Gulfport Energy Corporation (NYSE: GPOR) (“Gulfport” or the
“Company”) today reported financial and operating results for the
three and twelve months ended December 31, 2022 and provided its
2023 outlook.
Fourth Quarter 2022 and Recent Highlights
- Delivered total net production of 1,051.6 MMcfe per day
- Reported $748.6 million of net income and $155.9 million of
adjusted EBITDA(1)
- Generated $188.0 million of net cash provided by operating
activities and $33.2 million of adjusted free cash flow(1)
- Repurchased 206 thousand shares of common stock for $13.6
million subsequent to the end of fourth quarter 2022 at an average
price of $66.29 per share; repurchased 3.1 million shares of common
stock for $264.4 million(2) since the inception of the repurchase
program at an average price of $85.14 per share
- Expanded common stock repurchase program from $300 million to
$400 million
Full Year 2022 Highlights
- Delivered total net production of 983.4 MMcfe per day
- Reported $494.7 million of net income and $768.4 million of
adjusted EBITDA(1)
- Generated $739.1 million of net cash provided by operating
activities and $240.6 million of adjusted free cash flow(1)
- Increased the borrowing base under our revolving credit
facility from $850 million to $1.0 billion
- Reduced total debt by $19 million, maintaining a strong balance
sheet and low leverage
- Reported total proved reserves of 4.0 Tcfe, an increase of 4%
compared to 2021, and total discounted future net cash flows of
$8.3 billion at year-end SEC pricing
- Added incremental hedge positions for 2023 covering
approximately 36% of production with weighted-average floors of
$3.76 per MMBtu
Full Year 2023 Outlook
- Expect to deliver full year net production in the range of
1,000 MMcfe to 1,040 MMcfe per day, an increase of 2% to 6%
compared to 2022
- Plan to invest total capital expenditures of $450 million(3),
including $50 million to $75 million on leasehold and land
investment
- Project D&C capital expenditures to decrease approximately
6%(3) compared to 2022
- Anticipate minimal, if any, service cost inflation in 2023
- Forecast turning to sales 22 to 24 gross wells, which includes
2 wells targeting the Marcellus, 2 wells in the SCOOP and the
remaining wells targeting the Utica
- Marcellus delineation test planned in Belmont County, Ohio
possesses upside potential for unlocking valuable inventory
underlying current acreage position
- Forecast to reduce per unit operating(4) cost by approximately
7%(3) compared to 2022
- Plan to allocate adjusted free cash flow(1) towards common
share repurchases and incremental leasehold opportunities
"2022 was a productive year for Gulfport, maintaining
inventories of high quality acreage, delivering quality results
from the development program, generating significant free cash flow
and returning meaningful capital to shareholders through common
share repurchases," commented John Reinhart, CEO of Gulfport.
"As the company progresses into 2023, the team remains focused
on further optimizing our development programs cycle times and
operating costs, ultimately improving margins and supporting our
expected free cash flow generation. We plan to continue the return
of capital to our shareholders through common share repurchases,
while targeting incremental leasehold opportunities that complement
our resource depth and provide optionality to our future
development plans."
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.
- As of February 23, 2023.
- Assumes midpoint of 2023 guidance.
- Includes lease operating expense, transportation, gathering,
processing and compression expense and taxes other than
income.
Operational Update The table below summarizes Gulfport's
operated drilling and completion activity for the full year of
2022:
Year Ended December 31,
2022
Gross
Net
Lateral Length
Spud
Utica
19
17.4
14,200
SCOOP
6
4.3
10,200
Drilled
Utica
20
17.9
14,300
SCOOP
8
5.5
10,200
Completed
Utica
15
13.4
13,700
SCOOP
13
10.3
10,000
Turned-to-Sales
Utica
15
13.4
13,700
SCOOP
13
10.3
10,000
Gulfport’s net daily production for the full year of 2022
averaged 983.4 MMcfe per day, primarily consisting of 692.9 MMcfe
per day in the Utica and 290.5 MMcfe per day in the SCOOP. For the
full year of 2022, Gulfport’s net daily production mix was
comprised of approximately 90% natural gas, 7% natural gas liquids
("NGL") and 3% oil and condensate.
Successor
Predecessor
Three Months Ended
December 31, 2022
Three Months Ended
December 31, 2021
Year Ended
December 31, 2022
Period from
May 18, 2021 through
December 31, 2021
Period from
January 1, 2021
through
May 17, 2021
Production
Natural gas (Mcf/day)
934,763
977,411
883,195
915,094
907,148
Oil and condensate (Bbl/day)
4,959
4,438
4,412
5,121
3,879
NGL (Bbl/day)
14,520
10,808
12,281
11,658
8,841
Total (Mcfe/day)
1,051,637
1,068,888
983,354
1,015,764
983,466
Average Prices
Natural gas:
Average price without the impact of
derivatives ($/Mcf)
$
5.45
$
5.48
$
6.20
$
4.34
$
2.77
Impact from settled derivatives
($/Mcf)
(2.88
)
(2.35
)
(3.11
)
(1.44
)
(0.03
)
Average price, including settled
derivatives ($/Mcf)
$
2.57
$
3.13
$
3.09
$
2.90
$
2.74
Oil and condensate:
Average price without the impact of
derivatives ($/Bbl)
$
79.27
$
74.71
$
91.58
$
69.71
$
54.81
Impact from settled derivatives
($/Bbl)
(16.89
)
(13.18
)
(24.32
)
(8.33
)
—
Average price, including settled
derivatives ($/Bbl)
$
62.38
$
61.53
$
67.26
$
61.38
$
54.81
NGL:
Average price without the impact of
derivatives ($/Bbl)
$
30.85
$
44.18
$
41.26
$
39.56
$
30.37
Impact from settled derivatives
($/Bbl)
0.92
(7.02
)
(2.80
)
(4.88
)
—
Average price, including settled
derivatives ($/Bbl)
$
31.77
$
37.16
$
38.46
$
34.68
$
30.37
Total:
Average price without the impact of
derivatives ($/Mcfe)
$
5.64
$
5.77
$
6.49
$
4.72
$
3.05
Impact from settled derivatives
($/Mcfe)
(2.63
)
(2.27
)
(2.94
)
(1.39
)
(0.02
)
Average price, including settled
derivatives ($/Mcfe)
$
3.01
$
3.50
$
3.55
$
3.33
$
3.03
Selected operating metrics
Lease operating expenses ($/Mcfe)
$
0.18
$
0.14
$
0.18
$
0.14
$
0.14
Taxes other than income ($/Mcfe)
$
0.15
$
0.14
$
0.17
$
0.13
$
0.09
Transportation, gathering, processing and
compression expense ($/Mcfe)
$
0.99
$
0.88
$
1.00
$
0.92
$
1.20
Recurring cash general and administrative
expenses ($/Mcfe) (non-GAAP)
$
0.13
$
0.09
$
0.12
$
0.10
$
0.12
Interest expenses ($/Mcfe)
$
0.17
$
0.16
$
0.17
$
0.18
$
0.03
Capital Investment Capital investment was $449.2 million
(on an incurred basis) for the full year of 2022, of which $411.8
million related to drilling and completion (“D&C”) activity and
$37.4 million related to leasehold and land investment.
Financial Position and Liquidity As of December 31, 2022,
Gulfport had approximately $7.3 million of cash and cash
equivalents, $145.0 million of borrowings under its revolving
credit facility, $113.4 million of letters of credit outstanding
and $550 million of outstanding 2026 senior notes.
Gulfport’s liquidity at December 31, 2022, totaled approximately
$448.9 million, comprised of the $7.3 million of cash and cash
equivalents and approximately $441.6 million of available borrowing
capacity under its revolving credit facility.
As of February 23, 2023, Gulfport had $25.6 million of cash and
cash equivalents, $79.0 million of borrowings under its revolving
credit facility, $113.4 million of letters of credit outstanding
and $550 million of outstanding 2026 senior notes.
During 2022, the Company paid $5.4 million of cash dividends to
holders of our preferred stock.
Expanded Common Stock Repurchase Program Gulfport's board
of directors recently expanded the Company's previously announced
common stock repurchase program and Gulfport is now authorized to
repurchase up to $400 million of its outstanding shares of common
stock. 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.
As of February 23, 2023, the Company repurchased 3.1 million
shares for $264.4 million at a weighted average price of $85.14 per
share.
2023 Guidance Gulfport released operational guidance and
outlook for the full year 2023, including full year expense
estimates and projections for production and capital expenditures.
Gulfport's 2023 guidance assumes commodity strip prices as of
February 13, 2023, adjusted for applicable commodity and location
differentials, and no property acquisitions or divestitures.
Year Ending
December 31, 2023
Low
High
Production
Average daily gas equivalent (MMcfepd)
1,000
1,040
% Gas
~90%
Realizations (before hedges)
Natural gas (differential to NYMEX settled
price) ($/Mcf)
$(0.20)
$(0.35)
NGL (% of WTI)
40%
45%
Oil (differential to NYMEX WTI)
($/Bbl)
$(3.00)
$(4.00)
Operating costs
Lease operating expense ($/Mcfe)
$0.16
$0.18
Taxes other than income ($/Mcfe)
$0.10
$0.12
Transportation, gathering, processing and
compression ($/Mcfe)
$0.95
$0.99
Recurring cash general and
administrative(1,2) ($/Mcfe)
$0.11
$0.13
Total
Capital expenditures (incurred)
(in millions)
D&C
$375
$400
Leasehold and land
$50
$75
Total
$425
$475
(1) Recurring cash G&A includes
capitalization. It excludes non-cash stock compensation and
expenses related to the continued administration of our prior
Chapter 11 filing.
(2) 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 2022
total proved reserves of 4.0 Tcfe, consisting of 3.6 Tcf of natural
gas, 18.2 MMBbls of oil and 54.4 MMBbls of natural gas liquids.
Gulfport’s year end 2022 total proved reserves increased
approximately 4% when compared to its 2021 total proved reserves.
The standardized measure of discounted future net cash flows of
Gulfport’s total proved reserves was $8.3 billion and the present
value, discounted at 10% (referred to as “PV-10”), was $9.5 billion
at December 31, 2022, an increase of $4.1 billion and $5.2 billion,
respectively, when compared to its 2021 results.
The table below provides information regarding the components
driving the 2022 net proved reserve adjustments:
Total (Bcfe)
Proved Reserves, December 31, 2021
(Successor)
3,898
Extensions and discoveries
439
Revisions of prior reserve estimates
70
Current production
(359
)
Proved Reserves, December 31, 2022
(Successor)
4,048
Total may not sum due to rounding.
Proved developed reserves totaled approximately 2,295 Bcfe as of
December 31, 2022 or approximately 57% of Gulfport’s proved
reserves. Proved undeveloped reserves totaled approximately 1,752
Bcfe as of December 31, 2022.
The table below summarizes the Company’s 2022 net proved
reserves:
December 31, 2022
Oil
(MMBbl)
Natural Gas
(Bcf)
NGL
(MMBbl)
Total
(Bcfe)
Utica
Proved developed
2
1,523
9
1,591
Proved undeveloped(1)
7
1,256
6
1,335
Total proved
9
2,779
15
2,926
SCOOP
Proved developed
7
511
25
704
Proved undeveloped
2
322
14
417
Total proved
9
833
39
1,121
Total
Proved developed
9
2,034
34
2,295
Proved undeveloped
9
1,578
20
1,752
Total proved
18
3,612
54
4,048
Totals may not sum or recalculate due to
rounding.
_____________________
(1)
Includes approximately 72 Bcfe of net
reserves located in the Marcellus target formation.
The following table reconciles the standardized measure of
future net cash flows to the PV-10 value of Gulfport’s proved
reserves:
Proved
Developed
Proved
Undeveloped
Total Proved
($ in millions)
Estimated future net revenue(1)
$
10,712
$
7,951
$
18,663
Present value of estimated future net
revenue (PV-10)(1)
$
5,803
$
3,721
$
9,524
Standardized measure(1)
$
8,279
Totals may not sum due to rounding.
_____________________
(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, 2022, 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, 2022. The prices used in our PV-10 measure were $94.14
per barrel and $6.36 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, 2022. 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 $1.2 billion
as of December 31, 2022.
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 2022 Conference Call
Gulfport will host a teleconference and webcast to discuss its
fourth quarter and full year 2022 results, as well as its 2023
outlook, beginning at 9:00 a.m. ET (8:00 a.m. CT) on Wednesday,
March 1, 2023.
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, 2023 to
March 15, 2023, by calling 877-660-6853 domestically or
201-612-7415 internationally and then entering the replay passcode
13735766.
Financial Statements and Guidance Documents Fourth
quarter and full year 2022 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, inflation, share repurchases and
other return of capital plans, 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, 2022 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/20230228006286/en/
Investor Contact: Jessica Antle – Director, Investor
Relations jantle@gulfportenergy.com 405-252-4550
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