EUR 850.00 For Business Accounts Only

Morningstar | Oasis Primarily Operates in the North Dakota Bakken

Oasis Petroleum is a shale producer with assets in North Dakota and Texas. The company has been active in the Williston Basin since its inception in 2007, and this area is still its primary focus. Initial production rates are very impressive in the "core" portion of its acreage, which breaks even under $40 per barrel WTI and contains enough potential drilling locations to support at least 10 years of further drilling. The remainder offers more-pedestrian economics.Concurrently, the company is ramping up its operations in the Delaware Basin, where it holds 23,000 net acres (we wouldn't rule out bolt-on deals to expand this footprint). The area contains multiple stacked reservoir targets, and could contain as many as 50 locations per section in the best-case scenario. However, management is planning for 700 locations for now, which equates to about 18 locations per square mile (which is consistent with what other operators estimate, and is backed up by numerous spacing tests). The firm's track record in the basin is limited so far, but its first batch of Wolfcamp A and B wells are on track to yield about 1 mmboe cumulatively (which is consistent with a WTI break-even of about $40/bbl). There is ample scope for further efficiency gains as the firm transitions from single well testing to full-field development with multi-well pads.Vertical integration is one of the factors separating Oasis from its peers. The company holds a controlling stake in Oasis Midstream Partners (which holds water handling and gas gathering and processing assets) and it also has a well service segment (which supplies equipment and services for completions, such as frac spreads). Ownership of these complementary businesses ensures service availability for the E&P division and generates additional revenue from third-party sales. The services business also insulates the company from rising service costs, since independent contractors are likely to seek higher margins in a stronger oil price environment.