Quarterly / Earnings Reports | Third Quarter (3Q) Update

Gulfport Details Q3 Results; Mulls Sale of Utica Asset

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Gulfport Energy Corp. reported its Q3 2019 results.

Non-Core Asset Divestitures - Exploring Utica Sale

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.

Q3 Highlights:

• 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

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.

"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.

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.