Gulfport Energy (GPOR)
Q3 2012 Earnings Call
November 07, 2012 1:00 pm ET
Executives
Paul Heerwagen
James D. Palm - Chief Executive Officer and Director
Michael G. Moore - Chief Financial Officer, Principal Accounting Officer, Vice President and Secretary
Analysts
Neal Dingmann - SunTrust Robinson Humphrey, Inc., Research Division
Ronald E. Mills - Johnson Rice & Company, L.L.C., Research Division
Timothy Rezvan - Sterne Agee & Leach Inc., Research Division
Leo P. Mariani - RBC Capital Markets, LLC, Research Division
Jason A. Wangler - Wunderlich Securities Inc., Research Division
David W. Kistler - Simmons & Company International, Research Division
William B. D. Butler - Stephens Inc., Research Division
Biju Z. Perincheril - Jefferies & Company, Inc., Research Division
Presentation
Operator
Good day, ladies and gentlemen, and welcome to the Gulfport Energy Corporation Third Quarter 2012 Earnings Conference Call. [Operator Instructions] As a reminder, today's conference call is being recorded.
I'd now like to turn the conference over to your host, Mr. Paul Heerwagen, Director of Investor Relations. Please go ahead, sir.
Paul Heerwagen
Thank you, Elly, and good afternoon. Welcome to Gulfport's Energy Corporation's third quarter 2012 earnings conference call. I'm Paul Heerwagen, Director of Investor Relations, 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 business. 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 reference to other non-GAAP measures. If this occurs, the appropriate reconciliations to the GAAP measures will be posted to the website. An updated Gulfport presentation was posted to our website yesterday afternoon in conjunction with our earnings announcement. Please review at your leisure.
At this time, I'd like to turn the call over to Jim Palm.
James D. Palm
Thanks, Paul, good afternoon to each of you. During the third quarter, Gulfport generated approximately $43.8 million of operating cash flow, $42.6 million of EBITDA and $16 million of adjusted net income on production totaling 655,000 barrels of oil equivalent.
Operationally, we continue to make a strategic shift towards establishing the Utica Shale as Gold Gulfport's primary focus area. We've recently completed multiple transactions that provide a significant amount of capital and solidify Gulfport's liquidity position in the long term.
Firstly, we contributed all of our oil and gas interest in the Permian Basin to the Diamondback Energy initial public offering. Second, Grizzly Oil Sand secured $125 million credit facility to fund additional infrastructure in SAGD projects. Third, we completed a $250 million high-yield offering of senior notes due in 2020. Together, all of these events provide additional capital that will be directed towards and accelerate our Utica Shale development program. These transactions are major milestones along the road to simplifying the Gulfport story and becoming a Utica-focused company. And now let me briefly update you on our current operations and our plans for 2013 in each of our asset areas.
In the Utica Shale, Gulfport continues to develop and delineate our acreage position. Our technical staff did a great job of targeting a position within the core play based on certain high-graded geological and petrophysical characteristics, allowing us to lead a focused acquisition effort. Meanwhile, today, based on our interpretation of the rock properties, the pressure regime and the product phased windows, we believe that our position in the Utica could be as good as the best part of the Eagle Ford based upon the overall productivity and economics.
During our initial development of the play, we have collected extensive geological data, including full open-hole log suites and a full core from the Utica, Point Pleasant interval. Recently, in our evaluation of the core, we engaged Ingrain, the Pioneer-focused ion beam SEM, a technique which allows them to produce 3-D digital reconstructions of rock. We have learned a number of things from the Ingrain analysis and you can find slides depicting some of the results of this analysis in our current presentation. Specifically, what our cores show are signs of expulsion fractures created at hydrocarbon generation. This indicates overpressure. And we also found we have principally organic matter porosity, which creates superior porosity and permeability in our rock.
We find that particularly interesting that there are no shallow oil fields in our area of the play, a fact that we believe empirically demonstrates an effective seal preventing leak-off and trapping hydrocarbons in an overpressured regime within the Point Pleasant source rock. In addition to sudden pressures, we are experiencing confirmed and overpressured reservoir. Ingrain and I will both be going into further detail on the results of our analysis at the DUG Conference in Pittsburgh next week.
In general, the data confirms our original interpretation of the play, and with results from each well we test, it's becoming increasingly apparent that the Utica is a prolific shale play and we are very pleased to have captured a significant position within its core.
During the third quarter, we spud a total of 5 gross wells in the Utica Shale, with 2 gross wells completed and in their resting period at the end of the third quarter, 1 gross well waiting on completion and 2 gross wells drilling. We are currently running 2 rigs drilling ahead on our 11th and 12th wells of 2012, and today, we are prepared to release results from our 6th well in the play.
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