Oasis Petroleum Inc. Announces Quarter and Year Ending December 31, 2013 Earnings

Feb 25, 2014, 17:00 ET from Oasis Petroleum Inc.

HOUSTON, Feb. 25, 2014 /PRNewswire/ -- Oasis Petroleum Inc. (NYSE: OAS) ("Oasis" or the "Company") today announced financial results for the quarter and year ended December 31, 2013.

Financial Highlights in 2013:

  • Increased revenue by 66% to $1,142.0 million in 2013, up from $686.7 million in the prior year.
  • Grew Adjusted EBITDA by 60% to $821.9 million in 2013, up from $512.3 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 49% to $228.0 million in 2013, up from $153.4 million in the prior year.

Financial Update

The Company's revenues are detailed in the following table:

Quarter Ended:

Year Ended:

12/31/2013

9/30/2013

12/31/2013

12/31/2012

Revenues ($ in thousands)

Oil

$

295,903

$

273,663

$

1,028,089

$

641,925

Bulk oil sale

5,777

1,521

Natural gas

18,064

13,289

50,546

27,045

Well services (OWS)

17,579

17,090

51,845

16,177

Midstream (OMS)

2,069

1,456

5,742

Total revenues

$

333,615

$

305,498

$

1,141,999

$

686,668

Total revenues for the fourth quarter of 2013 increased by 9% compared to the third quarter of 2013, primarily due to higher production as a result of the Company's well completions and its acquisition of certain properties in its West Williston project area in the fourth quarter of 2013.

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

Quarter Ended:

Year Ended:

12/31/2013

9/30/2013

12/31/2013

12/31/2012

Operating expenses ($ in thousands):

  Lease operating expenses

$

35,048

$

21,831

$

94,634

$

54,924

  Well services (OWS)

10,228

9,929

29,259

11,774

  Midstream (OMS)

608

390

1,454

  Marketing, transportation and gathering expenses(1)

5,286

5,173

18,777

8,566

     Bulk oil purchase

5,776

1,383

     Non-cash valuation charge

782

515

1,371

(692)

   Select operating expenses

$

51,952

$

37,838

$

151,271

$

75,955

Operating expenses ($ per Boe):

  Lease operating expenses

$

9.05

$

7.18

$

7.65

$

6.68

  Marketing, transportation and gathering expenses(1)

1.36

1.70

1.52

1.04

(1)

Excludes bulk oil purchase and non-cash valuation charges.

The sequential quarter-over-quarter increase in lease operating expenses per barrel of oil equivalent ("Boe") was primarily due to additional workover costs, which include costs to protect producing wells from wells that are being completed, coupled with higher cost structures on wells acquired by the Company in the fourth quarter of 2013.

Marketing, transportation and gathering expenses, excluding non-cash valuation charges, was $5.3 million. The 20% sequential quarter-over-quarter decrease per Boe was primarily due to wells acquired in the fourth quarter of 2013 that were not connected to third-party infrastructure.

Production taxes for the fourth quarter of 2013 totaled $30.2 million, or 9.6% of oil and gas revenues, compared to 9.4% of oil and gas revenues for the third quarter of 2013. The sequential quarter-over-quarter increase in production taxes as a percentage of oil and gas revenues was due to the acquisition of wells in North Dakota, which imposes a higher production tax rate compared to Montana, which has lower incentivized production tax rates on certain new wells.

Depreciation, depletion and amortization for the fourth quarter of 2013 totaled $26.14 per Boe, compared to $23.91 per Boe in the third quarter of 2013. The increase per Boe was primarily due to costs related to the acquisition of certain properties in the Company's West Williston project area.

General and administrative ("G&A") expenses for the fourth quarter of 2013 totaled $28.1 million compared to $16.7 million in the third quarter of 2013. This increase was primarily due to the impact of the Company's organizational growth on employee compensation, additional end-of-year compensation expenses and acquisition-related costs. These increases were coupled with lower Oasis Well Services ("OWS") activity due to inclement weather at the end of the fourth quarter of 2013, which caused OWS G&A expenses to be $3.0 million higher in the fourth quarter of 2013 as compared to the third quarter of 2013.

The Company's derivative activities are detailed in the following table:

Quarter Ended:

Year Ended:

12/31/2013

9/30/2013

12/31/2013

12/31/2012

Derivative activities(1) ($ in thousands)

Derivative settlements

$

(2,998)

$

(8,067)

$

(8,133)

$

6,545

Change in fair value of derivative instruments

9,404

(31,750)

(27,299)

27,619

Net gain (loss) on derivative instruments

$

6,406

$

(39,817)

$

(35,432)

$

34,164

(1)

The Company's derivative instruments do not qualify for and were not designated as hedging instruments for accounting purposes.

Adjusted EBITDA for the fourth quarter of 2013 was $225.4 million, an increase of $61.9 million, or 38%, over the fourth quarter of 2012 of $163.5 million. Adjusted EBITDA for the full year 2013 was $821.9 million, an increase of $309.6 million, or 60%, over the full year 2012 of $512.3 million.

The Company reported net income of $54.5 million in the fourth quarter of 2013 compared to $42.6 million in the fourth quarter of 2012. For the full year 2013, Oasis reported net income of $228.0 million compared to $153.4 million for the full year 2012. Excluding certain non-cash items and their tax effect in the fourth quarters of 2013 and 2012, Adjusted Net Income (non-GAAP) was $49.7 million, or $0.52 per diluted share, and $45.2 million, or $0.49 per diluted share, respectively. Excluding certain non-cash items and their tax effect for the years ending December 31, 2013 and 2012, Adjusted Net Income (non-GAAP) was $247.0 million, or $2.64 per diluted share, and $138.4 million, or $1.50 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 $1,699.6 million for the fourth quarter of 2013 and $2,506.3 million for the year ending December 31, 2013.

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

2013

1Q

2Q

3Q

4Q

FY

CapEx ($ in thousands)

E&P CapEx

  West Williston

$

136,370

$

80,385

$

135,363

$

145,503

$

497,621

  East Nesson

82,429

92,576

97,881

105,654

378,540

  Sanish

19,943

5,577

9,964

5,083

40,567

Acquisitions(1)

5,554

127,660

1,430,197

1,563,411

  Total E&P CapEx(2)

$

238,742

$

184,092

$

370,868

$

1,686,437

$

2,480,139

OWS

302

2,559

3,399

8,957

15,217

Other Non E&P(3)

1,303

2,340

3,107

4,192

10,942

 Total Company CapEx(4)

$

240,347

$

188,991

$

377,374

$

1,699,586

$

2,506,298

(1)

Reflects all acquisitions in 2013, including $1,551.7 million for four separate acquisitions of an aggregate of approximately 161,000 net acres in the Company's West Williston and East Nesson project areas.

(2)

Total E&P capital expenditures include:

  • $855.8 million of drilling and completion (including production-related equipment) CapEx for operated and non-operated wells, including savings from services provided by OWS and Oasis Midstream Services ("OMS");
  • $26.5 million for maintaining and expanding the Company's leasehold position;
  • $22.3 million for constructing infrastructure to support production in the Company's core project areas, primarily related to salt water disposal systems;
  • $10.2 million for field facilities; and
  • $1.9 million for micro-seismic work, purchase of seismic data and other test work.

(3)

Non-E&P CapEx include such items as administrative capital and capitalized interest.

(4)

CapEx (including acquisitions) reflected in the table above differ from the amounts for capital expenditures and acquisition of oil and gas properties shown in the statement of cash flows in the Company's consolidated financial statements because amounts reflected in the table include changes in accrued liabilities from the previous reporting period for capital expenditures, while the amounts presented in the statement of cash flows are presented on a cash basis. In addition, acquisitions reflected in the table include inventory purchased as part of acquisitions, which is included in net cash provided by operating activities in the statement of cash flows in the Company's consolidated financial statements.

Hedging Activity

As of February 25, 2014, the Company had the following outstanding commodity derivate contracts, all of which are priced off NYMEX West Texas Intermediate crude oil index prices and settle monthly:

Weighted Average Prices ($/Bbl)

Current Hedged Volumes

Term

Sub-Floor

Floor

Ceiling

Swaps

BOPD

Total Barrels

2014

Full Year

Swaps

January - December

$

93.07

3,500

1,277,500

Swaps with sub-floor

January - December

$

70.00

$

92.60

6,000

2,190,000

Two-way collars

January - December

$

90.00

$

101.13

3,500

1,277,500

Three-way collars

January - December

$

70.59

$

90.59

$

105.25

8,500

3,102,500

First Half

Swaps

January - June

$

99.42

4,000

724,000

Three-way collars

January - June

$

70.00

$

90.00

$

103.98

2,000

362,000

Partial Year

Swaps

March - December

$

96.49

4,000

1,224,000

Total 2014 hedges (weighted average)

$

70.32

$

90.38

$

104.04

$

94.50

27,829

10,157,500

Remaining 1H14 Hedges (Mar-Jun)

31,500

Average 2H14 Hedges

25,500

2015

Full Year

Swaps

January - December

$

88.80

2,000

730,000

First Half

Swaps

January - June

$

90.03

4,000

724,000

Total 2015 hedges (weighted average)

$

89.41

3,984

1,454,000

Total 1H15 Hedges

6,000

Total 2H15 Hedges

2,000

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. Matt Ultis, (281) 404-9600

 

 

Oasis Petroleum Inc. Financial Statements

OASIS PETROLEUM INC.

CONSOLIDATED BALANCE SHEET

December 31,

2013

2012

(In thousands, except share data)

ASSETS

Current assets

Cash and cash equivalents

$

91,901

$

213,447

Short-term investments

25,891

Accounts receivable — oil and gas revenues

175,653

110,341

Accounts receivable — joint interest partners

139,459

99,194

Inventory

20,652

20,707

Prepaid expenses

10,191

1,770

Advances to joint interest partners

760

1,985

Derivative instruments

2,264

19,016

Deferred income taxes

6,335

Other current assets

391

335

Total current assets

447,606

492,686

Property, plant and equipment

Oil and gas properties (successful efforts method)

4,528,958

2,348,128

Other property and equipment

188,468

49,732

Less: accumulated depreciation, depletion, amortization and impairment

(637,676)

(391,260)

Total property, plant and equipment, net

4,079,750

2,006,600

Assets held for sale

137,066

Derivative instruments

1,333

4,981

Deferred costs and other assets

46,169

24,527

Total assets

$

4,711,924

$

2,528,794

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities

Accounts payable

$

8,920

$

12,491

Advances from joint interest partners

12,829

21,176

Revenues and production taxes payable

146,741

71,553

Accrued liabilities

241,830

189,863

Accrued interest payable

47,910

30,096

Derivative instruments

8,188

1,048

Deferred income taxes

4,558

Total current liabilities

466,418

330,785

Long-term debt

2,535,570

1,200,000

Asset retirement obligations

35,918

22,956

Derivative instruments

139

380

Deferred income taxes

323,147

177,671

Other liabilities

2,183

1,997

Total liabilities

3,363,375

1,733,789

Commitments and contingencies

Stockholders' equity

Common stock, $0.01 par value; 300,000,000 shares authorized; 100,866,589 shares and 93,432,712 shares issued at December 31, 2013 and 2012, respectively

996

925

Treasury stock, at cost; 167,155 shares and 129,414 shares at December 31, 2013 and 2012, respectively

(5,362)

(3,796)

Additional paid-in-capital

985,023

657,943

Retained earnings

367,892

139,933

Total stockholders' equity

1,348,549

795,005

Total liabilities and stockholders' equity

$

4,711,924

$

2,528,794

 

OASIS PETROLEUM INC.

CONSOLIDATED STATEMENT OF OPERATIONS

Three Months Ended December 31,

Year Ended December 31,

2013

2012

2013

2012

(In thousands, except per share data)

Revenues

Oil and gas revenues

$

313,967

$

208,634

$

1,084,412

$

670,491

Well services and midstream revenues

19,648

5,693

57,587

16,177

Total revenues

333,615

214,327

1,141,999

686,668

Expenses

Lease operating expenses

35,048

16,945

94,634

54,924

Well services and midstream operating expenses

10,836

4,670

30,713

11,774

Marketing, transportation and gathering expenses

6,068

1,974

25,924

9,257

Production taxes

30,228

19,546

100,537

62,965

Depreciation, depletion and amortization

101,276

65,951

307,055

206,734

Exploration expenses

(452)

79

2,260

3,250

Impairment of oil and gas properties

406

974

1,168

3,581

General and administrative expenses

28,072

17,568

75,310

57,190

Total expenses

211,482

127,707

637,601

409,675

Operating income

122,133

86,620

504,398

276,993

Other income (expense)

Net gain (loss) on derivative instruments

6,406

596

(35,432)

34,164

Interest expense, net of capitalized interest

(41,736)

(21,191)

(107,165)

(70,143)

Other income (expense)

119

2,339

1,216

4,860

Total other income (expense)

(35,211)

(18,256)

(141,381)

(31,119)

Income before income taxes

86,922

68,364

363,017

245,874

Income tax expense

32,432

25,774

135,058

92,486

Net income

$

54,490

$

42,590

$

227,959

$

153,388

Earnings per share:

Basic

$

0.58

$

0.46

$

2.45

$

1.66

Diluted

0.57

0.46

2.44

1.66

Weighted average shares outstanding:

Basic

94,228

92,226

92,867

92,180

Diluted

94,821

92,509

93,411

92,513

 

OASIS PETROLEUM INC.

SELECTED FINANCIAL AND OPERATIONAL STATS

Three Months Ended December 31,

Year Ended December 31,

2013

2012

2013

2012

Operating results ($ in thousands):

Revenues

Oil

$

295,903

$

199,761

$

1,033,866

$

643,446

Natural gas

18,064

8,873

50,546

27,045

Well services and midstream

19,648

5,693

57,587

16,177

Total revenues

$

333,615

$

214,327

$

1,141,999

$

686,668

Production data:

Oil (MBbls)

3,446

2,301

11,133

7,533

Natural gas (MMcf)

2,567

1,406

7,450

4,146

Oil equivalents (MBoe)

3,874

2,535

12,375

8,224

Average daily production (Boe/d)

42,106

27,556

33,904

22,469

Average sales prices:

Oil, without derivative settlements (per Bbl)(1)

$

85.87

$

86.82

$

92.34

$

85.22

Oil, with derivative settlements (per Bbl)(1)(2)

85.00

88.45

91.61

86.09

Natural gas (per Mcf)(3)

7.04

6.31

6.78

6.52

Costs and expenses (per Boe of production):

Lease operating expenses(4)

$

9.05

$

6.68

$

7.65

$

6.68

Marketing, transportation and gathering expenses(5)

1.36

1.03

1.52

1.04

Production taxes

7.80

7.71

8.12

7.66

Depreciation, depletion and amortization

26.14

26.01

24.81

25.14

General and administrative expenses

7.25

6.93

6.09

6.95

(1)

For the years ended December 31, 2013 and 2012, average sales prices for oil are calculated using total oil revenues, excluding bulk oil sales of $5.8 million and $1.5 million, respectively, 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)

For the year ended December 31, 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 year ended December 31, 2013.

(5)

Excludes bulk oil purchase and non-cash valuation charges.

 

OASIS PETROLEUM INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

Year Ended December 31,

2013

2012

(In thousands)

Cash flows from operating activities:

Net income

$

227,959

$

153,388

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

Depreciation, depletion and amortization

307,055

206,734

Impairment of oil and gas properties

1,168

3,581

Deferred income taxes

134,583

92,479

Derivative instruments

35,432

(34,164)

Stock-based compensation expenses

11,982

10,333

Debt discount amortization and other

4,248

2,810

Working capital and other changes:

Change in accounts receivable

(107,473)

(90,103)

Change in inventory

(13,941)

(29,313)

Change in prepaid expenses

(8,191)

346

Change in other current assets

(56)

156

Change in other assets

(3,248)

(95)

Change in accounts payable and accrued liabilities

107,451

76,706

Change in other current liabilities

(472)

Change in other liabilities

887

Net cash provided by operating activities

697,856

392,386

Cash flows from investing activities:

Capital expenditures

(893,524)

(1,051,365)

Acquisition of oil and gas properties

(1,560,072)

Derivative settlements

(8,133)

6,545

Purchases of short-term investments

(126,213)

Redemptions of short-term investments

25,000

120,316

Advances from joint interest partners

(8,347)

12,112

Net cash used in investing activities

(2,445,076)

(1,038,605)

Cash flows from financing activities:

Proceeds from issuance of senior notes

1,000,000

400,000

Proceeds from revolving credit facility

600,000

Principal payments on revolving credit facility

(264,430)

Debt issuance costs

(22,910)

(8,012)

Proceeds from sale of common stock

314,580

Purchases of treasury stock

(1,566)

(3,194)

Net cash provided by financing activities

1,625,674

388,794

Decrease in cash and cash equivalents

(121,546)

(257,425)

Cash and cash equivalents:

Beginning of period

213,447

470,872

End of period

$

91,901

$

213,447

Supplemental cash flow information:

Cash paid for interest, net of capitalized interest

$

85,596

$

53,488

Cash paid for taxes

750

107

Supplemental non-cash transactions:

Change in accrued capital expenditures

$

34,354

$

59,878

Change in asset retirement obligations

13,201

10,230

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.

Adjusted EBITDA Reconciliations

Three Months Ended

December 31,

Year Ended

December 31,

2013

2012

2013

2012

(In thousands)

Adjusted EBITDA reconciliation to Net Income:

Net income

$

54,490

$

42,590

$

227,959

$

153,388

Change in fair value of derivative instruments

(9,404)

3,165

27,299

(27,619)

Interest expense, net of capitalized interest

41,736

21,191

107,165

70,143

Depreciation, depletion and amortization

101,276

65,951

307,055

206,734

Impairment of oil and gas properties

406

974

1,168

3,581

Exploration expenses

(452)

79

2,260

3,250

Stock-based compensation expenses

3,571

3,706

11,982

10,333

Income tax expense

32,432

25,774

135,058

92,486

Other non-cash adjustments

1,321

54

1,910

(2)

Adjusted EBITDA

$

225,376

$

163,484

$

821,856

$

512,294

Adjusted EBITDA reconciliation to Net Cash Provided by Operating Activities:

Net cash provided by operating activities

$

161,175

$

110,258

$

697,856

$

392,386

Derivative settlements

(2,998)

3,761

(8,133)

6,545

Interest expense, net of capitalized interest

41,736

21,191

107,165

70,143

Exploration expenses

(452)

79

2,260

3,250

Debt discount amortization and other

(1,555)

(772)

(4,248)

(2,810)

Current tax expense

93

(57)

475

7

Changes in working capital

26,056

28,970

24,571

42,775

Other non-cash adjustments

1,321

54

1,910

(2)

Adjusted EBITDA

$

225,376

$

163,484

$

821,856

$

512,294

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 fair value of 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 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,

2013

2012

2013

2012

(In thousands, except per share data)

Net income

$

54,490

$

42,590

$

227,959

$

153,388

Change in fair value of derivative instruments

(9,404)

3,165

27,299

(27,619)

Impairment of oil and gas properties

406

974

1,168

3,581

Other non-cash adjustments

1,321

54

1,910

(2)

       Tax impact(1)

2,864

(1,581)

(11,302)

9,043

Adjusted Net Income

$

49,677

$

45,202

$

247,034

$

138,391

Adjusted earnings per share:

Basic

$

0.53

$

0.49

$

2.66

$

1.50

Diluted

0.52

0.49

2.64

1.50

Weighted average shares outstanding:

Basic

94,228

92,226

92,867

92,180

Diluted

94,821

92,509

93,411

92,513

Effective tax rate

37.3%

37.7%

37.2%

37.6%

(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.



RELATED LINKS

http://www.oasispetroleum.com