Gulfport Energy Corporation Announces Year-End Results
March 31 2006 - 6:32PM
PR Newswire (US)
OKLAHOMA CITY, March 31 /PRNewswire-FirstCall/ -- Gulfport Energy
Corporation (NASDAQ:GPOR) reports record financial results for the
year ended December 31, 2005. For the year ended December 31, 2005,
Gulfport generated revenues of $27.5 million and net income of
$10.9 million ($0.36 and $0.34 per basic and fully diluted common
share, respectively) with operating cash flow of $13.9 million and
EBITDA of $16.7 million (as defined below). Gulfport's net income
grew 153% from $4.3 million ($0.31 per share basic and $0.28 fully
diluted common share, respectively) in the prior year and revenues
grew 18.6% from $23.1 million for the year ended December 31, 2004.
The improvement in earnings was the result of an increase in the
average price received for oil to $46.39 per barrel for the year
ended December 31, 2005 as compared to $36.97 per barrel in 2004.
These price increases were offset slightly by a 3% decline in net
BOE production to 613 thousand barrels of oil equivalents (MBOE)
for year ended December 31, 2005 as compared to 631 MBOE for the
same period in 2004. The production decline was a result of the
down time experienced from facilities damaged due to Hurricane
Rita, which made landfall on September 24, 2005. During 2005,
Gulfport lost approximately 102 days of production as a result of
Hurricanes Katrina and Rita. James D. Palm, Chief Executive
Officer, of Gulfport said, "We are pleased with the over 150%
increase in our 2005 net income considering the loss of more than
100 days of production as a result of Hurricanes Katrina and Rita.
We feel 2006 will bring additional positive results for the Company
with this year's drilling programs at West Cote and Hackberry."
Hurricane Rita / Facilities Update On September 26, 2005, Gulfport
announced that it had sustained damage to both its Hackberry fields
located in Cameron Parish, Louisiana and its WCBB field located in
St. Mary Parish, Louisiana as a result of Hurricane Rita, which hit
land on September 24, 2005. At WCBB, our main tank batteries, which
handled approximately 70% of our production before Hurricane Rita,
and the gas sales line are now operational, and we anticipate that
the balance of our production facilities at WCBB will be brought on
line in the second and third quarters of 2006. We began returning
wells to production on February 5, 2006, and as of March 24, 2006,
27 of the 57 active wells in the field prior to Hurricane Rita had
been returned to production. We continue to reactivate our
remaining shut-in WCBB wells and are in the process of completing
14 that have been drilled after Hurricane Rita but not completed
due to the damage to our facilities caused by that storm. We expect
that all of these wells will begin producing during the second
quarter of 2006. In our East Hackberry field, production was
re-established in November 2005 on six of the 11 wells that were
producing prior to Hurricane Rita. We have an insurance program in
place that we believe will adequately cover damage to our platform
and facilities at WCBB. In addition, business interruption
insurance has helped mitigate the financial impact of Hurricane
Rita on our WCBB operations. West Cote Blanche Bay Field Drilling
Program In 2005, we drilled 17 wells and recompleted 11 existing
wells at WCBB. Of these 17 new wells, nine were completed as
producers, seven were drilled subsequent to Hurricane Rita and have
not yet been completed (including one that will be side-tracked in
2006 to test deeper zones) and one was a dry hole. We anticipate
drilling 22 wells and recompleting 18 existing wells at WCBB during
2006. As of March 24, 2006, we had drilled nine new wells and
production casing had been run on seven of these wells, bringing to
14 the number of wells that have been drilled but not yet been
completed due to the effects of Hurricane Rita. These 14 wells are
expected to commence production during the second quarter of 2006.
The remaining two wells drilled to date in 2006 were dry holes,
including one exploratory well that was drilled to satisfy our
drilling commitment to hold the non-productive portions of WCBB.
The nine wells we have drilled at WCBB to date in 2006 include
three deep wells, two intermediate depth wells and four shallow
wells. The deep wells, with total depths ranging from 8,850 to
9,400 feet, have approximately 373 feet of apparent net pay, the
intermediate wells, with total depths ranging from 5,000 to 7,500
feet, have approximately 188 feet of apparent net pay, and two of
the shallow wells, at depths of less than 3,000 feet, have 40 feet
of apparent net pay. On March 24, 2006, total net production at
WCBB from 27 of the 57 active wells that had been previously
shut-in as a result of Hurricane Rita was 2,137 Boe. East Hackberry
2006 Drilling Program During 2005, we completed a proprietary 42
square mile 3-D seismic survey at East Hackberry for a total cost
of approximately $5.0 million. Given that previous drilling
activities at the East Hackberry field were undertaken without the
benefit of modern seismic information, we believe that the newly
acquired 3-D seismic data will enhance our probability of drilling
success. We are evaluating the newly processed 3-D seismic data to
identify additional drilling locations. We currently intend to
drill six wells during 2006 to measured depths of approximately
13,000 feet using directional drilling techniques. The 3-D seismic
data also suggest the possibility of deep gas production and, as a
result, we intend to drill a deep wildcat well during 2007 for a
total anticipated well cost of approximately $4.0 million. If
productive, multiple offset locations could be drilled. On March
24, 2006, net production at East Hackberry from six of the 11 wells
that were producing prior to Hurricane Rita was approximately 192
Boe. In addition, net oil production in Gulfport's West Hackberry
field was 83 Boe. Engineering Results Since 2001, Gulfport has
engaged the independent engineering firm of Netherland, Sewell
& Associates, Inc. of Houston, Texas to render its reserve
report. The reserve report prepared as of December 31, 2005
reflected total net proved reserves of 23,173 MBOE (thousand
barrels of oil equivalent) for Gulfport with 1,162 MBOE (5%)
categorized as proved developed shut-in reserves, 493 MBOE (2%)
categorized as proved developed producing reserves, 3,280 MBOE
(14%) classified as proved developed non-producing reserves and
18,238 MBOE (79%) shown as proved undeveloped reserves. As a result
of the damage the Company sustained to its West Cote Blanche Bay
field by Hurricane Rita on September 24, 2005 and the field's
shut-in status on December 31, 2005, a portion of the reserves
associated with the proved developed reserves category have been
reclassified to a proved developed reserve shut-in category in this
December 31, 2005 report. The reserve report assigned a present
value of estimated future net revenues discounted at 10% (PV10) of
approximately $457 million in total proved reserves using the SEC
required Company year-end pricing of $57.75 a barrel for oil and
$10.08 per MMBtu for natural gas adjusted by lease for quality,
energy content, transportation fees and regional price
differentials. In 2005, Gulfport purchased an interest in an
international oil and gas venture which owns 8.5% of APICG which
owns interests in concessions covering 3 million acres in Southeast
Asia. Our interest includes net proved reserves of 570 MBOE as of
August 1, 2005. 2006 Guidance On February 16, 2006, Gulfport
provided updated guidance for 2006. Currently, our guidance for
2006 remains unchanged: * 2006 production estimate of 1,300,000 to
1,400,000 BOE with production increasing during the year. * Capital
expenditures in a range of $45 to $60 million for 2006. Gulfport
has spent $8.4 million in capital expenditures year-to-date. *
Lease operating expenditures of $6.00 to $7.00 per BOE for 2006 *
Selling, general and administrative expense of $1.40 to $1.60 per
BOE for 2006 Liquidity Gulfport intends to fund its 2006 drilling
and other activities with current cash of approximately $1.0
million, cash flows from operations and borrowings under its $30.0
million credit facility with Bank of America. As of this date,
Gulfport has outstanding borrowings of $14.5 million under the
credit facility. About Gulfport Gulfport is an independent oil and
gas exploration and production company with its principal producing
properties located along the Louisiana Gulf Coast. Gulfport seeks
to achieve revenue growth and increase cash flow by undertaking
drilling programs each year. The Gulfport website is
http://www.gulfportenergy.com/ . 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. A reconciliation of net income
to EBITDA and cash provided by operating activities to operating
cash flow follows: Twelve Months Ended December 31, 2005 Net Income
$10,895,000 Interest expense 250,000 Interest Expense - FAS 150
272,000 Accretion expense 516,000 Depreciation, depletion, and
amortization 4,789,000 EBITDA $16,722,000 Twelve Months Ended
December 31, 2005 Cash provided by operating activity $15,200,000
Adjustments: Changes in assets and liabilities (1,296,000)
Operating Cash Flow $13,904,000 DATASOURCE: Gulfport Energy
Corporation CONTACT: Jim Palm of Gulfport Energy Corporation,
+1-405-848-8807, ext. 179 Web site: http://www.gulfportenergy.com/
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