Strong well performance, minimal downtime and 20 net wells turned to sales during the third quarter helped Gulfport Energy Corp. far exceed the high end of its guidance for the period, reporting 734.1 MMcfe/d.
Given the momentum it has heading into the end of the year, its hedge position and current commodity prices, management said Thursday that it would start 2017 running six rigs in the Utica Shale's dry gas window in Ohio. That commitment stands in stark contrast to the beginning of this year when the company was contemplating a reduction in activity.
"While we are not providing specific activity level guidance today, we do feel very comfortable communicating that a six rig program represents a minimum level of activity for us during 2017," CEO Michael Moore told analysts during a call to discuss third quarter results.
The company had forecast quarterly production at 685-705 MMcfe/d. It was up from the 647.1 MMcfe/d Gulfport produced in the year-ago period and the 664.7 MMcfe/d it produced in 2Q2016. At that time, the company experienced high gathering line pressures and saw its volumes drop sequentially (see Shale Daily, Aug. 4)
"Gulfport installed pad-level compression on a select group of wells during the third quarter to validate reservoir response, increase line pressure and aid in the size of our large-scale field-level compression," said Managing Director of Midstream Operations Ty Peck. "As expected, we achieved the forecasted sizable improvements from the targeted pressure drop."
Management said in August it was considering a six to eight rig program for next year because of improving market conditions. It already has four horizontal rigs running in the Utica, and the company has contracted two others that will begin operations in November and December. The Utica accounted for 713 MMcfe/d of third quarter production, while the company's legacy assets on the Gulf Coast produced 20.2 MMcfe/d.
Management sees even more growth ahead in the Utica. It sold noncore exploratory acreage in West Virginia in the third quarter, with plans to redeploy that capital in Ohio, where management said the company continues to see opportunities for bolt-on acreage. Moore said lease expirations in the coming years would help Gulfport beef up its position in the state, adding that recently added acreage will help the company drill longer laterals beginning next year.
The company's average realized prices improved in the third quarter. A large non-cash derivative loss in 2Q2016 had it reporting a realized price of negative 47 cents/Mcfe. Although prices moved up to $2.87/Mcfe in the third quarter, they were down from $3.87/Mcfe in the year-ago period. Revenue slid from $230.6 million in 3Q2015 to $193.7 million.
Gulfport reported a net loss of $157.3 million (minus $1.25/share), compared to a net loss of $388.2 million (minus $3.59) in the year-ago quarter. The loss included a $212.2 million impairment of oil and gas properties.