Gulfport Energy (GPOR)

Q4 2012 Earnings Call

February 27, 2013 1:00 pm ET

Executives

Paul Heerwagen

Michael G. Moore - Chief Financial Officer, Principal Accounting Officer, Vice President and Secretary

James D. Palm - Chief Executive Officer and Director

Analysts

Neal Dingmann - SunTrust Robinson Humphrey, Inc., Research Division

Ronald E. Mills - Johnson Rice & Company, L.L.C., Research Division

Jason A. Wangler - Wunderlich Securities Inc., Research Division

Brian T. Velie - Capital One Southcoast, Inc., Research Division

Timothy Rezvan - Sterne Agee & Leach Inc., Research Division

Leo P. Mariani - RBC Capital Markets, LLC, Research Division

Jeffrey P. Hayden - KLR Group Holdings, LLC, Research Division

Mario Barraza - Tuohy Brothers Investment Research, Inc.

Biju Z. Perincheril - Jefferies & Company, Inc., Research Division

David E. Beard - Iberia Capital Partners, Research Division

Presentation

Operator

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Gulfport Energy Corporation Fourth Quarter 2012 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I'd like to introduce our host for today, Mr. Paul Heerwagen, Director of Investor Relations. Sir, please go ahead.

Paul Heerwagen

Thank you, operator, and good afternoon. Welcome to Gulfport Energy's Fourth Quarter and Year-End 2012 Earnings Conference Call. I'm Paul Heerwagen. And with me here today are Mike Liddell, Chairman of the Board; Jim Palm, Chief Executive Officer; and Mike Moore, Chief Financial Officer.

During this conference call, the participants may make certain forward-looking statements relating to the company's financial condition, results of operations, plans, objectives, future performance and businesses. We caution you that actual results could differ materially from those that are indicated in these forward-looking statements due to a variety of factors. Information concerning these factors can be found in the company's filings with the SEC.

In addition, we may make certain reference to other non-GAAP measures. If this occurs, the appropriate reconciliations to the GAAP measures will be posted to our website.

An updated Gulfport presentation was posted this morning to our website in conjunction with yesterday's earnings announcement. Please review at your leisure.

At this time, I'd like to turn the call over to Mike Moore.

Michael G. Moore

Thanks, Paul, and thank you all for joining us on our call. I am pleased to report that Gulfport recorded strong fourth quarter results, both operationally and financially, producing 608,000 total barrels of oil equivalent or BOE, generated approximately $50.8 million of EBITDA and 34 -- $35.5 million of operating cash flow and $15.9 million of net income. As a result, in 2012, Gulfport generated approximately $191.4 million of EBITDA, $178.8 million of operating cash flow and $68.4 million of net income on production totaling 2.5 million barrels of oil equivalent.

In the fourth quarter of 2012, production averaged 6,614 BOEs per day, which was a decrease quarter-over-quarter due to the contribution of our Permian Basin assets. For the year ended December 31, 2012, production averaged 7,029 BOEs per day, which was a 10% growth in production over 2011. Allocated by field, fourth quarter production breaks out to be 3,195 BOEs per day from West Cote; 2,366 BOEs per day from Hackberry; 757 BOEs per day from Utica; and 296 BOEs per day from the Permian, Niobrara, overrides and other miscellaneous areas.

Our production mix for the fourth quarter was 90% oil and natural gas liquids and 10% natural gas. Our full year production mix consisted of 93% oil and NGLs and 7% natural gas. Subsequent to year-end 2012, production during January of 2013 averaged approximately 6,614 BOEs per day.

Moving on to the income statement. Revenues for oils, natural gas and natural gas liquids in the fourth quarter were $56.5 million. Full year 2012 oil and gas revenues totaled $248.6 million, which was up 9% year-over-year. Average realized prices for the quarter were $101.89 per barrel of oil, $3 per MCF of natural gas and $42.51 per barrel of natural gas liquids. Our blended realized price for the fourth quarter was $92.88 per barrel of oil equivalent, and our blended realized price per barrel of oil equivalent for the full year 2012 was $96.63.

Lease operating expense for the fourth quarter was $6.1 million or $10.04 per BOE. For the full year, LOE was $24.3 million or $9.45 per BOE. G&A was $4.4 million or $7.29 per BOE for the quarter and $13.8 million or $5.37 per BOE for the full year. Depreciation, depletion and amortization expenses during the fourth quarter totaled $20.3 million or $33.40 per BOE and $90.7 million or $35.27 per BOE for the full year.

To finish up our income statement discussion, I would like to remind you of our prior comments surrounding the income tax expense going forward. We currently still project tax expenses of approximately 36% to 40% in 2013, but still expect our actual cash taxes to be minimal, if any. In terms of capital expenditures, we spent a total of $250 million in 2012, which includes $175 million in 2012 drilling and recompletion activities, with the rest attributable to 2011 wells and facility costs in all of our fields.

Moving on to the balance sheet. As of December 31, 2012, we had $167 million in cash and $299 million of total debt outstanding, and we're completely undrawn on revolving credit facility, which has a current borrowing base availability of $40 million. Today, we have approximately $270 million in cash.

At present, we have fixed price swaps in place for 5,000 barrels per day of production for the remainder of 2013 at a weighted average price of $100.90. I would like to note that this current level of hedging effectively secures $184 million of 200 -- of 2013 revenues, which goes a long way towards the capital commitments for our 2013 capital program.

Turning towards reserves. As of December 31, 2012, our total proved reserves on lower 48 were 8.25 million barrels of oil and 33.77 billion cubic feet of natural gas or 13.88 million BOEs. In Canada, Gulfport has 16.75 million barrels of proved reserves attributable to our 25% interests in Grizzly's Algar Lake SAGD project.

In addition, third-party engineers have issued a probable report estimating 12.84 million barrels of oil and 80.62 billion cubic feet of natural gas or a total of 26.27 million BOEs of probable reserves associated to our lower 48 and 17.75 million barrels of probable reserves attributable to our interest in Grizzly. Moreover, third-party engineer GLJ has provided an updated year-end resource report of some of Grizzly's properties and has identified 765 million barrels of best estimate contingent resource net to Gulfport's interest.

Read the rest of this transcript for free on seekingalpha.com

Copyright 2013 Seeking Alpha