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Laredo Petroleum Third Quarter 2022 Results

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   |    Thursday,November 03,2022

Laredo Petroleum, Inc. reported its third quarter 2022 results.

Third-Quarter 2022 Highlights:

  • Reported net income of $337.5 million and cash flows from operating activities of $182.6 million, generating Adjusted EBITDA1 of $222.8 million and Free Cash Flow1 of $51.4 million
  • Reduced Net Debt1/Consolidated EBITDAX1 ratio to 1.25x from 1.39x in second-quarter 2022
  • Repurchased $152.5 million face value of term-debt at 98% of par value
  • Repurchased $17.5 million of common stock at an average price of $71.56 per share

CEO Jason Pigott said: "We have continued to deliver on our commitment to utilize Free Cash Flow to strengthen our balance sheet and return cash to shareholders. We repurchased a combined $170 million of debt and equity, further reduced our leverage ratio and maintained liquidity of more than $1 billion. In 2023, we will remain focused on disciplined, capital-efficient development, Free Cash Flow generation, debt reduction and returning cash to shareholders."

3Q 2022 Financial and Ops Summary

Financial Results. The Company reported net income attributable to common stockholders of $337.5 million, or $20.08 per diluted share. Adjusted Net Income1 was $89.2 million, or $5.30 per adjusted diluted share. Adjusted EBITDA was $222.8 million.

Production. Consistent with preliminary volumes previously reported on October 18, 2022, Laredo's total and oil production during the period averaged 79,613 BOEPD and 34,994 BOPD, respectively.

Capital Investments. Laredo completed 11 wells and turned-in-line ("TIL") 12 wells during third-quarter 2022. Consistent with preliminary investments previously reported, total incurred capital expenditures were $140 million, excluding non-budgeted acquisitions and leasehold expenditures. Investments included $120 million in drilling and completions activities, inclusive of $6 million of non-operated activities, $2 million in land, exploration and data related costs, $10 million in infrastructure, including Laredo Midstream Services investments, and $8 million in other capitalized costs. Non-budgeted acquisitions and leasehold expenditures totaled $4 million.

1Non-GAAP financial measure; please see supplemental reconciliations of GAAP to non-GAAP financial measures at the end of this release.

Operating Expenses. Consistent with preliminary amounts previously reported, lease operating expenses ("LOE") during the period were $6.04 per BOE.

General and Administrative Expenses. General and administrative ("G&A") expenses, excluding long-term incentive plan ("LTIP") expenses, for third-quarter 2022 were $2.02 per BOE. G&A cash and G&A non-cash LTIP expenses were $(0.52) per BOE and $0.11 per BOE, respectively, each of which includes reductions associated with the forfeiture of LTIP awards by the Company's former Chief Operating Officer. One-time charges related to payments for the forfeited LTIP awards are reflected in Organizational restructuring expenses.

Equity and Debt Repurchases. During the third quarter of 2022, Laredo repurchased 244,687 shares of its common stock for $17.5 million at an average price of $71.56 per share. As of November 2, 2022, the Company has repurchased 441,897 shares for $34.1 million at an average price of $77.06.

During third-quarter 2022, Laredo purchased $152.5 million face value of term-debt at 98% of par value. As of November 2, 2022, the Company has purchased $245.3 million face value of term-debt at 99% of par value in 2022.

Liquidity. At September 30, 2022, the Company had $40 million drawn on its $1.0 billion senior secured credit facility and cash and cash equivalents of $50 million.

On November 1, 2022, the borrowing base of the Company's senior secured credit facility was increased to $1.3 billion from $1.25 billion. The elected commitment was maintained at $1.0 billion.

At November 2, 2022, the Company had no outstanding borrowing on its senior secured credit facility and cash and cash equivalents of $54 million.

Fourth-Quarter 2022 Guidance

The table below reflects the Company's guidance for total and oil production and incurred capital expenditures for fourth-quarter 2022. Fourth-quarter 2022 production guidance has incorporated increased expectations for production downtime associated with offset operator completions. The Company is currently operating two drilling rigs and one completions crew and expects to complete 13 wells and TIL 11 wells during the fourth quarter of 2022.

Total production (MBOE per day)   72.5 - 75.5
Oil production (MBOPD)   32.0 - 34.0
Incurred capital expenditures, excluding non-budgeted acquisitions ($ MM)   $135 - $145

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