Gulfport Energy CEO's Vision Gains Traction: Analyst Highlights Underappreciated Value And Prospects

KeyBanc Capital Markets analyst Tim Rezvan upgraded Gulfport Energy Corporation GPOR from Sector Weight to Overweight, with a price target of $145.

Gulfport guided to $40 million of opportunistic land acquisitions underway in Ohio that may add 25-30 locations, the analyst notes. 

The company also delineates the Marcellus Shale in eastern Ohio, which could derisk another 40+ locations, Rezvan notes, supporting the measured steps to backfill inventory.

The analyst thinks that Ohio well results bode well for future efficiencies and will benefit from a lower well-cost environment in the future.

The analyst applauds Gulfport's hedge book (49% hedged for natural gas in 2024), which offers strong CF visibility and an upside to the strong 2024 backdrop for natural gas.

Rezvan maintains an above-strip 2024 natural gas price forecast of $3.75/mcf. The analyst sees GPOR shares as a "value plus torque" idea, given its 91% gas skew and partially hedged 2024 production profile.

Rezvan believes that the marketplace is starting to appreciate the "new" Gulfport vision implemented by new CEO John Reinhart and team. However, the analyst thinks that the company remains undercovered, underappreciated, and undervalued. 

The analyst views incremental measured share sales from Gulfport's largest holder (sold 17% of position in June) as a net positive, given it should further improve liquidity. 

The analyst lowered FY23 EPS to $20.20 from $20.54. Rezvan also lowered FY24 EPS estimates to $35.16 from $37.08.

Price Action: GPOR shares are trading lower by 0.35% to $112.20 on the last check Thursday.