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Laredo Petroleum Provides Second-Quarter 2021 Operational Update and Revised 2021 Capital Budget and Production Guidance
Second-Quarter 2021 Operational Update
In the second quarter of 2021, Laredo produced approximately 85.9 thousand barrels of oil equivalent ("BOE") per day, including oil production of approximately 26.4 thousand barrels of oil per day ("BOPD"), growing both total and oil production by 9% versus first-quarter 2021.
In mid-to-late June, the Company’s production operations in Howard County were impacted by a combination of delayed third-party connections to tank batteries, downtime at third-party facilities due to weather-related events and lost power in the field. For approximately 10 days, Laredo chose to curtail production to minimize flaring rather than continue producing crude oil at maximum rates and flaring excessive amounts of wet gas. Laredo estimates that the curtailments and shut-ins reduced second-quarter 2021 total production by approximately 900 BOE per day, including approximately 700 BOPD of oil production. The midstream infrastructure and field electrical issues have been addressed and production operations in Howard County have returned to normal.
Incurred capital expenditures in the second quarter of 2021 were approximately
Revised Full-Year 2021 Capital Budget and Production Guidance
The Company’s revised full-year 2021 capital budget is driven by the integration of Sabalo’s operations into Laredo’s low-cost operational structure paired with continued efficiency gains. The revised budget achieves a 22% increase in completed wells and a 24% increase in completed lateral feet versus the previous budget while investing only 17% more capital. Revised production guidance reflects the sale of approximately 25,000 BOE (23% oil) per day of gas-weighted production from the Company’s legacy leasehold and the purchase of approximately 13,600 BOE (89% oil) per day of production from Sabalo, as of
|FY-21E Revised||FY-21E Previous|
|Production and capital:|
|Total production (MBOE per day)||77.0 - 80.0||80.0 - 85.0|
|Oil production (MBOPD)||30.5 - 31.5||27.3 - 29.3|
|Incurred capital expenditures, excluding non-budgeted acquisitions ($ MM)||$||420||$||360|
|Selected activity metrics:|
|Average lateral length (feet)||10,000||9,800|
Preliminary 2022 Operational Plan
By the second quarter of 2022, Laredo expects to return to a highly-efficient operational cadence of two rigs and one completions crew. Current plans are for total capital expenditures, including infrastructure and other capitalized costs, excluding non-budgeted acquisitions, of approximately
"During the second quarter, Laredo again executed on its Howard County development plan," stated
"As we integrate Sabalo’s operations, we have budgeted a moderate increase in activity and capital levels for the remainder of 2021, primarily driven by the drilling and completion of an eight-well package that was already in process at the closing of the transaction," continued
This press release and any oral statements made regarding the subject of this release contain forward-looking statements as defined under Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical facts, that address activities that Laredo assumes, plans, expects, believes, intends, projects, indicates, enables, transforms, estimates or anticipates (and other similar expressions) will, should or may occur in the future are forward-looking statements. The forward-looking statements are based on management’s current belief, based on currently available information, as to the outcome and timing of future events. Such statements are not guarantees of future performance and involve risks, assumptions and uncertainties.
General risks relating to Laredo include, but are not limited to, the decline in prices of oil, natural gas liquids and natural gas and the related impact to financial statements as a result of asset impairments and revisions to reserve estimates, the ability of the Company to execute its strategies, including its ability to successfully identify and consummate strategic acquisitions at purchase prices that are accretive to its financial results and to successfully integrate acquired businesses, assets and properties, oil production quotas or other actions that might be imposed by the
1Free Cash Flow (Unaudited)
Free Cash Flow is a non-GAAP financial measure that the Company defines as net cash provided by operating activities (GAAP) before changes in operating assets and liabilities, net, less costs incurred, excluding non-budgeted acquisitions. Free Cash Flow does not represent funds available for future discretionary use because it excludes funds required for future debt service, capital expenditures, acquisitions, working capital, income taxes, franchise taxes and other commitments and obligations. However, management believes Free Cash Flow is useful to management and investors in evaluating operating trends in its business that are affected by production, commodity prices, operating costs and other related factors. There are significant limitations to the use of Free Cash Flow as a measure of performance, including the lack of comparability due to the different methods of calculating Free Cash Flow reported by different companies.
Source: Laredo Petroleum, Inc.