Oasis Petroleum Inc. said it expects “meaningful production growth” through the remainder of 2014 and plans to expand its slickwater program in the Bakken Shale and Three Forks formation, after observing increased uplift from wells using the technique there.

The Houston-based company said average daily production was 43,668 boe/d, with 89.1% weighted toward oil. Production for the quarter was 44.7% over 2Q2013 (30,171 boe/d) and 6% above 1Q2014, excluding production from the Sanish formation (42,856 boe/d).

Oasis this year sold certain nonoperated properties in its Sanish project area, as well as some nonoperated leases adjacent to its position, to an undisclosed buyer for approximately $321.9 million (see Shale Daily, Feb. 6). The transaction closed on March 5.

Oasis reported that as of June 30 it had 537 gross (415.9 net) operated wells and 277 gross (21.4 net) wells in the Williston Basin. Of those, 364 gross (280.1 net) operated and 176 gross (14.2 net) nonoperated wells were in the West Williston project area, while 173 gross (135.8 net) operated and 101 gross (7.2 net) nonoperated wells were in the East Nesson project area.

The company said it had deployed approximately 16 rigs during 2Q2014, and at the end of the quarter its inventory of gross operated wells awaiting completion totaled 35 in the West Williston and 32 in the East Nesson. Oasis completed 41 gross (30.8 net) operated wells during the quarter and placed them into production.

“We expect meaningful production growth through the end of the year and specifically in the third quarter, increasing production to between 47,000-49,000 boe/d,” CEO Thomas Nusz said during a conference call with analysts. He added that the company was focusing on the transition to full field development and increasing production through optimized completion designs.

“Approximately 60% of our rigs are in full field development, where we are drilling out full spacing units,” said COO Taylor Reid. “In contrast, the other 40% of our rigs are drilling partial spacing units as we confirm infill spacing density, test new completion techniques and hold land.

“This portion of the program is an investment in the future that will pay off with an increasing percentage of the program being dedicated to full field development as we move forward.”

Reid added that Oasis had seen a 35% uplift on average across its wells in the Bakken. As a result, the company increased the percentage of wells it planned to develop with slickwater during the second half of 2014, from 20% to 25% of its well count.

“While it’s still early, the results are encouraging because we designed the plans for full field development with slickwater wells,” Reid said.

Adjusted earnings before interest taxes depreciation and amortization (EBITDA) totaled $254.7 million, a 37% increase over 2Q2013 ($185.5 million) and 6% above 1Q2014 ($239.8 million). Net income for 2Q2014 was $38.8 million (39 cents/share), compared to net income of $67.1 million (72 cents/share) in 2Q2013. The company said 2Q2014 was impacted by several non-cash items.

Analysts said they were disappointed by production for the quarter, saying it missed their expectations.

In a note Wednesday, Gabriele Sorbara of Topeka Capital Markets said Oasis had missed the firm’s earnings per share (EPS) estimate (81 cents/share) and its average production estimate (44,900 boe/d), as well as the consensus estimate for average production (44,800 boe/d). Nevertheless, Topeka reaffirmed its “buy” rating on Oasis, setting a target price of $64/share.

“While production missed expectations, it was within management’s guidance,” Sorbara said. “Further, the production miss does not come as a complete surprise following reported June production data to the North Dakota Industrial Commission earlier this week. The production miss was attributable to six fewer completions than planned during the quarter.

Irene Haas of Wunderlich Securities Inc. concurred, saying that while Oasis has missed the consensus for EPS (74 cents/share), EBITDA was in line and 2Q2014 production was impacted by weather-related road closures. Wunderlich also set a “buy” rating for Oasis, with a target price of $68/share.

“We expect more efficiency gains as 60% of the company’s rigs are in full field development, drilling out full spacing units on pads using skiddable rigs,” Haas said in a note Thursday. “Oasis now projects that 70% of completions will differ from the base design, up 10% from previous estimates. These new designs involve larger jobs with more fluids and proppants, resulting in more productive wells. With scope and scale, we expect [Oasis] to lower its per-unit costs as it continues to optimize.”

Haas added that “while the wet spring has impacted the company’s operation, we look forward to seeing all the innovations resulting in bigger and more profitable wells.”

On Wednesday, BMO Capital Markets Corp. labeled Oasis stock as “market outperform.” Production for the quarter was below BMO’s estimate of 45,700 boe/d.

“Listening to the 2Q2014 earnings call didn’t give us much confidence; the new and improved completion technique — slickwater, et al — is anything more than accelerating production, in our view,” said BMO analyst Dan McSpirit. “That may not matter if the name of the game is to increase [present value], but could matter if the decline rate is steeper in the out periods, perhaps changing the base decline rate of the company and/or changing the capital efficiency profile as well. [It] may be too early to tell whether the decline rate is steeper beyond the early days.”

Shares of Oasis were trading at $47.22, up 1.66% or 77 cents, during midday trading on the New York Stock Exchange on Friday.