Oasis Petroleum (OAS & OMP) Update by Stifel - June 19

[dan_s]

Oasis Petroleum Inc. (OAS, $5.27, Buy; Target $14.00) - by Derrick Whitfield at Stifel

A fundamentally sound value play with exposure to several value enhancing events. - Last week, we hosted Richard Robuck (SVP Finance and Treasurer) in London for a day of investor meetings. The reception was generally positive as management outlined its plan to remain capital disciplined, its important operational catalysts for 2019, and its receptiveness to more progressive long-term, shareholder-friendly initiatives.

In short, we believe 2H19 could be an inflection point for the stock as Bakken well performance is set to improve in 2019 and as long-term shareholder friendly initiatives are potentially advanced. Of greatest importance, we believe the company's Midstream business offers significant value enhancing optionality.

Assuming a divestiture, the proceeds could be used to materially lower the company's net debt and strengthen its growth and FCF profile. Alternatively, OAS could retain the assets and de-lever through the FCF profile of the Midstream business over time. In either scenario, we believe OAS deserves value recognition for the asset.