Oasis: Production Guidance and Key Management Strategies

Oasis Petroleum Stock Still Rallying: What to Expect for 1Q16?

(Continued from Prior Part)

OAS’s 2016 production guidance

For 2016, Oasis Petroleum (OAS) expects its annual production to be in the range of 46,000–49,000 boepd ( barrels of oil equivalent per day ). In fiscal 2015, OAS reported a total production of 50,477 boepd. This represents a ~11% year-over-year growth from 2014.

OAS’s cost efficiencies

Oasis Petroleum has significantly cut back on its costs in a bid to improve its margins. LOE (lease operating expenses) fell by 23% between 2014 and 2015. In its 4Q15 earnings release, the company stated that “Oasis was free cash flow positive in 2015, as we lowered drilling and completion capital by 70% and LOE per Boe by 23% year over year. We reduced our high intensity well costs by about 30% from the fourth quarter of 2014 to the second half of 2015.”

OAS’s capex

Due to momentum in its operating cost reductions, OAS expects to spend $200 million in drilling and completions capex in 2016, against ~$407 million in 2015.

Many upstream companies have slashed their 2016 capex in response to low energy prices (USO)(UNG). Anadarko Petroleum (APC), Whiting Petroleum (WLL), and Hess (HES) have announced capex cuts of 50%, 80%, and 40%, respectively, from 2015 levels. Combined, these companies make up ~8% of the SPDR S&P Oil & Gas Exploration & Production ETF (XOP).

Continue to Next Part

Browse this series on Market Realist:

• Part 1 - What Can we Expect from Oasis Petroleum’s 1Q16 Earnings?

• Part 3 - Oasis Petroleum’s Stock Rallies with Crude Oil Prices

• Part 4 - Oasis’s Earnings Release Approaches: What Do Analysts Recommend?