Gulfport Energy Corporation Reports Second Quarter 2018 Results

OKLAHOMA CITY, Aug. 01, 2018 (GLOBE NEWSWIRE) — Gulfport Energy Corporation (NASDAQ: GPOR) (“Gulfport” or the “Company”) today reported financial and operational results for the quarter and six months ended June 30, 2018 and provided an update on its 2018 activities.  Key information includes the following:

• Net production averaged 1,330.3 MMcfe per day during the second quarter of 2018.
• Net income of $111.3 million, or $0.64 per diluted share, for the second quarter of 2018.
• Adjusted net income (as defined and reconciled below) of $57.0 million, or $0.33 per diluted share, for the second quarter of 2018.
• Adjusted EBITDA (as defined and reconciled below) of $213.6 million for the second quarter of 2018.
• Repurchased 10.5 million shares of the Company’s common stock at a weighted-average share price of $10.47 during 2018 through August 1, 2018.
• Reiterated 2018 total capital expenditures to be in the range of $750 million to $815 million and funded within cash flow.
• Increased estimated 2018 full year net production and now forecast an average of 1,320 MMcfe to 1,340 MMcfe per day, an increase of approximately 21% to 23% over the average daily net production of 1,089.2 MMcfe per day during 2017.
• Currently estimate net production for the third quarter of 2018 to average approximately 1,360 MMcfe per day.
• Large 2018 hedge position of approximately 948 BBtu per day of natural gas fixed price swaps at an average fixed price of $3.05 per MMBtu.
• Increased 2019 hedge position to approximately 1,154 BBtu per day of natural gas fixed price swaps at an average fixed price of $2.81 per MMBtu.

Chief Executive Officer and President, Michael G. Moore, commented, “Gulfport had a solid second quarter and we continue to show consistency in our ability to execute by exceeding our production estimates and increasing the narrow-end of our 2018 production guidance while strictly adhering to our 2018 capital budget. During the quarter, we hedged a large portion of our anticipated 2019 natural gas production, mitigating the volatility in the commodity price and giving us a high degree of certainty in our anticipated cash flow.

Gulfport’s activities year-to-date have positioned us well as we continue to execute on our commitment to capital discipline and achieve free cash flow generation in the back half of the year. As we weigh the opportunities for uses of free cash flow, we will continue to consider all options, including additional share repurchases and debt reduction, remaining disciplined as we allocate capital and demonstrating our commitment to the Gulfport stockholders with every dollar invested.”

Stock Repurchase Program
As of August 1, 2018, the Company has repurchased 10.5 million shares at a weighted-average share price of $10.47 during 2018. Since initiating the share repurchase program in February 2018, Gulfport has reduced its shares outstanding by over five percent.

Gulfport’s board of directors has authorized the Company to acquire up to $200 million of its outstanding common stock during 2018 and approximately $90 million remains under the current authorization.  Purchases under the repurchase program may be made from time to time in open market or privately negotiated transactions, and will be subject to market conditions, applicable legal requirements, contractual obligations and other factors. The repurchase program does not require the Company to acquire any specific number of shares. The Company intends to purchase shares under the repurchase program opportunistically with available funds while maintaining sufficient liquidity to fund its 2018 capital development program. This repurchase program is authorized to extend through December 31, 2018 and may be suspended from time to time, modified, extended or discontinued by the board of directors at any time.

Second Quarter of 2018 Financial Results
For the second quarter of 2018, Gulfport reported net income of $111.3 million, or $0.64 per diluted share, on revenues of $252.7 million.  For the second quarter of 2018, EBITDA (as defined and reconciled below for each period presented) was $268.0 million and cash flow from operating activities before changes in operating assets and liabilities (as defined and reconciled below for each period presented) was $183.8 million.  Gulfport’s GAAP net income for the second quarter of 2018 includes the following items:

• Aggregate non-cash derivative loss of $76.8 million.
• Aggregate gain of $0.2 million attributable to net insurance proceeds in connection with legacy environmental litigation settlement.
• Aggregate gain of $122.0 million in connection with the sale of Gulfport’s equity interests in certain equity investments.
• Aggregate gain of $8.9 million in connection with Gulfport’s equity interests in certain equity investments.

Excluding the effect of these items, Gulfport’s financial results for the second quarter of 2018 would have been as follows:

• Adjusted oil and gas revenues of $329.6 million.
• Adjusted net income of $57.0 million, or $0.33 per diluted share.
• Adjusted EBITDA of $213.6 million.

Six-Months Ended June 30, 2018 Financial Results
For the six-month period ended June 30, 2018, Gulfport reported net income of $201.4 million, or $1.13 per diluted share, on revenues of $578.1 million.  For the six-month period ended June 30, 2018, EBITDA (as defined and reconciled below for each period presented) was $504.0 million and cash flow from operating activities before changes in operating assets and liabilities (as defined and reconciled below for each period presented) was $400.8 million.  Gulfport’s GAAP net income for the six-month period ended June 30, 2018 includes the following items:

• Aggregate non-cash derivative loss of $102.2 million.
• Aggregate gain of $0.2 million attributable to net insurance proceeds in connection with legacy environmental litigation settlement.
• Aggregate gain of $122.0 million in connection with the sale of Gulfport’s equity interests in certain equity investments.
• Aggregate gain of $22.4 million in connection with Gulfport’s equity interests in certain equity investments.

Excluding the effect of these items, Gulfport’s financial results for the six-month period ended June 30, 2018 would have been as follows:

• Adjusted oil and gas revenues of $680.4 million.
• Adjusted net income of $158.9 million, or $0.89 per diluted share.
• Adjusted EBITDA of $461.5 million.

Production and Realized Prices
Gulfport’s net daily production for the second quarter of 2018 averaged approximately 1,330.3 MMcfe per day. For the second quarter of 2018, Gulfport’s net daily production mix was comprised of approximately 89% natural gas, 7% natural gas liquids (“NGL”) and 4% oil.

Gulfport’s realized prices for the second quarter of 2018 were $1.86 per Mcf of natural gas, $33.46 per barrel of oil and $0.45 per gallon of NGL, resulting in a total equivalent price of $2.09 per Mcfe. Gulfport’s realized prices for the second quarter of 2018 include an aggregate non-cash derivative loss of $76.8 million. Before the impact of derivatives, realized prices for the second quarter of 2018, including transportation costs, were $2.15 per Mcf of natural gas, $66.26 per barrel of oil and $0.71 per gallon of NGL, for a total equivalent price of $2.67 per Mcfe.

The table below summarizes Gulfport’s second quarter of 2018 production by asset area:

2018 Capital Expenditures
For the six-month period ended June 30, 2018, Gulfport’s drilling and completion (“D&C”) capital expenditures totaled $483.5 million and non-D&C capital expenditures totaled $76.2 million.

2018 Financial Position and Liquidity
As of June 30, 2018, Gulfport had cash on hand of approximately $119.2 million. As of June 30, 2018, Gulfport’s $1.4 billion revolving credit facility, under which Gulfport has an elected commitment of $1.0 billion, had outstanding borrowings of $75.0 million and outstanding letters of credit totaling $257.3 million.

2018 Capital Budget and Production Guidance Update

Gulfport reaffirms its expectation that its 2018 D&C capital expenditures will be in the range of $630 million to $685 million and its 2018 non-D&C capital expenditures will be approximately $120 million to $130 million, including leasehold activities.

Based on results during the six-month period ended June 30, 2018, Gulfport has increased its production guidance and now forecasts its 2018 average daily net production will be in the range of 1,320 MMcfe to 1,340 MMcfe per day, an increase of 21% to 23% over its 2017 average daily net production of 1,089.2 MMcfe per day. For the third quarter of 2018, Gulfport estimates that its average daily net production will be in the range of 1,360 MMcfe per day.

Based on actual results during the six-month period ended June 30, 2018 and utilizing current strip pricing at the various regional pricing points at which the Company sells its natural gas, Gulfport reiterates its guidance that realized natural gas price differential, before the effect of hedges and inclusive of the Company’s firm transportation expense, will average in the range of $0.58 to $0.72 per Mcf below NYMEX settlement prices in 2018. Gulfport reiterates its guidance with respect to its expected 2018 realized NGL price and oil price, and forecasts that its 2018 realized NGL price, before the effect of hedges and including transportation expense, will be approximately 45% to 50% of WTI and its 2018 realized oil price will be in the range of $3.00 to $3.50 per barrel below WTI.

The table below summarizes the Company’s updated full year 2018 guidance:

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