Gulfport Energy Q1 Earnings Call Highlights

Key Points

• Gulfport posted a strong first quarter with $264 million in adjusted EBITDA and $119 million in adjusted free cash flow, while reaffirming full-year production and cost guidance. Management said results were supported by stronger commodity pricing and efficient operations.
• Capital returns remained a major focus, as the company bought back 866,000 shares for $172.8 million in the quarter, its largest quarterly repurchase investment ever. Gulfport also completed its discretionary acreage acquisition program and said it will keep targeting selective leasing to add high-quality inventory.
• Operations and leadership are in transition: Gulfport plans to move to a one-rig program in Ohio for the rest of 2026, while continuing to improve drilling efficiency and maintain very low leverage. Domenic J. Dell'Osso, Jr. is set to become CEO on May 28 as the company keeps its focus on disciplined execution and shareholder returns.

Gulfport Energy NYSE: GPOR reported a strong start to 2026, with executives highlighting higher commodity pricing, continued capital returns and operational efficiency gains during the company’s first-quarter earnings call.

Michael Hodges, Gulfport’s executive vice president and chief financial officer, said the quarter was marked by the completion of the company’s discretionary acreage acquisition program and what he described as a record quarter of share repurchase activity. The company also announced that Domenic J. Dell'Osso, Jr. will join Gulfport as president and chief executive officer on May 28.

Hodges said Dell'Osso, referred to on the call as Nick, brings more than two decades of energy industry experience and “a sharp focus on operational and financial discipline.” He said the incoming CEO is expected to participate in Gulfport’s next quarterly earnings call in August.

Adjusted EBITDA and Free Cash Flow Rise in First Quarter

For the first quarter, Gulfport generated $264 million of adjusted EBITDA and $119 million of adjusted free cash flow. Hodges said the results were driven by strong commodity pricing and development of the company’s asset base.

Average production totaled 997 million cubic feet equivalent per day, which Hodges said was in line with expectations provided in February. The company reaffirmed its full-year production guidance of 1.03 billion to 1.055 billion cubic feet equivalent per day.

Cash operating costs for the quarter totaled $1.38 per million cubic feet equivalent. Hodges said that level was consistent with expectations and similar to last year’s pattern, with the first quarter expected to be a quarterly high point. Gulfport reaffirmed its full-year per-unit operating cost guidance, including lease operating expense, midstream expenses and taxes other than income, of $1.23 to $1.34 per Mcfe.

Capital spending related to drilling and completion activity totaled $118 million in the quarter, while maintenance, land and seismic investments totaled $4 million.

Company Completes Discretionary Acreage Program

Hodges said Gulfport invested approximately $102 million over the past four quarters to add more than two years of high-quality inventory adjacent to its core positions in Belmont and Monroe counties in Ohio. He said the acquisitions were made at an average cost of just over $2 million per net location.

The company has focused its acreage efforts in the wet gas and dry gas windows of the Ohio Utica, which Hodges said generate some of the strongest returns in Gulfport’s portfolio and can be converted into producing assets relatively quickly.

Since 2022, Hodges said Gulfport’s targeted discretionary acreage acquisitions have added more than 4.5 years of high-quality net locations. In response to an analyst question, he said the company continues to view additional leasing opportunities as a high priority for free cash flow allocation, though he emphasized that the strategy is targeted rather than broad-based.

“It’s really not a carpet bombing exercise,” Hodges said. “It’s us going out and trying to make sure that we have that line of sight before we allocate the dollars.”

Share Repurchases Reach Record Quarterly Level

Gulfport repurchased 866,000 shares of common stock during the first quarter for approximately $172.8 million, which Hodges said represented the highest quarterly investment in share repurchases in company history.

Since the start of the program, including a preferred redemption in 2025, Gulfport has repurchased approximately 8.2 million shares at an average price of just over $133 per share. Hodges said the company has returned nearly $1.1 billion to shareholders over the past four years.

Over the past two quarters, Gulfport has allocated more than $300 million to share repurchases, retiring nearly 10% of shares outstanding, according to Hodges. He said the company expects repurchases to remain an attractive capital allocation priority in 2026, supported by adjusted free cash flow and revolver capacity, while maintaining leverage at or below one turn.

Gulfport exited the quarter with trailing 12-month net leverage of approximately 0.9 times. The company also completed its spring borrowing base redetermination, increasing elected bank commitments by 10% while reaffirming its borrowing base at $1.1 billion. Pro forma for the increase, Gulfport’s liquidity at the end of the quarter totaled $872 million, including $2.9 million of cash and $869.3 million of borrowing capacity under its revolver.

Operations Focus on Utica, Marcellus and SCOOP

Matthew Rucker, Gulfport’s executive vice president and chief operating officer, said the company completed drilling eight gross wells during the quarter: two Utica wet gas wells, four Marcellus wells and two SCOOP Woodford wells.

Gulfport entered the year with three drilling rigs operating. As planned, the company released its SCOOP rig at the end of the first quarter and currently has two rigs drilling in Ohio. Rucker said Gulfport plans to release one rig at the end of the second quarter, moving to a one-rig program in Ohio for the remainder of 2026.

On the completions side, Gulfport brought five gross Utica dry gas wells online during the quarter, including its first two Utica development wells. Rucker said those wells continue to perform in line with recently developed straight lateral offsets and have unlocked approximately one year of additional high-quality inventory for future development planning.

Rucker said approximately two-thirds of Gulfport’s remaining 2026 turn-in-lines are expected to include a significant liquids component in their production profile. Hodges later said the company expects to become more liquids-weighted in the back half of the year, moving toward a low-teens liquids percentage, while noting Gulfport remains primarily a gas company.

Rucker also highlighted safety and efficiency results, saying the company recorded zero recordable incidents or spills during the quarter. He said Gulfport maintained its record all-in footage per day in the Utica from 2025, improved average tophole drilling days by 8% compared with full-year 2025 and set a new company record for the fastest Utica tophole drilled at 5.4 days.

In the Marcellus, Rucker said Gulfport delivered a 20% improvement in footage drilled per day compared with the company’s prior two operated pads in the area. In the SCOOP, he said the company’s Hero pad averaged approximately 40 days from spud to rig release per well, beating the company’s internal expectation of 55 days.

Executives Address Pricing, Hedging and Future Development

During the question-and-answer session, Hodges said Gulfport does not see constraints on its ability to market additional gas, citing a firm transportation portfolio that provides access to the Gulf Coast, Midwest and local markets. He said the company continues to prioritize maximizing free cash flow and has so far viewed relatively flat production as the appropriate strategy.

Hodges also said Gulfport remains “bullish” on gas heading into 2027, while keeping flexibility in its hedging program. He said the company typically prefers to enter a year with hedge coverage in the 30% to 70% range and is currently near the lower end for 2027.

Asked about service cost inflation, Rucker said Gulfport is seeing pressure around diesel, including fuel prices and related logistics and trucking costs. However, he said the company is not changing capital guidance and that efficiency gains have helped offset recent impacts.

Executives also discussed future development opportunities in the Marcellus North area and the SCOOP. Rucker said Gulfport plans a two-well approach in the Marcellus North to confirm assumptions about liquids content and composition before broader midstream and processing negotiations. On the SCOOP, he said recent drilling improvements increase confidence, though the asset remains capital-intensive and Gulfport wants to see consistent repeatability before making major changes to capital allocation.

Hodges closed the call by saying Gulfport remains focused on disciplined execution, capital allocation and shareholder returns as Dell'Osso prepares to join the company as CEO.

About Gulfport Energy NYSE: GPOR

Gulfport Energy Corporation is an independent oil and gas exploration and production company based in Oklahoma City, Oklahoma. The company focuses on the development of onshore natural gas, natural gas liquids (NGLs) and crude oil properties in the United States. Gulfport utilizes horizontal drilling and multi-stage hydraulic fracturing techniques to maximize production and enhance recovery from its resource plays.

The company's primary operations are concentrated in two major U.S. resource basins.

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