- Earnings call transcript Q3 2022

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Q3 2022 Laredo Petroleum, Inc. Earnings Conference Call. I would now like to turn the call over to Ron Hagood, Vice President of Investor Relations. Please go ahead.

Ron Hagood

Thank you, and good morning.

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

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

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

reference on In be the non-GAAP we'll call we to financial at addition, Reconciliations turn our and will now for results Officer. GAAP release measures making to issued Chief over in to included operating I website financial and our detailing third and are quarter XXXX. measures. accessed yesterday, press www.laredopetro.com. presentation the The Pigott, financial release Executive President Jason press and be presentation can

Jason Pigott

Thanks, interest joining Ron, was one and good we We for add third our plan long-term Laredo our continued another to Financially, in appreciate value. quarter good proven as for the today. us execute company. to morning, everyone. Thanks your

benefit margins There highlights capital and commodity strong to preserve like to inflationary discipline would I our We prices are to and continue ongoing from our few manage maintain pressures. a review.

quarter. First, we generated third flow of free the $XX million in cash

drilling to $XXX X million leverage and last similar And consistent cash used completions a this in capital X.XXx. the debt flow and a and cash X of a we with finally, quarter combined crew. to strengthening Second, sheet of pace, hand our on equity, quarter rigs ratio to balance were investments repurchase

quarter to levels to in the $XXX and will maintain million of activity We plan similar $XXX million. invest fourth

the production our pad. have impacted were is producing operators than completions high from recently levels our The the expectations. near was but some negatively quarter larger was believe modeled. no range, volume Total recent by impacts management County volumes the came we offset weeks offset below that Howard operators, Howard activity by in levels industry to pre-released a previous decrease of reason Production in oil within production was developed of ago. Third few activity greater that impacted County, returns coordinate will We future. seeing in wells with strong of

assumed to well COO performance. and coming restructured be Katie performance business. to member, were will VP confident duties in stronger We Difficulty] Development, extremely VP are our have than presentation These immediately on on I'm and rather future County to of and team directly Howard distinct timing frac graph been the larger that that the have increase of impacted new reduced These frac frac ability and of impacted production X and the in per We've post eliminating position. wells Difficulty] estimates We Coldiron, our better of activity. Hill, Recently a significant taken steps Business the adjusted forecast [Technical predictable. operations our Laredo our focus of demonstrates of impact, Operations. now these a deliver following their returned our offset to parts forecast drivers Timing impacted. report the ensure me plotting that in leaders our X quarters. their reflect future wells wells the pre-frac radius in team, a to impact curve. our earnings included operated by Subsurface that all [Technical our of production more Kyle Slide change ensure

a made changes years, on XXXX the our a the company of year-to-date deck. we've some dramatic our made We compared last some progress challenges of While this reiterate of Difficulty] over list I as couple quarter, to performance. more of the would investor had few like since [Technical to journey current we we've have

highlights. Just of to those a name few

reduced and increased XX% First, ratio to oil our grew X.XXx. liquidity our billion, production $X.XXX XX% we XX% leverage to we

Before concerning XXXX. I like turn the call items a to few Bryan, I over to would cover

highly we are plan. confident our in business First,

all create value. to key the on High-quality risk inventory, aligned components objectives. of the key of a deep in place team assets, and have our importance We delivering professionals today effective a management

through Our sheet expect flow, program. our focus our will and and unchanged to free in we methodically strengthen we deliver cash on return capital balance debt, XXXX, discipline remained reduce that cash again shareholders buyback

levels program we X-rig expect our drilling XXXX, to current in continue to year. the activity For for run full

similar us in to XXXX. crew 'XX the year to We to will XXXX. expected more complete a oil spot is level experienced XXXX addition drilling crew mid-single-digit full year-to-date in of the 'XX. than continued generate improvements did wells production This X to we to growth fourth The existing efficiency quarter activity also add enable will compared in

and working of are all securing best equipment to Laredo's with We high labor while the at providers our quality ensure safety rate. standards service

flows. call for commodity derivative are and early we will markets our markets Board guidance financial practice, addition, certainty cash have approval. to to returns update. monitoring now past with in next year following plan continue will we over in and XXXX lock Consistent issue we our ensure to utilize high In I turn a Bryan internal and the reviews to

Bryan Lemmerman

you, Jason. Thank

strengthen balance to cash to Third sheet shareholders. return quarter, we our and continued

repurchased X, to base million debt refinanced $XXX term of approximately we year of $XX.X notes so. funded through next have have repurchases XX% free been term value need face million flexibility the of repurchased repurchases, the us These base our or by and $XXX.X par. total cash value of have million. at on hand quarter, we cash reduce flow, or the of at XX.X% enabling XXXX debt our increasing to Tuesday, be these of interest expense During value Through notes, a in Of par. million been redeemed annual as $XX November

million $XX cash million the hand. on on drawn $X had facility with quarter, total billion billion. quarter roughly During we We reduced the debt credit $X.XX to net our of $XX ended and

of finalized redetermination RBL November of revolver X, November process had bank paid we with $XX our our X semiannual approximately X, On and our balance million. group. hold to As cash we

As billion elected borrowing maintained our were our $X commitments $X.XX base to was part at of $X.X from increased process, billion. billion this and

other The brought have as and been was simplified baskets that where debt payments compliance restricted remain long line significant standard tests. gives in ratio market flexibility more and our as This us with in regard we change today. to the equity with repurchases is with

shares of we $XX. through were With equity, equity that, During of returned an average price the the $XX of $XX.X November repurchased the total over XXX,XXX will program. quarter, of the line I call Please a From to our for cash have repurchase X, million we shareholders turn questions. operator. million to at approximately open

Operator

the comes question line from of John first Our Annis Stifel. Instructions] [Operator from

John Annis

expectations first Could wanted in I your you from saw are my and future? share expect you impacts Howard how on planning an whether For the similar focus Slide to operational And guidance X question, period in this frac to approaching County. impact you specifically and frac on you the occur perspective?

Ron Hagood

Coldiron, and We'll who's of that. talk you to about Subsurface, Kyle let our Planning Head

Kyle Coldiron

Ron. Thanks, Yes.

experienced the a impact analysis of of they've hit. rates, impact and up here the terms our experienced as hit last long-term basically that frac went period And communicating back then can all frac hit that way the normalized them the ultimately, the seeing here wells did looked see is what of pre-frac So after this over have is cleaned their and we're years. kind and at the of X a not that that we and kind return in frac and we're production ultimately Howard And that what post in we County result of to you frac hit. a wells prior we

been for wells set older that have a number that has for that a newer only have few this been ultimately, are online and of wells So well months. online and are both years

a type can of And impact. set, well big seeing so you we're not that see across

little previous time decided past. we we've longer have modeling the radius that to what a wells up by bit clean We've our to their rates. effectively returning of impacted given be the So doubled that our in from to of assumed older expectation in wells also frac prior we've impact. And will offsetting to increase

But our of their production forward. rates. here we're changes wells to previous seeing that's a made well the So takeaway returned some is is loss going due we've what that really, in of productivity. not that And the key the production, a expectations to of deferral

John Annis

provide sense. some you makes approaches and details then versus And there's you how attention a wealth co-development peers on changing? just lot of That for their been season on my program this are Could and productivity. that now impacts differently your view on follow-up, approaches earnings

Kyle Coldiron

Yes.

and found is the right what of we spacing. we ultimately, well completion So think size mix

North Howard performance development on strong. our If Slide you there very X, can our North in you Howard, see at is look well

to you Our can the in see Howard, and we’re a bit that which Central spaced you on that are lines, see were can result those original of relative plot. doing what little today, the packages X orange tightly

like feel bit we’ve acreage But little and right think good fracs. operators go wider our of our well combination some and size. combination. we space can we found bigger got footprint, smaller tighter with a sometimes the frac we spacing Other ultimately, a So fracs, with with

Operator

Blunden next line comes Sachs. question Your from of Goldman Karl from the

Karl Blunden

price do was steps your Thanks XXXX. down. liabilities so just become addressing cutting work I back moving wall much your for good in down well, on and January. maturity the Really -- and the Those coal time. on it interested

As about liquidity would steps maturity? bit that to you more to further down? think the about more out that the maintain coal something reduction you take when would be measured you like of price for that priority is liquidity, be a and a Or

Bryan Lemmerman

Sure. This is Bryan.

what with much is pretty said, line cash pay we plan we've down do flow. As these to in

a they approach we lower bit as XXXX back. few prices been with months had a predicted than So

we think I closer. address it as gets will this

the now. mentioned, key a is you As component right liquidity

acquisitions. have in for puts space liquidity, We billion of a $X which good us

to So we maintain careful to be want that.

redetermination RBL we to basically them bring call whenever week, have the to process and flexibility revolver. bonds those want on the earlier the this we With completed

there's and and The main from be anytime do decisions. a rush. year a making right the flexibility can maintain item it would So financial not now between January. I that

that that closer as and address it monitor way. we'll we So get

Operator

Your question comes from from line JPMorgan. next Parham Zach the of

Zach Parham

'XX? far to bit Jason, for little a little color you how as about thinking this in as year? what you give But capital seeing about you're talked inflation could a thinking us prepared what comments. production expectations in compared XXXX year-over-year you're your you're Maybe on your

Jason Pigott

Yes. the Thanks question, for Zach.

good Right best consensus estimates to around there. inflation expect the be around for where us $XXX now, a in that around We is. XX% puts would million year. right put be factor to are And

So budgeting We're still the that's where think I process are through right now. going we today.

completions, DUCs built some the again, gone we've being because also of have, will this year. of we'll a but into more kind drilled we've We few wells less have as end

I think our out we're still plan, the process budget, details we'll the of and through where we'll of So finalizing year. those be early kind next that's but going come with

Ron Hagood

referring for Zach, to clarify, he's the said to relative when to 'XX. million is the Jason and XX% to XXXX 'XX $XXX relative year,

Zach Parham

then Got on guess follow-up the it. And just a buyback. I

thoughts With think any buyback above in the near the more commodity X, do term? to leverage buyback on in the debt pace and -- near thoughts have backwardation really, potentially you you term guess, of focus slowing longer in the I how and over over on reduction? the about still the strip Just general the on buyback

Bryan Lemmerman

Yes.

total bit. it come repurchase back, bond slowing back as little a as going programs. the it ratio I to price has a equity both to come seen the think down and we've cash

definitely flow decent down, much million and us were we year. into move equity of a prices as the program debt primary put That keeping ratio get Right focus using And or determining not is by get to just year, if on a commodity think cash the plan. whole us $XXX keeping of I'd is our now, -- and higher, still aggressive would less But pace. I how then factor we reduction. thing at on aggressive. more price we'd methodical end say paying ratio. As we the most is still the will we the repurchase a the next what move and moved thing, That next whole using prices important as at use free

Operator

the conclude company questions. to does remarks. over would closing now That I like turn today's to for the call

Ron Hagood

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

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