OKLAHOMA CITY, Aug. 15 /PRNewswire-FirstCall/ -- Gulfport Energy
Corporation (OTC:GPOR) (BULLETIN BOARD: GPOR) , reported record
financial results for the quarter ended June 30, 2005. For the
three months ended June 30, 2005, Gulfport generated net income of
$3,010,000 ($0.09 per basic and fully diluted common share),
operating cash flow of $8,198,000 (defined as cash flow from
operating activities before changes in assets and liabilities),
cash provided by operating activities of $10,099,000 and EBITDA of
$4,642,000 (defined as net income, plus provision for income taxes,
interest expense, other debt related expenses, accretion,
depreciation, depletion and amortization) on revenue of $7,853,000.
This compares with net income of $275,000 or, $.03 per share basic
and diluted, on total revenue of $4,577,000 for the quarter ended
June 30, 2004. The improvement in earnings was primarily the result
of an increase in the average price received for oil to $43.38 per
barrel from $33.68 per barrel for the quarter ended June 30, 2004.
In addition, there was a net increase in oil and gas production to
185 thousand barrels of oil equivalents (MBOE) for the quarter
ended June 30, 2005 from 137 MBOE for the same period in 2004. As
of August 14, 2005, Gulfport had total current net production of
approximately 3,050 barrels of oil and 2,013 Mcf of gas per day.
Gulfport commenced its 2005 drilling program at the West Cote
Blanche Bay Field ("WCBB") in St. Mary Parish, Louisiana during
March 2005 with the anticipation of drilling approximately 20 WCBB
wells. The Company now plans on continuing this drilling program in
the WCBB field. The wells to be drilled will primarily target
proved undeveloped reserve locations. Gulfport intends to also
explore for possible and probable reservoirs by going deeper and
directionally guiding the bit for untapped fault blocks. Completed
well costs for the WCBB wells are currently approximately $150 per
foot. Current net production at WCBB as of August 14, 2005 is over
2,768 barrels of oil and 1,922 Mcf of gas per day. Gulfport has
drilled nine wells since March 5, 2005. Gulfport spudded its tenth
well on August 10, 2005. Of the nine wells drilled, five are
producing, two are waiting on completion, one is shut in and one
was unsuccessful. The unsuccessful well was a shallow exploratory
well that allowed the Company to satisfy requirements to maintain
undeveloped acreage within State Lease 340 WCBB. As of August 14,
2005, the five new wells are producing net 638 barrels of oil and
1,901 Mcf of gas per day. Gulfport has completed seven
recompletions/workovers this year at an average cost of $110,000.
As of August 14, 2005 six of these recompleted wells are producing
a net aggregate of 809 barrels of oil and 871 Mcf of gas per day
and one well is shut in. Two more recompletions are planned for the
month of August. In Gulfport's East Hackberry Field located in
Cameron Parish, Louisiana, the Company has completed the
acquisition phase of the Hackberry proprietary three-dimensional
(3-D) seismic survey. The seismic survey covers 42 square miles in
and around Gulfport's East Hackberry field. Gulfport completed the
seismic data acquisition phase during the second quarter of 2005
and expects to have the final processed seismic data during the
third quarter of 2005. During the quarter ended June 30, 2005, the
Company spent $3,362,000 on this shoot for a total cost to date of
$4,924,607. The Company's outside engineers, Netherland, Sewell
& Associates, Inc. (NSA) had previously assigned 2 MMBO and 2.8
BCFG (net) to the proved undeveloped reserve category in the East
Hackberry field. Since this portion of the East Hackberry dome has
never been included in a 3-D seismic survey, the Company believes
the shoot will aid in the development of its proved undeveloped
reserves as well as allow the identification and exploitation of
new accumulations and is expected to allow Gulfport to maximize
efficiency in drilling wells to both shallow and deep targets in
the field. In addition, the 3D seismic data is expected to allow
the Company to drill existing proved undeveloped reserves and drill
deeper in the same borehole to encounter new previously unknown
fault blocks. This is expected to result in more reserve adds with
less cost due to less boreholes required to capture those reserves.
The drilling program in East Hackberry is expected to commence
during the first quarter of 2006. Current net production at
Hackberry is over 282 barrels of oil and 91 Mcf of gas per day.
Gulfport completed two workovers in the field that added 45 net
barrels of oil per day and reactivated State Lease 50 which is
producing 35 net barrels of oil per day. One more workover is
planned for State Lease 50 in the month of August. Currently, the
Company has the following hedges in place: January - June 2005
1,000 bbls per day @ $33.10 per barrel July - December 2005 1,000
bbls per day @ $39.70 per barrel September 2005 - December 2005
15,000 bbls per month @ $63.80 per barrel January 2006 - December
2006 45,000 bbls per month @ $64.05 per barrel Over the next two
years, the Company currently anticipates capital expenditures of
approximately $63,500,000, including the capital expenditures
needed to complete the 2005 drilling program. Gulfport intends to
fund this activity with the remaining net proceeds from the sale of
common stock in February 2005, cash flows from operations and
borrowings under its $30,000,000 million credit facility with Bank
of America if needed. No borrowings are currently outstanding under
this facility, and the Company has initial availability of
$18,000,000. Since 2001, Gulfport has engaged the engineering firm
of Netherland, Sewell & Associates, Inc. of Houston, Texas to
render its reserve report. The reserve report for the year ended
December 31, 2004 reflected total net proved reserves of 24,765
MBOE (thousand barrels of oil equivalent) for Gulfport with 1,974
MBOE (8%) categorized as proved developed producing reserves, 3,431
MBOE (14%) classified as proved developed non-producing reserves
and 19,360 MBOE (78%) shown as proved undeveloped reserves. The
reserve report assigned a present value of estimated future net
revenues discounted at 10% (PV10) of approximately $361,500,000 for
total proved reserves using the SEC required Company year-end
pricing of $40.25 a barrel for oil and $6.18 per MMBTU for natural
gas adjusted by lease for quality, energy content, transportation
fees and regional price differentials. PV10 may be considered a
non-GAAP financial measure as defined by Item 10(e) of Regulation
S-K and is derived from the standardized measure of discounted
future net cash flows which is the most directly comparable GAAP
financial measure. PV10 is a computation of the standardized
measure of discounted future net cash flows on a pre-tax basis.
PV10 is equal to the standardized measure of discounted future net
cash flows at December 31, 2004 less future income taxes,
discounted at 10%, of $60.5 million. Gulfport believes that the
presentation of the PV10 is relevant and useful to investors
because it presents the discounted future net cash flows
attributable to Gulfport's proved reserves prior to taking into
account corporate future income taxes and it is a useful measure
for evaluating the relative monetary significance of Gulfport's oil
and natural gas properties. Further, investors may utilize the
measure as a basis for comparison of the relative size and value of
Gulfport's reserves to other companies. Gulfport uses this measure
when assessing the potential return on investment related to its
oil and natural gas properties. However, PV10 is not a substitute
for the standardized measure of discounted future net cash flows.
Gulfport's PV10 measure and the standardized measure of discounted
future net cash flows do not purport to present the fair value of
our natural gas and oil reserves. Three Months Ended June 30, 2005
Net Income $3,010,000 Interest expense 63,000 Accretion expense
117,000 Depreciation, depletion, and amortization 1,452,000 EBITDA
$4,642,000 Three Months Ended June 30, 2005 Cash provided by
operating activity $10,099,000 Adjustments: Changes in assets and
liabilities (1,902,000) Operating Cash Flow $ 8,197,000 EBITDA is a
non-GAAP financial measure equal to net income, the most directly
comparable GAAP financial measure, plus provision for income taxes,
interest expense, other debt related expenses, accretion,
depreciation, depletion and amortization. Operating cash flow is a
non-GAAP financial measure equal to cash flow from operating
activities before changes in assets and liabilities. The Company
has presented EBITDA because it uses EBITDA as an integral part of
its internal reporting to measure its performance and to evaluate
the performance of its senior management. EBITDA is considered an
important indicator of the operational strength of the Company's
business. EBITDA eliminates the uneven effect of considerable
amounts of non-cash depletion, depreciation of tangible assets and
amortization of certain intangible assets. A limitation of this
measure, however, is that it does not reflect the periodic costs of
certain capitalized tangible and intangible assets used in
generating revenues in the Company's businesses. 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 EBITDA provides
useful information to its investors regarding its performance and
overall results of operations. EBITDA and operating cash flow 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 and
operating cash flow 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 and
operating EBITDA measures 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. Gulfport is an independent oil
and gas exploration and production company with its principal
properties located in the Louisiana Gulf Coast area. The Company
seeks to achieve reserve growth and increased cash flow from
operations through low risk development activities on its existing
properties and other acquisition opportunities. This news release
includes "forward-looking statements" within the meaning of Section
27A of the Securities Act of 1933, as amended (the "Securities
Act"), and Section 21E of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). All statements other than statements
of historical facts, included in this news release that address
activities, events or developments that Gulfport Energy Corporation
("Gulfport" or the "Company"), a Delaware corporation, expects or
anticipates will or may occur in the future, including such things
as 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, 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, or business
conditions; the opportunities (or lack thereof) that may be
presented to and pursued by Gulfport; 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.
Consequently, all of the forward-looking statements made in this
news 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. We have no intention, and disclaim any
obligation, to update or revise any forward-looking statements,
whether as a result of new information, future results or
otherwise. DATASOURCE: Gulfport Energy Corporation CONTACT: Mike
Liddell of Gulfport Energy Corporation, +1-405-848-8807, Ext.106
Web site: http://www.gulfportenergy.com/
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