Gulfport Energy Corporation (NYSE: GPOR) (“Gulfport” or the
“Company”) today reported financial and operating results for the
three and twelve months ended December 31, 2021 and provided its
2022 development plan and financial guidance.
Fourth Quarter 2021 Highlights
- Delivered total net production of 1,068.9 MMcfe per day
- Reported $558.1 million of net income and $224.9 million of
adjusted EBITDA(1)
- Generated $128.3 million of net cash provided by operating
activities and $133.9 million of free cash flow(1)
- Amended credit facility increasing liquidity by more than $160
million
- Authorized previously announced stock repurchase program to
acquire up to $100 million of outstanding common stock
Full Year 2021 Highlights(2)
- Delivered total net production 2% above and capital
expenditures 2% below the midpoint of original 2021 guidance
- Reported $138.2 million of net income and $716.8 million of
adjusted EBITDA(1)
- Reduced total per unit expense(3) by approximately 20% when
compared to 2020
- Generated $465.1 million of net cash provided by operating
activities and $361.0 million of free cash flow(1)
- Achieved leverage target of below 1.0x at year end 2021
- Reported total proved reserves of 3.9 Tcfe and total discounted
future net cash flows of $4.1 billion
Full Year 2022 Outlook & Overview
- Intend to invest approximately $360 million(4) of capital,
supporting a more continuous drilling program in the Utica,
resulting in more than 5% production growth in 2023
- Expect to deliver full year net production of approximately 1.0
Bcfe per day(4)
- Plan to generate approximately $335 million of free cash
flow(1); free cash flow yield(1,5) of approximately 24% at current
strip prices
"During 2021, we significantly improved our balance sheet and
cost structure through the restructuring process and emerged with a
continuous improvement mindset, focused on disciplined capital
allocation and free cash flow generation. The team executed
extremely well, delivering total 2021 net production at the high
end of the guidance range with total capital expenditures at the
low end of the range. We also successfully achieved numerous
financial objectives, including refinancing our credit facility and
reaching our target leverage ratio ahead of schedule," commented
Tim Cutt, CEO of Gulfport.
"Our 2022 development program is centered around more consistent
drilling operations in the Utica, allowing for increased
operational efficiencies and opportunities for incremental cost
reductions. We anticipate this level of activity will result in
production growth of more than 5% in 2023 and modest growth through
2025. We will continue to prioritize the return of capital to
shareholders and, now that we have reached our target leverage
ratio, look forward to beginning to execute our previously
announced stock repurchase program, which we believe holds
significant value at recent trading levels."
A company presentation to accompany the Gulfport earnings
conference call can be accessed by clicking here.
- A non-GAAP financial measure. Reconciliations of these non-GAAP
measures and other disclosures are provided with the supplemental
financial tables available on our website at
www.gulfportenergy.com.
- 2021 full year reflects the combination of Successor and
Predecessor company results, unless otherwise noted. The Company
refers to the post-emergence reorganized company as the Successor
for periods subsequent to May 18, 2021, and to the pre-emergence
company as the Predecessor for periods on or prior to May 17,
2021.
- Includes lease operating expense, midstream transportation,
gathering and processing expense, taxes other than income,
recurring general and administrative expense and interest.
- Assumes midpoint of 2022 guidance.
- Free cash flow yield calculated using market capitalization as
of February 25, 2022.
Operational Update
The table below summarizes Gulfport's operated drilling and
completion activity for the full year of 2021:
Year Ended December 31,
2021
Gross
Net
Lateral Length
Spud
Utica(1)
20
18.9
14,750
SCOOP
9
7.7
9,900
Drilled
Utica
11
10.6
15,350
SCOOP
5
4.9
9,750
Completed
Utica
17
17.0
12,500
SCOOP
11
9.4
9,500
Turned-to-Sales
Utica
17
17.0
12,500
SCOOP
11
9.4
9,500
(1) Includes eight gross wells spud with a
top-hole rig.
Gulfport’s net daily production for the full year of 2021
averaged 1,003.6 MMcfe per day, primarily consisting of 772.1 MMcfe
per day in the Utica and 231.1 MMcfe per day in the SCOOP. For the
full year of 2021, Gulfport’s net daily production mix was
comprised of approximately 91% natural gas, 6% natural gas liquids
("NGL") and 3% oil.
Successor
Predecessor
Non-GAAP Combined
Predecessor
Three Months Ended December
31, 2021
Three Months Ended December
31, 2020
Year Ended December 31,
2021
Year Ended December 31,
2020
Production
Natural gas (Mcf/day)
977,411
988,117
912,112
942,619
Oil and condensate (Bbl/day)
4,438
4,452
4,655
4,927
NGL (Bbl/day)
10,808
10,171
10,601
10,830
Total (Mcfe/day)
1,068,888
1,075,861
1,003,641
1,037,160
Average Prices
Natural Gas:
Average price without the impact of
derivatives ($/Mcf)
$
5.48
$
2.36
$
3.76
$
1.95
Impact from settled derivatives
($/Mcf)
(2.35
)
(0.70
)
(0.91
)
0.33
Average price, including settled
derivatives ($/Mcf)
$
3.13
$
1.66
$
2.85
$
2.28
Oil:
Average price without the impact of
derivatives ($/Bbl)
$
74.71
$
37.44
$
65.01
$
34.88
Impact from settled derivatives
($/Bbl)
(13.18
)
(4.84
)
(5.72
)
25.76
Average price, including settled
derivatives ($/Bbl)
$
61.53
$
32.60
$
59.29
$
60.64
NGL:
Average price without the impact of
derivatives ($/Bbl)
$
44.18
$
22.25
$
36.68
$
16.86
Impact from settled derivatives
($/Bbl)
(7.02
)
(0.54
)
(3.35
)
(0.04
)
Average price, including settled
derivatives ($/Bbl)
$
37.16
$
21.71
$
33.33
$
16.82
Total:
Average price without the impact of
derivatives ($/Mcfe)
$
5.77
$
2.53
$
4.10
$
2.11
Impact from settled derivatives
($/Mcfe)
(2.27
)
(0.67
)
(0.89
)
0.42
Average price, including settled
derivatives ($/Mcfe)
$
3.50
$
1.86
$
3.21
$
2.53
Selected operating metrics
Lease operating expenses ($/Mcfe)
$
0.14
$
0.13
$
0.14
$
0.14
Taxes other than income ($/Mcfe)
$
0.14
$
0.10
$
0.12
$
0.08
Transportation, gathering, processing and
compression expense ($/Mcfe)
$
0.88
$
1.23
$
1.02
$
1.20
Recurring cash general and administrative
expenses ($/Mcfe) (non-GAAP)
$
0.09
$
0.12
$
0.11
$
0.14
Interest expenses ($/Mcfe)
$
0.16
$
0.21
$
0.12
$
0.32
Capital Investment
Capital investment was $292.9 million (on an incurred basis) for
the full year of 2021, of which $275.6 million related to drilling
and completion (“D&C”) activity and $17.3 million related to
leasehold and land investment.
Financial Position and Liquidity
As of December 31, 2021, Gulfport had approximately $3.3 million
of cash and cash equivalents, $164.0 million of borrowings under
its revolving credit facility, $122.1 million of letters of credit
outstanding and $550 million of outstanding 2026 senior notes.
Gulfport’s liquidity at December 31, 2021, totaled approximately
$417.2 million, comprised of the $3.3 million of cash and cash
equivalents and approximately $413.9 million of available borrowing
capacity under its new revolving credit facility.
As of February 25, 2022, Gulfport had $7.1 million of cash and
cash equivalents, zero borrowings under its revolving credit
facility, $109.8 million of letters of credit outstanding and $550
million of outstanding 2026 Notes.
During 2021, the company paid dividends on its Preferred Stock,
which included 3,071 shares of New Preferred Stock paid in kind,
approximately $55 thousand of cash-in-lieu of fractional shares and
$1.5 million of cash dividends.
Stock Repurchase Program
On November 2, 2021, Gulfport announced the authorization by its
Board of Directors to repurchase up to $100 million of its
outstanding shares of common stock through December 31, 2022.
Purchases under the repurchase program may be made from time to
time in open market or privately negotiated transactions, and will
be subject to available liquidity, market conditions, credit
agreement restrictions, applicable legal requirements, contractual
obligations and other factors. The repurchase program does not
require the Company to acquire any specific number of shares. The
Company intends to purchase shares under the repurchase program
opportunistically with available funds while maintaining sufficient
liquidity to fund its capital development program. The repurchase
program may be suspended from time to time, modified, extended or
discontinued by the board of directors at any time. The Company did
not repurchase any common stock during the year ended December 31,
2021.
2022 Guidance Update
Gulfport released operational guidance and outlook for the full
year 2022, including full year expense estimates and projections
for production and capital expenditures. Gulfport's 2022 guidance
assumes commodity strip prices as of February 15, 2022, adjusted
for applicable commodity and location differentials, and no
property acquisitions or divestitures.
Year Ending
December 31, 2022
Low
High
Production
Average daily gas equivalent (MMcfepd)
975
1,025
% Gas
~90%
Realizations (before hedges)
Natural gas (differential to NYMEX settled
price) ($/Mcf)
$(0.15)
$(0.25)
NGL (% of WTI)
45%
55%
Oil (differential to NYMEX WTI)
($/Bbl)
$(3.00)
$(4.00)
Operating costs
Lease operating expense ($/Mcfe)
$0.16
$0.18
Taxes other than income ($/Mcfe)
$0.11
$0.13
Transportation, gathering, processing and
compression(1) ($/Mcfe)
$0.92
$0.96
Recurring cash general and
administrative(2,3) (in millions)
$42
$44
(1) Assumes rejection of Rover firm
transportation agreement.
(2) Recurring cash G&A includes
capitalization. It excludes non-cash stock compensation and
expenses related to certain legal and restructuring charges.
Total
Capital expenditures (incurred)
(in millions)
D&C
$320
$360
Leasehold and land
$20
Total
$340
$380
Free cash flow(3)
$335
(3) This is a non-GAAP measure.
Reconciliations of these non-GAAP measures and other disclosures
are provided with the supplemental financial tables available on
our website at www.gulfportenergy.com.
Derivatives
Gulfport enters into commodity derivative contracts on a portion
of its expected future production volumes to mitigate the Company's
exposure to commodity price fluctuations. For details, please refer
to the "Derivatives" section provided with the supplemental
financial tables available on our website at
ir.gulfportenergy.com.
Estimated Proved Reserves
Gulfport reported year end 2021 total proved reserves of 3.9
Tcfe, consisting of 3.5 Tcf of natural gas, 16.2 MMBbls of oil and
53.8 MMBbls of natural gas liquids. Gulfport’s year end 2021 total
proved reserves increased approximately 51% when compared to its
2020 total proved reserves. The standardized measure of discounted
future net cash flows of Gulfport’s total proved reserves was $4.1
billion and the present value, discounted at 10% (referred to as
“PV-10”), was $4.3 billion at December 31, 2021, an increase of
$3.6 billion and $3.8 billion, respectively, when compared to its
2020 results.
The table below provides information regarding the components
driving the 2021 net proved reserve adjustments:
Total (Bcfe)
Proved Reserves, December 31, 2020
(Predecessor)
2,588
Sales of oil and natural gas reserves in
place
—
Extensions and discoveries
695
Revisions of prior reserve estimates
982
Current production
(366)
Proved Reserves, December 31, 2021
(Successor)
3,898
Total may not sum due to rounding.
Proved developed reserves totaled approximately 2,165 Bcfe as of
December 31, 2021 or approximately 56% of Gulfport’s proved
reserves. Proved undeveloped reserves totaled approximately 1,733
Bcfe as of December 31, 2021.
The table below summarizes the Company’s 2021 net proved
reserves:
December 31, 2021
Oil (MMBbl)
Natural Gas (Bcf)
NGL (MMBbl)
Total (Bcfe)
Utica
Proved developed
2
1,482
9
1,550
Proved undeveloped
4
1,073
4
1,123
Total proved
6
2,555
13
2,673
SCOOP
Proved developed
6
445
22
613
Proved undeveloped
4
477
18
610
Total proved
10
922
40
1,223
Total
Proved developed(1)
8
1,928
31
2,165
Proved undeveloped
8
1,550
22
1,733
Total proved
16
3,478
54
3,898
Totals may not sum or recalculate due to
rounding.
The following table reconciles the standardized measure of
future net cash flows to the PV-10 value of Gulfport’s proved
reserves:
Proved Developed
Proved Undeveloped
Total Proved
($ in millions)
Estimated future net revenue(1)
$
4,649
$
3,585
$
8,234
Present value of estimated future net
revenue (PV-10)(1)
$
2,655
$
1,660
$
4,316
Standardized measure(1)
$
4,138
(1) Estimated future net revenue
represents the estimated future revenue to be generated from the
production of proved reserves, net of estimated production and
future development costs, using prices and costs under existing
economic conditions as of December 31, 2021, and assuming commodity
prices as set forth below. For the purpose of determining prices
used in our reserve reports, we used the unweighted arithmetic
average of the prices on the first day of each month within the
12-month period ended December 31, 2021. The prices used in our
PV-10 measure were $66.55 per barrel and $3.60 per MMBtu, before
basis differential adjustments. These prices should not be
interpreted as a prediction of future prices, nor do they reflect
the value of our commodity derivative instruments in place as of
December 31, 2021. The amounts shown do not give effect to
non-property-related expenses, such as corporate general and
administrative expenses and debt service, or to depreciation,
depletion and amortization. The present value of estimated future
net revenue typically differs from the standardized measure because
the former does not include the effects of estimated future income
tax expense of $178 million as of December 31, 2021.
Management uses PV-10, which is calculated
without deducting estimated future income tax expenses, as a
measure of the value of the Company's current proved reserves and
to compare relative values among peer companies. We also understand
that securities analysts and rating agencies use this measure in
similar ways. While estimated future net revenue and the present
value thereof are based on prices, costs and discount factors which
may be consistent from company to company, the standardized measure
of discounted future net cash flows is dependent on the unique tax
situation of each individual company. PV-10 should not be
considered in isolation or as a substitute for the standardized
measure of discounted future net cash flows or any other measure of
a company's financial or operating performance presented in
accordance with GAAP.
A reconciliation of the standardized
measure of discounted future net cash flows to PV-10 is presented
above. Neither PV-10 nor the standardized measure of discounted
future net cash flows purport to represent the fair value of our
proved oil and gas reserves.
Fourth Quarter and Full Year 2021 Conference Call
Gulfport will host a teleconference and webcast to discuss its
fourth quarter and full year 2021 results beginning at 9:00 a.m. ET
(8:00 a.m. CT) on Tuesday, March 1, 2022.
The conference call can be heard live through a link on the
Gulfport website, www.gulfportenergy.com. In addition, you may
participate in the conference call by dialing 866-373-3408
domestically or 412-902-1039 internationally. A replay of the
conference call will be available on the Gulfport website and a
telephone audio replay will be available from March 1, 2022 to
March 15, 2022, by calling 877-660-6853 domestically or
201-612-7415 internationally and then entering the replay passcode
13726914.
Financial Statements and Guidance Documents
Fourth quarter and full year 2021 earnings results and
supplemental information regarding quarterly data such as
production volumes, pricing, financial statements, and non-GAAP
reconciliations are available on our website at
ir.gulfportenergy.com.
Non-GAAP Disclosures
This news release includes non-GAAP financial measures. Such
non-GAAP measures should be not considered as an alternative to
GAAP measures. Reconciliations of these non-GAAP measures and other
disclosures are provided with the supplemental financial tables
available on our website at ir.gulfportenergy.com.
About Gulfport
Gulfport is an independent natural gas-weighted exploration and
production company focused on the exploration, acquisition and
production of natural gas, crude oil and NGL in the United States
with primary focus in the Appalachia and Anadarko basins. Our
principal properties are located in Eastern Ohio targeting the
Utica formation and in central Oklahoma targeting the SCOOP
Woodford and SCOOP Springer formations.
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 Securities Exchange Act of
1934. Forward-looking statements are statements other than
statements of historical fact. They include statements regarding
Gulfport’s current expectations, management's outlook guidance or
forecasts of future events, projected cash flow and liquidity,
share repurchases, its ability to enhance cash flow and financial
flexibility, future production and commodity mix, plans and
objectives for future operations, the ability of our employees,
portfolio strength and operational leadership to create long-term
value, the rejection of certain midstream contracts and the
assumptions on which such statements are based. Gulfport believes
the expectations and forecasts reflected in the forward-looking
statements are reasonable, Gulfport can give no assurance they will
prove to have been correct. They can be affected by inaccurate or
changed assumptions or by known or unknown risks and uncertainties.
Important risks, assumptions and other important factors that could
cause future results to differ materially from those expressed in
the forward-looking statements are described under "Risk Factors"
in Item 1A of Gulfport’s annual report on Form 10-K for the year
ended December 31, 2021 and any updates to those factors set forth
in Gulfport's subsequent quarterly reports on Form 10-Q or current
reports on Form 8-K (available at
https://www.gulfportenergy.com/investors/sec-filings). Gulfport
undertakes no obligation to release publicly any revisions to any
forward-looking statements, to report events or to report the
occurrence of unanticipated events.
Investors should note that Gulfport announces financial
information in SEC filings, press releases and public conference
calls. Gulfport may use the Investors section of its website
(www.gulfportenergy.com) to communicate with investors. It is
possible that the financial and other information posted there
could be deemed to be material information. The information on
Gulfport’s website is not part of this filing.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220227005185/en/
Investor Contact: Jessica Antle – Director, Investor
Relations jantle@gulfportenergy.com 405-252-4550
Media Contact Reevemark Hugh Burns / Paul Caminiti /
Nicholas Leasure 212-433-4600
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