Oasis Petroleum Inc. (ticker: OAS) is an independent exploration and production company focused on the acquisition and development of unconventional oil and natural gas resources, primarily operating in the Williston Basin.
Oasis Petroleum Inc. announced on December 4, 2013, the public offering of 7 million shares of common stock for gross proceeds of approximately $314.6 million. The net proceeds are intended to repay outstanding borrowings and general corporate purposes. The offering is expected to close on December 9, 2013. OAS had approximately $2.36 billion in long term debt at the time of its Q3’13 earnings release.
The latest sale follows a private placement offering of $1 billion on September 10, 2013, consisting of 6.875% senior unsecured notes due 2022. OAS used the proceeds to fund its $1.48 billion acquisition in the West Williston Basin.
Amping Up the Williston
The landmark Williston acquisition on September 5, 2013, included 161,000 net acres and approximately 9 MBOEPD across 854 gross operated well locations. Overall, the company now holds 492,000 net acres in the Bakken and estimates producing 42 to 46 MBOEPD in Q4’14. The stated area holds 216 MMBOE of proved reserves with a PV-10 of $5.0 billion. OAS believes the ample opportunities provide the company with 16 years of inventory, and its primary operatorship of 91% allows for flexibility with the pace of the drilling program. Total Williston production is approximately 30 MBOEPD and excludes its non-operated Sanish position, which is currently for sale and produces 2,762 BOEPD (8% of OAS’ production).
OAS is currently running 14 rigs and anticipates increasing its count to 16 rigs during 2H’14. The company reached a self-imposed goal of lowering well costs to $8 million per well by Q3’13 and intends to reduce the number to $7.5 million per well by year-end 2014. On the production side, the company expects to spud 210 wells in 2014 and place 180 wells to first production. Roughly 80% to 90% of the drilling will occur from a pad system as part of its downspacing program. Based on current well costs, OAS anticipates capital expenditures for 2014 to be in the range of $1.3 billion to $1.4 billion.
Despite the sizable acquisitions, OAS still has roughly $1 billion in liquidity to fund its ambitious drilling program.
In a conference call following its Q3’13 results, OAS said it intends to deleverage itself through production and aggressively hedge in the near term. In a presentation on December 11, 2013, management said the company views the debt to EBITDAX ratio as a benchmark and a long-term company goal is to lower the total to 1.5x to 2.0x.
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