Patrick Gundlach, CFA, joined M&I Investment Management Corp., a wholly owned subsidiary of BMO Financial Group, in June 2004 as an Analyst for the Small-Cap Growth and Mid-Cap Growth strategies. He was named Co-Manager in 2007. Previously, he was a Research Analyst for the Nicholas Company, Inc., where he focused on small- and mid-cap equities. He holds BBA and M.S. degrees in finance from the University of Wisconsin. He previously was a Senior Analyst focused on growth stocks for Tucker Anthony Sutro and also for C.L. King & Associates, where he began his investment career in 1986. He earned his B.A. degree cum laude in economics from the State University of New York at Potsdam.
TWST: What are some of your favorite ideas or stories right now? Maybe we can start with one that fits that category.
Mr. Gundlach: I'll start with a company called Gulfport Energy (GPOR). This is a U.S. producer of oil and gas, very heavily focused on oil production. More than 90% of their production is oil as opposed to natural gas, so the current pricing surrounding the two fuels is very favorable for them. We initially purchased the stock a little bit over a year ago, starting in the $15 range after we saw increasing rates of production and reserve growth. At that point in time, we needed to dig in and understand how were they generating this improvement and whether it could continue.
We saw that they had some very strong, mature properties in Louisiana where they were generating good production growth and very strong excess cash flow. Gulfport has been redeploying that excess free cash flow into some of their other areas, generating even more production growth and the potential for future production growth, including areas in West Texas, the Canadian oil sands, and very recently, the Utica Shale in Ohio, which is currently, in our view, one of the hottest oil and gas areas in the country. Based on the acreage blocks they've assembled in these and other areas, we see the potential for Gulfport to generate strong, double-digit production growth as far as the eye can see just with their current projects. So the stock has been a strong performer for us, but it continues to be an above-average-weighted position as we still see a lot of potential, especially as the Utica Shale is further developed by the industry.
GPOR: One man's opinion
GPOR: One man's opinion
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
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bearcatbob
Re: GPOR: One man's opinion
Dan, I consider GPOR am extra high risk play. Further price appreciation IMO depends on the Utica. Thankfully Ohio is not governed by fools - but the anti fracking campaign is really heating up. I fear we can no longer assume sanity will rule.
Bob
Bob
Re: GPOR: One man's opinion
I will be sending out a new "Sweet 16 Detailed Update" on Monday. Here are my current thoughts to GPOR.
GPOR is planning a 20 well drilling program in the Utica Shale in 2012. I don't see it as high risk. If they first couple wells do not look good they will stop. GPOR has plenty of upside in it other projects.
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Gulfport Energy Corp. (NASDAQ: GPOR) is an oil focused small-cap E&P with multiple production growth catalysts. Approximately 90 percent of their current production is crude oil.
Gulfport is on its way to becoming a major player in the Utica Shale
Gulfport reported strong 3rd quarter results that beat my forecast. They are selling 85% of their production into the Gulf Coast market where they get more than a $10/bbl premium to WTI. They are getting the premium price even on their hedged volumes. Production was up 12% from the previous year’s 3rd quarter to 6,415 boepd. Gulfport is expected to exit 2011at over 7,200 boepd.
The company is now positioned to deliver many years of double digit production growth.
My Fair Value estimate for Gulfport is $37.30/share.
o They are getting premium prices for 85% of their production since they are selling the oil into the Gulf Coast market.
o The Permian Basin is on its way to becoming a second core area of production.
o Gulfport has established a significant acreage block in the oil prone area of the Utica Shale with drilling to begin soon.
o Their ownership in the Grizzly Oil Sands project gives GPOR significant upside beyond 2011.
o GPOR made a major discovery in Thailand and we should be getting extended production test results during the 1st quarter
Gulfport has a rock solid Balance Sheet and current cash flow from operations exceeds the Company’s capital expenditures. Excess cash is being used to acquire additional acreage (see new Utica Shale acquisition) and pay down debt.
The company recently raised $111 million in new equity, with the money to be used primarily to accelerate their Utica Shale drilling program.
Oil production is up more than 26% since January, 2010 and I’m expecting that trend to continue as this year’s capital program is heavily weighted to development of their oil reserves. Based on company guidance, production is going up 17% in 2011 and on-track to go up another 33% in 2012.
For the third quarter of 2011, net production was 545,362 barrels of oil, 196,418 thousand cubic feet ("MCF") of natural gas and 505,270 gallons of natural gas liquids ("NGL"), or 590,128 BOE. Net production for the third quarter of 2011 by region was
• 358,680 BOE at West Cote Blanche Bay ("WCBB"),
• 147,281 BOE at Hackberry,
• 72,719 BOE in the Permian Basin
• 11,448 BOE in the Bakken, Niobrara and other areas.
West Cote Blanche Bay – shallow waters offshore Louisiana
At WCBB, Gulfport drilled eight wells and performed sixteen recompletions during the third quarter of 2011. Gulfport is currently drilling ahead on the seventeenth well of 2011 at the field. During 2012, Gulfport has budgeted to spend $42 million to $45 million to drill twenty-two to twenty-four wells and perform approximately sixty recompletions at West Cote.
Hackberry – onshore Louisiana
At Hackberry, Gulfport drilled six wells and performed six recompletions during the third quarter of 2011. At present, Gulfport has two rigs active at Hackberry drilling the seventeenth and eighteenth wells of 2011 at the field. During 2012, Gulfport has budgeted to spend $24 million to $26 million to drill ten to twelve wells and perform approximately ten recompletions at Hackberry.
Permian
In the Permian, 32 gross (14.3 net) wells have been drilled to date. They now have three rigs active in the play. Gulfport now holds over 14,700 acres in the Permian with 226 PUD locations and 234 gross probable locations. During 2012, Gulfport has budgeted to spend $23 million to $25 million to drill twenty-three to twenty-five gross wells in the Permian.
Niobrara – Colorado & Wyoming
Gulfport recently finished shooting a proprietary 60 square mile 3-D seismic survey over its Craig Dome prospect and currently expects to have fully processed 3-D seismic data by the end of 2011. In addition, Gulfport recently concluded drilling three vertical wells in the Niobrara, all of which are currently in various stages of completion. During 2012, Gulfport has budgeted to spend $5 million to $6 million in the Niobrara which would allow the Company to drill six to seven gross vertical wells.
Utica Shale – a new area for oil development beyond 2011
Gulfport currently has approximately 125,000 gross (62,500 net) acres under lease in the Utica Shale in Eastern Ohio. During 2012, Gulfport has budgeted to spend $72 million to $76 million to drill approximately twenty gross wells in the Utica. Gulfport currently plans to begin drilling in January 2012 and plans to add a second rig in April 2012, although Gulfport is also evaluating other potential opportunities relating to its Utica acreage.
The company believes that most of their acreage is rich in liquids.
Gulfport announced a major natural gas discovery in Thailand
Operational Update
Thailand – Discovery could be “multiple TCF in size”
Tatex III, a company in which Gulfport owns a 17.9% interest, concluded drilling operations on the TEW-E well in March 2011, the second exploratory well drilled by Tatex III on an approximate one-million acre concession block in Northeastern Thailand.
The well was drilled to a total depth of 15,026 feet and logged over 5,000 feet of apparent possible gas saturated column. TEW-E experienced gas shows and carried a flare measuring up to 25 feet after drilling below the intermediate casing point of 9,695 feet. Tatex III attempted to test the well in July but encountered a debris blockage in the open-hole portion of the TEW-E wellbore that prevented its testing.
Tatex recently took delivery of a rig and began workover operations on the TEW-E well. During 2012, Gulfport has budgeted approximately $6 million to be spent in Thailand for potentially drilling a confirmation well and testing other prospects on our acreage.
Canadian Oil Sands
Grizzly Oil Sands, a company in which Gulfport owns a 24.9999% interest, currently has a leasehold position in the Canadian oil sands totaling approximately 712,327 acres. As previously announced, the Alberta Energy Resources Conservation Board and Ministry of Environment have completed their review of Grizzly's Algar Lake Project application, and the fabrication of modules for Algar Lake's central processing facility is already underway. During 2012, Gulfport has budgeted approximately $40 million to $43 million for the construction of Grizzly's Algar Lake Project and Grizzly's 2011/2012 winter drilling program.
Gulfport has a solid base of oil production in Louisiana. From that base, they have “layers” of oil-focused development projects and potential world class resources plays in Canada and Thailand that lock in significant growth for at least five years.
GPOR is planning a 20 well drilling program in the Utica Shale in 2012. I don't see it as high risk. If they first couple wells do not look good they will stop. GPOR has plenty of upside in it other projects.
_______________________________________________________
Gulfport Energy Corp. (NASDAQ: GPOR) is an oil focused small-cap E&P with multiple production growth catalysts. Approximately 90 percent of their current production is crude oil.
Gulfport is on its way to becoming a major player in the Utica Shale
Gulfport reported strong 3rd quarter results that beat my forecast. They are selling 85% of their production into the Gulf Coast market where they get more than a $10/bbl premium to WTI. They are getting the premium price even on their hedged volumes. Production was up 12% from the previous year’s 3rd quarter to 6,415 boepd. Gulfport is expected to exit 2011at over 7,200 boepd.
The company is now positioned to deliver many years of double digit production growth.
My Fair Value estimate for Gulfport is $37.30/share.
o They are getting premium prices for 85% of their production since they are selling the oil into the Gulf Coast market.
o The Permian Basin is on its way to becoming a second core area of production.
o Gulfport has established a significant acreage block in the oil prone area of the Utica Shale with drilling to begin soon.
o Their ownership in the Grizzly Oil Sands project gives GPOR significant upside beyond 2011.
o GPOR made a major discovery in Thailand and we should be getting extended production test results during the 1st quarter
Gulfport has a rock solid Balance Sheet and current cash flow from operations exceeds the Company’s capital expenditures. Excess cash is being used to acquire additional acreage (see new Utica Shale acquisition) and pay down debt.
The company recently raised $111 million in new equity, with the money to be used primarily to accelerate their Utica Shale drilling program.
Oil production is up more than 26% since January, 2010 and I’m expecting that trend to continue as this year’s capital program is heavily weighted to development of their oil reserves. Based on company guidance, production is going up 17% in 2011 and on-track to go up another 33% in 2012.
For the third quarter of 2011, net production was 545,362 barrels of oil, 196,418 thousand cubic feet ("MCF") of natural gas and 505,270 gallons of natural gas liquids ("NGL"), or 590,128 BOE. Net production for the third quarter of 2011 by region was
• 358,680 BOE at West Cote Blanche Bay ("WCBB"),
• 147,281 BOE at Hackberry,
• 72,719 BOE in the Permian Basin
• 11,448 BOE in the Bakken, Niobrara and other areas.
West Cote Blanche Bay – shallow waters offshore Louisiana
At WCBB, Gulfport drilled eight wells and performed sixteen recompletions during the third quarter of 2011. Gulfport is currently drilling ahead on the seventeenth well of 2011 at the field. During 2012, Gulfport has budgeted to spend $42 million to $45 million to drill twenty-two to twenty-four wells and perform approximately sixty recompletions at West Cote.
Hackberry – onshore Louisiana
At Hackberry, Gulfport drilled six wells and performed six recompletions during the third quarter of 2011. At present, Gulfport has two rigs active at Hackberry drilling the seventeenth and eighteenth wells of 2011 at the field. During 2012, Gulfport has budgeted to spend $24 million to $26 million to drill ten to twelve wells and perform approximately ten recompletions at Hackberry.
Permian
In the Permian, 32 gross (14.3 net) wells have been drilled to date. They now have three rigs active in the play. Gulfport now holds over 14,700 acres in the Permian with 226 PUD locations and 234 gross probable locations. During 2012, Gulfport has budgeted to spend $23 million to $25 million to drill twenty-three to twenty-five gross wells in the Permian.
Niobrara – Colorado & Wyoming
Gulfport recently finished shooting a proprietary 60 square mile 3-D seismic survey over its Craig Dome prospect and currently expects to have fully processed 3-D seismic data by the end of 2011. In addition, Gulfport recently concluded drilling three vertical wells in the Niobrara, all of which are currently in various stages of completion. During 2012, Gulfport has budgeted to spend $5 million to $6 million in the Niobrara which would allow the Company to drill six to seven gross vertical wells.
Utica Shale – a new area for oil development beyond 2011
Gulfport currently has approximately 125,000 gross (62,500 net) acres under lease in the Utica Shale in Eastern Ohio. During 2012, Gulfport has budgeted to spend $72 million to $76 million to drill approximately twenty gross wells in the Utica. Gulfport currently plans to begin drilling in January 2012 and plans to add a second rig in April 2012, although Gulfport is also evaluating other potential opportunities relating to its Utica acreage.
The company believes that most of their acreage is rich in liquids.
Gulfport announced a major natural gas discovery in Thailand
Operational Update
Thailand – Discovery could be “multiple TCF in size”
Tatex III, a company in which Gulfport owns a 17.9% interest, concluded drilling operations on the TEW-E well in March 2011, the second exploratory well drilled by Tatex III on an approximate one-million acre concession block in Northeastern Thailand.
The well was drilled to a total depth of 15,026 feet and logged over 5,000 feet of apparent possible gas saturated column. TEW-E experienced gas shows and carried a flare measuring up to 25 feet after drilling below the intermediate casing point of 9,695 feet. Tatex III attempted to test the well in July but encountered a debris blockage in the open-hole portion of the TEW-E wellbore that prevented its testing.
Tatex recently took delivery of a rig and began workover operations on the TEW-E well. During 2012, Gulfport has budgeted approximately $6 million to be spent in Thailand for potentially drilling a confirmation well and testing other prospects on our acreage.
Canadian Oil Sands
Grizzly Oil Sands, a company in which Gulfport owns a 24.9999% interest, currently has a leasehold position in the Canadian oil sands totaling approximately 712,327 acres. As previously announced, the Alberta Energy Resources Conservation Board and Ministry of Environment have completed their review of Grizzly's Algar Lake Project application, and the fabrication of modules for Algar Lake's central processing facility is already underway. During 2012, Gulfport has budgeted approximately $40 million to $43 million for the construction of Grizzly's Algar Lake Project and Grizzly's 2011/2012 winter drilling program.
Gulfport has a solid base of oil production in Louisiana. From that base, they have “layers” of oil-focused development projects and potential world class resources plays in Canada and Thailand that lock in significant growth for at least five years.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group