Laredo Announces Expansion of Oil-Weighted Western Glasscock Leasehold

Source: www.gulfoilandgas.com 9/19/2021, Location: North America

Laredo Petroleum, Inc. announced the signing of a purchase and sale agreement to acquire approximately 20,000 net acres in western Glasscock County from Pioneer Natural Resources Company for approximately $230 million, subject to customary closing price adjustments. This is Laredo’s second significant acquisition in 2021, as the Company continues to execute its transformational strategy and expand its high-margin inventory. The leasehold to be acquired is directly adjacent to Laredo’s existing western Glasscock leasehold, expanding its oil-weighted core development area in the prolific Midland Basin. The transaction is expected to close in October 2021.

Highlights:
- Increases high-margin, oil-weighted inventory by 50%, extending development runway to approximately seven years at current activity levels
- Expands core development area in western Glasscock County to ~22,200 net acres
- Accretive to Free Cash Flow1 and Net Asset Value1 per share

Company remains on track to achieve previously stated YE-22 leverage target of 1.5x Net Debt/TTM Adjusted EBITDA1 Acquisition Details:
- ~20,000 net acres (~80% operated, 98% held by production) directly offsetting the Company’s existing western Glasscock leasehold
- ~135 gross operated oil-weighted locations (90% WI, average royalty of 20%) with an average lateral length of 9,700 feet Currently producing ~4,400 barrels of oil equivalent per day (59% oil, 82% liquids)
- Purchase price comprised of $160 million in cash and issuance of 959,691 shares of Laredo common equity to Pioneer Maintains current expectations for 2022 activity levels of two drilling rigs and one completions crew

"Upon closing this transaction, we will have acquired more than 55,000 net acres of highly productive, oil-weighted inventory in Howard and western Glasscock counties in just two years, fundamentally transforming Laredo," stated Jason Pigott, President and Chief Executive Officer. "Seven years of inventory across these core areas will enhance our ability to deliver sustainable, long-term Free Cash Flow1 generation and to rapidly deleverage. Through transactions like today’s, we continue to demonstrate our ability to integrate premier locations into our operations and enhance our return profile while operating in an environmentally responsible and sustainable manner."


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