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Despite Increased Total Output, Laredo Petroleum's Oil Production Falls

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Laredo Petroleum issued a look at its preliminary fourth quarter results.  Here is a quick look.

Laredo Petroleum said  "Results throughout the year were driven by consistent operational efficiency gains that positively impacted cycle times and wider-spaced well packages that averaged 16% better than the Company's oil type curve for Upper/Middle Wolfcamp wells on Laredo's established acreage."

Shale Experts CEO Rons Dixon on the reality:  "Oil Production mix has been falling all year, actually it has been falling through the 3rd quarter of this year.  There is nothing efficient about getting gassier."

Average Equivalent Production was 80.9 Mboe/d for the fourth quarter, that is up +15% vs last year.

Average Oil Production was 28,400 which is down -1% vs last year.   The company decided to swing this as "good news".    Lets revisit the fact that the company has seen its oil production fall for almost two years.  In the 4Q of 2017 oil production mix average 43%, that fell to 33.9% in the most recent quarter (3Q19).

It is also important not to forget that the company acquired 1,500 boe/d (55% oil) earlier this year:

The company touted this image in its presentation.   Beating oil guidance, but what it left out was the two times it increased its capital budget and well count.

Acquisitions

The company did spend $200 million last year to acquire properties producing 1,500 boe/d.

Lastly, lets look at cash flow vs capex, clearly this company continues to outspend with no end in sight.