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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