Energy Prospectus

TipRanks: "At 6:11PM ET on 10/18/2022 Piper Sandler analyst Mark Lear lowered the firm's price target on Laredo Petroleum to $71 from $83 and keeps a Neutral rating on the shares."

At the time of this post LPI was trading for $59.33.

My valuation adjusts to $123.00 based on the Q3 and Q4 production estimates and expenditure details the Company announced yesterday. I also lowered my valuation multiple to just 3X annualized operating cash flow per share.

Larado is still on track to report good results for 2022, including more than enough operating cash flow to fund this year's capital expenditures, payoff debt and continue their stock repurchase program.

The Wall Street Gang will lower their price targets because they hate when upstream companies miss their production guidance and wait this long to announce it (so do I). Since Laredo operates most of their production, they had to know several weeks ago that their oil production for Q3 was going to be below the guildance they provided on 8/4/2022.

The lower share count (just 16.8 million shares) will soften the impact on a per share basis. Based on my fresh forecast, Laredo should still generate over $43 per share of operating cash this year.

What the Company needs to do now is to provide clear guidance on how they are going to get production back over 80,000 Boepd in 2023.

My updated forecast model for LPI has been posted to the EPG website home page.

Details from Piper Sandler:

CONCLUSION
LPI pre-announced 3Q oil production below prior guidance, lowered 4Q oil and total
production guidance and raised FY22 capex. Lower 2H22 production and guidance was
related to offset frac hits in Howard County, while higher capex was driven by increased
inflation and timing of completion activity. While the company did not provide formal FY23,
the company expects to deliver mid- to high-single digit volume growth assuming +10%
inflation on the revised FY22 budget of ~$595mm. With the company expected to deplete
its remaining Howard County inventory by YE23, management stressed that it is actively
pursuing acquisition opportunities in the Midland, Delaware and Eagle Ford. We maintain
our Neutral rating and lower our PT to $71 (from $82) as a function of our lowered
projections (disc rate & YE21 asset values unchanged).

• 3Q Pre-Announced, 4Q Production Guided Lower. LPI announced preliminary 3Q22
results with 3Q total production averaging ~79.5 mboe/d compared guidance of 78.5–
81.5 mboe/d, while oil of ~35.0 was below guidance of 35.5-37.5 mboe/d, as production
negatively impacted as offset operator completions in Howard County. The company
revised 4Q22 production guidance to 72.5-75.5 mboe/d (from 77.5-80.5) due to offset
operator completions and production downtime due to increased equipment lead times.
Oil guidance of 32-34 mbbls/d for 4Q22 compared to prior guidance of 34.3-36.3 mbbls/
d, adjusted for the non-op sale of 1.2 mbbls/d / 1.6 mboe/d.

• FY22 Capex Raised. LPI spent $140mm in 3Q22, which was above guidance of ~
$120mm, and anticipates flat capital in 4Q22 resulting in FY22 capex of ~$595mm (prior
guidance of $550mm). Higher capex was driven by increased inflation, timing of drilling
and completion activity and infrastructure build out. 3Q LOE was ~$6.05/boe vs guidance
of $5.70/boe, driven by remediation operations on the Leech package and unplanned
workover activity. 3Q G&A was ~$1.60/boe vs guidance of $2.50/boe. LPI repurchased
$17.5mm of stock in 3Q22 at $71.56 per share.

Raymond James price target > Outperform 2 | $95.00 target
John Freeman , CFA (RJA)

Laredo pre-released 3Q22 results after the close on Tuesday. Third quarter production came
out to 79.5 Mboe/d, in-line with RJ/Guidance. However, oil production of 35 Mbbl/d fell
below RJ/Street (36.5/36.9 Mbbl/d) and below low-end of guidance (35.5 Mbbl/d). Similar
to SM Energy earlier this week, LPI stated that offset operator completions had negatively
impacted production, with older wells taking longer than expected to return to expected
production levels. 4Q22 production guidance of 72.5-75.5 mboe/d, is now 7% below RJ/
Street estimates. Realized pricing fell in-line with RJ expectations. Capex also was well above
expectations at $140M, $20M above expectations. 4Q22 capex is expected to fall in-line with
3Q, ~$15M above RJ/Street estimates. LOE of $6.05/bbl was ~$0.30 higher than RJ estimates.
Laredo releases 3Q22 earnings on November 3 after the close and earnings call on November
4 at 8:30 a.m. ET.
Non-GAAP EPS: 2022E $24.89 2023E $40.70 | < Compares to my 2023 EPS forecast of $29.45

From Stifel:
Laredo Petroleum, Inc. (LPI, $64.72, Buy; Target $158.00)
Announces a production miss due to offset operator activity - Derrick Whitfield
We view this release as negative.
The positives include: i) higher than expected total equivalent
volumes (0.4% above Stifel), and ii) realizations that were in line with guidance. The
negatives include: i) an oil production miss (2.0% below Stifel) due to frac impacts from
offset operator activity and higher than expected capex (16.7% above Stifel) due to
timing of D&C activity and inflation, ii) higher LOE due to remediation operations and
unplanned workover activity, iii) lowered 4Q22 total equivalent and oil guidance (5.1%
and 7.0% below Stifel, respectively) due to the impact of offset fracs, and iv) raised
4Q22 expected capex (15.7% above Stifel). While the quarter was messy and biases
2023 consensus estimates lower, we note that the negative production impacts are
not associated with well performance. In addition, management implemented a more
conservative modeling approach for offset operator activity impacts on the company's
wells.

158?? wtf is he smoking

He's looking at a 2023 forecast that shows LPI's EPS of $29.45 and operating cash flow per share of $50.46.

3X operating CFPS is not an extreme price target.