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Why Is Gulfport Energy (GPOR) Down 31.2% Since Last Earnings Report?

Zacks Equity Research

A month has gone by since the last earnings report for Gulfport Energy (GPOR). Shares have lost about 31.2% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Gulfport Energy due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Gulfport Q2 Earnings & Sales Top Estimates

Gulfport Energy reported second-quarter adjusted net earnings per share (EPS) of 21 cents, a penny above the Zacks Consensus Estimate, backed by higher-than-expected natural gas realizations. Precisely, natural gas realizations (including derivatives impact) came in at $2.20 per thousand cubic feet, beating the Zacks Consensus Estimate of $2.06. However, the bottom line was below the year-ago EPS of 33 cents a share amid weaker y/y commodity price realizations and higher costs.

Revenues of $459 million surpassed the Zacks Consensus Estimate of $310 million. The top line also surged from the year-ago figure of $253 million.

Production & Realized Prices

Gulfport’s total oil and gas production increased to 1,358.9 million cubic feet equivalent per day (MMcfe/d) from 1,330.3 MMcfe/d recorded in the corresponding period of last year. Of the total output, 90.2% comprised natural gas. Gas production from the Utica Shale declined 1.4% y/y to 95,616 MMcfe. Nearly 85.6% of its output came from the Utica acreage. Output from SCOOP came in at 27,149 MMcfe, higher than the year-ago level of $22,500 MMcfe.

Average realized natural gas oil price (before the impact of derivatives) during the second quarter was $2.02 per thousand cubic feet, lower than the year-ago period’s $2.15. Average realized natural gas liquids price was 45 cents per gallon, down from the year-ago quarter’s 71 cents. Gulfport fetched $56.85 per barrel of oil during the quarter, down from the year-ago figure of $66.26. Overall, the company realized $2.33 per thousand cubic feet equivalent in the quarter vis-a-vis $2.67 a year ago.

Costs, Capex and Balance Sheet

Total expenses in the quarter under review amounted to $242.1 million, higher than $238.9 million in the prior-year period. This uptick is mainly attributed to higher production taxes, and depreciation and midstream gathering/processing charges incurred in the reported quarter. Depreciation costs scaled up 2.4% from the prior-year quarter to $124.9 million.

In the reported quarter, Gulfport spent $112.8 million on drilling and completion. As of Jun 30, the natural gas-weighted energy explorer had approximately $20.8 million in cash and cash equivalents. Gulfport had a long-term debt of $2,198 million, representing a debt-to-capitalization ratio of around 37.8%.

2019 Guidance Retained

Gulfport reiterated its 2019 guidance that was unveiled in January. The upstream player expects 2019 capex in the band of $565-$600 million. It projects 2019 production within 1,360-1,400 MMcfe/d. The company expects free cash flow to exceed $100 million.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates flatlined during the past month.

VGM Scores

At this time, Gulfport Energy has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Gulfport Energy has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.



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