Laredo Petroleum Holdings (NYSE:LPI) is focused on various onshore oil and gas areas in the United States, including Granite Wash plays in the Anadarko Basin and various formations in the Permian Basin. The company is taking advantage of the market's insatiable appetite for energy stocks and has filed for an initial public offering.
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Laredo Petroleum Holdings has approximately 338,000 net acres under lease with most of its production and proved reserves coming from operations in the Anadarko Granite Wash and Permian Basin areas in Texas.
Laredo Petroleum Holdings reported average production of 22,070 barrels of oil equivalent (BOE) per day in the six months ending June 30, 2011. The company's proved reserves total 137 million BOE as of that date using reference prices mandated by the Securities and Exchange Commission (SEC).
Laredo Petroleum Holdings has received funding and support from Warburg Pincus, a private equity firm that has been involved in early stage financing of other oil and gas companies. These Warburg Pincus investments include Bill Barrett (NYSE:BBG), which owns oil and gas assets in the Rocky Mountain area.
Warburg Pincus was also an early backer of Targa Resources Corp (NYSE:TRGP), and Targa Resources Partners LP (NYSE:NGLS), which are involved with midstream assets across the United States.
Laredo Petroleum Holdings has budgeted $361 million in capital expenditures for the last six months of 2011 and a preliminary 2012 budget of $740 million. The company will spend almost all of these funds on drilling and completion of wells in its two primary areas.
Laredo Petroleum Holdings has 126,500 net acres in the Permian Basin and gas spent the last few years drilling several hundred vertical wells to delineate the Wolfberry play on its leasehold. The company has developed a number of formations here including the Spraberry, Dean, Wolfcamp, Cline Shale, Strawn and Atoka.
Laredo Petroleum Holdings has also started horizontal development here and targeted the Cline and Wolfcamp Shales. The company has drilled a total of 20 horizontal wells in the Permian Basin through August 2011.
Laredo Petroleum Holdings has approximately 38,000 net acres spread across the Texas and Oklahoma panhandle regions and has conducted vertical development of various formations that are collectively referred to as the Granite Wash.
Laredo Petroleum Holdings is also evaluating various formations in the Dalhart Basin, an area that has not garnered that much attention from the exploration and production industry. The company has approximately 78,000 net acres in the Dalhart Basin, which is located on the western side of the Texas Panhandle. Laredo Petroleum Holdings has finished seismic and other preliminary work here and has budgeted three wells in 2011, targeting various oil and liquid plays.
The Bottom Line
Laredo Petroleum Holdings is the latest private oil and gas company to file for an initial public offering and represents an additional method for investors to play the development of oil and liquids basins in the onshore United States. The company is also an early mover in a new basin and may accrue the benefits of this move if development is a success. (For additional reading, see A Guide To Investing In Oil Markets.)
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