Press release from PR Newswire
Oasis Petroleum Inc. Announces Quarter Ending March 31, 2011 Earnings and Year-over-Year Production Growth of 146%
Wednesday, May 11, 2011
Oasis Petroleum Inc. Announces Quarter Ending March 31, 2011 Earnings and Year-over-Year Production Growth of 146%16:19 EDT Wednesday, May 11, 2011HOUSTON, May 11, 2011 /PRNewswire/ -- Oasis Petroleum Inc. (NYSE: OAS) ("Oasis" or the "Company") today announced financial and operational results for the quarter ended March 31, 2011. Highlights for the three months ended March 31, 2011 include:Grew average daily production to 8,090 barrels of oil equivalent ("Boe") per day, a 146% increase over the first quarter of 2010 and a sequential increase of 8% over the fourth quarter of 2010.Increased Adjusted EBITDA to $41.1 million, an increase of $29.5 million over the first quarter of 2010 and a sequential increase of $9.9 million over the fourth quarter of 2010. For a definition of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to net loss and net cash provided by operating activities, see "Non-GAAP Financial Measure" below.Issued $400 million of 7.25% senior unsecured notes due 2019 on February 2, 2011."Our team delivered production growth despite a tough winter," said Thomas B. Nusz, Oasis' Chairman and Chief Executive Officer. "We continue to lock-in key contracts and invest infrastructure capital that will improve our ability to grow our production, increase our revenue, and lower our operated expenses. We now have six rigs running in West Williston and one in East Nesson, and we have two full-time frac crews working on behalf of Oasis. We have agreements with third parties that are building out crude oil and natural gas infrastructure, and are investing our own capital into salt water disposal systems. Overall, Oasis is taking the right steps to position the Company for the tremendous growth that is expected to come from executing our resource conversion strategy."Operational and Financial UpdateAverage daily production for the first quarter of 2011 was 8,090 Boe per day (99% was produced from Williston Basin properties), an increase of 146% as compared to 3,295 Boe per day in the first quarter of 2010. Sequential quarter-over-quarter production growth was 579 Boe per day, or 8%. In the first quarter of 2011, 95% of the production was from oil. Average daily production by project area is listed in the following table:Average Daily Production for the Three Months Ended (Boepd):Project AreaMar 31, 2011Dec 31, 2010Change% ChangeWilliston Basin:West Williston 4,3023,36693628%East Nesson 2,1582,295(137)-6%Sanish 1,5181,774(256)-14%Total Williston Basin 7,9787,4355437%Other 112763647%Total 8,0907,5115798%Average price per barrel of oil, without realized derivatives, was $82.33 in the first quarter of 2011, compared to $70.21 in the first quarter of 2010 and $73.05 in the fourth quarter of 2010. The average price differential compared to West Texas Intermediate crude oil index prices was 13% in the first quarter 2011, compared to 11% in the first quarter of 2010 and 14% in the fourth quarter of 2010. Total revenue for the first quarter of 2011 was $58.7 million compared to $20.1 million for the first quarter of 2010, an increase of 192%. Sequential quarter-over-quarter revenue growth was $9.6 million, or 20%.The following tables show the Company's drilling activity by project area in the Williston Basin as of March 31, 2011:Bakken/Three Forks WellsWest WillistonEast NessonSanishTotal Williston BasinProducing WellsProducing on or before December 31, 2010:Gross Operated (Net)20 (17.0)31 (25.8)-51 (42.8)Gross Non-Operated (Net)33 (3.0)35 (3.5)123 (9.6)191 (16.1)Production started in Q1 2011Gross Operated (Net)8 (5.5)008 (5.5)Gross Non-Operated (Net)04 (0.3)11 (0.6)15 (0.9)Wells Waiting on Completion on 3/31/11:Gross Operated (Net)19 (14.8)4 (2.6)023 (17.4)Gross Non-Operated (Net)3 (0.1)4 (0.3)9 (0.7)16 (1.1)Wells Drilling on 3/31/11:Gross Operated (Net)2 (1.4)1 (0.5)03 (1.9)Gross Non-Operated (Net)005 (0.2)5 (0.2)Note: 3 rigs were moving to new locations on March 31, 2011Lease operating expenses increased $3.0 million to $5.9 million for the first quarter 2011 compared to the first quarter 2010 and increased by $0.4 million in the first quarter 2011 compared to the fourth quarter 2010. Lease operating expenses decreased by $1.88 per Boe, or 19%, to $8.16 per Boe in the first quarter 2011 compared to the first quarter 2010. Lease operating expenses increased by $0.24 per Boe, or 3%, in the first quarter 2011 compared to the fourth quarter 2010 of $7.92 per Boe.Production taxes increased by $4.2 million to $6.1 million for the first quarter of 2011 compared to the first quarter of 2010 and increased by $0.4 million in first quarter 2011 compared to the fourth quarter 2010. Production taxes as a percent of revenue were 10.4% in the first quarter 2011, 9.5% in the first quarter 2010, and 11.5% in the fourth quarter 2010. Production taxes were lower in the first quarter of 2011 compared to the fourth quarter of 2010, primarily due to lower tax rates on wells recently drilled in Montana.Depreciation, depletion and amortization totaled $13.8 million in the first quarter of 2011, $5.8 million in the first quarter 2010, and $13.4 million in the fourth quarter 2010. Depreciation, depletion and amortization was $18.97 per Boe in the first quarter of 2011, $19.73 per Boe in the first quarter 2010, and $19.46 per Boe in the fourth quarter 2010. The Company recorded non-cash charges related to impairment of oil and natural gas properties of $1.4 million in the first quarter of 2011 related to unproved property leases that expired during the period. General and administrative expenses totaled $6.0 million in the first quarter of 2011, $3.5 million in the first quarter 2010, and $7.6 million in the fourth quarter 2010. General and administrative expenses were $8.17 per Boe in the first quarter of 2011, $11.86 per Boe in the first quarter 2010, and $11.05 per Boe in the fourth quarter 2010. The sequential decrease in general and administrative expenses was primarily due to decreased costs related to employee compensation as the fourth quarter of 2010 included the bonuses related to the full year 2010. Additionally, the Company recorded approximately $0.5 million, or $0.72 per Boe, for restricted stock based compensation, which is included in general and administrative expenses for the first quarter of 2011.Prior to the Company's corporate reorganization, the Company was a limited liability company not subject to entity-level income tax. Accordingly, no provision for federal or state corporate income taxes was recorded for the three months ended March 31, 2010 as taxable income was allocated directly to equity holders. In connection with the closing of the IPO in June 2010, the Company merged into a corporation and became subject to federal and state entity-level taxation. The Company's income tax benefit was $4.2 million for the three months ended March 31, 2011, resulting in an effective tax rate of 37.8%. The Company's effective tax rate is expected to continue to closely resemble the statutory rate applicable to the federal and the blended state rate of the states in which the Company conducts business.Adjusted EBITDA for the first quarter of 2011 was $41.1 million, an increase of $29.5 million, or 254%, over the first quarter of 2010 of $11.6 million, and a 32% increase over the fourth quarter of 2010 of $31.2 million.The Company reported net loss of $6.8 million, or $0.07 per weighted average diluted share, as compared to a net loss of $3.2 million for the first quarter of 2010. The first quarter of 2011 included an unrealized loss on derivative instruments of $31.2 million. Capital Expenditures and LiquidityOasis' exploration and production capital expenditures were $75.5 million for the first quarter of 2011. The Company's capital expenditures for drilling, development, and acquisition and undeveloped acreage costs for the first quarter of 2011 are summarized by project area in the following unaudited table:(In thousands)Project Area1Q 11 West Williston$61,314 East Nesson9,787 Sanish4,407 Other (Barnett shale)2Total (1)$75,510(1) Consolidated capital expenditures reflected in the table above differ from the amounts shown in the statement of cash flows in the Company's condensed 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. The capital expenditures amount presented in the statement of cash flows also includes cash paid for other property and equipment as well as cash paid for asset retirement obligations.On March 31, 2011, Oasis had total cash and cash equivalents of $355.0 million and short-term investments of $115.0 million. The Company had no outstanding indebtedness under its $137.5 million revolving credit facility. On February 2, 2011, the Company issued $400 million of 7.25% senior unsecured notes (the "Notes"). The Notes resulted in net proceeds to the Company of approximately $390 million and will mature on February 1, 2019.Risk ManagementAs of May 10, 2011, the Company had the following outstanding commodity derivative contracts, all of which settle monthly:Critical Prices ($ / Barrel)TypeRemaining TermSub-FloorFloorWtd Avg CeilingBarrels of Oil per DayTwo-Way Collar8 Months (May-Dec 2011)$60.00$80.25448Two-Way Collar8 Months (May-Dec 2011)$70.00$98.85400Two-Way Collar8 Months (May-Dec 2011)$75.00$92.451,200Two-Way Collar8 Months (May-Dec 2011)$85.00$101.622,500Two-Way Collar8 Months (May-Dec 2011)$90.00$104.651,000Two-Way Collar8 Months (May-Dec 2011)$95.00$123.392,5002011 - Total / Weighted Average Two-Way Collars$85.10$106.068,048Three-Way Collar8 Months (May-Dec 2011)$60.00$80.00$94.985002011 - Total Collars8,548Two-Way Collar12 Months (Jan-Dec 2012)$75.00$93.00500Two-Way Collar12 Months (Jan-Dec 2012)$80.00$103.251,000Two-Way Collar12 Months (Jan-Dec 2012)$85.00$102.421,000Two-Way Collar12 Months (Jan-Dec 2012)$90.00$112.621,500Two-Way Collar12 Months (Jan-Dec 2012)$95.00$116.305002012 - Total / Weighted Average Two-Way Collars$85.56$106.504,500Three-Way Collar12 Months (Jan-Dec 2012)$65.00$85.00$108.081,500Three-Way Collar12 Months (Jan-Dec 2012)$70.00$90.00$118.305002012 - Total / Weighted Average Three-Way Collars$66.25$86.25$110.642,0002012 - Total Collars6,500Two-Way Collar12 Months (Jan-Dec 2013)$90.00$107.201,000Three-Way Collar12 Months (Jan-Dec 2013)$70.00$90.00$122.451,0002013 - Total Collars2,000Conference Call InformationThe Company will host a conference call on Thursday, May 12, 2011, at 10:00 a.m. Central Time to discuss its first quarter 2011 financial and operational results. Investors, analysts and other interested parties are invited to listen to the conference call via the Company's website at www.oasispetroleum.com or by dialing (877) 621-0256 (US participants) or (706) 634-0151 (International participants) with the Conference ID of 62640075. A recording of the conference call will be available by dialing (800) 642-1687 (US participants) or (706) 645-9291 (International participants) using the Conference ID of 62640075 beginning at 1:00 p.m. Central Time on the day of the call until Thursday, May 19, 2011. The conference call will also be available for replay for 30 days at www.oasispetroleum.com. Upcoming ConferenceOasis also announced that management is scheduled on June 7, 2011 to participate in a Williston Basin panel at 9:30 a.m. Eastern Time and to present at 12:35 p.m. Eastern Time at the 2011 RBC Capital Markets' Global Energy and Power Conference.Forward-Looking StatementsThis 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.Richard Robuck, (281) 404-9600Director ? Investor RelationsOasis Petroleum Inc. Financial StatementsOasis Petroleum Inc.Condensed Consolidated Balance Sheet(Unaudited)March 31, 2011December 31,2010(In thousands, except per share data)ASSETSCurrent assets Cash and cash equivalents $ 354,990$ 143,520Short-term investments114,974-Accounts receivable ? oil and gas revenues 27,82025,909Accounts receivable ? joint interest partners 33,35228,596Inventory 1,0081,323Prepaid expenses 11490Advances to joint interest partners 2,7103,595Deferred income taxes9,6242,470Other current assets113-Total current assets 544,602205,903Property, plant and equipment Oil and gas properties (successful efforts method) 655,759580,968Other property and equipment 2,2621,970Less: accumulated depreciation, depletion, amortization and impairment (113,048)(99,255)Total property, plant and equipment, net 544,973483,683Deferred costs and other assets 12,0182,266Total assets$1,101,593$ 691,852LIABILITIES AND STOCKHOLDERS? EQUITYCurrent liabilitiesAccounts payable $ 643$ 8,198Advances from joint interest partners 8,0393,101Revenues payable and production taxes 5,6226,180Accrued liabilities 37,50858,239Accrued interest payable 4,7552Derivative instruments 25,4976,543Total current liabilities 82,06482,263Long-term debt 400,000-Asset retirement obligations 9,2877,640Derivative instruments 16,1433,943Deferred income taxes 48,42545,432Other liabilities 759780Total liabilities 556,678140,058Commitments and contingencies Stockholders? equityCommon stock, $0.01 par value; 300,000,000 shares authorized; 92,407,800 shares issued and outstanding 920920Treasury stock, at cost; 20,595 shares(559)-Additional paid-in-capital 644,246643,719Retained deficit(99,692)(92,845)Total stockholders? equity 544,915551,794Total liabilities and stockholders? equity $1,101,593$ 691,852Oasis Petroleum Inc.Condensed Consolidated Statement of Operations(Unaudited)Three Months Ended March 31,20112010(In thousands, except per share amount)Oil and gas revenues $58,744$20,068ExpensesLease operating expenses 5,9422,977Production taxes 6,0831,910Depreciation, depletion and amortization 13,8125,849Exploration expenses 3218Impairment of oil and gas properties 1,3813,077Stock-based compensation expenses -5,200General and administrative expenses 5,9503,516Total expenses 33,20022,547Operating income (loss) 25,544(2,479)Other income (expense)Change in unrealized gain (loss) on derivative instruments (31,154)(391)Realized gain (loss) on derivative instruments (512)(26)Interest expense (5,198)(338)Other income (expense) 3123Total other income (expense) (36,552)(752)Income (loss) before income taxes (11,008)(3,231)Income tax benefit (expense)4,161-Net income (loss) $(6,847)$(3,231)Income (loss) per share:Basic and diluted $ (0.07)$ -Weighted average shares outstanding:Basic and diluted92,047-Oasis Petroleum Inc.Selected Financial and Operational Statistics(Unaudited)Three Months Ended March 31,20112010Operating results ($ in thousands):RevenuesOil $57,172$18,943Natural gas 1,5721,125Total oil and gas revenues 58,74420,068Production data (units):Oil (MBbls) 694270Natural gas (MMcf) 202160Oil equivalents (MBoe) 728297Average daily production (Boe/d) 8,0903,295Average sales prices:Oil, without realized derivatives (per Bbl) $ 82.33$ 70.21Oil, with realized derivatives (1) (per Bbl) 81.5970.12Natural gas (per Mcf) 7.787.02Cost and expense (per Boe of production):Lease operating expenses $ 8.16$ 10.04Production taxes 8.356.44Depreciation, depletion and amortization 18.9719.73Stock-based compensation expenses-17.54General and administrative expenses 8.1711.86(1) Realized prices include realized gains or losses on cash settlements for commodity derivatives, which do not qualify for and were not designated as hedging instruments for accounting purposes.Oasis Petroleum Inc.Condensed Consolidated Statement of Cash Flows(Unaudited)Three Months Ended March 31,20112010(In thousands)Cash Flows from Operating Activities:Net loss $ (6,847)$ (3,231)Adjustments to reconcile net loss to net cash provided by operating activities:Depreciation, depletion and amortization 13,8125,849Impairment of oil and gas properties 1,3813,077Deferred income taxes (4,161)-Derivative instruments 31,666417Stock-based compensation expenses 5275,200Debt discount amortization and other 256185Working capital and other changes:Change in accounts receivable (6,667)(5,263)Change in inventory (37)269Change in prepaid expenses 47957Change in other current assets (113)-Change in other assets (3)-Change in accounts payable and accrued liabilities (7,448)1,153Change in other liabilities -(11)Net cash provided by operating activities 22,8457,702Cash flows from investing activities:Capital expenditures (91,126)(34,561)Derivative settlements (512)(26)Purchases of short-term investments (114,974)-Advances to joint interest partners 8851,888Advances from joint interest partners 4,938458Net cash used in investing activities (200,789)(32,241)Cash flows from financing activities:Proceeds from credit facility-20,000Principal payments on credit facility-(32,000)Proceeds from issuance of senior notes400,000-Purchases of treasury stock(559)-Debt issuance costs (10,027)(1,413)Net cash provided by (used in) financing activities 389,414(13,413)Increase (decrease) in cash and cash equivalents Cash and cash equivalents:211,470(37,952)Beginning of period 143,52040,562End of period $ 354,990$ 2,610Supplemental non-cash transactions:Change in accrued capital expenditures $ (16,644)$ 2,433Asset retirement obligations 1,656283Non-GAAP Financial MeasuresAdjusted 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 and amortization, property impairments, exploration expenses, unrealized derivative gains and losses and non-cash stock-based compensation expense. 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 loss and net cash provided by operating activities, respectively. Adjusted EBITDA ReconciliationsThree Months Ended March 31,20112010(In thousands)Adjusted EBITDA reconciliation to Net Income /(Loss): Net income (loss)$ (6,847)$ (3,231)Change in unrealized loss (gain) on derivative instruments31,154391Interest expense5,198338Depreciation, depletion and amortization13,8125,849Impairment of oil and gas properties1,3813,077Exploration expenses3218Stock-based compensation expenses5275,200Income tax expense (benefit) (4,161)-Adjusted EBITDA$41,096$11,642Adjusted EBITDA reconciliation to Net Cash Provided by Operating Activities:Net cash provided by operating activities$ 22,845$ 7,702Realized gain (loss) on derivative instruments(512)(26)Interest expense5,198338Exploration expenses3218Debt discount amortization and other(256)(185)Changes in working capital13,7893,795Adjusted EBITDA$41,096$11,642SOURCE Oasis Petroleum Inc.