Summary
Gulfport reported good Q3 results. Production was slightly above expectation, but it has limited potential for growth. The balance sheet is very healthy. Q3 profit was close to my expectation. The FCF is healthy and well capable of paying down existing senior notes and credit facilities. Shareholder returns are generous.
Gulfport in my 84-company ranking sits in the top 25 at a high 15th position.
Production
• Since it came out of Chapter 11 in 2021, Gulfport production has been held in a tight range of 950-1,050 MM scfe/d.
• Proven reserves (4.0 tcf = 10.3 years of 2025 production) and a moderate RRR (0.71) indicate that production can be maintained, but that there is limited potential for production growth.
• Q3 production (1,120 MM scfe/d) was well above the Q2 production (1,006 M scfe/d).
• Gulfport did not provide a Q3 outlook. I had expected a production of 1,090 MM scfe/d.
• Gulfport indicated earlier that Q4 production will be 20% above Q1. This is equivalent to 1,120 MM scfe/d. I expect a Q4 production of 1,090 MM scfe/d.
• Gulfport lowered its 2025 guidance to 1,040 MM scfe/d. I expect a 2025 production of 1,044 MM scfe/d.
• After 2025 production will remain near 2025 levels with limited potential for growth, although Gulfport claims it has 500 drilling locations equivalent to 12 years of drilling.
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Balance sheet
• Gulfport has a healthy balance sheet.
• Coming out of Chapter 11, the balance sheet no doubt has received continuously a lot of management attention.
• Equity ratio (=equity/balance sheet total) improved from a good 59.7% (Q2) to an even better 62.5% (Q3).
• Long-term debt reduced with $ 3 M from $ 695 M (Q2) to $ 692 M (Q3).
• The debt/EBITDA ratio is a good 0.84. With higher gas prices the debt EBITDA ratio can fall further towards in the end of 2025 a very healthy 0.5-0.6 level.
• The balance sheet allows generous shareholder returns.
Profitability
• Gulfport is a profitable company.
• Q3 realized gas prices ($ 2.61 /MM Btu)were lower than I had expected ($ 2.71/MM Btu) and well below Q2 ($ 2.97/MM Btu).
• Q3 profits (eps=$ 4.98) were above Q2 profits (eps=$ 4.38), mainly due the higher production. I had expected an eps in Q3 of $ 4.94.
• Operational costs were close to what I had expected.
• With almost no oil content, profits are almost independent of oil prices.
• For 2025 I expect an eps (excluding non-cash hedging) of $ 19.50 (PE=10.1).
• After 2026 the eps can initially increase to $ 21-22 due to higher gas prices, to fall back to $ 18 once gas prices recede.
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• Gulfport is generating significant amounts of FCF, also under lower oil prices.
• Gulfport has to repay $ 650 M of 6.75% unsecured notes in 2029 and $ 50 M on a credit facility in 2028. There are no scheduled debt repayments in the period 2026-2027 and in 2030..
• The FCF should be adequate to repay the debts.
• Of course there is no need to repay all the loans. Some expiring loans can be rolled over into new loans with a later maturation date.
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• Gulfport does not pay dividends, but buys back shares.
• Share buybacks were $ 60 M (Q1), $ 65 M (Q2) and $ 76.3 M in Q3.
• I Gulfport has indicated share buybacks of $ 125 M for Q4, leading to a high shareholder return of 9.1%.
• After 2025 shareholder returns can increase to 11-12%.
Conclusions
Gulfport reported good Q3 results. Production was slightly above expectation, but it has limited potential for growth. The balance sheet is very healthy. Q3 profit was close to my expectation. The FCF is healthy and well capable of paying down existing senior notes and credit facilities. Shareholder returns are generous.
Gulfport in my 84-company ranking sits in the top 25 at a high 15th position.