Oasis Conference Call -- 2Q11 -- Bakken, North Dakota, USA

Transcript has been posted.

Some of what we have learned:

Like all players in the Bakken, Oasis production was up 77% over 2Q10, but was flat following 1Q11. But the flooding in 2Q11 was awful and impacted production significantly.

Oasis has a third frack crew now; each team can frack three wells/month, and should get Oasis backlog down over the next three months (others have said the same thing; backlog should be less of a problem by November, 2011).

Time from spud to TD: 21 days
Time from spud to release rig: 25 days
In 2010: the time from spud to release rigs was 31 days; more efficient. If I understood the transcript correctly, Oasis has about 18 wells waiting completion; with increased efficiency, Oasis should normalize back to 10 to 14 wells.

Oasis will increase number of frac stages from 28 to 36.

Oasis will add two more rigs (a total of 9) in 4Q12.

Recognizes: well cost escalation.

Accelerating salt water disposal infrastructure.

Increase CAPEX for field operations in Williston, North Dakota.

But this may have been the high point of the conference call: Oasis plans to manage its own fracking in-house:

In June we formed a new company underneath Oasis Petroleum Inc., called Oasis Wells Services or OWS to provide pumping services to our operator wells. The crew is expected to begin operations in early 2012. The current operations team in our Williston office alone has over 100 combined years of experience in the frac business including experience with some of the larger providers as well as in pure start-up operations, most of that specifically in the Williston Basin.

So managing the hiring operations, consumables and logistics is nothing new to our team. The broader overall economics of this decision are quite compelling to us. In total completions make up anywhere from 45% to 60% of our well cost. Pressure pumping services alone comprise about 30% to 40% of our well cost. And there’s a relatively higher margin embedded in each job.

We’ll be able to capture that margin in the form of CapEx savings. So when we frac our own well, Oasis can save approximately $800,000 to $1 million per well gross, and that’s the way that you should think about modeling it. Additionally, we’ll earn a small profit margin on the services we provide to non-op partners, which would show up on our income statement and EBITDA in the neighborhood of about 300,000 per gross well-completed.