Gulfport Energy (GPOR)

[dan_s]

I have updated the Gulfport forecast model and it will be up on the EPG website by tomorrow. My valuation of $46.00/share has not changed.

Gulfport's 2nd quarter production came in at the low end of their guidance, but it was offset by better realized commodity prices. Revenues in Q2 should be approximately $170 million, compared to $157 million in Q1.

I was especially pleased to see a 43% increase in their realized NGL price from Q1 to Q2. It is important to understand that NGL prices are much more important to all three of our "gassers" (AR, RRC and GPOR) than oil prices are. GPOR's realized natural gas price only increased $0.04/mmbtu from Q1 to Q2 because they have such a high percentage of their gas hedged.
> AR has more than 100% of their forecast natural gas production for 2016 and 2017 hedged, so current prices have no impact on their revenues.
> RRC has ~79% of their 2016 natural gas production hedged at $3.22

GPOR's gas production was down quarter-over-quarter because they have decided to choke back production. Why sell gas at $2.00 now when you can wait a few months and sell it for more than $3.00/mmbtu? GPOR sold 579,945 mcfpd in Q2 when their actual production capacity is probably more like 700,000 mcfpd.

Listen to my podcast from last Saturday to understand why gas prices are going to be a lot higher within less than six months.

[jb2257]

GPOR had a bad day on Friday, but I'm still holding. It seems wall street was not thrilled with their update.

[dan_s]

Listen to my July 16 podcast and you will understand why "the stars are coming into alignment" for higher gas and NGL prices. It is the rapidly falling associated gas production in the oil shale plays that is setting up a very tight natural gas market heading into next winter.

"Associated gas" from oil wells is high btu and high in NGL content.

[dan_s]

Read this: http://finance.yahoo.com/news/gulfport- ... 12543.html