April 2015 Investor Meeting – Laredo Petroleum Inc.

Laredo Petroleum Inc. · Apr 13, 2015 · 146 slides

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Slides

Investor Meeting 2015 April 13, 2015 Houston, TX 1
Agenda Introduction Ron Hagood Strategic Overview Randy Foutch Land Position Mark King Reserves & Resource Gary Smallwood Importance of Data Collection & Analysis to Value Creation Patrick Curth Drilling Inventory Value…
Strategic Overview Randy Foutch Chairman & Chief Executive Officer 4
Do It Right From the Start Focus on long-term value from the beginning Hire quality people, and support them with the tools they need to be successful Acquire contiguous acreage in the right basin Collect quality data at the right…
Targeted Acreage in the Best Basin Clearfork Permian Basin Attributes Upper Spraberry Tremendous oil in place Lower Long history of oil production Spraberry Multi-stack horizontal targets 4,500 gross ft of prospective zones…
Contiguous Acreage Position With Significant Potential 179,722 Gross/149,141 net acres1 4.3 billion barrels of resource potential on 7,700 identified locations 3,200 operated Development Ready Hz locations with 90% average WI…
Adding Value Through Data Collection & Analysis Earth Optimization Model Highgrading Cumulative Resource Potential Knowledge Development Discovery Development Lower Wolfcamp Additional Zones & New Middle Wolfcamp…
4,500 gross ft of prospective zones Developed to Maximize NPV cline spraberry upper wolfcamp middle wolfcamp lower wolfcamp canyon penn cline cline shale strawn fusselman Laredo is focused on developing the entire resource and…
Infrastructure Integrated with Complete Development Plan Oil Takeaway Pipeline Oil Gathering Station Plains to Midland Oil Gathering Line Gas Lift Compression Facility Oil Takeaway Pipeline Medallion to Colorado City…
Growing Production with Greater Efficiencies Delineation Development Testing Development Transition to Single-Well Pads Multi-Well Pads Multi-Well Pads 50 45 40 35 30 MBOE/D 25 20 15 10 5 0 1Q-11…
Recent Accomplishments Proved the value of multi-well pads Expanded infrastructure including production corridors and Medallion pipeline Expanded well inventory Advanced Earth Model to support well planning Improved operating…
Flexibility in Face of Commodity Price Decline Laredo took immediate and decisive action to structure the Company for a low-price environment 105 95 85 Aligning cash flows and capital expenditures LPI Hedge Floor: 81/Bbl 75…
Laredo has . . . Strong Board and management team with highly experienced employee base High-quality, contiguous acreage across its large leasehold Deep inventory of data-supported locations in stacked zones Growing and valuable…
Land Position Mark King Vice President - Land 15
Land Position Chronology EXPLORATION DELINEATION DEVELOPMENT 2008 2010 2012 2015 Howard Howard Howard Howard Glasscock Glasscock Glasscock Glasscock Sterling Sterling Sterling Sterling Reagan LPI leasehold Irion Irion…
Concentrated Position With High Working Interest 179,722 Gross/149,141 net acres1 4.3 billion barrels of resource potential on 7,700 identified locations 3,200 operated Development Ready Hz locations with 90% average WI 96%…
Decreasing Vertical Drilling Activities 12 10 Vertical Rig Count 8 6 4 2 0 4Q-12 4Q-16 1Q-12 2Q-12 3Q-12 1Q-13 2Q-13 3Q-13 4Q-13 1Q-14 2Q-14 3Q-14 4Q-14 1Q-15 2Q-15 3Q-15 4Q-15 1Q-16 2Q-16…
Contiguous Acreage Enables Efficient Development Regan North development program Example of a development ready corridor LPI leasehold containing at least 450 future locations with an 98% average working interest1 1 As of…
Land Summary Current Build contiguous acreage block for efficient drilling: In the best part of the Midland Basin With high working interest With numerous operated horizontal locations for long lateral drilling HBP the acreage in…
Reserves & Resource Gary Smallwood Vice President Reservoir Modeling & Field Development 21
2014 Reserve Summary Permian Year-End Reserves1 350 300 297 250 200 MMBOE 150 100 50 25% Oil 47% 0 NGL YE-11 YE-12 YE-13 YE-14 Natural Gas 28% Developed Undeveloped 1 Based on YE-2014 2-stream…
Upper Wolfcamp 7,500 Type Curve EUR: 850 MBOE (45% oil) 200,000 180 cumulative: 55 MBO (60% oil) 160,000 Cumulative Production 80 UWC wells 120,000 (BOE) 60 UWC wells operated by LPI included in 7,500 type curve…
Middle Wolfcamp 7,500 Type Curve EUR: 750 MBOE (50% oil) 200,000 180 cumulative: 49 MBO (61% oil) 160,000 Cumulative Production 28 MWC wells 120,000 26 MWC wells operated by LPI (BOE) included in 7,500 type curve…
Lower Wolfcamp 7,500 Type Curve EUR: 700 MBOE (45% oil) 200,000 180 cumulative: 44 MBO (55% oil) 160,000 Cumulative Production 20 LWC wells 120,000 20 LWC wells operated by LPI (BOE) included in 7,500 type curve…
Cline 7,500 Type Curve 200,000 EUR: 725 MBOE (50% oil) 180 cumulative: 52 MBO (55% oil) 160,000 Cumulative Production 50 Cline wells 120,000 12 Cline wells operated by LPI (BOE) included in 7,500 type curve 80,000…
Introduction to 10,000 Type Curves Initial 10,000 predictions based on a formulaic analysis of data relating to inventory of well results and lateral length LPI used the same process to transition from 4,000 to 7,500 laterals…
10,000 Lateral Type Curves Upper Wolfcamp Middle Wolfcamp 10,000 10,000 1,000 1,000 BOE/D BOE/D 100 100 10 10 Normalized Production1 Type Curve Normalized Production1 Type Curve 1 1 0 500 1,000 1,500 0 500 1,000…
ROR Sensitivities vs Strip Pricing1 7,500' Single-Well Pad ROR Sensitivities 7,500' Multi-Well Pad ROR Sensitivities 60% 60% 50% 50% 40% 40% ROR % ROR % 30% 30% 20% 20% 10% 10% 0% 0% -10% Strip +10% +20% -10% Strip +10%…
Development Ready Resource Potential 4,500 4,000 3,500 3,000 MMBOE 2,500 2,000 1,500 1,000 500 0 Total Proved 1 Development 2 Resource Resource Total Resource 12/31/14 Ready Confirmed Untested Potential 1…
Importance of Data Collection & Analysis to Value Creation Patrick Curth Senior Vice President Exploration & Land 31
Good Data Drives Innovation Better Data Better Information Better Results Enhanced Value Step One: Data Collection, systematically obtain high-quality technical information over the whole asset, early in the learning cycle, to…
Adding Value Through Data Collection & Analysis Earth Optimization Model Highgrading Cumulative Resource Potential Knowledge Development Discovery Development Lower Wolfcamp Additional Zones & New Middle Wolfcamp…
Vertical Wells Across Asset Enable Data Collection HOWARD MITCHELL Laredo Petroleum has taken advantage of its vertical well program to gather critical open-hole and petrophysical data GLASSCOCK 950 vertical wells across…
Permian Asset Extensive Technical Database Technical database consisting of whole cores, sidewall cores, single-zone tests, open-hole logs, 3D seismic and production logs Provides the building blocks for identification of resource…
Core Data Cores provides the technical bridge between the actual reservoir rocks and the petrophysical analysis metrics 3,700 of proprietary whole cores in objective section 14 whole cores 715 sidewall core samples In addition…
Geophysical Data High-quality 3D seismic is a key foundation of the Earth Model in that it gives the geoscientists insight as to how the area-wide reservoir, petrophysical and seismic properties correlate relative to each targeted…
3D Seismic Program A high-quality, meaningful data set High fold: 250 fold (historical data sets are 100 fold or less) High frequency sweeps: up to 120 hertz Tight bin spacing: 70 feet (normal is 110 feet or greater) Wide…
Log Data Logs provide the framework for building the Earth Model and tying in the available petrophysical database 8,000 conventional public and proprietary open-hole logs 303 in-house proprietary petrophysical logs Extensive…
Dipole Sonic Importance & Integration Laredo was one of the first operators in the Midland Basin to acquire dipole enhanced geophysics for completion design Laredo now has 120 dipole sonic logs Dipole sonic is now the operator…
Integrated Petrophysics at Laredo Reservoir Characterization Fluid Characterization Rock properties that define Oil, gas & water proportions the reservoir Moveable vs. bound fluid Earth Model integration Identification of high oil…
Multi-Stacked Targets With Significant Resource Potential Utilization of our large technical dataset has permitted the identification, evaluation and ability to estimate resource potential across primary and additional horizons Upper…
Production Logs & Single-Zone Tests Single-zone tests confirm the productivity of potential zones Provide a multi-phase analysis (oil, gas & water) of each stage completed Identify the source of hydrocarbon (oil & gas) and water…
Drilling Inventory Patrick Curth Senior Vice President Exploration & Land 44
Multi-Stacked Targets with Significant Resource Potential Average Thickness Primary Targets (gross ft.) Midland Basin is unique among Upper Wolfcamp 489 U.S. shale resource plays due to Middle Wolfcamp 520 Lower Wolfcamp 493 the…
Location(s), Location(s), Location(s) Concentrated multi-zone horizontal development Laredo Petroleum has categorized its horizontal drilling inventory utilizing the following classifications: De-Risked Development Ready Locations…
Wolfcamp Inventory Development Hz Commerciality Hz Commerciality Formation/Zone Ready Confirmed Not Confirmed Upper Wolfcamp 828 36 637 Middle Wolfcamp 807 36 721 Lower Wolfcamp 813 36 722 Total 2,448 108 2,080 Formation/Zone LPI…
Canyon Inventory Development Hz Commerciality Hz Commerciality Formation/Zone Ready Confirmed Not Confirmed Canyon 311 593 686 Formation/Zone LPI Operated Hz wells Canyon 2 LPI Hz Canyon well Canyon Development Ready…
Cline Inventory Development Hz Commerciality Hz Commerciality Formation/Zone Ready Confirmed Not Confirmed Cline 1,223 182 161 Formation/Zone LPI Operated Hz Wells Cline 52 LPI Hz Cline well Cline Development Ready Hz…
Identified Resource Potential 4,500 4,000 3,500 3,000 MMBOE 2,500 2,000 1,500 1,000 500 0 Total Proved1 Development 2 Hz Hz Total Resource (12/31/14) Ready Commerciality Commerciality Potential Confirmed Not…
Value Creation Through Development & Discovery Mark Elliott Vice President Geology & Development- Permian 51
Adding Value Through Development & New Discovery Earth Optimization Model Highgrading Cumulative Resource Potential Knowledge Development Discovery Development Lower Wolfcamp Additional Zones & New Middle Wolfcamp…
Regional Cross-Section 1 1 2 3 4 5 6 7 8 9 10 2 North South 3 Upper 4 Spraberry 5 6 7 Lower Spraberry 8 UWC 9 MWC 10 10 MILES LWC Flattened on the Middle Wolfcamp Canyon 500 Cline Strawn - GAMMA RAY ABW -…
Canyon Formation: Data Driven Discovery Clearfork Development Upper Spraberry Lower Spraberry Geologic Dean Delineation Concept Upper Wolfcamp Middle Wolfcamp Lower Wolfcamp Canyon Penn Shale Data Collection, Cline…
Canyon Formation: Geologic Concept Conger Gas Field: Cumulative Oil: 30.8 MMBbl Cumulative Gas: 839.5 BCF Sugg Ranch Gas Field: Cumulative Oil: 43.9 MMBbl Cumulative Gas: 624.3 BCF Structural Dip Laredo acreage positioned…
Canyon Formation: Data Collection, Analysis & Integration Canyon Specific Database Production logs (17) Provide a quantitative production profile from multiple zones One of several qualitative tools to confirm hydrocarbon potential…
Canyon Formation: Geologic Concept Lower Distal/Medial Proximal Slope Basin Plain Basin Plain Fine Grained Clastic Sandstone Turbidites Finely laminated Debrites Shale West East Laredo Acreage Depositional system…
Canyon Formation: Production Logs 30 BO/D & 102 Mcf/D & 82 BW/D MARTIN HOWARD MITCHELL 32 BO/D & 14 Mcf/D & 108 BW/D Production logs 47 BO/D & 52 Mcf/D & 232 BW/D from vertical wells MIDLAND GLASSCOCK 46 BO/D & 221 Mcf/D &…
Canyon Formation: Discovery & Delineation LPI - Glass 22A-Aermotor 7SP 7,000 Lateral 30 Day IP: 1,151 BOED EUR 650 MBOE Normalized 7,500 lateral EUR: 696 MBOE LPI - Barbee C-1-1B 2SP 8,300 Lateral WOC EOG Rocker B 1949 1H…
Canyon Formation: Summary Data driven discovery Initial well results very encouraging 30-day IP: 1,151 BOE/D 90-day cumulative: 72,990 BOE Confirmation well drilled and waiting on completion Good mud log shows throughout the…
Wolfcamp & Cline Formations: Concept to Development Clearfork Development Upper Spraberry Lower Spraberry Geologic Dean Delineation Concept Upper Wolfcamp Middle Wolfcamp Lower Wolfcamp Canyon Penn Shale Data…
Wolfcamp and Cline Formation: Geologic Concept Medial Distal Basin Basin Plain Lower Plain Slope/Toe of Proximal Slope Basin Plain Thick light to Argillaceous Siltstone, Silica Rich, Brittle, Silty-Shale medium gray…
Wolfcamp & Cline: Data Collection, Analysis & Integration Wolfcamp & Cline Specific Database Production logs (36) Provide a quantitative production profile from multiple zones One of several qualitative tools to confirm hydrocarbon…
Wolfcamp & Cline: Discovery, Delineation & Discovery Data driven approach Proven geologic concept Data collection, analysis & integration ongoing Discovery & Deliniation wells drilled and completed in Upper, Middle and Lower…
Earth Model James Courtier Vice President Exploration & Geosciences Technology 65
Adding Value Through Optimization: Earth Model Earth Optimization Model Highgrading Cumulative Resource Potential Knowledge Development Discovery Development Lower Wolfcamp Additional Zones & New Middle Wolfcamp…
Earth Model Objectives Standard Wellbore 1 Select Landing Point 2 3 4 6 2 Geosteering (stay in zone) 3 Frac Design 5 & Spacing 4 Frac 1 Barrier 5 Lateral Length 6 Earth Model potential to optimize development &…
Earth Model Workflow & Learning Process Highgrade EUR & NPV targets Plan new wells & Acquire & execute operations assemble data EARTH MODEL DEVELOPMENT Perform lookback CYCLE Multivariate analysis & confirm statistical…
Step 1: Acquire & Assemble Data Completion Production Geological Pre-stack Core Data Petrophysics Microseismic Well data logs & model inversion production single-zone data tests High-quality database required for success…
Step 2: Define Multivariate Relationships & Relate to IP 36 Wells 0.81 Correlation Coefficient Earth Model Predicted 90-day Cumulative Oil 200% Fluid / Stress Fracturing 175% 150% (% of Type Curve) 125% Brittleness…
Step 3: Create 3D Production Attribute Fluid / Stress Fracturing Brittleness Lithology Storage 0 30K 60K 90-day Cumulative Oil (BO) Landing, geosteering & staying in-zone fundamentally linked to highest 90-day…
Step 4: Confirm Statistical Relationship 53 Wells 0.79 Correlation Coefficient 200% Calibration Wells Northern Reagan validation wells with 90-days production history Predicted 90-day Cumulative Oil 175% Validation Wells…
Contrasting Upper Wolfcamp Lookback Examples Above Type Curve Below Type Curve Projected 90-day Cumulative Oil: 47,000 BO Projected 90-day Cumulative Oil: 24,636 BO 7,741 Lateral Length Actual 7,257 Lateral Length Upper…
Step 5: New Well Planning & Execute Operations Flowback & Well Planning Drilling Completion Production Pick landing point Land & geosteer well Review Earth Model on Closely monitor Define Hz trajectory using Earth Model…
Earth Model Well Integration Calibration & Calibrate Validation Wells Validate Northern Reagan 23 Implement 36 4 24 17 13 5 3 5 5 Central Reagan Lookback Calibration Lookback Lookback Wells Drilling Wells Flowing Waiting…
Middle Wolfcamp Targeting Uplift Example Middle Wolfcamp Lookback & Type Curve Middle Wolfcamp Targeting Example 90-day Cumulative Oil Production 40,000 Optimized As Drilled Original Plan Cumulative Oil Production (BO) 30,000…
Potential Upper Wolfcamp Economic Uplift Implications 7,500 Upper Wolfcamp Multi-Well Pad Type Curve 50% Earth Model demonstrates increases in 90-day cumulative oil production 40% Upper Wolfcamp Type Curve ROR: 26% Earth Model…
Earth Model Future Development 1 Southern Howard Central & Southern Glasscock Earth Q3/Q4 2015 Start Model in progress Northeastern Tie producing Southern Wolfcamp & Glasscock Q3 2015 Start Canyon zones into Northern acreage…
Development Overview Jay Still President & Chief Operating Officer 79
Refining the Manufacturing Process Laredo believes better data leads to better decisions Since inception we have been testing concepts and analyzing data that has enabled us to move fully into the manufacturing process Confirmed…
Refining the Manufacturing Process: Multi-Well Pads Stacked Lateral Multi-Well Pads Horizontal Wells on Multi-Well Pads Four-stacked Three-stacked Two-stacked 2013 13 of pads 2 11 16 completed 2014 56 73 wells total1 2015 4 to…
Refining the Manufacturing Process: Adjacent Well Spacing Confirmed 660' Adjacent Well Spacing Middle Wolfcamp 190 2HM(SXS): 994 MBOE Type Curve: 750 MBOE T190 1HM(SXS): 709 MBOE Upper Wolfcamp Type Curve: 850 MBOE…
Refining the Manufacturing Process: Vertical Separation Vertical spacing of horizontal wells needs to be 400' EUR % of Type Curve vs. Well Spacing 5% 375' 200 (u) Upper Wolfcamp % of Type Curve vs Well Spacing 0%…
Refining the Manufacturing Process: Frac Impacts Frac Impact Example Frac impacts affect production but not reserves Frac impacts must be anticipated and planned around 40 days at 0 oil production Frac Impacts 84
Refining the Manufacturing Process: Stimulation Design Ceramic and resin coated sand proppant 20,000 Cline Test 35,000 Cline Test Slight Improvement Slight Improvement 18,000 Ceramic Ceramic 30,000 Resin Coated Sand 16,000…
Refining the Manufacturing Process: Stimulation Design More sand / more clusters Middle Wolfcamp Lower Wolfcamp 12,000 12,000 No Clear Improvement 40% Improvement 10,000 10,000 50 cluster spacing vs. 90 67% more sand 50 cluster…
Refining the Manufacturing Process: Stimulation Design Engineered perforations and clusters Upper Wolfcamp Lower Wolfcamp 18,000 12,000 Clear Improvement 16,000 No Improvement 10,000 14,000 Cumulative BOE / 1,000 ft 12,000…
Refining the Manufacturing Process: Development Simultaneous drilling, completion and production activity Successfully tested heel-to-heel drilling while completing wells going north and south Have successfully walked rigs from…
Best Composite Well: Cline Example Cline Best Composite Well 0 1,000 2013 Composite well goals 2,000 Continuous improvement 3,000 2014 Identification of best practices 4,000 2015 Implementation of best practices 5,000 6,000…
Composite Average Wells Comparison (Cline Example) Days vs. Depth 0 2013 2014 2015 5,000 = Average = Best Composite Depth (feet) 30% Reduction 10,000 25% Reduction 15,000 +900 MD 32 days 45.5 days 24 days 32…
Multi-Well Pad Savings 500,000 450,000 400,000 Completion 350,000 Savings per well 300,000 250,000 200,000 150,000 Drilling 100,000 50,000 - 2 Well Pad 4 Well Pad Rig moves Location Drill pipe handling Frac…
Drilling & Completion AFE Components Drilling Completion Production Facilities 45% 51% 4% 92
Drilling & Completion: Service Cost Reductions D&C AFE Components Rentals Cement 5% 3% Drilling Rig Completion 10% Services 34% 15% - 20% cost reductions to date D&C Fluids from service costs 13% D&C Tangibles Other +…
Well Cost Evolution (7,500 Laterals) 2013 2015 Cline Lower Wolfcamp Middle Wolfcamp Upper Wolfcamp 94
JE Cox Blanco Corridor Development JE Cox Blanco Corridor Atlas Gas interconnect F F Centralized Gas Compression and F Conditioning Unit Crude Oil Station Reagan North Corridor JE Cox Blanco Corridor Oil takeaway…
JE Cox Blanco Corridor Development (UWC/LWC Well Pairs) Fleet 1 Fleet 2 zipper frac zipper frac Lanes 7 & 8 wells currently flowing UWC/LWC UWC/LWC lane 1 lane 4 Step 1 Lanes 1 2 3 4 5 6 7 8 1-1/2 sections / 16 wells /…
JE Cox Blanco Corridor Development (UWC/LWC Well Pairs) Fleet 1 zipper Fleet 2 zipper frac UWC/LWC frac UWC/LWC lane 2 lane 3 Step 2 Run microseismic in lanes 1 & 4 to watch fracs in lane 2 & lane 3 Lanes 1 2 3 4 5 6 7 8…
JE Cox Blanco Corridor Development (UWC/LWC Well Pairs) Bring lanes Fleet 1 & 2 1 3 on zipper frac production UWC/LWC lanes 5 & 6 Step 3 Lane 4 left shut-in to Lane 7 left shut-in to protect wells in lanes 1 - 3 protect well…
Reagan North Corridor Rig 1 Rig 2 Rig 3 Rig 4 Rig 5 Rig 6 3 miles LPI leasehold Laredo Acreage Regan North corridor area Drilled To be drilled 7 miles Two rigs on the west side of the corridor march to the east…
Reagan North Area: Development Plan Step 1: UWC/MWC pairs in North direction Step 2: UWC/MWC pairs in South direction Plane UWC view MWC UWC Rig 2 Rig 2 MWC UWC MWC UWC Rig 1 Rig 1 MWC Cross-section view UWC MWC Eight…
Reagan North Area: Development Plan Future Drilling: LWC/Cny/C pairs in North direction Futue Drilling: LWC/Cny/C pairs in South direction Plane view LWC Cny/C LWC Rig 2 Rig 2 Cny/C LWC Cny/C LWC Rig 1 Rig 1 Cny/C…