Gulfport Energy Corporation Announces Results for Three Months Ended March 31, 2006
May 15 2006 - 7:16PM
PR Newswire (US)
OKLAHOMA CITY, May 15 /PRNewswire-FirstCall/ -- Gulfport Energy
Corporation (NASDAQ:GPOR) reports financial results for the three
months ended March 31, 2006. For the three months ended March 31,
2006, Gulfport generated net income of $2.8 million ($0.09 and
$0.08 per basic and fully diluted common share, respectively),
operating cash flow of $675,000 (as defined below), cash provided
by operating activities of $2.4 million and EBITDA of $4.2 million
(as defined below) on revenues of $4.5 million. This compares with
net income of $1.9 million ($0.08 per share basic and $0.07 fully
diluted common share), on total revenues of $6.8 million for the
three months ended March 31, 2006. The improvement in earnings was
primarily the result of a 47% increase in the average oil price
received to $60.74 per barrel for the three months ended March 31,
2006 from $41.41 per barrel for same period in 2005 and the
recognition of $2.7 million of business interruption insurance
recoveries, offset by a 52% decline in net Boe production to 80
thousand barrels of oil equivalents ("Mboe") for the three months
ended March 31, 2006 from 166 Mboe for the same period in 2005.
This production decline was a result of the down time experienced
from the damage to our facilities due to Hurricane Rita in
September 2005. Hurricane Rita / Facilities Update On September 24,
2005, the tidal surge from Hurricane Rita caused damage to our West
Cote Blanche Bay ("WCBB") facilities. We lost more than 150 days of
production, but our main tank batteries, which handled
approximately 70% of our production before Hurricane Rita, again
became operational during the first quarter of 2006. We anticipate
that the balance of our production facilities at WCBB will be
brought on line within the next 90 days. We began returning wells
to production during the first quarter of 2006, and as of May 15,
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 have recently begun producing from
thirteen new wells that were drilled after Hurricane Rita but had
not been completed due to the damage to our facilities caused by
that storm. In addition, we have one new WCBB well that we expect
to bring on line within the next ten days and three WCBB wells that
we expect to bring on line early in the third quarter of 2006. We
had an insurance program in place that we believe will adequately
cover the damage to our platform and facilities at WCBB caused by
Hurricane Rita. 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 To date in
2006, we have drilled twelve new wells and production casing has
been run on ten of these wells, with six of those wells now
producing and four wells waiting on completion. The remaining two
wells drilled to date in 2006 were shallow dry holes, including one
exploratory well that was drilled to satisfy our drilling
commitment to hold non-productive leasehold interests within the
WCBB field. We are currently drilling our 13th 2006 well and within
a week will begin drilling our 14th and 15th wells including a
deeper, exploratory 11,600' well. This exploratory WCBB well has an
estimated cost of $5.5 million with a net reserve potential of
10-20 BCF. The twelve wells we have drilled at WCBB to date in 2006
include six deep wells, two intermediate depth wells and four
shallow wells. The deep wells, with total depths ranging from 8,850
to 10,147 feet, have approximately 509 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. Aggregate net production from WCBB during
the first quarter of 2006 was 48.0 Mboe. On May 9, 2006, net
production at WCBB was 2,695 barrels of oil equivalents. East
Hackberry Updates and 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. A second rig will be brought in to drill these
wells. The 3-D seismic data also suggests 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 May 9, 2006 net production at East Hackberry was 125
Boe. On May 9, 2006, net production at our West Hackberry field was
79 barrels of oil. On May 9, 2006, Gulfport's total net production
from these three fields was approximately 2,900 Boe. 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/ . Non-GAAP
Financial Measures 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 expense, depreciation, depletion and
amortization. Operating cash flow is a non-GAAP financial measure
equal to cash flows 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. The following presents a
reconciliation of net income, the most directly comparable GAAP to
EBITDA and cash provided by operating activities to operating cash
flow: Three Months Ended March 31, 2006 Net Income $ 2,828,000
Interest expense 270,000 Accretion expense 149,000 Depreciation,
depletion, and amortization 993,000 EBITDA $ 4,240,000 Three Months
Ended March 31, 2006 Cash provided by operating activities $
2,428,000 Adjustments: Changes in assets and liabilities
(1,753,000) Operating Cash Flow $ 675,000 DATASOURCE: Gulfport
Energy Corporation CONTACT: Jim Palm, CEO, Ext. 179, or Mike Moore,
VP and CFO, Ext. 108, both of Gulfport Energy Corporation,
+1-405-848-8807 Web site: http://www.gulfportenergy.com/
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