Laredo Petroleum (LPI) Q3 Results - Nov 3

[dan_s]

Laredo Petroleum, Inc. (NYSE: LPI) announced its third-quarter 2021 financial and operating results.

Third-Quarter 2021 Highlights

Announced second significant acquisition of 2021, agreeing to purchase ~20,000 net acres in western Glasscock County, extending the Company's high-margin, oil-weighted development runway to approximately seven years at current activity levels

Closed the purchase of the assets of Sabalo Energy, LLC ("Sabalo") in north Howard County and divestiture of 37.5% of the Company's legacy proved developed reserves on July 1, 2021

Produced an average of 76,703 barrels of oil equivalent ("BOE") per day and 35,329 barrels of oil per day ("BOPD"), a decrease of 13% and an increase of 41%, respectively, versus the third quarter of 2020. < Compares to my forecast of 76,000 Boepd and 34,500 BO per day.

Increased oil cut to 46% of total production in third-quarter 2021 versus 29% in third-quarter 2020

Incurred capital expenditures of $137 million, excluding non-budgeted acquisitions and leasehold expenditures, completing 18 wells in Howard County during third-quarter 2021

Initiated the responsibly sourced gas (RSG) certification process and implementation of continuous on-site emissions monitoring of selected facilities

Published the Company's 2021 ESG and Climate Risk Report, which included Scope 3 emissions estimates and full workforce diversity data

Subsequent Highlights

Closed the western Glasscock County acquisition on October 18, 2021

Increased the borrowing base on the Company's senior secured credit facility to $1 billion from $725 million during the facility's semi-annual redetermination

"Over the last two years, we have successfully transformed Laredo by adding oily, high-margin inventory, reducing leverage and continuously improving operational and ESG performance," stated Jason Pigott, President and Chief Executive Officer. "Driven by seven years of high-quality, oil-weighted inventory and our demonstrated development expertise, we are now positioned to deliver sustainable Free Cash Flow generation and an even stronger capital structure. Our strategy has clearly created value for our shareholders and we will continue to seek accretive transactions where we can apply our proven development practices and ESG leadership.

For the third quarter of 2021, the Company reported net income attributable to common stockholders of $136.8 million, or $8.56 per diluted share, which included a $95.2 million non-cash gain on sale of oil and natural gas properties, net. Adjusted Net Income for the third quarter of 2021 was $29.4 million, or $1.84 per adjusted diluted share. < Adjusted Net Income compares to my forecast of $52 million or $3.10 per share.

Adjusted EBITDA for the third quarter of 2021 was $133.4 million.

[dan_s]

Stifel's take

Laredo Petroleum, Inc. (LPI, $73.95, Buy; Target $94.00) - Delivers an in-line
quarter and Q421 guide, well results continue to improve in Howard County - Derrick
Whitfield
We view this release as positive. The positives include: i) an adjusted
EBITDAX beat (1.1% above consensus) driven by slightly higher than expected
NGL and gas price realizations, ii) in-line Q421 production guidance (total equivalent
and oil volumes are 0.2% below and 0.5% above consensus, respectively) on
reiterated full-year 2021 capex guidance (1.2% below consensus), iii) continued
outperformance from the first two wider-spaced Howard County packages versus
tighter-spaced packages, and iv) well results from the acquired Sabalo asset that
are performing in line with management expectations. The only negative was higher-
than-expected LOE costs driven by inflationary pressures and increased workover
activity on acquired assets. Net-net, Laredo delivered both an in-line quarter and Q421
guide while well results continue to perform in line with or better than management's
expectations.