Bakken Weekly Roundup

In the last few days,  two of the stocks we have profiled recently have had some positive press.   Oasis Petroleum (OAS: 8.595 -0.865%) had a breakout on Friday hitting $30 for the first time in almost 3 months.   Per OptionMonster, OAS rose 3.62 percent to $29.80, with more of those gains coming late in the session after the options traded. This indicates that it was the work of one or more large institutional investors building a position in the company, which develops shale-energy resources in Montana and North Dakota.   In looking at the chart below,  OAS has long term support around $24 and short term support around $28 as it has moved above its 200 MA.    Oasis has a forward PE of about 13 and still could be a nice addition to a larger O&G player in the region

 

In other news,  US Silica got a much needed upgrade to a Buy rating from BB&T capital markets this morning.   As shown below, the stock has shown good support at $10 and has some resistance around $10.90.   The stock appears due for a breakout after a dismal performance since its IPO a few months ago.   Recent earnings were aligned with expectations and the stock still sports a forward PE below 6.

Until Next Time,  Keep Drillin

 

Oasis Petroleum blows out earnings, ramps up production dramatically

After market close yesterday,  Oasis Petroleum Inc. (OAS: 8.595 -0.865%)  announced financial results for the quarter ended June 30, 2012.   Oasis reported earnings of  $0.82 per share and increased net income to $76.0 million in the second quarter of 2012, up from $33.3 million in the second quarter of 2011 and $16.4 million in the first quarter of 2012, for an increase of 128% and 363%, respectively.     The reported EPS number trounced the high analyst estimate for the quarter which was $0.43 per share.  Oasis also increased average daily production to 20,353 barrels of oil equivalent per day (“Boepd”), a 158% increase over the second quarter of 2011.  In addition,  average daily production increased by 15% compared to the first quarter of 2012 and exceeded guidance range of 18,000 to 19,500 Boepd.     Average daily production by project area is listed in the following table:

Average Daily Production for the Quarter Ended (Boepd):
Project Area Jun 30, 2012 Mar 31, 2012 Change % Change
West Williston 13,715 12,131 1,584 13%
East Nesson 4,494 3,541 953 27%
Sanish 2,144 1,961 183 9%
Total Company 20,353 17,633 2,720 15%

The numbers bode well for Oasis outlook as well. Average daily production for the second quarter of 2012 was 20,353 Boepd, an increase of 158% as compared to 7,893 Boepd in the second quarter of 2011. Sequential quarter-over-quarter average daily production increased 2,720 Boepd, or 15%. In the second quarter of 2012, 91% of production was from oil.  More importantly,  the company raised the outlook for Q3 to 22,000 to 24,000 Boepd.   In early morning trading the stock was up more than 10% and could easily test $32 in the next week based on upward guidance.    The year over year eps growth of 40+% and forward PE on the stock is currently around 10 which makes it an attractive target for acquisition.

 

US Silica posts solid earnings, looks towards the future

Yesterday,  US Silica (SLCA: 28.11 +1.08%) posted solid earnings of $0.36 per share with the company reporting revenue growth of 41.2% to $104.6 million in the quarter.   Both top line and bottom line were  better than expected, but revenue guidance was slightly below expectations. The company expects that adjusted EBITDA would be $142 million-$150 million in line with previous guidance, so the earnings estimates should be kept intact for the next quarters.        The stock responded favorably jumping 10% on the day.

 

The forward PE on this stock is still extremely low compared to its peers and was not affected by the same product issues  (oversupply of resin coated proppant) that plagued Carbo Ceramics (CRR: 6.58 -3.24%) in its recent quarter.    We still continue to believe US Silica will pay off handsomely for investors who are holding for the long term.