Gulfport Energy Update - Dec 20

[dan_s]

I just got off the phone with Jessica Wills, Director of Investor Relations with GPOR. This is a very good move for the company. David Wood is a good choice. He is well respected and extremely well connected. He knows that Gulfport's stock is grossly under-valued. I also found out that Gulfport has been able to take advantage of some very good spot market prices for gas this month. - Dan
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OKLAHOMA CITY, Dec. 18, 2018 (GLOBE NEWSWIRE) -- Gulfport Energy Corporation (NASDAQ: GPOR) (“Gulfport” or the “Company”) today announced that its Board of Directors has appointed David M. Wood, a 40-year oil and gas industry veteran, to serve as President and Chief Executive Officer, effective immediately. Mr. Wood will also join the Company’s Board of Directors. Donnie Moore, who served as Interim Chief Executive Officer during a nationwide search led by Heidrick & Struggles for a chief executive to lead Gulfport for the long term, will continue to serve as the Company’s Chief Operating Officer and report to Mr. Wood.

Mr. Wood joins Gulfport from Arsenal Resources LLC, a West Virginia focused natural gas producer and First Reserve Corporation portfolio company, where he most recently served as Chairman of its Board of Directors and previously held the role of Chief Executive Officer. From 2013 to 2016, Mr. Wood served as a Senior Advisor to First Reserve, a premier energy-focused private equity firm, serving on several portfolio company boards. Prior to that, he spent more than 17 years at Murphy Oil Corporation, including as Chief Executive Officer, President, and Director from 2009 until his retirement in 2012. From 1980 to 1994, Mr. Wood held various senior positions with Ashland Exploration and Production. He began his career as a well-site geologist in Saudi Arabia. Mr. Wood currently serves on the board of Lilis Energy, Inc. (NYSE: LLEX), an exploration and development company operating in the Delaware Basin.

Mr. Wood commented, “I am excited to join the Gulfport team. The opportunity to build upon the asset base and drive value creation from the Company’s tremendous platform is very attractive and compelling. I look forward to getting to know our people over the coming weeks, immersing myself into the details of our asset base, and working to help drive shareholder returns.”

David L. Houston, Chairman of the Gulfport Board, said, “We are very pleased to welcome David as Gulfport’s new chief executive. After an extensive search, the Board is fully confident that David has the right mix of industry vision and experience, leadership skills and deep industry knowledge to lead Gulfport into the future. We look forward to drawing upon David’s experiences with a preeminent energy-focused private equity firm and as a CEO of a Fortune 100 company as well as his skills as a disciplined allocator of capital. We believe his strategic and operating experience in all stages of the energy value chain will further enhance our strategy and help us capitalize on the Company’s attractive assets.”

“We also want to thank Donnie for taking on the additional responsibility of serving as the Company’s chief executive on an interim basis during the search period,” continued Mr. Houston. “His nearly three decades of management and technical experience in the industry allowed him to seamlessly integrate into the role, continue to drive efficient execution of Gulfport’s operations, and maintain the strong performance standards for which the Company is known. We look forward to his continued valuable contributions as our Chief Operating Officer.”

David M. Wood holds a B.S. (Hons) Geology from the University of Nottingham in England and completed Harvard University’s Advanced Management Program. Mr. Wood previously served on the Board of Directors and as an Executive Committee Member of the American Petroleum Institute. He was also a member of the National Petroleum Council and is a member of the Society of Exploration Geophysicists. His past board affiliations include Crestwood Midstream GP LLC, Crestwood Equity GP LLC, Deep Gulf Energy LP, and Berkana Energy, when it was majority owned by Murphy Oil.

About Gulfport
Gulfport Energy is an independent natural gas and oil company focused on the exploration and development of natural gas and oil properties in North America and is one of the largest producers of natural gas in the contiguous United States. Headquartered in Oklahoma City, Gulfport holds significant acreage positions in the Utica Shale of Eastern Ohio and the SCOOP Woodford and SCOOP Springer plays in Oklahoma. In addition, Gulfport holds an acreage position along the Louisiana Gulf Coast, has an approximately 22% equity interest in Mammoth Energy Services, Inc. (NASDAQ:TUSK) and has a position in the Alberta Oil Sands in Canada through its 25% interest in Grizzly Oil Sands ULC. For more information, please visit www.gulfportenergy.com.

Investor Contact:
Jessica Wills – Director, Investor Relations
jwills@gulfportenergy.com
405-252-4550

[dave_n]

Dan

I’ve noticed a growing short position on GPOR lately. Almost up to 10% of shares outstanding. Do you have any insight on who is shorting or what they’re seeing?

Thx
Dave

[dan_s]

No, I don't know who is shorting GPOR.

Keep in mind that a lot of hedge funds maintain large short positions in a lot of stocks.

There is a belief that there will be a big surge of natural gas production in 2019. EIA has been saying we have a gas surplus for over a year, yet the amount of gas in storage is at a critical low level. We do have a lot of gas reserves and gas supply is growing, but demand for U.S. gas (the cheapest primary energy source on Earth) is also growing rapidly.

I just finished updating my forecast/valuation model for Range Resources (RRC). RRC closed at $9.64 on Friday, December 28. In the last 3 months, 10 ranked analysts set 12-month price targets for RRC that range from $17.00 to $26.00. The average price target among the analysts is $20.89. RRC has double digit annual production growth locked in for 2018, 2019 and 2020. Its growth is now fully funded by cash flow from operations and it will generate FREE CASH FLOW in Q4 2018 and in 2019 and 2020. Yet the stock is trading at just 2X operating cash flow per share. If you can explain this, then you can explain why someone would short GPOR. I sure can't think of any good reason for the "gassers" to continue to trade a insanely low prices.

One "Polar Vortex" will draw a lot of attention to the gassers.

[bobs]

The FCF won't happen if the NG prices drop way down and with all the continued growth in production even though demand grows the gassers values may stay down or continue to go lower which has been what seems to be going on for some years.
RRC is 10 and although many analysts think it could be 20 it is still 10 and that perhaps is because of the above.

[ChuckGeb]

If AR and GPOR are using FCF currently to pay down debt and buying stock under their stock repurchase plans, the shorts will be soon suffering the kind of pain we have endured. Looking forward to a turn in the tables in 2019.

[dan_s]

Go to the Range Resources website and look at their December presentations. On the 3rd slide it shows that at RRC's current share price it has an Enterprise Value of less than the value of its SEC Proved Reserves PV10 value. That should never happen. SEC rules are extremely conservative and it is a good bet that when they publish their 12/31/2018 reserve report it will show a much higher PV10 value. A company like RRC with over a decade of low-risk drilling inventory should be trading a double or triple the PV10 value of just its proved reserves (P1).

An upstream E&P company should never trade below book value. SEC accounting rules require public companies to write down their assets to current value at the end of each quarter if there is a big drop in commodity prices. AR, GPOR and RRC are all trading at less than half their book value.

There are many upstream companies trading way below net asset value today, which is why I anticipate a significant uptick in M&A activity in the sector in early 2019.