OMP - Earnings call transcript Q3 2018 | Oasis Midstream Partners LP

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Operator

Good morning, everyone. My name is William, and I will be your conference operator today. At this time, I'd like to welcome everyone to the Third Quarter 2018 Earnings Release and Operations Update for Oasis Midstream Partners [Operator Instructions]. And please note that this event is being recorded. I would now like to turn the call over to Richard Robuck, Oasis Midstream's CFO, to begin the conference. you. Thank

begin. now may You

Richard Robuck

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

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

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

Taylor Reid

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

financial exceptional. Midstream's Oasis remains outlook First,

provides financial per new day into foot gas cubic XXXX. Our a million strong plant tailwind XXX

natural startup of in processing capacity gas Dakota. largest have Midstream the second will the North Following the Partners Oasis plant,

XXXX guidance XXXX Additionally, signed incremental as coverage million well. expectations our by agreements increasing increasing are $X third-party EBITDA we and and

for across at temporary volumes were company Bobcat strong cubic Oasis a Partners million and gas quarter, as volumes been XX Midstream foot Adjusting expectations volumes as short the plant. the issues. modestly work to as of outage guidance plant Beartooth well. at per fell these well. our delivered day water impact, would to Turning gas volumes we generally Crude due Natural development natural or have this above suppressed gas

improving distribution OMP growth times volume in strong forward. leading position In times, Adjusting strong financial approximated third times our our a I The pure great Finally, down visibility both X.X of us We XX% shy XXXX. year-end and the of the growing and in at currently position. puts puts parent guidance. to distributions per quarter, quarter. parties third the combination during going third coverage just would from of impact into X.X unit Gas have past growth distribution X.X Plant the coverage of time, coverage for was have X.XX midpoint a

Oasis which is its distribution Our targeted increased month XXXX. The into year-end ramping and This DevCo At in on growth cash quarter. our last our X% rate. the the October, since comfortably with track supports flow us XX% another distribution, keeps Bighorn commissioning annualized foot before later commercial new began XXX successfully over cubic day gas this plant. Partners product mechanically Midstream plant million and per producing start we will complete

XXXX now financial growth. X.X coverage major distribution calls projections, this become with from volumes by fourth Oasis driver to third-party in of before volumes volumes times more We in of and significant for our yearend expect which sponsors The LP grow. up second second times Plant through of XXXX, XXXX X.X largely Gas as XX% to utilization to of our to XXXX is the a approximate consisting XX% increasing ramp January above XX% quarters

which continue this increased to investment this enable month. will gas to capture, sponsor to regulatory XX% for our Additionally, exceed requirements

secure the whole, which processing has months. This us turned For XX% tightness the we'll to five approximately at discuss past enabled in gas as contracts, basin in depth. third-party more a captures for later

our Turning to gas first plant.

two time failure. while XX July and we stands provided The months day were future second gas loss and had approximately to during Design efficiency. days downtime to has in two the days and units. lasting August October, refrigeration experienced flexibility feet XX running coming smoothly Bighorn were the efficiency On outages a cubic prevent volumes, operational volumes from to with plant plant our implemented benefit affected online this compressor the due record downtime During and affected. million by not down and XX month, downtime With since at of associated plants were Bobcat. Oasis August, average, mechanical changes September been our gas and for later per gas

front. earlier, strategic Has and knowledge Williston and As gathering a subsurface The active gas gas in largely announced of first I additional the advantage other mentioned we this streams as processing. on commodity We deals combination the plan in position multiple GORs put third-party to across Williston the related us in strong processing us core building and remain to Basin gave a accommodate with Basin. parties processing dialogue in the additional regarding rising of across mover well. opportunities in team

by but Williston OMP's rig supported well. areas a now and Basin-heavy, XXXX, will as the a contribution sponsor's be Wild adding The by from to program four is we our core rigs running in expect other program to as growth will growing be yearend. continue fifth is XXXX Looking Oasis to continue

to have coverage. and second volumes sponsor we growth additional providing year addition, growth, agreements to tailwind to fill the we third-party expected signed quarter this In that during are

base. to customer our of the great November. second than online gas X.X at to fourth coverage is has and future executing come plant now XXXX, month we quarter of multiple done times expect As end job expected about as this We're we projects the rather OMP at about team the our as a excited year look early diversifying

our that, I'll call and With streams. the across is turn to continue growth Michael. beyond, now XXXX to we opportunities financial see over and commodity fantastic additional outlook Looking to

Michael Lou

you, Thank Taylor.

agreements volume the flow As extending margins and drive is We the combination signed single Plant following to volumes versus volume robust increase distribution I levels. leading Bighorn XXXX II to growth, peer largest financial more gathering beyond. year. expected leading this And runway wanted fell and to to gas a growth of numerous constructed this end of In than down, DevCos, Gas Bobcat completion deliver handful us our and grew of X% it outlook and Plant accomplishments At winds across growth. finally, Plant of of DevCos, growth EBITDA major DevCo, the our for volumes of gas highlight are at Gas would improving the crude to the higher its I in the and across been month. across base adjusting volume water while Natural Bighorn XX%. the allowed third-party Gas sequentially downtime. driver during We related diversifying XXXX X%, grew through XXXX, the volumes customer just curtailed II. expecting remains double to neighborhood OMP have to our natural execution the year X% XXXX OMP's growth A of

at and quarter. at an grow volumes the to by program XXXX. expect over the high third contributions in development Beartooth DevCo, third-party XX%, all-time in a growing were forward, we Bobcat At Looking Oasis driven steady by EBITDA water

points, the XXXX. contribution have per a is XX% volumes. to total came we increase as potential to opportunities levels. net before a XX%; year-ago Altogether, from XXX,XXX Bobcat, XX%; about growth EBITDA company quarter, If of increased could was Bighorn of about minus to the be couple look growth, a water think of related parties as on forecast at Beartooth, Oasis-produced the During day, year, our plus percent XX% discussion with substantial for of from portion EBITDA water next to sales OMP, to public think barrels XX% expenses. and A we freshwater continues or and XX% roughly third volumes it we freshwater volume associate next helpful year. EBITDA the of increase Approximately OMP third-party with with increased

to through capital the opportunities we us. the continue to side, On many work available

As gathering. II reflecting Gas roughly the currently months. With coming working attributable to stands, growth we're over opportunities CapEx year-over-year drop of XX%, third-party significantly associated through many completion Oasis We're Plant and would state are it in think call I'll including to steady to the There evaluating, and with plant OMP infrastructure we this in hand Delaware options agreements. that, update the on to Richard. expect

Richard Robuck

an driven at strong quarter by valuation and OMP Michael. and discounted We activity parties. $X.XX even expectations. contribution XX% growth peers sponsor track metrics. target Growth continues distribution with unit. to peer-leading this remain Thanks, at third distribution from The growth increasing annualized of coverage, quarter distribution have on great with spite trades third to distribution our continues being distribution surpass similar a In be less still a OMP focus and to that growth impressive on execution and team or our at

is coverage XX% For improving even growth. with expected distribution with -- EBITDA about XXXX to up levels rapidly XX% be from XXXX, almost year-on-year

million. the During to to expectations. added was be together, led delivered cash modestly of the Downtime X million EBITDA gross the flow of of Distributable $XX.X and million DevCos third quarter, OMP EBITDA. volumes net $XX.X $XX.X at short plant

Going will two refrigeration plants and benefit provided the our flexibility by gas units. operational from forward, mechanical we

we maintenance plan work continue CapEx as quarter. improvement plan was to and to to about expect maintenance track on we especially capital a more little fourth CapEx time, to be quarter, bit below over to expectations of EBITDA continue the We XX% the while average to meet during do X% maintenance during our and

partnership million September million under revolving cash facility. of had $XXX the XX, of $XXX $X outstanding borrowing its million As credit XXXX, of and

closing, flexibility well. IPO over opportunity strong forward, XXXX just forward it's achievements. we're since we our retain proud to and of the set. In Going a as growth trajectory our OMP's to and been appropriate We're one year looking financial

Our growth, sponsor expertise, puts focus great OMP with a on subsurface capital a in position. strong exceptional coupled competitive with efficient

stable, a direct deliver to revenue growth fixed price remains long-term goal commodity acreage Our our which exposure. minimizes and to dedication, fee-based

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

Operator

[Operator question Instructions] with today for And & Bean Holt Co. will Tudor, our Colton Pickering, be first

Colton Bean

acquisition. Delaware the on off it kick to Just

associated all? for any commitments factor from acres, do do considerations you the at Midstream dedications the then additional that? evaluate X,XXX as are just think those that that? And about into how you -- Midstream So Or bolt-ons Delaware, with there guys

Michael Lou

of Basin Well, think they're Wild to service forward. necessity to it's to would've going commitments any and going in be what of parent think but think as at at. a, for going level, quality look an not going and sure, a we able been but question, free directly we Midstream going the that a commitments, to part like about that third at with I the it's parent, gone parties all better necessarily be areas we of we, that's Midstream upstream as marketing really or they're kind company, so deliver of But always if come to to has it look we've not

Colton Bean

on as Woods results the well. just Pan And

I think, should preliminary you in for? seen specifics. anything kind what that Midstream results the with line no standpoint, were we indications, the of of kind the be but noted in past? that guys From there, on of results is you've there encouraging water or side are a watching Any pretty

Taylor Reid

but in making Over are bigger wells. all, the line, ratios fairly probably

it's -- more an than we've as So those opportunity we'll would've on lot well had on you're to historically basis. produce. expect But cuts And an to per of undedicated, those about continue eye wells talked keep going a a you area, so volumes OMP. for that as

Colton Bean

here. final just And one for a me

as in gathering. Delaware crude participation, towards may potentially So the produced biased you you that water noted think I past, be you and think about oil

case? the I E&P changes be that And any in well? might still for are watch include guess, that on there that we that As as gas should the mix

Michael Lou

parts all if the And but it the that to cost of of talked well, I do we'd that's making does OMP the parties. other a of service a third at for No to we -- the real provide mean, we either at win-win make level kind that is in areas as sure parent changes. going of the for and love think kind level both of just certainty be can parties. same and or things can it it business do sponsor of -- service quality right to for other I

So that to on to the can commodities, it extent those any they we'll do do of that. try

gas and more think we water opportunities, all oil. so And that the

Operator

JP with And questioner be Jeremy the Tonet will Please Morgan. today go next ahead.

Rahul Krotthapalli

This is Jeremy. Rahul on for

by starting Is X.X 'XX this you the well of exiting this off drives to about here noted of here? what and driven? how third-party Oasis to the completely X.X backstopped Just And earlier? X.XX behind coverage much of which confidence revised completions, the is

Taylor Reid

Yes.

great intricately linked. that's is route the planning a volume are and effort and forecasting So OMP here at effort The question. the Oasis

so Oasis, we from we do we And look to our to on what then when by promised third-party. the think go great, that drive -- you'd we about underpinned so underlying and upside volumes, have sponsor, IPO,

so third-party And its already. up also the including overall in that is its little are are call that have part the Oasis' XXXX all sponsor and in then forecast for outline bit our of lined with a program we earlier we tied deals volumes

we get-go, going forecast. added that and could with. development the business business has our we've to only signed we've team folks up-to-date job done into that work the So a And from our identify out trying great just here

that gives for us more. hit team, all incremental hopefully, numbers lot the place of had that in efforts can opportunities we number we coverage even a their with their XXXX. for to backlog already ability expand into get our So And as and

Rahul Krotthapalli

to And helpful. infrastructure then Plant Gas equity interest the willing the be Bakken second forward? largest leverage into That's it. downstream and Would you comes II you'll once purchaser position online. this Got going since be

Taylor Reid

the position we -- flow if the to And has have basin. look to the with now, side have point for time, move. to and At on right focused in gas the NGLs we I streams in but think, it's great gathering makes over have, make we OMP the ensure it for But some we'll sure this volumes. worked on sense, is got contracts today, and commodity time, opportunities secured Oasis that downstream inside it processing that we the

Rahul Krotthapalli

final And then one. one

sequentially, guidance respect how this the third-party On to volumes? Beartooth is the with sensitive freshwater

Taylor Reid

a had is volumes really for. second of that The and it third the in what driven team, substantial that's a up party so contract drove Yes, with a again, lined arrangement quarter. third amount

guided for ceased talking had be we So getting and XXXX, had our fracs is that thought and those quarter we fourth good that process on guys running the have because could forecast The to again, we're upside up. and to again up that just news about our down volumes wound EBITDA. which

Operator

go be Spiro questioner with Dounis Suisse. ahead. next the will Crédit Please And today

Spiro Dounis

drop-down. to Just on start off wanted the

a just OAS come earlier, up around think, the few I the I heard timing. it times on call

but factors wondering you more give was of some curious It can timing if that's to what is color the the there. timing I size. like So us going sounds still just are and drive in in some flux, drop-down

Taylor Reid

would that. evaluate said Michael to Midstream in earlier terms the just sizing. upstream to agreeable It's and mutually update to really I what continue -- business on be has we today a just both it and business. little up no just timing echo There's the internally really that's the Yes, and something bit in of

on most color of kind probably that's I that the can think I front. So give you

Spiro Dounis

about gross the stands? being about And as And to I XX% XX% upside to XXXX. to on few I evaluating. that you by EBITDA Would of that mentioned business. is debt when for that, that believe opportunities then think think where XX% talked third-party a you to of be Curious, you're XX%? third-party that have it upside it just guys you then today end

Taylor Reid

Yes.

grow in It think both as is some water we've that growth of in specifically, side. as next seeing just see shorter-term the it you lot party and low And talked we very in less. tend that term third-party well. can then a long on doing pretty other mentioned, so significantly of Bobcat. the third the some how will got potentially now, gas that the as So third as and and be of kind Beartooth deals Bighorn about year X% right and some be parties Richard of grow future well maybe about we're are so or side, on of they you're contracts as in as Those to kind that third-party as won't but

grow still that you to room we're We that grow of can to all our have to together, all across continuing DevCos. third-party. see So continue

pursuing kind business. of we're additional So third-party aggressively

Spiro Dounis

Last one.

Midstream Just in opportunities the on Delaware.

sort something spend, then of the any company magnitude the OMP, by sure be is I the potentially actually us terms to OMP call, itself? take down just yet, not OAS Maybe maybe curious or just that it -- and think, the the or how whether it And at I but heard on Midstream when give of the Midstream timing. the level that come that you're size online? maybe of could fund on can going in at around you

Taylor Reid

mean, we're I kind little try detail. that and call the Parent will the of with it they year I fourth on in the the on mentioned scoping to Obviously, we're February Yes. think come spend with number things. out of something a something of depend that's more a size that the quarter capital to end going of with bit

and how gas, of Just whether broad end individually. of how many touching, system those commodities extensive up it, it's all with gets actually oil, we make how the along we or water, three the some

that parent the project to think, the where what see just that it's certainly certainly size is. be But could something the something ultimate that and so on wants the at And the funded go scope to have we of of OMP. we'll depending project, whole on

Operator

will with be And go the Kantor IFS today Securities. Please next Eli questioner ahead.

Eli Kantor

of expectations opportunity, moving Following there percentage lot a visibility, as and 'XX? beyond EBITDA this but fully are your for question, third-party of parts up EBITDA third-party growth gross to on appreciating a your the given

Taylor Reid

same lifespan, to But go that neighborhood it now, now, about XX% deals. as still have being could in Obviously, from conservative pretty to it say, XX% that we're there. right kind in that 'XX, we've don't third-party still we're of for we early that in capturing you these neighborhood. will. up in early We're Right if that. got think it I'd in

we're a important in look sponsor, we're for strong fixed the for fee that type of seen where cost And service over that provide thing to as we're parent. trying looking contracts be Oasis service similar will it, can. we is time. the that continuing producers think kind lock We term the to So for, certainty that will quality, call of customer level, we that, to look same to and

Right opportunities. mentioned currently lot than there's So before. though we Richard up, as signed what have in a we don't that other think now, built we've of

Eli Kantor

Fair enough. II? can that you be of capital to related OMP's CapEx is volumes what annual requirements an most CapEx Understanding start your Plant growth will And growth how on incremental sponsored, be up growth Gas finite? of financed, to update going following will the be give third-party

Taylor Reid

Yes.

at So now, right in in now kind -- of if of out we XXX down we're the being XX% CapEx. of program, on kind the plus neighborhood, XX-ish capital call to maintenance talking in about EBITDA then to laid X% XXX year-over-year, your it $X you'd XX% to what that's and you're right the million

growth connections just incremental again, So the a and like spend And and Beartooth. gathering across supporting is DevCos. of the that's, Bobcat for balance CapEx three little incremental bit

with incremental that that the deals think about EBITDA now of capital the associated opportunity. forecast right terms incremental not it, as third-party and In in we are

trajectory think returns we'll on around to sign And and projects business. so get update talk capital the update capital as the so multiple, of them we to for lined we'll between you -- just about as we those next now certainty up the we tend then our quarter, and view if build growth the and there's we up when anything incremental

Operator

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

Taylor Reid

for since exceeded and of of questions for continue In closing, we in William. OMP forward it's been in greatly delivering might forward look as year ourselves to again, We've -- outperformance future. a our for today. definitely last guidance our have, and with you to original continuing you progress the IPO year. working shareholders. and September Thanks, Thanks, to make look And any for will the joining available we follow-up call always,

Operator

and you lines. The may conference now for you your now concluded. has disconnect today's Thank attending presentation,

Oasis Midstream Partners (OMP) 10 Nov 182018 Q3 Earnings call transcript