Exhibit 99.1
Unaudited Pro Forma Condensed Combined Statement of Operations
The following unaudited pro forma condensed combined statement of operations is derived from the historical consolidated financial statements of Laredo Petroleum, Inc. (“Laredo” or the “Company”), Sabalo (as defined below), Shad Permian, LLC (“Shad”) and the Glasscock Properties (as defined below). Unless otherwise stated below, the unaudited pro forma condensed combined statement of operations of the Company reflects the historical results of the Company on a pro forma basis to give effect to the following transactions (collectively, the “Transactions”), which are described in further detail below.
| • | Laredo’s acquisition of substantially all of the key operating assets consisting of wellbore interests of Sabalo Energy, LLC (“Sabalo Energy”) and Sabalo Operating, LLC (“Sabalo Operating” and together with Sabalo Energy, “Sabalo”) for aggregate consideration of approximately $755.4 million, based on the closing price of a share of the Company’s common stock on July 1, 2021 (the “Sabalo Acquisition”), consisting of (i) $542.3 million of cash, net of closing adjustments, and (ii) 2,225,930 shares of the Company’s common stock. |
| • | Laredo’s acquisition of substantially all of the key operating assets consisting of wellbore interests of Shad for aggregate consideration of approximately $90.8 million, based on the closing price of a share of the Company’s common stock on July 1, 2021 (the “Shad Acquisition” and, together with the Sabalo Acquisition, the “Prior Acquisitions”), consisting of (i) $63.9 million of cash, net of closing adjustments, and (ii) 281,034 shares of the Company’s common stock. |
| • | Laredo’s sale of 37.5% of its working interest in certain oil and gas properties in Glasscock and Reagan Counties, Texas, to an unrelated third party for aggregate gross proceeds of $405.0 million plus potential cash-flow based earn-out payments over six years on July 1, 2021. |
| • | Laredo’s acquisition of certain oil and gas properties in the Midland Basin, including approximately 20,000 net acres located in western Glasscock County, Texas (the “Glasscock Properties”), from Pioneer Natural Resources USA, Inc. (“Pioneer”), DE Midland III, LLC, Parsley Minerals, LLC and Parsley Energy, L.P. for aggregate consideration of approximately $202.5 million, based on the closing price of a share of the Company’s common stock on October 18, 2021 (the “Pioneer Acquisition”), consisting of (i) $131.6 million in cash, net of closing adjustments, and (ii) 959,691 shares of the Company’s common stock. |
| • | Borrowings under Laredo’s Senior Secured Credit Facility of (i) approximately $20.0 million and $110.0 million on October 7, 2021 and October 18, 2021, respectively, which were used to fund the Pioneer Acquisition and related transaction costs (the “October Borrowing”) and (ii) approximately $220.0 million previously used to fund the Prior Acquisitions and related transaction costs (the “Prior Borrowing” and, together with the October Borrowing, the “Borrowings”). |
The unaudited pro forma condensed combined statement of operations of the Company for the year ended December 31, 2021 gives effect to the Transactions as if they had occurred January 1, 2021.
The unaudited pro forma condensed combined statement of operations is presented for illustrative purposes only to reflect the Transactions and does not represent what Laredo’s results of operations or financial position would actually have been had the transactions occurred on the dates noted above or project its results of operations or financial position for any future periods. The unaudited pro forma condensed combined statement of operations is intended to provide information about the continuing impact of the Transactions as if they had been consummated earlier. In the opinion of management, all material adjustments necessary to present fairly the unaudited pro forma condensed combined statement of operations have been made.
The following unaudited pro forma condensed combined statement of operations should be read in conjunction with Laredo’s consolidated financial statements for the year ended December 31, 2021 and the related notes thereto, which are included in Laredo’s Annual Report on Form 10-K for the year ended December 31, 2021, and the unaudited pro forma condensed combined statement of operations for the nine months ended September 30, 2021, which is included in Laredo’s Current Report on Form 8-K/A filed with the Securities and Exchange Commission on December 13, 2021 and incorporated herein by reference.
Laredo Petroleum, Inc.
Pro Forma Condensed Combined Statement of Operations
For the Year Ended December 31, 2021
(unaudited)
| | | Pro Forma
Combined | | | Fourth Quarter - As
Reported | | | Pro Forma
Combined | |
| (in thousands, except for per share data) | | For the nine
months ended
September 30, 2021 | | | For the three
months ended
December 31, 2021 | | | For the
year ended
December 31, 2021 | |
| Revenues: | | | | | | | | | | | | |
| Oil Sales | | $ | 590,318 | | | $ | 290,696 | | | $ | 881,014 | |
| NGL Sales | | | 115,208 | | | | 58,470 | | | | 173,678 | |
| Natural gas sales | | | 81,452 | | | | 51,918 | | | | 133,370 | |
| Midstream service revenues | | | 4,292 | | | | 2,337 | | | | 6,629 | |
| Sales of purchased oil | | | 173,500 | | | | 66,803 | | | | 240,303 | |
| Total revenues | | | 964,770 | | | | 470,224 | | | | 1,434,994 | |
| Costs and expenses: | | | | | | | | | | | | |
| Lease operating expenses | | | 88,444 | | | | 33,468 | | | | 121,912 | |
| Production and ad valorem taxes | | | 45,553 | | | | 22,785 | | | | 68,338 | |
| Transportation and marketing expenses | | | 34,477 | | | | 13,439 | | | | 47,916 | |
| Midstream service expenses | | | 2,572 | | | | 1,135 | | | | 3,707 | |
| Costs of purchased oil | | | 183,458 | | | | 67,603 | | | | 251,061 | |
| General and administrative | | | 52,331 | | | | 13,619 | | | | 65,950 | |
| Organizational restructuring expenses | | | 9,800 | | | | — | | | | 9,800 | |
| Depletion, depreciation and amortization | | | 229,112 | | | | 74,592 | | | | 303,704 | |
| Impairment expense | | | 1,613 | | | | — | | | | 1,613 | |
| Other operating expenses | | | 4,365 | | | | 134 | | | | 4,499 | |
| Total costs and expenses | | | 651,725 | | | | 226,775 | | | | 878,500 | |
| Operating income (loss) | | | 313,045 | | | | 243,449 | | | | 556,494 | |
| Non-operating income (expense): | | | | | | | | | | | | |
| Gain (loss) on derivatives, net | | | (458,142 | ) | | | 15,372 | | | | (442,770 | ) |
| Interest expense | | | (87,643 | ) | | | (31,163 | ) | | | (118,806 | ) |
| Loss on disposal of assets, net | | | (28 | ) | | | (8,903 | ) | | | (8,931 | ) |
| Other income, net | | | 2,236 | | | | 573 | | | | 2,809 | |
| Total non-operating income (expense), net | | | (543,577 | ) | | | (24,121 | ) | | | (567,698 | ) |
| Income (loss) before income taxes | | | (230,532 | ) | | | 219,328 | | | | (11,204 | ) |
| Income tax benefit (expense): | | | | | | | | | | | | |
| Current | | | (1,515 | ) | | | (24 | ) | | | (1,539 | ) |
| Deferred | | | 707 | | | | (3,028 | ) | | | (2,321 | ) |
| Total income tax benefit | | | (808 | ) | | | (3,052 | ) | | | (3,860 | ) |
| Net income (loss) | | $ | (231,340 | ) | | $ | 216,276 | | | $ | (15,064 | ) |
| | | | | | | | | | | | | |
| Net income (loss) per common share: | | | | | | | | | | | | |
| Basic | | $ | (14.38 | ) | | $ | 13.07 | | | $ | (0.93 | ) |
| Diluted | | $ | (14.38 | ) | | $ | 12.84 | | | $ | (0.93 | ) |
| | | | | | | | | | | | | |
| Weighted average common shares outstanding: | | | | | | | | | | | | |
| Basic | | | 16,086 | | | | 16,545 | | | | 16,246 | |
| Diluted | | | 16,086 | | | | 16,846 | | | | 16,246 | |
