Gulfport Energy Q1 Results

[dan_s]

Another rock solid quarter as the company stays on-track for over 20% YOY production growth.

OKLAHOMA CITY, May 08, 2018 (GLOBE NEWSWIRE) -- Gulfport Energy Corporation (GPOR) (“Gulfport” or the “Company”) today reported financial and operational results for the quarter ended March 31, 2018 and provided an update on its 2018 activities. Key information includes the following:
•Net production averaged 1,288.6 MMcfe per day during the first quarter of 2018.
•Net income of $90.1 million, or $0.50 per diluted share, for the first quarter of 2018.
•Adjusted net income of $101.9 million, or $0.56 per diluted share, for the first quarter of 2018. < Compares to my forecast of $0.36 EPS
•Adjusted EBITDA of $247.9 million for the first quarter of 2018.
•Reduced unit operating expense, including lease operating expense, midstream gathering and processing expense, production tax expense and general and administrative expense, for the first quarter of 2018 by 11% to $0.88 per Mcfe from $0.99 per Mcfe for the fourth quarter of 2017. < This is a big reason for the EPS beat
•Completed previously announced stock repurchase program of $100 million during first quarter of 2018 by acquiring 9.7 million shares.
•Expanded stock repurchase program to acquire up to an additional $100 million of outstanding common stock during 2018 for a total of $200 million.
•Sold 25% equity interest in Strike Force Midstream LLC ("Strike Force") for $175 million.
•Reduced 2018 non-drilling and completion ("D&C") capital expenditures by $20 million following the sale of Gulfport's equity interest in Strike Force.
•Budgeted 2018 total capital expenditures to be in the range of $750 million to $815 million and funded within cash flow.
•Increased forecasted 2018 production and estimate 2018 full year net production to average 1,310 MMcfe to 1,340 MMcfe per day, an increase of approximately 20% to 23% over the average daily net production of 1,089.2 MMcfe per day during 2017.
•Currently estimate second quarter of 2018 net production to average 1,300 MMcfe to 1,320 MMcfe per day.
•Gulfport's lead lenders have proposed an increase to Gulfport's borrowing base to $1.4 billion from $1.2 billion, subject to the approval of the additional banks within the syndicate, with Gulfport's elected commitment to remain at $1.0 billion.
•Increased hedge position to approximately 948 BBtu per day of natural gas fixed price swaps during 2018 at an average fixed price of $3.05 per MMBtu and a large base level of 662 BBtu per day of natural gas fixed price swaps during 2019 at an average fixed price of $2.84 per MMBtu.

Chief Executive Officer and President, Michael G. Moore, commented, "Gulfport began the year strong both operationally and financially, delivering on several of our strategic objectives planned for 2018. The outperformance of our base production wedge and new well delivery in the SCOOP positioned us well in the first quarter and led to an increase in our forecasted average daily volumes for the full year, highlighting the quality of our asset base and further bolstering the free cash flow generated from our 2018 activities. Gulfport remains steadfastly committed to funding our total 2018 capital budget from cash flow and estimate that roughly two-thirds of the capital budget will be invested during the first half of the year, with spend decreasing significantly in the third and fourth quarters.

We were opportunistic and aggressive with our stock repurchase program and completed the full $100 million authorization in the open market prior to the end of the first quarter. We remain committed to realizing the most value for our stockholders. As we evaluate the best uses of our available liquidity, we will consider a range of options, including stock repurchases and debt reduction, practicing discipline as we allocate capital to programs and strategic initiatives that we believe have the highest return potential. Furthermore, our commitment to demonstrating capital discipline is highlighted by our board’s decision to include a metric relating to Gulfport's return on average capital employed into Gulfport's 2018 annual incentive plan targets, which are intended to maximize the value of every dollar we invest and our commitment to the Gulfport stockholders."

[dan_s]

I have updated my forecast/valuation model for GPOR. It will be posted to the EPG website tonight.

Gulfport just keeps putting up solid results quarter-after-quarter, despite rather weak natural gas prices. Improving liquids prices help, but it is the company's increasing production combined with decreasing operating expenses that causes me to increase my valuation to $27.25/share.

BTW ~80% of this year's natural gas production is hedged at $3.01/MMBtu and they have rich gas that produces a lot of valuable NGLs.

The stock repurchase plan is also having an impact on the per share valuation.

Tuesday's closing price of $9.05 compares to my operating cash flow per share estimate for 2018 of $4.85. This company has over 20% production growth locked in, has a strong balance sheet and they are funding their 2018 D&C budget entirely from operating cash flow. There is no justification that I can see for this stock trading at less than 2X CFPS.

GPOR is just too "gassy" for Wall Street these days.

[dan_s]

Nice to see that others are finally seeing how under-valued GPOR is.

https://finance.yahoo.com/news/why-gulf ... 00585.html