In a June 26 research note, analyst John Freeman with Raymond James reported that Oasis Petroleum Inc. (OAS:NYSE) signed agreements to sell to an undisclosed buyer 65,000 noncore net acres in the Bakken's Williston Basin and production of about 4,400 barrels of oil equivalent per day (boe/d) for $283 million.
The land that Oasis is offloading in this transaction is composed of "acreage located in the Foreman Butte area in Southwest McKenzie and nonoperated acreage," Freeman described. Raymond James estimated that with the current arrangement, the sale price of the company's undeveloped property is about $1,500 an acre.
This recently announced deal brings the company closer to its goal of raising around $500 million through the divestiture of about 200,000 net acres and production of 80,000–10,000 boe/d. The money generated is earmarked for payments toward Oasis' 2017 acquisition of Forge Energy.
"Oasis managed to realize over 50% of its targeted divestiture proceeds while only selling 33% of its earmarked noncore acreage," Freeman pointed out. "While not necessarily apples to apples, as most of remaining marketed acreage is likely third tier, we believe this puts Oasis in a good position to meet its divestiture target." Currently, the company is marketing the additional assets it aims to sell.
Freeman concluded that "while largely expected, proceeds from the first portion of Oasis' planned noncore asset divestiture program appear to have come in modestly above expectations, giving us confidence that the program will be completed successfully."
Raymond James has a Strong Buy on Oasis, whose stock is trading today at around $13.21 per share.
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Disclosures from Raymond James, Oasis Petroleum Inc., June 26, 2018
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Raymond James & Associates makes a market in shares of OAS.
