S&P gives Oasis Midstream, notes B

S&P said it gave B ratings to Oasis Midstream Partners LP and its planned $450 million of senior unsecured notes due 2029. The partnership also plans to reduce its revolving credit facility commitment to $450 million from $575 million.

Oasis Midstream's credit quality is primarily driven by its parent linkage with Oasis Petroleum Inc. (OAS). “We believe that OMP's cash flows are dependent on OAS' drilling schedule. In 2020, OAS accounted for 85% of OMP's revenue, and we expect this customer mix to continue unless Oasis Midstream can attract additional third-party counterparties,” the agency said in a press release.

S&P added, “OAS controls the general partner of OMP and thus has the ability to dictate the financial policy of OMP. As a result, we view OAS' credit quality as weighing on OMP.”

The outlook is stable, reflecting a forecast expectation of regular volumes due to its revenue exposure to its parent, Oasis Petroleum, and as South Nesson volumes start flowing in 2022. “We also expect adjusted debt to EBITDA between 3x and 4x over the next two years,” S&P said.

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