A month has gone by since the last earnings report for Oasis Petroleum (OAS - Free Report) . Shares have lost about 25.1% 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 the most recent earnings report in order to get a better handle on the important drivers.
Oasis Petroleum Q3 Earnings Miss on Weak Output
Oasis Petroleum 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.
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.
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.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -26.7% due to these changes.
At this time, Oasis has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% 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.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Oasis has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.