Gulfport Energy Corporation

Greetings. Welcome to Gulfport Energy Corporation's first quarter 2024 earnings call. This time all participants are in listen-only mode. The question and answer session will follow the formal presentation. If anyone should require operator assistance during today's call, please press star zero from your telephone keypad. Please note this conference is being recorded. At this time, I'll now turn the conference over to Jessica Antle, Vice President, Investor Relations. Ms. Antle, you may now begin your presentation.

Thank you and good morning. Welcome to Gulfport Energy Corporation's first quarter 2024 earnings conference call. I am Jessica Ansell. Speakers on today's call include John Reinhart, President and CEO, Michael Hodges, Executive Vice President and CFO. In addition, we also have Matt Rucker available for the Q&A portion of today's call, Senior Vice President of Operations. 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 gap measures will be posted on our website. An updated Gulfport presentation was posted yesterday evening in conjunction with the earnings announcement. Please review at your leisure. At this time, I would like to turn the call over to John Reinhart, President and CEO.

Thank you, Jessica, and thank you to everyone for listening to our call. Gulfport started the year strong, highlighted by continued improvement in operational efficiencies that led to capital spending below analysts' expectations and strong free cash flow generation, which allowed us to continue returning capital to shareholders through our common share repurchase program. The significant operational momentum achieved last year continues, with another quarter of field operating teams executing at high levels of efficiencies. Several new company records were accomplished this quarter that contributed to strong financial results across the board relative to consensus expectations. Looking at our first quarter highlights, the company generated $186 million of adjusted EBITDA and $39 million of adjusted free cash flow. Our average daily production totaled nearly 1.054 billion cubic feet equivalent per day in line with analysts' expectations. Operationally, during the first quarter, the company completed drilling on eight gross wells, seven within Ohio targeting the Utica formation, and one in the Scoop targeting the Woodford formation. We entered the year with three operated drilling rigs running and, as planned, released one Utica rig during the first quarter and currently have one rig running in each of our asset areas. On the completions front, we turned to sales five gross wells during the quarter. all targeting the Utica, and are actively running one frack crew in the Utica. As previously mentioned, the operating teams achieved several milestones this quarter, which I would like to highlight. On the drilling side, we experienced a 9% quarter-over-quarter improvement in footage drilled per day in the Utica, which included a company record of the fastest Utica top hole drilled for Gulfport in the play, totaling just over six drilling days. On the completion side, our daily frac pumping hours improved to an average of 21 frac pumping hours per day for the quarter in the Utica, up 23% over full year 2023 and a new Gulfport record. The company's Utica frac provider set a company record with our activity for all of its U.S. pressure pumping fleets, pumping over 675 hours in a 31-day period. Lastly, during the first quarter, the average frac plugs drilled per day in the Utica improved by almost 38% over full year 2023, resulting in a quarterly average of 36.7 plugs drilled out per day. I've mentioned this before, but these efficiencies and corresponding cycle time reductions play an integral role in our corporate level returns, significantly improving turning line timing, reducing costs, and ultimately accelerating cash flows and overall financial performance of the company. I'm very proud of the team's accomplishments over the past year, and we continue to raise the bar every quarter. Specific to our Marcellus development, we included longer dated production results in our corporate deck on the company's first two operated Marcellus wells on our StackPay acreage in Belmont County, Ohio. And we continue to be very encouraged as we gain more production history. When normalized to a 15,000-foot lateral, the wells delivered 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. As a reminder, these wells are located on an existing Utica pad, allowing significant midstream flexibility. Given our ability to blend the rich gas from the Marcellus wells with existing Utica dry gas production on our initial pad. These wells continue to exhibit strong oil production and under pressure-managed flow remain at around 5 psi of pressure drop per day following 120 days of production. We believe this development, along with existing industry offset development in Ohio and West Virginia, has significantly de-risked our roughly 50 to 60 gross Marcellus locations across our Ohio acreage. As noted previously, the returns on our stack pay Marcellus inventory are attractive and compete for capital within our portfolio. Farther to that point, the company is currently planning a four-well Marcellus development on an existing Utica pad beginning in early 2025. In terms of current activity, we remain committed to developing our assets in an efficient and responsible manner. And given the current low natural gas price environment, we have elected to defer certain drilling and completion activities to the second half of 2024. We plan to release the active scoop rig in the second quarter after the current three-well extended lateral pad and plan to resume scoop drilling on this deferred pad in the fourth quarter. The shift of the two-well scoop pad to the fourth quarter, which are wells that were planned to be drilled but not completed in 2024, provides optionality of full-year capital spend pending assessment of commodity prices. On the completion side, the three-well Angela South pad was scheduled to be fracked in the second quarter, and due to utilization of a spot crew, the teams were able to shift this planned activity one and a half months into the third quarter. This shift in activity allows us to realize a value uplift by producing the deferred production into improving commodity prices. The company continuously assesses the timing and level of development activity to maximize value, and this shift in activity displays the flexibility that we possess in our development plan. These changes in activity will result in negligible impact on our full year 2024 production, and we reaffirm our full year production to be in the range of 1.045 to 1.080 billion cubic feet equivalent per day. We now forecast approximately 65% of our drilling and completion capital will be allocated in the first half of 2024 and trend lower in both the third and fourth quarters of this year and reaffirm our full year drilling and completion capital guidance range of 330 million to 360 million. Turning to land capital expenditures, through March 31st, 2024, we have invested roughly 18 million on maintenance, leasehold, and land investment, focused on bolstering our near-term drilling programs with increases of working interest and lateral footage in units we plan to drill in the near term. We did not have any discretionary acreage acquisition spend during the first quarter. However, we continue to monitor opportunities to meaningfully increase our leasehold footprint to enhance resource depth and believe these opportunities rank very high as we continuously evaluate uses of free cash flow in 2024. In closing, our solid financial foundation, improved capital efficiency, advantage expense structure, and robust well performance provides us with significant flexibility as we continue our 2024 development program in a volatile market. We believe our operational efficiency improvements and focus while more liquids-rich development this year will further improve margins and ultimately support our robust expected adjusted free cash flow generation. We plan to return to capital to our shareholders and excluding acquisitions expect to allocate substantially all of our full year 2024 adjusted free cash flow towards common share purchases. Now I'll turn the call over to Michael to discuss our financial results.