Oasis Petroleum Inc. announced select financial and operational results for the quarter and year ended December 31, 2020 and provided its 2021 outlook.
- Capex: $231-243 million - up 13% vs. 2020 levels
By Play:
- Production: 57-60 MBOEPD - flat from full year 2020 output
- Wells Completed: 29-33 gross wells
Oasis constructed its 2021 plan to maximize capital returns, productivity and efficiency while generating significant free cash flow at $40/bbl NYMEX WTI.
Highlights:
CEO Douglas Brooks said: "Led by a newly installed, diverse Board along with our dedicated Oasis team members, we achieved outstanding operational and financial results and installed material new strategic initiatives. These results exemplify the first steps that Oasis is taking to demonstrate to our stakeholders our commitment to our new strategy of strong capital discipline and significant free cash flow generation as well as commitments to our environment, our social responsibilities and the sustainability of our enterprise. Consistent with this strategy and the commitment of the Board of Directors to shareholders, we declared our first fixed dividend.
"Oasis generated significant free cash flow during the quarter and significantly reduced its RBL revolver balance and improved liquidity. Separately, the organization has already made tremendous progress on reducing operating, capital and general and administrative costs, and the work it has done with an outside consultant will further enhance our overall cost structure." With our cash flow profile and peer leading leverage of 0.6x(2) based on YE20 net debt and implied 2021 EBITDA guidance ($50/bbl WTI, $2.50/MMBtu NYMEX gas), Oasis is able to immediately return capital to its shareholders. Along these lines, our 2021 capital program was developed through the rigorous framework of the capital allocation committee and supports a disciplined reinvestment rate, strong returns, and sustainable distributions of capital to shareholders."
Mr. Brooks continued, "We entered 2021 with a returns-focused, capital efficient program, which in combination with our high-quality asset base supports significant free cash flow generation. Additionally, we have made important strides in aligning the Board and management with shareholders through our peer-leading returns-focused compensation program. As we look forward, the Oasis team is focused on executing our strategic objectives while maintaining a strong ESG culture to provide value to all stakeholders. Oasis is uniquely positioned with a strong balance sheet, a quality and sustainable long-lived asset base, and a rigorous new capital discipline that should translate into long-term value creation for our shareholders."
Oasis Petroleum has approved an expansion of its dedication to OMP in South Nesson to now include crude oil and produced water services. OMP already received the dedication for natural gas gathering and processing as well as gas lift in 2019, and OMP expects volumes under each service offering to flow in 2022. South Nesson is located between Johnson's Corner and OMP's gas plant complex, and is one of Oasis Petroleum's top operating areas. As part of the arrangement, Oasis Petroleum agreed to assign to Bighorn DevCo, which is 100% owned by OMP, certain assets in Bobcat DevCo specifically built to support both existing third-party customers in South Nesson and future development for Oasis Petroleum. All future assets for the South Nesson project will be built at Bighorn DevCo and all future revenue from Oasis Petroleum and third parties in South Nesson will accrue to Bighorn DevCo.
The following table depicts the Company's key balance sheet statistics and liquidity. Debt is calculated in accordance with respective credit facility definitions. The debt held at Oasis and OMP is not cross-collateralized and guarantors under the Oasis Credit Facility are not responsible for OMP debt.
YE20 ($ in millions) |
OAS |
OMP |
Consolidated |
||||||||
Borrowing Base |
$ |
575.0 |
$ |
575.0 |
$ |
1,150.0 |
|||||
Borrowings under revolver |
260.0 |
450.0 |
710.0 |
||||||||
LCs |
6.8 |
- |
6.8 |
||||||||
Total revolver exposure |
266.8 |
450.0 |
716.8 |
||||||||
Other debt |
5.4 |
3.0 |
8.4 |
||||||||
Total debt |
272.2 |
453.0 |
725.2 |
||||||||
Cash |
15.1 |
5.1 |
20.2 |
||||||||
Liquidity |
323.3 |
130.1 |
453.4 |
Oasis declared a $0.375 per share dividend for the fourth quarter of 2020 ($1.50/share annualized) for shareholders of record as of March 8, 2021, payable on March 22, 2021.
As of February 24, 2021, the Company had the following outstanding commodity derivative contracts, which settle monthly and are priced off of WTI for crude oil and NYMEX Henry Hub for natural gas:
1H21 |
2H21 |
1H22 |
2H22 |
2023 |
||||||||||||||||
Crude Oil (Volume in MBopd) |
||||||||||||||||||||
Fixed Price Swaps |
||||||||||||||||||||
Volume |
29.0 |
29.0 |
19.0 |
19.0 |
14.0 |
|||||||||||||||
Price ($ per Bbl) |
$ |
42.09 |
$ |
42.09 |
$ |
42.74 |
$ |
42.74 |
$ |
43.68 |
||||||||||
Two-Way Collars |
||||||||||||||||||||
Volume |
- |
3.0 |
3.0 |
- |
- |
|||||||||||||||
Floor ($ per Bbl) |
$ |
- |
$ |
45.00 |
$ |
45.00 |
$ |
- |
$ |
- |
||||||||||
Ceiling ($ per Bbl) |
$ |
- |
$ |
63.82 |
$ |
63.82 |
$ |
- |
$ |
- |
||||||||||
Total Crude Oil Volume |
29.0 |
32.0 |
22.0 |
19.0 |
14.0 |
|||||||||||||||
Natural Gas (Volume in MMBtupd) |
||||||||||||||||||||
Fixed Price Swaps |
||||||||||||||||||||
Volume |
40,000.0 |
40,000.0 |
30,000.0 |
- |
- |
|||||||||||||||
Price ($ per Btu) |
$ |
2.84 |
$ |
2.84 |
$ |
2.82 |
$ |
- |
$ |
- |
||||||||||
Total Natural Gas Volume |
40,000.0 |
40,000.0 |
30,000.0 |
- |
- |
The December 2020 crude oil derivative contracts settled at a net $0.4MM paid in January 2021 and will be included in the Company's 1Q21 derivative settlements.
The Company's estimated net proved reserves and related PV-10 at December 31, 2020 ("YE20") are based on reports prepared by DeGolyer and MacNaughton, independent reserve engineers. In preparing its reports, DeGolyer and MacNaughton evaluated properties representing all of the Company's PV-10 at YE20 in accordance with rules and regulations of the Securities and Exchange Commission applicable to companies involved in crude oil and natural gas producing activities. The following reserve information does not give any effect to or reflect Oasis's commodity hedges and utilizes an average NYMEX WTI crude oil price of $39.54 per barrel and an average natural gas price of $2.03 per MMBtu. These prices were adjusted by lease for quality, transportation fees, geographical differentials, marketing bonuses or deductions and other factors affecting the price received at the wellhead. All of the Company's estimated proved undeveloped reserves at YE20 are expected to be developed within five years. Oasis's estimated net proved crude oil and natural gas reserves at YE20 were 182.5 million barrels of oil equivalents ("MMBoe") and consisted of 119.8 million barrels of crude oil and 376.2 billion cubic feet of natural gas. The table below summarizes the Company's estimated net proved reserves and related PV-10 at YE20:
December 31, 2020 |
||||||
Net Estimated Reserves (MMBoe) |
PV-10 (in millions) |
|||||
Proved Developed |
129.2 |
$ |
936.9 |
|||
Proved Undeveloped |
53.3 |
178.1 |
||||
Total Proved |
182.5 |
$ |
1,115.0 |
PV-10 is a non-GAAP financial measure and generally differs from Standardized Measure, the most directly comparable GAAP financial measure, because it does not include the effect of income taxes on discounted future net cash flows.