PR Newswire | Aug 5, 2020 08:01AM EDT

Outlook

08/05 07:00 CDT

Oasis Petroleum Inc. Announces Second Quarter 2020 Results and Updates 2020 Outlook HOUSTON, Aug. 5, 2020

HOUSTON, Aug. 5, 2020 /PRNewswire/ -- Oasis Petroleum Inc. (NASDAQ: OAS) ("Oasis" or the "Company") today announced financial and operating results for the second quarter of 2020 and updated its 2020 outlook.

2Q20 Highlights:

* Delivered net cash used in operating activities of $47.9 million and Adjusted EBITDA(1) of $174.2 million in 2Q20. * Produced 54.1 MBoepd in 2Q20 with oil volumes at 36.4 MBopd. * E&P CapEx(2) was $36.9 million for 2Q20. * LOE per Boe decreased 12% to $6.01 per Boe in 2Q20 as compared to $6.83 per Boe in 1Q20. * Crude oil differentials were solid over 2Q20, averaging $2.90 off of NYMEX WTI. * E&P pre-tax loss was $116.4 million and E&P Free Cash Flow(1) was $92.7 million in 2Q20. * Midstream pre-tax income including non-controlling interests was $25.3 million and Midstream Adjusted EBITDA(1) was $44.2 million in 2Q20. Oasis Midstream Partners LP (NASDAQ: OMP) declared a distribution of $0.54 per unit, unchanged from 1Q20. * Continued to achieve industry-leading gas capture of approximately 96% across the entire Williston position and approximately 93% in the Delaware position.

Updated 2020 Outlook

* Expecting 2H20 E&P CapEx(2) of $60 million to $75 million. Full year 2020 E&P CapEx of $248 million to $263 million is 54-58% below original February 2020 guidance and towards the low-end of the CapEx range provided in May 2020. * Volumes have steadily increased from trough levels observed in May 2020. 3Q20 and 4Q20 oil volumes are expected to approximate 40-42 MBopd, approximately 13% above 2Q20 levels based on current market conditions. * Expecting to generate free cash flow at strip NYMEX WTI prices based on the Company's revised 2020 plan. * 2H20 hedged volumes of 25 MBopd drive mark-to-market value of $85 million as of June 30, 2020. * Midstream CapEx is expected to range between $5 million to $10 million in 2H20. Full year 2020 midstream CapEx of $36 million to $40 million is more than 60% below original February 2020 guidance. Approximately 25% of 2020 midstream CapEx is attributed to Oasis. See the Oasis Midstream Partners LP ("OMP") press release issued on August 5, 2020 for more details.

^(1) Non-GAAP financial measure. See "Non-GAAP Financial Measures" below for definitions of all non-GAAP financial measures included herein and reconciliations to the most directly comparable financial measures under United States generally accepted accounting principles ("GAAP").

^(2) E&P CapEx includes administrative capital and excludes capitalized interest, midstream CapEx and acquisitions for both 2Q20 actual and plan.

Chairman and Chief Executive Officer, Thomas B. Nusz, commented, "Oasis executed well through an exceptionally tumultuous period. The Oasis team responded swiftly and effectively, powering down activity in an orderly manner, significantly lowering operating cost structure and capital while maintaining the integrity of our infrastructure to enhance flexibility for the future. The team was successful in keeping per unit lease operating expense low despite significant shut-ins reflecting meticulous cost management, including a carefully planned curtailment process, pricing concessions, labor optimization, and deferring workovers. Strip pricing has improved materially, but Oasis will maintain a prudent approach to future activity. Capital efficiency improvements and a significantly lower cost structure will improve economics for future development. Additionally, cash generation and free cash flow benefit from a robust hedge position and our midstream ownership which continues to support industry leading gas capture. As always, we remain focused on the health and safety of our employees, contractors, and communities."

Select Financial Metrics

The following table presents select financial data for the period presented:

Metric 2Q20

Differential to NYMEX WTI ($ per Bbl) $2.90

Natural gas realized price (as a % of NYMEX Henry Hub)76%

Lease operating expenses ($ per Boe) $6.01

MT&G ($ per Boe) $4.83

Cash MT&G ($ per Boe)^(1) $4.58

G&A ($ in millions) $37.4

E&P Cash G&A ($ in millions)^(1) $28.8

Production taxes (as a % of oil and gas revenues) 7.2%

___________________

Cash MT&G and E&P Cash G&A represent non-GAAP financial measures. See (1)"Non-GAAP Financial Measures" below for further information and reconciliations to the most directly comparable financial measures under GAAP.

The following table presents select operational and financial data for the periods presented:

2Q20 1Q20 2Q19

Production data:

Crude oil (Bopd) 36,427 54,103 61,224

Natural gas (Mcfpd) 106,104 155,776 139,380

Total production (Boepd) 54,111 80,066 84,454

Percent crude oil 67.3 %67.6 %72.5 %

Average sales prices:

Crude oil, without derivative settlements $24.45 $43.22 $58.87 ($ per Bbl)

Differential to NYMEX WTI ($ per Bbl) 2.90 3.19 0.96

Crude oil, with derivative settlements ($ 58.78 44.24 56.79 per Bbl)^(1)(2)

Crude oil derivative settlements - net cash receipts (payments) ($ in millions)^ 113.8 5.0 (11.6) (2)(3)

Natural gas, without derivative 1.32 1.86 2.29 settlements ($ per Mcf)^(4)

Natural gas, with derivative settlements 1.32 1.86 2.43 ($ per Mcf)^(1)(4)

Natural gas derivative settlements - net - - 1.8 cash receipts ($ in millions)^(3)

Selected financial data ($ in millions):

Revenues:

Crude oil revenues $81.1 $212.8 $328.0

Natural gas revenues 12.8 26.3 29.0

Purchased oil and gas sales 37.4 86.3 109.4

Midstream revenues 34.8 56.4 51.6

Other services revenues 0.4 6.0 11.4

Total revenues $166.5 $387.8 $529.4

Net cash provided by (used in) operating $(47.9) $107.8 $214.0 activities

Adjusted EBITDA^(5) $174.2 $167.0 $249.6

Select operating expenses:

Lease operating expenses $29.6 $49.8 $56.2

Midstream expenses 8.2 13.1 17.4

Other services expenses 0.7 4.9 8.5

MT&G, including non-cash valuation charges23.8 29.5 28.5

Non-cash valuation charges 1.2 0.2 0.1

Purchased oil and gas expenses 33.2 85.2 109.7

Production taxes 6.8 19.3 28.1

Depreciation, depletion and amortization 33.1 203.8 177.4

Impairment 2.3 4,823.7 -

Total select operating expenses $137.7 $5,229.3 $425.8

Select operating expenses data:

Lease operating expense ($ per Boe) $6.01 $6.83 $7.32

MT&G ($ per Boe) 4.83 4.04 3.71

Cash MT&G ($ per Boe)^(5) 4.58 4.01 3.69

DD&A ($ per Boe) 6.73 27.97 23.08

G&A ($ per Boe) 7.60 4.28 4.02

E&P Cash G&A ($ per Boe)^(5) 5.84 2.29 2.24

Production taxes (as a % of oil and gas 7.2 %8.1 %7.9 %revenues)

___________________

Realized prices include gains or losses on cash settlements for commodity(1)derivatives, which do not qualify for or were not designated as hedging instruments for accounting purposes.

The average crude oil sales price, with derivative settlements, and crude oil derivative settlements for 2Q20 exclude $25.3 million of cash (2)proceeds received during 2Q20 for certain crude oil three-way costless collar contracts liquidated prior to the expiration of their contractual maturities.

Cash settlements represent the cumulative gains and losses on the (3)Company's derivative instruments for the periods presented and do not include a recovery of costs that were paid to acquire or modify the derivative instruments that were settled.

(4)Natural gas prices include the value for natural gas and natural gas liquids.

Adjusted EBITDA, Cash MT&G and E&P Cash G&A represent non-GAAP financial (5)measures. See "Non-GAAP Financial Measures" below for further information and reconciliations to the most directly comparable financial measures under GAAP.

G&A totaled $37.4 million in 2Q20, $30.9 million in 2Q19 and $31.2 million in 1Q20. Amortization of equity-based compensation, which is included in G&A, was $4.9 million, or $0.99 per barrel of oil equivalent ("Boe"), in 2Q20 as compared to $8.9 million, or $1.16 per Boe, in 2Q19 and $6.8 million, or $0.93 per Boe, in 1Q20. G&A for the Company's E&P segment, excluding G&A expenses attributable to other services, totaled $33.5 million in 2Q20, $25.8 million in 2Q19 and $23.3 million in 1Q20. E&P Cash G&A (non-GAAP) expenses, excluding G&A expenses attributable to other services, non-cash equity-based compensation expenses and other non-cash charges, were $5.84 per Boe in 2Q20, $2.24 per Boe in 2Q19 and $2.29 per Boe for 1Q20. For a definition of E&P Cash G&A expenses and a reconciliation of G&A expenses to E&P Cash G&A, see "Non-GAAP Financial Measures" below.

Impairment expense was $2.3 million in 2Q20 as compared to $4.8 billion in 1Q20. In 2Q20, the Company recorded impairment charges of $1.0 million on its equipment and materials inventory, $0.8 million on its unproved oil and gas properties and $0.6 million on its prepaid midstream equipment. In 1Q20, the Company recorded impairment charges of $4.4 billion on its proved oil and gas properties in the Williston Basin and the Delaware Basin, $291.3 million on its unproved oil and gas properties, $108.3 million on its midstream assets and $15.8 million on its well services assets.

Interest expense was $44.4 million in 2Q20 as compared to $43.2 million in 2Q19 and $95.8 million in 1Q20. Capitalized interest totaled $1.8 million in 2Q20, $3.6 million in 2Q19 and $2.3 million in 1Q20. Cash Interest (non-GAAP) totaled $39.0 million in 2Q20, $42.0 million in 2Q19 and $93.5 million in 1Q20. For a definition of Cash Interest and a reconciliation of interest expense to Cash Interest, see "Non-GAAP Financial Measures" below.

In 2Q20, the Company recorded an income tax benefit of $2.6 million, resulting in a 2.7% effective tax rate as a percentage of its pre-tax loss for the quarter. In 1Q20, the Company recorded an income tax benefit of $254.7 million, resulting in a 5.6% effective tax rate as a percentage of its pre-tax loss for the quarter.

In 2Q20, the Company reported a net loss of $92.9 million, or $0.29 per diluted share, as compared to net income of $42.8 million, or $0.14 per diluted share, in 2Q19. Excluding certain non-cash items and their tax effect, Adjusted Net Income Attributable to Oasis (non-GAAP) was $73.5 million, or $0.23 per diluted share, in 2Q20, as compared to Adjusted Net Income Attributable to Oasis of $11.0 million, or $0.03 per diluted share, in 2Q19. Adjusted EBITDA (non-GAAP) in 2Q20 was $174.2 million, which included $25.3 million for derivatives monetized in 2Q20, as compared to Adjusted EBITDA of $249.6 million in 2Q19. For definitions of Adjusted Net Income (Loss) Attributable to Oasis and Adjusted EBITDA and reconciliations to the most directly comparable financial measures under GAAP, see "Non-GAAP Financial Measures" below.

Capital Expenditures and Completions

The following table presents the Company's total capital expenditures ("CapEx") by category for the periods presented:

1Q20 2Q20 YTD - 2Q20



(In millions)

CapEx:

E&P $151.1$36.6$ 187.7

Other^(1) 2.5 2.1 4.6

Total CapEx before midstream153.6 38.7 192.3

Midstream^(2) 25.2 2.8 28.0

Total CapEx^(3) $178.8$41.5$ 220.3

___________________

Other CapEx includes administrative capital of $0.2 million and $0.3 (1)million for 1Q20 and 2Q20, respectively, and capitalized interest of $2.3 million and $1.8 million for 1Q20 and 2Q20, respectively.

(2)Midstream CapEx attributable to OMP was $17.2 million and $2.3 million for 1Q20 and 2Q20, respectively.

Total CapEx reflected in the table above differs from the amounts shown in the statements of cash flows in the Company's condensed consolidated (3)financial statements because amounts reflected in the table above include changes in accrued liabilities from the previous reporting period for CapEx, while the amounts presented in the statements of cash flows is presented on a cash basis.

Oasis completed 3 gross (1.9 net) operated wells in the Williston Basin and 6 gross (5.0 net) operated wells in the Delaware Basin.

Liquidity and Balance Sheet

As of June 30, 2020, Oasis had cash and cash equivalents of $77.4 million, total elected commitments under its revolving credit facility (the "Oasis Credit Facility") of $612.5 million and total elected commitments under the revolving credit facility among OMP, as parent, OMP Operating LLC, a subsidiary of OMP, as borrower, Wells Fargo Bank, N.A., as administrative agent and the lenders party thereto (the "OMP Credit Facility") of $575.0 million. In addition, Oasis had $502.0 million of borrowings and $71.6 million of outstanding letters of credit issued under the Oasis Credit Facility and $487.5 million of borrowings and a de minimis outstanding letter of credit issued under the OMP Credit Facility.

Hedging Activity

The Company's crude oil contracts will settle monthly based on the average NYMEX West Texas Intermediate crude oil index price ("NYMEX WTI") for fixed price swaps and two-way and three-way costless collars. During 2Q20, the Company liquidated certain NYMEX WTI three-way costless collars for $25.3 million. As of August 5, 2020, the Company had the following outstanding commodity derivative contracts:

Six Months Ending

December 31, 2020

Crude Oil (Volume in MBopd)

Fixed Price Swaps

Volume 11.0

Price ($ per Bbl) $ 56.27

Two-Way Collars

Volume 8.0

Floor ($ per Bbl) $ 51.38

Ceiling ($ per Bbl) $ 59.33

Three-Way Collars

Volume 6.0

Sub-Floor ($ per Bbl) $ 40.00

Floor ($ per Bbl) $ 53.29

Ceiling ($ per Bbl) $ 62.71

Total Crude Oil Volume 25.0

The June 2020 crude oil derivative contracts settled at a net $22.5 million, which was received in July 2020 and will be included in the Company's 3Q20 derivative settlements.

Conference Call Information

Investors, analysts and other interested parties are invited to listen to the webcast and conference call:

Date: Wednesday, August 5, 2020

Time: 10:00 a.m. Central Time

Live Webcast: https://www.webcaster4.com/Webcast/Page/1052/36096

Or:

Dial-in: 888-317-6003

Intl. Dial in:412-317-6061

Conference ID:6024862

Website: www.oasispetroleum.com

A recording of the conference call will be available beginning at 12:00 p.m. Central Time on the day of the call and will be available until Wednesday, August 12, 2020 by dialing:

Replay dial-in: 877-344-7529

Intl. replay: 412-317-0088

Replay code: 10146766

The conference call will also be available for replay for approximately 30 days at www.oasispetroleum.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that the Company 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 Company, including the Company's drilling program, production, derivative instruments, capital expenditure levels and other guidance included in this press release, as well as the impact of the novel coronavirus 2019 ("COVID-19") pandemic on the Company's operations. These statements are based on certain assumptions made by the Company 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 Company, 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, changes in crude oil and natural gas prices, developments in the global economy, particularly the public health crisis related to the COVID-19 pandemic and the adverse impact thereof on demand for crude oil and natural gas, the outcome of government policies and actions, including actions taken to address the COVID-19 pandemic and to maintain the functioning of national and global economies and markets, the impact of Company actions to protect the health and safety of employees, vendors, customers, and communities, weather and environmental conditions, the timing of planned capital expenditures, availability of acquisitions, the ability to realize the anticipated benefits from the previously announced assignment by Oasis of Delaware Basin midstream assets to OMP, uncertainties in estimating proved reserves and forecasting production results, operational factors affecting the commencement or maintenance of producing wells, the condition of the capital markets generally, as well as the Company'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 Company's business and other important factors that could cause actual results to differ materially from those projected as described in the Company's reports filed with the U.S. Securities and Exchange Commission. Additionally, the actions of foreign oil producers (most notably Saudi Arabia and Russia) to increase crude oil production, the unprecedented nature of the current economic downturn, the COVID-19 pandemic and the related decline of the crude oil exploration and production industry may make it particularly difficult to identify risks or predict the degree to which identified risks will impact the Company's business and financial condition. Because considerable uncertainty exists with respect to foreign oil production and the future pace and extent of a global economic recovery from the effects of the COVID-19 pandemic, the Company cannot predict whether or when crude oil production and economic activities will return to normalized levels.

Any forward-looking statement speaks only as of the date on which such statement is made and the Company 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 Petroleum Inc.

Oasis is an independent exploration and production company focused on the acquisition and development of onshore, unconventional crude oil and natural gas resources in the United States. For more information, please visit the Company's website at www.oasispetroleum.com.

Oasis Petroleum Inc.

Condensed Consolidated Balance Sheets

(Unaudited)



June 30, 2020 December 31, 2019



(In thousands, except share data)

ASSETS

Current assets

Cash and cash equivalents $77,408 $20,019

Accounts receivable, net 201,514 371,181

Inventory 36,920 35,259

Prepaid expenses 15,901 10,011

Derivative instruments 85,425 535

Other current assets 1,667 346

Total current assets 418,835 437,351

Property, plant and equipment

Oil and gas properties (successful efforts 9,358,710 9,463,038 method)

Other property and equipment 1,314,870 1,279,653

Less: accumulated depreciation, depletion, (8,521,390) (3,764,915) amortization and impairment

Total property, plant and equipment, net 2,152,190 6,977,776

Assets held for sale, net 1,380 21,628

Derivative instruments - 639

Long-term inventory 14,173 13,924

Operating right-of-use assets 15,232 18,497

Other assets 23,816 29,438

Total assets $2,625,626 $7,499,253



LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current liabilities

Accounts payable $5,131 $17,948

Revenues and production taxes payable 110,791 233,090

Accrued liabilities 143,263 281,079

Accrued interest payable 92,963 37,388

Derivative instruments - 19,695

Advances from joint interest partners 4,284 4,598

Current operating lease liabilities 3,435 6,182

Other current liabilities 1,486 2,903

Total current liabilities 361,353 602,883

Long-term debt 2,761,673 2,711,573

Deferred income taxes 10,042 267,357

Asset retirement obligations 58,294 56,305

Derivative instruments - 120

Operating lease liabilities 17,109 17,915

Other liabilities 7,066 6,019

Total liabilities 3,215,537 3,662,172

Commitments and contingencies

Stockholders' equity (deficit)

Common stock, $0.01 par value: 900,000,000 shares authorized; 325,144,949 shares issued and 320,984,071 shares outstanding 4,239 3,189 at June 30, 2020 and 324,198,057 shares issued and 321,231,319 shares outstanding at December 31, 2019

Treasury stock, at cost: 4,160,878 and 2,966,738 shares at June 30, 2020 and (36,507) (33,881) December 31, 2019, respectively

Additional paid-in capital 3,122,912 3,112,384

Retained earnings (accumulated deficit) (3,849,768) 554,446

Oasis share of stockholders' equity (759,124) 3,636,138 (deficit)

Non-controlling interests 169,213 200,943

Total stockholders' equity (deficit) (589,911) 3,837,081

Total liabilities and stockholders' equity $2,625,626 $7,499,253 (deficit)

Oasis Petroleum Inc.

Condensed Consolidated Statements of Operations

(Unaudited)



Three Months Ended June 30,Six Months Ended June 30,

2020 2019 2020 2019



(In thousands, except per share data)

Revenues

Oil and gas revenues$ 93,830 $ 357,004 $332,958 $725,786

Purchased oil and 37,352 109,389 123,630 257,860 gas sales

Midstream revenues 34,774 51,573 91,185 99,594

Other services 396 11,439 6,377 21,897 revenues

Total revenues 166,352 529,405 554,150 1,105,137

Operating expenses

Lease operating 29,608 56,228 79,377 114,672 expenses

Midstream expenses 8,161 17,368 21,245 34,097

Other services 729 8,474 5,660 15,444 expenses

Marketing, transportation and 23,765 28,488 53,229 63,438 gathering expenses

Purchased oil and 33,180 109,662 118,383 259,566 gas expenses

Production taxes 6,764 28,142 26,090 57,760

Depreciation, depletion and 33,130 177,358 236,885 367,191 amortization

Exploration expenses1,430 887 2,598 1,717

Impairment 2,319 24 4,825,997 653

General and administrative 37,443 30,926 68,617 65,385 expenses

Total operating 176,529 457,557 5,438,081 979,923 expenses

Gain (loss) on sale (1,047) (276) 10,179 (3,198) of properties

Operating income (11,224) 71,572 (4,873,752) 122,016 (loss)

Other income (expense)

Net gain (loss) on derivative (37,187) 34,749 248,135 (82,862) instruments

Interest expense, net of capitalized (44,388) (43,186) (140,145) (87,654) interest

Gain on extinguishment of - - 83,887 - debt

Other income 837 279 900 233

Total other income (80,738) (8,158) 192,777 (170,283) (expense), net

Income (loss) before(91,962) 63,414 (4,680,975) (48,267) income taxes

Income tax benefit 2,613 (12,240) 257,351 (8,537) (expense)

Net income (loss) including (89,349) 51,174 (4,423,624) (56,804) non-controlling interests

Less: Net income (loss) attributable 3,594 8,417 (19,820) 15,321 to non-controlling interests

Net income (loss) attributable to $ (92,943)$ 42,757 $(4,403,804)$(72,125)Oasis

Earnings (loss) attributable to Oasis per share:

Basic $ (0.29) $ 0.14 $(13.90) $(0.23)

Diluted (0.29) 0.14 (13.90) (0.23)

Weighted average shares outstanding:

Basic 317,629 314,982 316,899 314,724

Diluted 317,629 314,982 316,899 314,724

Oasis Petroleum Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)



Six Months Ended June 30,

2020 2019



(In thousands)

Cash flows from operating activities:

Net loss including non-controlling interests $(4,423,624)$(56,804)

Adjustments to reconcile net loss including non-controlling interests to net cash provided by operating activities:

Depreciation, depletion and amortization 236,885 367,191

Gain on extinguishment of debt (83,887) -

(Gain) loss on sale of properties (10,179) 3,198

Impairment 4,825,997 653

Deferred income taxes (257,315) 8,617

Derivative instruments (248,135) 82,862

Equity-based compensation expenses 11,697 17,924

Deferred financing costs amortization and other 16,755 12,245

Working capital and other changes:

Change in accounts receivable, net 167,871 (12,914)

Change in inventory (8,739) 3,029

Change in prepaid expenses (7,465) 3,918

Change in accounts payable, interest payable and(156,668) (36,514) accrued liabilities

Change in other assets and liabilities, net (3,298) (4,473)

Net cash provided by operating activities 59,895 388,932

Cash flows from investing activities:

Capital expenditures (270,283) (525,501)

Acquisitions - (5,781)

Proceeds from sale of properties 13,780 -

Derivative settlements 144,069 3,629

Net cash used in investing activities (112,434) (527,653)

Cash flows from financing activities:

Proceeds from revolving credit facilities 577,000 1,178,000

Principal payments on revolving credit (383,000) (1,025,000)facilities

Repurchase of senior unsecured notes (68,040) -

Deferred financing costs (102) (482)

Purchases of treasury stock (2,626) (4,305)

Distributions to non-controlling interests (12,042) (10,093)

Payments on finance lease liabilities (1,262) (941)

Other - (390)

Net cash provided by financing activities 109,928 136,789

Increase (decrease) in cash and cash equivalents57,389 (1,932)

Cash and cash equivalents:

Beginning of period 20,019 22,190

End of period $77,408 $20,258

Supplemental non-cash transactions:

Change in accrued capital expenditures $(60,655) $(30,598)

Change in asset retirement obligations 2,039 3,840

Non-GAAP Financial Measures

Cash MT&G Reconciliation

Cash MT&G is defined as the total marketing, transportation and gathering expenses less non-cash valuation charges on pipeline imbalances. Cash MT&G is not a measure of marketing, transportation and gathering expenses as determined by GAAP. Management believes that the presentation of Cash MT&G provides useful additional information to investors and analysts to assess the cash costs incurred to get its commodities to market without regard for the change in value of its pipeline imbalances, which vary monthly based on commodity prices. The following table presents a reconciliation of the GAAP financial measure of marketing, transportation and gathering expenses to the non-GAAP financial measure of Cash MT&G for the periods presented:

Three Months Ended June 30,Six Months Ended June 30,

2020 2019 2020 2019



(In thousands)

Marketing, transportation and $ 23,765 $ 28,488 $53,229 $63,438 gathering expenses

Pipeline imbalances (1,222) (120) (1,467) (2,395)

Cash MT&G $ 22,543 $ 28,368 $51,762 $61,043

E&P Cash G&A Reconciliation

E&P Cash G&A is defined as the general and administrative expenses less non-cash equity-based compensation expenses, other non-cash charges and G&A expenses attributable to other services, including midstream and other services, such as equipment rentals and well services. E&P Cash G&A is not a measure of general and administrative expenses as determined by GAAP. Management believes that the presentation of E&P Cash G&A provides useful additional information to investors and analysts to assess the Company's operating costs in comparison to peers without regard to equity-based compensation programs, which can vary substantially from company to company.

The following table presents a reconciliation of the GAAP financial measure of general and administrative expenses to the non-GAAP financial measure of E&P Cash G&A for the periods presented:

Three Months Ended June 30, Six Months Ended June 30,

2020 2019 2020 2019



(In thousands)

General and administrative $37,443 $30,926 $68,617 $65,385 expenses

Equity-based (4,738) (8,522) (11,359) (17,102) compensation expenses

G&A expenses attributable to (3,923) (5,165) (11,811) (12,097) midstream and other services^(1)

E&P Cash G&A $28,782 $17,239 $45,447 $36,186

___________________

For the six months ended June 30, 2020, G&A expenses attributable to (1)other services include severance expenses of $0.8 million as a result of the Company's exit from the well services business in the first quarter of 2020.

Cash Interest and E&P Cash Interest Reconciliations

Cash Interest is defined as interest expense plus capitalized interest less amortization and write-offs of deferred financing costs and debt discounts included in interest expense, and E&P Cash Interest is defined as total Cash Interest less Cash Interest attributable to OMP. Cash Interest and E&P Cash Interest are not measures of interest expense as determined by GAAP. Management believes that the presentation of E&P Cash Interest provides useful additional information to investors and analysts for assessing the interest charges incurred on its debt to finance its E&P activities, excluding non-cash amortization, and its ability to maintain compliance with its debt covenants.

The following table presents a reconciliation of the GAAP financial measure of interest expense to the non-GAAP financial measures of Cash Interest and E&P Cash Interest for the periods presented:

Three Months Ended June 30,Six Months Ended June 30,

2020^(1)(2)2019 2020^(1)(2)2019



(In thousands)

Interest expense $ 44,388 $ 43,186 $140,145 $ 87,654

Capitalized interest 1,776 3,645 4,063 6,463

Amortization of deferred financing (4,448) (1,823) (6,147) (3,593) costs

Amortization of debt (2,696) (3,006) (5,535) (5,890) discount

Cash Interest 39,020 42,002 132,526 84,634

Cash Interest (4,980) (4,133) (35,212) (7,723) attributable to OMP

E&P Cash Interest $ 34,040 $ 37,869 $97,314 $ 76,911

___________________

For the three and six months ended June 30, 2020, interest expense, Cash Interest and E&P Cash Interest include additional interest charges of (1)$1.0 million and $30.3 million, respectively, per the Fourth Amendment of the Oasis Credit Facility. The Fourth Amendment provides for forbearance of such additional interest until the earlier to occur of (i) October 24, 2020 and (ii) an event of default.

For the three and six months ended June 30, 2020, interest expense and Cash Interest include additional interest charges of $2.1 million and (2)$28.0 million, respectively, for the OMP Credit Facility. The Limited Waiver provides for forbearance of such additional interest until the earlier to occur of (i) November 10, 2020 and (ii) an Event of Default.

Adjusted EBITDA Reconciliation

The Company defines Adjusted EBITDA as earnings (loss) before interest expense, income taxes, depreciation, depletion, amortization, exploration expenses and other similar non-cash or non-recurring charges. Adjusted EBITDA is not a measure of net income (loss) or cash flows as determined by GAAP. Management believes that the presentation of Adjusted EBITDA provides useful additional information to investors and analysts for assessing the Company's results of operations, financial performance and ability to generate cash from its business operations without regard to its financing methods or capital structure coupled with its ability to maintain compliance with its debt covenants.

The following table presents reconciliations of the GAAP financial measures of net income (loss) including non-controlling interests and net cash provided by operating activities to the non-GAAP financial measure of Adjusted EBITDA for the periods presented:

Three Months Ended June 30,Six Months Ended June 30,

2020 2019 2020 2019



(In thousands)

Net income (loss) including $ (89,349)$ 51,174 $(4,423,624)$(56,804)non-controlling interests

(Gain) loss on sale 1,047 276 (10,179) 3,198 of properties

Gain on extinguishment of - - (83,887) - debt

Net (gain) loss on derivative 37,187 (34,749) (248,135) 82,862 instruments

Derivative 139,049 (9,817) 144,069 3,629 settlements^(1)

Interest expense, net of capitalized 44,388 43,186 140,145 87,654 interest

Depreciation, depletion and 33,130 177,358 236,885 367,191 amortization

Impairment 2,319 24 4,825,997 653

Exploration expenses1,430 887 2,598 1,717

Equity-based compensation 4,890 8,911 11,697 17,924 expenses

Income tax (benefit)(2,613) 12,240 (257,351) 8,537 expense

Other non-cash 2,765 120 3,010 2,395 adjustments

Adjusted EBITDA 174,243 249,610 341,225 518,956

Adjusted EBITDA attributable to 8,379 11,693 23,438 21,896 non-controlling interests

Adjusted EBITDA attributable to $ 165,864 $ 237,917 $317,787 $497,060 Oasis



Net cash provided by (used in) operating $ (47,880)$ 214,006 $59,895 $388,932 activities

Derivative 139,049 (9,817) 144,069 3,629 settlements^(1)

Interest expense, net of capitalized 44,388 43,186 140,145 87,654 interest

Exploration expenses1,430 887 2,598 1,717

Deferred financing costs amortization (10,567) (5,315) (16,755) (12,245) and other

Current tax 25 76 (36) (80) (benefit) expense

Changes in working 45,033 6,467 8,299 46,954 capital

Other non-cash 2,765 120 3,010 2,395 adjustments

Adjusted EBITDA 174,243 249,610 341,225 518,956

Adjusted EBITDA attributable to 8,379 11,693 23,438 21,896 non-controlling interests

Adjusted EBITDA attributable to $ 165,864 $ 237,917 $317,787 $497,060 Oasis

___________________

Cash settlements represent the cumulative gains and losses on the (1)Company's derivative instruments for the periods presented and do not include a recovery of costs that were paid to acquire or modify the derivative instruments that were settled.

Segment Adjusted EBITDA and E&P Free Cash Flow Reconciliations

The Company defines E&P Free Cash Flow as Adjusted EBITDA for its exploration and production segment plus distributions to Oasis for its ownership of (i) OMP limited partner units, (ii) a controlling interest in OMP's general partner, OMP GP LLC, and (iii) retained interests in Bobcat DevCo LLC and Beartooth DevCo LLC; less E&P Cash Interest, capital expenditures for E&P and other, excluding capitalized interest, and midstream capital expenditures attributable to its retained interests in Bobcat DevCo LLC and Beartooth DevCo LLC. E&P Free Cash Flow is not a measure of net income (loss) or cash flows as determined by GAAP. Management believes that the presentation of E&P Free Cash Flow provides useful additional information to investors and analysts for assessing the financial performance of its E&P business as compared to its peers and its ability to generate cash from its E&P operations and midstream ownership interests after interest and capital spending. In addition, E&P Free Cash Flow excludes changes in operating assets and liabilities that relate to the timing of cash receipts and disbursements, which the Company may not control, and changes in operating assets and liabilities may not relate to the period in which the operating activities occurred.

The following tables present reconciliations of the GAAP financial measure of income (loss) before income taxes including non-controlling interests to the non-GAAP financial measure of Adjusted EBITDA for the Company's two reportable business segments and to the non-GAAP financial measure of E&P Free Cash Flow for its exploration and production segment for the periods presented:

Exploration and Production^(1)

Three Months Ended June 30,Six Months Ended June 30,

2020 2019 2020 2019



(In thousands)

Income (loss) before income taxes including $ (116,366)$ 15,499 $(4,629,623)$(140,540)non-controlling interests

(Gain) loss on sale1,047 276 (10,179) 3,198 of properties

Gain on extinguishment of - - (83,887) - debt

Net (gain) loss on derivative 37,187 (34,749) (248,135) 82,862 instruments

Derivative 139,049 (9,817) 144,069 3,629 settlements^(2)

Interest expense, net of capitalized 39,202 38,977 104,702 79,697 interest

Depreciation, depletion and 25,676 173,680 224,330 359,692 amortization

Impairment 920 24 4,716,314 653

Exploration 1,430 887 2,598 1,717 expenses

Equity-based compensation 4,811 8,681 11,407 17,436 expenses

Other non-cash 2,765 120 3,010 2,395 adjustments

Adjusted EBITDA 135,721 193,578 234,606 410,739

Distributions to Oasis from OMP and 28,177 36,644 67,949 71,673 DevCo interests^(3)

E&P Cash Interest^ (34,040) (37,869) (97,314) (76,911) (4)

E&P and other capital (38,655) (212,240) (192,284) (381,926) expenditures

Midstream capital expenditures (272) (5,881) (7,713) (11,136) attributable to DevCo interests

Capitalized 1,776 3,645 4,063 6,463 interest

E&P Free Cash Flow^$ 92,707 $ (22,123)$9,307 $18,902 (4)

___________________

In the first quarter of 2020, the Company exited the well services business. Because the well services business will not continue to be a (1)separate reportable business segment going forward, it is included in the E&P business segment in the table above. Prior period amounts have been restated to reflect the change in reportable segments.

Cash settlements represent the cumulative gains and losses on the (2)Company's derivative instruments for the periods presented and do not include a recovery of costs that were paid to acquire or modify the derivative instruments that were settled.

Represents distributions to Oasis for the Company's ownership of (i) OMP (3)limited partner units, (ii) a controlling interest in OMP's general partner, OMP GP LLC, and (iii) retained interests in Bobcat DevCo LLC and Beartooth DevCo LLC.

For the three and six months ended June 30, 2020, E&P Cash Interest and E &P Free Cash Flow include the impact of additional interest charges of (4)$1.0 million and $30.3 million, respectively, per the Fourth Amendment of the Oasis Credit Facility. The Fourth Amendment provides for forbearance of such additional interest until the earlier to occur of (i) October 24, 2020 and (ii) an event of default.

Midstream

Three Months Ended June 30, Six Months Ended June 30,

2020 2019 2020 2019



(In thousands)

Income (loss) before income taxes including$ 25,347 $ 51,016 $ (47,362)$ 97,074 non-controlling interests

Interest expense, net of capitalized 5,186 4,209 35,443 7,957 interest

Depreciation, depletion and 12,023 8,893 22,426 18,080 amortization

Impairment 1,399 - 109,683 -

Equity-based 203 515 631 980 compensation expenses

Adjusted EBITDA $ 44,158 $ 64,633 $ 120,821 $ 124,091

Adjusted Net Income (Loss) Attributable to Oasis and Adjusted Diluted Earnings (Loss) Attributable to Oasis Per Share Reconciliations

Adjusted Net Income (Loss) Attributable to Oasis and Adjusted Diluted Earnings (Loss) Attributable to Oasis Per Share are supplemental non-GAAP financial measures that are used by management and external users of the Company's financial statements, such as industry analysts, investors, lenders and rating agencies. The Company defines Adjusted Net Income (Loss) Attributable to Oasis as net income (loss) after adjusting first for (1) the impact of certain non-cash items, including non-cash changes in the fair value of derivative instruments, impairment, and other similar non-cash charges, or non-recurring items, (2) the impact of net income (loss) attributable to non-controlling interests and (3) the non-cash and non-recurring items' impact on taxes based on the Company's effective tax rate applicable to those adjusting items in the same period. Adjusted Net Income (Loss) Attributable to Oasis is not a measure of net income (loss) as determined by GAAP. The Company defines Adjusted Diluted Earnings (Loss) Attributable to Oasis Per Share as Adjusted Net Income (Loss) Attributable to Oasis divided by diluted weighted average shares outstanding.

The following table presents reconciliations of the GAAP financial measure of net income (loss) attributable to Oasis to the non-GAAP financial measure of Adjusted Net Income (Loss) Attributable to Oasis and the GAAP financial measure of diluted earnings (loss) attributable to Oasis per share to the non-GAAP financial measure of Adjusted Diluted Earnings (Loss) Attributable to Oasis Per Share for the periods presented:

Three Months Ended June 30, Six Months Ended June 30,

2020 2019 2020 2019



(In thousands, except per share data)

Net income (loss) attributable to $ (92,943) $ 42,757 $(4,403,804) $(72,125) Oasis

(Gain) loss on 1,047 276 (10,179) 3,198 sale of properties

Gain on extinguishment of - - (83,887) - debt

Net (gain) loss on derivative 37,187 (34,749) (248,135) 82,862 instruments

Derivative 139,049 (9,817) 144,069 3,629 settlements^(1)

Impairment^(2) 2,275 24 4,799,805 653

Additional interest charges^ 3,037 - 58,300 - (3)(4)

Amortization of deferred financing4,360 1,823 5,971 3,593 costs^(5)

Amortization of 2,696 3,006 5,535 5,890 debt discount

Other non-cash 2,765 120 3,010 2,395 adjustments

Tax impact^(6) (48,928) 7,565 (1,108,867) 14,273

Deferred tax asset valuation 22,934 - 850,436 - allowance adjustment^(7)

Adjusted Net Income $ 73,479 $ 11,005 $12,254 $44,368 Attributable to Oasis



Diluted earnings (loss) $ (0.29) $ 0.14 $(13.90) $(0.23) attributable to Oasis per share

Adjustment to diluted weighted - - 0.06 - average shares outstanding^(8)

(Gain) loss on - - (0.03) 0.01 sale of properties

Gain on extinguishment of - - (0.26) - debt

Net (gain) loss on derivative 0.12 (0.11) (0.78) 0.26 instruments

Derivative 0.44 (0.03) 0.45 0.01 settlements^(1)

Impairment^(2) 0.01 - 15.09 -

Additional interest charges^ 0.01 - 0.18 - (3)(4)

Amortization of deferred financing0.01 0.01 0.02 0.01 costs^(5)

Amortization of 0.01 0.01 0.02 0.02 debt discount

Other non-cash 0.01 - 0.01 0.01 adjustments

Tax impact^(6) (0.16) 0.01 (3.49) 0.05

Deferred tax asset valuation 0.07 - 2.67 - allowance adjustment^(7)

Adjusted Diluted Earnings $ 0.23 $ 0.03 $0.04 $0.14 Attributable to Oasis Per Share



Diluted weighted average shares 318,112 314,982 318,092 316,081 outstanding^(8)



Effective tax rate applicable to 25.4 % 19.2 % 23.7 %(14.0) %adjustment items^ (6)

___________________

Cash settlements represent the cumulative gains and losses on the (1)Company's derivative instruments for the periods presented and do not include a recovery of costs that were paid to acquire or modify the derivative instruments that were settled.

For the three and six months ended June 30, 2020, OMP recorded an impairment expense of $0.2 million and $102.0 million, respectively, which is included in the Company's unaudited condensed consolidated (2)financial statements. The portion of OMP impairment expense attributable to non-controlling interests of $0.1 million and $26.2 million is excluded from impairment expense in the table above for the three and six months ended June 30, 2020, respectively.

For the three and six months ended June 30, 2020, the Company accrued additional interest charges of $1.0 million and $30.3 million, (3)respectively, per the Fourth Amendment of the Oasis Credit Facility. The Fourth Amendment provides for forbearance of such additional interest until the earlier to occur of (i) October 24, 2020 and (ii) an event of default.

For the three and six months ended June 30, 2020, the Company accrued additional interest charges of $2.1 million and $28.0 million, (4)respectively, for the OMP Credit Facility. The Limited Waiver provides for forbearance of such additional interest until the earlier to occur of (i) November 10, 2020 and (ii) an Event of Default.

The portion of amortization of deferred financing costs attributable to (5)non-controlling interests of $0.1 million and $0.2 million is excluded from amortization of deferred financing costs in the table above for the three and six months ended June 30, 2020, respectively.

The tax impact is computed utilizing the Company's effective tax rate (6)applicable to the adjustments for certain non-cash and non-recurring items.

Deferred tax asset valuation allowance is adjusted to reflect the tax (7)impact of the other adjustments using an assumed effective tax rate that excludes the impact of the valuation allowance.

The Company included the dilutive effect of unvested stock awards of 483,000, 1,193,000 and 1,357,000 for the three and six months ended June (8)30, 2020 and for the six months ended June 30, 2019, respectively, in computing Adjusted Diluted Earnings Attributable to Oasis Per Share, which were excluded from the GAAP calculation of diluted loss attributable to Oasis per share due to the anti-dilutive effect.

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SOURCE Oasis Petroleum Inc.