Laredo Petroleum’s active exploration in the Permian Basin resulted in improved earnings in the first quarter of 2022.
While the company reported a net loss of $86.8 million or $5.18 per diluted share, it also had cash flow from operating activities of $170.9 million which helped generate adjusted EBITDA of $222.1 million.
It’s Adjusted Net Income for the first quarter of 2022 was $88.2 million, or $5.17 per adjusted diluted share. Its free cash flow totaled $23.2 million.
Laredo also managed to reduce its net debt even with $171 million in capital expenditures. The Tulsa-company also produced 40,295 barrels of oil a day and 85,118 barrels of oil equivalent a day which was in line with its guidance. The barrels of oil a day production represented a 66% increase compared to the first quarter of 2021.
Laredo’s earnings helped secure an increase in the borrowing base and a commitment from the senior secured credit facility to $1.25 billion.
“We have executed extremely well year-to-date, generating Free Cash Flow and further reducing our leverage ratio,” commented Jason Pigott, President and Chief Executive Officer. “Well performance from Howard and western Glasscock counties is driving our strong oil production and capital efficiency. The exceptional returns of our development program in the current commodity environment enabled Free Cash Flow generation in the quarter.”
Pigott said the company still expects to see more than $300 million in free cash flow in 2022 and despite the inflationary environment, plans to use most of its free cash in 2022 to reduce debt by $300 million.
“As we reduce our leverage ratio, absolute debt levels and interest expense, we anticipate that we will be in a position to institute measures to return cash to shareholders by early 2023,” he added.
In the first quarter of 2022, the company completed and turned in line 18 wells. Laredo released one drilling rig and one completions crew during the quarter. The company is currently operating two drilling rigs and one completions crew and expects to complete 11 wells and turn in line seven wells during the second quarter of 2022.
Incorporating inflation to date and the price increases associated with contracted second-half pricing, Laredo adjusted its full-year 2022 capital budget to $550 million, up from $520 million.
At March 31, 2022, the company had outstanding borrowings of $100 million on its $725 million senior secured credit facility, resulting in available capacity, after the reduction for outstanding letters of credit, of $581 million. Including cash and cash equivalents of $65 million, total liquidity was $646 million.
On April 13, 2022, as part of the semi-annual borrowing base redetermination, Laredo’s borrowing base was increased to $1.25 billion from $1.0 billion and the elected commitment was increased to $1.0 billion from $725 million. At May 3, 2022, the company had outstanding borrowings of $50 million, resulting in available capacity, after the reduction for outstanding letters of credit, of $906 million. Including cash and cash equivalents of $104 million, total liquidity was $1.01 billion.
Click here for full release
Source: press release
