Richard Zeits On Oasis -- May 20, 2015; Wal-Mart; Target Getting Its Mojo Back

Seeking Alpha link here.

Scaling down drilling programs in order to achieve cash flow neutrality has been an important theme during the current earnings season in the E&P sector.

Oasis Petroleum reported significant progress in this direction and indicated that it should be able to balance its upstream spending and cash flow for the rest of the year. The company also guided that a $60 per barrel oil price would be sufficient for it to stay cash flow neutral in 2016.

The operating metrics highlighted by Oasis are mostly in line with the indications from other major operators in the Bakken. However, the concept of "cash flow neutrality" has many nuances that need to be carefully accounted for in order to avoid wrong conclusions.

Note: this is not an investment site. Do not make any investment decisions based on what you read here or what you think you may have been reading here.

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How I see the Bakken today, based on permitting, monthly dockets, producing wells completed:

• Oasis is perhaps the most aggressive operator in the Bakken right now
• Whiting has never slowed down in the Bakken (relative to the other operators / relative to all that is happening)
• Newfield seems to be more active than one might expect
• Hess, quietly, keeps doing its thing
• EOG, quick to slow, is talking a good story of getting back in
• CLR, difficult to read; so much going on with that company
• Slawson pops up every once in awhile
• Liberty Resources was recently recognized for its "manufacturing strategy" in the Bakken
• we're not hearing much from any of the others  (Statoil, XTO, BR)

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Wal-Mart: Idle Chatter

Regular readers are aware of the recent chatter regarding Wal-Mart and Dollar General. I don't want to step on any toes here. I am not an apologist for Wal-Mart. Okay, maybe I am. Whatever. But I have seldom had a bad experience in Wal-Mart. (Yes, I put my rose-colored glasses on whenever I go into Wal-Mart.)

This past year.

Fishing.

One day when I took the younger granddaughter to her soccer game, I noticed there was a stocked pond in the same area. I immediately drove to Wal-Mart, and in less than fifteen minutes had two Shakespeare rods and reels, tackle, and bait, and the older granddaughter was fishing within 30 minutes. She caught her first fish ever, and had caught it before her sister had even finished practicing soccer. The soccer players ran over to see the fish when practice was over; it was the hit of the day.  I don't recall the exact price, but I believe the cost for one rod and reel was about $24. Bait? Hot dogs. Yes, from Wal-Mart. One for the fish; seven for us when we got home.

Grilling.

Our daughter / son-in-law recently moved into a house after living in a small apartment the past two years. Low on their list was a grill. High on my list: a grill. About two weeks ago I went to Wal-Mart, found the large Weber grill, normally priced at $149 (see Amazon), marked at $88. I was having difficulty finding one still in the box; the manager of that part of the store saw me looking around, found the boxed Weber, and specifically told the cashier several times to charge me $88 for the Weber grill "regardless" of what shows up on the bar code/register. Obviously $149 was going to show up, but she charged me $88.

Kitchen.

After moving into their new home, and during grilling, I noted my daughter did not have (m)any steak knives. I went to Target -- it's one mile closer. Target only sells one brand of steak knives -- high end, and not my style, anyway. On top of that, Target had run out of their limited supply of steak knives. I drove the extra mile to Wal-Mart, surprised (not really) to find Wal-Mart had more steak knives and a much bigger selection. I could buy a set of four for $1.79 -- yes, a set of four for $1.79, or a $24 (again, $24) set for 8 Cephalon knives -- a really nice set. I bought the Cephalon.

DVDs.

Always the best prices on DVDs. Huge selection. Bought a few during Christmas.  I would not have bought any DVDs at Wal-Mart but we were there buying inexpensive board games for Toys for Tots and other charities. Again, the selection is broadest and least expensive (compare to Barnes and Noble).

Wal-Mart is not my first choice for shopping. For anything. But when I'm in a hurry and need it "now," I don't think I've ever been disappointed at Wal-Mart.

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Target

Speaking of Target, which we weren't, Reuters is reporting:

Target Corp on Wednesday reported a larger-than-expected increase in first-quarter profit as revenues got a boost from online sales and a program to narrow its product focus.

Target, the fourth-largest U.S. retailer, also said it repurchased $562 million worth of its shares in the quarter, resuming buybacks for the first time in nearly two years.

Adjusted earnings, excluding restructuring costs and other items, came to $1.10 per share in the three months ended May 2, against a profit of 92 cents in the same period a year earlier.

There's a difference between consumers' expectations and investors' expectations. The post above regarding Wal-Mart was from the perspective of a single consumer.

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Differing Views

There is a nice article over at Investopedia comparing Costco, Target, and Wal-Mart from an investor's point of view:

In April, Target’s overall comps improved 4.5% year over year. Wal-Mart was slightly more impressive, delivering a 5.0% improvement (4.0% without fuel). Costco’s comps improved 2%, but it would have been a 7% gain without negative impacts related to gas prices and foreign exchange, but these factors do matter.