Credit Suisse On Oasis Petroleum: 'Too Cheap To Ignore'

Oasis Petroleum Inc. OAS is an independent exploration and production company that offers investors one of the "most attractive" risk to reward profiles within the entire energy and petroleum space, according to Wall Street's newest bull analyst.

The Analyst

Credit Suisse's Betty Jiang initiated coverage of Oasis Petroleum's stock with an Outperform rating and $11 price target.

The Thesis

Oasis Petroleum's stock is trading at a valuation that implies it's only a Bakken pure-play, which means the stock comes with a free option on its exposure to Permian after buying more acreage from Forge Energy for $946 million in December, Jiang said in a note. The stock is also trading at roughly the same enterprise value today as it has prior to the deal and a "much steeper" NAV (net asset value) discount today of 0.51 times.

Investors may also not be fully appreciated the company's non-core Bakken asset sales, which could fetch $500 million (more than $1.60 per share) in a sale and could come in the first half of 2018, the analyst said. Beyond the first half of 2018, the stock could move higher if the company shows at the very least "adequate" Permian operating performance.

Price Action

Shares of Oasis Petroleum closed down 2.3 percent at $7.72.

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