Gulfport Energy (GPOR) 7 Aug 242024 Q2 Earnings call transcript

Ladies and gentlemen, greetings, and welcome to the Gulfport Energy Corporation Second Quarter 2024 Earnings Call. [Operator Instructions].

As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jessica Antle. Please go ahead.

morning. good and you, Thank Welcome to Call. XXXX Conference Second Energy Corporation's Quarter Earnings Gulfport I Investor President Vice am Antle, Jessica of Relations. President Speakers on and CFO. Vice CEO; President Reinhart, and today's call Michael include: Hodges, John and Executive

operations, Senior future addition, Q&A business. to materially SEC. the make remind those these certain and objectives, concerning participants the actual can found today's everybody results Vice In a that in these during that of plans, results caution company's you Information Rucker, President Operations, be financial conference available to in performance portion like We will indicated would . I of relating may due this could from forward-looking the of forward-looking the the factors. condition, factors with variety call. company's that statements for differ statements are be to of the filings Matthew call,

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

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

you for to and to our listening call. Thank Jessica, you, thank everyone

to quarter, operational, and and second capital plans to flow enhance and capital cash inventory. continued financial lower the high-quality costs, teams shareholders execution the During Gulfport's return generation, operating of planning company's successful our corporate maximize free

environment. free improvements flow pricing field operational development on continue resulting the despite and full in driving quarter a during program cash capital teams positive in year Our our the delivering volatile savings

also the financial attractive acreage diverse shareholders of prudent strong XXXX to and through asset commitment base the our corporate execution, a all which company common on plan, field reinvesting another strategy. performance acquisitions. delivering share quarter realized The capital of continued discretionary sustainability record-setting We in while while and development repurchases, to through returning contributed our in the underscores our to

highlights. quarter adjusted million second million Looking The $XX at company adjusted EBITDA of our and flow. $XXX of cash generated free

totaled the line billion feet actuals production quarter, X the midpoint the the and billion analyst feet targeting production the full guidance range first X SCOOP billion X.XXX of the formation cubic during daily future in expectations. cubic Woodford. per within X XXXX to average second gross quarter per to drilling equivalent day, completed and with in narrowed be unchanged. equivalent X.XX forecast has date production our targeting activity, company Our day, Operationally, planned to remaining the X.XX year in wells, on and company XXXX average Considering and with Ohio, Utica the

SCOOP quarter fourth the resume the SCOOP and operating during X-well to entered following have extended the lateral Ohio running of currently quarter and released drilling planned, plan We as of XXXX. completion rigs a We rig drilling X pad. the with drilling

to the the On Utica front, And focus gas records. improvement to quarter. led completions continuous comments, wells opening team's execution turned as in pad during in we the sales noted several dry X new the

surpassing to record average our hours. year for We another [ pumping of for frac results. XX% had our the full day over the up hours, of hours fleets, U.S. providers in achieved record XXXX continuously an year pressure the Furthermore, XX.X daily and full Utica, XX record X% pumping previous over quarterly the ] of our Utica frac XX.X company a pumping frac on XXXX new all significantly its hours, pumping improvement improving per over

million forecast savings drilling year role realize budget. play the in reductions These in development completion XXXX over full will the strong on an deliverables capital corporate integral corresponding cycle enhancing time and $XX program team's our to we level and returns. and efficiencies Due execution, our company

to flexibility commodity volatile a retaining commodity its savings, pending employ environment subsequently later As we navigate the of to in continue the year. these environment, the assessment is company

or sheet optionality to include balance to Allocation to company's high-quality the returns, market allocation be act savings, enhancing responsive shareholder Maintaining our top-tier shareholder the of our currently guidance. development and incremental the further assets, maintaining our options inventory full maximize value. the quickly position us capital capital company's Considering runway. we financial are of improvements allows the pending year

during be pad first Harrison shift focus to liquids-rich reach on our completed more County, completion to wells quarter. gross following in in weighted Ohio to more frac activity, the we Gulfport condensate operations company historical quarter area, during pad second Highlighting first in in dry realized activity condensate of the is performance. since directed the XXXX, activity compared the condensate X XXXX. on the recent Utica When our Gulfport's improvements liquids-rich the activity the This significant turned even Utica as operational sales gas well our to as to

production footage quarters our towards this X-well Harrison pleased reinforces the on and gas Our wells XX%. when the dry performance, and realized. with looking ahead our roughly in X improved subsequent production quarter's further We're improved Ohio, Utica initial liquids-rich operational we on results which weeks drilling next these will for economics, condensate historical early considering efficiency day share our total the drilling increased results detail schedule. metrics, shift liquids-rich efficiencies development. And pad call. XXX% day in Utica footage with And We more completed results. gains second attractive budget per per over under recently Overall, online implied company's compared prudent execution in drilling Utica County, the when delivering recent very pad resulted this at us to of

development. Marcellus our to Turning

operated continue average to on delivered production in Ohio. County, of the oil per XXX on X.X we be of Belmont day X history more Marcellus million a cubic encouraged When feet rate per our first and of barrels company's wells We the lateral, natural production gas. normalized pay XXX-day gain wells stack initial approximately to XX,XXX-foot day as very an

foot amount XXX oil online, after when oil after the XXX in wells days and Ohio, double Marcellus production in oil strong lateral wells to continue when are nearly by production and online the exhibit West normalizing average days compared over river of more across the County, XX% Virginia. the wells producing the Monroe to These

on XX existing XX Virginia in results offset Production locations forecasted Ohio. roughly West economics Marcellus to pad, industry on Ohio, our the reinforces development across this along with favorable Belmont County,

In production. addition, the Ohio the by monitoring possesses delineating development Marcellus play of company the where the Peer in that company is assist held closely further Utica acreage in western would boundary

within Pending efforts, our potential compete parties County to plans the Utica and to on to the economics for company reiterate of portfolio, gathering and with capacity. we an in add inventory pad meaningfully continues our Marcellus beyond. incremental And portfolio. based Marcellus our development pay NGL development capital with drilling company's activity midstream these solution attractive discussions X-well begin planned the Marcellus in status, Belmont stacked Marcellus there early third to is on the The are returns inventory and enhance a realizations XXXX current existing outcome on be our we on place believe processing XXXX. Also, will a and for

invested focused and interest million plan on and we drilling of units $XX Through with Turning our near-term to $XX million term bolstering and near June to investment, working on land of capital XX, XXXX, increases $XX program roughly our to drill land maintenance, million. footage leasehold reaffirm we lateral XXXX expenditures. in have budget

details discretionary announcement earnings acquisitions this pursued evening, outlined yesterday company regarding the providing as addition, is in acreage In being our further year.

to of to these margin, our and and level acreage high quarter add expand roughly to XXXX near-term company's to during of The million years window to delineation plans. second steps portfolio. total development plan focus inventory free allocate and X.X has million the of pursuing Depending And in at during roughly efforts. and have high-quality X.X areas looking These liquids-rich these the phase on adjusted added when discretionary of our spacing, anticipated will anticipate drilling for through investing XXXX well acquisitions will of acquisitions at flow approximately these the our approximately XXXX, company years XXXX been we at $XX optionality year-end compared pace. cash low of inventory of this resource These years $XX development will provide efforts. actively company the beginning breakeven inventory targeted core our to current X opportunities, acquisition

operations to realized improvements similar comparable going capital forward, more or of continuous requirements inventory drilling date capability at expenditures Gulfport future maintenance development our costs robust and flow highest realized pricing, expand team's the inventory the low of We the the reduce a efforts margin our future. our highlights in program believe capital emphasizes the optimization based generation prudent the to the enhance activity and on prioritize in allowing create breakeven pace. will capital free cash and company closing, In expenses gains to within deliver on our programs development lower long-lasting

shareholders will expect Lastly, year our core flow stock free capital acreage excluding repurchases. and XXXX towards the full cash to acquisitions, all discretionary corporate return of our common to continue allocate adjusted we strategy, substantially to

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

you, operational the value free efficiency first low flow call. and the impressive the by half generated of improvements everyone. prices company in during and mentioned Thank cash XXXX, John, all returning earlier morning, shareholders, Despite seen continued driven capital good gains commodity John the healthy the to and our

spend beat capital and changes provided quarter. our occur before accelerating we second environment cash less expenditures price with second operating And that analyst the land capital D&C performance free base by left during and deliver our quarter, XXXX spending provide XXXX. cost performance in our totaled later more in in strong funding Net adjusted than free for million the XX% half improving cash by a of incurred driven strong and book the tailwind $XXX expectations cash will hedge flow maintenance with XXXX. an activities commodity top-tier working enter We should expected capital as year, to adjusted operational approximately operating than flow, the for of

from price realized $X.XX benefit of and portfolio highlighting both the Gulfport's in impact $X.XX is our of index differentiated areas. This gas was per natural and for impact $XX all-in prices, Henry for XX% realized marketing the its asset NYMEX quarter, a cash the during price the including million cash to above uplift hedge of approximately hedging portfolio our pricing our hedge gain derivatives. cash-settled We flows. book unit or value Hub and second liquids of Mcfe, demonstrating the quarter our position, of realized Our the diverse

before In price Mcf access the price $X.XX improving firm gas before natural gas quarter, added and differential premium diverse transportation ultimately flows. full cash a portfolio, investor our realizations to markets, slide presentation evening, of provides posted highlights connectivity that the and the natural yesterday reaffirm year. strategic Mcf per we NYMEX NYMEX daily below for our to have which Our we compared our was average and negative per average hedges to differential the to settle $X.XX hedges during $X.XX our

XX% Approximately in and with to gas Henry $X.XX to at the Transco and of providing growing LNG exposure to corridor Station premiums XX% above Hub Lake Pool industrial firm hedge Gulf [ delivery ] future XXX natural of to $X.XX the Gulfport Coast our significant periods. and TGP centers demand XX, direct

capital activity related totaled front, to expenditures maintenance and $XXX.X million $XX capital incurred the investment. million related and and drilling On land completion to leasehold

half we Through the D&C our our both our guidance. year, the midpoint capital the land of of capital now have XXXX maintenance XX% first based and upon for spent of approximately

believe and With Our flexibility respect as operational price our will for we MMBtu. setup we we per stronger efficiency gas of are have current covering as to strong natural position, price hedge sheet enter pleased nearly what of a XX% proper production $X.XX remaining environment. balance position protection, our healthy plan significant the an floor provides be activity XXXX cash average robust and our we margins to XXXX downside consider improvements hedge commodity at and

with pressured natural defense softness our stated play quality sheets Gulfport we XXXX previously balance to protecting As I've book base their gas or ability and dividends. relevant gas more become while the prices, believe offense delivering the even differentiates both hedge in and our others natural in in its scale fortifying has value recent their play to during of shareholders

XXXX foundation our XXX approximately cubic totaling an currently of levels gas more color We price XX% at for contracts, have XXXX gas our continue and swap than of per and to average MMBtu. per day hedges of to add assuming opportunistically natural production $X.XX or feet million

nearly natural XXXX carefully collar in believe XXXX and and improve our to To for XXXX significant XXXX allow half well to should chosen that in hedges gas in by upside per we us be clear, maintain $X have gas MMBtu. of prices utilizing participate prices in structures above prices downside

have portfolio security addition a XXXX locked remaining the our have gas pricing basis at XX% prices, points sales exposure providing basis of comparative diverse On of of our base anticipated the locked FT. covering efforts similar of basis at our in in mitigation risk front, our XXXX over in we largest exposure and natural to hedging

to Turning our balance sheet.

remains Our our with of exiting $X.X below of million XX-month liquidity borrowing net strong million, plus $XXX financial the totaling availability XXXX. trailing leverage cash, quarter June base Xx, position as of of million $XXX.X a comprised XX, and

Our any from and foreseeable have value for a dislocations to future development to stakeholders. going should our liquidity fund tremendous that day for to rise be to more prices sufficient we the give us flexibility opportunistic is than are financial forward as capture we allow positioned might provides low gas perspective needs

stock common And approximately continue the repurchases We XXX,XXX to share allocation second million. opportunity. view $XX during we a nearly repurchased of compelling quarter, shares for capital as

the acreage We X.X of program, price cash $XXX inception repurchase common return price. of average mentioned million excluding at free share our share through our shareholders of XX% substantially share lowering adjusted to have of share $XX.XX, our million the John flow continue and of the shares nearly XX% stock discretionary under average As and at approximately a to common of all approximately program repurchased of since plan earlier. million had XX below to share count by repurchases, price approximately weighted availability currently our $XXX we acquisitions an July current

million XXX,XXX the utilized during our effectively common not under or our to incremental to stock during facility $XX.X standard of legacy million quarter. also stock program, the the $XX million one $XX under While approximately flow revolving second turn. leverage the liquidity acquisitions during strong the related discretionary we vesting keeping of second of million, our repurchase included $XX of to in shares cash while an quarter In all adjusted million equity awards credit addition free in summary, quarter share of repurchased quarter, approximately repurchase acreage our ample along $XX and with the financial common company

close shares continued share and that and generation capital we are as key cash XXXX, forecast repurchases we part XXXX believe out our return flow our As to strategy, ahead undervalued. of continue of look we given to free significant will remain a common

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

consistent past morning, solid our my quarter continuous second reflect theme the operational communicated quarters, results. up wrap in this results delivering a financial To comments several improvements,

returning fronts, continue through reinvesting more asset shareholders acquisitions of high-quality that company. delivering discretionary less, cash our succeed significant with to prudently positive portion allocating We share in free all acreage accretive the the our and value generating operationally enhance and repurchase flow a that underlying cash common program to flow, in

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

Bert [Operator Donnes Instructions] The comes first from with Securities. question Truist

maybe what maybe On see balance like Could be in trigger $XX some go the Or already price? markets that flexible. the savings, it forward dry of it earmarked larger is or stability? Or maybe through gap? pulling sounds to additional have activity. E&P used million that for you that you then It need it you would And Or macro could do theme? fill it sheet, is a is Is potential something you or remain gas to activity? liquids? set buybacks just

the question. thanks for Bert, is This John. Yes.

with is a environment. of really for monitored, wanted of months To point, performance what to year the a take pure second able this just gained. of the savings these all, it's to the long-lived actually capital we million and be and general continue few think to a efficiency we're teams $XX I very macro with gains, are execution first through pleased think, about our do and kind I of pause

lot there a volatility now. out There's right of

related really just condensate from meaningful. going industry general would overall, area. you is we're more to pretty be Quite focused the imagine, As on. potential frankly, pricing it's the And activity of be kind to to allocation think and outlook the primarily any oil oil is targeting accelerated is I key. what would the But gas

-- that know, incremental XX to balance well. million do Because quite as of activity, sheet, or opportunities to inventory have million we outside as apply adds $XX you frankly, accelerated the the

the how to next very on few $XX be have with we'll pleased months allocate in we're to to So do market so. be that. million sharing going position a over We're the that to more

That versus the think makes buybacks? I sense. excluding said your acreage was And then acquisitions, on to allocation comments you on wording the How cash flow just earlier. clarify want free works discretionary a acreage acquisitions. I that

more other find do fewer Or So fungibility competing or with each there the acquisitions, maybe buybacks? they we less some free you between other? are is If for these Are more each or not flow? cash with expect competing X?

Michael. Bert, this is

this those making rated options free top mean Quite are every at the cash of I the consistently and you're the highest point portfolio. liquids-rich our to extent quarter those with X flow the at of that of look get great we our can morning. allocating those use think these a Board for opportunities I we And opportunities capital. typically high-margin best and portfolio, the into identify frankly, Directors.

obviously of we're number of certainly, would to able to able as change be grab to our these time. and #X terms basin the the with shares can one. add be to that in of competing in And always to opportunity inventory from Our do. opportunity We're to buy others to is locations those. move looking kind there around, of But value it something either a I code think so time

free our cash many terms it see would grab remainder let's with we of then and of think flow. those can we where as of in as So I the of sit

KeyBanc The Rezvan next Markets. Capital with question is from Tim

this going on focused the on that of Marcellus sort SKU and you do your evolving based start see sort underway of now. condensate to that's liquids drilling XXXX. want How success on kind through I of liquid pivot

modeling from . Just have and help then the a you picture to on perspective big us side?

Very to the Tim. question. earlier have year Thanks the here made Yes. pleased for Sure, in on the this decision pivot.

a inventory. geared company it on liquids-rich bolstering low our to breakeven. inventory, think margin, of this And as high on in the amount dry is gas us certainly was sitting I really for substantial wanted we lean

with oil the to realized. you be stream this half start to in regards pivot of turn liquids a cadence commodity think cut to X% drilling, X% align the about of of As second the year, the going to you're reduction see and our meaningfully percentage or and

out 'XX, go would probably very points, would into percentage certainly XXs. looking it few have further we certainly And the a and that base. dry large are I high down in more We bracket gas -- a

would meaningfully that years realistic. mid-XXs certainly XXs anticipate commodity down that below over So very is the that I XX% into going probably high mix reasonable. moving next from not is the X.X But gas

So hopefully, question. your that answers

Yes. That's helpful.

you Okay. region? Valley far a up not Mountain of -- just seeing you, all do And in quicky. any impact the And positive basis genesis of anticipate material you the Are you in it's that then kind a Are Ohio? seeing that. for July. too started being in from you

Michael. is this Tim, Yes.

like have material a not couple months, we but gas I your answer basis $X.XX have is markets that bit. the mean -- have the in I larger no. said, think into to to the the change. $X.XX seen over I a any areas material it, the been maybe few But sell impact, our basin moving we around about call question last, of varied generally little indexes

expected largely lot in price pipe to XXXX market MVP the think on that sometime a in. come the I of and here

change a and on haven't and we're locations. those XXXX of beyond focused seen from So lot basis really

question Tudor, Roberts The is Jacob Holt from with Co. Pickering, next &

something million remarks, say more got $XX case And a I should think $XX toward fair and that million Or maintenance. highlighted. outlook mentioned up end as baseline we maintenance you to through that planned? Is been the Just QX of about the that less then, you've for we've John, that's an accruing in QX to capital circling the of your savings meaningfully year? of the would next tail thinking be on the it those back program be Is showing year? that kind

is John. this for question. the so Jake, Thanks Yes,

regarding -- capital not our you is weighed million would accrual cadence, $XX public savings as I think in is previously, that in for no the about about activity it allocation deck basically can think I that tell of and be there's you that should we been be what QX. today. talked towards that included currently accelerated But

activity, accelerated So to towards deck, be in you that have which again, hatched reiterate potential -- you point will where a that I'll do benefit amount we I'll QX And 'XX. again bit. activity, should of some we for that, geared because highest commodity development be environment, drill sure capital could highest towards that where would return, the the is current allocation that's with plant that allocated condensate margin the

to Yes. want Do maintenance you talk about thing?

Yes.

What maintenance regards with -- but capital, company a have you used, to very it's lot fortunate a Sorry of very is about diverse it's tell to in of it means a lot the interesting widely I'd to a portfolio. -- very people. things we're

We have SCOOP assets.

their the unique What regards Marcellus directly reduction have come into All liquids to see tell you is cadence. a a like-for-like with cost. your We forward you certainly those capital dry and times and cycle capital moving program year, would question Utica profile, with next Utica I'd most production on gas. to liquids,

'XX this continue we're environment that year. versus to development where of highest at be going and 'XX, and mix we we the highest on look commodity margin, drilled skew really could which we're to certainly look at on as drilling And return focus that focused where

feel simply cost that down very to cycle So and very positive put, teams this improved is continue times. a the we like thing drive

be certainly have. our years be we flat overall profile that forward low with a for profile 'XX, single digit type capital it flat or come to would It's reduced a or say for many program And reductions. going outlook to forward of would meaningful I looking would to production moving

So hopefully, question. answers your that

that. appreciate I Absolutely.

share a implementing formulaic? price the gap you close permanent your something to a guys think do a advantage little by think and really just I you thinking or As more if the could on I'm of second valuation you good job as question, the curious of repurchases. taking

this Yes. Jake, Michael. is

I time, and our think, not with approach, free cash to something although returning are we again, all we of about pretty we're it's flow. substantially our talk the all our in Board our the of that all framework formulaic in consistent

quarter-to-quarter So adhere to. we do while we formulaic a don't have return, a that have we framework

year, of we free about think flow returned those XX% to last cash back acreage after I repurchases. shareholders

So it's at. something that we look

I quite size been exposure our prices a of basis, when step and to a keep frankly, think presented And we some to themselves. got a little given our to we've alongside flexible. certainly on commodity things quarter-to-quarter like large repurchase we've and able shareholder in opportunities that

we option dynamic approach, think opposed Board more it at I as So the the about prefer do the level. we consistently talk to but formulaic

[ question next The with ] JPMorgan. Parham Instructions] [Operator is from Zach

guess sense price, just and it buybacks? $XX towards Does to share here with wanted that. pullback along the follow the stock million allocate with mean, price savings how make factor in I into you on could recent up macro the savings deploy to decision in environment? I the the I those the

I question. like I And dynamic our that appreciate Yes. we think question, Jake's consistently deploy we and yes, being at capital return. in stock look Zach, to the price ability the towards similar to

think it's a I factor.

kind factor, be development to mentioned next redeploy prices see macro the decisions environment, earlier, would where the out we're into on conditioned looking savings year, next we the year. into commodity John think the any I of the

tremendously of to a these that That's found NAV that there capture locations Certainly, we that in the business. are we the as extent think out factor also keeping well. the accretive mind can we to

the price answer there. more attractive the So is yes. we would we lean particular to mind. extent in the all option like than in keep mean, dictated that than being your I certainly certainly, others felt to that And the point, we share options

And Can just inventory? you where follow-up, locations start When would Just discretionary those those you're I compare kind wanted a curious ask developing of now? how the portfolio. into locations acreage these acquisitions. about current that to expect adding fit on little your the a to to talk you bit

question. It's John. is great this Zach, Yes, a

of held the targeting program breakeven similar kind to our we're already. last is production of The company think program. liquids-rich this that the largely high-margin, I year, areas these position is to benefit discretionary Utica for low by

acreage on positions these very could up high-quality we So it's that areas, X in to certain developments have X bringing pad advantageous. or bulk

as drilling. permitting months, looking last an we've example, about to process, start program we're within able actually the been to So year's XX and to XX begin

a very of fall the allocation time short prioritizing capital idea you and how gives where an that's it. within of period, kind that of So and they we're

And jumping quite drilling for 'XX. early because up delineated Marcellus we're and high the ranks the it acreage it frankly, on in there very

the schedule. margin So to we're targeting to us. are team's I new that would those assets. the for yes, X of year areas this probably into we're post producing X.X capabilities, And seeing on with And some able convert quickly resources at years look year these of acquisitions acreage

to conference question-and-answer hand concludes John comments. over Reinhart and our session. I like for Ladies to now the would gentlemen, closing that

and taking not hesitate investment, our This you out any please our our improve So . which attractive Should team is reach questions, an value join business tactically thank Relations fundamentals, with to positions further time continuing The enhancement. Energy call have Gulfport strategically for the team. to to today. you call. Investor for to continues concludes optionality

Thank This concludes you. teleconference. today's

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