Gulfport Energy Corporation Announces Update to its 2020 Operational and Financial Guidance and Provides Update on Cost Savin...
June 02 2020 - 7:00AM
Gulfport Energy Corporation (NASDAQ: GPOR) (“Gulfport” or the
“Company”) today announced an update to its 2020 operational and
financial guidance and provided an update on the Company’s ongoing
cost savings initiatives. Key highlights are as follows:
- Optimized production profile to take advantage of higher
commodity price environment in late 2020 and 2021
- New forecasted 2020 full year net production to average 1,000
MMcfe to 1,075 MMcfe per day
- Plan continues to generate positive free cash flow in 2020 at
current strip prices(1)
- Initiated plan to further reduce annual G&A expenses by
approximately $2 to $4 million and targeting low end of previously
provided guidance for 2020
- Optimization efforts expect to reduce near-term firm
transportation expenses by more than $10 million through 2021 and
targeting low end of previously provided natural gas differential
guidance for 2020
(1) |
Free cash flow is a non-GAAP
measure and defined as adjusted operating cash flow, before the
changes in working capital and inclusive of capitalized expenses,
less total capital expenditures incurred. |
David M. Wood, President and Chief Executive
Officer, commented, “As stated on our recent earnings call, we are
updating Gulfport’s 2020 plan, which now defers production from
mid-year when prices are low to late 2020 and into 2021 when prices
are expected to be higher. We are also now planning on more
completion activity late this year in the Utica to take advantage
of potentially strong prices in the winter. The savings we
are seeing in drilling and completion activities allows us to add
this activity and still be at the midpoint of our previously
provided capex guidance range. We believe these efforts will
better position the Company as we enter 2021, adding meaningful
value and allowing for higher production in a better forward
commodity price environment to maximize returns and cash flow."
Mr. Wood continued, "As it relates to our
outlook for 2021, under a maintenance level program, we would
expect to invest approximately $300 million of capital spend to
maintain a similar level of year over year production. Assuming
strip pricing of $2.75 per MMBtu for natural gas in 2021, we would
expect to be cash flow neutral under this program. Should gas
prices be between $2.75 per MMBtu and $3.00 per MMBtu, we would
remain disciplined to this maintenance program, generating
incremental free cash flow and highlighting our focus on exercising
capital discipline and maximizing cash flow generation.”
2020 Operational PlansAs a
result of the current commodity price environment, Gulfport
recently made the strategic decision to defer near-term production
to later periods in 2020 and early 2021, when natural gas prices
are expected to be materially higher when compared to mid-year
strip pricing. In addition, Gulfport plans to complete an
additional 3 gross wells in the Utica Shale during in the second
half of 2020, providing incremental production late this year and
into early 2021 in the anticipation of higher prices during the
winter months. Lastly, Gulfport’s updated production guidance
reflects the recent production impacts due to shut ins from both
the Company and its non-operated partners due to low prices.
Considering all these factors, Gulfport now expects 2020 full year
net production to average 1,000 MMcfe to 1,075 MMcfe per day. In
addition, Gulfport forecasts its second quarter of 2020 production
to average approximately 1,000 MMcfe to 1,050 MMcfe per day.
With the addition of this activity in late 2020,
Gulfport is currently projecting 2020 total capital expenditures to
be at the midpoint of the previously provided range of $285 million
to $310 million.
Cost Savings Initiatives
Gulfport recently implemented several general and administrative
expense (“G&A”) cost saving initiatives, including tiered
salary reductions for most employees, its senior management team
and its Board of Directors beginning early June 2020. This includes
a 10% salary reduction to Gulfport’s senior management team and a
20% salary reduction for the Company’s Chief Executive Officer. The
cash retainer paid to the Company’s Board of Directors will also be
reduced by 10%. In addition, select furloughs will be implemented
to reduce costs and better align the Company with its updated
operating plan. All health and related benefits will still be
available to furloughed employees during their furlough time.
The Company expects these cost saving items, combined with other
non-payroll initiatives, to reduce its 2020 recurring total G&A
by approximately $2 to $4 million and now forecasts its 2020 total
recurring G&A to be at the low end of its original guidance
range.
In addition, Gulfport has or expects to enter
into agreements with third-parties to reduce midstream costs and
obligations in both of its operating areas. Gulfport
estimates these initiatives will reduce its midstream expenses,
including transportation expenses, during the second half of 2020
and 2021 by more than $10 million. As a result of these cost
savings initiatives, Gulfport expects to be at or below the low end
of its previously provided natural gas differential guidance range
for 2020.
About GulfportGulfport Energy
is an independent natural gas and oil company focused on the
exploration and development of natural gas and oil properties in
North America and is one of the largest producers of natural gas in
the contiguous United States. Headquartered in Oklahoma City,
Gulfport holds significant acreage positions in the Utica Shale of
Eastern Ohio and the SCOOP Woodford and SCOOP Springer plays in
Oklahoma. In addition, Gulfport holds non-core assets that include
an approximately 22% equity interest in Mammoth Energy Services,
Inc. (NASDAQ: TUSK) and has a position in the Alberta Oil Sands in
Canada through its 25% interest in Grizzly Oil Sands ULC. For more
information, please visit www.gulfportenergy.com.
Forward Looking StatementsThis
press release includes “forward-looking statements” for purposes of
the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995, Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934.
All statements, other than statements of historical facts, included
in this press release that address activities, events or
developments that Gulfport expects or anticipates will or may occur
in the future, including such things as the expected impact of the
COVID-19 pandemic on our business, our industry and the global
economy, production and financial guidance, future capital
expenditures (including the amount and nature thereof), business
strategy and measures to implement strategy, repurchases of our
outstanding debt, the timing and completion of asset sales,
competitive strength, goals, expansion and growth of Gulfport’s
business and operations, plans, market conditions, references to
future success, reference to intentions as to future matters and
other such matters are forward-looking statements. These statements
are based on certain assumptions and analyses made by Gulfport in
light of its experience and its perception of historical trends,
current conditions and expected future developments as well as
other factors it believes are appropriate in the circumstances.
However, whether actual results and developments will conform with
Gulfport’s expectations and predictions is subject to a number of
risks and uncertainties, general economic, market, credit or
business conditions that might affect the timing and amount of the
repurchase program; the opportunities (or lack thereof) that may be
presented to and pursued by Gulfport; Gulfport’s ability to
identify, complete and integrate acquisitions of properties and
businesses; Gulfport’s ability to achieve the anticipated benefits
of its strategic initiatives; competitive actions by other oil and
gas companies; changes in laws or regulations; and other factors,
many of which are beyond the control of Gulfport. Information
concerning these and other factors can be found in the Company’s
filings with the Securities and Exchange Commission ("SEC"),
including its Forms 10-K, 10-Q and 8-K. Consequently, all of the
forward-looking statements made in this press release are qualified
by these cautionary statements and there can be no assurances that
the actual results or developments anticipated by Gulfport will be
realized, or even if realized, that they will have the expected
consequences to or effects on Gulfport, its business or operations.
Gulfport has no intention, and disclaims any obligation, to update
or revise any forward-looking statements, whether as a result of
new information, future results or otherwise.
Investors should note that Gulfport announces
financial information in SEC filings, press releases and public
conference calls. Gulfport may use the Investors section of
its website (www.gulfportenergy.com) to communicate with
investors. It is possible that the financial and other
information posted there could be deemed to be material
information. The information on Gulfport’s website is not
part of this filing.
Investor Contact:Jessica Antle
– Director, Investor
Relationsjantle@gulfportenergy.com405-252-4550
Media ContactReevemarkPaul
Caminiti / Hugh Burns / Nicholas Leasure212-433-4600
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