What Awaits Oasis Midstream (OMP) This Earnings Season?

Oasis Midstream Partners LP OMP is set to release second-quarter 2020 results before the opening bell on Wednesday, Aug 5. The current Zacks Consensus Estimate for the to-be-reported quarter is a profit of 57 cents per unit on revenues of $73 million.

Let’s delve into the factors that might have influenced the diversified energy pipeline partnership’s performance in the June quarter. But it’s worth taking a look at DCP Midstream’s previous-quarter performance first.

Highlights of Q1 Earnings & Surprise History

In the last reported quarter, the Houston, TX-based energy infrastructure provider beat the consensus mark on meaningful cost reductions and strong natural gas processing volumes. Oasis Midstream reported adjusted net income per unit of $1.87, comprehensively beating the Zacks Consensus Estimate of 91 cents. Moreover, the partnership’s quarterly revenues of $106.6 million surpassed the Zacks Consensus Estimate of $105 million.

As far as earnings surprises are concerned, Oasis Midstream beat the Zacks Consensus Estimate in three of the last four quarters and missed in the other, delivering an earnings surprise of 32.11%, on average. This is depicted in the graph below:

Oasis Midstream Partners LP Price and EPS Surprise

Oasis Midstream Partners LP Price and EPS Surprise

Oasis Midstream Partners LP price-eps-surprise | Oasis Midstream Partners LP Quote

Trend in Estimate Revision

The Zacks Consensus Estimate for second-quarter bottom line remained the same in the last seven days. However, the estimated figure indicates 25% deterioration year over year. The Zacks Consensus Estimate for revenues, meanwhile, is $73 million, suggesting a 25.2% decline year over year.

Factors to Consider This Quarter

While pipeline entities like Oasis Midstream have a lower correlation to oil and gas prices compared to its peers, this energy sub-industry hasn’t been immune to the coronavirus-induced downturn. With E&P operators pulling back activities and curtailing production in response to sharply lower commodity pricing and demand, Oasis Midstream faces a potential decline in volumes through its facilities, contributing to expectations for lower profits. As it is, the partnership’s sponsor Oasis Petroleum OAS has shut-in wells and pulled back capital spending in response to the weakness in commodity prices. Investors should know that Oasis Midstream was formed to primarily serve the midstream operations of Oasis Petroleum. Therefore, any production curtailment on the part of Oasis Petroleum will have impacted its second-quarter results.

However, as a counter to these negatives, Oasis Midstream has also done a fairly admirable job at reducing costs. Oasis Midstream’s cash outflows as capital expenditure continue to fall as it reins in spending levels. Apart from significant capital cuts, the partnership should realize sizeable savings from judicious contractor management and optimization of gathering systems. All this is expected to have pushed Oasis Midstream’s second-quarter earnings and cash flows higher.

What Does Our Model Say?

The proven Zacks model does not conclusively show that Oasis Midstream is likely to beat estimates in the second quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates. But that’s not the case here.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, for this company is 0.00%.

Zacks Rank: Oasis Midstream has a Zacks Rank of 3.

Stocks to Consider

While earnings beat looks uncertain for Oasis Midstream, here are some firms from the energy  space you may want to consider on the basis of our model:

USA Compression Partners, LP USAC has an Earnings ESP of +25% and a Zacks Rank #1. The firm is scheduled to release earnings on Aug 4.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Bonanza Creek Energy, Inc. BCEI has an Earnings ESP of +13.66% and is Zacks #1 Ranked. The firm is scheduled to release earnings on Aug 6.

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Oasis Petroleum Inc. (OAS): Free Stock Analysis Report
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Bonanza Creek Energy, Inc. (BCEI): Free Stock Analysis Report
Oasis Midstream Partners LP (OMP): Free Stock Analysis Report
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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.

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