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Discounted Cash Flow (DCF) Analysis Unlevered


Laredo Petroleum Inc.

Laredo Petroleum Inc. (LPI)

Energy

Operating Data

Year
A/P
2013
Actual
2014
Actual
2015
Actual
2016
Actual
2017
Actual
2018
Actual
2019
Projected
2020
Projected
2021
Projected
2022
Projected
2023
Projected
Revenue 665.26793.92606.63597.35822.131,105.771,252.511,418.711,606.981,820.222,061.77
Revenue (%)
EBITDA 527.42797.49-2,005.95-19.12798.54599.44-5.89-6.67-7.55-8.56-9.69
EBITDA (%)
EBIT 292.85550.98-2,283.67-167.44640.11386.80-372.12-421.50-477.43-540.79-612.55
EBIT (%)
Depreciation 234.57246.51277.72148.32158.43212.64366.23414.83469.88532.23602.86
Depreciation (%)

Balance Sheet Data

Year
A/P
2013
Actual
2014
Actual
2015
Actual
2016
Actual
2017
Actual
2018
Actual
2019
Projected
2020
Projected
2021
Projected
2022
Projected
2023
Projected
Total Cash 198.1829.3031.1832.68112.1445.12129.01146.13165.52187.48212.36
Total Cash (%)
Account Receivables 77.30126.9587.7286.85100.6394.32161.57183.01207.30234.81265.97
Account Receivables (%)
Inventories -----------
Inventories (%)
Accounts Payable 19.4938.9814.2052.2158.3769.5567.3876.3386.4697.93110.92
Accounts Payable (%)
Capital Expenditure -302.16-1,291.23-532.20-489.53-481.85-685.80-1,040.33-1,178.38-1,334.76-1,511.88-1,712.50
Capital Expenditure (%)

Weighted Average Cost Of Capital

Share price $ 2.82
Diluted Shares Outstanding 233.17
Cost of Debt
Tax Rate 1.29
After-tax Cost of Debt -0.01
Risk-Free Rate
Market Risk Premium
Cost of Equity 14.38
Total Debt 983.64
Total Equity 657.55
Total Capital 1,641.18
Debt Weighting 59.93
Equity Weighting 40.07
Wacc

Build Up Free Cash

Year
A/P
2013
Actual
2014
Actual
2015
Actual
2016
Actual
2017
Actual
2018
Actual
2019
Projected
2020
Projected
2021
Projected
2022
Projected
2023
Projected
Revenue 665.26793.92606.63597.35822.131,105.771,252.511,418.711,606.981,820.222,061.77
EBITDA 527.42797.49-2,005.95-19.12798.54599.44-5.89-6.67-7.55-8.56-9.69
EBIT 292.85550.98-2,283.67-167.44640.11386.80-372.12-421.50-477.43-540.79-612.55
Tax Rate 38.70%38.22%7.41%0.00%0.33%1.29%14.33%14.33%14.33%14.33%14.33%
EBIAT 179.50340.40-2,114.37-167.44638.02381.80-318.81-361.12-409.04-463.32-524.80
Depreciation 234.57246.51277.72148.32158.43212.64366.23414.83469.88532.23602.86
Accounts Receivable --49.6439.230.86-13.776.31-67.25-21.44-24.29-27.51-31.16
Inventories -----------
Accounts Payable -19.49-24.7938.016.1611.18-2.178.9410.1311.4713.00
Capital Expenditure -989.07-759.03-42.67-7.68203.95354.53138.05156.37177.12200.63
UFCF 414.071,545.83-2,581.24-22.91781.16815.87332.54179.27203.06230.00260.52
WACC
PV UFCF 305.86151.66158.01164.62171.51
SUM PV UFCF 1,248.23

Terminal Value

Growth in perpetuity method:
Long-term growth rate
WACC (%) 8.72
Free cash flow (t + 1) 270.94
Terminal Value 5,740.36
Present Value of Terminal Value 3,779.13

Intrinsic Value

Enterprise Value 5,027.36
Net Debt 938.52
Equity Value 4,088.84
Shares Outstanding 233.17
Equity Value Per Share 17.54

Results Unlevered DCF

Wacc / Long-term Growth -4 (%)-3 (%)-2 (%)-1 (%)0 (%)1 (%)2 (%)3 (%)4 (%)
10.72 (%) 8.56 Buy 9.38 Buy 10.40 Buy 11.68 Buy 13.34 Buy 15.58 Buy 18.77 Buy 23.68 Buy 32.19 Buy
10.22 (%) 8.07 Buy 8.81 Buy 9.71 Buy 10.82 Buy 12.25 Buy 14.13 Buy 16.74 Buy 20.57 Buy 26.79 Buy
9.72 (%) 7.64 Buy 8.30 Buy 9.10 Buy 10.07 Buy 11.31 Buy 12.91 Buy 15.07 Buy 18.14 Buy 22.86 Buy
9.22 (%) 7.24 Buy 7.84 Buy 8.55 Buy 9.41 Buy 10.49 Buy 11.86 Buy 13.67 Buy 16.18 Buy 19.88 Buy
8.72 (%) 6.88 Buy 7.42 Buy 8.05 Buy 8.82 Buy 9.76 Buy 10.95 Buy 12.49 Buy 14.57 Buy 17.54 Buy
8.22 (%) 6.55 Buy 7.03 Buy 7.61 Buy 8.29 Buy 9.13 Buy 10.16 Buy 11.48 Buy 13.23 Buy 15.65 Buy
7.72 (%) 6.24 Buy 6.69 Buy 7.20 Buy 7.82 Buy 8.56 Buy 9.47 Buy 10.61 Buy 12.10 Buy 14.10 Buy
7.22 (%) 5.97 Buy 6.37 Buy 6.84 Buy 7.39 Buy 8.05 Buy 8.85 Buy 9.85 Buy 11.13 Buy 12.81 Buy
6.72 (%) 5.71 Buy 6.08 Buy 6.50 Buy 7.00 Buy 7.59 Buy 8.31 Buy 9.18 Buy 10.29 Buy 11.72 Buy