HOUSTON, Nov. 8, 2018 /PRNewswire/ -- Oasis Midstream
Partners LP (NYSE: OMP) (the "Partnership" or "OMP") today
announced it has entered into a definitive agreement to acquire
additional interests in Bobcat DevCo LLC ("Bobcat DevCo") and
Beartooth DevCo LLC ("Beartooth DevCo") from Oasis Petroleum Inc.
(NYSE: OAS) ("Oasis") for $250
million. The acquisition will increase OMP's interest in the
Bobcat DevCo to 25% from 10% and will increase OMP's interest in
the Beartooth DevCo to 70% from 40%.
"We are pleased to announce Oasis Midstream Partners is
increasing its exposure to the Bobcat DevCo and Beartooth DevCo,"
said Taylor Reid, Chief Executive
Officer of OMP. "Oasis is investing capital in one of the premier
oil basins in the U.S., and OMP's highly strategic assets are
uniquely positioned to capture Oasis volume growth. The
Williston Basin continues to
provide attractive investment returns for both upstream and
midstream companies, and we are in an enviable position to
capitalize on future growth in the core of the play. Our team has
done an incredible job increasing contribution from third-party
customers across our asset base. Volumes from both Oasis and
third parties provide a solid foundation for peer leading growth
well beyond 2021. The transaction is extremely attractive for our
investors, allows OMP to increase our scale in an accretive manner,
and we look forward to capitalizing on future opportunities."
Accretive Acquisition
The acquisition is expected to
be immediately accretive to distributable cash flow per unit of the
Partnership, based on a transaction value representing roughly
6.75x 2019 estimated EBITDA of the acquired interests.
Distribution coverage is expected to increase 0.10x-0.15x above our
guidance provided on November 5,
2018, with the increase solely attributable to the
acquisition. The following table provides 2019 estimates
including and excluding the impact of today's
announcements.
|
2019E
|
|
($MM)
|
|
|
|
Net to
OMP
|
Prior
Guidance
|
|
Updated for
Acquisition
|
|
Adjusted
EBITDA
|
$106 - 112
|
|
$143 - 149
|
|
Maintenance
CapEx
% of
EBITDA
|
7-10%
|
|
7-10%
|
|
Distribution
($/unit)
|
$2.02
|
|
$2.02
|
|
LP Coverage
Ratio
|
Enter '19 1.4x,
increasing to 1.6x-1.7x
|
|
Enter '19 1.5x,
increasing to 1.7x-1.85x
|
|
|
|
|
|
|
|
Financing and Liquidity
OMP has agreed to pay Oasis
$250 million. The consideration
is expected to consist of $125
million in cash from borrowings under the OMP credit
facility, with the remainder to come from, depending on market
conditions, proceeds from any capital market transactions, and/or
the issuance of common units representing limited partner interests
in OMP to Oasis.
Total outstanding borrowings under OMP's credit facility are
expected to be $291 million pro-forma
for the acquisition as of September
30th, 2018, excluding fees and expenses
associated with the acquisition and financing. At the closing
of the acquisition, OMP's revolving credit facility will increase
from $250 million to $400 million. Pro-forma for the acquisition
and the increase to the credit facility, OMP's liquidity is
expected to be $114 million
consisting of approximately $109
million of available credit facility capacity and
$5 million of cash on hand. OMP
expects net debt at year end 2018 to 2019 estimated EBITDA to
remain under 2x.
The acquisition, which has an effective date of July 1, 2018, is expected to close in
December 2018, subject to the
satisfaction of customary closing conditions. The terms of
the transaction were approved by the Board of Directors of the
general partner of OMP following a unanimous recommendation for
approval from the conflicts committee of the Board of Directors of
the general partner of OMP, which consists entirely of independent
directors. The conflicts committee was advised by Baird on financial matters and Richards, Layton & Finger, P.A. on legal
matters. Oasis was advised by Evercore Group L.L.C. on
financial matters and Vinson and Elkins L.L.P. on legal
matters.
Bobcat DevCo
Bobcat DevCo's assets are focused on the
Wild Basin operating area and include gas gathering, compression
and gas lift, crude oil gathering and produced water gathering and
disposal. Bobcat DevCo is a particularly strategic midstream asset,
as it has been a key contributor to the early success of connecting
third party volumes to OMP's gas plants. Oasis and OMP have
invested heavily in Bobcat DevCo in 2018, positioning the DevCo for
over 50% EBITDA growth in 2019. These investments have been to
support both Oasis' volume growth as well as third party
opportunities at extremely attractive build multiples.
Beartooth DevCo
The Beartooth DevCo owns significant
water infrastructure assets across most of Oasis Petroleum's core
operating areas. These assets, which gather and dispose of produced
water, deliver freshwater for well completions and deliver
freshwater for production optimization services, are predominately
located in Oasis's Alger,
Cottonwood, Hebron, Indian Hills
and Red Bank operating areas.
Substantially all of the area around the Beartooth DevCo's
acreage dedication can be serviced by these assets, with minimal
additional expansion capital expenditures given the reach of our
widely dispersed infrastructure systems currently in place.
Beartooth DevCo's infrastructure can easily service additional
wells through low cost connections. Beartooth DevCo's extensive
footprint has allowed OMP to secure agreements with third-parties
related to water sourcing and disposal.
Non-GAAP Financial Measures
Limited Partner ("LP")
Coverage is defined as Adjusted EBITDA less maintenance capital
expenditures, cash interest expense, and General Partner ("GP")
distributions divided by LP Distributions. Cash Interest, Adjusted
EBITDA and Distributable Cash Flow are financial measures that are
not presented in accordance with generally accepted accounting
principles in the United States
("GAAP"). These non-GAAP financial measures should not be
considered in isolation or as a substitute for interest expense,
net income (loss), operating income (loss), net cash provided by
(used in) operating activities or any other measures prepared under
GAAP. Reconciliations of these non-GAAP financial measures to their
most comparable GAAP measure can be found in the annual report on
Form 10-K and quarterly reports on Form 10-Q. Amounts
excluded from these non-GAAP measure in future periods could be
significant.
The partnership does not provide financial guidance for
projected net income or changes in working capital, and, therefore,
is unable to provide a reconciliation of its adjusted EBITDA and
distributable cash flow projections to net income, operating
income, or net cash flow provided by operating activities, the most
comparable financial measures calculated in accordance with
GAAP.
Forward-Looking Statements
This press release contains
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. All statements, other
than statements of historical facts, included in this press release
that address activities, events or developments that the
Partnership expects, believes or anticipates will or may occur in
the future are forward-looking statements. Without limiting the
generality of the foregoing, forward-looking statements contained
in this press release specifically include the expectations of
plans, strategies, objectives and anticipated financial and
operating results of the Partnership, including the Partnership's
capital expenditure levels and other guidance included in this
press release, statements regarding the agreement to acquire
additional limited liability company interests of Bobcat DevCo and
Beartooth DevCo, its anticipated closing and financing for such
acquisition and statements regarding the assets being acquired.
These statements are based on certain assumptions made by the
Partnership based on management's experience and perception of
historical trends, current conditions, anticipated future
developments and other factors believed to be appropriate. Such
statements are subject to a number of assumptions, risks and
uncertainties, many of which are beyond the control of the
Partnership, which may cause actual results to differ materially
from those implied or expressed by the forward-looking statements.
These include, but are not limited to, actual future performance of
the Partnership, Bobcat DevCo and Beartooth DevCo, the closing of
the acquisition of additional limited liability company interests
of Bobcat DevCo and Beartooth DevCo, the availability of financing,
changes in oil and natural gas prices, weather and environmental
conditions, the timing of planned capital expenditures,
availability of other acquisitions and the Partnership's ability to
integrate such acquisitions into its existing business,
uncertainties in the estimates of proved reserves and forecasted
production results of the Partnership's customers, operational
factors affecting the commencement or maintenance of producing
wells, the condition of the capital markets generally, as well as
the Partnership's ability to access them, the proximity to and
capacity of transportation facilities, and uncertainties regarding
environmental regulations or litigation and other legal or
regulatory developments affecting the Partnership's business and
other important factors. Should one or more of these risks or
uncertainties occur, or should underlying assumptions prove
incorrect, the Partnership's actual results and plans could differ
materially from those expressed in any forward-looking
statements.
Any forward-looking statement speaks only as of the date on
which such statement is made and the Partnership undertakes no
obligation to correct or update any forward-looking statement,
whether as a result of new information, future events or otherwise,
except as required by applicable law.
About Oasis Midstream Partners LP
Oasis Midstream is a
growth-oriented, fee-based master limited partnership initially
formed by Oasis Petroleum (NYSE: OAS) to own, develop, operate and
acquire a diversified portfolio of midstream assets in North America that are integral to the oil and
natural gas operations of Oasis Petroleum and strategically
positioned to capture volumes from other producers. Oasis
Midstream's initial assets are located in the Williston Basin area of North Dakota and Montana. For more information, please visit
Oasis Midstream's website at www.oasismidstream.com.
Contact:
Oasis Midstream Partners LP
Bob Bakanauskas, (281) 404-9600
Director, Investor Relations
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SOURCE Oasis Midstream Partners LP