Technology

Oasis (OAS) Up 0.7% Since Last Earnings Report: Can It Continue?

A month has gone by since the last earnings report for Oasis Petroleum (OAS). Shares have added about 0.7% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Oasis due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Oasis Petroleum Q4 Earnings Miss on Weak Pricing

Oasis Petroleum reported fourth-quarter loss per share – excluding one-time items – of 2 cents, as against the Zacks Consensus Estimate of 4 cents profit and the year-ago income of 12 cents. The weak results can be attributed to lower realized oil prices.

Oasis Petroleum’s total operating revenues in the fourth quarter amounted to $599.8 million, increasing substantially from $434.9 million a year ago. The top line also surpassed the Zacks Consensus Estimate of $433 million, driven by strong production growth.

The company’s lease operating expenses rose 12.5% to $6.95 per barrels of oil equivalent.

Production & Realized Prices

The production of oil and natural gas averaged 88.3 thousand oil-equivalent barrels per day (MBOE/d) (76% oil), up 20.6% from last year and at the midpoint of the company’s guidance.

Oasis Petroleum’s production for oil was 67.3 thousand barrels per day (MBbl/d), while natural gas output came in at 126,135 thousand cubic feet per day (Mcf/d).

The average realized crude oil price during the fourth quarter was $52.01 per barrel, representing a decrease of 23.9% from the year-ago realization of $68.33. Meanwhile, the average realized natural gas price during the December quarter of 2018 was $4.27 per thousand cubic feet (Mcf), up 14.8% from the year-ago period.

Financial Position

Capital spending (before acquisitions) totaled $303.6 million this quarter. Oasis Petroleum delivered a slightly improving cash flow performance this quarter – a benchmark for the oil and gas industry – with $234.4 million in net cash flow from operations, up from $209.1 million a year ago.

As of Dec 31, 2018, the Bakken-focused operator with a market capitalization of almost $2 billion, had $22.2 million in cash and cash equivalents. The company had long-term debt of $2.7 billion, representing a debt-to-capitalization ratio of 41.1%.

Guidance

Oasis Petroleum expects first quarter output to be essentially flat sequentially, while 2019 production is estimated in the range of 86-91 MBOE/d. The company further said that it will spend 40% less in 2019, expecting capital spending of $540-$560 million (75% Williston, 25% Delaware). Overall, Oasis Petroleum projects 2019 capital spending of $709-$751 million (including $150-$170 million for midstream). The company’s lease operating expense is set to increase from $6.44 per BOE in 2018 to $7-$8 per BOE in 2019.

Proved Reserves

As of year-end 2018, Oasis had 320.5 thousand barrels of oil equivalent equivalent in proved reserves, up 2.7% year over year.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -35.46% due to these changes.

VGM Scores

At this time, Oasis has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Oasis has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.