Gulfport Energy Corporation (NYSE:GPOR) Q4 2024 Results Conference Call February 26, 2025 10:00 AM ET Company Participants Jessica Antle - Vice President, Investor Relations John Reinhart - President & Chief Executive Officer Michael Hodges - Executive Vice President & Chief Financial Officer Conference Call Participants Bert Donnes - Truist Securities Jon Mardini - KeyBanc Capital Markets Carlos Escalante - Wolfe Research. Brian Velie - Capital One Securities Noah Hungness - Bank of America Operator Greeti ...

Financial Performance - Net cash provided by operating activities was $650.0 million for the year ended December 31, 2024, compared to $723.2 million for the year ended December 31, 2023, primarily due to a decrease in natural gas revenues[305]. - The company reported a net change in cash and cash equivalents of $(456,000) for the year ended December 31, 2024[305]. - The company incurred $454.1 million in additions to oil and natural gas properties for the year ended December 31, 2024[305]. - The company recognized ceiling test impairments of $373.2 million in 2024, with no impairments recorded for the year ended December 31, 2023[317]. - The company paid $4.2 million in cash dividends to preferred stockholders in 2024, a decrease from $4.8 million in 2023[310]. Capital Expenditures - Capital expenditures for the year ended December 31, 2024, totaled $430.1 million, with $327.4 million allocated to drilling and completion activities[301]. - Cash capital expenditures for oil and natural gas properties in 2024 totaled $454.1 million, a decrease of 15.5% from $537.4 million in 2023[307]. - Total oil and natural gas property expenditures in 2024 were $454.1 million, which included drilling and completion costs of $325.1 million[307]. - The company expects its drilling and completion capital expenditures for 2025 to be in the range of $335 million to $355 million, aiming for production of approximately 1,040 to 1,065 MMcfe per day[302]. Debt and Obligations - Total contractual cash obligations as of December 31, 2024, amounted to $2,102.6 million, including long-term debt principal of $713.7 million and interest of $220.9 million[297]. - The company’s debt activity resulted in a net increase of $32.8 million during the year ended December 31, 2024[305]. - The company had $956.0 million in borrowings and $1.0 billion in repayments on its Credit Facility during 2024, with a loss on debt extinguishment of $13.4 million[307]. - The company incurred debt issuance and loan commitment fees of $14.9 million in 2024, up from $7.1 million in 2023, primarily due to the issuance of the 2029 Senior Notes[308]. - The company had $10.0 million in borrowings outstanding on its Credit Facility as of February 20, 2025[307]. Shareholder Activities - The company repurchased 1.2 million shares for approximately $184.5 million at a weighted average price of $153.35 per share in 2024, compared to 1.5 million shares for $148.9 million at a weighted average price of $101.53 per share in 2023[309]. - The company exchanged $23.6 million in shares for tax withholdings in 2024, significantly up from $3.2 million in 2023[311]. Market Conditions - During 2024, WTI prices ranged from $66.73 to $87.69 per barrel, while the Henry Hub spot market price of natural gas ranged from $1.21 to $13.20 per MMBtu[303]. Operational Activities - In the year ended December 31, 2024, the company spud 20 gross (19.7 net) operated wells in the Utica formation at a total cost of approximately $259.8 million[306]. - The company entered into natural gas, oil, and NGL derivative contracts for 2025, including swaps for 18,301 MMBtu/d at a weighted average price of $3.85[295]. - The company has $63.8 million in letters of credit and $44.9 million in surety bonds as part of its off-balance sheet arrangements[300].

Gulfport Energy (GPOR) Q4 2024 Earnings Call February 26, 2025 10:00 AM ET Company Participants Jessica Antle - VP - Investor RelationsJohn Reinhart - President,CEO & DirectorMichael Hodges - Executive VP & CFOJonathan Mardini - Equity Research AssociateCarlos Escalante - Senior AssociateMatthew Rucker - Senior Vice President of OperationsNoah Hungness - Associate Conference Call Participants Bertrand Donnes - Financial AnalystBrian Velie - Equity Analyst Operator and welcome to Gulfport Energy Corporation ...

Core Insights - Gulfport Energy reported a revenue of $239.87 million for Q4 2024, marking a 51% year-over-year decline and a surprise of -26.09% compared to the Zacks Consensus Estimate of $324.54 million [1] - The company achieved an EPS of $4.80, which is an increase from $3.10 a year ago, resulting in an EPS surprise of +23.08% against the consensus estimate of $3.90 [1] Financial Performance Metrics - Gulfport's shares have returned +3.1% over the past month, outperforming the Zacks S&P 500 composite's -1.8% change, and currently holds a Zacks Rank 2 (Buy) [3] - Average price for NGL was $30.98 per barrel, exceeding the two-analyst average estimate of $27.48 per barrel [4] - Daily production volume for gas equivalent was 1,055,472 Mcfe/D, slightly below the two-analyst average estimate of 1,067,496 Mcfe/D [4] - Daily production volume for natural gas was 958,075 Mcf/D, compared to the two-analyst average estimate of 974,991.8 Mcf/D [4] - Average price for natural gas was $2.99 per thousand cubic feet, above the two-analyst average estimate of $2.91 [4] - Daily production volume for NGL was 11,004 BBL/D, surpassing the two-analyst average estimate of 10,777.44 BBL/D [4] - Average price for oil and condensate was $65.75 per barrel, slightly higher than the two-analyst average estimate of $65.12 per barrel [4] - Daily production volume for oil and condensate was 5,229 BBL/D, exceeding the two-analyst average estimate of 4,839.98 BBL/D [4] - Revenues from natural gas sales were $221.55 million, lower than the $244.09 million estimated by two analysts, but represented a +4.2% change year-over-year [4] - Revenues from oil and condensate sales were $31.29 million, exceeding the two-analyst average estimate of $26.80 million, with a year-over-year change of +32.4% [4] - Revenues from natural gas liquid sales were $31.99 million, above the two-analyst average estimate of $28.16 million, reflecting a +19.4% change year-over-year [4]

Core Viewpoint - Gulfport Energy reported quarterly earnings of $4.80 per share, exceeding the Zacks Consensus Estimate of $3.90 per share, and showing an increase from $3.10 per share a year ago, representing an earnings surprise of 23.08% [1][2] Financial Performance - The company posted revenues of $239.87 million for the quarter ended December 2024, which missed the Zacks Consensus Estimate by 26.09%, and is a decline from year-ago revenues of $489.11 million [2] - Over the last four quarters, Gulfport has surpassed consensus EPS estimates three times but has not beaten consensus revenue estimates [2] Stock Performance and Outlook - Gulfport shares have decreased by about 1% since the beginning of the year, while the S&P 500 has gained 1.7% [3] - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to these expectations [4] Earnings Estimate Revisions - The trend for estimate revisions ahead of the earnings release was favorable, leading to a Zacks Rank 2 (Buy) for the stock, indicating expected outperformance in the near future [6] - The current consensus EPS estimate for the upcoming quarter is $4.80 on revenues of $324.06 million, and for the current fiscal year, it is $22.29 on revenues of $1.38 billion [7] Industry Context - The Oil and Gas - Exploration and Production - United States industry is currently in the top 22% of Zacks industries, suggesting that stocks in the top 50% outperform those in the bottom 50% by more than 2 to 1 [8] - Another company in the same industry, Granite Ridge Resources, Inc., is expected to report quarterly earnings of $0.14 per share, reflecting a year-over-year change of -30%, with a recent 19.4% upward revision in the consensus EPS estimate [9]

Production Volumes - Total production volumes for natural gas increased to 967,633 Mcf/day in 2024, up from 959,743 Mcf/day in 2023, representing a 0.9% increase[5] - Oil and condensate production volumes rose to 3,986 Bbl/day in 2024, compared to 3,733 Bbl/day in 2023, marking a 6.8% increase[8] - NGL production volumes decreased to 10,431 Bbl/day in 2024 from 12,018 Bbl/day in 2023, a decline of 13.2%[8] Financial Performance - Total revenues for Q4 2024 were $239.9 million, down from $489.1 million in Q4 2023, reflecting a 51.0% decrease[10] - Net loss attributable to common stockholders for Q4 2024 was $274.2 million, compared to a net income of $209.0 million in Q4 2023[10] - Total revenues decreased to $958.1 million in 2024 from $1.79 billion in 2023, a decline of approximately 46.4%[12] - Natural gas sales fell to $714.2 million in 2024, down from $831.8 million in 2023, representing a decrease of about 14.1%[12] - Net loss attributable to common stockholders was $265.6 million in 2024, compared to a net income of $1.25 billion in 2023[12] - Operating expenses increased to $1.19 billion in 2024, up from $816.9 million in 2023, marking an increase of approximately 46%[12] Asset and Debt Management - Cash and cash equivalents decreased to $1.47 million at the end of 2024 from $1.93 million at the end of 2023, a decline of about 23.9%[14] - Total assets decreased to $2.87 billion in 2024 from $3.27 billion in 2023, a reduction of approximately 12.2%[16] - Long-term debt increased to $702.9 million in 2024 from $667.4 million in 2023, an increase of about 5.3%[16] Impairments and Guidance - The company reported an impairment of oil and natural gas properties amounting to $342.7 million in Q4 2024[10] - The company reported an impairment of oil and natural gas properties amounting to $373.2 million in 2024[12] - The company provided 2025 guidance, indicating expectations for production growth and cost management strategies[2] - The company provided guidance for 2025 based on commodity strip prices as of January 27, 2025, with no property acquisitions or divestitures assumed[21] Production Projections - Average daily gas equivalent production is projected to be between 1,040 MMcfe/day and 1,065 MMcfe/day for the year ending December 31, 2025, with approximately 89% being gas[22] - Average daily liquids production is expected to range from 18.0 MBbl/day to 20.5 MBbl/day for the same period[22] - Capital expenditures for operated drilling and completion are estimated between $335 million and $355 million, with total base capital expenditures projected between $370 million and $395 million[22] Pricing and Swaps - Average price of natural gas, including settled derivatives, was $2.99/Mcf in Q4 2024, up from $2.91/Mcf in Q4 2023, an increase of 2.8%[7] - Average price of oil and condensate, including settled derivatives, decreased to $69.75/Bbl in 2024 from $70.74/Bbl in 2023, a decline of 1.4%[8] - The weighted average price for natural gas fixed price swaps is set at $3.82/MMBtu for 2025[26] - The company’s oil fixed price swaps volume is 3,000 Bblpd at a weighted average price of $73.29/Bbl for 2025[26] - The company has fixed price collars for natural gas with a weighted average floor price of $3.37/MMBtu and a ceiling price of $4.23/MMBtu for 2025[26] Adjusted Financial Metrics - Adjusted net income for the quarter ended December 31, 2024, is reported at $85.376 million, compared to $84.381 million for the same quarter in 2023[37] - The company incurred a net loss of $273.242 million for the quarter ended December 31, 2024, compared to a net income of $245.731 million for the same quarter in 2023[37] - Adjusted Net Income (Non-GAAP) for 2024 was $282,494 thousand, a decrease of 18.2% from $345,479 thousand in 2023[40] - Adjusted EBITDA (Non-GAAP) for the year ended December 31, 2024, was $731,079 thousand, slightly up from $725,045 thousand in 2023[48] - Adjusted Free Cash Flow (Non-GAAP) for 2024 was $256,811 thousand, an increase of 29.1% from $198,863 thousand in 2023[57] - Adjusted Free Cash Flow (Non-GAAP) for the three months ended December 31, 2024, was $125,210 thousand, an increase of 46.5% from $85,446 thousand in 2023[52] General and Administrative Expenses - General and administrative expenses (GAAP) for the year ended December 31, 2024, totaled $42,558,000, an increase from $38,600,000 in 2023, representing a growth of 5.1%[64] - Capitalized general and administrative expenses for 2024 were $25,338,000, up from $22,810,000 in 2023, indicating an increase of 11.0%[64] - Recurring general and administrative expenses before capitalization (Non-GAAP) reached $65,372,000 in 2024, compared to $58,566,000 in 2023, reflecting a rise of 11.6%[64] - Non-recurring general and administrative expenses for 2024 were $(2,524,000), slightly improved from $(2,844,000) in 2023[64] - Cash component of general and administrative expenses (GAAP) was $31,600,000 in 2024, compared to $30,385,000 in 2023, showing an increase of 4.0%[64] - Non-cash component of general and administrative expenses (GAAP) for 2024 was $10,958,000, up from $8,215,000 in 2023, a growth of 33.5%[64] - The total cash and non-cash general and administrative expenses for 2024 were $42,558,000, compared to $38,600,000 in 2023, indicating a total increase of 10.0%[64] - The recurring general and administrative expenses before capitalization (Non-GAAP) increased from $46,305,000 in 2023 to $49,016,000 in 2024, a rise of 5.9%[64]

Energy Market Overview - The U.S. Energy Information Administration (EIA) projects a mixed outlook for oil and natural gas markets through 2026, with production increases and slower demand growth shaping the landscape [1] - Brent crude prices are expected to decline, averaging $74 per barrel in 2025 and dropping to $66 in 2026 [1] - U.S. crude production is set to rise to a record 13.59 million barrels per day (bpd) in 2025, reflecting strong domestic output [1][6] Oil Demand and Consumption - Global liquid fuels demand is expected to rise by 1.4 million bpd in 2025 and 1 million bpd in 2026, primarily driven by non-OECD Asia, with India and China contributing significantly [3] - In the U.S., gasoline consumption is projected to remain flat in 2025 and slightly decline in 2026 due to improvements in fuel efficiency [4] Oil Supply Dynamics - Global liquid fuels production is forecasted to increase by 1.9 million bpd in 2025 and 1.6 million bpd in 2026, with non-OPEC+ countries leading the growth [5] - The easing of OPEC+ production cuts is expected to contribute an additional 600,000 bpd in 2026 [5] Natural Gas Market Insights - U.S. natural gas output is anticipated to reach 104.6 billion cubic feet per day (bcf/d) in 2025 and 107.3 bcf/d in 2026, continuing a record-setting trajectory [7] - Domestic gas consumption is projected to peak at 90.7 bcf/d in 2025 before slightly declining in 2026 [7] - The Henry Hub natural gas spot price is forecasted to rise to $3.80 per million British thermal units (MMBtu) in 2025 and $4.20/MMBtu in 2026 [7] Future Outlook for Oil and Gas - Despite expected declines in oil prices, strong production levels and resilient demand from key markets will keep the sector dynamic [8] - Natural gas is poised for long-term growth, supported by infrastructure expansion and increasing global demand for LNG [8] Investment Opportunities - Companies like Sunoco LP, Suncor Energy, and Gulfport Energy are highlighted as attractive investment options due to their efficient operations and stable cash flows [2][9][10][11] - Sunoco focuses on transportation and supply in the U.S. petroleum market, while Suncor is a leading integrated energy company in Canada [9][10] - Gulfport Energy, primarily focused on natural gas, has emerged from bankruptcy with a stronger balance sheet and a free cash flow-oriented strategy [11]

Core Viewpoint - Momentum investing focuses on following a stock's recent price trends, aiming to buy high and sell higher, with the expectation that established trends will continue [1] Company Overview: Gulfport Energy (GPOR) - Gulfport Energy currently holds a Momentum Style Score of B, indicating a favorable momentum characteristic [2] - The company has a Zacks Rank of 1 (Strong Buy), suggesting strong potential for outperformance in the market [3] Performance Metrics - GPOR shares have increased by 4.01% over the past week, outperforming the Zacks Oil and Gas - Exploration and Production - United States industry, which rose by 2.43% [5] - Over the past month, GPOR's price change is 14.94%, compared to the industry's 10.86% [5] - In the last quarter, GPOR shares have risen by 37.05%, and over the past year, they have gained 51.03%, while the S&P 500 has only increased by 4.32% and 27.01%, respectively [6] Trading Volume - The average 20-day trading volume for GPOR is 287,671 shares, which serves as a baseline for price-to-volume analysis [7] Earnings Outlook - In the past two months, two earnings estimates for GPOR have been revised upwards, with the consensus estimate increasing from $14.38 to $14.43 [9] - For the next fiscal year, four estimates have moved higher, with no downward revisions during the same period [9] Conclusion - Given the positive performance metrics and earnings outlook, GPOR is positioned as a strong buy with a Momentum Score of B, making it a compelling investment option [11]

Economic Environment - The favorable December inflation reading has alleviated concerns regarding the Federal Reserve's ability to justify rate cuts in 2025, contributing to positive market sentiment [1] - Uncertainty remains with Donald Trump resuming the presidency, as key policies such as higher trade tariffs and tighter immigration controls are anticipated to impact markets [2] Investment Strategy - Value investing is highlighted as a strategy to profit from stocks trading at a discount to their intrinsic values, with a focus on earnings yield as a key metric [3][5] - Earnings yield is calculated as annual earnings per share (EPS) divided by market price, providing insight into the anticipated return from earnings for each dollar invested [5][6] - A stock's earnings yield should be compared to the 10-year Treasury yield to assess its relative value; a higher yield indicates undervaluation [7] Stock Selection Criteria - An earnings yield greater than 10% is set as a primary screening criterion, supplemented by estimated EPS growth greater than or equal to the S&P 500 and an average daily volume of at least 100,000 [8][9] - Stocks must have a current price of at least $5 and a Zacks Rank of 1 (Strong Buy) or 2 (Buy) to be considered for investment [10] Recommended Stocks - **Harmony Biosciences (HRMY)**: Expected year-over-year growth of 18% in sales and 33% in earnings for 2025, with a Zacks Rank 1 and Value Score of A [12] - **Ingevity Corporation (NGVT)**: Anticipated growth of 2% in sales and 62% in earnings for 2025, holding a Zacks Rank 1 and Value Score of B [13] - **Gulfport Energy (GPOR)**: Projected year-over-year growth of 22% in sales and 55% in earnings for 2025, also with a Zacks Rank 1 and Value Score of B [14] - **Pitney Bowes (PBI)**: Expected earnings growth of 184% for 2025, with a Zacks Rank 1 and Value Score of A [15]

Earnings Outlook and Stock Performance - Gulfport Energy (GPOR) shows a noticeable improvement in its earnings outlook, making it an attractive investment option [1] - The stock has been a strong performer recently, and the momentum is expected to continue as analysts raise their earnings estimates [1] - The stock has risen 9.4% over the past four weeks due to strong estimate revisions and increased investor interest [7] Analyst Sentiment and Estimate Revisions - Analysts are increasingly optimistic about Gulfport's earnings prospects, leading to rising trend in estimate revisions [2] - Two estimates have moved higher for the current quarter over the last 30 days, with no negative revisions, resulting in a 6.25% increase in the Zacks Consensus Estimate [4] - For the full year, one estimate has moved higher over the past month, with no negative revisions, boosting the consensus estimate by 6.73% [5] Earnings Estimates and Growth - Gulfport is expected to earn $4.07 per share for the current quarter, representing a year-over-year increase of 31.29% [4] - For the full year, the company is expected to earn $14.43 per share, reflecting a year-over-year growth of 108.53% [5] Zacks Rank and Investment Potential - Gulfport has earned a Zacks Rank 1 (Strong Buy) due to favorable estimate revisions [6] - Stocks with Zacks Rank 1 (Strong Buy) and 2 (Buy) have historically outperformed the S&P 500, with Zacks 1 Ranked stocks generating an average annual return of +25% since 2008 [3][6] - The Zacks Rank system is a proven tool for identifying stocks with strong earnings estimate revisions and investment potential [6]