Laredo Petroleum, Inc. (ticker: LPI) has released its Q4 and full-year 2017 results. For the fourth quarter of 2017, the company reported net income attributable to common stockholders of $408.6 million, or $1.70 per diluted share – this included a $405.9 million gain on the sale of Laredo’s investment in the Medallion-Midland Basin pipeline system. Adjusted net income (non-GAAP), for the fourth quarter of 2017 was $44.8 million, or $0.19 per adjusted diluted share.
For 2017, Laredo reported net income attributable to common stockholders of $549.0 million, or $2.29 per diluted share. Adjusted net income for 2017 was $144.7 million, or $0.60 per adjusted diluted share.
Exploring, producing – Laredo plans 16 wells for Q1 2018
In the fourth quarter of 2017, Laredo completed 18 horizontal wells averaging approximately 9,500 completed lateral feet. Fourth-quarter 2017 production was 61,922 BOEPD, an increase of approximately 17% from fourth-quarter 2016.
During the fourth quarter of 2017, the company completed the six-well Kloesel package, drilled in the western Glasscock portion. The package tested five discrete landing points in a dense-spacing configuration. According to Laredo, the package was delayed due to drilling challenges associated with one well testing a higher-pressure landing point and a second well experiencing a problem with its casing. However, the root causes of both issues have been identified and are not expected to impede further activities in the area, Laredo said.
Laredo is currently operating three horizontal rigs and expects to complete 16 net horizontal wells with an average completed lateral length of approximately 9,100 feet in the first quarter of 2018. Cold weather early in the first quarter of 2018 disrupted operations, negatively impacting estimated quarterly volumes by 52,000 BOE.
The company expects well costs in the first quarter of 2018 to begin to trend lower as longer stage lengths, in-basin sand and other completion design changes are implemented. Additionally, Laredo has completed the process of selecting a second full-time completions crew. Pricing quotes from interested parties confirmed the company’s assumptions that current service cost increases are minimal and Laredo believes its average well cost savings goal of $600,000 per well in 2018 can be reached.
Laredo Midstream Services
Laredo’s midstream infrastructure saved the company $7.5 million in Q4 2017. The midstream branch delivered more than 10 million cubic feet of natural gas per day, according to Laredo, the natural gas would have been flared if it could not access alternative processing facilities.
Laredo Infrastructure, Feb. 2018
Laredo’s most recent investor presentation shows that the company has 95 miles of water gathering infrastructure, removing approximately ~185,000 truckloads from roads.
Q4 2017 CapEx
During the fourth quarter of 2017, Laredo invested approximately $160 million in exploration and development activities. Other expenditures incurred during the quarter included approximately $4 million in bolt-on land acquisitions and lease extensions, approximately $10 million in infrastructure held by LMS and approximately $8 million in capitalized employee-related costs.
2018 guidance and CapEx
Laredo anticipates full-year 2018 production growth of at least 10%. In Q1 2018, the company expects to produce 62 MBOEPD.
Laredo 2018 CapEx, Feb. 2018
