Gulfport Energy Corporation (GPOR)
Utica / Pt. Pleasant on the Horizon
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Highlighting Progress in the Utica. On 3/12/12, GPOR hosted a tour of the rig drilling the Wagner #1 H Utica well
located in Harrison County, OH. Recall, the Wagner well is located ~10 miles south of the CHK Buell #8H well that had
a 24-hr IP rate of ~3,000 Boe/d (47% liquids). GPOR noted that everything appears to be on schedule and expects to
frac the well in April. With 62.5k net acres (125k gross), GPOR is highly levered to the Utica and has acreage that is
most prospective for the wet gas window in Harrison, Guernsey and Belmont Counties, OH. Our 'PD Plus' NAV-based
$42 target price and Outperform rating remain unchanged.
Utica Catalyst Nearing. To date, GPOR has drilled ~5,250 ft of vertical depth (expected TVD of ~8,500 ft) and expects
to drill an ~8,000 ft lateral. GPOR expects to frac the well in April, and we believe that the results will be announced on
or just before GPOR's 2Q12 earnings. In addition, the Wagner well has access to water (Wagner farms) and takeaway
infrastructure (Dominion pipeline exists just over a mile from the site). GPOR also noted that Ohio provides several
options for used frac water including disposal wells and processing once fracking commences.
Wet Gas Window Shows Most Promise. Although the Utica still remains in the early stages, GPOR's geologists
highlighted that the wet gas window provided a combination of depth, thermal maturity, permeability, porosity and
pressure that gave it an advantage over the dry gas (less economic given natural gas prices) and oil (lower than ideal
permeability and porosity) windows. Importantly, GPOR noted that according to resistivity logs, water saturation in the
Pt. Pleasant was estimated to very low at ~3% vs. ~15% for the Lower Eagle Ford (an analog for the Utica), which
should result in higher oil/liquids ouput. GPOR also noted that TOC was ~2%, but could potentially be meaningfully
higher given that the original estimates were based on limited data points. GPOR expects most (90%) of the resource
potential will come from the Point Pleasant, which lies below the Utica.
Note published 13th March 2012 |
