Oasis Petroleum Inc. (NYSE:OAS) Q3 2019 Earnings Conference Call - Final Transcript

Nov 06, 2019 • 11:00 am ET

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Oasis Petroleum Inc. (NYSE:OAS) Q3 2019 Earnings Conference Call - Final Transcript

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Presentation
Executive
Tommy Nusz

we've made tremendous progress. The teams have been able to secure services and drive operational efficiencies get visibility on takeaway capacity and we continue to make significant progress delineating our position and understanding the subsurface across that position. During 2019 we brought on wells across the Wolfcamp A B and C intervals. Additionally we've been able to do multiple small bolt-on acquisitions at attractive prices allowing us to increase ownership and block up DSUs for longer laterals. Drilling times and well costs have come down significantly which should help drive efficiencies and lower costs going forward. In 2020 we will essentially shift towards development mode focusing on multi-well pads primarily in the Bone Springs and the Wolfcamp A.

Fourth our midstream assets continue to provide a competitive advantage as seen in our cost structure netbacks flow assurance and gas capture where we are currently running about 93% to 95% capture versus a North Dakota average of 81%. As you know we've made significant investments in this segment over the last several years and our midstream business has been a critical asset for managing business risk especially as other midstream companies are delaying and thus have been delaying investment in the Williston Basin. On the heels of our IPO of OMP in the fall of 2017 our premier midstream assets generated approximately $160 million of EBITDA in 2018 on added basis. Just a year later in 2019 we expect to generate between $260 million and $70 million. We continue to look at ways to enhance the value of our ownership in these assets. Fifth in August and September we took steps to optimize our G&A cost structure to better fit our business on a go forward basis. As part of this initiative we reduced our workforce by approximately 13% including the elimination of one of our two OWS frac crews. While these types of decisions are always difficult we need to continuously look at ways to be as efficient as we can throughout our organization. The team has done a great job and as a result we're trending below our G&A guidance for the year and these third quarter actions are expected to lower the annualized run rate by about $10 million based on where we are today. We'll continue to look for efficiency options to meet investor expectations as we move through the structural transition that the entire industry is experiencing today.

That includes developing creative solutions and doing things differently than we've done in the past. Lastly looking forward to 2020 our anticipated activity levels were essentially unchanged since our August call. We're currently planning to run 2 rigs in the Williston and 2 rigs in the Delaware for most of the year. We would expect fourth quarter 2020 volumes to be up modestly from our fourth quarter 2019 average this puts us on a path to maintain modest growth reduce debt and generate free cash flow in a $50 to $55 world or below and we will continue