Oasis Midstream Partners LP (OMP) Stock Analysis

Oasis Midstream Partners LP (OMP) Energy Operations & Outlook

Oasis Midstream Partners LP, now a subsidiary of Crestwood Equity Partners LP, delivers essential midstream services, including gathering, processing, and transportation of crude oil, natural gas, and water. Operating primarily in North America, the company supports upstream energy producers with critical infrastructure and logistics solutions.

What Is the Investment Thesis for OMP?

Oasis Midstream Partners LP's acquisition by Crestwood Equity Partners LP marks a significant shift in its operational structure and investment profile. Prior to the acquisition, OMP's financial performance was characterized by a P/E ratio of 35.09 and a profit margin of 6.6%, coupled with a high gross margin of 79.1%. The company's beta of 2.53 indicated a high level of volatility relative to the market. The absence of a dividend yield reflected a focus on reinvesting earnings into growth initiatives. The investment thesis now centers on Crestwood's ability to integrate OMP's assets and operations to enhance its overall midstream service offerings. Key value drivers include synergies from the acquisition, optimization of existing infrastructure, and expansion into new growth areas within the energy sector. Investors should monitor Crestwood's strategic execution and financial performance post-acquisition to assess the long-term value creation potential.

Based on FMP financials and quantitative analysis

OMP Key Highlights

Gross Margin of 79.1% indicates strong operational efficiency in midstream services.

• P/E Ratio of 35.09 reflects investor expectations of future earnings growth prior to acquisition.
• Beta of 2.53 suggests high volatility compared to the broader market, typical for energy sector companies.
• Profit Margin of 6.6% demonstrates profitability in a competitive market.
• Acquisition by Crestwood Equity Partners LP in February 2022 marks a strategic shift for OMP's assets and operations.

Who Are OMP's Competitors?

OMP is benchmarked below against 8 industry peers on price, market cap, and our AI MoonshotScore.

AI Score by Stock Expert AI · Price data: FMP / Yahoo Finance

What Are OMP's Key Strengths?

Strategic asset locations in key production areas.

• Integrated service offerings across the midstream value chain.
• Experienced management team with a proven track record.
• Stable revenue streams from long-term contracts.

What Are OMP's Weaknesses?

Exposure to commodity price fluctuations.

• Dependence on upstream production volumes.
• Regulatory risks associated with pipeline operations.
• Potential for environmental liabilities.

What Could Drive OMP Stock Higher?

Integration of OMP's assets and operations into Crestwood Equity Partners LP's portfolio.

• Optimization of existing midstream infrastructure to improve efficiency and reduce costs.
• Potential expansion of midstream services in high-growth production areas.
• Strategic partnerships to enhance service offerings and expand geographic reach.

What Are the Key Risks for OMP?

Rich valuation — a P/E of 35.09 runs well above the Energy sector’s ~15.80x, leaving little room for a miss.

• Insider selling — insiders were net sellers of roughly $1.0B recently.
• Fluctuations in commodity prices impacting profitability.
• Regulatory changes affecting pipeline operations and environmental compliance.
• Increased competition from other midstream companies.
• Operational disruptions due to weather events or equipment failures.
• Integration challenges following the acquisition by Crestwood Equity Partners LP.

What Are the Growth Opportunities for OMP?

• Expansion of Midstream Infrastructure: Crestwood Equity Partners LP can leverage OMP's existing assets to expand its midstream infrastructure network, particularly in high-growth production areas. This includes building new pipelines, storage facilities, and processing plants to accommodate increasing volumes of crude oil and natural gas. The market for midstream infrastructure is projected to grow as energy production increases, offering significant opportunities for expansion and revenue growth. Timeline: Ongoing.
• Optimization of Existing Assets: Crestwood can optimize OMP's existing assets through technological upgrades, operational improvements, and strategic partnerships. This includes implementing advanced monitoring systems, improving pipeline efficiency, and reducing operating costs. By optimizing its asset base, Crestwood can increase throughput, reduce downtime, and improve overall profitability. The market for midstream optimization services is growing as companies seek to maximize the value of their existing infrastructure. Timeline: Ongoing.
• Strategic Acquisitions and Partnerships: Crestwood can pursue strategic acquisitions and partnerships to expand its geographic reach and service offerings. This includes acquiring smaller midstream companies, forming joint ventures with upstream producers, and partnering with technology providers. By expanding its network and capabilities, Crestwood can enhance its competitive position and capture new market opportunities. The market for midstream acquisitions and partnerships is active, with numerous opportunities for consolidation and growth. Timeline: Ongoing.
• Focus on Sustainable Practices: Crestwood can invest in sustainable practices to reduce its environmental footprint and enhance its reputation. This includes implementing emissions reduction technologies, improving water management practices, and investing in renewable energy sources. By focusing on sustainability, Crestwood can attract environmentally conscious investors and customers, while also reducing its regulatory risk. The market for sustainable midstream services is growing as companies and investors prioritize environmental responsibility. Timeline: Ongoing.
• Leveraging Technological Advancements: Crestwood can leverage technological advancements to improve its operational efficiency, reduce costs, and enhance its service offerings. This includes implementing artificial intelligence (AI) and machine learning (ML) to optimize pipeline operations, using drones for pipeline inspection, and developing digital platforms for customer engagement. By embracing technology, Crestwood can gain a competitive advantage and drive innovation in the midstream sector. The market for midstream technology solutions is rapidly evolving, offering numerous opportunities for innovation and growth. Timeline: Ongoing.

What Are OMP's Competitive Advantages?

• Strategic asset locations in key production areas provide a competitive advantage.
• Long-term contracts with upstream producers ensure stable revenue streams.
• Integrated service offerings create synergies and enhance customer relationships.
• Operational expertise and experience in the midstream sector.

What Does OMP Do?

Founded in 2013 and based in Houston, Texas, Oasis Midstream Partners LP (OMP) was a key player in the North American midstream energy sector before being acquired by Crestwood Equity Partners LP on February 1, 2022. OMP provided a comprehensive suite of services related to crude oil, natural gas, and water management. These services included natural gas gathering, compression, processing, and gas lift supply; crude oil gathering, stabilization, blending, and storage; produced and flowback water gathering and disposal; freshwater distribution; and crude oil transportation. A significant aspect of their operations was the transportation of crude oil from the Wild Basin operating area to Johnson's Corner, highlighting their role in connecting production areas with key distribution points. OMP GP LLC served as the general partner, guiding the strategic direction and operational oversight of the company. The company's integrated approach to midstream services positioned it as a vital link between upstream producers and downstream markets, ensuring the efficient and reliable flow of energy resources.

What Products and Services Does OMP Offer?

• Gathering and processing natural gas from production sites.
• Compressing natural gas to facilitate transportation.
• Supplying gas lift services to enhance oil production.
• Gathering, stabilizing, blending, and storing crude oil.
• Gathering and disposing of produced and flowback water.
• Distributing freshwater for hydraulic fracturing operations.
• Transporting crude oil from production areas to delivery points.

How Does OMP Make Money?

• Fee-based contracts for gathering, processing, and transportation services.
• Long-term agreements with upstream producers to ensure stable revenue streams.
• Strategic investments in midstream infrastructure to support growing production volumes.
• Optimization of existing assets to improve efficiency and reduce operating costs.

What Industry Does OMP Operate In?

Oasis Midstream Partners LP operated within the dynamic and capital-intensive oil and gas midstream sector. This sector is characterized by the transportation, storage, and processing of crude oil, natural gas, and natural gas liquids. Key trends include increasing demand for midstream infrastructure to support growing production from shale plays and a focus on operational efficiency and cost reduction. The competitive landscape includes both large, integrated midstream companies and smaller, regional players. OMP's position within this landscape was defined by its focus on providing comprehensive midstream services in specific operating areas, primarily the Wild Basin.

Who Are OMP's Key Customers?

• Upstream oil and gas producers operating in the Wild Basin and surrounding areas.
• Refineries and processing plants that require crude oil and natural gas.
• Energy companies seeking water management solutions for hydraulic fracturing.
• Other midstream companies that require transportation and storage services.

Company Profile

Oasis Midstream Partners LP operates in the Oil & Gas Midstream industry within the Energy sector. It is headquartered in Houston, US. The company is led by CEO Taylor L. Reid. OMP has traded publicly since 2017.

The most recent 10 insider filings for Oasis Midstream Partners LP break down as 10 sales and 0 purchases. On net that is roughly 38.3M shares disposed (about $1.0B), a signal worth weighing alongside the fundamentals.

Oasis Midstream Partners LP has beaten Wall Street's EPS estimate in 4 of its last 8 reported quarters — more hits than misses. Reported results have landed about 4.0% below estimates on average.

Return on equity for Oasis Midstream Partners LP stands at 4.1%, a gauge of how efficiently it converts shareholder capital into profit. Return on assets is 2.2%, showing how much profit it generates from its asset base. OMP trades at a trailing price-to-earnings ratio of 35.09, above the Energy sector average of ~15.80x. A current ratio of 1.74 indicates the company holds enough short-term assets to cover its near-term obligations. Its earnings yield is 2.9%, the inverse of the P/E and a quick read on earnings relative to price.

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Disclaimer: This content is for informational purposes only and does not constitute investment advice. Always do your own research and consult a financial advisor.

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