Gulfport Energy Corporation

Greetings and welcome to the Gulfport Energy Corporation third quarter 2024 earnings 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. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jessica Angel. Thank you. You may begin.

Thank you and good morning. Welcome to go for energy corporations, third quarter, 2024 earnings conference call. I am Jessica Ansel, vice president of investor relations speakers on today's call include John Reinhart president and chief executive officer and Michael Hodges 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 gap measures will be posted on our website. An updated Gulfport presentation was posted yesterday evening to our website in conjunction with the earnings announcement. 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's third quarter results highlight our continued commitment to enhancing shareholder value. During the quarter, the company repurchased approximately $50 million of our common stock, expanded the company's common stock repurchase authorization by 54% to $1 billion, lowered 2024 capital spend guidance midpoint by $15 million, increased high margin condensate production by 68% quarter over quarter, and added to the company's high quality inventory with approximately $20 million of discretionary acreage acquisitions, which, when combined with the first half of 2024 activity, adds approximately one year of incremental liquids-rich drilling locations, which have competitive returns with our high-quality inventory and are targeted for near-term development. All of this was accomplished while improving our balance sheet by extending maturities by more than three years increasing liquidity by approximately $200 million and maintaining a very attractive leverage profile below one times. In addition to the strong financial performance, the company also issued our 2024 Corporate Sustainability Report and announced the company recently achieved an A-grade under the MIQ methane emission standard for all of our natural gas production in Appalachia for the second consecutive year. As a leading natural gas producer, we are committed to emission intensity reductions throughout our operations, and we are proud of our progress in delivering clean, safe, affordable, and reliable energy. Moving to our third quarter results, the company delivered adjusted EBITDA and adjusted free cash flow ahead of analysts' expectations, bolstered by the strong margins of our liquids-rich turn in lines during the quarter. operating efficiency improvements and correspondent cycle time reductions have led to meaningful savings, and we expect to realize over $25 million in capital savings on our drilling and completion activities during 2024. Based on the current commodity price environment, we have elected to allocate the majority of these savings to incremental shareholder returns, with the remainder being deployed in high-return capital projects that will position us well for 2025. As a result, the company is lowering our full year 2024 capital guidance by approximately 4% at the midpoint, now forecasting DNC capital to be in the range of $325 to $335 million, and maintaining our maintenance leasehold guidance range of $50 million to $60 million for the calendar year. Operationally in Ohio during the third quarter, the company completed drilling on five gross wells with one horizontal drilling rig. In addition, we concluded our 2024 turn in line program in the Utica, bringing online seven gross Utica wells during the third quarter and 16 gross Utica wells for the full year. In the scoop during the third quarter, the company completed and turned to sales three gross wells in late September, concluding our 2024 turn-in-line program for the year. The company is currently running one rig in the Utica and one rig in the Scoop, with plans to add an additional rig in the Utica focused on liquids-rich drilling late in the fourth quarter. Turning to land capital expenditures, through September 30, 2024, we have invested roughly $52 million on maintenance, leasehold, and land investments. focusing on enhancing our near-term drilling programs with increases in working interest and lateral footage. Our focus on maintenance leasehold and land spending over the last two years, in combination with our discretionary acreage acquisitions, have reinforced our future drilling programs and positioned the company for a future reduction of our anticipated maintenance land requirements going forward. For 2025, Gulfport forecasts maintenance leasehold and land spend will be approximately $45 million for the full year, a decrease of approximately 25% from the high end of our 2024 annual guidance. This lower level of maintenance land spending will further support Gulfport's robust free cash flow generation going forward. We're excited to announce the strong well performance results from our four-well pad in the condensate window of the Utica. As we noted on our second quarter call, the company turned to sales our Lake 7 pad in Harrison County, Ohio in mid-July. This development represents Gulfport's first condensate pad since the second quarter of 2020, and referring to slide 12 of our investor deck, we are pleased to provide an update on the early well performance. All four wells have exhibited attractive condensate and NGL production rates in combination with minimal pressure drawdown during the initial 90-day period. Current flowing parameters indicate similar productive capacity as nearby offsets, and given the well's strong performance during the cleanup phase, we are now testing increased production rates to determine the optimal production profile for this pad as well as subsequent pads aimed at optimizing long-term well performance while maximizing risk-adjusted returns. We're very encouraged by these early production results and believe the Utica condensate window, in combination with the Utica lean condensate and Ohio Marcellus, has the potential to provide a meaningful impact to the company's liquids production in the coming quarters and years. As previously communicated, The company also completed drilling on four additional Utica condensate wells near our Lake 7 pad that are targeting completions and turn-align for the first quarter of 2025, as well as development of a four-well Marcellus pad beginning in the first quarter of 2025. We currently forecast over 60% of our total company turn-aligns will be liquids rich weighted during 2025, an increase from approximately 37% in 2024. When considering the operational performance, attractive early production results, and expected economics, the prudent shift towards increased liquids-rich development highlights the optionality and flexibility of our asset base, as well as reinforces the company's continuous optimization of our development program targeting enhanced cash flows and improved returns. Lastly, in our investor deck on slide 11, we have provided an update on our pressure managed production results, which we enacted in early 2023. When compared to Gulfport's historical Utica dry gas well performance, the recent 2023 development program, which is being produced under our managed pressure approach, yields higher cumulative recoveries per 1,000 foot of lateral after an extended production period. As we have noted since the rollout of this program, we firmly believe this approach leads to lower upfront capital requirements, longer production plateau periods, shallower declines, improved reserves, lower lease operating expenses, lower water recoveries, less midstream and offset legacy production impacts from new pads being brought online, and overall lower production downtime. In addition to the well performance results, Prudent production from development wells allows the company to provide consistent, repeatable results and ultimately improves overall corporate decline rates and lowers future maintenance capital requirements. To summarize, 2024 has been a year where the company delivered results that highlighted our focus on shareholder returns, capital reductions, operational efficiency improvements, inventory additions, balance sheet improvements, and a shift towards high-margin liquids development. Each of these efforts deliver fundamental value improvements for the company, and we believe are aligned with enhancing shareholder value. Our focus on these key tenants will remain as the company enters 2025. Now I will turn the call over to Michael to discuss our financial results.