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Thursday, September 10, 2015

Gulfport Energy in Good Shape to Withstand Difficult Energy Market, Analyst Says

From Seeking Alpha:
In my opinion, the company will be able to survive the current oversupply on the energy market. The calculation results appear to be accurate, since the difference between costs per gas equivalent (Costs/Mcfe) and actual average realized price produces the company's reported loss for that period, which is $21.64 million (vs. $21.9 million according to my calculations). The very same calculation holds true for the second quarter too, in which the company has reported $28.77 million of net profit vs. $28.65 million if calculated through my price estimation formula (An example of the above mentioned calculations: $4.61 - $3.86 and multiplied with total amount of gas equivalents produced for the period - 38,198). 
A lot of independent crude oil and gas producers reported net losses due to the decline in prices of energy commodities. Gulfport Energy Corporation is on sound ground here. It has 29.49% Debt to Equity ratio - a small decrease since the beginning of the year. The biggest part of the company's debt is in senior unsecured notes due 2020 with the 7.75% coupon. It represents 62.26% of total long-term debt of the company. 
The other part of long-term debt is in senior unsecured notes due 2023 with the 6.625% coupon. It represents 36.3% of the company's total debt. The major concern for the near-term liquidity shortages can be dismissed until 2020. 
In the last quarter, the company completed a public offering of its shares to investors. As a result, the amount of paid in capital increased to $981.5 million for that period. 
Moreover, the company borrowed $250 million on the previously available credit line. These funds were used to acquire crude oil and natural gas properties. 
Gulfport Energy Corporation, as many other crude oil producers, did not curtail production significantly after the energy prices declined. It remains focused on the so-called "sweet spots" and expanding its operations to cost effective locations.
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As the 2nd quarter Utica shale production results show, Gulfport continues to be one of the key major players in Ohio.  If the opinion of this particular analyst is correct, the company will be poised to remain in that role for the foreseeable future despite the challenges that shale drillers are facing.

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