Gulfport Energy(GPOR) - 2023 Q4 - Annual Results

Production Volumes by Asset Area The company's production volumes for natural gas, oil, and NGLs are detailed across various asset areas Quarterly Production Volumes (Q4 2023) In Q4 2023, total combined production increased slightly to 1,063,341 Mcfe/day from 1,051,637 Mcfe/day in Q4 2022, driven by a significant increase in natural gas production from Utica & Marcellus assets offsetting declines in SCOOP and lower overall oil and NGL production Q4 2023 Production Volumes | Production (per day) | Q4 2023 | Q4 2022 | Change | | :--- | :--- | :--- | :--- | | Total Natural Gas (Mcf/day) | 976,820 | 934,763 | +4.5% | | - Utica & Marcellus | 795,776 | 702,041 | +13.3% | | - SCOOP | 181,044 | 232,722 | -22.2% | | Total Oil (Bbl/day) | 3,498 | 4,959 | -29.5% | | Total NGL (Bbl/day) | 10,923 | 14,520 | -24.8% | | Total Combined (Mcfe/day) | 1,063,341 | 1,051,637 | +1.1% | Annual Production Volumes (FY 2023) For the full year 2023, total combined production increased by 7.2% year-over-year to 1,054,251 Mcfe/day, primarily due to a 13.5% increase in natural gas production from Utica & Marcellus assets, while SCOOP and total liquids saw modest declines FY 2023 Production Volumes | Production (per day) | FY 2023 | FY 2022 | Change | | :--- | :--- | :--- | :--- | | Total Natural Gas (Mcf/day) | 959,743 | 883,195 | +8.7% | | - Utica & Marcellus | 765,556 | 674,314 | +13.5% | | - SCOOP | 194,187 | 208,881 | -7.0% | | Total Oil (Bbl/day) | 3,733 | 4,412 | -15.4% | | Total NGL (Bbl/day) | 12,018 | 12,281 | -2.1% | | Total Combined (Mcfe/day) | 1,054,251 | 983,354 | +7.2% | Production and Pricing This section analyzes the company's sales revenue, average realized commodity prices, and production costs Quarterly Production and Pricing (Q4 2023) In Q4 2023, total sales revenue fell sharply to $263.1 million from $545.9 million in Q4 2022, primarily due to a 54.7% drop in the average realized natural gas price before derivatives, though the average realized price including settled derivatives increased to $3.20/Mcfe due to significant derivative gains, and total production costs decreased by 12.1% to $1.16/Mcfe Q4 2023 Production and Pricing Metrics | Metric | Q4 2023 | Q4 2022 | | :--- | :--- | :--- | | Total Sales ($ million) | $263.1 | $545.9 | | Avg. Price (w/o derivatives, $/Mcfe) | $2.69 | $5.64 | | Avg. Price (with derivatives, $/Mcfe) | $3.20 | $3.01 | | Total Production Costs ($/Mcfe) | $1.16 | $1.32 | - The average realized price for natural gas, before the impact of derivatives, plummeted to $2.37/Mcf in Q4 2023 from $5.45/Mcf in Q4 2022[7] Annual Production and Pricing (FY 2023) For the full year 2023, total sales revenue was $1.05 billion, a 54.9% decrease from $2.33 billion in 2022, driven by a steep decline in commodity prices, with the average realized price before derivatives falling to $2.73/Mcfe from $6.49/Mcfe, partially offset by gains from settled derivatives, resulting in a final average price of $3.13/Mcfe, and total production costs per unit decreased by 12.7% to $1.17/Mcfe FY 2023 Production and Pricing Metrics | Metric | FY 2023 | FY 2022 | | :--- | :--- | :--- | | Total Sales ($ million) | $1,051.4 | $2,330.9 | | Avg. Price (w/o derivatives, $/Mcfe) | $2.73 | $6.49 | | Avg. Price (with derivatives, $/Mcfe) | $3.13 | $3.55 | | Total Production Costs ($/Mcfe) | $1.17 | $1.34 | - The average realized price for natural gas, before derivatives, fell by 61.8% to $2.37/Mcf in 2023 from $6.20/Mcf in 2022[8] Consolidated Statements of Income This section presents the company's financial performance, including revenues, expenses, and net income, for quarterly and annual periods Quarterly Income Statement (Q4 2023) In Q4 2023, Gulfport reported a Net Income of $245.7 million, a significant decrease from $748.6 million in Q4 2022, primarily due to lower revenues from commodity sales, partially offset by lower operating expenses and a smaller gain on derivatives, with Diluted EPS falling to $11.13 from $32.35 year-over-year Q4 2023 Consolidated Income Statement | Metric | Q4 2023 ($ thousands) | Q4 2022 ($ thousands) | | :--- | :--- | :--- | | Total Revenues | $489,108 | $982,492 | | Income from Operations | $282,493 | $764,699 | | Net Income | $245,731 | $748,568 | | Net Income Attributable to Common Stockholders | $208,980 | $625,601 | | Diluted EPS ($) | $11.13 | $32.35 | Annual Income Statement (FY 2023) For the full year 2023, Net Income surged to $1.47 billion from $494.7 million in 2022, primarily driven by a $740.3 million net gain on derivatives compared to a $999.7 million loss in the prior year, and a $525.2 million deferred income tax benefit, which more than compensated for lower revenues from commodity sales, with Diluted EPS rising to $66.46 from $20.32 FY 2023 Consolidated Income Statement | Metric | FY 2023 ($ thousands) | FY 2022 ($ thousands) | | :--- | :--- | :--- | | Total Revenues | $1,791,702 | $1,331,112 | | Net (gain) loss on derivatives | $740,319 | ($999,747) | | Income from Operations | $974,847 | $543,126 | | Total income tax benefit | ($525,156) | $0 | | Net Income | $1,470,916 | $494,701 | | Diluted EPS ($) | $66.46 | $20.32 | Consolidated Balance Sheets This section provides a snapshot of the company's financial position, detailing assets, liabilities, and equity at year-end Balance Sheet Summary (as of Dec 31, 2023) As of December 31, 2023, total assets increased to $3.27 billion from $2.53 billion at year-end 2022, largely due to a new $525.2 million deferred tax asset and higher net property and equipment value, while total liabilities decreased significantly to $1.06 billion from $1.65 billion, mainly from a reduction in derivative liabilities, consequently, total stockholders' equity more than doubled to $2.16 billion Consolidated Balance Sheet as of December 31 | Metric | Dec 31, 2023 ($ thousands) | Dec 31, 2022 ($ thousands) | | :--- | :--- | :--- | | Total Current Assets | $396,806 | $402,270 | | Total Property and Equipment, net | $2,252,299 | $2,057,730 | | Deferred Tax Asset | $525,156 | $0 | | Total Assets | $3,267,613 | $2,534,479 | | Total Current Liabilities | $344,454 | $793,320 | | Total Liabilities | $1,061,719 | $1,653,349 | | Total Stockholders' Equity | $2,161,680 | $828,835 | - A significant driver of the balance sheet change was the recognition of a $525.2 million deferred tax asset in 2023, which was not present in 2022[14] - Current liabilities were more than halved, primarily due to a decrease in short-term derivative instrument liabilities from $343.5 million in 2022 to $22.0 million in 2023[16] Consolidated Statement of Cash Flows This section outlines the company's cash inflows and outflows from operating, investing, and financing activities for quarterly and annual periods Quarterly Cash Flow Statement (Q4 2023) In Q4 2023, net cash from operating activities was $155.5 million, down from $188.0 million in Q4 2022, net cash used in investing was $117.2 million primarily for additions to oil and gas properties, and net cash used in financing was $44.7 million driven by common stock repurchases, with the company ending the quarter with $1.9 million in cash Q4 2023 Consolidated Cash Flow Statement | Metric | Q4 2023 ($ thousands) | Q4 2022 ($ thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $155,501 | $187,995 | | Net cash used in investing activities | ($117,246) | ($128,975) | | Net cash used in financing activities | ($44,651) | ($60,048) | | Cash and cash equivalents at end of period | $1,929 | $7,259 | Annual Cash Flow Statement (FY 2023) For the full year 2023, net cash from operating activities was $723.2 million, slightly down from $739.1 million in 2022, net cash used in investing increased to $537.2 million due to higher capital expenditures, and net cash used in financing was $191.3 million, reflecting debt repayments and $149.2 million in common stock repurchases, resulting in a $5.3 million decrease in the company's cash position during the year FY 2023 Consolidated Cash Flow Statement | Metric | FY 2023 ($ thousands) | FY 2022 ($ thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $723,181 | $739,077 | | Net cash used in investing activities | ($537,227) | ($458,295) | | Net cash used in financing activities | ($191,284) | ($276,783) | | Cash and cash equivalents at end of period | $1,929 | $7,259 | - The company repurchased $149.2 million of common stock in 2023 ($108.7 million + $40.4 million related party), compared to $250.5 million in 2022[20] 2024E Guidance This section provides the company's operational and financial outlook for the upcoming fiscal year 2024 2024 Full Year Guidance For 2024, Gulfport anticipates average daily production between 1,045 and 1,080 MMcfe/day, with approximately 92% being natural gas, and total base capital expenditures are projected to be between $380 million and $420 million, primarily allocated to drilling and completion (D&C) activities 2024 Full Year Guidance | Guidance Metric | Low | High | | :--- | :--- | :--- | | Avg. Daily Production (MMcfe/day) | 1,045 | 1,080 | | Lease Operating Expense ($/Mcfe) | $0.17 | $0.19 | | Transportation & Midstream ($/Mcfe) | $0.90 | $0.94 | | Total Base Capital Expenditures ($ millions) | $380 | $420 | - The company expects natural gas to constitute approximately 92% of its total production in 2024[22] Derivatives This section details the company's commodity hedging positions to mitigate price risk for future periods Hedging Positions As of February 27, 2024, Gulfport has significant hedging positions for 2024 and 2025 to manage commodity price risk, with 792 BBtupd of natural gas hedged for 2024 through a combination of swaps, collars, and sold calls, in addition to hedged oil and NGL production 2024 Natural Gas Hedging Positions | 2024 Natural Gas Hedges (NYMEX) | Volume (BBtupd) | Avg. Price / Range ($/MMBtu) | | :--- | :--- | :--- | | Fixed Price Swaps | 365 | $3.89 | | Fixed Price Collars | 225 | $3.36 - $5.14 | | Fixed Price Calls Sold | 202 | $3.33 | - The company has also hedged basis differentials for a portion of its natural gas production, including Rex Zone 3, Tetco M2, and NGPL TX OK[26] - For 2025, the company has already hedged 503 BBtupd of natural gas and 2,000 Bblpd of C3 Propane[26] Non-GAAP Reconciliations This section provides reconciliations of non-GAAP financial measures to their most directly comparable GAAP counterparts Definitions of Non-GAAP Measures The company uses several non-GAAP financial measures for internal evaluation and to provide investors with useful metrics for assessing operating performance, including Adjusted Net Income, Adjusted EBITDA, Adjusted Free Cash Flow, and Recurring General and Administrative Expense, which typically exclude non-cash items like deferred taxes and derivative gains/losses, as well as non-recurring costs such as restructuring expenses - Adjusted Net Income excludes items like deferred income tax, non-cash derivative gains/losses, and non-recurring G&A expenses[30] - Adjusted EBITDA is calculated by adding back interest, taxes, DD&A, and other non-cash or non-recurring items to net income[31] - Adjusted Free Cash Flow is defined as Adjusted EBITDA plus certain non-cash items, less interest expense and capital expenditures[32] Adjusted Net Income Reconciliation For the full year 2023, Adjusted Net Income was $345.5 million, a decrease from $438.2 million in 2022, with the reconciliation from GAAP Net Income ($1.47 billion) involving subtracting a large deferred income tax benefit and a significant non-cash derivative gain, while for Q4 2023, Adjusted Net Income was $94.5 million, up from $60.7 million in Q4 2022 FY 2023 Adjusted Net Income Reconciliation | Metric | FY 2023 ($ thousands) | FY 2022 ($ thousands) | | :--- | :--- | :--- | | Net Income (GAAP) | $1,470,916 | $494,701 | | Deferred income tax (benefit) | ($525,156) | $0 | | Non-cash derivative gain | ($588,120) | ($54,063) | | Adjusted Net Income (Non-GAAP) | $345,479 | $438,165 | Q4 2023 Adjusted Net Income Reconciliation | Metric | Q4 2023 ($ thousands) | Q4 2022 ($ thousands) | | :--- | :--- | :--- | | Net Income (GAAP) | $245,731 | $748,568 | | Adjusted Net Income (Non-GAAP) | $94,511 | $60,686 | Adjusted EBITDA Reconciliation Full-year 2023 Adjusted EBITDA was $725.0 million, a slight decrease from $768.4 million in 2022, with the reconciliation from GAAP Net Income involving adding back interest, DD&A, and other items, while subtracting the deferred tax benefit and non-cash derivative gains, and for Q4 2023, Adjusted EBITDA increased to $190.8 million from $155.9 million in Q4 2022 FY 2023 Adjusted EBITDA Reconciliation | Metric | FY 2023 ($ thousands) | FY 2022 ($ thousands) | | :--- | :--- | :--- | | Net Income (GAAP) | $1,470,916 | $494,701 | | DD&A and accretion | $322,497 | $270,507 | | Deferred income tax benefit | ($525,156) | $0 | | Non-cash derivative gain | ($588,120) | ($54,063) | | Adjusted EBITDA (Non-GAAP) | $725,045 | $768,445 | Q4 2023 Adjusted EBITDA Reconciliation | Metric | Q4 2023 ($ thousands) | Q4 2022 ($ thousands) | | :--- | :--- | :--- | | Net Income (GAAP) | $245,731 | $748,568 | | Adjusted EBITDA (Non-GAAP) | $190,811 | $155,925 | Adjusted Free Cash Flow Reconciliation Adjusted Free Cash Flow for the full year 2023 was $198.9 million, down from $240.6 million in 2022, reflecting lower Adjusted EBITDA and higher capital expenditures, while for Q4 2023, Adjusted Free Cash Flow was $85.4 million, a significant increase from $33.2 million in the prior-year quarter, driven by higher Adjusted EBITDA and lower capital expenditures in the quarter FY 2023 Adjusted Free Cash Flow Reconciliation | Metric | FY 2023 ($ thousands) | FY 2022 ($ thousands) | | :--- | :--- | :--- | | Adjusted EBITDA (Non-GAAP) | $725,045 | $768,445 | | Interest expense | ($57,069) | ($59,773) | | Capital expenditures incurred | ($446,202) | ($450,879) | | Adjusted Free Cash Flow (Non-GAAP) | $198,863 | $240,585 | Q4 2023 Adjusted Free Cash Flow Reconciliation | Metric | Q4 2023 ($ thousands) | Q4 2022 ($ thousands) | | :--- | :--- | :--- | | Adjusted EBITDA (Non-GAAP) | $190,811 | $155,925 | | Adjusted Free Cash Flow (Non-GAAP) | $85,446 | $33,191 | Recurring General and Administrative Expenses Reconciliation For the full year 2023, total recurring G&A expenses (before capitalization) were $58.6 million, an increase from $52.3 million in 2022, and for Q4 2023, recurring G&A was $17.6 million, up from $15.2 million in Q4 2022, with the calculation adjusting GAAP G&A by adding back capitalized G&A and removing non-recurring expenses FY 2023 Recurring G&A Expenses Reconciliation | Metric | FY 2023 ($ thousands) | FY 2022 ($ thousands) | | :--- | :--- | :--- | | G&A expense (GAAP) | $38,600 | $35,304 | | Capitalized G&A expense | $22,810 | $20,157 | | Non-recurring G&A expense | ($2,844) | ($3,152) | | Recurring G&A (Non-GAAP) | $58,566 | $52,309 | Q4 2023 Recurring G&A Expenses Reconciliation | Metric | Q4 2023 ($ thousands) | Q4 2022 ($ thousands) | | :--- | :--- | :--- | | G&A expense (GAAP) | $11,362 | $11,176 | | Recurring G&A (Non-GAAP) | $17,577 | $15,226 |