8-K
GULFPORT ENERGY CORP (GPOR)
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d)
of
the Securities Exchange Act of 1934
Dateof report (Date of earliest event reported): May 3, 2022
GULFPORT
ENERGY CORPORATION
(ExactName of Registrant as Specified in Charter)
| Delaware | 001-19514 | 86-3684669 |
|---|---|---|
| (State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification Number) |
| 3001 Quail Springs Parkway<br><br> <br>Oklahoma City, Oklahoma | 73134 | |
| --- | --- | |
| (Address of principal executive offices) | (Zip code) |
(405)
252-4600
(Registrant’stelephone number, including area code)
(Formername or former address, if changed since last report)
Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions:
| ☐ | Written<br>communications pursuant to Rule 425 under the Securities Act |
|---|---|
| ☐ | Soliciting<br>material pursuant to Rule 14a-12 under the Exchange Act |
| --- | --- |
| ☐ | Pre-commencement<br>communications pursuant to Rule 14d-2(b) under the Exchange Act |
| --- | --- |
| ☐ | Pre-commencement<br>communications pursuant to Rule 13e-4(c) under the Exchange Act |
| --- | --- |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Name of each exchange on which registered | Trading Symbol |
|---|---|---|
| Common stock, par value $0.0001 per share | The New York Stock Exchange | GPOR |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item2.02. Results of Operations and Financial Condition.
On May 3, 2022, Gulfport Energy Corporation (“Gulfport”) issued a press release reporting its financial and operational results for the three months ended March 31, 2022, and provided an update on its 2022 development plan and financial guidance. A copy of the press release and supplemental financial information are attached as Exhibit 99.1 and Exhibit 99.2, respectively, to this Current Report on Form 8-K.
Item7.01. Regulation FD Disclosure.
Also on May 3, 2022, Gulfport posted an updated investor presentation on its website. The presentation may be found on Gulfport’s website at http://www.gulfportenergy.com by selecting “Investors,” “Company Information” and then “Presentations.”
The information in the press release and updated investor presentation is being furnished, not filed, pursuant to Item 2.02 and Item 7.01. Accordingly, the information in the press release and updated investor presentation will not be incorporated by reference into any registration statement filed by Gulfport under the Securities Act of 1933, as amended, unless specifically identified therein as being incorporated therein by reference.
Item9.01. Financial Statements and Exhibits
(d) Exhibits
| Number | Exhibit |
|---|---|
| 99.1 | Press release dated May 3, 2022 entitled “Gulfport Energy Reports First Quarter 2022 Results and Expands Common Stock Repurchase Program.” |
| 99.2 | Supplemental Financial Information |
| 104 | Cover<br> Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document. |
1
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| GULFPORT<br> ENERGY CORPORATION | ||
|---|---|---|
| Date:<br> May 3, 2022 | By: | /s/<br> William J. Buese |
| William<br> J. Buese | ||
| Chief<br> Financial Officer |
2
Exhibit 99.1
| Gulfport Energy Reports First Quarter 2022 Results and Expands Common Stock Repurchase Program |
|---|
OKLAHOMA CITY (May 3, 2022) Gulfport Energy Corporation (NYSE: GPOR) (“Gulfport” or the “Company”) today reported financial and operating results for the three months ended March 31, 2022 and provided an update on its 2022 development plan and financial guidance.
First Quarter 2022 and Recent Highlights
| ● | Delivered total net production of 1,008 MMcfe per day |
|---|---|
| ● | Reported $492.0 million of net loss and $235.3 million of adjusted EBITDA^(1)^ |
| --- | --- |
| ● | Generated $253.7 million of net cash provided by operating activities and $116.8 million of free cash flow^(1)^ |
| --- | --- |
| ● | Repurchased approximately 748 thousand shares of common stock for a total of $63 million as of May 2, 2022 |
| --- | --- |
| ● | Expanded common stock repurchase program from $100 million to $200 million |
| --- | --- |
Updated Full Year 2022 Outlook
| ● | Increased expected capital expenditures to approximately $400 million^(2)^ |
|---|---|
| ● | Increased forecasted free cash flow generation to a range of $375 million to $425 million at current strip prices |
| --- | --- |
“Gulfport reported strong first quarter 2022 results, driven by the continued outperformance of our 2021 development program, excellent uptime during the winter months and the addition of five new SCOOP wells performing above expectations. As a result, we generated significant free cash flow, which allowed us to begin executing on our common stock repurchase program while maintaining a strong financial position and leverage below 1.0x,” commented Tim Cutt, CEO of Gulfport.
“Our outlook for free cash flow continues to improve, despite the growing inflationary effects that has led us to increase our capital outlook for the year. Our development program builds during the second quarter, before peaking in the third, which results in executing a high percentage of our program at higher service rates.”
“We continue to prioritize the return of capital to shareholders and are pleased to announce the expansion of our common stock repurchase program, which is now authorized up to $200 million during 2022.”
A company presentation to accompany the Gulfport earnings conference call can be accessed by clicking here.
| 1. | A non-GAAP financial measure. Reconciliations of these non-GAAP measures and other disclosures are provided<br>with the supplemental financial tables available on our website at www.gulfportenergy.com. |
|---|---|
| 2. | Assumes midpoint of 2022 guidance. |
| --- | --- |
Expanded Common Stock Repurchase Program
Gulfport’s board of directors recently expanded the Company’s previously announced common stock repurchase program and Gulfport is now authorized to repurchase up to $200 million of its outstanding shares of common stock through December 31, 2022. Purchases under the repurchase program may be made from time to time in open market or privately negotiated transactions, and will be subject to available liquidity, market conditions, credit agreement restrictions, applicable legal requirements, contractual obligations and other factors. The repurchase program does not require the Company to acquire any specific number of shares. The Company intends to purchase shares under the repurchase program opportunistically with available funds while maintaining sufficient liquidity to fund its capital development program. The repurchase program may be suspended from time to time, modified, extended or discontinued by the board of directors at any time.
As of May 2, 2022, the Company had repurchased 748 thousand shares of common stock at a weighted-average share price of $84.26 during 2022, totaling approximately $63 million in aggregate.
Operational Update
The table below summarizes Gulfport’s operated drilling and completion activity for the first quarter of 2022:
| Quarter Ended March 31, 2022 | ||||||
|---|---|---|---|---|---|---|
| Gross | Net | Lateral Length | ||||
| Spud | ||||||
| Utica^(1)^ | 5 | 5.0 | 16,910 | |||
| SCOOP | 4 | 2.8 | 10,320 | |||
| Drilled | ||||||
| Utica | 5 | 4.0 | 14,170 | |||
| SCOOP | 4 | 2.5 | 10,250 | |||
| Completed | ||||||
| Utica | 3 | 1.7 | 8,570 | |||
| SCOOP | 5 | 4.8 | 9,880 | |||
| Turned-to-Sales | ||||||
| Utica | — | — | — | |||
| SCOOP | 5 | 4.8 | 9,880 | |||
| (1) Includes 5 gross wells spud with a top-hole rig |
Gulfport’s net daily production for the first quarter of 2022 averaged 1,008.1 MMcfe per day, primarily consisting of 779.1 MMcfe per day in the Utica and 228.9 MMcfe per day in the SCOOP. For the first quarter of 2022, Gulfport’s net daily production mix was comprised of approximately 92% natural gas, 6% natural gas liquids (“NGL”) and 2% oil and condensate.
2
| Predecessor | ||||
|---|---|---|---|---|
| Three<br><br> Months<br><br> Ended<br><br> March 31,<br><br> 2021 | ||||
| Production | ||||
| Natural gas (Mcf/day) | 924,496 | 909,240 | ||
| Oil and condensate (Bbl/day) | 3,632 | 3,822 | ||
| NGL (Bbl/day) | 10,294 | 8,427 | ||
| Total (Mcfe/day) | 1,008,052 | 982,729 | ||
| Average Prices | ||||
| Natural Gas: | ||||
| Average price without the impact of derivatives (/Mcf) | 4.87 | $ | 2.88 | |
| Impact from settled derivatives (/Mcf) | (1.34 | ) | — | |
| Average price, including settled derivatives (/Mcf) | 3.53 | $ | 2.88 | |
| Oil and condensate: | ||||
| Average price without the impact of derivatives (/Bbl) | 92.51 | $ | 53.03 | |
| Impact from settled derivatives (/Bbl) | (24.91 | ) | — | |
| Average price, including settled derivatives (/Bbl) | 67.60 | $ | 53.03 | |
| NGL: | ||||
| Average price without the impact of derivatives (/Bbl) | 48.88 | $ | 31.35 | |
| Impact from settled derivatives (/Bbl) | (6.20 | ) | — | |
| Average price, including settled derivatives (/Bbl) | 42.68 | $ | 31.35 | |
| Total: | ||||
| Average price without the impact of derivatives (/Mcfe) | 5.30 | $ | 3.14 | |
| Impact from settled derivatives (/Mcfe) | (1.38 | ) | — | |
| Average price, including settled derivatives (/Mcfe) | 3.92 | $ | 3.14 | |
| Selected operating metrics | ||||
| Lease operating expenses (/Mcfe) | 0.19 | $ | 0.14 | |
| Taxes other than income (/Mcfe) | 0.14 | $ | 0.10 | |
| Transportation, gathering, processing and compression expense (/Mcfe) | 0.93 | $ | 1.20 | |
| Recurring cash general and administrative expenses ( millions) (non-GAAP) | 0.11 | $ | 0.12 | |
| Interest expenses (/Mcfe) | 0.15 | $ | 0.04 |
All values are in US Dollars.
Capital Investment
Capital investment was $100.4 million (on an incurred basis) for the first quarter of 2022, of which $94.3 million related to drilling and completion (“D&C”) activity and $6.1 million related to leasehold and land investment.
3
Financial Position and Liquidity
As of March 31, 2022, Gulfport had approximately $5.9 million of cash and cash equivalents, $25.0 million of borrowings under its New Credit Facility, $113.2 million of letters of credit outstanding and $550 million of outstanding 2026 Senior Notes.
Gulfport’s liquidity at March 31, 2022, totaled approximately $568 million, comprised of the $5.9 million of cash and cash equivalents and approximately $561.8 million of available borrowing capacity under its New Credit Facility.
In March 2022, the company paid approximately $1.5 million in cash dividends on its preferred stock.
Spring Borrowing Base Redetermination
Gulfport recently completed its spring borrowing base redetermination and on May 2, 2022, the Company entered into the first amendment to its credit agreement (the “Amendment”) governing the New Credit Facility. The Amendment, among other things, increased the borrowing base under the New Credit Facility from $850 million to $1 billion, with aggregate elected lender commitments to remain at $700 million. In addition, the Amendment eased certain requirements and limitations related to hedging, amended the covenants governing certain restricted payments and provides for the transition from a LIBOR to a SOFR benchmark. The Amendment increases Gulfport’s financial flexibility to continue to execute our business plan and provides additional clarity around our ability to return capital to shareholders.
2022 Guidance Update
Driven by increasing inflationary effects, Gulfport has updated its forecasted capital expenditures for D&C activity and expects to invest in a range of $355 million to $395 million during 2022. In addition, based on activity to date and planned activity, Gulfport has increased its forecasted leasehold and land investment to approximately $25 million during 2022.
Taking into account the previously mentioned updates in combination with a significant increase in commodity prices, Gulfport has updated its expected free cash flow (non-GAAP measure) and forecasted taxes other than income per Mcfe guidance for 2022.
4
| Year Ending | ||||||
|---|---|---|---|---|---|---|
| December 31, 2022 | ||||||
| Low | High | |||||
| Production | ||||||
| Average daily gas equivalent (MMcfepd) | 975 | 1,025 | ||||
| % Gas | ~90% | |||||
| Realizations (before hedges) | ||||||
| Natural gas (differential to NYMEX settled price) ($/Mcf) | $ | (0.15 | ) | $ | (0.25 | ) |
| NGL (% of WTI) | 45 | % | 55 | % | ||
| Oil (differential to NYMEX WTI) ($/Bbl) | $ | (3.00 | ) | $ | (4.00 | ) |
| Operating costs | ||||||
| Lease operating expense ($/Mcfe) | $ | 0.16 | $ | 0.18 | ||
| Taxes other than income ($/Mcfe) | $ | 0.15 | $ | 0.17 | ||
| Transportation, gathering, processing and compression^(1)^ ($/Mcfe) | $ | 0.92 | $ | 0.96 | ||
| Recurring cash general and administrative^(2,3)^ (in millions) | $ | 42 | $ | 44 | ||
| (1) Assumes rejection of Rover firm transportation agreement. | ||||||
| (2) Recurring cash G&A includes capitalization. It excludes non-cash stock compensation and expenses related to certain legal and restructuring charges. | ||||||
| Total | ||||||
| --- | --- | --- | --- | --- | ||
| Capital expenditures (incurred) | (in millions) | |||||
| D&C | $ | 355 | $ | 395 | ||
| Leasehold and land | $ | 25 | ||||
| Total | $ | 380 | $ | 420 | ||
| Free cash flow^(3)^ | $ | 375 | $ | 425 | ||
| (3) | This is a non-GAAP measure. Reconciliations of these non-GAAP<br>measures and other disclosures are provided with the supplemental financial tables available on our website at www.gulfportenergy.com. | |||||
| --- | --- |
Derivatives
Gulfport enters into commodity derivative contracts on a portion of its expected future production volumes to mitigate the Company’s exposure to commodity price fluctuations. For details, please refer to the “Derivatives” section provided with the supplemental financial tables available on our website at ir.gulfportenergy.com.
5
First Quarter 2022 Conference Call
Gulfport will host a teleconference and webcast to discuss its first quarter of 2022 results beginning at 9:00 a.m. ET (8:00 a.m. CT) on Wednesday, May 4, 2022.
The conference call can be heard live through a link on the Gulfport website, www.gulfportenergy.com. In addition, you may participate in the conference call by dialing 866-373-3408 domestically or 412-902-1039 internationally. A replay of the conference call will be available on the Gulfport website and a telephone audio replay will be available from May 5, 2022 to May 19, 2022, by calling 877-660-6853 domestically or 201-612-7415 internationally and then entering the replay passcode 13729307.
Financial Statements and Guidance Documents
First quarter of 2022 earnings results and supplemental information regarding quarterly data such as production volumes, pricing, financial statements and non-GAAP reconciliations are available on our website at ir.gulfportenergy.com.
Non-GAAP Disclosures
This news release includes non-GAAP financial measures. Such non-GAAP measures should be not considered as an alternative to GAAP measures. Reconciliations of these non-GAAP measures and other disclosures are provided with the supplemental financial tables available on our website at ir.gulfportenergy.com.
About Gulfport
Gulfport is an independent natural gas-weighted exploration and production company focused on the exploration, acquisition and production of natural gas, crude oil and NGL in the United States with primary focus in the Appalachia and Anadarko basins. Our principal properties are located in eastern Ohio targeting the Utica formation and in central Oklahoma targeting the SCOOP Woodford and SCOOP Springer formations.
Forward Looking Statements
This press release includes “forward-looking statements” for purposes of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are statements other than statements of historical fact. They include statements regarding Gulfport’s current expectations, management’s outlook guidance or forecasts of future events, projected cash flow and liquidity, inflation, share repurchases, its ability to enhance cash flow and financial flexibility, future production and commodity mix, plans and objectives for future operations, the ability of our employees, portfolio strength and operational leadership to create long-term value, the rejection of certain midstream contracts and the assumptions on which such statements are based. Gulfport believes the expectations and forecasts reflected in the forward-looking statements are reasonable, Gulfport can give no assurance they will prove to have been correct. They can be affected by inaccurate or changed assumptions or by known or unknown risks and uncertainties. Important risks, assumptions and other important factors that could cause future results to differ materially from those expressed in the forward-looking statements are described under “Risk Factors” in Item 1A of Gulfport’s annual report on Form 10-K for the year ended December 31, 2021 and any updates to those factors set forth in Gulfport’s subsequent quarterly reports on Form 10-Q or current reports on Form 8-K (available at https://www.gulfportenergy.com/investors/sec-filings). Gulfport undertakes no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events.
Investors should note that Gulfport announces financial information in SEC filings, press releases and public conference calls. Gulfport may use the Investors section of its website (www.gulfportenergy.com) to communicate with investors. It is possible that the financial and other information posted there could be deemed to be material information. The information on Gulfport’s website is not part of this filing.
Investor Contact:
Jessica Antle – Director, Investor Relations
jantle@gulfportenergy.com
405-252-4550
Media Contact
Reevemark
Hugh Burns / Paul Caminiti / Nicholas Leasure
212-433-4600
6
Exhibit 99.2
Three months ended March 31, 2022
Supplemental Information of Gulfport Energy
| Table of Contents: | Page: |
|---|---|
| Production Volumes by Asset Area | 2 |
| Production and Pricing | 3 |
| Consolidated Statements of Income | 4 |
| Consolidated Balance Sheets | 5 |
| Consolidated Statement of Cash Flows | 7 |
| Updated 2022E Guidance | 8 |
| Derivatives | 9 |
| Non-GAAP Reconciliations | 10 |
| Definitions | 11 |
| Adjusted Net Income | 12 |
| Adjusted EBITDA | 13 |
| Free Cash Flow | 14 |
| Recurring General and Administrative Expenses | 15 |
Production Volumes by Asset Area: Three months ended March 31,2022
Production Volumes
| Successor | Predecessor | |||
|---|---|---|---|---|
| Three Months Ended<br><br> March 31, 2022 | Three Months Ended<br><br> March 31, 2021 | |||
| Natural gas (Mcf/day) | ||||
| Utica | 761,810 | 797,452 | ||
| SCOOP | 162,654 | 111,708 | ||
| Other | 32 | 80 | ||
| Total | 924,496 | 909,240 | ||
| Oil and condensate (Bbl/day) | ||||
| Utica | 697 | 1,403 | ||
| SCOOP | 2,928 | 2,379 | ||
| Other | 7 | 40 | ||
| Total | 3,632 | 3,822 | ||
| NGL (Bbl/day) | ||||
| Utica | 2,183 | 2,665 | ||
| SCOOP | 8,111 | 5,758 | ||
| Other | 1 | 4 | ||
| Total | 10,294 | 8,427 | ||
| Combined (Mcfe/day) | ||||
| Utica | 779,089 | 821,858 | ||
| SCOOP | 228,885 | 160,528 | ||
| Other | 77 | 343 | ||
| Total | 1,008,052 | 982,729 | ||
| Totals may not sum or recalculate due to rounding. |
Page 2
Production and Pricing: Three months ended March 31, 2022
The following table summarizes production andrelated pricing for the three months ended March 31, 2022, as compared to such data for the three months ended March 31, 2021:
| Successor | Predecessor | ||||
|---|---|---|---|---|---|
| Three Months Ended<br><br> March 31, 2022 | Three Months Ended<br><br> March 31, 2021 | ||||
| Natural gas sales | |||||
| Natural gas production volumes (MMcf) | 83,205 | 81,832 | |||
| Natural gas production volumes (MMcf/d) | 924 | 909 | |||
| Total sales | $ | 405,212 | $ | 235,321 | |
| Average price without the impact of derivatives ($/Mcf) | $ | 4.87 | $ | 2.88 | |
| Impact from settled derivatives ($/Mcf) | $ | (1.34 | ) | $ | — |
| Average price, including settled derivatives ($/Mcf) | $ | 3.53 | $ | 2.88 | |
| Oil and condensate sales | |||||
| Oil and condensate production volumes (MBbl) | 327 | 344 | |||
| Oil and condensate production volumes (MBbl/d) | 4 | 4 | |||
| Total sales | $ | 30,239 | $ | 18,239 | |
| Average price without the impact of derivatives ($/Bbl) | $ | 92.51 | $ | 53.03 | |
| Impact from settled derivatives ($/Bbl) | $ | (24.91 | ) | $ | — |
| Average price, including settled derivatives ($/Bbl) | $ | 67.60 | $ | 53.03 | |
| NGL sales | |||||
| NGL production volumes (MBbl) | 926 | 758 | |||
| NGL production volumes (MBbl/d) | 10 | 8 | |||
| Total sales | $ | 45,284 | $ | 23,776 | |
| Average price without the impact of derivatives ($/Bbl) | $ | 48.88 | $ | 31.35 | |
| Impact from settled derivatives ($/Bbl) | $ | (6.20 | ) | $ | — |
| Average price, including settled derivatives ($/Bbl) | $ | 42.68 | $ | 31.35 | |
| Natural gas, oil and condensate and NGL sales | |||||
| Natural gas equivalents (MMcfe) | 90,725 | 88,446 | |||
| Natural gas equivalents (MMcfe/d) | 1,008 | 983 | |||
| Total sales | $ | 480,735 | $ | 277,336 | |
| Average price without the impact of derivatives ($/Mcfe) | $ | 5.30 | $ | 3.14 | |
| Impact from settled derivatives ($/Mcfe) | $ | (1.38 | ) | $ | — |
| Average price, including settled derivatives ($/Mcfe) | $ | 3.92 | $ | 3.14 | |
| Production Costs: | |||||
| Average lease operating expenses ($/Mcfe) | $ | 0.19 | $ | 0.14 | |
| Average taxes other than income ($/Mcfe) | $ | 0.14 | $ | 0.10 | |
| Average transportation, gathering, processing and compression ($/Mcfe) | $ | 0.93 | $ | 1.20 | |
| Total lease operating expenses, midstream costs and taxes other than income ($/Mcfe) | $ | 1.27 | $ | 1.44 |
Page 3
Consolidated Statements of Income: Three months ended March 31,2022
(In thousands, except per share data)
(Unaudited)
| Successor | Predecessor | |||||
|---|---|---|---|---|---|---|
| Three Months Ended<br><br> March 31, 2022 | Three Months Ended<br><br> March 31, 2021 | |||||
| REVENUES: | ||||||
| Natural gas sales | $ | 405,212 | $ | 235,321 | ||
| Oil and condensate sales | 30,239 | 18,239 | ||||
| Natural gas liquid sales | 45,284 | 23,776 | ||||
| Net loss on natural gas, oil and NGL derivatives | (788,551 | ) | (29,978 | ) | ||
| Total Revenues | (307,816 | ) | 247,358 | |||
| OPERATING EXPENSES: | ||||||
| Lease operating expenses | 17,644 | 12,653 | ||||
| Taxes other than income | 12,468 | 8,704 | ||||
| Transportation, gathering, processing and compression | 84,792 | 105,867 | ||||
| Depreciation, depletion and amortization | 62,284 | 41,147 | ||||
| Impairment of other property and equipment | — | 14,568 | ||||
| General and administrative expenses | 7,105 | 12,757 | ||||
| Accretion expense | 692 | 805 | ||||
| Total Operating Expenses | 184,985 | 196,501 | ||||
| (LOSS) INCOME FROM OPERATIONS | (492,801 | ) | 50,857 | |||
| OTHER (INCOME) EXPENSE: | ||||||
| Interest expense | 13,984 | 3,261 | ||||
| Loss from equity method investments, net | — | 342 | ||||
| Reorganization items, net | — | 38,721 | ||||
| Other, net | (14,810 | ) | (247 | ) | ||
| Total Other (Income) Expense | (826 | ) | 42,077 | |||
| (LOSS) INCOME BEFORE INCOME TAXES | (491,975 | ) | 8,780 | |||
| Income tax expense | — | — | ||||
| NET (LOSS) INCOME | $ | (491,975 | ) | $ | 8,780 | |
| Dividends on preferred stock | $ | (1,447 | ) | $ | — | |
| NET (LOSS) INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS | $ | (493,422 | ) | $ | 8,780 | |
| NET (LOSS) INCOME PER COMMON SHARE: | ||||||
| Basic | $ | (23.23 | ) | $ | 0.05 | |
| Diluted | $ | (23.23 | ) | $ | 0.05 | |
| Weighted average common shares outstanding—Basic | 21,242 | 160,813 | ||||
| Weighted average common shares outstanding—Diluted | 21,242 | 160,813 |
Page 4
Consolidated Balance Sheets
(In thousands, except share data)
| Successor | ||||||
|---|---|---|---|---|---|---|
| March 31, 2022 | December 31, 2021 | |||||
| Assets | (Unaudited) | |||||
| Current assets: | ||||||
| Cash and cash equivalents | $ | 5,898 | $ | 3,260 | ||
| Accounts receivable—oil and natural gas sales | 206,869 | 232,854 | ||||
| Accounts receivable—joint interest and other | 38,480 | 20,383 | ||||
| Prepaid expenses and other current assets | 5,348 | 12,359 | ||||
| Short-term derivative instruments | 15,720 | 4,695 | ||||
| Total current assets | 272,315 | 273,551 | ||||
| Property and equipment: | ||||||
| Oil and natural gas properties, full-cost method | ||||||
| Proved oil and natural gas properties | 2,030,289 | 1,917,833 | ||||
| Unproved properties | 203,678 | 211,007 | ||||
| Other property and equipment | 5,420 | 5,329 | ||||
| Total property and equipment | 2,239,387 | 2,134,169 | ||||
| Less: accumulated depletion, depreciation and amortization | (340,709 | ) | (278,341 | ) | ||
| Total property and equipment, net | 1,898,678 | 1,855,828 | ||||
| Other assets: | ||||||
| Long-term derivative instruments | 20,696 | 18,664 | ||||
| Operating lease assets | 274 | 322 | ||||
| Other assets | 19,557 | 19,867 | ||||
| Total other assets | 40,527 | 38,853 | ||||
| Total assets | $ | 2,211,520 | $ | 2,168,232 |
Page 5
Consolidated Balance Sheets
(In thousands, except share data)
| December 31, 2021 | |||||
| Liabilities, Mezzanine Equity and Stockholders’ Equity | |||||
| Current liabilities: | |||||
| Accounts payable and accrued liabilities | 398,067 | $ | 394,011 | ||
| Short-term derivative instruments | 820,255 | 240,735 | |||
| Current portion of operating lease liabilities | 173 | 182 | |||
| Total current liabilities | 1,218,495 | 634,928 | |||
| Non-current liabilities: | |||||
| Long-term derivative instruments | 281,622 | 184,580 | |||
| Asset retirement obligation | 28,972 | 28,264 | |||
| Non-current operating lease liabilities | 100 | 140 | |||
| Long-term debt, net of current maturities | 573,996 | 712,946 | |||
| Total non-current liabilities | 884,690 | 925,930 | |||
| Total liabilities | 2,103,185 | $ | 1,560,858 | ||
| Commitments and contingencies (Note 7) | |||||
| Mezzanine Equity: | |||||
| Preferred stock - 0.0001 par value, 110 thousand shares authorized, 57.9 thousand issued and outstanding at March 31, 2022 and December 31, 2021 | 57,878 | 57,896 | |||
| Stockholders’ Equity: | |||||
| Common stock - 0.0001 par value, 42.0 million shares authorized, 21.1 million issued and outstanding at March 31, 2022, and 20.6 million issued and outstanding at December 31, 2021 | 2 | 2 | |||
| Additional paid-in capital | 662,573 | 692,521 | |||
| Common stock held in reserve, 62 thousand shares at March 31, 2022, and 938 thousand shares at December 31, 2021 | (1,996 | ) | (30,216 | ) | |
| Accumulated deficit | (604,804 | ) | (112,829 | ) | |
| Treasury stock, at cost - 59.6 thousand at March 31, 2022, and no shares at December 31, 2021 | (5,318 | ) | — | ||
| Total stockholders’ equity | 50,457 | $ | 549,478 | ||
| Total liabilities, mezzanine equity and stockholders’ equity | 2,211,520 | $ | 2,168,232 |
All values are in US Dollars.
Page 6
Consolidated Statement of Cash Flows: Three months ended March 31,2022
(In thousands)
(Unaudited)
| Successor | Predecessor | |||||
|---|---|---|---|---|---|---|
| Three Months Ended<br><br> March 31, 2022 | Three Months Ended<br><br> March 31, 2021 | |||||
| Cash flows from operating activities: | ||||||
| Net (loss) income | $ | (491,975 | ) | $ | 8,780 | |
| Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||
| Depletion, depreciation and amortization | 62,284 | 41,147 | ||||
| Impairment of other property and equipment | — | 14,568 | ||||
| Loss from equity investments | — | 342 | ||||
| Net loss on derivative instruments | 788,551 | 29,978 | ||||
| Net cash (payments) receipts on settled derivative instruments | (125,046 | ) | 125 | |||
| Other | 2,690 | 1,574 | ||||
| Changes in operating assets and liabilities, net | 17,192 | 26,661 | ||||
| Net cash provided by operating activities | 253,696 | 123,175 | ||||
| Cash flows from investing activities: | ||||||
| Additions to oil and natural gas properties | (80,271 | ) | (56,895 | ) | ||
| Proceeds from sale of oil and natural gas properties | — | 15 | ||||
| Other | (7 | ) | (296 | ) | ||
| Net cash used in investing activities | (80,278 | ) | (57,176 | ) | ||
| Cash flows from financing activities: | ||||||
| Principal payments on pre-petition revolving credit facility | — | (2,202 | ) | |||
| Borrowings on pre-petition revolving credit facility | — | 26,050 | ||||
| Principal payments on Credit Facility | (456,000 | ) | — | |||
| Borrowings on Credit Facility | 317,000 | — | ||||
| Repurchase of common stock under Repurchase Program | (30,192 | ) | — | |||
| Dividends on preferred stock | (1,447 | ) | — | |||
| Other | (141 | ) | (7 | ) | ||
| Net cash (used in) provided by financing activities | (170,780 | ) | 23,841 | |||
| Net increase in cash, cash equivalents and restricted cash | 2,638 | 89,840 | ||||
| Cash, cash equivalents and restricted cash at beginning of period | 3,260 | 89,861 | ||||
| Cash, cash equivalents and restricted cash at end of period | $ | 5,898 | $ | 179,701 |
Page 7
Updated 2022E Guidance
Gulfport’s 2022 guidance assumes commodity strip prices as of April 25, 2022, adjusted for applicable commodity and location differentials, and no property acquisitions or divestitures.
| Year Ending | ||||||
|---|---|---|---|---|---|---|
| December 31, 2022 | ||||||
| Low | High | |||||
| Production | ||||||
| Average daily gas equivalent (MMcfepd) | 975 | 1,025 | ||||
| % Gas | ~90% | |||||
| Realizations (before hedges) | ||||||
| Natural gas (differential to NYMEX settled price) ($/Mcf) | $ | (0.15 | ) | $ | (0.25 | ) |
| NGL (% of WTI) | 45 | % | 55 | % | ||
| Oil (differential to NYMEX WTI) ($/Bbl) | $ | (3.00 | ) | $ | (4.00 | ) |
| Operating costs | ||||||
| Lease operating expense ($/Mcfe) | $ | 0.16 | $ | 0.18 | ||
| Taxes other than income ($/Mcfe) | $ | 0.15 | $ | 0.17 | ||
| Transportation, gathering, processing and compression^(1)^ ($/Mcfe) | $ | 0.92 | $ | 0.96 | ||
| Recurring cash general and administrative^(2,3)^ (in millions) | $ | 42 | $ | 44 | ||
| (1) | Assumes rejection of Rover firm transportation agreement. | |||||
| --- | --- | |||||
| (2) | Recurring cash G&A includes capitalization. It excludes non-cash<br>stock compensation and expenses related to certain legal and restructuring charges. | |||||
| --- | --- | |||||
| --- | --- | --- | --- | |||
| Capital expenditures (incurred) | ||||||
| D&C | $ | 395 | ||||
| Leasehold and land | 25 | |||||
| Total | $ | 420 | ||||
| Free cash flow^(3)^ | $ | 425 |
All values are in US Dollars.
| (3) | This is a non-GAAP measure. Reconciliations of these non-GAAP<br>measures and other disclosures are provided with the supplemental financial tables available on our website at www.gulfportenergy.com. |
|---|
Page 8
Derivatives
The below details Gulfport’s hedging positions as of May 3, 2022:
| 2022^(1)^ | 2023 | 2024 | |||||
|---|---|---|---|---|---|---|---|
| Natural Gas Contract Summary (NYMEX): | |||||||
| Fixed Price Swaps | |||||||
| Volume (BBtupd) | 190 | 165 | 35 | ||||
| Weighted Average Price ($/MMBtu) | $ | 2.90 | $ | 3.64 | $ | 3.77 | |
| Fixed Price Collars | |||||||
| Volume (BBtupd) | 431 | 285 | — | ||||
| Weighted Average Floor Price ($/MMBtu) | $ | 2.56 | $ | 2.93 | $ | — | |
| Weighted Average Ceiling Price ($/MMBtu) | $ | 3.07 | $ | 4.78 | $ | — | |
| Fixed Price Calls Sold | |||||||
| Volume (BBtupd) | 153 | 408 | 202 | ||||
| Weighted Average Price ($/MMBtu) | $ | 2.90 | $ | 2.90 | $ | 3.33 | |
| Rex Zone 3 Basis | |||||||
| Volume (BBtupd) | — | 20 | — | ||||
| Differential ($/MMBtu) | $ | — | $ | (0.21 | ) | $ | — |
| Oil Contract Summary (WTI): | |||||||
| Fixed Price Swaps | |||||||
| Volume (Bblpd) | 2,335 | 3,000 | — | ||||
| Weighted Average Price ($/Bbl) | $ | 66.17 | $ | 74.47 | $ | — | |
| Fixed Price Collars | |||||||
| Volume (Bblpd) | 1,500 | — | — | ||||
| Weighted Average Floor Price ($/Bbl) | $ | 55.00 | $ | — | $ | — | |
| Weighted Average Ceiling Price ($/Bbl) | $ | 60.00 | $ | — | $ | — | |
| NGL Contract Summary: | |||||||
| C3 Propane Fixed Price Swaps | |||||||
| Volume (Bblpd) | 3,502 | 3,000 | — | ||||
| Weighted Average Price ($/Bbl) | $ | 35.62 | $ | 38.07 | $ | — | |
| (1) April 1 - December 31, 2022 |
Page 9
Non-GAAP Reconciliations
Gulfport’s management uses certain non-GAAP financial measures for planning, forecasting and evaluating business and financial performance, and believes that they are useful tool to assess Gulfport’s operating results. Although these are not measures of performance calculated in accordance with generally accepted accounting principles (GAAP), management believes that these financial measures are useful to an investor in evaluating Gulfport because (i) analysts utilize these metrics when evaluating company performance and have requested this information as of a recent practicable date, (ii) these metrics are widely used to evaluate a company’s operating performance, and (iii) we want to provide updated information to investors. Investors should not view these metrics as a substitute for measures of performance that are calculated in accordance with GAAP. In addition, because all companies do not calculate these measures identically, these measures may not be comparable to similarly titled measures of other companies.
These non-GAAP financial measures include adjusted net income, adjusted EBITDA, free cash flow, and recurring general and administrative expense. A reconciliation of each financial measure to its most directly comparable GAAP financial measure is included in the tables below. These non-GAAP measure should be considered in addition to, but not instead of, the financial statements prepared in accordance with GAAP.
Page 10
Definitions
Adjusted net income is a non-GAAP financial measure equal to (loss) income before income taxes less reorganization items, non-cash derivative loss, impairments of oil and gas properties, property and equipment, contractual charges on midstream disputes, non-recurring general and administrative expenses, loss from equity method investments and other items which include rig termination fees, stock-based compensation and other non-material expenses.
Adjusted EBITDA is a non-GAAP financial measure equal to net (loss) income, the most directly comparable GAAP financial measure, plus interest expense, depreciation, depletion and amortization and impairment of oil and gas properties, property and equipment, reorganization items, non-cash derivative loss, contractual charges on midstream disputes, non-recurring general and administrative expenses, loss from equity method investments and other items which include rig termination fees, stock-based compensation and other non-material expenses.
Free cash flow is a non-GAAP measure defined as Adjusted EBITDA plus certain non-cash items that are included in net cash provided by (used in) operating activities but excluded from Adjusted EBITDA less interest expense, capital expenses incurred and capital expenditures incurred. Gulfport includes a free cash flow estimate for 2022. We are unable, however, to provide a quantitative reconciliation of the forward-looking non-GAAP measure to its most directly comparable forward-looking GAAP measure because management cannot reliably quantify certain of the necessary components of such forward-looking GAAP measure.
Recurring general and administrative expense is a non-GAAP financial measure equal to general and administrative expense (GAAP) plus capitalized general and administrative expense, less non-recurring general and administrative expense. Gulfport includes a recurring general and administrative expense estimate for 2022. We are unable, however, to provide a quantitative reconciliation of the forward-looking non-GAAP measure to its most directly comparable forward-looking GAAP measure because management cannot reliably quantify certain of the necessary components of such forward-looking GAAP measure.
Page 11
AdjustedNet Income: Three months ended March 31, 2022
(Inthousands)
(Unaudited)
| Successor | Predecessor | ||||
|---|---|---|---|---|---|
| Three Months Ended <br><br>March 31, 2022 | Three Months Ended<br><br> March 31, 2021 | ||||
| Net (loss) income (GAAP) | $ | (491,975 | ) | $ | 8,780 |
| Adjustments: | |||||
| Reorganization items, net | — | 38,721 | |||
| Non-cash derivative loss | 663,505 | 30,103 | |||
| Impairments | — | 14,568 | |||
| Contractual charges on midstream disputes | — | 19,508 | |||
| Non-recurring general and administrative expense | 495 | 6,485 | |||
| Stock-based compensation expense | 1,158 | 789 | |||
| Loss from equity method investments | — | 342 | |||
| Other, net | (14,810 | ) | 110 | ||
| Adjusted net income (Non-GAAP) | $ | 158,373 | $ | 119,406 | |
| Dividends on preferred stock | $ | (1,447 | ) | $ | — |
| Participating securities - new preferred stock | $ | (25,566 | ) | $ | — |
| Adjusted net income attributable to common stockholders (Non-GAAP) | $ | 131,360 | $ | 119,406 | |
| Adjusted net income per common share, basic (Non-GAAP) | $ | 6.18 | $ | 0.74 | |
| Adjusted net income per common share, diluted (Non-GAAP) | $ | 6.15 | $ | 0.74 |
Page 12
Adjusted EBITDA: Three months ended March 31, 2022
(In thousands)
(Unaudited)
| Successor | Predecessor | ||||
|---|---|---|---|---|---|
| Three Months Ended <br><br>March 31, 2022 | Three Months Ended <br><br>March 31, 2021 | ||||
| Net (loss) income (GAAP) | $ | (491,975 | ) | $ | 8,780 |
| Adjustments: | |||||
| Interest expense | 13,984 | 3,261 | |||
| DD&A and impairment | 62,976 | 56,520 | |||
| Reorganization items, net | — | 38,721 | |||
| Non-cash derivative loss | 663,505 | 30,103 | |||
| Contractual charges on midstream disputes | — | 19,508 | |||
| Non-recurring general and administrative expenses | 495 | 6,485 | |||
| Stock-based compensation expense | 1,158 | 789 | |||
| Loss from equity method investments | — | 342 | |||
| Other, net | (14,810 | ) | 110 | ||
| Adjusted EBITDA (Non-GAAP) | $ | 235,333 | $ | 164,619 |
Page 13
Free Cash Flow: Three months ended March 31, 2022
(In thousands)
(Unaudited)
| Successor | Predecessor | |||||
|---|---|---|---|---|---|---|
| Three Months Ended <br> March 31,<br> 2022 | Three Months Ended<br><br> March 31, 2021 | |||||
| Net cash provided by operating activity (GAAP) | $ | 253,696 | $ | 123,175 | ||
| Adjustments: | ||||||
| Interest expense | 13,984 | 3,261 | ||||
| Cash reorganization items, net | — | 38,719 | ||||
| Non-recurring general and administrative expenses | 495 | 6,485 | ||||
| Contractual charges on midstream disputes | — | 19,508 | ||||
| Other, net | (15,650 | ) | 132 | |||
| Changes in operating assets and liabilities, net | (17,192 | ) | (26,661 | ) | ||
| Adjusted EBITDA (Non-GAAP) | $ | 235,333 | $ | 164,619 | ||
| Interest expense | (13,984 | ) | (3,261 | ) | ||
| Capitalized expenses incurred^(1)^ | (4,147 | ) | (5,521 | ) | ||
| Capital expenditures incurred^(2)^ | (100,367 | ) | (72,712 | ) | ||
| Free cash flow (Non-GAAP) | $ | 116,835 | $ | 83,125 | ||
| (1) | Includes cash capitalized general and administrative expense and<br>incurred capitalized interest expenses. | |||||
| --- | --- | |||||
| (2) | Incurred capital expenditures and cash capital expenditures may<br>vary from period to period due to the cash payment cycle. | |||||
| --- | --- |
Page 14
Recurring General and Administrative Expenses:
Three months ended March 31, 2022
(In thousands)
(Unaudited)
| Successor | Predecessor | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Three Months Ended March 31,<br> 2022 | Three Months Ended March 31,<br> 2021 | |||||||||||||||
| Cash | Non-Cash | Total | Cash | Non-Cash | Total | |||||||||||
| General and administrative expense (GAAP) | $ | 5,947 | $ | 1,158 | $ | 7,105 | $ | 11,963 | $ | 794 | $ | 12,757 | ||||
| Capitalized general and administrative expense | 4,147 | 597 | 4,744 | 4,897 | 624 | 5,521 | ||||||||||
| Non-recurring general and administrative expense^(1)^ | (495 | ) | — | (495 | ) | (6,485 | ) | — | (6,485 | ) | ||||||
| Recurring general and administrative expense (Non-GAAP) | $ | 9,599 | $ | 1,755 | $ | 11,354 | $ | 10,375 | $ | 1,418 | $ | 11,793 | ||||
| (1) | Includes non-recurring general and administrative expenses related<br>to certain legal and restructuring charges. | |||||||||||||||
| --- | --- |
Page 15