Williston pure-play operator Oasis Petroleum Inc. cut its capital expenditures (capex) budget by more than one-third and plans to run a two-rig drilling program in 2016, after beating its production guidance for 4Q2015 and the year and seeing its lease operating expenses (LOE) for the quarter hit their lowest level since 2012.

During an earnings conference call Thursday, executives with the Houston-based exploration and production (E&P) company said it plans to maintain its strong borrowing base and liquidity into 2016, and will expand its high-intensity completion program to include all wells drilled during the year.

“While 2015 proved to be more challenging on the macro front than many had anticipated, from an operational standpoint it was arguably our best since inception,” said CEO Thomas Nusz. “We have also been able to remain strong and well positioned in a challenging environment, which is reflected by our continued ability to remain cash flow positive…despite a significant decrease in the commodity price year over year.

“Given the macro environment, we are keenly focused on our balance sheet with an eye on liquidity, leverage, our hedge profile and how our operational choices impact all of these items.”

Oasis said it plans to spend $400 million on capex in 2016 — a 43.3% cut from what the company originally planned to spend on capex in 2015, and 34.4% below the $610 million it actually spent. Of the $400 million for 2016, the company will allocate $200 million to drilling and completions, $140 million to Oasis Midstream Services (OMS), $42 million for acquisitions and other expenses and $18 million on capitalized interest.

OMS was the only capex item to get a funding boost from 2015, when it received $97 million. The unit includes more than 300 miles of saltwater gathering lines and 29 saltwater disposal wells.

The E&P said it will deploy two rigs in its Wild Basin project area, which is located in its Bakken core area in McKenzie County, ND. For the year, the company plans to complete 46 gross (28.6 net) operated wells at a cost of about $6.5 million per well.

“Wild Basin is in the deepest part of the basin and is some of the very best rock, not just in the company or the Williston Basin but across all of the North American resource plays,” said Nusz, adding that the company “can still drill economically attractive wells” there at a West Texas Intermediate (WTI) crude oil price of $35/bbl WTI.

Production averaged 50,700 boe/d (85% oil) in 4Q2015 and 50,500 boe/d (87% oil) for the full-year 2015. The latter was a 10.5% increase from 2014 (45,700 boe/d). Although Oasis beat its production guidance for both 4Q2015 (47,000-49,000 boe/d) and all of 2015 (45,000-49,000 boe/d), crude oil’s percentage of total production fell for the fourth consecutive year; it was 95% back in 2011. The company issued production guidance of 46,000-49,000 boe/d for 2016.

“The fourth quarter oil percentage came down mainly because we were connecting our wells at a higher rate and so we flared less gas,” said CFO Michael Lou. “The Wild Basin will be a little bit gassier, so the oil percentage will continue to inch down a bit as we do more Wild Basin wells.”

Lou added that the company’s 80 MMcf/d natural gas processing plant in the Wild Basin, currently under construction, should come online near the end of 3Q2016 or possibly sometime in 4Q2016.

According to COO Taylor Reid, as the company moves further into 2016, Oasis “will continue to keep an eye on the oil markets and will be prepared to adjust activity accordingly…In addition, our backlog of 85 wells waiting on completion at year-end provides us with immediate flexibility from a price recovery and operational standpoint.”

LOEs were $6.85/boe for the fourth quarter — its lowest level since 2012 — and $7.84/boe for the full-year 2015. The latter figure was a 23% reduction from 2014 ($10.18/boe), and was enough to beat its guidance of $9.50-10.50/boe for the year. Oasis said it expects LOEs to range from $7.75-8.50/boe in 1Q2016.

Oasis currently holds 485,000 net acres in the Williston Basin, 91% of which is held by production and 97% is operated (see Shale Daily, Aug. 11, 2014). The company’s total acreage is divided among the West Williston project area (345,000 acres in Montana’s Richland and Roosevelt counties, and North Dakota’s McKenzie and Williams counties), and the East Nesson project area (140,000 acres in North Dakota’s Burke and Mountrail counties).

Broken down further, West Williston includes the Montana (89,000 acres), Red Bank (74,000), Foreman Butte (64,000), Painted Woods (46,000), Indian Hills (39,000) and Wild Basin (18,000) project areas, while East Nesson includes the North Cottonwood (88,000), South Cottonwood (34,000) and Alger (17,000) project areas.

Oasis reported total revenue of $182.1 million in 4Q2015, a 39.2% decline from 4Q2014 ($299.7 million), and $789.7 million for the full-year 2015, a 43.2% decline from 2014 ($1.39 billion). Adjusted earnings before interest, taxes, depreciation, and amortization totaled $176.7 million in 4Q2015, a 19.5% decline from 4Q2014 ($219.5 million), and $820.2 million for the full-year 2015, a 13.9% decrease from 2014 ($952.8 million).

The company reported net income of $3.97 million (three cents/share) in 4Q2015, compared to net income of $176.5 million ($1.77/share) in 4Q2014. For the full-year 2015, Oasis had a net loss of $40.2 million (minus 31 cents/share), compared to net income of $506.9 million ($5.05/share) in 2014.

Oasis currently has nothing drawn under its $1.15 billion borrowing base and has no near-term maturities. Illustrating the point, the company currently has a “BB-” rating with Standard & Poor’s Ratings Service and a “B2” rating with Moody’s Investors Service.