Houston, TX-based Oasis Petroleum Inc. (OAS) has priced an underwritten public offering of 7,000,000 common shares at $45.15 a piece. The offering, announced Dec 3, is expected to close on Dec 9.
The energy explorer plans to use the net proceeds from this offering – expected to be approximately $314.6 million before the underwriting discount and estimated offering expenses – to pay back the outstanding debt under its credit facility, as well as for corporate purposes.
Oasis Petroleum, which went public in Jun 2010, is an independent exploration and production company engaged in the acquisition, finding, and development of unconventional onshore oil and gas properties. The company’s operations are concentrated primarily in the Williston Basin, consisting of the Bakken and Three Forks formations in North Dakota and Montana.
Having done a stellar job at raising production and adding acreage, analysts are predicting strong earnings growth for Oasis Petroleum over the next couple of years. The 2013 Zacks Consensus Estimate is $3.04, representing 103% earnings per share growth over 2012. Next year’s average forecast is $3.87, corresponding with 27% growth.
However, shares of Oasis Petroleum – currently trading at $45.90 – have already climbed some 40% since the beginning of the year. Therefore, any upside from here may be limited.
As a result, Oasis Petroleum currently retains a Zacks Rank #3 (Hold), implying that it is expected perform in line with the broader U.S. equity market over the next one to three months.
However, some better-ranked domestic upstream energy stocks include SM Energy Co. (SM), Matador Resources Co. (MTDR) and Abraxas Petroleum Corp. (AXAS). All these entities – sporting a Zacks Rank #1 (Strong Buy) – have solid secular growth stories with potential to rise significantly from current levels.