GPOR is one of my Top Picks for exposure to natural gas because they have a strong balance sheet, giving them the flexibility to respond to improving fundamentals for gas. Updating my forecast model now. - Dan
Gulfport has a weird way of reporting oil & gas revenues. They net their mark-to-market adjustments on hedges against the line items for natural gas, oil and NGL revenues. Since they have a very high percentage of their gas hedged at good prices, they have a big non-cash writedown on the value of their gas hedges at the end of Q2 which cause Gas Revenues to show up as a negative number. Actual revenues (including the cash settlements on hedges) was approximately $170.4 million vs the ($28.2 million) they show at the top of their income statement. No other company that I follow reports revenues like this and maybe this will cause Gulfport to change how they report in the future. I think the negative revenues are "shocking" to investors and may explain the dip in the share price.
OKLAHOMA CITY, Aug. 03, 2016 (GLOBE NEWSWIRE) -- Gulfport Energy Corporation (NASDAQ:GPOR) (“Gulfport” or the “Company”) today reported financial and operational results for the quarter ended June 30, 2016 and provided an update on its 2016 activities. Key information for the second quarter of 2016 includes the following:
•Net production averaged 664.7 MMcfe per day.
•Realized natural gas price, before the impact of derivatives and including transportation costs, averaged $1.44 per Mcf, a $0.51 per Mcf differential to the average trade month NYMEX settled price.
•Realized oil price, before the impact of derivatives and including transportation costs, averaged $42.00 per barrel, a $3.60 per barrel differential to the average WTI oil price.
•Realized natural gas liquids price, before the impact of derivatives and including transportation costs, averaged $14.04 per barrel, or $0.33 per gallon.
•Net loss of $339.8 million, or $2.71 per diluted share.
•Adjusted net income (as defined and reconciled below) of $30.4 million, or $0.24 per diluted share. < Beat my forecast
•Adjusted EBITDA (as defined and reconciled below) of $102.2 million.
•Reduced unit lease operating expense for the second quarter of 2016 by 38% to $0.24 per Mcfe from $0.39 per Mcfe in the second quarter of 2015.
•Reduced unit midstream gathering and processing expense for the second quarter of 2016 by 15% to $0.65 per Mcfe from $0.76 per Mcfe in the second quarter of 2015.
•Expect to drill an incremental 17 to 18 net wells and turn-to-sales an additional 10 to 11 net wells on its operated Utica acreage during 2016 and now budget 2016 total capital expenditures to be $475 to $550 million.
Michael G. Moore, Chief Executive Officer, commented, “With an improving fundamental outlook for natural gas and the recent strengthening in commodity prices, our strong financial position has provided us with the ability to react quickly and increase our activity within the basin. While our previous guidance contemplated a reduction in our program throughout 2016, we now plan to increase our activity in the near-term to take advantage of an improving natural gas market as we enter 2017, providing us leverage at a point in time when we see significant potential for strength in the curve."
"When you combine constructive natural gas fundamentals with our high quality asset base, we would expect to further increase our development pace during 2017, above and beyond the three-rig program we have running today. With the natural gas strip above $3.00, we believe our financial position comfortably supports a six-rig program. Based on our current estimates, we anticipate this level of activity would result in year-over-year growth of approximately 20 to 25 percent while spending $675 to $725 million on drilling and completion capex. As we move through the remainder of 2016, we will continue to monitor the pricing environment and refine our views as we consider the appropriate level of activities for 2017. Should natural gas prices improve further, we would look to expand our rig count beyond a six-rig scenario. Assuming an eight-rig program, we estimate this level of activity would result in year-over-year growth in 2017 of approximately 25 to 30 percent while spending $850 to $900 million in drilling and completion capex during 2017. These scenarios assume all incremental activity would be added on January 1, 2017, which, due to cycle times, would result in less than a full-year impact to production during 2017. Looking into 2018, we estimate a six-rig program in 2017 would generate nearly 35 percent year-over-growth in 2018 over 2017 and an eight-rig program during 2017 would generate close to 50 percent growth in 2018 over 2017,” stated Mr. Moore.
Gulfport Energy (GPOR)
Gulfport Energy (GPOR)
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Gulfport Energy (GPOR)
I have updated my forecast model and it will be posted to the EPG website later today.
My valuation comes down $1.00 to $45.00, compared to First Call's price target of $36.00. My valuation comes down a bit because I have lowered my 2017 production estimate to the company's guidance, but Gulfport has a history of "under-promising and over-delivering". If gas and NGL prices go where I think they are heading, GPOR has the ability to ramp up production. Their Utica Shale wells are capable of very high rates of production. They have several wells chocked back today. They also have a compression issue that is being resolved (see discussion of this in the press release) and will result in a spike in production from Q3 to Q4 (just in time for higher gas prices).
Today's natural gas storage report confirms for me that the U.S. gas market is going to be MUCH TIGHTER by the time winter rolls around. If you don't agree that gas prices are heading higher then the "gassers" (AR, GPOR and RRC) may not be right for you. Each of us have to make our own calls.
Keep in mind that the North American gas market is almost a "closed market". We have very little import capacity, except for pipelines from Canada and the Canadians will have less gas to ship to the U.S. this winter. We are also sending via pipeline about 3 Bcfpd to Mexico that is committed under long-term supply contracts. The U.S. natural gas market will be approximately 5 Bcf per day tighter this winter than it was last winter.
My valuation comes down $1.00 to $45.00, compared to First Call's price target of $36.00. My valuation comes down a bit because I have lowered my 2017 production estimate to the company's guidance, but Gulfport has a history of "under-promising and over-delivering". If gas and NGL prices go where I think they are heading, GPOR has the ability to ramp up production. Their Utica Shale wells are capable of very high rates of production. They have several wells chocked back today. They also have a compression issue that is being resolved (see discussion of this in the press release) and will result in a spike in production from Q3 to Q4 (just in time for higher gas prices).
Today's natural gas storage report confirms for me that the U.S. gas market is going to be MUCH TIGHTER by the time winter rolls around. If you don't agree that gas prices are heading higher then the "gassers" (AR, GPOR and RRC) may not be right for you. Each of us have to make our own calls.
Keep in mind that the North American gas market is almost a "closed market". We have very little import capacity, except for pipelines from Canada and the Canadians will have less gas to ship to the U.S. this winter. We are also sending via pipeline about 3 Bcfpd to Mexico that is committed under long-term supply contracts. The U.S. natural gas market will be approximately 5 Bcf per day tighter this winter than it was last winter.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group