Gulfport Energy Corporation Expands Drilling Program and Provides Guidance for 2005 and 2006
September 16 2005 - 7:49PM
PR Newswire (US)
OKLAHOMA CITY, Sept. 16 /PRNewswire-FirstCall/ -- Gulfport Energy
Corporation, (OTC:GPOR) (BULLETIN BOARD: GPOR) expands drilling
program and provides guidance for 2005 and 2006. In March 2005,
Gulfport commenced a new drilling program with initial plans for 20
new wells in its West Cote Blanche Bay Field (WCBB). Due to the
success of the wells drilled to date as well as the completion of
its proprietary seismic shoot in its East Hackberry Field, the
Company has expanded this drilling program to approximately 47
total wells and 18 recompletions. Gulfport anticipates spending
$60.0 - $65.0 million in capital expenditures from June 2005 to
March 2007 on drilling and recompletion activity as well as the
upgrade and expansion of its facilities. Gulfport intends to fund
this activity with the remaining net proceeds from the sale of
common stock in February 2005 and the exercise of most of the
Company's outstanding warrants, cash flows from operations and
borrowings under its $30.0 million credit facility with Bank of
America if needed. No borrowings are currently outstanding under
this facility, and the Company has initial availability of $18.0
million. Gulfport has current cash on hand of approximately $2.5
million. Mike Liddell, Gulfport's chief executive officer, said,
"We are very pleased with the initial results of our West Cote
Blanche Bay drilling program and excited about the completion of
our East Hackberry seismic shoot which should enable us to select
drilling locations before year-end. We believe these efforts will
significantly enhance Gulfport's production, provide us with an
inventory of new drilling locations and allow us to further reduce
our costs per barrel as we increase our production and leverage our
existing operating facilities." 2005 and 2006 Guidance As a result
of the initial drilling success, Gulfport's net production was
2,929 barrels of oil equivalents (BOE) per day on September 13,
2005, which is up 42% from 2,068 BOE at December 31, 2004. Our
projected 2005 production is expected to range from 815,000 to
850,000 BOE compared to 631,000 BOE for the year ended December 31,
2004. Gulfport anticipates that its expanded drilling program will
continue to enhance production and provides the following guidance
for the remainder of 2005 and 2006: 2005 * Q1 05 production was
165,000 BOE * Q2 05 production was 185,000 BOE * Q3 05 production
estimate of 210,000 to 220,000 BOE * Q4 05 production estimate of
255,000 to 280,000 BOE * Capital expenditures of $15 to $25 million
for the remainder of 2005 * Lease operating expenditures of $8.50
to $9.00 per BOE for Q3 and Q4 2005 * Selling, general and
administrative expenses of $2.50 to $3.00 per BOE for Q3 and Q4
2005 2006 * 2006 production estimate of 1,450,000 to 1,600,000 BOE
with production increasing during the year * Capital expenditures
in the range of $45 to $60 million for 2006 * Lease operating
expenditures of $5.50 to $6.00 per BOE for 2006 * Selling, general
and administrative expenses of $1.40 to $1.60 per BOE for 2006
Other Items * Gulfport has the following hedges currently in place
- Sept. to Dec. 2005: 1,000 bbls per day at $39.70 per bbl (price
is net of transportation costs) - Sept. to Dec. 2005: 15,000 bbls
per month at $63.80 per bbl (WTI) - Jan. to Dec. 2006: 45,000 bbls
per month at $64.05 per bbl (WTI) * Gulfport typically pays $0.85
per barrel in transportation costs and the basis differential in
Louisiana has historically been approximately $0.50 per barrel *
The Company has a $99 million net operating loss (NOL) carryforward
which expires between 2011 and 2024 * Severance taxes in the state
of Louisiana are approximately 12.5% of gross revenues on oil and
gas sales West Cote Blanche Bay Field Drilling Program Gulfport
commenced its WCBB drilling program in March 2005 and has drilled
11 wells with another 28 wells scheduled to be drilled along with
18 recompletions over the next 18 months. The Company projects the
total estimated cost of this drilling and recompletion program to
be approximately $47.0 million. The new wells will primarily target
proved undeveloped reserve locations. Since March 2005, Gulfport
has completed ten wells and nine recompletions in WCBB at a total
cost of approximately $14.0 million. Of the 11 wells drilled, nine
are producing, one is waiting on side-tracking and one was
unsuccessful. The one 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 September
12, 2005, the new wells and recompletions were producing 1,136 net
barrels of oil per day and 1,619 net mcf of gas per day. As of
September 12, 2005, net production at WCBB was 2,339 barrels of oil
per day, an increase of 31% from December 31, 2004. WCBB gas
production was 1,274 Mcf of gas on September 12, 2005. East
Hackberry Field Seismic Shoot Gulfport recently completed the
acquisition phase of its proprietary three-dimensional (3-D)
seismic survey of the East Hackberry Field located in Cameron
Parish, Louisiana. The seismic survey covers 42 square miles in and
around the East Hackberry Field. Since this portion of the East
Hackberry salt dome has never been included in a 3-D seismic
survey, the Company anticipates the shoot will reveal undrilled
fault blocks that will allow Gulfport to drill new wells to both
shallow and deep targets in the field. In addition, the Company
believes the 3-D seismic data will allow Gulfport to drill existing
proved undeveloped reserves as well as drill deeper in existing
boreholes to encounter previously unknown fault blocks. The
Company's independent 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 at December 31, 2004. Gulfport anticipates that
this will result in more reserve additions as well as reduced
drilling costs as less boreholes will be required to capture those
reserves. The total cost of the seismic shoot is estimated to be $5
million, the majority of which has already been funded. The final
processed seismic data should be received by the end of September
2005 and the Company anticipates selecting drilling targets before
year-end with commencement of drilling scheduled for the second
quarter 2006. Currently, the Company anticipates drilling at least
eight wells prior to March 2007. As of September 12, 2005, net
production at Hackberry was 204 barrels of oil per day and 75 Mcf
of gas per day. Facilities Gulfport reported minimal damage to its
facilities from Hurricane Katrina. The Company's East Hackberry
operations saw no effect or downtime from the hurricane and its
West Cote Blanche Bay facilities were shut-in and evacuated for
precautionary reasons for only 4 days. The West Cote Blanche Bay
operations are back up and running at 100% and the Company utilized
the shut-in period to implement tie-in points for future facilities
upgrades. Gulfport's existing facilities are capable of handling
the anticipated increase in production from our new drilling
program and as a result the Company will be able to further reduce
its costs per barrel. About Gulfport 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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