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Why Oasis Petroleum Shares Jumped

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Oasis Petroleum (NYSE: OAS  ) gained as much as 11% today on a strong earnings report, before finishing with a 7% gain.

So what: The young oil and gas producer, which is focused on the Bakken shale in North Dakota, increased production by 158% over a year ago, driving revenue growth of 122%, to $149.1million, and beating estimates. A $0.32 adjusted EPS beat expectations of $0.29 cents, while actual EPS came in at a whopping $0.82, thanks to derivatives used to hedge against low oil prices. Oasis plans to increase its capital expenditures for the year by about 20% to $1.06 billion, and boosted full-year production guidance by around 10%, with lower lease operating costs expected.

Now what: For shareholders, there’s a lot to like here; earnings reports simply don’t get much better than this. The company beat estimates on both the top and bottom lines, and raised its guidance. With oil prices cresting over $94 for the first time since May, and production levels expected to be about 15% higher than in Q2, there’s at least a few reasons to expect Q3 to be even stronger. Analysts have not yet adjusted their EPS estimates from$0.34 a share, so look for that in the coming days.

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Fool contributor Jeremy Bowman holds no positions in the companies in this article. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

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10/28/2016 10:32 AM
OAS $11.85 Up +0.23 +1.98%
Oasis Petroleum CAPS Rating: ****