Jessica R. Wills - Gulfport Energy Corp. Michael G. Moore - Gulfport Energy Corp. Stuart A. Maier - Gulfport Energy Corp. Rob Jones - Gulfport Energy Corp. Mark Malone - Gulfport Energy Corp. Keri Crowell - Gulfport Energy Corp. Ty Peck - Gulfport Energy Corp..

Neal D. Dingmann - SunTrust Robinson Humphrey, Inc. Ronald E. Mills - Johnson Rice & Co. LLC Jason A. Wangler - Wunderlich Securities, Inc. Marshall Hampton Carver - Heikkinen Energy Advisors LLC David A. Deckelbaum - KeyBanc Capital Markets, Inc. Stephen Fred Berman - Canaccord Genuity, Inc. Jeffrey Robertson - Barclays Capital, Inc.

Gordon Douthat - Wells Fargo Securities LLC.

Greetings and welcome to the Gulfport Energy Corporation Fourth Quarter 2016 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Ms.

Jessica Wills, Manager of Investor Relations and Research. Thank you. You may begin..

Thank you and good morning. Welcome to Gulfport Energy Corporation's fourth quarter and year-end 2016 earnings conference call. I am Jessica Wills, Manager of Investor Relations and Research.

With me today are Mike Moore, Chief Executive Officer and President; Keri Crowell, Chief Financial Officer; Mark Malone, Vice President of Operations; Paul Heerwagen, Vice President of Corporate Development; Rob Jones, Vice President of Drilling; Stuart Maier, Vice President of Geosciences; and Ty Peck, Managing Director of Midstream Operations.

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 conditions, 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 to other non-GAAP measures.

If this occurs, the appropriate reconciliations to the GAAP measures will be posted on our website. Yesterday afternoon, Gulfport reported a full year of 2016 net loss of $979.7 million or $7.97 per diluted share.

These results contain several non-cash items, including an aggregate non-cash derivative loss of $323.3 million, a loss of $715.5 million due to an impairment of oil and natural gas properties, a loss of $23.1 million associated with the impairment of our Canadian oil sands assets, a gain of $5.7 million attributable to net insurance proceeds in connection with a 2014 legacy environmental litigation settlement, a loss of $23.8 million associated with the debt extinguishment of our senior notes due 2020 and a loss of $10.9 million in connection with Gulfport's interest in certain equity investments and an adjustable tax benefit of $1.6 million.

Comparable to analyst estimates, our adjusted net income for the full year of 2016, which excludes all the previous mentioned non-cash items, was $109.8 million or $0.89 per diluted share.

For our 2016 program, Gulfport's D&C capital expenditures totaled $518 million, midstream capital expenditures totaled $11 million and leasehold capital expenditures net of proceeds from leasehold sales and excluding the announced December Utica Shale acquisition totaled approximately $20 million.

An updated presentation was posted yesterday evening to our website in conjunction with yesterday's earnings announcement. Please review at your leisure. At this time, I would like to turn the call over to Mike Moore..

Thank you, Jessica. Welcome, everyone, and thank you for listening in. Yesterday evening, we released our fourth quarter and full-year 2016 earnings, as well as announced our 2017 capital budget. 2016 proved to be a defining year for Gulfport Energy.

Our existing asset base provided another year of record production growth, an increase of 32% over 2015, and we also ended the year with significant acquisition in the core of the SCOOP play here in Oklahoma, positioning Gulfport as a leading operator in two of North America's high return natural gas basins.

Our continued focus on efficiencies throughout the year paid dividends and we experienced another year of costs trending lower across all areas of our business further expanding margins and increasing our overall returns.

Our per unit operating cost which include LOE, production tax, midstream gathering and processing and G&A trended lower in each individual line item throughout the year, decreasing 16% over 2015 and exiting the year at approximately $1.08 per Mcfe.

In addition, our drilling and completion teams continued to push the technical limits of our operations in the field, increasing efficiency and further reducing our D&C cost per lateral foot by nearly 10% over our publically provided estimated well cost in 2016.

With regard to realizations, I am very pleased with the strategic vision of our marketing team and the arrangements they have put in place over the past few years to ensure our products access to premium markets. For 2016, our natural gas differential came in at the tight end of our previously provided public guidance.

Our oil differential narrowed by 21% over 2015 and we increased the total value of our NGL barrel by 17% over 2015.

Our prolific asset base continued to drive significant production growth and during 2016, our year-end total proved reserves increased 36% year-over-year despite a reduction in both commodity prices and drilling activity in 2016 over 2015.

Our year-end 2016 net proved reserves totaled 2.3 Tcfe comprised of approximately 93% natural gas and 7% oil and natural gas liquids.

Our developmental focus in the dry gas window of the Utica Shale led to a 16% increase in proved developed producing reserves over 2015, equating to roughly 34% of our total reserves and our proved undeveloped reserves grew 56% over our 2015 report.

I'm very proud of all that our team has accomplished in 2016, and I'm even more proud of the measures they continue to put in place to expand upon these successes.

Our 2016 results have placed us in a position of strength both financially and operationally as we increase our activity levels in the Utica during 2017 and incorporate a new asset into the portfolio. As we approached this new acquisition, our process was very focused and methodical.

We aim to evaluate opportunities that included meaningful cash flow, production and reserves, did not dilute the quality of our existing portfolio, and also competed with returns of our high quality core position in the Utica, which is not an easy task.

That said, through our SCOOP acquisition, we have found a highly prolific stacked-pay resource with strong production history, a multi-year high return drilling inventory, and an opportunity for significant upside from both a resource and an operational perspective in what I believe is a unique opportunity and truly one-of-a-kind.

With regard to the resource, the SCOOP is a very delineated high quality reservoir with stacked-pay potential across the position. Historically, the industry is focused on the Woodford and Springer formations.

However, more recently, we have seen interest in the emerging Sycamore formation, which we believe holds significant upside across our acreage, which Stuart will go into further detail shortly. The combination of big stacked-pay, superior porosity and permeability and an over-pressured reservoir, provide top-tier flow rates today.

Operationally, the SCOOP acreage position is highly contiguous, which provides meaningful size and scale and will allow our operations team to optimally develop the resource once we enter full development mode, ultimately improving production results while also driving costs lower.

Additionally, the acreage is already over 80% held by production, enabling Gulfport's focus on pure returns as we contemplate the long-term development of the asset. The acquisition comes alongside an existing strong production base advantaged by proximity to end markets and growing demand centers commanding strong pricing for all products.

The immediate uplift in pricing enhances returns and the addition of this asset into the portfolio allows for flexibility with respect to marketing, providing end market diversification and the ability to optimize our current portfolio. From a personnel perspective, this asset directly aligns with the current Gulfport staffs' technical expertise.

Across every area of our business, the Gulfport team has extensive experience operating within the Mid-Con region and as we would hear from many of them today in the scripted remarks, we frankly could not be more excited to get to work on this asset.

Gulfport has called Oklahoma our home since the company was founded in the late 1990s and the SCOOP is truly in our own backyard. Our team has a strong track record of execution, drilling some of the most prolific natural gas wells in the northeast.

And I am confident that we have the right team in place to not only deliver on but exceed our current development plans. With that, I will turn the call over to Stuart Maier, our Vice President of Geosciences, to provide some color on the geology of our recent acquisition and what lies beneath the surface of this asset..

Thanks, Mike. Good morning, everyone. Since our entrance into Appalachia five years ago, we have developed and improved the Utica to be one of the most productive gas plays in North America. We have entered the Mid-Continent to do the same in the SCOOP play, another world-class resource.

The recently acquired SCOOP acreage is located in the heart of the play. Similar to our assets in Ohio, it consists of a series of hydrocarbon phase window that span across our position.

Our current leasehold consists of 46,400 net acres with STACK resources in the Woodford and Springer zones, giving us over 85,000 net effective acres, positioned across the over-pressured liquids-rich to dry gas phase windows of the play.

The acreage position is highly delineated by the strong horizontal wells drilled by Vitruvian, Continental, Marathon and Newfield, and by the over 3,000 producing wells in the immediate area.

The dense well oil control coupled with additional technical data, including hole and sidewall cores, micro-seismic, tracer analysis and 3D seismic gives us certainty of the reservoir characteristics across the position and a firm understanding of the productivity of the asset. Currently, our two primary targets here are the Woodford and Springer.

The Woodford Shale is regionally extensive, consistent and prospective across the entire acreage position. The Springer objectives are organic rich shale intervals that have thus far been predominantly oil productive. In addition to these targets, we see significant potential upside for the Sycamore.

The Sycamore is age equivalent to the Meramec and Osage, being developed up in the STACK and is located between the organic rich Woodford and Caney Shales. Focusing on the Woodford, it is age equivalent to the Marcellus and has been the primary target for recent horizontal industry activity, as well as the target for historical vertical wells.

Geologically, the acquired acres is optimally located for thickness, organic content and pressure, resulting in very high values of hydrocarbons in place. The Woodford section here varies in thickness from over 200 feet to over 400 feet. This rich, thick section allows for high well density and large stimulation treatments.

The regional structural trend deepens to the west and is locally deformed by the tectonics of the Carter Knox anticline. The increasing pressure with depth should result in high rate gas wells as we move to the west.

Combining all of these characteristics, you will find that the acquisition acreage lies within some of the highest quality Woodford resource. The substantial gas in place on the position is validated by the vast amount of data available across the asset.

Based on the results today, we see considerable upside to recovery factors as we take our knowledge from the Utica and apply it here as we enter developmental mode in the SCOOP. As to the Springer, our secondary target, its strata contains several laterally extensive siliceous slag shale that posses highly connected organic pores.

Although a play in its infancy, the recent results by Vitruvian and others have shown strong production and suggest high repeatability. Based on just the Woodford and Springer expense across the acreage, over 1,700 gross undeveloped locations exist. The excellent economic profile of these compares favorably with and complements our Utica activity.

These 1,700 locations equate to over 14 years worth of identified drillable locations at current efficiency and planned rig levels. As with any multi-pay prolific producing area, this number can grow substantially over time, providing us with considerable upside beyond what we assumed in our evaluation model.

As mentioned, one of the additional prospective zones is the Sycamore. It is sandwiched between the Woodford and Springer and is over 250 feet thick across the position, presenting a significant future developmental target. Offsetting operators are currently drilling this section, and we are monitoring the results as non-operating partners.

Our plan for 2017 is to focus development in the Woodford lean gas and wet gas areas and to begin testing the Springer and Sycamore intervals by the end of the year. I'd like to interject at this point that myself and the majority of our geoscience staff started out working in the Mid-Continent.

In fact, the greater part of our careers have been spent here. As we have branched out in other areas, Gulf Coast, Appalachia, Rockies, the geology is different, but rocks are rocks. The more you work them they are similar as they are different.

The strategies to improve results such as lateral placement and enhanced completions are as applicable here as they are in the Utica. Optimum lateral placement lets us stay within the best interval for fast drill rates and high frac efficiency while maintaining a good borehole trajectory.

These factors all contribute to the overall profitability of the well. Our ongoing plan is to take the analytical processes we used in the Utica for petrophysics, geomodelling and hydraulic fracture simulation with production matching, and apply them to the SCOOP. I also expect much of what we learned in the SCOOP can be applied back to the Utica.

I will now turn the call over to Rob to expand upon some of the initiatives I mentioned and provide further detail on our planned 2017 activity at the drill bit..

Thanks, Stuart. I will quickly touch on our 2016 results before providing an additional details on the drilling portion of the 2017 plan for both the Utica and the SCOOP. Our 2016 results are a testament to the focus the Gulfport team has had in the field improving upon efficiencies and cycle times and further reducing well cost.

This has been achieved at the same time that we're increasing lateral lengths, total measured depths and sand volumes, which I'll let Mark touch on shortly. But these factors generally move metrics in the other direction.

On the drilling front, over the past several years, we've focused on sourcing high quality equipment that would lead to increased efficiencies across operations and allow us to continue to drive the drilling metrics in the right direction.

In the Utica Shale, we drilled 50 gross wells yielding just over three rigs with an average spud to rig release of 23.5 days in 2016, a decrease of 14% over 2015. Recently, this has continued to trend lower, averaging 20.7 days during the fourth quarter of 2016.

It is important to note that we decreased days while the lateral length increased to an average of 8,340 feet for 2016, and increased 11% over 2015. Overall, we had an exceptional year that we exceeded many of our previous drilling records which provides new expectations and goals for the team focused on in 2017.

Last year, we drilled our longest well to-date in the play, the dry gas well that totaled 20,731 feet total measured depth. And based on our 2017 plans, multiple wellbores will surpass this metric.

We beat nearly all of our footage per day records, including total lateral feet drilled in a day, vertical feet drilled per day and average feet drilled per day for an entire well. While I'm proud of these accomplishments, I think we still have room to increase efficiencies.

As we entered 2017, we're putting initiatives in place to further improve these results and ultimately reduce days on location and drive costs lower. In the Utica, as we've mentioned in the past, access to consistent quality equipment and crews has proved to be central to our efficiency gains.

We currently have six high spec built-for-purpose shale rigs running that are locked in at attractive rates for the remainder of 2017 with ongoing discussions to extend. The rigs have all the necessary equipment to improve mobility on the pad and we recently had success with batch drilling on a few of our locations.

Batch drilling allows us to separate the horizontal and vertical phases of drilling for wells on a pad, eliminating the need to swap back and forth between air and mud systems, causing unnecessary down time during fluid changeover and reducing costs, where our leasing fluid specific equipment were not being utilized.

This process also allows for a consistent approach to the well and a continuous focus on the fluid system in service. Results are promising with the recent pad averaging 17.3 days per well and an average of 983 feet per day over the entire pad.

During 2017, we plan to focus our activity largely in the dry gas window of the play, running five rigs in the dry gas area and one rig in the wet gas window. We forecast this level of activity will generate 87 to 97 gross operated wells in the Utica and currently expect the 2017 program to have an average lateral length of approximately 8,700 feet.

In the SCOOP, we have recently added two senior drilling engineers to the group and look forward to mixing their SCOOP experience with our current teams' multiple years of Mid-Continent expertise. The basin has been in a delineation phase and has just begun the early phases of the shale development.

This development will begin to increase the learning curve and be able to implement developmental drilling strategy and technology. We will implement some of our best practices from our Ohio operations here in Oklahoma, starting with a more targeted lateral placement as Stuart mentioned.

Targeted drilling goes beyond identifying the best reservoir rock from a resource perspective, but also from a drilling perspective. We work closely with the geosciences group to identify the optimal landing zones that hold not only the best ultimate recoveries, but also the highest drilling penetration rates.

The use of improved rotary steerable technology is generally standard on our wells in the Utica, and we plan to utilize the same technology to assist with landing zone targeting top-hole deviation control and increased penetration rates, lowering costs and increasing returns.

In the SCOOP during 2017, we plan to focus our drilling within the wet gas window of the play, maintaining the four-rig program. We forecast this level activity will generate 19 to 21 gross wells and currently expect the 2017 program to have an average lateral length of approximately 8,500 feet.

Now, I will turn it over to Mark to walk through the completion side of our operations..

Thanks, Rob, and good morning. As Rob just mentioned, 2016 was a great year for the operations team, and I will be remiss to not touch on the progress we've made on the completion side of the business before providing more detailed overview of our 2017 plans.

During 2016, as we continued to endure a challenging time for the energy sector, the completions team focused on bringing the overall cost structure lower through shorter cycle times, adding value with every dollar invested throughout the year.

Efficiencies and cost savings were comparable with what we see on the drilling side of our operation and as Rob mentioned, all achieved while increasing sand volumes and total stages pumped during the year. Gulfport turned-to-sales 54 gross wells during 2016, completing approximately 2,118 total stages during the year.

Our 2016 timelines had an average perforated lateral length of 8,329 feet, an increase of 26% over 2015, and were completed at an average of 6.85 stages per day over 2015, an increase of 40% or an addition of 1.96 stages per day during 2016.

To my knowledge, the stage efficiency of 6.85 stages per day continues to track well ahead of our peers in the basin. Our 2016 results are evidenced by the benefits realized through our vertical integration efforts in the Utica.

By vertically integrating the key segments of the completion side of the business, we've guaranteed access to consistent operations, quality equipment, and experienced crews at a fair price.

In addition, as activity begins to increase within the area, it also protects Gulfport from high spot prices and supply shortfalls, providing insulation from service cost inflation.

We remain focused on locking in the benefits of our lower cost environment and including Rob's side of the AFE we now estimate we have approximately 85% of our Utica drilling and completion costs locked in for the remainder of 2017 and have already begun work on 2018.

Incorporating both the drilling and completion savings and efficiencies experienced in 2016, we estimate that Gulfport's well cost averaged $1,075 per foot of lateral during 2016, trending approximately 7% to 11% below our previously provided estimates in the public slide deck.

Alongside yesterday evening's earnings announcement, we have updated our anticipated well cost to reflect actuals realized during the year, and we now forecast wells within the dry gas window of the play to average $1,085 per foot of lateral.

This cost reflects an enhanced design on a portion of our 2017 completion program, which I will touch on more in a moment. These savings are also realized in the income statement on a per unit lease operating expense. For 2016, LOE totaled approximately $0.26 per Mcfe, down 25% over 2015.

This reduction in LOE is driven by initiatives to reduce water disposal cost by recycling all of our produced water and more modular production facility design that not only reduces the cost of materials, but also includes remote monitoring systems that allow for more efficient use of our existing labor force.

The same modular facility design coupled with our focused production processes and strong support from our midstream providers enable our team to maintain an average per well run time of 98.5%.

These are huge accomplishments for our team, and we believe the same initiatives will translate over to our SCOOP assets, continuing to drive operational costs lower and improve margins. All of these operational accomplishments leave us very well positioned as we execute our 2017 program.

In the Utica, we continue to push the envelope on well design to identify the best completion design. Completion techniques and technologies are constantly evolving and as we gather new data, our development plans also continue to evolve as we strive to better understand the optimal treatment for the reservoir.

The yield is not only the best productive results but also economic return profile. During 2017, we plan to complete a portion of our program with an enhanced design over our base completion.

Completion design is driven by a number of factors including drainage area, lease geometry, well economics and offset activity which is all being encountered for in our 2017 development plan.

In the Utica, we plan to turn the sales 72 to 80 gross wells during 2017, largely focused within the dry gas area of the play and currently forecast an average completed lateral length of approximately 8,100 foot.

In the SCOOP, I will echo both Stuart and Rob and say we're seeing some very conservative early generation stimulation techniques, and I believe the majority of the wells producing today have been drilled and stimulated sub-optimally.

During 2017, we plan to immediately walk up the sand volumes and begin implementing our base Utica design across the play. However, with the Woodford nearly two to four times thicker than our target interval in Ohio, we see potential upside to increase design even further as we gain results.

In the SCOOP, we plan to turned-to-sales 17 to 19 gross wells during 2017, largely focused within the wet gas area of the play and currently forecast an average completed lateral length of just over 8,000 foot. I will now turn the call over to Keri to discuss the specifics surrounding the 2017 capital budget..

Thanks, Mark. Gulfport's 2016 operational success mentioned by Rob and Mark were the strong financial results. Our continued dedication to preserving the financial strength of the company has positioned us well as we look to increase our activity levels in the Utica Shale and incorporate the SCOOP asset into our portfolio during 2017.

Yesterday evening, Gulfport announced that our Board of Directors has approved the capital budget for 2017 of approximately $1 billion to $1.1 billion. This budget includes approximately $845 million to $915 million on our drilling and completion activities which includes approximately $125 million to $135 million of non-operated activities.

Outside of D&C CapEx, we expect to invest approximately $50 million to $60 million on the midstream build out associated with Strike Force and approximately $110 million to $120 million on leasehold expenditures during 2017.

At this level of capital spend, Gulfport forecast production to be approximately 1 to 1.1 billion cubic feet per day, an increase of 45% to 53% over 2016.

Similar to last year, we plan to run our completion activity heavier during the summer months when operations prove to be more efficient and less costly and lighter during the winter and currently forecast of turned-to-sales approximately four net wells during the latter part of the first quarter. The balance sheet remains solid.

And as of December 31, our revolver of $700 million was undrawn, which we would anticipate to increase alongside the spring redetermination with the addition of the SCOOP reserve.

As we planned for 2017, we adhere to our commitment of funding our 2017 activity through operational cash flow and available sources of liquidity while also maintaining a reasonable leverage metric.

Based on our projected 2017 operating cash flows from the contemplated activities laid out today, at current strip prices, we would expect to comfortably remain within our leverage target of 2 to 3 times debt to trailing 12-month EBITDA at year-end 2017.

In terms of cash cost, we continue to realize economies of scale through our dry gas development in the Utica and including the addition of the liquids-rich SCOOP acquisition to our corporate profile, we forecast per unit cost will decrease by approximately 7% over full year 2016.

Similar to last year, for modeling purposes, we anticipate per unit, LOE midstream gathering and processing and production tax to begin 2017 at the high end of the ranges and directionally move towards the low end of the ranges provided by year-end 2017.

On the hedging front, we continue to provide increased certainty to our future cash flows through our robust hedging program. As we think about 2017, we have a solid base load of hedges in place and have been active in the market over the past several months, expanding the book to include the acquired SCOOP production.

Based on our 2017 guidance, Gulfport currently has nearly 60% of our expected 2017 natural gas production including the SCOOP acquisition swapped at $3.18 per Mcf.

Given the liquids rich nature of the SCOOP acquisition, we have also been active on the crude and NGL side, and when you include those volumes, we estimate to have approximately 55% to 58% of our total forecasted production locked in, securing a portion of our near-term activities at a strong rate of return.

We remain committed to obtaining strong realizations, and I will now turn the call over to Ty to provide more colors surrounding the marketing of our products during 2017 and differential expectations for the year..

Thank you, Keri, and good morning. On the realizations front, we had a strong 2016 with all products exceeding our previously provided public guidance.

Gulfport's 2016 realized natural gas price before the effect of hedges and including transport costs settled approximately $0.61 per Mcf below the average NYMEX price, approximately 4% better than the midpoint of a guidance range previously provided.

Before the effect of hedges, our realized oil price came in at $5.18 off of WTI, roughly 14% better than the midpoint of our previously provided expectations, driven by strong South Louisiana production and increased demand for our condensate in the Utica.

Our 2016 realized NGL price came in approximately 36% above the midpoint of guidance which was driven by higher seasonal demand during the fourth quarter and what we believe is to be the beginning of a supply-demand rebalance in the northeast with regards to NGLs.

As we look towards 2017, the opportunities and synergies we see and the combining of marketing arrangements from the Mid-Continent with our current portfolio in Appalachia creates increased optionality and diversification with regards to Gulfport's access to regional end markets and demand centers.

In the Utica, we are encouraged by recent FERC progress and improving pipeline projects beneficial to all Appalachia producers and have good visibility to the majority of our incremental firm targeting the Gulf Coast demand coming on in 2017.

Including some risking for the most recently approved projects, we continue to forecast that Gulfport's and basin exposure will be less than 5% of our 2017 forecasted production.

As for the SCOOP, the play is centrally located and in close proximity to multiple pricing – physical pricing hubs, including Henry Hub, Mont Belvieu and Cushing, reducing the transport cost and increasing margins.

The assets are located near multiple growing demand centers in the U.S., including Gulf Coast LNG, Mexican demand and growing power generation and utility loads in the southeast, ultimately increasing the price realized for our products and boosting returns.

Our SCOOP acquisition provides Gulfport with additional flexibility and opportunities to adopt as we allocate capital throughout the year and monitor all the major expansions across U.S. pipeline grid.

Incorporating SCOOP into our portfolio provides uplift to our expected realizations, and during 2017, before the effect of hedges and including transportation expense, the company expects basis differentials to range from $0.56 to $0.62 per Mcf off NYMEX monthly settled price for natural gas.

This differential is derived based on our current firm portfolio, including both Utica and SCOOP and forecast to 2017 production at current strip prices and current basis marks. In addition, Gulfport expects to realize approximately 35% of WTI for natural gas liquids, and approximately $4.50 to $5.50 off WTI for oil.

I will now turn the call back over to Mike for closing remarks..

In closing, our strong 2016 results have placed us in a position of strength as we look to carry out our future plans and increased activity levels in 2017. We doubled our rig count in the Utica and during 2017, continue concentrate on increasing efficiencies in the field.

As one of the technical leaders in the Appalachia, we are excited to bring our learnings from the basin and begin to push the envelope with the great rock that we have in the SCOOP during 2017 by drilling longer laterals, increasing recoveries, and further delineation of the underappreciated multi-zone opportunities across the SCOOP position.

We have a strong existing marketing portfolio in the Utica that has complemented the addition of the SCOOP assets, optimizing end market access and providing further basis diversification.

Our strategic commitment to the balance sheet and conservative leverage metrics provide us with the ability to pursue this growth plan through available sources of liquidity.

The combination of Utica and SCOOP provides us the opportunity to optimize the strengths of our business through strategic capital allocation across the portfolio, further diversifying Gulfport's commodity price exposure, affording our investors a low-risk and high growth opportunity in two of North America's lowest cost natural gas basins.

This concludes our prepared remarks. Thank you again for joining us for our call today, and we look forward to answering your questions. Operator, please open up the phone lines for questions from the participants..

Thank you. At this time, we will be conducting a question-and-answer session. Our first question is coming from Neal Dingmann of SunTrust Robinson Humphrey. Please proceed with your question..

Good morning, all. And, Mike and team, thanks for all the details..

Good morning, Neal..

Mike, my first question, I know you all have not released really a two to three year plan maybe like some other companies, but I guess my question is, I was wondering, how do you all think about that – think about the future growth versus what you're seeing this year, given you have – certainly are adding rigs, you brought in cost, you've done a lot of things that really prepare for, I would think, a higher growth rate? But I just want to see how you thought about in terms of a two to three-year plan, what you can say about that?.

All right. Thanks, Neal. Certainly, we model out pretty far when we're thinking about our future activity in future years, taking into consideration the amount of acres that we have and the opportunities that we have. I think as it relates to – let's talk about 2018 for a second.

As it relates to 2018, I think we're still comfortable with the base level of rigs that we have in Utica. We have talked about possibly adding a few more rigs in SCOOP in 2018. Certainly, we'll be looking for opportunities to increase activity levels as long as the strip cooperates.

We have worked pretty hard recently on getting a base wedge of hedges in place for 2018, obviously, we need to add some more. But I think right now, status quo for 2018, no changes. A 30% plus growth rate on a sustained basis seems reasonable. I don't think we have to go crazy from a growth perspective.

But obviously, Neal, we're going to have to just wait and watch the strip and make some decisions later in the year about 2018 and beyond..

And, Mike, just one follow-up on that maybe other (37:30) question again. Is that plan driven more about staying within cash flow when you, Keri, Rob, everybody comes together and works with that plan.

Is there a driver to such as staying within cash flow or a different variable that's really influencing, how do you all think about that?.

Yeah. That's a good question. For Gulfport, obviously, staying within cash flow and our available sources of liquidity, we typically like to fund our activities that way rather than from the capital markets. But leverage ratios obviously are a governor for us as well.

We will be adding some debt in 2017, but we just try to find the right balance of all of those..

Great details, Mike. Thanks. Good quarter..

Thank you..

Thank you. Our next question is coming from Ron Mills of Johnson Rice. Please proceed with your question..

Good morning, Mike..

Hi, Ron..

A question on the SCOOP and particularly on slide 27 of your presentation, you show number of wells in Gen 1 versus Gen 4 completions. Can you just provide – your current type curve I think is an average of all of the wells. And you pointed to having a thicker pay here so you could even have higher intensity fracs.

So, talk a little bit about completion thoughts through this year, and relative to what your type curve is based on, which seems to point to your initial look being pretty conservative..

Yeah. The production in the type curves that we drove (39:15) this acquisition on were based on historic wells which are largely comprised of Gen 1 completions. As Mark indicated, we're certainly going to have a group of wells here in SCOOP that we're going to move to the larger fracs Gen 4 completions.

So we're excited about the opportunity of applying the frac renaissance here.

Mark, would you add anything to that?.

Yeah, absolutely. We've been in the Utica play for some time now. Over the course of that time, we've gathered a great deal of data. As we gathered that data, we applied those learnings and enhanced our completions over the course of our stay there.

We plan to do the same thing in SCOOP and certainly off of that we've got a lot of the wells to look at, a lot of data gathered for us previous. So we'll start enhancing those completions right away..

And Ron just to follow-up on that, I did want to clarify that the type curves include – the well cost estimates and the type curve include the more recent Gen 3 and Gen 4 completions. So we've already built that in just in case there's any confusion there..

Okay, great. And then you talked about the stacked-pay potential and offset operators testing other zones in the area, Sycamore and others.

Do you have any non-op interest in some of those offsetting stacked-pay wells to help move you up that learning curve faster as you focus on the Woodford mostly this year?.

Yeah, we absolutely do. We're getting a lot of non-operated information. And that's one of the great things about the opportunity set that we have down here. We are surrounded by a lot of great offset operators and we are participating on a non-op basin in those wells.

So we're absolutely getting that information which obviously will help us move forward faster on the learning curve here..

All right. Great. I'll let someone else jump in. Thanks, Mike..

Thanks, Ron..

Thank you. Our next question is coming from Jason Wangler of Wunderlich Securities. Please proceed with your question..

Morning. Was just curious maybe sticking with the SCOOP as Ron was there. You've done a great job in the Utica of locking in a lot of your service costs and that's obviously been a discussion we're all having.

Can you talk about what you maybe be bringing on with the four-rig program in the SCOOP as far as contracts and just kind of how you see that playing out as you kind of takeover the asset?.

Yeah. This is Rob. On the drilling side, we've done a very good job in locking in our prices for 2017. Of all service costs, we've locked in about 85%. So we have the contracts through most of the year, and we are working on trying to extend them. So, from a drilling side, we've done a good job, and I'll let Mark discuss the completion..

Yeah. As you're aware, I mean we've been vertically integrated for quite some time, so most of our larger cost service items are already locked in. So we plan to take that same process into the SCOOP with us as we've applied in the Utica..

So....

Okay..

...Jason, just to – a little further information on that. Of course, we are closing here shortly on the SCOOP, so we're not completely in control yet. But we are having conversations with certainly service providers there. They're so interested they've even met with me. So I think we have lots of options.

Obviously, it's a vertically integrated company, and you saw the announcement this morning from Mammoth that they have purchased some additional equipment. They've done a great job for us up in Utica. So I think that gives us some optionality certainly as we develop the SCOOP play.

But we're going to try to lock in as much as we can for 2017 and even into 2018. You got to keep in mind we have 10 rigs running between the two plays now, and that should give us a lot of leverage in talking to these service providers. But we have built in, just to be clear here.

We have built in some cost inflation in SCOOP just in case, so that's already built in for our well cost..

That's great. Thank you. I'll turn it back..

Thank you..

Thank you. Our next question is coming from Marshall Carver of Heikkinen Energy Advisors. Please proceed with your question..

Yes. Thank you. Just any additional color you can provide on the Sycamore formation? I'm just not very familiar with that play.

Like what sort of IP rates have you all seen, and which operators have been active and any additional color you can provide?.

This is Stuart. The Sycamore is a highly prospective formation. A lot of the offset operators are just now starting to drill it. The IPs were comparable to the Woodford and Springer section. It's sandwiched in between all the productive zones, the Woodford and the Springer section. So it's got all the characteristics we look for in a good resource play.

So I expect really good results from our activities going forward with it..

So there's not a lot of information yet, Marshall, but there is a private operator just to the northwest of us that's developing Sycamore right now. So obviously, that's going to be something we watch very closely, and we're very interested in exploring that opportunity maybe later this year..

And would that be a second half well from you all?.

Yeah. It'd be later in the year. We're looking for a possible location for later in the year. So we're excited about that..

Okay. Thank you very much..

Thank you..

Thank you. Our next question is coming from David Deckelbaum of KeyBanc Capital Markets. Please proceed with your question..

Morning, everyone. Thanks for taking my questions..

Hi, David..

Curious I think I'd ask the – I understand the well cost that you have right now for the SCOOP, I guess, averaging about $1,400 per foot or so, incorporate sort of a Gen 3, Gen 4 design and some service cost inflation.

I guess, are you risking that also I guess for allowing more time, I would not use a word like inefficient, but I guess, can you give us an idea of what a reasonable target would be for cost savings through efficiencies as you kind of work this play?.

Well, that's a good question. And I will tell you that we've not built any of that. And even though, we think there's a great opportunity. I mean, if you think about what we were able to accomplish in the Utica over a short amount of time going from 45 days, down to, I think, Rob's at 20.7 days average right now.

And in the early part of the Utica, we were happy to get three stages a day, and we've gotten actually this year up to 13 stages a day. And on I think two different pads, we had an average of nine stages per day.

So, my point is, in a very short amount of time, our guys have really pushed the efficiency envelope, and I think we have an opportunity set here as well to do something. I'm not going to tell you it's going to be exactly the same. But these are very deep wells out here.

But it's hard to quantify at this point, David, but we are excited about the opportunity to get our hands on it and push the efficiency window..

This is Mark. I'll just reiterate what Mike said. If you think about the Utica, when we first got into that play, we were about three stages per day on average. That's about where the processes are in the SCOOP at this time.

So, as Mike mentioned, we are up to nine stages a day on a particular pad this year in the Utica, and there's no reason we shouldn't be able to carry the same kind of efficiencies forward in the SCOOP. I anticipate we'll be in the five-stage range..

I think on the drilling side, just to quantify it a little bit for you, we're assuming a 70-day drill, and certainly we think we can beat that based on our experiences. Quite frankly, Rob drilled a lot of these original wells out here that are HBP in our acreage. So, we feel pretty comfortable with our ability to do things faster out here..

I appreciate the color. If I could ask a little bit more just on the SCOOP here, I guess it's a thought (48:27) one or all of the completions this year are going to be Woodford. You also mentioned that you have the ability with this asset since it's 80% held just to sort of chase economics and no other real variables there.

By the end of, I guess 2017 – does that 80% HBP number increase substantially?.

Well, it will increase some. I can't tell you exactly how much. I don't know that it would be a huge incremental change to it. But we're going to be developing mostly Woodford wet gas this year, with some testing in the Sycamore and Springer as well, but the majority of it will be Woodford wet gas.

So, again, I can't quantify what the 80% goes to, but it will certainly grow some..

Okay. Thanks for the help, guys. That's all for me..

Thank you. Our next question is coming from Steve Berman of Canaccord Genuity. Please proceed with your question..

Thanks and good morning, everyone. I'm looking at slide 23, and you've got a Springer Sand and a Springer Shale in there.

Can you talk a little bit about the – geologically, the differences there? And when you do start testing the Springer, are you going to prefer one over the other?.

This is Stuart. If you look at page 22 before, there's a really nice cross-section that kind of spans Oklahoma, going from north to south. And on the right side, it shows how thick the Springer section becomes as you come down into the SCOOP area. The Springer Sands have been played in this area for quite some time.

The Springer Shale, which sits right below the Sands section, is really what our target is going forward. It's organic-rich siliceous shale section that should frac really nicely. It's got a really good pore system. So that'll be our target..

Right.

So the estimated locations you're talking about there would really be the Shale, there's nothing in there for the Sands, or is that not correct?.

Not at this time..

Okay. All right. That was it for me. Thank you..

Thanks, Steve..

Thank you. Our next question is coming from Jeff Robertson of Barclays. Please proceed with your question..

Thanks..

Hi, Jeff..

Can you talk a little bit about the thicknesses of the Woodford and the Sycamore? Do you see more than one potential landing zone in the Woodford, and how difficult is it to stay in zone in the Woodford given what structure there may be in place?.

Yeah. This is Stuart again. The middle section of the Woodford has three identified intervals that we like to stay within. It's structurally complicated down here. It's folded and faulted. We do have a luxury of a lot of well control and 3D seismic data over the areas that help us stay in zone.

You've got kind of a trade-off of staying in the best rock for producibility and drill right. But then you don't want a rollercoaster borehole. You need a pretty flat trajectory. So, our goal is to find a happy medium between all three of those and stay in zone with the drill bits.

And there certainly will be some testing in areas with a lot of thickness of wine racking or staggered stacking laterals. So there's certainly some things that we can do to help us out there..

Thanks.

Mike, can you also speak to the gathering and processing situation here and do you all need to do anything to improve on what you inherited for Vitruvian to handle what you hope to do from a growth standpoint in the next couple of years?.

Hi, Jeff. This is Ty. I think as we look at gathering and processing here in Oklahoma, we got a lot of good operators out there that know what they're doing, trains good, land owners are receptive. In particular with Vitruvian, they have dedication to or have a dedication to Woodford Express.

And those guys are known – guys that have been in the industry, had really focused on our drill bit, where we're going which is really good with regards to the receptive, the reactive to, and an even proactive, I guess I would say, to where we are trying to go.

And so, when we look at the gathering and processing, we feel like we're ahead of the curve there and look good for the upcoming years..

That dedication acreage or volume?.

That's acreage....

Okay..

...which is along the lines the same that we do in the Utica..

Okay. Thank you very much..

Thanks, Jeff..

Thank you. Our next question is coming from Gordon Douthat of Wells Fargo Securities. Please proceed with your question..

Thanks. Good morning, everybody. Just a question on the Utica. You previously talked about the potential opportunity to capture some leasehold as a primary term rolled out from some of your peers out there and just wanted to get an update on how that's looking particularly in light of now that you've got the SCOOP in hand or well here shortly.

How do you view that opportunity strategically by growing your Utica position?.

Yeah. It's interesting. I think that what the opportunity set is going to be for us or anyone is still, I would call it, a work in progress. We have to wait and see what kind of rigs people talk about adding back in the region, and how they're going to be able to hold their acreage.

So I guess, it's a hard question to answer, but for us, I think we're just focused on blocking and tackling and filling our acreage so we can drill longer units. We do think we'll certainly have those opportunities. We want to increase our working interest. And really, this applies to both Utica and SCOOP quite frankly.

You do see a little bit more robust land budget this year to account for that. But we feel comfortable with our ability to backfill and replace our inventory. So that's what we're going to focus on. If the other opportunity presents itself, we'll take a look at it, but we don't have to do anything huge..

Okay. And you kind of touched on a little bit, Mike, on – when you referenced the SCOOP.

But just a similar question, once you get that asset closed, the transaction closed, do you feel like you'll be able to grow that working interest as well?.

I think it's really the same answer, and I will tell you that we've already met with all the offsetting operators. We're already having conversations about working together, trading acreage. So I do think we'll be able to backfill our units and – so that we can draw longer laterals. But I think the same opportunity set exists down there.

I don't know if anything large is available but certainly lots of small stuff..

Okay. Thanks very much..

Thank you..

Thank you. We have now come to the end of our question-and-answer session. I would like to turn the floor back over to Mr. Moore for any additional or closing comments..

Thank you, Donna. We appreciate your time and interest today. Should you have any questions, please do not hesitate to reach out to our Investor Relations team. This concludes our call..

Ladies and gentlemen, thank you for your participation. This concludes today's teleconference. You may disconnect your lines at this time, and have a wonderful day..