Summary
- Oasis is a $1.3 billion market cap company most of whose production (93%) is in the Bakken (North Dakota).
- In the second quarter, the company produced 84,500 BOE/D, of which a healthy 72.5% was oil.
- With a 50% liability-to-asset ratio and negative cash flow, investors appear to be waiting for better results. However, the company expects to become free cash flow positive in 2019.
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Oasis Petroleum (OAS) appears to have been unduly punished for outspending cash flow. However, with the expectation of becoming cash flow positive in the second half of the year, a reserve value that far outweighs its market capitalization, and other indications of a bargain, energy investors looking for capital appreciation should consider this Bakken-primary company, particularly as it delivers on oil-weighted production. Additionally, it gains some operational heft via its majority interest in a midstream partnership.
Note that its liability-to-asset ratio is 50%. As of mid-August, shorted shares were 19% of floated shares. The company’s presence in the Delaware is fairly miniscule, and as a consequence, it risks overspending there.
The company does not pay a dividend.
Throughout the report I will describe the producing areas as Bakken - some also use Williston - and Delaware or Permian.
