LPI - Earnings call transcript Q4 2020

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Operator

Good day, ladies and gentlemen and welcome to Laredo Petroleum Inc.'s Fourth Quarter 2020 Earnings Conference Call. My name is Josh and I'll be your operator for today. At this time, all participants are in a listen-only mode.

We will be conducting a question-and-answer session after the financial and operations report.

As a reminder, this conference is being recorded for replay purposes. pleasure Mr. my now is to introduce It Ron President Investor Relations. Hagood, Vice

proceed You may sir.

Ron Hagood

good you morning. Thank and

today Jason Chief me Financial our Chandler, Lemmerman, Joining management are Vice Officer, Senior Officer, Chief Senior additional Vice Karen as Executive team. well President members and and President Operations as Bryan Pigott, Officer, Chief President of and

our forecasts, Before this morning, These during assumptions be we'll call, looking to we by let statements. that be expectations, Private of begin the provisions making including Litigation statements, beliefs, are intended describing Safe XXXX. those today's Act Reform and of me remind goals, Securities forward covered you the Harbor

may reasons, a differ results forward-looking these variety actual many statements are of which for control. Our of from our beyond

to reference XXXX. non-GAAP included operating a financial making be results financial measures Reconciliations news our fourth GAAP afternoon, will year we yesterday's release quarter addition, in we to are and for release. financial news Yesterday issued detailing measures. presentation In for

the during We refer today's by to will call. presentation page

If at not may our or on release access it of presentation, website copy you this have you do www.laredopetro.com. news a

Additionally, Pigott, accessed our call Officer. under we report, Sustainability and ESG turn the now I President Jason on and Tab. will Chief over website also can to publish the inaugural which our be climate-risk Executive

Jason Pigott

morning thank us Good for you today. joining Year for challenges and industry. XXXX presented our many

to together remotely working to we while on adjust team, strategy. quickly executing focus a our pulled As maintaining

substantial resulted continuous of culture all in improvement across our aspects Our improvements of business.

area figures now day activity our of XX,XXX until online average major is and barrels results. of new package County total first in demonstrate per tipping moved more the impacts up We their than in of oil for gross we is to that by our weather production. to Wolfcamp words curtailed strive results rather Howard to the largely inclement a We and wells wells capital XX-well the Our to Loredo. now ramp of how milestone County turning challenges Howard development our over continuously These driven of County a production We're efficient the a great company XXXX the wells just transition of able some completed beginning example Howard to all are improve production the Sprayberry assets. recent and growth lower up production. to

also the year XXXX net We Howard competitive during at position acres a leasehold increased our County in price. very and

transformation. built Opportunistically, hedging financial We for sheet. also to plan a We as have automating processes debt a support much future. we so manage XXXX, maturities eliminate and significant risks to early to intelligent application, and debt pushed purchased launched maintain manual We In our a the from embrace innovation and we cloud-based which well robust up to foundation provide is reduce expenses, more. ground operating paperwork, with partnered increase balance production, XXXX. others the we made of We digital our year framework designed took actions our XXXX. out started build our strides term last to some and in development XXXX in to to position

versus Our continue we highest core business. our business producing across to of successfully G&A driven company our culture ultimately levels. innovation our levels costs XXXX all aspects will being the well our is and Operationally, and at LOE of improve impact of position,

emissions and night, flared reduce also Last ESG by past our report, with published this by cutting environmental XX%, gas emitted water and XX%. greenhouse our XXXX. emissions along by to along by and production, metrics, than leadership executive greenhouse flaring all release, gas industry to demonstrating Importantly, In methane already from board levels reduced climate-risk success demonstrated we all organization. our report. to our oil to less our we versus emissions that in in and commitment target with gas we our the gain earnings of the spills volumes inaugural the XX% team In environmental with at experiencing of and line levels with natural gas our worked lower are to align structure compensation environmental peers. targets to X.X% alignment elimination than are this These the XXXX, reductions footprint we routine are of the

impact on lasting highlight proud women our We're of also one-half of goals, the our impact. diversified we addition environmental the board of on our our report, also issues. now our and our the technological, have Nearly In of legal, strong the our executive our emphasized team. In our by experience progress to to and board also spirit accomplishments workforce has communities of and XX% governance or to filled and roles as In minorities. partner being by are social we generous report, on is professional company a the backgrounds female adding employees we our agencies, local with we financial, very Loredo, represented with women.

For we strategy our XXXX, we have efficiency pivoting and November XXXX. gains Howard to shift XXXX in County. was in place The our the with development build foundation put of budget highlight plan from on communicated capital strong that the

DNC We as increasing expect the consistent with year oil the throughout free last cash growth generation same flow budget on along year.

costs additional year remain for the prices. are same acquire with more XXXX throughout [ph], maintaining margin consistent paired to budget. the acreage on to year up oil attractive lateral focused development expected rig XXXX versus complete high opportunities XX% by fact, at reduced DNC In when program We

to this turn we it for valuation be to over continued a I the and of more transformation will of catalyst so on one We details now for will framework also are Karen opportunities these set is the operations. and for Loredo. acquisitions committed opportunity anticipate far creative stronger our our year, significantly

Karen Chandler

our development XX costs, impressive by Loredo XX%, the the We completions wells four having quickly delivered restarted the fully increased program completing acreage, operations for Despite years, first then and in team Jason. of drilling operator our mine the first Through the wells our package quarter, by transitioning ability you, XX%, from drilling and costs heart or Basin. our halting current XXXX acreage, completion In foot sand company completed our well less. County completions or efficiencies quarter at our Thank five at from all County own reduce results. second confident to supply early month challenges operated completions County reduce can Permian first, $XXX aggressive mine by party Howard truck we on in activity program county. X%, around our in operations to completions operations efficiencies $XX,XXX our established year, we're by increased to this, an a an $XX,XXX Howard and Howard in activity and pivot operations leasehold. operational The in months. in by our by We wells transitioned deliver saves commenced presented of per to on the barrel. quarter also miles in the fourth At third service per for XX,XXX traffic per per we

take longer the early Howard the happy package wells. in September in especially general, In Howard we acreage, developed and to Spraberry early X of XX clean to on were were package County this That Lower performance wells Completions in as and these in Lower began wells with XX-well our wells with a wells on formation. said, wrapped December. established we're early County up wells than operations Spraberry. of being up first Our in in Wolfcamp counting very

was our for [ph]. higher the County. also XXXX Commensurately, currently prior X severe completions well on forward, in the temperatures with drilling past the they're As formal well up the guidance cleanup to Howard in [ph] package we're a oil over an ahead XX days. the parent-child quarter production activity ramp package and and four XX-well are getting quarter. quarter expect in or Jason few in seeing XXXX, package, first the commodity guidance completions I completions offsetting their on investment development XX and DSU wells than quality packages with of interactions operations path forward and into each XXXX size XX extended with of Howard want first as in even to into the after we spacing weather at bring accelerating package. Sprayberry days. Howard X more developed reflects just tracking the tracker package, Operations that referenced. activity long Depending up decision, on developed expectations now originally [indiscernible] finishing well mentioned, just the to communicated we're completions XXXX from the County avoid performing We're our the with adjusting production. share for either schedule each will be and wells per with as individual as associated Permian to are this our operator. one either production last XXXX package times items of the quarter or weather was higher we're the but as the consist to were Capital lower second of pricing even Basin, than our will of production uncertainties to and impacts XX for current our in I the are was done our full well large rock the package all In production and on second This on the Lower our Sprayberry. fourth wells situation on will expected this in first XXXX, our icing final well similar XXXX also budget reduced with freezing County of slightly The time Wolfcamp. are wells affected the incorporate oil efficiencies that one severe Improved from expectations of pulled beginning XX spacing

or to environmental weather. operations As the takeaway XX-day units vapor and compliance. first zero experienced impeded are timeframe, processing well environmental challenges our due production safety and fuel of sites Loredo's shutter optimal members limited including Multiple an and electricity, gas company's the necessary team always, priority. facilities, to safety capacity, are access this impact releases lack of incidents for recovery and which to over our We commitment the and

were the completions day, that in and a drilling package to County. completions estimates approximately proceed pre-storm of currently to by Howard completions delaying Additionally, of plug Currently, operations and impact activities rapidly production approximately for levels. reduce the resumed and oil XXXX BOE combined about oil out of drill quarter XXXX unable company first operations total in of returning normal on is will have XX-well production company's XXXX production day. the barrels delays and [indiscernible] The production per shut per week

the and volume value effect the few pricing of can have year-end our reserves. on on nature dramatic of SEC-mandated Obviously, at proof reserves Lastly, XXXX. comments a

or XX% Brian shortens numerous representing I'd work the Given is cost had [ph] the generate by being became for few our over proved Laredo weather, freezing in their update. and as of developed prices. various at and turn counted the prices. days. now icy On operations through hard what helping Remember, water that Slide both Everyone uneconomic PVXX County West a everyone company safe. value. power I'll X for positive oil the storm to additional benchmark developed thanking proved required team developed for be this starting booked wells at like proved the volumes, keep Howard only work. past to our That our reserve at impact this members dedication on, earnings have is at and with issues, manage difficult company's of all year-end things presentation, would capital develop economic prices. said, reserves value PVXX. development of of dealing for XXXX. you we value wells both call Already the to is at home to the through the decreased close to all Texas us Thank life working of as the has on show outages, long to financial well roads, going and over and higher No

Bryan Lemmerman

comments, Jason opening our managing success financial in his XXXX. In in Karen. you, risk mentioned Thank

and a future keeping the day driver in result our oil demand to for our of This cash a future in of ratios it XXXX oil related generation quarter production flow plan. XXXX barrels flow action in have abnormally a steep XX,XXX-barrel a to from For in but us, the range did Executing second completions low EBITDAX definitely levels prices XXXX oil day. company. production Responding our to activity quarter cash free principle barrels fourth plan the COVID Returning net approximately levels of capabilities big was part the to key XX,XXX take, months. four per strategic a to XX,XXX is an low. this we destruction, consolidated decline ongoing generation for correct day driven key to played the is levels debt by

These our many cash one past. we derived Our productivity we believe completion on range. oil goals XXXX to served oil within on rigs and measure Shifting levels. production, accomplishes on and our at consistent point levels, downside inflection a has have plan facilitate cash running we price efficient. range drive that To in throughout two take active including execute cash a County could do to to We cash potential in WTI that to our $XX the price $XX efficiencies and the year highly focus the is Howard Currently, downside our execute million risks pace program, an mitigated outcomes we the alone. flow risk a and of within to plan million flow strategy so point ability broad commodity flow this hedge at have us current well hedges. not $XX the our $XX continued our in versus impacts the to plan flow. We look free

at an in early of XXXX continued on decrease both dollar to the ledger, basis. the cost ideally and Looking briefly side absolute

continues XXXX, our For we the impacts winter production steady we the wells slight, decrease. County the production QX increase of turn legacy throughout year to Howard approximately temporal offs, increase as and as XX% to than freeze from expect weather line a in see in to but due other

couple also absolute G&A will basis. expense environment. telegraphing been LOE few decreased an we did in-line last more unit XXXX price XXXX a work on than overs and low This in is what steady in we increase of perform We both in the also with for quarters. have the

lower to activity the oil As to personnel decision we to align made tough the in with response we reduced activity cut new levels. prices,

flat have them other to levels freeze than again, on XXXX basis from our expect remain first XXXX We discipline expense and a absolute on maintained winter relatively basis flat versus relatively in managing in offs. G&A the the an and impact weather quarter BOE

fund bank opportunities Looking is pay to our plan further to our to sheet ability forward, continue additional improve and free our flow acquisitions We to down balance goal to our facility. bolt-on net on interest revolver strategies. cash and to to and utilize we with debt ratios to look we our execution are continue reduce Ultimately, flexibility for increase our other facilitate that the leverage focused transactions and of reduce accretive costs. highly corporate our

Jason Now, I to will for turn back closing comments. the call over

Jason Pigott

very Thank you, XXXX Bryan. about for Laredo. I'm excited

positioned We County. generation cash are now of capabilities expected to efficiency, in flow productivity Howard and capital demonstrate co-development the

be Risk operate. welling we'll principle additional We to are and operational at capabilities to in continues mitigation [ph] our continue margin high confident on adding attractive valuations. focus we how a locations of basic

ago demonstrated we've XX our working open drive months is Our line please determined questions. balance it for Operator, transformational the success. sheet forward just XXXX challenges A on ESG performance. remained plan and our strong we've we're of upon build to strong and communicated for the focus and

Operator

you. Thank Whitfield question comes from Our Derrick first with [Operator Stifel. Instructions]

You may proceed question. with your

Derrick Whitfield

good and morning, all. Thanks

Jason Pigott

Derrick. morning, Good

Derrick Whitfield

to notable like at For thinking on And adjustments my first there position are County. across question, go on are of limited focus designer data about in approach? like to any areas Karen's other you based incorporate forward spacing on you I'd your current generally your Howard have, the Karen, opportunity you how fullback B&C pricing? spacing comments or in

Karen Chandler

we at prior plans Thanks development releases wanted Wolfcamp. Hey in potential the different the to good question. in talked and for We've about look Yes. morning. that spacing

both X there. well, XX we're development well and looking at an So,

the are next packages The in packages on with packages. of based bit two little spacing. look tighter now developing wider first talked about first getting we're our that couple one, on the that of spacing on well configurations the at based be at investment decision be the looking right I packages, Howard decision the making in will different drilling the spacing. we're The the we'll a we Really, the just mentioned, and And since third those of operations the we made as bringing began. because XXXX decision also, then on packages the highlight time. that spacing, fourth And on based on middle the was at on economic that County

little a So, different environment. commodity bit

continue So, spacing, we're to different different the the at the development look also designs, look continuing at completion we really those plans, the around as both for different at to space and optimizing Sprayberry. Wolfcamp for

Bryan Lemmerman

the don't new wells and we cost designs all or first Actually, completion too, of the testing package that getting drilled. in have we're for part cost then the wells a of we've is in final the and

continue to and should to today. those in year get the going We opportunity there's and our cost we what costs need as just come be where costs think that drive we'll to are baked to from at all I down fully goes and So, down. on, look

Derrick Whitfield

That's perhaps regard than QX. to effectively XXXX? to the suggests guidance old perhaps profile raised seemingly guidance, trajectory with Karen, experienced and an a affects potentially in despite great. your previously And with That stronger for you exit up, you the your my follow weather production rate expected you speak Could XXXX offer Jason for or on color thought. production

Karen Chandler

Wolfcamp added the did County production in first comment online package time can and formation We coming specifically. results on of Howard the the deck and itself. I profile early the split actually this out Sprayberry the we

early, package well as first performance expectations. but So, we mentioned, on is meeting it's that

which County, first just a in is then, coming to XXXX, more spacing tighter seeing addition I'll improve. production that Wolfcamp and in footage also and looking everything be Again fourth on the is is that that we're to in good highlighted the in we that were showed there. again, production guidance done in original bit the by Howard impacting is to package little when with. quarter, continue So, the getting we comment trend that profiles continuing out went also because our efficiencies staying completions, also upward for data with

both of two in that the guidance. those increase So things really are impacting

Bryan Lemmerman

Yes. And is Derrick, this Brian.

that as year, On rates past the the of a throughout the kind see production it talked increase we've I in think the you'll throughout steady year.

annual so, of will number midpoint. be And kind the the

a the It's The year we're steady little we'll of pretty be see for increase. just quarterly above on, production we today and it that a of up rata should really as been The increase year. by speaking end expecting. but it gave characterize you increase packages with see the the a oil the pro is little and we're step rata lumpy to it generally a basis, the bit on coming So pretty going timing throughout much below be -- much year. pro guidance over we what have could I

Jason Pigott

big changes this co-development pivot year the to of Howard in one And the for are County. us

kind production paths to into our on, slugs, So wells XX XX when versus We've they come might Karen It some smaller we we're good been for before. how moving that talk were more as and hit. our about a we forecasting weather weather thought be forward the of of come that in little on some doing well to trying to incorporate bit about of just

Karen Chandler

Sure.

back it XX% Yesterday, online. production, of were that on at able backup So this weekend the running operations drilling over of temperatures completions, production we up level about warmed to that's at the operations. through get we pre-storm our bring the weekend, able and really get majority were up really all to kind really pre-storm full of when from was also back standpoint. we were all and we It back to were just of as last the our estimating

were that days. impacted days. So, XX a the about some those before XX% that at levels of we were of add the production release talked I'll way our also or storm below of operations in total for in we six about

overall everything So getting I as back we're online. mentioned,

knows, Our very everyone production concentrated area. as is on one to the call

package example, Howard in [ph] of and bringing XX-well one our in the For all tier package. so on one that impacting County, new wells off really well we're QX

impactful So, any be very it recent because our can concentrated. to events total so like weather is really the production,

the of our from guidance getting So, get the online operations back we potential worked to we're few the in production, the get we and evaluate everything online next with continue of in our fully impact release. higher back end back storm on as days. still all with We'll

Derrick Whitfield

detailed Great update, thanks your for response.

Bryan Lemmerman

Derrick. Thanks,

Operator

from Thank Brian you. next comes Our Singer [Operator with Sachs. Instructions] question Goldman

question. with may your You proceed

Brian Singer

impacting is inventory. Thank Derrick's question. morning to a you. bit how more results beyond? commodity follow that Based up you One regards does a your acquire ability Good higher in morning. locations? question of to this future It's little seeing impact you are moved or County, then Howard with it interest that first about that to think on XXXX and prices with specially and how having the is And from

Jason Pigott

we've Yes, year. that's lot been inventory our of there for range and and a got this out the updated and

some can is there with So, talking swing about four we're spacing, What X,XXX but as a acres. wells. be impacts it for again,

answer we're changes, through So, going with price. some that the and

So, continue we We're to ahead of that. look at price.

the So, there the much in $XX oil price when oil those were we put XX were was drilling out range. lower, was packages so when well

wells generated we'll just we acreage. Sprayberry, that we pulling some drill but So, We're the is the with all tackling. six be another instances There in us just there need that. different to [ph] more We're XX opportunity the are and we've the here some a We for other think us, in got purchasing respect either or Sprayberry, something this or think be where in bringing partner, design wells, another, organically. do eight at wells design with to flexible, section in Wolfcamp, And or wells blocking JV to to are JOA with opportunities gives I We've doing four than to to Wolfcamp. we'll wells got right also our We've results. the companies inventory, six need of to do. that that continue peers. it's our continuing and get test in the some but the continue

sold X,XXX that in an regular $XX,XXX acres at tackling $X,XXX basis. an and things we types do blocking brought the on for last plus. acreage just are acre those We a of acre So year that

bringing how in in. acreage negotiated in. the at So, we've good sale, a negotiated some some come very been transaction. been of It's hard was to say some a has landowners, that Each today it exactly with we was brought

ways, year multiple that opportunities a today, bring just ago. over in we portfolio drilling and-a-half everything So, but didn't in different we have we're our

in do methods to exactly at well continue to used in bringing far. those but those how hard because opportunities, So, it's describe been to bring multiple we've so they've

Brian Singer

thank Great, much. you very

Operator

you. further would at I'm any Thank not to for this time. Hagood I like Ron the turn questions now any showing call back to over remarks. further

Ron Hagood

much Thank We appreciate us your today. joining concludes this this interest call. and in you very for morning's Laredo,

Operator

ladies gentlemen, you, conference and Thank today's Thank participating. this for concludes call. you

may You now disconnect.

Vital Energy (VTLE) 23 Feb 212020 Q4 Earnings call transcript