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Oasis Petroleum Inc. Announces Quarter Ended June 30, 2016 Earnings

"Oasis delivered another strong quarter with production remaining basically flat for the seventh consecutive quarter in a row," said Thomas B. Nusz, Oasis' Chairman and Chief Executive Officer. "We are now increasing our full year production guidance to 48,500 to 49,500 Boepd. We finished our scheduled completion program in Indian Hills during the second quarter and began completing wells in Wild Basin at the end of the quarter. Our infrastructure project in Wild Basin continues to be developed on budget, and we continue to expect the project to be fully operational this fall."

Mr. Nusz added, "The team has further reduced our cost structure, driving down our current well costs from $6.5 million to $5.9 million and LOE from $7.84 per Boe for the year 2015 to $6.89 per Boe for the first six months of 2016. We believe that well costs still have a bias downward through further efficiency gains by the team, and we are lowering our full year LOE guidance to $6.75 to $7.50 per Boe. Our continually improved capital and operational efficiency coupled with our strong well performance in our core acreage continues to improve the trajectory of returns for Oasis. As a result, we now plan to complete 53 gross (34.3 net) wells in 2016, while continuing to operate two rigs and one frac spread and remaining within our original guidance of $200 million of drilling and completion capital. Lastly, we further reduced borrowings under our revolver from $65 million at the end of the first quarter of 2016 to $35 million at the end of the second quarter of 2016."

Operational and Financial Update

Select operational and financial statistics are in the following table:


Quarter Ended:


6/30/2016


3/31/2016


6/30/2015

Production data:






Oil (Bopd)

41,176



42,525



44,043


Natural gas (MMcfpd)

49,983



46,740



37,306


Total production (Boepd)

49,507



50,315



50,261


Percent Oil

83

%


85

%


88

%

Average sales prices:






Oil, without derivative settlements (per Bbl)

$

40.81



$

28.74



$

52.04


Differential to NYMEX West Texas Intermediate crude oil index prices ("WTI") (per Bbl)

4.85



4.85



5.90


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

48.94



47.68



78.01


Derivative settlements - net cash receipts (in millions)(2)

30.5



73.3



104.1


Natural gas (per Mcf)(3)

1.42



1.44



1.63


Revenues ($ in millions):






Oil

$

152.9



$

111.2



$

208.6


Natural gas

6.4



6.1



5.5


Well services ("OWS")

12.8



6.0



9.2


OMS

6.9



7.0



6.7


Total revenues

$

179.0



$

130.3



$

230.0


OWS and OMS operating expenses ($ in millions):






OWS

$

7.1



$

2.7



$

5.3


OMS

1.7



1.7



2.1


Select operating expenses:






LOE ($ per Boe)

$

7.00



$

6.78



$

8.26


MT&G ($ per Boe)(4)

1.55



1.60



1.68


DD&A ($ per Boe)

27.19



26.74



26.07


Exploration and production ("E&P") general and administrative expenses ("G&A") ($ per Boe)

3.93



4.61



4.34


Production taxes (% of oil and gas revenue)

9.0

%


9.2

%


9.6

%



















(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.

(2)

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.

(3)

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

(4)

Excludes non-cash valuation charges on pipeline imbalances.

G&A totaled $21.9 million in the second quarter of 2016, $21.5 million in the second quarter of 2015 and $24.4 million in the first quarter of 2016. Amortization of stock-based compensation, which is included in G&A, was $6.2 million, or $1.39 per Boe, in the second quarter of 2016 as compared to $6.1 million, or $1.32 per Boe, in the second quarter of 2015 and $6.7 million, or $1.47 per Boe, in the first quarter of 2016. G&A for the Company's E&P segment totaled $17.7 million in the second quarter of 2016, $19.8 million in the second quarter of 2015 and $21.1 million in the first quarter of 2016.

Interest expense was $35.0 million for the second quarter of 2016 compared to $37.4 million for the second quarter of 2015 and $38.7 million for the first quarter of 2016. Capitalized interest totaled $4.8 million for the second quarter of 2016, $4.9 million for the second quarter of 2015 and $4.5 million for the first quarter of 2016. Cash Interest totaled $37.8 million for the second quarter of 2016, $39.9 million for the second quarter of 2015 and $39.3 million for the first quarter of 2016. For a definition of Cash Interest and a reconciliation of interest expense to Cash Interest, see "Non-GAAP Financial Measures" below.

For the three months ended June 30, 2016, the Company recorded an income tax benefit of $52.5 million, resulting in a 36.9% effective tax rate as a percentage of its pre-tax loss for the quarter. The Company recorded an income tax benefit of $27.6 million, resulting in a 30.0% effective tax rate as a percentage of its pre-tax income for the three months ended March 31, 2016.

For the second quarter of 2016, the Company reported a net loss of $89.9 million, or $0.51 per diluted share, as compared to a net loss of $53.2 million, or $0.39 per diluted share, for the second quarter of 2015. Excluding certain non-cash and non-recurring items and their tax effect, Adjusted Net Loss (non-GAAP) was $19.4 million, or $0.11 per diluted share, in the second quarter of 2016, compared to Adjusted Net Income of $52.0 million, or $0.38 per diluted share, in the second quarter of 2015. For a definition of Adjusted Net Income (Loss) and a reconciliation of net income (loss) to Adjusted Net Income (Loss), see "Non-GAAP Financial Measures" below.

Adjusted EBITDA for the second quarter of 2016 was $132.2 million. For a definition of Adjusted EBITDA and a reconciliation of net income (loss) and net cash provided by (used in) operating activities to Adjusted EBITDA, see "Non-GAAP Financial Measures" below.

Capital Expenditures

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


1Q 2016


2Q 2016


YTD 2016

CapEx ($ in thousands):






E&P

$

47,734



$

73,125



$

120,859


OMS

35,039



52,843



87,882


OWS

650





650


Other(1)

4,532



5,320



9,852


Total CapEx(2)

$

87,955



$

131,288



$

219,243




(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.

Liquidity

In April 2016, the Company repurchased an aggregate principal amount of $46.8 million of its outstanding senior unsecured notes for an aggregate cost of $34.6 million, including accrued interest and fees. For the three months ended June 30, 2016, the Company recognized a pre-tax gain of $11.6 million related to these repurchases, which was net of the $0.5 million write-off of unamortized deferred financing costs.

As of June 30, 2016, Oasis had total cash and cash equivalents of $6.5 million. In addition, Oasis had $35.0 million of borrowings and $14.2 million of outstanding letters of credit issued under its revolving credit facility, resulting in an unused borrowing base capacity of $1,100.8 million as of June 30, 2016.

Hedging Activity

As of August 3, 2016, the Company had the following outstanding commodity derivative contracts, all of which are priced off of WTI and settle monthly:



Weighted Average Prices ($/Bbl)



Type


Sub-Floor


Floor


Ceiling


BOPD

2016 Swaps









Second Half (July - Dec)




$

49.15



$

49.15



32,000


2017 Swaps









Full Year Swaps




$

47.68



$

47.68



10,000


First Half (Jan - June)




$

45.00



$

45.00



2,000


2017 Collars









Full Year Two-way Collars




$

40.00



$

47.58



2,000


Full Year Three-way Collars


$

30.00



$

45.00



$

60.11



5,000


















The June 2016 contracts settled at $3.2 million and will be included in the Company's third quarter 2016 derivative settlements.

Conference Call Information

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

Date:


Thursday, August 4, 2016

Time:


10:00 a.m. Central Time

Dial-in:


888-317-6003

Intl. Dial in:


412-317-6061

Conference ID:


9978735

Website:


www.oasispetroleum.com

A recording of the conference call will be available beginning at 12:00 p.m. Central Time on the day of the call and will be available until Thursday, August 11, 2016 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...


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