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Gulfport grows Utica and SCOOP production, sells noncore assets in Q2

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Gulfport grows Utica and SCOOP production, sells noncore assets in Q2

Gulfport Energy Corp. sold its noncore assets in southern Louisiana and Thailand in the second quarter as the company reported modest year-over-year production growth in core producing areas of the Utica Shale in the U.S. Northeast and the SCOOP play of Oklahoma.

Gulfport recently closed the sale of its southern Louisiana assets to an unidentified third party for about $54.1 million, the company said in its second-quarter earnings statement Aug. 1. In addition, the producer said it sold its remaining interest in Tatex Thailand II for about $1.9 million in cash.

The company said the sales were part of its strategy to sharpen its focus on increasing efficiencies and maintaining capital discipline in order to begin to post free cash flow generation in the third quarter. As part of that effort, Gulfport said it was continuing its share repurchase program announced in January and said that as of Aug. 1, it had repurchased 3.8 million shares totaling approximately $30 million during 2019.

In its operational results, Gulfport reported net second-quarter production of 1.36 Bcfe/d, up from 1.33 Bcfe/d for the same quarter of 2018. Natural gas production grew slightly to 1.23 Bcf/d in the quarter, compared with 1.19 Bcf/d in the year-ago quarter. Gas comprised about 90% of Gulfport's net daily production mix in the quarter, while natural gas liquids comprised 7% and oil 3%.

"This was a successful quarter for Gulfport as we delivered results in line with expectations, highlighted by another active three months in both our Utica Shale and SCOOP asset areas," President and CEO David Wood said in a statement.

In its core Utica Shale acreage, the producer reported average production of approximately 1.05 Bcfe/d during the quarter. Gulfport spud five gross (3.8 net) operated wells and brought 25 wells into production in the quarter.

In the SCOOP, Gulfport's production averaged about 298.3 MMcfe/d. The company spud three gross operated wells and brought into production six gross operated wells.

In its financial results, Gulfport reported total revenues of $459.0 million compared with $252.7 million in the same quarter of 2018. The company's net income in the quarter totaled $235.0 million, up from $113.3 million in the year-ago quarter.

For the full year 2019, Gulfport confirmed its earlier guidance, forecasting that its average net production will be in the range of 1.36 Bcfe/d to 1.40 Bcfe/d. The producer also reaffirmed its expectation that its 2019 total capital expenditures would range between $565 million and $600 million, and said its annual capex would be funded entirely within cash flow at current strip pricing.

Analysts reported that the company's earnings results were largely in line with Wall Street estimates.

However, in a note to investors, analysts with the Williams Capital Group reported that the company's earnings fell below analyst estimates on several financial metrics.

The company's earnings per share of 21 cents and discretionary cash flow per share of $1.03 came in below the WCG estimates of 25 cents and $1.06 and the Wall Street consensus of 24 cents and $1.04, respectively.

In addition, Gulfport's EBITDA "was $194.5 million, below our estimate of $201.8 million and Consensus of $201.2 million," the analysts wrote.

They attributed the cash flow and EBITDA misses "to noise from asset sales during the quarter."

Jim Magill is a reporter with S&P Global Platts. S&P Global Market Intelligence and S&P Global Platts are owned by S&P Global Inc.