Oasis Midstream Partners LP (NYSE:OMP) Q4 2018 Earnings Conference Call - Final Transcript
Feb 27, 2019 • 12:30 pm ET
Taylor L. Reid
look to 2019, we have entered into an agreement with Oasis to increase our ownership in Bobcat further through a capital expenditure arrangement that Michael will discuss in more detail later.
Finally, OMP remains a compelling investment opportunity. Peer leading distribution growth and increasing coverage really separate us from the pack, and we look forward to executing our plan in 2019 and beyond.
In the fourth quarter, we reported distribution coverage of 1.21 times. Have we not done the drop, the coverage would have been 1.24 times versus our 1.2 guidance. However, adjusting for the new ownership interest and new units issued and the incremental debt for the full quarter, pro forma coverage would have been 1.43 times. We grew our distribution 5% versus the fourth quarter, keeping us on track to meet our targeted 20% annualized distribution growth rate.
At the Bighorn DevCo, in December, OMP began processing natural gas at its new 200 million cubic foot facility. The plant operated intermittently through December as we work through a few ordinary startup issues. Now, the plant is up and running. We briefly fought through some extreme cold earlier in February, but utilization has approximated 60% over the past two weeks, consisting of mostly Oasis volumes and some third-party as well.
Following the incremental third-party deals we signed, we now expect utilization to be above 90% by year-end versus 80% at our November update. Natural gas processed in the Williston Basin remains tight. As of December, North Dakota gas production was 2.65 Bcf per day, while Basin processing is only 2.2 Bcf per day, which is actually up by 0.2 Bcf per day as a result of our new plant start-up. The team's combination of subsurface knowledge, strategic planning and overall desire to do the right thing by capturing gas to reduce flaring gave us a first-mover advantage in building processing to accommodate rising GORs and overall gas production across the core of the Williston Basin. We continue to remain active with multiple parties regarding additional opportunities as we seek to reduce overall flaring in the Williston, while capitalizing on our strategic investments.
The ramp up in the second gas plant and growing third-party volumes across Bighorn and Bobcat are the major drivers behind our strong 2019 financial projections, which remain resilient despite the significant pullback in commodity prices and associated producer activity.
On that note, looking to 2019, OMP's growth will continue to be largely supported by our sponsor's development program in the Williston. While Oasis now plans to run two to three rigs in the Bakken this year versus five and oil prices were nearing $70 per barrel, activity is concentrated in Wild Basin, which as you know is where OMP's oil and gas gathering and processing assets are situated. The balance of our growth comes from third-party volumes and associated EBITDA.
As we look to the first quarter of 2019, we expect coverage of about 1.5 times. This is still expected to ramp up throughout the year