Fri, 12 Dec 2008|
Automatically Generated Transcript (may not be 100% accurate)
This trip set I'm Jim -- -- CEO of Gulfport energy and it's going to be here. With the -- today. Let's move on to -- cautionary forward looking statement. And we'll pass that -- using those before. -- little bit about Gulfport we operate them for -- areas we'll talk about it in more detail. They're all places with a big bankable in place we've got a conservative financial structure. We have some eyes fixed price hedges in place through 2009. -- really been -- today. And one of the things they give you some flexibility that a lot of people don't have as in the last four years and our main south Louisiana field. We drilled over sixty producing wells down there and we average about six zones -- well. So -- about 400 zones in the last four years these wells. Typical and average well about -- in your -- so. The vast majority of these 400 zones are still behind pipe and their -- there for us to complete him. At minimal capital cost and so. That alone puts -- and a pretty good place right now to be to ride out the storm there were in. For the next few years and so our plan which we talked about on our recent call. Is basically to maintain our production this year through re completion and some. Some -- to -- and that would need to do. Well process they -- like this we got a few -- we have protect but. Basically we'll talk about our plan later this essentially a maintenance capex plan. It's reduced a lot from last year but we think that's a place that would need to be right now. Now for those that are new to the story. Let me give you a quick review. We're -- enterprise value about 300 million dollars. And are only dead as a ninety million dollar revolver and we're we're up against the limits on that it. Closely as we go through our numbers that we're going to be thrown off a lot of even. Cash flow in the next year and so we plan to play that down. And we are high on oral we're bullish on oil -- -- prices suffered in the recent -- but we still -- a good place to be about 94% of our current production -- old. And our operating areas as -- -- places with a big bank. -- in place that includes southern Louisiana. Permian Basin Bakken in the Canadian oil sands. These are all great places and -- have tremendous drilling opportunities but just not today with prices where they are for the product. And it just as important with the costs that were there are. That's overweight or is for the cost to come back down we'll talk -- more about that fact. Let me related story from a couple days ago I talked to a friend of mine and Tulsa is. Lava. I have land men and one of the big independents in Tulsa. And he said that a couple months ago they had 28. To 32 rigs running. Usually it's you know -- one of the bigger. Companies and Oklahoma. Right now have four rigs running. And after Thanksgiving and they're going to be down to two rigs running. -- the go -- to zero as soon as they can. And their plan is to stop growing now they're gonna wait until at least march they're not plan on start -- -- -- march and that's a pretty good -- of him -- that generated have to be crazy to drill well now we expect the cost come down -- but point 5%. Well that's the same number that we were using when we had our call we're talking about 25% reductions in the costs. And another thing was that they had talked to their. -- supplier of the -- -- get most of the real leverage from. And that company already had 25%. Of the rigs on the grass. And he was expecting that come down substantially more so you know it. What goes up must come down you know we're always get hit by the cycles -- the -- business but. It's. -- prices rose too long ago when the prizes weren't you know we're kind of in the same level we'll talk about that a little bit later but. But the costs are -- and that's what Hillary is so right now. Where is gonna stick with where we are. Are we got a business strategy. That. Says it will drill when the prices are ride that right now they're not we've had strong performance this year. Do despite the two hurricanes came through and had an affect on our. Production. We position herself very well today's market we don't have any long term going contracts are similar obligations. Said we expect the drilling process to respond to the commodity prices. And we're gonna waited out till it -- it does respond. We've got fixed price contracts in place at present we got 3500 barrels which would make about 6000 barrels -- now. So it's over half of our production got it has about 8660. And in 2009 we have a year. Nine dollars and six cents for 3000 barrels about half -- -- -- producing now. But the most important thing. Is that the areas that were in -- places with long lived production profiles. And with particularly. -- -- major areas still be in south Louisiana where we have so many behind -- praise. We've just got a lot of flexibility about where we spend your money. Let's look here at. Some of our financial statistics and you concede won't go -- -- -- but you concede that. It looks like in 2009 it will continue to grow and all important categories -- -- financial performance goes revenue per share and pressure. Even -- share operating cash flow per share. And that's even taken into account the impacts of hurricanes. -- -- -- This is our current -- This is less -- in that the prices stay where there are now. We forecast 35 million next -- -- at this point last year we were -- announcement in 200895. Million. If the price goes up for the costs go down -- revised this forecast right now until things change. This is going to be. So again that's -- and and we re completed -- -- south Louisiana wells. We've got. The Permian wells. We put bill and there we'll talk about that little bit except for some political science wells. Or we're trying to learn to be more efficient there. And in the Bakken. We've we've -- to participate we don't operate if they're so it's we're kind of at the immersive. -- propose proposes wells that we anticipate that's gonna. Go down compared to 2008. Just because it's against Australia and compare the prices. So even with the reduction in camp -- Which will be due primarily to. The production will have will be. Because Marie complacent so we think that from the level we are now where we've been growing. Now that we're at this level we're lookin' at -- and that flat. Through the the coming year. And if -- -- for the coming year than our total production for the year will be up compared to last year so that's where we think we are right now. Then we're gonna use our discretionary cash flow to -- pay down. Our revolver. We think that will be seeing some opportunities from a little premature now. We have really seen lots of signs of distress sales by people -- we think they'll become and we. Have continually hatter -- look -- an acquisition opportunities we thank those things have come along so. We're trying to get. You know ourselves and a good positions possible to keep some dry powder and take advantage of what comes along later in the year. We talked about production you can -- We're a little bit. Above our growth rate. From last year a little bit about -- levels and 2008. If we had back the effects of the -- and the production that we lost. Due to that. We would've been substantially head back on our growth rate so. And you can see our range for next year. And that's from one point 922. Point one million barrels a boy also we think we can continue to grow just by having enough flat here from. Little less than 6000 barrels of -- now. These are areas of operation. Three years ago we were entirely in south Louisiana. And we started. Let's -- let's look back three years ago about 2004 the process 3658. 2005 we were in for VOA news we were in about the 4445. Dollar range. And that's when we ramp. Drilling in Wesco we ramp up for my wells the year before the seventh -- animate 26 places. So we wrapped up substantial other capitals 400. Behind that -- just in that field. 2006. The price was about 61 dollars. And we started buying and and start by Bakken acreage and -- by -- in the Canadian oilsands. And then in 200764. Dollars -- -- -- so that's our core areas that -- in now. And those are still tremendous -- to drill -- -- -- great wells we'll share some of that with him that. The only. Probably -- -- culture hand with the way the oil prices ramp up the cubs have just gone crazy. So we've managed to. Well philosophically we've always been pretty -- operators -- -- When I got no business. About thirty years ago my mentor is gonna grand riches and an operator -- -- for his company. For twenty some years and he said Jim when he got to -- road. Make it wide enough for one truck. To get down -- road than ever ever wants a while Michael little place where two trucks capacity each other. Don't spend the money to make it wide enough that the trucks to advance their replacements -- where we operate around Gulfport Michael Belle -- our. Board chairman he had a company called DLB. Which eventually. They'll be used merged in two. In the gulf -- about 97. And that -- we also had a drilling company named top drilling and I remember our -- ran -- drilling. He's disable I don't know Mike -- but he said I really like going for those guys over a deal because I finished the well. And I'd take them a bill and they write the check right then. So that's kind of why we do things around there and it's kind of -- well we've. We've. Done real well here's. South Louisiana. We managed basically. We pretty well kept our costs flat on drilling wells there -- those last three or four years by becoming more efficient. We've moved from. Just -- with conventional it's pretty complicated drill into it instead the conventional. Motors and -- as we've change things now where will PC bits of -- we've also. Have. Started use and brokerage terrible at the bottom of the holes prices come down -- that's -- drops more. So -- -- the first part with conventional directional tools on the second half of our nine or 101000 -- wells -- drilled rotors durable. So. Four years ago we were like one point eight million -- have -- now -- Sometimes as high as two million for those type -- wells but the costs have been gone up as you know ten to 15% for years now which here it is so. So we're looking forward to the cost coming back down and with the graders -- we've got. We'll be able to do some good things these two areas that you can see there toward the south part Louisiana together they've made about 300 million barrels of oil. And back in the ninety's everybody thought there were depleted. But today we is 3-D seismic. And directional drilling. And his legacy fields back to being profitable again our guys -- groundwork you have to go through the -- -- you -- pick all these zones that. You know like to say we always target about. Well in West -- a hundred different productive -- fact. I'm -- what looks like there there we are out of water to about eight feet deep. These -- that are shown on the lower -- only a small percentage of the hundred days. The -- just type blog although -- zones. And if you read it real closely you can see it tells how many million you know how many millions of barrels each of those zones has contributed so. It's real. Tough work -- now there's a thousand wells drilled out there almost. Some of them. There's probably about a third of them are like 2500 feet but it's a great older areas. We look for about six zones per well we expect to make a 100000 barrels plus sometimes -- 150000 have some morals of the 250. 4000 wells. And so it's a great area but we do have a tremendous inventory behind -- now based on the way we've wrapped up drilling there in the last. In the last. Four years in particular. Now let's look at -- very that's another. Grade area south Louisiana it's such a good area detect very -- one of the biggest in itself weighs in we can have the east -- -- it over on the west side. Is the strategic petroleum reserve selective decide -- about the quality of some of the reservoirs down there. So we shot some. 3-D seismic there. The first that are have been shot -- in 2000. We've drilled some wells are first go -- in 2007 we were real and out to the east side out like we. Didn't do very well we had a couple wells were drilled on land that did well last year -- drill four more wells on land. And they turn out be real nice swells and so were ready to go there we've got to know thirteen locations ready to go. But we won't -- until prices get back in line. So we slowed down -- West Coast so we could live within cash flow last year. And drill on the permanent because we've made an acquisition there that -- that we've still managed to maintain a 92% go and success ratio there. We've drilled thirteen wells in south Louisiana last year and twelve of them were producers. So it's it's a great area. Now to the Permian Basin and latter part of 2007 we acquired. And at 4100 acres in the Permian Basin. And it's a nice wolf very with some very very trend it's it's wolfcamp and -- -- -- very very. And so we had 32 producing locations there and about a 178. More locations to drill. And so it's they gave -- a big inventory to drill there so we wrapped up and we started off with six point six million barrels of oil equivalent shall we had -- the in the last year. We began drilling. The costs it started out even last. You're about one point seven million per well and by the end -- this year they're up to about two million for well. You're looking for about a 100000 barrels. And that at seventy dollar -- down below that nauert sixty dollar world rather -- Well do about -- about a a 7% internal rate of return. The costs are fixing to come down we've shut down our -- in -- out there. It's a classic old west Texas oilfield place. We've done some things are -- classic out there we have. Three wells because science wells we've drilled out of that -- -- this year. We've done things like run -- long long time -- -- up -- we've spent extra money would run is that -- sort of like core. It shows what in -- well looks like what the bedding plants looked like what's really shale what's really limestone you can see anomalies. -- it's quite expensive but we think it's gonna pay -- do that. We recently ran asked them. -- mapping out there -- Schlumberger. And what you do there you -- one well and you put some receivers some seismic receivers down hole and a couple other wells. And you actually conceive where the rocks -- -- and split bracken. You can see where -- we do ten zones in 2000 they. On the completion so you can see where that. Where that tracks -- on boats helping to find out which of the best zones to stimulate. -- right now the last well over -- out there main reason we're still drilling one well we have five or six straight from and a few months ago. But we're scoring out there -- anybody ever cores of well so we're down and -- and it's very very in the wolfcamp but. And taken cores down there so we can see again. You know you can't tell everything from electric logs and we'll actually have the rocks and hand to be able again to be more efficient so when we get started again. Next year we think we're -- know a whole lot more that we don't know this year so. So what it's it's a good place the place to grow older we gotten to the Bakken. A few years ago. -- by an acreage up there in 2006. Currently. We have. 171600. Net acres in the well. That's not big enough to be an operator up there so we participate that we -- most of our participation so far. Has been in the park shallow area and -- Canterbury -- operates. And this is turned out to be a great place to be the wells cost about. Six million today to drill. And you make some really nice wells. This will show you. Some of the wells in the area and some of them IPs. And it's it's really good one and even announced the well. Recently that made 4570. Barrels per day is just to the west of the -- that most of these wells are and so you can say it's an exciting play. And when where -- looking at those -- let's look at the next slide here. There's a couple wells that we participated in recently. On the left with -- or 16 sage. That well tested at a little over 18100 barrels. Of oil per day. And the -- 17. Tested over 2200. Barrels per day those are tremendous -- you know that is. That is some really good stuff but. You know that's. That's still it's with today's prices and today's -- -- -- that costs come down and it and it will. We have heard already -- well. A few months ago you couldn't get another -- up there now you can give rigs and we thank the process and be -- and on the -- we've heard people even. Canceling out commitments on rigs are being built so. It's. When prices get down into the fifties it makes it but again. What we'll drill up there next year will probably be -- in notably in the good areas we're getting proposals now. A few proposals still dinners that make 350 or 400000 barrels and IP for five or 600 girls vote -- You know -- -- though business you know those are tremendous wells but they just don't cut the mustard today. That they will when the price comes back particularly after the cost of softening got back down in line so long range. We're really -- on this area short range we're just participating in the real hot partial deals where you look at. You know 15102000. Barrels of it. Canadian all slams. Again and -- about -- -- -- pretty fast but you can see. This is the long range potential for built for. This is long term part of our asset portfolio. And most of -- noble -- They're voted -- -- what is that going to be like at today's prices are you gonna go broke through in the -- that well. I just. Raymond James study and they were still. At forty dollar -- TI. They were analyzing the minds and it's like the word we're going to be -- -- sanctity. They showed about 4542. Percent internal right of return on. The mine and -- projects. Four adult world so certainly would not build a plant. Today but we are working toward. One of these days build our plant would cost you back in line. I think the most important thing about. What we've got going up there -- get -- -- starter winter drilling program that's five million of the 35 million maintenance program. And we heard a guy named John pierce away from DeVon Canada. And he was there director of business development thermal heavy oil and he was in charge of the Jack Fisher project it's it's like the project was done thirty. As does 35000 barrels a day in the first phase -- -- -- on the second -- of 35000 barrels of and I don't think we could have found a better guy anywhere in the world and jobs -- are -- operation there. And a so it's you know what's up what's gonna happen one of these days our applications on in -- about a 350 million dollar. Project when you start one -- these. And but we've got quarter interest in grizzly so it's nine million dollars to spread over three years and so it's something that we can handle in the time drive that I really feel. Good about -- he's got some real innovative ideas up there and he's really strong technically was involved and Evans. Pipelines and everything that they were doing up there in -- so he's got a real network of contacts in the business so. That's that's -- over the most important thing even bigger than the things that we've been doing otherwise in Canada. Quickly -- -- Thailand that's. This is something that we got -- in that 2005. We've had a small interest and I camera has field over there that makes. -- -- hundred million cubic feet of gas a day so it's world class reserve potential over there. It's just a small interest Gulfport but it pays for everything we're do in the last couple years we've been. From the gas sales we have over there we've been finance in the other stuff that we do we recently. Took up 5% interest in -- maybe another million Acre block that's our fourth million Acre block of smaller interest -- the others but the one we have 5% in where. Shooting 3-D seismic right now and we think it's got them. Potential to be used as a hundred million -- -- producer that were already -- so. Would you step out every once -- while. Like everybody else here enterprise -- gotten killed -- were down to about 300 million. We got some nice numbers just like all the rest -- So. We think that there is a future government process go back up again. Thank goodness we do have some fixed price hedges these are not the normal. Financial type hedges that to see the user with shell our -- -- purchaser. And these are fixed price contracts so that. Gives us a lot of flexibility going -- margin calls or anything like that go with them so. We're in good shape through the end of 2009 and hopefully prizes -- recovered -- them. So let's wrap up by talking about. The company has. Compelling portfolio. Of course were like everybody else we're pretty good look combined at today's price levels. We've got. West code in particular. In south Louisiana that is a real solid cash flow cash -- it's always been that for us. And with -- -- we've got behind five now it's not gonna take much -- -- to sustain our production base. That had very. Read the four wells were drilled last summer -- really been pleased with. And we do have. Like is that thirteen have already permitted our guys are working on more so we've got some. Real potential at that other stuff -- in -- field. And the Permian the wells that we drove last year really just now ramping -- it takes about. Three months for them but come on -- -- -- in the once we -- couple months of government that is rampant -- their productive. Capability. And we'll probably drilled. About six or seven -- their next year. Can -- help sustain the productions those decline. Did lease obligations. The Bakken and we've got a nice footprint there and restore -- It's actually start to -- -- two years ago we spent about a million dollars in the Bakken this year will spend. Know some place from 810 million dollars and we've been in such good areas that we actually are now up to about. It's come up from little tiny interest of the in those seventh and now worth about 5% of our production so we're wrapping up their food. But -- pretty well level off next year in Canada. The little built for. There's only two of us DeVon and go for the only two US independents that are up in Canada. And actually grizzly has. Has over 500000 acres of Canadian -- and directory and Gulfport has a quarter of that which. Not for not that I would compare it to the assets that -- has. That fish that is kind of thing and that we're the largest acreage over or it go move it more than -- -- quarter interest so. The nice thing about it though in Canada those -- or fifteen year leases. And you know and it is the largest bankable next to Saudi Arabia so one where the other it's a freight train that's coming down the line and and it's going to be the big thing with the longest range potential for gulf -- so we're we're real pleased with where we are now we've got. We've got a real solid staff we've grown -- over the last few years we got plenty to keep them busy were kind of bank and prospects of and look -- that opportunities that come along so. So right has been pretty tough for everybody who worked real real good about where we are so he'll have any questions who would like see in the breaker program. Thank you.