Morningstar | Gulfport Surprises to the Upside on 3Q Production
Gulfport delivered production of 1,428 mmcfe/d in the third quarter, which was 7% higher sequentially and 19% higher year over year. This was enough to justify raising the full-year forecast to 1,360-1,370 mmcfe/d (up 3% at the midpoint). However, the company still plans to hit the previously announced range for capital spending, and that seems like a reasonable assumption given that the company has very little activity planned for the fourth quarter. It has already released all remaining Utica rigs, given that it has already built up a backlog of 55 uncompleted wells. And in Oklahoma, only two incremental net wells are slated for drilling. Though it will bring a handful of wells on line, these have already been completed--no further completion activity is planned in 2018.The firm also reported stronger-than-expected realized prices for oil and natural gas during the period and raised its full-year guidance for the average realizations of both commodities. However, the firm’s financial results were only slightly better than expected despite volumes and basis differentials both surprising to the upside. Adjusted EBITDA and adjusted earnings per share were $239 million and $0.49, respectively (consensus forecasts were $237 million and $0.36). After incorporating these results, our fair value estimate is unchanged at $13, which now reflects a slight premium to the current price after the stock’s recent slump. However, the stock remains in 3-star territory due to our very high uncertainty rating, which stems from the firm’s above-average financial leverage (which makes it particularly sensitive to commodity price fluctuations). As the company is free cash flow positive at current strip prices for natural gas we expect its leverage ratios to improve fairly quickly.
Our no-moat rating is unchanged.
Gulfport Energy is an oil and natural gas exploration and production company focused on the exploration, exploitation, acquisition and production of natural gas, crude oil and natural gas liquids. The company's principal properties are located in the Utica Shale primarily in Eastern Ohio and the SCOOP Woodford and SCOOP Springer plays in Oklahoma. In addition, among other interests, the company holds an acreage position along the Louisiana Gulf Coast in the West Cote Blanche Bay and Hackberry fields, an acreage position in the Alberta oil sands in Canada through its interest in Grizzly Oil Sands ULC and an equity interest in Mammoth Energy Services, Inc., an oil field services company.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
We have operations in 27 countries.
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