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Oasis Petroleum Inc. Announces Quarter Ended

The following excerpt is from the company's SEC filing.

September 30, 2015

Earnings

Houston, Texas —

November 3, 2015

— Oasis Petroleum Inc. (NYSE: OAS) (“Oasis” or the “Company”) today announced financial results for the quarter ended

and provided an operational update.

Highlights include:

Exceeded production guidance range and increased average daily production to

50,546

barrels of oil equivalent per day (“Boepd”), a

increase over the

quarter of

Completed and placed on production

gross (

net) operated and 0.7 net non-operated wells in the

Total cap ital expenditures (“CapEx”) were

$78.1 million

for the three months ended

and $519.6 million for the nine months ended September 30, 2015.

Decreased lease operating expenses (“LOE”) per barrel of oil equivalent (“Boe”) to

, a 27% decrease from the

and a 7% sequential quarter decrease.

Adjusted EBITDA was

$189.2 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.

“Oasis delivered another exceptional quarter by growing production, lowering LOE, delivering better differentials, and driving well costs down further,” said Thomas B. Nusz, Oasis’ Chairman and Chief Executive Officer. “Production of 50,546 Boepd exceeded the top end of our guidance range of 48,000 to 50,000 Boepd and LOE per Boe of $7.67 was below the low end of our guidance range of $8.35 to $9.00. Oil differentials improved to $4.82 per barrel compared to guidance of $5.50 to $6.50. The average cost to complete a slickwater well using all ceramics has fallen from $7.8 million at the end of the second quarter of 2015 to $7.4 million at the end of the third quarter. While costs are coming down, we continue to deliver strong performance with our high intensity completions, consistent with our historical high intensity results.”

“We now plan to complete 80 gross (63.8 net) operated wells during 2015 and have increased our full year guidance to 49,700 to 50,100 Boepd, up from 49,000 to 50,000 Boepd,” added Mr. Nusz. “Completion activity in the fourth quarter of 2015 is expected to be lower than the third quarter, primarily due to operations during winter months. We exited the third quarter of 2015 with 87 gross operated wells waiting on completion. We continue to run three rigs and have now started drilling operations in our Wild Basin project area.”

Michael Lou, Oasis’ Chief Financial Officer also commented, “The Oasis team continues to exceed expectations, allowing us to be cash flow positive, as measured by Adjusted EBITDA less cash interest and CapEx, again in the third quarter. Our operational performance and lower cost structure sets us up to be cash flow positive in the fourth quarter of 2015 and throughout 2016, excluding CapEx for Oasis Midstream Services, or OMS, during 2016. OMS delivered another strong quarter, with Adjusted EBITDA growing to $20.5 million, and OMS Adjusted EBITDA is now projected to exceed $60 million in 2015. OMS has increased produced water volumes flowing on its gathering lines from 40% at year-end 2014 to 75% at the end of the third quarter of 2015.”

“We continue to have a great liquidity position, as our lenders set our borrowing base at $1.525 billion in October 2015, which was equal to the elected commitment amount,” added Mr. Lou.

Operational and Financial Update

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

Quarter Ended:

9/30/2015

6/30/2015

9/30/2014

Production (Boepd)

50,261

45,873

Percent Oil

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

Differential to NYMEX West Texas Intermediate crude oil index prices (“WTI”)

Revenues ($ in thousands):

169,672

208,564

328,548

Natural gas

16,158

Well services (OWS)

15,381

20,925

Midstream services (OMS)

Total revenues

197,235

230,046

368,659

Well services revenues increased $6.2 million to

$15.4 million

as compared to

primarily due to well completion revenue as a result of OWS completing OPNA wells with a higher average third-party working interest in the

. Midstream revenues were

$6.6 million

, which was a $0.1 million sequential quarter decrease, primarily due to decreased fresh water sales, offset by increased water volumes flowing through OMS produced water gathering systems.

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

Operating expenses ($ in thousands):

Lease operating expenses (LOE)

35,670

37,761

44,361

13,572

Marketing, transportation and gathering expenses

Non-cash valuation charges

Total operating expenses

54,158

52,726

66,589

Operating expenses ($ per Boe):

Excludes non-cash valuation charges on pipeline imbalances.

The sequential quarter-over-quarter decrease in LOE per Boe was primarily due to an increase in salt water disposal volumes being transported on OMS pipelines and injected in OMS salt water disposal wells as well as lower workover costs, partially offset by higher costs associated with operating an increased number of producing wells quarter over quarter.

Marketing, transportation and gathering expenses, excluding non-cash valuation charges on pipeline imbalances, remained relatively flat across periods. Currently, the Company is flowing

of its gross operated oil production through third-party oil gathering systems.

Production taxes as a percentage of oil and gas revenues were

and 9.6% in the

Depreciation, depletion and amortization expenses (“DD&A”) totaled

$123.7 million

$107.0 million

and $119.2 million in the

. DD&A was

$26.61

per Boe in the

$25.35

and $26.07 per Boe in the

. The increase in the

quarter of 2015 DD&A rate was primarily due to lower oil and natural gas prices coupled with 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

$22.4 million

$23.9 million

and $21.5 million in the

. G&A expenses for our exploration and production segment totaled $18.9 million in the third quarter of 2015, $20.9 million in the third quarter of 2014 and $19.8 million in the second quarter of 2015. Exploration and production G&A expenses were $4.07 per Boe in the

, $4.94 per Boe in the

and $4.34 per Boe in the

. Amortization of stock-based compensation, which is included in G&A expenses, remained flat at $6.0 million, or $1.28 per Boe, in the

as compared to $6.1 million, or $1.44 per Boe, in the

and $6.1 million, or $1.32 per Boe, in the

As a result of its derivative activities and forward oil price changes, the Company incurred a

$103.6 million

net gain on derivative instruments, including net cash settlement receipts of

, for the

and a $39.4 million net loss on derivative instruments, including net cash settlement receipts of $104.1 million, for the

. The net cash settlement receipts from derivative instruments of

included $28.3 million, $21.4 million and $28.4 million from contract settlements in June 2015, July 2015 and August 2015, respectively. The Company’s derivative instruments do not qualify for and were not designated as hedging...


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