GPOR - Earnings call transcript Q2 2020 | Gulfport Energy Corporation

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Operator

Greetings, and welcome to Gulfport's Second Quarter 2020 Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Jessica Antle.

Jessica Antle

morning. good and you, Thank Welcome to call. XXXX conference second Energy Corporation's quarter earnings Gulfport I Investor Director the am Antle, Jessica of Relations. Chief Executive Speakers on and President Hicks, Officer Chief Wood, and Vice today's call President; include and David Financial Officer. Executive Quentin would plans, conference the this and objectives, statements to future participants that condition, financial forward-looking call, the certain performance to company's everybody make results I like relating during remind may of business. operations, forward-looking actual the are caution could due materially from variety that that factors. these We those indicated in of differ results statements a to you Information the concerning SEC. found these factors can company's be in the filings with

In Energy. website reference be would David to posted CEO we call conjunction announcement. earnings in yesterday Gulfport at non-GAAP will the website. the over our to measures. posted An updated with leisure. I the addition, Reconciliations time, may review At make this on presentation Gulfport like Please measures our comparable your Wood, turn to GAAP to was to evening of

David Wood

everyone all Thank Jessica. for thank morning. this Welcome you, us joining and you

closed resulting upended we times. to for for our Gulfport of and difficult a demand in and focus, quarter want dedication employees the pandemic the global during their these thank The perseverance many industry, unique businesses. collapse have I very As

extraordinary focused while strategic Overall, I on team’s of while we safe continue world carry continuing we economies environment to our without uncertain. the laid for The take disruption, practices. to employee to importantly, the that appropriate time out As safety ability during working the most do execute maintaining emerged our and operations staff path ensuring safe continues the around for to of proud our top everyone. a and lockdowns, from forward this a provide on priority job a to remains stay initiatives I contractors key terrific field XXXX. measures am remains significant

land, the uncertain. limited, outlook lockdowns the on have unpredictability situation in easing, is economic fluid extremely activity to across markets. and energy And global world’s producer pace of economy, half continue for and of second see many this we all remains recovery regarding specifically the gas given the visibility oil energy Although weigh year the the the been remains and

supply witnessed spending capital the from reduction side, oil-weighted the dramatic early a in On we year. in peers our

the now barrel, However, return with crossed activity to have near-term and XX-year on producers, Several some associated made same oil $XX and are with gas the the interpreting difficult. it pricing gas just back supply Gulfport, having and come declines near a production see production production lows market. gas. natural current gas we At time, or curtailed to including we natural deferred started experiencing have extremely

within of evolving on together, Lastly, that near-term going financial to energy uncertainties his forward. position Quentin the space remarks. gas natural future. for in these command the risks political cautious address elevated Considering more during environment detail continues prepared all this which in remain we pricing, ever headlines our will impacts

cash flow $XX.X of net million XXXX. and operating free the million in euring and we and adjusted second $XX.X before performance, to inclusive we reported of of the approximately quarter cash Turning income EBITDA. totaled reported capital generated $XX.X capitalized of million changes second flow working $XXX of expenses adjusted million Gulfport's quarter

year production expected when natural are prices As in strategic decision a result price defer the made quarter to of periods the be higher. and the to the later XXXX, we early environment, near-term during commodity second to a gas

legacy in chose SCOOP. operated of NGL the a to In vertical largely and oil our production during portion shut in second addition, low-margin to quarter, we weighted due of pricing, liquids very the low production consisting

from Utica both factors daily as of to These expected, but decline across shut-ins also slightly XXXX. We SCOOP production our average first partners. experienced from and the non-operated quarter the

the volumes weighted gas operated continue of liquids all Based we updated on we assets This pricing, reaffirm in non-operated months to guidance and natural executing feet production. had plan year. line nearly is on mid-July, profile curtailment mid-June to for XXXX with day. and on our returned our current average our to in peak of those both X.XXX during to provided production shaping our our year per colder to full partners our As X.X equivalent billion the cubic of production strategy, expectation

and expenditures lower Our forecast for highlighted efficiency continued the well in below incurred service came capital quarter by costs. gains

the front, spud rig drilling the of some since continue Utica to release achieve to SCOOP. and we average the On lowest both shale metrics entering

SCOOP third consecutive marked for and the In for target our the budget These high rig grade second fact, performance the of release teams our for ahead base. quarterly on equipment spud to XXXX. well record the planned while drilling quarter allowed remaining gains fleet

highlights our recycling reuse and low frac frac upward our environmental addition, to trend to basin continues water In during are which we a and leader efficiency and has stewardship. ultimately commitment total in reduced costs operations,

activity into year Great led costs to savings the wells production six the months continued full the have happen. additional this add gross it allow range. plan in and XXXX to Gulfport combined activity improvements us completion Donnie efforts his to these substantial production now We better during will XXXX guidance to still have in complete of incremental to All This teams provided within in seven during we XXXX. credit expect making drilling Efficient and to incremental for in position year of XXXX all provided levels. our and and CapEx and first previously provides incremental us be late Utica and opportunity this minimal operations Shale. impact an

of wells a days, X,XXX-foot had an release averaged to results. the full and months feet, we X,XXX specifics over one in the year released XXXX have six average roughly X.X down length and XXXX, rig normalizing of when an rigs in Utica currently The we lateral lateral, gross of utilizing drill spud to XX.X the drilling to X% first spud rig ahead in wells XX Turning play.

play, dry to the our the in the drilling pleased say of manufacturing leader and is a window program mode. Utica I'm in gas are We

gain the and little While through was hanging drill deliver there efficiencies the to on low fruit bit quarter-after-quarter. continues expectations team remaining,

Turning in we the and completions the six of during first the to shale, months began completed year wells XX XXXX. active Utica

of the have averaged in drilling The decrease to rig X,XXX to of the lateral, compared first over spud the during including release six XX frac Our $XXX market significant to the stages highlights in lateral, months of SCOOP and per Utica our one had activities a months basin. per in to to foot day-to-day Gulfport’s and drive seven trend well and crews completion over wells Switching our leading estimate development our only. averaging This wells XXXX, six program first the for the efficiency length original we trended feet both deliver our of cost of below Incorporating and per when upward and first play. a XXXX, the our averaged when wells we XX% rig during lateral budget. gross cost six completion X,XXX currently pricing days future a to $XXX normalized a the of drilling of continues year, average below average. and when approximately has XXXX an during XX% that the lateral of spud budget well foot foot structure released D&C six improvement of is for cost foot X,XXX well the months

days five the XX since marked of play results release six mentioned, past comparing I one with zero during the XXXX rig activity, drilled and entering the a and To XXXX of to As been wells quarter XXXX date, than less delivered have sub-XX during and days. in second new spud well to XXXX. when Gulfport record a XXXX

XXXX. quarter a increasing the We were depths per our for and increasing cost measured budget last As XXXX, while averaged below Gulfport's $X,XXX $XXX all during plan rig, lateral drilling D&C activities, completed highlighted were for quarter achieved completion estimate including completion of frac new that lateral, approximately per these activity SCOOP $X,XXX planned we months lateral approximately we the turn-in-line of SCOOP and Incorporating our of have first foot foot, well improvements lengths. further per the of the in only. no and of foot both and six program and when XX% we first adding

determined SCOOP, our and continued In cost highlights repeatable toward results our summary, are to consistent reductions emphasis progress and improvements gains, the to our implementing identifying, results realizing continue deliver the cycle and value-enhancing times. play. on demonstrate in progress We in efficiency shortened in efficiencies

low in the into are I that, price Quentin comments. we continuing enter XXXX XXXX, winter will production better be to will maximize prices over as XXXX for prices and efforts call and returns these a are higher season. XXXX strategy, the from to expected We company when our commodity flow. in the for We believe higher cash With position late production environment to better turn are curtailment deferring mid-year his to forward allowing when

Quentin Hicks

Dave, and morning, you, Thank good everyone.

As indicated, expect reaffirm range. we million guidance at million XXXX come our full CapEx and of of to that year $XXX low $XXX the to end Dave in

million of had quarter, of capital our land XX% $XX second budget June anticipated incurred the Roughly During Gulfport and D&C in XX. XXXX been CapEx. as incurred

efficient well drilling in some capital to operation expectations service below cost Our reductions. is due and spending XXXX completion prior coming and

and composed cubic gas equivalent quarter, X% billion X% the liquids natural day, XX% second gas During production gas, of of per X.XX averaged feet natural oil.

forecast we quarter, third to plan per our third production our XXX strategy, to will mentioned, Looking we quarter day. million cubic to X.XX the continue as average and Dave equivalent feet billion curtailment

per gas the quarter, range transportation was second approximately to $X.XX $X.XX costs Mcf. price per prices, before $X.XX and Mcf settled end of realized hedges effective natural below NYMEX our at the guidance including which During of low our the

our transport our firm XXXX production when expected below fees transport falls periods our incurred discussed, previously firm As includes during commitments. guidance

basis of We to but current reflecting hard our reaffirm are Mcf. per guidance to in not $X.XX transport firm opportunities work continue full reducing commitments, differential these guidance year our near-term and at $X.XX

during $X.XX the hedges, oil effect price volatility. the pricing in negatively realized realized and our our second at oil quarter, quarter, differentials of were below WTI swings During before impacted We WTI. in saw significant this the by came

kind curve, anticipate Through same the Looking going our effect before June, we at hedges the of in the realized $X.XX WTI. forward volatility year-to-date not forward. below price the at of oil came do

$X, discount better. but with to sales guiding oil optimize are our We toward WTI in purchasers of to continue to basin work the year and we to do a hope $X.XX full to still

Turning to NGLs.

Before the the came our price WTI of of in effect NGL XX% at hedges, approximately in quarter. realized

XX% right in to trending the full direction and the guidance to be our are reaffirm XX% of WTI for We XXXX. year

realized continue and hedge Mcfe we the strong be to realized of or position, $X.XX our of hedge settlement a XXXX, second during per prices gain supported million. by Our quarter $XXX.X

per over barrels our chose hedges noted in X,XXX redetermination hedges unwind in of we an day of late XXXX, for oil $XX per XXX ahead the we XXXX In currently to of swaps monetized per cubic of average May, half cash. day April. As have $X.XX million MMBtu. We hedged price of base million borrowing oil gas second the we roughly at in feet with

exposure year. In the addition, covering position the we have large of our for a hedge remainder oil

look add to for support in protection cash managing XXXX book. our continue to by hedge We opportunities particularly flows, downside additional our to actively

position six the months oil of realized hedge natural gas which approximately of revenues adjusted resulted in gas first and our liquids XX% For XXXX, and $XXX.X revenues. is million, composed prices of XX% and

our tax during gathering totaled LOE, In includes production the processing, unit per which second terms cash Mcfe expense, and expenses, of quarter. per midstream $X.XX and operating

costs figure, this If totaled guidance to our a the you $X.XX $X.XX end add G&A, our the operating of dollar high per one Mcfe below range. [ph] recurring year full or during unit quarter per

taxes Utica Second Due was range. above reaffirm the our assets. processing environment our approximately in in slightly guidance quarter increase. per end expense shale approximately of of Mcfe trending the due our high totaled full our to gathering to low per was of in quarter below quarter, and non-op fallen areas strategy, volume due $X.XX Mcfe, than during higher $X.XX because low expectations commitment Utica range, of pricing year. we Production the this non-op $X.XX Midstream LOE related have for toward totaled Mcfe, which high LOE. costs the one the minimum to $X.XX range We $X.XX at currently have, of gathering We're the end to is quarter. curtailment range volumes the driving end our of per the higher which to the second higher expected our for Mcfe of per primarily

midstream We active are to a this in with hopefully this provider remainder the of and optimization burden surrounding ongoing working solution year. alleviate are through discussions the towards

the than midstream our year. surrounding during we G&A capitalized better cash XX% are with combined the expense, improvement midstream a midpoint expected expenses portions, and success And differential, efforts. $XX.X Recurring second forecast quarter had for reduction costs both from optimization guidance have trending recent of cost We with when total our including net-net, associated XXXX. the of quarter, full million and the our totaled first lower

G&A million. mentioned, environment. be several resiliency for employees at Dave structure. full We These return $XX cost end full challenging G&A navigate guidance we we implemented appreciate to initiatives currently expect of this the to times, of our recently our As and we million through flexibility or the below are reduce range our the year to $XX low and year of extremely corporate as

sheet. Moving to balance the

Gulfport continue the wide We to a best future. position explore for of alternatives to range

million group that our to lien are $XXX relationships. of group and our us these As liability ongoing remains part we initiatives. recently have to facilitate The issue effort, partnership with to an management we bank important managing received second we bank of actively our debt very up allows to from that us, amendment

However, low balance are historical revolver redetermination we focused given remain our cost remain improving our as conservative and extremely base a their necessary industry. sheet pricing are structure the looking fall. reduce our we and face very to environment to extension Accordingly, seeing, exposure many this banks on of the and borrowing we

if June could totaled a $XXX be cost borrowing not profile. this our is year to leveraging liquidity XX, possible this due do materially liquidity significantly later as however lower of million. reduced improve Our It approximately that we base

have we earnings associated the continue our to as risks our a and in included going result, release ability language regarding a XX-Q concern. As with

an to remarks. efforts our back closing when on our to to opportunities continue work are provide for to do update available will call balance we the over I with We advisers turn explore to now and improve able these so. Dave sheet, we'll

David Wood

reduce that to efficiency you, are are our historically is everything operational the business. the steps Quentin. company's Thank the improve and mitigate The reiterate our controlling on I unpredictable, costs, what effect and making want on macro right we environment doing we within to to challenging control: power In is closing, laser-focused and our condition. in financial enhance energy

concludes work to appropriate you to balance prepared our to continue value for our will remarks. financial way strengthen all steps for This our We company's improve take stakeholders. sheet the Thank joining that again a preserves and in for today. position our us call

Operator

conference. today's concludes This

participation. You may time. at you disconnect this Thank your for your lines

Gulfport Energy (GPOR) 5 Aug 202020 Q2 Earnings call transcript