OMP was formed to develop and operate a portfolio of midstream assets. Its current midstream operations are performed exclusively within the Williston Basin, one of the most prolific crude oil producing basins in North America. OMP generates substantially all of its revenues through 15-year, fixed-fee contracts pursuant to which OMP provides crude oil, natural gas and water-related midstream services for Oasis.
Its sponsor, OAS, is an independent exploration and production (E&P) company focused on unconventional oil and natural gas resources in the North Dakota and Montana regions of the Williston Basin. At year end 2016, OAS held a highly concentrated and substantially wholly operated position composed of 730,267 gross (517,801 net) leasehold acres in the Williston Basin, of which approximately 94% are held by production.
The Williston Basin covers 202,000 square miles in the Northern US and Southern Canada. The Bakken and underlying Three Forks formations are the two primary reservoirs that OAS is currently developing in the Williston Basin. The Bakken and Three Forks shale formations contain technically recoverable reserves estimated at 5.0 billion barrels of oil, while North Dakota contains 7.3 trillion cubic feet of natural gas. The utilization of horizontal drilling and hydraulic fracturing has turned the Williston Basin into one of the most prolific crude oil producing basins in North America.
OMP expects to grow acquisitively through accretive, dropdown acquisitions, as well as organically as Oasis continues to develop its acreage in the Williston Basin. Additionally, OMP expects to grow by offering its services to third parties.
By generating substantially all of its revenues through long-term, fee-based contractual arrangements with OAS, this minimizes OMP’s direct exposure to commodity prices. Furthermore, OMP generally does not take ownership of the crude oil or natural gas that it handles. As such, OMP expects stable and predictable cash flows over the long-term.
Turning quickly to the financials, the company is profitable and reported 1H17 pro forma revenue of $75.0 million and adjusted EBITDA of $50.2 million. For 2016, pro forma revenue was $92.9 million and adjusted EBITDA of $60.8 million. Finally, with an MLP, the dividend is always important. OMP expects to make a minimum quarterly distribution of $0.375 per unit. That computes to a 7.5% annual yield based on the mid-point of this offering’s expected pricing range of $19-21.