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Why Did Oasis Petroleum Stock Fall after Its 1Q17 Earnings?

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Oasis Petroleum’s stock performance

After Oasis Petroleum (OAS) posted its 1Q17 earnings on May 8, its stock fell ~5% the next day. Its stock has fallen ~27% since the beginning of 2017. In this part of our series, we’ll analyze Oasis Petroleum’s stock performance with respect to movements in the broader industry and the broader market.

As the above graph shows, Oasis Petroleum’s performance was driven mainly by WTI (West Texas Intermediate) crude oil prices (UCO) and natural gas prices (UNG). The prices have also been driving the Energy Select Sector SPDR ETF (XLE).

Since the beginning of the year, Oasis Petroleum stock has mostly underperformed XLE. XLE fell ~12% at the end of the period under discussion.

Oasis Petroleum stock also failed to offer higher returns compared to crude oil at the end of the period. It also underperformed the SPDR S&P 500 ETF (SPY) (SPX-INDEX). SPY has risen 6.3% since the beginning of the year. The energy sector makes up ~7% of the S&P 500 ETF.

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Oasis Petroleum stock fell ~5% on May 9 despite its better-than-expected 1Q17 earnings. A 1.2% fall in crude oil prices on May 9 likely pulled the company’s stock lower. As we saw in the previous part of this series, much of Oasis Petroleum’s production is comprised of oil. So, a decrease in oil prices could be perceived as highly bearish by an investor in Oasis Petroleum stock.

In the next part of this series, we’ll discuss Oasis Petroleum’s implied volatility.

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