Gulfport Energy (GPOR)

[dan_s]

Q4 production came in slightly above my forecast. Updating forecast model now. - Dan

OKLAHOMA CITY, Feb. 17, 2016 (GLOBE NEWSWIRE) -- Gulfport Energy Corporation (GPOR) (“Gulfport” or the “Company”) today reported financial and operational results for the quarter and year ended December 31, 2015 and provided an update on its 2016 activities. Key information includes the following:

•Year-end 2015 total proved reserves grew to 1.7 Tcfe, as compared to 933.6 Bcfe at year-end 2014, an increase of 83% year-over-year.
•Net production during the full year of 2015 averaged 548.2 MMcfe per day, exceeding the high-end of Gulfport’s 2015 annual guidance of 541 MMcfe per day.
•Adjusted net loss (as defined and reconciled below) of $16.2 million, or $0.16 per diluted share, for the full year of 2015.
•Adjusted EBITDA (as defined and reconciled below) of $361.7 million for the full year of 2015.
•Budgeted 2016 drilling and completion expenditures are $335 million to $375 million.
•Budgeted 2016 total capital expenditures are $425 million to $475 million, approximately 36% to 43% lower than total 2015 capital expenditures.
•Forecasted 2016 full year production is estimated to be 695 MMcfe to 730 MMcfe per day, an increase of approximately 27% to 33% over the average daily net production of 548.2 MMcfe per day during 2015.
•Increased hedge position to approximately 480 MMcf per day of natural gas fixed price swaps for 2016 at an average fixed price of $3.29 per Mcf, securing over 75% of its anticipated natural gas production at a favorable average price.
•Bank syndicate recently reaffirmed Gulfport’s borrowing base of $700 million.

[dan_s]

I have updated my forecast model for Gulfport and it will be posted to the EPG website this evening.

It is all heading in the right direction for this one and they have many years of low-risk development drilling inventory in the heart of the Utica Shale play.
> Guidance is for production to grow more than 30% YOY in 2016
> Operating expenses keep coming down
> More than 75% of 2016 natural gas is hedged at $3.29/mmbtu. They also have good hedges in place for 2017 and 2018.
> Cash on hand + cash flow from operations should cover their entire capital program in 2016
> Strong balance sheet + plenty of liquidity to fund growth
> GPOR is well positioned to take advantage of an attractive M&A market in the Marcellus/Utica

My valuation increases to $43.30/share, compared to First Call's price target of $35.14.

GPOR is primarily a "gasser", but they hold 24.9% in Grizzly Oil Sands, which gives them exposure to oil if crude oil prices rebound. Grizzly holds assets in Canada that hold several hundred million barrels of heavy oil. P2 reserves net to Gulfport's interest are close to 50 million barrels of recoverable oil using SAGD method. See the GPOR website for more on this. There is nothing in my valuation of GPOR for Grizzly.

[setliff]

has production ever started in the grizzly?

[dan_s]

Several successful pilot projects, but Grizzly is on hold until oil prices rebound. GPOR has "impaired" the investment in Grizzly to zero. I give it no value today, BUT it does have HUGE upside potential if oil prices get back to the $70 range.