Laredo Petroleum Inc. said its Permian Basin-driven output was above guidance in the third quarter, while efficiencies reduced completion costs.
The Tulsa-based independent, whose primary operations are in West Texas, said 3Q2019 production totaled 81,900 boe/d, including 27,800 b/d of oil. Well costs fell to $660/lateral foot for standard completion designs.
Driven by improving fundamentals, production guidance for this year has been increased to 79,000 boe/d total output, with average oil production of 28,000 b/d. Anticipated cash flow for 2019 has been raised by $65 million from expectations in May.
"Our team is performing better than ever," CEO Jason Pigott said. "Wider spacing has improved our well productivity, general and administrative cost reductions have significantly lowered our cash costs, and we are bringing wells on line quicker than forecasted.
“These improvements are driving higher daily oil production than we originally anticipated and increasing well-level and corporate returns.”
The 52 gross completions planned for this year are expected to be finished by the end of October because of reduced cycle times. Well-level returns have improved by around 5% to date, confirming Laredo’s redesigned type curve, which uses wider spaced development.
Laredo currently is using one completion crew to allow the company to maintain “efficiency gains into 2020,” Pigott said. Operating a dedicated completion crew for the remainder of 2019 would increase anticipated completions to 58 gross wells.
Laredo now expects to invest $490 million in capital expenses this year, comprised of $425 million for drilling and completion activities and $65 million for production facilities, land and other capitalized costs.
Laredo said its 2020 oil hedge position now covers about 75% of forecasted production at a weighted-average floor price of $58.79/bbl.