Delaware (State or other jurisdiction of incorporation or organization) | 45-3007926 (I.R.S. Employer Identification No.) |
15 W. Sixth Street, Suite 900 | ||
Tulsa, Oklahoma | 74119 | |
(Address of principal executive offices) | (Zip code) |
Large accelerated filer ý | Accelerated filer o | |
Non-accelerated filer o | Smaller reporting company o | |
Emerging growth company o |
Page | |
• | the volatility of oil, natural gas liquids ("NGL") and natural gas prices, including in our area of operation in the Permian Basin; |
• | our ability to discover, estimate, develop and replace oil, NGL and natural gas reserves; |
• | the long-term performance of wells that were completed using different technologies; |
• | changes in domestic and global production, supply and demand for oil, NGL and natural gas; |
• | the ongoing instability and uncertainty in the United States and international financial and consumer markets that could adversely affect the liquidity available to us and our customers and the demand for commodities, including oil, NGL and natural gas; |
• | capital requirements for our operations and projects; |
• | the availability and costs of drilling and production equipment, supplies, labor and oil and natural gas processing and other services; |
• | the availability and costs of sufficient pipeline and transportation facilities and gathering and processing capacity in the Permian Basin, including the impact on steel costs and supplies following the Administration's imposed 25% global tariffs on certain imported steel mill products; |
• | our ability to maintain the borrowing capacity under our Fifth Amended and Restated Senior Secured Credit Facility (as amended, the "Senior Secured Credit Facility") or access other means of obtaining capital and liquidity, especially during periods of sustained low commodity prices; |
• | restrictions contained in our debt agreements, including our Senior Secured Credit Facility and the indentures governing our senior unsecured notes, as well as debt that could be incurred in the future; |
• | our ability to recruit and retain the qualified personnel necessary to operate our business; |
• | our ability to generate sufficient cash to service our indebtedness, fund our capital requirements and generate future profits; |
• | the impact of share repurchases or our suspension or discontinuation of the share repurchase program at any time; |
• | the potential negative impact on production of oil, NGL and natural gas from our wells due to tighter spacing of our wells; |
• | the potential impact on our inventory of future wells from increased spacing and/or decreased well performance; |
• | our ability to hedge and regulations that affect our ability to hedge; |
• | revisions to our reserve estimates as a result of changes in commodity prices and other uncertainties; |
• | impacts to our financial statements as a result of impairment write-downs; |
• | the potentially insufficient refining capacity in the United States Gulf Coast to refine all of the light sweet crude oil being produced in the United States, which could result in widening price discounts to world crude prices and potential shut-in of production due to lack of sufficient markets; |
• | risks related to the geographic concentration of our assets; |
• | changes in the regulatory environment and changes in United States or international legal, political, administrative or economic conditions, including regulations that prohibit or restrict our ability to apply hydraulic fracturing to our oil and natural gas wells and to access and dispose of water used in these operations; |
• | legislation or regulations that prohibit or restrict our ability to drill new allocation wells; |
• | our ability to execute our strategies; |
• | competition in the oil and natural gas industry; |
• | the adverse outcome and impact of litigation, legal proceedings, investigations and insurance or other claims, including the adverse outcome and impact of pending or protracted litigation; |
• | drilling and operating risks, including risks related to hydraulic fracturing activities; |
• | our ability to successfully identify and consummate strategic acquisitions at purchase prices that are accretive to our financial results and to successfully integrate acquired businesses, assets and properties; |
• | our ability to comply with federal, state and local regulatory requirements; and |
• | the impact of the new tax laws enacted on December 22, 2017. |
September 30, 2018 | December 31, 2017 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 50,407 | $ | 112,159 | ||||
Accounts receivable, net | 117,581 | 100,645 | ||||||
Derivatives | 3,074 | 6,892 | ||||||
Other current assets | 18,465 | 15,686 | ||||||
Total current assets | 189,527 | 235,382 | ||||||
Property and equipment: | ||||||||
Oil and natural gas properties, full cost method: | ||||||||
Evaluated properties | 6,589,327 | 6,070,940 | ||||||
Unevaluated properties not being depleted | 147,690 | 175,865 | ||||||
Less accumulated depletion and impairment | (4,798,527 | ) | (4,657,466 | ) | ||||
Oil and natural gas properties, net | 1,938,490 | 1,589,339 | ||||||
Midstream service assets, net | 132,415 | 138,325 | ||||||
Other fixed assets, net | 42,264 | 40,721 | ||||||
Property and equipment, net | 2,113,169 | 1,768,385 | ||||||
Derivatives | — | 3,413 | ||||||
Other noncurrent assets, net | 17,078 | 16,109 | ||||||
Total assets | $ | 2,319,774 | $ | 2,023,289 | ||||
Liabilities and stockholders' equity | ||||||||
Current liabilities: | ||||||||
Accounts payable and accrued liabilities | $ | 86,637 | $ | 58,341 | ||||
Accrued capital expenditures | 38,188 | 82,721 | ||||||
Undistributed revenue and royalties | 53,239 | 37,852 | ||||||
Derivatives | 44,060 | 22,950 | ||||||
Other current liabilities | 37,145 | 75,555 | ||||||
Total current liabilities | 259,269 | 277,419 | ||||||
Long-term debt, net | 963,191 | 791,855 | ||||||
Derivatives | 20,945 | 384 | ||||||
Asset retirement obligations | 55,684 | 53,962 | ||||||
Other noncurrent liabilities | 5,573 | 134,090 | ||||||
Total liabilities | 1,304,662 | 1,257,710 | ||||||
Commitments and contingencies | ||||||||
Stockholders' equity: | ||||||||
Preferred stock, $0.01 par value, 50,000,000 shares authorized and zero issued as of September 30, 2018 and December 31, 2017 | — | — | ||||||
Common stock, $0.01 par value, 450,000,000 shares authorized and 233,957,811 and 242,521,143 issued and outstanding as of September 30, 2018 and December 31, 2017, respectively | 2,340 | 2,425 | ||||||
Additional paid-in capital | 2,365,740 | 2,432,262 | ||||||
Accumulated deficit | (1,352,968 | ) | (1,669,108 | ) | ||||
Total stockholders' equity | 1,015,112 | 765,579 | ||||||
Total liabilities and stockholders' equity | $ | 2,319,774 | $ | 2,023,289 |
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Revenues: | ||||||||||||||||
Oil sales | $ | 160,007 | $ | 110,194 | $ | 469,972 | $ | 313,875 | ||||||||
NGL sales | 50,814 | 27,700 | 115,979 | 68,329 | ||||||||||||
Natural gas sales | 15,043 | 19,664 | 45,908 | 55,927 | ||||||||||||
Midstream service revenues | 2,255 | 2,446 | 6,590 | 8,148 | ||||||||||||
Sales of purchased oil | 51,627 | 45,814 | 252,039 | 135,546 | ||||||||||||
Total revenues | 279,746 | 205,818 | 890,488 | 581,825 | ||||||||||||
Costs and expenses: | ||||||||||||||||
Lease operating expenses | 23,873 | 19,594 | 68,466 | 56,690 | ||||||||||||
Production and ad valorem taxes | 14,015 | 9,558 | 38,232 | 26,811 | ||||||||||||
Transportation and marketing expenses | 5,036 | — | 6,570 | — | ||||||||||||
Midstream service expenses | 728 | 1,174 | 1,824 | 2,986 | ||||||||||||
Costs of purchased oil | 51,210 | 47,385 | 252,452 | 141,661 | ||||||||||||
General and administrative | 23,397 | 25,000 | 74,956 | 72,605 | ||||||||||||
Depletion, depreciation and amortization | 55,963 | 41,212 | 152,278 | 113,327 | ||||||||||||
Other operating expenses | 1,114 | 1,443 | 3,341 | 3,906 | ||||||||||||
Total costs and expenses | 175,336 | 145,366 | 598,119 | 417,986 | ||||||||||||
Operating income | 104,410 | 60,452 | 292,369 | 163,839 | ||||||||||||
Non-operating income (expense): | ||||||||||||||||
Gain (loss) on derivatives, net | (32,245 | ) | (27,441 | ) | (69,211 | ) | 38,127 | |||||||||
Income from equity method investee (see Note 3.c) | — | 2,371 | — | 7,910 | ||||||||||||
Interest expense | (14,845 | ) | (23,697 | ) | (42,787 | ) | (69,590 | ) | ||||||||
Other (expense) income | (267 | ) | 333 | 629 | 527 | |||||||||||
Loss on disposal of assets, net | (616 | ) | (991 | ) | (4,591 | ) | (400 | ) | ||||||||
Non-operating expense, net | (47,973 | ) | (49,425 | ) | (115,960 | ) | (23,426 | ) | ||||||||
Income before income taxes | 56,437 | 11,027 | 176,409 | 140,413 | ||||||||||||
Income tax benefit (expense): | ||||||||||||||||
Current | 381 | — | 381 | — | ||||||||||||
Deferred | (1,768 | ) | — | (1,768 | ) | — | ||||||||||
Total income tax expense: | (1,387 | ) | — | (1,387 | ) | — | ||||||||||
Net income | $ | 55,050 | $ | 11,027 | $ | 175,022 | $ | 140,413 | ||||||||
Net income per common share: | ||||||||||||||||
Basic | $ | 0.24 | $ | 0.05 | $ | 0.75 | $ | 0.59 | ||||||||
Diluted | $ | 0.24 | $ | 0.05 | $ | 0.75 | $ | 0.57 | ||||||||
Weighted-average common shares outstanding: | ||||||||||||||||
Basic | 230,605 | 239,306 | 233,228 | 239,017 | ||||||||||||
Diluted | 231,639 | 244,887 | 234,207 | 244,693 |
Common Stock | Additional paid-in capital | Treasury Stock (at cost) | Accumulated deficit | |||||||||||||||||||||||
Shares | Amount | Shares | Amount | Total | ||||||||||||||||||||||
Balance, December 31, 2017 | 242,521 | $ | 2,425 | $ | 2,432,262 | — | $ | — | $ | (1,669,108 | ) | $ | 765,579 | |||||||||||||
Adjustment to the beginning balance of accumulated deficit upon adoption of ASC 606 (see Note 4.a) | — | — | — | — | — | 141,118 | 141,118 | |||||||||||||||||||
Restricted stock awards | 3,248 | 33 | (33 | ) | — | — | — | — | ||||||||||||||||||
Restricted stock forfeitures | (266 | ) | (3 | ) | 3 | — | — | — | — | |||||||||||||||||
Share repurchases | — | — | — | 11,049 | (97,055 | ) | — | (97,055 | ) | |||||||||||||||||
Vested stock exchanged for tax withholding | — | — | — | 517 | (4,411 | ) | — | (4,411 | ) | |||||||||||||||||
Retirement of treasury stock | (11,566 | ) | (115 | ) | (101,351 | ) | (11,566 | ) | 101,466 | — | — | |||||||||||||||
Exercise of stock options | 21 | — | 86 | — | — | — | 86 | |||||||||||||||||||
Stock-based compensation | — | — | 34,773 | — | — | — | 34,773 | |||||||||||||||||||
Net income | — | — | — | — | — | 175,022 | 175,022 | |||||||||||||||||||
Balance, September 30, 2018 | 233,958 | $ | 2,340 | $ | 2,365,740 | — | $ | — | $ | (1,352,968 | ) | $ | 1,015,112 |
Nine months ended September 30, | ||||||||
2018 | 2017 | |||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 175,022 | $ | 140,413 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Deferred income tax expense | 1,768 | — | ||||||
Depletion, depreciation and amortization | 152,278 | 113,327 | ||||||
Non-cash stock-based compensation, net | 28,748 | 26,877 | ||||||
Mark-to-market on derivatives: | ||||||||
(Gain) loss on derivatives, net | 69,211 | (38,127 | ) | |||||
Settlements (paid) received for matured derivatives, net | (5,943 | ) | 34,791 | |||||
Settlements received for early terminations of derivatives, net | — | 4,234 | ||||||
Change in net present value of derivative deferred premiums | 564 | 199 | ||||||
Premiums paid for derivatives | (14,930 | ) | (13,542 | ) | ||||
Amortization of debt issuance costs | 2,484 | 3,132 | ||||||
Income from equity method investee (see Note 3.c) | — | (7,910 | ) | |||||
Other, net | 9,290 | 3,445 | ||||||
Increase in accounts receivable | (18,591 | ) | (2,973 | ) | ||||
Increase in other current assets | (6,479 | ) | (3,143 | ) | ||||
Decrease (increase) in other noncurrent assets | 346 | (77 | ) | |||||
Increase in accounts payable and accrued liabilities | 28,296 | 11,575 | ||||||
Increase in undistributed revenues and royalties | 15,387 | 6,384 | ||||||
Decrease in other current liabilities | (28,298 | ) | (6,264 | ) | ||||
Decrease in other noncurrent liabilities | (625 | ) | (290 | ) | ||||
Net cash provided by operating activities | 408,528 | 272,051 | ||||||
Cash flows from investing activities: | ||||||||
Acquisitions of oil and natural gas properties | (16,340 | ) | — | |||||
Capital expenditures: | ||||||||
Oil and natural gas properties | (522,470 | ) | (381,165 | ) | ||||
Midstream service assets | (5,764 | ) | (11,680 | ) | ||||
Other fixed assets | (5,945 | ) | (3,604 | ) | ||||
Investment in equity method investee (see Note 3.c) | — | (24,572 | ) | |||||
Proceeds from disposition of equity method investee, net of selling costs (see Note 3.c) | 1,655 | — | ||||||
Proceeds from dispositions of capital assets, net of selling costs | 12,433 | 64,128 | ||||||
Net cash used in investing activities | (536,431 | ) | (356,893 | ) | ||||
Cash flows from financing activities: | ||||||||
Borrowings on Senior Secured Credit Facility | 190,000 | 155,000 | ||||||
Payments on Senior Secured Credit Facility | (20,000 | ) | (70,000 | ) | ||||
Share repurchases | (97,055 | ) | — | |||||
Vested stock exchanged for tax withholding | (4,411 | ) | (7,638 | ) | ||||
Proceeds from exercise of stock options | 86 | 358 | ||||||
Payments for debt issuance costs | (2,469 | ) | (4,732 | ) | ||||
Net cash provided by financing activities | 66,151 | 72,988 | ||||||
Net decrease in cash and cash equivalents | (61,752 | ) | (11,854 | ) | ||||
Cash and cash equivalents, beginning of period | 112,159 | 32,672 | ||||||
Cash and cash equivalents, end of period | $ | 50,407 | $ | 20,818 |
Laredo Petroleum, Inc. |
Laredo Petroleum, Inc. |
Laredo Petroleum, Inc. |
Laredo Petroleum, Inc. |
Laredo Petroleum, Inc. |
Three months ended September 30, 2018 | Nine months ended September 30, 2018 | |||||||||||||||||||||||
(in thousands) | As computed under ASC 605 | As reported under ASC 606 | Increase/(decrease) | As computed under ASC 605 | As reported under ASC 606 | Increase/(decrease) | ||||||||||||||||||
Revenues: | ||||||||||||||||||||||||
Oil sales | $ | 160,246 | $ | 160,007 | $ | (239 | ) | $ | 472,496 | $ | 469,972 | $ | (2,524 | ) | ||||||||||
NGL sales | $ | 50,814 | $ | 50,814 | $ | — | $ | 115,979 | $ | 115,979 | $ | — | ||||||||||||
Natural gas sales | $ | 15,043 | $ | 15,043 | $ | — | $ | 45,908 | $ | 45,908 | $ | — | ||||||||||||
Costs and expenses: | ||||||||||||||||||||||||
Other operating expenses | $ | 1,353 | $ | 1,114 | $ | (239 | ) | $ | 5,865 | $ | 3,341 | $ | (2,524 | ) | ||||||||||
Net income | $ | 55,050 | $ | 55,050 | $ | — | $ | 175,022 | $ | 175,022 | $ | — |
Laredo Petroleum, Inc. |
Laredo Petroleum, Inc. |
(in thousands) | September 30, 2018 | December 31, 2017 | ||||||
Evaluated oil and natural gas properties | $ | 6,589,327 | $ | 6,070,940 | ||||
Less accumulated depletion and impairment | (4,798,527 | ) | (4,657,466 | ) | ||||
Evaluated oil and natural gas properties, net | 1,790,800 | 1,413,474 | ||||||
Unevaluated oil and natural gas properties not being depleted | 147,690 | 175,865 | ||||||
Midstream service assets | 171,740 | 171,427 | ||||||
Less accumulated depreciation and impairment | (39,325 | ) | (33,102 | ) | ||||
Midstream service assets, net | 132,415 | 138,325 | ||||||
Depreciable other fixed assets | 50,420 | 48,957 | ||||||
Less accumulated depreciation and amortization | (26,415 | ) | (23,150 | ) | ||||
Depreciable other fixed assets, net | 24,005 | 25,807 | ||||||
Land | 18,259 | 14,914 | ||||||
Total property and equipment, net | $ | 2,113,169 | $ | 1,768,385 |
Laredo Petroleum, Inc. |
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
(in thousands) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Capitalized employee-related costs | $ | 5,837 | $ | 6,938 | $ | 19,101 | $ | 17,911 |
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
(in thousands) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Property acquisition costs (see Note 3.a): | — | |||||||||||||||
Evaluated | $ | — | $ | — | $ | 13,847 | $ | — | ||||||||
Unevaluated | — | — | 2,790 | — | ||||||||||||
Exploration costs | 7,502 | 7,136 | 18,747 | 28,337 | ||||||||||||
Development costs | 139,748 | 160,359 | 467,582 | 397,255 | ||||||||||||
Total costs incurred | $ | 147,250 | $ | 167,495 | $ | 502,966 | $ | 425,592 |
Laredo Petroleum, Inc. |
September 30, 2018 | December 31, 2017 | |||||||||||||||||||||||
(in thousands) | Long-term debt | Debt issuance costs, net | Long-term debt, net | Long-term debt | Debt issuance costs, net | Long-term debt, net | ||||||||||||||||||
January 2022 Notes | $ | 450,000 | $ | (3,254 | ) | $ | 446,746 | $ | 450,000 | $ | (3,987 | ) | $ | 446,013 | ||||||||||
March 2023 Notes | 350,000 | (3,555 | ) | 346,445 | 350,000 | (4,158 | ) | 345,842 | ||||||||||||||||
Senior Secured Credit Facility(1) | 170,000 | — | 170,000 | — | — | — | ||||||||||||||||||
Total | $ | 970,000 | $ | (6,809 | ) | $ | 963,191 | $ | 800,000 | $ | (8,145 | ) | $ | 791,855 |
(1) | Debt issuance costs, net related to our Senior Secured Credit Facility of $7.4 million and $6.0 million as of September 30, 2018 and December 31, 2017, respectively, are reported in "Other assets, net" on the unaudited consolidated balance sheets. |
Laredo Petroleum, Inc. |
Laredo Petroleum, Inc. |
(in thousands, except for weighted-average grant-date fair value) | Restricted stock awards | Weighted-average grant-date fair value (per award) | |||||
Outstanding as of December 31, 2017 | 3,169 | $ | 12.81 | ||||
Granted | 3,248 | $ | 8.42 | ||||
Forfeited | (266 | ) | $ | 10.35 | |||
Vested(1) | (1,851 | ) | $ | 12.21 | |||
Outstanding as of September 30, 2018 | 4,300 | $ | 9.90 |
(1) | The total intrinsic value of vested restricted stock awards for the nine months ended September 30, 2018 was $16.1 million. |
Laredo Petroleum, Inc. |
(in thousands, except for weighted-average grant-date fair value) | Performance share awards | Weighted-average grant-date fair value (per award) | |||||
Outstanding as of December 31, 2017 | 2,745 | $ | 17.77 | ||||
Granted(1) | 1,389 | $ | 9.22 | ||||
Forfeited | (149 | ) | $ | 14.83 | |||
Vested(2) | (454 | ) | $ | 16.23 | |||
Outstanding as of September 30, 2018 | 3,531 | $ | 14.55 |
(1) | The amount of stock potentially payable at the end of the performance period for the performance share awards granted on February 16, 2018 will be determined based on three criteria: (i) relative three-year total shareholder return comparing the Company's shareholder return to the shareholder return of the peer group specified in the award agreement ("RTSR Performance Percentage"), (ii) absolute three-year total shareholder return ("ATSR Appreciation") and (iii) three-year return on average capital employed ("ROACE Percentage"). The RTSR Performance Percentage, ATSR Appreciation and ROACE Percentage will be used to identify the "RTSR Factor," the "ATSR Factor" and the "ROACE Factor," respectively, which are used to compute the "Performance Multiple" and ultimately to determine the final number of shares associated with each performance share unit granted at the maturity date (with all partial shares rounded, as appropriate). In computing the Performance Multiple, the RTSR Factor is given a 25% weight, the ATSR Factor a 25% weight and the ROACE Factor a 50% weight. The $9.22 per unit grant-date fair value consists of a (i) $10.08 per unit grant-date fair value, determined utilizing a Monte Carlo simulation, for the combined (.25) RTSR Factor and (.25) ATSR Factor and (ii) $8.36 per unit grant-date fair value for the (.50) ROACE Factor determined based on the closing price of the Company's common stock on the New York Stock Exchange on February 16, 2018. These awards have a performance period of January 1, 2018 to December 31, 2020. |
(2) | The performance share awards granted on February 27, 2015 had a performance period of January 1, 2015 to December 31, 2017 and, as their performance criteria were not satisfied, resulted in a TSR modifier of 0% based on the Company finishing in the 36th percentile of its peer group for relative TSR. As such, the units were not converted into the Company's common stock during the first quarter of 2018. |
February 16, 2018 | ||||
Risk-free interest rate(1) | 2.34 | % | ||
Dividend yield | — | % | ||
Expected volatility(2) | 65.49 | % | ||
Laredo stock closing price on grant date | $ | 8.36 | ||
Combined fair value per performance share award for the (.25) RTSR Factor and the (.25) ATSR Factor(3) | $ | 10.08 |
(1) | The risk-free interest rate was derived using a term-matched zero-coupon yield derived from the U.S. Treasury constant maturities yield curve on the grant date. |
(2) | The Company utilized its own historical volatility in order to develop the expected volatility. |
(3) | The market criteria portion of the performance share award represents 50% of each of the amount of stock potentially payable, if any, and the grant-date fair value of the award. |
Laredo Petroleum, Inc. |
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
(in thousands) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Restricted stock award compensation | $ | 6,001 | $ | 5,422 | $ | 19,332 | $ | 16,856 | ||||||||
Stock option award compensation | 970 | 1,159 | 3,010 | 3,600 | ||||||||||||
Performance share award compensation | 3,689 | 4,255 | 12,431 | 12,063 | ||||||||||||
Total stock-based compensation, gross | 10,660 | 10,836 | 34,773 | 32,519 | ||||||||||||
Less amounts capitalized in oil and natural gas properties | (1,927 | ) | (1,870 | ) | (6,025 | ) | (5,642 | ) | ||||||||
Total stock-based compensation, net | $ | 8,733 | $ | 8,966 | $ | 28,748 | $ | 26,877 |
Laredo Petroleum, Inc. |
Aggregate volumes (Bbl) | Floor price ($/Bbl) | Ceiling price ($/Bbl) | Contract period | ||||||||||
Oil swap | 1,095,000 | $ | 52.12 | $ | 52.12 | January 2018 - December 2018 |
Laredo Petroleum, Inc. |
Remaining year 2018 | Year 2019 | Year 2020 | Year 2021 | |||||||||||||
Oil: | ||||||||||||||||
Puts: | ||||||||||||||||
Hedged volume (Bbl) | 1,367,775 | 8,030,000 | 366,000 | — | ||||||||||||
Weighted-average floor price ($/Bbl) | $ | 51.93 | $ | 47.45 | $ | 45.00 | $ | — | ||||||||
Swaps: | ||||||||||||||||
Hedged volume (Bbl) | — | 657,000 | 695,400 | — | ||||||||||||
Weighted-average price ($/Bbl) | $ | — | $ | 53.45 | $ | 52.18 | $ | — | ||||||||
Collars: | ||||||||||||||||
Hedged volume (Bbl) | 1,030,400 | — | 1,134,600 | 912,500 | ||||||||||||
Weighted-average floor price ($/Bbl) | $ | 41.43 | $ | — | $ | 45.00 | $ | 45.00 | ||||||||
Weighted-average ceiling price ($/Bbl) | $ | 60.00 | $ | — | $ | 76.13 | $ | 71.00 | ||||||||
Totals: | ||||||||||||||||
Total volume hedged with floor price (Bbl) | 2,398,175 | 8,687,000 | 2,196,000 | 912,500 | ||||||||||||
Weighted-average floor price ($/Bbl) | $ | 47.42 | $ | 47.91 | $ | 47.27 | $ | 45.00 | ||||||||
Total volume hedged with ceiling price (Bbl) | 1,030,400 | 657,000 | 1,830,000 | 912,500 | ||||||||||||
Weighted-average ceiling price ($/Bbl) | $ | 60.00 | $ | 53.45 | $ | 67.03 | $ | 71.00 | ||||||||
Basis Swaps: | ||||||||||||||||
WTI Midland to WTI Cushing: | ||||||||||||||||
Hedged volume (Bbl) | 920,000 | 552,000 | — | — | ||||||||||||
Weighted-average price ($/Bbl) | $ | (0.56 | ) | $ | (4.37 | ) | $ | — | $ | — | ||||||
WTI Houston to WTI Midland: | ||||||||||||||||
Hedged volume (Bbl) | 920,000 | 1,810,000 | — | — | ||||||||||||
Weighted-average price ($/Bbl) | $ | 7.30 | $ | 7.30 | $ | — | $ | — | ||||||||
NGL: | ||||||||||||||||
Swaps - Purity Ethane: | ||||||||||||||||
Hedged volume (Bbl) | 156,400 | — | — | — | ||||||||||||
Weighted-average price ($/Bbl) | $ | 11.66 | $ | — | $ | — | $ | — | ||||||||
Swaps - Non-TET Propane: | ||||||||||||||||
Hedged volume (Bbl) | 128,800 | — | — | — | ||||||||||||
Weighted-average price ($/Bbl) | $ | 33.92 | $ | — | $ | — | $ | — | ||||||||
Swaps - Non-TET Normal Butane: | ||||||||||||||||
Hedged volume (Bbl) | 46,000 | — | — | — | ||||||||||||
Weighted-average price ($/Bbl) | $ | 38.22 | $ | — | $ | — | $ | — | ||||||||
Swaps - Non-TET Isobutane: | ||||||||||||||||
Hedged volume (Bbl) | 18,400 | — | — | — | ||||||||||||
Weighted-average price ($/Bbl) | $ | 38.33 | $ | — | $ | — | $ | — | ||||||||
Swaps - Non-TET Natural Gasoline: | ||||||||||||||||
Hedged volume (Bbl) | 46,000 | — | — | — | ||||||||||||
Weighted-average price ($/Bbl) | $ | 57.02 | $ | — | $ | — | $ | — | ||||||||
Total NGL volume hedged (Bbl) | 395,600 | — | — | — | ||||||||||||
TABLE CONTINUES ON NEXT PAGE |
Laredo Petroleum, Inc. |
Remaining year 2018 | Year 2019 | Year 2020 | Year 2021 | |||||||||||||
Natural gas: | ||||||||||||||||
Puts: | ||||||||||||||||
Hedged volume (MMBtu) | 2,055,000 | — | — | — | ||||||||||||
Weighted-average floor price ($/MMBtu) | $ | 2.50 | $ | — | $ | — | $ | — | ||||||||
Collars: | ||||||||||||||||
Hedged volume (MMBtu) | 3,928,400 | — | — | — | ||||||||||||
Weighted-average floor price ($/MMBtu) | $ | 2.50 | $ | — | $ | — | $ | — | ||||||||
Weighted-average ceiling price ($/MMBtu) | $ | 3.35 | $ | — | $ | — | $ | — | ||||||||
Totals: | ||||||||||||||||
Total volume hedged with floor price (MMBtu) | 5,983,400 | — | — | — | ||||||||||||
Weighted-average floor price ($/MMBtu) | $ | 2.50 | $ | — | $ | — | $ | — | ||||||||
Total volume hedged with ceiling price (MMBtu) | 3,928,400 | — | — | — | ||||||||||||
Weighted-average ceiling price ($/MMBtu) | $ | 3.35 | $ | — | $ | — | $ | — | ||||||||
Basis Swaps: | ||||||||||||||||
Hedged volume (MMBtu) | 2,300,000 | 20,075,000 | 25,254,000 | — | ||||||||||||
Weighted-average price ($/MMBtu) | $ | (0.62 | ) | $ | (1.05 | ) | $ | (0.76 | ) | $ | — |
Laredo Petroleum, Inc. |
(in thousands) | Level 1 | Level 2 | Level 3 | Total gross fair value | Amounts offset | Net fair value presented on the unaudited consolidated balance sheets | ||||||||||||||||||
As of September 30, 2018: | ||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||
Current: | ||||||||||||||||||||||||
Oil derivatives | $ | — | $ | 10,390 | $ | — | $ | 10,390 | $ | (10,390 | ) | $ | — | |||||||||||
NGL derivatives | — | — | — | — | — | — | ||||||||||||||||||
Natural gas derivatives | — | 13,002 | — | 13,002 | (9,309 | ) | 3,693 | |||||||||||||||||
Oil derivative deferred premiums | — | — | — | — | — | — | ||||||||||||||||||
Natural gas derivative deferred premiums | — | — | — | — | (619 | ) | (619 | ) | ||||||||||||||||
Noncurrent: | ||||||||||||||||||||||||
Oil derivatives | $ | — | $ | 2,056 | $ | — | $ | 2,056 | $ | (2,056 | ) | $ | — | |||||||||||
NGL derivatives | — | — | — | — | — | — | ||||||||||||||||||
Natural gas derivatives | — | 474 | — | 474 | (474 | ) | — | |||||||||||||||||
Oil derivative deferred premiums | — | — | — | — | — | — | ||||||||||||||||||
Natural gas derivative deferred premiums | — | — | — | — | — | — | ||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||
Current: | ||||||||||||||||||||||||
Oil derivatives | $ | — | $ | (41,692 | ) | $ | — | $ | (41,692 | ) | $ | 10,390 | $ | (31,302 | ) | |||||||||
NGL derivatives | — | (4,807 | ) | — | (4,807 | ) | — | (4,807 | ) | |||||||||||||||
Natural gas derivatives | — | 233 | — | 233 | 9,309 | 9,542 | ||||||||||||||||||
Oil derivative deferred premiums | — | — | (17,265 | ) | (17,265 | ) | — | (17,265 | ) | |||||||||||||||
Natural gas derivative deferred premiums | — | — | (847 | ) | (847 | ) | 619 | (228 | ) | |||||||||||||||
Noncurrent: | ||||||||||||||||||||||||
Oil derivatives | $ | — | $ | (17,279 | ) | $ | — | $ | (17,279 | ) | $ | 2,056 | $ | (15,223 | ) | |||||||||
NGL derivatives | — | — | — | — | — | — | ||||||||||||||||||
Natural gas derivatives | — | (2,468 | ) | — | (2,468 | ) | 474 | (1,994 | ) | |||||||||||||||
Oil derivative deferred premiums | — | — | (3,728 | ) | (3,728 | ) | — | (3,728 | ) | |||||||||||||||
Natural gas derivative deferred premiums | — | — | — | — | — | — | ||||||||||||||||||
Net derivative liability positions | $ | — | $ | (40,091 | ) | $ | (21,840 | ) | $ | (61,931 | ) | $ | — | $ | (61,931 | ) |
Laredo Petroleum, Inc. |
(in thousands) | Level 1 | Level 2 | Level 3 | Total gross fair value | Amounts offset | Net fair value presented on the unaudited consolidated balance sheets | ||||||||||||||||||
As of December 31, 2017: | ||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||
Current: | ||||||||||||||||||||||||
Oil derivatives | $ | — | $ | 7,427 | $ | — | $ | 7,427 | $ | (3,721 | ) | $ | 3,706 | |||||||||||
NGL derivatives | — | — | — | — | — | — | ||||||||||||||||||
Natural gas derivatives | — | 10,546 | — | 10,546 | (4,817 | ) | 5,729 | |||||||||||||||||
Oil derivative deferred premiums | — | — | — | — | (87 | ) | (87 | ) | ||||||||||||||||
Natural gas derivative deferred premiums | — | — | — | — | (2,456 | ) | (2,456 | ) | ||||||||||||||||
Noncurrent: | ||||||||||||||||||||||||
Oil derivatives | $ | — | $ | 11,613 | $ | — | $ | 11,613 | $ | (6,087 | ) | $ | 5,526 | |||||||||||
NGL derivatives | — | — | — | — | — | — | ||||||||||||||||||
Natural gas derivatives | — | 934 | — | 934 | (934 | ) | — | |||||||||||||||||
Oil derivative deferred premiums | — | — | — | — | (2,113 | ) | (2,113 | ) | ||||||||||||||||
Natural gas derivative deferred premiums | — | — | — | — | — | — | ||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||
Current: | ||||||||||||||||||||||||
Oil derivatives | $ | — | $ | (12,477 | ) | $ | — | $ | (12,477 | ) | $ | 3,721 | $ | (8,756 | ) | |||||||||
NGL derivatives | — | — | — | — | — | — | ||||||||||||||||||
Natural gas derivatives | — | — | — | — | 4,817 | 4,817 | ||||||||||||||||||
Oil derivative deferred premiums | — | — | (18,202 | ) | (18,202 | ) | 87 | (18,115 | ) | |||||||||||||||
Natural gas derivative deferred premiums | — | — | (3,352 | ) | (3,352 | ) | 2,456 | (896 | ) | |||||||||||||||
Noncurrent: | ||||||||||||||||||||||||
Oil derivatives | $ | — | $ | (2,389 | ) | $ | — | $ | (2,389 | ) | $ | 6,087 | $ | 3,698 | ||||||||||
NGL derivatives | — | — | — | — | — | — | ||||||||||||||||||
Natural gas derivatives | — | — | — | — | 934 | 934 | ||||||||||||||||||
Oil derivative deferred premiums | — | — | (7,129 | ) | (7,129 | ) | 2,113 | (5,016 | ) | |||||||||||||||
Natural gas derivative deferred premiums | — | — | — | — | — | — | ||||||||||||||||||
Net derivative asset (liability) positions | $ | — | $ | 15,654 | $ | (28,683 | ) | $ | (13,029 | ) | $ | — | $ | (13,029 | ) |
Laredo Petroleum, Inc. |
(in thousands) | September 30, 2018 | |||
Remaining 2018 | $ | 5,405 | ||
2019 | 15,502 | |||
2020 | 1,295 | |||
Total | $ | 22,202 |
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
(in thousands) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Balance of Level 3 at beginning of period | $ | (25,026 | ) | $ | (12,554 | ) | $ | (28,683 | ) | $ | (8,998 | ) | ||||
Change in net present value of derivative deferred premiums(1) | (168 | ) | (88 | ) | (564 | ) | (199 | ) | ||||||||
Total purchases and settlements of derivative deferred premiums: | ||||||||||||||||
Purchases | (2,101 | ) | (15,996 | ) | (7,523 | ) | (22,994 | ) | ||||||||
Settlements | 5,455 | 1,448 | 14,930 | 5,001 | ||||||||||||
Balance of Level 3 at end of period | $ | (21,840 | ) | $ | (27,190 | ) | $ | (21,840 | ) | $ | (27,190 | ) |
(1) | These amounts are included in the "Interest expense" line item in the unaudited consolidated statements of operations. |
September 30, 2018 | December 31, 2017 | |||||||||||||||
(in thousands) | Long-term debt | Fair value(1) | Long-term debt | Fair value(1) | ||||||||||||
January 2022 Notes | $ | 450,000 | $ | 448,875 | $ | 450,000 | $ | 454,500 | ||||||||
March 2023 Notes | 350,000 | 352,730 | 350,000 | 364,105 | ||||||||||||
Senior Secured Credit Facility | 170,000 | 170,084 | — | — | ||||||||||||
Total | $ | 970,000 | $ | 971,689 | $ | 800,000 | $ | 818,605 |
(1) | The fair values of the debt outstanding on the January 2022 Notes and the March 2023 Notes were determined using the September 30, 2018 and December 31, 2017 quoted market price (Level 1) for each respective instrument. The fair value of the outstanding debt on the Senior Secured Credit Facility as of September 30, 2018 was estimated utilizing a pricing model for similar instruments (Level 2). |
Laredo Petroleum, Inc. |
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
(in thousands, except for per share data) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Net income (numerator): | ||||||||||||||||
Net income—basic and diluted | $ | 55,050 | $ | 11,027 | $ | 175,022 | $ | 140,413 | ||||||||
Weighted-average common shares outstanding (denominator): | ||||||||||||||||
Basic(1) | 230,605 | 239,306 | 233,228 | 239,017 | ||||||||||||
Non-vested restricted stock awards(2) | 935 | 650 | 911 | 845 | ||||||||||||
Outstanding stock option awards(3) | 99 | 130 | 68 | 129 | ||||||||||||
Non-vested performance share awards(4) | — | 4,801 | — | 4,702 | ||||||||||||
Diluted | 231,639 | 244,887 | 234,207 | 244,693 | ||||||||||||
Net income per common share: | ||||||||||||||||
Basic | $ | 0.24 | $ | 0.05 | $ | 0.75 | $ | 0.59 | ||||||||
Diluted | $ | 0.24 | $ | 0.05 | $ | 0.75 | $ | 0.57 |
(1) | Weighted-average common shares outstanding used in the computation of basic and diluted net income per common share was computed taking into account share repurchases that occurred during the three and nine months ended September 30, 2018. See Note 7.a for additional discussion of the Company's share repurchase program. |
(2) | The effect of a significant portion of the non-vested restricted stock awards was excluded from the calculation of diluted net income per common share for the three and nine months ended September 30, 2018. The inclusion of these non-vested restricted stock awards would be anti-dilutive due to the sum of the assumed proceeds exceeding the average stock price during the period. |
(3) | The effect of the outstanding stock option awards, with the exception of those granted in 2016, was excluded from the calculation of diluted net income per common share for the three and nine months ended September 30, 2018. The inclusion of these stock option awards would be anti-dilutive as their exercise prices were greater than the average stock price during the period. |
(4) | The effect of the non-vested performance share awards was excluded from the calculation of diluted net income per common share for the three and nine months ended September 30, 2018 as the awards were below the respective agreements' payout thresholds. The effect of the non-vested performance share awards granted in 2018 was calculated utilizing the following criteria defined in Note 7.c: (i) the RTSR Performance Percentage, (ii) the ATSR Appreciation and (iii) the ROACE Percentage from the beginning of the performance period to September 30, 2018 for each of the criteria to identify the RTSR Factor, the ATSR Factor and the ROACE Factor, respectively, which were used to compute the Performance Multiple to determine the number of shares for the dilutive effect. The effects of the non-vested performance share awards granted in 2016 and 2017 were calculated utilizing the Company's TSR from the beginning of each performance share awards' respective performance period to September 30, 2018 in comparison to the TSR of the peers specified in each respective performance share awards' agreement. |
Laredo Petroleum, Inc. |
Laredo Petroleum, Inc. |
Nine months ended September 30, | ||||||||
(in thousands) | 2018 | 2017 | ||||||
Non-cash investing activities: | ||||||||
(Decrease) increase in accrued capital expenditures | $ | (44,533 | ) | $ | 39,156 | |||
Capitalized stock-based compensation | $ | 6,025 | $ | 5,642 | ||||
Capitalized asset retirement costs | $ | 719 | $ | 670 | ||||
Other supplemental cash flow information: | ||||||||
Capitalized interest | $ | 710 | $ | 756 |
Laredo Petroleum, Inc. |
Nine months ended September 30, | ||||||||
(in thousands) | 2018 | 2017 | ||||||
Liability at beginning of period | $ | 55,506 | $ | 52,207 | ||||
Liabilities added due to acquisitions, drilling, midstream service asset construction and other | 719 | 492 | ||||||
Accretion expense | 3,341 | 2,822 | ||||||
Liabilities settled due to plugging and abandonment or sale | (2,246 | ) | (1,228 | ) | ||||
Revision of estimates | — | 178 | ||||||
Liability at end of period | $ | 57,320 | $ | 54,471 |
Laredo Petroleum, Inc. |
(in thousands) | Laredo | Subsidiary Guarantors | Intercompany eliminations | Consolidated company | ||||||||||||
Accounts receivable, net | $ | 103,109 | $ | 14,472 | $ | — | $ | 117,581 | ||||||||
Other current assets | 70,413 | 1,533 | — | 71,946 | ||||||||||||
Oil and natural gas properties, net | 1,951,518 | 9,146 | (22,174 | ) | 1,938,490 | |||||||||||
Midstream service assets, net | — | 132,415 | — | 132,415 | ||||||||||||
Other fixed assets, net | 42,071 | 193 | — | 42,264 | ||||||||||||
Investment in subsidiaries | 130,439 | — | (130,439 | ) | — | |||||||||||
Other noncurrent assets, net | 13,113 | 3,965 | — | 17,078 | ||||||||||||
Total assets | $ | 2,310,663 | $ | 161,724 | $ | (152,613 | ) | $ | 2,319,774 | |||||||
Accounts payable and accrued liabilities | $ | 68,037 | $ | 18,600 | $ | — | $ | 86,637 | ||||||||
Other current liabilities | 162,893 | 9,739 | — | 172,632 | ||||||||||||
Long-term debt, net | 963,191 | — | — | 963,191 | ||||||||||||
Other noncurrent liabilities | 79,256 | 2,946 | — | 82,202 | ||||||||||||
Stockholders' equity | 1,037,286 | 130,439 | (152,613 | ) | 1,015,112 | |||||||||||
Total liabilities and stockholders' equity | $ | 2,310,663 | $ | 161,724 | $ | (152,613 | ) | $ | 2,319,774 |
(in thousands) | Laredo | Subsidiary Guarantors | Intercompany eliminations | Consolidated company | ||||||||||||
Accounts receivable, net | $ | 79,413 | $ | 21,232 | $ | — | $ | 100,645 | ||||||||
Other current assets | 132,219 | 2,518 | — | 134,737 | ||||||||||||
Oil and natural gas properties, net | 1,596,834 | 9,220 | (16,715 | ) | 1,589,339 | |||||||||||
Midstream service assets, net | — | 138,325 | — | 138,325 | ||||||||||||
Other fixed assets, net | 40,344 | 377 | — | 40,721 | ||||||||||||
Investment in subsidiaries | (7,566 | ) | — | 7,566 | — | |||||||||||
Other noncurrent assets, net | 15,526 | 3,996 | — | 19,522 | ||||||||||||
Total assets | $ | 1,856,770 | $ | 175,668 | $ | (9,149 | ) | $ | 2,023,289 | |||||||
Accounts payable and accrued liabilities | $ | 34,550 | $ | 23,791 | $ | — | $ | 58,341 | ||||||||
Other current liabilities | 193,104 | 25,974 | — | 219,078 | ||||||||||||
Long-term debt, net | 791,855 | — | — | 791,855 | ||||||||||||
Other noncurrent liabilities | 54,967 | 133,469 | — | 188,436 | ||||||||||||
Stockholders' equity | 782,294 | (7,566 | ) | (9,149 | ) | 765,579 | ||||||||||
Total liabilities and stockholders' equity | $ | 1,856,770 | $ | 175,668 | $ | (9,149 | ) | $ | 2,023,289 |
Laredo Petroleum, Inc. |
(in thousands) | Laredo | Subsidiary Guarantors | Intercompany eliminations | Consolidated company | ||||||||||||
Total revenues | $ | 225,970 | $ | 73,463 | $ | (19,687 | ) | $ | 279,746 | |||||||
Total costs and expenses | 123,942 | 69,146 | (17,752 | ) | 175,336 | |||||||||||
Operating income | 102,028 | 4,317 | (1,935 | ) | 104,410 | |||||||||||
Interest expense | (14,845 | ) | — | — | (14,845 | ) | ||||||||||
Other non-operating expense | (28,811 | ) | (26 | ) | (4,291 | ) | (33,128 | ) | ||||||||
Income before income taxes | 58,372 | 4,291 | (6,226 | ) | 56,437 | |||||||||||
Income tax expense | (1,387 | ) | — | — | (1,387 | ) | ||||||||||
Net income | $ | 56,985 | $ | 4,291 | $ | (6,226 | ) | $ | 55,050 |
(in thousands) | Laredo | Subsidiary Guarantors | Intercompany eliminations | Consolidated company | ||||||||||||
Total revenues | $ | 157,902 | $ | 63,686 | $ | (15,770 | ) | $ | 205,818 | |||||||
Total costs and expenses | 97,686 | 62,245 | (14,565 | ) | 145,366 | |||||||||||
Operating income | 60,216 | 1,441 | (1,205 | ) | 60,452 | |||||||||||
Interest expense | (23,697 | ) | — | — | (23,697 | ) | ||||||||||
Other non-operating income (expense) | (24,287 | ) | 2,290 | (3,731 | ) | (25,728 | ) | |||||||||
Income before income taxes | 12,232 | 3,731 | (4,936 | ) | 11,027 | |||||||||||
Income tax | — | — | — | — | ||||||||||||
Net income | $ | 12,232 | $ | 3,731 | $ | (4,936 | ) | $ | 11,027 |
(in thousands) | Laredo | Subsidiary Guarantors | Intercompany eliminations | Consolidated company | ||||||||||||
Total revenues | $ | 632,419 | $ | 312,784 | $ | (54,715 | ) | $ | 890,488 | |||||||
Total costs and expenses | 345,232 | 302,143 | (49,256 | ) | 598,119 | |||||||||||
Operating income | 287,187 | 10,641 | (5,459 | ) | 292,369 | |||||||||||
Interest expense | (42,787 | ) | — | — | (42,787 | ) | ||||||||||
Other non-operating expense | (62,532 | ) | (1,307 | ) | (9,334 | ) | (73,173 | ) | ||||||||
Income before income taxes | 181,868 | 9,334 | (14,793 | ) | 176,409 | |||||||||||
Income tax expense | (1,387 | ) | — | — | (1,387 | ) | ||||||||||
Net income | $ | 180,481 | $ | 9,334 | $ | (14,793 | ) | $ | 175,022 |
Laredo Petroleum, Inc. |
(in thousands) | Laredo | Subsidiary Guarantors | Intercompany eliminations | Consolidated company | ||||||||||||
Total revenues | $ | 439,269 | $ | 190,926 | $ | (48,370 | ) | $ | 581,825 | |||||||
Total costs and expenses | 276,855 | 183,310 | (42,179 | ) | 417,986 | |||||||||||
Operating income | 162,414 | 7,616 | (6,191 | ) | 163,839 | |||||||||||
Interest expense | (69,590 | ) | — | — | (69,590 | ) | ||||||||||
Other non-operating income | 53,780 | 7,622 | (15,238 | ) | 46,164 | |||||||||||
Income before income taxes | 146,604 | 15,238 | (21,429 | ) | 140,413 | |||||||||||
Income tax | — | — | — | — | ||||||||||||
Net income | $ | 146,604 | $ | 15,238 | $ | (21,429 | ) | $ | 140,413 |
(in thousands) | Laredo | Subsidiary Guarantors | Intercompany eliminations | Consolidated company | ||||||||||||
Net cash provided by operating activities | $ | 402,065 | $ | 15,797 | $ | (9,334 | ) | $ | 408,528 | |||||||
Change in investment between affiliates | 3,115 | (12,449 | ) | 9,334 | — | |||||||||||
Capital expenditures and other | (533,083 | ) | (3,348 | ) | — | (536,431 | ) | |||||||||
Net cash provided by financing activities | 66,151 | — | — | 66,151 | ||||||||||||
Net decrease in cash and cash equivalents | (61,752 | ) | — | — | (61,752 | ) | ||||||||||
Cash and cash equivalents, beginning of period | 112,158 | 1 | — | 112,159 | ||||||||||||
Cash and cash equivalents, end of period | $ | 50,406 | $ | 1 | $ | — | $ | 50,407 |
(in thousands) | Laredo | Subsidiary Guarantors | Intercompany eliminations | Consolidated company | ||||||||||||
Net cash provided by operating activities | $ | 273,309 | $ | 13,980 | $ | (15,238 | ) | $ | 272,051 | |||||||
Change in investment between affiliates | (36,890 | ) | 21,652 | 15,238 | — | |||||||||||
Capital expenditures and other | (321,261 | ) | (35,632 | ) | — | (356,893 | ) | |||||||||
Net cash provided by financing activities | 72,988 | — | — | 72,988 | ||||||||||||
Net decrease in cash and cash equivalents | (11,854 | ) | — | — | (11,854 | ) | ||||||||||
Cash and cash equivalents, beginning of period | 32,671 | 1 | — | 32,672 | ||||||||||||
Cash and cash equivalents, end of period | $ | 20,817 | $ | 1 | $ | — | $ | 20,818 |
• | Oil, NGL and natural gas sales of $225.9 million, compared to $157.6 million for the three months ended September 30, 2017; |
• | Average daily sales volumes of 71,382 BOE/D, compared to 60,011 BOE/D for the three months ended September 30, 2017; |
• | Net income of $55.1 million, compared to $11.0 million for the three months ended September 30, 2017; and |
• | Adjusted EBITDA (a non-GAAP financial measure) of $160.6 million, compared to $130.9 million for the three months ended September 30, 2017. See page 42 for a discussion and reconciliation of Adjusted EBITDA. |
• | Oil, NGL and natural gas sales of $631.9 million, compared to $438.1 million for the nine months ended September 30, 2017; |
• | Average daily sales volumes of 67,330 BOE/D, compared to 57,044 BOE/D for the nine months ended September 30, 2017; |
• | Net income of $175.0 million, compared to $140.4 million for the nine months ended September 30, 2017; and |
• | Adjusted EBITDA (a non-GAAP financial measure) of $456.5 million, compared to $352.6 million for the nine months ended September 30, 2017. See page 42 for a discussion and reconciliation of Adjusted EBITDA. |
For the quarters ended | ||||||||||||
September 30, 2018 | June 30, 2018 | March 31, 2018 | ||||||||||
Depletion per BOE sold | $ | 7.94 | $ | 7.68 | $ | 7.34 |
Three months ended September 30, | Nine months ended September 30, | |||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||
Oil sales | 57 | % | 54 | % | 53 | % | 54 | % | ||||
NGL sales | 18 | % | 13 | % | 13 | % | 12 | % | ||||
Natural gas sales | 5 | % | 10 | % | 5 | % | 10 | % | ||||
Midstream service revenues | 1 | % | 1 | % | 1 | % | 1 | % | ||||
Sales of purchased oil | 19 | % | 22 | % | 28 | % | 23 | % | ||||
Total | 100 | % | 100 | % | 100 | % | 100 | % |
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Sales volumes: | ||||||||||||||||
Oil (MBbl) | 2,651 | 2,425 | 7,604 | 7,027 | ||||||||||||
NGL (MBbl) | 1,987 | 1,491 | 5,328 | 4,187 | ||||||||||||
Natural gas (MMcf) | 11,577 | 9,630 | 32,697 | 26,154 | ||||||||||||
Oil equivalents (MBOE)(1)(2) | 6,567 | 5,521 | 18,381 | 15,573 | ||||||||||||
Average daily sales volumes (BOE/D)(2) | 71,382 | 60,011 | 67,330 | 57,044 | ||||||||||||
% Oil(2) | 40 | % | 44 | % | 41 | % | 45 | % | ||||||||
Sales revenues (in thousands): | ||||||||||||||||
Oil | $ | 160,007 | $ | 110,194 | $ | 469,972 | $ | 313,875 | ||||||||
NGL | 50,814 | 27,700 | 115,979 | 68,329 | ||||||||||||
Natural gas | 15,043 | 19,664 | 45,908 | 55,927 | ||||||||||||
Total oil, NGL and natural gas sales revenues | $ | 225,864 | $ | 157,558 | $ | 631,859 | $ | 438,131 | ||||||||
Average sales Realized Prices(2): | ||||||||||||||||
Oil, without derivatives ($/Bbl)(3) | $ | 60.36 | $ | 45.44 | $ | 61.80 | $ | 44.67 | ||||||||
NGL, without derivatives ($/Bbl)(3) | $ | 25.57 | $ | 18.58 | $ | 21.77 | $ | 16.32 | ||||||||
Natural gas, without derivatives ($/Mcf)(3) | $ | 1.30 | $ | 2.04 | $ | 1.40 | $ | 2.14 | ||||||||
Average price, without derivatives ($/BOE)(3) | $ | 34.39 | $ | 28.54 | $ | 34.38 | $ | 28.13 | ||||||||
Oil, with derivatives ($/Bbl)(4) | $ | 55.41 | $ | 50.72 | $ | 57.50 | $ | 49.08 | ||||||||
NGL, with derivatives ($/Bbl)(4) | $ | 23.99 | $ | 17.98 | $ | 20.95 | $ | 15.90 | ||||||||
Natural gas, with derivatives ($/Mcf)(4) | $ | 1.79 | $ | 2.10 | $ | 1.79 | $ | 2.17 | ||||||||
Average price, with derivatives ($/BOE)(4) | $ | 32.78 | $ | 30.80 | $ | 33.04 | $ | 30.07 |
(1) | BOE is calculated using a conversion rate of six Mcf per one Bbl. |
(2) | The numbers presented are based on actual results and are not calculated using the rounded numbers presented in the table above. |
(3) | Realized oil, NGL and natural gas prices are the actual prices received when control passes to the purchaser/customer adjusted for quality, transportation fees, geographical differentials, marketing bonuses or deductions and other factors affecting the price received at the wellhead. See "—Costs and expenses - Transportation and marketing expenses" for costs incurred prior to control passing to the final customer. |
(4) | Price reflects the after-effects of our derivative transactions on our average Realized Prices. Our calculation of such after-effects includes settlements of matured derivatives during the respective periods in accordance with GAAP and an adjustment to reflect premiums incurred previously or upon settlement that are attributable to derivatives that settled during the respective periods. |
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
(in thousands) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Settlements (paid) received for matured derivatives: | ||||||||||||||||
Oil | $ | (7,279 | ) | $ | 13,182 | $ | (16,623 | ) | $ | 33,399 | ||||||
NGL | (3,154 | ) | (897 | ) | (4,348 | ) | (1,761 | ) | ||||||||
Natural gas | 6,545 | 1,350 | 15,028 | 3,153 | ||||||||||||
Total | $ | (3,888 | ) | $ | 13,635 | $ | (5,943 | ) | $ | 34,791 | ||||||
Premiums paid previously or upon settlement attributable to derivatives that matured during the respective period: | ||||||||||||||||
Oil | $ | (5,849 | ) | $ | (362 | ) | $ | (16,090 | ) | $ | (2,383 | ) | ||||
Natural gas | (850 | ) | (769 | ) | (2,536 | ) | (2,301 | ) | ||||||||
Total | $ | (6,699 | ) | $ | (1,131 | ) | $ | (18,626 | ) | $ | (4,684 | ) |
(in thousands) | Oil | NGL | Natural gas | Total net effect of change | ||||||||||||
2017 Revenues | $ | 110,194 | $ | 27,700 | $ | 19,664 | $ | 157,558 | ||||||||
Effect of changes in average sales Realized Prices | 39,565 | 13,895 | (8,596 | ) | 44,864 | |||||||||||
Effect of changes in sales volumes | 10,248 | 9,219 | 3,975 | 23,442 | ||||||||||||
2018 Revenues | $ | 160,007 | $ | 50,814 | $ | 15,043 | $ | 225,864 |
(in thousands) | Oil | NGL | Natural gas | Total net effect of change | ||||||||||||
2017 Revenues | $ | 313,875 | $ | 68,329 | $ | 55,927 | $ | 438,131 | ||||||||
Effect of changes in average sales Realized Prices | 130,314 | 29,039 | (24,009 | ) | 135,344 | |||||||||||
Effect of changes in sales volumes | 25,783 | 18,611 | 13,990 | 58,384 | ||||||||||||
2018 Revenues | $ | 469,972 | $ | 115,979 | $ | 45,908 | $ | 631,859 |
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
(in thousands) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Midstream service revenues | $ | 2,255 | $ | 2,446 | $ | 6,590 | $ | 8,148 | ||||||||
Sales of purchased oil | $ | 51,627 | $ | 45,814 | $ | 252,039 | $ | 135,546 |
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
(in thousands except for per BOE sold data) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Costs and expenses: | ||||||||||||||||
Lease operating expenses | $ | 23,873 | $ | 19,594 | $ | 68,466 | $ | 56,690 | ||||||||
Production and ad valorem taxes | 14,015 | 9,558 | 38,232 | 26,811 | ||||||||||||
Transportation and marketing expenses | 5,036 | — | 6,570 | — | ||||||||||||
Midstream service expenses | 728 | 1,174 | 1,824 | 2,986 | ||||||||||||
Costs of purchased oil | 51,210 | 47,385 | 252,452 | 141,661 | ||||||||||||
General and administrative: | ||||||||||||||||
Cash | 14,664 | 16,034 | 46,208 | 45,728 | ||||||||||||
Non-cash stock-based compensation, net | 8,733 | 8,966 | 28,748 | 26,877 | ||||||||||||
Depletion, depreciation and amortization | 55,963 | 41,212 | 152,278 | 113,327 | ||||||||||||
Other operating expenses | 1,114 | 1,443 | 3,341 | 3,906 | ||||||||||||
Total costs and expenses | $ | 175,336 | $ | 145,366 | $ | 598,119 | $ | 417,986 | ||||||||
Average costs per BOE sold(1): | ||||||||||||||||
Lease operating expenses | $ | 3.63 | $ | 3.55 | $ | 3.72 | $ | 3.64 | ||||||||
Production and ad valorem taxes | 2.13 | 1.73 | 2.08 | 1.72 | ||||||||||||
Transportation and marketing expenses | 0.77 | — | 0.36 | — | ||||||||||||
Midstream service expenses | 0.11 | 0.21 | 0.10 | 0.19 | ||||||||||||
General and administrative: | ||||||||||||||||
Cash | 2.23 | 2.90 | 2.51 | 2.94 | ||||||||||||
Non-cash stock-based compensation, net | 1.33 | 1.62 | 1.56 | 1.73 | ||||||||||||
Depletion, depreciation and amortization | 8.52 | 7.46 | 8.28 | 7.28 | ||||||||||||
Total costs and expenses | $ | 18.72 | $ | 17.47 | $ | 18.61 | $ | 17.50 |
(1) | Average costs per BOE sold are based on actual amounts and are not calculated using the rounded numbers presented in the table above. |
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
(in thousands) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Depletion of evaluated oil and natural gas properties | $ | 52,169 | $ | 37,538 | $ | 140,971 | $ | 102,290 | ||||||||
Depreciation of midstream service assets | 2,456 | 2,241 | 7,321 | 6,569 | ||||||||||||
Depreciation and amortization of other fixed assets | 1,338 | 1,433 | 3,986 | 4,468 | ||||||||||||
Total DD&A | $ | 55,963 | $ | 41,212 | $ | 152,278 | $ | 113,327 |
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
(in thousands) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Gain (loss) on derivatives, net | $ | (32,245 | ) | $ | (27,441 | ) | $ | (69,211 | ) | $ | 38,127 | |||||
Income from equity method investee (see Note 3.c) | — | 2,371 | — | 7,910 | ||||||||||||
Interest expense | (14,845 | ) | (23,697 | ) | (42,787 | ) | (69,590 | ) | ||||||||
Other (expense) income | (267 | ) | 333 | 629 | 527 | |||||||||||
Loss on disposal of assets, net | (616 | ) | (991 | ) | (4,591 | ) | (400 | ) | ||||||||
Non-operating expense, net | $ | (47,973 | ) | $ | (49,425 | ) | $ | (115,960 | ) | $ | (23,426 | ) |
(in thousands) | Three months ended September 30, 2018 compared to 2017 | Nine months ended September 30, 2018 compared to 2017 | ||||||
Increase (decrease) in fair value of derivatives outstanding | $ | 12,719 | $ | (62,370 | ) | |||
Decrease in settlements received for matured derivatives, net | (17,523 | ) | (40,734 | ) | ||||
Decrease in settlements received for early terminations of derivatives, net | — | (4,234 | ) | |||||
Total change in gain (loss) on derivatives, net | $ | (4,804 | ) | $ | (107,338 | ) |
Nine months ended September 30, | ||||||||
(in thousands) | 2018 | 2017 | ||||||
Net cash provided by operating activities | $ | 408,528 | $ | 272,051 | ||||
Net cash used in investing activities | (536,431 | ) | (356,893 | ) | ||||
Net cash provided by financing activities | 66,151 | 72,988 | ||||||
Net decrease in cash and cash equivalents | $ | (61,752 | ) | $ | (11,854 | ) |
Nine months ended September 30, | ||||||||
(in thousands) | 2018 | 2017 | ||||||
Acquisitions of oil and natural gas properties | $ | (16,340 | ) | $ | — | |||
Capital expenditures: | ||||||||
Oil and natural gas properties | (522,470 | ) | (381,165 | ) | ||||
Midstream service assets | (5,764 | ) | (11,680 | ) | ||||
Other fixed assets | (5,945 | ) | (3,604 | ) | ||||
Investment in equity method investee (see Note 3.c) | — | (24,572 | ) | |||||
Proceeds from disposition of equity method investee, net of selling costs (see Note 3.c) | 1,655 | — | ||||||
Proceeds from dispositions of capital assets, net of selling costs | 12,433 | 64,128 | ||||||
Net cash used in investing activities | $ | (536,431 | ) | $ | (356,893 | ) |
Nine months ended September 30, | ||||||||
(in thousands) | 2018 | 2017 | ||||||
Borrowings on Senior Secured Credit Facility | $ | 190,000 | $ | 155,000 | ||||
Payments on Senior Secured Credit Facility | (20,000 | ) | (70,000 | ) | ||||
Share repurchases | (97,055 | ) | — | |||||
Vested stock exchanged for tax withholding | (4,411 | ) | (7,638 | ) | ||||
Proceeds from exercise of stock options | 86 | 358 | ||||||
Payments for debt issuance costs | (2,469 | ) | (4,732 | ) | ||||
Net cash provided by financing activities | $ | 66,151 | $ | 72,988 |
(in millions, except for interest rates) | Principal | Interest rate | |||||
January 2022 Notes | $ | 450.0 | 5.625 | % | |||
March 2023 Notes | 350.0 | 6.250 | % | ||||
Total senior unsecured notes | $ | 800.0 |
• | is widely used by investors in the oil and natural gas industry to measure a company's operating performance without regard to items excluded from the calculation of such term, which can vary substantially from company to company depending upon accounting methods, the book value of assets, capital structure and the method by which assets were acquired, among other factors; |
• | helps investors to more meaningfully evaluate and compare the results of our operations from period to period by removing the effect of our capital structure from our operating structure; and |
• | is used by our management for various purposes, including as a measure of operating performance, in presentations to our board of directors and as a basis for strategic planning and forecasting. |
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
(in thousands) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Net income | $ | 55,050 | $ | 11,027 | $ | 175,022 | $ | 140,413 | ||||||||
Plus: | ||||||||||||||||
Income tax expense | 1,387 | — | 1,387 | — | ||||||||||||
Depletion, depreciation and amortization | 55,963 | 41,212 | 152,278 | 113,327 | ||||||||||||
Non-cash stock-based compensation, net | 8,733 | 8,966 | 28,748 | 26,877 | ||||||||||||
Accretion expense | 1,114 | 951 | 3,341 | 2,822 | ||||||||||||
Mark-to-market on derivatives: | ||||||||||||||||
(Gain) loss on derivatives, net | 32,245 | 27,441 | 69,211 | (38,127 | ) | |||||||||||
Settlements (paid) received for matured derivatives, net | (3,888 | ) | 13,635 | (5,943 | ) | 34,791 | ||||||||||
Settlements received for early terminations of derivatives, net | — | — | — | 4,234 | ||||||||||||
Premiums paid for derivatives | (5,455 | ) | (1,448 | ) | (14,930 | ) | (13,542 | ) | ||||||||
Interest expense | 14,845 | 23,697 | 42,787 | 69,590 | ||||||||||||
Loss on disposal of assets, net | 616 | 991 | 4,591 | 400 | ||||||||||||
Income from equity method investee (see Note 3.c) | — | (2,371 | ) | — | (7,910 | ) | ||||||||||
Proportionate Adjusted EBITDA of equity method investee(1) | — | 6,789 | — | 19,755 | ||||||||||||
Adjusted EBITDA | $ | 160,610 | $ | 130,890 | $ | 456,492 | $ | 352,630 |
(1) | Proportionate Adjusted EBITDA of Medallion, our equity method investee until its sale on October 30, 2017, is calculated as follows: |
Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
(in thousands) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Income from equity method investee | $ | — | $ | 2,371 | $ | — | $ | 7,910 | ||||||||
Adjusted for proportionate share of depreciation and amortization | — | 4,418 | — | 11,845 | ||||||||||||
Proportionate Adjusted EBITDA of equity method investee | $ | — | $ | 6,789 | $ | — | $ | 19,755 |
(in thousands) | 10% Increase | 10% Decrease | ||||||
Net liability derivative position | $ | 70,691 | $ | 54,814 |
Maturity year | ||||||||
(in millions except for interest rates) | 2022 | 2023(1) | ||||||
Senior Secured Credit Facility | $ | — | $ | 170.0 | ||||
Floating interest rate | — | % | 3.438 | % | ||||
January 2022 Notes | $ | 450.0 | $ | — | ||||
Fixed interest rate | 5.625 | % | — | % | ||||
March 2023 Notes | $ | — | $ | 350.0 | ||||
Fixed interest rate | — | % | 6.250 | % |
(1) | The Senior Secured Credit Facility matures on April 19, 2023, provided that if either the January 2022 Notes or March 2023 Notes have not been refinanced on or prior to the applicable Early Maturity Date, the Senior Secured Credit Facility will mature on such Early Maturity Date. |
Period | Total number of shares purchased(1) | Weighted-average price paid per share | Total number of shares purchased as part of publicly announced plans(2) | Maximum value that may yet be purchased under the program as of the respective period-end date (2) | ||||||||||
July 1, 2018 - July 31, 2018 | 715 | $ | 9.62 | — | $ | 112,782,213 | ||||||||
August 1, 2018 - August 31, 2018 | — | $ | — | — | $ | 112,782,213 | ||||||||
September 1, 2018 - September 30, 2018 | 1,171,099 | $ | 8.41 | 1,170,190 | $ | 102,945,283 | ||||||||
Total | 1,171,814 | 1,170,190 |
(1) | Included in these amounts are 1,624 shares withheld by us to satisfy employee tax withholding obligations that arose upon the lapse of restrictions on restricted stock awards. |
(2) | In February 2018, our board of directors authorized a $200 million share repurchase program commencing in February 2018. The repurchase program expires in February 2020. Repurchases of shares under this program totaled 1,170,190 at a cost of $9.9 million during the three months ended September 30, 2018. Share repurchases, if any, under the share repurchase program may be made through a variety of methods, which may include open market purchases, privately negotiated transactions and block trades. |
Exhibit Number | Description | ||
101.INS* | XBRL Instance Document. | ||
101.SCH* | XBRL Schema Document. | ||
101.CAL* | XBRL Calculation Linkbase Document. | ||
101.DEF* | XBRL Definition Linkbase Document. | ||
101.LAB* | XBRL Labels Linkbase Document. | ||
101.PRE* | XBRL Presentation Linkbase Document. |
* | Filed herewith. |
** | Furnished herewith. |
# | Management contract or compensatory plan or arrangement. |
LAREDO PETROLEUM, INC. | ||
Date: November 6, 2018 | By: | /s/ Randy A. Foutch |
Randy A. Foutch | ||
Chairman and Chief Executive Officer | ||
(principal executive officer) | ||
Date: November 6, 2018 | By: | /s/ Richard C. Buterbaugh |
Richard C. Buterbaugh | ||
Executive Vice President and Chief Financial Officer | ||
(principal financial officer) | ||
Date: November 6, 2018 | By: | /s/ Michael T. Beyer |
Michael T. Beyer | ||
Vice President - Controller and Chief Accounting Officer | ||
(principal accounting officer) |
1. | DEFINITIONS. The following terms shall have the following meanings for all purposes of this Agreement: |
2. | LEASE AND DELIVERY OF THE AIRCRAFT |
2.1. | Lease. Lessor agrees to lease to Lessee, and Lessee agrees to lease from Lessor, the Aircraft, during each Lease Period and otherwise on the terms and conditions of this Agreement. |
2.2. | Delivery and Return. This Agreement contemplates use of the Aircraft by Lessee for one or more Lease Periods. For Lessee’s use, the Aircraft shall be delivered to Lessee on a mutually agreed date or dates at the Operating Base, or other mutually agreed location, "AS IS," "WHERE IS," AND SUBJECT TO EACH AND EVERY DISCLAIMER OF WARRANTY AND REPRESENTATION AS SET FORTH IN SECTION 4 HEREOF. Lessor shall not be liable for delay or failure to furnish the Aircraft pursuant to this Agreement, and Lessee shall not be liable for delay or failure to return the Aircraft at the end of any Lease Period pursuant to this Agreement, when such failure or delay is caused by an Excused Cause. Lessee shall return the Aircraft to Lessor at the Operating Base, or other mutually agreed location, according to the Lessee’s scheduled return date under Section 3.2. |
2.3. | Non-Exclusivity. Lessee and Lessor acknowledge that the Aircraft is leased to Lessee on a non-exclusive basis and may be subject to use by Lessor, and/or to additional non-exclusive leases to other parties during the Term. |
2.4. | Truth-In-Leasing Procedures. Lessee shall be responsible for assuring that the INSTRUCTIONS FOR COMPLIANCE WITH "TRUTH IN LEASING" REQUIREMENTS UNDER FAR § 91.23 contained on the cover page of this |
3. | TERM, SCHEDULING, AND RENT |
3.1. | Term. The term of this Agreement is one (1) year, automatically renewable for one (1) year terms unless cancelled as provided in this Section 3.1. This Agreement may be terminated at the will of either party at any time upon 30-day written notice. In the event that this Agreement is terminated at Lessor’s election during a Lease Period, Lessor shall pay the actual costs of repositioning the Aircraft to the Operating Base. In the event of termination by Lessee’s election during a Lease Period, Lessee will pay the costs of repositioning the Aircraft to the Operating Base. |
3.2. | Scheduling. Each use of the Aircraft by Lessee shall be subject to Lessor’s approval. Lessee shall submit flight-scheduling requests, containing such information as Lessor reasonably requires, to Lessor as far in advance as reasonably possible. Lessor may approve or deny any flight-scheduling request in Lessor’s sole discretion. Although this Agreement provides a framework for future use of the Aircraft by Lessee, it does not confer upon Lessee any recurring or continuous right to use the Aircraft. No Lease Period shall continue for a period of greater than seven (7) days. |
3.2.1. | Breaches of Schedule. In the event that Lessee has reason to believe that it will not be able to meet its scheduled time to return the Aircraft to Lessor, Lessee shall promptly alert Lessor to this fact. In such instance, for each day after the scheduled return time that Lessee does not return the Aircraft, Lessee shall be charged any amounts due under this Agreement. In the event that Lessor has reason to believe that it will not be able to meet its scheduled time to provide the Aircraft to Lessor once Lessor has approved a requested flight by Lessee, Lessor shall promptly alert Lessee to this fact. This paragraph shall not apply in any situation where (1) the delay results from an Excused Cause, and (2) Lessor provides the Aircraft to Lessee, or Lessee returns the Aircraft to Lessor, as soon as is practical after the Excused Cause abates. |
3.3. | RENT. Lessee shall pay rent as specified in Exhibit B, attached hereto. All rent shall be paid to the Lessor in immediately available U.S. funds and in form and manner as the Lessor in its sole discretion may instruct Lessee from time to time. |
3.3.1. | Minimum Charge During Lease Periods. There shall be no minimum charges with respect to Lessee’s use of the Aircraft. |
3.4. | TAXES. |
3.4.1. | Neither rent nor any other payments to be made by Lessee under this Agreement includes the amount of any Taxes which may be assessed or levied as a result of the lease of the Aircraft to Lessee or the use of the Aircraft by Lessee. |
3.4.2. | Lessee shall be responsible for, shall indemnify and hold harmless Lessor against, and, except as provided in Section 3.4.3, Lessee shall remit to Lessor all such Taxes together with each payment of rent pursuant to Section 3.3; provided, however, that if any such Taxes shall be due and payable at an earlier time as a matter of law, Lessee shall remit such Taxes to Lessor at the time required by law. |
3.4.3. | If any Taxes shall be required by law to be paid by Lessee directly to the appropriate taxing jurisdiction, Lessee shall remit such Taxes directly to the appropriate taxing jurisdiction promptly at the time required by law, and shall provide evidence of such payment to Lessor. |
4. | DISCLAIMER OF WARRANTIES AND WAIVER. THE AIRCRAFT IS BEING LEASED BY THE LESSOR TO THE LESSEE HEREUNDER ON A COMPLETELY "AS IS," "WHERE IS," BASIS, WHICH IS ACKNOWLEDGED AND AGREED TO BY THE LESSEE. LESSEE ACKNOWLEDGES THAT IT HAS SELECTED THE AIRCRAFT WITHOUT ANY ASSISTANCE FROM LESSOR, ITS AGENTS OR EMPLOYEES. THE WARRANTIES AND REPRESENTATIONS SET FORTH IN THIS SECTION 4, SECTION 7.3, SECTION 8.1 AND SECTION 14 ARE EXCLUSIVE AND IN LIEU OF ALL OTHER REPRESENTATIONS OR WARRANTIES WHATSOEVER, EXPRESS OR IMPLIED, AND LESSOR HAS NOT MADE AND SHALL NOT BE CONSIDERED OR DEEMED TO HAVE MADE (WHETHER BY VIRTUE OF HAVING LEASED THE AIRCRAFT UNDER THIS AGREEMENT, OR HAVING ACQUIRED THE AIRCRAFT, OR HAVING DONE OR FAILED TO DO ANY ACT, OR HAVING ACQUIRED OR FAILED TO ACQUIRE ANY STATUS UNDER OR IN RELATION TO THIS AGREEMENT OR OTHERWISE) ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRCRAFT OR TO ANY PART THEREOF, AND SPECIFICALLY, WITHOUT LIMITATION, IN THIS RESPECT DISCLAIMS ALL REPRESENTATIONS AND/OR WARRANTIES AS TO AIRWORTHINESS, VALUE, CONDITION, DESIGN, MERCHANTABILITY, COMPLIANCE WITH SPECIFICATIONS, CONSTRUCTION AND CONDITION OF THE AIRCRAFT OPERATION, OR FITNESS FOR A PARTICULAR USE OF THE AIRCRAFT AND AS TO THE ABSENCE OF LATENT AND OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, AS TO THE ABSENCE OF ANY INFRINGEMENT OR THE LIKE, HEREUNDER OF ANY PATENT, TRADEMARK OR COPYRIGHT, AS TO THE ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN TORT, OR AS TO THE QUALITY OF THE MATERIAL OR WORKMANSHIP OF THE AIRCRAFT OR ANY PART THEREOF OR ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED (INCLUDING ANY IMPLIED WARRANTY ARISING FROM A COURSE OF PERFORMANCE OR DEALING OR USAGE OF TRADE), WITH RESPECT TO THE AIRCRAFT OR ANY PART THEREOF. THE LESSEE HEREBY WAIVES, RELEASES, DISCLAIMS, AND RENOUNCES ALL EXPECTATION OF OR RELIANCE UPON ANY SUCH AND OTHER WARRANTIES, OBLIGATIONS, AND LIABILITIES OF LESSOR AND RIGHTS, CLAIMS, AND REMEDIES OF THE LESSEE AGAINST LESSOR, EXPRESS OR IMPLIED, ARISING BY LAW OR OTHERWISE (OTHER THAN BREACH OF EXPRESS TERMS OF THIS AGREEMENT), INCLUDING BUT NOT LIMITED TO (I) ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR USE, (II) ANY IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING, OR USAGE OF TRADE, (III) ANY OBLIGATION, LIABILITY, RIGHT, CLAIM, OR REMEDY IN TORT, WHETHER OR NOT ARISING FROM THE NEGLIGENCE OF LESSOR, ACTUAL OR IMPUTED, AND (IV) ANY OBLIGATION, LIABILITY, RIGHT, CLAIM OR REMEDY FOR LOSS OF OR DAMAGE TO THE AIRCRAFT, FOR LOSS OF USE, REVENUE OR PROFIT WITH RESPECT TO THE AIRCRAFT, OR FOR ANY OTHER DIRECT, INCIDENTAL, OR CONSEQUENTIAL DAMAGES. |
5. | REGISTRATION |
5.1. | Title and Registration; Subordination. Lessee acknowledges that, other than with respect to the leasehold interest transferred to Lessee during each Lease Period solely related to Lessee’s right to possess and operate the Aircraft as contemplated hereunder, title (legal, beneficial, and equitable) to the Aircraft shall not shift in any manner as a result of this Agreement. Lessee shall undertake, to the extent permitted by law, to do |
6. | USE AND OPERATION |
6.1. | Use and Operation. Lessee shall be solely and exclusively responsible for the use, operation, and control of the Aircraft during each Lease Period. Lessee (i) shall not operate or locate Aircraft, or suffer the Aircraft to be operated or located, in any area excluded from coverage by any insurance policy in effect or required to be maintained hereunder with respect to the Aircraft, or in any war zone, (ii) shall not operate the Aircraft or permit the Aircraft to be operated during the Term except in operations for which Lessee is duly authorized, or use or permit the Aircraft to be used for a purpose for which the Aircraft is not designed and suitable, (iii) shall not permit the Aircraft to be maintained, used, or operated during the Term in violation of any law, or contrary to any manufacturer's operating manuals or instructions, and (iv) shall not knowingly permit the Aircraft to be used for the carriage of any persons or property prohibited by law, nor knowingly permit the Aircraft to be used during the existence of any known defect except in accordance with the FARs; (v) shall not, without Lessor’s express permission, remove any parts or engines from the Aircraft, or make any modifications to the Aircraft; (vi) shall abide by Lessor’s reasonable rules to preserve the longevity, quality, and value of the Aircraft, including but not limited to no smoking and no animals aboard the Aircraft, and including appropriate, safe, and secure storage, including protection from wind and weather, when the Aircraft is stored or parked during a Lease Period; (vii) shall operate the Aircraft in accordance with the provisions of FAR 91 and shall not operate the Aircraft in commercial service, as a common carrier, or otherwise for compensation or hire except to the extent permitted under FARs 91.321 and 91.501, if applicable, and shall not sublease the Aircraft or otherwise allow any party other than Lessee or Lessor to assume Operational Control of the Aircraft; and (viii) shall use the aircraft only within the geographical area covering the United States, Western Europe, Canada, and the Caribbean. During any Lease Period, Lessee shall be responsible for the conduct of all persons onboard the Aircraft, other than authorized representatives of Lessor, if any. |
6.2. | Operational Control. THE PARTIES EXPRESSLY AGREE THAT LESSEE SHALL AT ALL TIMES WHILE THE AIRCRAFT IS IN ITS POSSESSION DURING A LEASE PERIOD MAINTAIN OPERATIONAL CONTROL OF THE AIRCRAFT, AND THAT THE INTENT OF THE PARTIES IS THAT THIS AGREEMENT CONSTITUTE A DRY OPERATING LEASE. Lessee shall exercise exclusive authority over initiating, conducting, or terminating any flight conducted by Lessee during a Lease Period pursuant to this Agreement, and the Flight Crew (as defined below) shall be under the exclusive command and control of Lessee in all phases of such flights. |
6.3. | Authority of Pilot in Command. Notwithstanding that Lessee shall have operational control of the Aircraft during any flight conducted pursuant to this Agreement, Lessor and Lessee expressly agree that the Pilot in Command, in his or her sole discretion may terminate any flight, refuse to commence any flight, or take any other flight-related action which in the judgment of the Pilot in Command is necessitated by considerations of safety. The Pilot in Command shall have final and complete authority to postpone or cancel any flight for any reason or condition that in his or her judgment would compromise the safety of the flight. No such action of the Pilot in Command shall create or support any liability for loss, injury, damage, or delay to Lessor. |
6.4. | Right to Inspect. Lessee and its agents shall have the right to inspect the Aircraft or the Aircraft Documents at any reasonable time, upon giving Lessor reasonable notice, to ascertain the condition of the Aircraft and to satisfy Lessee that Lessor is properly repairing and maintaining the Aircraft in accordance with the requirements of this Agreement. All required repairs shall be performed as soon as practicable after such inspection. |
6.5. | Aircraft Documents. Lessor shall, at its expense, maintain and preserve, or cause to be maintained and preserved, in the English language, all Aircraft Documents in a complete, accurate, and up-to-date manner. While the Aircraft is in Lessee’s possession during each Lease Period during the Term, Lessee shall keep accurate logs of the Aircraft location, and flight hours, and otherwise provide such information as is necessary for Lessor to meet its obligations with respect to maintenance of the Aircraft Documents as noted above. On an annual basis, or otherwise as reasonably requested by Lessor, Lessee shall provide to Lessor a signed record verifying this log. |
7. | MAINTENANCE AND AIRCRAFT EXPENSES |
7.1. | Lessee to Pay All Operating Costs. Lessee shall arrange for and pay all operating costs associated with Lessee’s use and incurred during the Term, including, without limitation, costs of pilots, cabin personnel, mechanics, and other ground support personnel (the foregoing collectively, the “Flight Crew”); oil, lubricants; landing and navigation fees; airport charges; passenger service and any and all other expenses of any kind or nature, arising directly or indirectly in connection with or related to the use, movement and operation of the Aircraft by Lessee during the Term. Aircraft fuel during Lease Periods shall be purchased by Lessee. If any fuel costs, landing fees or other charges related to Lessee’s use of the Aircraft are charged to or paid by Lessor, then Lessee shall reimburse Lessor in full for all undisputed charges. |
7.2. | Fines and Penalties. Lessee shall pay any fines and penalties associated with use of the Aircraft during a Lease Period. |
7.3. | Maintenance of Aircraft. Lessor shall arrange and pay for all necessary maintenance for the Aircraft to keep it in airworthy operating condition and in compliance with all applicable FARs and the Aircraft Operating Manual, including without limitation all non-scheduled and scheduled repairs, inspection and other maintenance required with respect to the operation of the Aircraft. Notwithstanding the foregoing, Lessee shall pay for repairs of the Aircraft when such repair is necessary solely as a result of Lessee’s misuse of the Aircraft rather than ordinary wear and tear. Lessee’s duty to repair damage due to Lessee’s misuse specifically includes any cosmetic damage to the interior or exterior of the Aircraft, including upholstery, carpet, paint and static wicks. So long as reasonably and timely scheduled and performed by Lessor, Lessor shall have no expense or liability for repair or maintenance delays and shall not be liable to Lessee for any damage from loss of profit or loss of use of Aircraft, either during or outside a Lease Period. |
7.4. | Flight Crew. Lessee, at its sole expense, shall locate and retain (through either direct employment or contracting with an independent contractor for flight services) a duly qualified “Flight Crew.” All members of the Flight Crew shall be fully competent and experienced, duly licensed, and qualified in accordance with all FAA and other legal requirements and shall be approved under all insurance policies covering the Aircraft. All members of the Flight Crew who are pilots shall be fully trained in accordance with an FAA-approved training program, including initial and recurrent training and, where appropriate, contractor-provided simulator training. |
7.5. | Insurance. Lessor shall maintain, or cause to be maintained, bodily injury and property damage, liability insurance in an amount no less than the amount outlined on Exhibit A and Combined Single Limit for the benefit of itself and Lessee in connection with the use of the Aircraft. Said policy shall be an occurrence policy naming Lessor and Lessee as named or additional insured, and shall be fully endorsed to cover the individual operations of Lessor and Lessee as the party in Operational Control of the Aircraft, as applicable. Lessor shall also maintain all risks aircraft hull insurance in an amount equal to the fair market value of the Aircraft, which the parties agree is not less than the amount outlined on Exhibit A, and such insurance shall name Lessor as the loss payee. All such insurance policies shall also contain provisions that: (a) they shall operate in the same manner as if there were separate policies covering each insured; (b) they shall not be invalidated due to any act or failure to act of Lessor and Lessee or any permitted passenger on the Aircraft; and (c) the insurer(s) shall grant a waiver of subrogation to Lessee with respect to physical damage coverage on the insurance policies. Upon execution of this Agreement, upon each annual renewal of said policies, and otherwise upon reasonable request, Lessor will provide Lessee with a Certificate of Insurance upon execution of this Agreement. |
8. | CONDITION DURING TERM AND RETURN OF AIRCRAFT |
8.1. | Delivery. At the commencement of each Lease Period, Lessor shall deliver the Aircraft to Lessee in an airworthy operating condition and in compliance with all applicable FARs and the Aircraft Operating Manual. |
8.2. | Return. Upon conclusion of each Lease Period, Lessee shall return the Aircraft to the Lessor by delivering the same, at the Lessee’s own risk and expense, to the Operating Base, or other mutually agreed location, fully equipped with all engines installed thereon. The Aircraft at the time of its return shall be in the condition set forth in this Section 8 and shall be free and clear of any Liens resulting from Lessee’s use or possession. |
8.3. | Condition of Aircraft. The Aircraft at the time of its return to Lessor shall have been maintained in accordance with the provisions of this Agreement with the same care and consideration for the technical condition of the Aircraft as if it were to have been kept in continued regular service by the Lessee, and shall meet the following requirements: |
8.3.1. | Operating Condition. The Aircraft shall be in as good condition as at the beginning of the Lease Period, ordinary wear and tear excepted. |
8.3.2. | Cleanliness Standards. The Aircraft shall be as clean as it was at the beginning of the Lease Period. |
8.4. | Aircraft Documents. Lessee shall deliver, or cause to be delivered to Lessor, at the time the Aircraft is returned to Lessor, all documentation reasonably necessary for Lessor to meet its obligations with respect to Lessor’s maintenance of the Aircraft Documents as contemplated hereunder. |
9. | LIENS. Lessee shall ensure that no Liens are created or placed against the Aircraft by Lessee or third parties as a result of Lessee’s actions, except for mechanic’s liens to be discharged in the ordinary course of business. Lessee shall notify Lessor promptly upon learning of any Liens not permitted by these terms. Lessee shall, at its own cost and expense, take all such actions as may be necessary to discharge and satisfy in full any such Lien promptly after the same becomes known to it. |
10. | DEFAULTS AND REMEDIES. In the event of default, the non-defaulting party shall be entitled only to expectancy damages, provided that in no event shall either party be subject to indirect, non-consequential or punitive damages of any kind. In the event of a dispute, the |
11. | NOTICES. All communications, declarations, demands, consents, directions, approvals, instructions, requests, and notices required or permitted by this Agreement shall be in writing and shall be deemed to have been duly given or made when delivered personally or transmitted electronically by e-mail or facsimile, receipt acknowledged, or in the case of documented overnight delivery service or registered or certified mail, return receipt requested, delivery charge or postage prepaid, on the date shown on the receipt thereof, in each case at the address set forth below: |
12. | AIRCRAFT INCIDENTS AND RISK OF LOSS. In the event of an Aircraft Incident during a Lease Period, Lessee shall immediately report such Aircraft Incident to Lessor, to the insurance company/ies underwriting such risk, and to any and all applicable governmental agencies, and shall furnish such information and execute such documents as may be required and necessary to collect the proceeds from the insurance policies. At all times during any Lease Period, but solely during such Lease Period, Lessee shall bear the entire risk of an Aircraft Incident, and shall indemnify and hold Lessor harmless from and against any losses or liabilities, including insurance deductibles, to the extent not compensated by insurance (provided that said obligation to indemnify shall not exceed the liability limits as set forth in this Agreement so long as said insurance coverage has not been denied due solely to Lessee’s own actions or failure to act), arising from an Aircraft Incident (including, without limitation, destruction, loss, theft, requisition of title or use, confiscation, taking, or damage of or to the Aircraft from any cause, as well as damage or injury to the person or property of others), and all fines or damages, including consequential, indirect, and punitive claims in contract, tort or otherwise owed to third parties, and suits, actions or proceedings arising from the use, operation, or storage of the Aircraft during a Lease Period. In the case of fines that are not tax deductible under 26 USC 162(f), indemnification shall be on an after-tax basis. |
12.1. | Amounts Paid by Third Parties. Lessor shall be entitled to receive directly any payments of monies by third parties or their insurers for damage to the Aircraft during a Lease Period. Such monies received will offset amounts otherwise owed by Lessee for such damage. |
12.2. | Destruction of Engine/s, but not Aircraft. In the event of loss or destruction during a Lease Period of an Aircraft engine so that it is no longer serviceable that arises solely and exclusively from the misuse of the Aircraft and/or engine by Lessee and not as a result of accident or normal wear and tear and that is not otherwise covered by any insurance or maintenance programs utilized by Lessor with respect to its Aircraft maintenance obligations hereunder, Lessee shall promptly notify Lessor of such event |
13. | ADDITIONAL PROVISIONS |
13.1. | Entire Agreement. This Agreement, and all terms, conditions, warranties, and representations herein, are for the sole and exclusive benefit of the signatories hereto. This Agreement constitutes the entire agreement of the parties as of its Effective Date and supersedes all prior or independent, oral or written agreements, understandings, statements, representations, commitments, promises, and warranties made with respect to the subject matter of this Agreement. This Agreement has been negotiated by the parties and shall not be deemed to have been prepared by one, but by each equally. |
13.2. | Other Transactions. Except as specifically provided in this Agreement, none of the provisions of this Agreement, nor any oral or written statements, representations, commitments, promises, or warranties made with respect to the subject matter of this Agreement shall be construed or relied upon by any party as the basis of, consideration for, or inducement to engage in any separate agreement, transaction, or commitment for any purpose whatsoever. |
13.3. | Authority of the Parties. Each of the parties hereto represents to that other that (i) it has full power, authority and legal right to enter into and perform this Agreement, (ii) the execution, delivery and performance of this Agreement has been duly authorized by all necessary action on each party’s part, does not require any approvals or consents except such approvals and consents as have been duly obtained, and (iii) this Agreement does not contravene any law binding on either of the parties or contravene any agreement to which either of the parties hereto is a party or by which it is bound, or any law governmental rule, regulation or order. Upon request, each of the parties will provide the other party with documentary evidence of its authority to enter into this Agreement. |
13.4. | Prohibited and Unenforceable Provisions. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be deemed replaced with a valid and enforceable provision that as nearly as possible effectuates the parties’ intent as expressed in this Agreement. To the extent permitted by law, Lessor and Lessee hereby waive any provision of law that renders any provision hereof prohibited or unenforceable in any respect. |
13.5. | Enforcement. This Agreement, including all agreements, covenants, representations, and warranties, shall be binding upon and inure to the benefit of and may be enforced by Lessor, Lessee, and each of their agents, servants, and personal representatives. No third party beneficiaries are created. No third party beneficiaries are created, other than the rights of the Aircraft owner under Section 12 (pertaining to owner’s rights in the case of an Aircraft Incident causing Aircraft damage). |
13.6. | Headings. The section and subsection headings in this Agreement are for convenience of reference only and shall not modify, define, expand, or limit any of the terms or provisions hereof. |
13.7. | Counterparts. The parties hereto may execute this Agreement in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. Electronic or FAX signatures shall have the same effect as originals. |
13.8. | Amendments. No term or provision of this Agreement may be amended, changed, waived, discharged, or terminated orally, but only by an instrument in writing signed by the party against which the enforcement of the change, waiver, discharge, or termination is sought. |
13.9. | No Waiver. No delay or omission in the exercise or enforcement of any right or remedy hereunder by either party shall be construed as a waiver of such right or remedy. All remedies, rights, undertakings, obligations, and agreements contained herein shall be cumulative and not mutually exclusive, and in addition to all other rights and remedies which either party possesses at law or in equity. |
13.10. | Assignments. Lessee shall have no right to assign this Agreement, but Lessor shall. |
14. | TRUTH IN LEASING UNDER SECTION 91.23 OF THE FARs. |
o | § 91.409 (f) (1): A continuous airworthiness inspection program that is part of a continuous airworthiness maintenance program currently in use by a person holding an air carrier operating certificate or an operating certificate issued under FAR Part 121 or 135 and operating that make and model aircraft under FAR Part 121 or operating that make and model under FAR Part 135 and maintaining it under FAR 135.411(a)(2). |
o | § 91.409 (f) (2): An approved aircraft inspection program approved under FAR 135.419 and currently in use by a person holding an operating certificate issued under FAR Part 135. |
ý | § 91.409 (f) (3): A current inspection program recommended by the manufacturer. |
o | § 91.409 (f) (4): Any other inspection program established by the registered owner or operator of the Aircraft and approved by the Administrator of the Federal Aviation Administration in accordance with FAR 91.409 (g). |
o § 91.409 (f) (1) | o § 91.409 (f) (2) ý § 91.409 (f) (3) o § 91.409 (f) (4) |
LESSOR: Lariat Ranch, LLC | LESSEE: Laredo Petroleum, Inc. |
By: /s/ Randy A. Foutch | By: /s/ Richard C. Buterbaugh |
Print: Randy A. Foutch | Print: Richard C. Buterbaugh |
Title: Manager | Title: Executive V.P. & CFO |
Aircraft Make, Model, | Cessna Citation CJ4, CE-525C |
Registration and Serial Number | N129CJ S/N 525C-129 |
Engine Information | FJ44-4A (2): S/N 211273 (left); 211272 (right) |
Add’l Aircraft Identification | |
Hull Value for Insurance: | $8,100,000 |
By: | _________________________ By: _________________________ |
Title: | _________________________ Title: _________________________ |
1. | I have reviewed this Quarterly Report on Form 10-Q of Laredo Petroleum, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting(as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: November 6, 2018 | |
/s/ Randy A. Foutch | |
Randy A. Foutch | |
Chairman and Chief Executive Officer |
1. | I have reviewed this Quarterly Report on Form 10-Q of Laredo Petroleum, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting(as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: November 6, 2018 | |
/s/ Richard C. Buterbaugh | |
Richard C. Buterbaugh | |
Executive Vice President and Chief Financial Officer |
(1) | the Quarterly Report on Form 10-Q of the Company for the period ending September 30, 2018, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
November 6, 2018 | |
/s/ Randy A. Foutch | |
Randy A. Foutch | |
Chairman and Chief Executive Officer |
November 6, 2018 | |
/s/ Richard C. Buterbaugh | |
Richard C. Buterbaugh | |
Executive Vice President and Chief Financial Officer |
Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Nov. 01, 2018 |
|
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Laredo Petroleum, Inc. | |
Entity Central Index Key | 0001528129 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 233,882,020 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q3 | |
Entity Emerging Growth Company | false | |
Entity Small Business | false |
Consolidated balance sheets (Parenthetical) - $ / shares |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Preferred stock par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock authorized (in shares) | 50,000,000 | 50,000,000 |
Preferred stock issued (in shares) | 0 | 0 |
Common stock par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock authorized (in shares) | 450,000,000 | 450,000,000 |
Common stock issued (in shares) | 233,957,811 | 242,521,143 |
Common stock outstanding (in shares) | 233,957,811 | 242,521,143 |
Consolidated statements of operations - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Revenues: | ||||
Total revenues | $ 279,746 | $ 205,818 | $ 890,488 | $ 581,825 |
Costs and expenses: | ||||
Lease operating expenses | 23,873 | 19,594 | 68,466 | 56,690 |
Production and ad valorem taxes | 14,015 | 9,558 | 38,232 | 26,811 |
General and administrative | 23,397 | 25,000 | 74,956 | 72,605 |
Depletion, depreciation and amortization | 55,963 | 41,212 | 152,278 | 113,327 |
Other operating expenses | 1,114 | 1,443 | 3,341 | 3,906 |
Total costs and expenses | 175,336 | 145,366 | 598,119 | 417,986 |
Operating income | 104,410 | 60,452 | 292,369 | 163,839 |
Non-operating income (expense): | ||||
Gain (loss) on derivatives, net | (32,245) | (27,441) | (69,211) | 38,127 |
Income from equity method investee (see Note 3.c) | 0 | 2,371 | 0 | 7,910 |
Interest expense | (14,845) | (23,697) | (42,787) | (69,590) |
Other (expense) income | (267) | 333 | 629 | 527 |
Loss on disposal of assets, net | (616) | (991) | (4,591) | (400) |
Non-operating expense, net | (47,973) | (49,425) | (115,960) | (23,426) |
Income before income taxes | 56,437 | 11,027 | 176,409 | 140,413 |
Income tax benefit (expense): | ||||
Current | 381 | 0 | 381 | 0 |
Deferred | (1,768) | 0 | (1,768) | 0 |
Total income tax expense: | (1,387) | 0 | (1,387) | 0 |
Net income | $ 55,050 | $ 11,027 | $ 175,022 | $ 140,413 |
Net income per common share: | ||||
Basic (in dollars per share) | $ 0.24 | $ 0.05 | $ 0.75 | $ 0.59 |
Diluted (in dollars per share) | $ 0.24 | $ 0.05 | $ 0.75 | $ 0.57 |
Weighted-average common shares outstanding: | ||||
Basic (in shares) | 230,605 | 239,306 | 233,228 | 239,017 |
Diluted (in shares) | 231,639 | 244,887 | 234,207 | 244,693 |
Oil sales | ||||
Revenues: | ||||
Total revenues | $ 160,007 | $ 110,194 | $ 469,972 | $ 313,875 |
NGL sales | ||||
Revenues: | ||||
Total revenues | 50,814 | 27,700 | 115,979 | 68,329 |
Natural gas sales | ||||
Revenues: | ||||
Total revenues | 15,043 | 19,664 | 45,908 | 55,927 |
Transportation and marketing expenses | ||||
Costs and expenses: | ||||
Cost of goods and services sold | 5,036 | 0 | 6,570 | 0 |
Midstream service revenues | ||||
Revenues: | ||||
Total revenues | 2,255 | 2,446 | 6,590 | 8,148 |
Costs and expenses: | ||||
Cost of goods and services sold | 728 | 1,174 | 1,824 | 2,986 |
Sales of purchased oil | ||||
Revenues: | ||||
Total revenues | 51,627 | 45,814 | 252,039 | 135,546 |
Costs and expenses: | ||||
Cost of goods and services sold | $ 51,210 | $ 47,385 | $ 252,452 | $ 141,661 |
Organization and basis of presentation |
9 Months Ended |
---|---|
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Organization and basis of presentation | Organization and basis of presentation a. Organization Laredo Petroleum, Inc. ("Laredo"), together with its wholly-owned subsidiaries, Laredo Midstream Services, LLC ("LMS") and Garden City Minerals, LLC ("GCM"), 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. LMS and GCM (together, the "Guarantors") guarantee all of Laredo's debt instruments. In these notes, the "Company" refers to Laredo, LMS and GCM collectively, unless the context indicates otherwise. All amounts, dollars and percentages presented in these unaudited consolidated financial statements and the related notes are rounded and, therefore, approximate. b. Basis of presentation The accompanying unaudited consolidated financial statements were derived from the historical accounting records of the Company and reflect the historical financial position, results of operations and cash flows for the periods described herein. The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). All material intercompany transactions and account balances have been eliminated in the consolidation of accounts. The accompanying unaudited consolidated financial statements have not been audited by the Company's independent registered public accounting firm, except that the consolidated balance sheet as of December 31, 2017 is derived from audited consolidated financial statements. In the opinion of management, the accompanying unaudited consolidated financial statements reflect all necessary adjustments to present fairly the Company's financial position as of September 30, 2018, results of operations for the three and nine months ended September 30, 2018 and 2017 and cash flows for the nine months ended September 30, 2018 and 2017. Certain disclosures have been condensed or omitted from these unaudited consolidated financial statements. Accordingly, these unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the 2017 Annual Report. Significant accounting policies See Note 2 "Basis of presentation and significant accounting policies" in the 2017 Annual Report for discussion of significant accounting policies. Use of estimates in the preparation of interim unaudited consolidated financial statements The preparation of the accompanying unaudited consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions about future events. These estimates and the underlying assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Although management believes these estimates are reasonable, actual results could differ. For further information regarding the estimates and assumptions, see Note 2.b "Use of estimates in the preparation of consolidated financial statements" in the 2017 Annual Report. Furthermore, see Note 7.c for a discussion of estimates pertaining to the Company's 2018 performance share awards. Reclassifications Certain amounts in the accompanying unaudited consolidated financial statements have been reclassified to conform to the 2018 presentation. These reclassifications had no impact on previously reported total assets, total liabilities, net income, stockholders' equity or total operating, investing or financing cash flows. |
Recently issued or adopted accounting pronouncements |
9 Months Ended |
---|---|
Sep. 30, 2018 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Recently issued or adopted accounting pronouncements | Recently issued or adopted accounting pronouncements The Company considers the applicability and impact of all accounting standard updates ("ASU") issued by the Financial Accounting Standards Board ("FASB") to the FASB Accounting Standards Codification ("ASC"). The discussion of the ASUs and a final rule issued by the SEC listed below were determined to be meaningful to the Company's unaudited consolidated financial statements and/or footnotes during the nine months ended September 30, 2018. a. Revenue recognition On January 1, 2018, the Company adopted ASC 606, Revenue from Contracts with Customers ("ASC 606"), using the modified retrospective approach of adoption. ASC 606 supersedes previous revenue recognition requirements in ASC 605, Revenue Recognition ("ASC 605"), and includes a five-step revenue recognition model to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. In addition, the new standard requires significantly expanded disclosures related to the nature, timing, amount and uncertainty of revenue and cash flows arising from contracts with customers. See Note 4 for further discussion of the ASC 606 adoption impact on the Company's unaudited consolidated financial statements and the Company's revenue recognition policies. b. Leases In February 2016, the FASB issued new guidance in ASC 842, Leases ("ASC 842"), which will supersede the current guidance in ASC 840, Leases ("ASC 840"). The core principle of the new guidance is that a lessee should recognize in the statement of financial position a liability to make lease payments and a right-of-use asset representing its right to use the underlying asset for the lease term for leases currently classified as operating leases. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election, by class of underlying asset, not to recognize lease assets and lease liabilities. In January 2018, the FASB issued new guidance in ASC 842 to provide an optional transition practical expedient to not evaluate existing or expired land easements that were not previously accounted for as leases under ASC 840. In July 2018, the FASB issued new guidance in ASC 842 to provide entities with an additional (and optional) transition method to adopt the new leases standard. Under this new transition method, an entity initially applies the new leases standard at the adoption date and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. Consequently, an entity's reporting for the comparative periods presented in the financial statements in which it adopts the new leases standard will continue to be in accordance with ASC 840. An entity that elects this transition method must provide the required ASC 840 disclosures for all periods that continue to be reported in accordance with ASC 840. The amendments in these ASUs are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The primary effect on the Company's consolidated financial statements will be to record assets and obligations for contracts currently recognized as operating leases with a term greater than 12 months and to evaluate operating leases with a term less than or equal to 12 months for accounting policy election. The Company has a team, including third-party consultants, to implement the standard and is implementing the software that will be used to track and account for lease activity. The Company anticipates that the adoption and implementation of ASC 842 will result in a material increase in assets and liabilities on the consolidated balance sheet but will not result in a material impact to the consolidated statement of operations. The estimate of the dollar value impact of the adoption is on-going. The Company has made certain accounting policy decisions including that it plans to adopt the short-term lease recognition exemption, accounting for certain asset classes at a portfolio level, and establishing a balance sheet recognition capitalization threshold. The transition will utilize the modified retrospective approach to adopting the new standard that will be applied at the beginning of the period adopted (January 1, 2019). The Company will utilize the transition package of expedients to leases that commenced before the effective date. The Company expects for certain lessee asset classes to elect the practical expedient and not separate lease and non-lease components. For these asset classes, the agreements will be accounted for as a single lease component. c. Business combinations In January 2017, the FASB issued new guidance in ASC 805, Business Combinations, to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The amendments in this ASU provide a screen to determine when a set of assets and activities is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. If the screen is not met, the amendments in this ASU require that to be considered a business, a set must include, at a minimum, an input and a substantive process that, together, significantly contribute to the ability to create an output. The primary effect of adoption of this ASU is that, depending on the facts and circumstances of each transaction, more transactions could be accounted for as acquisitions of assets. The Company adopted this ASU on January 1, 2018 on a prospective basis, and the adoption did not have an effect on its unaudited consolidated financial statements. See Note 3.a for discussion of the Company's 2018 acquisitions of evaluated and unevaluated oil and natural gas properties, which were accounted for as asset acquisitions under this ASU. d. Fair value measurements In August 2018, the FASB issued new guidance in ASC 820, Fair Value Measurement, to modify disclosure requirements. Of the amendments in the ASU, the below items affected the Company's fair value measurement disclosures in Note 9. Removed disclosure requirements that should be applied retrospectively to all periods presented are: (i) the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, (ii) the policy for timing of transfers between levels and (iii) the valuation processes for Level 3 fair value measurements. A modified disclosure requirement that should be applied prospectively is to clarify that the measurement uncertainty disclosure communicates information about the uncertainty in measurement as of the reporting date. A new disclosure requirement that should be applied prospectively is to disclose the range and weighted-average of significant unobservable inputs used to develop Level 3 fair value measurements. The Company has elected to early adopt this guidance upon the issuance of the ASU and has modified its disclosures accordingly in this Quarterly Report. e. SEC disclosure update and simplification In August 2018, the SEC issued Final Rule Release No. 33-10532, Disclosure Update and Simplification, which amends various SEC disclosure requirements that they have determined to be redundant, duplicative, overlapping, outdated or superseded. The amendments also extend the annual disclosure requirement of presenting the changes in stockholders' equity to interim periods. An analysis of changes in stockholders’ equity will now be required for the current and comparative year-to-date interim periods. The Company has incorporated certain aspects of the final rule in this Quarterly Report and will complete the implementation of the final rule in the fourth quarter of 2018. |
Acquisitions and divestitures |
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Business Combinations And Disposal Groups [Abstract] | |
Acquisitions and divestitures | Acquisitions and divestitures a. 2018 Acquisitions of evaluated and unevaluated oil and natural gas properties During the nine months ended September 30, 2018, through multiple transactions, the Company acquired 895 net acres of additional leasehold interests and working interests in 47 producing horizontal and vertical wells in Glasscock County, Texas for an aggregate purchase price of $16.3 million, net of post-closing adjustments. These acquisitions were accounted for as asset acquisitions. b. 2018 Divestitures of evaluated and unevaluated oil and natural gas properties and midstream service assets During the nine months ended September 30, 2018, through multiple transactions, the Company completed the sale of 3,070 net acres and working interests in 24 producing vertical and horizontal wells and associated midstream service assets in Glasscock County and Howard County in Texas to third-party buyers for an aggregate sales price of $12.0 million, net of post-closing adjustments. Of this amount, $11.5 million, net of post-closing adjustments, was recorded as adjustments to oil and natural gas properties pursuant to the rules governing full cost accounting. A loss of $1.0 million from the sale of the associated midstream service assets was included in the line item "Loss on disposal of assets, net" in the unaudited consolidated statements of operations. Effective at the closings, the operations and cash flows of these oil and natural gas properties and midstream service assets were eliminated from the ongoing operations of the Company, and the Company has no continuing involvement in the properties. These divestitures did not represent a strategic shift and will not have a major effect on the Company's future operations or financial results. c. 2017 Medallion sale Medallion Gathering & Processing, LLC, a Texas limited liability company formed on October 12, 2012, which, together with its wholly-owned subsidiaries (collectively, "Medallion"), was established for the purpose of developing midstream solutions and providing midstream infrastructure to bring oil to market from the Midland Basin. Prior to the Medallion Sale (defined below), LMS held 49% of Medallion's ownership units. LMS and the third-party 51% interest-holder agreed that the voting rights of Medallion, the profit and loss sharing and the additional capital contribution requirements would be equal to the ownership unit percentage held. Additionally, Medallion required a super-majority vote of 75% for many key operating and business decisions. The Company determined that Medallion was a variable interest entity ("VIE"). However, LMS was not considered to be the primary beneficiary of the VIE because LMS did not have the power to direct the activities that most significantly affected Medallion's economic performance. As such, prior to the Medallion Sale, Medallion was accounted for under the equity method of accounting. The Company's proportionate share of Medallion's net income is reflected in the unaudited consolidated statements of operations on the "Income from equity method investee" line item. On October 30, 2017, LMS, together with Medallion Midstream Holdings, LLC, which is owned and controlled by an affiliate of the third-party interest-holder, The Energy & Minerals Group, completed the sale of 100% of the ownership interests in Medallion to an affiliate of Global Infrastructure Partners ("GIP") for cash consideration of $1.825 billion (the "Medallion Sale"). LMS' net cash proceeds for its 49% ownership interest in Medallion in 2017 were $829.6 million, before post-closing adjustments and taxes, but after deduction of its proportionate share of fees and other expenses associated with the Medallion Sale. On February 1, 2018, closing adjustments were finalized and LMS received additional net cash of $1.7 million for total net cash proceeds before taxes of $831.3 million. The proceeds were used to pay borrowings on the Senior Secured Credit Facility in full, to redeem the May 2022 Notes (as defined below) and for working capital purposes. The Medallion Sale closed pursuant to the membership interest purchase and sale agreement, which provides for potential post-closing additional cash consideration that is structured based on GIP's realized profit at exit. There can be no assurance as to when and whether the additional consideration will be paid. The Medallion Sale did not represent a strategic shift and will not have a major effect on the Company's future operations or financial results. LMS has a Transportation Services Agreement (the "TA") with a wholly-owned subsidiary of Medallion under which LMS receives firm transportation of the Company's crude oil production from Reagan County and Glasscock County in Texas to Colorado City, Texas that continues to be in effect after the Medallion Sale. Historically, the Company's crude oil purchasers have fulfilled the commitment by transporting crude oil, purchased from the Company, under the TA, as agent. As a result of the Company's continuing involvement with Medallion by guaranteeing cash flows under the TA, the Company recorded a deferred gain in the amount of its maximum exposure to loss related to such guarantees that would have been amortized over the TA's firm commitment transportation term through 2024 had the Company not adopted new revenue recognition guidance on January 1, 2018. The deferred gain is included in the unaudited consolidated balance sheets in each of the "Other current liabilities" and "Other noncurrent liabilities" line items as of December 31, 2017. See Note 4.a for discussion of the impact to the deferred gain upon the adoption of ASC 606. d. 2017 Divestiture of evaluated and unevaluated oil and natural gas properties In January 2017, the Company completed the sale of 2,900 net acres and working interests in 16 producing vertical wells in the Midland Basin to a third-party buyer for a purchase price of $59.7 million. After transaction costs reflecting an economic effective date of October 1, 2016, the proceeds were $59.5 million, net of working capital and post-closing adjustments. A significant portion of these proceeds was used to pay down borrowings on the Senior Secured Credit Facility. The purchase price was recorded as an adjustment to oil and natural gas properties pursuant to the rules governing full cost accounting. Effective at closing, the operations and cash flows of these oil and natural gas properties were eliminated from the ongoing operations of the Company, and the Company has no continuing involvement in the properties. This divestiture did not represent a strategic shift and will not have a major effect on the Company's future operations or financial results. e. Exchange of unevaluated oil and natural gas properties From time to time, the Company exchanges undeveloped acreage with third parties. The exchanges are recorded at fair value and the difference is accounted for as an adjustment of capitalized costs with no gain or loss recognized pursuant to the rules governing full cost accounting, unless such adjustment would significantly alter the relationship between capitalized costs and proved reserves of oil, NGL and natural gas. |
Revenue recognition |
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Revenue recognition | Revenue recognition a. Impact of ASC 606 adoption Upon adoption of ASC 606 on January 1, 2018, for the three and nine months ended September 30, 2018, the Company reclassified certain firm transportation payments on excess pipeline capacity and other contractual penalties due to customers, historically included in the "Other operating expenses" line item in the unaudited consolidated statements of operations, and netted them with the revenue stream from which they derive as these payments to customers do not relate to the provision of a distinct good or service to the customer. In addition, there was an impact upon adoption related to the treatment of the gain on the Medallion Sale. The impact of the adoption of ASC 606 on the results of operations for the periods presented is as follows:
At December 31, 2017, the Medallion Sale was accounted for under the real estate guidance in ASC 360-20, Property, Plant, and Equipment ("ASC 360-20"), and the Company's maximum exposure to loss associated with future commitments under the TA was $141.1 million that was not recorded in the Company's unaudited consolidated balance sheets. Under ASC 360-20, as a result of the Company's continuing involvement with Medallion by guaranteeing cash flows under the TA, the Company recorded a deferred gain in the amount of its maximum exposure to loss related to such guarantees. This deferred gain would have been amortized over the TA's firm commitment transportation term through 2024 had the Company not adopted ASC 606 on January 1, 2018. See Note 3.c for further discussion of the Medallion Sale and the TA. Upon the adoption of ASC 606, the guidance in ASC 360-20 was superseded by ASC 860, Transfers and Servicing ("ASC 860"). The Medallion Sale is within the scope of ASC 860 and qualifies for sale accounting and recognition of the previously deferred gain because as of the date of the Medallion Sale (i) the Company transferred and legally isolated its full interests in Medallion to GIP, (ii) GIP received the right to pledge or exchange Medallion ownership interests at its full discretion and (iii) the Company did not have effective control over Medallion. Therefore, the deferred gain of $141.1 million was recognized as an adjustment to the beginning balance of accumulated deficit, presented in the unaudited consolidated statements of stockholders' equity, in accordance with the modified retrospective approach of adoption. b. Revenue recognition Oil, NGL and natural gas revenues are generally recognized at the point in time that control of the product is transferred to the customer. Midstream service revenues are generated through fees for products and services that need to be delivered by midstream infrastructure, including oil and liquids-rich natural gas gathering services as well as rig fuel, gas lift and water delivery, recycling and takeaway (collectively, "Midstream Services") and are recognized over time as the customer benefits from these services when provided. A more detailed summary of the underlying contracts that give rise to the Company's revenue and method of recognition is included below. Oil sales and sales of purchased oil Under its oil sales contracts, the Company sells produced or purchased oil at the delivery point specified in the contract and collects an agreed-upon index price, net of pricing differentials. The delivery point may be at the wellhead, the inlet of the purchaser's pipeline or nominated pipeline or the Company's truck unloading facility. At the delivery point, the purchaser typically takes custody, title and risk of loss of the product and, therefore, control as defined under ASC 606 typically passes at the delivery point. The Company recognizes revenue at the net price received when control transfers to the purchaser. From time to time, the Company engages in transactions in which it sells oil at the lease and subsequently repurchases the same volume of oil from that customer at a downstream delivery point under a separate agreement ("Repurchase Agreement") for use in the sale to the final customer. The commercial reasoning for such transactions may vary. Where a Repurchase Agreement exists, the Company must evaluate whether the customer obtains control of the oil at the lease and therefore whether it is appropriate to recognize revenue for the lease sale. Where the Company has an obligation or a right to repurchase the oil, the customer does not obtain control of the oil because it is limited in its ability to direct the use of, and obtain substantially all of the remaining benefits from the oil even though it may have physical possession of the oil. If the Company repurchases the oil for less than the original selling price, such a transaction will be classified as a lease. If the Company repurchases the oil for equal to or more than the original selling price, then the transaction represents a financing arrangement unless there is only a short passage of time between the sale and repurchase, in which case any excess amount paid represents an expense associated with the sale of oil to the final customer. The Company recognizes such repurchase expense and any transportation expenses incurred for the delivery of the oil to the final customer in the "Transportation and marketing expenses" line item in the accompanying unaudited consolidated statements of operations. Under certain of its customer contracts, the Company is subject to firm transportation payments on excess pipeline capacity and other contractual penalties if it fails to deliver contractual minimum volumes to its customers. Such amounts are recorded as a reduction to the transaction price as these amounts do not represent payments to the customer for distinct goods or services and instead relate specifically to the failure to perform under the specific customer contract. Such amounts are recorded as a reduction to the transaction price when payment is determined as probable, typically when such a deficiency occurs. NGL and natural gas sales Under its natural gas processing contracts, the Company delivers produced natural gas to a midstream processing entity at the wellhead or the inlet of the processing entity's system. The processing entity processes the natural gas, sells the resulting NGL and residue gas to third parties and pays the Company for the NGL and residue gas with deductions that may include gathering, compression, processing and transportation fees. In these scenarios, the Company evaluates whether it is the principal or the agent in the transaction. For existing contracts, the Company has concluded that it is the agent in the ultimate sale to the third party and the midstream processing entity is the principal and that we have transferred control of unprocessed natural gas to the midstream processing entity; therefore, the Company recognizes revenue based on the net amount of the proceeds received from the midstream processing entity who represents the Company's customer. If for future contracts the Company was to conclude that it was the principal with the ultimate third party being the customer, the Company would recognize revenue for those contracts on a gross basis, with gathering, compression, processing, and transportation fees presented as an expense. Midstream Services Revenue from oil throughput agreements is recognized based on a rate per barrel for volumes transported. Under the Company's oil throughput agreements, a volumetric deduction is taken from customer oil as a pipeline loss allowance. While these amounts represent non-cash consideration under ASC 606, such deductions are immaterial. Revenue from natural gas throughput agreements is recognized based on a rate per MMbtu for volumes transported. Revenue from water delivery, recycling and takeaway is recognized based on the volumes of water for which the services are provided at the applicable contractual rate. Imbalances The Company recognizes revenue for all oil, NGL and natural gas sold to purchasers regardless of whether the sales are proportionate to the Company's ownership interest in the property. Production imbalances are recognized as a liability to the extent an imbalance on a specific property exceeds the Company's share of remaining proved oil, NGL and natural gas reserves. The Company is also subject to natural gas pipeline imbalances, which are recorded as accounts receivable or payable at values consistent with contractual arrangements with the owner of the pipeline. The Company did not have any producer or pipeline imbalance positions as of September 30, 2018 or December 31, 2017. Significant judgments The Company engages in various types of transactions in which unaffiliated midstream entities process the Company's liquids-rich natural gas and, in some scenarios, subsequently market resulting NGL and residue gas to third-party customers on the Company's behalf. These types of transactions require judgment to determine whether the Company is the principal or the agent in the contract and, as a result, whether revenues are recorded gross or net. For existing contracts, the Company has determined that it serves as the agent in the sale of products under certain natural gas processing and marketing agreements with unaffiliated midstream entities in accordance with the control model in ASC 606. As a result, the Company presents revenue on a net basis for amounts expected to be received from third-party customers through the marketing process, with expenses and deductions incurred subsequent to control of the product(s) transferring to the unaffiliated midstream entity being netted against revenue. Transaction price allocated to remaining performance obligations A significant number of the Company's product sales are short-term in nature with a contract term of one year or less. For those contracts, the Company has utilized the practical expedient in ASC 606-10-50-14 that exempts the Company from disclosure of the transaction price allocated to remaining performance obligations if the performance obligation is part of a contract that has an original expected duration of one year or less. For the Company's product sales that have a contract term greater than one year and for its Midstream Services, the Company has utilized the practical expedient in ASC 606-10-50-14A that states that it is not required to disclose the transaction price allocated to remaining performance obligations if the variable consideration is allocated entirely to a wholly unsatisfied performance obligation. Under the Company's product sales contracts, each unit of product generally represents a separate performance obligation; therefore, future volumes are wholly unsatisfied. Under the Midstream Services contracts each unit of service represents a separate performance obligation and therefore performance obligations in respect of future services are wholly unsatisfied. Contract balances Under the Company's customer contracts, invoicing occurs once the Company's performance obligations have been satisfied, at which point payment is unconditional. Accordingly, the Company's contracts do not give rise to contract assets or liabilities under ASC 606. Prior-period performance obligations For sales of oil, NGL, natural gas and purchased oil, the Company records revenue in the month production is delivered to the purchaser. However, settlement statements and payment may not be received for 30 to 90 days after the date production is delivered and, as a result, the Company is required to estimate the amount of production that was delivered to the purchaser and the price that will be received for the sale of the product. The Company records the differences between estimates and the actual amounts received for product sales once payment is received from the purchaser. Such differences have historically not been significant. The Company uses knowledge of its properties, its properties' historical performance, spot market prices and other factors as the basis for these estimates. For the three and nine months ended September 30, 2018, revenue recognized related to performance obligations satisfied in prior reporting periods was not material. |
Property and equipment |
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Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and equipment | Property and equipment The following table presents the Company's property and equipment as of the dates presented:
For the three months ended September 30, 2018 and 2017, depletion expense for the Company's evaluated oil and natural gas properties was $7.94 per barrel of oil equivalent ("BOE") sold and $6.80 per BOE sold, respectively. For the nine months ended September 30, 2018 and 2017, depletion expense for the Company's evaluated oil and natural gas properties was $7.67 per BOE sold and $6.57 per BOE sold, respectively. The Company uses the full cost method of accounting for its oil and natural gas properties. Under this method, all acquisition, exploration and development costs, including certain employee-related costs incurred for the purpose of exploring for or developing oil and natural gas properties, are capitalized and depleted on a composite unit-of-production method based on proved oil, NGL and natural gas reserves. Such amounts include the cost of drilling and equipping productive wells, dry hole costs, lease acquisition costs, delay rentals and other costs related to such activities. Costs, including employee-related costs, associated with production and general corporate activities, are expensed in the period incurred. Sales of oil and natural gas properties, whether or not being depleted currently, are accounted for as adjustments of capitalized costs, with no gain or loss recognized, unless such adjustments would significantly alter the relationship between capitalized costs and proved reserves of oil, NGL and natural gas. The following table presents capitalized employee-related costs for the periods presented:
The Company excludes the costs directly associated with the acquisition and evaluation of unevaluated properties from the depletion calculation until it is determined whether or not proved reserves can be assigned to the properties. The Company capitalizes a portion of its interest costs to its unevaluated properties. Capitalized interest becomes a part of the cost of the unevaluated properties and is subject to depletion when proved reserves can be assigned to the associated properties. All items classified as unevaluated properties are assessed on a quarterly basis for possible impairment. The assessment includes consideration of the following factors, among others: intent to drill, remaining lease term, geological and geophysical evaluations, drilling results and activity, the assignment of evaluated reserves and the economic viability of development if proved reserves are assigned. During any period in which these factors indicate an impairment, the cumulative drilling costs incurred to date for such property and all or a portion of the associated leasehold costs are transferred to the full cost pool and are then subject to depletion. The following table presents costs incurred in the acquisition, exploration and development of oil and natural gas properties, with asset retirement obligations included in evaluated property acquisition costs and development costs, for the periods presented:
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | Debt a. March 2023 Notes On March 18, 2015, the Company completed an offering of $350.0 million in aggregate principal amount of 6 1/4% senior unsecured notes due 2023 (the "March 2023 Notes"). The March 2023 Notes will mature on March 15, 2023 and bear an interest rate of 6 1/4% per annum, payable semi-annually, in cash in arrears on March 15 and September 15 of each year, commencing September 15, 2015. The March 2023 Notes are fully and unconditionally guaranteed on a senior unsecured basis by LMS, GCM and certain of the Company's future restricted subsidiaries, subject to certain automatic customary releases, including the sale, disposition or transfer of all of the capital stock or of all or substantially all of the assets of a subsidiary guarantor to one or more persons that are not the Company or a restricted subsidiary, exercise of legal defeasance or covenant defeasance options or satisfaction and discharge of the applicable indenture, designation of a subsidiary guarantor as a non-guarantor restricted subsidiary or as an unrestricted subsidiary in accordance with the applicable indenture, release from guarantee under the Senior Secured Credit Facility, or liquidation or dissolution (collectively, the "Releases"). The Company may redeem, at its option, all or part of the March 2023 Notes at any time after March 15, 2018, at a price of 104.688% of face value with call premiums declining annually to 100% of face value on March 15, 2021 and thereafter plus accrued and unpaid interest to, but not including, the date of redemption. b. January 2022 Notes On January 23, 2014, the Company completed an offering of $450.0 million in aggregate principal amount of 5 5/8% senior unsecured notes due 2022 (the "January 2022 Notes"). The January 2022 Notes will mature on January 15, 2022 and bear an interest rate of 5 5/8% per annum, payable semi-annually, in cash in arrears on January 15 and July 15 of each year, commencing July 15, 2014. The January 2022 Notes are fully and unconditionally guaranteed on a senior unsecured basis by LMS, GCM and certain of the Company's future restricted subsidiaries, subject to certain Releases. The Company may redeem, at its option, all or part of the January 2022 Notes at any time after January 15, 2018, at a price of 102.813% of face value with call premiums declining annually to 100% of face value on January 15, 2020 and thereafter plus accrued and unpaid interest to, but not including, the date of redemption. c. May 2022 Notes On April 27, 2012, the Company completed an offering of $500.0 million in aggregate principal amount of 7 3/8% senior unsecured notes due 2022 (the "May 2022 Notes"). The May 2022 Notes were due to mature on May 1, 2022 and bore an interest rate of 7 3/8% per annum, payable semi-annually, in cash in arrears on May 1 and November 1 of each year, commencing November 1, 2012. The May 2022 Notes were fully and unconditionally guaranteed on a senior unsecured basis by LMS, GCM and certain of the Company's future restricted subsidiaries, subject to certain Releases. On November 29, 2017 (the "May 2022 Notes Redemption Date"), utilizing a portion of the proceeds from the Medallion Sale, the entire $500.0 million outstanding principal amount of the May 2022 Notes was redeemed at a redemption price of 103.688% of the principal amount of the May 2022 Notes, plus accrued and unpaid interest up to, but not including, the May 2022 Notes Redemption Date. The Company recognized a loss on extinguishment of $23.8 million related to the difference between the redemption price and the net carrying amount of the extinguished May 2022 Notes. d. Senior Secured Credit Facility The Senior Secured Credit Facility matures on April 19, 2023, provided that if either the January 2022 Notes or March 2023 Notes have not been refinanced on or prior to the date (as applicable, the "Early Maturity Date") that is 90 days before their respective stated maturity dates, the Senior Secured Credit Facility will mature on such Early Maturity Date. As of September 30, 2018, the Senior Secured Credit Facility had a maximum credit amount of $2.0 billion, a borrowing base of $1.3 billion and an aggregate elected commitment of $1.2 billion, with $170.0 million outstanding and was subject to an interest rate of 3.44%. The Senior Secured Credit Facility contains both financial and non-financial covenants, all of which the Company was in compliance with as of September 30, 2018. Laredo is required to pay a commitment fee on the unused portion of the financial institutions' commitment of 0.375% to 0.5%, based on the ratio of outstanding revolving credit to the aggregate elected commitment under the Senior Secured Credit Facility. Additionally, the Senior Secured Credit Facility provides for the issuance of letters of credit, limited to the lesser of total capacity or $80.0 million. No letters of credit were outstanding as of September 30, 2018 or December 31, 2017. See Note 16 for discussion of items affecting the Senior Secured Credit Facility subsequent to September 30, 2018. e. Long-term debt, net The following table summarizes the net presentation of the Company's long-term debt and debt issuance costs on the unaudited consolidated balance sheets as of the dates presented:
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Stockholders' equity and stock-based compensation |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' equity and stock-based compensation | Stockholders' equity and stock-based compensation a. Share repurchase program In February 2018, the Company's board of directors authorized a $200 million share repurchase program commencing in February 2018. The repurchase program expires in February 2020. Share repurchases under the share repurchase program may be made through a variety of methods, which may include open market purchases, privately negotiated transactions and block trades. The timing and actual number of share repurchases will depend upon several factors, including market conditions, business conditions, the trading price of the Company's common stock and the nature of other investment opportunities available to the Company. During the three months ended September 30, 2018, the Company repurchased 1,170,190 shares of common stock at a weighted-average price of $8.41 per common share for a total of $9.9 million under this program. During the nine months ended September 30, 2018, the Company repurchased 11,048,742 shares of common stock at a weighted-average price of $8.78 per common share for a total of $97.1 million under this program. All shares were retired upon repurchase. b. Treasury stock Treasury stock is recorded at cost, which includes incremental direct transaction costs, and is retired upon acquisition as a result from share repurchases under the share repurchase program or from the withholding of shares of stock to satisfy employee tax withholding obligations that arise upon the lapse of restrictions on their stock-based awards at the employees' election. c. Stock-based compensation The Company's Long-Term Incentive Plan (the "LTIP") provides for the granting of incentive awards in the form of restricted stock awards, stock option awards, performance share awards, performance unit awards and other awards. The LTIP provides for the issuance of up to 24,350,000 shares of Laredo's common stock. The Company recognizes the fair value of stock-based compensation awards expected to vest over the requisite service period as a charge against earnings, net of amounts capitalized. The Company's stock-based compensation awards are accounted for as equity instruments and are included in the "General and administrative" line item in the unaudited consolidated statements of operations. The Company capitalizes a portion of stock-based compensation for employees who are directly involved in the acquisition, exploration or development of oil and natural gas properties into the full cost pool. Capitalized stock-based compensation is included in the "Evaluated properties" line item on the unaudited consolidated balance sheets. Restricted stock awards All service vesting restricted stock awards are treated as issued and outstanding in the accompanying unaudited consolidated financial statements. Per the award agreement terms, if an employee terminates employment prior to the restriction lapse date for reasons other than death or disability, the awarded shares are forfeited and canceled and are no longer considered issued and outstanding. If the employee's termination of employment is by reason of death or disability, all of the holder's restricted stock will automatically vest. Restricted stock awards granted to officers and employees vest in a variety of vesting schedules that mainly include (i) 33%, 33% and 34% per year beginning on the first anniversary of the grant date and (ii) fully on the first anniversary of the grant date. Beginning August 2017, stock awards granted to non-employee directors vest immediately on the grant date. Restricted stock awards granted to non-employee directors prior to August 2017 vested on the first anniversary of the grant date. The following table reflects the restricted stock award activity for the nine months ended September 30, 2018:
The Company utilizes the closing stock price on the grant date to determine the fair value of service vesting restricted stock awards. As of September 30, 2018, unrecognized stock-based compensation related to the restricted stock awards expected to vest was $26.5 million. Such cost is expected to be recognized over a weighted-average period of 1.87 years. Stock option awards Stock option awards granted under the LTIP vest and become exercisable in four equal installments on each of the four anniversaries of the grant date. As of September 30, 2018, the 2,577,205 outstanding stock option awards have a weighted-average exercise price of $12.66 and a weighted-average remaining contractual term of 6.37 years. There were de minimis exercises, forfeitures and cancellations of stock option awards during the nine months ended September 30, 2018. There were no grants of stock option awards during the nine months ended September 30, 2018. The Company utilizes the Black-Scholes option pricing model to determine the fair value of stock option awards and recognizes the associated expense on a straight-line basis over the four-year requisite service period of the awards. Determining the fair value of equity-based awards requires judgment, including estimating the expected term that stock option awards will be outstanding prior to exercise and the associated expected volatility. As of September 30, 2018, unrecognized stock-based compensation related to stock option awards expected to vest was $5.0 million. Such cost is expected to be recognized over a weighted-average period of 1.67 years. Performance share awards Performance share awards, which the Company has determined are equity awards, are subject to a combination of market, performance and service vesting criteria. For awards with market criteria or portions of awards with market criteria, which include the RTSR Performance Percentage (as defined below), the ATSR Appreciation (as defined below) and the Company's total shareholder return ("TSR"), a Monte Carlo simulation prepared by an independent third party is utilized to determine the grant-date fair value and the associated expense is recognized on a straight-line basis over the three-year requisite service period of the awards. For portions of awards with performance criteria, which is the ROACE Percentage (as defined below), the grant-date fair value is equal to the Company's stock price on the grant date, and for each reporting period, the associated expense fluctuates and is trued-up based on an estimated probability of how many shares will be earned at the end of the three-year performance period. Any shares earned under performance share awards are expected to be issued in the first quarter following the completion of the requisite service period based on the achievement of certain market and performance criteria. The following table reflects the performance share award activity for the nine months ended September 30, 2018:
As of September 30, 2018, unrecognized stock-based compensation related to the performance share awards expected to vest was $18.6 million. Such cost is expected to be recognized over a weighted-average period of 1.72 years. The assumptions used to estimate the combined fair value for the (.25) RTSR Factor and the (.25) ATSR Factor for the market criteria portion of the performance share awards granted on the date presented are as follows:
Stock-based compensation expense The following has been recorded to stock-based compensation expense for the periods presented:
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Derivatives |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivatives | Derivatives Due to the inherent volatility in oil, NGL and natural gas prices, commodity transportation costs and differences in the prices of oil, NGL and natural gas between where the Company produces and where the Company sells such commodities, the Company engages in derivative transactions, such as puts, swaps, collars, basis swaps and, in the past, call spreads to hedge price risk associated with a portion of the Company's anticipated production. By removing a portion of the price volatility associated with future production, the Company expects to mitigate, but not eliminate, the potential effects of variability in cash flows from operations due to fluctuations in commodity prices, commodity transportation costs and differences in commodity prices between where the Company produces and where the Company sells its products. Each put transaction has an established floor price. The Company pays its counterparty a premium, which can be paid at inception or deferred until settlement, to enter into the put transaction. When the settlement price is below the floor price, the counterparty pays the Company an amount equal to the difference between the settlement price and the floor price multiplied by the hedged contract volume. When the settlement price is at or above the floor price in an individual month in the contract period, the put option expires with no settlement for that particular month, except with regard to the deferred premium, if any. Each swap transaction has an established fixed price. When the settlement price is below the fixed price, the counterparty pays the Company an amount equal to the difference between the settlement price and the fixed price multiplied by the hedged contract volume. When the settlement price is above the fixed price, the Company pays its counterparty an amount equal to the difference between the settlement price and the fixed price multiplied by the hedged contract volume. Each collar transaction has an established price floor and ceiling. Depending on the terms, the Company may pay its counterparty a premium, which can be paid at inception or deferred until settlement. When the settlement price is below the price floor established by these collars, the counterparty pays the Company an amount equal to the difference between the settlement price and the price floor multiplied by the hedged contract volume. When the settlement price is above the price ceiling established by these collars, the Company pays its counterparty an amount equal to the difference between the settlement price and the price ceiling multiplied by the hedged contract volume. When the settlement price is between the price floor and price ceiling established by these collars in an individual month in the contract period, the collar expires with no settlement paid by either the Company or the counterparty for that particular month, except with regard to the deferred premium, if any. Each basis swap transaction has an established fixed basis differential corresponding to two floating index prices. Depending on the difference of the two floating index prices in relationship to the fixed basis differential, the Company either receives an amount from its counterparty, or pays an amount to its counterparty, equal to the difference multiplied by the hedged contract volume. Each call spread transaction has an established short call price and long call price. Depending on the terms, the counterparty may pay a premium to the Company to enter into the transaction. When the settlement price is above the short call price and less than or equal to the long call price, the Company pays its counterparty an amount equal to the difference between the settlement price and the short call price multiplied by the hedged contract volume. When the settlement price is above the long call price, the Company pays the counterparty an amount equal to the difference between the long call price and the short call price multiplied by the hedged contract volume. When the settlement price is at or below the short call price in an individual month in the contract period, the call option expires with no settlement paid by either the Company or the counterparty for that particular month, except with regard to the deferred premium, if any. Other than the oil basis swaps, the Company's oil derivatives are settled based on the month's average daily NYMEX index price for the first nearby month of the West Texas Intermediate Light Sweet Crude Oil Futures Contract. The oil basis swaps are settled based on either (i) the differential between the Argus Americas Crude West Texas Intermediate ("WTI") index prices for WTI Midland-weighted average for the trade month and WTI Cushing-WTI formula basis for the trade month as compared to the basis swaps' fixed differential price or (ii) the differential between the Argus Americas Crude WTI Houston-weighted average price for the trade month and the WTI Midland-weighted average price for the trade month as compared to the basis swaps' fixed differential price. The Company's NGL derivatives are settled based on the month's average daily OPIS index price for Mont Belvieu Purity Ethane, TET and Non-TET Propane, Non-TET Normal Butane, Non-TET Isobutane and Non-TET Natural Gasoline. Other than the natural gas basis swaps, the Company's natural gas derivatives are settled based on the Inside FERC index price for West Texas WAHA for the calculation period. The natural gas basis swaps are settled based on the differential between the Inside FERC index price for West Texas WAHA for the calculation period and the NYMEX Henry Hub index price for the calculation period as compared to the basis swaps' fixed differential price. During the nine months ended September 30, 2017, the Company completed a hedge restructuring by early terminating a swap that resulted in a termination amount to the Company of $4.2 million that was settled in full by applying the proceeds to pay the premium on one new collar entered into during the restructuring. The following details the derivative that was terminated:
The following table summarizes open positions as of September 30, 2018, and represents, as of such date, derivatives in place through December 2021 on annual production volumes:
At each period end, the Company nets the fair value of derivatives by counterparty where the right of offset exists and reports this net basis on the "Derivatives" line items on the unaudited consolidated balance sheets as assets and/or liabilities. See Note 9.a for a summary of the fair value of derivatives on a gross basis. The Company's derivatives were not designated as hedges for accounting purposes. Accordingly, the changes in fair value are recognized in the unaudited consolidated statements of operations in the "Gain (loss) on derivatives, net" line item. Gains and losses on derivatives are included in cash flows from operating activities. |
Fair value measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value measurements | Fair value measurements See Note 10 "Fair value measurements" in the 2017 Annual Report for discussion on the Company's accounting policies for fair value measurements. a. Fair value measurement on a recurring basis The following tables summarize the Company's derivatives' fair value hierarchy by commodity and current and noncurrent assets and liabilities on a gross basis and the net presentation included in the "Derivatives" line items on the unaudited consolidated balance sheets as of the dates presented:
Significant Level 2 inputs associated with the calculation of discounted cash flows used in the fair value mark-to-market analysis of derivatives include each derivative contract's corresponding commodity index price(s), appropriate risk-adjusted discount rates and forward price curve models for substantially similar instruments generated from a compilation of data gathered from third parties. The Company's deferred premiums associated with its derivative contracts are categorized as Level 3, as the Company utilizes a net present value calculation to determine the valuation. They are considered to be measured on a recurring basis as the derivative contracts they derive from are measured on a recurring basis. As derivative contracts containing deferred premiums are entered into, the Company discounts the associated deferred premium to its net present value at the contract trade date, using the Senior Secured Credit Facility rate at the trade date and then records the change in net present value to interest expense over the period from the trade date until the final settlement date at the end of the contract. After this initial valuation, the net present value of each deferred premium is not adjusted; therefore, significant increases (decreases) in the Senior Secured Credit Facility rate would result in a significantly lower (higher) fair value measurement for each new contract entered into that contained a deferred premium; however, the valuation for the deferred premiums already recorded would remain unaffected. While the Company believes the sources utilized to arrive at the fair value estimates are reliable, different sources or methods could have yielded different fair value estimates. The deferred premiums are included in the "Derivatives" line items on the unaudited consolidated balance sheets, and as of September 30, 2018, their input rates range from 1.91% to 3.32% with a net fair value weighted-average rate of 2.78%. The following table presents payments required for derivative deferred premiums as of September 30, 2018 for the periods presented:
A summary of the changes in net assets and liabilities classified as Level 3 measurements for the periods presented are as follows:
b. Fair value measurement on a nonrecurring basis See Note 10.b "Fair value measurement on a nonrecurring basis" and Note 4.c "2016 acquisitions of evaluated and unevaluated oil and natural gas properties" in the 2017 Annual Report for the Company's accounting policies and assumptions in estimating the fair values of assets acquired and liabilities assumed for acquisitions of evaluated and unevaluated oil and natural gas properties. See Note 3.a for additional discussion of the Company's acquisitions of evaluated and unevaluated oil and natural gas properties for the nine months ended September 30, 2018. Items not accounted for at fair value The carrying amounts reported in the unaudited consolidated balance sheets for cash and cash equivalents, accounts receivable, accounts payable, accrued capital expenditures, undistributed revenue and royalties and other accrued assets and liabilities approximate their fair values. The Company has not elected to account for its debt instruments at fair value. The following table presents the carrying amounts and fair values of the Company's debt as of the dates presented:
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Net income per common share |
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Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income per common share | Net income per common share Basic net income per common share is computed by dividing net income by the weighted-average number of common shares outstanding for the period. Diluted net income per common share reflects the potential dilution of non-vested restricted stock awards, outstanding stock option awards and non-vested performance share awards. The dilutive effects of these awards were calculated utilizing the treasury stock method. See Note 7.c for additional discussion on these awards. The following table reflects the calculation of basic and diluted weighted-average common shares outstanding and net income per common share for the periods presented:
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Commitments and contingencies |
9 Months Ended |
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Sep. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and contingencies | Commitments and contingencies a. Litigation From time to time, the Company is subject to various legal proceedings arising in the ordinary course of business, including proceedings for which the Company may not have insurance coverage. While many of these matters involve inherent uncertainty, except with regard to the specific litigation noted below, as of the date hereof, the Company does not currently believe that any such legal proceedings will have a material adverse effect on the Company's business, financial position, results of operations or liquidity. On May 3, 2017, Shell Trading (US) Company ("Shell") filed an Original Petition and Request for Disclosure in the District Court of Harris County, Texas, alleging that the crude oil purchase agreement entered into between Shell and Laredo effective October 1, 2016 through June 30, 2020 does not accurately reflect the compensation to be paid to Shell under certain circumstances due to a drafting mistake. Shell seeks reformation of one clause of the crude oil purchase agreement on the grounds of alleged mutual mistake or, in the alternative, unilateral mistake, an award of the amounts Shell alleges it should have been or should be paid under the crude oil purchase agreement, court costs and attorneys' fees. The Company does not believe there was a drafting mistake made in the crude oil purchase agreement, which covered the sale to Shell of 19,000 barrels of crude oil per day of the Company's gross production as well as the purchase by the Company of like-quantity crude oil from Shell. On December 11, 2017, Shell filed its First Amended Petition, in which it asserted nine causes of action, including multiple new claims for breach of contract and fraud. Effective May 1, 2018, Shell terminated the crude oil purchase agreement and ceased purchasing the Company's crude oil and selling crude oil to the Company under the terms of such agreement. As a result, the Company filed its Second Amended Answer and Original Counterclaim against Shell on June 15, 2018, in which the Company denies all allegations by Shell and seeks damages in excess of $150.0 million resulting from Shell's breach and wrongful termination of the crude oil purchase agreement. Shell filed a Second Amended Petition on June 1, 2018, in which it asserted a new cause of action against the Company for alleged repudiation of Shell's proposed reformed version of the crude oil purchase agreement, a version never signed or agreed to by the Company. Through April 30, 2018, the date on which Shell wrongfully terminated the crude oil purchase agreement, the Company had accounted for the costs and crude oil price realization as reflected in the terms of the crude oil purchase agreement. The accompanying unaudited consolidated balance sheets do not include any amounts for damage claims or attorneys' fees sought by Shell. As of September 30, 2018, the Company had estimated an aggregate amount of $37.4 million that is the subject of Shell's claims, which is generally based on the contractual amount in dispute under the pricing election that is the subject of Shell's claims applied to the barrels of crude oil purchased and sold through the date on which Shell wrongfully terminated the crude oil purchase agreement. As a result of such termination, the Company's estimate of this unrecorded amount is not anticipated to materially increase in the future. This estimate does not include damages sought by Shell pursuant to its latest repudiation claim asserted in its Second Amended Petition or amounts sought by Shell for recovery of attorneys' fees incurred for the prosecution of its claims. The Company is unable to determine a probability of the outcome of this litigation at this time. The Company believes Shell's claims are meritless and the termination by Shell is improper and a breach of the crude oil purchase agreement. The Company therefore intends to vigorously defend itself against Shell's claims and pursue its rights under the terminated crude oil purchase agreement to seek all appropriate damages from Shell. b. Drilling contracts The Company has committed to several drilling contracts with third parties to facilitate the Company's drilling plans. Certain of these contracts are for a term of multiple months and contain early termination clauses that require the Company to potentially pay penalties to the third party should the Company cease drilling efforts. These penalties would negatively impact the Company's financial statements upon early contract termination. There were no penalties incurred for early contract termination for either of the nine months ended September 30, 2018 or 2017. The future commitment of $22.9 million as of September 30, 2018 is not recorded in the accompanying unaudited consolidated balance sheets. Management does not currently anticipate the early termination of these contracts in 2018. c. Firm sale and transportation commitments The Company has committed to deliver, for sale or transportation, fixed volumes of product under certain contractual arrangements that specify the delivery of a fixed and determinable quantity. If not fulfilled, the Company is subject to firm transportation payments on excess pipeline capacity and other contractual penalties. These commitments are normal and customary for the Company's business. In certain instances, the Company has used spot market purchases to meet its commitments in certain locations or due to favorable pricing. Management anticipates continuing this practice in the future. The Company incurred firm transportation payments on excess pipeline capacity and other contractual penalties of $0.2 million and $0.5 million during the three months ended September 30, 2018 and 2017, respectively, and $2.5 million and $1.1 million during the nine months ended September 30, 2018 and 2017, respectively. For the three and nine months ended September 30, 2018, these firm transportation payments on excess pipeline capacity and other contractual penalties are netted with the respective revenue stream in the unaudited consolidated statements of operations. For the three and nine months ended September 30, 2017, these firm transportation payments on excess pipeline capacity and other penalties are included in the "Other operating expenses" line item in the unaudited consolidated statements of operations. See Note 4.a for additional information regarding the presentation of firm transportation payments on excess pipeline capacity and other contractual penalties. Future commitments of $367.7 million as of September 30, 2018 are not recorded in the accompanying unaudited consolidated balance sheets. For information regarding the TA related to Medallion, see Note 3.c. d. Sand purchase and supply agreement During the second quarter of 2018, the Company entered into a sand purchase and supply agreement, for a term of one year, whereby it has committed to buy a certain volume of in-basin sand, utilized in the Company's completion activities, for a fixed price. As of September 30, 2018, under the terms of this agreement, the Company is required to purchase a certain percentage of the volume commitment or it would incur a shortfall payment of $5.7 million at the end of the contract period. e. Federal and state regulations Oil and natural gas exploration, production and related operations are subject to extensive federal and state laws, rules and regulations. Failure to comply with these laws, rules and regulations can result in substantial penalties. The regulatory burden on the oil and natural gas industry increases the cost of doing business and affects profitability. The Company believes that it is in compliance with currently applicable federal and state regulations related to oil and natural gas exploration and production, and that compliance with the current regulations will not have a material adverse impact on the financial position or results of operations of the Company. These rules and regulations are frequently amended or reinterpreted; therefore, the Company is unable to predict the future cost or impact of complying with these regulations. f. Environmental The Company is subject to extensive federal, state and local environmental laws and regulations. These laws, among other things, regulate the discharge of materials into the environment and may require the Company to remove or mitigate the environmental effects of the disposal or release of petroleum or chemical substances at various sites. Environmental expenditures are expensed in the period incurred. Liabilities for expenditures of a non-capital nature are recorded when environmental assessment or remediation is probable and the costs can be reasonably estimated. Such liabilities are generally undiscounted unless the timing of cash payments is fixed and readily determinable. Management believes no materially significant liabilities of this nature existed as of September 30, 2018 or December 31, 2017. |
Supplemental cash flow information |
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Supplemental Cash Flow Elements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental cash flow information | Supplemental cash flow information The following table presents supplemental cash flow information:
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Asset retirement obligations |
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Asset Retirement Obligation Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Asset retirement obligations | Asset retirement obligations See Note 2.m "Asset retirement obligations" in the 2017 Annual Report for discussion on asset retirement obligations. The following table reconciles the Company's asset retirement obligation liability associated with tangible long-lived assets:
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Income taxes |
9 Months Ended |
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Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income taxes | Income taxes The Company is subject to federal and state income taxes and the Texas franchise tax. The Company had federal net operating loss carry-forwards totaling $1.8 billion and state of Oklahoma net operating loss carry-forwards totaling $36.3 million as of September 30, 2018, which begin expiring in 2026 and 2032, respectively. Due to the passing of Public Law No. 115-97, commonly referred to as the Tax Cuts and Jobs Act (the "Tax Act"), $86.4 million of the federal net operating loss carry-forward will not expire but may be limited in future periods. As of September 30, 2018, the Company believes it is more likely than not that a portion of the net operating loss carry-forwards are not fully realizable. The Company continues to consider new evidence, both positive and negative, in determining whether, based on the weight of that evidence, a valuation allowance is needed. Such consideration includes projected future cash flows from its oil, NGL and natural gas reserves (including the timing of those cash flows), the reversal of deferred tax liabilities recorded as of September 30, 2018, the Company's ability to capitalize intangible drilling costs, rather than expensing these costs in order to prevent an operating loss carry-forward from expiring unused and future projections of Oklahoma sourced income. As of September 30, 2018, a full valuation allowance of $298.8 million has been recorded against the Company's federal and state of Oklahoma net deferred tax assets. As of September 30, 2018, a Texas deferred tax liability of $1.8 million has been recorded along with the corresponding deferred income tax expense. Additionally, a current tax refund of $0.4 million of Texas franchise tax is expected as a result of differences in estimated versus actual taxable income from the gain on the Medallion Sale and is recorded as a current income tax benefit. |
Subsidiary guarantors |
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Condensed Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Subsidiary guarantors | Subsidiary guarantors The Guarantors have fully and unconditionally guaranteed the January 2022 Notes, the March 2023 Notes and the Senior Secured Credit Facility (and had guaranteed the May 2022 Notes until the May 2022 Notes Redemption Date), subject to the Releases. In accordance with practices accepted by the SEC, Laredo has prepared condensed consolidating financial statements to quantify the balance sheets, results of operations and cash flows of such subsidiaries as subsidiary guarantors. The following unaudited condensed consolidating (i) balance sheets as of September 30, 2018 and December 31, 2017, (ii) statements of operations for the three and nine months ended September 30, 2018 and 2017 and (iii) statements of cash flows for the nine months ended September 30, 2018 and 2017 present financial information for Laredo on a stand-alone basis (carrying any investment in subsidiaries under the equity method), financial information for the subsidiary guarantors on a stand-alone basis (carrying any investment in subsidiaries under the equity method), and the consolidation and elimination entries necessary to arrive at the information for the Company on a condensed consolidated basis. Income taxes for LMS and for GCM are recorded on Laredo's balance sheets, statements of operations and statements of cash flows as they are disregarded entities for income tax purposes. Laredo and the Guarantors are not restricted from making intercompany distributions to each other. Condensed consolidating balance sheet September 30, 2018
Condensed consolidating balance sheet December 31, 2017
Condensed consolidating statement of operations For the three months ended September 30, 2018
Condensed consolidating statement of operations For the three months ended September 30, 2017
Condensed consolidating statement of operations For the nine months ended September 30, 2018
Condensed consolidating statement of operations For the nine months ended September 30, 2017
Condensed consolidating statement of cash flows For the nine months ended September 30, 2018
Condensed consolidating statement of cash flows For the nine months ended September 30, 2017
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Subsequent events |
9 Months Ended |
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Sep. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent events | Subsequent events On October 15, 2018, the Company borrowed $20.0 million on the Senior Secured Credit Facility. As a result, the outstanding balance under the Senior Secured Credit Facility was $190.0 million as of November 5, 2018. On October 23, 2018, pursuant to the regular semi-annual redetermination, the lenders reaffirmed the borrowing base of $1.3 billion under the Senior Secured Credit Facility. The Company's aggregate elected commitment of $1.2 billion remains unchanged. As of November 5, 2018, the Company had one letter of credit outstanding of $14.7 million under the Senior Secured Credit Facility. |
Organization and basis of presentation (Policies) |
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Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Basis of presentation | Basis of presentation The accompanying unaudited consolidated financial statements were derived from the historical accounting records of the Company and reflect the historical financial position, results of operations and cash flows for the periods described herein. The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"). All material intercompany transactions and account balances have been eliminated in the consolidation of accounts. The accompanying unaudited consolidated financial statements have not been audited by the Company's independent registered public accounting firm, except that the consolidated balance sheet as of December 31, 2017 is derived from audited consolidated financial statements. In the opinion of management, the accompanying unaudited consolidated financial statements reflect all necessary adjustments to present fairly the Company's financial position as of September 30, 2018, results of operations for the three and nine months ended September 30, 2018 and 2017 and cash flows for the nine months ended September 30, 2018 and 2017. Certain disclosures have been condensed or omitted from these unaudited consolidated financial statements. Accordingly, these unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the 2017 Annual Report. Significant accounting policies See Note 2 "Basis of presentation and significant accounting policies" in the 2017 Annual Report for discussion of significant accounting policies. |
Use of estimates in the preparation of interim unaudited consolidated financial statements | Use of estimates in the preparation of interim unaudited consolidated financial statements The preparation of the accompanying unaudited consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions about future events. These estimates and the underlying assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Although management believes these estimates are reasonable, actual results could differ. For further information regarding the estimates and assumptions, see Note 2.b "Use of estimates in the preparation of consolidated financial statements" in the 2017 Annual Report. Furthermore, see Note 7.c for a discussion of estimates pertaining to the Company's 2018 performance share awards. |
Reclassifications | Reclassifications Certain amounts in the accompanying unaudited consolidated financial statements have been reclassified to conform to the 2018 presentation. These reclassifications had no impact on previously reported total assets, total liabilities, net income, stockholders' equity or total operating, investing or financing cash flows. |
Recently issued or adopted accounting pronouncements | Recently issued or adopted accounting pronouncements The Company considers the applicability and impact of all accounting standard updates ("ASU") issued by the Financial Accounting Standards Board ("FASB") to the FASB Accounting Standards Codification ("ASC"). The discussion of the ASUs and a final rule issued by the SEC listed below were determined to be meaningful to the Company's unaudited consolidated financial statements and/or footnotes during the nine months ended September 30, 2018. a. Revenue recognition On January 1, 2018, the Company adopted ASC 606, Revenue from Contracts with Customers ("ASC 606"), using the modified retrospective approach of adoption. ASC 606 supersedes previous revenue recognition requirements in ASC 605, Revenue Recognition ("ASC 605"), and includes a five-step revenue recognition model to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. In addition, the new standard requires significantly expanded disclosures related to the nature, timing, amount and uncertainty of revenue and cash flows arising from contracts with customers. See Note 4 for further discussion of the ASC 606 adoption impact on the Company's unaudited consolidated financial statements and the Company's revenue recognition policies. b. Leases In February 2016, the FASB issued new guidance in ASC 842, Leases ("ASC 842"), which will supersede the current guidance in ASC 840, Leases ("ASC 840"). The core principle of the new guidance is that a lessee should recognize in the statement of financial position a liability to make lease payments and a right-of-use asset representing its right to use the underlying asset for the lease term for leases currently classified as operating leases. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election, by class of underlying asset, not to recognize lease assets and lease liabilities. In January 2018, the FASB issued new guidance in ASC 842 to provide an optional transition practical expedient to not evaluate existing or expired land easements that were not previously accounted for as leases under ASC 840. In July 2018, the FASB issued new guidance in ASC 842 to provide entities with an additional (and optional) transition method to adopt the new leases standard. Under this new transition method, an entity initially applies the new leases standard at the adoption date and recognizes a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. Consequently, an entity's reporting for the comparative periods presented in the financial statements in which it adopts the new leases standard will continue to be in accordance with ASC 840. An entity that elects this transition method must provide the required ASC 840 disclosures for all periods that continue to be reported in accordance with ASC 840. The amendments in these ASUs are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The primary effect on the Company's consolidated financial statements will be to record assets and obligations for contracts currently recognized as operating leases with a term greater than 12 months and to evaluate operating leases with a term less than or equal to 12 months for accounting policy election. The Company has a team, including third-party consultants, to implement the standard and is implementing the software that will be used to track and account for lease activity. The Company anticipates that the adoption and implementation of ASC 842 will result in a material increase in assets and liabilities on the consolidated balance sheet but will not result in a material impact to the consolidated statement of operations. The estimate of the dollar value impact of the adoption is on-going. The Company has made certain accounting policy decisions including that it plans to adopt the short-term lease recognition exemption, accounting for certain asset classes at a portfolio level, and establishing a balance sheet recognition capitalization threshold. The transition will utilize the modified retrospective approach to adopting the new standard that will be applied at the beginning of the period adopted (January 1, 2019). The Company will utilize the transition package of expedients to leases that commenced before the effective date. The Company expects for certain lessee asset classes to elect the practical expedient and not separate lease and non-lease components. For these asset classes, the agreements will be accounted for as a single lease component. c. Business combinations In January 2017, the FASB issued new guidance in ASC 805, Business Combinations, to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The amendments in this ASU provide a screen to determine when a set of assets and activities is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. If the screen is not met, the amendments in this ASU require that to be considered a business, a set must include, at a minimum, an input and a substantive process that, together, significantly contribute to the ability to create an output. The primary effect of adoption of this ASU is that, depending on the facts and circumstances of each transaction, more transactions could be accounted for as acquisitions of assets. The Company adopted this ASU on January 1, 2018 on a prospective basis, and the adoption did not have an effect on its unaudited consolidated financial statements. See Note 3.a for discussion of the Company's 2018 acquisitions of evaluated and unevaluated oil and natural gas properties, which were accounted for as asset acquisitions under this ASU. d. Fair value measurements In August 2018, the FASB issued new guidance in ASC 820, Fair Value Measurement, to modify disclosure requirements. Of the amendments in the ASU, the below items affected the Company's fair value measurement disclosures in Note 9. Removed disclosure requirements that should be applied retrospectively to all periods presented are: (i) the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, (ii) the policy for timing of transfers between levels and (iii) the valuation processes for Level 3 fair value measurements. A modified disclosure requirement that should be applied prospectively is to clarify that the measurement uncertainty disclosure communicates information about the uncertainty in measurement as of the reporting date. A new disclosure requirement that should be applied prospectively is to disclose the range and weighted-average of significant unobservable inputs used to develop Level 3 fair value measurements. The Company has elected to early adopt this guidance upon the issuance of the ASU and has modified its disclosures accordingly in this Quarterly Report. e. SEC disclosure update and simplification In August 2018, the SEC issued Final Rule Release No. 33-10532, Disclosure Update and Simplification, which amends various SEC disclosure requirements that they have determined to be redundant, duplicative, overlapping, outdated or superseded. The amendments also extend the annual disclosure requirement of presenting the changes in stockholders' equity to interim periods. An analysis of changes in stockholders’ equity will now be required for the current and comparative year-to-date interim periods. The Company has incorporated certain aspects of the final rule in this Quarterly Report and will complete the implementation of the final rule in the fourth quarter of 2018. |
Revenue recognition | Revenue recognition Oil, NGL and natural gas revenues are generally recognized at the point in time that control of the product is transferred to the customer. Midstream service revenues are generated through fees for products and services that need to be delivered by midstream infrastructure, including oil and liquids-rich natural gas gathering services as well as rig fuel, gas lift and water delivery, recycling and takeaway (collectively, "Midstream Services") and are recognized over time as the customer benefits from these services when provided. A more detailed summary of the underlying contracts that give rise to the Company's revenue and method of recognition is included below. Oil sales and sales of purchased oil Under its oil sales contracts, the Company sells produced or purchased oil at the delivery point specified in the contract and collects an agreed-upon index price, net of pricing differentials. The delivery point may be at the wellhead, the inlet of the purchaser's pipeline or nominated pipeline or the Company's truck unloading facility. At the delivery point, the purchaser typically takes custody, title and risk of loss of the product and, therefore, control as defined under ASC 606 typically passes at the delivery point. The Company recognizes revenue at the net price received when control transfers to the purchaser. From time to time, the Company engages in transactions in which it sells oil at the lease and subsequently repurchases the same volume of oil from that customer at a downstream delivery point under a separate agreement ("Repurchase Agreement") for use in the sale to the final customer. The commercial reasoning for such transactions may vary. Where a Repurchase Agreement exists, the Company must evaluate whether the customer obtains control of the oil at the lease and therefore whether it is appropriate to recognize revenue for the lease sale. Where the Company has an obligation or a right to repurchase the oil, the customer does not obtain control of the oil because it is limited in its ability to direct the use of, and obtain substantially all of the remaining benefits from the oil even though it may have physical possession of the oil. If the Company repurchases the oil for less than the original selling price, such a transaction will be classified as a lease. If the Company repurchases the oil for equal to or more than the original selling price, then the transaction represents a financing arrangement unless there is only a short passage of time between the sale and repurchase, in which case any excess amount paid represents an expense associated with the sale of oil to the final customer. The Company recognizes such repurchase expense and any transportation expenses incurred for the delivery of the oil to the final customer in the "Transportation and marketing expenses" line item in the accompanying unaudited consolidated statements of operations. Under certain of its customer contracts, the Company is subject to firm transportation payments on excess pipeline capacity and other contractual penalties if it fails to deliver contractual minimum volumes to its customers. Such amounts are recorded as a reduction to the transaction price as these amounts do not represent payments to the customer for distinct goods or services and instead relate specifically to the failure to perform under the specific customer contract. Such amounts are recorded as a reduction to the transaction price when payment is determined as probable, typically when such a deficiency occurs. NGL and natural gas sales Under its natural gas processing contracts, the Company delivers produced natural gas to a midstream processing entity at the wellhead or the inlet of the processing entity's system. The processing entity processes the natural gas, sells the resulting NGL and residue gas to third parties and pays the Company for the NGL and residue gas with deductions that may include gathering, compression, processing and transportation fees. In these scenarios, the Company evaluates whether it is the principal or the agent in the transaction. For existing contracts, the Company has concluded that it is the agent in the ultimate sale to the third party and the midstream processing entity is the principal and that we have transferred control of unprocessed natural gas to the midstream processing entity; therefore, the Company recognizes revenue based on the net amount of the proceeds received from the midstream processing entity who represents the Company's customer. If for future contracts the Company was to conclude that it was the principal with the ultimate third party being the customer, the Company would recognize revenue for those contracts on a gross basis, with gathering, compression, processing, and transportation fees presented as an expense. Midstream Services Revenue from oil throughput agreements is recognized based on a rate per barrel for volumes transported. Under the Company's oil throughput agreements, a volumetric deduction is taken from customer oil as a pipeline loss allowance. While these amounts represent non-cash consideration under ASC 606, such deductions are immaterial. Revenue from natural gas throughput agreements is recognized based on a rate per MMbtu for volumes transported. Revenue from water delivery, recycling and takeaway is recognized based on the volumes of water for which the services are provided at the applicable contractual rate. Imbalances The Company recognizes revenue for all oil, NGL and natural gas sold to purchasers regardless of whether the sales are proportionate to the Company's ownership interest in the property. Production imbalances are recognized as a liability to the extent an imbalance on a specific property exceeds the Company's share of remaining proved oil, NGL and natural gas reserves. The Company is also subject to natural gas pipeline imbalances, which are recorded as accounts receivable or payable at values consistent with contractual arrangements with the owner of the pipeline. The Company did not have any producer or pipeline imbalance positions as of September 30, 2018 or December 31, 2017. Significant judgments The Company engages in various types of transactions in which unaffiliated midstream entities process the Company's liquids-rich natural gas and, in some scenarios, subsequently market resulting NGL and residue gas to third-party customers on the Company's behalf. These types of transactions require judgment to determine whether the Company is the principal or the agent in the contract and, as a result, whether revenues are recorded gross or net. For existing contracts, the Company has determined that it serves as the agent in the sale of products under certain natural gas processing and marketing agreements with unaffiliated midstream entities in accordance with the control model in ASC 606. As a result, the Company presents revenue on a net basis for amounts expected to be received from third-party customers through the marketing process, with expenses and deductions incurred subsequent to control of the product(s) transferring to the unaffiliated midstream entity being netted against revenue. Transaction price allocated to remaining performance obligations A significant number of the Company's product sales are short-term in nature with a contract term of one year or less. For those contracts, the Company has utilized the practical expedient in ASC 606-10-50-14 that exempts the Company from disclosure of the transaction price allocated to remaining performance obligations if the performance obligation is part of a contract that has an original expected duration of one year or less. For the Company's product sales that have a contract term greater than one year and for its Midstream Services, the Company has utilized the practical expedient in ASC 606-10-50-14A that states that it is not required to disclose the transaction price allocated to remaining performance obligations if the variable consideration is allocated entirely to a wholly unsatisfied performance obligation. Under the Company's product sales contracts, each unit of product generally represents a separate performance obligation; therefore, future volumes are wholly unsatisfied. Under the Midstream Services contracts each unit of service represents a separate performance obligation and therefore performance obligations in respect of future services are wholly unsatisfied. Contract balances Under the Company's customer contracts, invoicing occurs once the Company's performance obligations have been satisfied, at which point payment is unconditional. Accordingly, the Company's contracts do not give rise to contract assets or liabilities under ASC 606. Prior-period performance obligations For sales of oil, NGL, natural gas and purchased oil, the Company records revenue in the month production is delivered to the purchaser. However, settlement statements and payment may not be received for 30 to 90 days after the date production is delivered and, as a result, the Company is required to estimate the amount of production that was delivered to the purchaser and the price that will be received for the sale of the product. The Company records the differences between estimates and the actual amounts received for product sales once payment is received from the purchaser. Such differences have historically not been significant. The Company uses knowledge of its properties, its properties' historical performance, spot market prices and other factors as the basis for these estimates. For the three and nine months ended September 30, 2018, revenue recognized related to performance obligations satisfied in prior reporting periods was not material. |
Full cost | The Company excludes the costs directly associated with the acquisition and evaluation of unevaluated properties from the depletion calculation until it is determined whether or not proved reserves can be assigned to the properties. The Company capitalizes a portion of its interest costs to its unevaluated properties. Capitalized interest becomes a part of the cost of the unevaluated properties and is subject to depletion when proved reserves can be assigned to the associated properties. All items classified as unevaluated properties are assessed on a quarterly basis for possible impairment. The assessment includes consideration of the following factors, among others: intent to drill, remaining lease term, geological and geophysical evaluations, drilling results and activity, the assignment of evaluated reserves and the economic viability of development if proved reserves are assigned. During any period in which these factors indicate an impairment, the cumulative drilling costs incurred to date for such property and all or a portion of the associated leasehold costs are transferred to the full cost pool and are then subject to depletion. The Company uses the full cost method of accounting for its oil and natural gas properties. Under this method, all acquisition, exploration and development costs, including certain employee-related costs incurred for the purpose of exploring for or developing oil and natural gas properties, are capitalized and depleted on a composite unit-of-production method based on proved oil, NGL and natural gas reserves. Such amounts include the cost of drilling and equipping productive wells, dry hole costs, lease acquisition costs, delay rentals and other costs related to such activities. Costs, including employee-related costs, associated with production and general corporate activities, are expensed in the period incurred. Sales of oil and natural gas properties, whether or not being depleted currently, are accounted for as adjustments of capitalized costs, with no gain or loss recognized, unless such adjustments would significantly alter the relationship between capitalized costs and proved reserves of oil, NGL and natural gas. |
Treasury stock | Treasury stock Treasury stock is recorded at cost, which includes incremental direct transaction costs, and is retired upon acquisition as a result from share repurchases under the share repurchase program or from the withholding of shares of stock to satisfy employee tax withholding obligations that arise upon the lapse of restrictions on their stock-based awards at the employees' election. |
Stock-based compensation | Stock-based compensation The Company's Long-Term Incentive Plan (the "LTIP") provides for the granting of incentive awards in the form of restricted stock awards, stock option awards, performance share awards, performance unit awards and other awards. The LTIP provides for the issuance of up to 24,350,000 shares of Laredo's common stock. The Company recognizes the fair value of stock-based compensation awards expected to vest over the requisite service period as a charge against earnings, net of amounts capitalized. The Company's stock-based compensation awards are accounted for as equity instruments and are included in the "General and administrative" line item in the unaudited consolidated statements of operations. The Company capitalizes a portion of stock-based compensation for employees who are directly involved in the acquisition, exploration or development of oil and natural gas properties into the full cost pool. Capitalized stock-based compensation is included in the "Evaluated properties" line item on the unaudited consolidated balance sheets |
Net income per common share | Net income per common share Basic net income per common share is computed by dividing net income by the weighted-average number of common shares outstanding for the period. Diluted net income per common share reflects the potential dilution of non-vested restricted stock awards, outstanding stock option awards and non-vested performance share awards. The dilutive effects of these awards were calculated utilizing the treasury stock method. |
Revenue recognition (Tables) |
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Impact of adoption of ASC 606 | The impact of the adoption of ASC 606 on the results of operations for the periods presented is as follows:
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Property and equipment (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of property and equipment | The following table presents the Company's property and equipment as of the dates presented:
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Schedule of employee-related costs capitalized to oil and natural gas properties | The following table presents capitalized employee-related costs for the periods presented:
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Costs incurred in the acquisition, exploration and development of oil and natural gas properties | The following table presents costs incurred in the acquisition, exploration and development of oil and natural gas properties, with asset retirement obligations included in evaluated property acquisition costs and development costs, for the periods presented:
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Debt (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of debt | The following table summarizes the net presentation of the Company's long-term debt and debt issuance costs on the unaudited consolidated balance sheets as of the dates presented:
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Stockholders' equity and stock-based compensation (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of restricted stock award activity | The following table reflects the restricted stock award activity for the nine months ended September 30, 2018:
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Schedule of performance share award activity | The following table reflects the performance share award activity for the nine months ended September 30, 2018:
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Schedule of share-based payment award, equity instruments other than options, valuation assumptions | The assumptions used to estimate the combined fair value for the (.25) RTSR Factor and the (.25) ATSR Factor for the market criteria portion of the performance share awards granted on the date presented are as follows:
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Schedule of allocated share-based compensation costs | The following has been recorded to stock-based compensation expense for the periods presented:
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Derivatives (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative instrument terminated | The following details the derivative that was terminated:
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Summary of open positions and derivatives in place | The following table summarizes open positions as of September 30, 2018, and represents, as of such date, derivatives in place through December 2021 on annual production volumes:
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Fair value measurements (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of fair value hierarchy for assets and liabilities measured at fair value on a recurring basis | The following tables summarize the Company's derivatives' fair value hierarchy by commodity and current and noncurrent assets and liabilities on a gross basis and the net presentation included in the "Derivatives" line items on the unaudited consolidated balance sheets as of the dates presented:
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Actual cash payments required for deferred premium contracts | The following table presents payments required for derivative deferred premiums as of September 30, 2018 for the periods presented:
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Summary of changes in net assets classified as Level 3 measurements | A summary of the changes in net assets and liabilities classified as Level 3 measurements for the periods presented are as follows:
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Schedule of carrying amount and fair value of debt instruments | The Company has not elected to account for its debt instruments at fair value. The following table presents the carrying amounts and fair values of the Company's debt as of the dates presented:
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Net income per common share (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of calculation of basic and diluted weighted-average common shares outstanding and net income per common share | The following table reflects the calculation of basic and diluted weighted-average common shares outstanding and net income per common share for the periods presented:
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Supplemental cash flow information (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Elements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of non-cash investing & financing and supplemental cash flow information | The following table presents supplemental cash flow information:
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Asset retirement obligations (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Asset Retirement Obligation Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of asset retirement obligation liability | The following table reconciles the Company's asset retirement obligation liability associated with tangible long-lived assets:
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Subsidiary guarantors (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of condensed consolidating balance sheet | Condensed consolidating balance sheet September 30, 2018
Condensed consolidating balance sheet December 31, 2017
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Schedule of condensed consolidating statement of operations | Condensed consolidating statement of operations For the three months ended September 30, 2018
Condensed consolidating statement of operations For the three months ended September 30, 2017
Condensed consolidating statement of operations For the nine months ended September 30, 2018
Condensed consolidating statement of operations For the nine months ended September 30, 2017
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Schedule of condensed consolidating statement of cash flows | Condensed consolidating statement of cash flows For the nine months ended September 30, 2018
Condensed consolidating statement of cash flows For the nine months ended September 30, 2017
|
Acquisitions and divestitures - 2018 acquisitions of evaluated and unevaluated oil and natural gas properties (Details) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2018
USD ($)
a
property
|
Sep. 30, 2017
USD ($)
|
|
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Acquisitions of oil and natural gas properties | $ 16,340 | $ 0 |
Leasehold interests and working interests acquired in glasscock county | ||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Net acres | a | 895 | |
Number of producing wells | property | 47 | |
Acquisitions of oil and natural gas properties | $ 16,300 |
Acquisitions and divestitures - 2018 divestitures of evaluated and unevaluated oil and natural gas properties and midstream assets (Details) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018
USD ($)
a
property
|
Sep. 30, 2017
USD ($)
|
Sep. 30, 2018
USD ($)
a
property
|
Sep. 30, 2017
USD ($)
|
|
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Loss on disposal of assets, net | $ (616) | $ (991) | $ (4,591) | $ (400) |
Glasscock and Howard | Disposal Group, Disposed of by Sale, Not Discontinued Operations | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Net acres | a | 3,070 | 3,070 | ||
Number of producing wells | property | 24 | 24 | ||
Proceeds, net of working capital and post-closing adjustments | $ 12,000 | $ 12,000 | ||
Adjustments to oil and natural gas properties | $ 11,500 | 11,500 | ||
Loss on disposal of assets, net | $ (1,000) |
Acquisitions and divestitures - 2017 divestiture of evaluated and unevaluated oil and natural gas properties (Details) - Disposal Group, Disposed of by Sale, Not Discontinued Operations - Midland Basin $ in Millions |
Jan. 31, 2017
USD ($)
a
property
|
---|---|
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |
Net acres | a | 2,900 |
Number of producing wells | property | 16 |
Sale price | $ 59.7 |
Proceeds, net of working capital and post-closing adjustments | $ 59.5 |
Revenue recognition - Revenue recognition (Details) |
9 Months Ended |
---|---|
Sep. 30, 2018 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Practical expedient in ASC 606-10-50-14 | the Company has utilized the practical expedient in ASC 606-10-50-14 that exempts the Company from disclosure of the transaction price allocated to remaining performance obligations if the performance obligation is part of a contract that has an original expected duration of one year or less |
Minimum | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Settlement statements and payments period | 30 days |
Maximum | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Settlement statements and payments period | 90 days |
Property and equipment - Other property and equipment information (Details) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018
USD ($)
$ / Boe
|
Sep. 30, 2017
USD ($)
$ / Boe
|
Sep. 30, 2018
USD ($)
$ / Boe
|
Sep. 30, 2017
USD ($)
$ / Boe
|
|
Property, Plant and Equipment [Abstract] | ||||
Depletion expense (in dollars per BOE) | $ / Boe | 7.94 | 6.80 | 7.67 | 6.57 |
Capitalized employee-related costs | $ | $ 5,837 | $ 6,938 | $ 19,101 | $ 17,911 |
Property and equipment - Costs incurred in the acquisition, exploration and development of oil and natural gas properties (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Property acquisition costs (see Note 3.a): | ||||
Evaluated | $ 0 | $ 0 | $ 13,847 | $ 0 |
Unevaluated | 0 | 0 | 2,790 | 0 |
Exploration costs | 7,502 | 7,136 | 18,747 | 28,337 |
Development costs | 139,748 | 160,359 | 467,582 | 397,255 |
Total costs incurred | $ 147,250 | $ 167,495 | $ 502,966 | $ 425,592 |
Debt - March 2023 Notes (Details) - Senior Notes - March 2023 Notes |
Mar. 18, 2015
USD ($)
|
---|---|
Debt Instrument [Line Items] | |
Face amount of debt | $ 350,000,000.0 |
Interest rate (as a percent) | 6.25% |
From March 15, 2018 until March 15, 2021 | |
Debt Instrument [Line Items] | |
Debt call price percentage | 104.688% |
On or After March 15, 2021 | |
Debt Instrument [Line Items] | |
Debt call price percentage | 100.00% |
Debt - January 2022 Notes (Details) - Senior Notes - January 2022 Notes |
Jan. 23, 2014
USD ($)
|
---|---|
Debt Instrument [Line Items] | |
Face amount of debt | $ 450,000,000.0 |
Interest rate (as a percent) | 5.625% |
From January 15, 2017 until January 15, 2020 | |
Debt Instrument [Line Items] | |
Debt call price percentage | 102.813% |
On or After January 15, 2020 | |
Debt Instrument [Line Items] | |
Debt call price percentage | 100.00% |
Debt - May 2022 Notes (Details) - Senior Notes - May 2022 Notes - USD ($) |
Nov. 29, 2017 |
Apr. 27, 2012 |
---|---|---|
Debt Instrument [Line Items] | ||
Face amount of debt | $ 500,000,000 | |
Interest rate (as a percent) | 7.375% | |
Repurchased face amount of debt | $ 500,000,000.0 | |
Debt call price percentage | 103.688% | |
Loss on extinguishment of debt | $ 23,800,000 |
Debt - Senior Secured Credit Facility (Details) - Secured debt - USD ($) |
3 Months Ended | 9 Months Ended | |
---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2018 |
Dec. 31, 2017 |
|
Senior Secured Credit Facility | |||
Debt Instrument [Line Items] | |||
Early maturity date description | 90 years | ||
Maximum borrowing capacity | $ 2,000,000,000.0 | $ 2,000,000,000.0 | |
Current borrowing capacity | 1,300,000,000 | 1,300,000,000 | |
Aggregate elected commitment | 1,200,000,000.0 | 1,200,000,000.0 | |
Amount outstanding | $ 170,000,000 | $ 170,000,000 | |
Credit facility, interest rate at period end (as a percent) | 3.44% | 3.44% | |
Senior Secured Credit Facility | Minimum | |||
Debt Instrument [Line Items] | |||
Line of credit facility, unused capacity, commitment fee percentage | 0.375% | ||
Senior Secured Credit Facility | Maximum | |||
Debt Instrument [Line Items] | |||
Line of credit facility, unused capacity, commitment fee percentage | 0.50% | ||
Letter of Credit | |||
Debt Instrument [Line Items] | |||
Maximum borrowing capacity | $ 80,000,000.0 | $ 80,000,000.0 | |
Letters of credit outstanding | $ 0 | $ 0 | $ 0 |
Debt - Long-term debt, net (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Debt Instrument [Line Items] | ||
Long-term debt | $ 970,000 | $ 800,000 |
Debt issuance costs, net | (6,809) | (8,145) |
Long-term debt, net | 963,191 | 791,855 |
Senior Notes | January 2022 Notes | ||
Debt Instrument [Line Items] | ||
Long-term debt | 450,000 | 450,000 |
Debt issuance costs, net | (3,254) | (3,987) |
Long-term debt, net | 446,746 | 446,013 |
Senior Notes | March 2023 Notes | ||
Debt Instrument [Line Items] | ||
Long-term debt | 350,000 | 350,000 |
Debt issuance costs, net | (3,555) | (4,158) |
Long-term debt, net | 346,445 | 345,842 |
Secured debt | Senior Secured Credit Facility | ||
Debt Instrument [Line Items] | ||
Long-term debt | 170,000 | 0 |
Debt issuance costs, net | 0 | 0 |
Long-term debt, net | 170,000 | 0 |
Secured debt | Senior Secured Credit Facility | Other Assets | ||
Debt Instrument [Line Items] | ||
Debt issuance costs related to line of credit arrangements | $ 7,400 | $ 6,000 |
Stockholders' equity and stock-based compensation - Share repurchase program - Narrative (Details) - USD ($) |
3 Months Ended | 9 Months Ended | |
---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2018 |
Feb. 28, 2018 |
|
Equity [Abstract] | |||
Share repurchase program, authorized amount | $ 200,000,000 | ||
Shares repurchased (in shares) | 1,170,190 | 11,048,742 | |
Weighted-average price per repurchased share (in dollars per share) | $ 8.41 | $ 8.78 | |
Shares repurchased and retired, value | $ 9,900,000 | $ 97,100,000 |
Stockholders' equity and stock-based compensation - Restricted Stock Awards - Outstanding restricted stock awards (Details) - Restricted stock awards $ / shares in Units, shares in Thousands, $ in Millions |
9 Months Ended |
---|---|
Sep. 30, 2018
USD ($)
$ / shares
shares
| |
Restricted stock awards | |
Outstanding at the beginning of the period (in shares) | shares | 3,169 |
Granted (in shares) | shares | 3,248 |
Forfeited (in shares) | shares | (266) |
Vested (in shares) | shares | (1,851) |
Outstanding at the end of the period (in shares) | shares | 4,300 |
Weighted-average grant-date fair value (per award) | |
Outstanding at the beginning of the period (in dollars per share) | $ / shares | $ 12.81 |
Granted (in dollars per share) | $ / shares | 8.42 |
Forfeited (in dollars per share) | $ / shares | 10.35 |
Vested (in dollars per share) | $ / shares | 12.21 |
Outstanding at the end of the period (in dollars per share) | $ / shares | $ 9.90 |
Equity instruments other than options, aggregate intrinsic value, vested | $ | $ 16.1 |
Stockholders' equity and stock-based compensation - Performance Share Awards - award activity (Details) - Performance share awards shares in Thousands |
9 Months Ended |
---|---|
Sep. 30, 2018
$ / shares
shares
| |
Performance share awards | |
Outstanding at the beginning of the period (in shares) | shares | 2,745 |
Granted (in shares) | shares | 1,389 |
Forfeited (in shares) | shares | (149) |
Vested (in shares) | shares | (454) |
Outstanding at the end of the period (in shares) | shares | 3,531 |
Weighted-average grant-date fair value (per award) | |
Outstanding at the beginning of the period (in dollars per share) | $ / shares | $ 17.77 |
Granted (in dollars per share) | $ / shares | 9.22 |
Forfeited (in dollars per share) | $ / shares | 14.83 |
Vested (in dollars per share) | $ / shares | 16.23 |
Outstanding at the end of the period (in dollars per share) | $ / shares | $ 14.55 |
Stockholders' equity and stock-based compensation - Performance Share Awards - assumptions used to estimate the fair value (Details) |
Feb. 16, 2018
$ / shares
|
---|---|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
RTSR Factor weight | 25.00% |
ATSR Factor weight | 25.00% |
Percentage of stock potentially payable | 50.00% |
Performance share awards with market criteria | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Risk-free interest rate | 2.34% |
Dividend yield | 0.00% |
Expected volatility | 65.49% |
Laredo stock closing price on grant date (in dollars per share) | $ 8.36 |
Grant-date fair value (in dollars per share) | $ 10.08 |
Derivatives - Commodity derivatives (Details) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2018
USD ($)
|
Sep. 30, 2017
USD ($)
derivative
|
|
Derivative [Line Items] | ||
Settlements received for early terminations of derivatives, net | $ 0 | $ 4,234 |
Early contract termination | Commodity derivatives | Derivatives not designated as hedges | ||
Derivative [Line Items] | ||
Settlements received for early terminations of derivatives, net | $ 4,200 | |
Number of restructuring derivatives | derivative | 1 |
Derivatives - Commodity derivative contracts terminated (Details) - Oil derivatives - Early contract termination - Swap January 2018 to December 2018 |
Sep. 30, 2017
bbl
$ / bbl
|
---|---|
Derivative [Line Items] | |
Aggregate volumes (Bbl) | bbl | 1,095,000 |
Floor price ($/Bbl) | 52.12 |
Ceiling price ($/Bbl) | 52.12 |
Fair value measurements - Narrative (Details) - Measurement input, discount rate - Recurring - Level 3 - Deferred premiums |
Sep. 30, 2018 |
---|---|
Minimum | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Debt instrument, measurement input | 0.0191 |
Maximum | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Debt instrument, measurement input | 0.0332 |
Weighted Average | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Debt instrument, measurement input | 0.0278 |
Fair value measurements - Cash payments required for deferred premium contracts (Details) $ in Thousands |
Sep. 30, 2018
USD ($)
|
---|---|
Fair Value Disclosures [Abstract] | |
Remaining 2018 | $ 5,405 |
2019 | 15,502 |
2020 | 1,295 |
Total | $ 22,202 |
Fair value measurements - Summary of changes in net assets classified as Level 3 (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Changes in assets classified as Level 3 measurements | ||||
Change in net present value of derivative deferred premiums | $ 564 | $ 199 | ||
Deferred premiums | ||||
Changes in assets classified as Level 3 measurements | ||||
Balance of Level 3 at beginning of period | $ (25,026) | $ (12,554) | (28,683) | (8,998) |
Change in net present value of derivative deferred premiums | (168) | (88) | (564) | (199) |
Total purchases and settlements of derivative deferred premiums: | ||||
Purchases | (2,101) | (15,996) | (7,523) | (22,994) |
Settlements | 5,455 | 1,448 | 14,930 | 5,001 |
Balance of Level 3 at end of period | $ (21,840) | $ (27,190) | $ (21,840) | $ (27,190) |
Commitments and contingencies - Litigation (Details) $ in Millions |
Sep. 30, 2018
USD ($)
bbl
|
Jun. 15, 2018
USD ($)
|
Dec. 11, 2017
Claim
|
---|---|---|---|
Commitments and Contingencies Disclosure [Abstract] | |||
Barrels of crude oil produced | bbl | 19,000 | ||
Number of causes of action | Claim | 9 | ||
Gain contingency, unrecorded amount | $ 150.0 | ||
Estimated litigation liability | $ 37.4 |
Commitments and contingencies - Drilling contracts (Details) - Drilling contracts - USD ($) |
9 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Cost of Goods and Services Sold [Abstract] | ||
Penalties incurred for early contract termination | $ 0 | $ 0 |
Future drilling contracts commitments | $ 22,900,000 |
Commitments and contingencies - Firm sale and transportation commitments (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Supply Commitment [Line Items] | ||||
Minimum volume commitments deficiency payments | $ 0.2 | $ 0.5 | $ 2.5 | $ 1.1 |
Firm sale and transportation commitments | ||||
Cost of Goods and Services Sold [Abstract] | ||||
Future drilling contracts commitments | $ 367.7 | $ 367.7 |
Commitments and contingencies - Purchase commitment (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Sep. 30, 2018 |
|
Commitments and Contingencies Disclosure [Abstract] | ||
Purchase agreement term | 1 year | |
Aggregate purchase commitment | $ 5.7 |
Commitments and contingencies - Environmental (Details) - USD ($) |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Commitments and Contingencies Disclosure [Abstract] | ||
Accrual for environmental loss contingencies | $ 0 | $ 0 |
Supplemental cash flow information (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Non-cash investing activities: | ||||
(Decrease) increase in accrued capital expenditures | $ (44,533) | $ 39,156 | ||
Capitalized stock-based compensation | $ 1,927 | $ 1,870 | 6,025 | 5,642 |
Capitalized asset retirement costs | 719 | 670 | ||
Other supplemental cash flow information: | ||||
Capitalized interest | $ 710 | $ 756 |
Asset retirement obligations (Details) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Asset Retirement Obligation, Roll Forward Analysis [Roll Forward] | ||
Liability at beginning of period | $ 55,506 | $ 52,207 |
Liabilities added due to acquisitions, drilling, midstream service asset construction and other | 719 | 492 |
Accretion expense | 3,341 | 2,822 |
Liabilities settled due to plugging and abandonment or sale | (2,246) | (1,228) |
Revision of estimates | 0 | 178 |
Liability at end of period | $ 57,320 | $ 54,471 |
Income taxes - Additional Information (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Operating loss carry-forward | ||||
Net operating loss carry-forward that will not expire due to TCJA | $ 86,400 | $ 86,400 | ||
Deferred tax assets, valuation allowance | 298,800 | 298,800 | ||
Current income tax benefit | 381 | $ 0 | 381 | $ 0 |
Internal Revenue Service (IRS) | Federal | ||||
Operating loss carry-forward | ||||
Operating loss carryforwards | 1,800,000 | 1,800,000 | ||
State of Oklahoma | State | ||||
Operating loss carry-forward | ||||
Operating loss carryforwards | 36,300 | 36,300 | ||
Texas | State | ||||
Operating loss carry-forward | ||||
Deferred tax liability | 1,800 | 1,800 | ||
Current income tax benefit | (400) | |||
Expected tax refund | $ 400 | $ 400 |
Subsidiary guarantors - Condensed consolidating statement of operations (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Subsidiary guarantees | ||||
Total revenues | $ 279,746 | $ 205,818 | $ 890,488 | $ 581,825 |
Total costs and expenses | 175,336 | 145,366 | 598,119 | 417,986 |
Operating income | 104,410 | 60,452 | 292,369 | 163,839 |
Interest expense | (14,845) | (23,697) | (42,787) | (69,590) |
Other (expense) income | (33,128) | (25,728) | (73,173) | 46,164 |
Income before income taxes | 56,437 | 11,027 | 176,409 | 140,413 |
Income tax expense | (1,387) | 0 | (1,387) | 0 |
Net income | 55,050 | 11,027 | 175,022 | 140,413 |
Intercompany eliminations | ||||
Subsidiary guarantees | ||||
Total revenues | (19,687) | (15,770) | (54,715) | (48,370) |
Total costs and expenses | (17,752) | (14,565) | (49,256) | (42,179) |
Operating income | (1,935) | (1,205) | (5,459) | (6,191) |
Interest expense | 0 | 0 | 0 | 0 |
Other (expense) income | (4,291) | (3,731) | (9,334) | (15,238) |
Income before income taxes | (6,226) | (4,936) | (14,793) | (21,429) |
Income tax expense | 0 | 0 | 0 | 0 |
Net income | (6,226) | (4,936) | (14,793) | (21,429) |
Laredo | Reportable Legal Entities | ||||
Subsidiary guarantees | ||||
Total revenues | 225,970 | 157,902 | 632,419 | 439,269 |
Total costs and expenses | 123,942 | 97,686 | 345,232 | 276,855 |
Operating income | 102,028 | 60,216 | 287,187 | 162,414 |
Interest expense | (14,845) | (23,697) | (42,787) | (69,590) |
Other (expense) income | (28,811) | (24,287) | (62,532) | 53,780 |
Income before income taxes | 58,372 | 12,232 | 181,868 | 146,604 |
Income tax expense | (1,387) | 0 | (1,387) | 0 |
Net income | 56,985 | 12,232 | 180,481 | 146,604 |
Subsidiary Guarantors | Reportable Legal Entities | ||||
Subsidiary guarantees | ||||
Total revenues | 73,463 | 63,686 | 312,784 | 190,926 |
Total costs and expenses | 69,146 | 62,245 | 302,143 | 183,310 |
Operating income | 4,317 | 1,441 | 10,641 | 7,616 |
Interest expense | 0 | 0 | 0 | 0 |
Other (expense) income | (26) | 2,290 | (1,307) | 7,622 |
Income before income taxes | 4,291 | 3,731 | 9,334 | 15,238 |
Income tax expense | 0 | 0 | 0 | 0 |
Net income | $ 4,291 | $ 3,731 | $ 9,334 | $ 15,238 |
Subsequent events - Additional Information (Details) - USD ($) |
9 Months Ended | |||||
---|---|---|---|---|---|---|
Oct. 15, 2018 |
Sep. 30, 2018 |
Sep. 30, 2017 |
Nov. 05, 2018 |
Oct. 23, 2018 |
Dec. 31, 2017 |
|
Subsequent Event [Line Items] | ||||||
Borrowings on Senior Secured Credit Facility | $ 190,000,000 | $ 155,000,000 | ||||
Senior Secured Credit Facility | Secured debt | ||||||
Subsequent Event [Line Items] | ||||||
Amount outstanding | 170,000,000 | |||||
Current borrowing capacity | 1,300,000,000 | |||||
Aggregate elected commitment | 1,200,000,000.0 | |||||
Senior Secured Credit Facility | Secured debt | Subsequent Event | ||||||
Subsequent Event [Line Items] | ||||||
Borrowings on Senior Secured Credit Facility | $ 20,000,000 | |||||
Amount outstanding | $ 190,000,000 | |||||
Current borrowing capacity | $ 1,300,000,000 | |||||
Aggregate elected commitment | $ 1,200,000,000 | |||||
Letter of Credit | Secured debt | ||||||
Subsequent Event [Line Items] | ||||||
Letters of credit outstanding | $ 0 | $ 0 | ||||
Letter of Credit | Secured debt | Subsequent Event | ||||||
Subsequent Event [Line Items] | ||||||
Letters of credit outstanding | $ 14,700,000 |
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