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Q1 2017 Earnings Presentation – Laredo Petroleum Inc.

Laredo Petroleum Inc. · May 3, 2017 · 34 slides

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Slides

  1. Q1 2017 Earnings Presentation – Laredo Petroleum Inc. – slide 1
    Corporate Presentation May 2017
  2. Q1 2017 Earnings Presentation – Laredo Petroleum Inc. – slide 2
    1Q-17 Highlights Grew production 13% from 1Q-16 Completed 13 Hz wells with an average lateral length of 9,900 Conducted drilling operations on 5 Hz wells with anticipated lateral lengths between 14,000 and 15,600 Reduced unit LOE…
  3. Q1 2017 Earnings Presentation – Laredo Petroleum Inc. – slide 3
    2017 Capital and Operating Expectations 2017 Capital Budget 1 530 MM 2017 Drilling & Completions 450 MM Operating 4 Hz rigs 80 MM Drilling and completing 70 Hz wells 85% targeting the UWC & MWC 95% average working interest…
  4. Q1 2017 Earnings Presentation – Laredo Petroleum Inc. – slide 4
    Consistent Production Growth Anticipate 2017 production growth of 15% 60 50 Production1,2 (MBOE/d) 40 30 20 10 0 2011 2012 2013 2014 2015 2016 2017E Actual Estimate 1 Production numbers prior to 2014 have…
  5. Q1 2017 Earnings Presentation – Laredo Petroleum Inc. – slide 5
    Capitalizing on Contiguous Acreage Position 145,224 gross/126,051 net acres1 The company has identified 2,000 locations that support lateral lengths of 10,000+ on its contiguous acreage The expected average lateral length for wells…
  6. Q1 2017 Earnings Presentation – Laredo Petroleum Inc. – slide 6
    Multiple Targeted Horizons 3 Stream Identified 2017 Drilling Targets Hz Wells Drilled Thickness (STMMBOE)1 Landing Points Clearfork Upper/Middle Spraberry Lower 4,500 gross ft. of prospective zones Spraberry 2 415 90 2-3…
  7. Q1 2017 Earnings Presentation – Laredo Petroleum Inc. – slide 7
    Peer-Leading Long-Lateral Execution 14,000 LPI 13,000 12,000 11,000 Estimated Lateral Length (ft) 10,000 9,000 8,000 7,000 6,000 5,000 4,000 Well Count 96 232 62 42 32 77 75 56 LPI Peers1 LPI has…
  8. Q1 2017 Earnings Presentation – Laredo Petroleum Inc. – slide 8
    Laredos Long Laterals Maintain Productivity 100 90 80 90-Day Average Production (MBOE) 70 60 50 40 30 20 90-day average production (MBOE) 10 Scaled type curve 0 Lateral Length (ft) Laterals longer than…
  9. Q1 2017 Earnings Presentation – Laredo Petroleum Inc. – slide 9
    Economic Benefits of Longer Laterals Proved Developed Finding & Development Costs 12 9.70 10 PD F&D (/BOE) 8 7.56 6.26 6 4 2 0 3x - 5,000' wells 2x - 7,500' wells 1x - 15,000' well Rate of Return (%) 60% 50% Rate…
  10. Q1 2017 Earnings Presentation – Laredo Petroleum Inc. – slide 10
    Drilling Efficiencies Maintain Lower Well Costs Drilled Lateral Footage per Rig per Year 2017E 175 2016 166 2015 125 2014 88 2013 76 0 20 40 60 80 100 120 140 160 180 200 Thousands of Lateral Feet Drilled per Rig per Year…
  11. Q1 2017 Earnings Presentation – Laredo Petroleum Inc. – slide 11
    Drilling & Completions Efficiencies Drive Savings 10 10,000 D&C Capital Savings 1 9 8 Cost-efficient development: Longer laterals D&C Capital Per Well ( MM) 7 Multi-well packages 6 Zipper fracing High-spec rigs 5 4…
  12. Q1 2017 Earnings Presentation – Laredo Petroleum Inc. – slide 12
    Accelerating Learning to Enhance Shareholder Returns Extensive, High-Quality Data + In-House Technology Development Active Data Earth Model Modeling Development Acquisition Analytics Seismic Logs & Core Data 3D Attributes…
  13. Q1 2017 Earnings Presentation – Laredo Petroleum Inc. – slide 13
    Earth Model and Completions Optimization Benefits Wells utilizing the Earth Model and optimized completions have performed at an average of 136% of 1.3 MMBOE Type Curve1 400 36% Uplift through Earth Average Cumulative Production…
  14. Q1 2017 Earnings Presentation – Laredo Petroleum Inc. – slide 14
    Multivariate Earth Model Enhancing Production Upper Wolfcamp Middle Wolfcamp 400 400 Cumulative Production (MBOE) Cumulative Production (MBOE) 300 300 1.3 MMBOE 1.3 MMBOE 200 200 100 100 35 wells, avg. 1,825 lb/ft sand 27…
  15. Q1 2017 Earnings Presentation – Laredo Petroleum Inc. – slide 15
    Multivariate Earth Model Driving Meaningful Uplift in Returns 200% 45 WTI 55 WTI 65 WTI 180% 160% 10,000 Lateral Rate of Return (%) 140% 120% 100% 80% 60% 40% 20% 0% UWC MWC Cline UWC MWC Cline UWC MWC Cline…
  16. Q1 2017 Earnings Presentation – Laredo Petroleum Inc. – slide 16
    Latest Optimization Tests Continue to Improve 13 wells utilizing the multivariate Earth Model and optimized completions with 2,400 lb/ft sand are yielding results significantly greater than type curve 250 Outperformance of 200…
  17. Q1 2017 Earnings Presentation – Laredo Petroleum Inc. – slide 17
    Managed Pressure Drawdown Enhances Value Managed pressure drawdown increases net present value 300,000 - 400,000 in the first year of production 300 12% uplift vs non-managed drawdown at 360 days 250 Average Cumulative Production…
  18. Q1 2017 Earnings Presentation – Laredo Petroleum Inc. – slide 18
    Testing Co-Development of Landing Points Potential to add additional high-value inventory 1,500 Upper Wolfcamp Vertical Pressure Monitor Well 530 Middle Wolfcamp Lower Wolfcamp Landing zone Wellbore 19
  19. Q1 2017 Earnings Presentation – Laredo Petroleum Inc. – slide 19
    Prior Investments in Infrastructure Providing Tangible Benefits Expect to receive 27.8 MM total benefits for 2017 5.8 MM total benefits in 1Q-171 Anticipate reducing 100,000 water truckloads in 2017 Eliminated 25,000 water…
  20. Q1 2017 Earnings Presentation – Laredo Petroleum Inc. – slide 20
    Significant Benefits through Water Infrastructure Investments Water infrastructure consists of: 78 miles of total water gathering pipelines Recycling plant capable of processing 30,000 BWPD Linked water storage assets with 8 MMBW…
  21. Q1 2017 Earnings Presentation – Laredo Petroleum Inc. – slide 21
    Water Infrastructure Capital and LOE Savings 3.1 MMBW (65%) of total 1Q-17 produced water was gathered on pipe Expected to increase to 75% for FY 2017 1.4 MMBW (30%) of total 1Q-17 produced water was recycled by LMS Expected to…
  22. Q1 2017 Earnings Presentation – Laredo Petroleum Inc. – slide 22
    LMS Crude Gathering System Benefits 44 miles of crude oil gathering lines 2.2 MMBO (73%) of gross operated production in 1Q-17 was gathered on pipe Reduces time from production to sales Benefits of system increase as trucking…
  23. Q1 2017 Earnings Presentation – Laredo Petroleum Inc. – slide 23
    Corridor Financial Benefits Production corridors reduced unit LOE by 0.46/BOE in 1Q-17 to 3.60/BOE Water Oil Gas 2016 Benefits 1Q-17 Benefits 2017 Benefits LMS Service Actual ( MM) Actual ( MM) Estimated ( MM)1 LPI Financial…
  24. Q1 2017 Earnings Presentation – Laredo Petroleum Inc. – slide 24
    Medallion-Midland Basin: The Premier Pipeline in the Permian Current Oil Production per Square Mile (Bbl/d) Medallions Delivered Volumes 0 200 400 600 800 1,000 1,200+ 180 0.49/Bbl EBITDA net to 160 LPI in 1Q-171 Volumes…
  25. Q1 2017 Earnings Presentation – Laredo Petroleum Inc. – slide 25
    Maintaining Strong Financial Position Historical Oil Price and Net Debt to Adjusted EBITDA 75 6.0 Proactively maintaining leverage despite a Net Debt to TTM Adj. EBITDA 65 29% drop in WTI prices from 4Q-14 to 1Q-17 5.0 WTI Price…
  26. Q1 2017 Earnings Presentation – Laredo Petroleum Inc. – slide 26
    Disciplined Hedging Program Volumes Protected by Floors Oil Hedges Natural Gas Hedges 100% 100% 90% 90% 80% 80% Providing cash 70% 70% % Natural Gas Hedged1 flow stability % Oil Hedged1 60% 60% while 50% 50%…
  27. Q1 2017 Earnings Presentation – Laredo Petroleum Inc. – slide 27
    Oil, Natural Gas & Natural Gas Liquids Hedges OIL1 2Q-17 - 4Q-17 2018 Puts: Hedged volume (Bbls) 790,625 1,779,375 Weighted average price (/Bbl) 60.00 55.90 Swaps: Hedged volume (Bbls) 1,512,500 1,095,000 Weighted average price…
  28. Q1 2017 Earnings Presentation – Laredo Petroleum Inc. – slide 28
    2Q-17 Guidance 2Q-17 Production (MBOE/d)... 55 - 58 Product % of total production: Crude oil.. 45% - 47% Natural gas liquids...... 26% - 27% Natural gas.... 27% - 28% Price Realizations (pre-hedge): Crude oil (% of WTI)......…
  29. Q1 2017 Earnings Presentation – Laredo Petroleum Inc. – slide 29
    Appendix
  30. Q1 2017 Earnings Presentation – Laredo Petroleum Inc. – slide 30
    UWC & MWC 1.3 MMBOE Cumulative Production Type Curve 1.3 MMBOE Cumulative Production Type Curve 600 Cumulative Production (MBOE) 500 400 1.3 MMBOE 300 200 100 0 12 Months 24 Months 36 Months 48 Months 60 Months…
  31. Q1 2017 Earnings Presentation – Laredo Petroleum Inc. – slide 31
    2016 & 2017 YTD Actuals 1Q-16 2Q-16 3Q-16 4Q-16 FY-16 1Q-17 Production (3-Stream) Production MBOE 4,204 4,338 4,718 4,889 18,149 4,716 BOE/D 46,202 47,667 51,276 53,141 49,586 52,405 % oil 48% 46% 46% 46% 47% 45% Realized…
  32. Q1 2017 Earnings Presentation – Laredo Petroleum Inc. – slide 32
    2015 Actuals 1Q-15 2Q-15 3Q-15 4Q-15 FY-15 Production (3-Stream) Production MBOE 4,274 4,234 4,124 3,714 16,346 BOE/D 47,487 46,532 44,820 40,368 44,782 % oil 51% 46% 45% 45% 47% Realized Pricing 3-Stream Prices Gas…
  33. Q1 2017 Earnings Presentation – Laredo Petroleum Inc. – slide 33
    2014 Two-Stream to Three-Stream Conversions 1Q-14 2Q-14 3Q-14 4Q-14 FY-14 Production (2-Stream) MBOE 2,434 2,607 3,033 3,655 11,729 Production BOE/D 27,041 28,653 32,970 39,722 32,134 % oil 58% 58% 59% 60% 59% Production…
  34. Q1 2017 Earnings Presentation – Laredo Petroleum Inc. – slide 34
    EBITDA Reconciliation LPI Adjusted EBITDA 1Q-17 (in thousands) Net income 68,276 Plus: Depletion, depreciation and amortization 34,112 Impairment expense - Non-cash stock-based compensation, net of amounts capitalized 9,224…

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