• Gulfport Energy Corporation Reports Second Quarter 2019 Financial and Operating Results

    Source: Nasdaq GlobeNewswire / 01 Aug 2019 16:03:57   America/New_York

    OKLAHOMA CITY, Aug. 01, 2019 (GLOBE NEWSWIRE) -- Gulfport Energy Corporation (NASDAQ: GPOR) (“Gulfport” or the “Company”) today reported financial and operational results for the three-months and six-months ended June 30, 2019 and provided an update on its 2019 activities.  Key information includes the following:

    • Net production averaged 1,359.0 MMcfe per day during the second quarter of 2019.
    • Net income of $235.0 million, or $1.47 per diluted share, for the second quarter of 2019.
    • Adjusted net income (as defined and reconciled below) of $33.3 million, or $0.21 per diluted share, for the second quarter of 2019.
    • Adjusted EBITDA (as defined and reconciled below) of $194.5 million for the second quarter of 2019.
    • Reaffirmed 2019 total capital expenditures to be in the range of $565 to $600 million and funded entirely within cash flow.
    • Reiterated 2019 full year net production to average 1,360 MMcfe to 1,400 MMcfe per day.
    • Maintained large hedge position of approximately 1,380 BBtu per day of natural gas fixed price swaps at an average fixed price of $2.81 per MMBtu and approximately 5,500 barrels per day of oil fixed price swaps at an average fixed price of $60.81 per barrel for the remainder of 2019.
    • Completed certain non-core asset divestitures.
    • Repurchased $105 million principal amount of the Company's senior notes outstanding for a total cash spend of $80 million in July 2019.

    Chief Executive Officer and President, David M. Wood, commented, "This was a successful quarter for Gulfport as we delivered results in line with expectations, highlighted by another active three months in both our Utica Shale and SCOOP asset areas and high single digit production growth over the first quarter of 2019. We remain on track to deliver on our 2019 production guidance, while adhering to our previously provided capital budget, and expect to begin significant free cash flow generation during the third quarter of 2019."

    Mr. Wood continued, "In addition, Gulfport continued to make progress on our strategic goals set at the beginning of the year, today announcing several non-core asset divestitures not contemplated within our current development plan. Furthermore, the monetization process of certain water infrastructure assets Gulfport holds across our SCOOP position is ongoing. As expected, this process has been very competitive and we are comfortable with a minimum value of what we expect to realize on the transaction. Taking this into consideration, we took advantage of an attractive opportunity to retire senior debt at a meaningful discount and we recently repurchased and retired a portion of our senior notes outstanding. As we look towards the remainder of 2019 and beyond, we will remain disciplined in our allocation of capital, focusing both on maintaining a strong balance sheet and enhancing shareholder value."

    Non-Core Asset Divestitures
    Gulfport recently closed the sale of its Southern Louisiana assets to a third party for a total consideration of approximately $54.1 million. Gulfport received approximately $9.2 million in cash and retained overriding royalty interests worth up to approximately $7.7 million based on current strip pricing. In addition, Gulfport could also receive contingent payments of up to $6.8 million based on commodity prices exceeding certain thresholds over the next two years. The buyer agreed to assume all plugging and abandonment liabilities associated with these assets, which totaled approximately $29.0 million and Gulfport will receive approximately $1.4 million in insurance premium reimbursement due to the sale of these assets. Net production from the assets averaged 1.5 MBoe per day during the six-months ended June 30, 2019, less than 1% of the Company's production during that period.  The effective date of the transaction is August 15, 2018 and the transaction closed on July 3, 2019.

    In addition, Gulfport closed the sale of its remaining interest in Tatex Thailand II to a third party for approximately $1.9 million in cash. No production is included in this transaction and the transaction closed during the second quarter of 2019.

    Balance Sheet and Liquidity
    As of June 30, 2019, Gulfport had cash on hand of approximately $20.8 million. As of June 30, 2019, Gulfport’s $1.4 billion revolving credit facility, under which Gulfport has an elected commitment of $1.0 billion, had outstanding borrowings of $155.0 million and outstanding letters of credit totaling $251.5 million. The Company's total liquidity as of June 30, 2019 was approximately $614.3 million, which included cash on hand and borrowing capacity of approximately $593.5 million under the Company's revolving credit facility.

    In July 2019, Gulfport repurchased and retired approximately $105 million principal amount of its senior notes for a total cash spend of approximately $80 million.

    Stock Repurchase Program
    In January 2019, Gulfport's board of directors authorized the Company to acquire a portion of its outstanding common stock within a 24-month period. As of August 1, 2019, the Company had repurchased 3.8 million shares totaling approximately $30 million during 2019.

    Second Quarter of 2019 Financial Results
    For the second quarter of 2019, Gulfport reported net income of $235.0 million, or $1.47 per diluted share, on revenues of $459.0 million.  For the second quarter of 2019, EBITDA (as defined and reconciled below for each period presented) was $216.8 million, cash provided by operating activity was $123.9 million and cash flow from operating activities before changes in operating assets and liabilities (as defined and reconciled below for each period presented) was $164.2 million.  Gulfport’s GAAP net income for the second quarter of 2019 includes the following items:

    • Aggregate non-cash derivative gain of $147.8 million.
    • Aggregate gain of $0.1 million attributable to net insurance proceeds in connection with legacy environmental litigation settlement.
    • Aggregate loss of $125.6 million in connection with Gulfport's equity interests in certain equity investments.

    Excluding the effect of these items, Gulfport’s financial results for the second quarter of 2019 would have been as follows:

    • Adjusted oil and gas revenues of $311.2 million.
    • Adjusted net income of $33.3 million, or $0.21 per diluted share.
    • Adjusted EBITDA of $194.5 million.

    Six-Months Ended June 30, 2019 Financial Results
    For the six-month period ended June 30, 2019, Gulfport reported net income of $297.2 million or $1.84 per diluted share, on revenues of $779.6 million. For the six-month period ended June 30, 2019, EBITDA (as defined and reconciled below for each period presented) was $432.7 million, cash provided by operating activity was $309.0 million and cash flow from operating activities before changes in operating assets and liabilities (as defined and reconciled below for each period presented) was $341.5 million.  Gulfport’s GAAP net income for the six-month period ended June 30, 2019 includes the following items:

    • Aggregate non-cash derivative gain of $152.6 million.
    • Aggregate gain of $0.1 million attributable to net insurance proceeds in connection with legacy environmental litigation settlement.
    • Aggregate loss of $121.3 million in connection with Gulfport's equity interests in certain equity investments.

    Excluding the effect of these items, Gulfport’s financial results for the second quarter of 2019 would have been as follows:

    • Adjusted oil and gas revenues of $627.0 million.
    • Adjusted net income of $86.5 million, or $0.54 per diluted share.
    • Adjusted EBITDA of $401.3 million.

    Production and Realized Prices
    Gulfport’s net daily production for the second quarter of 2019 averaged approximately 1,359.0 MMcfe per day. For the second quarter of 2019, Gulfport’s net daily production mix was comprised of approximately 90% natural gas, 7% natural gas liquids ("NGL") and 3% oil.

    Gulfport’s realized prices for the second quarter of 2019 were $3.38 per Mcf of natural gas, $75.14 per barrel of oil and $0.57 per gallon of NGL, resulting in a total equivalent price of $3.71 per Mcfe. Gulfport's realized prices for the second quarter of 2019 include an aggregate non-cash derivative gain of $147.8 million. Before the impact of derivatives, realized prices for the second quarter of 2019, including transportation costs, were $2.02 per Mcf of natural gas, $56.85 per barrel of oil and $0.45 per gallon of NGL, for a total equivalent price of $2.33 per Mcfe.

     
    GULFPORT ENERGY CORPORATION
    PRODUCTION SCHEDULE
    (Unaudited)
     Three months ended Six months ended
     June 30, June 30,
    Production Volumes:2019 2018 2019 2018
            
    Natural gas (MMcf)111,603 108,236 213,682  210,278 
    Oil (MBbls)649 744 1,261  1,501 
    NGL (MGal)57,189 58,512 113,019  124,268 
    Gas equivalent (MMcfe)123,668 121,061 237,394  237,038 
    Gas equivalent (Mcfe per day)1,358,989 1,330,342 1,311,567  1,309,602 
            
    Average Realized Prices       
    (before the impact of derivatives):      
            
    Natural gas (per Mcf)$2.02 $2.15 $2.35  $2.29 
    Oil (per Bbl)$56.85 $66.26 $55.03  $63.29 
    NGL (per Gal)$0.45 $0.71 $0.51  $0.71 
    Gas equivalent (per Mcfe)$2.33 $2.67 $2.65  $2.81 
            
    Average Realized Prices:       
    (including cash-settlement of derivatives and excluding non-cash derivative gain or loss):
            
    Natural gas (per Mcf)$2.20 $2.32 $2.32  $2.46 
    Oil (per Bbl)$57.42 $55.29 $55.34  $55.00 
    NGL (per Gal)$0.51 $0.64 $0.55  $0.66 
    Gas equivalent (per Mcfe)$2.52 $2.72 $2.64  $2.87 
            
    Average Realized Prices:       
            
    Natural gas (per Mcf)$3.38 $1.86 $2.98  $2.10 
    Oil (per Bbl)$75.14 $33.46 $64.08  $40.93 
    NGL (per Gal)$0.57 $0.45 $0.54  $0.61 
    Gas equivalent (per Mcfe)$3.71 $2.09 $3.28  $2.44 
                  

    The table below summarizes Gulfport’s second quarter of 2019 production by asset area:

     
    GULFPORT ENERGY CORPORATION
    PRODUCTION BY AREA
    (Unaudited)
     Three months ended Six months ended
     June 30, June 30,
     20192018 20192018
    Utica Shale     
    Natural gas (MMcf)92,301 92,670  178,002 179,866 
    Oil (MBbls)57 81  122 160 
    NGL (MGal)20,827 26,845  44,163 62,583 
    Gas equivalent (MMcfe)95,616 96,994  185,044 189,766 
          
    SCOOP     
    Natural gas (MMcf)19,283 15,536  35,649 30,367 
    Oil (MBbls)446 407  844 905 
    NGL (MGal)36,342 31,640  68,822 61,649 
    Gas equivalent (MMcfe)27,149 22,500  50,543 44,603 
          
    Southern Louisiana     
    Natural gas (MMcf) 4   11 
    Oil (MBbls)132 223  268 392 
    NGL (MGal)     
    Gas equivalent (MMcfe)793 1,340  1,606 2,360 
          
    Other     
    Natural gas (MMcf)19 26  31 34 
    Oil (MBbls)15 33  28 45 
    NGL (MGal)19 27  34 36 
    Gas equivalent (MMcfe)110 227  201 309 
              

    2019 Capital Expenditures
    For the six-month period ended June 30, 2019, Gulfport’s operated drilling and completion ("D&C") capital expenditures totaled $367.7 million and non-operated D&C activities totaled $68.3 million. In addition, land capital expenditures totaled $23.2 million for the six-month period ended June 30, 2019.

    Gulfport's operated capital expenditures for the six-month period ended June 30, 2019 are on budget with the Company's previously provided 2019 budget. Capital expenditures incurred on non-operated activity in the Utica Shale have resulted in larger-than-anticipated spend for the six-month period ended June 30, 2019 and Gulfport intends to recover a portion of these costs through trades or the monetization of certain non-operated interests during the second half of 2019. The Company reaffirmed its previously provided expectation that 2019 total capital expenditures will be in the range of $565 million to $600 million.

    Operational Update
    The table below summarizes Gulfport's activity for the six-month period ended June 30, 2019 and the number of net wells expected to be drilled and turned-to-sales for the remainder of 2019:

     
    GULFPORT ENERGY CORPORATION
    ACTIVITY SUMMARY
    (Unaudited)
         
     Three months endedThree months ended  
     March 31,June 30,Remaining WellsGuidance(1)
     2019201920192019
    Net Wells Drilled    
    Utica - Operated5.6 3.8 1.1 10.5 
    Utica - Non-Operated0.3 0.5 1.7 2.5 
    Total5.9 4.3 2.8 13.0 
         
    SCOOP - Operated3.1 2.6 1.8 7.5 
    SCOOP - Non-Operated0.3 0.3 0.9 1.5 
    Total3.4 2.9 2.7 9.0 
         
    Net Wells Turned-to-Sales    
    Utica - Operated6.0 25.0 11.5 42.5 
    Utica - Non-Operated 1.1 1.4 2.5 
    Total6.0 26.1 12.9 45.0 
         
    SCOOP - Operated2.8 5.9 5.8 14.5 
    SCOOP - Non-Operated 0.3 1.2 1.5 
    Total2.8 6.2 7.0 16.0 
         
    (1) Utilizes mid-point of publicly provided 2019 guidance
     

    Utica Shale
    In the Utica Shale, during the second quarter of 2019, Gulfport spud five gross (3.8 net) operated wells and turned-to-sales 25 gross and net operated wells.

    During the second quarter of 2019, net production from Gulfport’s Utica acreage averaged approximately 1,050.7 MMcfe per day.

    For the six-month period ended June 30, 2019, Gulfport spud 11 gross (9.4 net) operated wells. The wells drilled during this period had an average lateral length of approximately 10,900 feet. Normalizing to an 8,000 foot lateral length, Gulfport's average drilling days from spud to rig release totaled approximately 17.9 days, a decrease of 8% over full year 2018. In addition, Gulfport turned-to-sales 31 gross and net operated wells with an average stimulated lateral length of approximately 8,800 feet during the six-month period ended June 30, 2019.

    At present, Gulfport has one operated horizontal drilling rig running in the play.

    SCOOP
    In the SCOOP, during the second quarter of 2019, Gulfport spud three gross (2.6 net) operated wells and turned-to-sales six gross (5.9 net) operated wells.

    During the second quarter of 2019, net production from Gulfport's SCOOP acreage averaged approximately 298.3 MMcfe per day.

    For the six-month period ended June 30, 2019, Gulfport spud seven gross (5.7 net) operated wells. The wells drilled during this period had an average lateral length of approximately 9,300 feet. Normalizing to a 7,500 foot lateral length, Gulfport's average drilling days from spud to rig release totaled approximately 52.1 days, a decrease of 17% over full year 2018. In addition, Gulfport turned-to-sales nine gross (8.7 net) operated wells with an average stimulated lateral length of approximately 7,100 feet during the six-month period ended June 30, 2019.

    At present, Gulfport has one operated horizontal drilling rig running in the play.

    2019 Capital Budget and Production Guidance
    Gulfport reaffirms its expectation that its 2019 total capital expenditures will be in the range of $565 million to $600 million, which will be funded entirely within cash flow at current strip pricing. With this level of capital spend, Gulfport continues to forecast its 2019 average daily net production will be in the range of 1,360 MMcfe to 1,400 MMcfe per day.

    Based on actual results during the six-month period ended June 30, 2019, and utilizing current strip pricing at the various regional pricing points at which the Company sells its natural gas, Gulfport reiterates its natural gas differential guidance and forecasts that its realized natural gas price, before the effect of hedges and inclusive of the Company’s firm transportation expense, will average in the range of $0.49 to $0.66 per Mcf below NYMEX settlement prices in 2019. Gulfport reiterates its guidance with respect to its expected 2019 realized NGL price and oil price, and forecasts that its 2019 realized NGL price, before the effect of hedges and including transportation expense, will be approximately 40% to 45% of WTI and its 2019 realized oil price will be in the range of $3.00 to $3.50 per barrel below WTI.

    The table below summarizes the Company’s full year 2019 guidance:

     
    GULFPORT ENERGY CORPORATION
    COMPANY GUIDANCE
     Year Ending
      2019 
     Low High
    Forecasted Production   
    Average Daily Gas Equivalent (MMcfepd) 1,360   1,400 
    % Gas~90%
    % Natural Gas Liquids~7%
    % Oil~3%
        
    Forecasted Realizations (before the effects of hedges)   
    Natural Gas (Differential to NYMEX Settled Price) - $/Mcf$(0.49) $(0.66)
    NGL (% of WTI) 40%  45%
    Oil (Differential to NYMEX WTI) $/Bbl$(3.00) $(3.50)
        
    Projected Operating Costs   
    Lease Operating Expense - $/Mcfe$0.15  $0.17 
    Production Taxes - $/Mcfe$0.06  $0.07 
    Midstream Gathering and Processing - $/Mcfe$0.53  $0.58 
    General and Administrative - $/Mcfe$0.09  $0.11 
        
     Total
    Budgeted D&C Expenditures - In Millions:$525  $550 
    Budgeted Land Expenditures - In Millions:$40  $50 
    Total Capital Expenditures - In Millions:$565  $600 
        
    Net Wells Drilled   
    Utica - Operated 10   11 
    Utica - Non-Operated 2   3 
    Total 12   14 
        
    SCOOP - Operated 7   8 
    SCOOP - Non-Operated 1   2 
    Total 8   10 
        
    Net Wells Turned-to-Sales   
    Utica - Operated 40   45 
    Utica - Non-Operated 2   3 
    Total 42   48 
        
    SCOOP - Operated 14   15 
    SCOOP - Non-Operated 1   2 
    Total 15   17 
            

    Derivatives
    Gulfport has hedged a portion of its expected production to lock in prices and returns that provide certainty of cash flow to execute on its capital plans. The table below sets forth the Company's hedging positions as of July 31, 2019.

     
    GULFPORT ENERGY CORPORATION
    COMMODITY DERIVATIVES - HEDGE POSITION
    (Unaudited)
     3Q2019 4Q2019
    Natural gas:   
    Swap contracts (NYMEX)   
    Volume (BBtupd)1,380  1,380 
    Price ($ per MMBtu)$2.81  $2.81 
        
    Swaption contracts (NYMEX)   
    Volume (BBtupd)30  30 
    Price ($ per MMBtu)$3.10  $3.10 
        
    Basis Swap contracts (Transco Zone 4)   
    Volume (BBtupd)60  60 
    Price ($ per MMBtu)$(0.05) $(0.05)
        
    Oil:   
    Swap contracts (WTI)   
    Volume (Bblpd)5,500  5,500 
    Price ($ per Bbl)$60.81  $60.81 
        
    NGL:   
    C2 Ethane Swap contracts   
    Volume (Bblpd)1,000  1,000 
    Price ($ per Gal)$0.44  $0.44 
        
    C3 Propane Swap contracts   
    Volume (Bblpd)4,000  4,000 
    Price ($ per Gal)$0.69  $0.69 
        
    C5 Pentane Swap contracts   
    Volume (Bblpd)1,000  1,000 
    Price ($ per Gal)$1.28  1.28 
        
     2019(1) 2020
    Natural gas:   
    Swap contracts (NYMEX)   
    Volume (BBtupd)1,380  204 
    Price ($ per MMBtu)$2.81  $2.77 
        
    Swaption contracts (NYMEX)   
    Volume (BBtupd)30   
    Price ($ per MMBtu)$3.10  $ 
        
    Basis Swap contracts (OGT)   
    Volume (BBtupd)  10 
    Differential ($ per MMBtu)$  $(0.54)
        
    Basis Swap contracts (Transco Zone 4)   
    Volume (BBtupd)60  60 
    Differential ($ per MMBtu)$(0.05) $(0.05)
        
    Oil:   
    Swap contracts (WTI)   
    Volume (Bblpd)5,500  6,000 
    Price ($ per Bbl)$60.81  $59.82 
        
    NGL:   
    C2 Ethane Swap contracts   
    Volume (Bblpd)1,000   
    Price ($ per Gal)$0.44  $ 
        
    C3 Propane Swap contracts   
    Volume (Bblpd)4,000   
    Price ($ per Gal)$0.69  $ 
        
    C5 Pentane Swap contracts   
    Volume (Bblpd)1,000   
    Price ($ per Gal)$1.28  $ 
        
    (1) July 1 - December 31, 2019   
        

    Presentation
    An updated presentation has been posted to the Company’s website. The presentation can be found at www.gulfportenergy.com under the “Company Information” section on the “Investor Relations” page. Investors should note that Gulfport announces financial information in SEC filings, press releases and public conference calls.  Gulfport may use the Investors section of its website (www.gulfportenergy.com) to communicate with investors.  It is possible that the financial and other information posted there could be deemed to be material information. Information on the Company’s website does not constitute a portion of this press release.

    Conference Call
    Gulfport will hold a conference call on Friday, August 2, 2019 at 8:00 a.m. CDT to discuss its second quarter of 2019 financial and operational results and to provide an update on the Company’s recent activities.

    Interested parties may listen to the call via Gulfport’s website at www.gulfportenergy.com or by calling toll-free at 866-373-3408 or 412-902-1039 for international callers.  A replay of the call will be available for two weeks at 877-660-6853 or 201-612-7415 for international callers.  The replay passcode is 13686821.  The webcast will also be available for two weeks on the Company’s website and can be accessed on the Company’s “Investor Relations” page.

    About Gulfport
    Gulfport is an independent natural gas and oil company focused on the exploration and development of natural gas and oil properties in North America and is one of the largest producers of natural gas in the contiguous United States. Headquartered in Oklahoma City, Gulfport holds significant acreage positions in the Utica Shale of Eastern Ohio and the SCOOP Woodford and SCOOP Springer plays in Oklahoma. In addition, Gulfport has an approximately 22% equity interest in Mammoth Energy Services, Inc. (NASDAQ:TUSK) and has a position in the Alberta Oil Sands in Canada through its 25% interest in Grizzly Oil Sands ULC. For more information, please visit www.gulfportenergy.com.

    Forward Looking Statements
    This press release includes “forward-looking statements” for purposes of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that Gulfport expects or anticipates will or may occur in the future, 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, market conditions, 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, credit or business conditions that might affect the timing and amount of the repurchase program; the opportunities (or lack thereof) that may be presented to and pursued by Gulfport; Gulfport’s ability to identify, complete and integrate acquisitions of properties and businesses; Gulfport’s ability to achieve the anticipated benefits of its strategic initiatives, including the potential divestiture of certain water infrastructure assets Gulfport holds across its SCOOP position; 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. Information concerning these and other factors can be found in the Company's filings with the Securities and Exchange Commission, including its Forms 10-K, 10-Q and 8-K. Consequently, all of the forward-looking statements made in this press 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. Gulfport has no intention, and disclaims any obligation, to update or revise any forward-looking statements, whether as a result of new information, future results or otherwise.

    Non-GAAP Financial Measures
    EBITDA is a non-GAAP financial measure equal to net income, the most directly comparable GAAP financial measure, plus interest expense, income tax (benefit) expense, accretion expense and depreciation, depletion and amortization. Adjusted EBITDA is a non-GAAP financial measure equal to EBITDA less non-cash derivative loss (gain), insurance proceeds, and (income) loss from equity method investments. Cash flow from operating activities before changes in operating assets and liabilities is a non-GAAP financial measure equal to cash provided by operating activity before changes in operating assets and liabilities. Adjusted net income is a non-GAAP financial measure equal to pre-tax net income less non-cash derivative loss (gain), insurance proceeds, and (income) loss from equity method investments. The Company has presented EBITDA, adjusted EBITDA, adjusted net income and cash flow from operating activities before changes in operating assets and liabilities because it uses these measures as an integral part of its internal reporting to evaluate its performance and the performance of its senior management. These measures are considered important indicators of the operational strength of the Company's business and eliminate the uneven effect of considerable amounts of non-cash depletion, depreciation of tangible assets and amortization of certain intangible assets. A limitation of these measures, however, is that they do not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenues in the Company's business. 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 these measures provide useful information to its investors regarding its performance and overall results of operations. EBITDA, adjusted EBITDA, adjusted net income and cash flow from operating activities before changes in operating assets and liabilities 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, adjusted EBITDA, adjusted net income and cash flow from operating activities before changes in operating assets and liabilities 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, adjusted EBITDA, adjusted net income and cash flow from operating activities before changes in operating assets and liabilities 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.

    Investor Contact:
    Jessica Antle – Director, Investor Relations
    jantle@gulfportenergy.com
    405-252-4550

    Media Contact:
    Adam Weiner / Cameron Njaa
    Kekst CNC
    adam.weiner@kekstcnc.com / cameron.njaa@kekstcnc.com
    212-521-4800

     

    GULFPORT ENERGY CORPORATION
    CONSOLIDATED BALANCE SHEETS
     (Unaudited)

     

     June 30, 2019 December 31, 2018
      
     (In thousands, except share data)
    Assets   
    Current assets:   
    Cash and cash equivalents$20,777  $52,297 
    Accounts receivable—oil and natural gas sales131,675  210,200 
    Accounts receivable—joint interest and other46,645  22,497 
    Prepaid expenses and other current assets9,474  10,607 
    Short-term derivative instruments134,920  21,352 
    Total current assets343,491  316,953 
    Property and equipment:   
    Oil and natural gas properties, full-cost accounting, $2,836,441 and $2,873,037 excluded from amortization in 2019 and 2018, respectively10,510,427  10,026,836 
    Other property and equipment96,413  92,667 
    Accumulated depletion, depreciation, amortization and impairment(4,882,729) (4,640,098)
    Property and equipment, net5,724,111  5,479,405 
    Other assets:   
    Equity investments119,307  236,121 
    Long-term derivative instruments5,036   
    Deferred tax asset179,331   
    Inventories9,001  4,754 
    Operating lease assets19,334   
    Operating lease assets - related parties53,579   
    Other assets12,280  13,803 
    Total other assets397,868  254,678 
    Total assets$6,465,470  $6,051,036 
    Liabilities and Stockholders’ Equity   
    Current liabilities:   
    Accounts payable and accrued liabilities$493,830  $518,380 
    Short-term derivative instruments198  20,401 
    Current portion of operating lease liabilities17,999   
    Current portion of operating lease liabilities - related parties20,817   
    Current maturities of long-term debt615  651 
    Total current liabilities533,459  539,432 
    Long-term derivative instruments210  13,992 
    Asset retirement obligation—long-term88,491  79,952 
    Deferred tax liability3,127  3,127 
    Non-current operating lease liabilities1,335   
    Non-current operating lease liabilities - related parties32,762   
    Long-term debt, net of current maturities2,198,678  2,086,765 
    Total liabilities2,858,062  2,723,268 
    Commitments and contingencies   
    Preferred stock, $0.01 par value; 5,000,000 shares authorized (30,000 authorized as redeemable 12% cumulative preferred stock, Series A), and none issued and outstanding   
    Stockholders’ equity:   
    Common stock - $0.01 par value, 200,000,000 shares authorized, 159,396,017 issued and outstanding at June 30, 2019 and 162,986,045 at December 31, 20181,594  1,630 
    Paid-in capital4,202,599  4,227,532 
    Accumulated other comprehensive loss(48,615) (56,026)
    Accumulated deficit(548,170) (845,368)
    Total stockholders’ equity3,607,408  3,327,768 
    Total liabilities and stockholders’ equity$6,465,470  $6,051,036 
            

     

    GULFPORT ENERGY CORPORATION
    CONSOLIDATED STATEMENTS OF OPERATIONS
    (Unaudited)

     

     Three months ended June 30, Six months ended June 30,
     2019 2018 2019 2018
      
      
     (In thousands, except share data)
    Revenues:       
    Natural gas sales$225,257  $232,695  $501,273  $482,094 
    Oil and condensate sales36,910  49,319  69,392  95,005 
    Natural gas liquid sales25,687  41,271  57,812  88,107 
    Net gain (loss) on natural gas, oil, and NGLs derivatives171,140  (70,545) 151,095  (87,074)
     458,994  252,740  779,572  578,132 
    Costs and expenses:       
    Lease operating expenses22,388  22,912  42,195  41,818 
    Production taxes8,098  7,659  16,019  14,513 
    Midstream gathering and processing expenses72,015  71,440  142,297  135,633 
    Depreciation, depletion and amortization124,951  121,915  243,384  232,933 
    General and administrative expenses13,265  14,008  24,823  27,107 
    Accretion expense1,359  1,015  2,426  2,019 
     242,076  238,949  471,144  454,023 
    INCOME FROM OPERATIONS216,918  13,791  308,428  124,109 
    OTHER EXPENSE (INCOME):       
    Interest expense34,880  33,704  69,000  67,669 
    Interest income(159) (33) (311) (70)
    Insurance proceeds(83) (231) (83) (231)
    Gain on sale of equity method investments  (122,035)   (122,035)
    Loss (income) from equity method investments, net125,582  (8,888) 121,309  (22,424)
    Other expense (income)1,073  (45) 646  (140)
     161,293  (97,528) 190,561  (77,231)
    INCOME BEFORE INCOME TAXES55,625  111,319  117,867  201,340 
    INCOME TAX BENEFIT(179,331)   (179,331) (69)
    NET INCOME$234,956  $111,319  $297,198  $201,409 
    NET INCOME PER COMMON SHARE:       
    Basic$1.47  $0.64  $1.85  $1.14 
    Diluted$1.47  $0.64  $1.84  $1.13 
    Weighted average common shares outstanding—Basic159,324,909  173,623,630  161,064,787  177,158,230 
    Weighted average common shares outstanding—Diluted159,506,826  174,140,627  161,590,087  177,737,282 
                

     

    GULFPORT ENERGY CORPORATION
    CONSOLIDATED STATEMENTS OF CASH FLOWS
    (Unaudited)

     

     Six months ended June 30,
     2019 2018
      
     (In thousands)
    Cash flows from operating activities:   
    Net income$297,198  $201,409 
    Adjustments to reconcile net income to net cash provided by operating activities:   
    Accretion expense2,426  2,019 
    Depletion, depreciation and amortization243,384  232,933 
    Stock-based compensation expense3,379  3,624 
    Loss (income) from equity investments121,449  (22,322)
    Change in fair value of derivative instruments(152,589) 102,248 
    Deferred income tax benefit(179,331) (69)
    Amortization of loan costs3,191  3,006 
    Gain on sale of equity investments and other assets(112) (122,035)
    Distributions from equity method investments2,457   
    Changes in operating assets and liabilities:   
    Decrease in accounts receivable—oil and natural gas sales78,525  6,564 
    Increase in accounts receivable—joint interest and other(24,148) (16,385)
    Decrease (increase) in prepaid expenses and other current assets1,133  (5,786)
    Increase in other assets(296) (1,517)
    (Decrease) increase in accounts payable, accrued liabilities and other(87,560) 28,184 
    Settlement of asset retirement obligation(117) (719)
    Net cash provided by operating activities308,989  411,044 
    Cash flows from investing activities:   
    Additions to other property and equipment(4,298) (6,252)
    Additions to oil and natural gas properties(417,535) (579,734)
    Proceeds from sale of oil and natural gas properties745  3,762 
    Proceeds from sale of other property and equipment130  167 
    Contributions to equity method investments(432) (1,569)
    Distributions from equity method investments1,945  1,196 
    Net cash used in investing activities(419,445) (360,465)
    Cash flows from financing activities:   
    Principal payments on borrowings(345,350) (150,285)
    Borrowings on line of credit455,000  225,000 
    Debt issuance costs and loan commitment fees(114) (624)
    Payments for repurchase of stock(30,600) (104,997)
    Net cash provided by (used in) financing activities78,936  (30,906)
    Net (decrease) increase in cash, cash equivalents and restricted cash(31,520) 19,673 
    Cash, cash equivalents and restricted cash at beginning of period52,297  99,557 
    Cash, cash equivalents and restricted cash at end of period$20,777  $119,230 
    Supplemental disclosure of cash flow information:   
    Interest payments$67,472  $59,915 
    Income tax receipts$(1,794) $ 
    Supplemental disclosure of non-cash transactions:   
    Capitalized stock-based compensation$2,252  $2,416 
    Asset retirement obligation capitalized$6,230  $535 
    Interest capitalized$1,771  $2,351 
    Foreign currency translation gain (loss) on equity method investments$7,411  $(8,867)
            

     

     
    GULFPORT ENERGY CORPORATION
    RECONCILIATION OF EBITDA AND CASH FLOW
    (Unaudited)
            
     Three months ended June 30, Six months ended June 30,
     2019 2018 2019 2018
        
      (In thousands)  (In thousands)
            
    Net income$234,956  $111,319  $297,198  $201,409 
    Interest expense34,880  33,704  69,000  67,669 
    Income tax benefit(179,331)   (179,331) (69)
    Accretion expense1,359  1,015  2,426  2,019 
    Depreciation, depletion and amortization124,951  121,915  243,384  232,933 
    EBITDA$216,815  $267,953  $432,677  $503,961 
            
            
            
            
     Three months ended June 30, Six months ended June 30,
     2019 2018 2019 2018
      (In thousands)  (In thousands)
            
    Cash provided by operating activity$123,929  $184,695  $308,989  $411,044 
    Adjustments:       
      Changes in operating assets and liabilities40,263  (932) 32,463  (10,231)
    Operating Cash Flow$164,192  $183,763  $341,452  $400,813 
                    

     

     
    GULFPORT ENERGY CORPORATION
    RECONCILIATION OF ADJUSTED EBITDA
    (Unaudited)
        
     Three months ended Six months ended
     June 30, 2019 June 30, 2019
     2019 2019
      
      (In thousands)
        
    EBITDA$216,815  $432,677 
    Adjustments:   
    Non-cash derivative gain(147,798) (152,589)
    Insurance proceeds(83) (83)
    Loss from equity method investments125,582  121,309 
        
    Adjusted EBITDA$194,516  $401,314 
        

     

     
    GULFPORT ENERGY CORPORATION
    RECONCILIATION OF ADJUSTED NET INCOME
    (Unaudited)
        
     Three months ended Six months ended
     June 30, 2019 June 30, 2019
      
      
      (In thousands, except share data)
        
    Pre-tax net income excluding adjustments$55,625  $117,867 
    Adjustments:   
    Non-cash derivative gain(147,798) (152,589)
    Insurance proceeds(83) (83)
    Loss from equity method investments125,582  121,309 
    Pre-tax net income excluding adjustments$33,326  $86,504 
        
    Adjusted net income$33,326  $86,504 
        
    Adjusted net income per common share:   
    Basic$0.21  $0.54 
    Diluted$0.21  $0.54 
        
    Basic weighted average shares outstanding159,324,909  161,064,787 
    Diluted weighted average shares outstanding159,506,826  161,590,087 
          

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