OMP - Earnings call transcript Q2 2018 | Oasis Midstream Partners LP

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Operator

Good morning. My name is Kate and I will be your conference operator today. At this time I'd like to welcome everyone to the Second 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 Roebuck, the conference. call over to you. Thank

begin conference. may You your

Richard Robuck

everyone. Thanks Thank you Kate. for our call joining today. Hello

advised quarter Taylor our We're the uncertainties materially have Lou in other well could Reid release our and to Those Security We Midstream on Partners including and in I'm and members to financial team. as second Michael be operational XXXX from Please will joined you call reporting that results. reports claimed delighted today be as the currently remarks by disclosed Oasis and statements. Oasis our your filings risks XX-K, results actual that different Partners these our on described includes update on to our S-X. both Form our our matters Securities including Act. forward-looking the the earnings statements We quarterly believe Litigation Midstream that to and others, Oasis Private those we These and release conference Form on and be within statements any our form cause on just our have with include Petroleum we of statements earnings answers to questions be are the forward-looking report Reform meaning subject to XX-Q forward-looking annual that and call. well from risks Commission obligation as among Exchange as

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

Taylor. can over current our investor will I'll With on We find to turn website. the reference presentation which that our you call also

Taylor Reid

our Good of a morning out everyone call points. our thanks would highlighting start key couple joining call. We we for thought and

guidance Partners an DevCos quarter stream. exceeding for First with volumes or Oasis Midstream exceptional every commodity meeting had and

which financial third-party increase able Additionally, significantly multiple outlook. we to assign our deals were

are per XX% with distribution of we We coverage next the into at unit compelling but exceeding in Excess two growth is to cash grow position financial X.X distribution as our our increasing than do CapEx coverage. years we of to to the greater and used rate and end down growth visibility fund past can our pay flow be increase we have our now OMP's Third, even plan over guidance XX% is XXXX quarter not covers second In XXXX. coverage. significantly X.XX improving growing debt to X.XX. rapidly distribution the

DevCos our three the which All Oasis quarter we the quarter from volumes Petroleum growth Our cash which last flow volume solid since keeps in parties. our of contribution growth by driven X% increased We us annualized supports our third distribution in distribution another growth growing quarter-over-quarter. comfortably rate. on targeted achieve a parent XX% grew

to will by in growth rigs each activity sponsors Basin supported the which focused as Williston on continue the DevCo. now Our rig dedications from most has Wild four our program running be Oasis of with is

from XX% about impact opportunities sponsor As an which increase DevCo organic to included we relative the seeing water in robust are in volumes. first volumes as example increased third well the of of the types parties Beartooth as growth quarter

steady quarter to third-party flow especially two year. investments to we the X% on fantastic. portions were into new will on Bobcat a quarter-over-quarter we our also begin to We're and in XQ rigs that continue the spending. exceed months As to reflects and our on sponsor gas to build of volumes volumes. Oasis returns per gas a to we regulatory for Basin requirements driven our result will new the Bobcat Oasis with continue XXX addition We DevCo gas asset The XXXX. help assets. plant are tied sponsor growth for both operations see tremendous new with XXXX four putting increase of capture guidance one contract add million is Wild activity our each this still on-budget. to in cubic multiples on which November the the year. third party estimated continue This asset our XXXX the gathering we're by plan. significant support end third in the anticipate out We capital tighter This Bighorn two both of making expect as grew of ‘XX EBITDA plans feet we Bobcat. the make through All that look party and progress that this progressing into DevCo gas In we to base approximately on-time the enable Beartooth become and in We're volumes at focused agreements seeing times growth to EBITDA Williston capacity in plant as the standard further day.

more and with increasing going work with well-positioned the more in is operations additional capture coming sponsors OMP our opportunities. Williston to market critical and are activity assets rigs online production to to Our Basin

announced development capital party fulfill to these investments in and across the opportunities. companies we deals Basin the commence During multiple quarter Williston third all three

are We Basin third-party additional is plan opportunities in capture dialogues gas Wild once to gas volumes the regarding active incremental operational. new

million X.X times million our the parent volume remainder estimates XXXX to opportunities across provide cost $XX to coverage sign to further to continued to growth X.X X.X to structure our we in is continue all enter XXXX for and all lower times quickly third-party XXXX. XXXX of led $XXX will combination us targets. supporting growth in DevCos EBITDA increase OMP now in to $XX in OMP coverage million around to commodity expected with for The growth streams distribution of year-to-date Additionally, million. to guidance increase is of also a deals to in and our distribution look $XXX increasing EBITDA

now position us over call capitalize incremental to see can our will With attractive is to a turn market financial team on and the asset in you Michael. OMP's top-notch opportunities. As position and compelling that I base put

Michael Lou

our a add continues OMP increase XX% Taylor. its guidance and shareholders. Thanks update the We value relative XXXX for updated expectations. to original representing XXXX XXXX to EBITDA with incremental

implied As capital a reflects returns. of scale, are and outstanding ability value excess efficiency times. in build leverage the reminder X capture below an the update capacity from multiples plant drive our our June our to This the and second is

the sponsor next. substantial Our dedicated volumes volume and portion OMP this guidance a growing for direct We night. quarter year its to continues of forecasted drilling to XXXX in of last fourth and areas third provided

remainder and guidance EBITDA supporting year gross volumes margins solid of improved we forecast EBITDA the through the the growth Our drive outlined.

material year build MRUs incremental with Starting how owned will is be XXXX we being volumes OMP, with helpful which guidance. color XXXX driver to being new processed it next growth on clear we up provide the that online to We also the thought the the be might two it Bighorn year. for by When is the it full by ramped up to were that to the will plant November of in plant. plant transition XXX%

So when two comes the capture is the cost we initially because EBITDA overall plant grow can online. plant structure and gas also better more we on

over with Oasis filled on fourth volumes the quarter. bring to the exit third XX% from expect in parties. XXXX plan including filled of middle and also entering on plant We party volumes the over and XX% third some We

for growth deliver With of growth to the gross Another one is grow impressive year-over-year. those we XXX% plant. it to expecting for that the also growth. gathering efficient basis better into leverage gas attractive growing gas current high expected of as highly important in little and invested Bobcat existing infrastructure plant. volume to in impactful to gas are gathering, We're at a Bobcat volumes in growth On second thing is of gathering, year. a lines. spending than neighborhood strong Bobcat very behaves operating EBITDA to remember expected and is produced growth Each XX% pretty multiples our streams plant next we about this build gathering run Bobcat a less margins With different. our OMP. ownership to over gas XX% the volumes margins could Oasis plant blended year-over-year the due comprised translates water The second third the EBITDA most party drive lift. of oil makes a but year for gas first

Overall, activities about at completions be fuel for variability which will doing described. EBITDA And we following range the percent in Basin more One, obviously to which when successfully includes remains water think next we minus With Lastly, XX% in EBITDA could year-over-year a reasons. to say XX%, the for forecast as Beartooth few already produced assume for added as Wild be we upside think contribution plant EBITDA shows landed drive not growth areas do development, helpful It translate a Two, any or XXXX look a each full relatively of our might then second we gear helps providing we are year that EBITDA DevCo. November call over flat it's company focus have in that drilling. Richard. modeling as to probably in year. to the be total I'll public up before year Bighorn full fair later forecasts about are the already XXXX. couple are plus it in rigs to into This throughout year. we to expenses. water for and up If of fresh about Bobcat XX% the we or production our the Beartooth we turn party third a since really year tends development or as that we points of the next three, new the business

Richard Robuck

new valuation growth economics benefiting greater In last four the $X.XX to with peer delivered sub leading our original times IPO at being growth We to discounted is to on distribution trades team billed party remain or track OMP Michael. set five third robust the times this even OMP now and with continues and distribution year sponsor impressive quarter Still at forecast party Thanks target at XX% and our distribution outperform strong accretive quarter the growth sponsor coverage similar another quarter compared with second and still multiples distribution financially. that growth yield annualized we distribution volume a a out less metrics. and third spite to X highly have coupled unit. from expectations volumes growth multiples. of build peers all our of

and million. EBITDA three owns. EBITDA DevCos where cash up gross was net million $XX.X the $XX.X the to together is $XX.X adjusting that million Distributed DevCos OMP quarter the of each interest just EBITDA For by flow net of delivered OMP added

do million. During but quarter expenditures we the approximately with the during of of CapEx the net second being million capital OMP share CapEx of about a was to about below EBITDA expect $X.X quarter bit and $XX the $XX maintenance over partnership of invested North is to especially Maintenance quarter gross including expectations million continue our third the CapEx we Dakota. more CapEx to maintenance XX% little the maintenance during to when in X% average planned work time up as preventative weather good about

had As XX, outstanding given $XX of makes in the $X.X This million. XXXX of $XXX borrowing partnership associated our $XXX facility plant June of its investment million cash second gathering credit million million level capacity revolving the under system and in in borrowings resulting Basin. of sense gas and borrowing Wild

stable fee deliver direct long-term to exposure. acreage revenue remains fixed commodity goal dedication minimizing under based Our

the We the to structural hand team of operational and expectations execution. questions. position Oasis XX% of and strength us financial with With asset exceed for OMP. The of sponsor to best-in-class the our to with call quality and have our owning provide operator great that alignment I'll over continue our

Operator

Instructions]. [Operator

comes of Capital The ahead. Please from May go first Securities. One question Kyle

Kyle May

a for Hey see us to could your wanted transaction current guys. morning if you down the the later thoughts good for this additional drop I give potential around year? today. and color Thanks out start

Michael Lou

that that from think we a Hey the really that from to perspective question. building see EBITDA anytime at given is year. midstream in that what That parent the about We drop as end EMP I the wants flow any don't that. it Kyle. we into which and to continue that call has need grow year. XX% we're for is at over would drop doing have Thanks the said have you talked to the take all of to be and at strategy be OMP Oasis visibility even down by talked and success coverage, are significantly can had the company to and part updates about grown time that the projects early we last midstream as don't being great infrastructure seeing we to have potentially next of positive cash

Kyle May

volumes signed that. and Okay. provide or Great. third-party any the contributions color breakout can Thanks that for maybe you've about And on by contracts different talk the or additional you DevCo?

Michael Lou

can of I contracts can't into broke they talk impact longer-term tell in and specifically you are specific impact that that Bighorn DevCo that but you we the DevCo about the by out primarily dedicated So and any I contracts can as see 'XX.

lot of charge the deals third had 'XX to a quite at gas party the kind that We of mentioned So are a there. plant. with long-term. affect going of are the bit in fixed volumes third-party fee be we Those larger are deals for level what capacity we that that parent line around

also we We Once any of on basin kind of again third go both deals seen number deals. and that fresh those any produced but on water have of in other the deals across the kind party side. specifics with we've in in of a line can't the

Beartooth on increase So that and side. Beartooth affected XX% that mentioned Taylor the

the benefit zone. that into with few third-party their deals over going So in continued more that None quarters. to that of coming numbers you're next hopefully see taken

Kyle May

got it. in Thanks I'll jump back guys. queue. Okay

Michael Lou

Thanks.

Operator

The next Please Wang is ahead. George from go question Citigroup. of

George Wang

strong congrats Hey guys, on the quarter.

Taylor Reid

Thanks.

George Wang

Yes.

of a couple questions. Just quick

On sounds can timing drop-down terms drop-down wonder year the guys if valuation you guys like on or in benchmarks economics of for elaborate obviously in you the terms the criteria have year any I of next the OMP. the end and just the if accretion of just by

Taylor Reid

they that that accretion, but per what so see make guys of are unit parties transaction is want Oasis to be that look all Yes. on be dilution thoughtful so OMP kind not sure term I at multiples both what around sure try the The and just occurs. about the at market to like is continues to through in successful you'll parent that thinking as think the and they to the going the look will long we're OMP way looks that you it we very also valuation multiples ultimate look and over winners and that make

George Wang

think you. potential Got in in just mixing constraint Wild the just quarters. data secondly GOR be I in more that And few gas you bottom processing terms from Do update any OMP. last basin for also the have some upside in the given the of guys in full could Basin there on

give you wonder just I the more can So on if color GOR?

Taylor Reid

is GORs are gas that about with continue on and Basin portion in and located basin So of trend Wild up that it's bringing capture we've GOR more and Wild central the like gas plant generally as talked X,XXX to we overall of the in on and the our up part going deeper got higher of that the so seeing volumes in it's we to where more production mix. area Basin you're the our company for cut X,XXX the

of seeing part operators So from with what consistent it's the other that basin. we're very core in

lot area So in capture this GOR that's you're getting drilling leading a to a to gas. concentrated of third-party high opportunities

up for more being So for able gas.\ then we're guys looking sign are that and homes about into excited of to the tap that these

George Wang

just terms the have weather Permian? you on thoughts guys party of questions in OMP's latest for any Oasis future lastly just Permian third on or in volumes And quick upside you. do for Got Basin

Taylor Reid

Sure. we in kind being and of sure that We're XXXX and want as we've subsurface we the to working we're really together position the not of about place take about time. time our going to go making a we've all talked we out in talked the the also of plan to development but kind lined metered want which still approach at have then the infrastructure to into development the put at early only understanding that understand timeframe to terms in asset. Permian and subsurface on really as We're parent

some to looking time across are here. the opportunities some last the products in move We're I those what us. time sure in the would in product. got but your So make Williston; is basin the think at obviously you about about We're third important unlike got or amount fair a when not just a OMP. It's specifically for we've thing strategic perspective, all It's you've talk that look you at done from the up of we there's what that to clearly to think early be going services. there's to it's providing also opportunities going really do parties are midstream lead can't it's competitive we've who places then parent say midstream it and the place for

So there's both there's but parent. consideration component for from standpoint a a market also strategic the

opportunities. going end excited we're a about to So the to little we're exactly you but tell where early up

George Wang

Thanks jump Okay. would the lot. back I queue. into a

Operator

ahead. The next George Johnson question is Rice. from go of Please Venturatos

Georg Venturatos

Hey good afternoon guys.

Taylor Reid

Hey.

Georg Venturatos

gas touch just plant too. on to I wanted

by made dialogue terms operational sound for active as fill guys are Is and exit were for to now there just ‘XX. was and to on north top on it the additional agreements maybe clarify think the there XX% wanted least third-party spoken operators those You like well guidance volumes of I right there. of about plant mentioned had in guess of at going Oasis it then some be I for way that waiting that to capacity it? kind of as to

Michael Lou

That's XX -- contracts. Yes. fair. going XX% all on to the year The XX% all is in next

producers Our room parties do volumes plant. we the third to yes Oasis fill excess both and additional to we're rest the have of conversations some continue expectations and and having of

Georg Venturatos

it. Got

and Michael a you any that little big to but On guys the on you relation other margins shed at some light comment? with plant structure mentioned more cost can levers that side of you kind mentioned cost guys benefits gas two just improved

Michael Lou

and EBITDA to growth to by year as next the quarter understand to can DevCo end -- you of Yes. exact our we this the ability think those we're We overall increase see the look in exceed give into how way guys get to reasons of you up they the ever hopefully the call in guidance but then set the past look so year about the fourth the than you allocation and numbers for we into take so about what to that's at and to just don't the it Bighorn frankly margins color that get year margins that have can try talking in and them. more I we've you talked competitive breakout just the kind because is

Georg Venturatos

Got it.

feature easy Okay. Any the kind thoughts point. this why That XXX balance me just near-term and makes have on was that at or your expansion and accordion reason back one last at you past holding doesn't any guys of the for sense request mentioned that revolver then sheet in or to of on on now? kind right occur

Michael Lou

Yes. we had call We capacity. mentioned in million XX the in

any the a going capacity we asking not at talked was up all drop and to difficult a to for about being to if without issues how just as more on bank going to the incremental need. group drop then that secondly liquidity occur think able I that for be overall give we us see incremental but capacity to depending potential we don't little go is and use on a much

I Oasis and stands and solid the begin business. ready that those provide because facility the they and to guys the more so commitment facility a to facility in is of for participated midstream with the capital ready to provide in in So stand small OMP group the capital the were most think bank guys initial had have

Georg Venturatos

a the for Thanks in sense. guys. Congrats quarter. Make answers

Michael Lou

Thanks.

Operator

Holt. Deanna Zhang Pickering, from is ahead. question Tudor, go next of Please The

Deanna Zhang

Good morning.

Taylor Reid

Morning.

Deanna Zhang

announced that right and sales I being new from see you those by not still Oasis. drilling the now when into Are will baked from to the if recently the upside about guidance were programs ask the just sales? the wanted operators non-core

Michael Lou

Yes.

area large impact then was won't the obviously the primarily dedicated not operated futures an and was is which the the of rest was forward. non-dedicated of OMP's So areas on non-Op the and of portion it have OMP sales the Butte] in one either. for of kind a on so [foreman it large non-core side sale that going the on Williston And

sales think asset don't impact large any really those OMP we So in way.

Deanna Zhang

it. Got

little just wanted something give ask is? also to wondering seem sense. is Beartooth for versus timing or else? And and color that Volumes to it on Makes the be QX just why in commitments on QX. if bit a Is am QX. a down you I in it Okay. thing guidance between

Michael Lou

into modeling was news release is the of highlighted of Oasis third helps press them growth right what conservative so providing volume parties party water in Good terms We driven water in to fresh we're for is third be numbers is so some revenue the Yes. half we third and get both are and that the in quarter-over-quarter that and doing that we're with by now with we the and of function we're up impact comfortable that those sales just under volumes provided. was quarter. just trying Beartooth us same for tracking that of those a

meat think I frac this of it a exceed those in when we online. So of we comes and that we and don't just think range get terms make just do other also we sure folks ourselves can hopefully quarter timing we what did but and just to that about but as want not forecasts ahead

Deanna Zhang

Thank got quarter? you facility versus tightness whether or due an on take then last the that brought you're storage NGL it. you. if increased could away? you to online And guys utilization not on seeing new that's last update and higher quarter, Okay give And

Taylor Reid

NGL consistency. that was storage really What just operational did for provide us

temporary later of were your gas we on it was kind better and plant and and does if So then downstream up that is there operations basically any allows have of to somebody storage to of able us downstream just sort overall the flow actually what terms blip runtimes. processing build

to slow downstream accommodate down actually to So from it's business. impacts the to not having

that So asset just enabler our and that way would just you and plants of the throughput that day-to-day storage fluctuates partly is the processing gas NGL about through month-to-month really is improve uptick. so see the I and think

Deanna Zhang

Got that.

storage from facility I seeing it to take away guys trends that when any general tightness position outside or you utilization of are guess. So the comes just

Taylor Reid

we be with connected about NGLs and really yearend we that so when things increase place they're haven't to it think point to really going rail excited the pipe we will as that will help problems and get and have so by well. moving as and pricing of one in the towards deal is be endeavor we is reliability our NGLs closer had and moving a and that we to So

benefit talked as moving So current forward about problems storage allowed for we keep Richard going it's that it. the our us gives flexibility had double moving it's had but really us to and a volumes not us

Deanna Zhang

Yes. Okay. That's helpful.

Okay. me. That's it Thank you. for

Taylor Reid

Great. Thanks.

Operator

question is J.P. from The Please Jeremy Morgan. Tonet of next go ahead.

Unidentified Analyst

Good afternoon guys. This is Rahul on for Jeremy.

quick of Just Oasis? you How guidance for questions ramp a perspective here? in on couple growth of party me. predicated the or much is provide the from the Can color volume third overall versus DevCo some

Michael Lou

Yes.

ago well I minute talking just we're going because that aren't a that into contracts. confidential the of think it about are we specifics those -- just

bit at XXXX. level I high a that talked gas about in a of capacity second think quite we just remaining having plant throughout

in going overall two So based volume up plant. XX% on you've our we announcement that XX% EBITDA and filled is seen uptick on on announced one based just that from to the

a great from contribution seeing You're volumes. third party

Unidentified Analyst

Got the to you. for on the color then freshwater side on some between of a produced the mixed you would Beartooth businesses? able provide be side water And under breakdown

Taylor Reid

and the together about excuse two with actually competitive have discussion to we to that them how are on to a we I we separate, grow just not structure keep combined the basin. me, earlier a competitive rate separate can those in from so have the folks think comment think standpoint and flexibility back going

saw and release in clarity you I this quarter the in I is press where give was we'll you from make pretty that growth some do what but articulated think think well that of and yesterday. as is coming -- around So

Unidentified Analyst

for Thanks. helpful you. That's it guys. Got me. That's

Taylor Reid

Thank you. Great.

Operator

go Please The next from question [indiscernible]. is ahead.

Unidentified Analyst

Thanks for call. the taking

can gas Do [indiscernible] have talk some contract a of have that new commodity so exposures? like profile? you you a a about the you plant bit or POP contract little their For lot

Taylor Reid

no There's It's commodity no to Yes. all see exposure. POP.

Unidentified Analyst

kind guidance Beartooth also Is third your I or And to of noted quarter volume it. lower. seasonality that expectation due that is there? guidance what also for quarter versus first for Got

Taylor Reid

of previous second Yes. were highlight that put know some growth the but fresh to in driven first that was if little of and range that third that quarter the number. volume in from all third third as hopefully quarter the we of can we you're From second quarter that not our of timing into the just by we in conservatism as so third-party distinguishing question to we needed in expectations we we terms don't were I move or third water a we between that from quarter that what to same not just trying be to into move quarter-over-quarter was and but bit contract. that And put party wanted quarter into

visibility we fracks through as now that good going providing we or going and their that's it's So were to fracking to their have continue know wells for right continue we work the quarter.

Unidentified Analyst

Got Thank you. it. Okay.

Taylor Reid

you. Thank

Operator

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

Taylor Reid

joining today. again Thanks for the call

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

Operator

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

You may now disconnect.

Richard Robuck	SVP and CFO
Taylor Reid	CEO
Michael 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

Oasis Midstream Partners (OMP) 12 Aug 182018 Q2 Earnings call transcript