Oasis Petroleum Inc. (NYSE:OAS) Downgraded In Spite Of Major Acquisition


Dallas, Texas 10/30/2013 (Financialstrend) – Oasis Petroleum Inc. (NYSE:OAS) is a $5.04 billion independent oil and gas producer. On October 23, the stock was downgraded by rating agency Global Hunter Securities from previous accumulate to neutral. The new target price the rating agency has assigned is $54. Since then the stock has posted loss of 2.95% in its market value during trading over the past one week. Investors in the stock seem to have also overlooked U.S. Energy Information Administration’s “drilling productivity report” which was published on October 22. The report had specifically named Oasis Petroleum as one of the top producers of oil in the North Dakota’s Bakken oil fields.

In order to consolidate and build up strong acreage in the Bakken region, the oil producer has gone ahead and completed the purchase of close to 0.136 million net acres in the “Williston Basin” from two sellers who remain unidentified in the public announcements. Oasis is shelling out close to $1.47 billion for this acquisition. It funded this acquisition by utilizing its revolving credit facility and raising additional capital via issue of senior notes. The notes have a maturity date in 2022 and attract interest rates of 6.875%. The completion of the acquisition was intimated to Security and Exchange Commission via a mandatory note filed by Oasis.  With the latest acquisition the total holdings of Oasis has increased to 0.492 million acres.

The stock has gained close to 11.8% in market value over the past 30 days. It has managed to post annual sales of $901 million and recorded income of $179 million in the same period. As of 11:00 AM EST on October 29, the stock was trading at $54.13 per share, down 0.4% from its previous day close. At current valuations, the stock is trading at 5.87% below its 52 week high pricing.