From Seekiing Alpha:
Nov. 18, 2019 7:39 AM ET|About: Gulfport Energy Corporation (GPOR)|By: Carl Surran, SA News Editor
Gulfport Energy (NASDAQ:GPOR) says it is suspending its stock buyback program, changing its board and cutting its total workforce by ~13%.
In suspending its share repurchase program, GPOR cites current market conditions and a weak near-term gas price outlook.
Chairman David Houston will not seek re-election to GPOR's board at the company's next 2020 annual meeting, and two other directors will step down by the end of this year.
GPOR says it is making the job cuts "in an effort to improve profitability and better align the company's cost structure with the current depressed commodity price environment."
GPOR also says it recently repurchased $40.9M in face value of unsecured senior notes for $29.2M in cash proceeds, and plans to continue to pursue discounted repurchases of its unsecured senior notes.
GPOR hunkers down: lower/longer NG
Re: GPOR hunkers down: lower/longer NG
Overall, this sounds like good news. The two board members who are stepping down could be replaced by candidates with more energy experience. You can see profiles for Streller and Groeschel at link below:
https://www.gulfportenergy.com/about/board-of-directors
I also think suspending stock repurchase program in favor of debt reduction is a rather bold move that puts the Company in a better position over long-term. Not only are they retiring debt at 70 cents on the dollar, they;re saving the interest burden! As a shareholder, I'd prefer to see them strengthen the company by reducing debt service to survive what could end up being pro-longed low gas prices.
It's about time a Company took some bold action! Great job in my view!
https://www.gulfportenergy.com/about/board-of-directors
I also think suspending stock repurchase program in favor of debt reduction is a rather bold move that puts the Company in a better position over long-term. Not only are they retiring debt at 70 cents on the dollar, they;re saving the interest burden! As a shareholder, I'd prefer to see them strengthen the company by reducing debt service to survive what could end up being pro-longed low gas prices.
It's about time a Company took some bold action! Great job in my view!
Re: GPOR hunkers down: lower/longer NG
My view is that President David Wood is laser focused on maximizing shareholder value. He has carefully assessed the assets and liabilities of the company he inherited and has carefully navigated some treacherous waters to right the ship. He is very transparent and so far has executed the plan he has laid out. Probably not a growth company anymore but certainly a great value that I believe will be realized over time with this leadership. Buying discounted debt is very smart imho.
Re: GPOR hunkers down: lower/longer NG
I have never been a big fan of stock buybacks. To survive an extended period of low gas prices, it is much better to buy back debt at a discount, which improves the balance sheet and gives a boost to quarterly earnings. Gulfport reported a gain of $23.6 million on debt repurchases at a discount in Q3 and more will be coming in Q4. < These are non-cash gains that do not impact my valuation model, but they do improve the balance sheet ratios, eventually justify using a higher multiple of operating cash flow to value the stock.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: GPOR hunkers down: lower/longer NG
From our updated profile on Gulfport dated 11/26/2019
Stock and Bond Repurchases
In January 2019, Gulfport's board of directors authorized the Company to acquire a portion of its outstanding common stock within a 24-month period. There were no additional share purchases made during the third quarter of 2019.
Gulfport repurchased approximately $105 million principal amount of its senior notes for a total cash spend of approximately $80 million during the third quarter of 2019.
Subject to market conditions, the Company intends to opportunistically repurchase its outstanding debt or stock going forward, but is under no obligation to do so.
Gulfport’s goal is to purchase and retire 30% of their outstanding common stock, but in my opinion repurchasing debt at a big discount is a much better use of the company's free cash flow.
Non-Core Asset Divestitures
Gulfport recently agreed to monetize certain overriding royalty interests associated with assets held in the Bakken to a third party for approximately $8.0 million in cash. Net production from the assets averaged 68.6 Boe per day during the nine months ended September 30, 2019. The effective date of the transaction is July 1, 2019 and the transaction is expected to close in the fourth quarter of 2019.
The Company continues to make progress on the previously announced divestiture of water infrastructure assets Gulfport holds across its SCOOP position. Entry into a definitive agreement for this process is expected prior to year-end 2019 with closing shortly thereafter.
Gulfport is also pursuing a potential sale of certain non-operated interests in the Utica Shale. The proceeds of this potential sale would offset the larger-than-anticipated non-operated capital spend in the Utica Shale incurred during the nine-months ended September 30, 2019. Gulfport expects to enter into a definitive agreement on this divestiture prior to year-end 2019.
Production and Realized Prices
Gulfport’s net daily production for the third quarter of 2019 averaged approximately 1,527.0 MMcfe per day. For the third quarter of 2019, Gulfport’s net daily production mix was comprised of approximately 93% natural gas, 5% natural gas liquids ("NGL") and 2% oil. The Company's realized prices, including cash settlements on their hedges were $2.21/mcf of natural gas, $56.40/bbl of crude oil and $20.97/bbl of NGLs.
Stock and Bond Repurchases
In January 2019, Gulfport's board of directors authorized the Company to acquire a portion of its outstanding common stock within a 24-month period. There were no additional share purchases made during the third quarter of 2019.
Gulfport repurchased approximately $105 million principal amount of its senior notes for a total cash spend of approximately $80 million during the third quarter of 2019.
Subject to market conditions, the Company intends to opportunistically repurchase its outstanding debt or stock going forward, but is under no obligation to do so.
Gulfport’s goal is to purchase and retire 30% of their outstanding common stock, but in my opinion repurchasing debt at a big discount is a much better use of the company's free cash flow.
Non-Core Asset Divestitures
Gulfport recently agreed to monetize certain overriding royalty interests associated with assets held in the Bakken to a third party for approximately $8.0 million in cash. Net production from the assets averaged 68.6 Boe per day during the nine months ended September 30, 2019. The effective date of the transaction is July 1, 2019 and the transaction is expected to close in the fourth quarter of 2019.
The Company continues to make progress on the previously announced divestiture of water infrastructure assets Gulfport holds across its SCOOP position. Entry into a definitive agreement for this process is expected prior to year-end 2019 with closing shortly thereafter.
Gulfport is also pursuing a potential sale of certain non-operated interests in the Utica Shale. The proceeds of this potential sale would offset the larger-than-anticipated non-operated capital spend in the Utica Shale incurred during the nine-months ended September 30, 2019. Gulfport expects to enter into a definitive agreement on this divestiture prior to year-end 2019.
Production and Realized Prices
Gulfport’s net daily production for the third quarter of 2019 averaged approximately 1,527.0 MMcfe per day. For the third quarter of 2019, Gulfport’s net daily production mix was comprised of approximately 93% natural gas, 5% natural gas liquids ("NGL") and 2% oil. The Company's realized prices, including cash settlements on their hedges were $2.21/mcf of natural gas, $56.40/bbl of crude oil and $20.97/bbl of NGLs.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group