In a recent company update, John K. Reinhart, President, Chief Executive Officer, and Director of Gulfport Energy Corporation (NYSE: GPOR), provided an optimistic outlook on the company's performance in the first quarter of 2023.
Reinhart highlighted that production, adjusted EBITDA, and adjusted free cash flow outperformed analysts' predictions. This success, coupled with deflated capital costs, strong well productivity, and swift operational cycle times, has boosted confidence in the company's 2023 program.
In a Q&A session, following the Q1 results, analysts from Truist Securities and KeyBanc Capital Markets sought insights from Gulfport Energy Corporation executives on their future hedging plans and Appalachian pad development strategies.
Here's a summary of the main points discussed:
Michael L. Hodges, Gulfport Energy’s CFO, discussed the company’s hedging strategy with Neal Dingmann, an analyst at Truist Securities. According to Hodges, Gulfport Energy is just beginning its 2025 program and aims to grow their hedge book to something in the 30% to 50% range over the next few years.
The company is looking to use a blend of different hedging structures, including collars and swaps. This strategy would ensure that they retain some of the upside should gas prices rise above their hedged levels.
Appalachian Pad Development
In response to another query from Dingmann, John K. Reinhart, Gulfport Energy’s CEO, discussed the company's Appalachian pad development strategy. Reinhart explained that Gulfport Energy takes a holistic approach when it comes to development plans and cycle times. The company is considering a blend of four-well, three-well, and two-well pads.
Reinhart also expressed excitement over the potential of stacked Marcellus opportunities and the company’s plans to take advantage of existing pads for future developments. The decision on whether to prioritize Marcellus or Utica development depends on the results of Marcellus' delineation efforts this year.
Future Opportunities and Balance Sheet Flexibility
John Reinhart and Michael Hodges also responded to questions from Tim Rezvan, an analyst at KeyBanc Capital Markets, about Gulfport's leasing opportunities and balance sheet flexibility. Reinhart emphasized that the company's robust balance sheet provides flexibility for future investments.
Hodges added that the strong balance sheet allows for dynamic decision-making in response to market conditions. This flexibility could be particularly advantageous when considering potential accretive acquisitions of leasehold and share repurchases.
Gulfport Energy sees itself well-positioned for future value due to improved gas market fundamentals over the next 18 months, a strong balance sheet, and the ability to generate sustainable free cash flow.
As a result of its strong Q1 performance, Gulfport has been able to continue returning capital to its shareholders through share repurchases.
Hodges ended his shareholder address stating,
"This is an exciting time to be part of Gulfport. This year's program is off to a solid start and our first quarter results highlight the company's ability to outperform expectations."
Unlocking European Opportunities
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