GPOR - Embedded Expectations Analysis - 2018 09 26
Gulfport Energy Corporation (GPOR:USA) currently trades below recent averages relative to UAFRS-based (Uniform) Assets, with a 0.5x Uniform P/B. At these levels, markets are pricing in bearish expectations for the firm, and management is concerned about their ability to maintain current revenue and production levels, and about their hedging strategiesSpecifically, management may lack confidence in their ability to maintain revenue levels from their oil and natural gas segments, and elevated production levels. Additionally, they may lack confidence in their hedging strategies, and appear concerned about their recently acquired Sycamore well. Furthermore, they may be exaggerating their focus on safety and environmental performance, and concerned about base production and new well turn. Also, they may lack confidence in their ability to identify opportunities to increase efficiency, and may be concerned about ramping down production where they are front-end loaded. Moreover, they may lack confidence in their ability to optimize their designs to get the most out of their wells, and may be concerned about their current dollar per foot levels for their wet gas SCOOP wells
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.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
The integrity of Valens Research is founded in our disciplined processes and analytics. No “star” analysts. No corporate advisory relationships. No-nonsense opinions and recommendations.
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