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Laredo (LPI) Gives Revised 2021 Capex and Production Guidance
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Laredo Petroleum, Inc. announced an increase in the capital expenditure for 2021, subsequent to the acquisition of the exploration and production assets of Sabalo Energy LLC in Howard County, TX.
Laredo raised its capital budget to $420 million from the previously stated $360 million. The upward revision is driven by the incorporation of Sabalo’s operations into Laredo’s low-cost operational structure associated with continued efficiency gains.
Laredo announced an update to its production outlook for 2021. It is lowering its production guidance to 77,000-80,000 barrels of oil equivalent per day (boe/d) from 80,000-85,000 boe/d mentioned earlier. Of the total, oil production is expected to be 30,500-31,500 barrels per day (b/d) compared with the previously mentioned 27,300-29,300 b/d.
The reduced production guidance indicates the sale of 25,000 boe/d of natural gas-weighted assets from the company’s legacy leasehold. Moreover, it includes the 13,600 barrels of oil equivalent of production it plans to purchase from Sabalo. Notably, the Sabalo assets involve 21,000 contiguous net acres, with a total production of 14,500 boe/d.
Laredo also provided preliminary production results and operational updates for the second quarter of 2021. The company produced 85,900 boe/d in the second quarter of 2021, which included oil production of 26,400 b/d. Notably, both figures increased by about 9% from first-quarter 2021. The company believes that the curtailments and shut-ins in Howard County production operations reduced the total production by 900 boe/d in second-quarter 2021, which includes 700 b/d of oil production.
The company incurred $100 million of capex in the second quarter of 2021, excluding non-budgeted acquisitions and a $10-million leasehold expenditure. Laredo completed 16 wells in second-quarter 2021, three more than what it expected.
In 2021, the company plans to drill 64 wells, an increase from the previously mentioned 53 wells. Well completions are expected to reach 67 compared with 55 mentioned previously. The revised capital budget is expected to achieve a 22% increase in completed wells and a 24% increase in completed lateral feet, while investing only 17% more capital.
For 2022, Laredo is expecting total production of 75,000-78,000 boe/d, suggesting a slight year-over-year reduction. Oil production is anticipated to be 36,000-38,000 b/d. The company expects to generate $225-250 million of free cash flow, based on current commodity strip pricing.
Company Profile & Price Performance
Headquartered in Tulsa, OK, Laredo is engaged in the exploration, development and acquisition of oil and natural gas properties in the Permian and Mid-Continent regions of the United States.
Shares of the company have outperformed the industry in the past six months. Its stock has gained 141.2% compared with the industry’s 43.5% growth.
Image Source: Zacks Investment Research
Zacks Rank & Stocks to Consider
The company currently carries a Zack Rank #3 (Hold).
Image: Bigstock
Laredo (LPI) Gives Revised 2021 Capex and Production Guidance
Laredo Petroleum, Inc. announced an increase in the capital expenditure for 2021, subsequent to the acquisition of the exploration and production assets of Sabalo Energy LLC in Howard County, TX.
Laredo raised its capital budget to $420 million from the previously stated $360 million. The upward revision is driven by the incorporation of Sabalo’s operations into Laredo’s low-cost operational structure associated with continued efficiency gains.
Laredo announced an update to its production outlook for 2021. It is lowering its production guidance to 77,000-80,000 barrels of oil equivalent per day (boe/d) from 80,000-85,000 boe/d mentioned earlier. Of the total, oil production is expected to be 30,500-31,500 barrels per day (b/d) compared with the previously mentioned 27,300-29,300 b/d.
The reduced production guidance indicates the sale of 25,000 boe/d of natural gas-weighted assets from the company’s legacy leasehold. Moreover, it includes the 13,600 barrels of oil equivalent of production it plans to purchase from Sabalo. Notably, the Sabalo assets involve 21,000 contiguous net acres, with a total production of 14,500 boe/d.
Laredo also provided preliminary production results and operational updates for the second quarter of 2021. The company produced 85,900 boe/d in the second quarter of 2021, which included oil production of 26,400 b/d. Notably, both figures increased by about 9% from first-quarter 2021. The company believes that the curtailments and shut-ins in Howard County production operations reduced the total production by 900 boe/d in second-quarter 2021, which includes 700 b/d of oil production.
The company incurred $100 million of capex in the second quarter of 2021, excluding non-budgeted acquisitions and a $10-million leasehold expenditure. Laredo completed 16 wells in second-quarter 2021, three more than what it expected.
In 2021, the company plans to drill 64 wells, an increase from the previously mentioned 53 wells. Well completions are expected to reach 67 compared with 55 mentioned previously. The revised capital budget is expected to achieve a 22% increase in completed wells and a 24% increase in completed lateral feet, while investing only 17% more capital.
For 2022, Laredo is expecting total production of 75,000-78,000 boe/d, suggesting a slight year-over-year reduction. Oil production is anticipated to be 36,000-38,000 b/d. The company expects to generate $225-250 million of free cash flow, based on current commodity strip pricing.
Company Profile & Price Performance
Headquartered in Tulsa, OK, Laredo is engaged in the exploration, development and acquisition of oil and natural gas properties in the Permian and Mid-Continent regions of the United States.
Shares of the company have outperformed the industry in the past six months. Its stock has gained 141.2% compared with the industry’s 43.5% growth.
Image Source: Zacks Investment Research
Zacks Rank & Stocks to Consider
The company currently carries a Zack Rank #3 (Hold).
Some better-ranked players in the energy space are Range Resources Corporation (RRC - Free Report) , Enerplus Corporation (ERF - Free Report) and Repsol SA (REPYY - Free Report) , each currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Range Resources’ earnings for 2021 are expected to increase 15.9% year over year.
Enerplus’ earnings for 2021 are expected to increase 21.7% year over year.
Repsol’s earnings for 2021 are expected to rise 10.1% year over year.