OMP - Earnings call transcript Q2 2021 | Oasis Midstream Partners LP

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Operator

Good morning, and welcome to Oasis Midstream Second Quarter Conference Call. All participants will be in a listen-one mode. [Operator instructions] Please note that this event is being recorded.

Now, I'd like to turn the conference over to Mr. Richard Robuck, CFO. ahead. go Please

Richard Robuck

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

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

done quarter, team strong financial joining controlling and OMP our everyone, maximizing delivered performance. operational has another thanks supports as great amazing call. which and costs Good job reliability, for the an morning,

long-term Additionally, new development contracts, the outlook. which support continues team third-party business our with

like to has handful things. team hard highlighting by and start the I'd a record for year-to-date, today's and of been work safety progress OMP their all here. call Importantly, great key we applaud

and First, cost OMP's second volumes and EBITDA to on outperformance. leading coverage control, quarter performance exceeded expectations

Second, OMP connection across as third-party a recently greatly contracts third-party third-party to Wink. the building pipeline for major a the new This Bakken hub infrastructure in the its Delaware, In milestone which business, is it connects our team has and which a secured to Delaware. set. opportunity Delaware Basin, includes multiple expanded expands the our key OMP

both a we expected in around As of you've likely activity robust the work rig Much is noticed, have in continue of and to activity new pipeline and and infrastructure, key this Delaware. basins. permitting opportunities increased Bakken OMP's both

business accounted the for Oasis divestiture. revenue XXX% second Third-party of revenue treating Delaware our about of party to account quarter, third the as for in XX%

first we $X.XX representing from per the cash Third, second quarter, increase unit levels. declared a of in distribution $X.XX quarter

new in quarter. its We third late bit continue a call. business and opportunities expects opportunities Basin those close ahead. Petroleum, as Fourth, our confidence more in this sponsor, to Oasis we discuss our to the move have acquisition Williston We'll on

has indicated Oasis As post OMP-dedicated similar higher in OMP. strategic or that value volumes last we this it provides call, additional integration move highlighted to expects areas.

investor and in seen the Oasis. added and along of of with the program. allowing financial offering under deeper steady, allowing each and attractive build to We as from crude a and strength position, stronger peer-leading The services capturing multiples. presentations scale dedication Williston the late dedication already with invest Williston of We is highlight development Oasis have upstream capital acreage natural a oil, an pivot case study by Volumes the more City a are fantastic, that incremental as evidenced resilient even XXXX. The inventory, soon tenant City flow for the gas will includes as water asset. our Oasis economics produced OMP services. at becoming size OMP its anchor

project Painted of is We in Oasis' expected the also areas. refusal Painted of the core first investor operating after to the area, one which in be Williston of Woods a also City right of is is have case and part Woods developed study presentations. right

Finally, Oasis moves capturing O&P's and success into translate both in strategic differential for our new value creation recent business unitholders.

detail. of with now I'll to get a have Michael about balance more to over Our sheet, coupled excited outlook, strong the little OMP. call our us turn the operational into future

Michael Lou

as to with performance Taylor. sponsor beats. and levels remain very quarter capture and Basin is financials, the well of fee-based experienced EBITDA OMP's its little business quarter. allowed at OMP both Wild downtime delivered Thanks, about gas volumes high peer-leading primary as second in gas-related was capture in OMP a accounting oil and pipelines. another Capture as of XX% gas maintain our over remarkable Natural for water XX% driver our rates revenue. systems captured the on

ensuring objectives a declined expected. generally proud things, on across sponsor first others, which commodity most gas-flaring completion outlines its slightly is role its of the August, strong which, front. activity needed Quarter-over-quarter its or other critical OMP in announced minimizing Oasis flat publish as well performance and reflecting Our trucks to in streams, from to move and will it as oil was among number meets sponsor were this our volumes. sustainability play limited its water report volumes

on guidance oil water aggregate exceeded and However, volumes. versus expectations OMP gas,

in is the just in in Basin reliability quarter into expected last complex. operating to beyond. XXXX half taking Wild quarter, turnaround to a to turnaround strong ensure reflecting grow of and accelerate planned the third maintenance fourth XXXX week over declining to as of As we're before This the the the the opportunity move XXXX, volumes are Gas at we the to quarter fourth second expected

maintenance, $XXX the anticipated $XXX our to full adjusted related accelerated EBITDA million. range downtime Given to to year was million

would by Excluding midpoint million. the turnaround, $X new have exceeded original range our guidance roughly our guidance

the turnaround. expected CapEx maintenance is be the fourth increases Coverage reflecting X.Xx is million, EBITDA quarter for million quarter $XX to and about turnaround. EBITDA million, the by quarter between for decrease fourth $XX to as range $X Third expected to expected with

the couple Given on the time it's focused quarter from OMP's slightly Oasis' down for the years. volumes dedication, the on anticipated spending versus fourth base, our Nesson into some of of excitement of in to XXXX the volume along Williston outlook preliminary development quarter recent asset from program fourth South around EBITDA flat City with quarter first similar XXXX levels. the next The suggests of coverage in trajectory worth

single low year. of average, EBITDA expected On quarter for has forma expecting for XXXX. high digits be be should as mid-teens That quarter outlook potential quarter where quarter first versus Woods, should The accelerate acreage the online. XXXX ROFR based simplification EBITDA receives area the are Volumes we is during XXXX of and pro of thereafter the on to versus South on second 'XX full increase currently OMP current XXXX dedication EBITDA to the and captured First this fourth simplification. XXXX point project in the the we're the plan to sharply Painted the Oasis' assuming year comes Nesson be of process. XXXX. and for the up the the highest beyond

upside third-party to plan. would our Additional business represent

spending support XXXX spending to of dedication to we increase that, side, O&P with the to Williston as line $XX.X capital over increase Concurrent strong our versus and On City acreage quarter in $XX expect in capital XXXX invests the is expected new XXXX million of levels to as EBITDA million key $XX the to hand will OMP million critical guidance. on was third-party infrastructure. second growth. begins call Richard. I'll infrastructure that spending in construction With additional with business,

Richard Robuck

position financial OMP's remains Michael. Thanks, our compelling, is outlook differential. and

EBITDA grown As million to on XXXX when Slide you our we from expected to has investor XXXX. $XX $XXX in an million OMP's can see XX IPO-ed deck, million in of $XXX

OMP years we our increase receive sponsor business additional $X.XX is Michael to $X.XX in our is increasing distribution per grow our press as further release, set well. As and acreage from as discussed, announced unit. coming we With third-party this to dedications that

We still While to Big our performance where we on continue were leverage part year strong is ago, projections and distribution EBITDA slightly improved Michael of to long-term leverage target decisions of targets. will operating leverage of quarter-by-quarter delivering the into and from around half translate distribution will prudent distribution X.XXx leverage within recent our high end to range. our beginning above decision a which X.XXx. make outlook. with and the at go-forward XXXX earlier, seek we strategy significantly the our maintain outlined long-term trajectory the in have financial our target coverage, of the based

range leverage about or fourth with are our We XXXX. Xx into should the middle this the in quarter quickly comfortable of of tick-up fall since

OMP quarter the on As and $X.X had million team line $XXX XXXX as our OMP margins of EBITDA based bonds is I'd OMP on $XXX X.Xx. $XXX In to approximately back returns executed call strength Nick of to our closing, the well over supported cash. Leverage questions. up is congratulate go-forward for of revolver, its a attractive cash high, now of unitholders the to XX, was for years million should outlook second to for like to and and unsecured impressive, drive keeping which our I'll with come. during hand June drawn million annualized which quarter, the along outperformance. position in open the million

Operator

of Instructions] [Operator go from First JPMorgan. comes Chitteti Please Vinay question ahead.

Vinay Chitteti

you beyond. flattish also about I XXXX understanding XXXX half production was But looking just second My guidance the ask was Oasis to is every noted and in a addition year. -- the XXXX. to there preliminary and but of for wanted forward this in outlook

as how volumes see So translate to in in of that also, kind half you to to And expecting what are its would you I versus upside what second want would completion the understand activity midstream? XXXX?

Taylor Reid

a That's great sure. Yes, question.

Oasis to the in end assets third rigs we're As the quarter. near putting Diamondback the term. its on not you asset, is That on know, of acquisition the at of close expecting

means assets going be be completion so it's time. flat assets. over mentioned activity assets. other other rig its activity it's on and going be over putting will are Oasis declining And as specifically time, volumes keeping that to which Those means that you OMP naturally, the to

as be on those it's the So growing profile to of for overall would overall related Oasis. kind an basis, necessarily

was So and were that's asset then directed so that base. more clarifying a announced acquisition when question, -- the excited great yes, OMP that's which capital we a Oasis towards why

those incremental thing that's it relates forecast other to as that volumes. The the is capital by our is flip side putting is kind things. is in important of conservative note that One as two to But area, -- which third-party numbers both well that, the efficient area ground. South capital Woods is as to upside into there's that the and capital extremely third-party City into potential highly Williston for put Nesson for our Painted to

Vinay Chitteti

the Got one, comment it. made picking up you Sir, last on just there.

thoughts baked there. third-party you mean I more want Or I did is bake note some in the assumptions? So, conservative, and 'XX, of just XXXX that also in get guidance its you're primarily but Oasis? assumptions a for to kind little

Taylor Reid

we I -- because earlier, think our third parties. is is good that's revenue XX% was noted way mean of from it have The contracted as we around about revenue.

forecast. and negotiation conservative get process. customers, like expectations of third-party as And roll the so our really mentioned we incremental of final we contracts. already which into of then we forecast And It's have our earlier, a volume very, kind from the wedge stage

we included in our a on sheets stuff stage, that working more talking that behind So incremental forecast. like we're term not and lot prospects got that is

that's So our -- we really that's close third-party that's will, forecast and is three the you to being kind opportunity, doing kind of of what that super down. that then stuff and -- designed categorize buckets, and the get nailed like where we're we if

Vinay Chitteti

again one and Understood. on last could here. Maybe distribution I if

the increasing, about seeing comfortable? of is But 'XX. like kind what CapEx just said, the outlook? levels the from keeping XXXX. and you leverage of and do you how CapEx distribution line XXXX to versus still growth in given are see in And kind XQ range, you then leverage activity hitting top the understand you think -- guidance like the manageable creep higher And modestly then distribution So keeping do where of current flat

Taylor Reid

in a -- X.XXx. Yes, compared I neighborhood. of in through yes, is midstream think kind been while targets to We're that's that lot have And we've X.XXx that a businesses to the now. long-term that act going balancing of unique been for our

on us the in term, is to, capital. incremental So flexibility. understand And well. it a spend volumes, lot gives of It a spending flexibility very gives we the us then of capital little near bit we're

leverage And the so headed. we our and to have where predict understand ability is

leverage, as we at around coming end see XXXX down to so noted, that Xx. you And of the

below actually And we time see coming baking and march down those we now third-party even know forward, we given any and as so -- not incremental right it it over levels even upside. what

feel so the think our And is good it plan. about we like way about we really

at conservative it -- distribution you flexibility we've ability sure is we've kind been of remain a want the distributions, that see just years. the in we We just to to our so, stay out, remarks, that seen we're we is and and front we as volatility not just growth that past very commit to book. the quarter just prepared good over on offset given moderate committed hedge haven't strong a because in Oasis -- really want do we guess, doing good We in And make to increase of that some about pace. that shape. and to quarter I sure really make to of has couple a heard feel the that

of locked the next so are years. for And their couple cash in flows

decide if distribution. gives And us of that to so comfort continue be a to delivering increase the we the ability in lot activity they numbers OMP our the to and will

Operator

Please from The is ahead. next go One. question Capital of May Kyle

Kyle Capital

initial for I appreciate XXXX. and the XXXX outlook

Taylor Reid

lose Yes, did for sure we you? or

Richard Robuck

we him. lost think I

Taylor Reid

are still there? Nick, you

Richard Robuck

you hear can't by you mute chance. if on We went

Operator

Yes, I'm here.

Richard Robuck

Okay.

Operator

Mr. with line? May, are us on you the still

Taylor Reid

Let's back and question, go let to the him in next if works. dial that

Operator

Next Neal question will be of ahead. Dingmann Please go Trust. from

Neal Dingmann

Thanks getting me in. for

First a the a are the on CapEx, about talk you but about efficiencies, under nice talked the of but beats but come not remainder quarter, you year? flash can little beat there, a on the know on cost for bit very bit sort just talk what lot you all doing to you continue there. to but in -- the of I only just had improved question guide of CapEx nice a obviously, particularly,

Michael Lou

you about talking on the are the side? OASIS -- Neil,

Neal Dingmann

Yes, sir. sir. Yes,

Michael Lou

Yes.

Okay.

the this is But call on last yes, we call. on right. So the exactly you're side, O&P talked Oasis the about that

got side, On the CapEx we've had -- beats. we strong

about that's in on quarter. the the down things, that kind we you of E&P the combination of look saw efficiency but around A of that. of X% if larger lot side. the a as at was pieces second that year, think brought you Really, So of frac full one CapEx

But lowering bit The combination of frac second in the of of efficiency as little cetera. and a timing of cost is overall a the year that kind think quarter it interest side. the of kind of more was X% driven of look, et efficiency kind about kind wells, CapEx

Neal Dingmann

for it. deals Got out about talk a a a going then of is follow-up Or -- you've got you it. Could what you lot -- of there? about I know Got the improved? Or on you've out lot down. table, the know got just on options market I potential the talk maybe And sold OMP on options M&A just on there what's with that? just

Taylor Reid

price sets of talked Yes. are I'd We been from fantastic able of heard have them very to OMP It's attractive really both for of an deals parent, OMP, well shareholder there's options the a both a of to really some about on the midstream and lot a of the that really being set and played perspective. at up -- highlight assets companies all been OES with you thoughtful drop forward the the simplification is friendly companies. sides for deals What take equation. both going example at great of just call, super prior the have and

are again, us dedication you've Michael of two Williston, added regularly. and the Q, both accretive also talked for do in just So, both that South that projects in mean, seen very dedications about projects and of companies Richard Nesson, so we've City for some both in I the of them. important helpful

for forward. companies continue and going opportunities evaluate help we'll So, that will those to look both

Neal Dingmann

Look there's like it, options. lot to sir. a Yes, forward That seemed of guys.

Taylor Reid

Neil. Thanks, Great.

Richard Robuck

Thank you.

Operator

I'll go over the ahead. further Reid, back call no to at have this Please Taylor We turn Instructions] CEO. now Mr. time. questions [Operator

Taylor Reid

closing, growing supported is results execution. differential for In go-forward Nick. were dedications and position to unitholders, forward attractive, additional a outlook for joining. look value and in business. we second and continued solid the by Thanks acreage Thanks, is create quarter a third-party OMP to everybody,

Operator

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

now may You disconnect.

Oasis Midstream Partners (OMP) 4 Aug 212021 Q2 Earnings call transcript