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H.S. sophomore Avg
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New words:
Biden, Contemporaneously, Crestwood, designee, employee, ensure, Falcon, focused, Holder, hundred, indirect, Occupational, OPM, peer, President, rehearing, requisite, therefrom, unanimously, Undistributed, unitholder, unpredictable, written
Removed:
acceleration, disruption, improved, local, outbreak, represented, running, safe, spend
Financial report summary
?Risks
- Because a substantial majority of our revenue currently is, and over the long term is expected to be, derived from Oasis Petroleum, any development that materially and adversely affects Oasis Petroleum’s operations, financial condition or market reputation could have a material and adverse impact on us.
- Events outside of our control, including a pandemic, epidemic or outbreak of an infectious disease, such as the global COVID-19 pandemic, have materially adversely affected, and may further materially adversely affect, our business.
- In the event Oasis Petroleum elects to sell acreage that is dedicated to us to a third party, the third party’s financial condition could be materially worse than Oasis Petroleum, and thus we could be subject to nonpayment or nonperformance by the third party.
- We may not generate sufficient cash from operations following the establishment of cash reserves and payment of fees and expenses, including cost reimbursements to our General Partner, to enable us to pay the minimum quarterly distribution to our unitholders.
- Because of the natural decline in production from existing wells, our success depends, in part, on Oasis Petroleum’s ability to replace declining production and our ability to secure new sources of production from Oasis Petroleum or third parties. Any decrease in Oasis Petroleum’s production could adversely affect our business and operating results.
- Substantially all of our assets are controlling ownership interests in our DevCos. Because our interests in our DevCos represent almost all of our cash-generating assets, our cash flows will depend entirely on the performance of our DevCos and their ability to distribute cash to us.
- We serve customers who are involved in drilling for, producing and transporting crude oil and natural gas. Adverse developments affecting the oil and gas industry or drilling activity, including sustained low crude oil or natural gas prices, a decline in crude oil or natural gas prices, reduced demand for crude oil and natural gas products and increased regulation of drilling, production and/or transportation, could have a material adverse effect on our results of operations.
- Our ROFO/ROFR on Oasis Petroleum’s retained assets is subject to risks and uncertainty, and ultimately we may not acquire any of those assets.
- Certain of our commercial agreements with Oasis Petroleum provide it with termination rights under certain circumstances. In the event Oasis Petroleum were to exercise its termination rights under such circumstances, it may have a material adverse effect on our business, results of operations or financial position.
- Due to our lack of asset and geographic diversification, adverse developments in the areas in which we are located could adversely impact our financial condition, results of operations and cash flows and reduce our ability to make distributions to our unitholders.
- To the extent Oasis Petroleum shifts the focus of its development away from the acreage dedicated to us and to other areas of operations where we do not have assets or acreage dedications, our results of operations and distributable cash could be adversely affected. In addition, because of contractual dedications to third-party crude oil and natural gas gathering companies, our opportunity to purchase additional midstream assets from Oasis Petroleum is generally limited to midstream assets Oasis Petroleum may develop in the City of Williston, Painted Woods, Missouri, Dublin, Target, and Far North Cottonwood areas and other areas Oasis Petroleum may develop in the future.
- We may be unable to grow by acquiring from Oasis Petroleum the retained non-controlling interests in two of our DevCos or any other midstream assets that Oasis Petroleum builds with respect to its acreage and elects to sell in the future, which could limit our ability to increase our distributable cash.
- In our midstream infrastructure business, we may not be able to attract additional third-party gathering volumes, which could limit our ability to grow and diversify our customer base.
- If we are unable to make acquisitions on economically acceptable terms from Oasis Petroleum, any Oasis Petroleum successor or third parties, our future growth will be limited, and the acquisitions we do make may reduce, rather than increase, our distributable cash on a per unit basis.
- Our ability to grow in the future is dependent on our ability to access external financing for expansion capital expenditures.
- Increased competition from other companies that provide midstream infrastructure could have a negative impact on the demand for our services, which could adversely affect our financial results.
- We will be required to make substantial investments to increase our asset base. If we are unable to obtain needed capital or financing on satisfactory terms, our ability to make cash distributions may be diminished or our financial leverage could increase.
- The amount of capital expenditures that we make over time could increase as a result of increased demand for labor and materials.
- Oasis Petroleum may suspend, reduce or terminate its obligations under our natural gas gathering, compression, processing and gas lift supply; crude oil gathering, stabilization, blending, storage and transportation; produced and flowback water gathering and disposal; and freshwater distribution agreements in certain circumstances, which could have a material adverse effect on our financial condition, results of operations, cash flows and ability to make distributions to our unitholders.
- The amount of our distributable cash depends primarily on our cash flows and not solely on profitability, which may prevent us from making distributions, even during periods in which we record net income.
- Our utilization of existing capacity, expansion of existing midstream infrastructure assets and construction or purchase of new assets may not result in revenue increases and may be subject to regulatory, environmental, political, legal and economic risks, which could adversely affect our cash flows, results of operations and financial condition and, as a result, our ability to distribute cash to our unitholders.
- Our business would be adversely affected if we, Oasis Petroleum or our third-party customers experienced significant interruptions.
- If third-party pipelines or other facilities interconnected to our midstream systems become partially or fully shut down or otherwise unavailable, or if the volumes we gather or treat do not meet the quality specifications of such pipelines or facilities, our business, financial condition, results of operations, cash flows and ability to make distributions to our unitholders could be adversely affected.
- Our exposure to commodity price risk may change over time and we cannot guarantee the terms of any existing or future agreements for our midstream services with third parties or with Oasis Petroleum.
- Our business could be adversely impacted if we are unable to obtain or maintain the regulatory permits required to develop and operate our facilities or to dispose of certain types of wastes.
- Delays in obtaining permits by our crude oil and natural gas E&P customers for their operations could impair our business.
- In the future we may face increased obligations relating to the closing of our produced and flowback water facilities and may be required to provide an increased level of financial assurance to guaranty the appropriate closure activities occur for a produced and flowback water facility.
- Federal, state and local legislative and regulatory initiatives relating to hydraulic fracturing could result in increased costs of doing business and additional operations restrictions for our crude oil and natural gas E&P customers, which could reduce the throughput on our midstream infrastructure assets and adversely impact our revenues.
- Legislation or regulatory initiatives intended to address seismic activity could restrict our ability to dispose of produced and flowback water gathered from Oasis Petroleum and our other third-party E&P customers, which could have a material adverse effect on our business.
- Compliance with environmental laws and regulations could cause us and our E&P customers to incur significant costs or liabilities as well as delays in our E&P customers’ production that could reduce our volume of services and have a material adverse effect on our business.
- Our and our E&P customers’ operations are subject to a number of risks arising out of the threat of climate change that could result in increased operating costs, restrictions on drilling and costs of compliance, limit the areas in which crude oil and natural gas production may occur and reduce demand for the crude oil and natural gas that we handle, while potential physical effects of climate change could disrupt our operations and cause us to incur significant costs in preparing for or responding to those effects.
- Increasing attention to ESG matters may impact our business.
- The rates of our regulated assets are subject to review and reporting by federal regulators, which could adversely affect our revenues.
- Failure to comply with applicable market behavior rules, regulations and orders could subject us to substantial penalties and fines.
- A change in the jurisdictional characterization of some of our assets by federal, state or local regulatory agencies or a change in policy by those agencies may result in increased regulation of our assets, which may cause our operating expenses to increase, limit the rates we charge for certain services and decrease the amount of our distributable cash.
- We must comply with occupational health and safety laws and regulations at our facilities and in connection with our operations and failure to do so could result in significant liability and/or fines and penalties.
- Our business involves many hazards and operational risks, some of which may not be fully covered by insurance. The occurrence of a significant accident or other event that is not fully insured could curtail our operations and have a material adverse effect on our ability to distribute cash and, accordingly, the market price for our common units.
- Federal and state legislative and regulatory initiatives relating to pipeline safety that require the use of new or more stringent safety controls, substantial changes to existing integrity management programs or more stringent enforcement of applicable legal requirements could subject us to increased capital and operating costs and operational delays.
- We do not own all of the land on which our facilities are located, which could result in disruptions to our operations.
- A shortage of equipment and skilled labor could reduce equipment availability and labor productivity and increase labor and equipment costs, which could have a material adverse effect on our business and results of operations.
- The loss of key personnel could adversely affect our ability to operate.
- We do not have any officers or employees apart from those seconded to us and rely solely on officers of our General Partner and employees of Oasis Petroleum pursuant to our Services and Secondment Agreement with Oasis Petroleum.
- Crude oil and natural gas producers’ operations, especially those using hydraulic fracturing, are substantially dependent on the availability of water. Restrictions on the ability to obtain water may incentivize water recycling efforts by our customers, which would decrease the volume of non-hazardous waste and water delivered to our facilities and could have an adverse effect on our cash flows.
- Our E&P customers must comply with North Dakota rules on the capture rather than flaring of natural gas in connection with production of crude oil and natural gas, which compliance activities may increase the costs of compliance and restrict or prohibit future production, which results could adversely affect our services.
- Crude oil and natural gas prices are volatile, and a change in these prices in absolute terms, or an adverse change in the prices of crude oil and natural gas relative to one another, could adversely affect our gross margin, business, financial condition, results of operations, cash flows and ability to make cash distributions.
- We may not be able to renew or replace expiring contracts at favorable rates or on a long-term basis.
- Contracts with customers are subject to additional risk in the event of a bankruptcy proceeding.
- Our businesses and results of operations are subject to seasonal fluctuations, which could result in fluctuations in our operating results and common unit price.
- Crude oil and natural gas production and gathering may be adversely affected by weather conditions and terrain, which in turn could negatively impact the operations of our gathering, treating and processing facilities and our construction of additional facilities.
- Our general partner and its affiliates, including Oasis Petroleum, which owns a substantial majority of our General Partner, may have conflicts of interest with us and have limited duties to us and our unitholders, and they may favor their own interests to the detriment of us and our other common unitholders.
- Ongoing cost reimbursements due to our General Partner and its affiliates for services provided, which will be determined by our General Partner, may be substantial and will reduce our distributable cash.
- We expect to distribute a significant portion of our distributable cash to our partners, which could limit our ability to grow and make acquisitions.
- Our partnership agreement replaces our General Partner’s fiduciary duties to holders of our common units with contractual standards governing its duties.
- Our General Partner may elect to convert the Partnership to a corporation for U.S. federal income tax purposes without unitholder consent.
- Our partnership agreement restricts the remedies available to holders of our common units for actions taken by our General Partner that might otherwise constitute breaches of fiduciary duty.
- Our partnership agreement includes exclusive forum, venue and jurisdiction provisions. By purchasing a common unit, a limited partner is irrevocably consenting to these provisions regarding claims, suits, actions or proceedings and submitting to the exclusive jurisdiction of Delaware courts. Our partnership agreement also provides that any unitholder bringing an
- unsuccessful action will be obligated to reimburse us for any costs we have incurred in connection with such unsuccessful claim.
- Holders of our common units have limited voting rights and are not entitled to elect our General Partner or its directors, which could reduce the price at which our common units will trade.
- Even if holders of our common units are dissatisfied, they cannot initially remove our General Partner without its consent.
- Our General Partner may elect to cause us to issue common units to it in connection with a resetting of the target distribution levels related to our incentive distribution rights, without the approval of the conflicts committee of our General Partner’s board of directors or the holders of our common units. This could result in lower distributions to holders of our common units.
- The IDRs held by our General Partner may be transferred to a third party without unitholder consent.
- Units held by persons who our General Partner determines are not “eligible holders” at the time of any requested certification in the future may be subject to redemption.
- Our partnership agreement restricts the voting rights of unitholders owning 20% or more of our common units.
- Control of our General Partner may be transferred to a third party without unitholder consent.
- We may issue additional units, including units that are senior to the common units, without unitholder approval, which would dilute unitholders’ existing ownership interests.
- Oasis Petroleum may sell common units in the public or private markets, which sales could have an adverse impact on the trading price of the common units.
- Our General Partner’s discretion in establishing cash reserves may reduce the amount of distributable cash we have to distribute to unitholders.
- Affiliates of our General Partner, including Oasis Petroleum, may compete with us, and neither our General Partner nor its affiliates have any obligation to present business opportunities to us except with respect to our Subject Assets and dedications contained in our commercial agreements with Oasis Petroleum.
- Our General Partner has a call right that may require unitholders to sell their common units at an undesirable time or price.
- The price of our common units may fluctuate significantly, and unitholders could lose all or part of their investment.
- Unitholders may have liability to repay distributions that were wrongfully distributed to them.
- Our tax treatment depends on our status as a partnership for federal income tax purposes. If the IRS were to treat us as a corporation for federal income tax purposes, which would subject us to entity-level taxation, or if we were otherwise subjected to a material amount of entity-level taxation, then our cash flows and ability to make cash distributions to our unitholders would be substantially reduced.
- The tax treatment of publicly traded partnerships or an investment in our common units could be subject to potential legislative, judicial or administrative changes or differing interpretations, possibly applied on a retroactive basis.
- If the IRS were to contest the federal income tax positions we take, it may adversely impact the market for our common units, and the costs of any such contest would reduce our distributable cash.
- If the IRS makes audit adjustments to our income tax returns for tax years beginning after December 31, 2017, it (and some states) may assess and collect any taxes (including any applicable penalties and interest) resulting from such audit adjustments directly from us, in which case our distributable cash might be substantially reduced.
- Our unitholders are required to pay taxes on their share of our income even if they do not receive any cash distributions from us.
- Tax gain or loss on the disposition of our common units could be more or less than expected.
- Tax-exempt entities face unique tax issues from owning our common units that may result in adverse tax consequences to them.
- We treat each purchaser of our common units as having the same tax benefits without regard to the common units actually purchased. The IRS may challenge this treatment, which could adversely affect the value of our common units.
- We generally prorate our items of income, gain, loss and deduction between transferors and transferees of our common units each month based upon the ownership of our common units on the first day of each month, instead of on the basis of the date a particular common unit is transferred. The IRS may challenge this treatment, which could change the allocation of items of income, gain, loss and deduction among our unitholders.
- A unitholder whose common units are the subject of a securities loan (e.g., a loan to a “short seller” to cover a short sale of common units) may be considered to have disposed of those common units. If so, such unitholder would no longer be treated for tax purposes as a partner with respect to those common units during the period of the loan and may recognize gain or loss from the disposition.
- We have adopted certain valuation methodologies in determining a unitholder’s allocations of income, gain, loss and deduction. The IRS may challenge these methodologies or the resulting allocations, which could adversely affect the value of our common units.
- Our unitholders will likely be subject to state and local taxes and income tax return filing requirements in jurisdictions where they do not live as a result of investing in our common units.
- Restrictions in our Revolving Credit Facility could adversely affect our business, financial condition, results of operations and ability to make quarterly cash distributions to our unitholders.
- Debt we incur in the future may limit our flexibility to obtain financing and to pursue other business opportunities.
- Increases in interest rates could adversely affect our business, our unit price and our ability to issue additional equity, to incur debt to capture growth opportunities or for other purposes, or to make cash distributions at our intended levels.
- Terrorist attacks or cyber-attacks could have a material adverse effect on our business, financial condition or results of operations.
- A cyber incident could result in information theft, data corruption, operational disruption and/or financial loss.
- If we fail to develop or maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent fraud. As a result, current and potential unitholders could lose confidence in our financial reporting, which would harm our business and the trading price of our units.
- For as long as we are an “emerging growth company,” we will not be required to comply with certain disclosure requirements that apply to other public companies.
- The Nasdaq does not require a publicly traded partnership like us to comply with certain of its corporate governance requirements.
- If we are deemed an “investment company” under the Investment Company Act of 1940, it would adversely affect the price of our common units and could have a material adverse effect on our business.
Management Discussion
- •Midstream services - Oasis Petroleum. We record service revenues for fee-based arrangements with Oasis Petroleum for midstream services, including: (i) natural gas gathering, compression, processing, gas lift supply and NGL storage services; (ii) crude oil gathering, terminaling and transportation services; and (iii) produced and flowback water gathering and disposal services.
- •Midstream services - third parties. We record service revenues from third parties for fee-based arrangements for crude oil services and produced and flowback water services provided to non-affiliated customers.
- •Product sales - Oasis Petroleum. We record product sales from Oasis Petroleum for the sale of crude oil, residue gas and NGLs to certain subsidiaries of Oasis Petroleum, which we generate from purchase agreements with third parties. We also record product sales from Oasis Petroleum for the distribution of freshwater to Oasis Petroleum.