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Ohio Utica Shale

Gulfport Energy reworks 2014 guidances, loves Utica shale

By Bob Downing Published: May 8, 2014

From Gulfport Energy:

Gulfport Energy Corporation Reports First Quarter 2014 Results

 

OKLAHOMA CITY, May 7, 2014 (GLOBE NEWSWIRE) -- Gulfport Energy Corporation (Nasdaq:GPOR) today reported financial and operational results for the first quarter of 2014 and provided an update on its 2014 activities.

Financial and Operational Highlights

  • Produced oil and natural gas sales volumes of 2,437,851 barrels of oil equivalent ("BOE"), or 27,087 barrels of oil equivalent per day ("BOEPD"), in the first quarter of 2014, as compared to 575,543 BOE, or 6,395 BOEPD in the first quarter of 2013 and 1,533,480 BOE, or 16,668 BOEPD in the fourth quarter of 2013.
  • Recorded net income of $82.6 million, or $0.96 per diluted share, in the first quarter of 2014, as compared to $24.3 million, or $0.30 per diluted share, in the fourth quarter of 2013.
  • Reported adjusted net income of $16.7 million, or $0.20 per diluted share, in the first quarter of 2014.
  • Generated $192.8 million of EBITDA in the first quarter of 2014, as compared to $90.7 million in the fourth quarter of 2013.
  • Reduced unit lease operating expense for the first quarter of 2014 to $4.77 per BOE, as compared to $5.45 per BOE in the fourth quarter of 2013.
  • Increased its acreage position by 13,000 net acres in the Utica Shale, bringing the Company's total acreage position to approximately 179,000 net acres under lease.
  • Grizzly Oil Sands ULC ("Grizzly"), a company in which Gulfport holds an approximate 25% equity interest, achieved first bitumen production at its first SAGD facility at Algar Lake.
  • Nine rigs are currently active in Gulfport's core operating areas, with seven horizontal rigs in the Utica Shale and two rigs in Southern Louisiana.

Financial Results

For the first quarter of 2014, Gulfport reported net income of $82.6 million on oil and natural gas revenues of $117.9 million, or $0.96 per diluted share. For the first quarter of 2014, EBITDA (as defined below) was $192.8 million and cash flow from operating activities before changes in working capital was $141.1 million.

Gulfport's 2014 first quarter financial results include an aggregate non-cash loss of $8.7 million due to a hedge ineffectiveness. Excluding the impact of the hedge ineffectiveness, oil and natural gas revenues for the first quarter of 2014 would have been $126.5 million. Gulfport's 2014 first quarter financial results also include an aggregate gain of $48.8 million in connection with Gulfport's equity interest in Diamondback Energy, Inc. ("Diamondback"), a NASDAQ Global Select Market listed company, and an aggregate gain of $84.8 million in connection with the sale of certain equity interests by Blackhawk Midstream LLC, an entity in which Gulfport owns a 50% interest. In addition, Gulfport's 2014 first quarter financial results include an aggregate expense of $1.8 million in connection with a non-recurring retirement expense and an aggregate loss of $18.0 million in connection with a litigation settlement. Associated with this taxable income was $10.0 million of income tax expense. Excluding the effects of these items, adjusted net income for the first quarter of 2014 would have been $16.7 million, or $0.20 per diluted share.

Production

For the first quarter of 2014, net production was 726,720 barrels of oil, 7,661,819 thousand cubic feet ("MCF") of natural gas and 18,234,754 gallons of natural gas liquids ("NGL"), or 2,437,851 BOE. Net production for the first quarter of 2014 by region was 1,895,608 BOE in the Utica Shale, 302,463 BOE at West Cote Blanche Bay, 217,344 BOE at Hackberry and an aggregate of 22,436 BOE in the Bakken, Niobrara and other areas.

Gulfport's 2014 first quarter realized prices include an aggregate non-cash loss of $8.7 million due to a hedge ineffectiveness. Before the impact of derivatives, realized prices for the first quarter of 2014 were $98.26 per barrel of oil, $4.98 per MCF of natural gas and $1.43 per gallon of NGL, for a total equivalent of $55.66 per BOE.

 

 
GULFPORT ENERGY CORPORATION
PRODUCTION SCHEDULE
(Unaudited)
     
Production Volumes: 1Q2014 1Q2013
     
Oil (MBbls) 726.7 517.0
Natural gas (MMcf) 7,661.8 319.7
NGL (MGal) 18,234.8 223.1
Oil equivalents (MBOE) 2,437.9 575.5
     
Average Realized Prices    
(before the impact of derivatives):    
     
Oil (per Bbl) $ 98.26 $110.60
Natural gas (MMcf) $ 4.98 $4.59
NGL (per Gal) $ 1.43 $1.45
Oil equivalents (BOE) $ 55.66 $102.45
     
Average Realized Prices:    
(including cash-settlement of derivatives and excluding non-cash hedge ineffectiveness):  
     
Oil (per Bbl) $ 96.73 $110.60
Natural gas (MMcf) $ 3.93 $4.59
NGL (per Gal) $ 1.43 $1.45
Oil equivalents (BOE) $ 51.90 $102.45
     
Average Realized Prices:    
     
Oil (per Bbl) $ 100.97 $102.68
Natural gas (MMcf) $ 2.39 $4.59
NGL (per Gal) $ 1.43 $1.45
Oil equivalents (BOE) $ 48.35 $95.34

Subsequent to the first quarter of 2014, net production for the month of April 2014 averaged approximately 24,769 BOEPD. April production was negatively impacted due to 14 wells being taken offline for ongoing completion activities in the Utica Shale.

Derivatives

The table below sets forth the Company's hedging positions as of May 7, 2014.

 

 
GULFPORT ENERGY CORPORATION
COMMODITY DERIVATIVES - HEDGE POSITION AS OF MAY 7, 2014
(Unaudited)
       
  Quarter Ending
  2Q2014 3Q2014 4Q2014
Oil (MBbls):      
Swap contracts      
Volume 182 184 184
Price $101.50 $101.50 $101.50
       
Natural gas (MMcf):      
Swap contracts      
Volume 11,830 14,260 14,260
Price $ 4.05 $ 4.07 $ 4.07
       
  Year Ending December 31,
  2014 2015 2016
Oil (MBbls):      
Swap contracts      
Volume 910 -- --
Price $102.79 -- --
       
Natural gas (MMcf):      
Swap contracts      
Volume 48,560 54,750 9,380
Price $ 4.06 $ 4.08 $ 4.02
       
Swaption contracts      
Volume -- 9,125 3,025
Price -- $ 4.10 $ 4.10

Operational Update

Utica Shale

In the Utica Shale, Gulfport spud nine gross (7.5 net) wells during the first quarter of 2014. In addition, Gulfport returned to seven gross (4.7 net) wells during the first quarter of 2014 that were spud as part of our 2013 top-hole program. At present, Gulfport has seven horizontal rigs drilling in the play.

Since March 2014, Gulfport has increased its acreage position in the core of the play, adding approximately 13,000 net acres, bringing the Company's total acreage position to approximately 180,000 gross (179,000 net) acres under lease in the Utica Shale.

Canadian Oil Sands

In the Canadian Oil Sands, Grizzly achieved first bitumen production at its SAGD facility at Algar Lake during the first quarter of 2014. Grizzly currently has all ten well pairs on full steam circulation and averaged approximately 275 barrels of bitumen production per day during April 2014. Grizzly continues to see the production ramp as expected during steam circulation and currently anticipates the first phase of this facility to reach its peak production potential of approximately 6,200 barrels of bitumen per day in the second quarter of 2015. In addition, Grizzly's Windell rail transloading facility at Conklin, Alberta commenced operations during the first quarter of 2014 and the first load of bitumen from Algar Lake was hauled by truck to the Windell terminal for sales.

Southern Louisiana

At its West Coast Blanche Bay and the Hackberry fields, Gulfport drilled nine wells during the first quarter of 2014, completing four wells as productive with four waiting on completion at the end of the quarter. One well was nonproductive. In addition, Gulfport performed 38 recompletions at the fields. At present, Gulfport has two rigs active in Southern Louisiana drilling ahead on the thirteenth and fourteenth wells of 2014.

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