
Oil equivalents (MBoe) | 3,974 | 2,746 | 7,831 | 5,459 | |||||||||||
Average daily production (Boe/d) | 43,668 | 30,171 | 43,264 | 30,162 | |||||||||||
Average sales prices: | |||||||||||||||
Oil, without derivative settlements (per Bbl) (1) | $ | 94.48 | $ | 91.15 | $ | 92.10 | $ | 92.24 | |||||||
Oil, with derivative settlements (per Bbl) (1) (2) | 91.26 | 91.65 | 90.15 | 92.83 | |||||||||||
Natural gas (per Mcf) (3) | 7.56 | 5.98 | 8.37 | 6.55 | |||||||||||
Costs and expenses (per Boe of production): | |||||||||||||||
Lease operating expenses | $ | 10.21 | $ | 6.65 | $ | 10.29 | $ | 6.92 | |||||||
Marketing, transportation and gathering expenses (4) | 1.76 | 1.82 | 1.65 | 1.54 | |||||||||||
Production taxes | 8.68 | 7.79 | 8.47 | 7.97 | |||||||||||
Depreciation, depletion and amortization | 24.48 | 24.33 | 24.08 | 24.37 | |||||||||||
General and administrative expenses | 5.22 | 6.07 | 5.65 | 5.58 | |||||||||||
(1) | For the three and six months ended June 30, 2013, average sales prices for oil are calculated using total oil revenues, excluding bulk oil sales of $5.8 million, divided by oil production. |
(2) | 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. |
(3) | Natural gas prices include the value for natural gas and natural gas liquids. |
(4) | Excludes bulk oil purchase and non-cash valuation charges on pipeline imbalances. |
9
Oasis Petroleum Inc.
Condensed Consolidated Statement of Cash Flows
(Unaudited)
Six Months Ended June 30, | |||||||
2014 | 2013 | ||||||
(In thousands) | |||||||
Cash flows from operating activities: | |||||||
Net income | $ | 208,786 | $ | 118,970 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation, depletion and amortization | 188,548 | 133,051 | |||||
Gain on sale of properties | (187,033 | ) | — | ||||
Impairment of oil and gas properties | 804 | 706 | |||||
Deferred income taxes | 118,695 | 67,974 | |||||
Derivative instruments | 83,173 | 2,021 | |||||
Stock-based compensation expenses | 9,678 | 5,371 | |||||
Debt discount amortization and other | 3,220 | 1,753 | |||||
Working capital and other changes: | |||||||
Change in accounts receivable | (37,132 | ) | (13,768 | ) | |||
Change in inventory | 3,016 | (4,200 | ) | ||||
Change in prepaid expenses | 1,284 | (4,402 | ) | ||||
Change in other current assets | (30 | ) | 330 | ||||
Change in other assets | (1,477 | ) | — | ||||
Change in accounts payable and accrued liabilities | 91,543 | 48,701 | |||||
Change in other current liabilities | 3,311 | 688 | |||||
Change in other liabilities | (132 | ) | 612 | ||||
Net cash provided by operating activities | 486,254 | 357,807 | |||||
Cash flows from investing activities: | |||||||
Capital expenditures | (606,924 | ) | (428,630 | ) | |||
Acquisition of oil and gas properties | (8,116 | ) | — | ||||
Proceeds from sale of properties | 324,888 | — | |||||
Costs related to sale of properties | (2,337 | ) | — | ||||
Redemptions of short-term investments | — | 25,000 | |||||
Derivative settlements | (13,644 | ) | 2,932 | ||||
Advances from joint interest partners | (5,919 | ) | (5,593 | ) | |||
Net cash used in investing activities | (312,052 | ) | (406,291 | ) | |||
Cash flows from financing activities: | |||||||
Proceeds from revolving credit facility | 100,000 | — | |||||
Principal payments on revolving credit facility | (335,570 | ) | — | ||||
Purchases of treasury stock | (3,315 | ) | (364 | ) | |||
Debt issuance costs | (85 | ) | (2,998 | ) | |||
Other | (176 | ) | — | ||||
Net cash used in financing activities | (239,146 | ) | (3,362 | ) | |||
Decrease in cash and cash equivalents | (64,944 | ) | (51,846 | ) | |||
Cash and cash equivalents: | |||||||
Beginning of period | 91,901 | 213,447 | |||||
End of period | $ | 26,957 | $ | 161,601 | |||
Supplemental non-cash transactions: | |||||||
Change in accrued capital expenditures | $ | 51,129 | $ | (6,085 | ) | ||
Change in asset retirement obligations | 1,624 | 3,441 | |||||
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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 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, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
(In thousands) | |||||||||||||||
Adjusted EBITDA reconciliation to net income: | |||||||||||||||
Net income | $ | 38,833 | $ | 67,119 | $ | 208,786 | $ | 118,970 | |||||||
Gain on sale of properties | (3,640 | ) | — | (187,033 | ) | — | |||||||||
Non-cash change in fair value of derivative instruments | 54,165 | (11,345 | ) | 69,529 | 4,953 | ||||||||||
Interest expense | 38,990 | 21,392 | 79,148 | 42,575 | |||||||||||
Depreciation, depletion and amortization | 97,276 | 66,790 | 188,548 | 133,051 | |||||||||||
Impairment of oil and gas properties | 42 | 208 | 804 | 706 | |||||||||||
Exploration expenses | 475 | 392 | 855 | 2,249 | |||||||||||
Stock-based compensation expenses | 5,173 | 3,082 | 9,678 | 5,371 | |||||||||||
Income tax expense | 23,287 | 37,824 | 124,806 | 68,911 | |||||||||||
Other non-cash adjustments | 118 | 25 | (628 | ) | 74 | ||||||||||
Adjusted EBITDA | $ | 254,719 | $ | 185,487 | $ | 494,493 | $ | 376,860 | |||||||
Adjusted EBITDA reconciliation to net cash provided by operating activities: | |||||||||||||||
Net cash provided by operating activities | $ | 277,987 | $ | 187,260 | $ | 486,254 | $ | 357,807 | |||||||
Derivative settlements | (11,405 | ) | 1,246 | (13,644 | ) | 2,932 | |||||||||
Interest expense | 38,990 | 21,392 | 79,148 | 42,575 | |||||||||||
Exploration expenses | 475 | 392 | 855 | 2,249 | |||||||||||
Debt discount amortization and other | (1,733 | ) | (1,007 | ) | (3,220 | ) | (1,753 | ) | |||||||
Current tax expense | 3,345 | 837 | 6,111 | 937 | |||||||||||
Changes in working capital | (53,058 | ) | (24,658 | ) | (60,383 | ) | (27,961 | ) | |||||||
Other non-cash adjustments | 118 | 25 | (628 | ) | 74 | ||||||||||
Adjusted EBITDA | $ | 254,719 | $ | 185,487 | $ | 494,493 | $ | 376,860 | |||||||
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 provides reconciliations of net income (GAAP) to Adjusted Net Income (non-GAAP) and diluted earnings per share (GAAP) to Adjusted Diluted Earnings Per Share (non-GAAP):
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
(In thousands, except per share data) | ||||||||||||||||
Net income | $ | 38,833 | $ | 67,119 | $ | 208,786 | $ | 118,970 | ||||||||
Non-cash change in fair value of derivative instruments | 54,165 | (11,345 | ) | 69,529 | 4,953 | |||||||||||
Gain on sale of properties | (3,640 | ) | — | (187,033 | ) | — | ||||||||||
Impairment of oil and gas properties | 42 | 208 | 804 | 706 | ||||||||||||
Other non-cash adjustments | 118 | 25 | (628 | ) | 74 | |||||||||||
Tax impact (1) | (19,000 | ) | 4,045 | 43,896 | (2,145 | ) | ||||||||||
Adjusted Net Income | $ | 70,518 | $ | 60,052 | $ | 135,354 | $ | 122,558 | ||||||||
Diluted earnings per share | $ | 0.39 | $ | 0.72 | $ | 2.08 | $ | 1.28 | ||||||||
Non-cash change in fair value of derivative instruments | 0.54 | (0.12 | ) | 0.69 | 0.05 | |||||||||||
Gain on sale of properties | (0.04 | ) | — | (1.86 | ) | — | ||||||||||
Impairment of oil and gas properties | — | — | 0.01 | 0.01 | ||||||||||||
Other non-cash adjustments | — | — | (0.01 | ) | — | |||||||||||
Tax impact (1) | (0.19 | ) | 0.05 | 0.44 | (0.02 | ) | ||||||||||
Adjusted Diluted Earnings Per Share | $ | 0.70 | $ | 0.65 | $ | 1.35 | $ | 1.32 | ||||||||
Diluted weighted average shares outstanding | 100,260 | 92,702 | 100,328 | 92,812 | ||||||||||||
Effective tax rate | 37.5 | % | 36.0 | % | 37.4 | % | 36.7 | % | ||||||||
(1) | 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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