Oasis Petroleum beats on earnings, could be an acquisition target

Posted by bakken

Oasis Petroleum Inc. (NYSE: OAS) announced financial and operational results for the quarter ended September 30, 2011 yesterday after the market closed.  In the quarter ending on September 30, 2011,  OAS grew average daily production to 11,583 barrels of oil equivalent per day (“Boepd”), a 110% increase over the third quarter of 2010. Daily production increased by 47% compared to the second quarter of 2011.  Increased Adjusted EBITDA to $62.9 million, an increase of $40.9 million over the third quarter of 2010 and a sequential increase of $18.4 million over the second quarter of 2011.    Thomas B. Nusz, Oasis’ Chairman and Chief Executive Officer stated

“Our multi-year inventory of oil drilling locations in the Williston Basin provides us with strong visible growth potential. Consistent with our plan, we just added our eighth and ninth operated rigs.”

Total revenue for the third quarter of 2011 was $87.6 million compared to $33.0 million for the third quarter of 2010, an increase of 166%. Sequential quarter-over-quarter revenue growth was $20.4 million, or 30%.   Lease operating expenses (“LOE”) increased $6.6 million to $9.8 million for the third quarter 2011 compared to the third quarter 2010 and increased by $3.6 million in the third quarter 2011 compared to the second quarter 2011.     With the latest earning report,  the forward 2012 PE for OASIS (OAS: 26.35 +6.81%) looks to be under 15.   This could be an attractive aquisition target with 300,000 plus acres in the Bakken region.   In an earlier Bloomberg report, Among companies drilling for Bakken shale oil, Oasis and Whiting now offer the greatest value per acre, according to data compiled by Bloomberg. Houston-based Oasis controls 303,000 net acres in the Bakken and has an enterprise value, or the sum of its equity and net debt, of about $2.87 billion.   Using Statoil’s deal offer of $12,082 per acre for Brigham, shares of Oasis and Whiting could now be worth at least 20 percent more in an acquisition, the data show.      Oasis is a likely takeover candidate because it has properties close to Brigham’s fields and is probably open to selling itself, Pritchard Capital’s Berman said.

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Inside Brigham’s reported earnings loss

Posted by bakkenexpert

 The following article was contributed by one of our readers, M. Klotz.  

Be careful with what you hear as the press notes Brigham’s 2009 annual report on 2/25/2010. Net income before income tax for 2009 is being reported as a loss of $123.2 million. However if you dial back to Q1 ‘09, you will remember that accounting rules required a write down of $114.8 million because the discounted present value of “Proved Reserves” was less than the capitalized cost of oil and gas properties at that time. This calculation is required to be based on the realizable price of Oil/Gas at the end of Q1 ‘09. The realizable price at that date was substantially less than today. Additionally, since Q1 ‘09, Brigham’s proved reserves have increased substantially as Bakken has de-risked substantial acreage. Unfortunately, rules do not permit reinstatement of an impairment such as this once made. While this accounting rule substantially reduces 2009 net income, there is a positive carry forward impact of this write-down. The foot-notes report that this write down reduced the rate of depletion by $18.2 million ($.18 per share) for 2009. In future years this would imply similar gifts to reported net income because the expense has already been absorbed. Other oil and gas players likely have similar stories, although they may not be as extreme as Brigham. As Washington focuses on places to create new revenue sources, they are bound to look soon to oil and gas net income and return to some form of Jimmy Carter’s Windfall Profits taxes. This $.18 per share is not in fact income but recovery of premature losses caused by write-down of assets due in large part to a temporary low commodity price.

A sixth month chart of BEXP is below,  the stock has support at its 50 day MA of 14.28.  In pre market, BEXP was up over 3% but is down in early market trading with the rest of market due to poor uemployment data that came out before the trading session.

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