Laredo Petroleum Inc (NYSE:LPI) posted better than expected second quarter earnings helped by a bounce back in oil prices from multi-year lows and record production levels. The oil and natural gas company says revenues for the quarter stood at $146.8 million compared to estimates of $138 million. A net loss of $71.4 million for the quarter was an improvement from a net loss of $397 million posted for the same quarter last year.
Improved Production Levels
Laredo has attributed an increase in revenue in the quarter to record production levels having produced 47,667 barrels of oil a day. Given the current production rate, the oil giant has increased its full year production forecast to a range midpoint of 17.15 million barrels.
Record production levels according to Laredo validated the company’s long-term initiatives as well as investments in infrastructure that are helping improve capital efficiencies. During the quarter, the company says it completed 16 horizontal wells with an average lateral length of 9,700 feet. Operating costs according to the company continue to drop as more wells come online.
Investments towards exploration and development activities totaled $80 million in the quarter. Laredo now expects its field infrastructure investments to continue driving operating costs lower in the subsequent quarters LOE having decreased by 34% in the quarter compared to a year earlier.
Lease operating expenses, on the other hand, dropped by 36% to $4.43. Laredo Petroleum Inc (NYSE:LPI) exited the quarter with $19 million in cash and cash equivalent and undrawn cash under its secured credit facility of $724 million. The company also boasts of a strong hedge position that CEO, Randy Foutch says provides the much-needed shield against commodity volatility in the industry.
Laredo should continue to post impressive results on oil prices stabilizing above the $40 a barrel market having bounced from multi-year lows of $27 a barrel. The stock is already up by 31% since the beginning of the year as it closes in on its 52-week high of $14.19 a share.