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Ohio Utica Shale

Gulfport Energy releases data on another Harrison County well

By Bob Downing Published: November 7, 2012

From the Marcellus Drilling News:

Gulfport Energy Corporation, a company that has two of the highest producing natural gas wells in the Ohio Utica Shale, released their third quarter financial and operational update yesterday. Counter to most other large drillers, Gulfport showed a slight profit in 3Q12—of $0.5 million—on $60.5 million in revenue. If not for some income tax expenses their net income for 3Q12 would have been $16 million.

In the 3Q12 update we get production details for a sixth horizontal well drilled by Gulfport in the Utica—the BK Stephens 1-16H well (in Harrison County, OH), which is producing an initial 1,224 barrels of condensate per day, 6.9 million cubic feet of natural gas per day, and 759 barrels of natural gas liquids per day.

 

Select portions of the Gulfport 3Q12 update, including an operational update for the Utica Shale:

For the third quarter of 2012, Gulfport reported net income of $0.5 million on oil and natural gas revenues of $60.5 million, or $0.01 per diluted share. EBITDA (as defined below) for the third quarter of 2012 was $42.6 million and cash flow from operating activities before changes in operating assets and liabilities (as defined below) was $43.8 million.

Gulfport’s 2012 third quarter results include a $15.5 million non-cash income tax expense primarily as a result of a taxable gain in connection with Gulfport’s contribution of its oil and natural gas interests in the Permian Basin to Diamondback Energy, Inc. (“Diamondback”). Excluding the effects of this non-cash income tax expense, adjusted net income for the third quarter of 2012 would have been $16.0 million, or $0.28 per diluted share.

Financial Highlights

  • Produced oil and natural gas sales volumes of 655,437 barrels of oil equivalent (“BOE”), or 7,124 barrels of oil equivalent per day (“BOEPD”), in the third quarter of 2012, an 11% year-over-year increase from the third quarter of 2011
  • Generated $60.5 million of oil and natural gas revenues in the third quarter of 2012, a 4% year-over-year increase from the third quarter of 2011

Production

For the third quarter of 2012, net production was 579,288 barrels of oil, 314,674 thousand cubic feet (“MCF”) of natural gas and 995,549 gallons of natural gas liquids (“NGL”), or 655,437 BOE. Net production for the third quarter of 2012 by region was 252,876 BOE at West Cote Blanche Bay (“WCBB”), 261,042 BOE at Hackberry, 110,846 BOE in the Permian Basin, 17,764 BOE in the Utica Shale and an aggregate of 12,909 BOE in the Bakken, Niobrara and other areas.

Realized prices for the third quarter of 2012, which includes transportation costs, were $101.17 per barrel of oil, $3.09 per MCF of natural gas and $0.88 per gallon of NGL, for a total equivalent price of $92.24 per BOE. Realized prices for oil in the third quarter of 2012 reflect the impact of fixed price contracts for July of approximately 3,000 barrels of oil per day at a weighted average price of $109.73 and fixed price contracts for August and September of approximately 4,000 barrels of oil per day at a weighted average price of $107.29. Gulfport currently has fixed price swaps in place for 4,000 barrels of oil per day at $107.29 for the remainder of 2012. Gulfport’s hedging program for 2013 currently consists of fixed price swaps for January through June of 4,000 barrels of oil per day at a weighted average price of $103.33 and fixed price swaps for July through December of 3,000 barrels of oil per day at a weighted average price of $100.04.

Recent Operational Highlights

  • Gulfport recently tested its sixth horizontal well in the Utica Shale after only a 30-day resting period. The BK Stephens 1-16H, tested at a peak rate of 1,224 barrels of condensate per day, 6.9 million cubic feet (“MMCF”) per day of natural gas and 759 barrels of NGLs per day assuming full ethane recovery and a natural gas shrink of 11%, or 3,007 BOEPD.
  • Gulfport spud a total of 13 wells in Southern Louisiana during the third quarter, completing eight of the wells as productive. Four wells were waiting on completion and one well was still being drilled at the end of the quarter.
  • Grizzly Oil Sand ULC (“Grizzly”), in which Gulfport owns a 24.9% interest, continues to be on schedule for first production in mid-2013 at its first SAGD facility.
  • Five rigs are currently active in Gulfport’s three core operating areas, with two rigs drilling in the Utica, two rigs drilling at Hackberry, and one rig drilling at WCBB.

Operational Update

Utica Shale

Gulfport recently tested its sixth horizontal well in the Utica Shale. The BK Stephens 1-16H was drilled to a true vertical depth of 8,225 feet with a 5,276 foot horizontal lateral. Following only a 30-day resting period, the well tested at a gross peak rate of 1,224 barrels of condensate per day and 6.9 MMCF per day of natural gas. Based upon composition analysis, the gas being produced is 1,207 BTU rich gas. Assuming full ethane recovery, the composition above is expected to produce an additional 110 barrels of NGLs per MMCF of natural gas and result in a natural gas shrink of 11%. In ethane rejection mode, the composition is expected to yield 42 barrels of NGLs per MMCF of natural gas and result in a natural gas shrink of 1%. Gulfport currently anticipates the BK Stephens 1-16H will begin flowing into a sales pipeline by the end of January.

In the Utica Shale, Gulfport spud five gross (2.5 net) wells during the third quarter of 2012. At the end of the quarter, two of these gross wells were completed and in their resting period, one gross well was waiting on completion, and two gross wells were being drilled. At present, two rigs are drilling ahead on the eleventh and twelfth wells of 2012 in the play. During 2013, Gulfport has budgeted $215 million to $225 million to drill approximately fifty gross wells in the Utica.*

*Gulfport Energy Corporation (Nov 6, 2012) – Gulfport Energy Corporation Reports Third Quarter 2012 Results

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