Gulfport Energy Corp. is still curtailing Appalachian natural gas production in anticipation of better prices later this year and into 2021.
Given an uncertain economic outlook, weak energy demand and a slight rebound in associated gas volumes, Gulfport remains “cautious near-term on natural gas pricing,” said CEO David Wood during a call to discuss second quarter results.
The company made the decision during the second quarter to shut-in some Utica Shale gas production along with vertical oil wells in the South Central Oklahoma Oil Province (SCOOP) because of low liquids prices. Nearly all of the SCOOP wells have returned to production.
“Based on current natural gas pricing, we plan to continue executing on our curtailment strategy, shaping our production profile to peak in the colder months of the year,” Wood said of the Utica curtailments. “This is in line with our updated guidance provided in June.”
The independent also plans to complete another seven gross Utica wells in the second half of the year, up from a plan announced in June to complete three. Through the first six months of the year, 13 net operated wells had been completed in the Utica with 3.8 net operated wells in the SCOOP.
“This additional activity provides incremental production late this year and into early 2021 in the anticipation of higher prices during the winter months,” management said.
The company reaffirmed its 2020 full-year net production at 1.0-1.075 Bcfe/d. Management also said drilling and completion efficiencies would likely help spending come in at the low end of its previously announced $285-310 million capital expenditure budget.
Gulfport reported a decline in average realized prices during the second quarter, including transportation costs and cash-settled derivatives, of $2.46/MMcfe, compared with $2.52 in the year-ago period. Revenue also fell year/year to $132.4 million from $459 million.
The company recorded a second quarter net loss of $561.1 million (minus $3.51/share) versus net income of $235 million ($1.47) in the year-ago period. The 2Q2020 loss was primarily related to a $532.9 million impairment on the value of oil and gas properties given the decline in commodity prices.
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