Operating cash flow
For 2Q17, Gulfport Energy (GPOR) reported operating cash flow of ~$144 million, which is ~3% lower than Wall Street analysts’ expectation for ~$149 million in cash flows. On a year-over-year basis, GPOR’s 2Q17 cash flow is ~144% higher than the ~$59 million in 2Q16.
Declining operating cash flow
Gulfport Energy’s operating cash flow started to decline in 4Q15 due to a strong decline in natural gas (UNG) prices. In 2Q16, Gulfport Energy reported the lowest ever operating cash flow of ~$59 million in the last two years. On a sequential basis, GPOR’s 2Q17 cash flow is lower when compared with ~$84 million in 1Q17.
Free cash flow
In 2Q17, Gulfport Energy spent ~$284 million in capital expenditures, meaning GPOR’s free cash flow is negative at ~-$140 million, or ~-$0.77 per share.
In 1H17, Gulfport Energy’s total capital expenditures were ~$611 million. GPOR spent ~$536 million on drilling and completion, ~$52 million on leasehold capital expenditures, and ~$23 million on midstream operations. GPOR’s 1H17 capital expenditures are higher by ~128% when compared with 1H16 capital expenditures of ~$267 million.
While commenting on capital expenditures, Michael Moore, Gulfport’s CEO and president, said, “As planned, the second quarter of 2017 marks our most active quarter from both an activity and capital spending standpoint for 2017. We currently forecast a similar to slightly lower drilling and completion spend during the third quarter of 2017, decreasing significantly in the fourth quarter of 2017 and reaffirm our capital budget for 2017 of approximately $1.0 to $1.1 billion.”
Gulfport Energy’s forecasted a fiscal 2017 capital program of $1.0 billion to $1.1 billion, which represents a midpoint increase of ~91% when compared with capital expenditures of ~$550 million in 2016. GPOR’s peer Encana (ECA) expects capital expenditures in a range of $1.6 billion–$1.8 billion, which is ~55% higher when compared with ECA’s capital expenditures of ~$1.1 billion in 2016.