Laredo Petroleum (LPI)

[dan_s]

I spent several hours looking at LPI today. We will send out an updated profile on the company late today.

I want to confirm my valuation of $16.80/share, compared to First Call's Price Target of $12.05:
> They are on track to hit the high end of their production guidance, which will be 40% YOY production growth
> 100% of their Q4 oil production is hedged at $80.99/bbl
> ~85% of their 2016 oil production (based on my forecast volumes) is hedged at $70.84/bbl
> They have moved to a three rig drilling program. All new wells are drilled from pads, which significantly reduces their well costs
> Their LOE is dropping like a rock, thanks to their gathering system and water delivery system

LPI is a PRIME TAKEOVER TARGET.

This is a pure play on the Permian Basin where Wolfcamp horizontal wells deliver better than 30% ROI at $40/bbl oil.

Read the profile carefully.