Laredo Petroleum to Acquire Sabalo Energy, Partner for $715 Million
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Laredo Petroleum entered into a purchase and sale agreement to acquire the assets of Sabalo Energy, a portfolio company of EnCap Investments, and a non-operating partner for about $715 million.
The deal is subject to customary closing price adjustments, comprised of $625 million in cash and approximately 2.5 million shares of Laredo common equity.
Additionally, Laredo sold 37.5 percent of its operated proved developed producing (PDP) reserves in its legacy leasehold in Reagan and Glasscock counties to an affiliate of Sixth Street Partners for proceeds of $405 million and additional potential cashflow based earn-out payments over the next six years. None of the PDP reserves are in Howard or Western Glasscock counties. Both transactions are expected to close July 1.
“The transformational impact for Laredo of the combined transactions is significant. Upon closing, we will be positioned for sustainable free cash flow generation and significant deleveraging, have more than 30,000 highly productive, contiguous net acres in Howard County and a near-term pathway to increasing our oil cut to more than 50 percent from the current 30 percent,” said Jason Pigott, president and chief executive officer.
“The value derived from employing our efficient, low-cost operations in Howard County has already been established on our current leasehold and we expect to perform equally well on this new acreage. Additionally, we will be applying our ESG best practices to the development of this acreage, maintaining our prior commitments to reducing greenhouse gas intensity, methane emissions and eliminating routine flaring,” added Pigott.
“This transaction complements Laredo’s existing asset base and strategy and accelerates the company’s transformation to becoming a leading independent operator in the Midland Basin,” said Doug Swanson, managing partner of EnCap.
“Laredo is well positioned to maximize value from the Sabalo assets and we view this transaction as compelling for Laredo shareholders, including EnCap, as part of this transaction,” added Swanson.
About Laredo Petroleum
Laredo Petroleum, Inc. is an independent energy company with headquarters in Tulsa, Oklahoma. Laredo’s business strategy is focused on the acquisition, exploration and development of oil and natural gas properties, primarily in the Permian Basin of West Texas.
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