Gulfport Energy (GPOR) 6 Nov 24 2024 Q3 Earnings call transcript

Gulfport Energy Corporation's third quarter 2024 earnings call was marked by a strong financial performance, strategic initiatives, and a focus on enhancing shareholder value. The company's executives, John Reinhart and Michael Hodges, provided insights into the company's operational efficiency improvements, capital reductions, inventory additions, and balance sheet improvements.

Operational Efficiency and Capital Reductions

Gulfport Energy reported a strong financial performance in the third quarter, with adjusted EBITDA and adjusted free cash flow ahead of analyst expectations. The company achieved this through operational efficiency improvements and cycle time reductions, leading to significant savings. According to CEO John Reinhart, these savings, which are largely due to efficiency gains, will last throughout the year and position the company for long-term cost savings.

Strategic Inventory Additions and Capital Allocation

The company's strategic inventory additions, particularly in high-margin liquids-rich areas, have been a significant focus. Gulfport Energy has invested approximately $20 million in discretionary acreage acquisitions, enhancing its future drilling programs and positioning the company for a future reduction of anticipated maintenance land requirements. This strategic move underscores the company's commitment to maximizing shareholder value through efficient capital allocation.

Balance Sheet Improvements and Shareholder Returns

CFO Michael Hodges highlighted the company's balance sheet improvements, including the successful tender for approximately 95% of Gulfport's $550 million of 8% senior notes due 2026, while issuing new long-term senior notes. These actions extended the weighted average maturity of the company's long-term senior notes by about 3.2 years and lowered the company's weighted average interest rate on its long-term senior notes by approximately 1.2%. The company also announced an increase in its common stock repurchase authorization by 54% to $1 billion, demonstrating a continued commitment to enhancing shareholder value.

Focus on Shareholder Returns and Liquids-Rich Development

Gulfport Energy's focus on shareholder returns was evident in its decision to repurchase approximately 5.2 million shares of its common stock since the inception of the program, lowering its share count by about 18%. The company also highlighted its shift towards high-margin liquids-rich development, with over 60% of its total company turn in lines forecasted to be liquids-rich weighted during 2025. This strategic move is expected to provide a meaningful impact on the company's liquids production in the coming quarters and years.

In conclusion, Gulfport Energy Corporation's third quarter 2024 earnings call underscored a strong financial performance, strategic inventory additions, balance sheet improvements, and a focus on enhancing shareholder value. The company's operational efficiency improvements, capital reductions, and strategic shifts towards high-margin liquids-rich development position Gulfport Energy for continued success in the future.