Energy Prospectus

These are two very good wells that produce high BTU gas and lots of liquids. Gulfport should finish 2017 with year-over-year production growth of 52%. I am forecasting 30% YOY production growth in 2018. The company has now completed to sales eleven SCOOP wells and they are all very good wells. You can find a table showing all eleven wells in yesterday's press release. My valuation of GPOR is $30.00, which compares to First Call's price target of $19.08.


OKLAHOMA CITY, Dec. 21, 2017 (GLOBE NEWSWIRE) -- Gulfport Energy Corporation (GPOR) (“Gulfport” or the “Company”) today provided an update on recent SCOOP Sycamore and SCOOP Woodford well results. Key highlights include:

Gulfport’s first SCOOP Sycamore well, the Serenity 5-22H, produced at a 24-hour initial peak production rate of 15.7 MMcfe per day, or 2,618 Mcfe per 1,000 foot of lateral, comprised of approximately 70% natural gas, 19% natural gas liquids and 11% oil. When normalized to the Company’s standard 7,500 foot lateral, the Serenity 5-22H produced at a 24-hour initial rate of 19.6 MMcfe per day.

The Winham 7-22H, a wet gas Woodford well, produced at a 24-hour initial peak production rate of 23.4 MMcfe per day, or 4,779 Mcfe per 1,000 foot of lateral, comprised of approximately 64% natural gas, 18% natural gas liquids and 18% oil. When normalized to the Company’s standard 7,500 foot lateral, the Winham 7-22H produced at a 24-hour initial rate of 35.8 MMcfe per day.

Recent Initial 24-Hour SCOOP Sycamore Well Result

Gulfport recently turned-to-sales a Sycamore well located in southern Grady County, Oklahoma. The Serenity 5-22H has a stimulated lateral length of 5,980 feet and a 24-hour initial peak production rate of 12.6 MMcf per day and 282 barrels of oil per day. Based upon the composition analysis, the gas being produced is 1,143 BTU gas and yielding 39.2 barrels of NGLs per MMcf of natural gas and results in a natural gas shrink of 13%. On a three-stream basis, the Serenity 5-22H produced at a 24-hour initial production peak rate of 15.7 MMcfe per day, which is comprised of approximately 70% gas, 19% natural gas liquids and 11% oil.

Recent Initial 24-Hour SCOOP Woodford Well Result

Gulfport recently turned-to-sales a Woodford well located in the wet gas window in southern Grady County, Oklahoma. The Winham 7-22H has a stimulated lateral length of 4,898 feet and a 24-hour initial peak production rate of 17.3 MMcf per day and 701 barrels of oil per day. Based upon the composition analysis, the gas being produced is 1,146 BTU gas and yielding 40.0 barrels of NGLs per MMcf of natural gas and results in a natural gas shrink of 13%. On a three-stream basis, the Winham 7-22H produced at a 24-hour initial production peak rate of 23.4 MMcfe per day, which is comprised of approximately 64% natural gas, 18% natural gas liquids and 18% oil.

Apparently, their news falls on deaf ears.......................

As I said in the last podcast, the price of natural gas today makes no sense. Natural gas storage below the 5-year average in the middle of December is usually a sure sign that gas prices are going up. Over the next two weeks there is going to be a BIG INCREASE in demand for natural gas.

Watch the daily update here: https://www.weatherbell.com/premium/

The cold wave that is going to hit Chicago on New Years Day may cause a draw from natural gas storage of more than 300 Bcf for the week ending January 5th. We have not seen a weekly draw from storage over 300 Bcf in at least six years. The largest draw during the last five years was 288 Bcf the second week of January, 2014 and it took gas up to $5.00/MMBtu.

I have no control over the traders that set the natural gas prices on NYMEX, but a weather event like this is going to have an impact on the physical market. It might also reduce supply because nights below zero cause production problems like wellhead and flow line freeze ups. I will be stunned if it does not impact the physical market in a big way.

Gulfport is going to report strong Q4 results. Go look at the GPOR forecast model which you can view on the EPG website. Note that Gulfport has ~72% of their Q4 natural gas hedged at $3.19, so today's gas price has very little impact on the forecast for Q4. Scroll down the spreadsheet and tell us how much gas that the have hedged for 2018. I can tell you now, but you will get more out of it by learning to us the forecast models yourself.

"Gassers" are out of favor on Wall Street these days, but the Wall Street Herd can change directions quickly.

If you feel uncomfortable holding GPOR, then you should sell it. There are lots of upstream oil companies that are undervalued these days.

Run a one year chart that shows all three of our gassers (AR, GPOR and RRC) on the same chart. You will see that all three companies are still trading near their 52-week lows. However, they have all started to move higher.

Range Resources (RRC) has had the worst year of these three. RRC's operating cash flow per share is on-track to be $3.45 in 2017, compared to $2.02 per share in 2016. RRC's production is up 30% YOY. So, I think you'd agree that it is rather hard to explain why the share price is down 52% YTD.

Only four of the Sweet 16 are trading near the top of their 52-week range: CXO, CLR, EOG and FANG

100% of the Sweet 16 are in much better shape today than they were a year ago.

The weather has not been this bullish for natural gas demand in several decades. See update at https://www.weatherbell.com/premium/


The only reasonable explanation for why oil and gas prices aren't a heck of a lot higher is that there is the perception on Wall Street that there is a massive amount of supply just waiting to be released. Yes, we have a lot of natural gas reserves in the ground. There is no debate about it. However, "reserves in the ground" and "production capacity" are two totally different things. My expectation (call it a hope) is that this artic air covering the eastern 2/3s of the U.S. will change the Wall Street "paradigm" about natural gas. Regardless, we will see natural gas storage levels plunge through January.