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Gulfport Energy Corporation (NASDAQ:GPOR)

Q1 2008 Earnings Call Transcript

May 7, 2008 12:00 pm ET

Executives

John Kilgallon – Director of IR

Mike Moore – SVP and CFO

Jim Palm – CEO

Analysts

Gary Muscular [ph]

Ron Mills – Johnson Rice

Ross DeMont

Robert Lynd – Simmons & Co.

John Jumarji [ph]

Rupesh Shah [ph]

Patrick Edison [ph]

Russell Senvachek [ph]

Operator

Good day, ladies and gentlemen. I would like to turn the presentation over to your host for today's call, Mr. John Kilgallon. You may proceed.

John Kilgallon

Thanks, Jasmine, and good morning. Welcome to the Gulfport Energy first quarter 2008 earnings conference call. I am John Kilgallon, Director of Investor Relations. Joining me today are Mike Liddell, Chairman of the Board; Jim Palm, Chief Executive Officer; and Mike Moore, Chief Financial Officer.

During this call, representatives of the company may make certain forward-looking statements relating to the company's financial condition, results of operations, plans, objectives, and future performance. We caution that actual results may differ materially from these indicated in our 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 to other non-GAAP measures. If this does occur, appropriate reconciliation to the GAAP measures will be posted to our web site.

I might as well that Gulfport has added a new presentation to the web site in conjunction with this presentation. We will not go through the slides, but they are reference material and please pull those down off of our web site.

Now I would like to turn the call over to Mike Moore.

Mike Moore

Thanks, John. Thank you for joining us for our call. For the first quarter, Gulfport reported net income of $11.5 million or $0.27 per diluted share based on average diluted shares outstanding of 43.1 million. Our first quarter EPS of $0.27 exceeded consensus estimates of $0.20 per share.

EBITDA for the first quarter of 2008 was $22.3 million, an increase of $3.2 million compared to the fourth quarter of 2007 and a record for Gulfport. For the first quarter, production was approximately 423,000 barrels of oil equivalent or 4,647 barrels a day. Realized price for oil for the quarter after the effects of fixed price contracts was $77.07 per barrel. Average realized price for gas was $8.13 per MCF. And average realized natural gas liquids price was $1.37 per gallon or $57.54 per barrel.

For the remaining nine months of the year, Gulfport has fixed price contracts for 3,500 barrels per day at an average price of $81.30. For 2009, Gulfport has fixed price contracts for 3,000 barrels a day at an average price of $89.06 per barrel. Lease operating expenses for the first quarter was $3.7 million or $8.84 per BOE. LOE is down $1.8 million from last quarter. LOE for the year is projected to be between $9 and $10 per BOE. For the quarter, G&A was $1.7 million or $3.98 per BOE.

Full-year G&A is still projected to be $3 to $4 per BOE. Our CapEx spending in quarter one for our 2008 activities, including Canada, is as follows: $12.2 million for West Cote, $6.7 million for Hackberry, $700,000 for Permian and then we spent $4 million in Canada. The company had $82.8 million of debt outstanding at the end of the first quarter and currently has $79 million drawn against our $90 million revolving credit facility. We have identified $95 million of capital expenditures for 2008, but may expand this number if new opportunities arise.

Now I would like to turn the call over to Jim to cover our operational highlights. Jim?

Jim Palm

Thank you, Mike. And now let's cover each our operating areas. In Southern Louisiana, we drilled three wells in the early part of the first quarter as we ramped up our 2007 program before releasing the rigs. Of the three wells, two were in West Cote and one in Hackberry. All three wells were productive and are solid producers averaging over 100 barrels of oil equivalent a day each. At Hackberry, we have set surface location and are surface casing that 2,500 feet and we are ready to drill out on our first land well this year. The drilling rig is contracted to drill three additional land wells in Hackberry back-to-back.

At West Cote, we expect to have a barge rig back in the field in late July to restart our development program. We have a recompletion rig in the field on an ongoing basis to perform work-over and recompletion activity. We plan on drilling 8 to 12 wells at West Cote Blanche Bay in 2008. Production for the month of April from Southern Louisiana has averaged 4,878 barrels of oil equivalent a day.

And now to West Texas, year-to-date, we have drilled four gross wells. Of the four wells, two wells have been fraced and are in the initial stages of flow back and two wells are awaiting completion. Gulfport has a 50% interest in this activity. We are currently drilling with three rigs in West Texas and will soon go to four rigs. We're also considering adding to our acreage position in West Texas. Now let's discuss our Canadian oil sands assets.

In Canada, we own approximately a 25% interest in Grizzly Oil Sands ULC. Grizzly concluded a 55 well core hole evaluation program and shot 7.5 square miles of seismic. Grizzly expects to submit an application for a 10,000 barrel of day SAGD facility at its Algar Lake project in the third quarter of 2008. But, the target production date is as early as 2011. Significant CapEx for this facility is not anticipated until late 2009. Grizzly is contracted with McDaniel & Associates to prepare an updated resources estimate following our drilling and seismic activity from this past winter. We expect this report early in the third quarter. Grizzly plans on marketing a private capital raise in the second half of 2008 to fund these activities.

And now let's move to the Bakken. In the Bakken, Gulfport currently has approximately 14,000 net acres. In 2007, we participated in 11 proposals at a net cost of less than $1 million. So far in 2008, we've committed on 14 proposals with a net exposure to Gulfport of about $1.4 million. As a result of the increased pace of activity, we expect to spend $10 million in CapEx in 2008. Activity could double year-over-year for the next several years. Most of our wells to date have been on the EOG Parshall area where recent IPs per EOG have averaged 1,700 barrels of oil equivalent per day. About half of our acreages, in Mountrail and Dunn Counties which are the focus for EOG, Marathon and Windy [ph]. Our joint venture partner in the play has recently contracted an H&P FlexRig for one year and will be moving in equipment today to begin building the first location. The first well will spud in a couple of weeks. Gulfport's working interest in that well is 15.5%.

And now, let us talk about Thailand. Gulfport has a 0.7% indirect interest in the Phu Horm natural gas field in Thailand. Gulfport also holds a 2% indirect interest in a 3 million acre concession block in Northeast Thailand and we recently acquired an additional 5% interest in a 1 million acre concession. Phu Horm produces approximately 100 million cubic feet of gas per day and 500 barrels of gross condensate. On a BTU basis, production net to our interest is about 117 barrels of oil equivalent per day. Production is currently limited by the local demand for power and we expect that demand will increase as additional power generation comes online.

And that pretty well covers the nuts and bolts of our current operations. But now let's step back. Let's step back and let's talk about the net asset value that underlies all these numbers. A couple of years ago, we had one core area, South Louisiana. Now we've added the Permian as another core area. And we're well on a way to ramping up the Bakken to core status. In addition, we have a couple areas in Thailand and on the Canadian Oil Sands that are making impressive strides, but because they are indirect investments, they aren't given any value at all in our reserve report.

Now, we just talked about Thailand, a third-party report prepared by Gaffney Cline credits the well that are currently producing with a half TCF. In my experience, a half TCF field is pretty hard to come by without going to some place like Thailand with great exploratory potential. That same report shows 3P reserves as over 9 TCF just for the producing Phu Horm field. That's 18 times greater than the half TCF number for the wells producing now. Phu Horm covers about 43,000 acres. And we have an additional 4 million acres for our average interest is four times as large.

Now let's go to Grizzly. Most of you know Grizzly, our investment there is an indirect one as well. And I'd direct you to grizzlyoilsands.com for their web site. If you go through the prospect maps at that web site with the presentations, I think you would be struck by the names of the other players who are actively drilling wells offsetting our acreage: Chevron, Total, Marathon, Athabasca Oil Sands, SQ Oil [ph], OSUM, Shell and others have stepped up their drilling around our areas and we're activity swapping informations with some of them. Our indirect investment in Grizzly is still is tiny in comparison with the potential for longed-lived reserves from SAGD and probably from other new technology as well.

Let's go to Bakken. Our Bakken investment may seem small now, but we may get to have even more potential than the Permian. As you will recall, we have about 14,000 net acres in the Bakken and most of our acreage is the inter coast to Mountrail County. This has been the heart of some of best wells in the Bakken.

We have acreage in the heart of the Parshall Field and the first well operated by our appropriating in the play will we drilled a couple miles West of the EOG's Austin wells, some of which have IPs around 2,000 barrels of oil per day. West of that is (inaudible) Field which has had IPs from 1,000 barrels a day to 2,200 barrels of oil per day. Our Riverbend areas next to (inaudible) acreage and its also close to Marathon's core areas in Dunn County where they are targeting about 340,000 barrel of oil equivalent gross per well. Overall, we have 14,000 acres of some good company on the best part of Bakken. And we see that EOG is already applying for down spacing to a 320 acre drilling pattern. And that gives essentially why we are so excited about this acreage.

In the Permian, we have three rigs running and we will soon have four rigs running, with plans to drill 35 to 45 gross wells per year. We have a significant drilling inventory and we believe there is a good probability we will eventually down space to 20 acres or even less. We are going to active drilling on the Permian well camp [ph] for a number of years.

And finally, our West Cote Blanche Bay and Hackberry and South Louisiana, we still have a PUD inventory of over 100 wells as shown in our 2007 reserve reports and that's about five years drilling at our current level and many more years considering the major wells we are drilling in South Louisiana are not booked PUDs but new wells generated of our staff that are best described as a PUD-type risk that are unbooked in the reserve report. We still have a great multi-year inventory of drilling to do in South Louisiana.

I am going to make one more comment about our reserve report. Keep in mind that our 2007 year-end report was based on price deck of $92.50 WTI oil and $6.80 Henry Hub gas, and it valued Gulfport's PV10 at $822 million. Now, oil is around $120 and gas is around $11.

And certainly, we believe our value is significantly higher in today's prices, particularly when we add in the current and potential value for Thailand, Grizzly and Bakken, which are virtually unreflected in the $822 million figure. Any way you figure it, Gulfport's net asset value is significantly higher than our current year price value of around $564 million, and the market has a great opportunity to buy at today's stock prices.

Well, thank you for listening to our presentation. Once more, we are pleased with the results for the first quarter of 2008 and we look forward to answering your questions. Thank you.

John Kilgallon

Jasmine, if you could begin queuing up the questions.

Question-and-Answer Session

Operator

(Operator instructions) And your first question comes from Gary Muscular [ph]. Please proceed.

Gary Muscular

Thanks. Good morning guys.

Jim Palm

Hi, Gary.

Gary Muscular

First question, in the Permian Basin, what kind of production do you think you can exit the year at?

Jim Palm

I think we can exit the year at somewhat in the 1,700 to 2,000 barrels a day range.

Gary Muscular

Okay. You are talking 35 to 45 wells?

Jim Palm

That's right. That's correct.

Gary Muscular

Okay. And then second question is over in the Bakken Shale, I know you say drilling costs are $5.5 million to $7 million per well. Can you give us a sense of what you're seeing in terms of the trending cost over there, has it remained relatively flat or are you starting to see those costs move higher or can you just provide some color there?

Jim Palm

Gary, it's pretty flat right now. The cost can range from, because a lot of people are doing open whole completion, like Marathon might propose their cost might be less than $5 million. You get up to pinpoint branch [ph] like EOG does and you might be $6 million to $6.5 million. Those have pretty well been the numbers that we're seeing for the past six months. Everything has been tight for the past six months and actually there is people moving equipment and now so, in some ways, maybe there will be able to get more equipment out there, but so far it has been pretty flat.

Gary Muscular

Okay. That's helpful guys. Thank you.

Jim Palm

Thanks, Gary.

Operator

And your next question comes from Ron Mills. You may proceed.

Ron Mills – Johnson Rice

Sorry guys, I got disconnected. I missed Gary's question; I'm assuming that was about Bakken?

Jim Palm

Right. Yes.

Ron Mills – Johnson Rice

And was it just about well costs?

Jim Palm

It was primarily well costs and the trends in there so far have stayed pretty consistent in the Bakken.

Ron Mills – Johnson Rice

Okay. And you made a comment, Jim, about Bakken potentially having more value to you than Permian is, should we read anything into that about your views of the Permian properties relative to the acquisition time or is it just higher excitement level for the Bakken area?

Jim Palm

No – if you go to the Bakken and you spend $6 million and you get a 2,000 barrel a day IP and then you go the Permian and you drill three wells for about the same price and got 135 barrel of oil equivalent IPs, obviously, you get excited about the Bakken. But, you can drill more wells in the Permian. So, it's more of a factory kind of deal. It's lower risk. We like them both, but Bakken is certainly a place to get excited.

Ron Mills – Johnson Rice

Do you have a high interest in the Permian, so it somewhat helps that play, correct?

Jim Palm

Right now, we have a higher interest, but we also have 14,000 net acres in the Bakken versus 4,000 net acres in the Permian. So see there is a lot of upside to the Bakken.

Ron Mills – Johnson Rice

Great. And then in terms of – Mike, I think this should be for you. Your guidance targets for the year were relatively unchanged given the lack of activity levels in South Louisiana and what appears to be a later start in the Permian Basin which are to you I guess higher impact from production standpoint areas. What's your outlook for the second quarter as you build to that 1.9 to 2.1 million barrels for the full year. Obviously, it's back-end loaded, but I'm just curious how the second quarter from your standpoint looks.

Mike Moore

I would say it's flat – are you talking about lifting cost?

Ron Mills – Johnson Rice

No, I'm talking about production.

Mike Moore

Production. I would say, for the second the quarter, you can expect flat to maybe just a little bit of growth. I wouldn't expect a great deal.

Ron Mills – Johnson Rice

Okay. So, you have enough – what would be offsetting some of your declines. The reason I'm asking is you don't really have any activity in the South Louisiana portion which you have declines on, so, is some of the production adds offset that declines coming from Permian or is it just ongoing work-overs or recompletions?

Mike Moore

Remember, we have a large inventory of wells that we have drilled, so we also have a large inventory of recompletions and we will continue to perform those recompletions throughout the second quarter.

Ron Mills – Johnson Rice

Okay. And then two questions on the oil sands, you drilled 55 core holes this winter. That's a lower number than I think original expectations, but you also acquired some seismic. What was behind that decision?

Jim Palm

Ron, we had a warmer season this year, so we kind of started late and we ended early compared to last year. In the meantime, one of our focus areas was Algar Lake where we had hoped to drill more wells but, because of the river and the environmental considerations, we had to cut that number down a little bit. That's one reason we ran to 3D, so we could get a good picture of the reservoir. The government, when you apply for your permit, will let you replace wells with 3D. And so, for that reason, we cut back a little bit.

Ron Mills – Johnson Rice

Okay. Were you able to test in you all's opinion enough of each of the areas that you planned to test despite drilling fewer wells?

Jim Palm

We did, but we have still going to lot of drilling to do out there. We are going to be drilling wells. We have 15-year leases; we will be drilling wells for 15 years in the core hole [ph] type.

Ron Mills – Johnson Rice

I was just asking as it related to your expected analysis of this year/s winter program?

Jim Palm

We drilled everything we needed to drill at Algar and we stepped out into some new areas, but we have got a full drilling program already on the works for next year.

Ron Mills – Johnson Rice

And then finally, the capital raise that you mentioned for Grizzly. I know that's outside of your hands, but it's a restarting up of what was attempted to do late last year and when they were trying to go out and maybe raise some outside capital?

Mike Moore

Yes. In essence, it will be. Keep in mind that now we've got one more year's drilling under our belt, so we're going to have new reserve reports. We're going to use McDaniel's this time. Those reports will be ready around August. So we'll have more certainty in all the information that's available there. We'll have more wells drilled. It's going to be a more complete package than it was before, a lot of uncertainly taken out of my last year's drilling.

Ron Mills – Johnson Rice

It's McDaniel's & Company, I'm just not as familiar with them as I am with DeGolyer and McNaughton. What's your decision to change those reserve engineers?

Jim Palm

There are some really good reserve reporting companies up there. But McDaniel's is high on the list as far as everybody's concerned about the Canadian Oil Sands. They kind of set the standard up there, so that's why we picked down to do this report.

Ron Mills – Johnson Rice

Okay. And I'll jump off and let someone else on. Thanks.

Mike Moore

Thanks, Ron.

Operator

And your next question comes from Ross DeMont. Please proceed.

Ross DeMont

Hi, guys. Good quarter. And Jim, thanks for that sort of detailed summary, we appreciate it.

Jim Palm

That's okay.

Ross DeMont

Can you just give a little more color – I think everyone understands that South Louisiana is going to have some declines in the second quarter. I think you said, because there is not a rig there, I think you said that April production was around 4,878 barrels a day. What did that decline to towards the end of the quarter? I mean, I'd just like some color there so there is no surprises?

Jim Palm

Ross, I don't think we expect it to decline really because, as Mike mentioned, we've drilled almost 50 wells, producers down there in the last couple of years. Those wells have been in a state of decline, but now that we're moving up hole, we've got a lot of zones behind pipe, and so we're going up there and sometimes, the bottom zones are not always the best zone, so sometimes the zones we are going to now are better than they were originally. So, I don't see a reason for declines.

Ross DeMont

Okay. Maybe my assumption is wrong, I guess then the notion here is that recompletions can offset the natural declines in the other wells?

Jim Palm

That's right.

Ross DeMont

Okay. Can you give a little more color on the decision to move an extra rig into the Permian. It doesn't look like it's changing the CapEx number or the number of wells drilled. Can you just talk a little bit about that?

Jim Palm

It's been a little slow, we got started on those drilling, plus we have got some science down here that slow us down. We drill one well, normally we don't even spend an electric log [ph], we just drill one (inaudible). We ran open hole logs; we ran a sophisticated tool called an FMI that is sort of core in the well. We are looking for the fracture orientation so we can plan our drill patterns and plan our frac jobs, so we have been drilling some science too early in the game. So, we need to just pick up the pace a little bit, so we are going to bring another rig.

Ross DeMont

Okay. Can you talk, Mike, a little bit to the extent you are willing to about – given that we are sort of almost half way through the second quarter, what we can – should model for price realizations. I know – I think you had some hedges stepping up at some point and obviously, the spot oil has been strong. I am assuming that you guys will realize better prices in the second quarter than you did in the first?

Mike Moore

Yes. Definitely we will see some better realized prices in the second quarter, of course, you know what our hedges are. They are posted out there, but we will see definitely some better pricing.

Ross DeMont

Okay. Couple of more quick ones. I know you are drilling some offsets at Hackberry, on the land there, when will we begin to hear about the potential success there I guess?

Jim Palm

It's going to be a while. We are drilling two rigs on one pad so we will really start completing the first one in about a month and a half or two, then we will complete two, and then a couple of months after that we should have results on the next two.

Ross DeMont

Kind of a July –

Jim Palm

The next call probably that maybe we will get something out ahead of time but for sure by the next call, we will have some pretty good indication of it.

Ross DeMont

Okay. And last one, I know you shot that seismic I think that was in Algar Lake up in Canada and drove a bunch of more cores. I know you are not ready to talk about everything you have seen, but is there anything so far that suggests that we have anything other than the nice commercial resource up there?

Jim Palm

Well, we are still on planning on getting our application and everything looks good. We are really getting into the thick of modeling the reservoir now and so forth and all the things you need to do for the application, but everything is go ahead as expected.

Ross DeMont

Okay, very good. Thanks for taking my questions.

Operator

And your next question comes from Robert Lynd. You may proceed.

Robert Lynd – Simmons & Co.

Good morning.

Jim Palm

Good morning, Robert.

Robert Lynd – Simmons & Co.

I will hawk back over to Hackberry, it sounds like the well drilled there in the first quarter was in the lake. And if I recall, the wells that were drilled out in the lake had some issues. Can you walk me through the thoughts behind that well and how did it perform? I know you said your average for the three wells in South Louisiana was around 100 barrels a day, but just want to get some color on that well?

Jim Palm

Well, we are just starting with what went out on at the lake. Now, that's not to say that there is not some decent wells in the lake. We have just found that as we complete and we tend to find more limited reservoir and they don't stick around as long, but we had some IP back of it. I'm sure we will drill some more – our guys still think there is some wells to be drilled out there, but this year, we are going to concentrate on the land. So, we're not surprised that it is producing, it's not the first well to be producing at that rate. But we'll watch it and see what happens and this year just concentrate on the land wells.

Robert Lynd – Simmons & Co.

Okay. So you do have an inventory still out in the lake that you're going to potentially go after, and this well was around the average rate of 100 barrels a day?

Jim Palm

Yes. We're still looking at drilling in the lake, but we've got a risk that's – our guys really nailed the seismic on the lake, just like they did on land. So it came in just the way it ought to. The unpredictable factor, I think there was probably some erosion of the sand after deposition and we have got some smaller reservoirs, it's hard to predict that. So, we put that on the backburner for now and we are drilling on the land where things were more as expected.

Robert Lynd – Simmons & Co.

Okay. And on land, can you remind me at least or at this time how many locations you might have there?

Jim Palm

Well, we've actually permitted 17 locations on land and we're drilling the first 4. So, we've got a nice inventory still there and of course these other ones we haven't permitted yet, that's just the ones we've actually permitted at the State of Louisiana.

Robert Lynd – Simmons & Co.

Okay. And then back to West Texas, you mentioned Jim that you might pick up some more acreage here. Is it safe to assume this is bolt-on acreage to what you are doing there now and would you did it with you partner?

Jim Palm

Most certainly, we'll do it with the partner and yes, we have an AMI with them that covers a pretty good area along this trend just kind of west of Midland, and we would do with them and you'd be surprised there are a few blocks out there and we bid on some, but we got outbid.

Robert Lynd – Simmons & Co.

Okay. Thank you. That's all I had.

Jim Palm

Thanks, Robert.

Operator

Your next question comes from John Jumarji [ph]. You may proceed.

John Jumarji

Good morning. Great quarter guys. Could you talk a little bit about the hedges and as the rolling off, are you all replacing him, are you leaving the part is growing off unhedged, just a little bit about little pictures so we see what's going on latter part of 2009 into 2010?

Mike Moore

Okay, we have put some addition hedges in place recently. We now are at 3,000 barrels a day pretty entire year of '09 and the average price is 89.06 we just did a new hedge at – for 500 barrel at $111, so we continue to evaluate that.

John Jumarji

Okay. Do you plan to put on hedges as on a monthly basis as these things roll off, are you going to be trying to match them back up?

Jim Palm

There is opportunities we will take advantage of and we evaluate it closely and I can't say it necessarily will automatically as they role off put new ones in place that we do monitor it and make decisions quickly.

John Jumarji

Okay thanks.

Jim Palm

Okay.

Operator

(Operator instructions) And your next question comes form Rupesh Shah [ph]. You may proceed.

Rupesh Shah

Good morning. Thanks for taking my questions. Just following up to an earlier comment you made about exiting the year in the Permian Basin at 1700 to 2000 barrels day, did I hear that correctly?

Jim Palm

That's right.

Rupesh Shah

So, assuming that Louisiana and Texas term declined very much, then perhaps you are exiting the year at somewhere between 5000, 5500 barrels a day. Is that the way of looking at it?

Mike Moore

I think – give me your range again.

Rupesh Shah

It's somewhere around the 5500 barrels per day for (inaudible) as a whole, as a company exiting 2008?

Mike Moore

I mean our production range is 1.9 million to 2.1 million for the total year.

Rupesh Shah

That's right, so that implies a ramp up in the back half the year, correct?

Mike Moore

Correct.

Jim Palm

That's correct.

Mike Moore

That's right.

Rupesh Shah

And so, I am trying to get a sense of that ramp up. I mean if you have existing properties during what they are doing now and then the Permian Basin going from whatever 600 to 1700, then what is the daily production rate exiting 2008?

Mike Moore

It depends on where you are pointing on our production guidance, the 1.9 million to 2.1 million, so it's certainly – you have got first quarter actuals and then just plug in your estimates for 2Q and 3Q, we don't give quarterly estimates.

Jim Palm

We have already mentioned that our second quarter is relatively flat, so you have the first six months of the year. And then you can just take the difference and assume some ramp up in the last six months.

Rupesh Shah

Okay. So just generally the slope definitely looks steeper in the second half of the year?

Jim Palm

Absolutely.

Rupesh Shah

Okay, fair enough. And then on the Canadian oil sands, just a quick question there, I know you put out the number of about $325 million CapEx for the SAGD facility there? Is that number still good or are you seeing any kind of cost inflation there that might cause that number to change?

Jim Palm

Now, that's still a good number, it is higher than it was a few years ago by a little bit, but SAGD has been pretty consistent.

Rupesh Shah

Okay. That's all I have, thank you.

Jim Palm

Thank you

Operator

And your next question comes form Patrick Edison [ph]. You may proceed.

Patrick Edison

Hi, I am trying to just look at the production in Southern Louisiana to understand that a little bit better. It's seems you averaged about 4000 barrels in the first – for Q1 and you now for April at about 4,900 barrels. Could you help me to understand was Q1 lower because of recompletes or what was going on?

Jim Palm

Q1 was lower because we just – we didn't make as good wells for one thing and early in the year and they were approaching recompletion time by the end of the year. So now that we're in the process of recompleting those wells, it's going to ramp that production. Of course it varies from month-to-month depending on what zones you are completing. We have winter time, it is tougher to operate out there, cold weather problems. That's a little bit everything, but pretty well everything has stabilized now and we feel good about maintaining what we've got.

Patrick Edison

Okay, great. Thank you.

Operator

And your next question comes from Russell Senvachek [ph]. You may proceed.

Russell Senvachek

Hey guys. Actually my question was answered, but I might just ask you one other kind of general comp to comment on. You guys basically kind of said for a while now that we are trading at fifty cent dollars or forty cent dollars out there as far as our equity value. Can you just give a little color how you both to the company and personally might think about projects and capital spending going forward, if our public equity value is so out of whack, so to speak, with the rest of the industry? Thanks.

Mike Moore

Well, we just think we've got a tremendous net asset value out there that's really not been reflected, I don't – we've already said this year we are going to live out of our cash flow. And one thing that we are doing too is ranking all of our areas as we should with the highest return first. So, Grizzly we've already done, Permian we are pursuing actively, the Bakken we are going as quick as we can there, West Cote and Hackberry in South Louisiana, we still got some great assess down there. And so, we are just spending what we've got available this year at $95 million and we don't have a whole lot of choice right now in what we're doing.

Russell Senvachek

Great. I am just saying kind of pretty supportive of everything thing that you said as far as especially Grizzly and the projects that have funding laid out for already. But, when I look at our company trading at, what you think to feel is somewhere around half of less of fair value, it makes me question our capital spending going forward and whether …

Mike Moore

I think it is one of those cases of having to get the public just to – the market just to realize what we have got. We have got some great individual projects. One of the things we have got now is a lot more security because we have got more good areas to go to than we did in the past. So, we can be more selective about them, not just one area where we are locked in. We have got some other areas, we have got a great future ahead of us; we just got to get the market to recognize that.

Russell Senvachek

Right. Can I just ask you one last thing, just as the management, I mean would you guys – have you guys personally bought stock here and what's your plans going forward, because it certainly seems like we are trading at a such a huge discount to the asset value that it kind of leaves you scratching your head why management and why the ...

Jim Palm

I'll tell you, everybody's – I sure everybody's answer is different. This is Jim. A big part of my compensation is my options and when I came here a couple of years ago, about 2.5 years ago, I thought I'd like to take us from $11 to $21 in three years. We really got there in about two years and I didn't sell any of my options or any of my stock. So, obviously I though it was underpriced to $21, so I still feel that way. That's where we are headed.

Mike Moore

This is Michael. I excised my options the last two or three years and I think every chance I do and went ahead bought mine in January, February whenever I could. And of course we will do that, so we all continue to evaluate buy opportunities and you are right, it is a great buy.

Russell Senvachek

Thank you.

Operator

At this time, you have no questions. I'd like to turn the call back over to Mr. John Kilgallon. You may proceed.

John Kilgallon

Thanks, Jasmine. A replay of this call will be available temporarily on the company's Web site. Thank you for your interest in Gulfport this morning. This concludes our call.

Operator

Thank you for attending today's conference. This concludes your presentation. You may now disconnect. Good day.

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Source: Gulfport Energy Corporation Q1 2008 Earnings Call Transcript
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