Value Buy Alert: Gulfport Energy Corporation

Gulfport Energy had the profitable combination of rising production and higher crude and natural gas prices in the second quarter as the company surprised on estimates by 25%. It has surprised on estimates the last 2 quarters by an average of 33.5%. Gulfport’s forward P/E is 6.24.

Company Description

Gulfport Energy Corporation (GPOR) is an independent oil and natural gas exploration company headquartered in Oklahoma City. The company has properties in the Louisiana Gulf and the Permian Basin in West Texas.

Gulfport, a Zacks #1 Rank (Strong Buy), is also active in the Alberta Oil Sands through a 25% interest in Grizzly Oil Sands ULC. Grizzly is a major player among the independents in the oil sands, with the second largest land position in Alberta with 511,765 net acres of oil sands leases, all of which are owned and operated by Grizzly.

GPOR is also participating in the drilling of 27 wells in the Bakken play in the Williston Basin in North Dakota.

Gulfport’s strategy is to aggressively drill in its proven oil reserve properties in Southern Louisiana and the Permian Basin while exploring in other areas that may have high impact, such as the Oil Sands.

Revenues Surge 43% in the Second Quarter%

On Aug 7, Gulfport Energy reported second quarter earnings that surprised on estimates by 25%, or 7 cents per share. It was the second quarter in a row the company easily beat estimates.

Net income rose 55.5% to $14.886 million, or 35 cents per share, compared to $9.57 million, or 27 cents per share, in the year ago period.

Revenues jumped 43% to $35.802 million compared to $25.009 million last year.

Production Increases Year-Over-Year

Production also increased 12% year-over-year to 444.6 MBOE compared to 395.9 MBOE in the year ago period.

The company reported it saw exploration success in Southern Louisiana, as all four wells it drilled at Hackberry appear to be productive and are in line with expectations.

As expected given the rise in crude prices, average realized price for oil in the second quarter was $81.85 per barrel compared to $63.88 per barrel in the second quarter of 2007. Natural gas, which had also spiked in the second quarter, averaged $12.22 per MCF compared to $8.91 per MCF a year ago.

Consensus Estimates Rise for the Full Year

Given the rise in crude prices and the strong second quarter, covering analysts have been raising estimates for the full year.

In just the last 7 days, 2 out of 4 covering analysts raised full year estimates to $1.60 from $1.56 per share. 90 days ago, consensus estimates called for $1.47 per share.

Value Fundamentals

Gulfport Energy has a forward P/E of only 6.24. Its price-to-book is 1.85. The company has an average five year return on equity (ROE) of 13.69%.

Posted in Categories: Contributor, External Research, Stocks, UK.

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