Oasis Petroleum (OAS) Q2 Results - August 7

[dan_s]

Stifel: Oasis Petroleum Inc. (OAS, $3.83, Buy; Target $10.00) by Derrick Whitfield

Expect stock to underperform on negative capital efficiency optics

We view the release as negative.
The positives include i) a slight EBITDA beat (1.3% above consensus) supported by higher than expected oil realizations and ii) improved oil differential guidance.
The negatives include i) a material capex miss (35.2% above consensus) ii) a miss on total equivalent and oil production (4.7% / 4.0% below consensus, respectively) due to gas processing outages in the Williston, and iii) a 1.0% decrease to 2019 total equivalent production guidance with a 12.9% increase to 2019 capex guidance.

We caution investors to note that $50mm of the $80mm increase in Upstream capex was contemplated in its 2019 corporate planning process.
Net-net, we expect a negative reaction tomorrow as the optics project deteriorating capital efficiency. However, we believe management's commentary on OMP could soften the price action.