Laredo Petroleum
Laredo Petroleum
Crushed today on no apparent news. Most of their production for 2016 is hedged, as well as a decent amount in 2017. Any comments?
Re: Laredo Petroleum
there was a very negative seeking alpha article that was almost instantly refuted by another-- I think that had something to do with it.
the hedges are not being recognized by a lot of folks, imo.
I am anxious to see what dan says.
jim
the hedges are not being recognized by a lot of folks, imo.
I am anxious to see what dan says.
jim
Re: Laredo Petroleum
You can find my updated Net Income & Cash Flow Forecast model for LPI on the EPG website. Take a hard look at Row 55: Cash Flow From Operations.
With such a high percentage of their oil and gas hedged at good prices, LPI's cash flows are easy to forecast.
None of their NGLs are hedged, but NGL prices are improving and I now think they will be higher than what I used in the LPI forecast.
Also, note that on each forecast model there is a red box that shows what First Call is forecasting for Cash Flow per Share.
With such a high percentage of their oil and gas hedged at good prices, LPI's cash flows are easy to forecast.
None of their NGLs are hedged, but NGL prices are improving and I now think they will be higher than what I used in the LPI forecast.
Also, note that on each forecast model there is a red box that shows what First Call is forecasting for Cash Flow per Share.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Laredo Petroleum
One of the major issues the negative articles in SeekingAlpha focused upon was that capex exceeds operating cash flow in 2016 despite the hedges. Dan, your spreadsheet seems to confirm that, though the numbers are a lot closer. The normal way to deal with that is through debt, equity, or capex reduction, though the equity seems unlikely with the stock trading at near bankruptcy valuation. I am not an accountant, so must admit I am very confused at the moment.
Re: Laredo Petroleum
2016 Capital Budget
Laredo’s Board of Directors approved a $345 million capital budget for 2016, excluding investments in the Medallion system and potential acquisitions, a reduction of approximately 39% from 2015. The budget includes $280 million for drilling and completions, $35 million for production facilities and $30 million for land, seismic and other capitalized costs. Included in the 2016 budgeted drilling and completions capital are $13 million for increased proppant and approximately $55 million for 10 wells that commenced drilling in 2015.
The Company expects to operate the equivalent of 2.5 horizontal rigs in 2016 and anticipates drilling 36 to 38 gross horizontal wells with an average Laredo working interest of approximately 96%. Laredo anticipates operating three horizontal rigs in the first half of 2016 and two horizontal rigs in the second half of the year. No vertical wells are planned in 2016.
The advantages afforded by Laredo’s contiguous acreage base, completed infrastructure investments and concerted cost reduction efforts enable the Company to continue to drill economically in the current commodity price environment. The 2016 drilling program is focused to maximize rate of return, with more than 65% of the wells planned to be 10,000-foot laterals, approximately 80% on multi-well pads, approximately 55% on existing production corridors and approximately 95% targeting the Upper and Middle Wolfcamp zones.
Expected capital costs for Upper and Middle Wolfcamp horizontal wells drilled on two-well pads in the 2016 budget are approximately $5.25 million for 7,500-foot laterals and $5.90 million for 10,000-foot laterals. Included in these costs are pad preparation, separators, heater treaters, well-site metering and artificial lift equipment.
Laredo expects full-year 2016 production to be in the range of 15.3 MMBOE to 15.7 MMBOE. Operating cash flow, including the Company’s commodity derivatives, is expected to fund 75% to 80% of the planned capital budget for the year.
At 12-31-2015 Laredo had over $100 million of working capitial (current assets - current liabilities), so capex s/b covered for this year. Capex exceeding cash flow from operations is not that big of a deal if the company is building up their asset base.
Laredo’s Board of Directors approved a $345 million capital budget for 2016, excluding investments in the Medallion system and potential acquisitions, a reduction of approximately 39% from 2015. The budget includes $280 million for drilling and completions, $35 million for production facilities and $30 million for land, seismic and other capitalized costs. Included in the 2016 budgeted drilling and completions capital are $13 million for increased proppant and approximately $55 million for 10 wells that commenced drilling in 2015.
The Company expects to operate the equivalent of 2.5 horizontal rigs in 2016 and anticipates drilling 36 to 38 gross horizontal wells with an average Laredo working interest of approximately 96%. Laredo anticipates operating three horizontal rigs in the first half of 2016 and two horizontal rigs in the second half of the year. No vertical wells are planned in 2016.
The advantages afforded by Laredo’s contiguous acreage base, completed infrastructure investments and concerted cost reduction efforts enable the Company to continue to drill economically in the current commodity price environment. The 2016 drilling program is focused to maximize rate of return, with more than 65% of the wells planned to be 10,000-foot laterals, approximately 80% on multi-well pads, approximately 55% on existing production corridors and approximately 95% targeting the Upper and Middle Wolfcamp zones.
Expected capital costs for Upper and Middle Wolfcamp horizontal wells drilled on two-well pads in the 2016 budget are approximately $5.25 million for 7,500-foot laterals and $5.90 million for 10,000-foot laterals. Included in these costs are pad preparation, separators, heater treaters, well-site metering and artificial lift equipment.
Laredo expects full-year 2016 production to be in the range of 15.3 MMBOE to 15.7 MMBOE. Operating cash flow, including the Company’s commodity derivatives, is expected to fund 75% to 80% of the planned capital budget for the year.
At 12-31-2015 Laredo had over $100 million of working capitial (current assets - current liabilities), so capex s/b covered for this year. Capex exceeding cash flow from operations is not that big of a deal if the company is building up their asset base.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group