Laredo Petroleum (LPI) Q1 Results - May 4

[dan_s]

TULSA, OK, May 04, 2022 (GLOBE NEWSWIRE) -- Laredo Petroleum, Inc. (NYSE: LPI) ("Laredo" or the "Company") today announced its first-quarter 2022 financial and operating results. A conference call and webcast to discuss the results is planned for 7:30 a.m. CT, Thursday, May 5, 2022. Complete details can be found within this release.

First-Quarter 2022 Highlights

Reported a net loss of $86.8 million and cash flows from operating activities of $170.9 million, generating Adjusted EBITDA of $222.1 million and Free Cash Flow of $23.2 million. < Reported Net Loss is a meaningless number. Adjusted Cash Flow from Operations (before working capital changes) should be close to my forecast of $190.5 million.

Reduced Net Debt/Consolidated EBITDAX ratio to 1.9x

Produced 40,295 barrels of oil per day ("BOPD") and 85,118 barrels of oil equivalent per day ("BOEPD"), in line with guidance and an increase of 66% and 8%, respectively, versus first-quarter 2021 < Beat my forecast of 84,000 Boepd / 40,000 BOPD.

Incurred capital expenditures of $171 million, excluding non-budgeted acquisitions and leasehold expenditures, in line with guidance

Subsequent Highlights

Secured pricing and supply for majority of second-half 2022 expenditures, increasing 2022 capital budget by 6% to ~$550 million < Some analysts will list increasing capex budgets as a negative. If production is going up, I do not.

Increased the borrowing base and elected commitment of the Company's senior secured credit facility to $1.25 billion and $1.0 billion, respectively

Achieved Project Canary TrustWell™ Gold certification for approximately 31,500 BOEPD of gross operated production to become the first Permian producer to receive TrustWell™ certified responsibly sourced oil and natural gas production

"We have executed extremely well year-to-date, generating Free Cash Flow and further reducing our leverage ratio," commented Jason Pigott, President and Chief Executive Officer. "Well performance from Howard and western Glasscock counties is driving our strong oil production and capital efficiency. The exceptional returns of our development program in the current commodity environment enabled Free Cash Flow generation in the quarter."

"Free Cash Flow during 2022 is still expected to exceed $300 million, despite the highly inflationary environment" continued Mr. Pigott. "We plan to utilize the majority of our free cash this year to reduce debt by $300 million and expect to achieve our leverage targets of 1.5x in the third quarter of 2022 and 1.0x by the first quarter of 2023. As we reduce our leverage ratio, absolute debt levels and interest expense, we anticipate that we will be in a position to institute measures to return cash to shareholders by early 2023."

First-Quarter 2022 Financial Results

For the first quarter of 2022, the Company reported a net loss attributable to common stockholders of $86.8 million, or $5.18 per diluted share, which included a non-cash loss on derivatives, net, of $200.4 million, or $11.95 per diluted share. Adjusted Net Income for the first quarter of 2022 was $88.2 million, or $5.17 per adjusted diluted share. Adjusted EBITDA for the first quarter of 2022 was $222.1 million. < Adjusted Net Income compares to my forecast of $95.1 million.

Operations Summary

In the first quarter of 2022, the Company's total and oil production averaged 85,118 BOEPD and 40,295 BOPD, respectively. Both metrics were in-line with guidance, driven by solid execution and well performance, including results from wells in the Middle Spraberry and Wolfcamp D formations.

Lease operating expenses ("LOE") in first-quarter 2022 were $5.34 per BOE, higher than original guidance, reflecting inflation and integration costs from recently acquired assets. The increase is primarily related to artificial lift and flowback management on new wells in Howard and western Glasscock counties. This includes higher costs for generators and fuel to operate electric submersible pumps on wells in Howard County and higher compression and fuel gas costs for gas lifted wells in western Glasscock County.

Laredo is working to offset these cost pressures by reallocating power generation systems to high-line power as it becomes available in its operating areas, switching to liquefied natural gas generator systems and consolidating production in Howard County to upgraded, Laredo-built facilities. The Company anticipates these cost pressures will persist for the remainder of 2022 and expects total LOE will be consistent with first quarter levels, with unit LOE varying with production levels.

During the first quarter of 2022, Laredo maintained its improved venting/flaring performance on its acquired properties in Howard County. The Company vented/flared 0.64% of produced gas during first-quarter 2022, roughly flat compared to the 0.61% vented/flared in the fourth quarter of 2021.

In the first quarter of 2022, the Company completed and TIL'd 18 wells. Laredo released one drilling rig and one completions crew during the quarter. The Company is currently operating two drilling rigs and one completions crew and expects to complete 11 wells and TIL seven wells during the second quarter of 2022.
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Everything is close to my forecast. I will listen to Laredo's Q1 conference call and update my valuation tomorrow.