Exhibit 99.1

 

Press Release   LOGO

 

Gulfport Energy Corporation Reports Third Quarter 2019 Financial and Operating Results

OKLAHOMA CITY (October 31, 2019) Gulfport Energy Corporation (NASDAQ: GPOR) (“Gulfport” or the “Company”) today reported financial and operational results for the three-months and nine-months ended September 30, 2019 and provided an update on its 2019 activities. Key information includes the following:

 

  •  

Net production averaged 1,527.0 MMcfe per day during the third quarter of 2019

 

  •  

Net loss of $48.8 million, or $(0.31) per diluted share, for the third quarter of 2019

 

  •  

Adjusted net income (non-GAAP) of $39.0 million, or $0.24 per diluted share, for the third quarter of 2019

 

  •  

Adjusted EBITDA (non-GAAP) of $219.4 million for the third quarter of 2019

 

  •  

Cash provided by operating activity of $217.6 million for the third quarter of 2019

 

  •  

Generated Free Cash Flow (non-GAAP), excluding working capital changes as defined and reconciled below, of $103.4 million for the third quarter of 2019

 

  •  

Forecasted 2019 full year net production is estimated to average at the midpoint of the Company’s previously provided guidance range of 1,360 MMcfe to 1,400 MMcfe per day.

 

  •  

Significant level of new hedges added for 2020 with 548 BBtu per day of natural gas fixed price swaps at an average fixed price of $2.88 per MMBtu

 

  •  

Completed certain non-core asset divestitures

 

  •  

Total liquidity of $626.5 million, including cash on hand and borrowing capacity of approximately $616.4 million under the Company’s revolving credit facility

See the supplemental tables at the end of this press release for a reconciliation of non-GAAP measures including adjusted net income, EBITDA, adjusted EBITDA, operating cash flow and free cash flow.

Chief Executive Officer and President, David M. Wood, commented, “Gulfport’s third quarter was underscored by our continued strong performance from each of our operating areas and achieving the next phase of our 2019 plan provided at the start of the year, free cash flow generation. We exceeded our production targets while adhering to our capital budget, improved our balance sheet through the previously announced repurchase of senior notes and generated significant cash flow from our 2019 activities. Our quality core assets have us on track to deliver on all our operational guidance metrics, while forecasting total capital spend, net of the planned divestiture of certain non-operated assets, within the original budget provided in January.”

Mr. Wood continued, “As we focus towards 2020 and beyond, our message remains consistent and we carry forward our commitment to allocating capital in a disciplined manner, focusing on returns, operating within our cash flow and maintaining strong liquidity and reasonable leverage metrics. We continue to put an emphasis on bottom-line returns and expect our 2020 capital plan to generate neutral to positive cash flow with production an output not a target.”

Balance Sheet and Liquidity

As of September 30, 2019, Gulfport had cash on hand of approximately $10.1 million. As of September 30, 2019, Gulfport’s $1.4 billion revolving credit facility, under which Gulfport has an elected commitment of $1.0 billion, had outstanding borrowings of $135.0 million and outstanding letters of credit totaling $248.6 million. The Company’s total liquidity as of September 30, 2019 of approximately $626.5 million, which included cash on hand and borrowing capacity of approximately $616.4 million under the Company’s revolving credit facility.

Stock and Bond Repurchases

In January 2019, Gulfport’s board of directors authorized the Company to acquire a portion of its outstanding common stock within a 24-month period. There were no additional share purchases made during the third quarter of 2019.

Gulfport repurchased approximately $105 million principal amount of its senior notes for a total cash spend of approximately $80 million during the third quarter of 2019.

Subject to market conditions, the Company intends to opportunistically repurchase its outstanding debt or stock going forward, but is under no obligation to do so.

Non-Core Asset Divestitures

Gulfport recently agreed to monetize certain overriding royalty interests associated with assets held in the Bakken to a third party for approximately $8.0 million in cash. Net production from the assets averaged 68.6 Boe per day during the nine months ended September 30, 2019. The effective date of the transaction is July 1, 2019 and the transaction is expected to close in the fourth quarter of 2019.

The Company continues to progress on the previously announced divestiture of water infrastructure assets Gulfport holds across its SCOOP position. Entry into a definitive agreement for this process is expected prior to year-end 2019 with closing shortly thereafter.

Gulfport is also pursuing a potential sale of certain non-operated interests in the Utica Shale. The proceeds of this potential sale would offset the larger-than-anticipated non-operated capital spend in the Utica Shale incurred during the nine-months ended September 30, 2019. Gulfport expects to enter into a definitive agreement on this divestiture prior to year-end 2019.

Production and Realized Prices

Gulfport’s net daily production for the third quarter of 2019 averaged approximately 1,527.0 MMcfe per day. For the third quarter of 2019, Gulfport’s net daily production mix was comprised of approximately 93% natural gas, 5% natural gas liquids (“NGL”) and 2% oil.

GULFPORT ENERGY CORPORATION

PRODUCTION SCHEDULE

(Unaudited)

 

     Three months ended      Nine months ended  
     September 30,      September 30,  
     2019      2018      2019      2018  

Production Volumes:

            

Natural gas (MMcf)

      130,071        116,994        343,753        327,272  

Oil (MBbls)

      474        665        1,735        2,166  

NGL (MGal)

      52,951        72,427        165,970        196,695  

Gas equivalent (MMcfe)

      140,482        131,328        377,875        368,366  

Gas equivalent (Mcfe per day)

      1,526,977        1,427,479        1,384,159        1,349,326  

Average Realized Prices

            

(before the impact of derivatives):

 

Natural gas (per Mcf)

    $ 1.64      $ 2.32      $ 2.08      $ 2.30  

Oil (per Bbl)

    $ 51.75      $ 68.73      $ 54.13      $ 64.96  

NGL (per Gal)

    $ 0.38      $ 0.74      $ 0.47      $ 0.72  

Gas equivalent (per Mcfe)

    $ 1.84      $ 2.82      $ 2.35      $ 2.81  

Average Realized Prices:

            

(including cash-settlement of derivatives and excluding non-cash derivative gain or loss):

 

Natural gas (per Mcf)

    $ 2.21      $ 2.40      $ 2.28      $ 2.44  

Oil (per Bbl)

    $ 56.40      $ 53.97      $ 55.63      $ 54.68  

NGL (per Gal)

    $ 0.49      $ 0.67      $ 0.53      $ 0.66  

Gas equivalent (per Mcfe)

    $ 2.42      $ 2.78      $ 2.56      $ 2.84  

Average Realized Prices:

            

Natural gas (per Mcf)

    $ 1.73      $ 2.44      $ 2.51      $ 2.22  

Oil (per Bbl)

    $ 78.59      $ 51.26      $ 68.05      $ 44.10  

NGL (per Gal)

    $ 0.45      $ 0.57      $ 0.51      $ 0.60  

Gas equivalent (per Mcfe)

    $ 2.04      $ 2.75      $ 2.82      $ 2.55  

The table below summarizes Gulfport’s third quarter of 2019 production by asset area:

GULFPORT ENERGY CORPORATION

PRODUCTION BY AREA

(Unaudited)

 

     Three months ended      Nine months ended  
     September 30,      September 30,  
     2019      2018      2019      2018  

Utica Shale

            

Natural gas (MMcf)

      111,635        100,274        289,637        280,140  

Oil (MBbls)

      61        74        183        234  

NGL (MGal)

      17,225        29,806        61,388        92,389  

Gas equivalent (MMcfe)

      114,459        104,975        299,503        294,741  

SCOOP

            

Natural gas (MMcf)

      18,435        16,704        54,084        47,071  

Oil (MBbls)

      393        412        1,237        1,316  

NGL (MGal)

      35,715        42,593        104,537        104,241  

Gas equivalent (MMcfe)

      25,897        25,259        76,440        69,862  

Southern Louisiana

            

Natural gas (MMcf)

      —          6        —          17  

Oil (MBbls)

      6        167        274        559  

NGL (MGal)

      —          —          —          —    

Gas equivalent (MMcfe)

      38        1,009        1,644        3,370  

Other

            

Natural gas (MMcf)

      1        9        32        43  

Oil (MBbls)

      14        12        42        57  

NGL (MGal)

      11        29        44        65  

Gas equivalent (MMcfe)

      87        85        289        393  

2019 Capital Expenditures

For the nine-month period ended September 30, 2019, Gulfport incurred operated drilling and completion (“D&C”) capital expenditures of $423.7 million and non-operated D&C expenditures of $72.6 million. In addition, land capital expenditures incurred totaled $33.1 million for the nine-month period ended September 30, 2019.

Gulfport’s operated D&C expenditures for the nine-month period ended September 30, 2019 are consistent with the Company’s expectations while non-operated D&C expenditures have been higher than anticipated. Gulfport intends to recover a portion of the non-operated D&C capital overspend through the monetization of certain non-operated Utica Shale interests during the fourth quarter of 2019. Net of the planned divestiture of certain non-operated assets, total capital expenditures for 2019 are expected to be within in the previously provided guidance range of $565 million to $600 million.

Operational Update

The table below summarizes Gulfport’s activity for the nine-month period ended September 30, 2019 and the number of net wells expected to be drilled and turned-to-sales for the remainder of 2019:

GULFPORT ENERGY CORPORATION

ACTIVITY SUMMARY

(Unaudited)

 

     Three months
ended		      Three months
ended		      Three months
ended		                
     March 31,      June 30,      September 30,      Remaining Wells      Guidance  
     2019      2019      2019      2019      2019  

Net Wells Drilled

               

Utica - Operated

      5.6        3.8        2.0        3.0        14.4  

Utica - Non-Operated

      0.3        0.5        0.1        —          0.9  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total

      5.9        4.3        2.1        3.0        15.3  

SCOOP - Operated

      3.1        2.6        1.0        1.0        7.7  

SCOOP - Non-Operated

      0.3        0.3        0.2        —          0.8  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total

      3.4        2.9        1.2        1.0        8.5  

Net Wells Turned-to-Sales

               

Utica - Operated

      6.0        25.0        10.5        —          41.5  

Utica - Non-Operated

      —          1.1        1.7        —          2.8  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total

      6.0        26.1        12.2        —          44.3  

SCOOP - Operated

      2.8        5.9        —          3.9        12.6  

SCOOP - Non-Operated

      —          0.3        0.4        —          0.7  
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total

      2.8        6.2        0.4        3.9        13.3  

Utica Shale

In the Utica Shale, during the third quarter of 2019, Gulfport spud two gross and net operated wells and turned-to-sales 16 gross (10.5 net) operated wells.

During the third quarter of 2019, net production from Gulfport’s Utica acreage averaged approximately 1,244.1 MMcfe per day.

For the nine-month period ended September 30, 2019, Gulfport spud 13 gross (11.4 net) operated wells. The wells drilled during this period had an average lateral length of approximately 12,200 feet. Normalizing to an 8,000 foot lateral length, Gulfport’s average drilling days from spud to rig release totaled approximately 18.6 days, a decrease of 5% over full year 2018. In addition, Gulfport turned-to-sales 47 gross (41.5 net) operated wells with an average stimulated lateral length of approximately 9,800 feet during the nine-month period ended September 30, 2019.

At present, Gulfport has one operated drilling rig running in the play.

SCOOP

In the SCOOP, during the third quarter of 2019, Gulfport spud one gross and net operated well.

During the third quarter of 2019, net production from Gulfport’s SCOOP acreage averaged approximately 281.5 MMcfe per day.

For the nine-month period ended September 30, 2019, Gulfport spud eight gross (6.7 net) operated wells. The wells drilled during this period had an average lateral length of approximately 8,400 feet. Normalizing to a 7,500 foot lateral length, Gulfport’s average drilling days from spud to rig release totaled approximately 59.0 days, a decrease of 7% over full year 2018. In addition, Gulfport turned-to-sales nine gross (8.7 net) operated wells with an average stimulated lateral length of approximately 7,100 feet during the nine-month period ended September 30, 2019.

At present, Gulfport has one operated drilling rig running in the play.

2019 Capital Budget and Production Guidance

Gulfport reaffirms its expectation that 2019 total capital expenditures will range between $565 million to $600 million after adjusting for the planned divestiture of certain non-operated assets. With this level of capital spend, Gulfport continues to forecast its 2019 average daily net production will range between 1,360 MMcfe to 1,400 MMcfe per day.

Based on actual results during the nine-month period ended September 30, 2019, and utilizing current strip pricing at regional pricing points the Company sells its products, Gulfport reiterates its expected 2019 natural gas and oil differential guidance. Gulfport now forecasts its expected 2019 realized NGL price, before the effect of hedges and including transportation expense, to be approximately 35% of WTI .

The table below summarizes the Company’s full year 2019 guidance:

GULFPORT ENERGY CORPORATION

COMPANY GUIDANCE

 

     Year Ending  
     2019  
     Low      High  

Forecasted Production

      

Average Daily Gas Equivalent (MMcfepd)

      1,360        1,400  

% Gas

      ~90%  

% Natural Gas Liquids

      ~7%  

% Oil

      ~3%  

Forecasted Realizations (before the effects of hedges)

      

Natural Gas (Differential to NYMEX Settled Price) - $/Mcf

    $ (0.49 )     $ (0.66 ) 

NGL (% of WTI)

      35%  

Oil (Differential to NYMEX WTI) $/Bbl

    $ (3.00 )     $ (3.50 ) 

Projected Operating Costs

      

Lease Operating Expense - $/Mcfe

    $ 0.15      $ 0.17  

Production Taxes - $/Mcfe

    $ 0.06      $ 0.07  

Midstream Gathering and Processing - $/Mcfe

    $ 0.53      $ 0.58  

General and Administrative - $/Mcfe

    $ 0.09      $ 0.11  
     Total  

Budgeted D&C Expenditures - In Millions:

    $ 525      $ 550  

Budgeted Land Expenditures - In Millions:

    $ 40      $ 50  
  

 

 

     

 

 

  

Total Capital Expenditures(1) - In Millions:

    $ 565      $ 600  
  

 

 

     

 

 

  

Net Wells Drilled

      

Utica - Operated

      14.4     

Utica - Non-Operated

      0.9     
  

 

 

     

Total

      15.3     

SCOOP - Operated

      7.7     

SCOOP - Non-Operated

      0.8     
  

 

 

     

Total

      8.5     

Net Wells Turned-to-Sales

      

Utica - Operated

      41.5     

Utica - Non-Operated

      2.8     
  

 

 

     

Total

      44.3     

SCOOP - Operated

      12.6     

SCOOP - Non-Operated

      0.7     
  

 

 

     

Total

      13.3     

 

(1)

Net of certain non-operated asset divestitures

Derivatives

Gulfport regularly hedges a portion of its expected production to lock in prices and returns that provide certainty of cash flow to execute on its capital plans. The table below details the Company’s hedging positions as of October 31, 2019:

GULFPORT ENERGY CORPORATION

COMMODITY DERIVATIVES - HEDGE POSITION

(Unaudited)

 

     2019(1)     2020     2021      2022      2023  

Natural gas:

             

Swap contracts (NYMEX)

             

Volume (BBtupd)

      1,260       548       —          —          —    

Price ($ per MMBtu)

    $ 2.81     $ 2.88     $ —        $ —        $ —    

Swaption contracts (NYMEX)

             

Volume (BBtupd)

      30       —         —          —          —    

Price ($ per MMBtu)

    $ 3.10     $ —       $ —        $ —        $ —    

Call Option contracts (NYMEX)

             

Volume (BBtupd)

      —         —         —          628        628  

Price ($ per MMBtu)

    $ —       $ —       $ —        $ 2.90      $ 2.90  

Basis Swap contracts (OGT)

             

Volume (BBtupd)

      —         10       —          —          —    

Differential ($ per MMBtu)

    $ —       $ (0.54 )    $ —        $ —        $ —    

Basis Swap contracts (Transco Zone 4)

             

Volume (BBtupd)

      60       60       —          —          —    

Differential ($ per MMBtu)

    $ (0.05 )    $ (0.05 )    $ —        $ —        $ —    

Oil:

             

Swap contracts (WTI)

             

Volume (Bblpd)

      4,500       6,000       —          —          —    

Price ($ per Bbl)

    $ 60.55     $ 59.82     $ —        $ —        $ —    

NGL:

             

C2 Ethane Swap contracts

             

Volume (Bblpd)

      1,000       —         —          —          —    

Price ($ per Gal)

    $ 0.44     $ —       $ —        $ —        $ —    

C3 Propane Swap contracts

             

Volume (Bblpd)

      4,000       —         —          —          —    

Price ($ per Gal)

    $ 0.69     $ —       $ —        $ —        $ —    

C5 Pentane Swap contracts

             

Volume (Bblpd)

      1,000       —         —          —          —    

Price ($ per Gal)

    $ 1.28     $ —       $ —        $ —        $ —    

 

(1)

October 1 - December 31, 2019

Presentation

An updated presentation has been posted to the Company’s website. The presentation can be found at www.gulfportenergy.com under the “Company Information” section on the “Investor Relations” page. 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. Information on the Company’s website does not constitute a portion of this press release.

Conference Call

Gulfport will hold a conference call on Friday, November 1, 2019 at 8:00 a.m. CDT to discuss its third quarter of 2019 financial and operational results and to provide an update on the Company’s recent activities.

Interested parties may listen to the call via Gulfport’s website at www.gulfportenergy.com or by calling toll-free at 866-373-3408 or 412-902-1039 for international callers. A replay of the call will be available for two weeks at 877-660-6853 or 201-612-7415 for international callers. The replay passcode is 13695468. The webcast will also be available for two weeks on the Company’s website and can be accessed on the Company’s “Investor Relations” page.

About Gulfport

Gulfport 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 has 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 Statements

This 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 Exchange Act. 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, future capital expenditures (including the amount and nature thereof), business strategy and measures to implement strategy, repurchases of our outstanding debt or equity, 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, including the potential divestiture of certain water infrastructure assets Gulfport holds across its SCOOP position; 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, 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.

Investor Contact:

Jessica Antle – Director, Investor Relations

jantle@gulfportenergy.com

405-252-4550

GULFPORT ENERGY CORPORATION

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

     September 30, 2019     December 31, 2018  
     (In thousands, except share data)  
Assets     

Current assets:

     

Cash and cash equivalents

    $ 10,124     $ 52,297  

Accounts receivable—oil and natural gas sales

      112,657       210,200  

Accounts receivable—joint interest and other

      41,327       22,497  

Prepaid expenses and other current assets

      5,658       10,017  

Short-term derivative instruments

      134,571       21,352  
  

 

 

    

 

 

  

Total current assets

      304,337       316,363  
  

 

 

    

 

 

  

Property and equipment:

     

Oil and natural gas properties, full-cost accounting, $2,814,334 and $2,873,037 excluded from amortization in 2019 and 2018, respectively

      10,551,713       10,026,836  

Other property and equipment

      96,233       92,667  

Accumulated depletion, depreciation, amortization and impairment

      (5,063,413 )      (4,640,098 ) 
  

 

 

    

 

 

  

Property and equipment, net

      5,584,533       5,479,405  
  

 

 

    

 

 

  

Other assets:

     

Equity investments

      73,962       236,121  

Long-term derivative instruments

      23,419       —    

Deferred tax asset

      205,853       —    

Inventories

      7,022       5,344  

Operating lease assets

      13,920       —    

Operating lease assets - related parties

      48,449       —    

Other assets

      11,653       13,803  
  

 

 

    

 

 

  

Total other assets

      384,278       255,268  
  

 

 

    

 

 

  

Total assets

    $ 6,273,148     $ 6,051,036  
  

 

 

    

 

 

  
Liabilities and Stockholders’ Equity     

Current liabilities:

     

Accounts payable and accrued liabilities

    $ 439,019     $ 518,380  

Short-term derivative instruments

      429       20,401  

Current portion of operating lease liabilities

      12,848       —    

Current portion of operating lease liabilities - related parties

      21,017       —    

Current maturities of long-term debt

      622       651  
  

 

 

    

 

 

  

Total current liabilities

      473,935       539,432  
  

 

 

    

 

 

  

Long-term derivative instruments

      72,040       13,992  

Asset retirement obligation—long-term

      59,819       79,952  

Uncertain tax position liability

      3,127       3,127  

Non-current operating lease liabilities

      1,072       —    

Non-current operating lease liabilities - related parties

      27,432       —    

Long-term debt, net of current maturities

      2,076,569       2,086,765  
  

 

 

    

 

 

  

Total liabilities

      2,713,994       2,723,268  
  

 

 

    

 

 

  

Commitments and contingencies

     

Preferred stock, $0.01 par value; 5,000,000 shares authorized (30,000 authorized as redeemable 12% cumulative preferred stock, Series A), and none issued and outstanding

      —         —    

Stockholders’ equity:

     

Common stock - $0.01 par value, 200,000,000 shares authorized, 159,709,221 issued and outstanding at September 30, 2019 and 162,986,045 at December 31, 2018

      1,597       1,630  

Paid-in capital

      4,205,158       4,227,532  

Accumulated other comprehensive loss

      (50,679 )      (56,026 ) 

Accumulated deficit

      (596,922 )      (845,368 ) 
  

 

 

    

 

 

  

Total stockholders’ equity

      3,559,154       3,327,768  
  

 

 

    

 

 

  

Total liabilities and stockholders’ equity

    $ 6,273,148     $ 6,051,036  
  

 

 

    

 

 

  

GULFPORT ENERGY CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

     Three months ended
September 30,		     Nine months ended
September 30,		  
     2019     2018     2019     2018  
     (In thousands, except share data)  

Revenues:

         

Natural gas sales

    $ 213,227     $ 271,167     $ 714,500     $ 753,261  

Oil and condensate sales

      24,550       45,682       93,942       140,687  

Natural gas liquid sales

      20,324       53,776       78,136       141,883  

Net gain (loss) on natural gas, oil and NGLs derivatives

      27,074       (9,663 )      178,169       (96,737 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  
     285,175       360,962       1,064,747       939,094  
  

 

 

    

 

 

    

 

 

    

 

 

  

Costs and expenses:

         

Lease operating expenses

      22,473       22,325       64,668       64,143  

Production taxes

      6,565       9,348       22,584       23,861  

Midstream gathering and processing expenses

      78,435       78,913       220,732       214,546  

Depreciation, depletion and amortization

      145,490       119,915       388,874       352,848  

Impairment of oil and natural gas properties

      35,647       —         35,647       —    

General and administrative expenses

      14,659       15,848       39,482       42,955  

Accretion expense

      747       1,037       3,173       3,056  
  

 

 

    

 

 

    

 

 

    

 

 

  
     304,016       247,386       775,160       701,409  
  

 

 

    

 

 

    

 

 

    

 

 

  

(LOSS) INCOME FROM OPERATIONS

      (18,841 )      113,576       289,587       237,685  
  

 

 

    

 

 

    

 

 

    

 

 

  

OTHER EXPENSE (INCOME):

         

Interest expense

      34,095       33,253       103,095       100,922  

Interest income

      (338 )      (92 )      (649 )      (162 ) 

Gain on debt extinguishment

      (23,600 )      —         (23,600 )      —    

Gain on sale of equity method investments

      —         (2,733 )      —         (124,768 ) 

Loss (income) from equity method investments, net

      43,082       (12,858 )      164,391       (35,282 ) 

Other expense

      3,194       856       3,757       485  
  

 

 

    

 

 

    

 

 

    

 

 

  
     56,433       18,426       246,994       (58,805 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

(LOSS) INCOME BEFORE INCOME TAXES

      (75,274 )      95,150       42,593       296,490  

INCOME TAX BENEFIT

      (26,522 )      —         (205,853 )      (69 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

NET (LOSS) INCOME

    $ (48,752 )    $ 95,150     $ 248,446     $ 296,559  
  

 

 

    

 

 

    

 

 

    

 

 

  

NET (LOSS) INCOME PER COMMON SHARE:

         

Basic

    $ (0.31 )    $ 0.55     $ 1.55     $ 1.69  
  

 

 

    

 

 

    

 

 

    

 

 

  

Diluted

    $ (0.31 )    $ 0.55     $ 1.51     $ 1.68  
  

 

 

    

 

 

    

 

 

    

 

 

  

Weighted average common shares outstanding—Basic

      159,548,477       173,057,538       160,553,796       175,776,312  

Weighted average common shares outstanding—Diluted

      159,548,477       173,304,914       164,820,002       176,440,461  

GULFPORT ENERGY CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

     Nine months ended September 30,  
     2019     2018  
     (In thousands)  

Cash flows from operating activities:

     

Net income

    $ 248,446     $ 296,559  

Adjustments to reconcile net income to net cash provided by operating activities:

     

Accretion expense

      3,173       3,056  

Depletion, depreciation and amortization

      388,874       352,848  

Impairment of oil and natural gas properties

      35,647       —    

Stock-based compensation expense

      4,969       5,792  

Loss (income) from equity investments

      164,532       (35,040 ) 

Gain on debt extinguishment

      (23,600 )      —    

Change in fair value of derivative instruments

      (97,425 )      106,373  

Deferred income tax benefit

      (205,853 )      (69 ) 

Amortization of loan costs

      4,821       4,554  

Gain on sale of equity investments and other assets

      (178 )      (124,768 ) 

Distributions from equity method investments

      2,457       1,978  

Changes in operating assets and liabilities:

     

Decrease (increase) in accounts receivable—oil and natural gas sales

      97,543       (10,618 ) 

Increase in accounts receivable—joint interest and other

      (18,830 )      (2,277 ) 

Increase in accounts receivable—related parties

      —         (79 ) 

Decrease (increase) in prepaid expenses and other current assets

      4,359       (4,830 ) 

(Increase) decrease in other assets

      (30 )      1,228  

Increase in accounts payable, accrued liabilities and other

      8,567       36,809  

Settlement of asset retirement obligation

      (117 )      (719 ) 
  

 

 

    

 

 

  

Net cash provided by operating activities

      617,355       630,797  
  

 

 

    

 

 

  

Cash flows from investing activities:

     

Additions to other property and equipment

      (4,694 )      (7,134 ) 

Additions to oil and natural gas properties

      (646,535 )      (777,104 ) 

Proceeds from sale of oil and natural gas properties

      10,864       4,820  

Proceeds from sale of other property and equipment

      204       217  

Proceeds from sale of equity method investments

      —         226,487  

Contributions to equity method investments

      (432 )      (2,318 ) 

Distributions from equity method investments

      1,945       446  
  

 

 

    

 

 

  

Net cash used in investing activities

      (638,648 )      (554,586 ) 
  

 

 

    

 

 

  

Cash flows from financing activities:

     

Principal payments on borrowings

      (550,500 )      (165,428 ) 

Borrowings on line of credit

      640,000       225,000  

Repurchase of senior notes

      (79,480 )      —    

Debt issuance costs and loan commitment fees

      (211 )      (772 ) 

Payments for repurchase of stock

      (30,689 )      (109,997 ) 
  

 

 

    

 

 

  

Net cash used in financing activities

      (20,880 )      (51,197 ) 
  

 

 

    

 

 

  

Net (decrease) increase in cash, cash equivalents and restricted cash

      (42,173 )      25,014  

Cash, cash equivalents and restricted cash at beginning of period

      52,297       99,557  
  

 

 

    

 

 

  

Cash, cash equivalents and restricted cash at end of period

    $ 10,124     $ 124,571  
  

 

 

    

 

 

  

Supplemental disclosure of cash flow information:

     

Interest payments

    $ 85,272     $ 75,045  
  

 

 

    

 

 

  

Income tax receipts

    $ (1,794 )    $ —    
  

 

 

    

 

 

  

Supplemental disclosure of non-cash transactions:

     

Capitalized stock-based compensation

    $ 3,313     $ 3,862  
  

 

 

    

 

 

  

Asset retirement obligation capitalized

    $ 6,846     $ 1,094  
  

 

 

    

 

 

  

Asset retirement obligation removed due to divestiture

    $ (30,035 )    $ —    
  

 

 

    

 

 

  

Interest capitalized

    $ 2,782     $ 3,956  
  

 

 

    

 

 

  

Fair value of contingent consideration asset on date of divestiture

    $ (1,137 )    $ —    
  

 

 

    

 

 

  

Foreign currency translation gain (loss) on equity method investments

    $ 5,347     $ (5,815 ) 
  

 

 

    

 

 

  

Explanation and Reconciliation of Non-GAAP Financial Measures

EBITDA is a non-GAAP financial measure equal to net (loss) income, the most directly comparable GAAP financial measure, plus interest expense, income tax (benefit) expense, accretion expense, depreciation, depletion and amortization and impairment of oil and gas properties. Adjusted EBITDA is a non-GAAP financial measure equal to EBITDA less non-cash derivative loss (gain), insurance proceeds, litigation settlement, rig terminations fees, gain on debt extinguishment and (income) loss from equity method investments. Cash flow from operating activities before changes in operating assets and liabilities is a non-GAAP financial measure equal to cash provided by operating activity before changes in operating assets and liabilities and inclusive of capitalized expenses incurred during the given period. Free cash flow is a non-GAAP measure defined as cash flow from operating activities before changes in operating assets and liabilities (as defined above) less capital expenditures incurred. Adjusted net income is a non-GAAP financial measure equal to pre-tax net (loss) income less non-cash derivative loss (gain), impairment of oil and gas properties, insurance proceeds, litigation settlement, rig terminations fees, gain on debt extinguishment and (income) loss from equity method investments. The Company has presented EBITDA, adjusted EBITDA, adjusted net income, cash flow from operating activities before changes in operating assets and liabilities and free cash flow because it uses these measures as an integral part of its internal reporting to evaluate its performance and the performance of its senior management. These measures are considered important indicators of the operational strength of the Company’s business and eliminate the uneven effect of considerable amounts of non-cash depletion, depreciation of tangible assets and amortization of certain intangible assets. A limitation of these measures, however, is that they do not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenues in the Company’s business. Management evaluates the costs of such tangible and intangible assets and the impact of related impairments through other financial measures, such as capital expenditures, investment spending and return on capital. Therefore, the Company believes that these measures provide useful information to its investors regarding its performance and overall results of operations. EBITDA, adjusted EBITDA, adjusted net income, cash flow from operating activities before changes in operating assets and liabilities and free cash flow are not intended to be performance measures that should be regarded as an alternative to, or more meaningful than, either net income as an indicator of operating performance or to cash flows from operating activities as a measure of liquidity. In addition, EBITDA, adjusted EBITDA, adjusted net income and cash flow from operating activities before changes in operating assets and liabilities are not intended to represent funds available for dividends, reinvestment or other discretionary uses, and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. The EBITDA, adjusted EBITDA, adjusted net income, cash flow from operating activities before changes in operating assets and liabilities and free cash flow presented in this press release may not be comparable to similarly titled measures presented by other companies, and may not be identical to corresponding measures used in the Company’s various agreements.

GULFPORT ENERGY CORPORATION

RECONCILIATION OF EBITDA

(Unaudited)

 

     Three months ended September 30,      Nine months ended September 30,  
     2019     2018      2019     2018  
     (In thousands)      (In thousands)  

Net (loss) income

    $ (48,752 )    $ 95,150      $ 248,446     $ 296,559  

Interest expense

      34,095       33,253        103,095       100,922  

Income tax benefit

      (26,522 )      —          (205,853 )      (69 ) 

Accretion expense

      747       1,037        3,173       3,056  

Depreciation, depletion and amortization

      145,490       119,915        388,874       352,848  

Impairment of oil and gas properties

      35,647       —          35,647       —    
  

 

 

    

 

 

     

 

 

    

 

 

  

EBITDA

    $ 140,705     $ 249,355      $ 573,382     $ 753,316  
  

 

 

    

 

 

     

 

 

    

 

 

  

GULFPORT ENERGY CORPORATION

RECONCILIATION OF ADJUSTED EBITDA

(Unaudited)

 

     Three months ended     Nine months ended  
     September 30, 2019     September 30, 2019  
     2019     2018     2019     2018  
     (In thousands)     (In thousands)  

EBITDA

    $ 140,705     $ 249,355     $ 573,382     $ 753,316  

Adjustments:

         

Non-cash derivative loss (gain)

      54,131       4,125       (98,458 )      106,373  

Non-cash derivative loss on contingent payments

      1,034       —         1,034       —    

Insurance proceeds

      —         —         (83 )      (231 ) 

Litigation settlement

      (158 )      917       (158 )      917  

Rig termination fees

      4,176       —         4,176       —    

Gain on debt extinguishment

      (23,600 )      —         (23,600 )      —    

Gain on sale of equity method investments

      —         (2,733 )      —         (124,768 ) 

Loss (income) from equity method investments

      43,082       (12,858 )      164,391       (35,282 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Adjusted EBITDA

    $ 219,370     $ 238,806     $ 620,684     $ 700,325  
  

 

 

    

 

 

    

 

 

    

 

 

  

GULFPORT ENERGY CORPORATION

RECONCILIATION OF CASH FLOW

(Unaudited)

 

     Three months ended September 30,     Nine months ended September 30,  
     2019     2018     2019     2018  
     (In thousands)     (In thousands)  

Cash provided by operating activity

    $ 217,586     $ 203,288     $ 617,355     $ 630,797  

Adjustments:

         

Changes in operating assets and liabilities

      (33,175 )      7,182       (91,492 )      (19,514 ) 

Capitalized expenses incurred(1)

      (10,773 )      (11,874 )      (29,074 )      (32,432 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Operating cash flow

    $ 173,638     $ 198,596     $ 496,789     $ 578,851  

Capital expenditures incurred(2)

      (70,239 )      (174,815 )      (529,416 )      (734,423 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Free cash flow

    $ 103,399     $ 23,781     $ (32,627 )    $ (155,572 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

 

(1)

Includes capitalized general and administrative expense incurred and capitalized interest expenses incurred

(2)

Incurred capital expenditures and cash capital expenditures may vary from period to period due to the cash payment cycle

GULFPORT ENERGY CORPORATION

RECONCILIATION OF ADJUSTED NET INCOME

(Unaudited)

 

     Three months ended     Nine months ended  
     September 30, 2019     September 30, 2019  
     2019     2018     2019     2018  
     (In thousands, except share data)     (In thousands, except share data)  

Pre-tax net (loss) income excluding adjustments

    $ (75,274 )    $ 95,150     $ 42,593     $ 296,490  

Adjustments:

         

Non-cash derivative loss (gain)

      54,131       4,125       (98,458 )      106,373  

Non-cash derivative loss on contingent payments

      1,034       —         1,034       —    

Impairment of oil and gas properties

      35,647       —         35,647       —    

Insurance proceeds

      —         —         (83 )      (231 ) 

Litigation settlement

      (158 )      917       (158 )      917  

Rig termination fees

      4,176       —         4,176       —    

Gain on debt extinguishment

      (23,600 )      —         (23,600 )      —    

Gain on sale of equity method investments

      —         (2,733 )      —         (124,768 ) 

Loss (income) from equity method investments

      43,082       (12,858 )      164,391       (35,282 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Pre-tax net income excluding adjustments

    $ 39,038     $ 84,601     $ 125,542     $ 243,499  
  

 

 

    

 

 

    

 

 

    

 

 

  

Adjusted net income

    $ 39,038     $ 84,601     $ 125,542     $ 243,499  
  

 

 

    

 

 

    

 

 

    

 

 

  

Adjusted net income per common share:

         

Basic

    $ 0.24     $ 0.49     $ 0.78     $ 1.39  
  

 

 

    

 

 

    

 

 

    

 

 

  

Diluted

    $ 0.24     $ 0.49     $ 0.76     $ 1.38  
  

 

 

    

 

 

    

 

 

    

 

 

  

Basic weighted average shares outstanding

      159,548,477       173,057,538       160,553,796       175,776,312  

Diluted weighted average shares outstanding

      159,548,477       173,304,914       164,820,002       176,440,461