EUR 850.00 For Business Accounts Only

Morningstar | Oasis Leaves Full -Year Guidance and Budget Unchanged After 1Q. See Updated Analyst Note from 08 May 2019

Oasis remains on track to hit its 2019 production and capital targets with one quarter now in the bag, and there is no change to our fair value or no-moat rating.

The firm delivered production of 91.7 mboe/d in the first quarter, which was 4% higher sequentially and 19% higher year over year. The firm’s financial results were mixed, with adjusted EBITDA and adjusted earnings per share coming in at $269 million and negative $0.02, respectively (consensus estimates were $236 million and $0.04). On the revenue side, realized prices were negatively impacted by declining commodity benchmarks but basis differentials improved markedly, owing to the utilization of the Dakota Access Pipeline to ship Bakken crude to the Gulf Coast. The firmwide average discount to West Texas Intermediate shrank to $1.30 per barrel from almost $7 in the prior period, although the benefit was partially offset by an $0.80/bbl increase in marketing costs.

The improved differentials and incremental marketing costs are both expected to persist through 2019, according to updated guidance from management. The outlook for Delaware Basin well costs has also improved, with well costs now averaging $10.1 million, down from $11 million in the previous quarter. However, there was minimal impact on our valuation as we were already modeling a substantial reduction to bring Oasis closer to its Delaware Basin peers (who typically pay around $1.1 million per 1,000 lateral feet, consistent with Oasis’ updated cost estimate).