What happened

Shares of Oasis Petroleum Inc. (OAS) rallied 13.2% in August, primarily due to the oil driller's stronger-than-expected second-quarter report.

So what

Oasis Petroleum hauled in $31.2 million, or $0.10 per share, of adjusted net income during the second quarter, which came in $0.03 per share ahead of the consensus estimate. Two factors drove that better-than-expected performance. First, production rose to an average of 79,400 barrels of oil equivalent per day (BOE/D) during the second quarter, which was not only up 28% year over year, but was toward the top end of its guidance range. Meanwhile, lease operating costs per BOE fell nearly 6% from last quarter as the company did an excellent job of keeping a lid on expenses.

A drilling rig in North Dakota.

Image source: Getty Images.

On top of reporting strong second-quarter results, Oasis provided investors with a bullish outlook. The company announced that it planned to increase its capital spending plan by about $80 million, with it focusing that investment on the Williston Basin. The company noted that this incremental spending would enable it to produce between 83,000 to 84,500 BOE/D this year, which is 4% higher than the midpoint of its previous guidance range. Further, that spending increase positions the company to exit 2019 producing 15% above this year's expected exit rate, which is 6% above its prior forecast. It's also worth noting that the company expects to deliver this higher growth rate while generating free cash flow from its exploration and production business in both 2018 and 2019.

Now what

Oasis Petroleum is thriving in the current oil market environment. Thanks to higher oil prices, the company can grow at an even faster rate over the next two years and still generate free cash flow. That ability to deliver high-octane growth and excess cash has the potential to continue creating shareholder value in the coming years as long as oil prices cooperate.