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Monday, August 24, 2015

Gulfport Energy Well-Positioned to Continue Growth Even as Road Gets Bumpy

From Seeking Alpha:
Natural gas producers have already reported significant drops in realizations in the current earnings season. Gulfport Energy (NASDAQ:GPOR), for instance, one of the fastest growing gas producers in terms of production, pre-announced its production numbers last month that showed more than 50% drop in realizations from last year to $3.41 per thousand cfe of gas. And things might not get significantly better in the coming months as some of the biggest players in this space, including Chesapeake Energy (NYSE:CHK) and Cabot Oil & Gas (NYSE:COG), are not expecting a turnaround in pricing g environment. 
Tough environment 
Last week, prices went below $2.80 a million Btu, thanks to a 4.9% decline which was the single biggest drop of the last six months. The market's optimism, which was fueled by an expected uptake in seasonal demand, was quashed by a report from the U.S. Energy Information Administration that showed a 65 billion cubic feet increase in inventories for the week ending August 7 which was 10 billion cubic feet more than analysts' expectations. The high level of inventories is one of the key factors that could keep a lid on natural gas prices. 
As a result, a number of gas producers, who have already significantly reduced their capital budgets for the current year, could follow in Cabot Oil & Gas's footsteps by committing to maintaining the current level of suppressed drilling activity. However, if prices continue to head lower, then gas producers will be forced to make further cuts to their capital budgets for 2016. But in this case, Gulfport Energy could be one of the few companies that could still post double-digit production growth.
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