Simmons Assumes Oasis Petroleum (OAS) at Neutral

Simmons, a unit of Piper Jaffray, assumes coverage on Oasis Petroleum (NYSE: OAS) with a Neutral rating and a price target of $13.00 (from $11.00).

Analyst Kashy Harrison commented, "We are assuming coverage of OAS with a Neutral rating and $13/sh NAV based price target (+$2/sh from the prior projection). Operationally OAS has had a strong start to the year, anchored by lower well costs and free cash flow. We anticipate more of the same heading into 2Q as we continue to see: i) the benefit of high-intensity completions, ii) well costs moving 5-10% lower through YE'16, and iii) LOE toward the bottom of the guided range with attractive oil differentials $4-$5/bbl. While many are focused on possible monetization news in 2H'16 related to its midstream segment (OMS) and rapid improvement in debt/ EBITDAX metrics, we think OAS' strong liquidity position (>$1B), significant cash flow leverage to improved crude prices, and 83 well DUC inventory provide the company with the luxury of patience to maximize the value of OMS. We view OAS as an attractive holding for investors seeking oil beta in the intermediate term but retain our Neutral rating owing to near-term uncertainty stemming from an OMS decision."

For an analyst ratings summary and ratings history on Oasis Petroleum click here. For more ratings news on Oasis Petroleum click here.

Shares of Oasis Petroleum closed at $10.77 yesterday.

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