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Gulfport Energy(GPOR) - 2025 Q2 - Quarterly Report

PART I FINANCIAL INFORMATION Item 1. Consolidated Financial Statements (Unaudited) Unaudited consolidated financial statements for June 30, 2025, show total assets increased to $2.96 billion, with Q2 2025 net income of $184.5 million, a significant turnaround driven by natural gas sales and derivative gains Consolidated Balance Sheets Total assets increased to $2.96 billion by June 30, 2025, driven by net property and equipment, with total liabilities at $1.16 billion and stockholders' equity at $1.77 billion Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total current assets | $197,923 | $231,313 | | Total property and equipment, net | $2,189,797 | $2,018,271 | | Total assets | $2,959,457 | $2,865,697 | | Total current liabilities | $389,619 | $345,508 | | Long-term debt | $695,154 | $702,857 | | Total liabilities | $1,162,422 | $1,116,956 | | Total stockholders' equity | $1,765,679 | $1,711,393 | Consolidated Statements of Operations Q2 2025 net income reached $184.5 million, a substantial improvement from a prior year loss, fueled by a 147% revenue increase to $447.6 million from natural gas sales and derivative gains Q2 Statement of Operations Highlights (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Total revenues | $447,616 | $181,117 | | Natural gas sales | $241,236 | $144,458 | | Net gain (loss) on derivatives | $136,101 | $(8,615) | | Total operating expenses | $196,848 | $199,236 | | Net income (loss) | $184,466 | $(26,212) | | Diluted EPS | $9.12 | $(1.51) | YTD Statement of Operations Highlights (in thousands, except per share data) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Total revenues | $644,650 | $464,346 | | Natural gas sales | $522,742 | $332,744 | | Net (loss) gain on derivatives | $(10,447) | $36,521 | | Total operating expenses | $381,868 | $400,699 | | Net income | $184,002 | $25,823 | | Diluted EPS | $9.01 | $1.09 | Consolidated Statements of Stockholders' Equity Total stockholders' equity increased to $1.77 billion by June 30, 2025, primarily due to $184.0 million in net income, partially offset by $125.9 million in common stock repurchases - Key changes in stockholders' equity for the six months ended June 30, 2025 include net income of $184.5 million, stock repurchases under the Repurchase Program of $125.9 million, and stock compensation expense of $9.4 million41 Consolidated Statements of Cash Flows Net cash from operations for the first six months of 2025 totaled $408.7 million, with significant outflows for investing ($254.0 million) and financing ($152.4 million) activities Consolidated Cash Flow Summary (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $408,683 | $311,487 | | Net cash used in investing activities | $(253,965) | $(246,498) | | Net cash used in financing activities | $(152,397) | $(65,685) | | Net change in cash and cash equivalents | $2,321 | $(696) | | Cash and cash equivalents at end of period | $3,794 | $1,233 | Notes to Consolidated Financial Statements Notes detail accounting policies, segment operations, debt, equity, and derivatives, with key updates including 2026 Senior Notes redemption, an expanded share repurchase program, and preferred stock redemption notice - The company operates as a single reportable segment focused on the exploration, acquisition, and production of natural gas, crude oil, and NGL in the Appalachia and Anadarko basins4754 - The company did not record any impairment of its oil and natural gas properties for the three or six months ended June 30, 2025 or 2024, as the net book value was below the calculated ceiling63 - Subsequent to quarter end, on August 4, 2025, the Board of Directors increased the authorized share repurchase program from $1.0 billion to $1.5 billion and extended it through December 31, 2026172 - On August 5, 2025, the company issued a notice of redemption for all its outstanding preferred stock, effective September 5, 2025173 Item 2. Management's Discussion and Analysis of Financial Conditions and Results of Operations Improved Q2 2025 results are attributed to higher natural gas prices and derivative gains, despite a slight production decline, supported by strong liquidity of $884.9 million and ongoing capital return initiatives 2025 Operational and Financial Highlights Q2 2025 highlights include 1,006.3 MMcfe/day net production, 13.8 net wells turned to sales, $231.4 million operating cash flow, $65.0 million in share repurchases, and $884.9 million total liquidity - Reported total net production of 1,006.3 MMcfe per day185 - Turned to sales 14 gross (13.8 net) operated wells185 - Generated $231.4 million of operating cash flows185 - Repurchased 338,886 shares for $65.0 million185 - Exited the quarter with total liquidity of $884.9 million185 2025 Production and Drilling Activity Q2 2025 net production averaged 1,006.3 MMcfe/day, a decrease from Q2 2024 due to natural declines and midstream issues, with drilling focused in Utica/Marcellus and SCOOP regions Average Daily Production by Basin (Q2) | Basin | Q2 2025 (Mcfe/day) | Q2 2024 (Mcfe/day) | | :--- | :--- | :--- | | Utica & Marcellus | 800,557 | 836,892 | | SCOOP | 205,742 | 213,245 | | Total | 1,006,299 | 1,050,137 | - The decline in daily production was primarily due to natural declines from the timing of development programs and the impact of unplanned, third-party midstream outages and constraints184 - Drilling activity in Q2 2025 included spudding 4.0 net wells in the Utica and turning to sales 8.0 net Utica wells, 4.0 net Marcellus wells, and 1.8 net SCOOP wells188189 Comparison of Quarter-to-Date (Q2 2025 vs Q2 2024) Q2 2025 total sales revenue increased 64% to $311.5 million, driven by an 82% rise in natural gas prices, while LOE increased 11% and interest expense decreased 9% Average Realized Price Comparison (Q2) | Commodity | Avg. Price Q2 2025 (w/o derivatives) | Avg. Price Q2 2024 (w/o derivatives) | | :--- | :--- | :--- | | Natural Gas ($/Mcf) | $2.97 | $1.63 | | Oil & Condensate ($/Bbl) | $58.20 | $76.51 | | NGL ($/Bbl) | $27.91 | $28.18 | - The increase in natural gas sales was due to an 82% increase in realized prices, driven by a higher Henry Hub index, partially offset by an 8% decrease in sales volumes194 - Total lease operating expenses (LOE) increased by 11% to $17.6 million, primarily due to higher water hauling and labor expenses198 - Interest expense decreased by 9% due to the tender offer and redemption of the 2026 Senior Notes, partially offset by interest on the new 2029 Senior Notes203 Comparison of Year-to-Date (Six Months 2025 vs 2024) YTD 2025 total sales revenue increased 53% to $655.1 million, driven by a 78% rise in natural gas prices, with LOE up 16% and DD&A expense down 12% Average Realized Price Comparison (YTD) | Commodity | Avg. Price YTD 2025 (w/o derivatives) | Avg. Price YTD 2024 (w/o derivatives) | | :--- | :--- | :--- | | Natural Gas ($/Mcf) | $3.34 | $1.88 | | Oil & Condensate ($/Bbl) | $61.22 | $73.84 | | NGL ($/Bbl) | $30.92 | $29.48 | - The increase in natural gas sales was due to a 78% increase in realized prices, partially offset by a 12% decrease in sales volumes207 - Total LOE increased by 16% to $37.9 million, primarily due to higher costs for water hauling, labor, and weather-related operations211 - Depreciation, depletion, and amortization (DD&A) decreased by 12% due to a lower depletion rate resulting from full cost ceiling test impairments recorded in 2024214 Liquidity and Capital Resources As of June 30, 2025, Gulfport reported $3.8 million in cash and $705.0 million in funded debt, supported by a $1.1 billion credit facility borrowing base and $408.7 million in YTD operating cash flow - As of June 30, 2025, the company had $3.8 million in cash, $55.0 million outstanding on its Credit Facility, and $650.0 million of 2029 Senior Notes222 - The Credit Facility borrowing base was reaffirmed at $1.1 billion with elected commitments of $1.0 billion as of May 5, 2025226 - The company redeemed the remaining $25.7 million balance of its 2026 Senior Notes in May 2025224 2025 Capital Expenditure Guidance | Category | Estimated Range | | :--- | :--- | | Operated Drilling & Completion | $335.0M - $355.0M | | Maintenance Leasehold & Land | $35.0M - $40.0M | | Discretionary Acreage Acquisitions | $75.0M - $100.0M | Item 3. Quantitative and Qualitative Disclosures About Market Risk Gulfport faces commodity price and interest rate risks, mitigated by derivative instruments like swaps and costless collars, with a net derivative liability of $32.9 million as of June 30, 2025 - The company's primary market risks are commodity price volatility and interest rate fluctuations on its Credit Facility248256 - Gulfport uses derivative instruments, including swaps and costless collars, to manage commodity price risk and enhance revenue predictability248254 - As of June 30, 2025, the company's derivative portfolio had a net liability fair value of $32.9 million. A hypothetical 10% increase in commodity prices would increase this liability by approximately $99.3 million255 Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during Q2 2025 - Based on an evaluation as of June 30, 2025, the CEO and CFO concluded that the company's disclosure controls and procedures are effective258 - No changes in internal control over financial reporting occurred during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, internal controls260 PART II OTHER INFORMATION Item 1. Legal Proceedings The company is involved in various legal and regulatory proceedings, including lawsuits related to lease formations, environmental compliance, and royalty disputes, as detailed in Note 9 - Information regarding legal proceedings is detailed in Note 9 of the consolidated financial statements262 Item 1A. Risk Factors There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024 - The company refers to the Risk Factors section in its Annual Report on Form 10-K for the year ended December 31, 2024, for a description of factors that could materially affect its business263 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds During Q2 2025, Gulfport repurchased 350,896 shares of common stock at an average price of $191.70 per share, with 338,886 shares under its publicly announced program Common Stock Repurchase Activity (Q2 2025) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 2025 | 49,264 | $171.91 | | May 2025 | 250,865 | $194.51 | | June 2025 | 50,767 | $196.98 | | Total | 350,896 | $191.70 | - As of June 30, 2025, the approximate maximum dollar value of shares that may yet be purchased under the plans or programs was $290.9 million265 Item 5. Other Information During the second quarter of 2025, none of the company's officers or directors adopted or terminated any Rule 10b5-1 trading plans or other non-Rule 10b5-1 trading arrangements - No officers or directors adopted or terminated any Rule 10b5-1 trading arrangements during the three months ended June 30, 2025268 Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications and XBRL data files - The report includes required certifications from the Chief Executive Officer and Chief Financial Officer pursuant to SEC rules, as well as XBRL interactive data files271