OAS

[dan_s]

Oasis Petroleum (OAS) is now on-track for better than 90% year-over-year production growth in 2012.

Highlights for the three months ended March 31, 2012 include:

•Grew average daily production to 17,633 barrels of oil equivalent per day ("Boepd"), a 118% increase over the first quarter of 2011. Daily production increased by 16% compared to the fourth quarter of 2011 and exceeded guidance range of 15,000 to 16,500 Boepd.
•Increased revenue to $138.6 million in the first quarter of 2012, up from $58.7 million in the first quarter of 2011 and $116.9 million in the fourth quarter of 2011, for an increase of 136% and 19%, respectively.
•Grew Adjusted EBITDA to $101.1 million, an increase of $60.0 million over the first quarter of 2011 and a sequential increase of $15.3 million over the fourth quarter of 2011. For a definition of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to net income (loss) and net cash provided by operating activities, see "Non-GAAP Financial Measure" below.
•Increased net income to $16.4 million in the first quarter of 2012, up from a net loss of $6.8 million in the first quarter of 2011 and a net loss of $13.4 million in the fourth quarter of 2011.
"Our team's ability to bring forward incremental activity and increase working interests above plan resulted in production 7% over the top end of our guidance range for the first quarter of 2012. We believe our production will continue to grow in the second quarter of 2012, ranging between 18,000 and 19,500 Boepd," said Thomas B. Nusz, Oasis' Chairman and Chief Executive Officer. "We exited the quarter with momentum, as we continue to improve rig efficiency and frac times. We drove lease operating expenses down to $6.12 per Boe as our infrastructure development efforts deliver on expected cost reductions. Lastly, price differentials for Bakken crude were volatile again in the first quarter of 2012, but Oasis Petroleum Marketing did a great job moving oil and transitioning our takeaway to a mix of about 50% rail and 50% pipeline. Differentials have also improved dramatically from the widest levels experienced in February 2012."

[dan_s]

Sweet 16 Growth Portfolio: An updated Net Income and Cash Flow Forecast model for Oasis Petroleum (OAS) has been posted under the Sweet 16 Tab.

[dan_s]

OAS is a perfect example of why investors need to ignore reported earning per share and focus on cash flow per share. When a company is using the full cost method of accounting and growing production this fast, the EPS are almost worthless.

Mark-to-market adjustments on hedges and other BS GAAP accounting rules really distort quarterly earnings. If oil prices are lower at June 30 than they were at March 31, OAS will book a big gain on its hedges. These rules are very confusing to most investors and IMHO should be a footnote to the financials not something that gets booked each quarter. We can blame these rules on Enron.

Oasis is rapidly growing production, proven reserves, the value its acreage position in the Bakken and cash flows.
CFPS
2010 = $1.68 per share
2011 = $2.27 per share
2012 = $4.48 per share (based on my forecast which is slightly below the First Call CFPS estimate)
2013 = $6.97 per share

8X CFPS is a reasonable price target for a company with this much locked in growth potential. BTW Oasis is currently debt free and they should be self funded by the end of 2013. This is an incredible growth story.

[prince_jake_33]

Dan will you be making a comparison between OAS and KOG thanks bob jacobson

[dan_s]

One of our interns has been assigned the task of updating our profile on KOG. I promise to update my forecast model for it next week, after I get done with all of the Sweet 16 updates.

The problem I had with KOG is that management cannot stop over-promising and under-delivering. They seem to miss guidance each quarter, which tells me they don't have a good handle on what is going on in the field.
KOG has impressive growth and some very attractive leasehold in the Bakken. It is on my list of Top Ten Takeover Targets.