Gulfport Energy Corporation

Greetings. Welcome to the Gulfport Energy Corp third quarter 2021 conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note that this conference is being recorded. I will now turn the conference over to your host, Tommy Renard. You may begin.

Thank you and good morning. Welcome to Goldport Energy Corporation's third quarter of 2021 earnings conference call. I am Tommy Renard, Senior Analyst of Investor Relations. Speakers on today's call include Tim Cutt, Chief Executive Officer, and Bill Beezy, Executive Vice President and Chief Financial Officer. I would like to remind everybody that during this conference call, the participants may make certain forward-looking statements relating to the company's financial condition, results of operations, plans, objectives, future performance, and business. We caution you that actual results could differ materially from those that are indicated in these forward-looking statements due to a variety of factors. Information concerning these factors can be found in the company's filings with the SEC. In addition, we may reference non-GAAP measures. Reconciliations to the comparable GAAP measures will be posted on our website. An updated goal for presentation was posted yesterday evening to our website earnings announcement. Please review at your leisure. At this time, I would like to turn the call over to Tim Cutt, CEO.

Thanks, Tommy, and good morning, and thank you for joining the call. I will begin this morning with a summary of the third quarter highlights, followed by an operational update before turning the call over to Bill to discuss the financial and updates of our full year 2021 guidance. As you saw from our earnings release, we've made steady progress on numerous fronts during the quarter. We put a new credit facility in place that increases our liquidity by $160 million and accelerates our ability to return capital to shareholders as demonstrated by the announced $100 million share repurchase program. The six-well Angelo pad was completed in the Utica, which is currently flowing at a rate of 200 million feet per day. Finally, the company fully resolved its largest post-bankruptcy litigation exposure with TC Energy in and announced a settlement agreement related to its longstanding litigation with Stingray Pressure Pumping in September. I'm pleased to have this litigation behind us so that we can focus on the company's tremendous opportunities moving forward. Moving to our third quarter operational results, production averaged 973 million cubic feet of gas equivalent per day during the quarter, slightly above expectations driven by strong reservoir performance from both the Utica and the Scoop development programs. We anticipate an increase in total production during the fourth quarter, driven by the strong contribution from the Angelo pad. Gulfport invested $81 million of capital in the third quarter. We continue to identify opportunities to lower our total drilling and completion costs, however, remain primarily focused on delivering peer-leading development costs per NCFE produced. Moving forward, we continue to target a maintenance level of capital spend of approximately $300 million per year, despite service cost inflation. This level of spend is expected to result in roughly one BCF equivalent per day of production. Improved well performance and longer flat time periods resulting from our new development spacing and completion designs provide this opportunity, allowing us to deliver more molecules with less capital. Prior to providing formal 2022 guidance, we are exploring ways to improve cost efficiency by potentially moving to a continuous one rig drilling program in both the Utica and Scoop. Turning now to our development program, I am pleased to report that our results in both the Scoop and Utica are outperforming historical development results. On page 13 of the IRDEC, you will find recent results from our 2021 Utica program. The Shannon and Hendershot wells have been online for approximately eight months and remain on plateau. In addition, our Morris and Garrett pads have been online several months, and we are seeing similar promising early-time data. These wells are located in the southern portion of the play in Monroe County, and we are very encouraged with how these wells are performing as compared to historic wells in the same area. And finally, you can see the rapid buildup of the Angola wells to their target production rates ahead of schedule. We expect the Utica 2021 development program production to stay relatively flat through November and start to decline in December as the Shannon-Henishaw wells approach line pressure. We believe that this strong performance is driven by the move to water spacing and optimized frac jobs. On slides 14 through 17, we have highlighted our AngeloPAD development. This is our most substantial test of our new development program approach to date. We have provided a picture of the simul-track operation on page 14 of the IR deck. This operation enables us to complete the wells in 60 days versus 90 days using normal fracking techniques. We completed an average of just over nine stages per day versus our historical six per day and are encouraged by the fact that we achieved multiple days above 12 stages and a record day of 16. We are very pleased to achieve 100% reuse of produced water for fracking operations and plan to utilize dual fuel rigs and frack spreads for future operations, which will lower costs and improve environmental performance. You will see on slide 15 that we utilized two snubbing units to drill out the Angelo wells simultaneously, which accelerated production and startup into a high commodity price environment by 10 days. As shown on slide 16, production was brought online at target rates ahead of schedule and is expected to remain on plateau for extended period. The estimated drilling complete costs are consistent with our new development approach at $750 a foot, and when applying lessons learned from the Angelo pad, there is additional opportunity for improvement. Moving to the scoop, development results, we experienced strong production from the asset during the quarter, an increase of 12% from the second quarter, In addition, as you can see from slide 12, the wells are declining at a slower rate than budgeted, resulting in cumulative rates performing much better than historical billport wells. We attribute the improved performance to wider spacing and longer laterals and are pleased with the results to date. We are currently running one rig in the scoop and plan to return to fracking operations in January of 2022. We continue to focus on improving the company's cost efficiencies. As discussed during the last call, costs are expected to decline by $0.43 per MCFE or 23% year-on-year, which significantly improves our margins and is expected to provide substantial and sustainable free cash flow generation moving forward. LOE for the quarter was up slightly primarily due to increased water hauling costs, but the full-year guidance remained consistent at $0.14 per MCFE for 2021. Reducing corporate overhead remains a key initiative for the management team, and we have lowered recurring cash DNA guidance by $3 million compared to the midpoint of our previous guide provided in August. We expect to achieve top quartile DNA costs of $0.12 per MCFE for the full year of 2021 and maintain this run rate into 2022. In closing, as always, we are fully committed to safely executing in the field and improving environmental, social, and governance performance. flatten our corporate structure, reduced overhead, and are focused on optimizing our development program to deliver the highest returns possible for our investors. I'll now turn the call over to Bill to discuss our financial results in 2021 guidance.