(Adds plant details, quotes on cheap oil, stock movement)
By Ernest Scheyder
DENVER, April 1 (Reuters) - Oasis Petroleum Inc may create a master limited partnership (MLP) for a $200 million North Dakota gas processing plant, taking advantage of a key financial trend in the energy sector to generate cash, President Taylor Reid said on Wednesday.
Oasis, which operates solely in North Dakota's Bakken shale formation, plans to construct the plant to process natural gas from the Wild Basin portion of North Dakota's Bakken shale formation, over the next two years.
The project would also contain crude oil gathering lines as well as saltwater distribution lines.
"We have potential JV partners for that, or we could go down the path of an MLP," Reid said at the DUG conference in Denver.
An MLP conversion would follow in the steps of Hess Corp , El Paso Pipeline Partners LP and other peers that have announced MLPs of their own for pipeline and processing assets.
MLPs, which trade like equity, are not taxed at the U.S. federal level, lowering their cost of capital for parent companies. They typically have higher quarterly payouts than dividend-paying companies, making them appealing to stockholders.
"In a low commodity price environment, you've got to find new ways to do things," he said.
Reid added that Oasis is "well positioned" to weather the low oil price environment.
The company, which has seen its share price plunge in the past seven months, completed a stock offering of 32 million shares in March to shore up its balance sheet and provide capital to weather cheap oil.
Part of the company's advantage stems from its division that hydraulically fractures, or "fracks," wells, meaning Oasis is not reliant on Halliburton Co or peers for that service.
For instance, Oasis plans to frack 80 wells this year using its own two frack crews. That saves about $400,000 per well, Reid estimated.
"Even in a lower price environment, there's still good benefits, because we're doing all this work ourselves," he said.
Yet the company is already preparing for higher oil prices, with Reid mentioning executives are right now "building a rebound scenario." Part of any higher-price strategy could involve development of acreage in Montana, which Oasis expects could hold as much as 500,000 barrels of oil equivalent, Reid said.
Shares of Houston-based Oasis rose 5.2 percent to $14.96 in Wednesday afternoon trading, in line with a jump in the U.S. benchmark price of crude.
(Reporting by Ernest Scheyder; Editing by Bernard Orr)