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2019 Game Plan for Texas Oil & Gas Firm 'Remains on Track'
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A Raymond James report discussed what to expect, operationally and financially, from this energy company next year.

John Freeman, a Raymond James analyst, reported that Oasis Petroleum Inc. (OAS:NYSE) "delivered an in line Q3/18 despite temporary issues hampering gas production" and the company's "2019 game plan remains on track."

Freeman reviewed production, capex and differentials, looking forward. Despite an anticipated Q4/18 production miss, the longer-term outlook for Oasis remains unchanged, he indicated. The company still expects its exit rate production to increase by about 25% in 2018 and 15% in 2019.

Due to rescheduled well completions, Oasis now expects Q4/18 production of 87.590 thousand barrels of oil equivalent per day (87.590 Mboe/d) versus its prior guidance of 9194 Mboe/d, which the company maintains. The revised rate is below Raymond James' forecast of 91.792.2 Mboe/d.

Also noteworthy, Freeman wrote, is it looks like Oasis will exceed expected completions in 2018 and 2019. With a fifth rig added at year-end 2018 in the Bakken and a third rig added in mid-2019 in the Delaware, the company should achieve 1520 completions in 2018 versus the expected eight and surpass the 110 planned for 2019.

To achieve all of these, the required capital spend would be more than roughly $1 billion ($1B), Freeman pointed out. Additionally, pipeline infrastructure in the Delaware should need about $150200 million ($150200M). Offsetting these costs would be capex on the Williston midstream, which is expected to be about 40% lower year over year, at roughly $180M. "All in, we estimate 2019 capex at about $1.4B, which includes projected midstream spending and anticipated Delaware buildout," Freeman noted.

As for differentials, guidance on them remains the same despite some expected changes at Williston. As a result of higher refinery maintenance costs, differentials will likely rise in December from October's $3 per barrel rate. As for 2019 though, Freeman indicated, "rail expansion and normalized refinery demand should help keep differentials in check."

About the company's overall efforts, Freeman concluded, "Oasis continues to make good progress proving out its acreage, and we look forward to future tests that could help to further expand the core Bakken position and help delineate the Delaware acreage further in 2019."

He reiterated Raymond James' Strong Buy rating and $22 per share target price on Oasis, whose stock is currently trading at around $9.36 per share.


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.
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Disclosures from Raymond James, Oasis Petroleum Inc., Nov. 7, 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 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.

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