OMP - Earnings call transcript Q1 2018 | Oasis Midstream Partners LP

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Operator

Good morning. My name is Debbie, I will be your conference operator today. At this time, I’d like to welcome everyone to the First Quarter 2018 Earnings Release and Operations Update for Oasis Midstream Partners. All participants will be in listen-only mode. [Operator Instructions]. will opportunity there ask presentation, today’s be to an questions. After Instructions]. [Operator this Please recorded. is being note, event will I the CFO turn now to Oasis Richard begin Midstream’s Robuck, the conference. call over to you. Thank

begin conference. may You your

Richard N. Robuck

morning everyone. financial XXXX results. Thanks Debbie operational and Today are first and reporting we quarter our good

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

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

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

Taylor L. Reid

of quarter continuing our grow coverage X.XX everyone call. morning which coverage Oasis the distribution strong in on which track grow above in growth. our started has XX% Midstream distribution and per provided exceeded volumes for initial targeted the to which support us distribution volumes our annual OMP meet year strong and of continued off beyond our DevCos times keeps joining Partners respective unit In higher to thanks our forecast Good for February. and guidance our to allowed

tighter completely distribution We cash of winters. our despite still and almost plant some million requirements plant volumes spent a of X% enable with to to The This which last significant capacity on progressing site addition of capture during in online Our operating North some time our expect become winter. keep our tremendous gas we the regulatory to future exceed which supports some for end will operations of was standard since all in Dakota We is increased progress grew nature begin tough made flow volumes base investments conditions of and feet mitigate more which major in little impacts sponsor quarter, quarter. this XXXX. per to Furthermore our the placed which we've with equipment Basin seasonal on the new our at Wild actually on year. harsh over fourth on normally the the those in cubic asset the quarter both day. to We the was and of quarter-over-quarter budget. XXX complete XX% gas hundred

Basin presents. positioned sponsors that work best is our coming online and are increasing current activity to going production more and capitalize to on more operations Williston critical assets Our with market rigs the with in to the opportunity OMP

gas gas due and to projects rising production to volumes identified from encounter higher have capture DevCos Bobcat and our several are obtain forecasted to incremental Bighorn for that associated regulations. We customers constraints

operational. new Wild active significant of volumes X is amount a in third once Gas capture party to gas dialogues regarding are the We Plant multiple opportunities Basin

targets. continue will further look of DevCos I over volume to party distribution OMP growth supporting the across to Michael. growth now call in streams coverage that third to our provide of all all opportunities With for commodity our will Additionally turn

Michael H. Lou

Taylor. Thanks

XXXX completed DevCo takeaway the produced completed both DevCos. services. OMP a last partnership volumes has the mitigating milestones important has growth. the bottlenecks third storage previous March sets We of We across already plant secured quarter continued grew compared water of NGL up several Basin run contracts several for Williston in that new in We quarters each and first impact for fresh pipelines. party water our facility quarter of the time in improved by our to Over Beartooth which NGL on

our to to of coverage XXXX currently to approximately coverage to into XXXX allows times start Our on our first X.XX of We expect growing of based guidance strong quarter the calculated is on the year. full us X.X quarter realize the to of partnership distribution year the XXXX. attributable second MQD. greater to $XX $XX the EBITDA X.X distribution in than in million end and by times the still in execution year from remain X.X confident to coverage not This on our growing million our

multiples on CAPEX spite expected year that investments at previously last strong to growth down remained the drop trades of and unchanged price to volatile a these peer have valuation project as mentioned. same similar OMP and leading still four performance returns few equity economics In five times the the are peers to had expansion forecasted inventories. discounted the over and we've level build on Our months distribution

portion to continues to volumes its dedicated forecasted a sponsor and next. Our direct of year growing areas drilling substantial OMP this

you our have guidance second quarter in for full the volumes as we of in provided updated of topic XXXX year volumes and night, guidance. saw probably the press last On volumes release growing

improved call of over drive gross With margins EBITDA growth forecast the volumes and that remainder Richard. the Our year. through I'll to hand solid the

Richard N. Robuck

that to to financial EBITDA you delivered Thanks operationally see operational income quarter In table release by a financially add header team you DevCo. and update. can depreciation press in Michael. both the get which The robust can our under and operating

EBITDA DevCos of owns. three net net quarter XX.X delivered of million for interest OMP entire OMP DevCo each just by or the million. the EBITDA together added cash $XX.X XX.X gross adjusting and million was For flow is Distributable EBITDA

During gross the the CAPEX invested approximately by XX share the including maintenance quarter. XX first partnership of line XXX,XXX. being of already of quarter of plant million the a much with the was CAPEX for with OMP capital gas second the net with first expenditures million end expectation capital about This invested in of

systems supported our expect maintenance on volume to continue to our to DevCos three spend to over All respective about from program of Oasis We Williston as running the now grown Rig DevCo. four time. continue Basin to X% on and rigs in CAPEX be by budget EBITDA focused be XX% is which will have of the dedications for each within quarter-over-quarter, activity its Oasis' Wild has growth with most

borrowed As had in just XXX of million million revolver partnership capacity of borrowing resulting XXXX X outstanding cash over of $XXX March and XX, under million the million. XX

expect remain to debt months the leverage XX remainder We two next partnership EBITDA of the under the for year. for to times

Our goal price under remains exposure. revenue to to direct deliver and stable, fixed minimize dedication long-term fee commodity acreage

and for in owns the question. to position and now exceed best team OMP. and our alignment structural call back We have The us Oasis strength assets great who class expectations quality the executions. hand of operational Debbie financial provide our about over of continue I of XX% to with to will

Operator

[Operator Instructions].

Jeremy J.P. Please ahead. first The comes Morgan. with question go from Tonet

Jeremy Tonet

Good morning.

this of touch should the normalized it a you quarter of O&M up run Just a think that how like for noted, going seemed kind step wanted to spent on not noted issues as about bit and we you SG&A you might what more kind repeat wondering forward? rate, was winter just the

Taylor L. Reid

the Yeah, that that the the we think some things plant did areas I outside of highlighted removal had work and also plant further then little things to did seasonal can excess plant. of some snow and then just mean were side we a like things. the extra -- some you on winterize

And as then so where well. into that quarter the think if at up and you I by second think we tick quarter for couple into margins a the the should first points rest year EBITDA were look

Jeremy Tonet

then similar as kind helpful, far wise a step at seem what up like thanks. kind XQ first Got the the remainder the in looks related water of you, the this happening timing bit with a it kind provide of that's of you're big And Beartooth, after there what's flat in for can Bobcat the volumes of year, then is color looks you as and flat or quarter there? anything showing else

Taylor L. Reid

quarter, driven first just Bobcat growth Yes, the doing gasless that by on volumes volumes of a the then Wild also parent so coming inside a in on of we behalf the on gathering lot the side more and had Basin. great incremental

our fit I was on we of more on the relating way capacity of quarter the that bit the contracts gas of projected the see And that plant comes contracts online. incremental the get more we we're of think have processed And we as incremental gas Beartooth a on the we're visibility are should that of program side quarter. we side helps you -- full end growing volumes more party think growth in off be Michael it's what's of program into to second will able of the into some the kind that thinking a as you'll we'll that some fourth function to get we to and as to completion and of update be we about kind just And available volumes. when water towards kind Beartooth little of Just that third -- then business. that support to kind tailoring and fresh on growth get I until year kind sales third earlier as to about that curbing

Jeremy Tonet

of have just kind if how might date that the it -- a you guess? thanks will present for flared for I and wondering processing seems partnership you, really for and that as Got like whole opportunities constraints what later basin then up thinking the again

Taylor L. Reid

especially issue higher of up clearly basin with already that are what core picking as so that been Yes, in same operators we're actually an and processing core constraints starts in the the seeing levels with is level part processing GOR's production the the drilling for activity capacity. have the and in at basin

of constraint points. to lot are a So people starting hit

that, gas the strong certainly keep asset, want good a very we're level coveted to going is additional party what capacity And be to on the pretty capacity to seeing later third at that for volumes. with parent day online. to think that a XXX opportunity will million the will we Once and not partnership the have on And the thing coming that Now is only working this plant be will good it that others in of. our on -- a is keep that Wild again that be Basin a capture has year. it asset budget we're time handle become also part

Jeremy Tonet

and Great, that stands to could, one Permian the thanks I then where potential to regard regards serve any are one to production thoughts as with parents far updated the acreage, if OMP just last there forward? going as with

Taylor L. Reid

there won't Yes, we a so of a from a OMP also and are there's the large for will a in be lot of third what we that taking be They're about other party We -- side. only opportunities of the or and to certainly don't there call. we opportunities look at OMP basin. And in opportunities on essentially have looking gathering as going opportunities that but terms marketing not involved there's yet but there's forward window the of detail think for out parent it well. exactly any it doing think on is significant talked at OMP perspective

Jeremy Tonet

you, it that's for thank you. that's helpful, all Got me,

Taylor L. Reid

you. Thank

Operator

Please question Holt. Pickering, comes Deanna with ahead. next Zhang go Tudor, from The

Deanna Zhang

Good morning.

storage just in that are So, about I the branching structure and want on just the further on OAS that whether was specifically you wanted where is guys mentioned, downstream or in guys to NGL if just or NGL facility side? that you clarify to touch the thinking OMP

Taylor L. Reid

is couple some point. a Yeah, even on to is resolved as really constraints have Bighorn that's not processing think good There it takeaway capacity, are you the things a in coming year. NGL a in on end that early some becomes longer and only seeing allows DevCo We what also certainly that it's are big do years but as capacity. of of this in way additional you

at So NGL hiccups obviously there's lines to some going those constraint with be on times. that

its be seen withstand it's just what helped we've want the time able any on those constraints to storage our the kind to hiccups. downstream in of manage to short those from So is of that that the have And perspective allowed better and time. us run been plant you

in facility we've that putting So really with been place. pleased

Deanna Zhang

any or color for you Got can any I storage you facility so giving provide with amount as sense the contribution Bighorn? and of guess on NGL

Taylor L. Reid

run around around and -- be at a forward. so be You the will going be see is going what more our on going is to running of and to capacity it's you'll plant ongoing higher basis primarily it that kind know really fulsome full times

NGL So that's contribution from going storage main to side. the be the

Deanna Zhang

Got the little the a the on it, those CAPEX you bit makes what in sense. more talk identified, timing opportunities will Can that gas also lift currently whether and be? that's you've budget about

Taylor L. Reid

lift is gas budget. it's of the the Wild all Yeah, in so Bobcat it's Right throughout all Basin the now DevCo. in

gathering about that you and side, that with have have crude on along is And compression you have Bobcat so the the gathering, compression water way produced lift. in to think gas gas you -- handling water

those it and parties in those for do parent some are looking of also All the for those to well of third we're areas. as being done

the we see we additional Certainly growth activity third opportunities to will is kind budget have will capital around the if party be so And CAPEX the add. significant those sponsor. for of that

included as will what's is then get So we add those as party that. other to line work continue all the that to Bobcat services CAPEX parents we DevCo gas the and well for as in third lift

Deanna Zhang

Got it makes you, for you. sense. it That's Thank me.

Operator

Venturatos Georg Please from comes go question next ahead. Johnson The with Rice.

Georg Venturatos

afternoon Hey, good guys.

in Just party of positive last where terms volume exit wanted frame going in we that quarters of where DevCo, third a parties? sense commentary we've across you throughput the related seen third relative see to the percentage could if XXXX to from XXXX you're kind with the get to incremental what in to we just activity up be of could or maybe few

Taylor L. Reid

on And complete starting we update more third now we and think call deals have side. be that's at opportunity there you're think obviously fulsome smaller that those is that so Yeah, to speculation. some will and that year-end And you We'll We to distribution off about But able to a the in. to it's year. our its by on that XX% to a certainly able believe. already on is roll not end our do we we're Right about remember when of to coverage have year continue looking we see and large is quarter next -- call only then coverage X.X trying plus rate. to that from that growth coverage. X.XX first times a party coverage the by talk guys grow we're we -- talking signal the going of X.X give expand been next quarter what first by to of expected

of come to So third certainly We starting months with significant really to not over that get parent those as what the some portion the come we're can we're we're only well trying actually continue of doing show you we'll those then. think to along. but in more party but you update is coming

Georg Venturatos

here startup late this Got year. the update And it, good obviously plant maintain gas quarter, this just hear that's to on helpful. X then that

a to spent. dollars been the XX% say and have did made large mention You you point complete

see share the wanted could what standpoint any Just to to finish startup? just here just get you before on detail from remains a largely line if to construction

Taylor L. Reid

and also of people big there's that have we there and needed obviously We connections been that that our is understood equipment Most there make so of to the to progress want the set have out finish sure did to though made. make contractors line. smaller we getting kind payments

to the on done from spent budget So of project. are with that to closer Bighorn Bighorn. we're said CAPEX $XX probably in on now. range, top end all what But that standpoint be and when you'll we in time, capital a is closer XX It's see going to million

the that the We that to at everything's online and really progressing end well come on of year expect front.

timeline. were very there to that that we're more a much knew Obviously come that up likely winter even over we little So able was work pleased. in winter as and during expected done to Even what we than difficult though maybe timeframe. we the winter get Balkan is a bit

schedule very project. of that far stay ahead kind progress on of at I'm and pleased or So with so the we

Georg Venturatos

to for answers. Got great Thanks it, hear. the

Taylor L. Reid

Thank you.

Operator

ahead. next comes Please May from The go One with Capital question Kyle Securities.

Kyle May

a First question talking that? I call, outspend on Oasis to about up the wanted from to year on I this later for potential just later this about the follow clarify comment just wanted another me, drop were of believe really for and year you funding clarify infrastructure were talking you I a means or

Taylor L. Reid

our the the level that's infrastructure related was Yeah, at what in that isn't about there parent at level. talking an we're that's parent outspend call just

through the like they've fund been that outspend the what so talking to about through is Midstream would they that Company MLP. And

And about year the timing drop having first a maybe that perspective down. of later from so of a talking this drop,

Kyle May

thanks can distance sense looking map maybe Okay, volumes or year X third about plant for of where it as is and centralized this target? larger look you of the kind kind gas or provide, a or that that can later talk about at of potential can we Basin as we're the more just the great, that. for infrastructure And third us area give one you you a volumes, party Wild range maybe party capture you is there around

Michael H. Lou

Yeah, of get you likely to Obviously XX is a really it where you'll how can radius. third as that building area continues some thing pipe the then relies the and have, on that's synergies, for that on to you mile four we go broaden our as well from focus can put XX radius that need running mile lot the what good continues to a to in to rigs is radius bringing larger of grow, something radius the and call gather obviously And so Oasis start you you a that as outside system there's we visibility we're assets The as gather good grows. that have of clearly ground more just that in some much that to the grow system target. there's around parties assets. that continue just much in that in gas asset

Taylor L. Reid

I think fill ample the in volume. the that to think the need news radius we that capacity additional good for talking Michael's is that plant don't there's parents we mile of opportunities the really that about XX

excited we're about that. So

Kyle May

all That's guys. great. Okay, me. for Thanks

Operator

ahead. Schultz The next go question from Please Capital. with TJ comes RBC

TJ Schultz

you or any certain opportunities if The thanks. that there that markets on of could just take advantage as financing forward term accessible Great, is not you would a just and generally expectations view if or you that leverage leverage debt goal execute drop two are long down? remain does if take equity referenced discuss to to needed for that the next drops you Thanks. would as like higher

Michael H. Lou

Yeah, is think long-term our goal. I that

we it incremental think obviously because bringing think EBITDA from a drop. from whatever I about perspective forward your in you're

consider to got it you perspective. that from So

Additionally time. ton comes once a online from that second which flow of over gas that help you're get cash you will well to delever plant going as

think on it kind going rapidly of at at so next maybe to look the will gas we months how I pretty look because plant. versus be as we XX be cash we of by the And that's balanced second contributed XXXX flow frankly

if as the the And to talked undrawn the $XXX we So something a then having work we -- will about revolver. offer XX obviously have we way million have finance we process parents it something million on us. to that's the evaluate through

revolver, scale can on In up $XXX million. that that a to accordion feature there's they to addition

the just And you to have the we banks flow if hard to it. are with go so that isn't capture, support too cash working

the balance been where to to we XXX if like then leverage we time why levels that not we've of over a have access about you conservative it leverage talking continue a is well sheet. So will but incremental at have million, lot

probably drop. right term I that's look targeting all in the to of don't And so markets, for first equity You're and I in be time the security options we to the sense the opposed a out value future as something I Obviously -- we'll think capital really there over that terms -- is really would the attractive. as we access also don't we're it think and us. brings. stock a an think are. think which something -- strength inherent extremely is ample is back monitor that into that are perspective that's sources have interesting taking the good for are capital. and way there's that Oasis out own. to investigate not to the it's are see just overtime And if doing And well things then and it's like to raise other continue there from we think then value in But of love actually other at shares we what just obviously that yield to it near makes revolvers I the that the private Oasis

TJ Schultz

all Okay, had. great, thank you. That's I

Operator

The Shen next question go Please [ph]. Lynn from ahead. Height with comes

Unidentified Analyst

on mentioned taking that for end probably so you the How Thanks want MLP follow parent? dropdown about to just should I [indiscernible] further dropdown can question. my be up of post think we accretive this year. of

Taylor L. Reid

that work. great hyper something extremely I a have over about scoped but you haven't it the shareholders Yeah, think important kind for I time first drop incremental that accretive of be heavily And OMP question. work Oasis IPO. definitely buy I on is it's that's to capital think as at talking OMP see time, will is Obviously drops. in it we for that the that we're accretive for and focused important is for balances any saw that opportunity. acquisitions. get that management out And look to to to understand think team It the stock actually to access just we have anything and important Because at I

holders. have ownership the with to participate units LP to own checks OMP LP and team their management any in write the had didn't As you might remember equity alongside

they see are our to is sure so trying entity focused management that drops when on as us that team and you'll coming And a successful way. through make accretive the

Unidentified Analyst

you very thank much. Great,

Operator

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

Taylor L. Reid

today. for joining Thanks the call again

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

Operator

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

You may disconnect. now

Richard N. Robuck	SVP and CFO
Taylor L. Reid	CEO
Michael H. Lou	President
Jeremy Tonet	J.P. Morgan
Deanna Zhang	Tudor, Pickering, Holt & Co.
Georg Venturatos	Johnson Rice & Company L.L.C.
Kyle May	Capital One Securities
TJ Schultz	RBC Capital Markets
Unidentified Analyst -

Oasis Midstream Partners (OMP) 11 May 182018 Q1 Earnings call transcript