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Why Gulfport Energy Corporation’s Stock Is Skyrocketing Today

By Matthew DiLallo - Updated May 9, 2018 at 11:43AM

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The oil and gas producer posted surprisingly strong results.

What happened

Shares of Gulfport Energy Corporation (GPOR) surged on Wednesday, rising more than 13% by 10:45 a.m. EDT after the oil and gas producer reported strong first-quarter results.

So what

Gulfport Energy pulled in $101.9 million, or $0.56 per share, of adjusted net income during the first quarter, which beat the consensus estimate by $0.14 per share. Fueling that strong showing was a more than 50% surge in production versus the year-ago quarter, due to strong drilling results in the Utica Shale and the impact of its acquisition of assets in the SCOOP play of Oklahoma. The company also benefited from an 11% decrease in operating costs from the fourth quarter.

A drilling rig with a sunset in the background.

Image source: Getty Images.

The company also made quick work of its $100 million share repurchase authorization, spending it all during the quarter. Because of that, the driller added another $100 million to the program, which it can afford after agreeing to sell its 25% stake in Strike Force Midstream for $175 million.

Gulfport's strong start to the year enabled it to increase its full-year production forecast. The company now sees output rising 20% to 23% over last year's average. That's up from its initial estimate that production would increase 15% to 19% this year. Furthermore, the company can achieve that higher output while keeping spending within its original budget, which it expects to fund with the cash flows it can generate at current oil and gas prices.

Now what

Gulfport Energy is off to a strong start in 2018. Not only is it growing briskly, but it's doing so while living within cash flow. Meanwhile, it's using excess cash from asset sales to buy back its beaten-down shares. That buyback is an excellent use of funds, since the stock is still down 35% over the past year even with today's pop, suggesting it could have more upside from here.

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