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Why Oasis Midstream Partners Shares Crashed 23% Today

By Jason Hall – May 27, 2020 at 3:31PM

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Today marks an important date to get out and still get the next dividend payment.

What happened

Units of Oasis Midstream Partners (OMP) are down 25.7% at 2:18 p.m. EDT on May 27, while most of its peers in the midstream MLP space aren't seeing anything close to the same level of volatility. 

So what

Today marks an important date for dividend stocks like Oasis Midstream: the ex-dividend date. The ex-dividend date marks the first trading day when an upcoming dividend payment is not included in a stock's price.  

Four oil pipelines through banks of dirt

Image source: Getty Images.

What exactly does that mean? Without getting too deep into the weeds, it has to do with how share ownership is officially recorded. It takes three days after you buy shares before you are officially a shareholder of record. As a result, investors listed as the shareholder of record of Oasis Midstream today can sell their shares and still collect the $0.54 per-unit distribution Oasis Midstream will pay on June 8. 

And it's looking like a massive number have taken the opportunity to get out the door. More than 1.7 million shares have traded hands today; almost four times more than the recent average volume. 

Now what

Why all the selling? Because there's a very real concern that Oasis Midstream won't be able to maintain its dividend, which at the current level is worth more than $2 per share.

Over the past couple of weeks since the company reported first-quarter earnings, Oasis Midstream units have shot up significantly, both on better-than-expected results and the quarterly dividend that many investors expected would get cut or even suspended. 

Today's selling, however, is a reminder that the near-term future for oil remains very uncertain. Despite holding firm on the payout this quarter, Oasis' board will go quarter-to-quarter on future payouts. Despite a nice paycheck coming from the first quarter's earnings, Oasis Midstream still faces enormous headwinds that could force it to cut the payout. It looks like a lot of investors think that will happen, based on today's big selling activity. 

Jason Hall has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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