News Releases

HOUSTON, Aug. 5, 2014 /PRNewswire/ -- 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 millionin 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:

The following table describes the Company's producing wells by project area in the Williston Basin as of June 30, 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:

The Company's operating expenses are detailed in the following table:

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, $24.33per 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 $5.22per 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: 

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 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:

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:

Conference Call Information

Investors, analysts and other interested parties are invited to listen to the conference call:

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 untilWednesday, August 13, 2014 by dialing:

The conference call will also be available for replay at www.oasispetroleum.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that the Company expects, believes or anticipates will or may occur in the future are forward-looking statements. Without limiting the generality of the foregoing, forward-looking statements contained in this press release specifically include the expectations of plans, strategies, objectives and anticipated financial and operating results of the Company, including the Company's drilling program, production, derivative instruments, capital expenditure levels and other guidance included in this press release. These statements are based on certain assumptions made by the Company based on management's experience and perception of historical trends, current conditions, anticipated future developments and other factors believed to be appropriate. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the Company, which may cause actual results to differ materially from those implied or expressed by the forward-looking statements. These include, but are not limited to, changes in oil and natural gas prices, weather and environmental conditions, the timing of planned capital expenditures, availability of acquisitions, uncertainties in estimating proved reserves and forecasting production results, operational factors affecting the commencement or maintenance of producing wells, the condition of the capital markets generally, as well as the Company's ability to access them, the proximity to and capacity of transportation facilities, and uncertainties regarding environmental regulations or litigation and other legal or regulatory developments affecting the Company's business and other important factors that could cause actual results to differ materially from those projected as described in the Company's reports filed with the SEC.

Any forward-looking statement speaks only as of the date on which such statement is made and the Company undertakes no obligation to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by applicable law.

About Oasis Petroleum Inc.

Oasis is an independent exploration and production company focused on the acquisition and development of unconventional oil and natural gas resources, primarily operating in the Williston Basin. For more information, please visit the Company's website atwww.oasispetroleum.com.

Contact:

Oasis Petroleum Inc.
Matt Ultis, (281) 404-9600
Manager � Finance and Investor Relations

 

 

 

 

 

 

 

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 Statesgenerally 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.

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.

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):

 

SOURCE Oasis Petroleum Inc.