Oasis Petroleum Inc. Announces Quarter and Year Ending December 31, 2011 Earnings and Provides an Operational Update

Thursday, Feb 23, 2012

HOUSTON, Feb. 22, 2012 /PRNewswire/ -- Oasis Petroleum Inc. (NYSE: OAS) ("Oasis" or the "Company") today announced quarter and year ending December 31, 2011 financial results and provided an operational update.  

Highlights in 2011:

• Increased revenue to $330.4 million in 2011, up from $128.9 million in the prior year for an increase of 156%.
• Grew Adjusted EBITDA to $234.5 million in 2011, up from $82.2 million in the prior year for an increase of 185%.
• Increased net income to $79.4 million in 2011, up from a net loss of $29.7 million in the prior year.
  
  "Production more than doubled and reserves nearly doubled in 2011, as we significantly grew the business in the midst of some tough operating conditions," said Thomas B. Nusz, Oasis' Chairman and Chief Executive Officer.  "We currently have nine rigs running and three dedicated frac crews.  Three more rigs are under contract for delivery in 2012, and we expect to begin operations for Oasis Well Services at the end of this quarter.  The Williston Basin continues to experience significant growth, as the overall rig count is now around 210. Over the past five years, oil production in North Dakota alone has grown from 115,142 barrels per day in December 2006 to a new record of 534,884 barrels per day in December 2011. The oil-prone Williston Basin is a highly attractive area for a growth company like ours. Our growth strategy is on target, as we grew our average daily production rate in 2011 to 10,724 barrels of oil equivalent per day, up 106% from 5,206 equivalent barrels per day in 2010."

Financial Update

Total revenue for the fourth quarter of 2011 was $116.9 million compared to $49.1 million for the fourth quarter of 2010, an increase of 138%.  Sequential quarter-over-quarter revenue growth was $29.3 million, or 33%.  Total revenue for the full year 2011 was $330.4 million compared to $128.9 million in 2010.

Lease operating expenses for the fourth quarter of 2011 totaled $12.1 million, or $8.63 per Boe, a 9% increase per Boe over the fourth quarter of 2010 of $7.92 per Boe.  Lease operating expenses for the full year 2011 totaled $34.1 million, or $8.70 per Boe, a 13% increase per Boe over the full year 2010 of $7.67per Boe.  This year-over-year increase was primarily due to increased costs associated with water production, salt water disposal and the continuing effects of the inclement weather during the first half of 2011. We have $57.0 million of capital in our 2012 budget allocated to infrastructure, primarily for building salt water disposal infrastructure, which is currently being deployed in our key operating areas. This infrastructure is expected to reduce the need for trucks and simplify operational logistics. We are projecting unit operating costs in 2012 to range between $6.00 to $8.00 per Boe compared to $8.70 per Boe in 2011.

Production taxes for the fourth quarter of 2011 totaled $11.8 million, or 10.1% of revenue. For the full year 2011, production taxes totaled $33.9 million, or 10.2% of revenue. Production taxes decreased in 2011 compared to 2010, at 10.7% of revenue, primarily due to the increased weighting of oil revenues inMontana, which imposes a lower production tax rate than North Dakota. Our production taxes for the year ended December 31, 2010 were primarily for oil and natural gas sales revenue associated with properties in the North Dakota portion of our West Williston project area, which generates revenue subject to an 11.5% production tax rate.

Depreciation, depletion and amortization for the fourth quarter of 2011 totaled $27.2 million, or $19.40 per Boe, compared to $13.4 million, or $19.46 per Boe, in the fourth quarter of 2010.  Depreciation, depletion and amortization for the full year 2011 totaled $75.0 million, or $19.16 per Boe, compared to $37.8 million, or $19.91 per Boe, for the full year 2010. The $37.2 million increase in depreciation, depletion and amortization expense for the year ended December 31, 2011 was primarily a result of our production increases and well completions during 2011. The $0.75 per Boe decrease was due to the lower cost of reserve additions associated with our 2011 drilling activities.

General and administrative expenses for the fourth quarter of 2011 totaled $9.6 million, or $6.82 per Boe, compared to $7.6 million, or $11.05 per Boe, in the fourth quarter of 2010.  General and administrative expenses for the full year 2011 totaled to $29.4 million, or $7.52 per Boe, as compared to $19.7 million, or$10.39 per Boe, for the full year 2010.  Of this $9.7 million year-over-year increase, approximately$6.5 million was due to the impact of our organizational growth on employee compensation and approximately $2.4 million was due to the amortization of our restricted stock awards.  As of December 31, 2011, we had 146 full-time employees compared to 62 full-time employees as of December 31, 2010.

As a result of our derivative activities, we incurred a net cash settlement gain of $1.0 million in the fourth quarter of 2011 and a net cash settlement loss of $0.1 million in the fourth quarter of 2010. As a result of forward oil price changes, we recognized non-cash unrealized mark-to-market derivative losses of $66.5 million and $7.4 million for the fourth quarter of 2011 and 2010, respectively. For the years endedDecember 31, 2011 and 2010, we incurred net cash settlement losses of $3.8 million and $0.1 million, respectively. In addition, as a result of forward oil price changes, we recognized a $5.4 million non-cash unrealized mark-to-market derivative gain during the year ended December 31, 2011 and a $7.5 millionnon-cash unrealized mark-to-market derivative loss during the year ended December 31, 2010.

Adjusted EBITDA for the fourth quarter of 2011 was $85.9 million, an increase of $54.7 million, or 176%, over the fourth quarter of 2010 of $31.2 million.  Adjusted EBITDA for the full year 2011 was $234.5 million, an increase of $152.3 million, or 185%, over the full year 2010 of $82.2 million.

The Company reported a net loss of $13.4 million in the fourth quarter of 2011 compared to net income of$1.6 million in the fourth quarter of 2010.  For the full year 2011, Oasis reported net income of $79.4 million, or $0.86 per weighted average diluted share.  

SOURCE Oasis Petroleum Inc.

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