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BAML ENERGY AND POWER LEVERAGED FINANCE – Laredo Petroleum Inc.

Laredo Petroleum Inc. · Jun 3, 2014 · 38 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

Slides

  1. BAML ENERGY AND POWER LEVERAGED FINANCE – Laredo Petroleum Inc. – slide 1
    Bank of America Merrill Lynch Energy and Power Leveraged Finance June 3, 2014
  2. BAML ENERGY AND POWER LEVERAGED FINANCE – Laredo Petroleum Inc. – slide 2
    Laredo Petroleum Today Market MarketValuation Valuation 1 High-quality, contiguous acreage Equity market capitalization 3,900 MM position in the heart of the Midland Net debt 2 1,000 MM Basin Enterprise value 4,900 MM Top-tier…
  3. BAML ENERGY AND POWER LEVERAGED FINANCE – Laredo Petroleum Inc. – slide 3
    Consistent Reserve Growth 1 250 250 Total Proved Reserves: By Category Total Proved Reserves: By Product 200 200 150 150 MMBOE MMBOE PD 100 PUD 100 Natural Gas Oil 50 50 - - 2009 2010 2011 2012 2013 2009 2010 2011…
  4. BAML ENERGY AND POWER LEVERAGED FINANCE – Laredo Petroleum Inc. – slide 4
    Concentrated Asset Position in the Permian Basin Permian-Garden City Market Valuation Total proved reserves 1 204 MMBOE Howard Mitchell % Proved developed 35% % Oil 55% Total net acres 2 144,107 % Held by production 65%…
  5. BAML ENERGY AND POWER LEVERAGED FINANCE – Laredo Petroleum Inc. – slide 5
    Consistent Permian Production Growth 70 Production growth is 60 driven by a rapid increase in volumes1 from 50 horizontal wells MBOE/D 1 40 33.4 - 34.8 30 25.0 20.7 20 14.8 10 0 2011 2012 2013 2014P 2015P 2016P…
  6. BAML ENERGY AND POWER LEVERAGED FINANCE – Laredo Petroleum Inc. – slide 6
    Vertical Wolfberry: Confirms Quality of Acreage1 Mitchell Howard 840 vertical Wolfberry wells across acreage 360 deep vertical Wolfberry wells through the Atoka Sterling Glasscock Average vertical well density is 85+…
  7. BAML ENERGY AND POWER LEVERAGED FINANCE – Laredo Petroleum Inc. – slide 7
    Significant Data Inventory Garden City Data Inventory 1 3,400 of whole cores in objective Howard section Mitchell 13 whole cores 650 SWC samples 48 single-zone tests from objective section (Spraberry to Ellenberger) 8,000…
  8. BAML ENERGY AND POWER LEVERAGED FINANCE – Laredo Petroleum Inc. – slide 8
    Proven Multi-zone Horizontal Performance Commercial development has been proven for initial four zones from 103 horizontal wells Horizontal Total of Long Lateral 180-Day Zone Completions1 Cumulative Prod.2 Short Lateral Long…
  9. BAML ENERGY AND POWER LEVERAGED FINANCE – Laredo Petroleum Inc. – slide 9
    Production History Supports Type Curves 150 150 Upper Wolfcamp Lower Wolfcamp 104% of Type Curve 110% of Type Curve 758 MBOE 100 Two-stream 100 668 MBOE MBOE Two-stream MBOE 50 50 0 0 0 90 180 270 360 0 90 180 270…
  10. BAML ENERGY AND POWER LEVERAGED FINANCE – Laredo Petroleum Inc. – slide 10
    Substantial Low-Risk Horizontal Inventory on De-Risked Acreage Upper Middle Lower Market Valuation Cline Wolfcamp Wolfcamp Wolfcamp Number of completions 1 36 15 6 7 LPI type curve EUR (2-stream) 758 MBOE 650 MBOE 668 MBOE 620…
  11. BAML ENERGY AND POWER LEVERAGED FINANCE – Laredo Petroleum Inc. – slide 11
    Identified Path for Growth 3,400 3,200 3,000 2,800 2,600 2,400 2,200 MMBOE (2-Stream) 2,000 1,800 1,400 1,600 1,600 1,400 1,200 1,000 800 600 400 204 200 0 Total Proved Additional Identified Additional Total…
  12. BAML ENERGY AND POWER LEVERAGED FINANCE – Laredo Petroleum Inc. – slide 12
    Concentration of Resources Drives Efficiencies Not to scale Represents 5,000 ft 3 sections / 64 wells / 4 Zones Single-zone development (UWC) only recovers 12 MMBOE of reserves at 55% ROR 4-stacked development program recovers…
  13. BAML ENERGY AND POWER LEVERAGED FINANCE – Laredo Petroleum Inc. – slide 13
    ROR vs Well Capital Costs Permian Well Costs Upper Middle Lower (MM) Cline Vertical Wolfcamp Wolfcamp Wolfcamp 2014 Budget 7.4 7.4 8.1 8.6 2.2 2014 YE Target 6.8 6.8 7.5 8.0 1.9 90/Bbl and 3.75/Mcf 70% 60% 4-stack ROR% 50%…
  14. BAML ENERGY AND POWER LEVERAGED FINANCE – Laredo Petroleum Inc. – slide 14
    Cost Savings Initiatives Pad drilling efficiencies Multi-well frac efficiencies Negotiated service cost reductions Coil Pumping services Wireline logging Frac tank Optimizing drilling and completions operations Proppant sourcing…
  15. BAML ENERGY AND POWER LEVERAGED FINANCE – Laredo Petroleum Inc. – slide 15
    Transitioning to Muti-Zone Development in 2014 Stacked Lateral 4-Stacked 3-Stacked 2-Stacked Development 2014 program expected 60 wells total to drill 60 stacked lateral wells utilizing 20 multi-well pads Efficiency gains are…
  16. BAML ENERGY AND POWER LEVERAGED FINANCE – Laredo Petroleum Inc. – slide 16
    Efficiency Gains from Pad Drilling Drill and Complete Days For Individual Well 1 2 5 15 30 52 0 20 Days 40 60 Efficiency Gain for 4-Well Pad vs 4-Well Individual Program 52 52 52 52 3 135 15 18 2 40-Day Efficiency…
  17. BAML ENERGY AND POWER LEVERAGED FINANCE – Laredo Petroleum Inc. – slide 17
    Production Impact From Multi-Well Pads One Rig, 4-Well Stacked Pad Drilling Example 6,000 5,000 Production 2nd Pad Production Impact (Gross BOE/D) 4,000 Production 1st Pad 3,000 2,000 1,000 Wells Spud, Drill and…
  18. BAML ENERGY AND POWER LEVERAGED FINANCE – Laredo Petroleum Inc. – slide 18
    2014 Capital Budget Total Capital Drilling & Completion 1,000 MM 840 MM Number of Rigs / Wells 6-7 Horizontal Rigs Development Wells: 90% Delineation Wells: 10% 5 Vertical Rigs Development: 120 - 125 Drilling & Completion…
  19. BAML ENERGY AND POWER LEVERAGED FINANCE – Laredo Petroleum Inc. – slide 19
    Non-D&C 2014 Capital Expenditures 160 Million Non-Drilling Capital Expenditures Crude Oil Projects In-field crude gathering Water Projects system Water recycle pits Reagan County truck Water station 16% Non- transportation…
  20. BAML ENERGY AND POWER LEVERAGED FINANCE – Laredo Petroleum Inc. – slide 20
    Non-D&C Capital Enhances Development Higher assurances of flow and operational flexibility Less dependence on truck drivers showing up at our lease Crude oil and natural gas are consolidated, affording the opportunity to connect to…
  21. BAML ENERGY AND POWER LEVERAGED FINANCE – Laredo Petroleum Inc. – slide 21
    Production Corridor Oil Gathering Station Oil Takeaway Pipeline LMS Owned Gathering Line Gas Lift Compression Facility LMS Owned Gathering Line Production corridor can accommodate the 448 horizontal wells necessary…
  22. BAML ENERGY AND POWER LEVERAGED FINANCE – Laredo Petroleum Inc. – slide 22
    Disciplined Financial Strategy Laredos commitment: Maintain strong balance sheet and capital structure Maintain financial flexibility and liquidity Self-fund a growing percent of capital expenditures Create take-away optionality…
  23. BAML ENERGY AND POWER LEVERAGED FINANCE – Laredo Petroleum Inc. – slide 23
    Balance Sheet Positioned for Significant Flexibility Liquidity 1 3/31/14 Financial Debt Ratios 2 3 3/31/14 Cash and marketable securities 548 MM Net Debt / Adj. EBITDA-TTM 2.0x Current Borrowing Base 825 Borrowings - Net Debt /…
  24. BAML ENERGY AND POWER LEVERAGED FINANCE – Laredo Petroleum Inc. – slide 24
    Committed to Strong Financial Metrics Net Debt 1 / Adjusted EBITDA 2 (LQA) Net Debt 1 / Proved Developed Reserves 3.0 16 2.5 14 12 2.0 Multiple 10 /BOE 1.5 8 1.0 6 4 0.5 2 - 0 1Q-13 2Q-13 3Q-13 4Q-13 1Q-14 2010…
  25. BAML ENERGY AND POWER LEVERAGED FINANCE – Laredo Petroleum Inc. – slide 25
    Strong Cash Margin 60 50 49.67 47.52 46.39 40 43.08 39.97 36.70 36.54 36.26 35.40 /BOE 30 20 10 0 1Q-12 2Q-12 3Q-12 4Q-12 1Q-13 2Q-13 3Q-13 4Q-13 1Q-14 Cash Cashmargin Margin 26 NYSE: LPI…
  26. BAML ENERGY AND POWER LEVERAGED FINANCE – Laredo Petroleum Inc. – slide 26
    Marketing Flexibility Firm transportation out of the Permian 13,000 BOPD committed to Longhorn, increasing annually to 22,000 BOPD in 2017 Cushing 10,000 BOPD committed to BridgeTex Wichita Falls Colorado City Provides…
  27. BAML ENERGY AND POWER LEVERAGED FINANCE – Laredo Petroleum Inc. – slide 27
    LPI Direct Connectivity to Multiple Processing Plants Rawhide Plt Conger Plt 75 MMcf/D 25 MMcf/D Bearkat Plt 60 MMcf/D Processor DCP Midstream High Plains Plt 200 MMcf/D Atlas Glasscock Sterling Plt 62 MMcf/D Ector Midland…
  28. BAML ENERGY AND POWER LEVERAGED FINANCE – Laredo Petroleum Inc. – slide 28
    Oil Hedges Open Positions As of April 1, 2014 (1) 2014 2015 2016 2017 2018 Total OIL (2) Puts: Hedged volume (Bbls) 405,000 456,000 - - - 861,000 Weighted average price (/Bbl) 75.00 75.00 - - - 75.00 Swaps: Hedged volume (Bbls)…
  29. BAML ENERGY AND POWER LEVERAGED FINANCE – Laredo Petroleum Inc. – slide 29
    Natural Gas Hedges Open Positions As of April 1, 2014 (1) 2014 2015 2016 2017 2018 Total (2) NATURAL GAS Swaps: Hedged volume (MMBtu) 4,950,000 - - - - 4,950,000 Weighted average price (/MMBtu) 4.32 - - - - 4.32 Collars: Hedged…
  30. BAML ENERGY AND POWER LEVERAGED FINANCE – Laredo Petroleum Inc. – slide 30
    Laredo Investment Opportunity Pure-play Permian-focused E&P company with large, de- risked acreage position in the fairway of the Midland Basin Large inventory of drilling locations with years of horizontal development…
  31. BAML ENERGY AND POWER LEVERAGED FINANCE – Laredo Petroleum Inc. – slide 31
    Appendix
  32. BAML ENERGY AND POWER LEVERAGED FINANCE – Laredo Petroleum Inc. – slide 32
    Permian Basin: Present Day LPI acreage Cline deposition axis Wolfcamp deposition axis Present day axis Delaware Basin N 0 100 miles 33 NYSE: LPI www.laredopetro.com
  33. BAML ENERGY AND POWER LEVERAGED FINANCE – Laredo Petroleum Inc. – slide 33
    Laredo Situated Over Thickest Column of Sediment: W-E West East A A Approx. 2,000 ft. of pay Cline Laredo Acreage 1 Modified from Core-Lab, 2013 34 NYSE: LPI www.laredopetro.com
  34. BAML ENERGY AND POWER LEVERAGED FINANCE – Laredo Petroleum Inc. – slide 34
    Laredo Situated Over Thickest Column of Sediment: N-S North South B B Approx. 2,000 ft. of pay Cline Laredo Acreage 1 Modified from Core-Lab, 2013 35 NYSE: LPI www.laredopetro.com
  35. BAML ENERGY AND POWER LEVERAGED FINANCE – Laredo Petroleum Inc. – slide 35
    Laredos Permian-Garden City Shales1 Significant oil in place in multiple stacked zones Spraberry Wolfcamp Cline A/B/W Combined Depth (ft) 5,000 7,000 7,000 8,500 9,000 9,500 9,500 10,500 5,000 10,500 Average Thickness (ft) 1,500…
  36. BAML ENERGY AND POWER LEVERAGED FINANCE – Laredo Petroleum Inc. – slide 36
    Horizontal Type Curves 1,000 1,000 Upper Wolfcamp Lower Wolfcamp BOE/D BOE/D 100 758 MBOE 100 668 MBOE Two-stream Two-stream 10 10 Months Months 1,000 1,000 Middle Wolfcamp Cline BOE/D BOE/D 100 650 MBOE 100 620…
  37. BAML ENERGY AND POWER LEVERAGED FINANCE – Laredo Petroleum Inc. – slide 37
    2013 Reserve Update 1 487% Production Replacement 575% Permian Production Replacement 250 55 204 200 189 Permian Reserves 150 (29) (11) MMBOE Permian Reserves 100 50 0 Total Proved Sales of Total…
  38. BAML ENERGY AND POWER LEVERAGED FINANCE – Laredo Petroleum Inc. – slide 38
    Adjusted EBITDA Reconciliation Three months ended March 31, (in thousands, unaudited) 2014 2013 Net income (loss) (213 ) 1,409 Plus: Interest expense 28,986 25,349 Depletion, depreciation and amortization 49,607 65,130…

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