Oasis Midstream Partners LP Announces Quarter Ended September 30, 2020 Earnings

HOUSTON, Nov. 3, 2020 /PRNewswire/ -- Oasis Midstream Partners LP OMP ("OMP" or the "Partnership") today announced financial and operating results for the third quarter of 2020.

Third Quarter 2020 Highlights

• Declared the quarterly cash distribution of $0.54 per unit.
• Net income was $43.7 million and net cash from operating activities was $53.3 million.
• Adjusted EBITDA⁽¹⁾ was $57.1 million and Adjusted EBITDA attributable to Oasis Midstream Partners LP⁽¹⁾ was $37.3 million, a 45% increase from the second quarter.
• Distributable cash flow⁽¹⁾ ("DCF") was $34.1 million and DCF coverage was 1.8x.
• Solid cost control drove higher margins across commodity streams. Operating income improved to 55% of revenue in the third quarter, compared to 42% in the second quarter.
• Resumption of shut-in production drove higher volumes. Natural gas processing volumes were 213.1 MMscfpd in the third quarter, increasing approximately 40% from the second quarter. 61.5 MMscfpd of natural gas processing volumes were from third party producers, up approximately 130% from the second quarter.
• Executed agreement to permanently waive default interest charges based on certain conditions set by OMP lenders that are expected to be satisfied (see "Waiver and Forbearance Agreement" below).
• OMP is not included in Oasis Petroleum's financial restructuring process; OMP and Oasis Petroleum continue to operate in the normal course; Oasis Petroleum expects to complete its restructuring and emerge from Chapter 11 later this month.

(1) Non-GAAP measure. See "Non-GAAP Financial Measures" below for definitions of all non-GAAP measures included herein and reconciliations to the most directly comparable financial measures under United States generally accepted accounting principles ("GAAP").

Chief Executive Officer, Taylor Reid, commented, "Volumes rebounded in the third quarter, as companies brought back a substantial amount of previously shut-in production. The OMP team managed costs exceptionally well, driving improved margins and coverage over the course of the quarter. We're pleased that conditions appear to have stabilized compared to earlier this year, and we continue to take a prudent approach to capital spending as we manage the current operating environment. To that end, we reduced our capital spending outlook in the third quarter and now expect full-year spending to be down approximately 70% from the original budget. In addition, OMP declared a quarterly cash distribution of $0.54 per unit and will continue to monitor market conditions and adjust its operational and financial strategy as appropriate. We remain focused on the health and safety of our employees, contractors, and communities as we continue to drive value for all stakeholders, including OMP unitholders."    

Outlook Update

• Capital expenditures ("CapEx") net to OMP for full-year 2020 are expected to range from $21 million to $24 million, with $5 million to $8 million of spending in the fourth quarter. Total 2020 CapEx net to OMP is almost 70% below original 2020 guidance.
• OMP expects to exceed the high-end of its 2020 EBITDA guidance released in August 2020 and has increased the range to $140 million to $144 million, with fourth quarter EBITDA expected to range between $30 million to $34 million.

Operational and Financial Update

The following table presents select operational and financial data:

The following table presents throughput volumes for the third quarter of 2020:

Liquidity

As of September 30, 2020, the Partnership had cash and cash equivalents of $34.7 million and $487.5 million of borrowings outstanding under its revolving credit facility (the "Revolving Credit Facility"). The aggregate commitments under the Revolving Credit Facility were $575.0 million at September 30, 2020, and the Partnership had an unused borrowing capacity of $87.5 million. The Partnership has the ability to further increase the commitments on the revolving credit facility to $775.0 million.

The Partnership was in compliance with the covenants under its Revolving Credit Facility at September 30, 2020.

Waiver and Forbearance Agreement

In May 2020, the Partnership entered into a limited waiver (the "Limited Waiver") of an event of default with Wells Fargo Bank, N.A., as Administrative Agent (the "Administrative Agent") and the Majority Lenders (as defined in the Partnership's credit agreement), which provides forbearance of additional interest owed arising from an event of default ("Specified Default Interest") until the earlier of (i) November 10, 2020 and (ii) an event of default. Pursuant to the Limited Waiver, the Partnership recorded an additional interest charge of $28.0 million during the nine months ended September 30, 2020. No additional interest charge was recorded during the three months ended September 30, 2020. The Limited Waiver excludes the Specified Default Interest from the interest coverage ratio financial covenant calculation.

On September 29, 2020, the Partnership entered into a Waiver, Discharge and Forgiveness Agreement and Forbearance Extension (the "Waiver and Forbearance Agreement") to permanently waive payment of the Specified Default Interest, subject to certain conditions. Under the terms of the Waiver and Forbearance Agreement, the Administrative Agent and the Majority Lenders agreed to forbear from demanding payment of the Specified Default Interest until the earlier to occur of (i) an additional event of default and (ii) the occurrence of the maturity date provided for in the Senior Secured Superpriority Debtor-In-Possession Revolving Credit Agreement entered into on October 2, 2020, among Oasis Petroleum, the other parties party thereto, each of the lenders thereto and Wells Fargo Bank, N.A., as administrative agent and issuing bank. The effectiveness of the waiver, discharge and forgiveness of the Specified Default Interest is subject to certain conditions, namely, effectiveness of a chapter 11 plan of restructuring at Oasis Petroleum, as well as the maintenance of Oasis Petroleum's and certain of its subsidiaries' material contracts with OMP.

Quarterly Distribution

On November 3, 2020, the board of directors of OMP GP LLC (our "General Partner") declared the quarterly cash distribution for the third quarter of 2020 of $0.54 per unit. In addition, the General Partner will receive a cash distribution of $1.0 million attributable to the incentive distribution rights related to earnings for the third quarter of 2020. These distributions will be payable on November 27, 2020 to unitholders of record as of November 13, 2020.

Qualified Notice

This release is intended to be a qualified notice under Treasury Regulation Section 1.1446-4(b). Brokers and nominees should treat one hundred percent (100.0%) of the Partnership's distributions to non-U.S. investors as being attributable to income that is effectively connected with a United States trade or business. Accordingly, the Partnership's distributions to non-U.S. investors are subject to federal income tax withholding at the highest applicable effective tax rate.

Conference Call Information

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

A recording of the conference call will be available beginning at 11:30 a.m. Central Time on the day of the call and will be available until Wednesday, November 11, 2020 by dialing:

The conference call will also be available for replay for approximately 30 days at www.oasismidstream.com.

Contact:
Oasis Midstream Partners LP
Bob Bakanauskas, (281) 404-9600
Director, Investor Relations

Forward-Looking Statements

This press release contains forward-looking statements. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that the Partnership 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 Partnership, including the Partnership's capital expenditure levels and other guidance included in this press release. These statements are based on certain assumptions made by the Partnership 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 Partnership, 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, developments in the global economy, particularly the public health crisis related to the novel coronavirus 2019 ("COVID-19") pandemic and the adverse impact thereof on demand for crude oil and natural gas and our customers' demand for our services, the risk of further impairments, the Partnership's ability to integrate acquisitions into its existing business, changes in crude oil and natural gas prices, weather and environmental conditions, the timing of planned capital expenditures, availability of acquisitions, uncertainties in the estimates of proved reserves and forecasted production results of the Partnership's customers, operational factors affecting the commencement or maintenance of producing wells, the condition of the capital markets generally, as well as the Partnership's ability to access them, the proximity to and capacity of transportation facilities, an inability of Oasis Petroleum Inc. and certain of its wholly-owned subsidiaries ("Oasis Petroleum") to effectively implement a plan of financial restructuring, an inability of Oasis Petroleum or our other customers to meet their operational and development plans on a timely basis or at all and uncertainties regarding environmental regulations or litigation and other legal or regulatory developments affecting the Partnership's business and other important factors. Should one or more of these risks or uncertainties occur, or should underlying assumptions prove incorrect, the Partnership's actual results and plans could differ materially from those expressed in any forward-looking statements. In addition, certain of our forward-looking statements address the various risks and uncertainties associated with the extraordinary market environment and impacts resulting from the COVID-19 pandemic and the actions of foreign oil producers (most notably Saudi Arabia and Russia) to increase crude oil production and the expected impact on our businesses, operations, earnings and results. Because considerable uncertainty exists with respect to foreign oil production and the future pace and extent of a global economic recovery from the effects of the COVID-19 pandemic, we cannot predict whether or when crude oil production and economic activities will return to normalized levels.

Any forward-looking statement speaks only as of the date on which such statement is made and the Partnership 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 Midstream Partners LP

Oasis Midstream Partners LP is a fee-based master limited partnership formed by its sponsor, Oasis Petroleum Inc., to own, develop, operate and acquire a diversified portfolio of midstream assets in North America that are integral to the crude oil and natural gas operations of Oasis Petroleum Inc. and are strategically positioned to capture volumes from other producers. For more information, please visit the Partnership's website at www.oasismidstream.com.

Non-GAAP Financial Measures

Cash Interest, Adjusted EBITDA and DCF are supplemental non-GAAP financial measures that are used by management and external users of the Partnership's financial statements, such as industry analysts, investors, lenders and rating agencies. These non-GAAP financial measures should not be considered in isolation or as a substitute for interest expense, net income, operating income, net cash provided by operating activities or any other measures prepared under GAAP. Because Cash Interest, Adjusted EBITDA and DCF exclude some but not all items that affect interest expense, net income and net cash provided by operating activities and may vary among companies, the amounts presented may not be comparable to similar metrics of other companies.

Cash Interest

Cash Interest is defined as interest expense plus capitalized interest less amortization of deferred financing costs included in interest expense. Cash Interest is not a measure of interest expense as determined by GAAP. Management believes that the presentation of Cash Interest provides useful additional information to investors and analysts for assessing the interest charges incurred on the Partnership's debt, excluding non-cash amortization, and the Partnership's ability to maintain compliance with its debt covenants.

The following table presents a reconciliation of the GAAP financial measure of interest expense, net of capitalized interest, to the non-GAAP financial measure of Cash Interest for the periods presented:

Adjusted EBITDA and Distributable Cash Flow

Adjusted EBITDA is defined as earnings (loss) before interest expense (net of capitalized interest), income taxes, depreciation, amortization, impairment, equity-based compensation expenses and other similar non-cash adjustments. Adjusted EBITDA attributable to Oasis Midstream Partners LP is defined as Adjusted EBITDA less Adjusted EBITDA attributable to Oasis Petroleum's retained interests in two of the Partnership's DevCos, Bobcat DevCo and Beartooth DevCo. Adjusted EBITDA should not be considered an alternative to net income (loss), net cash provided by operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. Management believes that the presentation of Adjusted EBITDA provides information useful to investors and analysts for assessing the Partnership's results of operations, financial performance and the Partnership's ability to generate cash from its business operations without regard to the Partnership's financing methods or capital structure, coupled with the Partnership's ability to maintain compliance with its debt covenants. The GAAP measures most directly comparable to Adjusted EBITDA are net income (loss) and net cash provided by operating activities.

DCF is defined as Adjusted EBITDA attributable to Oasis Midstream Partners LP less Cash Interest attributable to Oasis Midstream Partners LP and maintenance capital expenditures attributable to Oasis Midstream Partners LP. DCF should not be considered an alternative to net income (loss), net cash provided by operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. Management believes that the presentation of DCF provides information useful to investors and analysts for assessing the Partnership's results of operations, financial performance and the Partnership's ability to generate cash from its business operations without regard to the Partnership's financing methods or capital structure, coupled with the Partnership's ability to make distributions to its unitholders. The GAAP measures most directly comparable to DCF are net income (loss) and net cash provided by operating activities.

The following table presents reconciliations of the GAAP financial measures of net income (loss) and net cash provided by operating activities to the non-GAAP financial measures of Adjusted EBITDA and DCF for the periods presented:

SOURCE Oasis Midstream Partners LP