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Gulfport Energy (GPOR) Down 9.2% Since Last Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for Gulfport Energy (GPOR - Free Report) . Shares have lost about 9.2% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Gulfport Energy due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Gulfport Q3 Earnings Top Estimates on High Gas Output

Gulfport Energy reported third-quarter adjusted net income per share of 49 cents, beating the Zacks Consensus Estimate of 35 cents. The bottom line also jumped from the prior-year level of 32 cents. Surging production has helped the company to boost its earnings per share.

Revenues of $361 million came in line with the Zacks Consensus Estimate. The top line improved from the year-ago figure of $265.5 million on higher natural gas realizations.

Production Rises

Gulfport’s total oil and gas production increased to 1,427.5 million cubic feet equivalent per day (MMcfe/d) from 1,199.6 MMcfe/d recorded in the corresponding period of last year. Of the total output, 89.1% comprised natural gas.  

The company recorded improved year-over-year production from Utica and SCOOP plays in the quarter. Output from Utica and SCOOP totaled 104,975 MMcfe and 25,259 MMcfe, respectively, in the third quarter of 2018. Nearly 79.9% of its output came from the Utica acreage.

Increased Realized Prices

Average realized natural gas oil price (before the impact of derivatives) during the third quarter was $2.32 per Mcf, higher than the year-ago period’s $2.28. Average realized natural gas liquids price was 74 cents per gallon, up from the year-ago quarter’s 57 cents. Gulfport fetched $68.73 per barrel of oil during the quarter, up from the year-ago figure of $45.90.

Expenses

Total expenses in the quarter under review amounted to $247.4 million, reflecting an increase from $215 million in the third quarter of 2017. This is mainly attributed to increased depreciation and midstream gathering/processing charges incurred in the reported quarter.

While depreciation costs rose 12.4% to stand at $119.9 million, midstream gathering/processing expenses scaled up 13.8% to $78.9 million.

Capex, Balance Sheet & Stock Buyback

In the reported quarter, Gulfport spent $154.6 million on drilling and completion, as well as capital expenditure. As of Sep 30, 2018, the natural gas-weighted energy explorer had approximately $124.6 million in cash and cash equivalents. Gulfport had a long-term debt of $2,100.8 million, representing a debt-to-capitalization ratio of around 39%.

On a year-to-date basis, the company repurchased 10.5 million shares at an average price of $10.47, with total share buyback worth more than $109.9 million.  

Guidance

Gulfport expects its 2018 capital expenditure to be around $815 million, of which $685 million is expected to be allotted for drilling and completion. The company now anticipates its output in the range of 1,360-1,370 MMcfe/d versus prior guidance of 1,320-1,340 MMcfe/d. The increase reflects a 25-26% production growth from 2017’s average daily net production figure of 1,089.2 MMcfe. Strong production in the first nine months enabled the company to increase its full year guidance.

Of the total expected output, around 89% is anticipated to be natural gas. The company expects its natural gas differentials in the range of 58-61 cents in 2018.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended upward during the past month. The consensus estimate has shifted 14.73% due to these changes.

VGM Scores

Currently, Gulfport Energy has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Gulfport Energy has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.




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