OMP - Earnings call transcript Q4 2017 | Oasis Midstream Partners LP

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Operator

Good morning. My name is Laura and I will be your conference operator today. At this time, I’d like to welcome everyone to the Fourth Quarter 2017 Earnings Release and Operations Update for Oasis Midstream Partners. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. this being note, Please Instructions] event recorded. is [Operator call Richard the Robuck, will now Midstream’s to the turn begin I Oasis over CFO conference. to you. Thank Mr. Robuck, may begin conference. you your

Richard Robuck

full-year [Technical and Difficulty] XXXX and fourth operational quarter results. financial

Taylor the the to disclosed those Midstream we you results as Act. your include conference both to earnings answer have Oasis different uncertainties well our remarks matters the well call. – today our release filings Lou, to among Oasis your delighted be statements Reid include the Form in be with our our members advised cause to believe Commission, Partners any on statements on S-X. be Michael in that Those earnings within we’ve including of We’re answers forward-looking and other on Oasis subject Please questions I’m Petroleum and these our that currently Private statements joined statements. and risks by team. include, as We Reports that release our obligation as call. Midstream Form Quarterly others, as actual Form from to our in on and Partners materially Securities forward-looking described These could to meaning are risks of Litigation disclaim forward-looking including XX-Q Reform Report Annual update on to Security and Exchange XX-K, that

non-GAAP references measures certain website. earnings make During on can our also in financial and this found release reconciliations conference we call, these be to measures to applicable will our

over that, find Investor I’ll you With on website. reference to also current our can will which Taylor. We turn the call our Presentation,

Taylor Reid

successfully exciting since we OMP. have joining public and It to our everyone, the has added short we been thanks time, five an our call. ton a value of In offering. Good of initial period for months launched morning,

efforts our impacts distribution the of our to support growing flow XX% while growth coverage, to continuing expectations. seeing through We’re our

MQD include: quarter we distribution the level. First, for accomplishments our of at paid the first third in period, quarter stock recent Some our fourth

performance quarter IPO. and our line fourth the are our compared time the detail volumes in of get our the more in at we expectations into quarter delivering with model Second, We’ll was to updated highlights in our a growth forecasts moment. for the

feet we completed and we of processing processing and to the plant day, which a cubic on fourth gas to gas capitalize XX per a second XXX with assignment the total capacity is regulatory our per then with million capacity is units on Third, allowing progressing on of volumes requirements, have until standard from begin gas second million temporary our incremental currently time OMP Wild the fourth, ensure of budget. to deployed operation sponsor capture feet XXXX expected Basin produced meet in plant slowdown fully to production quarter order is of cubic operational. in not gas gas total standard day does And to

can excess clearly which presentation. gas We production the Williston you Slide infrastructure our built, was forecasts of in see Basin basin in of see in increased that are continue to around which the on XX levels

impact the is regulations. infrastructure capture our also an and both We’re combined of with curtailed. needed, operator is tighter This so means not more sponsor gas production

to for third build from and sponsor volumes in capitalize we to gathering We are in order gas in plans increased DevCo definitely support out the trying from gas Bobcat increased opportunity Williston, Basin as have this parties. Wild our

and to in that volume projected volumes, on provided result, which are our updated will by has forecast our incremental are forecasted we XXXX. capture be seen us. also to planning productivity gas Wild As a able to in We’ve investing XX% overall increase Oasis to in move higher Basin, we the wells

as return for capital investing multiples of four to currently in we’re these attractive at rates times are projects. We seeing these five build projects extremely

customers to forecasted I Additionally, our in opportunities has third obtain constraints the capture parties to from With DevCo higher Bighorn team and now gas rising gas regulations. identified call basin to from are and will due turn encounter that, production to that the volumes associated Michael. the gas processing over

Michael Lou

Taylor. Thanks,

throughput As additional our we of release, interconnects press FERC-regulated into Corner XX%. the which We projected pipeline, optimized crude forecast noted the cash which OMP. our Dakota that Pipeline, team the on Access the is Johnson’s improving increased identified has projects flow oil by line,

in online run impact pipelines. We plant time Williston to the new is come a of NGL NGL expected have mitigate bottlenecks storage on facility, and which in place improve Basin put shortly will which March,

end together, Lastly, across our we X.X contracts of growing the unit times with projecting greater for and our Beartooth of services. DevCo produced based have on This some is now This we distribution third-party targeted taking freshwater feel of are year and All per confident distribution on first to growth we in early our not coverage annual times wins growing our very the our XX%. than X.X from coverage XXXX. both alone, water distribution with approximately XXXX MQD. calculated at quarter

As services XX% sponsored and which sponsors EBITDA provides of acreage. Wild provides a currently gas water produced DevCo, as reminder, Basin partnership DevCo, services to Bobcat droppable owns and and XX% freshwater our of there to in is other crude most OMP, Beartooth the gathering which a large available of produced backlog of in

top investors distribution the companies. of dropdown discounted despite place We for a attractive E&P for Oasis midstream trades peer-leading currently leading valuation an to supported peers, one similar is expect American believe dropdown with by the is distribution investment ROFO and to growth having We pursue to to OMP North that accretive with great economics with top we at growth. one and midstream Oasis. way of way vehicle partnership the a pure in the inventory others midstream – through put to get acquisitions capital a future a in

of You presentation. highlighted on this our can see XX Slide

XX% inventory XXXX, and considerable very OMP dedicated with drilling to with volumes to economic of low through break-even decades XX% XXXX plans Oasis a capital two nearly directed portion has sponsor prices. Our of areas. to grow

XXXX a strong plan. We has needed team great execute operational have tools a to that the

started the OMP expect to With Our the year over that, call sponsor has strong I’ll and same. off we to Richard. hand do the already

Richard Robuck

delivered our release Michael. which Thanks, a in by Update. under header solid table, We press add and to operating the to Financial Operational EBITDA see get depreciation can can quarter, you DevCo. that you In income

million distribution resulting added of coverage DevCos cash the was OMP owns. For about flow the adding EBITDA, the gross EBITDA Distributable DevCos million interest $XX where delivered times. entire three $XX net net OMP and is EBITDA to X.XX each quarter, just the of by of in $XX.X million, together

million, of million $XXX on fourth partnership the million spent the with the of The $XXX Gas be the million. million. XXXX fourth invested $XX of quarter the Plant maintenance in CapEx II the assignment XXXX. for of to $XXX million $XX being capital plant amount OMP represents During expenditures gross CapEx net the Bighorn spent quarter, being remainder expected share $X.X capital about OMP’s and plant to with a gas DevCo, total of is Including

maintenance grown over three systems of We CapEx respective EBITDA on be have volumes XX% X% about to to quarter-over-quarter. its time. DevCos All continue to expect

growing two one in Oasis’ Alger, running in will supported Basin, five growth which Hills. by Williston, Oasis two were Our Indian rigs of to and program Wild is rig the be continue as in now in

million under resulting of outstanding $XXX credit revolving a million. the had As just borrowed cash and partnership remaining $X under year-end, its million borrowing million of in of capacity $XXX $XX facility,

the We updated XXXX expect EBITDA our We be on two to presentation, for volume of the highlighted the the driving remain full-year XX our of in times between We’ve million press XXXX. partnership XXXXX. well. as $XX XXXX to quarter next outlook, XX basically well. leverage across also Volumes million presented forecasted of for EBITDA the up which we Board, months the under in in debt first partnership Slide $XX XXXX in as target to can and release which seen are attributable

deliver We strategic by total $XX growth by capital of $XX $XXX between amount we’ve million close to spending which partnership. to efficient capital invest million to drive I’ll expect our reiterating to million, our a and the gross borne focus on $XXX million of commodity from goal direct of acreage investments, under have dedication, to strategic XXXX our long-term growth our stable aim fee outlook. annual Due distribution our for unitholders. to IPO greatly increased We exposure. minimizing forecast fixed our price volume peer-leading revenue for

to We inventory EBITDA of continue further long-term to our growth droppable forecasts. support a have large

assets We position strong our hand have us OMP in quality with our structural for deliver of over the XXXX. Oasis Laura to alignment great with sponsor now XX% our to The and financial interests. call of I’ll the strength over questions. and results and operational team owning IDR of

Operator

you. Thank

from begin JPMorgan. now will question [Operator first Jeremy the question-and-answer come our Instructions] of We And will Tonet session.

Jeremy Tonet

as a – a of to acquisition Oasis you morning. want was far I impact OMP with wondering expand OMP I How about the think there’s on of to more service? just there. as could if here, if opportunity off start should acreage the we undedicated And Good Permian. lot bit

Taylor Reid

program the I’d two that in economics what sponsors last the year. core this see as grow assets from they’re over Williston. that well. you XX sponsor year, to Great And sponsor Williston. in the increased – year And last XXX see in Sure. larger are One level to currently wells things obviously, this year at well It’s to the driving XXX all a to can inventory say going just Jeremy. note, the the the you’ll continuing Williston.

So that, right area, that in drives the mentioned, going Delaware, well OMP to and you small parties it that’s a well. of really oil opportunity what’s opportunity that are a in water What sponsor find that that footprint as favorable. but for or driving the more core there also are lot there. opportunities the on inventory things there’s might asset surface as is assets and vehicle Williston decide overall In has third the and pretty big Pretty, in gas of the other a basin. terms growth on

to will be that Delaware good competitive in but the position it that process, I be think think I good and help Williston partnership a in a sponsor. the well. We’ve in could the a as shown So

Jeremy Tonet

Bakken see – growth if the across Thanks. And just could of ramp more you that could talking cadence in the that flavor the up us and that the I’m give about wondering how bit year. year? will growth this a of you

Taylor Reid

Yes.

can volumes see, well. As investor first the look really the that presentation you full-year then yes, of the XX, on the see quarter kind Slide you we you volumes and website our can out on put as at

side, time I the to over think one fourth And good would I probably when gas note in see you’ll The up Bobcat way probably one little about that’s the comes a But like the throughput the would that, of that’s plant think, also helps so on in you one timing nuance step the in on to. over particularly that area probably that’s bit point the quarter, is and I well. kind year. a – volumes, a the the Bighorn that as thing on

Jeremy Tonet

thoughts very as coverage high cash. your market towards Thanks more rate there? versus And you to It growth rate? for more over quarter? think is through, you coverage, that. a distribution turning growing uptick as retain Is walk was at about fund far I self-funding to guess, the then we next there. just ability that higher about the how the growth, the running starting and XX% time wondering, talked maybe to tilting like – internally us is more I should that can just dropdowns And seems

balance think the those rate? growth you between how about So factors the in XX%

Taylor Reid

Yes.

MQD. sit Slide the of XXXX one. going from peers first the first on quarter XX – just answer in highlighted it Michael our growing so the we to distribution we our from for to growth where we’re question, start think, And original versus the I

kind about basis, growth. think at I necessarily that year, leverage But, the for that at just kind annualized I for So the we of with exit grow above on the we quarter X.X to over unit, of conservatively increasing is there’s look looking fourth in the like that why in what to is you here and think highlighted capital third-party with we’re neighborhood. about that think, paid kind or then so that, which a thinking, increased of And first in number to about. of kind internally volume time increase manage we – spend for the obviously it for growth as the getting we’re you coverage first coverage X.X drops in aligned talking opportunities as $X.XX of that near-term, continues what that quarter. growth. quarter agree – coverage for times self-funding we’ll in as And start And look as kind that’s quarter-over-quarter terms similar well. in future, X.X% the said talked of time we we’ve first increased be and the opportunities of think I the think you an been a guidance quarter-over-quarter. of that yes, distribution news will coverage great XXXX we’ll not But our We’ve at

Jeremy Tonet

That’s questions. my it taking for me. Thanks for

Taylor Reid

Jeremy. Thanks,

Richard Robuck

Thanks.

Operator

And Deanna of our Zhang next question comes TPH. from

Deanna Zhang

Good morning.

Taylor Reid

morning. Good

Deanna Zhang

XXXX So provide wondering, could I the detail around CapEx was if some you more items.

for currently building And off And Beartooth I you the So are large recurring? note should in so on higher. out be also guys won’t infrastructure was specifically, a it’s then we what words, Bobcat – XXXX? drop expecting that other starting in be CapEx

color could on provide you if driving wondering more Just what’s that?

Taylor Reid

Yes.

performance levels increased is year on nature wells. So lot on the what we see early sponsor at you’ll those of announced increasing last performance time the a and Bobcat, so late

is so then gas bit of with of GOR coming And that quite on rising gas lot frankly, off of and area. a that even additional the side a water in oil, what’s more a and

we the So in need about fourth an talked additional plant. gas for the quarter

process a will processing get up a lines plant day So along day. that. we’re only with a a million our significant gas of notice plant What is in XX XXX that, gathering current you XXX you’ll million amount that day are the to million our of capacity, or building

And we clearly that to a expand so need bit.

going capacity expansion across So have start you FERC-regulated some productivity Basin. The on that moving the compressors line and those as there, on we the add of that’s and increased line, more that mentioned we’re well as to crude crude lines, side. of part because on in throughput water some in Wild

a bit So Bobcat overall, there’s a of spend.

And years basin. of kind You’re kind of system is next and right forward spend. across Beartooth, that further pulled some year the then about a that think from off there a of you got we’ve spend as is good out that drop great

had over there’s some As coming are you go be as little capital few intense is a completion areas because less on is these there of higher to into those bit back some with But activity increase that much well last some areas it spent, capital. years, these wells. have be the capital capacity, higher incremental spent

in high-teen You’ll see XX volumes the up the percentage. in water XX out volumes we those presentation going considerably lay Beartooth in or Page are that well as

Deanna Zhang

it. Got

that’s is – accommodate in highlighted are in also mostly that I well? that adding guess, So that the guys capacity you Bighorn you as that’s to third-party volumes, Beartooth, in also

Taylor Reid

Yes. think The opportunity in actually There’s capacity DevCos. to is all significant volumes. add to three in all we third-party three

of in the of capacity some on, to a gas pipeline on think that kind on FERC-regulated growth think So the of step in as plant well system, plants, cheap through the comes large bit in as relatively gas want midstream guys front incrementally add we’re Bakken. Beartooth side. that of we capacity a can if bit in when – each we both freshwater other Bighorn, water And and have produced you both water on of especially the system. them in second quite we third-party cheaply In that you’ll side the

that think we a So quite need capacity. bit producers there’s will of that

we and think there’s And bit seeing there activity opportunity area. So of then a Basin we’re our Wild a lot there’s gathering in of lines quite that as in well, that.

once other our water we again, or system, that gathering think we it’s the of whole oil whether gas can and number parties those a systems tie side. third into So leverage from

Deanna Zhang

it. Got Okay.

And catching so you to those volumes? up front, Bighorn how do on the see Bobcat quickly volumes

Taylor Reid

as the produced of combination Yes. are as a The well gas system. gathering gas, Bobcat volumes on

in see can grow of those the that, place. plant in Bighorn. naturally once translate so line is pretty to gas growth on that second But will And what to it’s you you in capture side perfectly going not

in that so this have the access Bighorn. And see that be will up online, in, a gas because you’ll big similarly, more Bobcat of in back-half when is you processing there’ll plant comes in And year, to gas what capacity. go bump

grow that is little be once there’ll plant in it So that a it second – all bit will more line together, of gas online. – will gas but

Deanna Zhang

final question. helpful. Okay, then a that’s And

size? the any drop has smaller, bigger making guys you Bobcat of in thinking, you or expectations, outperformed guys the updated is So I on dropped guess, thoughts percentage you XXXX or have still thinking you DevCo in are EBITDA thinking guys do ownership being the drop how that Are about, now? size, given are the about given large

Taylor Reid

expected all Yes, I’d the performance Board is the a and we the been better the across than couple say of things. One, IPO. has at DevCo

second said of XXXX, of keep distribution kind we So is out a some for the these terms within All here, of gets achievable, plant partnership. organic additional pushed the our and annual ability the with as that third-party for growth mid the said, projects is, and great have about assignment with more being holders thinking That as that we the that in growth has outside that to opportunities of the growth of – need XX% well. in started the drops for drops opportunities transactions well organic gas bode needed that wants we to sponsor when we it especially think unit fund.

it’s decision to there win-win is the that the where we’ll available if it’s of is partnership acquisitions, time news less we basin, from the – at assets to the time. the those IPO. third-party at given there’s But just can the whether need of clearly where something those at look were the we get that, not a or compared sponsor the and good deals, for at access a make So a situation become accretive performance

Deanna Zhang

Well, Got for you. me. Great. that’s it it. Thank

Taylor Reid

Thanks.

Operator

Heikkinen of Amoss will Energy. next come David our And question from

David Amoss

which about to the you barrel Basin the profile could question third-party or you wouldn’t be And feel time, had business? guess, a there? Good understand I’m for follow-up business, see your really is would Delaware payback would with seems to bit guys start water intensity in high then opportunity couldn’t that per fit a go the funding the morning. a many water and of oil? barrels guess, a why it getting guys. if fast built or just like, OMP on comfortable an typically question, trying Hey, like, of my process then business? early OMP in get that’s well. it decision the And it I Is I how dig little that low-capital sponsor I wanted that

Taylor Reid

how a going like thinking was, and it. is and about evaluate level couple develop. characteristics of around time The will going what intervals be longer-term, to comments our I’d the we’re be understand sponsor take what production expect will spacing and then we’re to what to

And the investment it so we’ve but and OMP. to it’s want also when doing parties evaluate got opportunity go I an opportunity for if the have midstream really at opportunity, look road. mean that, with to that RFPs attractive down to the doing that And we third time all do –

the You Basin, kind oil Williston per know, talked where higher which about you barrel cuts compared to or three the as in asked water four are you’ve you per of certainly of was ratio on generally volume formation. Delaware, the times and water got dependent what to

David Amoss

get geography understanding And Okay, a then there. just of the trying thanks. regional to better

gas gas – that to in region capacity third sponsors of to what capacity about If parties. process gas? the trunkline relative you from and you to terms think process processing looks third of of available like from big give just picture a kind us your Can it gathering parties

Michael Lou

We in or both of then and ways good We to interested and do of and lack think that of and that, competition And gathering about there’s talking I’d a basin. lot look parties us Yes. are of and And no the transporting to actually none it. the is at this point – could gas say all there’s there’s on in oil part business is and the gas. the at number the processing side. a news

can mainline whole thing. field this partner do – the with and somebody there’s can you transportation do believe where options, so you gathering And they or it’s

for So many best the that to there’s OMP. we’re – understand try value things going proposition other to what’s

David Amoss

then sorry. And last – go ahead, Okay.

Taylor Reid

multi-well back-end, is, thing as one And last a from is into the or mode pads Maybe moving over perspective, on that Petroleum Oasis Bakken capacity ultimately and takeaway whether have products, all pipes access really to important have your oil, in we what But it’s of lot gone gas the has oil you’re the think development the thing freshwater sponsor dollars well make it. large fracs one the development to through add to is, and thing assets you’re From is that is sure you putting sponsor gas, very your a or standpoint, on of that you ground, once that sell you water and that’s I’d capacity to does years. intense. it’s have to you certain for here of make delivery takeaway few mode a your sure drilling need to have the for all up one found downstream of going again, that set on density downstream. Delaware to development the going it really large or takeaway have to water, be – make

a to there shown consistency. You partnership to that years that all they whether the that And your volumes or service there’s for we that make the a third-party and very in can very, consistent manner providers high over good that very we’ve is flow their is huge will it’s OMP quality make of show and connection sponsor. somebody for can need thing sure is, obviously. you The else sure

that’s partnership. positive for obviously So one big the

David Amoss

a Thanks. And timeframe conclusions? anything us you for those give of coming the going starting on and and is out you RFPs potentially bidding helpful. That’s expect just process what one, the to then can last

Taylor Reid

talked don’t the obviously the that not there’s level I done get to take rush has there. a and the at or reacted so. watch and from about it timing key know sponsor quarter sponsor We’ll time. huge But the Yes, next appropriate

David Amoss

Thank Okay, guys. that’s helpful. you,

Taylor Reid

Thanks.

Operator

Georg from Johnson come Venturatos will question next Our Instructions] of [Operator Rice.

Georg Venturatos

afternoon, guys. good Hey,

Taylor Reid

Hello.

Georg Venturatos

guys. good Hey, afternoon,

Taylor Reid

Good afternoon.

Georg Venturatos

and certainly XXXX nice the the hear II story. Plant It update growth piece on Gas was to to nice progress

timing or did the for with clarify in just to XXXX EBITDA a XXXX, mention to within associated was during the late gauge I But know get you Just the relation for and of what startup, EBITDA kind a call. wanted guidance clarify year? said that to guidance sense wanted embedded XQ

Richard Robuck

Yes.

so similar So definitely from to the volumes those But own discussion and along Midstream MLP get growing you from year. of they’re you perspective EBITDA, a the lines perspective, Bighorn. throughout XXX% you the when it’s about I think a – slug because lot

comes. So that definitely

the quarter For middle now, construct as it, we’ll let’s call and of the in continue we fourth plant. kind of update to you the

Georg Venturatos

as sense. strategically touched additional as Okay, opportunities any certainly, you on II, then to well discussions just this located, Gas appreciate you relates kind Could also hit that on needs. it might commentary makes on with in be it. perspective say timing from relation be well. would But third-party more And it to as Plant but color you opportune of I well great? a operator

Taylor Reid

Yes.

with significant a for the can gas you as basically basin demand of point. in plant. there’s there that third-party level incorporating Actually, MCF in start little and the that, not every capacity that much of is obviously down. we obviously, of things at processing There’s production flow into in at not to point. incorporating the get this this nail What we’ll same there’s say we’re at can every that side, guidance. very start We’ll amount gas there imagine, On as

year, basin. the the So there definitely getting of by going are the end tighter and definitely Regulations are in constraints too. on flaring there’s some

all flaring for bit for a getting requirements tighter producers. little are the So

need for everybody the the side large. So on processing is

there’s opportunity conversation. that think a and terms we’re in seeing we on So side, our of big that

Georg Venturatos

Thanks lot, Great. guys. a

Taylor Reid

Thanks.

Operator

to any remarks. this And the session. turn question-and-answer concludes conference I over for Reid like our closing back would Taylor to

Taylor Reid

Thanks joining for call again the today.

you make in ourselves definitely will we with questions to look and you. might any you have, working Thank forward follow-up future. We for available the

Operator

you now The attending conference presentation. concluded. is today’s for Thank

now may disconnect. You

Richard Robuck	Senior Vice President and Chief Financial Officer
Taylor Reid	Chief Executive Officer
Michael Lou	President and Director
Jeremy Tonet	JPMorgan
Deanna Zhang	Tudor, Pickering, Holt & Co.
David Amoss	Heikkinen Energy Advisors LLC
Georg Venturatos	Johnson Rice & Company L.L.C.

Oasis Midstream Partners (OMP) 28 Feb 182017 Q4 Earnings call transcript