In a June 26 research note, analyst John Freeman with Raymond James reported that Oasis Petroleum Inc. (OAS:NYSE) signed agreements to sell to an undisclosed buyer 65,000 noncore net acres in the Bakken's Williston Basin and production of about 4,400 barrels of oil equivalent per day (boe/d) for $283 million.
The land that Oasis is offloading in this transaction is composed of "acreage located in the Foreman Butte area in Southwest McKenzie and nonoperated acreage," Freeman described. Raymond James estimated that with the current arrangement, the sale price of the company's undeveloped property is about $1,500 an acre.
This recently announced deal brings the company closer to its goal of raising around $500 million through the divestiture of about 200,000 net acres and production of 80,000–10,000 boe/d. The money generated is earmarked for payments toward Oasis' 2017 acquisition of Forge Energy.
"Oasis managed to realize over 50% of its targeted divestiture proceeds while only selling 33% of its earmarked noncore acreage," Freeman pointed out. "While not necessarily apples to apples, as most of remaining marketed acreage is likely third tier, we believe this puts Oasis in a good position to meet its divestiture target." Currently, the company is marketing the additional assets it aims to sell.
Freeman concluded that "while largely expected, proceeds from the first portion of Oasis' planned noncore asset divestiture program appear to have come in modestly above expectations, giving us confidence that the program will be completed successfully."
Raymond James has a Strong Buy on Oasis, whose stock is trading today at around $13.21 per share.
Want to read more Energy Report articles like this? Sign up for our free e-newsletter, and you'll learn when new articles have been published. To see a list of recent articles and interviews with industry analysts and commentators, visit our Streetwise Interviews page.
1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article, until one week after the publication of the interview or article.
Disclosures from Raymond James, Oasis Petroleum Inc., June 26, 2018
Analyst Compensation: Equity research analysts and associates at Raymond James are compensated on a salary and bonus system. Several factors enter into the compensation determination for an analyst, including i) research quality and overall productivity, including success in rating stocks on an absolute basis and relative to the local exchange composite Index and/or a sector index, ii) recognition from institutional investors, iii) support effectiveness to the institutional and retail sales forces and traders, iv) commissions generated in stocks under coverage that are attributable to the analyst's efforts, v) net revenues of the overall Equity Capital Markets Group, and vi) compensation levels for analysts at competing investment dealers.
The views expressed in this report accurately reflect the personal views of the analyst(s) covering the subject securities. No part of said person's compensation was, is, or will be directly or indirectly related to the specific recommendations or views contained in this research report. In addition, said analyst has not received compensation from any subject company in the last 12 months.
RAYMOND JAMES RELATIONSHIP DISCLOSURES
Raymond James Ltd. or its affiliates expects to receive or intends to seek compensation for investment banking services from all companies under research coverage within the next three months.
Raymond James & Associates makes a market in shares of OAS.