Laredo Petroleum, Inc. (NYSE: LPI) ("Laredo" or the "Company")
today announced its capital budget and production guidance for
full-year 2022.
Highlights
- Allocates capital to highest-return opportunities, prioritizing
the generation of Free Cash Flow1 and leverage reduction
- Maintains capital discipline with flat activity levels versus
2021, with expected total capital expenditures of ~$520 million,
including ~$20 million for non-operated activity and ~$10 million
for ESG focused investments
- Generates expected Free Cash Flow1 of >$300 million at $80
WTI and $4.65 Henry Hub
- Accelerates achievement of deleveraging targets by
approximately six months. Company expects to achieve 1.5x Net
Debt/Adjusted EBITDA1 ratio in third-quarter 2022 and below 1.0x by
the second half of 2023
- Holds oil production approximately flat with 4Q-21 levels and
generates expected full-year oil production growth of 24 -34%
versus prior year, driven primarily by production acquired in the
second-half of 2021
- Improves capital efficiency through longer-lateral completions,
with average lateral length for 2022 expected to be ~11,800 feet,
including 18 15,000-foot wells
"Our 2022 capital budget and expectations are a
direct result of the transformational nature of the transactions we
executed in 2021," stated Jason Pigott, President and CEO. "The
well-timed acquisitions and efficient integration of the properties
into our development plan dramatically increased our capital
efficiency and oil cut, driving our expected Free Cash Flow1
generation and enabling us to further strengthen our balance sheet.
Combined, these important steps are expected to position the
Company to return cash to shareholders by early 2023."
Laredo’s 2022 capital budget maintains the
Company’s commitment to capital discipline, holding its rig and
completions crew count flat with 2021. Activity and capital levels
are front-end loaded, with the year’s highest level of investment
occurring in the first quarter of 2022, during which the Company is
operating three drilling rigs and two completions crews for much of
the quarter. Laredo plans to release one drilling rig and one
completions crew by the end of the first quarter and operate a
constant two drilling rigs and one completions crew for the balance
of 2022.
The Company’s 2022 development plan is focused
entirely on capital efficient, oil-weighted Howard County
inventory. Efficiencies are expected to further improve with 18
15,000-foot wells in the 2022 plan and average lateral length
increasing ~18% to 11,800 feet. Laredo expects to hold full-year
2022 average daily oil production relatively flat with Q4-21
levels.
The primary driver for the expected increase in
2022 capital expenditures versus 2021 is a robust inflationary
environment, with Laredo anticipating average inflation of ~15% for
2022. The Company has contracted a significant portion of its
services and tangible goods through the first half of 2022. Other
significant differences from 2021 investments include ~$20 million
for non-operated activities and ~$10 million for facility upgrades
to improve emissions on recently acquired properties.
1Non-GAAP financial measure; please see
definitions of non-GAAP financial measures at the end of this
release.
Full-Year 2022 Guidance
The table below reflects the Company's guidance
for total and oil production, incurred capital expenditures and
selected activity metrics.
|
|
|
FY-22E |
Total
production (MBOE per
day) |
|
|
82.0 - 86.0 |
Oil
production
(MBOPD) |
|
|
39.5 -
42.5 |
Incurred
capital expenditures, excluding non-budgeted acquisitions ($
MM) |
|
|
~520 |
|
|
|
|
Average
drilling rigs |
|
|
2.3 |
Average
completions
crews |
|
|
1.2 |
TILs/Completions/Spuds |
|
|
55/55/65 |
Average
lateral length
(ft.) |
|
|
11,800 |
Average
WI% |
|
|
97% |
|
|
|
|
Forward-Looking Statements
This press release and any oral statements made
regarding the contents 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. 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. Such
statements are not guarantees of future performance and involve
risks, assumptions and uncertainties. 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, the ability of the Company to execute its
strategies, including its ability to successfully identify and
consummate strategic acquisitions at purchase prices that are
accretive to its financial results and to successfully integrate
acquired businesses, assets and properties, oil production quotas
or other actions that might be imposed by the Organization of
Petroleum Exporting Countries and other producing countries
("OPEC+"), the outbreak of disease, such as the coronavirus
("COVID-19") pandemic, and any related government policies and
actions, changes in domestic and global production, supply and
demand for commodities, including as a result of the COVID-19
pandemic and actions by OPEC+, long-term performance of wells,
drilling and operating risks, the increase in service and supply
costs, tariffs on steel, pipeline transportation and storage
constraints in the Permian Basin, the possibility of production
curtailment, hedging activities, the impacts of severe weather,
including the freezing of wells and pipelines in the Permian Basin
due to cold weather, possible impacts of litigation and
regulations, the impact of the Company’s transactions, if any, with
its securities from time to time, the impact of new laws and
regulations, including those regarding the use of hydraulic
fracturing, the impact of new environmental, health and safety
requirements applicable to the Company’s business activities, the
possibility of the elimination of federal income tax deductions for
oil and gas exploration and development and other factors,
including those and other risks described in its Annual Report on
Form 10-K for the year ended December 31, 2020, Current Report on
Form 8-K, filed with the Securities and Exchange Commission ("SEC")
on May 11, 2021 and those set forth from time to time in other
filings with the 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. Any
forward-looking statement speaks only as of the date on which such
statement is made. Laredo does not intend to, and disclaims any
obligation to, correct, update or revise any forward-looking
statement, whether as a result of new information, future events or
otherwise, except as required by applicable law.
Free Cash Flow (Unaudited)
Free Cash Flow is a non-GAAP financial measure
that the Company defines as net cash provided by operating
activities (GAAP) before changes in operating assets and
liabilities, net, less incurred capital expenditures, excluding
non-budgeted acquisition costs. Free Cash Flow does not represent
funds available for future discretionary use because it excludes
funds required for future debt service, capital expenditures,
acquisitions, working capital, income taxes, franchise taxes and
other commitments and obligations. However, management believes
Free Cash Flow is useful to management and investors in evaluating
operating trends in its business that are affected by production,
commodity prices, operating costs and other related factors. There
are significant limitations to the use of Free Cash Flow as a
measure of performance, including the lack of comparability due to
the different methods of calculating Free Cash Flow reported by
different companies.
Adjusted EBITDA (Unaudited)
Adjusted EBITDA is a non-GAAP financial measure
that the Company defines as net income or loss (GAAP) plus
adjustments for share-settled equity-based compensation, depletion,
depreciation and amortization, impairment expense, mark-to-market
on derivatives, premiums paid or received for commodity derivatives
that matured during the period, accretion expense, gains or losses
on disposal of assets, interest expense, income taxes and other
non-recurring income and expenses. Adjusted EBITDA provides no
information regarding a company's capital structure, borrowings,
interest costs, capital expenditures, working capital movement or
tax position. Adjusted EBITDA does not represent funds available
for future discretionary use because it excludes funds required for
debt service, capital expenditures, working capital, income taxes,
franchise taxes and other commitments and obligations. However,
management believes Adjusted EBITDA is useful to an investor in
evaluating the Company's operating performance because this
measure:
- is widely used by investors in the oil and natural gas industry
to measure a company's operating performance without regard to
items that can vary substantially from company to company depending
upon accounting methods, the book value of assets, capital
structure and the method by which assets were acquired, among other
factors;
- helps investors to more meaningfully evaluate and compare the
results of the Company's operations from period to period by
removing the effect of its capital structure from its operating
structure; and
- is used by management for various purposes, including as a
measure of operating performance, in presentations to the Company's
board of directors and as a basis for strategic planning and
forecasting.
There are significant limitations to the use of
Adjusted EBITDA as a measure of performance, including the
inability to analyze the effect of certain recurring and
non-recurring items that materially affect the Company's net income
or loss and the lack of comparability of results of operations to
different companies due to the different methods of calculating
Adjusted EBITDA reported by different companies. The Company's
measurements of Adjusted EBITDA for financial reporting as compared
to compliance under its debt agreements differ.
Net Debt (Unaudited)
Net Debt, a non-GAAP financial measure, is
calculated as the face value of long-term debt less cash and cash
equivalents. Management believes Net Debt is useful to management
and investors in determining the Company's leverage position since
the Company has the ability, and may decide, to use a portion of
its cash and cash equivalents to reduce debt.
Net Debt to TTM Adjusted EBITDA
(Unaudited)
Net Debt to TTM Adjusted EBITDA is calculated as
Net Debt divided by trailing twelve-month Adjusted EBITDA. Net Debt
to Adjusted EBITDA is used by the Company's management for various
purposes, including as a measure of operating performance, in
presentations to its board of directors and as a basis for
strategic planning and forecasting.
Investor Contact: Ron Hagood
918.858.5504 rhagood@laredopetro.com
Laredo Petroleum (NYSE:LPI)
Historical Stock Chart
From Jun 2024 to Jul 2024
Laredo Petroleum (NYSE:LPI)
Historical Stock Chart
From Jul 2023 to Jul 2024