Laredo Petroleum, Inc. (NYSE: LPI) ("Laredo" or "the Company"),
today provided an update to the Company's 2020 capital budget and
operating plan. Prioritizing Free Cash Flow1, returns and balance
sheet strength in a volatile commodity price environment, the
Company has reduced its 2020 capital budget by 36%, to $290 million
from the previously-announced $450 million, and expects to generate
approximately $90 million in Free Cash Flow1, excluding
non-budgeted acquisitions, for full-year 2020. Additionally, the
Company has updated its hedge positions for 2020 and 2021.
"Fueled by an extremely strong hedge position, Laredo has the
flexibility to substantially reduce activity to preserve the value
of our assets until commodity prices normalize," stated Jason
Pigott, President and Chief Executive Officer. "We are moving
quickly to stop most of our drilling and completions operations for
the remainder of 2020. Our longstanding strategy of maximizing
flexibility by limiting long-term service contracts, maintaining a
strong hedge position and prioritizing a solid balance sheet with
no near-term debt maturities enables us to scale back operations
and preserve the financial strength to weather a decline in oil
prices."
Updated 2020 Budget Details
- 100% of anticipated oil production hedged, with 7.2 million
barrels swapped at $59.50 WTI and 2.4 million barrels swapped at
$63.07 Brent
- Reducing planned capital expenditures by 36% for full-year
2020, including a 55% decrease in the last nine months of the
year
- Targeting Free Cash Flow1 of approximately $90 million for
Full-Year 2020, excluding non-budgeted acquisitions, assuming $25
WTI for balance of year
- Suspending completions operations in the first week of May for
remainder of 2020
- Reducing operated rig count from four rigs to one rig by June
and then expect to run one rig for balance of 2020
- Expect oil production for full-year 2020 to decline
approximately 8% versus full-year 2019 and for total production to
remain approximately flat
Laredo is making rapid adjustments to its 2020 operating plan in
response to the substantial decrease in oil and natural gas prices.
The Company expects to drop its one currently-contracted
completions crew in early May and to suspend completions activity
for the remainder of 2020. Additionally, Laredo expects to reduce
its operated rig count to one rig, which will operate in Howard
County. To preserve the recently-acquired, tier-one locations in
Howard County, the Company will not complete any wells in Howard
County in 2020 and will build a DUC inventory of these locations to
complete in a potentially more favorable commodity price
environment.
The Company plans to release additional details on full-year
2020 operational plans in association with its first-quarter 2020
earnings release. Guidance issued on February 26, 2020 should no
longer be relied upon.
Liquidity and Hedging Update
Laredo's liquidity, balance sheet structure and hedge position
provide financial strength and flexibility in this commodity price
environment. At March 23, 2020, the Company had outstanding
borrowings of $275 million on its $950 million senior secured
credit facility, resulting in available capacity, after the
reduction for outstanding letters of credit, of $660 million.
Including cash and cash equivalents of $102 million, total
liquidity was $762 million. Additionally, the Company has no
term-debt maturities until 2025.
The Company's robust hedge book underpins cash flow assumptions
in 2020. Laredo currently has approximately 100% of anticipated
2020 oil production hedged with 7.2 million barrels swapped at
$59.50 WTI and 2.4 million barrels swapped at $63.07 Brent. The
value of all of the Company's 2020 hedges exceeds $300 million at
oil prices of $30 WTI and natural gas prices of $2.25 Henry Hub.
For additional details on Laredo's hedge position as of December
31, 2019, with trades entered into through March 20, 2020, please
refer to the table below.
|
|
1Q-20 |
|
2Q-20 |
|
3Q-20 |
|
4Q-20 |
|
FY-20 |
|
FY-21 |
Oil Swaps: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WTI: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Volume (Bbl) |
|
|
1,783,600 |
|
|
|
1,783,600 |
|
|
|
1,803,200 |
|
|
|
1,803,200 |
|
|
|
7,173,600 |
|
|
|
— |
|
Weighted-Average Price ($/Bbl) |
|
$59.50 |
|
|
$59.50 |
|
|
$59.50 |
|
|
$59.50 |
|
|
$59.50 |
|
|
|
— |
|
Brent: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Volume (Bbl) |
|
|
591,500 |
|
|
|
591,500 |
|
|
|
598,000 |
|
|
|
598,000 |
|
|
|
2,379,000 |
|
|
|
1,825,000 |
|
Weighted-Average Price ($/Bbl) |
|
$63.07 |
|
|
$63.07 |
|
|
$63.07 |
|
|
$63.07 |
|
|
$63.07 |
|
|
$60.13 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil Collars: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brent: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Volume (Bbl) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
584,000 |
|
Weighted-Average Floor Price ($/Bbl) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
$45.00 |
|
Weighted-Average Ceiling Price ($/Bbl) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
$59.50 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil Basis Swaps: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brent/WTI: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Volume (Bbl) |
|
|
— |
|
|
|
364,000 |
|
|
|
368,000 |
|
|
|
368,000 |
|
|
|
1,100,000 |
|
|
|
— |
|
Weighted-Average Price ($/Bbl) |
|
|
— |
|
|
$5.08 |
|
|
$5.08 |
|
|
$5.08 |
|
|
$5.08 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural Gas Swaps: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Henry Hub: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Volume (MMBtu) |
|
|
5,915,000 |
|
|
|
5,915,000 |
|
|
|
5,980,000 |
|
|
|
5,980,000 |
|
|
|
23,790,000 |
|
|
|
14,052,500 |
|
Weighted-Average Price ($/MMBtu) |
|
$2.72 |
|
|
$2.72 |
|
|
$2.72 |
|
|
$2.72 |
|
|
$2.72 |
|
|
$2.63 |
|
TABLE CONTINUES ON
NEXT PAGE |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1Q-20 |
|
2Q-20 |
|
3Q-20 |
|
4Q-20 |
|
FY-20 |
|
FY-21 |
Natural Gas Basis Swaps: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Waha/Henry Hub: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Volume (MMBtu) |
|
|
8,099,000 |
|
|
|
10,465,000 |
|
|
|
10,580,000 |
|
|
|
10,580,000 |
|
|
|
39,724,000 |
|
|
|
23,360,000 |
|
Weighted-Average Price ($/MMBtu) |
|
|
-$0.76 |
|
|
|
-$0.82 |
|
|
|
-$0.82 |
|
|
|
-$0.82 |
|
|
|
-$0.81 |
|
|
|
-$0.47 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural Gas Liquids
Swaps: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mt. Belvieu: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ethane: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Volume (Bbl) |
|
|
91,000 |
|
|
|
91,000 |
|
|
|
92,000 |
|
|
|
92,000 |
|
|
|
366,000 |
|
|
|
912,500 |
|
Weighted-Average Price ($/Bbl) |
|
$13.60 |
|
|
$13.60 |
|
|
$13.60 |
|
|
$13.60 |
|
|
$13.60 |
|
|
$12.01 |
|
Non-TET Propane: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Volume (Bbl) |
|
|
309,400 |
|
|
|
309,400 |
|
|
|
312,800 |
|
|
|
312,800 |
|
|
|
1,244,400 |
|
|
|
730,000 |
|
Weighted-Average Price ($/Bbl) |
|
$26.58 |
|
|
$26.58 |
|
|
$26.58 |
|
|
$26.58 |
|
|
$26.58 |
|
|
$25.52 |
|
Non-TET Normal Butane: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Volume (Bbl) |
|
|
109,200 |
|
|
|
109,200 |
|
|
|
110,400 |
|
|
|
110,400 |
|
|
|
439,200 |
|
|
|
255,500 |
|
Weighted-Average Price ($/Bbl) |
|
$28.69 |
|
|
$28.69 |
|
|
$28.69 |
|
|
$28.69 |
|
|
$28.69 |
|
|
$27.72 |
|
Non-TET Isobutane: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Volume (Bbl) |
|
|
27,300 |
|
|
|
27,300 |
|
|
|
27,600 |
|
|
|
27,600 |
|
|
|
109,800 |
|
|
|
67,525 |
|
Weighted-Average Price ($/Bbl) |
|
$29.99 |
|
|
$29.99 |
|
|
$29.99 |
|
|
$29.99 |
|
|
$29.99 |
|
|
$28.79 |
|
Non-TET Natural Gasoline: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Volume (Bbl) |
|
|
100,100 |
|
|
|
100,100 |
|
|
|
101,200 |
|
|
|
101,200 |
|
|
|
402,600 |
|
|
|
237,250 |
|
Weighted-Average Price ($/Bbl) |
|
$45.15 |
|
|
$45.15 |
|
|
$45.15 |
|
|
$45.15 |
|
|
$45.15 |
|
|
$44.31 |
|
About Laredo
Laredo Petroleum, Inc. is an independent energy company with
headquarters in Tulsa, Oklahoma. Laredo's business strategy is
focused on the acquisition, exploration and development of oil and
natural gas properties, primarily in the Permian Basin of West
Texas.
Additional information about Laredo may be found on its website
at www.laredopetro.com.
Forward-Looking Statements
This press release and any oral statements made regarding the
subject of this release contain 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, indicates, enables, transforms,
estimates or anticipates (and other similar expressions) will,
should or may occur in the future are forward-looking statements.
This press release and any accompanying disclosures may include or
reference certain forward-looking, non-GAAP financial measures,
such as Free Cash Flow, and certain related estimates regarding
future performance, results and financial position. 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, long-term performance of wells, drilling and
operating risks, the increase in service and supply costs, tariffs
on steel, pipeline transportation constraints in the Permian Basin,
hedging activities, the outbreak of disease, such as the COVID-19
pandemic, possible impacts of litigation and regulations and other
factors, including those and other risks described in its Annual
Report on Form 10-K for the year ended December 31, 2019, and those
set forth from time to time in other filings with the Securities
and 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. Any forward-looking
statement speaks only as of the date on which such statement is
made and the Company undertakes no obligation to correct or update
any forward-looking statement, whether as a result of new
information, future events or otherwise, except as required by
applicable law.
All amounts, dollars and percentages presented in this press
release are rounded and therefore approximate.
1Free Cash Flow (non-GAAP) is based on adjusting net cash
provided by operating activities (GAAP) to cash flow from operating
activities before changes in operating assets and liabilities, net,
less costs incurred, excluding non-budgeted acquisition costs.
Contact: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