A large investor in US natural gas producer Gulfport Energy has called on the company to launch a $500 million buyback programme or face scrutiny from dissatisfied stockholders.

In a letter sent Thursday to the Gulfport board of directors, investment firm Firefly Value Partners, which owns about 8.1% of the company's shares, said it was concerned by the prolonged slump in Gulfport share prices and blamed the decline on poor capital allocation decisions.

Gulfport's shares have tumbled dramatically along with commodity prices since 2014, when the company's stock price peaked at more than $74. At mid-day on Thursday, they were trading at under $9.

A $500 million share repurchase programme could boost Gulfport stock by $9, Firefly said.

"Not only do we consider a buyback Gulfport’s highest-returning potential use of capital, but a large buyback would also signal to the market that the company is committed to improving its capital allocation," Firefly said in the letter.

The investment firm suggested the company, which has core assets in the Utica shale of Ohio and the Scoop play of Oklahoma, could fund the programme through the $124 million cash on hand and by selling off non-core assets. Firefly calculates Gulfport could fetch $215 million for its 22% stake in Mammoth Energy Services, and $50 million from non-core asset sales including its holdings in the Bakken, the Niobrara and southern Louisiana. Free cash flow from 2018 and 2019 would cover the rest, according to the letter.

"Importantly, a $500 million buyback program would neither stress Gulfport’s balance sheet nor cause the company to incur additional debt," according to the letter.

Firefly also called on Gulfport to stop issuing shares for funding, a practice the investor called "value destructive".

"The board should reassure stockholders that it considers long-term capital allocation a top priority for Gulfport," Firefly said. "We believe that a strict moratorium on further share issuances would show stockholders that the board has learned from Gulfport’s mistakes and will not repeat them."

Firefly said it had spoken with the board but the conversations were fruitless, and suggested the panel would benefit from greater shareholder representation

"The current board does not seem up to the task of fixing the company’s capital allocation strategy and regaining investors’ trust," according to the letter.

Gulfport chief executive David Wood, who took the job last month, said he had received the letter and that it "followed dialogue we have had since my appointment to Gulfport last month regarding our mutual interest in enhancing and delivering value to all Gulfport shareholders."

Wood added that a previously scheduled board meeting would take place on Thursday, after which Gulfport would provide more information on the company's plans for 2019.