Laredo Petroleum (LPI) Update from Stifel - May 7

[dan_s]

Laredo Petroleum, Inc. (LPI, $36.37, Buy; Target $68.00) -
Defending LPI, sell-off creates a buying opportunity given the de minimis impact on NAV - Derrick Whitfield, Stifel

In our view, LPI is oversold on fundamentals. Despite its positive Q121 results and guidance, the stock materially underperformed its closest peers yesterday based on weaker-than-expected well performance from its first Howard County well package, which was disclosed in its Q121 presentation. As shown in Figure 1, industry (OVV) is outperforming our type curve (in line with LPI) with offsetting wells spaced at 8 wells per section for the WC-A interval. Assuming the Street was modeling the most aggressive spacing previously communicated (16 wells per DSU), we estimate the impact of up-spacing to 12 wells per DSU in Howard County would decrease our NAV by $2.34/share (vs the $7.05/share decline yesterday). Net-net, while management hoped to start better out of the gate with its first well package, we believe the sell-off creates a buying opportunity for investors given the de minimis impact on our NAV.
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MY TAKE: Given that LPI had some well spacing problems in 2018 that still haunt them, I believe investors over-reacted to even a hint of problems. IMO LPI was grossly oversold on a day when the whole sector took a beating. There is nothing to justify LPI trading at barely over 1X operating cash flow per share. My current valuation is $54/share.

[Fraser921]

https://seekingalpha.com/article/442650 ... ced-hedges

[Fraser921]

https://investor.laredopetro.com/static ... 73aa98f4bf

- May 9, 2021 - Laredo Petroleum, Inc. (NYSE: LPI) ("Laredo" or the "Company") today announced the
signing of a purchase and sale agreement to acquire the assets of Sabalo Energy, LLC ("Sabalo"), a portfolio
company of EnCap Investments L.P. ("EnCap"), and a non-operating partner for approximately $715 million,
subject to customary closing price adjustments, comprised of $625 million in cash and approximately 2.5 million
shares of Laredo common equity. Additionally, the Company announced the sale of 37.5% of its operated proved
developed producing ("PDP") reserves in its legacy leasehold in Reagan and Glasscock counties ("Legacy") to an
affiliate of Sixth Street Partners, LLC ("Sixth Street") for proceeds of $405 million and additional potential cashflow based earn-out payments over the next six years. None of the PDP reserves are located in Howard or Western
Glasscock counties. Both transactions are expected to close July 1, 2021

[Fraser921]

slide deck

https://investor.laredopetro.com/static ... 9130ac1568

[KGardiner]

Dan, when I look at Laredo's Assets vs Debt vs Net Book Value and Free Cash Flow, it seems to me they could pay down 30% of their debt this year. Am I understanding this correctly?
Thanks
Kevin