Earnings call transcript Q2 2023

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Operator

Greetings, and welcome to the Gulfport Energy Corporation's Second Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Jessica Antle, Director of Investor Relations. proceed. Please

Jessica Antle

President good conference Gulfport Speakers of President call. call be John the and quarter Corporation's on for and Welcome Officer; available President include earnings Executive call. of and today's XXXX I’m Reinhart, Senior Chief morning. Financial you, Executive portion Matthew Energy to second today's Michael Officer Thank Hodges, Chief Rucker, Vice Vice and Q&A Jessica will Antle. Operations

call, factors. remind financial I results these factors can and Information are could may actual that operations, everybody company’s from materially the would conference relating be company’s participants caution indicated certain this found the the plans, to in forward-looking conditions, those with statements to forward-looking you in due the the like business. SEC. We that of concerning that performance, statements, make during of filings objectives, to these differ future variety a results

GAAP to may we presentation yesterday addition, In website An evening review updated the announcement. at to our in was Please comparable reference be leisure. your Gulfport posted earnings our measures. Reconciliations posted on with website. conjunction these measures non-GAAP will

President turn I this like At John call CEO. to would to over Reinhart, time, and the

John Reinhart

in year with operating playing budget you board led in well our execution you, the The than positive highlights estimates. EBITDA outpacing I'm quarter pleased guidance. capital revisions analyst strong in in performance listening today and spend realizations role production, outperformance times to better to cost and our key cycle all production coming operating quarterly expectations, adjusted on and full Thank strong Jessica costs, to across thank and second XXXX the to provide for consensus operational everyone our call. a the company's

free utilizing corporate cash lowering an quartile and growth, cycle balance attractive company enhance to shareholder asset and sheet and flow expand level enhancing improving returns our disciplined operational focused delivering on inventory. our all times quality returns, while efficiencies and The and costs, top both remains yield maintaining high

for the value positions which fundamental continued company improvements. of All attractively

quarter the within despite company nature the of results, strong activity cash the remains second capital program behind adjusted flow volatile us, second market, position $XXX.X Highlighting XXXX. accelerate and first front-loaded in of our commodity cash our million EBITDA. quarter The adjusted our second funded generating from of of financial our flow the half free with $XX expect XXXX the in a million we half year to

totaled cubic was the continued day well equivalent of production daily expectations wells timing average development program. billion and brought accelerated driven by feet online the our performance X.XXX from as per Our of in strong the analyst ahead as quarter,

seven During second Utica. and the which the were gross the eight of drilled rig released quarter, company wells, in

the gross during quarter, On online the in completed in two brought Utica and completion XX wells and we XX wells SCOOP. the the side,

continued the We improvements, cycle two-week gross realizing consistent turn-in-line realize to dates. during each wells of and planned quarter, acceleration online time XX a deliver of turn-in-lines accelerating brought execution all strong operational the

and we to our have of perform has Slide results. of high focus level deck included able investor team at efficiency and to the Year-to-date, contributing summarize a key XX to areas highlight been the of the several

of idle are fully continuous front, with our time group, integrating and operations. improved planning being function mitigation, operations the logistics between our by risk reduction planning the into improvements operational phases On realized all

continues are a Drilling drill Regarding footage efficiency improve realizing our in performance quarter-over-quarter to X% gains. per business of operations, all functions day. with improvement

and significant frac decreasing a side, completion per phases. drill space the reduction non-productive we in increase pumping seen in day, dead hours as frac time, as have On well between out

hours reaching led stage operations. stage frac per XX X% day, in with by to plus is design quarter the and improvements logistics pumping hours and modifications days efficient counts, on pumping perforating stage performance second day daily considering focus the have which per sizes many average improving and highly Our XX

significantly improved ultimately our we improving cash which an and efficiency and capital believe remain lower level intently operational efficiencies result returns corporate The forward. expenditures enhancing play focused turn-in-line role acceleration going cycle timing, gains margins, integral of in in time flow. reductions maintenance capital on will These and we

pad Ridge As XX In County attractive an are approach, with well in wells. drawdown rates pressure pad quarter, managed feet generating the County, the equivalent which we Monroe cubic equivalent feet we well on these historic results our mentioned per production Utica, continues in Early of initial area. last leading is pad quarter, the same mentioned last our to continue of day. average pressure lateral of results to for drawdown. production per This pressure in estimates in focus to psi million to minimal billion average X.X three which feet Monroe well at strong cubic Barber excess reserve excess of XXXX per produce continues outperform three located day XX

to has in development County an XXXX by equivalent which Historic feet averaged outperformance billion cubic development represents a X.X offsetting relative lateral, of minimum feet of per Monroe XX%.

pressure improved the Monroe ultimately optimized relating to County capital to development. longer flow We planning Utica production shallower gas declines, development compression. facilities of believe economics We are back periods, our spacing, and efficiencies very will treatments reserves, stimulation dry rightsizing and of and with enhanced consolidated well improved encouraged managed production our lead and plateau remainder for

with our yields, drawdown, to profit the Fowler the moderated second positively outdone online Slide and approach, Utica presentation on has development XXXX responding than came in ultimate looking deliver XX. production managed last our a initial higher during expected two as the continue the lateral as very at shown average well we back. pad XXXX currently to Not well be hydrocarbon oil improved feet in SCOOP, by lower years and forecast XXXX Utica since investor program, our improved in XX% EUR for to three quarter full over the relative of pressure pressure flow is as recoveries to When

the those development consistent in in as look company wells across SCOOP seen wells our of the delivered acreage. years, highlighting best in The recent our results, and some line Fowler be to has with

Looking at can SCOOP per in XXXX. to the you Slide average XXXX forward to in improved our more in XX% historic Oklahoma see of We feet our look EUR a by program of since XXXX. activity returning investor has of over deck, lateral development level XX

continue our In the terms rig County these to is one drilling expect activity, fourth have to turn which development to Belmont ahead sales drilling of in in current Marcellus during we and operating wells quarter. Ohio, on

Marcellus XXXX approximately wells XX Marcellus potential the see of holding unlock to and the We in development later look upside to incremental farther forward XX discussing year progress our with to our value to acreage guidance our drilling The us while base and operational completion the same well additions budget. efficiency maintaining continued company. inventory the allow increase capital strength our gains to and in production performance

feet in expectations of for production feet billion X% $X.XX than XXXX range be range. previously to Production issued second totaled cubic the quarter year an range. We now increase XXXX below initial X.XXX and forecast of per X% the to cost better guidance guidance analyst consensus equivalent the our X.XXX cubic equivalent day, full will our per based upon company's million

year. unit driven by a and firm primarily the decrease is expenses per for improvement transportation expected realized and processing The in

of equivalent, to the which our approximately operating million and upon we've $X.XX cubic full $X.XX feet improvement midstream year X% LOE, an per guidance, unit than XXXX, to taxes based cost For of reduced income midpoint includes continue other costs unit optimize of work year. guidance and and aggressively the on our to opportunities reduce the range. during per issued to costs previously midstream The improve teams remainder our to LOE operating both

our with feet company the The our $X.XX cash equivalent. maintained million totaling general and quartile top quarter per reoccurring spend administrative G&A, during cubic

XXXX On year in roughly interest XXXX These results working program. drilling savings the capital forecast the production savings drilling completion well every we our being This average in efforts, the in nearly to increase results development year. full contributes our facilitating for our and ongoing by further improve and expected to driven to-date, capital counts net well improvements an maintenance our and operational and the completion in side, has on are reinvested our in company ability realized leasing our X% efficiency budget. company's

in affirm guidance Based on the activity capital $XXX well the $XXX to as as will million that continue improvements team remain expected and remainder budgeted operational full completion the and of confident focus our we in budget year, into of drilling gains capital range our million capital savings The are for of base on efficiency XXXX to further meaningful going spending. to development translate into year XXXX.

footage million we focused facilitating on interest maintenance, $XX Turning increases expenditures. and bolstering land spend programs plan We million near-term. on land in drilling in XXXX investment. is our drill leasehold plans reaffirm to allocate to XXXX lateral our land and $XX and working units to This to our capital and

discretionary detail our quality year. optionality discussed and evening is yesterday announcement pursued plans. conference acquisitions will acreage earnings the this held being our and further production high depth, last our to in predominantly the company expand acquisitions near-term providing provide call, outlined is long-term As by on which quarter’s development regarding resource These

valuations strong a are cash acquisition we acquire of strategy leasing intend cost We are to efficient the overall core to We is adjusted to acreage which flow. opportunities allocate these towards million attractive XXXX $XX are We pursuing opportunities robust actively attractive believe approximately high from free to position. extending our accretive believe attractive inventory value at that our organic acreage this approach organic opportunistic quality most business. these

of area approximately of discretionary anticipate development cost the acquisitions interest, with to will X.X phase of average add an $XX the exact location. Depending pace years acreage at million $X.X on million drilling $X.X approximately million per window roughly we our current inventory and of

in closing, developing sustainable development In reinforces of importance our an natural assets environment the current efficient gas the manner. and

is company. positioning addition and strength further focused of financial efficiencies the strategy attractive will This robust and optimizing going return shareholder enhancing forward. portfolio our our team enhancement acreage the to on in Our improve a strong the protecting margins, of

substantially the through free We offering capital reduced our concurrent cash alongside flow as by to discretionary June over by acquisitions. continue XXXX. initiating have accounting all prioritize share repurchases and adjusted continue the common our equity common to secondary the of return plan XX% repurchase of after our stock acreage shareholders for program, to allocating we repurchases in common outstanding we Since to evidenced shares the

call discuss I’ll results. the turn to over Now to our Michael financial

Michael Hodges

and Thank morning everyone. you, good John,

capital by quarter, macro almost gas the before approximately in expenditures, changes during in second our area achieve business. despite the level to company capital working strong activity. continued results accelerated funding than the our the totaled second million provided and the activities every During of Net more quarter, $XXX cash operating soft of

program We free million million cash for reported in the adjusted flow driven strong the maintenance a reported capital that EBITDA and commodity should mentioned, John occur outspend the adjusted first D&C spending our of slight XX% year, with during and approximately expectations to left to same the XXXX our second the adjusted $X than less an to the expected enter leasehold by price analyst than our waiting improving free XXXX. provides period half production just as of year, accelerating due With of $XXX of quarter, cash and later performance. flow cost environment half strong operating year as a tailwind we and in the in deliver of better

cash price price Henry hedge is $X.XX natural quarter per both of derivatives commodity before realized quarter realized books $XX impact marketing pricing $X.XX highlighting Gulfport’s approximately We our of our settled all-in gain was price, uplift This and second firm our areas. above in cash softened portfolio NYMEX and cash Mcfe pricing a Index during for unit Our the the of asset hedging strengthened Hub transportation. the as the gas benefit liquids for and diverse the million of flow. from realized our

our of will remain hedging prices should protection or believe XXXX provide remainder the We at position below for current levels. ample

per the expect and we increasing quarter. the settled hedges to $X.XX price negative progress differential our quarter daily the fourth through average we NYMEX driven before by and gas to as during strip differential before third natural Mcfe quarter move Our wider seasonality was in the compared narrowing price pricing year,

expect full end our the per natural current below gas wide and based of We average end year, prices before differential on provided for NYMEX cents $X.XX range. average to toward the the toward basis reaffirm Mcf – the basis forward and $X.XX our marks hedges to

year, In XX% XX% we to date addition impacts WTI and for realized company’s natural year. revised anticipate to the and expectations liquids reflect for our guidance the realizing market realized calendar the of of the to to have gas prices remainder

to remain and maintenance half spent land of results incurred that XX% capital initial first confident and expected base and capital to full of and year within capital Through million expected $XXX.X million XXXX and capital of drilling leasehold year, we now XXXX, guidance. our approximately related our completion we D&C for the deliver front, we for land XX% related the our will expenditures investment. approximately activity On and of we $XX.X leasehold have the

acceleration for forward XX% during time cycle will continued first drilling approximately of Our the the we improvements planned capital of XXXX. pulled occur year of three estimate quarters has and and activity the completion capital

strong we Our be we our operational will stronger commodity efficiency sheet enter balance what healthy provide XXXX setup consider and the cash improvements, proper price as robust margins activity as and significant a hedge plan environment. flexibility for believe we position,

per the per current an at an XXXX cubic to are have covering Mcf. XXXX of average of Mcf respect floor $X.XX approximately protection average protection at feet With position, of natural XXX price million our pleased floor price $X.XX downside and hedge in XX% per we to downside roughly gas remaining day of production

natural hedges totaling average price day Mcf and to layering opportunistically of per floor. begun the cubic gas have $X.XX XXX also an have approximately swap feet million currently for per XXXX contracts and collar at We in

amounts locked XXXX and better days of basis future present cash natural front, sales hedging there of our around in XXXX approach the targeted a On we with flows plans to points the of primarily yet gas are exposure, we remainder natural opportunities as gas pricing layer for the in committed disciplined remain to year. security hedges, basis believe largest We providing our incremental have ahead for XX% our themselves. at to in

Turning sheet. to the balance

million account borrowing our of at financial totaling and $XXX.X spring comprised month announced strong million availability, into million amendment XX takes $X.X base remains previously which facility. with successful X.Xx very redetermination plus trailing of our Our and our borrowing exiting cash leverage the credit $XXX position of quarter our liquidity base to

perspective to is needs more future sufficient any we financial liquidity fund and going from have development a flexibility foreseeable forward. Our tremendous today provides for might than the

to allows our positioned opportunistic us that should we to value be capture As are situations for stakeholders. arise

offering In XX%. stockholders with the by and we equity capital approximately equity in selling markets, June million shares secondary roughly ownership X.X completed equity their public Gulfport’s by the a increasing reducing with the at during connection executed price the second buyback $XX.XX total in of million common and we shares XXX,XXX an Further in quarter. Gulfport repurchased average concurrent transaction, of approximately a $XX shares float

account inception currently We had $XX value we $XXX repurchase at of XX% by of XX, our availability our X.X since million approximately program share share and stock to the July million of of As repurchased repurchase approximately our price remains average an the shares share common million of $XX.XX, same. approximately our lowering program. under plan share shareholder have deliver

substantially XXXX to all debt We repurchases, share the excluding will return free that acreage flow John year earlier. continue of acquisitions our cash common adjusted discretionary mentioned through to full shareholders

repurchases ahead XXXX key significant As and forecast strategy. capital continued free and we out look close of flow share a our common XXXX, part to generation cash remain return of will we

Given equity. the in believe recognized value, our we remains

the repurchase our of anticipate continuation authorization this plan share we Given in current our to respect future. existing near shareholder expanding with returns,

been time In fronts we delivering operationally as of the forward part This both to flow and half Gulfport. is guidance to our of XXXX cash within than premium lower costs investors. a success. than and more now projected, at deliver We has production yields free existing operating while summary, Simply on financially this first continued move forward. put, be to progress all promised is year’s our investing an program we look to and delivering plan exciting

and environment few fully willing strong has believe months, been While improving for our especially natural capabilities. Gulfport’s current volatile for as valuation light outlook both well that our we execution could of to a a the We the that gas potential natural we in upside, recognize substantial last our deliver the investors. possess and significant these believe multiple upside operational macro results that opportunity an for this recognize provides investment as gas to expansion those current landscape the

With the over back open turn up operator call that, for to to I’ll the call the questions.

Operator

Please proceed. Instructions] [Operator you. [indiscernible] comes from with Our Truist. Thank first question

Unidentified Analyst

team. morning Good

pursue program you an is whether when just that of board? for. should locations you what we the how to could expected you get make Or On trying maybe on not think to you there? on de-risking Are a to more many looking about those a this Marcellus or be results decision idea bring get

John Reinhart

is John. your This today. Appreciate question Bert. Yes, the and participation

about we’ve couple that We’re last excited the the development the it mentioned as potential pretty brings. quarters Marcellus

closing our out noted, we’re on drilling that in actually So early as well, second starting I and forward to production looking here QX.

it, would the and there just are attractive wells bucket I As across look right at as opportunity set we the to south. river the very

what expected. We’ve ran pilot that are some is also early tell some you sidewall early as and and cores, logs results I’ll

our the better in midstream perspective, to south to our these to economic bucket delineate help set would the pressures looking look the are liquids how discussion. the a opportunity might and I on we’re get content like to from profile us handle the as production northwest are what So to and a better in

So what So prioritize the might of answers would better assessing productivity to that more of want the formation development? outline we hopefully where question. your subsequent be initially and a

Unidentified Analyst

That’s That on just commentary. great. the follow-up that does. the is And prepared then

repurchases described You flow the of for of the have kind as the share amount free year. remaining you cash

was obviously so some a pulled environment, you gas forward. lower of that XQ price maybe So,

the want share a using just amount you’re more are year just opportunistic just or Thanks is similar you going we cash ratable year looking make kind of should free they we repurchases a program Or buybacks? of I and at to forward forward come understand, it a those of as flow sure calculation guys. So of then for along? expect

Michael Hodges

is great a question. That’s Michael. Bert, Yes. this

throughout of year year this program. a full being kind described we’ve as So the

repurchases kind month think where that assess that. might can feel make And of and We like we look we acreage free into share that sits opportunities and described the once year into coming, take of at of John every we look commodity be that flow. prices that we So this certainly account any at our morning. full amount we we XXXX then what can available cash the play at

So attractive consistently. the at current the certainly that throughout from can think levels have been year. vary We felt we’ve quarter-to-quarter. extremely active buyers equity is way and And that

chase And free We the quarterly really in need that it on with flow. don’t balance year our full at so on our liquidity of basis. we to the look changes healthy cash revolver, with sheet, kind

year, the available in the cash have And half so it to still make fashion as out look free as we additional to and of we repurchases assessing second the we’re flow. plan that

Unidentified Analyst

go a guys. think that’s I great way to Thanks it. about

Operator

with Our Rezvan next from Please question Tim comes KeyBanc Capital. proceed.

Tim Rezvan

Good Thank everybody. taking you Okay. for questions. my morning,

on we hedged, out momentum. XX% you look operational sheet As is the to ignore to if Is calls, just the where look the XXXX, we that curious sort given level your roughly be higher of thoughts would sold the like Just improve? balance to you or the and push if to be where a much you there. you curious opportunistically level saw want good XXXX strip

Michael Hodges

Michael. this Yes, Tim, is

about Another is position positive the strip have we for really mark good the sits the we I question, where think place the we're feel significantly in given XXXX. hedge or in at market where and in good certainly right now

You I strategy where vary for range I at little or to balance hedge call typical or book. mentioned lower, whether we're in we to sheet, a our us our typical our that flexibility little gives little want of be would higher bit, a middle somewhere the the the think a

currently, the If where XXXX, with to of certainly think really were the sits add in really significantly prepared think my don't We XXXX think room higher, we're pretty And I where a have strip book. move feel bit. we're and I mentioned probably optimistic pretty in our have to we I could and XXXX. existing that we'd with ton So, I layer a for little we strip a comfortable most but bullish sits. part on focused view the on to left comfortable comments,

to So keep we've been using us some there. structures allow upside that the

in if of room work our we think strip XXXX, bit could be most do I saw will a for little some there. So, some where the improvement of on XXXX, probably but there's we focus additional

Tim Rezvan

as how deck, question, in next of so follow appreciate to is in just couple that on there? Oklahoma John. be, you've that you're now And up see the about for more minimal kind we color. a the learned increase next it's CapEx few full-time more that CapEx asset, there out wells talking In SCOOP I trying a increasing a the more can could been curious, you've understand months? maybe about year, like material sort year, overview the this Just rig seat of or a for chance investor running Okay, an

John Reinhart

capital we're participating it we've certainly that allocation are that economics capital excited in. from the now XXXX, did historic the question. I We as the to due about regards really talked area. nature. Quite good results, appreciate the Tim, more highly funds and Marcellus and a call. allocating thanks the allocation HBP XXXX economic the for with capital the again Hey our we to prior But about pretty SCOOP we wanted really Listen, into frankly, the as in SCOOP warrant take program coming some to reinvest in done. to Oklahoma of it's which quarters to going with to delineation, turn be we in

moving capital you forward. think And that neighborhood plus XX% minus of the the XX% about or in of range to can that

appreciate pretty about question. of or we'll I out of kind – our for in the February can getting So tell you January cadence year. this our our But put of we're early portfolio, normal the back guidance, so economic to full for part excited highly

Tim Rezvan

thank Okay, you.

Operator

this remarks. CEO Thank to the you. Reinhart, Mr. call At I final turn will John time, back for

John Reinhart

Thank time today. you the taking to our for join Yes. call

our to a commitment of any generate in the be to Should for Thanks have you team a consistent further our company to is and company opportunistic flow day. a one, has the don't This please that future. for maintaining strategically value shareholder reach great free call, joining and enhancement future. have accretion. healthy attractive out have in and balance message levers by towards investor directed healthy many cash growth, a value minimal run with Our tactically again the and sheet moderate questions, to hesitate substantial been relations levels allows

Operator

teleconference. today's concludes This

at You thank and may disconnect this your time your participation. line you for

Gulfport Energy (GPOR) 2 Aug 232023 Q2 Earnings call transcript