Laredo lays out plan for Permian bolt-on acres

By Luke Geiver | December 10, 2019

Laredo Petroleum turned to its $1 billion senior secured credit facility to add-on acreage that has better first-year production than existing near-by Laredo acreage. For $245 million, the Tulsa-based exploration and production company has added 45 total drilling locations spread across 4,475 acres in Glasscock County, Texas.

“This acquisition expands our Glasscock County position further to the west into an area of higher oil productivity than our established acreage position,” said Jason Pigott, president and CEO.

According to the company, the new acres have high oil productivity and will produce up to 37 percent more oil in the first year of production than other legacy Laredo wells drilled into the Wolfcamp shale have in the past.

The acres will primarily allow Laredo to target the Lower Spraberry, Upper Wolfcamp and Middle Wolfcamp formations at spacing of roughly 1,320 feet. Nearly 80 percent of the production is already held, however, Pigott said his team will add the remaining non-HBP acres into the current drilling and completion mix throughout the next two years after the company completes the full development of its Howard County development plan.

This purchase also helps Laredo increase its free cash flow through the addition of the oil-heavy acres. According to Laredo, the purchase price of the acres in the bolt-on acquisition were well below historic Howard County averages.

In the Lower Spraberry portion, drilling units could include four wells per DSU. In the Upper Wolfcamp, the DSUs could hold a range of 8 to 12 wells.