Monday, January 20, 2014

Utica Shale Success Places Gulfport Energy on Top in List of Fastest Growing E&P Companies

From Seeking Alpha:
The following five companies are among the fastest growing public oil and gas companies in the US. They are active in some of the "hottest", fastest growing shale oil plays in the US. They are primarily focused on growing oil production, mostly through unconventional development. And due to their rapid growth, they are likely to be featured more prominently going forward.
1) Gulfport Energy (GPOR)
One of the fastest growing oil and gas companies, small or large, is Gulfport. Gulfport is focused on the development of the Utica / Point Pleasant shale play in eastern Ohio. It has already grown rapidly and is projected by analysts to grow its EBITDA a phenomenal 153% (from 2013 to 2014)! Utica wells in the sweet spot, which Gulfport has exposure to, may generate 100%+ IRRs, which will help Gulfport finance its continued growth in 2014 and beyond.
One challenge I have had investing in Gulfport is the large premium Gulfport trades at to its proved reserve value. Gulfport trades at over 10x its most recently reported after-tax PV-10. This is likely because of the rapid growth it is experiencing, and reserves may be likely to increase rapidly along with production growth. But as a value investor, this does make investing in Gulfport a challenge. Another challenge is the high EV/EBITDA multiple Gulfport trades at. At ~8x EV/EBTIDA for consensus 2014 estimates, Gulfport trades above its comparable peers. But this is less difficult to reconcile than the reserve multiple, as the production growth could justify this higher than average multiple.
Read about the other four companies on the list by clicking here. 

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