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Understanding Oasis Petroleum’s Net Debt Evolution

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Oasis Petroleum’s net debt-to-earnings

Oasis Petroleum’s (OAS) net-debt-to-adjusted-EBITDA (earnings before interest, tax, depreciation, and amortization) multiple rose steadily between 1Q15 and 4Q16, and then dropped in 1Q17. In 1Q17, Oasis’s net-debt-to-adjusted-EBITDA multiple was ~5.1x.

As the graph above shows, Oasis’s net debt was mostly steady between 1Q15 and 3Q15, before it started dropping. However, Oasis’s net debt has increased recently. In 1Q17, Oasis’s net debt dropped on a sequential and YoY (year-over-year) basis. However, its 1Q17 trailing-12-month adjusted EBITDA rose sequentially and YoY, explaining the fall in Oasis’s net-debt-to-adjusted-EBITDA multiple between 4Q16 and 1Q17.

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Oasis’s 1Q17 net debt was ~$2.29 billion, compared with ~$2.2 billion in 1Q16 and ~$2.28 billion in 4Q16. Its trailing-12-month adjusted EBITDA in 1Q17 were ~$450 million, compared with ~$381 million in 1Q16 and $352 million in 4Q16. In comparison, peers Whiting Petroleum (WLL), Newfield Exploration (NFX), and Continental Resources (CLR) had net-debt-to-adjusted-EBITDA multiples of 4x, 2.3x, and 4.2x, respectively. Continental Resources, Whiting Petroleum, and Newfield Exploration make up ~4% of the First Trust Energy AlphaDEX ETF (FXN).

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