Oasis Petroleum Inc. Announces Quarter Ended June 30, 2015 Earnings

Aug 04, 2015, 16:56 ET from Oasis Petroleum Inc.

HOUSTON, Aug. 4, 2015 /PRNewswire/ -- Oasis Petroleum Inc. (NYSE: OAS) ("Oasis" or the "Company") today announced financial results for the quarter ended June 30, 2015 and provided an operational update.

Highlights include:

  • Exceeded production guidance range and increased average daily production to 50,261 barrels of oil equivalent per day ("Boepd"), a 15% increase over the second quarter of 2014.
  • Completed and placed on production 21 gross (18.5 net) operated and 1.2 net non-operated wells in the second quarter of 2015.
  • Total capital expenditures ("CapEx") were $170.4 million, in line with the Company's plan, for the three months ended June 30, 2015.
  • Decreased lease operating expenses ("LOE") per barrel of oil equivalent ("Boe") to $8.26, a 19% decrease from the second quarter of 2014 and a 4% sequential quarter decrease.
  • Grew Adjusted EBITDA by 17% to $245.4 million in the second quarter of 2015, up from $208.9 million in the first quarter of 2015. For a definition of Adjusted EBITDA and a reconciliation of net income and net cash provided by operating activities to Adjusted EBITDA, see "Non-GAAP Financial Measures" below.

"Our team has exceeded all of our expectations during the first half of 2015, with production averaging over 50,000 Boepd and LOE trending below $8.50 per Boe year to date," said Thomas B. Nusz, Oasis' Chairman and Chief Executive Officer. "Production is ahead of schedule as we continue to see excellent performance from our high intensity completions along with high volume lift systems and reduced downtime. Lease operating expenses on a per barrel basis improved again sequentially with the benefit of growth in critical infrastructure. Oasis Midstream Services ("OMS") increased pipeline connections resulting in the amount of produced water flowing through our system to our disposal wells increasing significantly from 48% to 65% during the second quarter of 2015. Additionally, well costs continue to decrease as we optimize pad operations, improve drilling efficiency, and reduce the cost of source water with OMS infrastructure. Wells completed with slickwater in Indian Hills are now approximately $7.8 million, which is 13% lower than where they were in May 2015. Our team has done a tremendous job driving cost improvement through both efficiency gains and service cost reductions."

"We released a rig at the end of the second quarter, dropping down to three rigs running, as the team increased drilling efficiencies throughout the first half of the year," Mr. Nusz added. "By lowering drilling cycle times, we ended the second quarter with a backlog of wells drilled and not completed of 93, which was higher than originally planned. Given the current commodity backdrop, we have not changed our original completion plan of 79 gross (63.3 net) operated wells during 2015. With this pace of completions coupled with lower well costs, we are now planning on investing $670 million in CapEx during 2015 compared to our board approved budget of $705 million. Taking into consideration this completion program and improved operational performance, we are also increasing our production guidance range for the year from 46,000 to 49,000 Boepd up to 49,000 to 50,000 Boepd."

Michael Lou, Oasis' Chief Financial Officer also commented, "Based on operational performance and cost savings in the first half of 2015, we were cash flow positive in the second quarter and expect to be cash flow positive for the remainder of 2015. Our employees have done a great job of positioning Oasis to be able to grow within cash flow in the current pricing environment in the coming years."

 

Operational and Financial Update

The Company's average daily production and revenues are detailed in the following table:

 

Quarter Ended:

6/30/2015

3/31/2015

6/30/2014

Production (Boepd)

50,261

50,446

43,668

Percent Oil

87.6

%

88.6

%

89.1

%

Average oil sales price, without derivative settlements (per Bbl)

$

52.04

$

40.73

$

94.48

Revenues ($ in thousands):

Oil

$

208,564

$

163,813

$

334,559

Natural gas

5,546

10,046

19,623

Well services (OWS)

9,219

2,708

14,878

Midstream (OMS)

6,717

3,820

3,318

Total revenues

$

230,046

$

180,387

$

372,378

 

Total revenues for the second quarter of 2015 increased by 28% compared to the first quarter of 2015, primarily due to higher oil prices in the second quarter of 2015. In the second quarter of 2015, as NYMEX West Texas Intermediate crude oil index prices ("WTI") improved, the Company's price differentials returned to approximately 10% as a percentage of WTI and continued to decrease in terms of the dollar per barrel discount to WTI to an average of $5.90 per barrel of oil compared to $7.85 per barrel of oil during the first quarter of 2015. The Company expects its price differential to WTI to range between $5.50 and $6.50 per Boe in the third quarter of 2015.

Well services revenues increased $6.5 million to $9.2 million for the second quarter of 2015 as compared to first quarter of 2015 primarily due to an increase in well completion activity as a result of completing over 50% more stages in the second quarter of 2015. Midstream revenues were $6.7 million for the three months ended June 30, 2015, which was a $2.9 million sequential quarter increase, primarily due to increased fresh water sales and increased water volumes flowing through OMS salt water disposal systems.

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

Quarter Ended:

6/30/2015

3/31/2015

6/30/2014

Operating expenses ($ in thousands):

Lease operating expenses (LOE)

$

37,761

$

39,125

$

40,553

Well services (OWS)

5,343

1,054

7,200

Midstream (OMS)

2,052

898

1,569

    Marketing, transportation and gathering expenses (1)

7,667

7,282

6,996

      Non-cash valuation charges

(97)

(4)

118

   Total operating expenses

$

52,726

$

48,355

$

56,436

Operating expenses ($ per Boe):

Lease operating expenses (LOE)

$

8.26

$

8.62

$

10.21

    Marketing, transportation and gathering expenses (1)

1.68

1.60

1.76

(1)

Excludes non-cash valuation charges on pipeline imbalances.

 

The sequential quarter-over-quarter decrease in LOE per Boe was primarily due to more salt water disposal volumes going to OMS disposal wells, offset by higher water volumes produced.

Marketing, transportation and gathering expenses, excluding non-cash valuation charges, remained relatively flat across periods, totaling $7.7 million in the second quarter of 2015, $7.0 million in the second quarter of 2014 and $7.3 million in the first quarter of 2015. 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. Currently, the Company is flowing 79% of its gross operated oil production through these gathering systems.

Production taxes as a percentage of oil and gas revenues were 9.6% in both the second and first quarters of 2015 and 9.7% in the second quarter of 2014.

Depreciation, depletion and amortization expenses ("DD&A") totaled $119.2 million in the second quarter of 2015, $97.3 million in the second quarter of 2014 and $118.5 million in the first quarter of 2015. DD&A was $26.07 per Boe in the second quarter of 2015, $24.48 per Boe in the second quarter of 2014 and $26.10 per Boe in the first quarter of 2015. The increase in the 2015 DD&A rates were primarily due to increased exploratory and delineation drilling in the Three Forks formation, which has produced lower recoverable reserves in comparison to the Bakken formation.

General and administrative ("G&A") expenses totaled $21.5 million in the second quarter of 2015, $20.8 million in the second quarter of 2014 and $23.3 million in the first quarter of 2015. G&A expenses were $4.70 per Boe in the second quarter of 2015, $5.22 per Boe in the second quarter of 2014 and $5.14 per Boe in the first quarter of 2015. Amortization of stock-based compensation, which is included in G&A expenses, was $6.1 million, or $1.32 per Boe, in the second quarter of 2015 as compared to $5.2 million, or $1.30 per Boe, in the second quarter of 2014 and $7.6 million, or $1.68 per Boe, in the first quarter of 2015.

As a result of its derivative activities and forward oil price changes, the Company incurred a $39.4 million net loss on derivative instruments, including net cash settlement receipts of $104.1 million, for the second quarter of 2015 and a $47.1 million net gain on derivative instruments, including net cash settlement receipts of $109.3 million, for the first quarter of 2015. The net cash settlement receipts from derivative instruments of $104.1 million in the second quarter of 2015 included $41.1 million, $33.3 million and $29.7 million from contract settlements in March 2015, April 2015 and May 2015, respectively. The Company's derivative instruments do not qualify for and were not designated as hedging instruments for accounting purposes.

Interest expense was $37.4 million for the second quarter of 2015 compared to $39.0 million for the second quarter of 2014 and $38.8 million for the first quarter of 2015. The $1.4 million sequential quarter decrease was primarily due to an increase in capitalized interest in the second quarter of 2015 as a result of increased accumulated capital expenditures for assets not yet placed into production in the second quarter of 2015 as compared to the first quarter of 2015. Capitalized interest totaled $4.9 million for the second quarter of 2015, $2.3 million for the second quarter of 2014 and $3.9 million for the first quarter of 2015.

For the three months ended June 30, 2015, the Company recorded an income tax benefit of $30.8 million, resulting in a 36.7% effective tax rate as a percentage of its pre-tax loss for the quarter. The Company recorded an income tax benefit of $7.4 million, resulting in a 29.0% effective tax rate as a percentage of its pre-tax loss for the three months ended March 31, 2015. While the Company's effective tax rate for the three months ended June 30, 2015 was consistent with the statutory tax rate applicable to the U.S. and the blended state rate for the states in which the Company conducts business, the effective tax rate for the three months ended March 31, 2015 was lower due to permanent differences between the compensation amounts expensed for book purposes versus the amounts deductible for income tax purposes.

Adjusted EBITDA for the second quarter of 2015 was $245.4 million, a 4% decrease from the second quarter of 2014 of $254.7 million, and a 17% increase from the first quarter of 2015 of $208.9 million. For a definition of Adjusted EBITDA and a reconciliation of net income and net cash provided by operating activities to Adjusted EBITDA, see "Non-GAAP Financial Measures" below.

For the second quarter of 2015, the Company reported a net loss of $53.2 million, or $0.39 per diluted share, as compared to net income of $38.8 million, or $0.39 per diluted share, for the second quarter of 2014. Excluding certain non-cash and non-recurring items and their tax effect in the second quarter of 2015 and 2014, Adjusted Net Income (non-GAAP) was $51.7 million, or $0.38 per diluted share, and $70.5 million, or $0.70 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

The following table depicts the Company's total CapEx by category:

1Q 2015

2Q 2015

YTD 2015

CapEx ($ in thousands):

Exploration and production

$

225,499

$

106,212

$

331,711

OMS

35,778

39,369

75,147

OWS

2,023

19,663

21,686

Other CapEx (1)

7,805

5,164

12,969

Total CapEx (2)

$

271,105

$

170,408

$

441,513

(1)

Other CapEx includes such items as administrative capital and capitalized interest.

(2)

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 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.

Updated Outlook for 2015

The following table includes updates to the Company's expectations:

Prior

Updated

Production (Boepd) (Full Year)

46,000 to 49,000

49,000 to 50,000

Production (Boepd) (3Q15)

N/A

48,000 to 50,000

LOE ($/Boe) (Full Year)

$9.00 to $10.00

$8.35 to $9.00

Oil Differential (3Q15)

N/A

$5.50 to $6.50

Liquidity

On June 30, 2015, Oasis had total cash and cash equivalents of $13.7 million. As of June 30, 2015, the Company had $155.0 million of borrowings and $5.2 million of outstanding letters of credit issued under its revolving credit facility, resulting in an unused borrowing base capacity of $1,364.8 million.

Hedging Activity

As of August 4, 2015, the Company had the following outstanding commodity derivative contracts, all of which are priced off of WTI and settle monthly:

Weighted Average Prices ($/Bbl)

Floor

Ceiling

BOPD

Second Half 2015

Swaps

$

73.35

$

73.35

23,000

Two-way collars

$

86.00

$

103.42

5,000

Total 2H15 hedges (weighted average)

$

75.61

$

78.72

28,000

First Half 2016

Swaps

$

63.20

$

63.20

8,000

Total 1H16 hedges (weighted average)

$

63.20

$

63.20

8,000

Second Half 2016

Swaps

$

63.94

$

63.94

3,000

Total 2H16 hedges (weighted average)

$

63.94

$

63.94

3,000

Conference Call Information

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

Date:

Wednesday, August 5, 2015

Time:

10:00 a.m. Central Time

Dial-in:

888-317-6003

Intl. Dial in:

412-317-6061

Conference ID:

4014181

Website:

www.oasispetroleum.com

A recording of the conference call will be available beginning at 3:00 p.m. Central Time on the day of the call and will be available until Wednesday, August 12, 2015 by dialing:

Replay dial-in:

877-344-7529

Intl. replay:

412-317-0088

Replay code:

10069861

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 at www.oasispetroleum.com.

 

Oasis Petroleum Inc.

Condensed Consolidated Balance Sheet

(Unaudited)

June 30, 2015

December 31, 2014

(In thousands, except share data)

ASSETS

Current assets

Cash and cash equivalents

$          13,684

$                      45,811

Accounts receivable — oil and gas revenues

134,518

130,934

Accounts receivable — joint interest partners

96,275

175,537

Inventory

17,669

21,354

Prepaid expenses

5,764

14,273

Derivative instruments

108,742

302,159

Other current assets

1,001

6,539

Total current assets

377,653

696,607

Property, plant and equipment

Oil and gas properties (successful efforts method)

6,278,726

5,966,140

Other property and equipment

416,417

313,439

Less: accumulated depreciation, depletion, amortization and impairment

(1,338,486)

(1,092,793)

Total property, plant and equipment, net

5,356,657

5,186,786

Derivative instruments

1,077

13,348

Deferred costs and other assets

48,545

41,671

Total assets

$    5,783,932

$                5,938,412

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities

Accounts payable

10,452

20,958

Revenues and production taxes payable

193,270

209,890

Accrued liabilities

259,066

410,379

Accrued interest payable

49,458

49,786

Deferred income taxes

26,808

97,499

Advances from joint interest partners

6,210

6,616

Total current liabilities

545,264

795,128

Long-term debt

2,355,000

2,700,000

Deferred income taxes

559,239

526,770

Asset retirement obligations

44,230

42,097

Other liabilities

3,267

2,116

      Total liabilities

3,507,000

4,066,111

Commitments and contingencies 

Stockholders' equity

Common stock, $0.01 par value: 300,000,000 shares authorized; 139,560,426 shares issued and 139,156,287 shares outstanding at June 30, 2015 and 101,627,296 shares issued and 101,341,619 shares outstanding at December 31, 2014

1,373

1,001

Treasury stock, at cost: 404,139 and 285,677 shares at June 30, 2015 and December 31, 2014, respectively

(12,603)

(10,671)

Additional paid-in capital

1,484,664

1,007,202

  Retained earnings

803,498

874,769

Total stockholders' equity

2,276,932

1,872,301

Total liabilities and stockholders' equity

$    5,783,932

$                5,938,412

 

Oasis Petroleum Inc.

Condensed Consolidated Statement of Operations

(Unaudited)

Three Months Ended June 30,

Six Months Ended June 30,

2015

2014

2015

2014

(In thousands, except per share data)

Revenues

Oil and gas revenues

$  214,110

$  354,182

$  387,969

$  686,029

Well services and midstream revenues

15,936

18,196

22,464

35,868

Total revenues

230,046

372,378

410,433

721,897

Operating expenses

Lease operating expenses

37,761

40,553

76,886

80,542

Well services and midstream operating expenses

7,395

8,769

9,347

19,689

Marketing, transportation and gathering expenses

7,570

7,114

14,848

12,300

Production taxes

20,618

34,493

37,239

66,296

Depreciation, depletion and amortization

119,218

97,276

237,696

188,548

Exploration expenses

1,082

475

1,925

855

Rig termination

2,815

-

3,895

-

Impairment of oil and gas properties

19,516

42

24,837

804

General and administrative expenses

21,508

20,751

44,832

44,271

Total operating expenses

237,483

209,473

451,505

413,305

Gain on sale of properties

-

3,640

-

187,033

Operating income (loss)

(7,437)

166,545

(41,072)

495,625

Other income (expense)

Net gain (loss) on derivative instruments

(39,424)

(65,570)

7,648

(83,173)

Interest expense, net of capitalized interest

(37,405)

(38,990)

(76,189)

(79,148)

Other income (expense)

191

135

121

288

Total other income (expense)

(76,638)

(104,425)

(68,420)

(162,033)

Income (loss) before income taxes

(84,075)

62,120

(109,492)

333,592

Income tax benefit (expense)

30,845

(23,287)

38,221

(124,806)

Net income (loss)

$  (53,230)

$    38,833

$  (71,271)

$  208,786

Earnings (loss) per share:

  Basic

$      (0.39)

$         0.39

$      (0.58)

$         2.10

  Diluted

(0.39)

0.39

(0.58)

2.08

Weighted average shares outstanding:

  Basic

136,859

99,663

123,157

99,612

  Diluted

136,859

100,260

123,157

100,328

 

Oasis Petroleum Inc.

Selected Financial and Operational Statistics

(Unaudited)

Three Months Ended June 30,

Six Months Ended June 30,

2015

2014

2015

2014

Operating results ($ in thousands):

Revenues

Oil

$  208,564

$  334,559

$  372,377

$  643,790

Natural gas

5,546

19,623

15,592

42,239

Well services and midstream

15,936

18,196

22,464

35,868

Total revenues

$  230,046

$  372,378

$  410,433

$  721,897

Production data:

Oil (MBbls)

4,008

3,541

8,030

6,990

Natural gas (MMcf)

3,395

2,596

6,502

5,045

Oil equivalents (MBoe)

4,574

3,974

9,114

7,831

Average daily production (Boe/d)

50,261

43,668

50,353

43,264

Average sales prices:

Oil, without derivative settlements (per Bbl) 

$      52.04

$      94.48

$      46.37

$      92.10

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

78.01

91.26

72.94

90.15

Natural gas (per Mcf) (2)

1.63

7.56

2.40

8.37

Costs and expenses (per Boe of production):

Lease operating expenses 

$         8.26

$      10.21

$         8.44

$      10.29

Marketing, transportation and gathering expenses (3)

1.68

1.76

1.64

1.65

Production taxes

4.51

8.68

4.09

8.47

Depreciation, depletion and amortization

26.07

24.48

26.08

24.08

General and administrative expenses

4.70

5.22

4.92

5.65

(1)

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. Cash settlements represent the cumulative gains and losses on the Company's derivative instruments for the periods presented and do not include a recovery of costs that were paid to acquire or modify the derivative instruments that were settled.

(2)

Natural gas prices include the value for natural gas and natural gas liquids.

(3)

Excludes non-cash valuation charges on pipeline imbalances.

 

Oasis Petroleum Inc.

Condensed Consolidated Statement of Cash Flows

(Unaudited)

Six Months Ended June 30,

2015

2014

(In thousands)

Cash flows from operating activities:

Net income (loss)

$   (71,271)

$  208,786

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation, depletion and amortization

237,696

188,548

Gain on sale of properties

-

(187,033)

Impairment of oil and gas properties

24,837

804

Deferred income taxes

(38,221)

118,695

Derivative instruments

(7,648)

83,173

Stock-based compensation expenses

13,663

9,678

Deferred financing costs amortization and other

5,059

3,220

Working capital and other changes:

Change in accounts receivable

75,799

(37,132)

Change in inventory

3,685

3,016

Change in prepaid expenses

3,394

1,284

Change in other current assets

5,538

(30)

Change in other assets

-

(1,477)

Change in accounts payable and accrued liabilities

(22,624)

91,543

Change in other current liabilities

-

3,311

Change in other liabilities

(21)

(132)

Net cash provided by operating activities

229,886

486,254

Cash flows from investing activities:

Capital expenditures

(586,661)

(606,924)

Acquisition of oil and gas properties

(769)

(8,116)

Proceeds from sale of properties

-

324,888

Costs related to sale of properties

-

(2,337)

Derivative settlements

213,336

(13,644)

Advances from joint interest partners

(406)

(5,919)

Net cash used in investing activities

(374,500)

(312,052)

Cash flows from financing activities:

Proceeds from sale of common stock

463,010

-

Proceeds from revolving credit facility

320,000

100,000

Principal payments on revolving credit facility

(665,000)

(335,570)

Deferred financing costs

(3,591)

(85)

Purchases of treasury stock

(1,932)

(3,315)

Other

-

(176)

Net cash provided by (used in) financing activities

112,487

(239,146)

Decrease in cash and cash equivalents

(32,127)

(64,944)

Cash and cash equivalents:

Beginning of period

45,811

91,901

End of period

$      13,684

$    26,957

Supplemental non-cash transactions:

Change in accrued capital expenditures

$ (156,368)

$    51,129

Change in asset retirement obligations

2,649

1,624

 

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 GAAP financial measures of net income and net cash provided by operating activities to the non-GAAP financial measure of Adjusted EBITDA for the periods presented:

 

Three Months Ended June 30,

Six Months Ended June 30,

2015

2014

2015

2014

(In thousands)

Net income (loss)

$  (53,230)

$    38,833

$  (71,271)

$  208,786

Gain on sale of properties

-

(3,640)

-

(187,033)

Net (gain) loss on derivative instruments

39,424

65,570

(7,648)

83,173

Derivative settlements (1) 

104,077

(11,405)

213,336

(13,644)

Interest expense, net of capitalized interest

37,405

38,990

76,189

79,148

Depreciation, depletion and amortization

119,218

97,276

237,696

188,548

Impairment of oil and gas properties

19,516

42

24,837

804

Rig termination

2,815

-

3,895

-

Exploration expenses

1,082

475

1,925

855

Stock-based compensation expenses

6,057

5,173

13,663

9,678

Income tax (benefit) expense

(30,845)

23,287

(38,221)

124,806

Other non-cash adjustments

(97)

118

(101)

(628)

Adjusted EBITDA

$  245,422

$  254,719

$  454,300

$  494,493

Net cash provided by operating activities

141,525

277,987

229,886

486,254

Derivative settlements (1) 

104,077

(11,405)

213,336

(13,644)

Interest expense, net of capitalized interest

37,405

38,990

76,189

79,148

Rig termination

2,815

-

3,895

-

Exploration expenses

1,082

475

1,925

855

Deferred financing costs amortization and other

(3,404)

(1,733)

(5,059)

(3,220)

Current tax expense

-

3,345

-

6,111

Changes in working capital

(37,981)

(53,058)

(65,771)

(60,383)

Other non-cash adjustments

(97)

118

(101)

(628)

Adjusted EBITDA

$  245,422

$  254,719

$  454,300

$  494,493

(1)

Cash settlements represent the cumulative gains and losses on the Company's derivative instruments for the periods presented and do not include a recovery of costs that were paid to acquire or modify the derivative instruments that were settled.

 

The following tables present reconciliations of the GAAP financial measure of income before income taxes to the non-GAAP financial measure of Adjusted EBITDA for the Company's three reportable business segments on a gross basis for the periods presented:

 

Exploration and Production

Three Months Ended June 30,

Six Months Ended June 30,

2015

2014

2015

2014

(In thousands)

Income (loss) before income taxes

$ (99,164)

$  49,221

$ (133,172)

$  314,507

Gain on sale of properties

-

(3,640)

-

(187,033)

Net (gain) loss on derivative instruments

39,424

65,570

(7,648)

83,173

Derivative settlements (1)

104,077

(11,405)

213,336

(13,644)

Interest expense, net of capitalized interest

37,405

38,990

76,189

79,148

Depreciation, depletion and amortization

118,049

96,477

235,589

186,705

Impairment of oil and gas properties

19,516

42

24,837

804

Rig termination

2,815

-

3,895

-

Exploration expenses

1,082

475

1,925

855

Stock-based compensation expenses

5,973

5,094

13,515

9,522

Other non-cash adjustments

(97)

118

(101)

(628)

Adjusted EBITDA

$229,080

$240,942

$428,365

$473,409

(1)

Cash settlements represent the cumulative gains and losses on the Company's derivative instruments for the periods presented and do not include a recovery of costs that were paid to acquire or modify the derivative instruments that were settled.

 

Well Services

Three Months Ended June 30,

Six Months Ended June 30,

2015

2014

2015

2014

(In thousands)

Income before income taxes

$    9,030

$  16,318

$  18,638

$  29,822

Depreciation, depletion and amortization

5,008

3,124

9,526

5,759

Stock-based compensation expenses

443

406

986

659

Adjusted EBITDA

$  14,481

$  19,848

$  29,150

$  36,240

Midstream Services

Three Months Ended June 30,

Six Months Ended June 30,

2015

2014

2015

2014

(In thousands)

Income before income taxes

$  15,922

$  6,096

$  25,211

$  10,728

Depreciation, depletion and amortization

1,375

883

2,561

1,734

Stock-based compensation expenses

119

-

323

-

Adjusted EBITDA

$  17,416

$  6,979

$  28,095

$  12,462

 

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 presents reconciliations of the GAAP financial measure of net income to the non-GAAP financial measure of Adjusted Net Income and the GAAP financial measure of diluted earnings per share to the non-GAAP financial measure of Adjusted Diluted Earnings Per Share for the periods presented:

 

Three Months Ended June 30,

Six Months Ended June 30,

2015

2014

2015

2014

(In thousands, except per share data)

Net income (loss)

$ (53,230)

$  38,833

$ (71,271)

$  208,786

    Gain on sale of properties

-

(3,640)

-

(187,033)

    Net (gain) loss on derivative instruments

39,424

65,570

(7,648)

83,173

    Derivative settlements (1)

104,077

(11,405)

213,336

(13,644)

    Impairment of oil and gas properties

19,516

42

24,837

804

    Rig termination

2,815

-

3,895

-

    Other non-cash adjustments

(97)

118

(101)

(628)

      Tax impact (2)

(60,804)

(19,000)

(81,795)

43,896

Adjusted Net Income

$   51,701

$  70,518

$   81,253

$  135,354

Diluted earnings per share

$      (0.39)

$      0.39

$      (0.58)

$         2.08

Gain on sale of properties

-

(0.04)

-

(1.86)

Net (gain) loss on derivative instruments

0.29

0.65

(0.06)

0.83

Derivative settlements (1)

0.76

(0.11)

1.73

(0.14)

Impairment of oil and gas properties

0.14

-

0.20

0.01

Rig termination

0.02

-

0.03

-

Other non-cash adjustments

-

-

-

(0.01)

  Tax impact (2)

(0.44)

(0.19)

(0.66)

0.44

Adjusted Diluted Earnings Per Share

$        0.38

$      0.70

$        0.66

$         1.35

Diluted weighted average shares outstanding

136,859

100,260

123,157

100,328

Effective tax rate

36.7%

37.5%

34.9%

37.4%

(1)

Cash settlements represent the cumulative gains and losses on the Company's derivative instruments for the periods presented and do not include a recovery of costs that were paid to acquire or modify the derivative instruments that were settled.

(2)

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

 

SOURCE Oasis Petroleum Inc.



RELATED LINKS

http://www.oasispetroleum.com