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Gulfport Trims Production View, Controls Midstream & G&A Cost

Zacks Equity Research
·3 min read

Gulfport Energy Corporation GPOR recently announced its downward revision of 2020 capital budget and operational production in the wake of a weak natural gas pricing scenario. Investors should know that of the company’s total output, nearly 90% comprises natural gas.

The natural gas price is persistently trending in the bear territory along with crude prices that are plunging since the coronavirus pandemic started adversely impacting global energy demand. As a result, the outlook for all industries in the energy sector seems gloomy. Thus, energy players are restricting their operational activities by streamlining capital budgets.

So, Gulfport aims to prune current-year net production to 1-1.1 billion cubic feet equivalent per day (Bcfe/d), indicating a fall from the prior guidance of 1.1-1.5 Bcfe/d. This downtrend is induced by shut-ins and deferred completions. Further, the company projects its second-quarter 2020 production to average at 1-1.05 Bcfe/d.

Gulfport also plans to complete three more gross Utica wells later in the year to help add incremental production into early 2021 with the hope of recovering commodity prices by the end of this year and next on the back of favourable weather conditions.

Apart from the operational rejig, Gulfport is currently anticipating total capex for 2020 to be at the midpoint of the earlier-provided guided range of $285-$310 million. This Oklahoma -based company plans to snap up deals with third parties to lower midstream expenses in its two operating areas including transportation costs by more than $10 million through 2021.

Gulfport predicts saving up to worth $2-4 million from general and administrative expense via the salary cuts of employees and executives along with furloughs. The pay cuts account for a respective 10% and 20% reduction in the remuneration of the company’s senior management team and its chief executive officer in addition to a 10% decrease in the cash retainer paid to the board of directors.

By means of this strategic cost-cutting, the Zacks Rank #2 (Buy) player joins other natural gas focued energy entities including Montage Resources Corporation MR, SilverBow Resources SBOW and EQT Corporation EQT. All these industry players aim to tide over the tough times, simultaneously maintaining financial flexibility and operational excellence. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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