Gulfport Energy Corporation Reports First Quarter 2019 Financial and Operating Results

OKLAHOMA CITY, May 02, 2019 (GLOBE NEWSWIRE) -- Gulfport Energy Corporation (NASDAQ: GPOR) (“Gulfport” or the “Company”) today reported financial and operational results for the three-months ended March 31, 2019 and provided an update on its 2019 activities.  Key information includes the following:

• Net production averaged 1,263.6 MMcfe per day during the first quarter of 2019.
• Net income of $62.2 million, or $0.38 per diluted share, for the first quarter of 2019.
• Adjusted net income (as defined and reconciled below) of $53.2 million, or $0.33 per diluted share, for the first quarter of 2019.
• Adjusted EBITDA (as defined and reconciled below) of $206.8 million for the first quarter of 2019.
• Gulfport drilled six gross (5.6 net) operated wells in the Utica Shale and four gross (3.1 net) operated wells in the SCOOP and had three gross wells in various stages of drilling at the end of the first quarter of 2019.
• Gulfport completed 25 gross and net operated wells in the Utica Shale and seven gross (6.7 net) operated wells in the SCOOP during the first quarter of 2019 and had eight gross wells in various stages of completion at the end of the first quarter of 2019.
• Gulfport turned-to-sales six gross and net operated wells in the Utica Shale and three gross (2.8 net) operated wells in the SCOOP during the first quarter of 2019, which includes six gross and net wells turned-to-sales after March 25, 2019.
• Repurchased 3.8 million shares of the Company's common stock through May 1, 2019.
• Reaffirmed 2019 total capital expenditures to be in the range of $565 to $600 million and funded entirely within cash flow.
  
• Reiterated 2019 full year net production to average 1,360 MMcfe to 1,400 MMcfe per day.
• Forecasted 2019 full year free cash flow in excess of $100 million.
• Maintained large 2019 hedge position of approximately 1,254 BBtu per day of natural gas fixed price swaps at an average fixed price of $2.83 per MMBtu.
  
• Increased oil hedge position to approximately 4,104 barrels per day of oil fixed price swaps at an average fixed price of $60.72 per barrel in 2019 and 6,000 barrels per day at an average fixed price of $59.82 per barrel in 2020.

Chief Executive Officer and President, David M. Wood, commented, "Gulfport is off to a strong start in 2019, beginning the year active in our core asset areas and remaining on track to deliver on our previously announced 2019 capital budget, operational outlook and commitment to free cash flow generation. Capitalizing on our drilled uncompleted well inventory, we began the year active on the ground and as previously mentioned, we forecast this robust level of activity will lead to a heavy turn in line schedule during the second quarter of 2019. We plan to progressively turn to sales in excess of 30 gross wells during the quarter, leading to solid production growth and positioning us well as we continue to execute on our 2019 program."

Mr. Wood continued, "In addition, we continue to simplify the portfolio through non-core asset monetizations and recently entered into an agreement to monetize a small footprint of Marcellus formation rights overlying a portion of our acreage in the Utica Shale of Eastern Ohio.  Consistent with our previous comments on our ongoing stock repurchase program, the anticipated proceeds of this transaction allowed Gulfport to repurchase approximately $30 million of Gulfport common stock during the first quarter of 2019, reducing our shares outstanding by approximately 2%. In addition, we expect to launch a process to divest certain water infrastructure assets Gulfport holds across our SCOOP position in the coming weeks, including water handling and water recycling facilities, and we plan to provide further details on the monetization process when appropriate. All in all, our 2019 program is off to a strong start and we remain focused on disciplined capital allocation, cash flow generation and enhancing shareholder returns going forward."

Stock Repurchase Program
As of May 1, 2019, the Company has repurchased 3.8 million shares totaling approximately $30 million during 2019.

In January 2019, Gulfport's board of directors authorized the Company to acquire up to $400 million of its outstanding common stock within a 24 month period and approximately $370 million remains available 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 2019 capital development program. This repurchase program may be suspended from time to time, accelerated, modified, extended or discontinued by the board of directors at any time.

First Quarter of 2019 Financial Results
For the first quarter of 2019, Gulfport reported net income of $62.2 million, or $0.38 per diluted share, on revenues of $320.6 million.  For the first quarter of 2019, EBITDA (as defined and reconciled below for each period presented) was $215.9 million and cash flow from operating activities before changes in operating assets and liabilities (as defined and reconciled below for each period presented) was $177.3 million.  Gulfport’s GAAP net income for the first quarter of 2019 includes the following items:

• Aggregate non-cash derivative gain of $4.8 million.
• Aggregate gain of $4.3 million in connection with Gulfport's equity interests in certain equity investments.

Excluding the effect of these items, Gulfport’s financial results for the first quarter of 2019 would have been as follows:

• Adjusted oil and gas revenues of $315.8 million.
• Adjusted net income of $53.2 million, or $0.33 per diluted share.
• Adjusted EBITDA of $206.8 million.

Production and Realized Prices
Gulfport’s net daily production for the first quarter of 2019 averaged approximately 1,263.6 MMcfe per day. For the first quarter of 2019, Gulfport’s net daily production mix was comprised of approximately 90% natural gas, 7% natural gas liquids ("NGL") and 3% oil.

Gulfport’s realized prices for the first quarter of 2019 were $2.54 per Mcf of natural gas, $52.35 per barrel of oil and $0.52 per gallon of NGL, resulting in a total equivalent price of $2.82 per Mcfe. Gulfport's realized prices for the first quarter of 2019 include an aggregate non-cash derivative gain of $4.8 million. Before the impact of derivatives, realized prices for the first quarter of 2019, including transportation costs, were $2.70 per Mcf of natural gas, $53.10 per barrel of oil and $0.58 per gallon of NGL, for a total equivalent price of $3.00 per Mcfe.

The table below summarizes Gulfport’s first quarter of 2019 production by asset area:

First Quarter 2019 Capital Expenditures
During the first quarter of 2019, Gulfport’s drilling and completion ("D&C") capital expenditures totaled $254.9 million and land capital expenditures totaled $20.1 million.  According to plan, the 2019 capital program is weighted to first half of 2019 and Gulfport reaffirmed its previously provided expectation that 2019 total capital expenditures will be approximately $565 million to $600 million.

2019 Financial Position and Liquidity
As of March 31, 2019, Gulfport had cash on hand of approximately $18.0 million. As of March 31, 2019, Gulfport’s $1.4 billion revolving credit facility, under which Gulfport has an elected commitment of $1.0 billion, had outstanding borrowings of $45.0 million and outstanding letters of credit totaling $271.1 million.

2019 Capital Budget and Production Guidance
Gulfport reaffirms its expectation that its 2019 total capital expenditures will be in the range of $565 million to $600 million, which will be funded entirely within cash flow at current strip pricing. With this level of capital spend, Gulfport continues to forecast its 2019 average daily net production will be in the range of 1,360 MMcfe to 1,400 MMcfe per day.

Based on actual results during the first quarter of 2019 and utilizing current strip pricing at the various regional pricing points at which the Company sells its natural gas, Gulfport reiterates its natural gas differential guidance and forecasts that its realized natural gas price, before the effect of hedges and inclusive of the Company’s firm transportation expense, will average in the range of $0.49 to $0.66 per Mcf below NYMEX settlement prices in 2018. In addition, Gulfport reiterates its oil differential guidance and forecasts that its 2019 realized oil price will be in the range of $3.00 to $3.50 per barrel below WTI. With respect to its expected realized NGL price, based on actual results to date and utilizing current strip pricing, Gulfport now forecasts its 2019 realized NGL price, before the effect of hedges and including transportation expense, will be approximately 40% to 45% of WTI.

The table below summarizes the Company’s updated full year 2019 guidance:

Operational Update
The table below summarizes Gulfport's activity for the three-month period ended March 31, 2019 and the number of net wells expected to be drilled and turned-to-sales for the remainder of 2019:

Utica Shale
In the Utica Shale, during the first quarter of 2019, Gulfport spud six gross (5.6 net) operated wells. The wells drilled during the first quarter of 2019 had an average lateral length of approximately 10,600 feet. Normalizing to an 8,000 foot lateral length, Gulfport's average drilling days during the first quarter of 2019 from spud to rig release totaled approximately 17.7 days, a decrease of 9% over full year 2018. In addition, Gulfport turned-to-sales six gross and net operated wells with an average stimulated lateral length of approximately 8,200 feet during the first quarter of 2019, which includes four gross and net wells turned-to-sales after March 25, 2019.

During the first quarter of 2019, net production from Gulfport’s Utica acreage averaged approximately 993.6 MMcfe per day.

At present, Gulfport has one operated horizontal drilling rig running in the play.

SCOOP
In the SCOOP, during the first quarter of 2019, Gulfport spud four gross (3.1 net) operated wells, which includes three gross wells targeting the Woodford formation and one gross well targeting the Sycamore formation. The wells drilled during this period had an average lateral length of approximately 8,000 feet. Normalizing to a 7,500 foot lateral length, Gulfport's average drilling days from spud to rig release totaled approximately 63.2 days, in line with the Company's full year 2018 results.  In addition, Gulfport turned-to-sales three gross (2.8 net) operated wells with an average stimulated lateral length of approximately 7,000 feet during the first quarter of 2019, which includes two gross and net wells turned-to-sales after March 25, 2019.

During the first quarter of 2019, net production from Gulfport's SCOOP acreage averaged approximately 259.9 MMcfe per day.

At present, Gulfport has two operated horizontal drilling rigs active in the play.

Derivatives
Gulfport has hedged a portion of its expected production to lock in prices and returns that provide certainty of cash flow to execute on its capital plans. The table below sets forth the Company's hedging positions as of May 1, 2019.

Presentation
An updated presentation has been posted to the Company’s website. The presentation can be found at www.gulfportenergy.com under the “Company Information” section on the “Investor Relations” page.  Information on the Company’s website does not constitute a portion of this press release.

Conference Call
Gulfport will hold a conference call on Friday, May 3, 2019 at 8:00 a.m. CDT to discuss its first quarter of 2019 financial and operational results and to provide an update on the Company’s recent activities.

Interested parties may listen to the call via Gulfport’s website at www.gulfportenergy.com or by calling toll-free at 866-373-3408 or 412-902-1039 for international callers.  A replay of the call will be available for two weeks at 877-660-6853 or 201-612-7415 for international callers.  The replay passcode is 13686821. The webcast will also be available for two weeks on the Company’s website and can be accessed on the Company’s “Investor Relations” page.

About Gulfport
Gulfport 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.

Forward Looking Statements
This press release includes “forward-looking statements” for purposes of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that Gulfport expects or anticipates will or may occur in the future, future capital expenditures (including the amount and nature thereof), business strategy and measures to implement strategy, competitive strength, goals, expansion and growth of Gulfport's business and operations, plans, market conditions, references to future success, reference to intentions as to future matters and other such matters are forward-looking statements. These statements are based on certain assumptions and analyses made by Gulfport in light of its experience and its perception of historical trends, current conditions and expected future developments as well as other factors it believes are appropriate in the circumstances. However, whether actual results and developments will conform with Gulfport's expectations and predictions is subject to a number of risks and uncertainties, general economic, market, credit or business conditions that might affect the timing and amount of the repurchase program; the opportunities (or lack thereof) that may be presented to and pursued by Gulfport; Gulfport’s ability to identify, complete and integrate acquisitions of properties and businesses; competitive actions by other oil and gas companies; changes in laws or regulations; and other factors, many of which are beyond the control of Gulfport. Information concerning these and other factors can be found in the Company's filings with the Securities and Exchange Commission, including its Forms 10-K, 10-Q and 8-K. Consequently, all of the forward-looking statements made in this press release are qualified by these cautionary statements and there can be no assurances that the actual results or developments anticipated by Gulfport will be realized, or even if realized, that they will have the expected consequences to or effects on Gulfport, its business or operations. Gulfport has no intention, and disclaims any obligation, to update or revise any forward-looking statements, whether as a result of new information, future results or otherwise.

Non-GAAP Financial Measures
EBITDA is a non-GAAP financial measure equal to net income, the most directly comparable GAAP financial measure, plus interest expense, income tax (benefit) expense, accretion expense and depreciation, depletion and amortization. Adjusted EBITDA is a non-GAAP financial measure equal to EBITDA less non-cash derivative loss (gain) and (income) loss from equity method investments. Cash flow from operating activities before changes in operating assets and liabilities is a non-GAAP financial measure equal to cash provided by operating activity before changes in operating assets and liabilities. Adjusted net income is a non-GAAP financial measure equal to pre-tax net income less non-cash derivative loss (gain) and (income) loss from equity method investments. The Company has presented EBITDA and adjusted EBITDA because it uses these measures as an integral part of its internal reporting to evaluate its performance and the performance of its senior management. These measures are considered important indicators of the operational strength of the Company's business and eliminate the uneven effect of considerable amounts of non-cash depletion, depreciation of tangible assets and amortization of certain intangible assets. A limitation of these measures, however, is that they do not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenues in the Company's business. Management evaluates the costs of such tangible and intangible assets and the impact of related impairments through other financial measures, such as capital expenditures, investment spending and return on capital. Therefore, the Company believes that these measures provide useful information to its investors regarding its performance and overall results of operations. EBITDA, adjusted EBITDA, adjusted net income and cash flow from operating activities before changes in operating assets and liabilities are not intended to be performance measures that should be regarded as an alternative to, or more meaningful than, either net income as an indicator of operating performance or to cash flows from operating activities as a measure of liquidity. In addition, EBITDA, adjusted EBITDA, adjusted net income and cash flow from operating activities before changes in operating assets and liabilities are not intended to represent funds available for dividends, reinvestment or other discretionary uses, and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. The EBITDA, adjusted EBITDA, adjusted net income and cash flow from operating activities before changes in operating assets and liabilities presented in this press release may not be comparable to similarly titled measures presented by other companies, and may not be identical to corresponding measures used in the Company's various agreements.

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