Key Shale Players' Earnings Strong As Production Soars

Several oil and natural gas companies beat estimates Wednesday as they explore new domestic shale plays and use new techniques to boost production at existing sites from Texas to North Dakota.

Oasis Petroleum (OAS) said late Wednesday that Q3 earnings leapt 110% to 80 cents a share, topping estimates of analysts polled by Thomson Reuters by 5 cents. Revenue jumped 65% to $305.5 million, also above forecasts. The oil and natgas company focuses on shale deposits in North Dakota and Montana. In September, it announced a deal to buy 161,000 acres in North Dakota's Williston Basin, which closed Oct. 1.

Oasis has been a pioneer with down spacing in the Bakken. The new technique reduces the space between wells. COO Taylor Reid said in the earnings statement that he expects "to have numerous blocks that will be drilled with four to six wells per horizon drilling into the Middle Bakken and first bench of the Three Forks" in the next year.

Paul Grigel, an analyst at Macquarie Reserach, said down spacing is one of the biggest drivers in the Bakken Basin.

Every Bakken player has been attempting down spacing. Kodiak Oil & Gas (KOG) and others have experimented with it, but Oasis is the first to make such a huge commitment. "They are showing confidence in well results," he said of Oasis' move to build four to six wells per pad.

Shares rose 2% late, but that followed a drop of nearly 2% during Wednesday's regular session.

Meanwhile, Concho Resources (CXO) cited "early success" with horizontal oil drilling in the Midland Basin in Texas. Q3 EPS rose 9% and sales 21%, both beating. Shares rose 2% late after sliding 4% in the regular session.

Continental Resources (CLR), a big Bakken player, said Q3 earnings per share rose 85% excluding various items, easily beating forecasts as production jumped 38%.

Rosetta Resources (ROSE), which operates primarily in south Texas, reported a 33% jump in Q3 EPS to $1.01 late Wednesday, topping estimates by 7 cents. Revenue also rose, beating views as production grew 37% to 50,900 barrels of oil equivalents per day. Output ramped up at its core Eagle Ford assets and from newly acquired Permian Basin assets. Rosetta completed its first operational horizontal well in the Delaware Basin, which is part of the broader Permian.

Smaller U.S. oil companies have been nimble in grabbing acreage in up-and-coming shale areas before energy giants. Royal Dutch Shell (RDSA) is selling its assets in the new Tuscaloosa field in Louisiana, after joining the drilling late. That leaves more room for players like Sanchez Energy (SN), which reports late Thursday.

The fracking boom has also helped suppliers such as U.S. Silica (SLCA). In the past it did most of its business with glass and industrial product makers, but demand has boomed as oil and gas companies use its silica in fracking.

U.S. Silica's EPS rose 16% and sales 25%, both beating Q3 views.

CEO Bryan Shinn said in the release that he was "encouraged by the strong secular demand trends driven by increased drilling efficiencies and overall greater proppant use per well." He said Silica is still on track to double EBITDA by 2016.

U.S. Silica shares rose 3% late after falling 4% ahead of results.

Meanwhile, natural gas giant Chesapeake (CHK) met earnings estimates, but shares fell 7% Wednesday on its weak Q4 production outlook, including a decline in its Eagle Ford oil output.