Greetings, and welcome to the Gulfport Second Quarter 2021 Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jessica Antle. Thank you, Jessica. You may begin.

Thank you, and good morning. Welcome to the Gulfport Energy Corporation's second quarter 2021 earnings conference call. I am Jessica Antle, Director of Investor Relations. Speakers on today's call include, Tim Cutt, Interim Chief Executive Officer and; and Bill Buese, Executive Vice President and Chief Financial Officer. I would like to remind everybody that during this conference call, the participants may make certain forward-looking statements relating to the company's financial condition, results of operations, plans, objectives, future performance and business. We caution you that the actual results could differ materially from those that are indicated in these forward-looking statements due to a variety of factors. Information concerning these factors can be found in the company's filings with the SEC. In addition, we may make reference non-GAAP measures. Reconciliations to the comparable GAAP measures will be posted on our website. An updated Gulfport presentation was posted yesterday evening to our website in conjunction with the earnings announcement. Please review at your leisure. At this time, I would like to turn the call over to Tim.

Thank you, Jessica. And good morning, and thank you very much for joining the call today. I am here today with Bill Buese, who I had the pleasure of working with recently at QEP Resources. I am personally very excited to be here and look forward to sharing with you the significant value opportunity within Gulfport Energy. I would like to start by thanking our employees for their hard work during a challenging and successful restructuring process. Today, for the first time in a long time, we have a balance sheet that complements the value of our asset base with the right size corporate overhead and top quartile operating costs. We have the same high quality natural gas assets that you are familiar with. However, our 2021 program is delivering strong results above historical averages reflecting our new development plan built upon free cash flow generation, capital discipline and value optimization. As a company, we have a new, highly engaged Board of Directors and we’ve adopted a new business model focused on free cash flow generation and returns over production growth, we expect to use excess cash flow to continue to reduce our outstanding debt until we are able to begin returning capital to shareholders. I will begin with an update on our second quarter operational results and an overview of the development plan performance in both the Utica and SCOOP. Bill will then discuss Gulfport’s financial performance and provide guidance for 2021. We have emerged from restructuring process with a renewed focus on sustainability and delivering on the key metrics outlined in our corporate sustainability report. We are very proud of the progress made in reducing our greenhouse gas and methane emissions. We recently appointed Stephanie Timmermeyer, Vice President of EH&S to the executive team and she is already…

Thank you, Dan, and good morning, everyone. As Tim suggested in his remarks, a lot of hard work has gone into getting the company during the restructuring process. As we look to the future, we firmly believe that all the hard work has positioned us to offer a compelling opportunity for investors. Our efficient asset base supports a low reinvestment rate and the potential for strong return of capital to shareholders in the future. Our 2021 free cash yield is the best in our peer group and we believe that our ability to generate significant free cash going forward is underappreciated. As Tim mentioned earlier, our business plan is committed to developing our assets in a disciplined manner investing $300 million of capital to deliver roughly 1 billion cubic feet per day of equivalent production while targeting annual free cash flow of approximately $300 million. Finally, while our liquidity has already much improved, we expect it to continue to get even better as we execute on our business plan. Upon emergence on May 17, we adopted fresh start accounting which resulted in the company becoming a new entity for financial reporting purposes. As a result, our operating results is now split between free and post emergence periods. Fresh start accounting requires that we establish new fair values to the company's assets, liabilities and equity as of the date of emergence. Consequently, certain pre and post emergence financial and operational results will not be comparable. The specific valuation approaches and key assumptions used to arrive at those values, as well as the value of the discrete assets and liabilities will be described in greater detail in our second quarter 10-Q. Our recent restructuring also had a dramatic impact on our capital structure, which delevered our balance sheet by over $1.2 billion.…

[Operator Instructions] Thank you. Our first question comes from Neal Dingmann with Truist. Please proceed with your question.

Good morning, all. A nice first call Tim and Bill. My first question, again, I like the slides. You've got some good op slides in there today. And my question is, now that you both sort of gone through - the properties gone through the details sort of post-restructuring, have you gone through enough to decide just any potential non-core sales? Or how you're thinking about your locations or inventory? And again, kind of why I am asking that, it seems like in the market today, as you all probably might agree this. But I think I'd agree that right now, a lot people aren't getting paid or right now getting value for their full inventory. So, based on that, based on sort of free cash flow, sort of importance these days, two questions. Have you had enough time to go through? And would you consider any sort of non-core sales?

Thanks for the question, Neal. I appreciate that. So what we're doing, what we've been doing over the last few months is really looking at the standalone case for the business, taking a really hard at the Utica and SCOOP, the inventory levels and what the value is for shareholders on a standalone basis. We've also looked out the asset base, obviously, you can see from the slides SCOOP has some incredible opportunities in the near term and we're going to execute against those. So, certainly when we don't see anything within our core acres that we would call non-core. Just like every other company, we have small things. We have small things up in the wells. We have some overriding interest. We some joint interest. Those kind of things will clearly clean up. But we don't see anything right now that we would say non-core core and some of the completions design we're applying, we're really testing in some of the areas and they have a little bit lower gas in place that I talked about. And we want to improve and we really want to understand those areas before we would consider doing any sort of divestment or trade.

Okay. Makes a lot of sense. And then, just on capital allocation, it sounds like you have gone quite detail through both Utica and the SCOOP. Given sort of pricing, is there one that sticks out? You'll be focusing more and kind of in that same vein obviously these days just your thoughts on kind of target maybe more natural gas versus NGLs and either of the properties, is there anything in that sort of vein that you'll do?

Yes. So, if you look at the Utica, we are targeting dry gas, so that's the program in the Utica. We do have the opportunity for actual oil production in the SCOOP, which obviously is up in the economics quite a bit. So we'll have some liquids production out of the SCOOP development. If you look at - we looked at - we put our whole inventory in there, which is plus or minus 500 wells, when you look at the next ten years, which I always focus on about 70 plus percent of that drilling will be focused in the Utica.

Okay. And then one last one if I could, just maybe for Tim. Tim, what are the - remind me the – I assume there is some restrictions still. I am just wondering how long those will go on as far is- is it something that you are required to do as far as - you talk about the capital allocation. It makes a lot of anyways. But I am just wondering would you have to - your debt is already down under I think, $300 million. Would you have to, at a certain point, just continue to pay that down? I am just wondering on free cash flow allocation and hedges, kind of maybe your thoughts or what's required? Or again, I think I've talked to Justin you could be on the Board could change that. Your thoughts on maybe hedges and free cash allocation if - I don't know, by the end of the year or so?

Yes. I'll start on that. I think the number you quoted on the $300 million and that was a very helpful number. So, we've been higher than that. So, we are really confident of being able to generate 1 Bcf hopefully growing slightly with time as we get more efficient spending about $300 million and generating about $300 million of cash flow that we are going to focus on paying down the debt with that. And we do have some restrictions on issuing dividends and those kind of things that you can talk to Jessica, about a little more detail on sidebar. But, we're running this as a normal company now. We're fully emerged and we like the leverage. It will get better. And so, there is nothing. And on the hedge side on your question, we feel really good about of hedges for 2022 and we feel like we are fully hedged. Obviously, there is some upside on the price with where we sit and we are looking all the optionality we have going into 2023 with the gas curve and vaccination, we're not moving heavily into 2023 yet, but we're certainly studying that.

Got it. Yes. I guess that was nearly getting to 550. So, thanks. Thanks, Tim.

Yes. Thanks Neal.

Thank you. Our next question comes from Leo Mariani with KeyBanc. Please proceed with your question.

Hey guys. Just a question on your Utica production here. If I am reading the financials right, I think you guys brought seven wells online in Utica in the first quarter. And I guess, I was expecting that to have some benefit here on second quarter Utica production, but I guess your Utica production if my math right was down about 9% in this second quarter versus the first quarter. Can you kind of help us kind of understand what was driving that?

Yes. I think, Leo, it’s going be really important as we implement a fairly small development program. It's going to be lumpy. And as we go through and we go quarter-on-quarter, we'll start providing more and more details where just like in this quarter, we put the torch in there that show when our anticipated timing is for the new wells. So that, you're asking about the Utica and the Scoop, finish – its chill program in the beginning of year. So that's on decline. And you can see where we were bringing the wells on, so the only wells that were really online and producing during that period were the Shannon and Hendershot. And they were online for a good period of time. And then you'll see, Morris came on just before the end of the quarter. You'll see the Gehrig and then very importantly, you'll see the Angelo come on. So it's a little bit back-end loaded. And so, with a decline rate of north of 40%, you're going to see those kind of dips, but they are going to - so it's going to be a little bit lumpy as you go through. But as we go forward, we're going to provide you guys enough detail looking forward. So you can anticipate that a little bit better and not be surprised about it.

Okay. Were there any kind of midstream initiatives issues you might experienced in the Utica in the second quarter that caused your production to be quite a bit lower than first quarter? I know there were some midstream issues caught up in different parts of Appalachia during the quarter.

No. So, again, in the first quarter we had all weather issues like everybody else. And coming into the second quarter, it’s more - again, you need to look at what's coming - actually coming online. And then what the base plan is, if you it do the math on that, I think you get pretty close. But we're very happy to spend a little bit time offline describing the dynamics of that with you.

Yes. That'd be great. It's hard to - hard time reconciling the numbers since your 10-Q as you bring seven wells online in the first quarter. So I am just trying to figure out where the benefit from those wells was. I didn't really see it in the numbers. So, okay. And I guess just out the SCOOP here, obviously, it's a multi phase play as you guys described. You talked about having kind of 500 locations in inventory. I think you said 70% was Utica, I guess that leaves the remainder here in SCOOP. Can you give us a sense of the different kind of remaining inventory in the SCOOP in terms of phases? Is more of that concentrated in kind of the condensate window? Or is little bit more of it kind of a rich gas? Can you maybe just tell us more about kind of what's left to drill in the SCOOP and kind of the phase of that inventory and kind of what's the focus in the relative economics? Do you guys look to drill more valley or condensate state rich wells in the SCOOP here? I know the plan is done for a year was as we get into next year, oil prices remain high. How do you see the economics in those different windows?

Yes. I think the – so, one thing you said early on was the 500 wells. What I said on the 70:30 was with our next ten years of inventory. And so we'll have to describe it a little bit differently for the overall inventory. But in the near-term in the SCOOP, especially next year, we're drilling wells that have good liquid rich content in the condensate window. And so, we're going to see, if you look at one of the slides in the deck, you can see we show the economics of that. Obviously, that's bolstered somewhat by that liquid rich nature. So we are going to take advantage of those liquid rich locations, while the prices are high on the liquid side.

Okay. Now that's helpful. All alright. I guess just longer term you kind of alluded to this, but and I know there is no formal long-term guidance, but if I heard your prepared comments correctly, it sounded like you're basically saying, kind of steady activity, spend roughly $300 million a year and kind of keep the production flattish. But you hinted that there could be a little bit of modest upside in the next couple of years. You quoted the balance sheet is in pretty good shape at this point. I guess, is there no thought at all of maybe focusing more on gas activity this winter and next year if gas prices remain really high and in 2022? And this growth just something you don't even consider is kind of a newly merged company here?

Yes. I think in the near-term, it’s really important to steady everything out. And really we've developed a manufacturing process here that fits 1 Bcf a day and spends put the dollar in get the dollar out. I think that's a good starting point. Our goal always is going to be taking that $300 million investment down and having that Bcf a day inch up as we get more efficient. And as we deliver longer plateaus, we hope to see that happen. So, right now, I'd say, we would have to see much longer term sustainability on gas north of $3. But want to change that. We want to hear from our investors that that's something we'd like to see done, because the main thing for us right now is, not only paying down that debt, be getting to a point we're spending out quite a bit of cash being returned to the shareholders. So, if we start investing more comfortable to move that up, our cash flow drops and we'll go through a period of time. So you may feel good, if oil the price is at $3 $4 and then miss the window. And so we'd like more of a steady focus there. The $300 billion helps us to stop the decline. That's happened over the last few years. You'll see that build back up in the fourth quarter. And again, like, on the earlier question, production will be a little bit lumpy, but average around 1 Bcf and we have to see that move up with efficiency, not necessarily more capital in this.

Okay, great. Thank you.

Thank you. This is the end of our Q&A session. I would like to turn the floor back over to Tim Cutt, Interim CEO of Gulfport Energy for closing comments.

Alright. Well, thanks for joining us today. I know this is all fairly new news. So we didn't have so many questions, but I hope to see more on next call. We are happy to engage with you all and further questions or others would like to ask questions. Please don't hesitate to reach out to our Investor Relations team. And with that, that concludes the call. Thank you very much.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation. Have a wonderful day.