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Why Is Oasis Petroleum Inc. (OAS) Down 1% Since Last Earnings Report?

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A month has gone by since the last earnings report for Oasis Petroleum Inc. (OAS). Shares have lost about 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 Petroleum Inc. due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Oasis Petroleum Q2 Earnings and Revenues Beat Estimates

Oasis Petroleum reported second-quarter 2021 adjusted earnings per share of $2.76, comfortably beating the Zacks Consensus Estimate of $2.29 and improving from the year-ago profit of 23 cents. The outperformance can be attributed to higher commodity prices and better-than-expected production.

The company’s total operating revenues of $393.1 million beat the Zacks Consensus Estimate of $271 million. The top line also more than doubled from the year-ago figure of $166.4 million.

Among other encouraging metrics for Oasis Petroleum, adjusted EBITDA, and exploration and production (E&P) free cash flow totaled $107 million and $54.8 million, respectively. The company, which currently pays a quarterly dividend of 37.5 cents ($1.50 annualized), reiterated its plan to hike it to 50 cents, following the completion of the previously announced Williston Basin acquisition.

Production & Price Realizations

Total production (comprising 64% oil) edged up 0.3% from the year-ago level to 54.271 thousand oil-equivalent barrels per day (MBOE/d) and surpassed the Zacks Consensus Estimate of 53.3 MBOE/d. While oil volume came in at 34.668 thousand barrels per day (down 4.8% year over year), natural gas totaled 117,617 thousand cubic feet per day (up 10.9%).

The average realized crude oil price during the second quarter was $65.52 per barrel, reflecting a 168% increase from the prior-year realization of $24.45. The average realized natural gas price was $4.53 per thousand cubic feet, surging 243.2% from the year-earlier period.

Total Expenses

Total operating expenses in the quarter climbed to $240.5 million from the year-ago quarter’s $176.5 million. This was mainly on account of a jump in midstream outlays, and purchased oil and gas expenses, which were up 188.5% and 157.5%, respectively, from the corresponding quarter of last year. The company’s lease operating expenses also rose to $10.21 per barrel of oil equivalent (Boe) from the year-ago figure of $6.01 per Boe.

Financial Position

Capital spending totaled $53 million in the quarter. Oasis Petroleum recorded $160 million in net cash flow used in operations.

As of Jun 30, this Bakken-focused operator had $388.9 million in cash and cash equivalents. The company had long-term debt of $1 billion, representing a debt-to-capitalization of 50.5%.

Guidance

For the third and fourth quarters of 2021, Oasis Petroleum estimates its E&P capex in the $50-$60 and $65-$65 million range, respectively. Oasis Petroleum revised its current-year E&P capex outlook downward from its previous guidance, and now projects it in the $200-$215 million band.

Further, management has given its production guidance for the next two quarters of 2021. They stand at 49-52 MBOE/d for the third quarter and 74.5-77.5 MBOE/d for the fourth quarter.



 

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 -34.76% due to these changes.

VGM Scores

Currently, Oasis Petroleum Inc. has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Oasis Petroleum Inc. has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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