Workflow
Gulfport Energy(GPOR) - 2023 Q4 - Earnings Call Transcript
GPORGulfport Energy(GPOR)2024-02-28 19:45
Filings

Financial Data and Key Metrics Changes - The company reported net cash provided by operating activities before changes in working capital totaling approximately 184millionduringQ42023,morethandoublingcapitalexpendituresandallowingforsignificantcommonsharerepurchases[13]−AdjustedEBITDAforthequarterwas184 million during Q4 2023, more than doubling capital expenditures and allowing for significant common share repurchases [13] - Adjusted EBITDA for the quarter was 191 million, with adjusted free cash flow of 85milliondrivenbyastronghedgepositionandlowoperatingcosts[13]−Theall−inrealizedpriceduringQ4was85 million driven by a strong hedge position and low operating costs [13] - The all-in realized price during Q4 was 3.20 per million cubic feet equivalent (Mcfe), which is 0.33abovetheNYMEXHenryHubIndexprice,highlightingthebenefitsofthecompany′sdiversemarketingportfolio[55]BusinessLineDataandKeyMetricsChanges−Thecompanydrilledandturnedtosales24grosswellsin2023,including20intheUtica,2intheMarcellus,and2intheSCOOP,achievingovera600.33 above the NYMEX Henry Hub Index price, highlighting the benefits of the company's diverse marketing portfolio [55] Business Line Data and Key Metrics Changes - The company drilled and turned to sales 24 gross wells in 2023, including 20 in the Utica, 2 in the Marcellus, and 2 in the SCOOP, achieving over a 60% year-over-year improvement in total footage drilled per day [6][24] - Production for the year averaged 1,054 million cubic feet equivalent per day, roughly 3% above the high-end of initial guidance [5] - The company anticipates production levels in 2024 to be between 1.045 billion to 1.08 billion cubic feet equivalent per day, remaining relatively flat compared to 2023 [11] Market Data and Key Metrics Changes - The natural gas price differential before hedges was negative 0.51 per Mcf compared to the average monthly NYMEX settled price during Q4, slightly tighter than Q3 2023 [55] - The company has locked in over 40% of its 2024 natural gas basis exposure, providing pricing security at major sales points [56] Company Strategy and Development Direction - The company plans to focus on optimizing margins, development program cycle times, and operating costs, projecting total capital spending for 2024 to be in the range of 380millionto380 million to 420 million [30] - The company is prioritizing the development of recently acquired Utica acreage, with plans to begin pad construction in late 2024 and commence drilling in early 2025 [29] - The company aims to allocate substantially all of its adjusted free cash flow towards common share repurchases, excluding acquisitions, for the foreseeable future [12][17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in generating meaningful adjusted free cash flow in 2024 despite a challenging commodity backdrop, projecting a top decile free cash flow yield relative to natural gas peers [12] - The company remains committed to a disciplined approach for hedging cash flows, with downside protection covering 590 million cubic feet per day in 2024 at an average floor price of 3.69perMcf[15][16]−Managementhighlightedtheimportanceofdevelopingassetsefficientlyandsustainably,withafocusoncapitalefficiencyandcostreduction[24][30]OtherImportantInformation−Thecompanyachievedover3.69 per Mcf [15][16] - Management highlighted the importance of developing assets efficiently and sustainably, with a focus on capital efficiency and cost reduction [24][30] Other Important Information - The company achieved over 35 million in capital savings during 2023, which were reinvested into the development of high-quality assets [7] - The company has repurchased approximately 4.5 million shares of common stock since initiating the repurchase program in March 2022, reducing common shares outstanding by 15% [17] Q&A Session Summary Question: What are the drivers of the 10% lower capital requirement? - The company noted that approximately 65% of the savings are due to efficiencies, while 35% comes from supply chain improvements and restructuring contracts [59] Question: How does the company view the Marcellus development? - Management expressed excitement about the Marcellus, indicating it could become a larger part of the program depending on pricing and returns [62] Question: What would lead the company to defer production? - The company assesses production on an economic basis, considering commodity prices and potential future upside when deciding on deferrals [49]