Sunday, March 15, 2020

Oasis: Feburary, 2020 -- Presentation

Oasis: February, 2020, presentation (website here);
  • net acres:
    • Williston: 408K
    • Delaware: 25K
  • average rigs in 2020:
    • Williston: 2
    • Delaware: 2
  • 2020 gross op completions:
    • Williston: 45 - 55
    • Delaware: 20 -25
  • 4Q19 production (rounded):
    • Williston: 80,000 boepd
    • Delaware: 8 boepd
  • Plays in the Bakken:
    • top-tier
      • Montana
      • Red Bank
      • Painted Woods
      • Indian Hills (sic)
      • Wild Basin
      • South Cottonwood
      • Alger
    • additional upside
      • North Cottonwood
      • "State Line" -- east Montana (Roosevelt) / west North Dakota (Williams)
    • portfolio strategy:
      Bakken: cornerstone asset delivering + free cash flow
    • Delaware: repeatable, capital efficient growth
  • top tier returns:
    • Bakken; peer leading well productivity with lower well costs
    • Delaware: development mode improves capital productivity
  • free cash flow
    • Bakken: significant FCF generation to fund Delaware and repay debt
    • Delaware: growth engine to reach FCF inflection
  • Delaware
    • bolt-on success
    • added 1,800 acres in 2019
  • Delaware:
    • drilling days: ~ 25 days
    • well costs: ~$8.6 million 
  • Bakken:
    • drilling days: ~ 7 days
    • well costs: $7.8 million (which, by the way, seems to be a bit on the high side)
  • E&P operating cost structure, per bbls
    • the small print says the 2018 and 2019 data includes both the Bakken and the Delaware
    • interestingly, in big print bubble: "Oasis is a top oil and gas producer in the Williston Basin
      • 2014: $38.86/boe
      • 2018: $22.99/boe
      • $22.21/boe
  • comment: costs significantly higher in the Delaware than the Bakken
    • if one were to exclude the Delaware, costs/boe would be slight less, but probably not all that much; the ratio of Bakken to Delaware is 10:1
  • very concerning: 2020 plan 
    • positive free cash flow at $55 WTI
    • cash flow neutral at $50 WTI
  • midstream
    • Bakken: OMP
    • Delaware: Panther DevCo 
  • of note:
    • Oasis testing a three mile lateral in south Cottonwood
      • a reader might know where this well is -- I don't see it
      • a lot of Cottonwood locations are not PNC'd
      • Oasis does have two pads in south Cottonwood with four wells each all on loc status; I check four of them; none of them were extended long laterals;
  • the big takeaway from this presentation: when, if ever, does the Delaware become profitable for Oasis?
    • same number of rigs in both plays (2)
    • will complete twice as many wells in the Bakken as the Permian in CY 2020
    • 2019: Bakken produced 10x production compared to Permian with same number of rigs
Oasis shares have tumbled 21 percent following last week’s disclosure, pointing to growing tension between oil producers looking to invest in their future and investors demanding better returns.
Oasis said the $946 million cash-and-stock investment secures a premier foothold in the Delaware basin area of the Permian, the nation’s fastest-growing oil field, while spreading its costs over a wider drilling footprint.
Oasis is buying the land from Forge Energy LLC, a private company backed by some of the same investors who funded Oasis when it was founded in 2007. At a cost of about $46,600 an acre, the deal is among the most-expensive this year in the Permian, according to data from PLS, an oil and gas research firm.

Chief Executive Officer Tommy Nusz said in an interview that Oasis is not running out of opportunities in the Bakken, where he said it has at least 16 years of drilling ahead of it, and adding that Permian land will improve economies of scale by spreading costs. 
The agreement, expected to close in February 2018, covers 20,300 net acres across Loving, Ward, Winkler, and Reeves counties in Texas.
November production from the assets totaled 3,500 boe/d from 601 gross operated locations (76% working interest) and 507 net core locations targeting the Wolfcamp A, B, and C and the Bone Spring formations.
  • $1 billion / 20,000 net acres = $50,000 / acre  
Permian vs the Bakken in a WTI beatdown.

Bottom line: Oasis has had their play in the Permian for two full years. They have two rigs in each play. In one play: 80,000 boepd. In the other play, 8,000 boepd. And per their February presentation, Oasis has some of the best locations in the Permian.

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