Shares of Laredo Petroleum (NYSE:LPI) jumped by as much as 16% in early morning trading on Thursday after the company reported earnings for the quarter and announced that it would be adding rigs to to its drilling plans for the rest of the year.
Thanks to record daily average production of 51,276 barrels of oil equivalent, Laredo was able to handily beat revenue expectations by generating $159.7 million in the third quarter, trouncing consensus analyst estimates compiled by S&P Capital IQ of $133 million.
Laredo also impressed this quarter by drastically lowering its costs. The company estimates that its per-barrel operating costs are $18.56 per barrel equivalent sold, down from $30.01 this time last year. All of this led to the company posting its first profit since 2014. Also, these improved results gave management enough confidence to put another rig to work in November, and it now expects total production for 2016 to be 10% higher than initially guided.
Things are looking much, much better at Laredo than they did for all of 2015 and the first half of 2016. With the company generating modest profits at today's still quite low oil prices and its intention to increase production, we could see some very good things from Laredo as oil prices continue to slowly recover.