Hedging | Capital Markets | Capital Expenditure | Capex Decrease | Capital Expenditure - 2020

Laredo Petroleum Talks Revised 2020 Capex & Development Plan

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Laredo Petroleum today provided an update on its 2020 development plan and hedge book.  The Company has reduced its 2020 capital budget by 36%, to $290 million from the previously-announced $450 million, and expects to generate approximately $90 million in Free Cash Flow¹, excluding non-budgeted acquisitions, for full-year 2020. Additionally, the Company has updated its hedge positions for 2020 and 2021.

Updated 2020 Budget Details

• Capex : Revised Capex now $290 million
• Drilling Program : Reduced operated rig program from 4 rigs to 1 by june.  Expect to run 1 through the end of 2020
• Oil Production to decline 8% while total productiion to remain flat with 2019.
• Free Cash Flow of $90 million.
• 7.2 million bbls oil hedged (via swaps) at $59.50.

To preserve the recently-acquired, tier-one locations in Howard County, the Company will not complete any wells in Howard County in 2020 and will build a DUC inventory of these locations to complete in a potentially more favorable commodity price environment.

The Company plans to release additional details on full-year 2020 operational plans in association with its first-quarter 2020 earnings release. Guidance issued on February 26, 2020 should no longer be relied upon.

Liquidity and Hedging Update

Laredo's liquidity, balance sheet structure and hedge position provide financial strength and flexibility in this commodity price environment. At March 23, 2020, the Company had outstanding borrowings of $275 million on its $950 million senior secured credit facility, resulting in available capacity, after the reduction for outstanding letters of credit, of $660 million. Including cash and cash equivalents of $102 million, total liquidity was $762 million. Additionally, the Company has no term-debt maturities until 2025.

The Company's robust hedge book underpins cash flow assumptions in 2020. Laredo currently has approximately 100% of anticipated 2020 oil production hedged with 7.2 million barrels swapped at $59.50 WTI and 2.4 million barrels swapped at $63.07 Brent. The value of all of the Company's 2020 hedges exceeds $300 million at oil prices of $30 WTI and natural gas prices of $2.25 Henry Hub. For additional details on Laredo's hedge position as of December 31, 2019, with trades entered into through March 20, 2020, please refer to the table below.