Laredo Petroleum Announces Howard County Divestiture
TULSA, OK, Aug. 17, 2022 (GLOBE NEWSWIRE) — Laredo Petroleum, Inc. (NYSE: LPI) (“Laredo” or the “Company”) today announced that it has signed an agreement to purchase and sell to dispose of certain operated properties in Howard County for $110 million, subject to customary closing price adjustments. The transaction is expected to close in October 2022, with an effective date of August 1, 2022.
The non-operated assets comprise approximately 1,650 net acres and forecast an average net production for the year 2023 of approximately 1,800 BOEPD (~72% oil). The Company expects to adjust its production forecast after closing of the transaction. The sale does not reduce the eight-year inventory of high-quality drilling sites operated by the Company.
“We have built an extensive portfolio of high-quality development locations, which we are constantly optimizing through the acquisition of high-yielding assets and the sale of certain non-core properties,” commented Jason Pigott, President and Chief direction. “The implied value of this sale is accretive to our net asset value1 per share and generates proceeds that support the redemption of our equity and debt. »
1Non-GAAP financial measure; please refer to the definitions of non-GAAP financial measures at the end of this press release.
Truist Securities, Inc. acted as financial advisor to Laredo in connection with this transaction.
Laredo Petroleum, Inc. is an independent energy company headquartered in Tulsa, Oklahoma. Laredo’s business strategy is focused on the acquisition, exploration and development of oil and gas properties in the West Texas Permian Basin.
Additional information about Laredo can be found on its website at www.laredopetro.com.
This press release and any oral statements made regarding the contents of this release, including on the conference call referenced herein, contain forward-looking statements as defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical fact, that address activities that Laredo assumes, plans, expects, believes, intends, projects, indicates, enables, transforms, estimates or anticipates (and other similar expressions) will, will or may occur in the future are forward-looking statements. Forward-looking statements are based on management’s current belief, based on currently available information, as to the outcome and timing of future events. These statements are not guarantees of future performance and involve risks, assumptions and uncertainties.
General risks related to Laredo include, but are not limited to, declining oil, natural gas liquids and natural gas prices and the related impact on the financial statements due to asset write-downs and revisions reserves estimates, the Company’s ability to execute its strategies, including its ability to identify and successfully complete strategic acquisitions at purchase prices accretive to its financial results and to successfully integrate the businesses, assets and acquired properties, oil production quotas or other actions that may be imposed by the Organization of Petroleum Exporting and Other Producing Countries (“OPEC+”), disease outbreak, such as the coronavirus pandemic (” COVID-19″), and all related government policies and actions, changes in domestic and global production, supply and demand for commodities, including as a result of the pandemic. COVID-19 outbreak, OPEC+ actions and the Russian-Ukrainian military conflict, eg long-term well performance, drilling and operating risks, increased service and supply costs, including due to inflationary pressures, steel tariffs, pipeline transportation and storage constraints in the Permian Basin, the possibility of reduced production, hedging activities, the impacts of extreme weather conditions, including including the freezing of wells and pipelines in the Permian Basin due to cold weather, the possible impacts of litigation and regulations, the impact of the Company’s dealings, if any, with its securities from time to time, the the impact of new laws and regulations, including those regarding the use of hydraulic fracturing, the impact of new environmental, health and safety requirements applicable to the company’s business activities Company, the possibility of the elimination of federal tax deductions for oil and gas exploration and development and other factors, including those and other risks described in its Annual Report on Form 10-K for the fiscal year ended December 31, 2021 and those set forth from time to time in other documents filed with the Securities and Exchange Commission (“SEC”). These documents are available on the Laredo website at www.laredopetro.com under the “Investor Relations” tab or through the SEC’s Electronic Data Collection and Analysis System at www.sec.gov. Each of these factors could cause Laredo’s actual results and plans to differ materially from those contained in the forward-looking statements. Accordingly, Laredo cannot guarantee that its future results will be as estimated. Any forward-looking statement speaks only as of the date such statement is made. Laredo does not intend to correct, update or revise any forward-looking statement, and disclaims any obligation to do so, whether as a result of new information, future events or otherwise, except as required by applicable law. requires it.
The SEC generally permits oil and gas companies, in their filings with the SEC, to disclose proven reserves, which are estimates of reserves that geological and engineering data demonstrates with reasonable certainty that they will be recoverable in the years to come from known reservoirs under existing economic and operating conditions. , and certain probable and possible reserves that meet the SEC’s definitions for those terms. In this press release and the conference call, the Company may use the terms “resource potential”, “resource set”, “estimated ultimate recovery” or “EUR”, “type curve” and “standardized measure”, each of them being SEC guidelines prohibit being included in documents filed with the SEC without strictly conforming to SEC definitions. These terms refer to the Company’s internal estimates of quantities of unaccounted hydrocarbons that could potentially be discovered by exploratory drilling or recovered with additional drilling or recovery techniques. “Resource potential” is used by the Company to refer to the estimated quantities of hydrocarbons that can be added to proven reserves, largely from a specified resource area potentially supporting numerous drilling locations. A “resource play” is a term used by the Company to describe an accumulation of hydrocarbons known to exist over a large area and/or thick vertical section potentially supporting many drilling locations, which, when compared to a conventional area, generally has a lower risk of geological and/or commercial development. “EUR” is based on the Company’s previous operating experience in a given area and publicly available information regarding the operations of producers who conduct operations in such areas. Unreserved resource potential and “EUR” do not constitute reserves within the meaning of the Society of Petroleum Engineers’ Petroleum Resource Management System or SEC rules and do not include any proven reserves. The actual quantities of reserves that may ultimately be recovered from the Company’s interests may differ materially from those presented herein. Factors affecting ultimate recovery include the scope of the Company’s current drilling program, which will be directly impacted by the availability of capital, declining oil, natural gas liquids and natural gas prices, the spacing of wells, drilling and production costs, availability and cost of drilling services and equipment, lease expirations, transportation constraints, regulatory approvals, negative revisions to reserve estimates and other factors, as well as actual drilling results, including geological and mechanical factors affecting recovery rates. The “EUR” of the reserves may change significantly as the development of the main assets of the Company provides additional data. In addition, the Company’s production forecasts and expectations for future periods depend on numerous assumptions, including estimates of the rates of decline in production from existing wells and the completion and outcome of future drilling activities, which may be affected by significant declines in commodity prices or increases in drilling costs. . “Type Curve” refers to a production profile of a well, or a particular class of wells, for a specific area and/or area. The “standard measure” of new discounted future cash flows is calculated in accordance with SEC regulations and at a discount rate of 10%. Actual results may vary significantly and should not be considered representative of the fair market value of the Company’s proved reserves.
This press release and all accompanying information includes financial measures that do not conform to generally accepted accounting principles (“GAAP”), such as net asset value. Although management believes these measures are useful to investors, they should not be relied upon as a substitute for GAAP financial measures. For a reconciliation of these non-GAAP financial measures to the nearest comparable GAAP measure, please see the Supplemental Financial Information at the end of this press release.
Unless otherwise stated, references to “average sale price” mean the average sale price excluding the effects of the Company’s derivative transactions.
All amounts, dollars and percentages presented in this press release are rounded and therefore approximate.
Net asset value
Net asset value is a non-GAAP financial measure that the Company defines as the present value of future revenues less future expenses less net debt. Net asset value is not the standardized measure of discounted future net cash flows, as it takes into account net debt and excludes adjustments for future income tax expense. However, management believes that net asset value is useful to management and investors in assessing the value of the company, which is affected by the rate of capital expenditures and inventory development, future commodity prices and commodity prices. future services used to develop the company’s inventory. There are significant limitations to the use of NAV as a measure of value, including lack of comparability with calculations of NAV by other companies due to differences in the assumptions used in the calculations.