Analyzing Gulfport’s Decision to Diversify Away from the Utica

Last week MDN told you about Gulfport Energy’s deal to buy 85,000 acres of leases with 48 horizontal wells in Oklahoma’s SCOOP shale play in a $1.85 billion deal (see Gulfport Energy Expands into SCOOP, New Stock & IOUs to Pay $1.85B). At the time we said, “we jealously wish they were investing that money here [in the Utica] and not there.” Looks like we’re not the only ones questioning Gulfport’s strategy of “diversifying away from the Utica.” None other than energy analyst Richard Zeits, our favorite Seeking Alpha author, did a deep dive into the deal. He found that Gulfport paid $27,000 per acre and although they paid for it with a fair amount of equity, they also increased their debt load “significantly.” Zeits said, “The move into a new core area raises questions with regard to the company’s macro outlook for the Utica/Marcellus region.” Hmmm. Here’s what else the oracle of energy had to say about Gulfport’s SCOOP deal…

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