Oasis Midstream (OMP) Update - May 21
Posted: Fri May 21, 2021 9:36 am
This should be a positive development for OMP, one of the C-Corps in our High Yield Income Portfolio.
HOUSTON, May 20, 2021 /PRNewswire/ -- Oasis Petroleum Inc. (NASDAQ: OAS) ("Oasis" or the "Company") announced today it has entered into a series of definitive agreements to sell its entire Permian Basin position for total gross potential consideration of $481MM. The total consideration consists of $406MM at closing and up to three $25MM annual contingent payments in 2023, 2024 and 2025 if WTI averages over $60 per barrel in each respective calendar year. The primary transaction is expected to close around June 30, 2021, subject to customary closing conditions, and two smaller transactions have already closed. Oasis has updated its 2021 outlook to reflect the divestment.
"The decision to exit the Permian Basin while building scale in the Williston Basin is fundamentally based on aligning Company resources with our core competitive strengths and strategic focus of building a sustainable enterprise which generates significant free cash flow for the benefit of the Company and shareholders," said Danny Brown, Oasis' Chief Executive Officer. "The successful conclusion of our Permian divestiture process allows us to bring substantial value forward from an asset that was difficult to scale, strengthens our balance sheet from already peer-leading levels, and allows us to focus our attention on driving significant value from our world-class Williston acreage position, where we see great upside opportunity and long-term running room. The combined Williston and Permian transactions are highly accretive, position Oasis to take advantage of expanded scale, result in very low leverage, and demonstrate our commitment to shareholders. We believe Oasis represents a compelling investment opportunity, and we will continue to be aggressive in pursuing strategies to unlock value."
Transaction Highlights:
Positions Oasis exclusively in the Williston Basin, where the Company expects to drive significant value creation through its size, scale and robust inventory life as one of the basin's largest operators;
Divests non-strategic Permian position consisting of approximately 24k net acres and 1Q21 production of 7.2 MBoe/d;
Purchase price of $481MM values production at $67k/Boepd and 1Q21 annualized Adjusted EBITDA(1) at 4.6x;
When combined with the recent Williston acquisition, the transactions result in paying approximately 1.7x for $145MM – $165MM of net EBITDA(1,2);
OMP retains midstream assets in Panther DevCo and expects to benefit from incremental activity based on plans from the new operator;
Lowers full-year G&A by approximately $1MM – Oasis expects cash E&P G&A(1) per boe of $1.30 – $1.40 in 4Q21;
Reduces Oasis' pro forma leverage to approximately 0.3x, based on 1Q21 annualized Adjusted EBITDA to Oasis and pro forma for the recently announced Williston acquisition, which remains well below Oasis's 1.0x target and far below peers.
HOUSTON, May 20, 2021 /PRNewswire/ -- Oasis Petroleum Inc. (NASDAQ: OAS) ("Oasis" or the "Company") announced today it has entered into a series of definitive agreements to sell its entire Permian Basin position for total gross potential consideration of $481MM. The total consideration consists of $406MM at closing and up to three $25MM annual contingent payments in 2023, 2024 and 2025 if WTI averages over $60 per barrel in each respective calendar year. The primary transaction is expected to close around June 30, 2021, subject to customary closing conditions, and two smaller transactions have already closed. Oasis has updated its 2021 outlook to reflect the divestment.
"The decision to exit the Permian Basin while building scale in the Williston Basin is fundamentally based on aligning Company resources with our core competitive strengths and strategic focus of building a sustainable enterprise which generates significant free cash flow for the benefit of the Company and shareholders," said Danny Brown, Oasis' Chief Executive Officer. "The successful conclusion of our Permian divestiture process allows us to bring substantial value forward from an asset that was difficult to scale, strengthens our balance sheet from already peer-leading levels, and allows us to focus our attention on driving significant value from our world-class Williston acreage position, where we see great upside opportunity and long-term running room. The combined Williston and Permian transactions are highly accretive, position Oasis to take advantage of expanded scale, result in very low leverage, and demonstrate our commitment to shareholders. We believe Oasis represents a compelling investment opportunity, and we will continue to be aggressive in pursuing strategies to unlock value."
Transaction Highlights:
Positions Oasis exclusively in the Williston Basin, where the Company expects to drive significant value creation through its size, scale and robust inventory life as one of the basin's largest operators;
Divests non-strategic Permian position consisting of approximately 24k net acres and 1Q21 production of 7.2 MBoe/d;
Purchase price of $481MM values production at $67k/Boepd and 1Q21 annualized Adjusted EBITDA(1) at 4.6x;
When combined with the recent Williston acquisition, the transactions result in paying approximately 1.7x for $145MM – $165MM of net EBITDA(1,2);
OMP retains midstream assets in Panther DevCo and expects to benefit from incremental activity based on plans from the new operator;
Lowers full-year G&A by approximately $1MM – Oasis expects cash E&P G&A(1) per boe of $1.30 – $1.40 in 4Q21;
Reduces Oasis' pro forma leverage to approximately 0.3x, based on 1Q21 annualized Adjusted EBITDA to Oasis and pro forma for the recently announced Williston acquisition, which remains well below Oasis's 1.0x target and far below peers.