Title : Not Ready For Prime Time -- December 12, 2017
link : Not Ready For Prime Time -- December 12, 2017
Not Ready For Prime Time -- December 12, 2017
Disclaimer: this is not an investment site. Do not make any investment, financial, job, travel, or relationship decisions based on anything you read here or think you may have read here.Disclaimer: I own no shares in Oasis or any company directly related to Oasis. I never have. I have no plans to do so in the next several weeks and perhaps never.
Disclaimer: these are simply some random thoughts in line with the original "purpose" of the blog.
1. When I first saw the news that Oasis had bought any acreage in the Permian I was disappointed.
2. When I saw the price they paid I was not only disappointed but also incredulous. A half billion dollars for 20,000 net acres.
3. I just went through their slide presentation, previously posted. I will link it here when I have time.
4. After looking at the slides, it made me re-think my position (thoughts) on Oasis. There are a lot of things that one can take away from that slide presentation, and there are a lot of things not said.
5. Missing: which Bakken acreage will be sold. Oasis shows a map of their core, extended core, and their fairway. I don't think Oasis provided it in this presentation, but it looks like, visual approximation:
- core: 25% of total Bakken holdings
- extended core: 25% extended core holdings
- fairway: 50% of their core holdings
- one could argue: 30 - 30 - 40
6. Selling scenarios: total holdings in the Bakken: 520,000 net acres (rounded)
By definition, it is clear that the "fairway" will be sold. The question is whether any of the "extended core" will be sold. Oasis hopes to sell "non-core assets" for $500 million.
- Let's run some scenarios:
-
- A: sell only the fairway, 50% of total holdings:
-
- 260,000 net acres; $500 million / 260K acres = $1,900/acre
- B: sell only the fairway, 40% of total holdings:
-
- 200,000 net acres: $500 million / 200K acres = $2,500/acre
- C: sell the fairway (50%) and half of the extended core (15% of total holdings):
-
- 260,000 + 80,000 acres: $500 million / 340K acres = $1,500/acre
- D: sell the fairway (40%) and half of the extended core (15% of total holdings):
-
- 200,000 +80,000 acres: $500 million / 280K acres = $1,800/acre
7. Positive: Oasis has learned about very deep drilling in the Bakken. Their newly acquired acquired acreage is in the deepest part of the Permian.
8. Positive: Their newly acquired acreage in the Permian is predominantly oil. One of the criticisms I have had of the Permian is that a lot of it is "gassy." The Permian acreage Oasis bought is nowhere near the gas condensate portion of the basin.
9. Positive: surface location outstanding: I know nothing about the Permian but when I do hear about the Permian, there are three or four counties that keep coming up in conversation: Reeves, Loving, Winkler, and one or two others. Their newly acquire acreage in the Permian is smack dab in the middle of the aforementioned Texas counties. This would be like buying into the Bakken acreage right around Watford City, ND.
10. Positive: their acreage is contiguous and compact; a lot of the infrastructure is already there. They are surrounded by the "big boys": ExxonMobil; Shell; Anadarko; Devon.
11. Wow, this is so cool. I don't recall the original press release from Oasis stating who the sellwas. I may have missed it. But looking at the map, it appears it might be Forge Energy. Doing a google search this popped up: it was Forge Energy. Whoo-hoo.
12. Negative? Financials: I can't do the financials. I can only assume very smart people know what they are doing. But $50,000 / acre is ... well, a bit more money than I have. LOL.
13. One-half of E&P is "E." Everyone pretty much knows what Oasis will produce in the Bakken. Oasis is in the manufacturing stage in the Bakken. If Oasis doesn't doesn't look at the other half o the equation, exploration, it will stagnate. It may make a lot of money in the Bakken but from an oilman's (or oilwoman's) perspective, that gets boring awful fast. Oilmen and oilwomen are always looking for a deal, always looking for that next big gusher. I have to think that is part of what is going on here. One can argue that the Permian is simple in the production phase now and that this really doesn't qualify as exploration. Be that as it may. But if nothing else, Oasis is in a new tier among US oil companies.
14. Faith. There have been a number of stories recently that investors and bankers (bankrolling the US shale industry) are losing their patience. Investors and bankers want to see some return on their investments. My first thought, along with a reader who has skin in the game with regard to Oasis, felt that Oasis was finally "getting their ship righted (financially)" and now they go and do this. We already know that Oasis' banker is willing to go along with this. I doubt the 30 million stock offering will fail (investor trust).
15. Investors? Buying opportunity. OAS is down almost 14% today, down from $10 to almost $8.50/share.
16. What else? I'm sure there are some more things that I will come to mind later, but this is a start.
17. Bottom line: my initial reaction to this announcement was disappointment and incredible surprise. After going through the presentation, I am really, really excited for Oasis. I think they did the right thing for the company. For investors? I don't know. Maybe another buying opportunity?
Thus Article Not Ready For Prime Time -- December 12, 2017
That's an article Not Ready For Prime Time -- December 12, 2017 This time, hopefully can give benefits to all of you. well, see you in posting other articles.
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