Shares of Gulfport Energy Corporation (NASDAQ:GPOR) rallied about 10% by 10:30 a.m. EST on Monday. Fueling the natural gas producer's surge was some follow-through from its strong third-quarter results last week and a big uptick in natural gas prices due to the forecast of colder weather on the horizon.
The price of natural gas surged 8% in early-morning trading on Monday after weather forecasters said that a blast of cold air would hit the U.S. this week. The cooler temperatures will likely bring rain and snow across much of the Great Plains and Midwest before they head east. That cold front will likely fuel greater demand for natural gas to heat homes, which is why its price is on fire today. The potential for an uptick in demand and pricing is excellent news for Gulfport Energy, since natural gas accounted for 89% of the company's production last quarter.
Investors need to look no further than Gulfport Energy's stronger-than-expected third-quarter results last week to see how much improving commodity prices can impact its profitability. The natural gas driller earned an adjusted profit of $0.49 per share, which beat expectations by $0.07 per share and was well ahead of the year-ago profit of $0.32 per share. Fueling the company's strong showing was a surge in natural gas production out of the Utica Shale and a big uptick in natural gas liquids (NGLs) from the SCOOP play of Oklahoma as well as an improvement in its realized price for gas from $2.21 to $2.44 per million cubic feet.
While natural gas is a versatile fuel, changes in the weather can have a big impact on pricing since it's vital for heating homes and businesses in the winter. Because of that, the shift in temperatures should fuel greater near-term natural gas demand, enabling gas-focused producers like Gulfport Energy to make more money. However, while the weather is providing a short-term boost, the industry has several headwinds to overcome before natural gas stocks are worth buying for the long haul.