Each one in plain English, with the numbers worked through for a shareholder.
2 July 2021asset acquisition disposition● NeutralMajor
On 2021-07-01 Laredo closed both deals announced in May: the Sabalo Energy acquisition and the sale of a share of its producing wells to a Sixth Street affiliate. For Sabalo it paid $606 million in cash (after price adjustments) plus 2,507,000 (2,506,964) new shares, and it received $405 million cash from Sixth Street plus possible earn-out payments over six years. The release says 16.1 million shares are now outstanding, 714,526 shares were sold through the ATM program at an average $65.70 for $45.8 million net, the credit facility borrowing base stays at $725 million, and $380 million is drawn with total liquidity of $355 million.
11 May 2021capital raising announcement● NeutralMajor
On 2021-05-07 Laredo agreed to buy Midland Basin properties in Howard and Borden Counties, Texas from Sabalo and Shad for $714.3 million ($624.3 million cash plus 2,506,964 new shares), expected to close around 2021-07-01. To help fund it, it agreed to sell about 37.5% of its interest in certain producing wells in Glasscock and Reagan Counties to a Sixth Street affiliate for $405 million cash plus possible earn-out payments, and amended its credit facility, keeping the borrowing base at $725 million, to permit both deals. Both are subject to closing conditions, and the sale is conditioned on the acquisition closing.
On 2021-02-23 Laredo set up an at-the-market program allowing it to sell up to $75.0 million of new common stock over time through Wells Fargo Securities, which takes a 2.5% commission. The company need not sell any shares; proceeds are for general purposes, which may include repaying debt. Any sales would add shares, diluting existing holders.
On 2020-10-22 Laredo signed a fifth amendment to its credit facility, keeping the borrowing base at $725 million (the figure set in April) but raising margins and letter-of-credit fees by another 0.500%. It added a weekly repayment requirement when cash exceeds $50 million and lowered the maximum leverage ratio for the main covenant from 4.25 to 4.00 from 2020-12-31, while letting the company buy back up to $50 million of notes under a looser 2.75 ratio test. The filing also gave preliminary third-quarter figures (e.g. $58.2 million of derivative settlements received, 11.7 million weighted-average shares) and mentions a Howard County acreage acquisition, with no further details in the text shown.
Laredo said its first-quarter 2020 financial statements can no longer be relied on. A reserve-value calculation omitted transportation costs, so the asset write-down was understated by about $160 million and net income overstated by the same amount, meaning the net income reported in the 2020-05-06 results was too high. The company also said it had a material weakness in internal controls and will amend the 10-Q; the error was limited to the first-quarter estimate.
On 2020-04-30 Laredo signed a fourth amendment to its bank credit facility, cutting the borrowing base (the amount banks will lend against its reserves) from $950 million to $725 million, with borrowing costs and letter-of-credit fees up 0.500%. It also tightened limits on asset sales (10% to 5% of the borrowing base) and, until conditions are met, capped investments, shareholder distributions and note buybacks since 2020-04-01 at $100 million. The same filing announced first-quarter 2020 results (press release says net income attributable to common stockholders of $235.1 million, or $1.01 per diluted share, adjusted EBITDA $116.8 million); this follows the January refinancing, which had already cut the base to about $950 million.
On 2020-03-26 the NYSE told Laredo its average share price over the prior 30 trading days was below the $1.00 minimum for listing. It has six months to fix this and says it may consider a reverse stock split if appropriate; shares keep trading under LPI with a '.BC' (below compliance) tag, and the company says the notice does not breach its debt obligations. Delisting is possible if it fails to cure.
24 Jan 2020security holder rights change● NeutralMajor
The $1.0 billion note offering closed on 2020-01-24 with about $982.0 million of net proceeds, and the credit facility's borrowing base was automatically cut to about $950 million. Holders of the 2022 and 2023 notes consented to remove most protective covenants, and the company issued redemption notices: remaining 2022 notes to be redeemed 2020-01-29 at 100% of principal, and untendered 2023 notes on 2020-03-15 at 101.563%. This carries out the refinancing of the January 2022 and March 2023 notes that had been an open thread.
Laredo priced $1.0 billion of new unsecured notes: $600 million at 9.500% due 2025 and $400 million at 10.125% due 2028, with net proceeds of about $982.0 million expected on closing around 2020-01-24. The money is meant to refinance $450.0 million of 5 5/8% notes due 2022 and $350.0 million of 6 1/4% notes due 2023, pay tender premiums and fees, and for general purposes including paying down some credit facility borrowings. This continues the refinancing of the January 2022 and March 2023 notes noted earlier, at much higher interest rates than the old notes.
Vital Energy (then Laredo Petroleum) agreed on 2019-11-04 to buy oil and gas properties from Cordero Energy Resources LLC for $130,250,000, mainly funded by borrowing on its existing revolving credit facility. It put down a $13,025,000 deposit, and closing is expected around 2019-12-12 but is not guaranteed. The same filing reported the third-quarter 2019 results already seen (net loss of $264.6 million including a $397.9 million non-cash impairment); the press release describes the purchase as 7,360 net acres in Howard County.
On April 19, 2018 the company amended its senior secured credit facility: the borrowing base rose from $1.0 billion to $1.3 billion, the elected commitment from $1.0 billion to $1.2 billion, and maturity was extended to April 19, 2023 (earlier if the January 2022 or March 2023 notes are not refinanced 90 days before their maturity). Interest margins and letter-of-credit fees fell by 0.750%, and caps on investments, distributions and senior note redemptions were removed subject to conditions. This follows the October 2017 reaffirmation of the $1.0 billion borrowing base.
29 Nov 2017material agreement termination▲ GoodMajor
On November 29, 2017 the company redeemed all $500,000,000 of its 7.375% Senior Notes due 2022 at 103.688% of principal plus accrued interest, and the governing indenture was discharged. This completes the redemption called on October 30 after the Medallion sale.
30 Oct 2017asset acquisition disposition▲ GoodMajor
The Medallion sale closed on October 30, 2017: the company's subsidiary received net cash of about $829.6 million for its 49% stake, before post-closing adjustments and taxes. The company also amended its credit agreement on October 24 to allow redeeming senior notes with sale proceeds, had its $1.0 billion borrowing base reaffirmed, and called all $500.0 million of its 7 3/8% Senior Notes due 2022 for redemption on November 29, 2017 at 103.688%. This completes the sale announced October 2 and starts the debt redemption.
On October 1, 2017, the company's subsidiary Laredo Midstream Services agreed with Medallion Midstream Holdings (EMG affiliate) to sell 100% of Medallion Gathering & Processing to an affiliate of Global Infrastructure Partners for about $1.825 billion cash. The company's share, for its 49% interest, is about $894 million, with possible extra payments tied to GIP's profit at exit. Closing is expected in the fourth quarter of 2017, subject to conditions including antitrust waiting periods.
The company (filing under the name Laredo Petroleum, Inc.) agreed on July 14, 2016 to sell 13,000,000 new shares to underwriters led by Credit Suisse at $10.51275 per share, with an option for 1,950,000 more. It expects about $136.3 million net and plans to use it to repay borrowings under its senior secured credit facility; existing shareholders are diluted by the new shares. This completes the offering whose prospectus supplements were filed on 2016-07-14 and 2016-07-18.
