Gulfport Energy Corporation

Greetings. Welcome to the Gulfport fourth 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 this conference is being recorded. I will now turn the conference over to your host, Jessica Antle. Thank you. You may begin.

Thank you and good morning. Welcome to Goldport Energy's fourth quarter and full year 2021 earnings conference call. I am Jessica Antle, Director of Investor Relations. Speakers on today's call include Tim Cutt, Chief Executive Officer, and Bill Beasley, Executive Vice President and Chief Financial Officer. I would like to remind everybody that during this conference call, the participants may make certain board-looking statements relating to the company's financial condition, results of operations, plans, objectives, future performance, and business. We caution you that the 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 Gulfport presentation was posted yesterday evening to our website in conjunction with the earnings announcement. Please review at your leisure. At this time, I would like to turn the call over to Tim Cutts.

Thank you, Jessica. Good morning, and thank you for joining the call. I will begin this morning with a summary of the end-of-year highlights, followed by an operational update before turning the call to Bill to discuss the financials. As you saw from our release, we had a very strong quarter and delivered full-year results at the top end of guidance. We generated over $360 million of free cash flow, significantly increased liquidity, and achieved our target leverage of below one times. We are now well positioned to begin executing on our previously announced $100 million share repurchase program and are evaluating additional return of capital opportunities. We were able to achieve this strong performance with approximately $290 million of CAPEX spend in 2021, which was at the low end of guidance, and translated into an average production over one BCF of gas equivalent per day, which was at the high end of guidance. This was driven by a strong contribution from both the Utica and Scoop development programs. Turning to our development program, I am pleased to report that our results in both the SCOOP and Utica continue to outperform historical wells. We are focused on delivering peer-leading development costs for MCF, and our implementation of wider spacing and more intensive completion designs is yielding strong results. On slide 10 of the IRDEC, you will find recent results from our 2021 Utica program. The Angelo pad was brought online late October, and to date has averaged 245 million cubic feet equivalent gross production per day. We are flowing these wells above the pad target rate of 230 million cubic feet equivalent per day, given the quality of the reservoir, as well as the very favorable gas market. I'm pleased to report that since bringing the Angelo pad online, it has produced approximately 32 BCF. This single pad is expected to generate a PV town of greater than $150 million, with an IRR greater than 100% at current strip prices. Given the high production rates and the current pressures, we would expect the wells to begin to decline by the end of the first quarter. The Shannon and Haneshot wells have also performed extremely well, and only recently began to decline following plateau periods of eight to 10 months, and are expected to accumulate approximately 2.5 BCF per thousand foot per well. The Morris and Gehrig wells in our southern Monroe County acreage have also exceeded expectations with the average production plateau expected to be over six months outperforming historical wells in this area. You will see on page 11 of the IR deck that we have lower development costs per NCFE of reserves developed in the Utica by almost 44% since 2019 from $1 per NCFE to 55 cents. Our target continues to be below 50 cents going forward using wider spacing and more intense frac jobs. The chart on the right hand side of the slide 11 shows the step change of well performance utilizing the new frac design. We are seeing similar positive results in the scoop. Slide 12 of the deck demonstrates that the three new pads in the scoop are performing better than anticipated. As compared to historical completions, the 2021 wells are delivering 25% more cumulative MCF per lateral foot after 250 days of production. We continue to drive down development costs in the scoop and during 2021, We lowered development costs to 50 cents per MCFE developed. We continue to focus on improving our total per unit operating costs and are identifying improvement efficiencies across the company. We delivered a total operating cost of $1.20 per MCFE, which represents a reduction of 16% year on year. LOE for the year was brought on budget at 14 cents per MCFE. For 2022, we do expect our LOE to trend slightly higher through adding additional compression to take full advantage of the current market conditions along with inflation primarily related to water disposal. We continue to focus on reducing corporate overhead in 2021 and came in below our full year G&A guidance at $40 million. We expect to maintain top quartile G&A costs of 12 cents per MCFE or below for the full year of 2022. Our strong asset performance in 2021 combined with a lower cost structure and substantially higher commodity price led to significant additions in our year-end approved reserves. At year-end, we grew our SEC approved reserves by 51% to 3.9 TCFE. Our total before-tax PV10 value for 2021 was $4.3 billion. As a proxy for value, our total before-tax PV10 is more than double our current enterprise value. Even more compelling, the $2.7 billion of PDP PV10 value is more than 20% higher than our current enterprise value. Looking at 2022, our development program is centered around a continuous rig program in the Utica to help drive efficiencies. Capital spend for the year is projected to be approximately $360 million. The increase from 2021 is driven by the incremental Utica activity I just mentioned, along with about 10% inflationary effects. The plan is designed to TD 24 gross wells and turn 17 gross wells to sales in the Utica, and to TD 8 gross wells and turn 13 gross wells to sale in the Scoop. We anticipate this level of activity to deliver approximately one BCFE per day in 2022, growing by approximately 5% in 2023. The program is expected to generate approximately $335 million of free cash flow in 2022. Similar to last year, the production buildup from our development program is back in loaded. Where we ultimately land in the production guidance range will depend heavily on the actual timing of the development program delivery. As shown on slides 15 through 17, we expect production to decline during the first two quarters and grow in the back half of the year as new wells are turned to sales. In summary, during 2022, we remain focused on cost-effective production and capital discipline. supported by our much improved balance sheet. We are fully committed to safely executing in the field and improving our environmental, social, and governance performance. We have flattened our corporate structure, reduced overhead, and are focused on optimizing our development program to deliver the highest returns possible to our investors. I'll now turn the call over to Bill to discuss our financial results.