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With Gulfport Energy 'Scaling Up,' Morgan Stanley Is Raising Targets

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In a report published Friday, analysts at Morgan Stanley maintained their Equal-Weight rating on Gulfport Energy Corporation (NASDAQ: GPOR), while raising the price target from $52 to $54. The company has announced strong production results for 1Q15, while also announcing the acquisition of 24,000 acres.

The analysts expect the dry gas window acquisition to be accretive for Gulfport. The company has announced the issuance of 9.5 million shares and debt offering worth $350 million to fund this acquisition and to repay outstanding borrowings. According to Morgan Stanley, this development is likely to significantly improve leverage after the acquisition.

"The acquired acreage, primarily located on the east side of Belmont county is a natural bolt-on to GPOR's existing position and is in the vicinity of positive industry results. We view the transaction metrics positively for Gulfport," the analysts said.

Gulfport has also announced that it intends to add a rig to the newly acquired acreage in 4Q15, in order to drill for four new wells, which should be completed in 2016. This, the analysts believe, should lead to the addition of another $15-$20 million to the company's capex for 2015.

"Shares are likely to be range bound until Gulfport's growth outlook crystallizes. It will need to meet quarterly production estimates consecutively before GPOR can discount its full asset value potential," Morgan Stanley added.

Latest Ratings for GPOR

DateFirmActionFromTo
Aug 2020Morgan StanleyMaintainsUnderweight
Aug 2020Piper SandlerMaintainsUnderweight
May 2020Imperial CapitalMaintainsOutperform

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