Gulfport Energy has reported financial and operating results for the three and twelve months ended December 31, 2021 and provided its 2022 development plan and financial guidance.

Fourth Quarter 2021 Highlights

• Delivered total net production of 1,068.9 MMcfe per day
• Reported $558.1 million of net income and $224.9 million of adjusted EBITDA
• Generated $128.3 million of net cash provided by operating activities and $133.9 million of free cash flow
• Amended credit facility increasing liquidity by more than $160 million
• Authorized previously announced stock repurchase program to acquire up to $100 million of outstanding common stock

Full Year 2021 Highlights

• Delivered total net production 2% above and capital expenditures 2% below the midpoint of original 2021 guidance
• Reported $138.2 million of net income and $716.8 million of adjusted EBITDA
• Reduced total per unit expense by approximately 20% when compared to 2020
• Generated $465.1 million of net cash provided by operating activities and $361.0 million of free cash flow
• Achieved leverage target of below 1.0x at year end 2021
• Reported total proved reserves of 3.9 Tcfe and total discounted future net cash flows of $4.1 billion

Full Year 2022 Outlook & Overview

• Intend to invest approximately $360 million of capital, supporting a more continuous drilling program in the Utica, resulting in more than 5% production growth in 2023
• Expect to deliver full year net production of approximately 1.0 Bcfe per day
• Plan to generate approximately $335 million of free cash flow; free cash flow yield of approximately 24% at current strip prices

"During 2021, we significantly improved our balance sheet and cost structure through the restructuring process and emerged with a continuous improvement mindset, focused on disciplined capital allocation and free cash flow generation. The team executed extremely well, delivering total 2021 net production at the high end of the guidance range with total capital expenditures at the low end of the range. We also successfully achieved numerous financial objectives, including refinancing our credit facility and reaching our target leverage ratio ahead of schedule," commented Tim Cutt, CEO of Gulfport.

"Our 2022 development program is centered around more consistent drilling operations in the Utica, allowing for increased operational efficiencies and opportunities for incremental cost reductions. We anticipate this level of activity will result in production growth of more than 5% in 2023 and modest growth through 2025. We will continue to prioritize the return of capital to shareholders and, now that we have reached our target leverage ratio, look forward to beginning to execute our previously announced stock repurchase program, which we believe holds significant value at recent trading levels."

Production

Gulfport’s net daily production for the full year of 2021 averaged 1,003.6 MMcfe per day, primarily consisting of 772.1 MMcfe per day in the Utica and 231.1 MMcfe per day in the SCOOP. For the full year of 2021, Gulfport’s net daily production mix was comprised of approximately 91% natural gas, 6% natural gas liquids ("NGL") and 3% oil.

Estimated Proved Reserves

Gulfport reported year end 2021 total proved reserves of 3.9 Tcfe, consisting of 3.5 Tcf of natural gas, 16.2 MMBbls of oil and 53.8 MMBbls of natural gas liquids. Gulfport’s year end 2021 total proved reserves increased approximately 51% when compared to its 2020 total proved reserves. The standardized measure of discounted future net cash flows of Gulfport’s total proved reserves was $4.1 billion and the present value, discounted at 10% (referred to as “PV-10”), was $4.3 billion at December 31, 2021, an increase of $3.6 billion and $3.8 billion, respectively, when compared to its 2020 results.

Capital Investment

Capital investment was $292.9 million (on an incurred basis) for the full year of 2021, of which $275.6 million related to drilling and completion (“D&C”) activity and $17.3 million related to leasehold and land investment.

Financial Position and Liquidity

As of December 31, 2021, Gulfport had approximately $3.3 million of cash and cash equivalents, $164.0 million of borrowings under its revolving credit facility, $122.1 million of letters of credit outstanding and $550 million of outstanding 2026 senior notes.

Gulfport’s liquidity at December 31, 2021, totaled approximately $417.2 million, comprised of the $3.3 million of cash and cash equivalents and approximately $413.9 million of available borrowing capacity under its new revolving credit facility.

As of February 25, 2022, Gulfport had $7.1 million of cash and cash equivalents, zero borrowings under its revolving credit facility, $109.8 million of letters of credit outstanding and $550 million of outstanding 2026 Notes.

During 2021, the company paid dividends on its Preferred Stock, which included 3,071 shares of New Preferred Stock paid in kind, approximately $55 thousand of cash-in-lieu of fractional shares and $1.5 million of cash dividends.