Oasis (OAS) Down 77.7% Since Last Earnings Report: Can It Rebound?

It has been about a month since the last earnings report for Oasis Petroleum (OAS). Shares have lost about 77.7% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Oasis due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Oasis Petroleum Q4 Loss Narrower Than Estimates

Oasis Petroleum Inc. incurred fourth-quarter 2019 adjusted loss per share of 2 cents, narrower than the Zacks Consensus Estimate of a loss of 6 cents. This outperformance can be attributed to higher realized oil prices and reduced year-over-year operating expenses. Meanwhile, the bottom line was essentially flat year over year.

The company’s total operating revenues of $483.9 million surpassed the Zacks Consensus Estimate of $421 million. However, the top line fell from the year-ago figure of $599.7 million owing to lower production.

Production & Price Realizations

Total production (comprising 69% oil) was marginally down from the year-ago level to 87.4 thousand oil-equivalent barrels per day (MBOE/d). While oil volume came in at 60.1 thousand barrels per day (down 10.6% year over year), natural gas totaled 163,762 thousand cubic feet per day (up 30%).

The average realized crude oil price during the fourth quarter was $53.66 per barrel, reflecting a 3.17% increase from the prior-year realization of $52.01. However, the average realized natural gas price was $2.77 per thousand cubic feet, down 35.1% from the year-earlier period.

Total Expenses

Total operating expenses in the quarter declined 11.6% year over year to $459.4 million, primarily owing to lower commodity purchase costs. Notably, purchased oil and gas expenses were $70.9 million compared with $179 million in the corresponding quarter of last year.

The company’s lease operating expenses increased to $7.26 per barrel of oil equivalent (Boe) from the year-ago figure of $6.95 per Boe.

Financial Position

Capital spending (before acquisitions) totaled $134.5 million in the quarter. Oasis Petroleum recorded $252.9 million in net cash flow from operations, higher than the year-ago period’s $234.4 million.

The company posted a positive free cash flow of $75.3 million in the quarter under review.

As of Dec 31, this Bakken-focused operator with a market capitalization of almost $1 billion had $20 million in cash and cash equivalents. The company had long-term debt worth $2.7 billion, representing a debt-to-capitalization ratio of 41.4%.

Guidance

Oasis Petroleum expects 2020 total capital spending within $685-$715 million, indicating a fall from the previous year’s reported figure of $843.4 million. The company’s E&P and other capex view for the full year is expected within $575-$595 million. It further projects its midstream segment’s capex outlook in the band of $110-$120 million.

Full-year output is anticipated within 82.5-86.5 MBOE/d.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision. The consensus estimate has shifted -379.17% due to these changes.

VGM Scores

Currently, Oasis has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Oasis has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.