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Oasis (OAS) to Sell Its Midstream Assets to Simplify Structure

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Oasis Petroleum Inc. OAS reported that it entered a contribution and simplification agreement with Oasis Midstream Partners LP OMP, wherein the latter will purchase all remaining interests of Oasis Petroleum in Bobcat DevCo LLC and Beartooth DevCo LLC. Via simplification, the midstream partnership (formed by Oasis Petroleum) will expand its interest in Bobcat DevCo from 35% to 100% and in Beartooth DevCo from 70% to 100%.

The transaction is slated to conclude by the end of this month, contingent upon customary closing conditions. Oasis Petroleum, which recently came out of a pandemic-forced bankruptcy, anticipates $81 million in cash flows from Oasis Midstream limited partner distributions in 2021 after the simplification is completed.

Douglas E. Brooks, Oasis Petroleum’s board chair and CEO, said, "The Simplification increases transparency of Oasis' midstream ownership and highlights significant value within Oasis while improving OMP's scale and competitive positioning. This transaction is a compelling proposition for both Oasis and OMP investors and was unanimously approved by the board of directors of Oasis and the general partner of OMP as well as its conflicts committee. OMP remains a valuable investment for Oasis and we will continue evaluating additional options for further value enhancement."

Further, in an effort to simplify its corporate structure, Oasis Petroleum decided that in exchange for around $510 million ($229 million in cash and 14.8 million Oasis Midstream common units) it will withdraw its incentive-distribution rights under the MLP.

Finally, in addition to its previously announced dividend of $1.50 per share annually, Oasis Petroleum announced that its board of directors approved a new $100-million share-repurchase program. The stock repurchase policy will run out on Dec 31, 2022.

About Oasis Petroleum

Established in 2007, Houston, TX-based Oasis Petroleum is an independent explorer, engaged in acquiring and developing oil and natural gas resources. The company’s asset base primarily focuses on the Bakken shale oil play of the Williston Basin, where it has more than 400,000 net leasehold acres.

Zacks Rank & Key Picks

Oasis Petroleum currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the energy space are Matador Resources Company MTDR and Denbury Inc. DEN, each presently flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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