Whiting wasn’t the only oil company in the Bakken to lay off employees in early August. Oasis Petroleum also laid off a sizable portion of its Williston workforce about a week after Whiting did.
No one was available with Oasis Petroleum to discuss the matter on Friday. An answering machine at the main desk said the company’s employees are off every other Friday. Neither emails nor phone calls to various Oasis Petroleum employees, as well as the main desk were returned.
A former employee told the Williston Herald the company laid off about half of its pressure pumping staff, and said the total layoff was around 80 people. Job Services North Dakota, meanwhile, confirmed that a notice was filed by Oasis as required by state laws. That notice estimated the layoff affected 40 employees in the Williston region.
Notices are required when companies with at least 100 employees in an office will be laying off either 33 percent of that workforce or at least 50 of those employees.
Oasis Petroleum’s latest earnings call on Aug. 7 did contain some clues as to what might have prompted the layoff, though it did not mention the layoff at all.
Among problems the company faced in the second quarter were unplanned delays in getting its Wild Basin gas processing plant in McKenzie County up and running.
The facility was down for about 20 days, company officials said, downtime that was attributed to normal efforts for the startup phase for a new facility. This downtime reduced quarterly production by an estimated 3,000 barrels of oil equivalent net per day in the second quarter, Oasis executives estimated.
Weather issues and North Dakota’s short construction season affected some other gas plant facilities more adversely, company officials also said.
“Getting that plant up online in time for December was a huge feat for the team,” an unidentified Oasis executive said on the call. “Now we are through it, and I think we are past it.”
The asset is what the company described as a “coveted” asset — whether it’s owned by Oasis, or a different entity, executives said.
There was a clear implication in discussion that followed that the facility could be for sale at the right price.
“More of our drilling activity will move out of Wild Basin, so that asset won’t be quite as strategic to us on a go-forward basis as it has been in the past,” said Oasis Petroleum’s Director and Chief Executive Officer Tommy Nusz.
“It’s still very important to us,” Oasis Petroleum’s Director, President and Chief Operating Officer Taylor Reid said. “But the biggest strategic piece of it, that we wanted to get it set up and in place, has been served at this point, so as we go forward and think about that investment and the value of it, people ask would you ever consider doing anything about that and we go on saying, like in 15 and 16, that we are open to alternatives and will consider all those things. We want to maximize value for the company, and will be thinking about all those things going forward.”
Oasis officials said they were successful in bringing 24 wells online in the Bakken during the second quarter, despite challenging weather and flooding issues. Meanwhile, in the Delaware, tests continue to prove that the company’s Permian investments have great future potential — as good as or better than what the company is seeing in the Bakken.
The company will continue to use its Bakken profits to fuel Permian development.
Executives said they expect to generate $75 to $120 million in free cash flow in its exploration and production business in 2019 at $50 to $60 WTI. That money will be taken to its revolving loan fund, to reduce debt.
The company meanwhile expects to finalize additional assets in its Delaware acreage by Sept. 1, and its executives said additional spending in the capital expenditures budget was mostly to accelerate construction of infrastructure.
While there’s been some deterioration in the prices of natural gas and NGLs, Oasis executives said they were early with some strong contracts, which should keep its pricing toward the top end of its peer group.
Nonetheless, realizations from that area have dropped significantly — estimated to be about $30 million lower, based on where differentials and pricing are today.
Oasis said it has successfully reduced well completion costs in both basins where it is operating. In the Bakken, it expects to push well costs down to $7 million, from $7.6 million.
There was also some discussion of the “broken oil market” similar to a discussion in Continental Oil’s latest earnings call.
The Stockmarket isn’t valuing Oasis Petroleum the way it should, one analyst suggested.
Nusz harked back to the “coveted” assets the company has developed over time, which he said provide Oasis with a lot of “optionality.”
“We have that thing in place, and as we move drilling outside the Wild Basin complex, it increases options for us, is probably the easiest way to say that, if it makes sense,” he said.
If the company did “monetize” the facility, company executives told the analyst the proceeds would be used to reduce debt and get “right-sized” for a market that no one expects to change any time soon.