Oasis Petroleum (OAS) Slips To Loss In Q4, Production Jumps

U.S. energy firm Oasis Petroleum Inc. (NYSE:OAS) 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.

Zacks Rank & Stock Picks

Oasis Petroleum currently retains a Zacks Rank #3 (Hold).

Some better-ranked players in the energy space are Enbridge Inc. (NYSE:ENB) , Archrock, Inc. (NYSE:AROC) and NuStar Energy L.P. (NYSE:NS) . All the companies carry a Zacks Rank #2 (Buy).

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

Enbridge’s earnings beat the Zacks Consensus Estimate in three of the last four quarters, the average positive surprise being 31.8%.

The 2019 Zacks Consensus Estimate for Archrock is 63 cents, representing 31.3% earnings per unit growth over 2018. Next year’s average forecast is 78 cents pointing to another 23.8% growth.

The 2019 Zacks Consensus Estimate for NuStar is $1.10, representing 64.2% earnings per unit growth over 2018. Next year’s average forecast is $1.32 pointing to another 20.3% growth.

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