Oasis Petroleum, Inc. :OAS-US: Earnings Analysis: Q3, 2017 By the Numbers : December 13, 2017

Oasis Petroleum, Inc. reports financial results for the quarter ended September 30, 2017.

We analyze the earnings along side the following peers of Oasis Petroleum, Inc. – Cimarex Energy Co., Whiting Petroleum Corporation, Denbury Resources Inc., Marathon Oil Corporation, Continental Resources, Inc., Northern Oil and Gas, Inc., Vermilion Energy Inc., Enerplus Corporation and QEP Resources, Inc. (XEC-US, WLL-US, DNR-US, MRO-US, CLR-US, NOG-US, VET-US, ERF-US and QEP-US) that have also reported for this period.

Highlights

  • Summary numbers: Revenues of USD 304.75 million, Net Earnings of USD -41.21 million.
  • Gross margins widened from 6.86% to 18.07% compared to the same period last year, operating (EBITDA) margins now 54.08% from 49.13%.
  • Year-on-year change in operating cash flow of 177.58% is about the same as the change in earnings, likely no significant movement in accruals or reserves.
  • Earnings decline largely a result of non-operational activity, pretax margins improved from -28.56% to -19.66%.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income growth:

2017-09-30 2017-06-30 2017-03-31 2016-12-31 2016-09-30
Relevant Numbers (Quarterly)
Revenues (mil) 304.75 254.09 285.12 217.99 177.31
Revenue Growth (%YOY) 71.87 41.89 118.84 19.73 -10.1
Earnings (mil) -41.21 16.57 23.83 -54.69 -33.94
Earnings Growth (%YOY) -21.42 118.42 136.96 -1478.23 -225.46
Net Margin (%) -13.52 6.52 8.36 -25.09 -19.14
EPS -0.18 0.07 0.1 -0.25 -0.19
Return on Equity (%) -1.37 0.56 0.81 -2.06 -1.43
Return on Assets (%) -2.61 1.06 1.54 -3.78 -2.51

Access our Ratings and Scores for Oasis Petroleum, Inc.

Market Share Versus Profits

Revenues History
Earnings History

OAS-US’s change in revenue this period compared to the same period last year of 71.87% is almost the same as its change in earnings, and is about average among the announced results thus far in its peer group, suggesting that OAS-US is holding onto its market share. Also, for comparison purposes, revenues changed by 19.94% and earnings by -348.76% compared to the immediate last period.

Revenues Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Leader, Earnings Focus, Laggard, Revenues Focus

Earnings Growth Analysis

The company’s year-on-year earnings decline did not come as a result of a contraction in gross margins or because of any cost control issues. Both gross margins and operating margins (EBITDA) margins actually improved over this time frame. Gross margins went from 6.86% to 18.07%, while operating margins improved from 49.13% to 54.08% over this period. For comparison, gross margins were 12.64% and EBITDA margins 52.69% in the immediate last period.

Gross Margin Versus EBITDA Margin

Quadrant label definitions. Hover to know more

Differentiated; Low Cost, Commodity; Low Cost, Commodity; High Cost, Differentiated; High Cost

Gross Margin Trend

Companies sometimes sacrifice improvements in revenues and margins in order to extend friendlier terms to customers and vendors. Capital Cube probes for such activity by comparing the changes in gross margins with any changes in working capital. If the gross margins improved without a worsening of working capital, it is possible that the company’s performance is a result of truly delivering in the marketplace and not simply an accounting prop-up using the balance sheet.

Gross Margin History
Working Capital Days History

OAS-US’s gross margin improvement has not produced any big difference in its working capital. Working capital days are currently -22.36, compared to last year’s level of -53.41 days. This leads Capital Cube to conclude that the improvements in gross margins are likely from operating decisions and not trade-offs with the balance sheet.

Gross Margin Versus Working Capital Days

Quadrant label definitions. Hover to know more

Customer Financed, Cash Starved, Supplier Financed, Cash Rich

Cash Versus Earnings – Sustainable Performance?

It is important to examine a company�s cash versus earnings numbers to gauge whether its performance is sustainable.

OAS-US’s change in operating cash flow of 177.58% compared to the same period last year is about the same as its change in earnings this period. Additionally, this change in operating cash flow is about average among its peer group. This suggests that the company did not use accruals or reserves to manage earnings this period, and that, all else being equal, the earnings number is sustainable.

Operating Cash Flow Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Cash Flow based Earnings, Likely Non-cash Earnings, Low Cash Flow Base, Likely Undeclared Earnings

Margins

The company’s earnings decline is largely a result of non-operational activity. As a matter of fact, the company showed increases in operating (EBIT) and pretax margins. EBIT margins improved from -14.28% to 10.68% and pretax margins widened from -28.56% to -19.66%.

EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables
EBIT Margin History
PreTax Margin History

Access our Ratings and Scores for Oasis Petroleum, Inc.

Company Profile

Oasis Petroleum, Inc. engages in the business of acquisition, development and exploration. It focuses on oil and natural gas properties of Williston Basin. It operates through the following segments: Exploration and Production, Midstream Services, and Well Services. The Exploration and Production segment refers to the sale of oil, and natural gas production. The Midstream Services segment performs salt water gathering, disposal services, fresh water services, natural gas gathering and processing as well as crude oil gathering and transportation, and other midstream services for the oil and natural gas wells. The Well Services segment relates to the completion services for the oil and natural gas wells as well as the products sales and equipment rentals. The company was founded by Thomas B. Nusz and Taylor L. Reid on March 8, 2007 and is headquartered in Houston, TX.

CapitalCube does not own any shares in the stocks mentioned and focuses solely on providing unique fundamental research and analysis on approximately 50,000 stocks and ETFs globally. Try any of our analysis, screener or portfolio premium services free for 7 days. To get a quick preview of our services, check out our free quick summary analysis of OAS-US.

Disclaimer

The information presented in this report has been obtained from sources deemed to be reliable, but AnalytixInsight does not make any representation about the accuracy, completeness, or timeliness of this information. This report was produced by AnalytixInsight for informational purposes only and nothing contained herein should be construed as an offer to buy or sell or as a solicitation of an offer to buy or sell any security or derivative instrument. This report is current only as of the date that it was published and the opinions, estimates, ratings and other information may change without notice or publication. Past performance is no guarantee of future results. Prior to making an investment or other financial decision, please consult with your financial, legal and tax advisors. AnalytixInsight shall not be liable for any party’s use of this report. AnalytixInsight is not a broker-dealer and does not buy, sell, maintain a position, or make a market in any security referred to herein. One of the principal tenets for us at AnalytixInsight is that the best person to handle your finances is you. By your use of our services or by reading any of our reports, you’re agreeing that you bear responsibility for your own investment research and investment decisions. You also agree that AnalytixInsight, its directors, its employees, and its agents will not be liable for any investment decision made or action taken by you and others based on news, information, opinion, or any other material generated by us and/or published through our services. For a complete copy of our disclaimer, please visit our website www.analytixinsight.com.