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Oasis Petroleum shares rise on analyst upgrade

LOS ANGELES (AP) -- Shares of Oasis Petroleum Inc. got a lift Friday, a day after the oil and gas company announced several land acquisition deals that will help boost production in the Williston Basin of North Dakota.

A Deutsche Bank analyst raised his rating on the company's shares to a "Buy," while several others raised their price target on the stock.

THE SPARK: The company agreed to pay $1.52 billion to acquire 161,000 acres of land in four separate deals. The move will boost its holdings in the Williston Basin by nearly 50 percent to 492,000 acres. Recent production on the total acreage acquired in the deals is equal to about 43,000 barrels of oil per day.

THE BIG PICTURE: Oasis, based in Houston, is an independent oil and gas producer with operations in North Dakota and Montana. The company currently operates 11 rigs in the Williston Basin. The company expects to be running as many as 16 by the end of next year.

THE ANALYSIS: In a research note Friday, Deutsche Bank analyst Ryan Todd said that acquisition amounts to a double victory for Oasis. He noted that, in addition to significantly boosting the company's land holdings, it reduces or removes the risk of having to expand outside the Williston Basin.

Todd raised his rating on the stock to "Buy" from "Hold" and increased his target price on the shares to $55 from $45.

In a separate note, a group of KeyBanc analysts said they believe there isn't any merit now to concerns that Oasis doesn't have ample quality holdings. They also estimated that the company now has about 11 years of land inventory.

The KeyBanc analysts reiterated their "Buy" rating on Oasis shares and raised their price target on the stock to $51 from $47.

SHARE ACTION: Up $1.47, or 3.5 percent, to $43.35 in afternoon trading. The stock is up 36 percent this year.