Oasis Midstream Partners On Sale: 12% Yield, 14% In 2020, Higher Beyond, With 1.7X Coverage, Big Upside Opportunity

Sep. 21, 2019 9:15 AM ETOasis Midstream Partners LP (OMP)CHRD36 Comments


  • OMP yields 12.26%, with 1.7X coverage in Q2 '19 and 1.8 -1.9X in Q3-4 '19.
  • Management guided to 20% annual distribution growth through 2021.
  • It's 17% below analysts' lowest price target and 32% below the average price target.
  • This idea was discussed in more depth with members of my private investing community, Hidden Dividend Stocks Plus. Get started today »

Irrational discounting - we've all seen it in the market from time to time, when a sector or sub-industry falls out of favor. If, after you've done your due diligence, no apparent reason surfaces, it becomes a head-scratcher. "Should I average down at this very tempting level or wait until the market starts to support this stock again?"

Such is the case of Oasis Midstream Partners LP (NASDAQ:OMP), a fairly new firm, which continues to exceed its guidance and IPO promises. OMP generates most of its revenues through 15-year, fixed-fee contracts for providing crude oil, natural gas and water-related midstream services for OAS. However, it also has been increasing its amount of third-party contracts - management estimates that more than 15% to 20% of OMP's Q4 2019 EBITDA will come from third parties.

OMP's management has been acquiring larger pieces of the development companies, or Devco's, from its parent/GP, Oasis Petroleum (OAS). It now owns 100% of Bighorn, 70% of Beartooth, ~35% of Bobcat, and will own 100% of the new Panther Devco, a deal which is expected to close in Q3 '19.

Management noted on the Q2 '19 earnings call that, "This (deal) is a huge opportunity for OMP unitholders, which enhances the financial outlook for OMP, while keeping the balance sheet strong."

(Source: OMP site)

Panther Project:

OMP will own 100% of the Panther property, where it will provide water and crude services. These assets will produce three revenue streams - Crude Oil Gathering, Produced Water Gathering, and Produced Water Disposal.

OMP expects 2019 Q4 EBITDA for Panther DevCo to range between $1 million and $3 million.

(Source: OMP site)


Here's a look at OMP's quarterly growth for the most recent four quarters - no lack of growth here in any category:

They've also done

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This article was written by

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Disclosure: I am/we are long OMP. 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.

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