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Oasis Petroleum Second Quarter 2021 Results

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   |    Monday,August 09,2021

Oasis Petroleum Inc. announced financial and operating results for the second quarter of 2021, declared its second quarter 2021 dividend, and updated its 2021 outlook.

2Q21 Highlights:

  • Produced total volumes of 54.3 MBoepd and oil volumes of 34.7 MBopd in 2Q21, both above guidance midpoint. Reiterating 4Q21 average volumes of 74.5-77.5 MBoepd and oil volumes of 49.5-51.5 MBopd;
  • E&P CapEx was $52.5MM, 36% below guidance midpoint reflecting operational efficiencies, timing, and other items. Lowering full-year capital by 7% to $200MM-$215MM ($215MM-$230MM prior guidance);
  • Consolidated G&A was $20.2MM. E&P Cash G&A(1) totaled $11.0MM, including approximately $3.0MM of planned non-recurring items. FY21 and 4Q21 E&P Cash G&A per Boe guidance remains unchanged;
  • Drove E&P LOE below low-end of guidance ($10.50-$11.50/Boe) to $10.21/Boe and anticipate further reductions in 2H21;
  • Crude oil differentials were tight during 2Q21 averaging $0.61 off of NYMEX WTI;
  • Net cash provided by operating activities was $160.0MM and net income was $81.3MM;
  • Adjusted EBITDA to Oasis(1) was $107.0MM and E&P Free Cash Flow(1) was $54.8MM;
  • Oasis Midstream Partners (NASDAQ: OMP) announced a $0.56/unit 2Q21 distribution;
  • Determined qualification under Section 382(l)(5) of the Internal Revenue Code to reduce cash taxes to zero in 2Q21 and FY21, a savings of over $50MM vs. prior estimates. By YE21, Oasis projects an estimated net operating loss ("NOL") between $400MM-$500MM(2), which could be used to offset future taxable income (see NOL Update below).

Strategic Initiatives:

  • Publishing inaugural Sustainability Report in August 2021 highlighting our commitment to and transparency around ESG initiatives;
  • Expect acquisition of Williston Basin assets from Diamondback Energy to close late in the third quarter of 2021. Purchase price of $745MM will be adjusted downward for free cash flow generated from the April 1 effective date;
  • Completed sale of remaining upstream assets in Permian Basin;
  • Announced inventory post Williston Basin acquisition and Permian Basin divestiture of approximately 670 locations with breakeven oil price of $55/bbl NYMEX WTI or below, including approximately 140 three-mile lateral locations. IRR for all locations expected to average 46% assuming $55/bbl NYMEX WTI and $2.75/mmBtu NYMEX gas. See Oasis's latest investor presentation for more detail;
  • Declared $0.375/share dividend ($1.50/share annualized) and reiterated plan to increase the fixed dividend to $0.50/share upon the first quarter after closing the previously announced Williston Basin acquisition;
  • Redeemed $87.0MM of OMP common units and paid special dividend of $4 per common share in July. Oasis now owns 33.8MM OMP common units;
  • Repurchased $14.6MM of common stock at a weighted average price of $76.30 per common share under current $100MM share repurchase plan;
  • Best-in-class balance sheet supported by strong free cash flow generation in 2Q21, no debt under the Oasis credit facility as of June 30, 2021, and low leverage pro forma for pending Williston Basin acquisition;
  • Issued $400.0MM of 6.375% senior unsecured notes due 2026.

CEO Danny Brown said: "Second quarter operational and financial results demonstrate strong execution and cost control. Additionally, Oasis continues to make progress on our key strategic initiatives including our commitment to capital discipline, significant free cash flow generation, and returns to shareholders. In the quarter, we successfully executed multiple strategic initiatives including opportunistically restructuring our asset portfolio at attractive valuations, delivered strong operational results in the field, and identified opportunity to enhance future free cash generation by utilizing our NOLs to offset taxable income. Looking forward, we anticipate generating significant free cash flow and will continue to focus on delivering value and returning cash to shareholders."

"Additionally, Oasis remains committed to our environment, social responsibilities and the sustainability of our enterprise. As such, I'm pleased to announce we are publishing our inaugural Sustainability Report in August which provides greater transparency into our operations and our focus on continuous improvement. I encourage all stakeholders to review the report to better understand our achievements, progress and ongoing commitments in this important area. Finally, I'm pleased to report we are providing greater transparency into our substantial well inventory with enhanced disclosure on spacing assumptions, anticipated returns, the impact of longer laterals, and economic well count at $55/$2.75 pricing. We are excited about the progress we have made to-date, but continue to see opportunity to create additional value for our shareholders in the future."

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