Can Oasis Petroleum Stock Bounce Back?


Aug. 23 2017, Published 6:17 a.m. ET

Oasis Petroleum stock

Like many of its upstream peers, Oasis Petroleum stock has fallen significantly since the beginning of 2017. Oasis Petroleum stock has fallen 53% year-to-date.

The Energy Select Sector SPDR ETF (XLE) has returned -18% during the same period. The S&P 500 ETF (SPY), which represents the broader market, returned ~7.8%.

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What’s happening with Oasis Petroleum stock?

As you can see in the above graph, Oasis Petroleum stock has mostly been mirroring crude oil prices. Crude oil prices have fallen ~7.3% since the beginning of 2017. Natural gas prices have fallen 13% during the same period. While the fall in oil prices seems marginal compared to the fall in Oasis Petroleum stock, because oil makes up more than 77% of Oasis Petroleum’s production mix, any weakness in oil prices has a significant impact on Oasis Petroleum stock.

Oasis Petroleum thinks that its wells will remain “highly economical” even in the current energy price environment. In 2H17, Oasis Petroleum plans to accelerate its completion activity. Investors will watch closely to see how the acceleration could impact Oasis Petroleum’s 2H17 production and its stock.

Oasis Petroleum’s long-term debt at the end of 2Q17 was $2.4 billion—compared to a market cap of $1.7 billion. Higher debt could also be another factor that’s holding down Oasis Petroleum stock this year.

The company’s management spoke about future expectations in its 2Q17 earnings conference call. Management said, “With our gains and capital efficiency, we can now we keep volumes flat or grow nominally within cash flow in a $40 world and deliver attractive growth rates in a $50 world.”

The company also noted that it hedged ~65% of its oil volumes in 2H17. It has hedged ~22,000 barrels of oil per day in 2018.


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