Oasis Petroleum Inc.

Good morning and welcome to the OASIS Business Update. All participants will be in listen-only mode. If you need assistance, please signal a conference specialist by pressing the Start key followed by zero. After today's presentation, there will be an opportunity to ask questions. Please note that this event is being recorded. I'd like to turn the conference over to Mr. Michael Liu, Chief Financial Officer. Please go ahead.

Thank you, Nick. Good morning, everyone. Today we are providing preliminary operating and financial metrics for the fourth quarter of 2021, along with our 2022 outlook and formalized return of capital plan. We're delighted to have you on our call. I'm joined today by Danny Brown, Taylor Reed, as well as other members of the team. Please be advised that our remarks, including the answers to your questions, include statements that we believe to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act. These forward-looking statements are subject to risks and uncertainties that could cause actual results to be materially different from those currently disclosed in our release and conference calls. Those risks include, among others, matters that we have described in our releases as well as in our filings with the Securities and Exchange Commission, including our annual report on Form 10-K and our quarterly reports on Form 10-Q. We disclaim any obligation to update these forward-looking statements. During this conference call, we'll make references to non-GAAP measures, and reconciliations to the applicable GAAP measures can be found in our releases and on our websites. We may also reference our current investor presentation, which you can find on our website. With that, I'll turn the call over to our CEO, Danny Brown.

Thanks, Michael. I'd like to start out today by thanking everyone for joining our call this morning. because I think we've got some really exciting details to share with you today. But before we begin, I'd first like to thank the employees of Oasis Petroleum for their hard work and dedication, which resulted in 2021 being a transformational year for our organization. So just a moment of reflection there. Over the course of the last year, the organization announced its first fixed dividend, which we subsequently raised later in the year, simplified our midstream structure, sold assets in the Permian Basin where we didn't see ourselves being able to build scale, and bought assets in the Williston where we did, paid a $4 per share special dividend, completed a $100 million share repurchase program, and announced the merging of Oasis Midstream Partners into Crestwood Equity Partners, a transaction which we believe was critical to help unlock the full value of our assets for our shareholders, which closed last week. Simply put, it was an amazing year. And to build on those actions, I wanted to spend a moment this morning talking about the return of capital program we announced yesterday. While I hope our actions through the course of 2021, which returned approximately $210 million to shareholders for the year, demonstrate our commitment on this topic, I also recognize that increased transparency would be helpful for investors. In light of that, and because returning capital is a key tenet of our strategy, last night we announced a fixed $280 million return program for 2022, which I believe, A, delivers more certainty to investors on the amount we will be returning, B, provides meaningful capital return in line with peers across a variety of metrics, and C, retains flexibility for the organization to pursue other value-enhancing opportunities, including M&A or accretive organic growth, should prices and conditions warrant. The $280 million program increases year-over-year returns by 33% and does so through a combination of a fixed dividend, variable dividends, and share repurchases. As part of our return program, we are increasing the base dividend immediately to an aggregate annual amount of $45 million. Given the share repurchases that took place in 2021, this yields a quarterly dividend of 58.5 cents per share, up 17% from the 50 cents per share we announced in November. Complementing this increase to our base dividend, OASIS expects to announce a variable dividend at the end of each quarter based on the difference between $70 million, which is one quarter of the annual $280 million program, and the amount used to pay the base dividend and repurchase shares during the prior quarter. We expect both variable dividends and share buybacks to play a role in our capital return framework, and we'll revisit the plan as the year progresses. And in conjunction with our plan, we also announced the approval of a new share repurchase authorization for $150 million. So now I'd like to pivot the discussion to our operational performance and plans. So let me start with how we closed out last year by shifting my commentary, before shifting my commentary to 2022. First, a little bit about our year-end reserves. As you likely noticed in our press release, year-end reserves are up significantly year-on-year. Proven reserves, including the impact of acquisitions, divestitures, prices, development planning, O&P deconsolidation, and revisions are up 38% to approximately 251 million barrels of oil equivalent. Our cost of development for 2021 was a very attractive $9.60 per BOE. However, our year-over-year reserve changes do include some negative revisions, and we've trued up our forecast with actual performance and feel like we're in a good spot moving forward. With the positive change in SEC pricing and reserves, it's unsurprising that before tax PV10 value is up significantly to $3.1 billion. So to finish up with comments on 2021, let me talk about the fourth quarter for a moment, where I'm pleased with the continued strong performance with cost, both on a capital and expense side, which led to strong EBITDA and free cash generation. In total, capital costs for the fourth quarter were roughly $20 million lower than guidance, despite the inflationary pressure we are seeing in the market. While much of this is the result of the good work of our engineers and field operations team, some is also the result of decreased activity, which translates to slightly lower volumes. So to discuss that for a moment, in the fourth quarter, we had a few items impact volume delivery. I think many folks recognize the really tough weather we had in December, which certainly played a role. But we also significantly reduced our work over rig activity, leading to many more wells than normal being offline. We reduced this activity deliberately to address some concerns we were seeing with safety performance. While I'm very proud that our 2021 incident severity is at a several year low, the absolute number of incidents across the organization is higher than we'd like it to be. And our issues on this front have been most pronounced with our work over operations. To be clear, The safety of our employees and contractors is of paramount importance to me and this organization. So we took a pause with our work over activity to ensure our expectations with respect to safety were well understood by all and that all of our employees, contractors, and service providers were aligned around the items we need to focus on to improve our safety performance. While we're largely back up and running on this front, we do have a backlog of downed wells that we will be working through in the early part of 2022 to reach normal downtime levels. Finally, I want to talk briefly about our Nikolai wall development in the northernmost portion of Wild Basin. We currently expect this program to develop a full cycle, fully loaded rate of return of around 90% at 60 and 3 pricing. These results are highly economic, but are below our original expectations. The units are located adjacent to an area of high structural flexure as you climb out of the basin center to the Nessun anticline. They also happen to be in an area of very heavy development and adjacent to some strong performing DSUs. From what we've observed with the early production and pressure data, these two units appear to have been connected to the neighboring DSUs, likely through natural fracturing, which has resulted in greater depletion than modeled and had a resulting impact on volumes for the quarter. So, with that commentary for the fourth quarter of last year, I'd now like to turn comments over to our expectations for 2022. As we evaluated the landscape of rising prices, experienced crew shortages, and service availability, rather than scramble to work with unproven service providers, and pay elevated rates to slot in activities to deliver a volume answer. We constructed a program that focuses on operational consistency, which we believe will lead, most importantly, to safer but also more efficient and cost-effective operations. The impact of this approach is reflected in the 2022 plan, which seeks to maximize continuity with our rigs and completion crews. We believe operational consistency is an important element in delivering high operational performance. This approach results in a 2022 program, which delivers a group of wells starting late in the first quarter and then has a continuous completions crew running starting in late May. In total, this delivers 41 wells over the course of 2022, including 11 three-mile laterals. While we believe this is the right approach, it delivers about 10 fewer completions for the year than we originally contemplated, with the first group of wells coming online toward the end of the first quarter instead of the beginning. When combining this development plan with the impacts of the workover backlog and Nikolai Wall project I mentioned earlier, we forecast delivering volumes at a midpoint of 67.5 million barrels of oil equivalent with 67.5 thousand barrels a day with significant capital savings over our originally contemplated plan. We think our development plan avoids approximately 60 million in 2022 and expect a capital program of approximately 295 million for the year. I would note that this amount includes about a 15% increase in well costs versus our expectations in the second half of last year. Taylor will cover some more details on our development plans when I turn it over to him in just a few moments, but we think this program sets us up well for a successful 2022. Finally, I wanted to touch on our ESG plans for the year. As you know, 2021 was a pivotal year on this front as the company released its first sustainability report as well as investor short debt. This allowed the company to set a baseline for performance and improve transparency and reporting on our ESG efforts. Going forward, you should expect to see more progress, including enhanced disclosures on our performance and target setting to drive key strategic objectives and improve our operations. With that, I'll turn it over to Taylor to expand on our operational results and give more insight on the 2022 program.