Oasis Petroleum And Southwestern Energy: Two Early Cap Structure Compression Candidates

| About: Oasis Petroleum (OAS)


In follow-up to my recent note on potential “Cap Structure Compression” at Oasis Petroleum, I breakout the "Cap Structure Compression Model”.

If you own bonds in Oil & Natural Gas E&Ps - you definitely need to assess your holdings for Cap Structure Compression risk.

If you want an idea of how scary Cap Structure Compression can be, take a look at Oasis Petroleum bonds from late-January/early-February.

But there are also ways to play Cap Structure Compression from the short-side, I outline these within the screencast as well.

In follow-up to my recent note on potential "Cap Structure Compression" at Oasis Petroleum (NYSE:OAS) - Cap Structure Compression being a major theme, we as a firm are watching into 2H/2016 - I break out the "Cap Structure Compression Model". In an effort to assist market participants with identifying potential Cap Structure Compression E&P candidates, I address the following within screencast below:

  • What is Cap Structure Compression?
  • How is Oasis Petroleum a good example of a Cap Structure Compression candidate?
  • What are identifiers of a high-probability Cap Structure Compression model?
  • How can I take advantage of a cap structure with compression probability?
  • Overall, what are the risks associated with Cap Structure Compression from the short-side?
  • Why is this an asymmetric investment opportunity?

Click to enlarge

As a bonus, I identify Southwestern Energy (NYSE:SWN) as another high-probability Cap Structure Compression candidate that we're very closely watching for indications that the thesis is about to be realized.


Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: ALL data-visuals were created by Atlas Consulting. Atlas Consulting grants permission for redistribution of data-visuals to all parties reading this note. Data-visuals were created using Power BI via Microsoft and using data licensed via Kamakura Corporation (a risk-management consulting firm).