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Gulfport Energy Corporation Reports Second Quarter 2013 Results



Gulfport Energy Corporation Reports Second Quarter 2013 Results

OKLAHOMA CITY, Aug. 6, 2013 (GLOBE NEWSWIRE) -- Gulfport Energy Corporation
(Nasdaq:GPOR) today reported financial and operating results for the second
quarter of 2013 and provided an update on its 2013 activities.

For the second quarter of 2013, Gulfport reported net income of $43.8 million
on oil and natural gas revenues of $70.2 million, or $0.56 per diluted share.
EBITDA (as defined below) for the second quarter of 2013 was $101.3 million
and cash flow from operating activities before changes in operating assets and
liabilities (as defined below) was $43.9 million.

Gulfport's 2013 second quarter financial results include an aggregate gain of
$51.4 million in connection with Gulfport's equity interest in Diamondback
Energy, Inc. ("Diamondback"), a NASDAQ Global Select Market listed company.
Associated with this taxable income was $19.6 million of income tax expense.
Excluding the effects of this income and associated non-cash income tax
expense, adjusted net income for the second quarter of 2013 would have been
$12.1 million, or $0.16 per diluted share.

                             Financial Highlights

  * Produced oil and natural gas sales volumes of 815,300 barrels of oil
    equivalent ("BOE"), or 8,959 barrels of oil equivalent per day ("BOEPD"),
    in the second quarter of 2013, a 40% sequential increase from the first
    quarter of 2013
  * Generated $70.2 million of oil and natural gas revenues in the second
    quarter of 2013, a 28% sequential increase from the first quarter of 2013
  * Reduced unit lease operating expense for the second quarter of 2013 to
    $7.21 per BOE, a 20% sequential decrease from the first quarter of 2013

Production

For the second quarter of 2013, net production was 535,182 barrels of oil,
1,414,797 thousand cubic feet ("MCF") of natural gas and 1,861,360 gallons of
natural gas liquids ("NGL"), or 815,300 BOE. Net production for the second
quarter of 2013 by region was 297,421 BOE at West Cote Blanche Bay ("WCBB"),
183,703 BOE at Hackberry, 320,718 BOE in the Utica Shale and 13,458 BOE in the
Bakken, Niobrara and other areas.

Realized prices for the second quarter of 2013, which includes transportation
costs, were $113.98 per barrel of oil, $4.80 per MCF of natural gas and $1.29
per gallon of NGL, for a total equivalent price of $86.10 per BOE. Realized
price for oil in the second quarter of 2013 reflects the impact of fixed price
contracts for approximately 5,000 barrels of oil per day at a weighted average
price of $101.96 before transportation costs and differentials. For the
remainder of 2013, Gulfport has fixed price swaps in place for 5,000 barrels
of oil per day at a weighted average price of $99.86. For October 2013 through
December 2013, Gulfport has fixed price swaps in place for 10,000 MCF of gas
per day at a weighted average price of $4.00 before transportation costs and
differentials. In addition, Gulfport has entered into a new hedging program
consisting of fixed price swaps for January 2014 through December 2014 of
2,000 barrels of oil per day at a weighted average price of $101.65 hedging
Brent as the underlying index, fixed price swaps for January 2014 through
December 2014 of 15,000 MCF of natural gas per day at a weighted average price
of $4.01, and fixed price swaps for January 2015 through March 2016 of 10,000
MCF of natural gas per day at a weighted average price of $4.00.

 
GULFPORT ENERGY CORPORATION
PRODUCTION SCHEDULE
(Unaudited)
                                                                  
Production Volumes: ^(1) 2Q2013       2Q2012       YTD 2013      YTD 2012
                                                                  
Oil (MBbls)              535.2        608.5        1,052.1       1,203.5
Natural Gas (MMcf)       1,414.8      216.1        1,734.5       426.8
NGL (MGal)               1,861.4      804.1        2,084.5       1,428.8
Oil equivalents (MBOE)   815.3        663.6        1,390.8       1,308.7
                                                                  
Average Realized Price:                                           
                                                                  
Oil (per Bbl)            $113.98      $106.86      $108.43       $107.20
Natural Gas (per Mcf)    $4.80        $2.50        $4.76         $2.70
NGL (per Gal)            $1.29        $0.86        $1.31         $1.05
Oil equivalents (BOE)    $86.10       $99.84       $89.92        $100.62
                                                                  
^(1) Gulfport's production during the second quarter of 2012 includes 68,272
barrels of oil, 93,049 MCF of natural gas and 792,238 gallons of NGLs, or
102,643 BOE attributable to its oil and natural gas assets in the Permian
Basin. In October 2012, Gulfport contributed these assets to Diamondback. As a
result, no Permian Basin production is included in Gulfport's production
volumes during the second quarter of 2013

Subsequent to the second quarter of 2013, net production for the month of July
averaged approximately 12,548 BOEPD. 

                        Recent Operational Highlights

  * Gulfport recently secured firm transportation agreements with ten year
    terms on both Dominion East Ohio ("DEO") and Dominion Transmission
    Incorporated ("DTI").
  * Gulfport's Boy Scout 2-33H well was recently placed on production in the
    Utica Shale. The Boy Scout 2-33H produced at an average seven-day sales
    rate of 747 barrels of condensate per day, 2.1 MMCF of natural gas per day
    and 298 barrels of NGLs per day assuming full ethane recovery and a
    natural gas shrink of 25%, or 1,308 BOEPD.
  * Gulfport's Boy Scout 4-33H well was recently placed on production in the
    Utica Shale. The Boy Scout 4-33H produced at an average seven-day sales
    rate of 519 barrels of condensate per day, 2.0 MMCF of natural gas per day
    and 264 barrels of NGLs per day assuming full ethane recovery and a
    natural gas shrink of 22%, or 1,043 BOEPD.
  * Gulfport spud a total of nine wells in Southern Louisiana during the
    second quarter of 2013, completing five of the wells as productive. One
    well was waiting on completion and three wells were still being drilled at
    the end of the quarter.
  * Grizzly Oil Sand ULC ("Grizzly"), in which Gulfport owns a 24.9% interest,
    expects to have first steam in the coming months followed by first
    production in the fourth quarter of 2013 at its first SAGD facility at
    Algar Lake.
  * Nine rigs are currently active in Gulfport's three core operating areas,
    with seven horizontal rigs in the Utica, one rig drilling at Hackberry and
    one rig drilling at WCBB.

Operational Update

Utica Shale

Gulfport has executed firm transportation agreements with ten year terms on
both DEO and DTI for up to 100,000 Dth/day of residue originating at the
MarkWest Energy Cadiz gas processing facility for delivery to ANR Pipeline at
Lebanon, Ohio via DTI's interconnection with DEO at Harlem Springs, Ohio,
effective immediately. This will allow Gulfport access to Midwest natural gas
markets in Wisconsin, Illinois, Indiana and Michigan. In November of 2014, an
additional 150,000 Dth/day of firm transportation will be available for
delivery to Texas Eastern and Rockies Express pipelines at Clarington, Ohio
and to DTI at Mullett, Ohio.

In the Utica Shale, Gulfport spud sixteen gross (11.78 net) wells during the
second quarter of 2013. At the end of the second quarter, Gulfport had four
gross wells waiting on completion, three gross wells being drilled by
horizontal rigs and nine gross wells with their vertical sections completed
and waiting on a horizontal rig. At present, Gulfport has seven horizontal
rigs drilling on the eighteenth through twenty-fourth gross wells of 2013 in
the play.

Gulfport recently began flowing into sales pipelines its Boy Scout 2-33H and
Boy Scout 4-33H wells in the Utica Shale. The Boy Scout 2-33H was drilled to a
true vertical depth of 7,677 feet with a 8,511 foot horizontal lateral.
Following a 60-day resting period, the well was placed on production at an
average gross seven-day sales rate of 747 barrels of condensate per day and
2.1 MMCF of natural gas per day. The well produced at a flowing tubing
pressure of 1,505 psi. Based upon composition analysis, the gas being produced
is 1,310 BTU gas. Assuming full ethane recovery, the composition above is
expected to produce an additional 142 barrels of NGLs per MMCF of natural gas
and result in a natural gas shrink of 25%. In ethane rejection mode, the
composition is expected to yield 84 barrels of NGLs per MMCF of natural gas
and result in a natural gas shrink of 17%.

The Boy Scout 4-33H was drilled to a true vertical depth of 7,874 feet with a
5,848 foot horizontal lateral. Following a 60-day resting period, the well was
placed on production at an average gross seven-day sales rate of 519 barrels
of condensate per day and 2.0 MMCF of natural gas per day. The well produced
at a flowing tubing pressure of 1,398 psi. Based upon composition analysis,
the gas being produced is 1,289 BTU rich gas. Assuming full ethane recovery,
the composition above is expected to produce an additional 132 barrels of NGLs
per MMCF of natural gas and result in a natural gas shrink of 22%. In ethane
rejection mode, the composition is expected to yield 58 barrels of NGLs per
MMCF of natural gas and result in a natural gas shrink of 10%.

Gulfport ended the second quarter of 2013 with thirteen gross wells producing.
Subsequent to the second quarter, Gulfport has begun flowing an additional two
gross wells into sales pipelines. Gulfport currently expects to begin flowing
a total of four to six gross wells during the third quarter of 2013 and
twenty-five to thirty gross wells during the fourth quarter of 2013.

Hackberry

At Hackberry, Gulfport drilled four wells, completing two wells as productive
during the second quarter of 2013. Two wells were still being drilled at the
end of the quarter. In addition, Gulfport performed nineteen recompletions at
the field. At present, Gulfport has one rig active at Hackberry drilling ahead
on the eleventh well of 2013 at the field. 

WCBB

At WCBB, Gulfport drilled five wells, completing three wells as productive
during the second quarter of 2013. One well was waiting on completion and one
well was still being drilled at the end of the quarter. In addition, Gulfport
performed twenty-one recompletions at the field. At present, Gulfport has one
rig active at WCBB drilling ahead on the eleventh well of 2013 at the field.

Canadian Oil Sands

In the Canadian Oil Sands, Grizzly is currently in the process of
commissioning at its first SAGD facility at Algar Lake and expects first steam
during the third quarter of 2013 with first production by year-end. From an
exploratory standpoint, Grizzly continues to work toward filing a regulatory
application to support an initial 12,000 barrel per day SAGD project at May
River by the end of 2013.

2013 Guidance

Gulfport currently estimates 2013 production to be in the range of 5.0 million
to 6.0 million BOE. Third quarter 2013 production is currently estimated to be
in the range of 14,000 to 15,000 BOEPD. Budgeted exploration and production
capital expenditures for 2013, excluding acquisitions, are estimated to be in
the range of $570 million to $590 million. For 2013, Gulfport projects lease
operating expense to be in the range of $6.00 to $7.00 per BOE, general and
administrative expense to be between $2.50 to $3.50 per BOE, production taxes
to be between 8% and 9% of revenues and depreciation, depletion and
amortization expense to be in the range of $30 to $33 per BOE.

 
 
GULFPORT ENERGY CORPORATION
2013 GUIDANCE
                                                          
                                   Quarter Ending        Year Ending
                                   9/30/2013             12/31/2013
Forecasted Production                                     
Oil Equivalent - BOE               1,288,000 - 1,380,000 5,000,000 - 6,000,000
Average Daily Oil Equivalent -     14,000 - 15,000       13,699 - 16,438
BOEPD
                                                          
Projected Year-Over-Year           94% - 108% ^(1)       94% - 133% ^(2)
Production Increase
                                                          
Projected Cash Operating Costs per                        
BOE
Lease Operating Expense - $/BOE    $6.75 - $7.25         $6.00 - $7.00
Production Taxes - % of Revenue    8.0% - 9.0%           8.0% - 9.0%
General and Administrative - $/BOE $3.00 - $3.50         $2.50 - $3.50
                                                          
Depreciation, Depletion and        $32.00 - $34.00       $30.00 - $33.00
Amortization per BOE
                                                          
                                                          
                                                         Year Ending
Budgeted Capital Expenditures - In                       12/31/2013
Millions: ^(3)
West Cote Blanche Bay                                    $42 - $45
Hackberry                                                $24 - $26
Utica                                                    $8 - $12
Grizzly                                                  $494 - $504
Thailand                                                 $2.0 - $2.5
Total Budgeted E&P Capital                               $570 - $590
Expenditures
                                                          
                                                          
^(1) Based upon second quarter 2012 actual production of 663,626 BOE (which
includes 102,643 BOE attributable to the oil and natural gas assets
contributed to Diamondback in October 2012) and the second quarter 2013
forecasted production 
^(2) Based upon 2012 actual production of 2,572,618 BOE (which includes
321,302 BOE attributable to the oil and natural gas assets contributed to
Diamondback in October 2012) and the 2013 forecasted production 
^(3) Excludes amounts for infrastructure, vertical integration projects and
acquisitions 

Management Team

Gulfport announced today that is has appointed Michael G. Moore as the
Company's President. Mr. Moore will now serve as the President and Chief
Financial Officer. In addition, Gulfport has appointed Stuart Maier as its
Vice President of Geosciences and Steve Baldwin as its Vice President of
Reservoir Engineering. Mr. Maier and Mr. Baldwin have been employed with the
Company since 1998 and 2006, respectively.

Presentation

An updated presentation has been posted to the Company's website. The
presentation can be found at www.gulfportenergy.com under the "Webcasts &
Presentations" section on the "Investor Relations" page. Information on the
Company's website does not constitute a portion of this press release.   

Conference Call

Gulfport will host a conference call on August 7, 2013 at 8:00 AM CDT to
discuss its second quarter 2013 financial and operational results. Interested
parties may listen to the call via Gulfport's website at
www.gulfportenergy.com or by calling toll-free at 877-291-1287 or 973-409-9250
for international callers. The passcode for the call is 17381754. A replay of
the call will be available for two weeks at 855-859-2056 or 404-537-3406 for
international callers. The replay passcode is 17381754. The webcast will be
archived on the Company's website and can be accessed on the Company's
"Investor Relations" page. 

About Gulfport

Gulfport Energy Corporation is an Oklahoma City-based independent oil and
natural gas exploration and production company with its principal producing
properties located along the Louisiana Gulf Coast and in the Utica Shale of
Eastern Ohio. Gulfport also has producing properties in the Niobrara Formation
of Northwestern Colorado. In addition, Gulfport holds a sizeable acreage
position in the Alberta Oil Sands in Canada through its interest in Grizzly
Oil Sands ULC, a 13.5% equity interest in Diamondback Energy Inc., a NASDAQ
Global Select Market listed company, and has an interest in an entity that
operates in Southeast Asia, including the Phu Horm gas field in Thailand.

Forward Looking Statements

This press release includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended (the "Securities Act"),
and Section 21E of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). All statements, other than statements of historical facts,
included in this press release that address activities, events or developments
that Gulfport expects or anticipates will or may occur in the future, future
capital expenditures (including the amount and nature thereof), business
strategy and measures to implement strategy, competitive strength, goals,
expansion and growth of Gulfport's business and operations, plans, market
conditions, references to future success, reference to intentions as to future
matters and other such matters are forward-looking statements. These
statements are based on certain assumptions and analyses made by Gulfport in
light of its experience and its perception of historical trends, current
conditions and expected future developments as well as other factors it
believes are appropriate in the circumstances. However, whether actual results
and developments will conform with Gulfport's expectations and predictions is
subject to a number of risks and uncertainties, general economic, market,
credit or business conditions; the opportunities (or lack thereof) that may be
presented to and pursued by Gulfport; competitive actions by other oil and gas
companies; changes in laws or regulations; and other factors, many of which
are beyond the control of Gulfport. Information concerning these and other
factors can be found in the Company's filings with the Securities and Exchange
Commission, including its Forms 10-K, 10-Q and 8-K. Consequently, all of the
forward-looking statements made in this news release are qualified by these
cautionary statements and there can be no assurances that the actual results
or developments anticipated by Gulfport will be realized, or even if realized,
that they will have the expected consequences to or effects on Gulfport, its
business or operations. Gulfport has no intention, and disclaims any
obligation, to update or revise any forward-looking statements, whether as a
result of new information, future results or otherwise.

Non-GAAP Financial Measures

EBITDA is a non-GAAP financial measure equal to net income, the most directly
comparable GAAP financial measure, plus interest expense, income tax expense,
accretion expense and depreciation, depletion and amortization. Cash flow from
operating activities before changes in operating assets and liabilities is a
non-GAAP financial measure equal to cash provided by operating activities
before changes in operating assets and liabilities. Adjusted net income
available is a non-GAAP financial measure equal to net income plus income tax
expense. The Company has presented EBITDA because it uses EBITDA as an
integral part of its internal reporting to measure its performance and to
evaluate the performance of its senior management. EBITDA is considered an
important indicator of the operational strength of the Company's business.
EBITDA eliminates the uneven effect of considerable amounts of non-cash
depletion, depreciation of tangible assets and amortization of certain
intangible assets. A limitation of this measure, however, is that it does not
reflect the periodic costs of certain capitalized tangible and intangible
assets used in generating revenues in the Company's business. Management
evaluates the costs of such tangible and intangible assets and the impact of
related impairments through other financial measures, such as capital
expenditures, investment spending and return on capital. Therefore, the
Company believes that EBITDA provides useful information to its investors
regarding its performance and overall results of operations. EBITDA, adjusted
net income, and cash flow from operating activities before changes in
operating assets and liabilities are not intended to be performance measures
that should be regarded as an alternative to, or more meaningful than, either
net income as an indicator of operating performance or to cash flows from
operating activities as a measure of liquidity. In addition, EBITDA, adjusted
net income and cash flow from operating activities before changes in operating
assets and liabilities are not intended to represent funds available for
dividends, reinvestment or other discretionary uses, and should not be
considered in isolation or as a substitute for measures of performance
prepared in accordance with GAAP. The EBITDA, adjusted net income and cash
flow from operating activities before changes in operating assets and
liabilities presented in this press release may not be comparable to similarly
titled measures presented by other companies, and may not be identical to
corresponding measures used in the Company's various agreements.

 
 
GULFPORT ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
                                                                  
                                                                  
                      Three Months Ended June 30,   Six Months Ended June 30, 
                     2013           2012           2013          2012
                     (In thousands, expect share   (In thousands, expect share
                     data)                         data)
Revenues:                                                         
Oil and condensate    $ 60,999       $ 65,020       $ 114,079     $ 129,024
sales
Gas sales             6,793          541            8,259         1,154
Natural gas liquids   2,404          694            2,728         1,500
sales
Other income          238            70             368           108
(expense)
                                                                  
                      70,434         66,325         125,434       131,786
                                                                  
Costs and expenses:                                               
Lease operating       5,878          5,714          11,050        11,563
expenses 
Production taxes      8,341          7,572          15,628        15,341
Depreciation,
depletion, and        28,540         23,652         51,123        45,047
amortization
General and           4,900          3,263          9,312         6,272
administrative
Accretion expense     174            177            349           353
Loss on sale of       145            --             572           --
assets
                                                                   
                      47,978         40,378         88,034        78,576
                                                                  
INCOME FROM           22,456         25,947         37,400        53,210
OPERATIONS:
                                                                  
OTHER (INCOME)                                                    
EXPENSE:
Interest expense      3,284          474            6,763         627
Interest income       (62)           (4)            (141)         (31)
(Income) loss from
equity method         (50,108)       360            (111,318)     628
investments
                                                                  
                      (46,886)       830            (104,696)     1,224
INCOME BEFORE INCOME  69,342         25,117         142,096       51,986
TAXES
                                                                  
INCOME TAX EXPENSE:   25,514         --             53,709        --
                                                                  
                                                                  
NET INCOME            $ 43,828       $ 25,117       $ 88,387      $ 51,986
                                                                  
NET INCOME PER                                                    
COMMON SHARE:
                                                                  
Basic                 $ 0.57         $ 0.45         $ 1.18        $ 0.93
                                                                  
Diluted               $ 0.56         $ 0.45         $ 1.17        $ 0.93
                                                                  
                                                                  
Basic weighted
average shares        77,428,605     55,656,274     75,142,113    55,641,241
outstanding
                                                                  
Diluted weighted
average shares        77,906,787     56,334,095     75,599,608    56,175,248
outstanding

 
 
GULFPORT ENERGY CORPORATION
RECONCILIATION OF EBITDA AND CASH FLOW
(Unaudited)
                                                                   
                           Three Months Ended June  Six Months Ended June 30, 
                          30, 
                          2013         2012        2013           2012
                           (In thousands)           (In thousands) 
                                                                   
Net Income                 $ 43,828     $ 25,117    $ 88,387       $ 51,986
Interest expense           3,284        474         6,763          627
Income tax expense         25,514       --          53,709         --
Accretion expense          174          177         349            353
Depreciation, depletion,   28,540       23,652      51,123         45,047
and amortization
EBITDA                     $ 101,340    $ 49,420    $ 200,331      $ 98,013
                                                                   
                                                                   
                                                                   
                           Three Months Ended June  Six Months Ended June 30, 
                          30, 
                          2013         2012        2013           2012
                           (In thousands)           (In thousands) 
                                                                   
Cash provided by           $ 38,538     $ 30,068    $ 73,545       $ 99,497
operating activity
Adjustments:                                                       
Changes in operating       5,316        19,713      6,009          51
assets and liabilities
Operating Cash Flow        $ 43,854     $ 49,781    $ 79,554       $ 99,548

 
 
GULFPORT ENERGY CORPORATION
RECONCILIATION OF ADJUSTED NET INCOME
(Unaudited)
                                             
                                             Three Months Ended June 30, 
                                            2013
                                             (In thousands) 
                                             
Pre-tax net income                           $ 69,342
Adjustments:                                 
Diamondback income on equity investment      (51,361)
Pre-tax net income excluding Diamondback     $ 17,981
                                             
Tax expense excluding Diamondback            5,904
                                             
Adjusted net income                          $ 12,077
                                             
Adjusted net income per common share:        
                                             
Basic                                        $ 0.16
                                             
Diluted                                      $ 0.16
                                             
Basic weighted average shares outstanding    77,428,605
                                             
Diluted weighted average shares outstanding  77,906,787

CONTACT: Investor Contact:
         Paul K. Heerwagen IV
         Director, Investor Relations
         pheerwagen@gulfportenergy.com
         405-242-4888
        
         Jessica R. Wills
         Associate Director, Investor Relations
         jwills@gulfportenergy.com
         405-242-4421

Gulfport Energy
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