Gulfport Energy Update - Oct 18

[dan_s]

Q3 production comes in 69,700 MMcfe (11,617 Boe) per day above my forecast. - Dan

This press release came out AFTER THE MARKETS CLOSED on October 18.

OKLAHOMA CITY, Oct. 18, 2018 (GLOBE NEWSWIRE) -- Gulfport Energy Corporation (GPOR) (“Gulfport” or the “Company”) today provided an update for the quarter and nine-months ended September 30, 2018. Key information includes the following:

•Net production during the third quarter of 2018 averaged 1,427.5 MMcfe per day, a 7% increase over the second quarter of 2018 and 19% increase versus the third quarter of 2017.
•Realized natural gas price for the third quarter of 2018, before the impact of derivatives and including transportation costs, averaged $2.32 per Mcf, a $0.58 per Mcf differential to the average trade month NYMEX settled price.
•Realized oil price for the third quarter of 2018, before the impact of derivatives and including transportation costs, averaged $68.73 per barrel, a $0.77 per barrel differential to the average WTI oil price.
•Realized natural gas liquids price for the third quarter of 2018, before the impact of derivatives and including transportation costs, averaged $0.74 per gallon, equivalent to $31.18 per barrel, or approximately 45% of the average WTI oil price.
•Realized natural gas price for the nine-months ended September 30, 2018, before the impact of derivatives and including transportation costs, averaged $2.30 per Mcf, a $0.59 per Mcf differential to the average trade month NYMEX settled price.
•Realized oil price for the nine-months ended September 30, 2018, before the impact of derivatives and including transportation costs, averaged $64.96 per barrel, a $1.83 per barrel differential to the average WTI oil price.
•Realized natural gas liquids price for the nine-months ended September 30, 2018, before the impact of derivatives and including transportation costs, averaged $0.72 per gallon, equivalent to $30.30 per barrel, or approximately 45% of the average WTI oil price.
•Gulfport turned-to-sales 11 gross and net operated wells in the Utica Shale and 7 gross (5.4 net) operated wells in the SCOOP during the third quarter of 2018. < This is very good news.

Chief Executive Officer and President, Michael G. Moore, commented, "The third quarter marked another outstanding operational quarter for Gulfport, delivering a 7% increase in total production per day and realizing strong price realizations across all of our products. Gulfport’s third quarter production increase was driven by the continued outperformance of our base production wedge, an active turn-in-line schedule and an increase in ethane recovery during the quarter, maximizing the value received for the natural gas liquids stream.”

Third Quarter 2018 Production and Realized Prices

Gulfport’s net daily production for the third quarter of 2018 averaged approximately 1,427.5 MMcfe per day. For the third quarter of 2018, Gulfport’s net daily production mix was comprised of approximately 89% natural gas, 8% NGL and 3% oil.

Gulfport’s realized prices for the third quarter of 2018 were $2.44 per Mcf of natural gas, $51.26 per barrel of oil and $0.57 per gallon of NGL, resulting in a total equivalent price of $2.75 per Mcfe. Gulfport's realized prices for the third quarter of 2018 include an aggregate non-cash derivative loss of $4.1 million. Before the impact of derivatives, realized prices for the third quarter of 2018, including transportation costs, were $2.32 per Mcf of natural gas, $68.73 per barrel of oil and $0.74 per gallon of NGL, for a total equivalent price of $2.82 per Mcfe.

[dan_s]

Gulfport's "realized" commodity prices, including the cash settlements on their hedges during the 3rd quarter were:
$2.40/mcf on 1,271,674 mcfpd of natural gas
$53.97/bbl on 7,225 bopd of crude oil (only 3% of their production)
$28.14/bbl on 18,742 bbls per day of NGLs

The big increase in NGL production, from 15,309 bpd in Q2 to 18,742 bpd in Q3, is the primary reason that Gulfport will beat the First Call EPS estimate by $0.08 to $0.10 for the 3rd quarter, on revenues that should be about $20 million over the First Call estimate.

[dan_s]

In the Company's Q2 financial results press release, Gulfport gave 2018 production guidance of 220,000 to 223,333 Boepd. With production growth accelerating in Q3 at a much faster pace than expected, it now looks like 2018 production will be in the range of 227,000 to 230,000 Boepd.

NOTE that GPOR is as close to a "pure gasser" as you can get. Only 3% of their production is crude oil.

My valuation is now raised $0.50/share to $29.00/share, which compares to First Call's price target of $15.22.

My updated forecast/valuation model will be posted to the EPG website this evening.

[dave_n]

And no reaction in aftermarket trading whatsoever... They must be blind...

[dan_s]

From TPH Morning Notes on October 19:

"Release last night highlights Q3'18 prod'n of 1,427.5mmcfe/d, well above TPHe/Street 1,370/1,360 and management's Q2 guidance of 1,360, driven by continued asset outperformance across both the SCOOP and Utica vs. our model, an active TIL schedule (11 gross/net operated Utica wells and 7 gross (5.4 net) operated SCOOP wells), and an increase in ethane recovery during the quarter. Pre-derivative gas realizations at $2.32/mcf vs. TPHe $2.25 per mcf, while NGLs priced at $31.18/bbl vs. TPHe $31.24/bbl. Looking ahead to the c-call, we're watchful for: i) where Q3 capex is shaking out (TPHe/Street $132/$133MM), ii) initial results on the company's first operated Upper Sycamore well result, and iii) updated thoughts on weighing longer-term growth vs. generating incremental FCF given current LT strip pricing. While we see 89% upside to our $20/shr NAV at $64 WTI / $2.67 HHUB / $70 Brent, a 3.0x 2020 EV/EBITDA and a 6.1x 2020 P/E, we remain a hold on concerns around 2019 gas fundamentals."

[ChuckGeb]

Shocking what has happened to GPOR’s stock this week. I sure hope the company is a buyer this week and banking a bunch of treasury stock!