Laredo Petroleum (LPI)

dan_s · Post by **dan_s** » Fri Nov 06, 2015 4:30 pm

Laredo reported 3rd quarter results that beat my forecast. I have updated my forecast model and it will be posted to the EPG website later today.

My valuation increases to $16.80, compared to First Call's price target of $11.81.

LPI has 100% of their 2015 oil production hedged at $81/bbl and they have 85% of their 2016 oil production hedged at more than $70/bbl. In the first 9 months of 2015 they have collected cash settlements on their hedges of more than $175 million and they will collect another $60 million CASH in Q4. Their 2016 hedges have a current cash value of more than $100 million.

Laredo's production will be up ~40% YOY in 2015 and they have many years of running room in the Permian Basin where a high percentage of their leasehold has been de-risked. The have a strong balance sheet and access to plenty of liquidity.

IMO this puppy is a Screaming Takeover Target.