Morningstar | Lowering Gulfport FVE to $10 After Incorporating Slower Growth Outlook. See Updated Analyst Note from 01 Mar 2019
We are lowering our fair value estimate for Gulfport Energy to $10 per share after taking into account the firm's plan to maintain flat production and prioritize free cash flows rather than chasing growth. Though the slower cadence weighs slightly on net asset value, we think the market reaction is overdone and see the stock as modestly undervalued at this point.The budget has been set at $565 million-$600 million, down 29% at the midpoint versus last year. At that level, production is expected to trend flat relative to the fourth quarter, but management still expects free cash flows of $100 million. Going forward, we expect the company to maximize margins and returns while living within cash flows. Allocating additional development capital is unlikely without a sustainable shift in commodity prices. Cash generated is most likely to be returned to shareholders or used to manage the balance sheet. Following the completion of a $200 million share-repurchase program in 2018, management is now looking to repurchase an additional $400 million of shares over the next two years.
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.
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