Gulfport Energy Corporation (NYSE:GPOR) has delivered an impressive performance in the first quarter of 2024, showcasing the strength of its operational execution and financial discipline. The company's focus on improving efficiencies across its drilling and completion activities has translated into robust financial results, allowing Gulfport to continue returning capital to shareholders through its share repurchase program.

Financials

For the full year 2023, Gulfport reported annual revenue of $1,470,916,000, annual net income of $1,051,383,000, annual operating cash flow of $723,181,000, and annual free cash flow of $185,821,000. These strong financial metrics demonstrate the company's ability to generate sustainable cash flows and create value for its shareholders.

Recent Developments

In the first quarter of 2024, Gulfport continued to build on this momentum, reporting several operational milestones that contributed to its solid financial performance. The company's average daily production totaled nearly 1.054 billion cubic feet equivalent per day, in line with analyst expectations. Notably, the company experienced a 9% quarter-over-quarter improvement in footage drilled per day in the Utica, including a company record for the fastest Utica top hole drilled in just over 6 days.

On the completion side, Gulfport's daily frac pumping hours improved to an average of 21 hours per day in the Utica, up 23% over the full year 2023 and a new company record. Additionally, the company's Utica frac provider set a record for Gulfport's activity, pumping over 675 hours in a 30-day period. These operational efficiencies have translated into significant cost savings and accelerated cash flows for the company.

Gulfport's focus on liquids-rich development in 2024 is also expected to contribute to improved margins and enhanced free cash flow generation. The company's Marcellus wells in Belmont County, Ohio, have continued to exhibit strong oil production, with the initial two wells delivering an average 120-day initial production rate of approximately 795 barrels per day of oil and 5.5 million cubic feet per day of natural gas when normalized to a 15,000-foot lateral.

Liquidity

The company's financial position remains robust, with a trailing 12-month net leverage ratio of 0.9x and total liquidity of $757.4 million as of March 31, 2024. Gulfport has utilized its strong cash flow to reduce its outstanding debt by $31 million during the first quarter and maintain significant financial flexibility.

Business Overview

Gulfport's management team has demonstrated its ability to navigate the volatile commodity environment by strategically deferring certain drilling and completion activities to the second half of 2024. This decision was driven by the current low natural gas price environment, allowing the company to optimize the timing of its capital deployment and realize value uplift from improved commodity prices.

The company's hedge position also continues to provide significant downside protection, with approximately 60% of its remaining 2024 natural gas production hedged at an average floor price of $3.67 per Mcf. Gulfport's diverse marketing portfolio and pricing uplift from its liquids production have further enhanced its realized pricing, with an all-in realized price of $3.16 per Mcfe in the first quarter, including the impact of cash-settled derivatives.

Outlook

Looking ahead, Gulfport remains committed to its disciplined capital allocation strategy, with plans to return substantially all of its 2024 adjusted free cash flow to shareholders through its common share repurchase program, excluding any potential acquisitions. The company has already repurchased 4.6 million shares, or approximately 16% of its outstanding shares, at a weighted average price of $93.77, demonstrating its focus on enhancing shareholder value.

Conclusion

Gulfport's operational excellence, financial strength, and strategic capital allocation have positioned the company as an attractive investment opportunity in the current market environment. The company's ability to consistently deliver strong results, optimize its development activities, and return capital to shareholders underscores its commitment to creating long-term value for its stakeholders.