Without acknowledging pressure from an activist shareholder, Gulfport Energy Corp. said late Jan. 17 that it will buy back $400 million of its shares over the next two years using funds from operations and asset sales.
Gulfport's new authorization of $400 million shares, plus $90 million of shares repurchased in the fourth quarter of 2018, brings the shale oil and gas producer close to the $500 million — over one year — that hedge fund Firefly Value Partners LP demanded in a letter to the board the morning of Jan. 17.
Firefly, which owns an 8.1% stake in Gulfport, had no immediate comment on whether it was satisfied with Gulfport's new buyback program.
Firefly said a $500 million buyback over a year would double the value of Gulfport's remaining shares and would be a better use of the company's positive cash flows than increasing its drilling efforts.
Gulfport's 2019 plan, also released Jan. 17, is to drill enough wells in Ohio's Utica Shale and Oklahoma's SCOOP play to keep production roughly flat with 2018 while spending between $565 million and $600 million, roughly 28% less than it did in 2018. The company forecast $100 million in positive cash flow in 2019 and said it would sell certain noncore assets to make up the difference for the share buyback.
Gulfport did not reveal its plans for its largest noncore holding, a 22% stake in oilfield services firm Mammoth Energy Services valued at $217 million, according to S&P Global Market Intelligence. Gulfport also has leased acreage in Louisiana, Colorado's Niobrara Shale and North Dakota's Bakken Shale as well as $124 million in cash on hand.
Gulfport shares jumped as much as 7% higher in after-hours trading, following the announcement of its fourth-quarter 2018 results and 2019 spending plans.
Gulfport said its 2018 production of 1.36 Bcfe/d was 25% more than it produced in 2018. The production was 91% natural gas, with 81% coming from the Utica Shale, where Gulfport used to be Ohio's leading producer. For full year 2018, Gulfport said it spent $813.9 million, slightly less than analysts surveyed by S&P Global Market Intelligence expected.