LPI - Earnings call transcript Q3 2021

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

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

Third Quarter 2021 Earnings Conference Call. My name is Brian and I will 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.

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

sir. You proceed may

Ron Hagood

Thank morning. you, and good

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

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

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

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

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

Jason Pigott

And joining for today. thank morning. you us Good

the success with financially. quarter strong demonstrate Our We're and this strong quarter our results acquisition. Sabalo entering momentum third both and fourth XXXX integrating operationally

industry, accomplishments flow jumping our maximize the to our two XXXX, over to and strategic reflect last to let cash of quarterly our me results, on take Like Laredo Before cycle pursue key into in about prior a to a production. few was moments years. spending stuck growth most

generating in future. weighted, flow largely far and levered, heavily was sustainable our the balance Our was inventory was gas the cash of free prospect sheet

of team flow, assets. have better highest short always and operating our been to have the much a and with fortunate of operational improving today. transformed cash development margins, a ESG optimizing on focused years, creating track efficiencies are has with standards. record Laredo we generating our strengthening sheet strong two our and free positioned balance We are now the fundamentally In Laredo

the creation. have required ingredients sustaining for term value We all key long

Let's review some of key the highlights.

key than weighted our inventory through more we prices transitioned acres linked acquired life of XX,XXX added increased oil we strip. and margin margins quality program the to net rate cuts. well inventory, projects. oil assets inventory underwritten fully We've weighted With oil First, of years grew today's high below seven return have our development oil of highest in that

asset disciplined goal free current importance are We investments, fourth improved an deliver quarter the with and will company the and sustainable of in with cash this flow capital run XXXX beginning continue investors this portfolio in to recognize we Second, positioned at of to the to mind. now prices. mining

under enough. the to reducing our recognize to Third, producing allow be We one to structure focused proud products and and returns net improved footprint. are EBITDA, has projects redoubled And to XXXX. and our our delivering we owners. environmental are not consider capital as on friendly potentially we shareholder leverage adjusted cash in future are return the trajectory soon us will actions near more as times debt simply significantly commitment reduce that options will excellence and on is multiple All our that ESG our to table. pursuing finally, to This

competitive capture market. A&D We today's have adding in to proven our ability transactions value

create seek Our continue new to inventory. ways operating find on and maximizing to acreage while teams second will value improving to to are innovative margins none and

competitiveness company. the seek leverage We of and transactions reducing increase will accelerate continue further our to accretive, to

to now started us. that an our value to will working Karen just capture accomplishments, of the We're While we operational day are our for proud getting the and recognize management stakeholders. and opportunity lies over call and employees update. team our are satisfied hard we collective I for are hardly before every great hand

Karen Chandler

Thank you, morning. Jason good and

Our our ESG mentioned operating applying our indicative to in Jason opening his the to acquisitions was integrate and remarks, best of in practices assets. is on the with performance ability our focus acquired third strong, efficiently as quarter and profitably

a shifted from operations ago, year our Howard our our position. to drilling and legacy acreage over Just completions acquired leasehold County

our within now from Howard trucking. for us total miles of Our XXX,XXX were operated Due per completions trucking, to $XXX,XXX to XXXX, relative inflationary total our with and located associated we teams long of pay At further the over of term emissions positive opened month current in continues well, prices able sand, dividends. party market and approach expected our XXXX. maintain we Laredo’s This leasehold. costs $XXX In sand operations $XX,XXX further approximately well. completions to savings innovative rising insulated equipment gains, Further, to mine County reduce throughout and to savings our sourcing cost time, third pressures by foot allowing the sand to completions efficiency per to per eliminated trajectory prices. about drilling owned drilling per us a a late sand operations and company reducing

prices, pumping, diesel strength chemicals to name and recent rates, pervasive today cost few a rig and commodity seeing pressures casing, we more the items. are With in pressure

laterals, anticipating during expectations working offline in implementing are fast XX% faster But not Our higher for expenditures. LOEs. fracking teams of technology inflation are inflation driving times somewhat we operations. gains, transition we but County, margins, versus cuts higher oil efficiency with such offset Howard cementing, our also thoughts capital initial XXXX our to as midyear longer line XXXX new move higher only our are utilizing hard when drilling around to communicated With for and

Third expenses, in anticipated higher failures. Howard experienced acquired impacted ESP as work North by quarter higher we were over as than primarily well operating costs

remain higher acquisition by LOE associated anticipated activity with artificial driven the usage, of expenses lift costs diesel work expected optimization new to forward generator continued are and Going and increased areas. over increase designs

full to BOE for around We XXXX. full LOE company expect be per $X.XX year

more than cost. low basin and Midland drives Our team’s experience the knowledge operating in

learnings. enables Our analysis application the development experience basin of Midland also in and real time

Howard well in subsequent spacing XX packages spacing was Our wider per developed the Central of to XX ultimately to two it early first were well in development wells per wider a spacing test two then wells we and In packages, DSU. developments, We space packages. the as DSU. on our higher including began transition believe to XX important well as

The North third showing XX% from perception. economics fourth recently and value two well packages, currently two XX% superior the than performing developed and well position, first driving were which packages wider our in results. very results are In acquired Howard spacing, positive better are well packages, at

production to As continue we we data, this development our will optimize longer in dated area. gain

emissions co-developed and in development unbounded range in the continuing our bounded of Laredo assumptions can and the the performance is entire to bounded, spacing basin. semi Importantly, these packages forefront are confirming that occur Midland at area. on stay of the

During flared we third X.XX% the vented of or produced quarter, gas.

of in While the North Howard. acquired higher than assets driven was past integration the by performance, this

assets, we or Excluding of produced Howard gas North quarter. the flared X.XX% during the vented

into strengthen high are expect to We gas to no maximize partner additional levels. complete, also flaring. working now commitment upgrading the total to robust and agreements reduction. eliminate and our and production and emission facility facilities ensure gathering entered that previous standards gas performance Once constraints, we takeaway to our party processing further assuming emissions our are acquired company to We've with already better third the meet are upgrades performance to

RST with Howard Western commitment emissions, conjunction of will certification processed, in on county we Significantly, have greenhouse areas. the monitoring to initiated foreseeable process initiated emissions furthering responsibly future. horizontal of the XXXX. pilot and elimination all receive gas in sourced measure that the our to and reduce the wells methane gas the Glasscock have a reduction facilities In development our development are with set emissions. the goals flaring selected cover We've the capital on entirety along We areas and of expected County, our routine this gas continuous aggressive Howard greenhouse in by for development

goals to will quality committed commitments. continue to deliver art on the state We employ are our of processes high maintain and these we as and facilities achieving

the last years Our two impressive. has performance been over

performance a we then A&D of sourcing Our acquired team quickly assets. responsible fluid will the through financial I and a Bryan can call to over has integration sustainable environmental for Further, assets. the and update. and acquired value manner market integrate the the proven that and pricing in transactions accomplish improve hand a create from the the we now and in can improve

Bryan Lemmerman

performance terminate first, divestiture and issued parcel million has been our Thank year in drive operations, also company. financial our the in the X. this Then of Sabalo on XXXX third XXX a and we has quarter notes transformative helped you, the due look at facility. PDP Taking Karen. acquisition we closed legacy Like mid-July, strong transformation of credit July our highlights;

and bank our committed extended of credit to the energy that and reduce we four our sector. that restructured banks group the XXXX process, As and facility banks maturity adding dropping strongly renewed their exposure part wanted to of eight also to

second with closed since announced acquisition net acquisition in fourth we significant This seven our XX,XXX XXXX oil purchase runway years. to western the weighted our County, acres has Glasscock Lastly, development extending quarter. in approximately the of to agreement

strategic an improved stems We our a structure, This operating and longer enter oil of quality high momentum capital performance. recent inventory, acquisitions. strong will XXXX with from ESG and runway accretive and

reported the increased to cut. even seven, increase cash improvement we and Our our strategy leverage pivot natural where our would the point our higher and oil flow. other historic half mix realizations margin, increase dramatic reducing by improved owners cash commodity is free adjusted than in options are net times not and below debt be to us acquisition two position and levels, burden our in you end NGL had uplift oil XX% current show end one Had this on I reducing outlook an leverage one will cut, The of cut attributable slide the XXXX. at our the for to and driving inventory lower remained return would we process cash margin pursued oil commodity an to XXXX, sooner have margins, below gas with we you than our and than to and consider of to the track by to EBITDA our sustainable more step planned. interest to a At previously of lower prices, been times numbers.

third quarter highlights, capital the going improving Beyond strengthen continued to our seeing help fundamentals, structure forward. which we are continue

our previous issued previously, facility credit and in was As of percent notes billion. from X benchmark With October, base note. lower our quarter million XXXX. we than mentioned coupon our million XXX of a In two increased I to borrowing a due XXX

approximately current generation commodity Our elected million million. the XXX hedges, our of flow based is at current XXXX, XXX cash free in XXX And approximately is our million. on including commitments liquidity prices,

de-leveraging are to likely on are two for that the While success, already we continue per not these in share basis acquisitions a impressive, rest and are look on our content are closed to we accretive are nearly improvements XXXX company. to

mentioned, we the in basin. Karen remarks. to combined I our As ability of will now Midland and turn leadership some our acquisitions efficiently call us a profitably when preferred makes and with closing integrate assets have demonstrated for Jason ESG to over buyer the

Jason Pigott

Before we key take questions, reiterate a your to points. would few like I

have strides Over company success. significant we transforming it the made positioning for last our two years and

have high higher a leading assets oil cut weighted We to oil and margins. margin acquired higher

to ourselves have on a reducing ratio times. below one put to We path our leverage

our team operations integrating successfully acquisitions. Our is

We are commitments. sustainable development our safety that focused environmental support on and practices

questions. that in strategy We With all and please for every is that on is operator, have open to to value second employees for stakeholders. that come our create deliver of a motivated none our the group and line day

Operator

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

Your now line is open

Derrick Whitfield

morning and to good Thanks all.

Jason Pigott

morning, Good Derrick.

Derrick Whitfield

a question, picture Bryan. prepared first wanted or my comments, in for topic that on you your to reference Jason bigger yourself, focus For I perhaps

between reduction a half years and sub oil XXXX. attained Now about inventory by preference capital sight and of one by we return seven time? think ratio should one and your debt a year-end capital net of for look allocation in to line XXXX, have and sub we that you've forward How as debt-to-EBITDA of likely M&A

Jason Pigott

past, now sell people and debt not an reduction they much that for them. Yes, for can very where the top were time interesting I think may is right oil before in be come us $XXX it's waiting go worth assets the and the priority. M&A

environment interesting an it's There packages of are can the and market. But So again, coming out there. plenty those to come go.

levering the to added have up. past been company. been We've in right. what about to thoughtful think from value use been has they deals demonstrated we've able equity that to we've and some we've very the that the The an done is timing I keep

of a So really I deals, well lot materiality the primary I to has done team on the If think see sense. a that again. these We're industry production think just that good make doing focus. timing and continue act good is in we’ll the deals still grow things job logical achieving but we and working greater of

Derrick Whitfield

shift your most flattish, recent down I'd your production a follow Last to And guidance. XXXX. XXXX the still trajectory over maybe Great. my for perhaps relative suggested XXXX to like up, Is year slightly acquisition? that as volumes reasonable following disclosures QX quarter's to projection full

Jason Pigott

it'll lot mean, that wells Yes, February. yes, I But fairly of be more year-over-year. that wells that a than be guidance I we'll unbounded mean, say outperforming. are the I it'll come also have they're there that We do parts. give are moving ones outperforming. flat are other

West. Acquisition. to on digest Howard the from our data that in just being information County. for good going to there wells got now new now test So getting the continue we're Pioneer are We're and in completed We've some

we've parts us, expecting about for free very $XX would so year us cash a lot there's $XXX of still at next of flow the done. that million look going So We're a we I cash to deals year. with flow all robust for the be say to XXXX. just oil, moving for

We are capital in side. working the

upgrade it versus the pipeline may that in areas. newly be third party. will in like our or facilities we a We a may budget, And things there's fund not the acquired

moving So moving all very lot to there's there's of even these flow parts. just robust, next still with be for cash a but parts, expect year

Derrick Whitfield

Understood. update, thanks your time. Great for

Operator

Parks one you. Thank next our will And Tuohy of come Brothers. question from Noel with

now line is open. Your

Noel Parks

Good morning.

Jason Pigott

Good morning.

Noel Parks

couple questions. Just had of a

going your On and your and that the eliminate -- emissions to discussion forward. on on inspiring goals

it are monitoring cost like to vendors, your equipment technologies. a whether is pretty a best emissions could how, piloting talk different bit look of wonder sort you I what that some and Or tried And, of test choose out whether terms I how sort about I in believe there. you that just mentioned if and facilities. of work. you and what You little the lot there to might know well would in out from much work and,

Unidentified Company Representative

[indiscernible]. this is morning, Good

that So three monitoring. our we're actually looks data, product using those of kind of different emissions for is what of determine of And vendors us the lot a successful to like. pilot and project, of with provides of that the best pilot looking best we're kind continuous view objective different of a for in which terms vendors the pilot variables

a really objective this of year-long the is that's effort. So pilot

monitoring comes cases, amount real have just and then vendors the locations, we that on we're have looking going to vendor XX start we're facility and any observing think three monitor, the stations frequency, facilities we at monitoring kind other Some of a of emissions. time that data all their in putting of kind of facility. choosing we to In which single observation sampling have different

the is So to vendors figure out of product. best objective that's which us provides the those really

Jason Pigott

focused We've recognizing code these well. in on done emissions optical a our, thermal that of in-house able actually with add, start good transformation Laredo. digital we've we've some also and they're got and to these We've got cameras. actually some our as batteries, got I’d really job here our written. We've tank

So using external carbon to and technology try internal to as footprint our we're as reduce again, both possible. much really

Noel Parks

and of progress? other on on it made is made there is ESG M&A just them having And, market, unusual and as any out today. moving any working what have mentioned moving do with those interesting. -- is or the curious or lot or discussing operators it of you transactions different there, to Great, a it flaring emissions pretty small on I'm or remains operators, of see you've any parts parts, And done Or, the for any pretty strides also issues?

Jason Pigott

at was a week. last I Houston in conference Again,

are caught the of smaller up. operators So I do some they get must again, believe

been little it these they've is washing efforts, bit going in assets are, again, going again, green It's spectrum it thing. that they speak behind. small to to to to are right some they're broad everybody for really on you see operators, as focused space, think some I public of for think the market. there's like, doing a hard that put a I their very And even then there's and their that ESG thumb

Noel Parks

And learning great. and earlier, North about it. there's development you bounded semi in last Okay, think Howard bit me, just there. different one the was for by bounded of little it I of what that you're a about the in learned, one just anything what sort talk just Could mentioned non-intuitive that work parts and that's implied more your area, you've of your,

Jason Pigott

expect it's we really see. And think, intuitive. would I So what nothing, not to

I what just are we're well. you see in see they can performing you which of our with the think in to kind that can getting our there in packages, very release, segment

what kind very Those we're that is communicate performance. with so their of wells And happy trying we're to unbounded. are

like expectations they wells, they're plan of development, of or not our which they so is kind And our single pattern And reflective co-developed practices, are forward. for parent act wells. spacing going

Noel Parks

a great. Hey Thanks enough. Fair lot.

Jason Pigott

Thank you.

Operator

you. our session Thank concludes answer for And today. this question

So is to pleasure now comments conference Haygood, over for any Investor Mr. Relations Vice my hand back Ron the to closing or remarks. President, it

Ron Hagood

joining you Laredo. and in our us great appreciate morning. your for call, a Thank This interest today. concludes have We

Operator

you. This our Thank for call concludes conference today. webcast and

disconnect. may day. wonderful You have now a Everybody

Vital Energy (VTLE) 3 Nov 212021 Q3 Earnings call transcript