Gulfport Energy Corporation (GPOR): Business Model Canvas [11-2024 Updated]
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Gulfport Energy Corporation (GPOR) Bundle
Understanding the business model of Gulfport Energy Corporation (GPOR) offers valuable insights into how this key player in the energy sector operates. With a focus on natural gas and oil exploration, GPOR leverages its strategic partnerships and advanced technologies to maintain a competitive edge. This analysis will delve into the components of GPOR's Business Model Canvas, highlighting essential factors such as revenue streams, cost structure, and customer segments that drive its success in the dynamic energy market. Discover more about how GPOR positions itself for sustainable growth and profitability below.
Gulfport Energy Corporation (GPOR) - Business Model: Key Partnerships
Financial Institutions for Commodity Hedging
Gulfport Energy Corporation actively partners with financial institutions to manage price volatility through commodity hedging. As of September 30, 2024, Gulfport had the following open fixed price swap positions:
| Index | Daily Volume (MMBtu/d) | Weighted Average Price ($/MMBtu) |
|---|---|---|
| Remaining 2024 NYMEX Henry Hub | 400,000 | $3.77 |
| 2025 NYMEX Henry Hub | 250,000 | $3.82 |
| 2026 NYMEX Henry Hub | 160,000 | $3.59 |
| Remaining 2024 NYMEX WTI | 500 | $77.50 |
| 2025 NYMEX WTI | 2,000 | $74.50 |
| Remaining 2024 Mont Belvieu C3 | 2,500 | $30.25 |
| 2025 Mont Belvieu C3 | 2,000 | $30.09 |
These hedging strategies allow Gulfport to mitigate risks associated with fluctuations in natural gas and oil prices, which are often subject to significant volatility.
Energy Trading Firms for Derivative Contracts
Gulfport collaborates with energy trading firms to enter into various derivative contracts, including options and swaps. The company utilizes these contracts to manage its exposure to commodity price fluctuations. As of September 30, 2024, Gulfport had the following open sold call option positions:
| Index | Daily Volume (MMBtu/d) | Weighted Average Price ($/MMBtu) |
|---|---|---|
| Remaining 2024 NYMEX Henry Hub | 202,000 | $3.33 |
| 2025 NYMEX Henry Hub | 193,315 | $5.80 |
These arrangements help Gulfport to enhance its revenue streams while limiting downside risks in adverse market conditions.
Service Providers for Drilling and Completion Operations
Partnerships with service providers are critical for Gulfport's operational efficiency in drilling and completion activities. The company has reported significant investments in drilling operations, with a total net production of 1,057.2 MMcfe per day as of the third quarter of 2024. Gulfport turned to sales 10 gross (9.0 net) operated wells during the same period.
Key operational expenses related to service providers include:
| Expense Type | Amount ($ thousands) |
|---|---|
| Lease Operating Expenses | 50,843 |
| Transportation, Gathering, Processing and Compression | 263,048 |
| Depreciation, Depletion and Amortization | 241,401 |
These partnerships not only facilitate drilling operations but also contribute to the overall cost management strategy of Gulfport, ensuring the company can operate efficiently and effectively within its target markets.
Gulfport Energy Corporation (GPOR) - Business Model: Key Activities
Exploration and production of natural gas and oil
Gulfport Energy Corporation engages primarily in the exploration and production of natural gas and oil, with significant operations located in the Utica and Marcellus formations in the Appalachia region and the SCOOP play in Oklahoma. During the third quarter of 2024, Gulfport reported total net production of approximately 1,057.2 MMcfe per day, which reflects a marginal increase from 1,056.9 MMcfe per day in the same period of 2023.
In the nine months ending September 30, 2024, Gulfport spud 13 gross (12.7 net) operated wells and commenced sales from 16 gross (15.4 net) operated wells targeting the Utica formation, incurring a total cost of approximately $227.5 million. Additionally, the company commenced sales from 3 gross (2.4 net) operated wells in the SCOOP for a total incurred cost of around $47.5 million.
| Production Volumes | Three Months Ended September 30, 2024 | Three Months Ended September 30, 2023 |
|---|---|---|
| Natural Gas (Mcf/day) | 966,522 | 971,352 |
| Oil and Condensate (Bbl/day) | 4,618 | 3,195 |
| NGL (Bbl/day) | 10,489 | 11,061 |
Implementing risk management strategies
To mitigate the financial impact of commodity price volatility, Gulfport utilizes various risk management strategies including derivative contracts. As of September 30, 2024, Gulfport's natural gas and oil derivatives were structured to provide a degree of price certainty, with the following positions:
| Natural Gas Costless Collars | Daily Volume (MMBtu/d) | Weighted Average Floor Price ($/MMBtu) | Weighted Average Ceiling Price ($/MMBtu) |
|---|---|---|---|
| Remaining 2024 NYMEX Henry Hub | 225,000 | 3.36 | 5.14 |
| 2025 NYMEX Henry Hub | 220,000 | 3.37 | 4.23 |
Additionally, Gulfport has entered into natural gas basis swap positions to guarantee fixed price differentials to NYMEX Henry Hub from specified delivery points.
Maintaining operational efficiency in production
Gulfport Energy focuses on enhancing operational efficiency in its production processes. For the nine months ended September 30, 2024, the company reported total operating expenses of $640.0 million, with significant costs in transportation, gathering, processing, and compression amounting to $263.0 million. The company aims to optimize its operations while maintaining a disciplined capital expenditure plan, which for 2024 is estimated to be in the range of $325 million to $335 million for drilling and completion activities.
In terms of cash flow, Gulfport generated $501.2 million from operating activities for the nine months ended September 30, 2024, compared to $567.7 million for the same period in 2023.
| Cash Flows Overview | Nine Months Ended September 30, 2024 | Nine Months Ended September 30, 2023 |
|---|---|---|
| Net Cash Provided by Operating Activities | $501.2 million | $567.7 million |
| Total Oil and Natural Gas Property Expenditures | $376.9 million | $421.1 million |
| Repurchases of Common Stock | $103.9 million | $82.8 million |
Gulfport Energy Corporation (GPOR) - Business Model: Key Resources
Assets in the Appalachia and Anadarko basins
Gulfport Energy Corporation primarily operates in two significant regions: the Appalachia basin, focusing on the Utica and Marcellus formations, and the Anadarko basin, targeting the SCOOP Woodford and Springer formations. As of September 30, 2024, the company reported total net production averaging approximately 1,057.2 MMcfe per day, maintaining production levels consistent with the previous year, primarily due to effective development programs.
| Region | Production (Mcf/day) | Oil & Condensate (Bbl/day) | NGL (Bbl/day) |
|---|---|---|---|
| Utica & Marcellus | 822,015 | 3,105 | 3,491 |
| SCOOP | 144,507 | 1,513 | 6,998 |
| Total | 966,522 | 4,618 | 10,489 |
Skilled workforce and technical expertise
Gulfport places significant emphasis on its skilled workforce, which is crucial for its operational efficiency and technological advancement. The company employs a highly trained team that specializes in the exploration and production of natural gas and oil. This expertise enables Gulfport to effectively manage its assets and optimize production techniques. The company has also invested in training programs to enhance the skills of its workforce, ensuring they are well-equipped to handle advanced drilling and completion technologies.
Advanced drilling and completion technologies
Gulfport Energy leverages advanced drilling and completion technologies to enhance its operational efficiency and reduce costs. These technologies include the use of horizontal drilling and hydraulic fracturing, which have significantly improved production rates. As of September 30, 2024, Gulfport reported turning to sales 10 gross (9.0 net) operated wells, highlighting its capability in executing effective drilling programs.
The company's financial performance reflects its strategic use of these technologies, with operating cash flows amounting to $189.7 million during the third quarter of 2024. This operational efficiency is further supported by a robust financial structure, including total liquidity of $909.4 million at the end of the third quarter.
Gulfport Energy Corporation (GPOR) - Business Model: Value Propositions
Reliable supply of natural gas and oil
Gulfport Energy Corporation is focused on providing a reliable supply of natural gas and oil. As of the third quarter of 2024, the company reported a total net production of approximately 1,057.2 MMcfe per day, consistent with the previous year, indicating stable production capabilities amid fluctuating market conditions.
The breakdown of production volumes for the three months ended September 30, 2024, is as follows:
| Product Type | Utica & Marcellus (Mcf/day) | SCOOP (Mcf/day) | Total (Mcf/day) |
|---|---|---|---|
| Natural Gas | 822,015 | 144,507 | 966,522 |
| Oil and Condensate (Bbl/day) | 3,105 | 1,513 | 4,618 |
| NGL (Bbl/day) | 3,491 | 6,998 | 10,489 |
Commitment to environmentally responsible operations
Gulfport Energy demonstrates a commitment to environmentally responsible operations. The company actively engages in sustainable practices that minimize environmental impact while maximizing efficiency. Gulfport's development strategy emphasizes the use of advanced technologies and best practices to ensure compliance with environmental standards.
In 2024, Gulfport's operational highlights included:
- Total liquidity of $909.4 million.
- Extended the maturity of substantially all long-term Senior Notes from 2026 to 2029.
- Extended the maturity of the Credit Facility to 2028.
Focus on sustainable cash flow and shareholder returns
The company prioritizes sustainable cash flow and shareholder returns. In the three months ended September 30, 2024, Gulfport generated approximately $189.7 million in operating cash flows. The financial results for the nine months ended September 30, 2024, compared to the previous year, are summarized as follows:
| Category | 2024 (in thousands) | 2023 (in thousands) | % Change |
|---|---|---|---|
| Natural Gas Sales | $492,606 | $619,181 | (20)% |
| Oil and Condensate Sales | $70,295 | $76,212 | (8)% |
| NGL Sales | $80,870 | $92,935 | (13)% |
| Total Revenues | $718,258 | $1,302,594 | (45)% |
Gulfport also actively repurchased shares, with 341,132 shares repurchased for $49.9 million in the third quarter of 2024, reflecting a commitment to enhancing shareholder value.
Gulfport Energy Corporation (GPOR) - Business Model: Customer Relationships
Building long-term relationships with energy buyers
Gulfport Energy Corporation focuses on establishing strong, long-term relationships with its energy buyers. The company’s production operations are primarily concentrated in the Appalachia and Anadarko basins, targeting high-demand natural gas markets. In 2024, Gulfport reported total net production of 1,057.2 MMcfe per day, showcasing its ability to meet the energy needs of its customers effectively .
Engaging in transparent communication regarding production updates
Gulfport emphasizes transparency in its operations, providing regular updates to its customers about production levels and market conditions. The company generated $189.7 million of operating cash flows during the third quarter of 2024, which reflects its robust operational performance and commitment to keeping stakeholders informed .
Offering competitive pricing through effective hedging strategies
To ensure competitive pricing for its customers, Gulfport employs effective hedging strategies. As of September 30, 2024, the company had open fixed price swap positions totaling 400,000 MMBtu/d at a weighted average price of $3.77 per MMBtu for natural gas. Furthermore, Gulfport's hedging strategy includes the use of costless collars, allowing them to maintain price stability while managing market volatility.
| Index | Daily Volume | Weighted Average Price |
|---|---|---|
| Natural Gas (MMBtu/d) | 400,000 | $3.77 |
| Oil (Bbl/d) | 500 | $77.50 |
| NGL (Bbl/d) | 2,500 | $30.25 |
In addition to these strategies, Gulfport’s customer relationship management is supported by a robust financial framework. The company’s total revenues for the nine months ended September 30, 2024, were $718.3 million, down from $1.3 billion in the same period the previous year, reflecting the fluctuating market conditions affecting energy prices . This performance highlights Gulfport's resilience and commitment to maintaining strong relationships with its customers through competitive pricing and reliable service delivery.
Gulfport Energy Corporation (GPOR) - Business Model: Channels
Direct sales to utilities and industrial customers
Gulfport Energy Corporation engages in direct sales of natural gas, oil, and NGLs (Natural Gas Liquids) to utilities and industrial customers. For the nine months ended September 30, 2024, the company reported total revenues of $718.3 million, with natural gas sales contributing $492.6 million, oil and condensate sales accounting for $70.3 million, and natural gas liquids sales at $80.9 million. The focus on direct sales allows Gulfport to establish long-term relationships with large customers, ensuring a steady demand for its products.
Partnerships with energy trading platforms
Gulfport has formed strategic partnerships with various energy trading platforms to enhance its market reach and optimize pricing strategies. As of September 30, 2024, the company had entered into several commodity derivative contracts to hedge against price fluctuations, including fixed price swaps and basis swaps. These partnerships enable Gulfport to manage risk and maintain competitive pricing, thereby facilitating smoother transactions with trading partners.
Market presence in regional energy exchanges
Gulfport Energy maintains a significant market presence in regional energy exchanges, facilitating the trading of its commodities. As of September 30, 2024, the company held fixed price swap contracts for natural gas with a daily volume of 400,000 MMBtu at a weighted average price of $3.77. This presence in energy exchanges allows Gulfport to capitalize on market opportunities and adjust its sales strategies based on real-time market conditions.
| Channel Type | Description | Key Metrics |
|---|---|---|
| Direct Sales | Sales to utilities and industrial customers | Total Revenues: $718.3 million (Natural Gas: $492.6 million) |
| Partnerships | Strategic partnerships with energy trading platforms | Hedged Contracts: Fixed price swaps and basis swaps |
| Market Presence | Active participation in regional energy exchanges | Fixed Price Swap Volume: 400,000 MMBtu at $3.77 |
Gulfport Energy Corporation (GPOR) - Business Model: Customer Segments
Utility companies requiring natural gas supply
Gulfport Energy Corporation primarily serves utility companies that require a stable supply of natural gas. In 2024, the company reported a total natural gas production volume of approximately 266,011 MMcf for the nine months ended September 30, 2024, with an average price of $2.76 per Mcf, including the impact from settled derivatives. This consistent production supports utility companies' demand for natural gas, essential for electricity generation and heating.
Industrial manufacturers using oil and gas products
Gulfport also caters to industrial manufacturers that utilize oil and gas products in their operations. The company reported oil and condensate sales of $70.3 million for the nine months ended September 30, 2024. The demand from industrial sectors for these products remains significant, contributing to the overall revenue stream of Gulfport. The company’s strategic focus on its operations in the Utica and Marcellus regions, which are rich in oil and natural gas, further supports this customer segment.
Investors seeking returns from energy production
Investors represent a crucial customer segment for Gulfport Energy Corporation, particularly those seeking returns from energy production. The company’s net income attributable to common stockholders for the three months ended September 30, 2024, was $7.3 million, translating to a net income per share of $0.40. Gulfport has also engaged in share repurchase programs, repurchasing 341,132 shares for $49.9 million at a weighted average price of $146.17 per share during the third quarter of 2024, indicating a commitment to returning capital to shareholders.
| Customer Segment | 2024 Production Volume (MMcf) | Average Price ($/Mcf) | Oil and Condensate Sales ($ million) | Net Income ($ million) | Share Repurchase ($ million) |
|---|---|---|---|---|---|
| Utility Companies | 266,011 | 2.76 | - | - | - |
| Industrial Manufacturers | - | - | 70.3 | - | - |
| Investors | - | - | - | 7.3 | 49.9 |
Gulfport Energy Corporation (GPOR) - Business Model: Cost Structure
Exploration and production costs
As of September 30, 2024, Gulfport Energy Corporation incurred exploration and production costs primarily associated with drilling and completion activities. The total cash expenditures for oil and natural gas properties for the nine months ended September 30, 2024, were as follows:
| Category | Amount (in thousands) |
|---|---|
| Drilling and completion costs | $267,802 |
| Leasehold acquisitions | $89,931 |
| Other | $19,177 |
| Total oil and natural gas property expenditures | $376,910 |
Operational costs related to drilling and completion
The operational costs associated with drilling and completion processes contribute significantly to Gulfport's overall cost structure. These costs include lease operating expenses, taxes other than income, and transportation, gathering, processing, and compression expenses. The average costs per Mcfe for these operations for the nine months ended September 30, 2024, were as follows:
| Cost Type | Average Cost ($/Mcfe) |
|---|---|
| Lease operating expenses | $0.18 |
| Taxes other than income | $0.08 |
| Transportation, gathering, processing, and compression | $0.91 |
| Total operating costs (including midstream costs) | $1.16 |
Administrative and financing expenses
Administrative and financing expenses also play a crucial role in the cost structure of Gulfport Energy Corporation. For the nine months ended September 30, 2024, the company reported the following administrative expenses:
| Expense Type | Amount (in thousands) |
|---|---|
| General and administrative expenses, gross | $59,921 |
| Reimbursed from third parties | ($10,962) |
| Capitalized general and administrative expenses | ($18,530) |
| General and administrative expenses, net | $30,429 |
The interest expenses for the same period were as follows:
| Interest Expense Type | Amount (in thousands) |
|---|---|
| Interest on 2026 Senior Notes | $31,014 |
| Interest on 2029 Senior Notes | $2,194 |
| Interest expense on Credit Facility | $12,001 |
| Total interest expense | $46,027 |
Overall, Gulfport Energy Corporation's cost structure reflects a combination of exploration, operational, administrative, and financing expenses that are essential for maintaining its operations and achieving financial stability in a volatile market. The strategic management of these costs is vital for maximizing profitability while minimizing risks associated with commodity price fluctuations and operational inefficiencies.
Gulfport Energy Corporation (GPOR) - Business Model: Revenue Streams
Sales from natural gas, oil, and NGL products
Total sales for Gulfport Energy Corporation for the nine months ended September 30, 2024, were $643.8 million, a decrease from $788.3 million in the same period of 2023, reflecting an 18% decline.
Breakdown of sales by product for the nine months ended September 30, 2024:
| Product | Sales ($ thousands) | Sales ($ thousands) 2023 | % Change |
|---|---|---|---|
| Natural Gas | 492,606 | 619,181 | (20)% |
| Oil and Condensate | 70,295 | 76,212 | (8)% |
| NGL | 80,870 | 92,935 | (13)% |
| Total | 643,771 | 788,328 | (18)% |
Average prices without the impact of derivatives for natural gas were $2.23/Mcfe in 2024 compared to $2.75/Mcfe in 2023, reflecting a decrease of 22%. The average price, including settled derivatives, was $3.06/Mcfe for 2024, compared to $3.10/Mcfe in 2023.
Income from hedging activities
Gulfport's hedging activities contributed significantly to its financial performance. For the nine months ended September 30, 2024, the net gain on natural gas, oil, and NGL derivatives was $74.5 million, compared to $514.3 million in the same period of 2023.
Breakdown of gains and losses on derivative instruments for the nine months ended September 30, 2024:
| Derivative Type | Fair Value Gains (Losses) ($ thousands) | Settlement Gains (Losses) ($ thousands) | Total Gains (Losses) ($ thousands) |
|---|---|---|---|
| Natural Gas | (168,516) | 242,645 | 74,129 |
| Oil | 4,832 | (166) | 4,666 |
| NGL | (2,771) | (1,537) | (4,308) |
| Total | (166,455) | 240,942 | 74,487 |
As of September 30, 2024, Gulfport had natural gas basis swap positions that included daily volumes and fixed spreads, which are critical for managing price volatility.
Potential revenue from partnerships and joint ventures
Gulfport Energy actively seeks partnerships and joint ventures to enhance its revenue streams. As of late 2024, the company has engaged in various partnerships to explore and develop new drilling opportunities, particularly in the Utica and Marcellus regions, which are expected to yield significant returns.
Through joint ventures, Gulfport aims to leverage shared resources and expertise, thereby reducing costs and increasing production efficiency. The focus remains on maximizing the value derived from its existing assets while exploring new opportunities for growth.
Updated on 16 Nov 2024
Resources:
- Gulfport Energy Corporation (GPOR) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Gulfport Energy Corporation (GPOR)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Gulfport Energy Corporation (GPOR)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.