LPI

[mkarpoff]

I wonder about LPI's buyback announcement. They have so few shares outstanding that the buyback can only increase volatility. Secondly, they are buying high. I think giving a divvy would have been a better move, IMHO.

[dan_s]

I agree that a stock buyback seems strange, but based on my valuation the stock is very cheap (under 2.5 x CFPS).

[farrell90]

The market likes the announcement ... LPI is up 16% so far today.

[dan_s]

What today's announcement did was draw Wall Street's attention to a stock that is grossly undervalued.

My current valuation of $158/share is just 3.25X annualized operating cash flow per share based on conservative oil, gas and NGL prices.

When they reach their balance sheet goal of 1.0X Net Debt / EBITDAX by Q1 2023 a valuation multiple of 5X CFPS will be conservative if WTI is still over $100/bbl.

My 2023 forecast is based on realized prices of $85/bbl oil, $4.00/mcf for ngas (net of gathering, transportation & processing) and $26/bbl for NGLs, which shows 2023 operating cash flow of $1,133.7 million ($63/share) based on the current share count.
So, a 12-month price target of $300 is reasonable for LPI.

Note that LPI is not required to buyback a single share, so I do think today's press release is designed to draw attention to the stock.