Laredo Petroleum (LPI) Q4 Results

dan_s · Post by **dan_s** » Wed Feb 20, 2019 11:43 am

I have updated my forecast/valuation model for LPI and posted it to the EPG website.

LPI is trading at $3.83 as I post this note. My valuation is now $8.00/share; a dollar lower than what I valued LPI at in the last newsletter.

For 2018: LPI reported EPS of $1.41 and operating cash flow per share of $2.33.

The problem with LPI is that their gas-to-oil ratio has been increasing in the Midland Basin. The company believes they have solved the problem and that they can stabilize their oil production by 2H 2019. If so, there is upside to my valuation. Their guidance is for production to increase by 9% in 2019 to an exit rate of ~75,000 BOE per day (~34% crude oil). Capex in 2019 s/b totally funded by cash flow from operations.

At this point, LPI is more of a "value" stock vs a "growth" stock.

We will publish an updated profile on LPI in March.