PBIOS - October 2021 - 109

$230 million deal to acquire 20,000 net
acres in western Glasscock County from
Pioneer Natural Resources Company.
Directly adjacent to Laredo's existing
leasehold, the deal expands its oil-weighted
holdings.
The bolt-on acreage increases Laredo's
high-margin, oil-weighted inventory in
the core development area in the Midland
Basin by 50% and extends development
to seven years at current activity levels.
The transaction, which was scheduled
to close in October, expands Laredo's
western Glasscock core development
area to 22,200 net acres and adds ~135
gross operated oil-weighted locations.
Current production of 4,400 boe/d is
59% oil and 82% liquids. About 80% of
the 20,000 acres is operated, and 98%
is held by production
" Upon closing this transaction, we
will have acquired more than 55,000
net acres of highly productive, oilweighted
inventory in Howard and western
Glasscock counties in only two
years, fundamentally transforming Laredo, "
says Pigott. " Seven years of inventory
across these core areas will enhance
our ability to deliver sustainable, longterm
free cash flow generation and to
rapidly deleverage. "
Laredo is running two rigs and one
completion crew, mostly in Howard County,
where it closed earlier this year on an
acquisition of Sabalo Energy LLC and
its 21,000 contiguous net acres in Howard
County (86% operated and 100% held
by production). Output was 14,500 boe/d,
including 83% oil, at the time of the acquisition
" For
Laredo, our big story is that the
rate of change for us has been faster
than for nearly any company out there, "
Pigott says.
The Sabalo transaction was effectively
the size of Laredo's market cap at the
time, Pigott points out. To support the
acquisition, the company raised $405
million from the sale of 37.5% of its operated
proved, developed and producing
reserves from existing wellbores on legacy
Birch Resources is running two rigs in the Midland Basin targeting the Spraberry and
Wolfcamp with laterals averaging 11,000 feet. The company places a major emphasis on
ESG performance across its footprint, including a minimum number of central processing
facilities with vapor recovery and emissions control systems to maximize methane
capture and eliminate routine venting.
leaseholds in Texas' nearby Reagan and
Glasscock counties.
Currently, Laredo has a roughly fiveyear
inventory of premium wells, but
wants to expand the inventory to 7-10
years, he says. The company is running
two rigs and one completion crew, mostly
in Howard County.
Average laterals on 120 operated locations
and 150 nonoperated locations
acquired from Sabalo are 10,000 feet or
more, Pigott says, with a couple of packages
expected to include 15,000-foot laterals,
he says.
The company will average 12 wells
per section, including six in the Lower
Sprayberry and six in the Wolfcamp A,
with the addition of the Wolfcamp B in
Glasscock County, Pigott relates. Laredo
is standardizing wider well spacings in
the Wolfcamp A in Howard County after
completions on its 13-well Davis package
in Howard County boosted production
by 19% compared to wells with tighter
spacing, he reveals.
This year, Laredo expects to spud 64
wells and complete 67. The company
has pumped proppant of about 2,400
pounds per foot, but of late, it has tested
2,000 pounds, Pigott says. Second-quarter
production averaged 85,924 boe/d and
26,440 bbl/d of oil, both increases of 9%
over the first quarter of 2021.
Ownership of its own sand mine in
the middle of its Howard County operation
is helping mitigate inflationary pressure
and lower emissions in the process, Pigott
says, with ESG improvement being a
major focus. Laredo recently hired a sustainability
officer who reports directly to
Pigott. The officer already is adding to
the company's air quality staff, he says.
Flaring and venting are down to only
0.29% of produced gas, and Laredo is
working to electrify its locations.
" One of the challenges that operators
face is when pipelines go down, they
have to flare gas to produce and sell their
oil, " Pigott says. " We made the commitment
earlier this year to further reduce
flaring and have even shut in wells rather
than flare the gas. Our goal is to transform
Laredo in a responsible and sustainable
manner. "
Full-Life Cycle Business Model
Privately held Birch Resources LLC is
focusing on a full-life cycle business model
that includes fully developing its acreage
in Martin and Howard counties in the
OCTOBER PBIOS 2021 109

PBIOS - October 2021

Table of Contents for the Digital Edition of PBIOS - October 2021

Table Of Contents
PBIOS - October 2021 - Intro
PBIOS - October 2021 - Cover1
PBIOS - October 2021 - Cover2
PBIOS - October 2021 - 3
PBIOS - October 2021 - Table Of Contents
PBIOS - October 2021 - 5
PBIOS - October 2021 - 6
PBIOS - October 2021 - 7
PBIOS - October 2021 - 8
PBIOS - October 2021 - 9
PBIOS - October 2021 - 10
PBIOS - October 2021 - 11
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PBIOS - October 2021 - 15
PBIOS - October 2021 - 16
PBIOS - October 2021 - 17
PBIOS - October 2021 - 18
PBIOS - October 2021 - 18A
PBIOS - October 2021 - 18B
PBIOS - October 2021 - 18C
PBIOS - October 2021 - 18D
PBIOS - October 2021 - 18E
PBIOS - October 2021 - 18F
PBIOS - October 2021 - 19
PBIOS - October 2021 - 20
PBIOS - October 2021 - 21
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PBIOS - October 2021 - 89
PBIOS - October 2021 - 90
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PBIOS - October 2021 - 120
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PBIOS - October 2021 - Cover3
PBIOS - October 2021 - Cover4
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