Gulfport Energy Corporation

Good day, ladies and gentlemen, and welcome to your Gulfport Energy Corporation second quarter 2022 earnings call. All lines have been placed in a listen-only mode, and the floor will be open for your questions and comments following the presentation. If you should require assistance throughout the conference, please press star zero. At this time, it is my pleasure to turn the floor over to your host, Jessica Antle. Ma'am, the floor is yours.

Thank you, Melinda, and good morning. Welcome to Gulfport Energy Corporation's second quarter 2022 earnings conference call. I am Jessica Antle, Director of Investor Relations. Speaker 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 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 Goldport 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.

Thanks, Jessica, and good morning, and thank you for joining the call. I will begin this morning with a summary of the second quarter 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 strong quarter delivering 960 million cubic feet equivalent per day of production and $80 million of free cash flow. We exited the quarter with a conservative leverage ratio of 0.8 times and liquidity of $469 million. We made significant progress in our share repurchase program and have repurchased $189 million year to date, decreasing our outstanding shares by 8% and representing approximately 50% of full-year 2022 expected free cash flow. In addition, the Board has recently approved an incremental $100 million of share repurchases taking the program to $300 million in total. Turning to production, our strong second quarter results were driven by the continued outperformance of our 2021 development program, excellent uptime across our operations, and the robust productivity from our scoop Nelapad brought online in March of 2022. Given the timing of our development program, we expect production to decline slightly in the third quarter before growing significantly in the fourth quarter. Following the casing remediation discussed last quarter in the Utica, we have successfully brought on the Charlotte pad and are within days of turning to sales the Clark pad. The delays associated with these pads, along with the approximately 45-day knock-on effect to the timing of our subsequent completion program, have caused us to lower the high end of our 2022 production guidance range. This is strictly a timing issue. And but for the timing shift, we would have expected to exceed the top end of our production guidance for 2022. We expect strong performance from the remaining Utica and Scoop turn-in lines in the back half of the year. Our strong first half production results and expectations for the remainder of the year are clearly demonstrated on slide 8 of the IR deck. As previously discussed, we continue to expect to grow production in 2023 by more than 5%, over 2022. Turning to our development program, during the second quarter, we turned in line three wells in the Utica and are projecting to bring seven gross wells online in the Utica and two gross wells in the Scoop during the third quarter. On page 10 of our IR deck, you can see how strong the five-melded development, five-well development in the Scoop continues to perform, which is now expected to remain on flat-time production for over half of the year. The next page illustrates the significant improvement in development costs and well performance generated by these NELDA wells in our 2021 program compared to historical development, driven by the team integrating learnings across both of our assets and focusing on optimizing value. We highlighted a similar slide for the Utica in early 2022, and those wells continue to perform well compared to historical development. To improve the efficiency of our drilling program, and mitigate the risk of releasing and picking up rigs in a tight market, we are implementing a continuous rig program in the Utica and anticipate doing the same in the Scoop in 2023. On the completion side, the market for frac units is also tight. To create a more continuous frac schedule, we are evaluating the opportunity to add a tuple rig in the Utica during the fourth quarter of 2022, accelerating our drilling program entering 2023. We would plan to continue running the Top Hole Rig alongside our current rig for the first half of the year and expect this activity level could enable us to execute a continuous eight-month frac program in the Utica starting in January of 2023. In order to create the option for a Top Hole Rig program and stay ahead of our current continuous rig program, we have increased our 2022 land capital by $10 million. We are still evaluating all available options for 2023, and if we choose to proceed with this plan, we will discuss the costs and the benefits of this opportunity during our next call. On capital, we continue to experience inflationary pressure and now expect inflation to be up 20 to 25 percent this year, an increase from 15 to 20 percent discussed last quarter. This, along with the additional $10 million in land capital, takes the midpoint of our capital guidance to $425 million for 2022. Despite these impacts, our guidance for free cash flow remains unchanged. We continue to focus on improving our total per unit operating costs and are actively identifying efficiencies across the company. We continue to optimize the reuse of water in our frac operations in the Utica, and we released all winter maintenance rental equipment during the quarter resulting in second quarter LOE of $0.16 per MCFE, down 16% from the first quarter of 2022. In summary, we remain focused on cost-effective production, capital discipline, and delivering peer-leading development costs per MCFE. We have implemented wider spacing and more intensive completion designs, which continue to deliver exceptional results. Our low leverage, along with significant free cash flow, will allow us to organically grow the business while returning significant capital to our shareholders. Our commitment to returning capital to shareholders is further demonstrated by the Board's $100 million increase to the Share Repurchase Program. I'll now turn the call over to Bill to discuss the financial results.