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Gulfport Again Lifts Production Guidance on Utica, SCOOP Performance

Strong performance during the first six months of the year has prompted Gulfport Energy Corp. to again increase its 2018 production guidance.

Gulfport CEO Michael Moore said “strong production in the Utica Shale” and “continued solid performance” in the South Central Oklahoma Oil Province (SCOOP) during the second quarter now have the company guiding for up to 23% year/year volume growth. The company raised the low-end of its estimate, with production expected to come in at 1.32-1.34 Bcfe/d, instead of the 1.31-1.34 Bcfe/d it announced in May after strong performance during the first quarter.

“In the Utica, as anticipated, the numerous capacity projects put into service to date has led to a structural improvement in local differentials, advantaging Gulfport as our incremental growth volumes are priced into a basis tightening local market,” Moore said this month during a call to discuss second quarter results. “In addition, in the SCOOP we have built a diversified firm portfolio with regards to both pipelines and markets outside of the basin which has boosted our realizations to date and bridged us to our long-term solution.”

Ohio’s Utica Shale continued to drive gains, with production coming in at 97 Bcfe, compared with 78 Bcfe at the same time last year. SCOOP volumes, which have continued to grow since the company entered the play early last year, accounted for 22.5 Bcfe in 2Q2018, up from 14.7 Bcfe in the year-ago period. Legacy properties on the Gulf Coast in southern Louisiana accounted for 1.3 Bcfe.

While prices were stronger for many operators in Appalachia during the second quarter, where more takeaway capacity has come online, Gulfport’s figures included a one-time noncash derivatives loss of $76.8 million. As a result, average realized prices were $2.09/Mcfe in 2Q2018, compared with $3.43/Mcfe in the year-ago period.

Although Gulfport is increasing its production guidance for the year, the company reiterated its spending plans, and Moore said Gulfport is “strictly adhering” to its 2018 capital budget of $750-815 million. He added that the company “has reached a significant milestone in our 2018 program,” as management expects to generate free cash flow later this year, a top priority among investors across the entire sector when the year started. 

Gulfport reported second quarter net income of $111.3 million (64 cents/share), compared with net income of $105.9 million (58 cents) in the year-ago period. Revenue declined to $252.7 million from $324 million over the same time.

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