GULFPORT ENERGY CORP (GPOR) stock intrinsic value fair value estimate & owner earnings analysis

Gulfport Energy produces natural gas, with some natural gas liquids and oil, from the Utica and Marcellus shales in Ohio and Pennsylvania (about 81% of 2025 output) and the SCOOP play in Oklahoma (about 19%). In 2025 it produced about 1,039 million cubic feet equivalent per day, had revenue of about $1.42 billion and ended the year with proved reserves of 4,253 Bcfe. That is about eleven years of current production, and reserves rose during 2025 because 701 Bcfe of additions more than replaced the 379 Bcfe produced. The selling price is set by the gas market, not by management. The company went through Chapter 11 in late 2020 and emerged in May 2021 with the old shareholders wiped out. The business before the bankruptcy, with a different balance sheet, different assets and a growth-at-any-cost drilling program, lost cash in most years, so we value the business as it has run since emerging. How we measure earnings. We start from operating cash flow, strip out working-capital swings and stock compensation, and subtract the drilling spend needed to keep production level. Since 2021 production has been roughly flat (about 1,003, 983, 1,054, 1,054 and 1,039 MMcfe per day for 2021 through 2025), so almost all drilling counts as upkeep. The one exception is 2023, when output rose about 7% and we treated a small slice of that year's spending as growth. On that basis owner earnings per share were about $5.43 (2021, a year split by the reorganization), $12.44 (2022), $9.71 (2023), $11.09 (2024) and $15.51 (2025). Adding back cash interest paid gives the cash the business produces before paying its lenders: roughly $311 million, $237 million, $247 million and $334 million for 2022 through 2025. We anchor on the median of those four years, about $279 million or about $15.55 per share. We exclude 2021 because it straddles the reorganization. These figures depend partly on hedging. In 2024 Henry Hub prices were weak, and the company collected about $283 million on its hedges, which was more than all of that year's cash before interest. In 2022 prices were high, and it paid out roughly $1.05 billion on hedges. Hedging smooths results but does not change where gas prices settle over a full cycle. What the company owes. At June 30, 2026 debt was about $922 million against roughly $1 million of cash. The debt is $650 million of 6.75% senior notes due September 2029, with the rest drawn on a reserve-based revolving credit facility. The facility has a $1.1 billion borrowing base and $1.0 billion of commitments, matures September 2028 and is redetermined twice a year. The preferred stock was fully redeemed in 2025. Including a small charge for borrowing costs above 6% until the notes mature, we treat the debt as about $935 million, or about $52 per share on roughly 17.9 million diluted shares. Base case, about $111 per share. Cash before interest holds at about $279 million a year. Year one is flat, below 2025's roughly 43% rise in owner earnings, because that rise came largely from gas prices recovering from the 2024 trough, and that is not something we can count on continuing. That level holds for twelve years, supported by about eleven years of proved reserves plus the company's demonstrated ability to replace them. It then fades to zero over ten more years as the inventory runs out, since nothing we can document carries the business beyond that. The business is worth about $2.93 billion; less $935 million owed leaves about $2.0 billion, or $111 per share. We credit no production growth. Management's 2026 plan, $400 to $430 million of capital and 1.030 to 1.055 Bcfe per day, is a flat-production program. Bear case, about $13 per share. Gas prices repeat the collapses this company has already lived through. In 2015-2016 and again in 2019-2020, Gulfport took billions in impairments, and in 2020 operating cash flow fell to $95 million against $367 million of drilling, which ended in bankruptcy. In this case 2026 is still protected by hedges (about $250 million), followed by two years in which the business burns about $60 million a year, a partial recovery to $100 million, about $200 million a year for six years, and a fade to zero over six more as drilling is cut and reserves are written down. The business is worth about $1.27 billion. Debt is about $1.03 billion after allowing for a borrowing-base cut on the revolver and refinancing the 2029 notes at higher rates. That leaves roughly $240 million, about $13 per share. Cash flow falls below the interest bill for two years in this case, and that is as far as lenders would plausibly tolerate. Bull case, about $167 per share. Cash before interest runs at about $340 million a year, close to what 2025 actually produced. Reserve replacement continues at its 2025 pace, extending the full-production period to fifteen years before a ten-year fade. The business is worth about $3.94 billion; less $935 million owed leaves about $3.0 billion, or $167 per share. We did not include expected new demand from LNG exports or power generation, because none of it is contracted to Gulfport. What has changed since our previous analysis. This analysis measures earnings on a full-calendar, consistent basis and values the business before and after its debt, so the earlier figures are not comparable. In the business itself, debt rose from about $788 million at year end 2025 to about $922 million at mid-2026, because buybacks and drilling were partly funded on the revolver. Proved reserves grew to 4,253 Bcfe. Margin-of-safety price. We are moderately sure of the earnings level. Four years since emerging from bankruptcy is a short record, and it includes one trough year (2024) that looked good only because of hedges. Unhedged, 2024 cash before interest would have been roughly break-even. The worst plausible outcome is a repeat of 2019-2020: a multi-year gas price slump during which the bank cuts the borrowing base just as the 2029 notes come due. With about $52 per share of debt and assets that are depleting reserves rather than hard, long-lived property, shareholders could again be left with very little. That is what the bear case shows, and the company's own history shows it is not remote. The things we are most likely to be wrong about are the normal price of gas, how long the drilling inventory lasts at today's well costs, and whether recent reserve additions continue. If normal cash before interest is $225 million rather than $279 million, the shares are worth about $80. If inventory supports eight years of full output instead of twelve, they are worth about $70. The company pays no common dividend; it returns cash through buybacks, and in a normal year it generates roughly $11 to $15 per share of owner earnings that go to buybacks and debt reduction. The margin-of-safety price is $40. From that price, a few normal years of cash generation plus a value in the $70 to $110 range implies more than a 20% annual return, assuming a three- to five-year holding period. All but the bottom-decile outcome also imply recovering most of that price. Above $40, a single bad gas cycle like the ones in this company's own record would leave no room for error.