Q3 2025 Gulfport Energy Corp Earnings Call

Speaker #3: Greetings and welcome to the Gulfport Energy Corp Corporation . Third quarter 2025 Earnings Call . At this time , all participants are in a listen only mode .

Speaker #3: A question and answer session will follow the formal presentation . If anyone should require operator assistance , please press Star Zero on your telephone keypad .

Speaker #3: As a reminder , this conference is being recorded . It is now my pleasure to introduce Jessica Antle Vice President of Investor Relations .

Speaker #3: Please go ahead .

Speaker #4: Thank you and good morning . Welcome to Gulfport Energy Corp Third Quarter 2020 Earnings Conference call . I am Jessica Antle Vice president of Investor Relations .

Speaker #4: Speakers on today's call include John Reinhart President and Chief Executive Officer , Michael Hodges executive Vice President and chief Financial officer . In addition , Matthew Rucker , executive vice president and chief operating officer , will be available for the Q&A portion of today's call .

Speaker #4: 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 .

Speaker #4: We caution you that these actual results could differ materially from those that are indicated in the forward looking statements , due to a variety of factors .

Speaker #4: Information concerning these factors can be found in the company's filings with the SEC . In addition , we may reference non-GAAP measures , reconciliations to the comparable GAAP measures will be posted on our website .

Speaker #4: An updated Gulfport presentation was posted yesterday evening to our website in conjunction with the earnings announcement . At this time , I would like to turn the call over to John Reinhart president and CEO .

Speaker #5: Thank you , Jessica , and thank you for joining our call today . Last night we announced meaningful progress on key inventory additions that strengthen the company's core asset value and support sustainable long term value creation for shareholders .

Speaker #5: Since 2023 , we have consistently communicated our commitment to adding high quality , low breakeven locations . And during the third quarter , we made meaningful strides in expanding our drillable inventory .

Speaker #5: First driven by Gulfport's development in recent peer activity , resource viability of the Ohio , Marcellus has expanded to the north , demonstrating the significant incremental value in Gulfport inventory portfolio overlying our existing Ohio Utica development in northern Belmont and southern Jefferson counties .

Speaker #5: These high quality locations are being added to the existing portfolio at no incremental land cost . Effectively doubling our net Drillable Marcellus inventory in Ohio .

Speaker #5: Second , the successful appraisal drilling of our first two new development wells in the Utica validates feasibility of new development across our acreage position , adding economic low break inventory on otherwise underutilized acreage , which previously only accommodated sub short lateral development .

Speaker #5: Third , we have continued our disciplined discretionary acreage acquisitions into the third quarter and since mid 2023 have the invested over $100 million towards high quality , low break even locations that enhance optionality across our portfolio .

Speaker #5: Collectively , these initiatives have increased our gross , undeveloped inventory by more than 40% since year end 2022 , and we now estimate Gulfport holds approximately 700 gross locations across our asset base .

Speaker #5: These inventory additions facilitate substantial fundamental value enhancements for the company by increasing our net economic inventory by approximately three years and brings our total net inventory to roughly 15 years with peer leading Breakevens below $2.50 per MMBtu .

Speaker #5: Finally , we also achieved a significant milestone on the financial front during the quarter by completing the redemption of our preferred equity . This transaction simplified our capital structure and complements our ongoing equity repurchase program , inclusive of the preferred redemption .

Speaker #5: As of September the 30th , Gulfport has returned 785 million to shareholders since March 2022 , and we intend to continue to opportunistically repurchase our undervalued common stock .

Speaker #5: Announcing plans to allocate an incremental 125 million towards repurchases during the fourth quarter of 2025 . All while maintaining an attractive leverage ratio forecasted to be at or below one times eight year end 2025 .

Speaker #5: Moving to our third quarter results . Our average daily production totaled 1.1 2,000,000,000 cubic feet equivalent per day . An increase of 11% over the second quarter of 2025 .

Speaker #5: And keeping us on track to deliver full year production of approximately 1.0 4,000,000,000 cubic feet equivalent per day , which includes unplanned third party midstream occurrences that were previously disclosed alongside our second quarter results in August .

Speaker #5: On the capital front , we remain committed to allocating capital to the highest value opportunities across our asset base . We announced two targeted initiatives where we plan to invest incremental discretionary capital expenditures during 2025 .

Speaker #5: First , as part of our technical team's ongoing focus to optimize development and unlock additional value within our existing portfolio , we have elected to invest approximately $30 million towards discretionary appraisal development during 2025 .

Speaker #5: This program , predominantly targets the drilling and completion of our first two development wells in the Utica , which , as mentioned , were recently successfully drilled and are scheduled for completion late in the fourth quarter .

Speaker #5: These wells validate the technical feasibility of view development across our acreage and enable us to optimally develop areas of our acreage footprint that were either not prioritized for future development due to acreage configuration or only contemplated for a shorter lateral development that did not clear our current economic hurdles .

Speaker #5: This discretionary investment allowed us to unlock roughly 20 gross locations , nearly one year of high quality dry gas inventory , and enhances our long term development optionality .

Speaker #5: In addition , our team identified and executed several other appraisal opportunities during the second and third quarters of 2025 , including duck of laterals that were drilled several years ago , infilling 2000 foot spaced laterals as well as refrac opportunities from unstimulated wells in the Utica .

Speaker #5: These activities were designed to supplement base production with limited incremental capital , and we will assess performance from these initiatives and apply the learnings to pursue additional value enhancing opportunities that may exist elsewhere in the company's portfolio .

Speaker #5: Second , in response to known forecasted production impacts from simultaneous operations of an offsetting operator as well as planned third party midstream maintenance production downtime in the first quarter of 2026 , we are planning to invest approximately 35 million towards discretionary development activity during 2025 .

Speaker #5: This proactive spend is expected to mitigate the forecasted upcoming production impact and position the company to deliver offsetting volumes into a favorably and to a favorable economic commodity price environment .

Speaker #5: While we continue to optimize our 2026 development program amongst our attractive development areas and plan to announce our formal capital and production guidance in February , the discretionary Capital investments made in 2025 will benefit the 2026 program , along with these incremental capital investments , the company reiterates our commitment to return capital to shareholders through our ongoing common share repurchases , and this incremental capital spending will not reduce the amount we previously planned to allocate toward share buybacks during 2025 .

Speaker #5: In total , we expect to allocate approximately 325 million to common stock repurchases during the year while maintaining financial leverage at or below an attractive one times on the land front through September 30th , 2025 .

Speaker #5: We have invested roughly 23.4 million on maintenance , leasehold and land investment focused on bolstering our near-term drilling programs with increases of working interest and lateral footage in units .

Speaker #5: We plan to drill near term . In addition , we continue to pursue discretionary acreage acquisitions , primarily in the dry gas and wet gas windows of the Utica , and we have invested approximately 15.7 million during the first nine months of 2025 .

Speaker #5: We reiterate our plans and remain on track to allocate 75 million to 100 million in total before the end of the first quarter of 2026 , and currently forecast approximately 60 million of cumulative spend by year end 2025 .

Speaker #5: Upon successful completion of our planned expenditures , this is planned to add over two years of core drilling inventory . Further bolstering our undeveloped well counts and development optionality .

Speaker #5: Beyond the additions we announced earlier today . Specific to our Marcellus activity , we continue to be very encouraged by our Hendershot pad results and our first Multi-well development .

Speaker #5: The four well , Yankee Pad brought online late in the second quarter and located in the Marcellus core development area . The Yankee Pad is exhibiting attractive performance compared to its direct offset .

Speaker #5: The Hendershot five . Well . And when normalized to 15,000 foot laterals , tracking in line on a two stream equivalent comparison . Notably , the Yankee pad represents our first Marcellus pad to be gathered and processed under our new midstream agreement , which enhances development economics by enabling the extraction and sales of valuable NGLs , especially considering the favorable ethane treatment that the contract provides .

Speaker #5: In addition to our Marcellus core inventory . As I noted , recent peer development activity has expanded our Ohio resource viability into northern Belmont and southern Jefferson counties , where we hold a meaningful amount of acreage as depicted on slide eight of our investor presentation .

Speaker #5: We estimate approximately 120 to 130 gross locations across the defined Marcellus North Development Area , expanding Gulfport's , Gross Marcellus inventory by approximately 200% .

Speaker #5: We plan to drill our first Marcellus North development in early 2026 , and look forward to discussing the development results once the wells come online and we gain production history .

Speaker #5: In summary , we remain focused on expanding and responsibly developing Gulfport's high quality , low break even inventory while prioritizing shareholder returns and maintaining our strong financial position .

Speaker #5: The expansion of our Ohio Marcellus inventory , validation of new development and targeted discretionary acreage acquisitions have increased our total net inventory to roughly 15 years , with Breakevens below $2.50 per MMBtu , and we remain committed to returning capital to shareholders through common share repurchases , including the planned incremental repurchases in the fourth quarter of 2025 .

Speaker #5: Again , all while preserving a strong balance sheet . Now , I'll turn the call over to Michael to discuss our financial results .

Speaker #6: Thank you , John , and good morning , everyone . From a financial perspective , Gulfport delivered a strong quarter with robust quarterly production growth and solid cash operating costs , which resulted in attractive adjusted EBITDA and free cash flow generation .

Speaker #6: Net cash provided by operating activities before changes in working capital totaled approximately $198 million during the third quarter , more than funding our capital expenditures and common share repurchases .

Speaker #6: While maintaining our balance sheet strength at just over 8/10 of a turn of financial leverage , we reported adjusted EBITDA of approximately $213 million during the quarter , and generated adjusted free cash flow of approximately $103 million , which includes the impact of approximately $12.4 million of discretionary capital expenditures .

Speaker #6: Our all in realized price for the third quarter was $3.37 per mcfe , including the impact of cash settled derivatives , resulting in a premium of $0.30 above the nine Henry Hub Index price .

Speaker #6: This outperformance reflects Gulfport's differentiated hedge position . The pricing uplift from our liquids portfolio , and the impact of our diverse marketing portfolio for our natural gas .

Speaker #6: As many of our peers have discussed . We are entering an exciting time for the natural gas market , fueled by LNG expansion and the increase in demand for natural gas powered generation that is accelerating from the build out of new data centers .

Speaker #6: This evolving landscape presents exciting opportunities , and while on a smaller scale than some industry peers , Gulfport has been able to benefit from our firm transportation portfolio to secure targeted arrangements with larger gas marketers that deliver incremental value to the company .

Speaker #6: We continue to evaluate additional opportunities to supply gas to meet this growing demand , and Ohio appears to be fertile ground for future development in this area .

Speaker #6: This market trend also pairs well with our direct exposure to the growing LNG corridor near the Gulf Coast . Through our firm transportation agreements that access the TGP 500 .

Speaker #6: And 85 sales points markets which averaged more than $0.50 above the Henry Hub Index price during the third quarter . Together , these marketing and takeaway arrangements improve our realized prices , increase our all in netbacks and ultimately lead to enhanced durability in our free cash flows .

Speaker #6: Turning to the balance sheet , our financial position remains strong with 12 month net leverage exiting the quarter at approximately 0.81 times , down from the prior quarter , and benefiting from the increasing EBITDA .

Speaker #6: Our business has delivered over the past year . As of September 30th , 2025 , our liquidity totaled $903 million , comprised of $3.4 million of cash , plus $900.3 million of borrowing base availability .

Speaker #6: And we recently completed our fall borrowing base redetermination with our lenders , unanimously reaffirming our borrowing base at $1.1 billion with elected lender commitments remaining at $1 billion .

Speaker #6: Our strong liquidity and financial position today is more than sufficient to fund any development needs we might have for the foreseeable future , and provides tremendous flexibility from a financial perspective , as we are positioned to be opportunistic , should situations arise that allow us to capture value for our stakeholders .

Speaker #6: As demonstrated through our discretionary acreage acquisitions . Proactive capital initiatives and planned share repurchases announced alongside our earnings . As John mentioned previously , we completed the opportunistic redemption of all outstanding shares of Gulfport's preferred stock during the third quarter .

Speaker #6: The company redeemed a total of 2449 shares of preferred stock at an aggregate redemption value of approximately $31.3 million . This is a milestone financial accomplishment for Gulfport , as the completion of this transaction simplifies our capital structure and underscores our belief in the attractive value proposition that Gulfport's equity represents , inclusive of the preferred redemption .

Speaker #6: During the third quarter , we repurchased 438,000 shares of common stock for approximately $76.3 million . And since the inception of the program , we have repurchased approximately 6.7 million shares of common stock at an average price of $117.45 per share .

Speaker #6: Approximately 40% below the current share price . Our consistent approach to share repurchases over the last few years has delivered tremendous value to our shareholders .

Speaker #6: That said , we also remain opportunistic , utilizing our financial flexibility to allocate capital when we believe the current valuation does not reflect the strength of our underlying fundamentals .

Speaker #6: And as such , repurchasing shares at today's level represents a highly attractive use of capital . As John mentioned , we expect the incremental discretionary capital expenditures announced today to be funded without impacting our planned share buyback program .

Speaker #6: And alongside earnings , announced plans to allocate approximately $125 million to common stock repurchases in the fourth quarter of 2025 . To be funded from adjusted free cash flow and available revolver capacity , all while maintaining leverage at or below one times .

Speaker #6: In closing, we remain committed to allocating capital strategically, recognizing the highest value opportunities across our assets while maintaining our return of capital framework.

Speaker #6: All anchored by a strong financial position that provides substantial flexibility . Our recent inventory expansion delivers meaningful asset accretion and long term shareholder value , and our low breakeven inventory positions the company to benefit from improving natural gas fundamentals and deliver meaningful free cash flow growth going forward .

Speaker #6: With that , I will turn the call back over to the operator to open up the call for questions .

Speaker #3: Thank you . Ladies and gentlemen , if you would like to ask a question , please press Star One on your telephone keypad .

Speaker #3: And a confirmation tone will indicate your line is in the question queue . You may . You can press star two if you would like to remove your question from the queue for participants using speaker equipment , it may be necessary to pick up your handset before pressing the star keys .

Speaker #3: And the first question comes from the line of Neal Dingmann with William Blair . Please proceed .

Speaker #7: Good morning guys . Great update . John , my question is you've talked a lot on the on the release . And this morning about just seems like well results when I look at versus type curve they continue to improve and I'm just wondering I guess two questions around that is is is it just you're targeting the rock better or maybe , maybe just talk about what do you think is is really driving that that certainly notable upside .

Speaker #7: And then is it fair to say , I mean , if there was even , you know , pressure and takeaway wasn't an issue that that , you know , could we even see materially bigger wells than , than , than we're already seeing .

Speaker #5: Hey , good morning Neal . Thanks for the question . I think one of the things that we're pretty proud of here is the team's constant focus on operational execution and they're their ability to test and optimize the completions and drilling .

Speaker #5: Quite frankly . And drill out phases of our development . The team's you know what ? I'll point you to the teams have progressed , especially in the different windows of the Utica , you know , with cluster spacing , with sand .

Speaker #5: So , for instance , there's been a pretty material change in the way we allocate sand , whether it's 40 , 70 or 100 mesh , the cluster spacing , the stage sizes .

Speaker #5: So the teams are constantly evolving , assessing and testing as we move through our development program . And both the Marcellus and Utica and the condensate and a well results show that so pretty pleased with how the teams are focused on that .

Speaker #5: And that optimization . And certainly look forward for more to come . I think on the upside question you asked about , there's there's certainly no doubt with some of the occurrences that we experienced that the throughput could have been , you know , well over what our actual production results went up in 25 .

Speaker #5: And we communicated that earlier in the year . I think on a per . Well basis . You know , we do follow restricted choke management .

Speaker #5: And while there may be some upside there , generally speaking , although we've had some modifications to some of these restricted rates being a little bit lower because of some of the occurrences , I'll tell you that the teams and the execution of the production results out there are following in trend .

Speaker #5: And what we expect . So limited upside on the pressure managed . You know , results . What I'll tell you is any any restrictions .

Speaker #5: We'll see . Near-term will just kind of pan out and prolong the plateau period and shallow the decline later on . But I mean , overall , great .

Speaker #5: Well, results. It's a great asset base, and the teams are constantly looking to optimize value.

Speaker #7: Great . Great point . And then just to follow up , maybe on capital allocation , I don't know either for you or Michael .

Speaker #7: I mean , is it simply I mean , again , we know you focused on the , you know , I think very smartly on on the stock buyback .

Speaker #7: But again , when you're looking at M&A and you have little , little debt . So I understand that . But when you guys are looking at sort of M&A prospects , does it just is it you know I don't know , maybe I'm making it too simple .

Speaker #7: Simply is it are we better to buy it . Continue buying back a ton of our shares or , you know , what is the value when we when we see some assets out in the market ?

Speaker #7: I mean, does that factor in? Maybe just discuss that around the capital allocation?

Speaker #6: Yeah . Hey Neil , this is Michael . And John can certainly jump in , but I think you're hitting the nail on the head .

Speaker #6: I think when we look at kind of the opportunities that are already in front of us , kind of I'll call them these organic opportunities with the the acreage acquisitions , we've been able to execute on over the last few years .

Speaker #6: And then with the equity , I think those are extremely attractive . I mean , again , I won't get into specific rates of return .

Speaker #6: And , you know , there's always intangible factors . We consider as well . But I would just tell you the rates of return on some of those investments are quite high .

Speaker #6: And so you think about other opportunities outside of the portfolio and the need for those to compete . You know , there certainly are those opportunities out there .

Speaker #6: And , you know , we do know that the market has seemed to value some scale . But I think for us , the way that we've been able to consistently add at those high rates of return has made a lot of sense .

Speaker #6: And I think the equity value has reflected that so far . We think there's still some some underappreciated aspect to it there . But I think again , we're we're constantly measuring those opportunities against what we already have .

Speaker #6: And at least , you know , in our view , trying to be very disciplined about the way we think about those things .

Speaker #7: Great . Thanks , guys .

Speaker #5: Thanks , Neil .

Speaker #3: The next question comes from the line of Brian Velie with Capital One Securities . Please proceed .

Speaker #8: Good morning everybody . Thanks for taking my questions . Just a couple here real quick . I wondered if you could walk me through kind of your line of thinking for adding those appraisal view development wells this year , rather than waiting until 26 ?

Speaker #8: Was it just , you know , the gas pricing , getting better recently ? It certainly looks like it was the right time to do it .

Speaker #8: But I just wondered what that does for you or what this does for you . In setting up 26 , maybe just kind of puts you a little bit leaning forward into next year where there other timeline considerations or things that , you know , encouraged you or convinced you to pull this into this year ?

Speaker #5: Yeah . Good morning , Brian , I appreciate the question . I think as we looked at the the company's portfolio , I mean , it should be no surprise to anybody that we've been very focused on expanding the high quality inventory over the past three years .

Speaker #5: You know , we we probably sound like a broken record whenever we say it . But that is a key focus for us .

Speaker #5: And as we looked at the fourth quarter , there's robust cash flow . The company has a healthy balance sheet . And , you know , almost every investor meeting that we have , you know , wants to see us kind of grow that inventory .

Speaker #5: And I think we agree , having sustainable long term low breakeven inventory is very important for the company . It just provides durability .

Speaker #5: That's very important . So as we looked at all that , it was the right time to take a look at this appraisal bucket and which was primarily allocated towards these .

Speaker #5: You development . And this is you know , this is a real opportunity for the company to take what was what I would call short or lateral type development that were subeconomic to the right side of the skyline and really pull forward some really good high quality return , 20 gross wells that also adds , by the way , you know , some dry gas into 26 .

Speaker #5: So , you know , I think the company was positioned very well overall financially . The commodity environment , you know , really looks constructive .

Speaker #5: And it was just the right time to continue to expand on our inventory to the Marcellus delineation efforts and all the technical work there , as well as the new development .

Speaker #6: Yeah . And I just think maybe I'd add to that . Brian , I think the timing certainly helps , right ? I mean , I think the gas environment is strong and , you know , I think we're we're certainly conscious of that as we make these decisions .

Speaker #6: But John hit on the point . I think it's really about unlocking the inventory . And , you know , we'll see what the results look like .

Speaker #6: We'll we'll get these things completed near the end of the year , get the production online . You know , some of this appraisal capital , I think John mentioned in his remarks was also related to some , some legacy ducks and some refracts .

Speaker #6: And so we'll kind of see what the productivity of these projects are . And so I think as far as thinking about next year at this point , probably a little early to guide you on kind of how much incremental there is there .

Speaker #6: But we'll certainly be following up . And , you I think John mentioned this in his prepared remarks , looking for other opportunities within the portfolio where we can apply some of these learnings that we've had .

Speaker #6: .

Speaker #8: Great . Thanks . That's very helpful . And then maybe one quick follow up . Just want to make sure that I'm I'm thinking about this correctly and see if any shifts in the way that you guys are thinking about it .

Speaker #8: But we're working on two back to back years , returning more than 90% of free cash flow to shareholders this year . It's probably going to be in the low 90% .

Speaker #8: The way I model it with fourth quarter free cash flow and your 325 million buybacks , plus the discretionary capital number , you're going to be right there .

Speaker #8: Again this year . It's a little bit more of the total is on acquisitions of land versus buybacks . That maybe it has been the past two years .

Speaker #8: Should we think about that the same way for 2026 at least as it stands now , where the mix or the balance between the two choices that you have is going to depend on kind of acquisition , availability or deal flow .

Speaker #8: And then the other piece of share price performance is that the right way to continue thinking about it ?

Speaker #6: Yeah , Brian , I think that's a great way to think about it . I think the framework that we've laid out hasn't changed , right ?

Speaker #6: I mean , I think we we feel like , you know , we're going to generate a lot of free cash flow next year .

Speaker #6: And we are going to continue to look for these highly accretive locations that we've been able to add this year . We we had line of sight to a little bit bigger number than the last two years .

Speaker #6: But this is three years in a row that we've we've been able to add those locations . So as we think about next year and what the opportunity set may be , certainly not ready to size that just yet .

Speaker #6: But whatever that size comes in at , I think our strategy would remain with , you know , buying back the equity , assuming that the value continues to be , you know , a proposition that we think makes a lot of sense .

Speaker #6: And so as I sit here today , that's that's the way we think about it . And certainly able to adjust that as we move forward .

Speaker #6: But , you know , we think that that's the that's the highest and best use of our free cash flow right now .

Speaker #8: Perfect . Thanks very much . Appreciate it guys . Good work on the inventory . Adds . .

Speaker #5: Thanks , Brian .

Speaker #3: The next question comes from the line of Kim Raven with KeyBanc Capital Markets . Please proceed .

Speaker #9: Good morning folks . Thanks for taking my questions . I know you all don't have 2026 guidance out yet , but we're trying to understand sort of the puts and takes of your recent comments , your accelerating some activity in for CU and you mentioned some , you know , constraints that you're seeing in one Q from , from midstream and offset Fracs .

Speaker #9: You know , we saw pretty dramatic kind of skew to the production in 2025 with first quarter down a lot . How should we think about sort of the shape of production ?

Speaker #9: I know you don't have guidance, but I'm just trying to understand the kind of impact of your four accelerations and how that's going to shape the next couple of quarters.

Speaker #9: Can you give any context on that ?

Speaker #6: Yeah . Hey , Tim , this is Michael . I'll take the first shot . And John can certainly jump in . I think , you know , if you look back at Gulfport over the past , few years when , when our management team has been involved , we've had a fairly front loaded capital program .

Speaker #6: And that was true in 25 as well . So if you think about the timing of the turn in lines for some of that activity , you're going to see that a lot of that coming online .

Speaker #6: Call it second , third , early , fourth quarter , which leads you to flush production kind of late in the year and a little bit lower production as you get into the first part of the year .

Speaker #6: Now to your point , we've got some projects here later in the year that will will help the first quarter production , but we also have some midstream issues .

Speaker #6: So all that to say , I think the general shape will be similar to years in the past . I think that some of these projects might help a little bit .

Speaker #6: So maybe on a year to year comparison , there might be might be a little bit of a benefit there . But I think overall that cadence is going to be very similar .

Speaker #6: And you'll see strong production from Gulfport kind of Q3 , Q4 , with a little bit lighter as you go into first quarter , second quarter .

Speaker #9: Okay , okay . That's helpful . I appreciate that . And then , you know , talk on ops real quick . Slide eight showed sort of this outperformance of the Yankee wells versus the Hendershot pad .

Speaker #9: And you talked about that a little bit . Is there something specifically you can kind of point to that that drove that outperformance ?

Speaker #9: I know that no rock is identical , but is there something you feel that has kind of emboldened you to for this resource acquisition from that pad ?

Speaker #9: You know , when you think about sort of optimizing production , just curious , any insights on that ? Thank you .

Speaker #10: Yeah . This is this is Matt happy to take that one . Certainly . You know from that Hendershot pad , the first two wells that we performed here in Ohio a lot lots of lessons learned , core data taken , things like that .

Speaker #10: So when we came back in for the full development opportunity here at the Yankee certainly applied those lessons , I can't necessarily attribute it to one specific thing , but we did change our completion design techniques based on what we saw in the first two wells , as well as some different targeting within the formation there .

Speaker #10: Based on our core data and our production results . So , you know , all of those things combined and understanding the reservoir fluid system a little better after the first two allowed us to really hone in on what those are based on just learnings and other plays and basins .

Speaker #10: And so I think that's the result we're seeing here . And certainly applicable to the rest of our position , which is kind of , you know , giving us the support here to continue to add to our inventory .

Speaker #9: Okay . Thanks for the details .

Speaker #5: Thanks , Tim .

Speaker #6: Thanks , Tim .

Speaker #3: The next question comes from the line of David Deckelbaum with TD . Please proceed .

Speaker #8: Thanks , guys for taking my questions today .

Speaker #6: Thanks , David .

Speaker #5: Curious . Just .

Speaker #8: Morning .

Speaker #11: Just curious on on the Marcellus delineation . You know , first activity I guess up in Belmont . You know , one , I guess .

Speaker #11: When are you thinking about doing some of your own work in Jefferson ? And I guess as you look at delineated activity in Belmont , what percentage do you think that that would incrementally de-risk of Marcellus Prospectivity in Belmont ?

Speaker #11: And I suppose as well , like with the intention be to design wells , that would be similar to what you would see in development mode , or is there going to be a little bit more science on these ?

Speaker #5: Yeah , I think to your first question on activity and just our general inventory add there , you know , there are several well points to the east of us .

Speaker #5: And I think even Michael , Matt and I and our prior lives , you know , down in Monroe County , there's been several Marcellus and in here we're of course , up in that Belmont area .

Speaker #5: I think there's a lot of data points . What really kind of triggered the timing for us here is that northern data point that that kind of shored up the structural features and structural mapping as you go from south to north , which which really kind of put a pin in it for us .

Speaker #5: And that offset operator who drilled that well , it's got substantial production . It's public now . And and I'd reference you to inverse as well on some of their inventory data .

Speaker #5: It really facilitated us recognizing , you know , what we believe is a is a materially de-risked footprint here . I will tell you that we're pretty conservative .

Speaker #5: And we took a conservative approach on these inventory ads in Marcellus . If you reference slide eight in the investor deck , it kind of shows ongoing assessment .

Speaker #5: And I think that's maybe what you were referring to . You know , we wanted to make sure that we stayed structurally and honored to structural and honored the data that we saw for these 50 or 60 net inventory wells .

Speaker #5: But there is meaningful upside , I think , to your point , as we think about development , we're going to drill this first pad in northern Belmont , which kind of ties along to the same structure .

Speaker #5: And features as that southern Jefferson . So for us , it's we're agnostic to it . What we're looking for is what well mix that's going to provide .

Speaker #5: So, by the end of this year, or sorry, by the end of next year, we'll have a pretty good understanding of the production mix.

Speaker #5: And so to your question about development opportunities , we'll then take that information and start looking at midstream contracts , processing agreements . So we're probably 2 to 3 years out from actually full developing that northern core .

Speaker #5: But we are going to drill our first well up there to get a good idea of production mix on the South . Ongoing assessments .

Speaker #5: What I'll tell you is , you know , we're not an exploration company . We like to really de-risk what we do . You know , operationally .

Speaker #5: So as we work from the East to the West , that will naturally start to delineate that ongoing assessment area where we feel like there's some real upside there , potentially for the company , because the actual play moves to the West as you go farther south , just that's where the way the structure works .

Speaker #5: So there's there's a little bit we feel positive about the opportunities to potentially add some locations in the future , but we won't have any kind of real well set data or anything to compare to , at least over the next year and a half .

Speaker #5: So there's more to come there in the future .

Speaker #11: I appreciate all the details . There . I wanted to just ask on on the buyback and the context of flexibility going forward .

Speaker #11: You know , you guys highlighted the 35 million of spends that would accelerate the path into for Q25 to really , I offset impacts that would have happened in the first quarter .

Speaker #11: And you guys announced you're going to buy back about 125 million shares in the fourth quarter. It's 3.5% of your market cap.

Speaker #11: Pretty notable . Do you do you see an intention , I guess , to start building excess activity so that you have flexibility around issues in sort of peak periods as you get sort of beyond 26 ?

Speaker #6: Yeah , I'll take the first part and then John or Matt can talk about kind of excess operational activity . I think on the buyback side , I think , you know , we've remained pretty consistently committed to it , David .

Speaker #6: So I think , you know , the the announcement around around earnings , the extra 125 million , I think it was maybe a little bit of an extension of what we'd been doing .

Speaker #6: Anyway , I do think as we , you know , as we thought about the additional capital investment that we talked about earlier , the appraisal capital and then the proactive development capital , I think we wanted to show that the buyback is not is not kind of the offset to that .

Speaker #6: Right . So I think that was the intention there . And I think there was a , call , a question earlier in the call about the intention going forward and I think will remain pretty consistent there .

Speaker #6: But I don't I don't think that on the buyback side , kind of the inventory of operational opportunities is changing our approach . In fact , I think what we did here in the fourth quarter kind of indicates that the buyback will remain consistent .

Speaker #6: You know , despite any kind of additional activity . We consider going forward . So I don't know if John or Matt , you have anything you want to add to that ?

Speaker #5: No , I'll touch on the preparedness and kind of contingencies . You know , we've really been focused as we've talked about , on adding additional inventory and these inventories kind of scour different landscaped areas .

Speaker #5: So we we've been focused on dry gas , wet gas . We've developed and certainly some Marcellus we've developed some condensate wells . So as you think about , you know , preparations for future occurrences and incidents , these all are in different footprints in different areas .

Speaker #5: So by default of just adding this low break , even high quality blocky acreage , we can develop , it does set us up for contingent , you know , options as we move forward for any kind of unforeseen or unplanned incidents that we might have in the future .

Speaker #5: So by by default , we're actually focused in doing that by these inventory adds . And we feel like that's a very prudent action for us to take .

Speaker #5: Just considering what's happened over the last year .

Speaker #11: Appreciate you guys .

Speaker #5: Yes , sir .

Speaker #3: The next question comes from the line of Jacob Roberts with Tudor Pickering , Holt and Company . Please proceed .

Speaker #12: Good morning Jake .

Speaker #5: Good morning .

Speaker #12: Guys . I wanted to ask on the the 20 you development locations . Is that largely a function of just the the previous wells drilled or is that a function of that that footnoted price .

Speaker #12: I'm just wondering over a multiple year period , how many of these do you think you could actually identify as , feasible ?

Speaker #5: Yeah , it's a great question . I'll tell you that the general first review over our portfolio and acreage footprint , these are more geared towards looking at land configurations that would limit lateral lengths otherwise that would be longer lateral development .

Speaker #5: So for instance , when the teams went through and scoured in these highly productive , high quality acreage positions , we had 20 gross locations that we could actually form through , you know , basically combining , let's just call it double that amount of shorter laterals and what that did was it took a very subeconomic short lateral , even at 353 , 75 gas .

Speaker #5: And let's just call it 20% IRR . These are still attractive returns , but they're just they don't compete for capital with our current portfolio , you know .

Speaker #5: And they raise those up to somewhere along the lines of 60% plus returns. So what we're effectively doing is combining some of these sub-economic shorter laterals and moving them to the left in the skyline chart.

Speaker #5: So it's really a function of the acreage position . And maximizing our utilization of our current footprint . That's how I would characterize it .

Speaker #12: Great . Thank you . As a follow up , I'll echo the sentiment that it's great to see the inventory additions to the to the portfolio .

Speaker #12: I'm wondering if that longer dated inventory and as you guys continue to add to that , does that open up the conversation more to potential power agreements , data centers , and all those types of conversations ?

Speaker #12: I understand there's an absolute volumes component to those conversations as well . But just just wondering if that's making making those conversations more feasible .

Speaker #6: Yeah . Hey , Jake , this is Michael . I think . I think not necessarily like so if you think about our position in the area , we're having kind of ongoing discussions , you know , we are a bit on the smaller side .

Speaker #6: And so I think in general , you're going to see most of those announcements go with folks that are investment grade or just bigger producers of gas .

Speaker #6: I think having the inventory certainly matters when you have those discussions . I mean , there's certainly kind of , you know , a desire to be able to demonstrate the durability .

Speaker #6: I would tell you that our motivation has really been more on our business , and certainly shoring up our own views of of kind of duration of inventory , which , again , we've felt very strongly about over the past few years .

Speaker #6: And we're continuing to execute on that . So just kind of demonstrating that out . But I don't think that in the past those have been issues that have limited those discussions .

Speaker #6: We're in discussions on some of those projects , but certainly doesn't hurt to have kind of , you know , that that additional runway to be able to demonstrate .

Speaker #12: Great, I appreciate the time.

Speaker #5: Thank you .

Speaker #3: The next question comes from the line of Payton Doran with UBS . Please proceed .

Speaker #13: Hey , John , team , thank you very much for getting me on . Just one question on my end , NGL stepped up nicely in the period .

Speaker #13: I believe it was from the new Marcellus pad , and maybe also from the cage pad . I just wonder if you could touch on how the NGL recoveries have gone so far with that development mode that you entered into , and how you see NGL marketing shaping up as you obviously added a bit more to that .

Speaker #13: Marcellus opportunity set . Thank you .

Speaker #6: Yeah . Hey , Peyton , this is Michael . It's a great question . Actually . You're you're right . We did see a nice uplift in our NGL volumes this quarter .

Speaker #6: A combination of things there . Right . So you mentioned our Marcellus pad , our Yankee pad is a four well pad . And Marcellus , we had some strong recoveries there .

Speaker #6: I think the the liquids yield on those wells has looked very attractive to us . And our new midstream agreement that we actually signed earlier this year .

Speaker #6: This is the first four well pad where we've been able to process the liquids over there . So a good recovery . There's some strong economics over there as well .

Speaker #6: John mentioned in his prepared remarks we don't talk a lot about it , but actually have some really good pricing around some components of the barrel of that , of that NGL barrel over there .

Speaker #6: So that was a positive . The other area that you didn't mention is , you know , we have our , our , our wet gas development .

Speaker #6: You know, that's come on this year. And I would tell you that the yields there have actually been very strong as well.

Speaker #6: So that's in our kind of we called it our , our wet gas Utica . It's part of our discretionary acreage budget that we spent over the last couple of years .

Speaker #6: We put those wells on earlier this year . And we saw , I would tell you , kind of outperformance on the NGL side .

Speaker #6: So again , you know , we've got favorable contracts up there . Not a lot has changed in our legacy . Ohio , Utica contracts , but that Marcellus contract on the marketing side is very strong from an economic perspective .

Speaker #6: And so , you know , we feel really good that our netbacks have been strong even when , you know , I would tell you that some others in the basin have seen some weakness in NGLs .

Speaker #13: Yeah , certainly . Good to see . Thanks for getting me on .

Speaker #6: Thanks . Thanks .

Speaker #3: The next question comes from the line of Noah Hungus with Bank of America . Please proceed .

Speaker #14: Good morning . First question here . Last week , governor DeWine announced the energy Opportunity Initiative , a $100 million fund for power developments in Ohio .

Speaker #14: And I guess I was just wondering, how do you think that changes the playing field for data center developments and, ultimately, just regional natural gas demand?

Speaker #6: Yeah . Hey , Noah , this is Michael . Great question . I think , you know , we've seen increasing levels of interest .

Speaker #6: I was just going to you know , I mentioned that maybe a little bit earlier in my prepared remarks that there's a lot of activity going on in Ohio right now .

Speaker #6: I think Ohio , I think I called it fertile ground , but it certainly seems like there's a favorable regulatory environment . There's favorable political environment , and there's just a lot of interest in projects in that area .

Speaker #6: So again , from our perspective , we're you know , we're a bit smaller than some of the other guys out there . So more likely for us to participate in kind of some aggregation strategy of marketing firms that put together volumes of gas come to us looking for volumes .

Speaker #6: You know, we can get some uplift in our value when we do that. I think you're aware that we like to keep things fairly flexible in our business.

Speaker #6: So we're always kind of balancing the the long term commitment element of that with the pricing opportunity that we have . So to your point , I think it's very favorable .

Speaker #6: I'd call positive momentum in the area right now . And ultimately , you know , we've got gas , a lot of gas that's still uncommitted to any of those projects .

Speaker #6: And so to the extent there's further opportunities , you know , we can certainly consider those .

Speaker #14: That's really helpful . And then for my second question here , going over to slide eight , I see that you guys gave an average lateral length for your core .

Speaker #14: Marcellus and North Marcellus positions . And it is long laterals three three and a half miles . But given the undeveloped nature of the bench , why do you think the lateral lengths aren't longer ?

Speaker #14: You know , something like four miles or four and a half miles ?

Speaker #10: Yeah . No , this is Matt . I mean , this is really just a representation of our current development plan on our footprint .

Speaker #10: We'll always be looking for opportunities to find more efficient, longer laterals. I think there are some land constraints in certain parts, but these are pretty long and pretty attractive economically.

Speaker #10: So for us , this is kind of in that wheelhouse of where we like to be with minimal risk on the operations side .

Speaker #10: And so , you know , that may change over time as we continue to develop out the footprint . But this is a pretty comfortable position for us to be in right now .

Speaker #14: That makes sense. Thank you.

Speaker #6: Thanks . Thanks , Noah .

Speaker #3: The next question comes from the line of Carlos Escalante with Wolfe Research . Please proceed .

Speaker #15: Hey , good morning team . Thank you for for taking my question . Look , I think the inventory disclosure is is very helpful for the market .

Speaker #15: So I can appreciate your efforts to across multiple horizons to deepen your portfolio bench and the value add that it has . But I wonder what what kind of conversations are taking place .

Speaker #15: Aiming at larger opportunities in particular around what your role is and broader consolidation . And this goes for both of your operated basins .

Speaker #15: I mean , we've seen a lot of activity on a relative scale in the Anadarko in general . So just wondering where your head is at with that .

Speaker #6: Yeah , I'll start . And then John can jump in . Carlos , thanks for the question . I think Neal asked a little bit earlier , a similar question where , you know , I think our view on those opportunities is that we have pretty compelling entities within our existing portfolio , and we're measuring anything outside our portfolio against those opportunities .

Speaker #6: So , you know , I think there are , you know , likely you're aware that there's been some activity up in Appalachia .

Speaker #6: I think , for the company . You know , we've been disciplined over the last few years and feel like the strategy has really been effective for us .

Speaker #6: So I think that'll continue . And I think , you know , to your point on the Anadarko Basin , I think there was another operator last night that that announced a potential transaction .

Speaker #6: There is growing activity in that area . We've seen a number of transactions . Our our position is , you know , very , very strong in that area .

Speaker #6: I would tell you that it's desirable , but we really like it . We allocate capital there every year . I think , you know , if you look at it on a rate of return basis , the the , well results are very competitive with our Appalachian position .

Speaker #6: So , you know , from our perspective , the growing interest down there is positive . But I think , you know , again , you know , we like what we have and we think we create value through the drill bit .

Speaker #6: And so for us to develop that asset still makes a lot of sense .

Speaker #15: Thank you guys I'll turn it right over back to you .

Speaker #5: Thanks , Carlos .

Speaker #3: The next question comes from the line of Nicholas Pope with Roth MKM . Please proceed .

Speaker #16: Good morning guys .

Speaker #5: Morning .

Speaker #16: Hoping we could talk a little bit more about the development kind of reach, total depth on these wells. Curious what risks you're looking at remaining as you kind of move to completion.

Speaker #16: And and bringing these wells online , I guess compared to to the wells that you have existing in a similar lateral length . But I guess obviously a different geometry on these , these wells .

Speaker #10: Yeah . Nick , this is Matt . Thanks for the question . You know , we did get both Wells TD and K starting to move into the completions phase here in the fourth quarter .

Speaker #10: You know I would just tell you the risk . You know like in most horizontal wells developments really on your pump down of tools and getting all the way to TD to start your perforating and your frac .

Speaker #10: And then ultimately your drill out . So when you talk about U-shaped development wells , it's really important on the front end to get your well designed planning accurately .

Speaker #10: And so the teams have done a really good job of running our torque and drag modeling and appropriately using the proper build rates to ensure that we're able to get those things down .

Speaker #10: So I see that as a minimal risk based on the well planning that the teams have done over the last several months , preparing for this development .

Speaker #16: Got it . That makes sense . And as you look at like the kind of mile markers that we should look for as you kind of move into production and kind of getting a sense of how these things produce , should we expect similar production rates from these wells to comparable kind of straight lateral length wells in the same region ?

Speaker #16: Is is that kind of how we should be comparing things as these wells start to , to be developed ?

Speaker #10: Yeah , I think that's a good way of thinking about it . Nick . I think when you think about the perforated lateral footage on both of those , essentially doubling for the footprint , there , it'll be very similar to the dry gas development on a straight lateral , where we kind of target a capped rate per foot on our IP rates from a choke management perspective , in very similar air per foot over the over the life of the wells .

Speaker #10: So I would expect that to look very similar . So in our type curves on a , you know , 15,000 foot lateral we're in that 30 million a day range .

Speaker #10: So adjusting around that for us . And it choke management situation , that's what that would look like .

Speaker #16: Got it . That's very helpful I appreciate it . Thank you . Thank you .

Speaker #3: Thank you . This concludes the question and answer session . I'd like to turn the call back to John Reinhart for closing remarks .

Speaker #5: Thank you for taking the time to join our call today . Should you have any questions , please don't hesitate to reach out to our Investor Relations team .

Speaker #5: Have a great day .