Gulfport Energy(GPOR) - 2025 Q1 - Quarterly Report

PART I FINANCIAL INFORMATION Consolidated Financial Statements (Unaudited) Gulfport Energy reported a net loss of $0.5 million for Q1 2025, a significant decline from $52.0 million net income in Q1 2024, primarily due to a $146.5 million derivative loss, with total assets increasing to $2.95 billion and operating cash flow at $177.3 million Consolidated Balance Sheets As of March 31, 2025, total assets increased to $2.95 billion, total liabilities rose to $1.26 billion due to derivative liabilities, and stockholders' equity decreased to $1.66 billion Consolidated Balance Sheet Highlights (in thousands of US dollars) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total current assets | $205,294 | $231,313 | | Total property and equipment, net | $2,121,446 | $2,018,271 | | Total assets | $2,947,585 | $2,865,697 | | Total current liabilities | $477,538 | $345,508 | | Total liabilities | $1,259,199 | $1,116,956 | | Total stockholders' equity | $1,655,499 | $1,711,393 | Consolidated Statements of Operations For Q1 2025, the company reported a net loss of $0.5 million, a significant decline from $52.0 million net income in Q1 2024, primarily due to a $146.5 million net loss on derivative instruments Statement of Operations Summary (in thousands of US dollars, except per share data) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Total revenues | $197,034 | $283,229 | | Net (loss) gain on derivatives | $(146,548) | $45,136 | | Income from operations | $12,014 | $81,766 | | Net (loss) income | $(464) | $52,035 | | Net (loss) income per diluted share | $(0.07) | $2.34 | Consolidated Statements of Stockholders' Equity Stockholders' equity decreased from $1.71 billion to $1.66 billion by March 31, 2025, primarily due to a $60.6 million common stock repurchase and a $0.5 million net loss - During Q1 2025, the company repurchased common stock for $60.6 million, contributing to a decrease in total stockholders' equity[35] Consolidated Statements of Cash Flows Net cash from operating activities was $177.3 million in Q1 2025, with $108.8 million used in investing and $64.6 million in financing activities, resulting in $5.3 million cash at quarter-end Cash Flow Summary (in thousands of US dollars) | Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $177,280 | $188,022 | | Net cash used in investing activities | $(108,777) | $(118,952) | | Net cash used in financing activities | $(64,634) | $(62,790) | | Net change in cash | $3,869 | $6,280 | Notes to Consolidated Financial Statements The notes detail accounting policies, debt structure, and derivative activities, highlighting the company's single segment operation, no impairment charges, $700.4 million total debt, $149.5 million net derivative liability, and ongoing legal proceedings - The company operates as a single reportable segment focused on natural gas, oil, and NGL production in the Appalachia and Anadarko basins[40][48] - Under the full cost method, the net book value of oil and gas properties was below the calculated ceiling, resulting in no impairment charge for Q1 2025 or Q1 2024[55] - Total long-term debt as of March 31, 2025, was $700.4 million, primarily consisting of $650.0 million in 6.750% senior notes due 2029 and $35.0 million outstanding on the Credit Facility[61] - The company is involved in several legal proceedings, including a class action lawsuit alleging underpayment of royalties and a matter with the USEPA regarding alleged untimely repairs under a Consent Decree, which may result in monetary sanctions over $300,000[110][112] Management's Discussion and Analysis of Financial Conditions and Results of Operations Management discusses a decrease in net production to 929.3 MMcfe per day in Q1 2025, an increase in sales revenue (excluding derivatives) by 44% to $343.6 million, a net loss due to derivative impacts, and strong liquidity of $906.5 million 2025 Operational and Financial Highlights Q1 2025 highlights include net production of 929.3 MMcfe per day, $177.3 million in operating cash flow, $60.0 million in share repurchases, and $906.5 million in total liquidity - Key achievements for Q1 2025 include[168] - Total net production of 929.3 MMcfe per day - Generated $177.3 million of operating cash flows - Repurchased 340,664 shares for $60.0 million - Exited the quarter with total liquidity of $906.5 million 2025 Production and Drilling Activity Q1 2025 net production averaged 929.3 MMcfe per day, a decrease from Q1 2024, with drilling focused on the Utica/Marcellus region where eight wells were spud and seven turned to sales Average Daily Production | Production | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Natural gas (Mcf/day) | 837,816 | 973,564 | | Oil and condensate (Bbl/day) | 5,282 | 3,329 | | NGL (Bbl/day) | 9,962 | 10,031 | | Combined (Mcfe/day) | 929,280 | 1,053,722 | - Drilling activity in Q1 2025 was focused on the Utica/Marcellus, where eight gross wells were spud and seven were turned to sales[165][166] - No wells were spud or turned to sales in the SCOOP[165][166] Comparison of Quarter-to-Date Q1 2025 saw natural gas sales revenue increase by 50% due to a 76% rise in realized prices, despite a $146.5 million net derivative loss, while LOE increased 21% and DD&A decreased 18% Revenue and Production Cost Comparison (per Mcfe) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Avg. price w/o derivatives ($/Mcfe) | $4.11 | $2.48 | | Avg. price w/ settled derivatives ($/Mcfe) | $3.99 | $3.16 | | Avg. lease operating expenses ($/Mcfe) | $0.24 | $0.18 | | Avg. DD&A ($/Mcfe) | $0.78 | $0.83 | | Avg. interest expense ($/Mcfe) | $0.16 | $0.16 | - The increase in natural gas sales was due to a 76% increase in realized prices, as the average Henry Hub index rose from $2.24/Mcf in Q1 2024 to $3.65/Mcf in Q1 2025[171] - Total and per-unit LOE increased primarily due to higher costs for water hauling, labor, and winter weather operations[175] Liquidity and Capital Resources The company maintains liquidity through operating cash flow and its Credit Facility, with total funded debt at $710.7 million, a $1.1 billion borrowing base, and estimated 2025 capital expenditures of $335-$355 million - As of March 31, 2025, the company had $5.3 million in cash, $35.0 million outstanding on its Credit Facility, and total principal debt of $710.7 million[186] - The 2025 capital expenditure budget is estimated at $335-$355 million for drilling and completions, plus $35-$40 million for land and leasehold investments[199] Major Sources and Uses of Cash (Q1 2025, in thousands of US dollars) | Item | Amount | | :--- | :--- | | Net cash from operating activities | $177,280 | | Additions to oil and natural gas properties | $(108,231) | | Repurchases of common stock | $(57,809) | | Debt activity, net | $(3,000) | Quantitative and Qualitative Disclosures About Market Risk The company manages commodity price and interest rate risks through derivatives, holding a $149.5 million net derivative liability as of March 31, 2025, with a 10% price change impacting it by $94-$97 million - The company's primary market risk is commodity price volatility, which it manages through a hedging program using swaps, collars, and other derivatives[208][210] - As of March 31, 2025, the company had a net derivative liability of $149.5 million[215] - A hypothetical 10% increase in commodity prices would increase this liability by about $97.2 million[215] - The company is exposed to interest rate risk through its Credit Facility[216] - At March 31, 2025, $35.0 million was outstanding under this floating-rate facility[216] Controls and Procedures Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting during the quarter - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of the end of the quarter[218] - No changes occurred during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, internal controls over financial reporting[220] PART II OTHER INFORMATION Legal Proceedings Details on legal proceedings, including class action lawsuits and USEPA disputes, are provided in Note 9 of the consolidated financial statements - For details on legal proceedings, refer to Note 9 of the consolidated financial statements[222] Risk Factors No material changes to risk factors have occurred since the company's 2024 Annual Report on Form 10-K - The company refers to the risk factors disclosed in its 2024 Annual Report on Form 10-K, indicating no material changes[223] Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities in Q1 2025, but repurchased 340,664 shares for approximately $60.0 million under its repurchase program - There were no unregistered sales of equity securities in Q1 2025[224] Issuer Repurchases of Equity Securities (Q1 2025) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | Jan 2025 | 25,086 | $185.83 | | Feb 2025 | 44,127 | $181.09 | | Mar 2025 | 288,271 | $174.52 | | Total | 357,484 | $176.13 | Defaults Upon Senior Securities The company reported no defaults upon senior securities during the period - None[226] Mine Safety Disclosures This item is not applicable to the company - Not applicable[227] Other Information No officers or directors adopted or terminated Rule 10b5-1 trading plans or arrangements during Q1 2025 - No officers or directors adopted or terminated a Rule 10b5-1 trading plan during Q1 2025[228] Exhibits This section lists exhibits filed with Form 10-Q, including CEO and CFO certifications and XBRL data files - The exhibits include required CEO and CFO certifications pursuant to the Securities Exchange Act of 1934 and the Sarbanes-Oxley Act of 2002[231]