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Oasis Petroleum (OAS) Q3 Earnings Miss Estimates, Rise Y/Y

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U.S. energy firm Oasis Petroleum Inc. (OAS - Free Report) reported third-quarter earnings per share – excluding one-time items – of 8 cents, lagging the Zacks Consensus Estimate of 12 cents. The weaker-than-expected results can be attributed to lower-than-anticipated production volumes. Precisely, output in the quarter under review came in at 85.4 thousand oil-equivalent barrels per day (MBOE/d), missing the Zacks Consensus Estimate of 85.9 MBOE/d.  

However, the bottom line was significantly higher than the year-earlier quarter’s break-even earnings on the back of higher realized oil prices.

Oasis Petroleum’s total operating revenues in the third quarter amounted to $546.4 million, increasing substantially from $304.7 million a year ago. The top line also surpassed the Zacks Consensus Estimate of $469 million.

Oasis Petroleum Inc. Price, Consensus and EPS Surprise


Oasis Petroleum Inc. Price, Consensus and EPS Surprise | Oasis Petroleum Inc. Quote

Production & Realized Prices

The production of oil and natural gas averaged 85.4 MBOE/d (77% oil), up 29.1% from last year. Oasis Petroleum’s production for oil was 65.9 thousand barrels per day (MBbl/d), while natural gas output came in at 117,182 thousand cubic feet per day (Mcf/d).

The average realized crude oil price during the third quarter was $68.07 per barrel, representing an increase of 46.9% from the year-ago realization of $46.35. Meanwhile, the average realized natural gas price during the September quarter of 2018 was $3.72 per thousand cubic feet (Mcf), up 6.3% from the year-ago period.

Financial Position

Capital spending totaled $372.3 million this quarter. Importantly, Oasis Petroleum delivered a good cash flow performance this quarter – a benchmark for the oil and gas industry – with $230 million in net cash flow from operations, surging from $88.9 million a year ago.

As of Sep 30, 2018, the Bakken-focused operator with a market capitalization of more than $3 billion, had $16.9 million in cash and cash equivalents. The company had long-term debt of $2.6 billion, representing a debt-to-capitalization ratio of 41.9%.

Updated 2018 Guidance

Oasis Petroleum cut fourth quarter production guidance range to 87.5–90 MBOE/d from 91 MBOE/d – 94 MBOE/d previously, prompted by delay in the planned start-up of its second gas plant. However, the company is maintaining its 2018 exit rate of 91–94 MBOE/d and grow exit rate production (from the fourth quarter of 2017 to the fourth quarter of 2018) by around 15%. Meanwhile, Oasis Petroleum’s guidance on capital expenditure for the full year remains intact at $900 – $930 million.

Zacks Rank & Stock Picks

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

Some better-ranked players in the upstream space are Bonanza Creek Energy, Inc. (BCEI - Free Report) , Magnolia Oil & Gas Corporation (MGY - Free Report) and Murphy Oil Corporation (MUR - Free Report) . Bonanza Creek Energy carries a Zacks Rank #1 (Strong Buy), while Magnolia Oil & Gas and Murphy Oil have a Zacks Rank #2 (Buy).

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

Bonanza Creek’s earnings beat the Zacks Consensus Estimate in three of the last four quarters, the average positive surprise being 74.9%.

Murphy Oil’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average positive surprise being 96.5%.

Meanwhile, over 30 days, Magnolia Oil & Gas has seen the Zacks Consensus Estimate for 2018 and 2019 increase 19.1% and 8.8%, to $1.37 and $1.74 per share, respectively.

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