Laredo Petroleum raises FY19 total production guidance to 79 MBOE per day
Laredo Petroleum is announcing third-quarter oil and total production results that are above prior guidance. Additionally, Laredo is providing an update to the Company's 2019 operating plan and full-year 2019 production and free cash flow guidance, reflecting improving capital efficiency, which is primarily driven by reduced cycle times, well cost reductions and productivity improvements from wider-spaced development. Third-Quarter 2019 Highlights: Exceeded both oil and total production guidance for the quarter, producing 27.8 thousand barrels of oil per day and 81.9 thousand barrels of oil equivalent per day . Continued to reduce well costs through efficiencies and service cost reductions, lowering costs at the end of the quarter to $660 per lateral foot for Laredo's standard completion design. Reduced the outstanding balance on the Company's senior secured credit facility by $50M with internally generated cash flow, lowering the balance to $185M at September 30, 2019 Since the announcement of Laredo's operating plan in May 2019, the Company's execution of the plan has exceeded expectations and accelerated early 2020 activity into 2019. The 52 gross completions that were planned for full-year 2019 are now expected to be finished by the end of October as the Company has further reduced cycle times. Return expectations for 2019 continue to improve as well costs have decreased, improving well-level returns by approximately 5%, and well results confirm the Company's type curve for wider spaced development. Driven by these improving fundamentals, production guidance for full-year 2019 has been raised to 28.1 MBOPD for oil and to 79.0 MBOE per day for total production, and anticipated cash flow in 2019 has increased by $65 million from expectations in May. Reflecting the improving capital efficiency and cash flows, Laredo now believes it will deliver $40M of free cash flow in 2019 while maintaining its dedicated completions crew for the remainder of 2019. Operating the Company's dedicated completions crew for the remainder of 2019 increases anticipated completions to 58 gross wells in 2019. Laredo now expects to invest $490M in 2019, comprised of $425M for drilling and completion activities and $65 million for production facilities, land and other capitalized costs. The additional activity in 2019 is anticipated to positively impact oil production and cash flows in 2020 and 2021. By maintaining operational momentum through 2019, the Company now expects to be cash flow positive in both 2020 and 2021 and grow oil production each year from the estimated higher updated full-year 2019 oil production base. Laredo believes that its robust 2020 oil hedge position, covering approximately 75% of forecasted oil production at a weighted-average floor price of $58.79 per barrel, significantly reduces the impact of oil price declines and helps to ensure the Company's cash flow projections.