Gulfport Energy Corp. spud its first Springer Shale and Sycamore wells in the South Central Oklahoma Oil Province (SCOOP) during the second quarter, developments that management expects will guide plans in next year's drilling program.
"One of the reasons that we were excited to be able to push forward the development of the Springer and Sycamore is so that we could think about what level of activity we would have in our 2018 plans," CEO Michael Moore told analysts on Wednesday during a call to discuss quarterly results. "I can't tell you how much it's going to be yet, but certainly it's an economic decision, it's optionality...We'll have to see what we have and continue to watch the peers. We should have information in time to include some of that in our 2018 activity."
The company acquired 46,400 net surface acres in a deal that closed earlier this year. Gulfport has been targeting the Woodford Shale, where well results have so far met expectations. The Springer and Sycamore wells are the first steps to test other prospective zones it acquired. The Sycamore is similar in age to the Meramec and Osage formations that are being developed to the north of Gulfport's position. It is sandwiched between the Woodford and Springer, and is more than 250 feet thick across the company's position.
Moore said the Sycamore test is on the western side of the Woodford wet gas window, while the Springer well was spud on an oilier patch of acreage at the eastern side of its SCOOP position. Gulfport has added 2,600 net acres in Oklahoma since the acquisition. It's also planning to drop from six to four SCOOP rigs in the coming weeks as contracts expire.
Another six rigs are running in the Utica Shale, and 2Q2017 was Gulfport’s most active quarter since entering the play in 2011.
"As we look to 2018, obviously we continue to be more efficient in the field," Moore said. "So, the truth is, we can do more with less. I'm not going to go into specific details of how many rigs in each field, but I think you can make the assumption that we will probably have less rigs running" next year.
Gulfport produced 1.038 Bcfe/d during the second quarter, up 22% sequentially and 56% from the year-ago period. The Utica accounted for 857.2 MMcfe/d, while the SCOOP contributed 162 MMcfe/d; legacy assets on the Gulf Coast added 18.1 MMcfe/d. Given its results through the first six months of the year, Gulfport increased the low end of its 2017 production guidance to 1.065 Bcfe/d from 1.045; the high end was unchanged at 1.1 Bcfe/d.
The company turned to sales 26.7 net operated Utica wells during the second quarter and drilled another 25.7 net operated wells. Moore said the company expects 2 Bcf/d of takeaway capacity to come online in the Appalachian Basin by November, and he noted that the region is on the cusp of having another 5 Bcf/d after that. Once those projects are in service, the company expects to see higher in-basin prices. He echoed other Northeast producers that have expressed optimism about capacity constraint relief heading into the second half of the year.
Second quarter results improved from the year-ago period when Gulfport reported no revenue and an all-in average realized price of negative 47 cents/Mcfe. Second quarter realized prices came in at $3.43/Mcfe. Revenue increased to $324 million.
The company reported net income of $105.9 million (58 cents/share), compared with a net loss of $339.8 (minus $2.71) in the year-ago quarter.