Oasis Petroleum Inc. (NYSE:OAS) Gas Plant II Update

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Oil and gas production from Oasis Petroleum Inc. (NYSE:OAS) Wild Basin wells continues to surpass expectations, mainly due to increased frac intensity in the core parts of the Williston Basin. The preliminary gas to oil ratio is usually more in the core of the Williston Basin, counting areas of McKenzie County, as against the entire basin.

The combined impact of these elements have led in remarkable gas production levels in the Williston Basin and especially in McKenzie County where a big part of the drilling since 2015 has happened, which now produces around 50% of the gas production in North Dakota. Following the improved gas production in the Williston Basin, there is a requirement for incremental processing capacity in the respective basin.

The highlights

Gas production in Wild Basin has by now surpassed original design projections for 80 MMscfpd gas plant of OMP, which is held by its wholly-owned development firm Bighorn DevCo LLC, and lately has averaged gross gas production of around 100 MMscfpd in Wild Basin. Oasis preliminary assessed alternatives to process the incremental gas around and being produced in Wild Basin and subsequently commenced the front end design and engineering procedure for a second gas plant and started calling for long lead time items.

Oasis Petroleum recently took the decision to advance with the construction of Gas Plant II. On November 6, 2017, the company agreed to give the project to OMP. In lieu for the job of Gas Plant II into Bighorn DevCo, OMP decided to reimburse Oasis Petroleum for entire capital spent-to-date and will support 100% of the remaining project fund. The repayment was done by OMP under its revolving credit facility. OMP will have full privileges to all cash flows recorded from both gas plants of Bighorn DevCo.

In the last trading session, the stock price of Oasis declined more than 1% to close the day at $9.92.

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