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Here's How Laredo Petroleum (LPI) Looks Ahead of Q1 Earnings

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Laredo Petroleum, Inc. (LPI - Free Report) is set to release first-quarter 2021 results after the closing bell on Wednesday, May 5. The current Zacks Consensus Estimate for the to-be-reported quarter is a profit of $2.16 per share on revenues of $184.74 million.

Let’s delve into the factors that might have influenced the oil and gas producer’s performance in the March quarter. But it’s worth taking a look at Laredo Petroleum’s previous-quarter performance first.

Highlights of Q4 Earnings & Surprise History

In the last-reported quarter, the Tulsa, OK-based upstream operator missed the consensus mark due to lower sales volumes, which, at 7,595 thousand barrels of oil equivalent (MBOE) failed to match the Zacks Consensus Estimate of 7,658 MBOE and fell 1.7% year over year. Laredo Petroleum reported adjusted net income per share of $3.23, lower than the Zacks Consensus Estimate of $3.32. However, the energy explorer’s quarterly revenues of $188.1 million beat the Zacks Consensus Estimate by 2.6% on the back of stronger-than-expected commodity prices.

As far as earnings surprises are concerned, Laredo Petroleum beat the Zacks Consensus Estimate in two of the last four quarters and missed in the other two, delivering an earnings surprise of 17.06%, on average. This is depicted in the graph below:
 

Laredo Petroleum, Inc. Price and EPS Surprise

Laredo Petroleum, Inc. Price and EPS Surprise

Laredo Petroleum, Inc. price-eps-surprise | Laredo Petroleum, Inc. Quote

 

Trend in Estimate Revision

The Zacks Consensus Estimate for the first-quarter bottom line has been revised 10% downward in the last seven days. However, the estimated figure indicates a 20% rise year over year. The Zacks Consensus Estimate for revenues, meanwhile, suggests a 9.88% decrease from the year-ago period.

Factors to Consider This Quarter

Laredo Petroleum is expected to have benefited from the improvement in commodity prices. As a reflection of this price boost, the Zacks Consensus Estimate for the first-quarter average sales price for oil and natural gas are pegged at $58 per barrel and $2.12 per thousand cubic feet, respectively, indicating an increase from the year-ago levels of $57 and 26 cents. The year-over-year improvement in realizations has most likely buoyed Laredo Petroleum’s revenues and cash flows.

The company has also done a fairly admirable job at reducing costs. Apart from a disciplined capital strategy, Laredo Petroleum should realize sizeable savings from operating cost control. Of late, the company has been able to lower its lease operating expenses and well costs significantly. Laredo Petroleum has vowed to continue delivering strong cost performance this year. This is expected to have had a positive effect on the company’s first-quarter earnings and margins.

However, on a somewhat bearish note, the company is likely to have faced the repercussions from mid-February’s Texas freeze, which was a week-long spell of severe cold blast that affected Laredo Petroleum’s drilling operations, causing lost revenues. The company warned that extreme cold weather lowered first-quarter output by around 10%. As a reflection of this, the Zacks Consensus Estimate for the to-be-reported quarter’s total production stands at 7,083 MBOE, implying a 10% decrease from 7,874 MBOE in the January-March period of 2020.

What Does Our Model Say?

The proven Zacks model does not conclusively show that Laredo Petroleum is likely to beat estimates in the first quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of beating estimates. But that’s not the case here.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, for this company is -8.40%.

Zacks Rank: Laredo Petroleum currently carries a Zacks Rank #1.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks to Consider

While an earnings beat looks uncertain for Laredo Petroleum, here are some firms from the energy space that you may want to consider on the basis of our model:

Whiting Petroleum Corporation (WLL - Free Report) has an Earnings ESP of +7.27% and a Zacks Rank #1. The firm is scheduled to release earnings on May 5.

Viper Energy Partners LP (VNOM - Free Report) has an Earnings ESP of +40% and is Zacks #2 Ranked. The firm is scheduled to release earnings on May 3.

Transocean Ltd. (RIG - Free Report) has an Earnings ESP of +7.41% and a Zacks Rank #3. The firm is scheduled to release earnings on May 3.

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