Oasis Petroleum -3% after deal; analysts say buy on weakness from offering

|About: Oasis Petroleum Inc. (OAS)|By:, SA News Editor

Oasis Petroleum (OAS -3.1%) is sharply lower after its $785M purchase of Williston Basin assets from SM Energy and subsequent 40M-share offering, but some analysts suggest buying the dip.

Cowen says OAS addressed inventory concerns with the acquisition, adding 12.4K boe/day of production, 92 core net locations and 31.6M boe of proved developed producing reserves; pricing does not appear cheap, but will prove warranted if acquired locations produce close to the updated productivity numbers of Wild Basin.

SunTrust says the deal appears positive, with its estimate of ~$3K/acre purchase price in-line with prior core asset sales in the play, but shares are underperforming today given ~25% dilution from the equity deal.

KeyBanc is less optimistic, saying the deal lacks meaningful accretion and valuation implying ~$5.2K/acre adjusted for production, and ~$4M per core location, “appears a bit rich.”

Before the deal was announced, Goldman Sachs had downgraded OAS to Sell from Neutral with an $8.50 price target, trimmed from $8.75.