LPI - Earnings call transcript Q2 2021

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Operator

Good day, ladies and gentlemen, and welcome to Laredo Petroleum, Inc.

Second Quarter 2021 Earnings Conference Call. My name is Kevin and I'll be your operator for today. At this time, all participants are in a listen-only mode.

Following -- we will conduct a question-and-answer session after the financial and operations report.

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

You may proceed sir.

Ron Hagood

Thank you, morning. and good

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

to describing and be Reform call, forward-looking statements. Private intended those we assumptions including forecast expectations, will the making covered Safe our today's Act the goals, During statements, beliefs, of by Harbor be are These of provisions XXXX. Litigation Securities

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

to release In in our are the addition, quarter we presentation be and financial reference for second will yesterday XXXX. Reconciliations financial of our and GAAP included making that press to we measures. that issued measures results details operating financial non-GAAP

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

a this call Officer. over website Pigott, have will the at turn not our do and Chief now President copy www.laredopetro.com. on press you presentation release, to may it of If I access you Executive or Jason

Jason Pigott

thank us I with ago, expanding our today. just risk; continuously Good for managing started and model years morning, a improving. we over three When two straightforward out core principles: you Laredo rolled business and on joining based high-margin inventory;

transformational of from change wild these experienced oil-weighted acquisition accelerated of has to during has some we progress. have over steep. announced never subsequently swings and of our core quarter November in principles, our our been the years, our wavered close, industry XXXX, the Our and two properties rate the last we first Since activities

acres Howard during Xst, in over completed to Sabalo development oil-weighted wells leasehold. a in closing package of activity our our first the quarter substantial acquisition the this year net over leasehold efficiency County acquired position EBITDA more throughout on reflecting flow increased With debt and our in XXXX, our the cash than our XXXX. of to have of transitioned is us anticipated and a free hedge flow transition and We of XXXX XX,XXX to expected which little completely position July result capital half, we've reducing substantially should our for that a protect fourth to program. the We of generation free cash generation, development

We which inventory us partners worked providing future to facility the paid for a discuss financial with our extend Bryan credit growth, and the down path moment. a will also in revolver,

even reduced our operationally, Howard complete development in pressures. County. of of the increased to improve the to with transition cost continue program We We DC&E cost face

well are per sand the are We keeping basin trucks drying highlight sand of a is outperforming off there wider-spaced will on $XXX,XXX in strategy wells which Howard wells our Howard it Northern how eliminates is cost with other also our wet saves believe and current in additional substantial in our Karen road package benefits environment. combustion mines. The estimate related Central sand us the leader the associated the that emissions our working. also mine a mine has approximately mitigated pressure, establishing portion because we surface, and ESG company-owned We of County initial in the County. occurs mine,

and We now I generate build to principles update. an it continue investors. over free Karen for will value our core substantial will follow ability our to operational in results turn for that these to long-term flow cash

Karen Chandler

you, Jason, and good Thank morning, everyone.

activity in our Howard to transitioned of we have now mentioned, activities Howard majority with acquired the positions just development acreage our and Western Jason in County. County fully As Glasscock our

all third are County. staying four not Slide develop These the well XX our and X, well in wells lower do we first the is four and This and counts package, packages, Howard. spacing cumulative and with now the the third four on package. wells plan well gross the different in completed Trentino/Whitmire the Howard, packages in lower Central wells in and lower to formation. been eight is spaced see two Slide first gross we will our all well the Sprayberry. in wells also the locations wells to that wells well and count This the location XX production we shown packages Wolfcamp-A the wells package these packages wells first subsequent our we in Howard which Wolfcamp-A with first in the quarter, what Sprayberry. from Central to package well of were targeted on to well widened Wolfcamp-A in calling second the in Sprayberry. since widening Central are tightly In have During the included to In In in relative Gilbert/Passowt the we Howard, you we the in Davis wells the equivalent spacing the we the expect XX any are two two in changes spacing XX Davis On packages. quarter more X. Wolfcamp-A Davis

X County outperformance with package about and was wells we very Central Howard with strength to average The the of area, North drilled performance on be Spraberry that Again, Wolfcamp-A early from came XX based the Sprayberry County. are XX like initial in out Everett a acquisition we was point package The relative the Vince the responding spacing in but XX-well about you as Howard, in July due reflecting exactly XX%. Vince is in of package Sabalo other development flowback, package, to wells the In and would XX development will slightly the per the still quality wider acreage Everett on of its which on West wells recently the plan narrow the the expect excited spacing this plan the performance now outperforming Howard lower I'd and tighter the with we Vince actually leasehold. package differ wells also section, still packages the of well a stay move and this the this is tighter by than at wells it time. Sabalo telling spacing slide. potentially by how somewhat position. space of tighter total in DSU. calling While North we lower to Davis the of and the lower the DSU, was Howard packages is to Everett X us we're an per over on Howard plan, well wider this still to But And initial per our completed will Xst. what expect spacing, the Howard North

We are Sabalo our development leasehold currently plans. working to fully integrate the acquired into

year activities Xst. and drilling crew. key additional second pace this As oil increase we we will previously quarters of temporarily are in that flowback close in acquisition the Slide increasing chart moderate was and fourth In on in July and completed fourth the activity. the put to of operating the the of wells third third begun progress of be announced, to one and XXXX, two completions to and this being momentum you to prior on can to rigs low building in The in the XXXX, in in a expect the the half finish the bottom on XXXX Sabalo into all we X. with this year X, growth of by return both In on Slide completions driving top you see see work quarters activity as chart of with increase can more production wells

with We completions average down expect to oil costs able flat and and and our more In beyond at activity XXXX, of drilling the to drive to continue delivered even first we wells relatively production XXXX be completions the and foot. hold $XXX half levels. per drilling cost an of moderate in

is getting As offset strong are shown we operations coupled our to fully in that second our our for us saving $XXX,XXX more sand three XX pricing. These mine second allowed wells prices, pumping, and a mine, efficient pressure cost deliver Laredo-owned At X, beginning market current their savings related the the efficiencies wells. to diesel per Slide and pressures us through quarter we of quarter. also completions and to sand These of more more steel continued that with now total helped see us efficiencies additional from estimate well. drilling on than trend

to I'd Lastly, out flaring venting for like statistics Slide the first point XX, to our turning and of XXXX. half

the numbers. you On and XXXX will the right, reduced see chart venting XXXX of and on to strong compared flaring trend our the

the XXXX the half Bryan financial emissions, in reducing testament teams our will operations levels operations to a update. for out Midstream build transition even and first as to Howard now work of we I call and over to are County. on focus Our turn our

Bryan Lemmerman

Karen. you, Thank

reflected of activity flowback in Most increasing temporarily this by increases guided are the and the XX days quarter a QX will being impact in when of XX activity our Flowback resulting a and in QX days activity on have and value. these of impact we capital QX. drives packages flowback. finish substantial mentioned, Karen to The estimate we end have the begun with expect no production or best ranges and As QX steep for trajectory which oil real the is outlined we QX, to QX Sabalo. slower dates reflect the see faster can towards

day at on production expect rate Moving activity a quarter-on-quarter, levels, into XX,XXX to spend of per demonstrated capital per have the relatively XXXX, we have to XX,XXX as through we Slide barrels X. flat at variations our moderated Again day. will oil barrels normalized hold graph

to Now, balance turning the sheet.

improving our to on $XXX divestiture in continue facility previously A acquisitions our Street million acreage. facility greater with concluding million offering balance make We liquidity bond the runway to credit credit Sixth progress oily and move for and extension structure sheet transactions continue and preserving our and will Sabalo provide we program opportunities. deleveraging extend front bond continue opportunities and of to much with announced acquisition look through inventory million us and the right the The the to related us around future extension. $XXX and $XX direction capital high-quality transaction inventory additional the ATM

with extension, in for existing pleased We market the we our replacing the mandates well as supportive new exit to prepared banks As going had exposure, due the that around of our banks exposure many received were forward needed banks very we from with to reception the their our group. facility exposure. extremely we facility increase the reducing bank four energy feel facility welcomed credit and to

extension $XXX rating credit Moody's. of As part and of notch one maintain bond commitment the we credit from facility offering, million improvement our a and level this saw

forward is to pay our continue and to Our down sheet. goal strengthen moving balance debt

XXXX free next XX the have for we and the hedged acquisition XX% the cash and approximately company flow generation our program, of for 'XX. months. With the recent XX% we for enhanced hedging oil profile for Currently, remainder of the are

To are We is approximately high-margin for remarks. oil-weighted gas approximately company. we XXXX. the for while hedged operational 'XX this, our that, Ultimately, do our capital hedged 'XX. over goal spending remainder properties generation the With efficient, XX% XX% apply where intend hedged focusing to additional XX% 'XX the of to for in capabilities. our in Jason to low-cost and discipline acquiring approximately call natural profile And I and can NGLs, we closing on on flow turn maintain we cash are free enhance for of XX%

Jason Pigott

Our to were transformation. activities quarter in third our the pivotal

over that the lot of talented change momentum excited the maintain to team we last working half have to of year second a years. our rate into I'm high continue with experienced have couple of of the We the and going

We line the will questions. now for open

Operator

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

Derrick Whitfield

good and morning, Thanks, all.

Jason Pigott

morning. Good

Derrick Whitfield

For to the than greatest X, the other is timing learning factor over trajectory. to Slide given in I'd several risk XX curve view imagine Central like the achieving Howard the focus wells fourth bringing during execution in so limited speak, the your sign, an Referencing your production on County my I'd quarter question, rate Howard in quarters? From exit what first you're last in QX. on there's in your ramp in perspective,

Jason Pigott

question, great Derrick. a that's Yes,

of XX over on a the add of as through X,XXX just I we pads, as to some wells frac these barrels think each. hit peaks these of wells, again we some well look day bringing think, crew,

And could prepared you spacing out in our so to really there, frac been for a the are initial those see package. takes crew outperforming we to there -- when to wells these a things are wells, packages as the behind as come create But about getting those get week well. volumes -- on of excited that we it first Bryan longer but uncertainty on quarter, Slide here new new all on our things make if any new we've it, in are of necessarily the this -- -- had go that got to the but more second [ph] test we spacing of X the at leaving planned, kind impact aren't that. comments, into crew are as those packages, a kind of lessened that just test and some the We're these mentioned tighter frac deck that value wells company spun-up but in timing, have wider that the to on the already needed ones pre-planned as spacing and than we sure weren't

great package that is initial every what's So, is the we sequential online outperforming package. sub brought

Slide they started, where look area wells the those and the our then pad, moving you doing our is most with we see we kind that on didn't which to acreage that pair the And see dominate for that rigs those moving For phenomenal. we we'll work earlier, we're [ph] Northern Vince over you'll X, that lines as XXXX. to added that County, are Everett of but Sabalo in our of update are finish activity, Howard that area also turn-in

Derrick Whitfield

differences perhaps few plan detail. approach, Great question, speak to quarters? development that two how you build Karen, the for the Sabalo's, perhaps your of Great. then, bridge that could and you a next material over slight and between on the to And is

Karen Chandler

calling I'll be how in Howard going we North bit talk Yes. into what the, more area. the to we're Sure, about are little a happy now,

showing we're most is package, per The XX-well section mentioned, on which in of results. and So Spraberry both recent well the as the Davis formation. the our Jason Wolfcamp-A based the

looking move XX be DSU. results of the the on Everett we the area, As per plan will at start development we at forward, the as Howard looking Vince well comparison, again in for North wells based that,

same total the overall development count. overall well a from really So plan

results. North move well move transition, really see the much you stronger and in focus we As well to we those plan into with really direction, the development new that Sprayberry to Northwest the acreage position, as And the want results.

the X-well development. So, and a right having within X-well at a Wolfcamp-A now looking Sprayberry XX-well

work Overall, the think for to that and DSU that right at do the development wider we'll on So continue now the kind base per plan the plan, we the is XX-well transition. plan right of Davis on wells really spacing the early where Sprayberry kind which of [ph] was produce and in right Vince County out watch how of kind to continue we are past Everett, additional time see now based the and the the production. development

Derrick Whitfield

for helpful. Thanks your Very time.

Jason Pigott

Thank you, Derrick.

Operator

with Your GoldenTree. Stuart next from comes question Jordan

Eric Seeve

Eric that like seems is, or a charge for for with pay little a Hey, quarter, -- guys. just of and on looks to there commodity in non-cash side, is talk a curious, matured paid Eric -- add that there's looks that you This you color not that net it about expense, is what $XX with for the and like just process Jordan. thought for Could which charge premiums adjusted hedging quarter. the why a terms million during it's it bit the a Question premium more derivatives Seeve on a bit number? like whether is to back your little give EBITDA prior this -- non-cash we'll

Bryan Lemmerman

allocation they as That Actually those the in in -- and had they premium XXXX the earlier we are and this throughout over those charge. You paid hedges still the -- but those occurs XXXX, year. so are being The were sold allocated is sold puts, premiums we of those correct. a -- if year, had but non-cash puts were mature. with

cash but an is a adjusted this it's not so year, adjustment charge. throughout to EBITDA And

Eric Seeve

the that for in future quarters? And Okay. expectation what's

Bryan Lemmerman

and move as in XQ XQ you that have cease. into then it there will but 'XX, 'XX, of -- you will So,

Eric Seeve

Okay, great. Thank you.

you we on trending that on color based line and Moving what trending? bit oil. a item it's QX? that beyond elaborate on you're guidance. can it's Can the guess would love the expect And expecting more the one on why way like a as that understand in loss the and QX little well, to activity I we It expand bit a purchased represents little don't looks little what from maybe

Jason Pigott

-- Yes. the by transport we Coast really Gulf sale at portion production to that to Coast a the of production the is have calculated we This Midland the has and for on the price and purchase Gulf really we calculation price, crude Gulf based our bases result function the the Coast. Coast, in is sizable excess Not we purchased oil loss a oil closing. been of the a do. of Gulf transport to derived amount net the transport all our of this the of It's quarter a growth on

You to MEH and of premium, in growing the see that we summarized were both Brent which the exposed appendix, the which premium, related oil been sales can plus we Midland, [ph] well. summarized we our to the has as

the closing differentials is the takeaway So main there.

we're to role that's portion to Central Sabalo after forward, crude acquired Coast. going Gulf larger to being the Going have the of Gulf transported the our transport of oil this what's Coast, the assets Howard, the a quarter,

our slightly up, down. So should the but will go purchase of party go and transportation oil sale third

and And year will first then the expires. change a in next day next the with transportation, is the portion which of XX,XXX so step be Bridgetex --

Eric Seeve

this where for So or differentials based how we differentials, beyond to today the you net trend on expect QX? see futures charge should

Jason Pigott

opening It will the trend of relative differential. to the

Eric Seeve

Okay, great. Thank you.

Operator

showing time. call back questions like not to would any I the this host. turn at I'm over And further our to

Ron Hagood

concludes interest call. morning. joining for in this this your us We appreciate Thank you Laredo. our And

Operator

requeue, speakers. conclude you [ph], to that this and take Ladies and I'll presentation. Jordan got question? We want Pardon go me today's do does gentlemen,

day. wonderful a have and disconnect, now may You

Vital Energy (VTLE) 5 Aug 212021 Q2 Earnings call transcript