Gulfport Energy Corporation

Greetings and welcome to the Gulfport Energy Corporation fourth quarter 2022 earnings call. At this time, all participants are in a listen-only mode. A brief 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. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jessica Antle, Director of Investor Relations. Thank you, Jessica. You may begin.

Thank you and good morning. Welcome to Gulfport Energy Corporation's fourth quarter and full year 2022 earnings conference call. Speakers on today's call include John Reinhart, President and CEO, 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 filing with the SEC. In addition, we may make reference to non-GAAP measures. Reconciliations to these 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 John, President and CEO.

Thank you, Jessica, and thank you to everyone for listening to our call today. To open, I would like to express my gratitude to the Board of Directors for the opportunity to be a part of the continuing evolution of Gulfport Energy. The company is positioned with high quality natural gas weighted asset base and a balance sheet that provides optionality to enhance shareholder value. Working alongside the many talented individuals at Gulfport, we will remain focused on actions that facilitate efficient and sustainable development of the company's quality inventory, enhance margins, and optimize efficiencies within our capital programs, all while maintaining an attractive balance sheet and utilizing our free cash flow to position the company for success. Further to this point, The Board recently authorized the expansion of our common share repurchase program by an incremental $100 million. We believe allocating our free cash flow towards the continued investment in our undervalued stock, as well as utilizing it in acquiring incremental leasehold, will add value, optionality, and quality resource depth for the company moving forward. On behalf of the full board, I would like to also thank Tim Cutt for his leadership of the company through the initial post restructuring period. This was a critical phase of the company and his leadership positioned us for meaningful shareholder value enhancement moving forward. We all look forward to working closely with Tim as chairman of the board. I will begin with a summary of our 2022 operational highlights, followed by our 2023 outlook, including the cadence of our capital and production in the upcoming year. Bill will then review our fourth quarter and full-year 2022 financial results and provide some additional commentary surrounding our 2023 plans. 2022 was a productive year for Gulfport, maintaining inventories of high-quality acreage and delivering strong results from both the Utica and Scoot development programs. The company generated over $240 million of adjusted free cash flow, which was utilized to return capital to shareholders and reduce our outstanding shares by over 12% or 3 million shares since initiating the common share repurchase program in early 2022. The quality asset base contributed to an increase in both approved reserves and borrowing base while also delivering top quartile well productivity results. While the commodity markets have certainly been volatile, the company is well positioned to deliver value on our 2023 operating plans and maintain financial strength. Turning to the specifics, full year 2022 capital expenditures totaled approximately $450 million. Production for the year averaged 983 million cubic feet equivalent per day at the midpoint of guidance, which includes the impacts from winter storm Elliott. For the full year, the company drilled 28 gross wells, which were predominantly focused in the Utica. On the completion side, Gulfport completed and turned to sales 15 gross wells in the Utica and 13 gross wells in the Scoop throughout 2022. Operationally, we continue to be very pleased with the recent well results in both the Utica and Scoop. On slide seven and eight of the investor relations deck, we included slides that highlight Gulfport's recent single well performance compared to peers. normalizing the cumulative production on a 1,000-foot of lateral basis. In the Utica, Gulfport's development results have led to production outperformance compared to peers, with nine of the top 15 producing wells over the past two years being Gulfport-operated wells. In the scoop, for comparative purposes, data was included that depicts all wells drilled in both the scoop and stack. Similarly, the Gulfport Operated Development Program over the past two years has outpaced our peers as 13 of the top 15 producing wells, which include all five wells from the company's NELDA development being top performers when comparing cumulative production on a per 1,000 foot of lateral normalized basis. Turning to reserves, our strong and consistent well performance is reflected in the 2022 reserve report. as our approved reserves were up 4% year-over-year, totaling 4 trillion cubic feet equivalent. At the year-end 2022 SEC price tag of $6.36 per MMBTU and $94.14 per barrel of oil, the company's before-tax approved reserve value was $9.5 billion. At a flat $3 per MMBTU and $70 per barrel oil case, Our after-tax approved reserve values total approximately $2.8 billion, or $108 per share, after subtracting our current net debt. This highlights, along with our peer-leading free cash flow yield, attractive margins, debt maturity profile, and attractive balance sheet, the compelling value opportunity that Gulfport Energy represents. As the company progresses into 2023, we are focused on further optimizing margins and capital efficiencies through reductions in our cycle times and operating costs, ultimately supporting the company's expected free cash flow generation. Given the current market, we have taken proactive steps to moderate overall development activity, with 2023 primarily focused on Utica development and Marcellus delineation activity. Total capital spend for the year is projected to be approximately $450 million, which includes roughly $50 to $75 million of land and leasehold investment. The land spend is focused on bolstering our 2023 and 2024 drilling program, facilitating increases in our working interest and lateral footage in units we plan to drill near term. Four-year DNC spend is expected to be in the range of $375 to $400 million. a decrease of approximately 6% from full year 2022. We expect minimal, if any, oilfield service inflation year over year, and given the meaningful pullback in commodity prices, we believe there is potential to take advantage of a better service cost environment in the second half of the year as we lock in our 2024 program. Looking at allocation between our assets, we project roughly 90% of DNC capital spend will be allocated to our Ohio development, which includes Gulfport's first Marcellus delineation activities, developing two gross wells in Belmont County, Ohio. We currently forecast two-thirds of our capital will be allocated in the first half of 2023 and trend lower in both the third and fourth quarters of the year. Turning to production, we anticipate this level of spend will deliver 1 to 1.04 billion cubic feet equivalent per day in 2023, an increase of 2 to 6% over full year 2022. Production growth will be back half-weighted, driven primarily by timing of capital spend and the Utica-Turn-A-Line schedule being heavily concentrated in the summer months. In our investor deck on slide 11, we include a more detailed outlook on our expected 2023 capital and production cadence. For 2023, we expect our per unit operating cost to decrease by approximately 7% compared to 2022, driven primarily by production tax impacts associated with lower commodity prices and midstream cost reductions year over year. We continue to maintain top quartile G&A spend and forecast reoccurring cash G&A of 12 cents per million cubic feet equivalent for the full year. On slide 18 of our investor presentation, we provided a range of 2023 adjusted free cash flow outlooks at various natural gas prices. We project adjusted free cash flow will range from roughly $175 million at $2.50 gas to $320 million at $3.50 gas, implying a free cash flow yield range of 14% to 25%. We plan to continue the return of capital to our shareholders through common share purchases while also actively pursuing incremental leasehold opportunities that increase our resource debt and provide optionality to our future development plans. These opportunities would have characteristics comparable to our existing assets and further build on our core position while improving our opportunity set and drilling economics in our future development plan. In closing, we have right-sized our drilling program for 2023 and are intently focused on reducing cycle times and operating costs to further improve margins. As we progress through the year, we plan to maintain capital discipline, prioritize free cash flow generation, return capital to shareholders through common share purchases, enhance scale through incremental leasehold opportunities, all while protecting our balance sheet and adding value to the company. Now I will turn the call over to Bill to discuss our financial results.