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CST: 13/11/2019 07:07:08   

Gulfport Energy Corporation Reports Third Quarter 2019 Financial and Operating Results

12 Days ago

OKLAHOMA CITY, Oct. 31, 2019 (GLOBE NEWSWIRE) -- 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,
Production Volumes: 2019   2018   2019   2018
               
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  
                       

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