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Oasis (OAS) Down 22.1% Since Last Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for Oasis Petroleum (OAS - Free Report) . Shares have lost about 22.1% in that time frame, underperforming the S&P 500.

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

Oasis Petroleum Reports Q2 Earnings

Oasis Petroleum Inc. delivered adjusted net earnings per share (EPS) of 23 cents, compared to the Zacks Consensus Estimate of a loss of 6 cents and the year-ago earnings of 3 cents a share. The outperformance was attributable to lower lease operating and depreciation expenses.

The company’s total operating revenues of $166.35 million missed the Zacks Consensus Estimate of $245 million on lower-than-expected production and lower commodity price realizations. Precisely, this upstream player’s output of 54.11 thousand oil-equivalent barrels per day (MBOE/d) missed the Zacks Consensus Estimate of 59.14 MBOE/d. Moreover, the top line fell from the year-ago figure of $529.41 million due to weak production.

Production & Price Realizations

Total production (comprising 67.3% oil) declined 36% from the year-ago level to 54.11 MBOE/d. While oil volume came in at 36.4 thousand barrels per day (down 40.5% year over year), natural gas totaled106,104 thousand cubic feet per day (down 23.9%).

The average realized crude oil price during the second quarter was $24.45 per barrel, reflecting a 58.5% decrease from the prior-year realization of $58.87. Moreover, the average realized natural gas price was $1.32 per thousand cubic feet, down 42.4% from the year-earlier period.

Total Expenses

Total operating expenses in the quarter plummeted to $137.7 million from the year-ago quarter’s $425.8 million. This was mainly on account of lowerdepreciation expenses which came in at $33.1 million compared to the year-ago figure of $177.4 million. Moreover, purchased oil and gas expenses of $33.2 million declined from $109.7 million in the corresponding quarter of last year.

The company’s lease operating expenses also declined to $6.01 per barrel of oil equivalent (Boe) from the year-ago figure of $7.32 per Boe.

Financial Position

Capital spending (before acquisitions) totaled $41.5 million in the quarter. Oasis Petroleum recorded $47.9 million in net cash flow used in operations.

As of Jun 30, this Bakken-focused operator had $77.4 million in cash and cash equivalents. The company had long-term debt of $2.76 billion.

Guidance

For the second half of 2020 Oasis Petroleum estimates itsE&P capex in the $60-$75 million range. Oasis Petroleum trimmed its current-year E&P capex outlook by 54-58% from its February 2020 guidance, and now projects it in the $248-$263 million band.

Oasis Petroleum projects its Midstream capex guidance for the second half of this year between $5 million and $10 million. The company further anticipates its 2020 Midstream capex guidance in the range of $36-$40 million with roughly 25% attributable to Oasis.

Further, the company’s third quarter and fourth quarter oil output is anticipated to improve by almost 13% to 40-42 million barrels of oil per day from the second quarter levels. Based on its revised 2020 plan, Oasis Petroleum expects to generate free cash flow.
 

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended upward during the past month. The consensus estimate has shifted 121.02% due to these changes.

VGM Scores

At this time, Oasis has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

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

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. 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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