Gulfport Energy (GPOR) 6 Aug 212021 Q2 Earnings call transcript

Greetings, and welcome to the Gulfport Second Quarter 2021 Conference 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. Jessica. you, Thank

begin. You may

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

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

operating value look who sharing with recently am Buese, be very you joining with and forward the for Resources. Bill I much overhead had and hard call of And within a corporate significant you time, the am with excited Jessica. personally thank you, we I the start here Today, our and like our value complements by would size to to QEP first the base quartile employees Thank of today morning, have time challenging good the here for I opportunity long at work today. their very working restructuring I costs. pleasure thanking balance and right a that a top the for Energy. sheet asset process. in to during successful with Gulfport

natural are that you We the with. same high quality have gas assets familiar

is capital historical averages plan generation, value results However, reflecting discipline optimization. our flow built strong our development and free upon cash XXXX program new above delivering

our and returning have plan our and growth, highly are flow engaged Board use financial business we As both to model Gulfport’s to we adopted shareholders. flow on an and will on and quarter cash a operational guidance provide outstanding a able a discuss update of for we expect I XXXX. begin results the until overview with then Bill will to we’ve company, returns to Directors the second debt new, capital focused production over and of development SCOOP. Utica an excess to begin performance in performance free generation reduce continue cash new

We have process metrics restructuring report. key renewed outlined on in with delivering emerged the corporate focus from a on sustainability our sustainability and

is already our appointed she We very methane of the proud playing in made recently and progress Vice emissions. We EH&S of and the our progress executive key forward regards ESG with the will of social company. important a stewardship, leadership initiatives. role look to team executive responsibility team to President greenhouse reducing Stephanie are environmental to and Stephanie gas Timmermeyer, the closely with and work governance

its SCOOP equivalent We development second a the as third Utica averaged X of XXX programs. gas comes quarter million per to during quarter and shown day quarter Slide which a during included contribution cubic from on feet production. second feet deck, drop of as in anticipate production Moving slight SCOOP IR the both the our results, strong off operational the the production

capital when the pad Gulfport online quarter. $XX comes in in reverse million the to of decline the the invested six Utica. the Angela expect fourth We quarter well second in

lowering development and will towards in I delivering explain work through staying to further this a peer-leading our produced. Mcf costs as We I talk focused strategy completion while cost continue primarily few per on drilling minutes.

year, Moving presenting forward, spend exact the of number on we annual are to $XXX is per per of expected Bcf completion in our roughly the This of million result slightly will of a maintenance-level fluctuate targeting timing activity. capital drilling equivalent approximately and spend production. X level day

quarter. pleased the you'll outperforming XXXX to Utica plan. recent our now results program historical results find Utica Page and from XXX been plateau. on are production plateau development cubic the current per approximately averages the development five months on in in wells The stay feet both pressure for eight compares equivalent could our the less. have months day months, ten results. Turning Hendershot am million Shannon these the IR I deck, online to SCOOP the to On our where totaled Based favorably historical report on remain X for which to wells or six of and during and decline,

online was moving wider seeing a month are time performance of in pad now and to early and we addition, that encouraging We similar and frac believe slightly larger a data. Morris over result In direct for spacing this our is ups.

will completing We we oil. our wells The attribute to performing recent in laterals. better The return of pad look the longer using which Angelo technology of simul-frac bringing and wells, this the program quarter spacing results SCOOP for the planned. pad of Slide XX, during economically forward gas Gulfport On SCOOP. the are at XXXX and approximately wider XX% $X.XX as see fourth most are you Utica the the with wells $XX rates online and with can than currently historical beat

our Looking the the at scenarios. compelling at we XX the varying price program SCOOP, Slide on core returns we have Utica and detailed economics seeing are in both of the

lead XXX,XXX and day is Despite out deliverability to our the structure focused Mcf our per of operations. year, and the or year-on-year XX% half us as of recently appropriately forward. gross dramatic area in on Midstream and largely free diversified continues reduction future. flattened moving capacity this transportation the keenly reduced the $X.XX and first result, number by which below decatherm right-sized operating the remain and significantly aided commitments volume our which reduction portfolio takeaway by well planned for sustainable the process, our our to to commitments, markets of substantially provide the generation in our foreseeable We basin. with improve expense, the improves structure During organization transportation, we been firm corporate and able overheads the The planned cash we've flow for largest to per interest executives reducing gathering processing, premium leveraged balance is our sheet sizing right-sized contracts. of organization restructuring have been our gains a to cost more optionality reducing capacity, expected our cost midstream margin

we reductions, of we confident these of will With top for G&A achieve costs XXXX. quartile $X.XX per are that full year the Mcf

spend to even which minutes is in average and XXXX completion unit on agree costs focusing few to programs. further. committed now always down moving describing bring foot expected and to cost We LOE, is team working development per Gulfport’s the cost are field forward. $X.XX Mcfe that important is lowering a I'll per lowering for drilling these per the while Lastly, to and continuous drive

production. each lowest We cost for also the outcome most looking believe when to that the at spent deliver especially, dollar few molecule important the is year's first

has intense intensity feet, eliminates approximately operators foot plateau with Slide unit the a declines. per periods of $XXX the in smaller steeper superior jobs on with started Slide XXXX wider spacing foot in IR and well XX historically We drilling X,XXX has optimal more that proppant and by down investing , we higher spaced The objectives loading. been of At to some design and economic deck, are least shown frac impact example developed deliver delivering wider which driven spacing the is lead shown that outcome. has the to one wells the pumping on the As we support wells this Utica treat believe to spacing, on completions to XX. target at which fluid cost

lower space the versus and redesigned we reflect cumulative plan believe foot well forward. XX,XXX approximately development have laterals believe and during longer our overall demonstrate economics this well years also we DMC higher to wider production online. well, cost develop tighter but similar, cost a and is We space of improve Gulfport’s plateaus per few The feet going our longer first will four pad the performance pad that a five to

performance. XX XXXX process benefited and discipline, wells of gas recent by demonstrating place. Utica XXXX this strong economic for greater ultimately superior taken premise This as improvement Our on improve believe encouraged on the restructuring performance will XX. continuous from mindset, generation, XXXX to lead our that areas by completion are approach and production with demonstrated we and are emerged in lower original development supported flow summary, planned field which in We the free Slide have sheet. and IRRs and will our in approach, the capital also and EURs balance will support cost-effective we have we approach and a focused with In cash

development deliver safely structure, to and returns financial the our our committed fully the corporate turn and over We and are the our XXXX possible guidance. our call flow results executing focus field the governance optimizing to performance. in We improving social and on environmental, and reduced flatten overhead, investors. strong highest Bill cash to now I our free will program discuss to to

and Dan, good you, Thank everyone. morning,

the company lot a has during work restructuring process. of remarks, getting his in suggested the Tim into hard gone As

As for believe we positioned investors. look a to to we compelling firmly has us offer that all opportunity work hard future, the the

a return to Our reinvestment the efficient potential for asset future. capital of base supports rate and strong shareholders the in low

yield underappreciated. believe our cash peer free generate our is is ability the to going best in we significant group XXXX cash Our free and that forward

manner Tim of X of in free developing cash $XXX million while investing of cubic deliver our roughly earlier, feet targeting billion per is a disciplined our annual flow to plan business day As assets $XXX committed equivalent capital to million. production approximately mentioned

XX, we purposes. we our while it resulted reporting to in Upon to already emergence fresh accounting new better start even expect improved, for much the financial which adopted as get May continue our execute has company entity plan. on on business a liquidity we becoming Finally,

approaches and emergence As is certain second date valuation at establish free will between operating results be arrive described financial of specific and not values, emergence detail that value assets, emergence. the the post key we greater a The of new Consequently, liabilities and assets comparable. periods. values and split post and be accounting as results in as equity our the now those and discrete start to XX-Q. requires result, the used operational as in quarter of assumptions pre to Fresh well company's fair liabilities will our

reflected are capital interest all the today's of $X.X In the a our Q&A deck time, balance sheet and details will impact during also will now, happy but session. billion. the Our structure, they walk I to over which be delevered our recent questions I answer in restructuring through had on dramatic not IR XX-Q and by any

persistent despite drive second from managing emergence organization, Turning team to its which our results financial our for quarter. bankruptcy, continued on cost results, focus the control our helped across quarter the through strong

the we second XXXX, income generated three period for flow reported $XXX cash same of combined XX, million totaled combined adjusted $XX generated $XX the of million EBITDA. by June we and period. activities cash ending million net operating million the For quarter provided and free month $XX of during Net

derivative to a less incurred generate and program enter to free ability expense continued as during ensure cash commodity interest EBITDA, cash, we G&A. free capitalized As capital define expenditures, To into and reminder, adjusted the our quarter. we fund our contracts flow capital

swap six price collar of $X.XX totaling feet remaining of the cubic approximately an day million natural per gas with we & XXXX, Mcf. For currently average hold XXX contracts months floor per

contracts for price approximately portfolio. We also additional details have natural feet average per per an XXXX. floor our common Please our cubic $X.XX XX-Q derivative day million on &collar Mcf totaling see XXX at gas swap for of

and sheet, at of outstanding total $XXX million the under Turning $XXX revolver, consisting shareholders’ approximately outstanding the under equity term million. quarter, second our of $XXX $XXX total Total were and was balance of debt was million briefly $XXX $X.X now million, end outstanding notes. loan, our to senior million assets approximately our billion gross

cash million We of $XXX on end and had at outstanding of letters of hand the credit million the quarter. $X also of

$XXX capacity of $XXX approximately our that On liquidity, the quarter up made cash borrowing million of of of liquidity we front, approximately total with exited the revolver. under million second $X million

is Moving X,XXX cubic per on guidance million feet production XXX total to day. million our guidance, equivalent to XXXX

$X.XX $X.XX per a expense is and significant Mcfe. point guidance XXXX to gathering, transportation $X.XX operating improvement the expense Our for the processing per lease Earlier, Mcfe discussed or GP&T improvements, $X.XX result front these our on midstream and to for of for guidance Tim as XXXX.

the $XX It expect Our G&A in that recurring of do important XXXX. incur charges G&A to lower, in we - reoccurring XXXX. note meaningful XX% of half is million. to for million, restructuring expense any midpoint The to not guidance this is or $XX is compared XXXX second guidance

and divestiture guidance includes which for investment capital million, acquisition $XXX excluding million activity, Finally, XXXX of to capital for leasehold. is our approximately million $XXX $XX

Now the summary, plans. on two-thirds our of will additional our few that our little budget XXXX believe we earnings a be guidance. to release our over positioned well are details XXXX see Utica. execute In Please allocated we business to for

the forward improvement our flow Our deliver paying the returning deliver believe improved material and With to free yield that, enable capital will term look that cost free open majority a shareholders our to opportunity our in the peer to and continuous and free ability cash to provides unique structure we to flow. In and now focus us down up for on cash leading cash plan a investors. sustainable call for revolver the questions. loan we will future. near-term, to of allocate We

Instructions] Thank you. [Operator

comes Our with Truist. Neal with your first question. from Please Dingmann proceed question

like call nice again, first and My question, I morning, Bill. slides. Tim the all. Good A first

I as again, both in non-core inventory. op all in seems aren't any I now, getting got you of that, value now getting probably is, right enough to through have am today. through think I'd sort slides question agree my just you're about potential the kind or post-restructuring, you it good there thinking like might today, locations sort your full right inventory? decide a through market gone how But why the And that Or details You've the agree or this. of lot - And of some people asking for now their paid gone sales? you properties gone that

any of you these cash And you So, based non-core questions. would flow, two on time sort days, importance that, on free enough consider of based through? of sort sales? go had Have to sort

Thanks I for question, that. appreciate the Neal.

and looking So base, what case the SCOOP, last basis. taking a against at obviously, see going we're really shareholders the for we're incredible few doing, levels can is hard the to out SCOOP We've over what Utica the really the in standalone term value looked you on near from what is at and also doing and we've inventory been execute has those. slides some asset standalone the business, months the opportunities the a for the

when we our certainly within that don't call non-core. see core acres So, would anything we

Just like every other company, we have small things.

the We have wells. small things up in

areas we in the about. want those before of overriding we of in place we're have kind up. some interest. clean areas trade. any talked things have sort understand now clearly some consider But improve lower non-core or some of We little see I they interest. really gas that We of a say would don't testing And and bit we completions we divestment and want to applying, doing and to really would will core joint we the design that right some Those anything we're

a SCOOP. on allocation, And like both you quite sense. sounds just capital of lot Utica through Makes and detail then, gone it have the Okay.

you'll there pricing, versus that of Given either anything is out? gas the thoughts be of more same of sort obviously sticks sort target these and that properties, one that days is You'll that do? focusing of vein kind NGLs kind natural more just vein in of on maybe and your there in

Yes.

oil the obviously So, in if that's targeting are you look is opportunity production actual bit. gas, at the we the Utica. dry have up quite a do SCOOP, the We in which the Utica, economics the in for so program

out development. of production liquids some the have we'll SCOOP So

in that at our wells, you whole on or focus inventory XXX looked you at of we when ten plus will years, at If which I be next plus about is the XX Utica. minus look - the we - there, put in focused look which drilling always percent

thoughts you me the the is will long of as go one about still. if there cash talked then Justin you And would is wondering I have or down? am - I debt what's continue I Or allocation. you it that. your required restrictions again, Would down a I to just Okay. far assume maybe those It could, have flow million. think, - you free makes wondering do on the to, anyways. some am I've maybe far think - remind certain under that your just kind and just at as hedges, on what could one are just to is- of Tim, Tim. the last for point, just But already – are pay could is $XXX I am a how talk as I you lot that to something wondering be to allocation Board capital I on change required?

by cash so? maybe on the hedges thoughts - if I allocation the don't of or and free Your end know, year

I'll Yes. start on that.

quoted I you very number. and the number helpful a on was $XXX think the million that

been we've that. higher So, than

those normal So, It sidebar. some time able generate of like of of efficient little detail restrictions to issuing we more about company about to flow hopefully million can that that. a generating this the the kind get we as Jessica, debt do to growing going Bcf and X But, we spending slightly get with better. about now. on really dividends that we are running fully cash we're million focus you being paying And down on we talk things are confident We're will as leverage. a emerged more $XXX have with $XXX and on and

fully are hedged. the is vaccination, the on And is upside hedges curve there into so, we're like yet, studying we your the and certainly we're heavily hedge really into question, where feel that. good Obviously, XXXX of on we for about we we we optionality XXXX XXXX price not some on side nothing. are gas have feel And sit we and going and moving looking all the there with but with

I nearly that getting was XXX. Got Yes. guess to it.

So, thanks. Thanks, Tim.

Yes. Thanks Neal.

you. Thank

with Our next Leo Please question from KeyBanc. question. proceed Mariani with comes your

Hey guys.

on some am brought kind you kind guys here. my quarter first I that your X% down quarter. And that? of production guess, Utica to about was quarter here if help Utica driving but financials have expecting versus reading second I Can seven us in was first a the your think was right Utica I Just If Utica online the the guess production second what I right, question in production, on wells benefit you I math this of understand quarter. in

Yes.

Leo, going a this think, we it’s program. we It's timing in small going I the go show through And just go lumpy. put our important details be wells. providing fairly there more we we when implement new the and really torch quarter-on-quarter, start we'll as more where that like for is as and in to development be quarter, anticipated

about Utica Scoop, asking year. and the the – of program you're So its in that, beginning the finish chill

were decline. see Morris on Shannon they were see, you the quarter. of on can good you'll really and the the just online the were that's before only And wells online during end So time. that and And Hendershot. period of wells then period were on, that where so producing the bringing we And for a came

importantly, very come You'll and see see the the then Angelo on. Gehrig you'll

little a back-end it's So loaded. bit

as going you through. looking But And - dips, you going going enough go but to decline we detail so see bit you're north be of are with kind to rate so, it's to go provide as a lumpy forward. of a we're little forward, guys going to they those of XX%,

and not little you So bit be better that anticipate a it. about surprised can

midstream any issues the you were to there in midstream I quarter? a Utica different caused up first initiatives parts that bit Appalachia there quarter. some the of experienced than production issues second kind lower be in quarter caught know quite of Were the during might Okay. your in

No.

you time in to else. - quarter, the like coming first then the what's we're plan need is, online. you pretty had again, get quarter more that - with the at second that, to base describing the the everybody you what on math close. we into of look weather So, spend it’s offline do But And a very dynamics if coming actually coming you. think little happy again, all issues bit And it I

online - great. be reconciling as the to you It's wells seven Yes. since hard hard time XX-Q That'd quarter. the in bring your first numbers

trying in was. numbers. those just wells am I see I the figure it didn't from So to where really out the benefit

here, I So, just out okay. And described. as it's SCOOP obviously, phase play the a guys you guess multi

inventory. You talked about having kind of XXX in locations

SCOOP is those in about bit the kind look you remaining the window? year, into said state inventory more drill sense wells or the you was get Utica, of in of remainder prices high. in think more just condensate rich more guys economics? that economics in kind I concentrated the of phase kind see guess Is a leaves year oil I the of inventory condensate relative that as I Or in the tell was remain terms is of focus Can a and How it here valley done here? Do you SCOOP the the in different you what's Can what's of of do kind you know give in of SCOOP. and the for a windows? rich SCOOP different next of the plan of us XX% to that us the little kind gas? left in maybe of to more phases? kind we drill

Yes.

said the the on – of ten with the think so, on thing next inventory. you one XX:XX I I wells. our said XXX What was was early years

condensate next describe have the we'll to especially content differently near-term for wells SCOOP, the window. we're good drilling so in in that overall in bit the But liquid the have little inventory. year, And rich it a

if of bolstered going that. show that's the by rich one that slides you we're deck, we nature. see at Obviously, look economics in to of can so, the liquid you And see, somewhat the

the those going advantage of high on liquid liquid side. are are while take we So rich to locations, prices the

Okay.

year of and keep saying, production sounded you little hinted of formal kind activity, I that upside is could basically correctly, comments this, no if $XXX kind there the helpful. a be your that's the long-term know but roughly couple guess guidance, Now next term kind it longer to I I prepared million of like in you alluded But steady bit spend heard years. and alright. of of you're flattish. but modest a there just All

the pretty sheet good something no is in is high more is I at gas year this and kind quoted focusing next activity balance And point. thought shape of this You remain and guess, a maybe prices there gas XXXX? newly all consider don't company on of in you really winter at if just this merged here? growth even

Yes.

think really it’s and really day I Bcf out. here dollar get process fits a developed to important near-term, in everything the the a dollar spends X that the steady in And out. manufacturing put we've

a starting I think point. good that's

and going see happen. get hope plateaus, be always is And to goal as we day longer that up $XXX deliver a investment having that we that inch to down more taking Our Bcf million as we efficient.

that we because point we're shareholders. gas I'd done, is, spending to of getting only quite cash paying us the be to So, We would see But being to right to term something that want from to returned for change want a main see on the that. we'd investors now right bit have of debt, our down $X. out not longer a thing say, north sustainability like now, that's much hear to

drops flow period So, if we go time. a up, we'll of through more to and start cash investing our that comfortable move

and miss good, you price the window. $X $X if So then is the at oil feel may

there. so more helps the And few stop we'd a That's the decline. focus like us The $XXX last to over of years. happened billion steady

but on see build capital and X quarter. little up will we with a move necessarily earlier to production have that You'll Bcf lumpy, in average in this. not that be And fourth like, back around again, question, see the up bit the efficiency, more

great. Thank you. Okay,

to of Thank Gulfport like for the Interim over floor would Cutt, Q&A closing CEO of end our session. is This Tim Energy you. turn the to comments. back I

fairly today. all new Well, know joining for this Alright. thanks news. is I us

I questions, many but so to have on didn't see more we hope call. So next

And questions. call. like you happy you and the others are to further Relations to to concludes Thank questions engage to Please We hesitate team. would with ask out Investor or that, that reach don't our much. very all with

This today's conference. concludes

may You Thank at day. your a time. you Have your lines disconnect for participation. wonderful this