Oasis Petroleum announces quarter and year ending December 31, 2012 earnings

Tuesday, February 26, 2013
  • Total revenue for the fourth quarter of 2012 was $214.3 million compared to $116.9 million for the fourth quarter of 2011, an increase of 83%.

Oasis Petroleum Inc. (NYSE: OAS) announced financial results for the quarter and year ending December 31, 2012.

Financial Highlights in 2012:

  • Increased revenue by 108% to $686.7 million in 2012, up from $330.4 million in the prior year.
  • Grew Adjusted EBITDA by 118% to $512.3 million in 2012, up from $234.5 million in the prior year. For a definition of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to net income and net cash provided by operating activities, see "Non-GAAP Financial Measures" below.
  • Increased net income by 93% to $153.4 million in 2012, up from $79.4 million in the prior year.

Financial Update

Total revenue for the fourth quarter of 2012 was $214.3 million compared to $116.9 million for the fourth quarter of 2011, an increase of 83%. Sequential quarter-over-quarter revenue growth was $29.6 million, or 16%. Total revenue for the full year 2012 was $686.7 million compared to $330.4 million in 2011. This year-over-year increase was due to a $340.1 millionincrease in oil and gas revenues primarily related to higher production in 2012 and a $16.2 million increase in well services revenues related to Oasis Well Services LLC ("OWS") commencing fracturing activity in 2012.

Lease operating expenses for the fourth quarter of 2012 totaled $16.9 million, or $6.68 per Boe, a 19% decrease per Boe over the fourth quarter of 2011 of $8.22 per Boe. Lease operating expenses for the full year 2012 totaled $54.9 million, or $6.68 per Boe, a 20% decrease per Boe over the full year 2011 of $8.36 per Boe. This year-over-year decrease was primarily due to the increase in production of 110% outpacing the Company's overall net increase in costs of 68%. Increased costs primarily related to workovers, chemical treatments, equipment rental and fresh water injections, which have improved operational performance and minimized downtime in our wells. These cost increases were partially offset by salt water disposal activity and lower operating costs related to improved weather conditions as compared to the first half of 2011.

Well services operating expenses represent third-party working interests' share of fracturing service costs incurred by OWS for fracturing jobs completed in 2012. Well services operating expenses totaled $4.7 million for the fourth quarter of 2012 and$11.8 million for the full year 2012. There were no well services operating expenses in 2011 because OWS did not commence fracturing activity until the first quarter of 2012.

Marketing, transportation and gathering expenses for the fourth quarter of 2012 totaled $2.0 million, or $0.78 per Boe, a 90% increase per Boe over the fourth quarter of 2011 of $0.41 per Boe. Marketing, transportation and gathering expenses for the full year 2012 totaled $9.3 million, or $1.13 per Boe, a $0.79 increase per Boe over the full year 2011 of $0.34 per Boe. This year-over-year increase was mainly attributable to increased oil transportation costs related to Oasis Petroleum Marketing LLC ("OPM"), which did not commence operations until late in the third quarter of 2011, combined with a $1.4 million cost for bulk oil purchases made by OPM in the first quarter of 2012, partially offset by a $0.7 million non-cash valuation charge on oil pipeline imbalances. Excluding this pipeline imbalance charge and bulk oil purchase costs, our marketing, transportation and gathering expenses would have been $1.04 per Boe for the full year 2012 and $1.03 for the fourth quarter of 2012. The increase in marketing, transportation and gathering in the fourth quarter 2012 over the fourth quarter of 2011 was primarily due to higher operated volumes flowing through third-party oil gathering pipelines, partially offset by a non-cash oil pipeline imbalance valuation charge. While transporting volumes through third-party oil gathering pipelines increases marketing, transportation and gathering expenses, it improves oil price realizations by eliminating trucking costs, which are reflected in the oil price differential rather than as an expense.

Production taxes for the fourth quarter of 2012 totaled $19.5 million, or 9.4% of oil and gas revenues. For the full year 2012, production taxes totaled $63.0 million, or 9.4% of oil and gas revenues. Production taxes decreased in 2012 compared to the full year 2011, at 10.2% of oil and gas revenues, primarily due to the increased weighting of oil revenues in Montana, which has lower incentivized production tax rates on certain new wells for the first twelve months of production.

Depreciation, depletion and amortization for the fourth quarter of 2012 totaled $66.0 million, or $26.01 per Boe, compared to$27.2 million, or $19.40 per Boe, in the fourth quarter of 2011. Depreciation, depletion and amortization for the full year 2012 totaled $206.7 million, or $25.14 per Boe, compared to $75.0 million, or $19.16 per Boe, for the full year 2011. The $131.8 million increase in DD&A expense for the year ended December 31, 2012 was primarily a result of our production increases from our 2012 well completions. The higher DD&A rate was a result of increased well costs in 2012, which outpaced the increase in associated reserves. The increased well costs were a result of increases in service costs in the Williston Basin during 2011 and the first half of 2012 and the addition of infrastructure assets, primarily our salt water disposal systems.

General and administrative expenses for the fourth quarter of 2012 totaled $17.6 million, or $6.93 per Boe, compared to $9.6 million, or $6.82 per Boe, in the fourth quarter of 2011. General and administrative expenses for the full year 2012 totaled to$57.2 million, or $6.95 per Boe, as compared to $29.4 million, or $7.52 per Boe, for the full year 2011. Of this $27.8 millionyear-over-year increase, approximately $20.3 million was due to the impact of the Company's organizational growth on employee compensation and approximately $6.7 million was due to the amortization of restricted stock awards and performance share units. As of December 31, 2012, the Company had 281 full-time employees compared to 146 full-time employees as of December 31, 2011.

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser. More

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