Laredo Petroleum Acquires Bolt-On Midland Basin Acreage
July 14 2016 - 6:29AM
Laredo Petroleum, Inc. (NYSE:LPI) (“Laredo” or the “Company”) today
announced that it has signed a purchase and sale agreement for
additional acreage within the Company's existing footprint in the
Midland Basin for $125 million, subject to customary closing price
adjustments. The acquisition secures additional rights to the
Spraberry interval, enables the drilling of additional 10,000-foot
or longer locations, facilitates the new Western Glasscock
production corridor and increases the Company's working interest in
current leasehold in western Glasscock and Reagan counties, Texas.
The acquisition adds approximately 9,200 net acres, of which
approximately 6,300 are in the Spraberry interval and approximately
2,900 net acres are in the Spraberry, Upper, Middle and Lower
Wolfcamp, Canyon and Cline zones. The purchase includes
approximately 300 net barrels of oil equivalent per day of
Laredo-operated production from existing vertical wells through
increased working interest in the wells.
The primary focus of the acquisition is the Company's acreage
position in western Glasscock County. The contiguous acreage block
drives capital efficiencies by enabling the building of the
Company's new Western Glasscock production corridor, developing the
entire block with 10,000-foot or longer laterals and utilization of
Laredo's Earth Model to optimize location selection and completion
design.
The acreage outside of the Western Glasscock production corridor
is in Laredo's primary development area, proximate to other Laredo
production corridors and covered by the Earth Model. The acreage
bolts on directly to current drilling units and further enables the
development of the acreage with 10,000-foot or longer laterals.
"This acquisition combines the acreage attributes and strategic
investments that are drivers of the Company's capital
efficiencies," commented Randy A. Foutch, Chairman and Chief
Executive Officer. "Acquiring additional Spraberry rights,
utilizing the Earth Model to optimize location selection and
completion design and drilling long laterals along the new Western
Glasscock production corridor enables the Company to efficiently
develop this large, contiguous acreage block in western Glasscock
County."
On July 13, 2016, the Company closed a portion of this
acquisition for approximately $92.7 million. The closings on the
remaining interests, which are subject to certain preferential
purchase rights and consents, are expected to occur as such rights
and consents are satisfied or obtained.
Commodity Derivatives Update
In early July, the Company hedged 2,007,500 barrels of oil for
2017, resulting in 5,684,875 barrels of oil hedged for 2017 at a
weighted-average floor price of $57.01 per barrel. The Company
retains significant upside to an increase in the price of oil as
approximately 2,628,000 of these barrels have a weighted-average
ceiling price of $97.22 per barrel and 1,049,375 barrels have no
ceiling. Additionally, the Company hedged 444,000 barrels of ethane
for 2017 at $11.24 per barrel and 375,000 barrels of propane for
2017 at $22.26 per barrel.
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, and the transportation of oil and natural
gas from such properties, primarily in the Permian Basin in West
Texas.
Additional information about Laredo may be found on its website
at www.laredopetro.com.
Forward-Looking Statements
This press release 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.
Contact:Ron Hagood: (918) 858-5504 -
rhagood@laredopetro.com
16-13
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