Oasis Petroleum blows out earnings, ramps up production dramatically

After market close yesterday,  Oasis Petroleum Inc. (OAS: 8.60 -0.81%)  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.

 

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