Shares of Gulfport Energy Corporation GPOR have surged more than 25% since its earnings announcement on Oct 31.
The reasons for the rally were better-than-expected third-quarter results and strong free cash flow generation. The upstream energy player expects to maintain its free cash flow momentum in the fourth-quarter as well. Let’s delve deeper.
Gulfport reported third-quarter 2019 adjusted net income per share of 24 cents, above the Zacks Consensus Estimate of 22 cents. The beat was driven by robust production. Precisely, the upstream player’s output of 1,527 million cubic feet equivalent per day (MMcfe/d) surpassed the Zacks Consensus Estimate of 1,434 MMcfe/d.
On a further bullish note, Gulfport generated free cash flows of $103.4 million, substantially higher than $23.8 million of free cash flows reported in the third quarter of 2018.
However, the bottom line was 51% below the year-earlier quarter's earnings due to lower natural gas price realizations. The company’s average realized natural gas price of $1.64 per thousand cubic feet fell 29.3% year over year and was lower than the Zacks Consensus Estimate of $1.88.
Revenues of $285.2 million missed the Zacks Consensus Estimate of $327 million. The top line also slumped 21% from the year-ago figure of $361 million.
Gulfport Energy Corporation Price, Consensus and EPS Surprise
Gulfport Energy Corporation price-consensus-eps-surprise-chart | Gulfport Energy Corporation Quote
Production, Realized Prices
Gulfport’s total oil and gas production increased to 1,527 MMcfe/d from 1,427.5 MMcfe/d recorded in the corresponding period of last year. Of the total output, almost 93% comprised natural gas. In particular, output from the Utica Shale, which is responsible for 81% of the company’s volumes, improved more than 9%.
Average realized natural gas oil price (before the impact of derivatives) during the third quarter was $1.64 per thousand cubic feet, significantly lower than the year-ago period’s $2.32. Average realized natural gas liquids price was 38 cents per gallon, down from the year-ago quarter’s 74 cents. Gulfport fetched $51.75 per barrel of oil during the quarter, as against $68.73 in the year-ago period. Overall, the company realized $1.84 per thousand cubic feet equivalent in the quarter vis-a-vis $2.82 a year ago.
Costs, Capex and Balance Sheet
Total expenses in the quarter under review amounted to $304 million, higher than $247.4 million in the prior-year period. This uptick is mainly attributed to impairment costs and increase in depreciation, depletion and amortization outlays.
In the reported quarter, Gulfport spent $56 million on drilling and completion. As of Sep 30, the natural gas-weighted energy explorer had approximately $10.1 million in cash and cash equivalents. Gulfport had a long-term debt of $2.1 billion, representing a debt-to-capitalization ratio of around 36.8%.
Gulfport reiterated its 2019 guidance that was unveiled in January. The upstream player expects 2019 capex in the band of $565-$600 million and projects 2019 production within 1,360-1,400 MMcfe/d.
Zacks Rank & Stock Picks
Gulfport Energy holds a Zacks Rank #4 (Sell).
Meanwhile, investors interested in the energy space could look at some better options like Murphy USA Inc. MUSA, Phillips 66 PSX and HollyFrontier Corporation HFC that sport a Zacks Rank #2 (Buy).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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