Disclosures

DISCLOSURES FOR COMPANY: Gulfport Energy (GPOR)

IMPORTANT DISCLOSURES

Wolfe Research Fundamental Stock Ratings Key

Outperform (OP): The security is projected to outperform analyst’s industry coverage universe over the next 12 months.
Peer Perform (PP): The security is projected to perform approximately in line with analyst’s industry coverage universe over the next 12 months.
Underperform (UP): The security is projected to underperform analyst’s industry coverage universe over the next 12 months.

Wolfe Research uses a relative rating system using terms such as Outperform, Peer Perform and Underperform (see definitions above). Wolfe Research does not assign ratings of Buy, Hold or Sell to the stocks it covers. Outperform, Peer Perform and Underperform are not the respective equivalents of Buy, Hold and Sell. Please carefully read the definitions of all ratings used in Wolfe Research research. In addition, since Wolfe Research research contains more complete information concerning the analyst’s views, please carefully read Wolfe Research research in its entirety and not infer the contents from the ratings alone. In all cases, ratings (or research) should not be used or relied upon as investment advice and any investment decisions should be based upon individual circumstances and other considerations.

Wolfe Research Fundamental Sector Weighting System

Market Overweight (MO): Expect the industry to outperform the primary market index for the region (S&P 500 in the U.S.) by at least 10% over the next 12 months.
Market Weight (MW): Expect the industry to perform approximately in line with the primary market index for the region (S&P 500 in the U.S.) over the next 12 months.
Market Underweight (MU): Expect the industry to underperform the primary market index for the region (S&P 500 in the U.S.) by at least 10% over the next 12 months.

Wolfe Research Distribution of Fundamental Stock Ratings (As of March 31, 2018)

Outperform (Buy): 41% (3% Investment Banking Clients)
Peer Perform (Hold): 50% (2% Investment Banking Clients)
Underperform (Sell): 9% (4% Investment Banking Clients)

Wolfe Research does not assign ratings of Buy, Hold or Sell to the stocks it covers. Outperform, Peer Perform and Underperform are not the respective equivalents of Buy, Hold and Sell but represent relative weightings as defined above. To satisfy regulatory requirements, Outperform has been designated to correspond with Buy, Peer Perform has been designated to correspond with Hold and Underperform has been designated to correspond with Sell.

Wolfe Research Fundamental Valuation Methodology

Company: Gulfport Energy (GPOR)
Fundamental Valuation Methodology: Forward EV/EBITDAX & Sum-of-the-parts NAV

Wolfe Research Fundamental Recommendation, Rating and Target Price Risks

Company: Gulfport Energy (GPOR)
Risks That May Impede Achievement of the Recommendation, Rating or Price Target: Risks to our rating and target price include a volatile commodity price environment, particularly natural gas. Risks to the upside include a natgas price higher than the $2.75 - $3.25/mcf range factored in our 16-18 estimates. Another key risk to the upside is further M/A that may reset both values for acreage and EBITDAx above what we have modeled. On the downside, GPOR is in development mode incorporating pad drilling primarily with its Ohio Utica acreage. Given the discrete timing of drilling, completion, and bringing to sales, we believe production additions may be lumpy for the foreseeable future. Moreover, greater activity in the Utica shale may create tightness in rig and service/frac spread availability which could impact operating margins and cash flow negatively. Access to pipeline takeaway and processing infrastructure in the Utica may not expand commensurate with the company and industry production, making sales growth targets and narrower differentials more difficult to achieve. Finally, the company is also appraising its Utica shale opportunity and some portion of its drilling activity is also slated to hold acreage. If the Utica proves to be smaller or less economic, GPOR may not be able to find and replace its reserves as cost effectively through acquisition as with organic development of its Utica acreage, especially if we are at lower for longer natural gas prices.

Wolfe Research Research Disclosures

Gulfport Energy (GPOR): None.

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