Gulfport Energy (GPOR) - Utica Update

[dan_s]

The Ohio Department of Natural Resources released 3Q13 well-by-well production data for
the Utica. Included was production data for GPOR.

The Ohio Department of Natural resources released data on 239 wells with production in 3Q13. There
are several things to note about the data set.
> They are excluding wells that had no 3Q13 production or produced only water, along with one well that produced for only one day.
> Most wells in the Utica are somewhat constrained by infrastructure, which can make the data difficult to compare.
> In addition, not all the wells were on production for all of 3Q13, and some of the wells have already produced substantial hydrocarbons in prior periods, making their rates not comparable with newer wells.
> The gas volumes are reported as wet gas, so NGLs have yet to be stripped out. The inclusion of NGLs would lead to higher rates, especially on the gassier wells.
> Operators also use substantially different lateral lengths in the Utica, and this data is not adjusted.

GPOR's wells look like some of the best in the sample.
The data set included 24 of GPOR's Utica wells.
On average, GPOR's wells produced around 5.2 MMcfepd (68% gas), which is quite solid. Split into
condensate and gas wells, the 19 condensate wells averaged 3.9 MMcfepd (60% gas), while the gas wells
averaged 10.3 MMcfepd (99% gas). Some notable wells include the original Boy Scout 1-33H, which is
still producing 2.2 MMcfepd, although its oil cut is now only around 42% (57% of original IP rate). The
offset Boy Scout 2-33H produced nearly 600 Bopd on average during 3Q13 (5.5 MMcfepd total, 35%
gas), which makes it a strong oil well. GPOR's Stutzman 1-14H was the strongest of its gas wells (14.0
MMcfepd), while the other four gas wells all produced 9-10 MMcfepd.

Gulfport's 3rd quarter production was 12,977 boepd. I am expecting them to report 4th quarter production near 20,000 boepd. My 2014 forecast and my Fair Value Estimate ($75.50) are based on the low end of the company's guidance (50,000 boepd) for 2014.

At this point it is very difficult for me to know the mix of their future production. For 2014, I am assuming 56% natural gas, 24% NGLs and 20% crude oil. Most of their legacy production in Louisiana is oil.

Another Utica Shale producer to watch is REXX.

[dan_s]

Gulfport Energy (GPOR): An updated Net Income & Cash Flow Forecast model has been posted under the Sweet 16 Tab. I have increased my Fair Value Estimate $3 to $75.50.

First Call's Price Target is $78.03

[bearcatbob]

"Gulfport Energy Corporation Announces 2013 Exit Rate and Provides Update on Production
Ticker Symbol: U:GPOR

OKLAHOMA CITY, Jan. 6, 2014 (GLOBE NEWSWIRE) -- Gulfport Energy Corporation (Nasdaq:GPOR) ("Gulfport") today announced that it achieved record daily production of approximately 27,780 barrels of oil equivalent per day ("BOEPD") on December 31, 2013.

James Palm, Gulfport's Chief Executive Officer, commented, "We entered 2013 producing approximately 6,300 BOEPD and exited the year producing 27,780 BOEPD, which was over 340% in growth during this period. This is a significant milestone for Gulfport employees and shareholders. We are diligently working to execute on our 2014 program and look forward to substantial growth as a company during 2014 as we continue to develop our Utica Shale assets.""

[dan_s]

Gulfport currently estimates that fourth quarter 2013 production was approximately 1.5 million barrels of oil equivalent. Production during the first quarter of 2014 is currently expected to be relatively flat compared to the Company's 2013 exit rate due to scheduled downtime on existing producing wells resulting from completion operations conducted on offset wells on the same pad.

Q4 production less than what I had in my model, but definitely heading a lot higher.

My valuation is based on the low end of their 2014 guidance of 50,000 to 60,000 Boe per day.

[dan_s]

An updated forecast model for GPOR is now available under the Sweet 16 Tab. Just click on the Gulfport logo.

[setliff]

Gulfport Energy sees flat Q1 production, downgraded at RBC

Jan 7 2014, 08:42 Gulfport Energy (GPOR) is downgraded to Sector Perform from Outperform with a $61 price target, cut from $64, at RBC after GPOR indicated it expects Q1 production to come in relatively flat.

The firm thinks the flat guidance may make GPOR's FY 2014 guidance difficult to hit, as the bottom end would require an average of ~57K boe/day for Q2-Q4; also, given the big industry growth in the Utica, the play will have a challenging operational environment in the medium term given infrastructure, terrain, weather and workforce quality concerns (Briefing.com)

[dan_s]

We need to hear it from GPOR, not an RBC analyst. My take is that Q1 production will be "flat" with the exit rate, not flat with Q4. So, Q4 production of approximately 16,500 boepd will go to around 27,000 boepd in Q1. You won't find many E&P companies with growth like that.

Production delays due to midstream issues do not bother me. Those are just timing issues. Focus on the actual well results and reserve report. I am also eager to get details on the production mix and product pricing.

I think GPOR has a very significant asset in their Canadian Oil Sands company (Grizzly), which the market gives them very little credit for. Grizzly should be ramping up production this year.

My valuation is based on the low end of GPOR production guidance. It will stay there until the company changes their guidance. We should get more details when Q4 results and CC arrive.