Oasis Petroleum Inc. Announces Quarter and Year Ending December 31, 2012 Earnings

HOUSTON, Feb. 25, 2013 /PRNewswire/ -- Oasis Petroleum Inc. (NYSE: OAS) ("Oasis" or the "Company") today announced financial results for the quarter and year ending December 31, 2012. 

Financial Highlights in 2012:

  • Increased revenue by 108% to $686.7 million in 2012, up from $330.4 million in the prior year.
  • Grew Adjusted EBITDA by 118% to $512.3 million in 2012, up from $234.5 million in the prior year. 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.
  • Increased net income by 93% to $153.4 million in 2012, up from $79.4 million in the prior year.

Financial Update
Total revenue for the fourth quarter of 2012 was $214.3 million compared to $116.9 million for the fourth quarter of 2011, an increase of 83%.  Sequential quarter-over-quarter revenue growth was $29.6 million, or 16%.  Total revenue for the full year 2012 was $686.7 million compared to $330.4 million in 2011.  This year-over-year increase was due to a $340.1 million increase in oil and gas revenues primarily related to higher production in 2012 and a $16.2 million increase in well services revenues related to Oasis Well Services LLC ("OWS") commencing fracturing activity in 2012.

Lease operating expenses for the fourth quarter of 2012 totaled $16.9 million, or $6.68 per Boe, a 19% decrease per Boe over the fourth quarter of 2011 of $8.22 per Boe.  Lease operating expenses for the full year 2012 totaled $54.9 million, or $6.68 per Boe, a 20% decrease per Boe over the full year 2011 of $8.36 per Boe.  This year-over-year decrease was primarily due to the increase in production of 110% outpacing the Company's overall net increase in costs of 68%.  Increased costs primarily related to workovers, chemical treatments, equipment rental and fresh water injections, which have improved operational performance and minimized downtime in our wells. These cost increases were partially offset by salt water disposal activity and lower operating costs related to improved weather conditions as compared to the first half of 2011.

Well services operating expenses represent third-party working interests' share of fracturing service costs incurred by OWS for fracturing jobs completed in 2012. Well services operating expenses totaled $4.7 million for the fourth quarter of 2012 and $11.8 million for the full year 2012. There were no well services operating expenses in 2011 because OWS did not commence fracturing activity until the first quarter of 2012.

Marketing, transportation and gathering expenses for the fourth quarter of 2012 totaled $2.0 million, or $0.78 per Boe, a 90% increase per Boe over the fourth quarter of 2011 of $0.41 per Boe.  Marketing, transportation and gathering expenses for the full year 2012 totaled $9.3 million, or $1.13 per Boe, a $0.79 increase per Boe over the full year 2011 of $0.34 per Boe.  This year-over-year increase was mainly attributable to increased oil transportation costs related to Oasis Petroleum Marketing LLC ("OPM"), which did not commence operations until late in the third quarter of 2011, combined with a $1.4 million cost for bulk oil purchases made by OPM in the first quarter of 2012, partially offset by a $0.7 million non-cash valuation charge on oil pipeline imbalances.  Excluding this pipeline imbalance charge and bulk oil purchase costs, our marketing, transportation and gathering expenses would have been $1.04 per Boe for the full year 2012 and $1.03 for the fourth quarter of 2012.  The increase in marketing, transportation and gathering in the fourth quarter 2012 over the fourth quarter of 2011 was primarily due to higher operated volumes flowing through third-party oil gathering pipelines, partially offset by a non-cash oil pipeline imbalance valuation charge.  While transporting volumes through third-party oil gathering pipelines increases marketing, transportation and gathering expenses, it improves oil price realizations by eliminating trucking costs, which are reflected in the oil price differential rather than as an expense.

Production taxes for the fourth quarter of 2012 totaled $19.5 million, or 9.4% of oil and gas revenues. For the full year 2012, production taxes totaled $63.0 million, or 9.4% of oil and gas revenues. Production taxes decreased in 2012 compared to the full year 2011, at 10.2% of oil and gas revenues, primarily due to the increased weighting of oil revenues in Montana, which has lower incentivized production tax rates on certain new wells for the first twelve months of production.

Depreciation, depletion and amortization for the fourth quarter of 2012 totaled $66.0 million, or $26.01 per Boe, compared to $27.2 million, or $19.40 per Boe, in the fourth quarter of 2011.  Depreciation, depletion and amortization for the full year 2012 totaled $206.7 million, or $25.14 per Boe, compared to $75.0 million, or $19.16 per Boe, for the full year 2011. The $131.8 million increase in DD&A expense for the year ended December 31, 2012 was primarily a result of our production increases from our 2012 well completions. The higher DD&A rate was a result of increased well costs in 2012, which outpaced the increase in associated reserves. The increased well costs were a result of increases in service costs in the Williston Basin during 2011 and the first half of 2012 and the addition of infrastructure assets, primarily our salt water disposal systems.

General and administrative expenses for the fourth quarter of 2012 totaled $17.6 million, or $6.93 per Boe, compared to $9.6 million, or $6.82 per Boe, in the fourth quarter of 2011.  General and administrative expenses for the full year 2012 totaled to $57.2 million, or $6.95 per Boe, as compared to $29.4 million, or $7.52 per Boe, for the full year 2011.  Of this $27.8 million year-over-year increase, approximately $20.3 million was due to the impact of the Company's organizational growth on employee compensation and approximately $6.7 million was due to the amortization of restricted stock awards and performance share units.  As of December 31, 2012, the Company had 281 full-time employees compared to 146 full-time employees as of December 31, 2011.

As a result of its derivative activities, the Company incurred net cash settlement gains of $3.8 million and $1.0 million in the fourth quarters of 2012 and 2011, respectively. As a result of forward oil price changes, the Company recognized non-cash unrealized mark-to-market derivative losses of $3.2 million and $66.5 million for the fourth quarters of 2012 and 2011, respectively. The Company incurred a net cash settlement gain of $6.5 million for the year ended December 31, 2012 and a net cash settlement loss of $3.8 million for the year ended December 31, 2011. In addition, as a result of forward oil price changes, the Company recognized non-cash unrealized mark-to-market derivative gains of $27.6 million and $5.4 million during the years ended December 31, 2012 and 2011, respectively.

Adjusted EBITDA for the fourth quarter of 2012 was $163.5 million, an increase of $77.6 million, or 90%, over the fourth quarter of 2011 of $85.9 million.  Adjusted EBITDA for the full year 2012 was $512.3 million, an increase of $277.8 million, or 118%, over the full year 2011 of $234.5 million.

The Company reported net income of $42.6 million in the fourth quarter of 2012 compared to a net loss of $13.4 million in the fourth quarter of 2011.  For the full year 2012, Oasis reported net income of $153.4 million compared to $79.4 million for the full year 2011.  Excluding certain non-cash items and their tax effect in the fourth quarters of 2012 and 2011, Adjusted Net Income (non-GAAP) was $45.2 million, or $0.49 per diluted share, and $28.0 million, or $0.30 per diluted share, respectively. Excluding certain non-cash items and their tax effect for the years ending December 31, 2012 and 2011, Adjusted Net Income (non-GAAP) was $138.4 million, or $1.50 per diluted share, and $78.2 million, or $0.85 per diluted share, respectively. 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
Oasis' capital expenditures ("CapEx") were $276.3 million for the fourth quarter of 2012 and $1,148.6 million for the year ending December 31, 2012. 

CapEx primarily consists of:

  • $1,008 million of drilling and completion CapEx for operated and non-operated wells, including expected savings from services provided by OWS;
  • $64 million for constructing infrastructure to support production in Oasis' core project areas, primarily related to salt water disposal systems;
  • $37 million for maintaining and expanding the Company's leasehold position;
  • $3 million for geology (micro-seismic);
  • $16 million for OWS; and
  • $21 million for other (facilities, district tools and administrative capital, including capitalized interest of $3 million).

The following table depicts the Company's CapEx for exploration and production ("E&P"), by project area, and non-E&P:


2012

($ in millions)

1Q


2Q


3Q


4Q


FY

E&P CapEx by Project Area










West Williston

$  204.0


$  187.9


$  189.2


$  144.7


$     725.8

East Nesson

50.1


56.6


106.0


110.3


323.0

Sanish

12.9


18.7


16.2


15.1


62.9

Total E&P CapEx

$267.0


$263.2


$311.4


$270.1


$1,111.7

Other Non E&P (1)

21.3


4.1


5.3


6.2


36.9

Total Company CapEx (2)

$288.3


$267.3


$316.7


$276.3


$1,148.6

(1)

Non-E&P capital expenditures include such items as capital expenditures related to OWS, district tools, administrative capital and capitalized interest.  

(2)

Capital expenditures reflected in the table above differ from the amounts shown in the statement of cash flows in the Company's 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.

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

Date:

Tuesday, February 26, 2013

Time:

10:00 a.m. Central Time

Dial-in:

855-384-2828

Intl. Dial in:

706-634-0151

Conference ID:

98545808

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 Tuesday, March 5, 2013 by dialing:

Replay dial-in:

855-859-2056

Intl. replay:

404-537-3406

Conference ID:

98545808

The conference call will also be available for replay for approximately 30 days 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, derivatives activities, 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 changes in oil and natural gas prices, 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

 

Oasis Petroleum Inc. Financial Statements


OASIS PETROLEUM INC.

CONSOLIDATED BALANCE SHEET






December 31,
 2012


December 31,
2011


(In thousands, except share data)

ASSETS




Current assets 




Cash and cash equivalents 

$        213,447


$        470,872

Short-term investments

25,891


19,994

Accounts receivable — oil and gas revenues 

110,341


52,164

Accounts receivable — joint interest partners 

99,194


67,268

Inventory 

20,707


3,543

Prepaid expenses 

1,770


2,140

Advances to joint interest partners 

1,985


3,935

Derivative instruments 

19,016


-

Deferred income taxes

-


3,233

Other current assets

335


491

Total current assets 

492,686


623,640

Property, plant and equipment 




Oil and gas properties (successful efforts method) 

2,348,128


1,235,357

Other property and equipment 

49,732


20,859

Less: accumulated depreciation, depletion, amortization and impairment 

(391,260)


(176,261)

Total property, plant and equipment, net 

2,006,600


1,079,955

Derivative instruments 

4,981


4,362

Deferred costs and other assets 

24,527


19,425

Total assets

$     2,528,794


$     1,727,382





LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities




Accounts payable 

$          12,491


$          12,207

Advances from joint interest partners 

21,176


9,064

Revenues and production taxes payable

71,553


19,468

Accrued liabilities 

189,863


119,692

Accrued interest payable 

30,096


15,774

Derivative instruments 

1,048


5,907

Deferred income taxes 

4,558


-

Other current liabilities

-


472

Total current liabilities 

330,785


182,584

Long-term debt 

1,200,000


800,000

Asset retirement obligations 

22,956


13,075

Derivative instruments 

380


3,505

Deferred income taxes 

177,671


92,983

Other liabilities 

1,997


997

Total liabilities 

1,733,789


1,093,144

Commitments and contingencies 




Stockholders' equity




Common stock, $0.01 par value; 300,000,000 shares authorized; 93,432,712 issued and 93,303,298 outstanding at December 31, 2012 and 92,483,393 issued and 92,460,914 outstanding at December 31, 2011

925


921

Treasury stock, at cost; 129,414 and 22,479 shares at December 31, 2012 and 2011, respectively

(3,796)


(602)

Additional paid-in-capital 

657,943


647,374

Retained earnings (deficit)

139,933


(13,455)

Total stockholders' equity 

795,005


634,238

Total liabilities and  stockholders' equity 

$     2,528,794


$     1,727,382

 

 

OASIS PETROLEUM INC.

CONSOLIDATED STATEMENT OF OPERATIONS






Three Months Ended December 31,


Year Ended December 31,


2012


2011


2012


2011


(In thousands, except per share data)

Revenues 








Oil and gas revenues

$208,634


$116,876


$670,491


$330,422

Well services revenues

5,693


-


16,177


-

Total revenues 

214,327


116,876


686,668


330,422









Expenses








Lease operating expenses (1)

16,945


11,529


54,924


32,707

Well services operating expense

4,670


-


11,774


-

Marketing, transportation and gathering expenses

1,974


568


9,257


1,365

Production taxes 

19,546


11,824


62,965


33,865

Depreciation, depletion and amortization 

65,951


27,210


206,734


74,981

Exploration expenses 

79


1,340


3,250


1,685

Impairment of oil and gas properties 

974


297


3,581


3,610

Loss on sale of properties 

-


207


-


207

General and administrative expenses 

17,568


9,565


57,190


29,435

Total expenses 

127,707


62,540


409,675


177,855

Operating income 

86,620


54,336


276,993


152,567

Other income (expense)








Net gain (loss) on derivative instruments 

596


(65,510)


34,164


1,595

Interest expense 

(21,191)


(10,873)


(70,143)


(29,618)

Other income  (expense)

2,339


420


4,860


1,635

Total other income (expense) 

(18,256)


(75,963)


(31,119)


(26,388)

Income (loss) before income taxes 

68,364


(21,627)


245,874


126,179

Income tax benefit (expense)

(25,774)


8,226


(92,486)


(46,789)









Net income (loss) 

$42,590


$(13,401)


$153,388


$79,390









Earnings (loss) per share:








Basic and diluted 

$      0.46


$      (0.15)


$         1.66


$      0.86









Weighted average shares outstanding:








Basic

92,226


92,070


92,180


92,056

Diluted

92,509


92,070


92,513


92,241

(1)

For both the three months and year ended December 31, 2011, lease operating expenses exclude marketing, transportation and gathering expenses to conform such amounts to current year classifications.

 

 

 

OASIS PETROLEUM INC.
SELECTED FINANCIAL AND OPERATIONAL STATS






Three Months Ended December 31,


Year Ended December 31,


2012


2011


2012


2011

Operating results ($ in thousands):




Revenues








   Oil 

$199,761


$113,226


$643,446


$321,668

   Natural gas 

8,873


3,650


27,045


8,754

   Well services

5,693


-


16,177


-

    Total revenues 

214,327


116,876


686,668


330,422









Production data:








Oil (MBbls) 

2,301


1,325


7,533


3,732

Natural gas (MMcf) 

1,406


464


4,146


1,092

Oil equivalents (MBoe) 

2,535


1,402


8,224


3,914

Average daily production (Boe/d) 

27,556


15,243


22,469


10,724









Average sales prices:








Oil, without realized derivatives (per Bbl) (1)

$    86.82


$    85.46


$    85.22


$    86.18

Oil, with realized derivatives (per Bbl) (1) (2)

88.45


86.20


86.09


85.15

Natural gas (per Mcf) (3)

6.31


7.86


6.52


8.02









Costs and expenses (per Boe of production):








Lease operating expenses (4)

$      6.68


$      8.22


$      6.68


$      8.36

Marketing, transportation and gathering expenses

0.78


0.41


1.13


0.34

Production taxes 

7.71


8.43


7.66


8.65

Depreciation, depletion and amortization 

26.01


19.40


25.14


19.16

General and administrative expenses

6.93


6.82


6.95


7.52

(1)

For the year ended December 31, 2012, average sales prices for oil are calculated using total oil revenues, excluding bulk purchase sales of $1.5 million, divided by oil production.



(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 both the three months and year ended December 31, 2011, lease operating expenses exclude marketing, transportation and gathering expenses to conform such amounts to current year classifications.

 

 

OASIS PETROLEUM INC.

CONSOLIDATED STATEMENT OF CASH FLOWS




Year Ended December 31,


2012


2011


(In thousands)

Cash flows from operating activities:




Net income

$   153,388


$   79,390

Adjustments to reconcile net income to net cash provided by
operating activities:







Depreciation, depletion and amortization 

206,734


74,981

Impairment of oil and gas properties 

3,581


3,610

Loss on sale of properties

-


207

Deferred income taxes 

92,479


46,789

Derivative instruments 

(34,164)


(1,595)

Stock-based compensation expenses 

10,333


3,656

Debt discount amortization and other 

2,810


1,561

Working capital and other changes:




Change in accounts receivable 

(90,103)


(64,900)

Change in inventory 

(29,313)


(2,550)

Change in prepaid expenses 

346


(1,600)

Change in other current assets 

156


(491)

Change in other assets 

(95)


(139)

Change in accounts payable and accrued liabilities 

76,706


36,316

Change in other current liabilities 

(472)


472

Change in other liabilities 

-


317

Net cash provided by operating activities 

392,386


176,024

Cash flows from investing activities:




Capital expenditures 

(1,053,315)


(613,223)

Derivative settlements 

6,545


(3,841)

Purchases of short-term investments 

(126,213)


(184,907)

Redemptions of short-term investments 

120,316


164,913

Advances to joint interest partners 

1,950


(497)

Advances from joint interest partners 

12,112


5,963

Proceeds from equipment and property sales

-


2,202

Net cash used in investing activities 

(1,038,605)


(629,390)

Cash flows from financing activities:




Proceeds from issuance of senior notes

400,000


800,000

Purchases of treasury stock

(3,194)


(602)

Debt issuance costs 

(8,012)


(18,680)

Net cash provided by financing activities 

388,794


780,718

Increase (decrease) in cash and cash equivalents 

(257,425)


327,352

Cash and cash equivalents:




Beginning of period 

470,872


143,520

End of period 

$   213,447


$ 470,872





Supplemental cash flow information:




Cash interest paid, net of capitalized interest

$     53,488


$   13,748

Cash paid for taxes

107


-





Supplemental non-cash transactions:




Change in accrued capital expenditures 

$     59,878


$   58,205

Change in asset retirement obligations 

10,230


5,434

 

 

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 (loss) and net cash provided by operating activities, respectively. 

 

Adjusted EBITDA Reconciliations










Three Months Ended December 31,


Year Ended December 31,


2012


2011


2012


2011


(In thousands)

Adjusted EBITDA reconciliation to Net Income (Loss): 





Net income (loss)

$     42,590


$ (13,401)


$   153,388


$     79,390

Change in unrealized (gain) loss on derivative instruments

3,165


66,500


(27,619)


(5,436)

Interest expense

21,191


10,873


70,143


29,618

Depreciation, depletion and amortization

65,951


27,210


206,734


74,981

Impairment of oil and gas properties

974


297


3,581


3,610

Exploration expenses

79


1,340


3,250


1,685

Loss on sale of properties

-


207


-


207

Stock-based compensation expenses

3,706


1,064


10,333


3,656

Income tax (benefit) expense 

25,774


(8,226)


92,486


46,789

Other non-cash adjustments 

54


-


(2)


-

Adjusted EBITDA

$163,484


$85,864


$512,294


$234,500









Adjusted EBITDA reconciliation to Net Cash Provided by Operating Activities:



Net cash provided by operating activities

$   110,258


$  36,342


$   392,386


$   176,024

Realized gain (loss) on derivative instruments

3,761


990


6,545


(3,841)

Interest expense

21,191


10,873


70,143


29,618

Exploration expenses

79


1,340


3,250


1,685

Debt discount amortization and other

(772)


(520)


(2,810)


(1,561)

Income taxes

(57)


-


7


-

Changes in working capital

28,970


36,839


42,775


32,575

Other non-cash adjustments 

54


-


(2)


-

Adjusted EBITDA

$163,484


$85,864


$512,294


$234,500

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 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.

The following table provides a reconciliation of the GAAP financial measure of net income (loss) to the non-GAAP financial measure of Adjusted Net Income for the periods presented.

 


Adjusted Net Income Reconciliation








Three Months Ended December 31,


Year Ended December 31,


2012


2011


2012


2011


(In thousands, except per share amounts)







Net income (loss)

$  42,590


$ (13,401)


$   153,388


$  79,390

Change in unrealized (gain) loss on derivative instruments

3,165


66,500


(27,619)


(5,436)

Impairment of oil and gas properties

974


297


3,581


3,610

Other non-cash adjustments 

54


-


(2)


-

Tax impact (1)

(1,581)


(25,407)


9,043


677









Adjusted Net Income

$45,202


$27,989


$138,391


$78,241









Adjusted earnings per share:








Basic and diluted

$      0.49


$      0.30


$         1.50


$      0.85









Weighted average shares outstanding:








Basic

92,226


92,070


92,180


92,056

Diluted

92,509


92,070


92,513


92,241









Effective Tax Rate

37.7%


38.0%


37.6%


37.1%

(1)

The tax impact is computed utilizing the Company's effective tax rate on the adjustments for certain non-cash items.

SOURCE Oasis Petroleum Inc.



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