Laredo Petroleum Expects 15% Production Growth in 2017
According to Laredo's recently announced 2017 outlook the company is expecting production growth of 15% next year, which is a little ahead of our prior estimate (though the company's $530 million capital budget is more than we previously modeled as well). The net impact on our valuation is slightly positive. But we have also increased the firm's cost of capital to 9.2% from 7.3% to better reflect its relatively high financial leverage. Accordingly our fair value estimate has fallen slightly to $...Laredo Petroleum is an independent energy company focused on the acquisition, exploration and development of oil and natural gas properties, and midstream and marketing services, primarily in the Permian Basin of West Texas. The Permian Basin is comprised of several distinct geological provinces, including the Midland Basin to the east, the Delaware Basin to the west and the Central Platform in the middle. The company's primary development and production fairway is located on the east side of the Midland Basin, 35 miles east of Midland, TX. The company's acreage is contiguous in the neighboring Texas counties of Howard, Glasscock, Reagan, Sterling and Irion.
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