Stifel comments on GPOR Q2 press release:
Management Provides Detailed Breakdown of Utica Acreage
As anticipated, management released its initial dry Utica type curve. However,
unexpectedly, management released a comprehensive overhaul that included
three new distinct Utica dry gas type curves (East, Central, West), as well as one
new wet gas and two new condensate curves. The company's dry Utica wells are
estimated to have EURs ranging from 17.2 to 20.7 Bcf, 15% to 38% higher than
our prior estimates. Alternatively, the company's new wet and condensate type
curves (excluding the ethane uplift) generate EURs of 16 Bcfe in the wet and
8.1/5.7 in the condensate windows, an average of 11% and 8% below our prior
estimates. Based on $3/MMBtu (before transportation and basis differentials),
management estimates its dry Utica assets are generating IRRs ranging from
31%-36%. We estimate its dry Utica assets are economic down to a realized price
just below $2.00/MMBtu.
Raising NAV on New and Updated Type Curves
Based on management's comprehensive update, we are increasing our NAV 11%
to $69/share (Exhibit 1). Of note, we are conservatively risking the company's
acreage and assuming the company develops 560 dry Utica locations, below
management's estimate of 878 locations. As GPOR continues to de-risk its
acreage, inclusion of an additional 15% of the dry Utica acreage, or 160 net
locations, could provide an additional 15% upside to our NAV.
GPOR
Re: GPOR
Drew Venker, CFA – Morgan Stanley
August 6, 2015 2:53 AM GMT
In line type curve update overshadowed by outsized 2015 production guidance raise. We expect shares to react positively to the update.
Dry gas type curve slightly lower than RICE but economics comparable. As expected, Gulfport updated Utica wet gas and condensate type curves for its managed pressure program and unveiled its dry gas type curve. The update was highlighted by the dry gas type curve (the largest portion of GPOR's inventory), which was established at 2.4 Bcf/1,000' (weighted average of GPOR's three dry gas areas) for a well cost of $1.3 million/1,000'. This compares to RICE's EUR of 2.5 Bcf/1,000' for $1.5 million/1,000'. The most comparable data point is in GPOR's Dry Gas West region, which was established at 2.2 Bcf/1,000' EUR, below RICE. Given RICE's type curve is largely based on wells it has drilled in this area, we believe this is the best point of comparison for GPOR's type curve. However, with lower well costs in the play relative to RICE we expect this will be viewed as an in line update. IRRs equate to 88% at $4/MMBtu gas, in line with RICE at 87% (including RICE's midstream benefit).
Wet gas EUR above expectations. GPOR established an ethane rejection EUR of 2.0 Bcfe/1,000', slightly below the midpoint of the original EUR range of 2.1 Bcfe/1,000' (ethane rejection). Based on production data provided by GPOR, expectations were for this EUR to come in below the low-end of the old range (1.8 Bcfe/1,000' in ethane rejection).
Condensate EURs below expectations. GPOR's condensate EUR of 0.8 Bcfe/1,000 came in slightly below the midpoint of the old range (0.86 Bcfe/1,000', adjusted for ethane rejection). Expectations were for this to come in closer to the high-end of the range (1.0 Bcfe/ 1,000').
2015 production guidance raised well above expectations. On the back of two consecutive quarterly production beats, Gulfport raised 2015 production guidance to 517-541 MMcfe/d, 10% above the high-end of prior guidance and 6% above MS at the midpoint.
August 6, 2015 2:53 AM GMT
In line type curve update overshadowed by outsized 2015 production guidance raise. We expect shares to react positively to the update.
Dry gas type curve slightly lower than RICE but economics comparable. As expected, Gulfport updated Utica wet gas and condensate type curves for its managed pressure program and unveiled its dry gas type curve. The update was highlighted by the dry gas type curve (the largest portion of GPOR's inventory), which was established at 2.4 Bcf/1,000' (weighted average of GPOR's three dry gas areas) for a well cost of $1.3 million/1,000'. This compares to RICE's EUR of 2.5 Bcf/1,000' for $1.5 million/1,000'. The most comparable data point is in GPOR's Dry Gas West region, which was established at 2.2 Bcf/1,000' EUR, below RICE. Given RICE's type curve is largely based on wells it has drilled in this area, we believe this is the best point of comparison for GPOR's type curve. However, with lower well costs in the play relative to RICE we expect this will be viewed as an in line update. IRRs equate to 88% at $4/MMBtu gas, in line with RICE at 87% (including RICE's midstream benefit).
Wet gas EUR above expectations. GPOR established an ethane rejection EUR of 2.0 Bcfe/1,000', slightly below the midpoint of the original EUR range of 2.1 Bcfe/1,000' (ethane rejection). Based on production data provided by GPOR, expectations were for this EUR to come in below the low-end of the old range (1.8 Bcfe/1,000' in ethane rejection).
Condensate EURs below expectations. GPOR's condensate EUR of 0.8 Bcfe/1,000 came in slightly below the midpoint of the old range (0.86 Bcfe/1,000', adjusted for ethane rejection). Expectations were for this to come in closer to the high-end of the range (1.0 Bcfe/ 1,000').
2015 production guidance raised well above expectations. On the back of two consecutive quarterly production beats, Gulfport raised 2015 production guidance to 517-541 MMcfe/d, 10% above the high-end of prior guidance and 6% above MS at the midpoint.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: GPOR
My updated forecast mode for GPOR will be available on the website this afternoon.
If you believe natural gas prices are going higher (I sure do), then you need to take a hard look at Gulfport.
My valuation has increased $1.50/share to $56.50. This compares to First Call's Price Target of $53.04, which I am sure will be going up after analysts digest what the company reported today.
If you believe natural gas prices are going higher (I sure do), then you need to take a hard look at Gulfport.
My valuation has increased $1.50/share to $56.50. This compares to First Call's Price Target of $53.04, which I am sure will be going up after analysts digest what the company reported today.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group