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Gulfport Energy Slashes Workforce, Pauses Share Buybacks

Zacks Equity Research

Gulfport Energy Corporation GPOR recently announced job cuts and suspension of the share buyback program, in line with its efforts to bring down expenses. Also, two of the company’s board members, Scott Streller and Craig Groeschel are expected to step down by the end of 2019. Following the announcement on Nov 18, 2019, the stock declined 12%.

The Oklahoma City, OK-based natural gas producer reduced workforce by 13%, in order to cope up with the current weak pricing environment. Notably, its bottom line in third-quarter 2019 declined 51% from the year-ago period's earnings due to lower natural gas price realizations.

The company has been under pressure from investors to improve stock performance. Its second-largest shareholder Firefly Value Partners, a hedge fund based out of New York, urged the company to repurchase $500 million worth of stock. As such, Gulfport Energy created a $400-million buyback program. However, due to weak near-term gas price outlook, the company recently suspended the program. The move is expected to enable the company to improve its leverage profile and liquidity.

It now plans to use excess cash to reduce debt burden. The move can strengthen its balance sheet, which had a long-term debt of $2.1 billion, representing a debt-to-capitalization ratio of around 36.8% at the end of third-quarter 2019. As of Sep 30, it had only $10.1 million in cash and cash equivalents.

Price Performance

The company has lost 58.5% year to date compared with 28.9% decline of the industry it belongs to.

Zacks Rank & Stocks to Consider

Currently, Gulfport Energy has a Zacks Rank #4 (Sell). Some better-ranked players in the energy space are Phillips 66 PSX, CNX Resources Corporation CNX, and Contango Oil & Gas Company MCF. All these companies carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Phillips 66’s 2019 earnings per share have witnessed nine upward movements and no downward revision in the past 30 days.

CNX Resources’ 2019 earnings per share have witnessed three upward movements and no downward revision in the past 30 days.

Contango Oil & Gas’ bottom line for the current year is expected to rise around 87% year over year.

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