Q3 2020 Oasis Midstream Partners LP Earnings Call

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Oh, I suppose management will discuss third quarter 2020 results in the current environment. Please.

Please note that this event is being recorded I would now like to turn the call over to were trying for a Buck Oasis Mitch.

<unk> CFO to begin the conference. Thank you.

Thank you Kate good morning, everyone. This is Richard Lubbock, They were reporting our third quarter 2020 financial and operational results. We're delighted to have you on our call I'm joined today by Taylor Reid and Michael Lou as well as other members of the team.

Please be advised that our remarks about the waitress petroleum and Oasis Midstream partners include statements that we believe to be forward looking statements within the meaning of the price right Private Securities Litigation Reform Act.

These forward looking statements are subject to risks and uncertainties that could cause actual results to be materially different from those currently disclose our earnings release and conference call.

Those risks include.

Among others matters that we have described in our earnings release as well right.

Filing with the Securities and Exchange Commission, including our annual report on form 10-K, and our quarterly reports on form 10-Q, we disclaim any obligation to update these forward looking statements.

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

We will not be hosting a Q and a session at the end of our call, but feel free to reach out directly to us after we wrap up after <unk> petroleum or mergers.

It's highly efficient restructuring process, we expect to resume our practice hosting Q and a session at the end of our calls we posted an updated presentation to our website. This morning. So please take a look at it.

In the meantime to learn more about Olympics with that I'll turn the call over to Taylor.

Thanks Richard.

Good morning, everyone and thanks for joining our call.

Well conditions were relatively stable in the third quarter.

19 pandemic continues to weigh heavily on the oil and gas industry.

We remain focused on the health and safety of our employees contractors and communities.

Third quarter financial performance improved materially from the second quarter as we saw an increase in previously curtailed volumes.

As well as continued cost control.

On that last point would recognize the O M. P team for their strong contributions there.

This has been a difficult year, but the team has remained focused in most successful one aggressively lowering both.

Both capital and operating costs.

I'll begin by discussing the restructuring announcement of our largest customer oasis petroleum or.

I'll reiterate what Oasis noted at September Thirtyth announcement.

Oh, It is midstream partners and all the subsidiaries are not included in the chapter 11 filing.

Operations have not been affected and continue as normal and our contract and dedications with away says remain in place.

When we IPO or P. in 2017, we deliberately structured the n. entity to stand on its own it'd be resilient to customer and market fluctuations.

Oh piece financial leverage was maintained at relatively modest levels compared to many GMP peers.

This gave us flexibility in terms of uses of cash flow.

There was no immediate need to reduce our distribution reduce debt through 2020, we have kept our distribution flat with fourth quarter 2019 levels and leverage remains in check at around three times.

Additionally, there are no cross default provisions on on one piece of debt.

That is the defaulted oasis did not trigger a default they don't want to be.

Well if he has strong relationships with its bank group in its current 575 million dollar credit facility remains in place.

Looking forward, assuming oasis restructuring is consummated according to the terms set out in the restructuring support agreement.

The outcome is decidedly positive for all and Pete.

First oasis is expected to emerge in a stronger financial position.

With lower leverage and a leaner cost structure. This.

This will give oasis the ability to run a steady Brazil had development program less likely to shift significantly with lower prices.

Second.

Because the way says improved position benefits old piece financial outlook.

We now have a stronger hand in negotiating and capturing third party opportunities.

The team has done a great job building an extensive diverse portfolio of third party business. We're currently about evaluating multiple projects, which could expand it even further.

Third Oh.

Oh, it's a deep development inventory in two premiere basins remains intact.

Through years of developing its inventory always has a strong track record of involving on Peter mutually beneficial arrangements and we expect that to continue in the future but.

Additionally, always a strong operating team clean balance sheet and lean cost structure make it a natural consolidator of assets, which could ultimately benefit <unk>.

Fourth as part of the Yara say.

Oh, It always is reaching an agreement I don't want to Greenwood Marotta importantly, this is expected to be fully funded by Oasis as expected under the indemnity agreement that was put in place between Oasis and no one p. at our IPO.

And finally as part of the restructuring $28 million of interest associated with the technical default in the second quarter is expected to be permanently waived.

As we noted last quarter shut ins were pervasive across the Williston earlier this year.

As operators responded to exceptionally weak benchmark pricing and differentials.

Billions recovered steadily through the spring and summer and at this juncture. The vast majority of shut in production is back on.

Oh, one piece third quarter performance benefited from these higher volumes as well as strong cost control.

I want to be declared a third quarter distribution of 54 cents per unit with coverage of approximately 1.8 times.

We will continue to monitor the environment and all these operational and financial outlook to informed decisions on future distributions.

We lowered the range on our 2020 capital guidance.

Now expecting this year spending levels to fall about 70% below the original budget to 21 to 24 million net to own Pete.

We continue to take a prudent approach to the current environment in an effort to preserve the balance sheet and maintain on one piece flexible.

I'll now turn the call over to Michael to get into a little more operational.

Thanks Taylor.

Operating performance remains strong at LMP capture rates remain at very high levels at Olympias system experienced little downtime and allowed our sponsor to maintain its pure leading performance and gas capture as well as the oil and water captured on pipeline.

Wild basin gas capture was about 98% and third quarter, which compares to approximately 91% to 92% across North Dakota I.

I commend the operating team for strong performance in both cost control and product capture that challenge them to keep up the good work.

Oh, and P. remains focused on keeping costs low and were successful on that front in the third quarter.

During the third quarter EBITDA margins improved significantly across all commodity streams as revenues increase substantially and we were able to control costs.

Looking to the fourth quarter EBITDA is expected to decline modestly from the third quarter a basin activity remains limited and the resumption of shut in volumes was a celebrated from the second quarter.

Third party volumes are expected to hold steady or slightly increased from the third quarter.

We expect only piece full year 2020, EBITDA to exceed the top end of our prior $130 million to $140 million range.

Our new 2020 view calls for EBITDA to range from $140 million to $144 million, implying a fourth quarter range of $30 million to $34 million.

[noise] Olympia is anchored by asset situated into the best oil basins in the U.S. and has had a strong track record of making accretive investments and leveraging our scale to by securing a diverse portfolio of third party customers.

We continue to believe this environment is transitory.

However, the timing of such a recovery is uncertain and we will continue to manage the business prudently to conserve capital and preserve the balance sheet.

With that I'll hand, the call over to Richard.

Thanks, Michael own piece financial position remained strong with net debt to trailing 12 month EBITDA of 2.8 times, we expect leverage to remain at similar levels through the end of the year. We had 488 million drawn on our 575 million dollar revolver and 35 million of cash at the end of the quarter and closing.

The team did an impressive job transitioning from the second quarter to the third quarter as kids should conditions improve considerably I've been so impressed with the team's ability to pivot in order to both drive down cost and make sure we capture oil gas and water across our position from both Oasis petroleum and our third party customers. We see this reflected in our volume perform.

Once and our great EBITDA margins delivered during the quarter again hats off to the team for providing great uninterrupted service in the quarter and hearing Oasis petroleum's restructuring process I'll now hand, the call back over to Taylor for closing remarks.

Thanks, Richard and closing third quarter results were solid as volumes increase to cost control remains strong.

The team is focused on controlling what it can control and managing through this cycle.

As always we will make ourselves available.

For follow up questions in the coming days, thanks again for joining the call.

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