Why Is Oasis Petroleum Inc. (OAS) Up 11.3% Since Last Earnings Report?

Zacks Equity Research

June 3, 2022 5 min read

It has been about a month since the last earnings report for Oasis Petroleum Inc. (OAS). Shares have added about 11.3% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Oasis Petroleum Inc. due for a pullback? 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 Q1 Earnings Beat Estimate

Oasis Petroleum reported first-quarter 2022 adjusted earnings per share (EPS) of $8.32, beating the Zacks Consensus Estimate of $7.13 and also improving from the quarter-ago profit of $4.34, due to higher price realization as a result of the surging energy prices in the reported quarter.

Oasis Petroleum’s total operating revenues of $653 million beat the Zacks Consensus Estimate of $372 million. The top line also improved from the sequential quarter’s figure of $522 million. This can be attributed to higher commodity prices and the overall bullishness of the energy sector.

Among the other encouraging metrics of Oasis Petroleum, adjusted EBITDA and adjusted free cash flow totaled $287.4 million and $217.5 million, respectively.

Oasis Petroleum announced that it would pay its base dividend of 58.5 cents ($2.34 per share annualized) on Jun 1, 2022 to shareholders of record as of May 20, 2022.

In good news for investors, Oasis Petroleum declared a variable dividend of $2.94 per share to shareholders of record as of Jun 1, 2022, payable on Jun 15, 2022. The base dividend and the variable dividend are in line with OAS' previously announced proposal to return $70 million of capital to shareholders per quarter.

Production & Price Realizations

The total production (comprising 64.6% oil) jumped 21.7% from the quarter-ago level to 69.606 oil-equivalent barrels per day (MBOE/d). While the oil volume came in at 44.975 thousand barrels per day (up 22.2% from the last year’s quarter), natural gas totaled 147.783 thousand cubic feet per day (up 20.7% year over year).

The average realized crude oil price in the first quarter was $95.34 per barrel, reflecting a 70% increase from the prior year’s first-quarter realization of $56.09. The average realized natural gas price was $8.09 per thousand cubic feet, increasing about 49.5% from the year-ago quarter’s figure.

Total Expenses

Total operating expenses in the quarter ascended to $362.6 million from the year-ago quarter’s $226 million. This increase in expenses was mainly due to a rise in lease operating expenses, depreciation and purchased oil and gas expenses, which were up 23.5%, 45.2% and 104.7%, respectively, from the corresponding year-ago quarter’s levels. Oasis Petroleum’s lease operating expenses also rose to $10.07 per barrel of oil equivalent (Boe) from the quarter-ago figure of $9.63 per Boe.

Financial Position

Capital spending totaled $62.9 million in the quarter. Oasis Petroleum recorded $265.6 million in the net cash flow provided by operations.

As of Mar 31, this Bakken-focused operator had $410.2 million in cash and cash equivalents. The company had long-term debt of $393.9 million, representing a debt-to-capitalization of about 21.4%.

Guidance

Oasis Petroleum declared that it is expecting to close the pending merger with Whiting sometime in the third quarter of 2022.

Oasis Petroleum’s guidance for the year remains unchanged since February. For 2022, Oasis Petroleum anticipates its E&P Capex estimate of around $295 million. OAS expects 2022 EBITDA of $860 million, with a free cash flow of more than $500 million.

No change has been made in the production guidance for the year, which remains in the band of 65-70 MBOE/d for the entire year.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision.

The consensus estimate has shifted -18.23% due to these changes.

VGM Scores

Currently, Oasis Petroleum Inc. has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. 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 #1 (Strong Buy). We expect an above average return from the stock in the next few months.

Performance of an Industry Player

Oasis Petroleum Inc. belongs to the Zacks Oil and Gas - Exploration and Production - United States industry. Another stock from the same industry, Range Resources (RRC), has gained 14% over the past month. More than a month has passed since the company reported results for the quarter ended March 2022.

Range Resources reported revenues of $986.66 million in the last reported quarter, representing a year-over-year change of +57.6%. EPS of $1.18 for the same period compares with $0.30 a year ago.

Range Resources is expected to post earnings of $1.07 per share for the current quarter, representing a year-over-year change of +345.8%. Over the last 30 days, the Zacks Consensus Estimate has changed +5.2%.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Range Resources. Also, the stock has a VGM Score of A.

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