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Gulfport Energy (GPOR) Down 19% Post Q2 Earnings Release

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Shares of Gulfport Energy Corporation (GPOR - Free Report) have declined almost 19% since its second-quarter 2020 earnings announcement on Aug 4. While the bottom line came ahead of the Zacks Consensus Estimate, investors are snubbed by the company’s Q3 guidance that is projected to be lower sequentially and the year-ago figure.

Let’s delve deeper.

Gulfport’ssecond-quarter 2020 earnings surpassed estimates.

The Oklahoma-based company delivered adjusted net earnings per share (EPS) of 29 cents, attributable to lower lease operating and depreciation expenses. Meanwhile, the Zacks Consensus Estimate was of a loss of one cent. Moreover, the bottom line improved from the year-ago earnings of 21 cents a share.

However, revenues of $132.41 million fell shy of the Zacks Consensus Estimate by 38.24%. Further, the top line plunged from the year-ago figure of $458.99 million amid weaker year-over-year natural gas price realizations and contracted production volumes.

Production & Realized Prices

Gulfport’s total oil and gas production decreased to 93,463 million cubic feet equivalent (MMcfe) from 123,668 MMcfe in the corresponding period of last year. Volumes were also lower than the Zacks Consensus Estimate of 94,081 MMcfe.  Of the total output, 90.9% comprised natural gas. Gas production from the Utica Shale dropped 24.6% year over year to 72,082 MMcfe. Nearly, 77.1% of the entire output came from the Utica acreage. Output from SCOOP came in at 21,330 MMcfe, down from the year-ago level of 27,149 MMcfe.

Average realized natural gas price (before the impact of derivatives) during the second quarter was $1.02 per thousand cubic feet, lower than the year-ago period’s $2.02. Average realized natural gas liquids price was 25 cents per gallon, down from the year-ago quarter’s 45 cents. Gulfport fetched $20.14 per barrel of oil during the quarter, down from the year-ago figure of $56.85. Overall, the company’s average realized price came in at $1.13 per thousand cubic feet equivalent  in the quarter compared with $2.33 a year ago.

Gulfport Energy Corporation Price, Consensus and EPS Surprise

Gulfport Energy Corporation Price, Consensus and EPS Surprise

Gulfport Energy Corporation price-consensus-eps-surprise-chart | Gulfport Energy Corporation Quote

Costs, Capex and Balance Sheet

Total expenses in the quarter under review were $688.2 million, higher than $240.5 million in the prior-year period. This downside is mainly attributed to increased impairment charges of oil and natural gas properties incurred in the reported quarter. However, depreciation costs plunged 48.1% from the prior-year quarter to $64.8 million while lease operating expense fell 29.9% from the year-ago figure to $15.7 million.

In the second quarter, Gulfport spent $51.7 million on drilling and completion. As of Jun 30, this natural gas-weighted energy explorer had $2.8 million in cash and cash equivalents. The company had a long-term debt of $1,910 million, representing total debt to total capital of 89.2%.

2020 Guidance

As a result of the coronavirus- induced economic downturn,this upstream player reiterates its current-year capex view at the lower end of the $285-$310 million band.

Gulfport also maintains its previously announced projection in June that targets current-year net production to be 1-1.1 billion cubic feet equivalent per day (Bcfe/d), lower than the prior guidance of 1.1-1.5 Bcfe/d. This downtrend was induced by shut-ins and deferred completions activities. Further, the company envisions third-quarter 2020 production to average at 980 million-1.03 Bcfe/d, which at the midpoint suggests a decline from the second-quarter 2020 production result of 1.03 Bcfe/d as well as the year-ago reported figure of 1.53Bcfe/d. This action in turn, reflects Gulfport’s curtailment strategy.

Zacks Rank & Key Picks

Gulfport has a Zacks Rank #3 (Hold), currently. Some better-ranked players in the energy space are Halliburton Company (HAL - Free Report) , Core Laboratories NV (CLB - Free Report) and Pembina Pipeline Corp (PBA - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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