Permian Basin independent Laredo Petroleum Inc. exceeded oil and natural gas guidance for 2019, claiming a 19% increase year/year, with total proved reserves climbing by 23%.
The Tulsa-based producer’s output last year was estimated at 80,900 boe, with proved reserves increasing by 55 million boe to 293 million boe.
Oil production averaged 28,400 b/d, up 2% over 2018, with proved oil reserves increasing by 17 million bbl, or 27% higher.
"The company's strong performance in 2019 reflects the successful implementation of our returns and free cash flow generation-focused strategy," said CEO Jason Pigott.
"Results in 2019 were driven by our outstanding operational performance and improved well productivity related to wider-spaced development. Development in 2020 will shift to our recent Howard County acquisition, as we seek to further improve corporate returns and free cash flow generation through accretive acquisitions that target oily, high-margin inventory."
During the 3Q2019 conference call in November, Pigott announced a $130 million agreement with an undisclosed seller to add a 96%-operated leasehold in Howard County in West Texas that included 750 net royalty acres. Last month, Laredo added another 4,475 contiguous net acres in West Texas within Glasscock County.
Laredo said the year-end production tally exceeded guidance for the fourth consecutive quarter. Total oil and gas output in 4Q2019 totaled 84,000 boe/d, besting internal forecasts by 10%. Oil production totaled 27,000 b/d, which beat guidance by 5%.
“Results throughout the year were driven by consistent operational efficiency gains that positively impacted cycle times and wider-spaced well packages that averaged 16% better than the company's oil type curve for Upper/Middle Wolfcamp wells on Laredo's established acreage,” management said.
The increase in Laredo’s proved reserves was partly driven by results from wells developed with wider spacing versus wells developed in 2018 with tighter spacing.
Additionally, Laredo also increased its proved undeveloped (PUD) bookings, primarily from the recently acquired Howard County acreage.
The company has chosen to increase PUD bookings versus previous years, “reflecting the certainty of the near-term development plan for the Howard County acreage.”
The Howard County acreage had offset development activity before Laredo took ownership that was weighted around 80% to oil in the first year of production. The first-year oil productivity also was 55% higher than expectations for legacy Laredo drilling in the Wolfcamp formation and 20% higher than in the Cline program, management said.