Laredo Petroleum, Inc. (NYSE:LPI) (“Laredo” or “the Company”)
announces its 2017 capital budget and anticipated production growth
and its conference call to discuss fourth-quarter and full-year
2016 results.
2017 Capital Budget
Laredo today announced that its Board of Directors has approved
a $530 million capital budget for 2017. The budget includes
approximately $450 million for drilling and completions activities
and approximately $80 million for production facilities and other
capitalized costs, including completions testing, data acquisition
and land. The approved budget does not include potential
investments in the Medallion-Midland Basin pipeline system.
"Our 2017 capital budget takes advantage of our contiguous
acreage position and production corridor investments to generate
capital-efficient production growth," stated Randy A. Foutch,
Laredo Chairman and Chief Executive Officer. "The horizontal wells
we expect to drill this year have an average lateral length of
approximately 10,000 feet and almost all production and produced
water from these wells is expected to be gathered by Laredo
Midstream Services' production corridors and pipeline assets,
maximizing capital efficiency and minimizing operating costs. Our
development plan capitalizes on the ability of our production
corridors to handle the movement of large volumes of oil, gas and
water, thus enabling the development of multi-well packages. We
plan to primarily target our highly productive Upper and Middle
Wolfcamp zones while continuing to optimize completions by
adjusting stage and cluster spacing and proppant
concentrations."
Laredo expects to operate four horizontal rigs in 2017 and
anticipates drilling and completing approximately 70 horizontal
wells with an average working interest of approximately 95%. The
Company expects approximately 85% of its drilling activity to
target the Upper and Middle Wolfcamp zones with the remainder in
the Lower Spraberry and Cline zones. This activity is expected to
generate total production growth of more than 15% versus full-year
2016 volumes.
The Company expects all wells to be drilled as multi-well
packages with, on average, with four to five wells per package.
Developing wells in larger packages enables Laredo to minimize the
impact of current drilling on future development plans by
mitigating pressure depletion and frac impact. Multi-well package
development is expected to benefit full-year production, although
the size and timing of the packages may substantially vary the
number of well completions and daily production growth on a
quarterly basis.
The Company's fourth horizontal rig, which was delivered in
mid-November and used to drill a core test through the end of 2016,
is expected to impact production during the second quarter of 2017.
As production from the fourth rig comes online, production growth
is expected to accelerate in the second half of the year,
generating anticipated growth of more than 17% in the fourth
quarter of 2017, compared to the fourth quarter of 2016.
Capital costs for Upper and Middle Wolfcamp wells drilled on
multi-well pads are expected to be approximately $6.4 million for a
10,000-foot lateral completed with 1,800 pounds of sand per foot.
Recent increases in service costs have been incorporated into the
Company's budgeted wells costs, a portion of which have been offset
by continued efficiency gains.
The budget is expected to be funded with internally generated
cash flows and borrowings on the Company's senior secured credit
facility. Additionally, today the Company expects to close the sale
of approximately 2,900 net acres for proceeds of approximately $60
million. After the closing and application of the proceeds to pay
down a portion of the credit facility, the Company will have
approximately $15 million drawn on its $815 million credit
facility.
Laredo maintains a disciplined hedging program to reduce the
variability in its anticipated cash flow due to fluctuations in
commodity prices. At January 16, 2017, the Company had hedges in
place for 2017 for 6,852,875 barrels of oil at weighted-average
floor price of $55.82 per barrel, representing approximately 70% of
anticipated oil production in 2017. Approximately 80% of
anticipated oil production in 2017 retains significant upside to an
increase in the price of oil with those volumes either having a
weighted-average ceiling price of $86.00 per barrel or no ceiling
at all.
Fourth-Quarter and Full-Year 2016 Earnings Conference
Call
Laredo plans to release fourth-quarter and full-year 2016
earnings on Wednesday, February 15, 2017 after the market close and
the Company will host a conference call on Thursday, February 16,
2017 at 7:30 a.m. CT (8:30 a.m. ET) to discuss its fourth-quarter
and full-year 2016 financial and operating results. Individuals who
would like to participate on the call should dial 877.930.8286
(international dial-in 253.336.8309), using conference code
53302066 or listen to the call via the Company's website at
www.laredopetro.com, under the tab for "Investor Relations." A
telephonic replay will be available approximately two hours after
the call on February 16, 2017 through Thursday, February 23, 2017.
Participants may access this replay by dialing 855.859.2056, using
conference code 53302066.
Forward-Looking Statements
This press release and any oral statements made regarding the
subject of this release, including in the conference call
referenced herein, contains forward-looking statements as defined
under Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. All
statements, other than statements of historical facts, that address
activities that Laredo assumes, plans, expects, believes, intends,
projects, estimates or anticipates (and other similar expressions)
will, should or may occur in the future are forward-looking
statements. The forward-looking statements are based on
management’s current belief, based on currently available
information, as to the outcome and timing of future events.
General risks relating to Laredo include, but are not limited
to, the decline in prices of oil, natural gas liquids and natural
gas and the related impact to financial statements as a result of
asset impairments and revisions to reserve estimates, and other
factors, including those and other risks described in its Annual
Report on Form 10-K for the year ended December 31, 2015, and those
set forth from time to time in other filings with the Securities
Exchange Commission (“SEC”). These documents are available through
Laredo’s website at www.laredopetro.com under the tab
“Investor Relations” or through the SEC’s Electronic Data Gathering
and Analysis Retrieval System at www.sec.gov. Any of these factors
could cause Laredo’s actual results and plans to differ materially
from those in the forward-looking statements. Therefore, Laredo can
give no assurance that its future results will be as estimated.
Laredo does not intend to, and disclaims any obligation to, update
or revise any forward-looking statement.
The SEC generally permits oil and natural gas companies, in
filings made with the SEC, to disclose proved reserves, which are
reserve estimates that geological and engineering data demonstrate
with reasonable certainty to be recoverable in future years from
known reservoirs under existing economic and operating conditions
and certain probable and possible reserves that meet the SEC’s
definitions for such terms. In this press release and the
conference call, the Company may use the terms “resource potential”
and “estimated ultimate recovery,” or “EURs,” each of which the SEC
guidelines restrict from being included in filings with the SEC
without strict compliance with SEC definitions. These terms refer
to the Company’s internal estimates of unbooked hydrocarbon
quantities that may be potentially added to proved reserves,
largely from a specified resource play. A resource play is a term
used by the Company to describe an accumulation of hydrocarbons
known to exist over a large areal expanse and/or thick vertical
section potentially supporting numerous drilling locations, which,
when compared to a conventional play, typically has a lower
geological and/or commercial development risk. EURs are based on
the Company’s previous operating experience in a given area and
publicly available information relating to the operations of
producers who are conducting operations in these areas. Unbooked
resource potential or EURs do not constitute reserves within the
meaning of the Society of Petroleum Engineer’s Petroleum Resource
Management System or SEC rules and do not include any proved
reserves. Actual quantities of reserves that may be ultimately
recovered from the Company’s interests may differ substantially
from those presented herein. Factors affecting ultimate recovery
include the scope of the Company’s ongoing drilling program, which
will be directly affected by the availability of capital, decreases
in oil and natural gas prices, drilling and production costs,
availability of drilling services and equipment, drilling results,
lease expirations, transportation constraints, regulatory
approvals, negative revisions to reserve estimates and other
factors as well as actual drilling results, including geological
and mechanical factors affecting recovery rates. Estimates of
unproved reserves may change significantly as development of the
Company’s core assets provides additional data. In addition, our
production forecasts and expectations for future periods are
dependent upon many assumptions, including estimates of production
decline rates from existing wells and the undertaking and outcome
of future drilling activity, which may be affected by significant
commodity price declines or drilling cost increases.
17-1
Contacts:
Ron Hagood: (918) 858-5504 - RHagood@laredopetro.com
Laredo Petroleum (NYSE:LPI)
Historical Stock Chart
From Mar 2024 to Apr 2024
Laredo Petroleum (NYSE:LPI)
Historical Stock Chart
From Apr 2023 to Apr 2024