Laredo Petroleum Announces Closing of Acquisition of Sabalo Energy Assets and Divestiture of Proved Developed Producing Reserves

 

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Laredo Petroleum Announces Closing of Acquisition of Sabalo Energy Assets and Divestiture of Proved Developed Producing Reserves

Sabalo Energy
July 1, 2021

TULSA, OK (GLOBE NEWSWIRE) -- Laredo Petroleum, Inc. (NYSE: LPI) ("Laredo" or the "Company") announced today that it has closed its previously announced transactions to acquire the oil-weighted Howard County leasehold of Sabalo Energy, LLC ("Sabalo"), a portfolio company of EnCap Investments L.P., and a non-operating partner, and to partially divest of certain legacy gas-weighted proved developed producing reserves to an affiliate of Sixth Street Partners, LLC ("Sixth Street"). Additionally, the Company announced the results of its "at-the-market" offering program (the "ATM Program"), described in a prospectus supplement filed with the Securities and Exchange Commission (the "SEC") on February 23, 2021, and scheduled its second-quarter 2021 earnings release and conference call.

On July 1, 2021, Laredo closed two previously announced transformative transactions. For the acquisition of Sabalo’s assets, after closing price adjustments, the Company paid the sellers aggregate consideration of $606 million in cash and 2.507 million shares of Laredo’s common stock. For the sale of proved developed reserves to Sixth Street, Laredo received $405 million in cash, subject to customary adjustments, and may receive additional potential cash flow based earn-out payments over the next six years.

Subsequent to the announcement of the transactions, the Company sold 714,526 shares through its ATM Program at an average price of $65.70 for net proceeds of $45.8 million. Laredo has 16.1 million total shares outstanding as of July 1, 2021, including shares issued in connection with the closing of the Sabalo acquisition.

In connection with the closing of the transactions, the Company’s senior secured credit facility borrowing base was reaffirmed at $725 million, with both Laredo’s elected commitment and lender commitments set at $725 million. As of July 1, 2021, Laredo has outstanding borrowings of $380 million on its senior secured credit facility, resulting in available capacity, after the reduction for outstanding letters of credit, of $301 million. Including cash and cash equivalents of $54 million, total liquidity is $355 million.

"The closing of these transformative transactions marks the transition of Laredo into a very different Company than it was two years ago," stated Jason Pigott, President and Chief Executive Officer. "Our disciplined acquisition strategy has dramatically improved our expected capital efficiency and Free Cash Flow1 generation capability. We remain committed to reducing leverage and maintaining our financial strength as we develop our oil-weighted properties and further transform our asset base."