This is not the first rodeo for Randy Foutch, the founder, chairman and chief executive officer of Laredo Petroleum Holdings Inc. Three times since 1991, he has built private E&P companies with equity from First Reserve, Warburg Pincus and JP Morgan. He grew the E&Ps substantially and sold them to larger entities, for $34 million in 1996 in the case of Colt Resources, and as much as $750 million in the case of Latigo Petroleum, which was sold to Pogo Producing in 2006. Returns on equity invested have totaled more than three to one.

Shortly after the last sale, he and Warburg formed Laredo. But five years later, in mid-December, Foutch took the company public on the New York Stock Exchange, instead of selling it. For once, the right assets met the right market timing: high oil prices and a big position in the Permian Basin. LPI had soared by 32% by early February, and at press time, was up 55% from its IPO price.

The Tulsa-based company, with offices in Midland and Dallas, could grow production by 25% this year, to 10.6 million barrels of oil equivalent (41% crude oil). Some analysts have called it “the next Concho,” referring to the latter’s big growth profile in the Permian Basin as a pure play on that oil-rich region. But Laredo is not solely tied to the Permian Basin, although some 80% of its $700-million drilling budget is allocated this year to the Spraberry, Wolfcamp and Cline formations there, where it holds some 135,000 net acres. It also has a large position in the Granite Wash, and the Dalhart Basin of the Texas Panhandle.

This time around, Randy Foutch, founder, chairman and chief executive of Laredo Petroleum Holdings Inc., has taken his company public, propelled by high oil prices and a big position in the Permian Basin.

Foutch holds a geology degree from the University of Texas and a master’s of science in petroleum engineering from the University of Houston. He is on the board of driller Helmerich & Payne Inc., and is a member of the National Petroleum Council and America’s Natural Gas Alliance (ANGA), among many other public and private business and charitable endeavors.

We caught up with Foutch after he had returned from cross-country IPO road shows made during December.

Investor You’ve been so successful in the past, backed by private equity and building three companies that you sold. Why go public this time around?

Foutch I get asked that a lot. It kind of snuck up on me. But the fact of the matter is, at Lariat and Latigo we had been semi-ready to go public and we were even preparing an S-1 on Lariat. Lariat could have gone public, but about that time the stock market started to get squirrely, so we pulled back and I asked the board for permission to invite about five companies in to take a look at us. Newfield bought us for $333 million, and they’ve done well with those assets—that got them into the Midcontinent in a big way.

Now we think we have more value creation in front of us than I’ve ever had before, and more inflection points ahead of us.

Investor Inflection points?

Foutch Inflection points to define a new play in some areas, and get enough data to be able to pound the table and say, “Yes, it’s there, and we’ll go after it.” We see a lot of opportunities.

So we thought it was really premature to sell Laredo, and, plus, we wanted to make sure we had the ability to access public equity if we wanted to.

Investor And now you have 6,000 locations to drill.

Foutch Maybe a bit more; it depends on which of those inflection points works out. In some areas we have not drilled enough wells yet. The biggest chunk of our growth is in the traditional vertical Wolfberry and horizontal wells in the Wolfcamp and Cline formations.

Investor What about the Dalhart Basin?

Foutch It’s still in the exploration stage, and in that one we need more data. In the Permian Basin, there are three horizontal zones in the Wolfcamp with potential. We have a lot of vertical data and cores but it’s going to take awhile to test along that 80-mile stretch that we have.

Investor How many wells will you drill this year?

Foutch We’ve told people that if we do what we modeled, that’s about 250 to 300 wells. We have three rigs in the horizontal Granite Wash, and we may adjust that up or down. We have about 3,500 vertical locations. (Some are PUDs, about 800.) We have 2,250 horizontal locations. That’s partly why we went public, as we wanted to make sure we had access to capital.

Investor The question always is, what percent of the locations do you “PUD up” before you exit some day. Is it 20% or 70%?

Foutch There’s no one answer. I’ve dealt with that question before with Latigo and Lariat, but we need to do what’s best for our shareholders. I don’t envision a sale in the next few years. You know, we never intended to sell the other companies—we thought we were building them for the long term. So we’ll address how many PUDs we drill as we go along.

Investor Do you need to form a joint venture to get all this done?

Foutch We are spending above cash flow but we are well financed, we have access to high-yield debt, and now that we are public we have access to public equity. We’ve looked at the JV thing a fair bit, but the timing needs to be right. We think it’s a bit early in our plays to look for a JV partner. We need to get some more wells drilled. Who would’ve thought we’d be producing from these shales?

Investor What do you think of the idea circulating that the U.S. could someday be energy self-sufficient?

Foutch I spoke on this at the Harvard Business School late in 2011. I don’t know yet if self-sufficiency is possible in oil. But unless there is some adverse political decision that changes conditions, we do have a chance to dramatically increase domestic supply, and that’s a good thing. Every 100,000 barrels more we produce here is a good thing.

Investor Do you think you’ll look at entering the Bakken or other oil plays?

Foutch We have always tended to stick to the Midcontinent area and Permian Basin. These are great areas and there’s a lot to do there. So I don’t visualize leaving. We like what we have. I never say never, but in general, we have a pretty good hunting ground and we won’t stray off the reservation.

Investor Are you hiring?

Foutch Yes we are. We’ve got 190 to 200 employees, but we’re hiring in the field and in the office, across all spectrums of the business.

Investor The Broad Oak acquisition doubled your Permian acreage.

Foutch It was always interesting to us. I was on their original board and an original investor, so I knew the guys and had confidence in what they were doing. They were on my list to stay in contact with. They had a sale process at one time that didn’t go as well as they hoped, so we contacted them. Both of us were drilling in the Spraberry and Wolfcamp, and we thought our horizontal play extended under their acreage.

Investor What about the Cline?

Foutch We’ll start talking about that one later when we have more data. It’s a traditional, Pennsylvanian shale, found right under the Wolfcamp but separate from it. We’ve cored the Cline a lot and performed several single-zone production tests. Some people also call it the Cisco. We acquired our Permian acreage initially for the horizontal Strawn play, but when we drilled those wells, we saw significant oil and gas shows in the Cline. There’s going to be a learning curve, but we think it’s a very viable target. We’ve drilled about 22 horizontal wells in it so far. The Texas Railroad Commission allows you to drill the Spraberry, Wolf-camp and Cline under one nomenclature of Wolfberry and commingle production.

Investor With all these locations, what is your 2012 budget?

Foutch The total is set at $757 million, with about $700 million of that marked for drilling, and $560 million of that in the Permian, where the biggest chunk of our growth is coming from.

Investor The Permian is so hot right now, are you having trouble getting rigs or frac crews?

Foutch In general, we’ve seen that the service companies are good at fixing demand issues any time they see a problem. It may take awhile. We did get further behind than I’d like on fracs about six months ago, but now we can get the fracs done when we want. We have pretty good luck getting rigs. It’s back in balance now, more or less. If the Permian continues to grow at the pace it has lately, we could see a problem getting frac crews.

Investor You must be even more excited about your big Granite Wash position, given Cordillera’s recent sale there to Apache.

Foutch Apache is a pretty smart buyer and Cordillera is a pretty smart seller. That whole play has increased in value. The Granite Wash is a bit different, we are in the more distal portion of it. With the ability we have now to frac those wells, people are realizing that the Granite Wash section, and uphole in the Marmaton, is a great play.

We got out there early so our acreage costs are good—it was the first deal, aside from a small acquisition, that we did at Laredo. We have 38,000 acres and wish we had more.

Investor Now that you are public, what is your biggest challenge?

Foutch More so than for any other company I’ve had, it’s going to be honing in on capital efficiency—trying to figure out the best rate of return we can achieve and where to get it, what with all those Permian locations, the Cline and so on. We are blessed as we have a minimum target and almost everything we have is at least at that target. What we’re trying to do is figure out which projects are way past the minimum.

We are going to spend a lot on science, which doesn’t give you a return now, probably, but if you can prove up a play, that will add to your value longer term. We are paying attention to where we put our capital to work.

For more on the Permian Basin and the Granite Wash, see OilandGasInvestor.com.