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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2021
OR
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF SECURITIES EXCHANGE ACT OF 1934
For the transition period from                    to                                    
Commission File Number 001-19514
Gulfport Energy Corporation
(Exact Name of Registrant As Specified in Its Charter)
Delaware86-3684669
(State or Other Jurisdiction of Incorporation or Organization)(IRS Employer Identification Number)
3001 Quail Springs Parkway
Oklahoma City,Oklahoma73134
(Address of Principal Executive Offices)(Zip Code)
(405) 252-4600
(Registrant Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.0001 par value per shareGPORThe New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. 
    Yes  ý     No  ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or such shorter period that the registrant was required to submit such files).      Yes  ý    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large Accelerated filer  ¨     Accelerated filer   ý    Non-accelerated filer  ¨   
Smaller reporting company   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. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes      No  ý
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.
 Yes  ý    No  ¨
As of October 28, 2021, 20,585,964 shares of the registrant’s common stock were outstanding.


GULFPORT ENERGY CORPORATION
TABLE OF CONTENTS
 
  Page
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Item 4.
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Item 1A.
Item 2.
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Item 4.
Item 5.
Item 6.



i

DEFINITIONS
Unless the context otherwise indicates, references to “us,” “we,” “our,” “ours,” “Gulfport,” the “Company” and “Registrant” refer to Gulfport Energy Corporation and its consolidated subsidiaries. All monetary values, other than per unit and per share amounts, are stated in thousands of U.S. dollars unless otherwise specified. In addition, the following are other abbreviations and definitions of certain terms used within this Quarterly Report on Form 10-Q:
2023 Notes. 6.625% Senior Notes due 2023.
2024 Notes. 6.000% Senior Notes due 2024.
2025 Notes. 6.375% Senior Notes due 2025.
2026 Notes. 6.375% Senior Notes due 2026.
ASC. Accounting Standards Codification.
ASU. Accounting Standards Update.
Bankruptcy Code. Chapter 11 of Title 11 of the United States Code.
Bankruptcy Court. The United States Bankruptcy Court for the Southern District of Texas.
Bbl. One stock tank barrel, or 42 U.S. gallons liquid volume, used herein in reference to crude oil or other liquid hydrocarbons.
Btu. British thermal unit, which represents the amount of energy needed to heat one pound of water by one degree Fahrenheit and can be used to describe the energy content of fuels.
Building Loan. Loan agreement for our corporate headquarters scheduled to mature in June 2025.
Chapter 11 Cases. Voluntary petitions filed on November 13, 2020 by Gulfport Energy Corporation, Gator Marine, Inc., Gator Marine Ivanhoe, Inc., Grizzly Holdings, Inc., Gulfport Appalachia, LLC, Gulfport Midcon, LLC, Gulfport Midstream Holdings, LLC, Jaguar Resources LLC, Mule Sky LLC, Puma Resources, Inc. and Westhawk Minerals LLC.
CODI. Cancellation of indebtedness income.
Completion. The process of treating a drilled well followed by the installation of permanent equipment for the production of natural gas, oil and NGL.
Current Combined YTD Period. Combined Current Successor YTD Period and Current Predecessor YTD Period.
Current Predecessor YTD Period. Period from January 1, 2021 through May 17, 2021.
Current Successor Quarter. Period from July 1, 2021 through September 30, 2021.
Current Successor YTD Period. Period from May 18, 2021 through September 30, 2021.
DD&A. Depreciation, depletion and amortization.
Debtors. Collectively, Gulfport Energy Corporation, Gator Marine, Inc., Gator Marine Ivanhoe, Inc., Grizzly Holdings, Inc., Gulfport Appalachia, LLC, Gulfport Midcon, LLC, Gulfport Midstream Holdings, LLC, Jaguar Resources LLC, Mule Sky LLC, Puma Resources, Inc. and Westhawk Minerals LLC.
DIP Credit Facility. Senior secured superpriority debtor-in-possession revolving credit facility in an aggregate principal amount of $262.5 million.
Emergence Date. May 17, 2021.
Exit Credit Agreement. The Second Amended and Restated Credit Agreement with the Bank of Nova Scotia as lead administrative agent and various lender parties providing for the Exit Facility and the First-Out Term Loan.
Exit Credit Facility. Collectively, the First-Out Term Loan and the Exit Facility, with an initial borrowing base and elected commitment amount of up to $580 million.
1

Exit Facility. Senior secured reserve-based revolving credit facility with The Bank of Nova Scotia as the lead arranger and administrative agent and various lender parties.
First-Out Term Loan. Senior secured term loan in an aggregate maximum principal amount of $180 million.
Grizzly. Grizzly Oil Sands ULC.
Grizzly Holdings. Grizzly Holdings Inc.
Gross Acres or Gross Wells. Refers to the total acres or wells in which a working interest is owned.
Guarantors. All existing consolidated subsidiaries that guarantee the Company's revolving credit facility or certain other debt.
Indentures. Collectively, the 1145 Indenture and the 4(a)(2) Indenture governing the Successor Senior Notes.
IRC. The Internal Revenue Code of 1986, as amended.
LIBOR. London Interbank Offered Rate.
LOE. Lease operating expenses.
MBbl. One thousand barrels of crude oil, condensate or natural gas liquids.
Mcf. One thousand cubic feet of natural gas.
Mcfe. One thousand cubic feet of natural gas equivalent.
MMBtu. One million British thermal units.
MMcf. One million cubic feet of natural gas.
MMcfe. One million cubic feet of natural gas equivalent.
Natural Gas Liquids (NGL). Hydrocarbons in natural gas that are separated from the gas as liquids through the process of absorption, condensation, adsorption or other methods in gas processing or cycling plants. Natural gas liquids primarily include ethane, propane, butane, isobutene, pentane, hexane and natural gasoline.
New Common Stock. $0.0001 par value common stock issued by the Successor on the Emergence Date.
New Credit Facility. The Third Amended and Restated Credit Agreement with JPMorgan Chase Bank, N.A. as administrative agent and various lender parties, providing for a new money senior secured reserve-based revolving credit facility effective as of October 14, 2021.
New Preferred Stock. $0.0001 par value preferred stock issued by the Successor on the Emergence Date.
NYMEX. New York Mercantile Exchange.
Petition Date. November 13, 2020.
Plan. The Amended Joint Chapter 11 Plan of Reorganization of Gulfport Energy Corporation and Its Debtor Subsidiaries.
Pre-Petition Revolving Credit Facility. Senior secured revolving credit facility, as amended, with The Bank of Nova Scotia as the lead arranger and administrative agent and certain lenders from time-to-time party thereto with a maximum facility amount of $580 million.
Prior Predecessor Quarter. Period from July 1, 2020 through September 30, 2020.
Prior Predecessor YTD Period. Period from January 1, 2020 through September 30, 2020.
Restructuring. Restructuring contemplated under the Restructuring Support Agreement including equitizing a significant portion of our pre-petition indebtedness and rejecting or renegotiating certain contracts.
RSA. Restructuring Support Agreement.
2

SCOOP. Refers to the South Central Oklahoma Oil Province, a term used to describe a defined area that encompasses many of the top hydrocarbon producing counties in Oklahoma within the Anadarko basin. The SCOOP play mainly targets the Devonian to Mississippian aged Woodford, Sycamore and Springer formations. Our acreage is primarily in Garvin, Grady and Stephens Counties.
SEC. The United States Securities and Exchange Commission.
Predecessor Senior Notes. Collectively, the 2023 Notes, 2024 Notes, 2025 Notes and 2026 Notes.
Successor Senior Notes. 8.000% Senior Notes due 2026.
Utica. Refers to the hydrocarbon bearing rock formation located in the Appalachian Basin of the United States and Canada. Our acreage is located primarily in Belmont, Harrison, Jefferson and Monroe Counties in Eastern Ohio.
Working Interest (WI). The operating interest which gives the owner the right to drill, produce and conduct operating activities on the property and a share of production.
WTI. Refers to West Texas Intermediate.


3

GULFPORT ENERGY CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)

SuccessorPredecessor
September 30, 2021December 31, 2020
(Unaudited)
Assets
Current assets:
Cash and cash equivalents$4,485 $89,861 
Accounts receivable—oil and natural gas sales185,941 119,879 
Accounts receivable—joint interest and other9,669 12,200 
Prepaid expenses and other current assets18,487 160,664 
Short-term derivative instruments2,142 27,146 
Total current assets220,724 409,750 
Property and equipment:
Oil and natural gas properties, full-cost method
Proved oil and natural gas properties1,831,762 9,359,866 
Unproved properties216,357 1,457,043 
Other property and equipment5,277 88,538 
Total property and equipment2,053,396 10,905,447 
Less: accumulated depletion, depreciation and amortization(212,403)(8,819,178)
Total property and equipment, net1,840,993 2,086,269 
Other assets:
Equity investments  24,816 
Long-term derivative instruments961 322 
Operating lease assets34 342 
Other assets25,496 18,372 
Total other assets26,491 43,852 
Total assets$2,088,208 $2,539,871 

See accompanying notes to consolidated financial statements.

4

GULFPORT ENERGY CORPORATION
CONSOLIDATED BALANCE SHEETS–CONTINUED
(In thousands, except share data)
SuccessorPredecessor
September 30, 2021December 31, 2020
(Unaudited)
Liabilities, Mezzanine Equity and Stockholders’ Equity (Deficit)
Current liabilities:
Accounts payable and accrued liabilities$436,172 $244,903 
Short-term derivative instruments560,722 11,641 
Current portion of operating lease liabilities34  
Current maturities of long-term debt60,000 253,743 
Total current liabilities1,056,928 510,287 
Non-current liabilities:
Long-term derivative instruments272,935 36,604 
Asset retirement obligation19,854  
Long-term debt, net of current maturities689,502  
Total non-current liabilities982,291 36,604 
Liabilities subject to compromise 2,293,480 
Total liabilities$2,039,219 $2,840,371 
Commitments and contingencies (Note 9)
Mezzanine Equity:
New Preferred Stock - $0.0001 par value, 110 thousand shares authorized, 57.9 thousand issued and outstanding at September 30, 2021
57,920 — 
Stockholders’ equity (deficit):
Predecessor common stock - $0.01 par value, 200.0 million shares authorized, 160.8 million issued and outstanding at December 31, 2020
— 1,607 
Predecessor accumulated other comprehensive loss— (43,000)
New Common Stock - $0.0001 par value, 42.0 million shares authorized, 20.6 million issued and outstanding at September 30, 2021
2 — 
Additional paid-in capital692,182 4,213,752 
New Common Stock held in reserve, 938 thousand shares
(30,216)— 
Accumulated deficit(670,899)(4,472,859)
Total stockholders’ deficit$(8,931)$(300,500)
Total liabilities, mezzanine equity and stockholders’ deficit$2,088,208 $2,539,871 

See accompanying notes to consolidated financial statements.
5

GULFPORT ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited) 
SuccessorPredecessor
Three Months Ended September 30, 2021Three Months Ended September 30, 2020
REVENUES:
Natural gas sales$301,516 $155,163 
Oil and condensate sales33,279 16,012 
Natural gas liquid sales45,153 18,824 
Net loss on natural gas, oil and NGL derivatives(622,476)(53,823)
Total Revenues(242,528)136,176 
OPERATING EXPENSES:
Lease operating expenses13,864 13,393 
Taxes other than income11,844 6,102 
Transportation, gathering, processing and compression84,435 110,567 
Depreciation, depletion and amortization62,573 51,551 
Impairment of oil and natural gas properties 270,874 
General and administrative expenses16,691 20,331 
Restructuring and liability management expenses2,858 8,984 
Accretion expense488 774 
Total Operating Expenses192,753 482,576 
LOSS FROM OPERATIONS(435,281)(346,400)
OTHER EXPENSE:
Interest expense16,351 34,321 
Loss from equity method investments, net 153 
Other, net9,031 89 
Total Other Expense25,382 34,563 
LOSS BEFORE INCOME TAXES(460,663)(380,963)
Income tax expense650  
NET LOSS$(461,313)$(380,963)
Dividends on New Preferred Stock$(2,095)$ 
NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS$(463,408)$(380,963)
NET LOSS PER COMMON SHARE:
Basic$(22.50)$(2.37)
Diluted$(22.50)$(2.37)
Weighted average common shares outstanding—Basic20,598 160,683 
Weighted average common shares outstanding—Diluted20,598 160,683 

6

GULFPORT ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS—CONTINUED
(In thousands, except per share data)
(Unaudited)
 
SuccessorPredecessor
Period from May 18, 2021 through September 30, 2021Period from January 1, 2021 through May 17, 2021Nine Months Ended September 30, 2020
REVENUES:
Natural gas sales$413,234 $344,390 $456,859 
Oil and condensate sales50,866 29,106 47,553 
Natural gas liquid sales61,230 36,780 45,989 
Net (loss) gain on natural gas, oil and NGL derivatives(762,134)(137,239)71,414 
Total Revenues(236,804)273,037 621,815 
OPERATING EXPENSES:
Lease operating expenses17,980 19,524 41,166 
Taxes other than income16,900 12,349 19,039 
Transportation, gathering, processing and compression125,811 161,086 334,789 
Depreciation, depletion and amortization94,935 62,764 194,369 
Impairment of oil and natural gas properties117,813  1,357,099 
Impairment of other property and equipment 14,568  
General and administrative expenses23,209 19,175 45,719 
Restructuring and liability management expenses2,858  9,601 
Accretion expense714 1,229 2,270 
Total Operating Expenses400,220 290,695 2,004,052 
LOSS FROM OPERATIONS(637,024)(17,658)(1,382,237)
OTHER EXPENSE (INCOME):
Interest expense25,245 4,159 99,677 
Gain on debt extinguishment  (49,579)
Loss from equity method investments, net 342 10,987 
Reorganization items, net (266,898) 
Other, net7,979 1,711 8,957 
Total Other Expense (Income)33,224 (260,686)70,042 
(LOSS) INCOME BEFORE INCOME TAXES(670,248)243,028 (1,452,279)
Income tax expense (benefit)650 (7,968)7,290 
NET (LOSS) INCOME$(670,898)$250,996 $(1,459,569)
Dividends on New Preferred Stock$(3,126)$ $ 
NET (LOSS) INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS$(674,024)$250,996 $(1,459,569)
NET (LOSS) INCOME PER COMMON SHARE:
Basic$(32.87)$1.56 $(9.12)
Diluted$(32.87)$1.56 $(9.12)
Weighted average common shares outstanding—Basic20,507 160,834 160,053 
Weighted average common shares outstanding—Diluted20,507 160,834 160,053 

See accompanying notes to consolidated financial statements.
7

GULFPORT ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands)
(Unaudited)

SuccessorPredecessor
Three Months Ended September 30, 2021Three Months Ended September 30, 2020
Net loss$(461,313)$(380,963)
Foreign currency translation adjustment 3,661 
Other comprehensive income 3,661 
Comprehensive loss$(461,313)$(377,302)
SuccessorPredecessor
Period from May 18, 2021 through September 30, 2021Period from January 1, 2021 through May 17, 2021Nine Months Ended September 30, 2020
Net (loss) income$(670,898)$250,996 $(1,459,569)
Foreign currency translation adjustment  (4,497)
Other comprehensive loss  (4,497)
Comprehensive (loss) income$(670,898)$250,996 $(1,464,066)

See accompanying notes to consolidated financial statements.

8

GULFPORT ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
(In thousands)
(Unaudited)
Common Stock Held in Reserve
Paid-in
Capital
Accumulated
Other
Comprehensive (Loss) Income
Reined Earnings Accumulated
Deficit
Total
Stockholders’
Equity (Deficit)
Common Stock
 SharesAmountSharesAmount
Balance at January 1, 2020 (Predecessor)159,711 $1,597  $ $4,207,554 $(46,833)$(2,847,726)$1,314,592 
Net Loss— — — — — — (517,538)(517,538)
Other Comprehensive Loss— — — — — (15,030)— (15,030)
Stock Compensation— — — — 2,104 — — 2,104 
Shares Repurchased(80)(1)— — (78)— — (79)
Issuance of Restricted Stock211 2 — — (2)— —  
Balance at March 31, 2020 (Predecessor)159,842 $1,598  $ $4,209,578 $(61,863)$(3,365,264)$784,049 
Net Loss— $— — $— $— $— $(561,068)$(561,068)
Other Comprehensive Income— — — — — 6,872 — 6,872 
Stock Compensation— — — — 1,515 — — 1,515 
Shares Repurchased(27)— — — (28)— — (28)
Issuance of Restricted Stock301 3 — — (3)— —  
Balance at June 30, 2020 (Predecessor)160,116 $1,601  $ $4,211,062 $(54,991)$(3,926,332)$231,340 
Net Loss— $— — $— $— $— $(380,963)$(380,963)
Other Comprehensive Income— — — — — 3,661 — 3,661 
Stock Compensation— — — — 1,314 — — 1,314 
Shares Repurchased(136)(2)— — (127)— — (129)
Issuance of Restricted Stock782 8 — — (8)— —  
Balance at September 30, 2020 (Predecessor)160,762 $1,607  $ $4,212,241 $(51,330)$(4,307,295)$(144,777)


9

GULFPORT ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT) CONTINUED
(In thousands)
(Unaudited)
Common Stock Held in Reserve
Paid-in
Capital
Accumulated Other
Comprehensive (Loss) Income
Retained Earnings (Accumulated
Deficit)
Total Stockholders’
Equity (Deficit)
Common Stock
 SharesAmountSharesAmount
Balance at January 1, 2021 (Predecessor)160,762 $1,607  $ $4,213,752 $(43,000)$(4,472,859)$(300,500)
Net Income— — — — — — 8,780 8,780 
Other Comprehensive Income— — — — — 2,570 — 2,570 
Stock Compensation— — — — 1,419 — — 1,419 
Shares Repurchased(86)(1)— — (7)— — (8)
Issuance of Restricted Stock203 3 — — (2)— — 1 
Balance at March 31, 2021 (Predecessor)160,879 $1,609  $ $4,215,162 $(40,430)$(4,464,079)$(287,738)
Net Income— $— — $— $— $— $242,214 $242,214 
Issuance of Restricted Stock25 — — — — — — — 
Shares Repurchased(10)— — — — — — — 
Stock Compensation— — — — 5,095 — — 5,095 
Accumulated other comprehensive income extinguishment— — — — — 40,430 — 40,430 
Cancellation of Predecessor Equity(160,894)(1,609)— — (4,220,256)— 4,221,865  
Issuance of New Common Stock21,525 2 — — 693,773 — — 693,775 
Shares of New Common Stock Held in Reserve— — (1,679)(54,109)— — — (54,109)
Balance at May 17, 2021 (Predecessor)21,525 $2 (1,679)$(54,109)$693,774 $ $ $639,667 
Balance at May 18, 2021 (Successor)21,525 $2 (1,679)$(54,109)$693,774 $ $ $639,667 
Net Loss— — — — — — (209,586)(209,586)
Release of New Common Stock Held in Reserve— — 741 23,893 — — — 23,893 
Conversion of New Preferred Stock10 — — — 147 — — 147 
Dividends on New Preferred Stock— — — — (1,031)— — (1,031)
Balance at June 30, 2021 (Successor)21,535 $2 (938)$(30,216)$692,890 $ $(209,586)$453,090 
Net Loss— $— — $— $— $— $(461,313)$(461,313)
Stock Compensation— — — — 1,387 — — 1,387 
Dividends on New Preferred Stock— — — — (2,095)— — (2,095)
Balance at September 30, 2021 (Successor)21,535 $2 (938)$(30,216)$692,182 $ $(670,899)$(8,931)
See accompanying notes to consolidated financial statements.
10

GULFPORT ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

SuccessorPredecessor
Period from May 18, 2021 through September 30, 2021Period from January 1, 2021 through May 17, 2021Nine Months Ended September 30, 2020
Cash flows from operating activities:
Net (loss) income$(670,898)$250,996 $(1,459,569)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depletion, depreciation and amortization94,935 62,764 194,369 
Impairment of oil and natural gas properties117,813  1,357,099 
Impairment of other property and equipment 14,568  
Loss from equity investments 342 10,987 
Gain on debt extinguishment  (49,579)
Net loss (gain) on derivative instruments762,134 137,239 (71,414)
Net cash (payments) receipts on settled derivative instruments(99,574)(3,361)225,364 
Non-cash reorganization items, net (446,012) 
Deferred income tax expense   7,290 
Other, net1,487 1,725 12,753 
Changes in operating assets and liabilities, net(41,260)153,894 (27,299)
Net cash provided by operating activities164,637 172,155 200,001 
Cash flows from investing activities:
Additions to oil and natural gas properties(119,306)(102,330)(337,979)
Proceeds from sale of oil and natural gas properties600 15 46,932 
Other, net2,562 4,484 351 
Net cash used in investing activities(116,144)(97,831)(290,696)
Cash flows from financing activities:
Principal payments on Pre-Petition Revolving Credit Facility (318,961)(372,000)
Borrowings on Pre-Petition Revolving Credit Facility 26,050 531,857 
Borrowings on Exit Credit Facility306,855 302,751  
Principal payments on Exit Credit Facility(409,000)  
Principal payments on DIP credit facility (157,500) 
Debt issuance costs and loan commitment fees(1,225)(7,100)(633)
Repurchase of senior notes  (22,827)
Proceeds from issuance of New Preferred Stock 50,000  
Other, net(55)(8)(719)
Net cash (used in) provided by in financing activities(103,425)(104,768)135,678 
Net (decrease) increase in cash, cash equivalents and restricted cash(54,932)(30,444)44,983 
Cash, cash equivalents and restricted cash at beginning of period59,417 89,861 6,060 
Cash, cash equivalents and restricted cash at end of period$4,485 $59,417 $51,043 
 See accompanying notes to consolidated financial statements.
11

GULFPORT ENERGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1.BASIS OF PRESENTATION
Description of Company
Gulfport Energy Corporation (the "Company" or "Gulfport") is an independent natural gas-weighted exploration and production company with assets primarily located in the Appalachia and Anadarko basins. Gulfport filed for voluntary reorganization under Chapter 11 of the Bankruptcy Code on November 13, 2020, and subsequently operated as a debtor-in-possession, in accordance with applicable provisions of the Bankruptcy Code, until its emergence on May 17, 2021. The Company refers to the post-emergence reorganized organization in the condensed financial statements and footnotes as the "Successor" for periods subsequent to May 17, 2021, and the pre-emergence organization as "Predecessor" for periods on or prior to May 17, 2021.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of Gulfport were prepared in accordance with GAAP and the rules and regulations of the SEC.
This Quarterly Report on Form 10-Q (this “Form 10-Q”) relates to the financial position and periods as of and for the three months ended September 30, 2021 ("Current Successor Quarter"), May 18, 2021 through September 30, 2021 (“Current Successor YTD Period”), January 1, 2021 through May 17, 2021 (“Current Predecessor YTD Period”), the three months ended September 30, 2020 (“Prior Predecessor Quarter”) and the nine months ended September 30, 2020 ("Prior Predecessor YTD Period"). The Company's annual report on Form 10-K for the year ended December 31, 2020 (“2020 Form 10-K”) should be read in conjunction with this Form 10-Q. Except as disclosed herein, and with the exception of information in this report related to our emergence from Chapter 11 and the application of fresh start accounting, there has been no material change in the information disclosed in the notes to the consolidated financial statements included in the 2020 Form 10-K. The accompanying unaudited consolidated financial statements reflect all normal recurring adjustments which, in the opinion of management, are necessary for a fair statement of our condensed consolidated financial statements and accompanying notes and include the accounts of our wholly-owned subsidiaries. Intercompany accounts and balances have been eliminated. The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern.
Certain reclassifications have been made to prior period financial statements and related disclosures to conform to current period presentation. These reclassifications have no impact on previous reported total assets, total liabilities, net loss, total stockholders' deficit or total operating cash flows.
Voluntary Reorganization Under Chapter 11 of the Bankruptcy Code
On the Petition Date, the Debtors filed voluntary petitions of relief under the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Texas. The Chapter 11 Cases were administered jointly under the caption In re Gulfport Energy Corporation, et al., Case No. 20-35562 (DRJ).
The Bankruptcy Court confirmed the Plan and entered the confirmation order on April 28, 2021. The Debtors emerged from the Chapter 11 Cases on the Emergence Date. The Company's bankruptcy proceedings and related matters have been summarized below.
During the pendency of the Chapter 11 Cases, the Company continued to operate its business in the ordinary course as debtors-in-possession in accordance with the applicable provisions of the Bankruptcy Code. The Bankruptcy Court granted the first day relief requested by the Company that was designed primarily to mitigate the impact of the Chapter 11 Cases on its operations, vendors, suppliers, customers and employees. As a result, the Company was able to conduct normal business activities and satisfy all associated obligations for the period following the Petition Date and was also authorized to pay mineral interest owner royalties, employee wages and benefits, and certain vendors and suppliers in the ordinary course for goods and services provided prior to the Petition Date. During the pendency of the Chapter 11 Cases, all transactions outside the ordinary course of business required the prior approval of the Bankruptcy Court.
12

Subject to certain specific exceptions under the Bankruptcy Code, the filing of the Chapter 11 Cases automatically stayed all judicial or administrative actions against the Company and efforts by creditors to collect on or otherwise exercise rights or remedies with respect to pre-petition claims. Absent an order from the Bankruptcy Court, substantially all of the Debtors’ pre-petition liabilities were subject to compromise and discharge under the Bankruptcy Code. The automatic stay was lifted on the Emergence Date.
The Company applied FASB ASC Topic 852 - Reorganizations ("ASC 852") in preparing the consolidated financial statements for the period ended May 17, 2021. ASC 852 specifies the accounting and financial reporting requirements for entities reorganizing through Chapter 11 bankruptcy proceedings. These requirements include distinguishing transactions associated with the reorganization separate from activities related to the ongoing operations of the business. Accordingly, pre-petition liabilities that may be impacted by the Chapter 11 proceedings were classified as liabilities subject to compromise on the consolidated balance sheet as of December 31, 2020. Additionally, certain expenses, realized gains and losses and provisions for losses that are realized or incurred during the Chapter 11 Cases are recorded as reorganization items, net. Refer to Note 3 for more information regarding reorganization items.
Accounts Payable and Accrued Liabilities
Accounts payable and accrued liabilities consisted of the following at September 30, 2021 and December 31, 2020:
SuccessorPredecessor
September 30, 2021December 31, 2020
Accounts payable and other accrued liabilities$159,080 $120,275 
Revenue payable and suspense155,454 124,628 
Accrued contract rejection damages and shares held in reserve121,638  
Total accounts payable and accrued liabilities$436,172 $244,903 
Recently Adopted Accounting Standards
In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. This new standard simplifies and adds disclosure requirements for the accounting and measurement of convertible instruments. It eliminates the treasury stock method for convertible instruments and requires application of the “if-converted” method for certain agreements. In addition, the standard eliminates the beneficial conversion and cash conversion accounting models that require separate accounting for embedded conversion features and the recognition of a debt discount and related amortization to interest expense of those embedded features.
The Company elected to early adopt this standard effective on the Emergence Date. The Company adopted the new standard using the modified retrospective approach transition method. No cumulative-effect adjustment to retained earnings was required upon adoption of the new standard. The consolidated financial statements for the Successor Period are presented under the new standard, while the predecessor periods and comparative periods are not adjusted and continue to be reported in accordance with the Company's historical accounting policy.
13

Supplemental Cash Flow and Non-Cash Information
SuccessorPredecessor
Period from May 18, 2021 through September 30, 2021Period from January 1, 2021 through May 17, 2021Nine Months Ended September 30, 2020
Supplemental disclosure of cash flow information:
Cash paid for reorganization items, net$42,202 $87,199 $ 
Interest payments6,465 7,272 73,979 
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable - oil and natural gas sales(5,230)(60,832)28,767 
(Increase) decrease in accounts receivable - joint interest and other5,536 (3,005)32,827 
Increase (decrease) in accounts payable and accrued liabilities(48,903)79,193 (40,552)
(Increase) decrease in prepaid expenses7,231 135,471 (45,620)
(Increase) decrease in other assets106 3,067 (2,721)
Total changes in operating assets and liabilities$(41,260)$153,894 $(27,299)
Supplemental disclosure of non-cash transactions:
Capitalized stock-based compensation$484 $930 $2,189 
Asset retirement obligation capitalized55 546 2,343 
Asset retirement obligation removed due to divestiture  (2,033)
Interest capitalized117  907 
Fair value of contingent consideration asset on date of divestiture  23,090 
Release of New Common Stock Held in Reserve23,893   
Foreign currency translation gain (loss) on equity method investments 2,570 (4,497)
2.CHAPTER 11 EMERGENCE
As described in Note 1, on November 13, 2020, the Debtors filed the Chapter 11 Cases and the Plan, which was subsequently amended, and entered the confirmation order on April 28, 2021. The Debtors then emerged from bankruptcy upon effectiveness of the Plan on May 17, 2021. Capitalized terms used but not defined herein shall have the meaning ascribed to them in the Plan.
Plan of Reorganization
In accordance with the Plan confirmed by the Bankruptcy Court, the following significant transactions occurred upon the Company's emergence from bankruptcy on May 17, 2021:
Shares of the Predecessor's common stock outstanding immediately prior to the Emergence Date were cancelled, and on the Emergence Date, the Company issued 19,845,780 shares of New Common Stock and 55,000 shares of New Preferred Stock, which were the result of the transactions described below. The Company also entered into a registration rights agreement and amended its articles of incorporation and bylaws for the authorization of the New Common Stock and New Preferred Stock among other corporate governance actions. See Note 6 for further discussion of the Company's post-emergence equity;
All outstanding obligations under the Predecessor Senior Notes were cancelled;
The Predecessor effectuated certain restructuring transactions, including entering into a plan of Merger with Gulfport Merger Sub, Inc., a newly formed, wholly owned subsidiary of Gulfport ("Merger Sub"), pursuant to which Merger Sub was merged with and into Predecessor, resulting in the Predecessor becoming a wholly owned subsidiary of Gulfport;
The Debtors entered into a Second Amended and Restated Credit Agreement (the "Exit Credit Agreement") with the Bank of Nova Scotia as administrative agent, various lender parties and acknowledged and agreed to by certain of Gulfport's subsidiaries, as guarantors, providing for (i) a new money senior secured reserve-based revolving credit facility in an aggregate maximum principal amount of up to $1.5 billion (the "Exit Facility"); (ii) a senior secured term loan in an aggregate maximum principal amount of up to $180 million (the "First-Out Term Loan") and together with the Exit Facility (the "Exit Credit Facility"), collectively with an initial borrowing base and elected commitment
14

amount of up to $580 million (less the amount of any term loan deemed funded by any RBL Lender that is not a Consenting RBL Lender);
The Company entered into an indenture to issue up to $550 million aggregate principal amount of its 8.000% senior notes due 2026, dated as of May 17, 2021, by and among the Issuer, UMB Bank, National Association, as trustee, and the guarantors party thereto (such indenture, the “1145 Indenture,” and such senior notes issued thereunder, the “1145 Notes”), under section 1145 of the Bankruptcy Code (“Section 1145”). Certain eligible holders have made an election (the “4(a)(2) Election”) entitling such holders to receive senior notes issued pursuant to an indenture, dated as of May 17, 2021, by and among the Issuer, UMB Bank, National Association, as trustee, and the guarantors party thereto (such indenture, the “4(a)(2) Indenture,” and such senior notes issued thereunder, the “4(a)(2) Notes”), under Section 4(a)(2) of the Securities Act of 1933, as amended as opposed to its share of the up to $550 million aggregate principal amount of 1145 Notes. The 4(a)(2) Indenture's terms are substantially similar to the terms of the 1145 Indenture. The 1145 Indenture and the 4(a)(2) Indenture are referred to together as the "Indentures". The 1145 Notes and the 4(a)(2) Notes are collectively referred to as the "Successor Senior Notes";
The DIP Credit Facility indefeasibly converted into the Exit Facility, and all commitments under the DIP Credit Facility terminated. Each holder of an Allowed DIP Claim received, in full and final satisfaction, settlement, release, and discharge of, and in exchange for, each Allowed DIP Claim its Pro Rata share of participation in the Exit Credit Facility;
Each holder of an Allowed Notes Claim received its pro rata share of 19,714,204 shares of New Common Stock, 54,967 shares of New Preferred Stock and New Unsecured Senior Notes.
1,678,755 shares of New Common Stock were issued to the Disputed Claims reserve;
Each holder of a Class 4A Claim greater than the Convenience Claim Threshold received its pro rata share of 119,679 shares of New Common Stock (which were issued to the Unsecured Claims Distribution Trust), $10 million in cash, subject to adjustment by the Unsecured Claims Distribution Trustee, and 100% of the Mammoth Shares;
Each holder of a Class 4B claim greater than the Convenience Claim Threshold received its pro rata share of 11,897 shares of New Common Stock, 33 shares of New Preferred Stock, the Rights Offering Subscription Rights and the Successor Senior Notes.
Each holder of a Convenience Class Claim will share in a $3 million cash distribution pool, which the Unsecured Claims Distribution Trustee may increase by an additional $2 million by reducing the Gulfport Parent Cash Pool;
Each intercompany claim was cancelled on the Emergence Date and holders of intercompany interests received no recovery or distribution;
The Company conducted a Rights Offering and issued 50,000 shares of New Preferred Stock at $1,000 per share to holders of claims against the Predecessor Subsidiaries, raising $50 million in proceeds. Additionally, 5,000 shares were issued to the Back Stop Commitment counterparties in lieu of cash consideration as per the Backstop Commitment Agreement.
The Company adopted the Gulfport Energy Corporation 2021 Stock Incentive Plan (the "Incentive Plan") effective on the Emergence Date and reserved 2,828,123 shares of New Common Stock for issuance to Gulfport's employees and non-employee directors pursuant to equity incentive awards to be granted under the Incentive Plan.
Additionally, pursuant to the Plan confirmed by the Bankruptcy Court, the Company's post-emergence Board of Directors is comprised of five directors, including the Company's Chief Executive Officer, Timothy Cutt, and four non-employee directors, David Wolf, Guillermo Martinez, Jason Martinez and David Reganato.
Executory Contracts
Subject to certain exceptions, under the Bankruptcy Code the Debtors were entitled to assume, assign or reject certain executory contracts and unexpired leases subject to the approval of the Bankruptcy Court and fulfillment of certain other conditions. Generally, the rejection of an executory contract was treated as a pre-petition breach of such contract and, subject to certain exceptions, relieved the Debtors from performing future obligations under such contract but entitled the counterparty to a pre-petition general unsecured claim for damages caused by such deemed breach. Alternatively, the assumption of an
15

executory contract or unexpired lease required the Debtors to cure existing monetary defaults under such executory contract or unexpired lease, if any, and provide adequate assurance of future performance. Accordingly, any description of an executory contract or unexpired lease with the Debtors in this document, including where applicable quantification of the Company’s obligations under such executory or unexpired lease of the Debtors, is qualified by any overriding rejection rights the Company has under the Bankruptcy Code. Further, nothing herein is or shall be deemed an admission with respect to any claim amounts or calculations arising from the rejection of any executory contract or unexpired lease and the Debtors expressly preserve all of their rights thereto. Refer to Note 9 for more information on potential future rejection damages related to general unsecured claims.
3.FRESH START ACCOUNTING
In connection with the Company's emergence from bankruptcy and in accordance with ASC 852, the Company qualified for and applied fresh start accounting on the Emergence Date. The Company qualified for fresh start accounting because (1) the holders of existing voting shares of the Company prior to the Emergence Date received less than 50% of the voting shares of the Successor's equity following its emergence from bankruptcy and (2) the reorganization value of the Company's assets immediately prior to confirmation of the Plan of approximately $2.3 billion was less than the post-petition liabilities and allowed claims of $3.1 billion.
In accordance with ASC 852, with the application of fresh start accounting, the Company allocated its reorganization value to its individual assets based on their estimated fair value in conformity with FASB ASC Topic 820 - Fair Value Measurements and FASB ASC Topic 805 - Business Combinations. Accordingly, the consolidated financial statements after May 17, 2021 are not comparable with the consolidated financial statements as of or prior to that date. The Emergence Date fair values of the Successor's assets and liabilities differ materially from their recorded values as reflected on the historical balance sheet of the Predecessor.
Reorganization Value
Reorganization value is derived from an estimate of enterprise value, or fair value of the Company's interest-bearing debt and stockholders' equity. Under ASC 852, reorganization value generally approximates fair value of the entity before considering liabilities and is intended to approximate the amount a willing buyer would pay for the assets immediately after the effects of a restructuring. As set forth in the disclosure statement, amended for updated pricing, and approved by the Bankruptcy Court, the enterprise value of the Successor was estimated to be between $1.3 billion and $1.9 billion. With the assistance of third-party valuation advisors, the Company determined the enterprise value and corresponding implied equity value of the Successor using various valuation approaches and methods, including: (i) income approach using a calculation of present value of future cash flows based on our financial projections, (ii) the market approach using selling prices of similar assets and (iii) the cost approach. Deferred income taxes were determined in accordance with FASB ASC Topic 740 - Income Taxes. For GAAP purposes, the Company valued the Successor's individual assets, liabilities and equity instruments and determined an estimate of the enterprise value within the estimated range. Management concluded that the best estimate of enterprise value was $1.6 billion. Specific valuation approaches and key assumptions used to arrive at reorganization value, and the value of discrete assets and liabilities resulting from the application of fresh start accounting, are described below in greater detail within the valuation process.
The enterprise value and corresponding implied equity value are dependent upon achieving the future financial results set forth in our valuation using an asset-based methodology of estimated proved reserves, undeveloped properties, and other financial information, considerations and projections, applying a combination of the income, cost and market approaches as of the fresh start reporting date of May 17, 2021. As estimates, assumptions, valuations and financial projections, including the fair value adjustments, the financial projections, the enterprise value and equity value projections, are inherently subject to significant uncertainties, the resolution of contingencies is beyond our control. Accordingly, there is no assurance that the estimates, assumptions, valuations or financial projections will be realized, and actual results could vary materially.
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The following table reconciles the enterprise value to the implied fair value of the Successor's equity as of the Emergence Date:
Enterprise Value$1,600,000 
Plus: Cash and cash equivalents(1)
1,526 
Less: Fair value of debt(852,751)
Successor equity value(2)
$748,775 
(1) Restricted cash is not included in the above table.
(2) Inclusive of $55 million of mezzanine equity.
The following table reconciles the enterprise value to the reorganization value as of the Emergence Date:
Enterprise Value$1,600,000 
Plus: Cash and cash equivalents(1)
1,526 
Plus: Current and other liabilities686,489 
Plus: Asset retirement obligations19,084 
Less: Common stock reserved for settlement of claims post Emergence Date(54,109)
Reorganization value of Successor assets$2,252,990 
(1) Restricted cash is not included in the above table.
The fair values of our oil and natural gas properties, other property and equipment, derivative instruments, equity investments and asset retirement obligations were estimated as of the Emergence Date.
Oil and natural gas properties. The Company's principal assets are its oil and natural gas properties, which are accounted for under the full cost method of accounting. The Company determined the fair value of its oil and natural gas properties based on the discounted future net cash flows expected to be generated from these assets. Discounted cash flow models by operating area were prepared using the estimated future revenues and operating costs for all developed wells and undeveloped properties comprising the proved and unproved reserves. Significant inputs associated with the calculation of discounted future net cash flows include estimates of (i) recoverable reserves, (ii) production rates, (iii) future operating and development costs, (iv) future commodity prices escalated by an inflationary rate after seven years, adjusted for differentials and (v) a market-based weighted average cost of capital by operating area. The Company utilized NYMEX strip pricing, adjusted for differentials, to value the reserves. The NYMEX strip pricing inputs used are classified as Level 1 fair value assumptions and all other inputs are classified as Level 3 fair value assumptions. The discount rates utilized were derived using a weighted average cost of capital computation, which included an estimated cost of debt and equity for market participants with similar geographies and asset development type by operating area.
Other property and equipment. The fair value of other property and equipment, such as land, buildings, vehicles, computer equipment and other equipment, was maintained at net book value as the carrying value reasonably approximated the fair value of the assets.
Asset retirement obligations. In accordance with FASB ASC Topic 410 - Asset Retirement and Environmental Obligations ("ASC 410"), the asset retirement obligations associated with the Company's oil and gas assets was valued using the income approach. The fair value of the Company’s asset retirement obligations was revalued based upon estimated current reclamation costs for our assets with reclamation obligations, updated estimates of timing of reclamation obligations, an appropriate long-term inflation adjustment, and the Company's revised credit adjusted risk-free rate. The credit adjusted risk-free rate was based on an evaluation of an interest rate that equates to a risk-free interest rate adjusted for the effect of the Company's credit standing.
Derivative Instruments. The fair value of derivative instruments was adjusted based on the change in the Company’s credit rating reflecting the Company’s credit standing at the Emergence Date.

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Equity Investments. The fair value of the Company's investment in Grizzly Sands ULC was reduced by $27 million. The reduction in valuation was based upon the assessment of the investment by the Company's new management and its priority for future funding in its portfolio. In particular, Grizzly’s operations remained suspended, even with improvements in the pricing environment since its initial suspension in 2015. Additionally, the Company does not anticipate funding future capital calls which will lead to further dilution of its equity ownership interest.
Consolidated Balance Sheet
The following consolidated balance sheet is as of May 17, 2021. This consolidated balance sheet includes adjustments that reflect the consummation of the transactions contemplated by the Plan (reflected in the column “Reorganization Adjustments”) as well as fair value adjustments as a result of the adoption of fresh start accounting (reflected in the column “Fresh Start Adjustments”) as of the Emergence Date. The explanatory notes following the table below provide further details on the adjustments, including the assumptions and methods used to determine fair value for its assets and liabilities.
As of May 17, 2021
PredecessorReorganization AdjustmentsFresh Start AdjustmentsSuccessor
(In thousands)
Assets
Current assets:
Cash and cash equivalents$146,545 $(145,019)(a)$ $1,526 
Restricted cash57,891(b)57,891
Accounts receivable—oil and natural gas sales180,711180,711
Accounts receivable—joint interest and other15,43115,431
Prepaid expenses and other current assets86,189(60,894)(c)25,295
Short-term derivative instruments3,324141(r)3,465
Total current assets432,200(148,022)141284,319
Property and equipment:
Oil and natural gas properties, full-cost method
Proved oil and natural gas properties9,558,121(7,860,713)(s)1,697,408
Unproved properties1,375,681(1,145,507)(s)230,174
Other property and equipment38,026(31,133)(t)6,893
Total property and equipment10,971,828(9,037,353)1,934,475
Accumulated depletion, depreciation and amortization(8,870,723)8,870,723(u)
Total property and equipment, net2,101,105(166,630)1,934,475
Other assets:
Equity investments27,044(27,044)(v)
Long-term derivative instruments7,468715(w)8,183
Operating lease assets4747
Other assets18,8667,100(d)25,966
Total other assets53,4257,100(26,329)34,196
Total assets$2,586,730 $(140,922)$(192,818)$2,252,990 
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PredecessorReorganization AdjustmentsFresh Start AdjustmentsSuccessor
(In thousands)
Liabilities and Stockholders’ Equity (Deficit)
Current liabilities:
Accounts payable and accrued liabilities$384,200 $122,599 (e)$ $506,799 
Short-term derivative instruments96,116  2,784 (x)98,900 
Current portion of operating lease liabilities 38 (f) 38 
Current maturities of long-term debt280,251 (220,251)(g) 60,000 
Total current liabilities760,567 (97,614)2,784 665,737 
Non-current liabilities:
Long-term derivative instruments69,331  11,411 (y)80,742 
Asset retirement obligation 65,341 (h)(46,257)(z)19,084 
Non-current operating lease liabilities 9 (i) 9 
Long-term debt, net of current maturities 792,751 (j) 792,751 
Total non-current liabilities69,331 858,101 (34,846)892,586 
Liabilities subject to compromise2,224,449 (2,224,449)(k)— — 
Total liabilities$3,054,347 $(1,463,962)$(32,062)$1,558,323 
Commitments and contingencies (Note 9)
Mezzanine Equity:
New Preferred Stock$— $55,000 (l)$— $55,000 
Stockholders’ equity (deficit):
Predecessor common stock1,609 (1,609)(m)— — 
New Common Stock— 2 (n)— 2 
Additional paid-in capital4,215,838 (3,522,064)(o) 693,774 
New Common Stock held in reserve (54,109)(p) (54,109)
Accumulated other comprehensive loss(40,430)40,430 (q)  
Retained earnings (accumulated deficit)(4,644,634)4,805,390 (q)(160,756)(aa) 
Total stockholders’ equity (deficit)$(467,617)$1,268,040 $(160,756)$639,667 
Total liabilities, mezzanine equity and stockholders’ equity (deficit)$2,586,730 $(140,922)$(192,818)$2,252,990 
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Reorganization Adjustments
(a)The table below reflects changes in cash and cash equivalents on the Emergence Date from implementation of the Plan:
Release of escrow funds by counterparties as a result of the Plan$63,068 
New Preferred Stock rights offering proceeds50,000 
Funds required to rollover the DIP Credit Facility and Pre-Petition Revolving Credit Facility into the Exit Facility(175,000)
Payment of accrued Pre-Petition Revolving Credit Facility and DIP Credit Facility interest(1,022)
Payment of issuance costs related to the Exit Credit Facility(10,250)
Funding of the Professional Fee Escrow(43,891)
Payment of professional fees at Emergence Date(7,964)
Transfer to restricted cash for the Unsecured Claims Distribution Trust(1,000)
Transfer to restricted cash for the Convenience Claims Cash Pool(3,000)
Transfer to restricted cash for the Parent Cash Pool(10,000)
Payment of severance costs at Emergence Date(5,960)
Net change in cash and cash equivalents$(145,019)
(b)Changes in restricted cash reflect the net effect of transfers from cash and cash equivalents for the Professional Fee Escrow and various claims class cash pools.
(c)Changes in prepaid expenses and other current assets include the following:
Release of escrow funds as a result of the Plan$(63,068)
Recognition of counterparty credits due to settlements effectuated at Emergence4,247 
Prepaid compensation earned at Emergence(2,073)
Net change in prepaid expenses and other current assets$(60,894)
(d)Changes in other assets were due to capitalization of debt issuance costs related to the Exit Credit Facility.
(e)Changes in accounts payable and accrued liabilities included the following:
Payment of accrued Pre-Petition Revolving Credit Facility and DIP Credit Facility interest$(1,022)
Payment of professional fees at emergence(7,964)
Accrued payable for claims to be settled via Unsecured Claims Distribution Trust1,000 
Accrued payable for claims to be settled via Convenience Claims Cash Pool3,000 
Accrued payable for claims to be settled via Parent Cash Pool10,000 
Professional fees payable at Emergence18,047 
Accrued payable for General Unsecured Claims against Gulfport Parent to be settled via 4A Claims distribution from common shares held in reserve23,894 
Accrued payable for General Unsecured Claims against Gulfport Subsidiary to be settled via 4B Claims distribution from common shares held in reserve30,216 
Reinstatement of payables due to Plan effects45,428 
Net change in accounts payable and accrued liabilities$122,599 
(f)Changes to current operating lease liabilities reflect the reinstatement of lease liabilities due to contract assumptions.
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(g)Changes in the current maturities of long-term debt include the following:
Current portion of Term Notes issued under the Exit Facility$60,000 
Payment of DIP Facility to effectuate Exit Facility(157,500)
Transfer of post-petition RBL borrowings to Exit Facility(122,751)
Net changes to current maturities of long-term debt$(220,251)
(h)Reflects the reclassification of asset retirement obligations from liabilities subject to compromise.
(i)Changes to non-current operating lease liabilities reflect the reinstatement of lease liabilities due to contract assumptions.
(j)Changes in long-term debt include the following:
Emergence Date draw on Exit Facility$122,751 
Noncurrent portion of First-Out Term Loan issued under the Exit Credit Facility120,000 
Issuance of Successor Senior Notes550,000 
Net impact to long-term debt, net of current maturities$792,751 
(k)On the Emergence Date, liabilities subject to compromise were settled in accordance with the Plan as follows:
General Unsecured Claims settled via Class 4A, 4B, and 5B distributions$74,098 
Predecessor Senior Notes and associated interest1,842,035 
Pre-Petition Revolving Credit Facility197,500 
Reinstatement of Predecessor Claims as Successor liabilities45,475 
Reinstatement of Predecessor asset retirement obligations65,341 
Total liabilities subject to compromise settled in accordance with the Plan$2,224,449 
The resulting gain on liabilities subject to compromise was determined as follows:
Pre-petition General Unsecured Claims Settled at Emergence$74,098 
Predecessor Senior Notes Claims settled at Emergence1,842,035 
Pre-Petition Revolving Credit Facility197,500 
Rollover of Pre-Petition Revolving Credit Facility into Exit RBL Facility(197,500)
Accrued payable for claims to be settled via Unsecured Claims Distribution Trust(1,000)
Accrued payable for claims to be settled via Convenience Claims Cash Pool(3,000)
Accrued payable for claims to be settled via Parent Cash Pool(10,000)
Accrued payable for shares to be transferred to trust(54,109)
Issuance of New Common Stock to settle Predecessor liabilities(639,666)
Issuance of Successor Senior Notes in settlement of Class 4B and 5B claims(550,000)
Gain on settlement of liabilities subject to compromise$658,358 
(l)Changes to New Preferred Stock reflect the fair value of preferred shares issued in the Rights Offering.
(m)Changes in Predecessor common stock reflect the extinguishment of Predecessor equity as per the Plan.
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(n)Changes in New Common Stock included the following:
Issuance of common stock to settle General Unsecured Claims against Gulfport Parent (par value)$ 
Issuance of common stock to settle General Unsecured Claims against Gulfport Subsidiaries (par value)2 
Common stock reserved for settlement of claims post Emergence Date (par value) 
Net change to New Common Stock$2 
(o)Changes to paid in capital included the following:
Issuance of common stock to settle General Unsecured Claims against Gulfport Parent $27,751 
Issuance of common stock to settle General Unsecured Claims against Gulfport Subsidiaries 666,022 
Extinguishment of Predecessor stock-based compensation4,419 
Extinguishment of Predecessor paid in capital(4,220,256)
Net change to paid in capital$(3,522,064)
(p)New Common Stock held in reserve to settle Allowed General Unsecured Claims include:
Shares held in reserve to settle Allowed Claims against Gulfport Parent(23,894)
Shares held in reserve to settle Allowed Claims against Gulfport Subsidiary(30,215)
Total New Common Stock held in reserve$(54,109)
(q)Change to retained earnings (accumulated deficit) included the following
Gain on settlement of liabilities subject to compromise$658,358 
Extinguishment of Predecessor common stock and paid in capital4,221,864 
Recognition of counterparty credits due to settlements effectuated at Emergence4,247 
Deferred compensation earned at Emergence(2,073)
Extinguishment of Predecessor accumulated other comprehensive income(40,430)
Write-off of debt issuance costs related to First-Out Term Loan(3,150)
Severance costs incurred as a result of the Plan(5,961)
Professional fees earned at Emergence(18,047)
Rights offering backstop commitment fee(5,000)
Extinguishment of Predecessor stock-based compensation(4,418)
Net change to retained earnings (accumulated deficit)$4,805,390 
Fresh Start Adjustments
(r)The change in fair value of short-term derivative instruments is due to the change in the Company's post-emergence credit rating.
(s)The change in oil and natural gas properties represents the fair value adjustment to the Company's properties due to the adoption of fresh start accounting.
(t)Predecessor accumulated depreciation and amortization for other property and equipment was net against the gross value of the assets with the adoption of fresh start accounting.
(u)Predecessor accumulated depreciation and amortization was eliminated with the adoption of fresh start accounting.
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(v)The change in equity investments is due to the fair value adjustment to the Company's Grizzly investment.
(w)The change in fair value of long-term derivative instruments is due to the change in the Company's post-emergence credit rating.
(x)The change in fair value of liabilities related to short-term derivative instruments is due to the change in the Company's post-emergence credit rating.
(y)The change in fair value of liabilities related to long-term derivative instruments is due to the change in the Company's post-emergence credit rating.
(z)The fair value of asset retirement obligations were reduced due to the change in the Company's credit adjusted risk-free rate and expected economic life estimates.
(aa)Changes to retained earnings represent the total impact of fresh start adjustments to the post-reorganization balance sheet.
Reorganization Items, Net
The Company has incurred significant expenses, gains and losses associated with the reorganization, primarily the gain on settlement of liabilities subject to compromise, provision for allowed claims and legal and professional fees incurred subsequent to the Chapter 11 filings for the restructuring process. The accrual for allowed claims primarily represents damages from contract rejections and settlements attributable to the midstream savings requirement as stipulated in the Plan. While the claims reconciliation process is ongoing, the estimate of liabilities related to the rejection of certain midstream contracts reflects the best estimate of the most probable outcomes of ongoing litigation and settlement negotiations. The amount of these items, which were incurred in reorganization items, net within the accompanying unaudited condensed consolidated statements of operations, have significantly affected the Company's statements of operations.
The following table summarizes the components in reorganization items, net included in the Company's unaudited consolidated statements of operations:
SuccessorPredecessor
Period from May 18, 2021 through September 30, 2021Period from January 1, 2021 through May 17, 2021
Legal and professional advisory fees$ $(81,565)
Net gain on liabilities subject to compromise 575,182 
Fresh start adjustments, net (160,756)
Elimination of predecessor accumulated other comprehensive income— (40,430)
Debt issuance costs (3,150)
Other items, net (22,383)
Total reorganization items, net$ $266,898 
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4.PROPERTY AND EQUIPMENT
The major categories of property and equipment and related accumulated DD&A and impairment as of September 30, 2021 and December 31, 2020 are as follows:
SuccessorPredecessor
September 30, 2021December 31, 2020
Proved oil and natural gas properties$1,831,762 $9,359,866 
Unproved properties216,357 1,457,043 
Other depreciable property and equipment4,891 85,530 
Land386 3,008 
Total property and equipment2,053,396 10,905,447 
Accumulated DD&A and impairment(212,403)(8,819,178)
Property and equipment, net$1,840,993 $2,086,269 

Under the full cost method of accounting, the Company is required to perform a ceiling test each quarter. The test determines a limit, or ceiling, on the book value of the Company's oil and natural gas properties. At September 30, 2021, the net book value of the Company's oil and gas properties was below the calculated ceiling for the period leading up to September 30, 2021. As a result, the Company did not record an impairment of its oil and natural gas properties during the third quarter of 2021. The Company recorded impairment charges of $117.8 million for the Current Combined YTD Period. The Company recorded impairments of its oil and natural gas properties of $270.9 million and $1.4 billion for the Prior Predecessor Quarter and the Prior Predecessor YTD Period, respectively, as a result of the significant decrease in commodity prices.
Certain general and administrative costs are capitalized to the full cost pool and represent management’s estimate of costs incurred directly related to exploration and development activities. All general and administrative costs not capitalized are charged to expense as they are incurred. Capitalized general and administrative costs were approximately $5.1 million for the Current Successor Quarter, $7.3 million for the Current Successor YTD Period, and $8.0 million for the Current Predecessor YTD Period. Capitalized general and administrative costs were approximately $6.2 million and $19.8 million for the Prior Predecessor Quarter and the Prior Predecessor YTD Period, respectively.
The Company evaluates the costs excluded from its amortization calculation at least annually. Individually insignificant unevaluated properties are grouped for evaluation and periodically transferred to evaluated properties over a timeframe consistent with their expected development schedule.
The following table summarizes the Company’s unevaluated properties excluded from amortization by area at September 30, 2021:
Successor
September 30, 2021
(In thousands)
Utica$179,449 
SCOOP36,905 
Other3 
Total unproved properties$216,357 
Impairment of Other Property and Equipment
During the Current Predecessor YTD Period, the Company recorded an impairment of $14.6 million related to its corporate headquarters as a result of changes in the expected future use.
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Asset Retirement Obligation
The following table provides a reconciliation of the Company’s asset retirement obligation for the periods presented:
Asset retirement obligation at January 1, 2021 (Predecessor)$63,566 
Liabilities incurred546 
Accretion expense1,229 
Ending balance as of May 17, 2021 (Predecessor)$65,341 
Fresh start adjustments(1)
(46,257)
Asset retirement obligation at May 18, 2021 (Successor)$19,084 
Liabilities incurred37 
Accretion expense226 
Asset retirement obligation at June 30, 2021$19,347 
Liabilities incurred19 
Accretion expense488 
Asset retirement obligation at September 30, 2021$19,854 
(1) See Note 3 for additional discussion of fresh start adjustments.
5.LONG-TERM DEBT
Long-term debt consisted of the following items as of September 30, 2021 and December 31, 2020:
SuccessorPredecessor
September 30, 2021December 31, 2020
Exit Facility$35,606 $ 
First-Out Term Loan165,000  
8.000% senior unsecured notes due 2026
550,000  
DIP Credit Facility 157,500 
Pre-Petition Revolving Credit Facility 292,910 
6.625% senior unsecured notes due 2023
 324,583 
6.000% senior unsecured notes due 2024
 579,568 
6.375% senior unsecured notes due 2025
 507,870 
6.375% senior unsecured notes due 2026
 374,617 
Building Loan 21,914 
Debt issuance costs(1,104) 
Total Debt$749,502 $2,258,962 
Less: current maturities of long-term debt(60,000)(253,743)
Less: amounts reclassified to liabilities subject to compromise (2,005,219)
Total Debt reflected as long term$689,502 $ 
25

Successor Debt
Our post-emergence debt consisted of the Exit Credit Facility and the Successor Senior Notes. Subsequent to the end of the third quarter of 2021, the Company amended and refinanced the Exit Credit Facility with the New Credit Facility.
New Credit Facility
On October 14, 2021, the Company entered into the New Credit Facility for an aggregate maximum principal amount of up to $1.5 billion, an initial borrowing base of $850.0 million and an initial aggregate elected commitment amount of $700.0 million. See Note 17 for additional discussion of the New Credit Facility.
Exit Credit Facility
As discussed in Note 2, on the Emergence Date, pursuant to the terms of the Plan, the Company entered into the Exit Credit Agreement, which provided for (i) the Exit Facility in an aggregate principal amount of up to $1.5 billion and (ii) the First-Out Term Loan in an aggregate maximum amount of up to $180.0 million. The Exit Facility had an initial borrowing base and elected commitment amount of up to $580.0 million.
Loans drawn under the Exit Facility were not subject to amortization, while loans drawn under the First-Out Term Loan amortized with $15.0 million quarterly installments, commencing on the closing date and occurring every three months after the closing date. The Exit Credit Facility was schedule to mature on May 17, 2024.
The Exit Facility provided for a $150.0 million sublimit of the aggregate commitments that is available for the issuance of letters of credit. The Exit Facility also included a $40 million availability blocker that was to remain in place until Successful Midstream Resolution (as defined in the Exit Credit Agreement), as discussed in Note 9.

As of September 30, 2021, the Exit Facility and the First-Out Term Loan bore interest at weighted average rates of 4.50% and 5.50%, respectively.

As of September 30, 2021, the Company had $35.6 million outstanding borrowings under the Exit Facility, $165 million outstanding borrowings under the First-Out Term Loan and $115.5 million in letters of credit outstanding. At September 30, 2021, the Company was in compliance with all covenants under its Exit Credit Facility.
Successor Senior Notes
As discussed in Note 2, on the Emergence Date, pursuant to the terms of the Plan, the Company issued $550 million aggregate principal amount of its 8.000% senior notes due 2026.
The notes are guaranteed on a senior unsecured basis by each of the Company's subsidiaries that guarantee the Exit Credit Facility and the New Credit Facility as discussed in Note 17.
Interest on the Successor Senior Notes will be payable semi-annually, on June 1 and December 1 of each year, commencing on December 1, 2021.
The Successor Senior Notes were issued under the Indentures, dated as of May 17, 2021, by and among the Issuer, UMB Bank, National Association, as trustee, and the Guarantors.
The covenants of the 1145 Indenture (other than the payment covenant) require that the Company comply with the covenants of the 4(a)(2) Indenture, as amended. The 4(a)(2) Indenture contains covenants limiting the Issuer’s and its restricted subsidiaries’ ability to (i) incur additional debt, (ii) pay dividends or distributions in respect of certain equity interests or redeem, repurchase or retire certain equity interests or subordinated indebtedness, (iii) make certain investments, (iv) create restrictions on distributions from restricted subsidiaries, (v) engage in specified sales of assets, (vi) enter into certain transactions among affiliates, (vii) engage in certain lines of business, (viii) engage in consolidations, mergers and acquisitions, (ix) create unrestricted subsidiaries and (x) incur or create liens. These covenants contain important exceptions, limitations and qualifications. At any time that the Successor Senior Notes are rated investment grade, certain covenants will be terminated and cease to apply.
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Chapter 11 Proceedings - Predecessor Debt
Filing of the Chapter 11 Cases constituted an event of default with respect to certain of our secured and unsecured debt obligations. As a result of the Chapter 11 Cases, the principal and interest due under these debt instruments became immediately due and payable. However, Section 362 of the Bankruptcy Code stayed the creditors from taking any action as a result of the default.
The principal amounts from the Predecessor Senior Notes, Building Loan and Pre-Petition Revolving Credit Facility, other than letters of credit drawn on the Pre-Petition Revolving Credit Facility after the Petition Date, have been classified as liabilities subject to compromise on the accompanying consolidated balance sheet as of December 31, 2020.
Debtor-in-Possession Credit Agreement
Pursuant to the RSA, the Consenting RBL Lenders agreed to provide the Company with a senior secured superpriority debtor-in-possession revolving credit facility in an aggregate principal amount of $262.5 million consisting of (a) $105 million of new money and (b) $157.5 million to roll up a portion of the existing outstanding obligations under the Pre-Petition Revolving Credit Facility. The terms and conditions of the DIP Credit Facility are set forth in that certain form of credit agreement governing the DIP Credit Facility. The proceeds of the DIP Credit Facility were used for, among other things, post-petition working capital, permitted capital investments, general corporate purposes, letters of credit, administrative costs, premiums, expenses and fees for the transactions contemplated by the Chapter 11 Cases and payment of court approved adequate protection obligations. On the Emergence Date, the DIP Facility was terminated and the lenders indefeasibly converted into the Exit Facility. Each holder of an allowed DIP Claim received, in full and final satisfaction, settlement, release, and discharge of, and in exchange for, each Allowed DIP Claim its Pro Rata share of participation in the Exit Credit Facility.
Pre-Petition Revolving Credit Facility
Prior to the Emergence Date, the Company had entered into a senior secured revolving credit facility agreement, as amended, with The Bank of Nova Scotia, as the lead arranger and administrative agent and certain lenders from time to time party thereto. The Pre-Petition Revolving Credit Facility had a borrowing base of $580 million. On the Emergence Date, the Pre-Petition Revolving Credit Facility was terminated and the lenders indefeasibly converted into the Exit Credit Facility. Each holder of an allowed claim under the Pre-Petition Revolving Credit Facility received, in full and final satisfaction, settlement, release, and discharge of, and in exchange for, each Allowed DIP Claim its Pro Rata share of participation in the Exit Credit Facility.
Predecessor Senior Notes
On the Emergence Date, all outstanding obligations under the Predecessor Senior Notes were cancelled in accordance with the Plan and each holder of an allowed unsecured notes claim received their pro-rata share of 19.7 million shares of New Common Stock and $550 million of the Successor Senior Notes.
Predecessor Building Loan
In June 2015, the Company entered into a loan for the construction of the Company's corporate headquarters in Oklahoma City, which was substantially completed in December 2016. On the Emergence Date, ownership of the Company's corporate headquarters reverted to the Building Loan lender and the Company entered into a short-term lease agreement for the headquarters with the lender. As a result, the building loan liability was discharged as of the Emergence Date.
Capitalization of Interest
The Company capitalized approximately $0.1 million of interest expense for the Current Successor YTD Period related to its unevaluated oil and natural gas properties. The Company did not capitalize interest expense for the Current Predecessor YTD Period. The Company capitalized approximately $0.2 million and $0.9 million in interest expense during the Prior Predecessor Quarter and the Prior Predecessor YTD Period, respectively.
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Fair Value of Debt
At September 30, 2021, the carrying value of the outstanding debt represented by the Successor Senior Notes was $548.9 million. Based on the quoted market prices (Level 1), the fair value of the Successor Senior Notes was determined to be $601.4 million at September 30, 2021.
6.EQUITY
As discussed in Note 2, the Company filed an amended and restated certificate of incorporation with the Delaware Secretary of State on the Emergence Date to provide for, among other things, (i) the authority to issue 42 million shares of New Common Stock with a par value of $0.0001 per share and (ii) the designation of 110,000 shares of New Preferred Stock, with a par value of $0.0001 per share and a liquidation preference of $1,000 per share.
New Common Stock
On the Emergence Date, all existing shares of the Predecessor's common stock were cancelled. The Successor issued approximately 19.8 million shares of New Common Stock and 1.7 million shares of New Common Stock were issued to the Disputed Claims reserve.
New Preferred Stock
On the Emergence Date, the Successor issued 55,000 shares of New Preferred Stock.
Holders of New Preferred Stock are entitled to receive cumulative quarterly dividends at a rate of 10% per annum of the Liquidation Preference (as defined below) with respect to cash dividends and 15% per annum of the Liquidation Preference with respect to dividends paid in kind as additional shares of New Preferred Stock (“PIK Dividends”). Gulfport must pay PIK Dividends for so long as the quotient obtained by dividing (i) Total Net Funded Debt (as defined in the Exit Credit Facility) by (ii) the last twelve (12) months of EBITDAX (as defined in the Exit Credit Facility) calculated as at the applicable record date is equal to or greater than 1.50. If such ratio is less than 1.50 such dividend may be paid in either cash or as PIK Dividends, subject to certain conditions under the Company's credit agreement. This requirement with respect to PIK Dividends is no longer applicable upon the effective date of the New Credit Facility.
Each holder of shares of New Preferred Stock has the right (the “Conversion Right”), at its option and at any time, to convert all or a portion of the shares of New Preferred Stock that it holds into a number of shares of Common Stock equal to the quotient obtained by dividing (x) the product obtained by multiplying (i) the Liquidation Preference times (ii) an amount equal to one (1) plus the Per Share Makewhole Amount (as defined in the Preferred Terms) on the date of conversion, by (y) $14.00 per share (as may be adjusted under the Preferred Terms) (the “Conversion Price”). The shares of New Preferred Stock outstanding at September 30, 2021 would convert to 4.1 million shares of New Common Stock if all holders of New Preferred Stock exercised their Conversion Right.
Gulfport shall have the right, but not the obligation, to redeem all, but not less than all, of the outstanding shares of New Preferred Stock by notice to the holders of New Preferred Stock, at the greater of (i) the aggregate value of the New Preferred Stock, calculated by the Current Market Price (as defined in the Preferred Terms) of the number of shares of Common Stock into which, subject to redemption, such New Preferred Stock would have been converted if such shares were converted pursuant to the Conversion Right at the time of such redemption and (ii) (y) if the date of such redemption is on or prior to the three year anniversary of the Emergence Date, the sum of the Liquidation Preference plus the sum of all unpaid PIK Dividends through the three year anniversary of the Emergence Date, or (x) if the date of such redemption is after the three year anniversary of the Emergence Date, the Liquidation Preference (the “Redemption Price”).
Following the Emergence Date, if there is a Fundamental Change (as defined in the Preferred Terms), Gulfport is required to redeem all, but not less than all, of the outstanding shares of New Preferred Stock by cash payment of the Redemption Price per share of New Preferred Stock within three (3) business days of the occurrence of such Fundamental Change. Notwithstanding the foregoing, in the event of a redemption pursuant to the preceding sentence, if Gulfport lacks sufficient cash to redeem all outstanding shares of New Preferred Stock, the Company is required to redeem a pro rata portion of each holder’s shares of New Preferred Stock.
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The New Preferred Stock has no stated maturity and will remain outstanding indefinitely unless repurchased or redeemed by Gulfport or converted into Common Stock.
The New Preferred Stock has been classified as mezzanine equity in the accompanying consolidated balance sheets due to the redemption features noted above.
Dividends
On September 30, 2021, the company paid dividends on its New Preferred Stock, which included 2,065 shares of New Preferred Stock paid in kind and approximately $30 thousand of cash-in-lieu of fractional shares. The following table summarizes PIK dividends and conversions of the Company’s New Preferred Stock subsequent to the Emergence Date:
New Preferred Stock at May 18, 2021 (Successor)55,000 
Issuance of New Preferred Stock1,006 
Conversion of New Preferred Stock(146)
New Preferred Stock at June 30, 202155,860 
Issuance of New Preferred Stock2,065 
Conversion of New Preferred Stock(5)
New Preferred Stock at September 30, 202157,920 
7.STOCK-BASED COMPENSATION
As discussed in Note 2, on the Emergence Date, the Company's Predecessor common stock was cancelled and New Common Stock was issued. Accordingly, the Company's then existing stock-based compensation awards were also cancelled, which resulted in the recognition of previously unamortized expense of $4.4 million related to the cancelled awards on the date of cancellation, which was included in reorganization items, net on the accompanying consolidated statements of operations. Stock-based compensation for the Predecessor and Successor periods are not comparable.
Successor Stock-Based Compensation
As of the Emergence Date, the board of directors adopted the Incentive Plan with a share reserve equal to 2,828,123 shares of New Common Stock. The Incentive Plan provides for the grant of incentive stock options, nonstatutory stock options, restricted stock, restricted stock units, stock appreciation rights, dividend equivalents and performance awards or any combination of the foregoing. The Company has granted restricted stock units to employees and directors pursuant to the Incentive Plan, as discussed below. During the Current Successor Quarter and the Current Successor YTD Period, the Company's stock-based compensation expense was $1.4 million, of which the Company capitalized $0.5 million relating to its exploration and development efforts. Stock compensation expense, net of the amounts capitalized, is included in general and administrative expenses in the accompanying consolidated statements of operations.
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The following table summarizes restricted stock unit activity for the Current Successor YTD Period:
Number of
Unvested
Restricted Stock Units
Weighted
Average
Grant Date
Fair Value
Number of
Unvested
Performance Vesting Restricted Stock Units
Weighted
Average
Grant Date
Fair Value
Unvested shares as of May 18, 2021 $  $ 
Granted198,755 65.92 141,697 47.67 
Vested    
Forfeited/canceled    
Unvested shares as of September 30, 2021198,755 $65.92 141,697 $47.67 
Successor Restricted Stock Units
Restricted stock units awarded under the Incentive Plan generally vest over a period of 1 to 4 years in the case of employees and 4 years in the case of directors upon the recipient meeting applicable service requirements. Stock-based compensation expense is recorded ratably over the service period. The grant date fair value of restricted stock units represents the closing market price of the Company's common stock on the date of the grant. Unrecognized compensation expense as of September 30, 2021 was $12.2 million. The expense is expected to be recognized over a weighted average period of 3.05 years.
Successor Performance Vesting Restricted Stock Units
The Company has awarded performance vesting restricted stock units to certain of its executive officers under the Incentive Plan. The number of shares of common stock issued pursuant to the award will be based on a combination of (i) the Company's total shareholder return ("TSR") and (ii) the Company's relative total shareholder return ("RTSR") for the performance period. Participants will earn from 0% to 200% of the target award based on the Company's TSR and RTSR ranking compared to the TSR of the companies in the Company's designated peer group at the end of the performance period. Awards will be earned and vested over a performance period from May 17, 2021 to May 17, 2024, subject to earlier termination of the performance period in the event of a change in control. The grant date fair value was determined using the Monte Carlo simulation method and is being recorded ratably over the performance period. Expected volatilities utilized in the Monte Carlo model were estimated using a historical period consistent with the remaining performance period of approximately 3 years. The risk-free interest rate was based on the U.S. Treasury rate for a term commensurate with the expected life of the grant. The Company assumed a risk-free interest rate of 0.35% and expected volatility of 87.0% to estimate the fair value. Unrecognized compensation expense as of September 30, 2021, related to performance vesting restricted shares was $6.3 million. The expense is expected to be recognized over a weighted average period of 2.8 years.
Predecessor Stock-Based Compensation
The Company granted restricted stock units to employees and directors pursuant to the 2019 Amended and Restated Incentive Stock Plan ("2019 Plan"). During the Current Predecessor YTD Period, the Company’s stock-based compensation cost was $4.4 million, of which the Company capitalized $0.9 million, relating to its exploration and development efforts. During the Prior Predecessor Quarter and the Prior Predecessor YTD Period, the Company’s stock-based compensation cost was $8.9 million and $13.2 million, respectively, of which the Company capitalized $0.3 million and $2.2 million, respectively, relating to its exploration and development efforts. Stock compensation costs, net of the amounts capitalized, are included in general and administrative expenses in the accompanying consolidated statements of operations.
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The following table summarizes restricted stock unit activity for the Current Predecessor YTD Period:
Number of
Unvested
Restricted Stock Units
Weighted
Average
Grant Date
Fair Value
Number of
Unvested
Performance Vesting Restricted Stock Units
Weighted
Average
Grant Date
Fair Value
Unvested shares as of January 1, 20211,702,513 $4.74 840,595 $4.07 
Granted    
Vested(227,132)8.45   
Forfeited/canceled(1,475,381)4.16 (840,595)4.07 
Unvested shares as of May 17, 2021 $  $ 
Predecessor Restricted Stock Units
Restricted stock units awarded under the 2019 Plan generally vested over a period of one year in the case of directors and three years in the case of employees and vesting was dependent upon the recipient meeting applicable service requirements. Stock-based compensation costs are recorded ratably over the service period. The grant date fair value of restricted stock units represents the closing market price of the Company's common stock on the date of grant. All unrecognized compensation expense was recognized as of the Emergence Date.
Predecessor Performance Vesting Restricted Stock Units
The Company previously awarded performance vesting restricted stock units to certain of its executive officers under the 2019 Plan. The number of shares of common stock issued pursuant to the award was based on RTSR. RTSR is an incentive measure whereby participants will earn from 0% to 200% of the target award based on the Company’s TSR ranking compared to the TSR of the companies in the Company’s designated peer group at the end of the performance period. Awards were to be earned and vested over a performance period measured from January 1, 2019 to December 31, 2021, subject to earlier termination of the performance period in the event of a change in control. All unrecognized compensation expense was recognized as of the Emergence Date.
8.EARNINGS (LOSS) PER SHARE
Basic income or loss per share attributable to common stockholders is computed as (i) net income or loss less (ii) dividends paid to holders of New Preferred Stock less (iii) net income or loss attributable to participating securities divided by (iv) weighted average basic shares outstanding. Diluted net income or loss per share attributable to common stockholders is computed as (i) basic net income or loss attributable to common stockholders plus (ii) diluted adjustments to income allocable to participating securities divided by (iii) weighted average diluted shares outstanding. The "if-converted" method is used to determine the dilutive impact for the Company's convertible New Preferred Stock and the treasury stock method is used to determine the dilutive impact of unvested restricted stock.
There were no potential shares of common stock that were considered dilutive for the Current Successor YTD Period, Current Successor Quarter, Current Predecessor Quarter or the Current Predecessor YTD Period. There were 4.1 million shares of potential common shares issuable due to the Company's convertible New Preferred Stock that were considered anti-dilutive for the Current Successor YTD Period due to the Company's net loss. There were 0.1 million shares of restricted stock that were considered anti-dilutive during the Current Successor Quarter and Current Successor YTD Period due to the Company's net loss.
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Reconciliations of the components of basic and diluted net (loss) income per common share are presented in the tables below:
SuccessorPredecessor
Three Months Ended September 30, 2021Three Months Ended September 30, 2020
Net loss$(461,313)$(380,963)
Dividends on New Preferred Stock(2,095) 
Participating securities - New Preferred Stock(1)
  
Net loss attributable to common stockholders$(463,408)$(380,963)
Basic Shares20,598 160,683 
Basic and Dilutive EPS$(22.50)$(2.37)
SuccessorPredecessor
Period from May 18, 2021 through September 30, 2021Period from January 1, 2021 through May 17, 2021Nine Months Ended September 30, 2020
Net (loss) income attributable to Gulfport$(670,898)$250,996 $(1,459,569)
Dividends on New Preferred Stock(3,126)  
Participating securities - New Preferred Stock(1)
   
Net (loss) income attributable to common stockholders$(674,024)$250,996 $(1,459,569)
Basic Shares20,507 160,834 160,053 
Basic and Dilutive EPS$(32.87)$1.56 $(9.12)
(1)
New Preferred Stock represents participating securities because they participate in any dividends on shares of common stock on a pari passu, pro rata basis. However, New Preferred Stock does not participate in undistributed net losses.
9.COMMITMENTS AND CONTINGENCIES
Commitments
Future Firm Transportation and Gathering Agreements
    The Company has contractual commitments with midstream and pipeline companies for future gathering and transportation of natural gas from the Company's producing wells to downstream markets. Under certain of these agreements, the Company has minimum daily volume commitments. The Company is also obligated under certain of these arrangements to pay a demand charge for firm capacity rights on pipeline systems regardless of the amount of pipeline capacity utilized by the Company. If the Company does not utilize the capacity, it often can release it to other counterparties, thus reducing the cost of these commitments. Working interest owners and royalty interest owners, where appropriate, will be responsible for their proportionate share of these costs. Commitments related to future firm transportation and gathering agreements are not recorded as obligations in the accompanying consolidated balance sheets; however, costs associated with utilized future firm transportation and gathering agreements are reflected in the Company's estimates of proved reserves.
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A summary of these commitments at September 30, 2021 are set forth in the table below, excluding contracts recently rejected or in the process of being rejected as discussed in the Litigation and Regulatory Proceedings section below:
(In thousands)
Remaining 2021$61,609 
2022224,537 
2023222,730 
2024215,865 
2025137,116 
Thereafter977,616 
Total$1,839,473 
Future Firm Sales Commitments
The Company has entered into various firm sales contracts to deliver and sell natural gas. The Company expects to fulfill its delivery commitments primarily with production from proved developed reserves. The Company's operated production has generally been sufficient to satisfy its delivery commitments during the periods presented, and it expects its operated production will continue to be the primary means of fulfilling its future commitments. However, where the Company's operated production is not sufficient to satisfy its delivery commitments, it can and may use spot market purchases to satisfy the commitments.
A summary of these volume commitments at September 30, 2021 are set forth in the table below:
(MMBtu per day)
Remaining 202116,000 
20224,000 
Contingencies
The Company is involved in a number of litigation and regulatory proceedings including those described below. Many of these proceedings are in early stages, and many of them seek or may seek damages and penalties, the amount of which is indeterminate. The Company's total accrued liabilities in respect of litigation and regulatory proceedings is determined on a case-by-case basis and represents an estimate of probable losses after considering, among other factors, the progress of each case or proceeding, its experience and the experience of others in similar cases or proceedings, and the opinions and views of legal counsel. Significant judgment is required in making these estimates and their final liabilities may ultimately be materially different. In accordance with ASC Topic 450, Contingencies, an accrual is recorded for a material loss contingency when its occurrence is probable and damages are reasonably estimable based on the anticipated most likely outcome or the minimum amount within a range of possible outcomes.

Litigation and Regulatory Proceedings
Commencement of the Chapter 11 Cases automatically stayed the proceedings and actions against us that are described below, in addition to actions seeking to collect pre-petition indebtedness or to exercise control over the property of the Company's bankruptcy estates. The Plan in the Chapter 11 Cases, which became effective on May 17, 2021, provided for the treatment of claims against the Company's bankruptcy estates, including pre-petition liabilities that had not been satisfied or addressed during the Chapter 11 Cases.

As part of its Chapter 11 Cases and restructuring efforts as discussed in Note 2, the Company filed motions to reject certain firm transportation agreements between the Company and affiliates of TC Energy Corporation ("TC") and Rover Pipeline LLC ("Rover") or jointly as the “Pending Motions to Reject”. The Pending Motions to Reject were removed to the United States District Court for the Southern District of Texas. While the Pending Motions to Reject are litigated, the Company isn’t required to perform under these firm transportation agreements. During the third quarter of 2021, Gulfport finalized a settlement agreement with TC that was approved by the Bankruptcy Court on September 21, 2021. Pursuant to the settlement agreement, Gulfport and TC agreed that the firm transportation contracts between Gulfport and TC would be rejected without any further
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payment or obligation by Gulfport or TC, and TC assigned its damages claims from such rejection to Gulfport. In exchange, Gulfport agreed to make a payment of $43.8 million in cash to TC. The $43.8 million was paid to TC on October 7, 2021 and as of September 30, 2021 is presented in "Accounts payable and accrued liabilities" in the accompanying consolidated balance sheet. Gulfport expects to receive distributions for substantially all of the $43.8 million payment based on the assigned claims pursuant to Gulfport’s Chapter 11 plan of reorganization that became effective in May 2021. Any future distributions will be recognized once received by Gulfport. The Company believes that the remaining Pending Motion to Reject will be ultimately granted, and that the Company does not have any ongoing obligation pursuant to the contract; however, in the event that the Company is not permitted to reject the Rover firm transportation contract, it could be liable for demand charges, attorneys' fees and interest in excess of approximately $40 million.

The Company, along with a number of other oil and gas companies, has been named as a defendant in two separate complaints, one filed by the State of Louisiana and the Parish of Cameron in the 38th Judicial District Court for the Parish of Cameron on February 9, 2016, and the other filed by the State of Louisiana and the District Attorney for the 15th Judicial District of the State of Louisiana in the 15th Judicial District Court for the Parish of Vermilion on July 29, 2016 (together, the "Complaints"). The Complaints allege that certain of the defendants’ operations violated the State and Local Coastal Resources Management Act of 1978, as amended, and the rules, regulations, orders and ordinances adopted thereunder (the "CZM Laws") by causing substantial damage to land and waterbodies located in the coastal zone of the relevant Parish. The plaintiffs seek damages and other appropriate relief under the CZM Laws, including the payment of costs necessary to clear, re-vegetate, detoxify and otherwise restore the affected coastal zone of the relevant Parish to its original condition, actual restoration of such coastal zone to its original condition, and the payment of reasonable attorney fees and legal expenses and interest. The United States District Court for the Western District of Louisiana issued orders remanding the cases to their respective state court, and the defendants have appealed the remand orders to the 5th Circuit Court of Appeals. On September 9, 2021, the State of Louisiana and Cameron Parish dismissed all claims against Gulfport without prejudice.
In September 2019, a stockholder of Mammoth Energy filed a derivative action on behalf of Mammoth Energy against members of Mammoth Energy’s Board of Directors, including a director designated by the Company, and its significant stockholders, including the Company, in the United States District Court for the Western District of Oklahoma. The complaint alleges, among other things, that the members of Mammoth Energy’s Board of Directors breached their fiduciary duties and violated the Securities Exchange Act of 1934, as amended, in connection with Mammoth Energy’s activities in Puerto Rico following Hurricane Maria. The complaint seeks unspecified damages, the payment of reasonable attorney fees and legal expenses and interest and to force Mammoth Energy and its Board of Directors to make specified corporate governance reforms. On October 4, 2021, plaintiffs filed a stipulation and agreement of settlement to dismiss all claims against Gulfport that is pending approval by the trial court.
In March 2020, Robert F. Woodley, individually and on behalf of all others similarly situated, filed a federal securities class action against the Company, David M. Wood, Keri Crowell and Quentin R. Hicks in the United States District Court for the Southern District of New York. The complaint alleges that the Company made materially false and misleading statements regarding the Company’s business and operations in violation of the federal securities laws and seeks unspecified damages, the payment of reasonable attorneys’ fees, expert fees and other costs, pre-judgment and post-judgment interest, and such other and further relief that may be deemed just and proper. On October 16, 2021, Gulfport filed a motion to dismiss that is currently pending before the trial court.
In December 2019, the Company filed a lawsuit against Stingray Pressure Pumping LLC, a subsidiary of Mammoth Energy (“Stingray”), for breach of contract and to terminate the Master Services Agreement for pressure pumping services, effective as of October 1, 2014, as amended (the “Master Services Agreement”), between Stingray and the Company. In March 2020, Stingray filed a counterclaim against the Company in the Superior Court of the State of Delaware. The counterclaim alleges that the Company has breached the Master Services Agreement. The counterclaim seeks actual damages, and Stingray filed claims in the Chapter 11 proceedings exceeding $80 million related to breach of contract damages, attorneys' fees and interest. In September 2021, Gulfport reached an agreement in principle with Stingray that fully resolves the litigation between the parties. Pursuant to the settlement, Stingray and Gulfport have agreed to drop all of the claims brought against each other in Delaware Court and Bankruptcy Court. On September 22, 2021, the parties announced to the bankruptcy court that all Stingray claims would be withdrawn. The parties are finalizing settlement documents.

In August 2020, Muskie filed an action against the Company in the Superior Court of the State of Delaware for breach of contract. The complaint alleges that the Company breached its obligation to purchase a certain amount of proppant sand each month or make designated shortfall payments under the Sand Supply Agreement, effective October 1, 2014, as amended (the “Sand Supply Agreement”), between Muskie and the Company, and seeks payment of unpaid shortfall payments, and Muskie
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filed a claim in the Chapter 11 proceedings for $3.4 million. On September 22, 2021, the parties announced to the bankruptcy court that an agreed claim for $3.1 million would resolve the matter. The parties are finalizing settlement documents.
In April 2020, Bryon Lefort, individually and on behalf of similarly situated individuals, filed an action against the Company in the United States District Court for the Southern District of Ohio Eastern Division. The complaint alleges that the Company violated the Fair Labor Standards Act (“FLSA”), the Ohio Wage Act and the Ohio Prompt Pay Act by classifying the plaintiffs as independent contractors and paying them a daily rate with no overtime compensation for hours worked in excess of 40 hours per week. The complaint seeks to recover unpaid regular and overtime wages, liquidated damages in an amount equal to six percent of all unpaid overtime compensation, the payment of reasonable attorney fees and legal expenses and pre-judgment and post-judgment interest, and such other damages that may be owed to the workers, and claims were filed in the Chapter 11 proceedings totaling $5.8 million. On October 1, 2021, the bankruptcy court approved the parties' settlement resolving all claims for a bankruptcy claim of approximately $0.7 million. Final dismissal is currently pending before the United States District Court for the Southern District of Ohio Eastern Division.
The Company, along with other oil and gas companies, have been named as a defendant in J&R Passmore, LLC, individually and on behalf of all others similarly situated, in the United States District Court for the Southern District of Ohio on December 6, 2018. Plaintiffs assert their respective leases are limited to the Marcellus and Utica Shale geological formations and allege that Defendants have willfully trespassed and illegally produced oil, natural gas, and other hydrocarbon products beyond these respective formations. Plaintiffs seek the full value of any production from below the Marcellus and Utica shale formations, unspecified damages from the diminution of value to their mineral estate, unspecified punitive damages, and the payment of reasonable attorney fees, legal expenses, and interest.
Business Operations
The Company is involved in various lawsuits and disputes incidental to its business operations, including commercial disputes, personal injury claims, royalty claims, property damage claims and contract actions.
Environmental Contingencies
The nature of the oil and gas business carries with it certain environmental risks for Gulfport and its subsidiaries. Gulfport and its subsidiaries have implemented various policies, programs, procedures, training and audits to reduce and mitigate environmental risks. The Company conducts periodic reviews, on a company-wide basis, to assess changes in their environmental risk profile. Environmental reserves are established for environmental liabilities for which economic losses are probable and reasonably estimable. The Company manages its exposure to environmental liabilities in acquisitions by using an evaluation process that seeks to identify pre-existing contamination or compliance concerns and address the potential liability. Depending on the extent of an identified environmental concern, they may, among other things, exclude a property from the transaction, require the seller to remediate the property to their satisfaction in an acquisition or agree to assume liability for the remediation of the property.
Other Matters
Based on management’s current assessment, they are of the opinion that no pending or threatened lawsuit or dispute relating to its business operations is likely to have a material adverse effect on their future consolidated financial position, results of operations or cash flows. The final resolution of such matters could exceed amounts accrued, however, and actual results could differ materially from management’s estimates.
10.DERIVATIVE INSTRUMENTS
Natural Gas, Oil and Natural Gas Liquids Derivative Instruments
Gulfport has established policies and procedures for managing commodity price volatility through the use of derivative instruments. The Company seeks to mitigate risks related to unfavorable changes in natural gas, oil and NGL prices, which are subject to significant and often volatile fluctuation, by entering into over-the-counter fixed price swaps, basis swaps, collars and various types of option contracts. The derivative instruments allow the Company to mitigate the impact of declines in future commodity prices by effectively locking in a floor price for a certain level of the Company’s production. However, these instruments also limit future gains from favorable price movements. The volume of commodity derivative instruments utilized by the Company may vary from year to year based on forecasted production.
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Fixed price swaps are settled monthly based on differences between the fixed price specified in the contract and the referenced settlement price. When the referenced settlement price is less than the price specified in the contract, the Company receives an amount from the counterparty based on the price difference multiplied by the volume. Similarly, when the referenced settlement price exceeds the price specified in the contract, the Company pays the counterparty an amount based on the price difference multiplied by the volume. The prices contained in these fixed price swaps are based on the NYMEX Henry Hub for natural gas, the NYMEX WTI for oil and Mont Belvieu for propane.
Below is a summary of the Company’s open fixed price swap positions as of September 30, 2021. 
LocationDaily VolumeWeighted
Average Price
Natural Gas(MMBtu/d)($/MMBtu)
Remaining 2021NYMEX Henry Hub198,000 $2.85 
2022NYMEX Henry Hub140,740 $2.88 
2023NYMEX Henry Hub34,932 $3.24 
Oil(Bbl/d)($/Bbl)
Remaining 2021NYMEX WTI3,000 $57.67 
2022NYMEX WTI2,104 $66.23 
NGL(Bbl/d)($/Bbl)
Remaining 2021Mont Belvieu C33,100 $27.80 
2022Mont Belvieu C33,378 $35.09 

In the second half of 2019, the Company sold 2022 and 2023 natural gas call options in exchange for a premium and used the associated premiums to enhance the fixed price on certain natural gas swaps that settled in 2020. Each call option has an established ceiling price of $2.90/MMBtu. If monthly NYMEX natural gas prices settle above the $2.90/MMBtu ceiling price, the Company is required to pay the option counterparty an amount equal to the difference between the referenced NYMEX natural gas settlement price and $2.90/MMBtu multiplied by the hedged contract volumes.
Below is a summary of the Company's sold natural gas call option positions as of September 30, 2021.
LocationDaily VolumeWeighted Average Price
Natural Gas(MMBtu/d)($/MMBtu)
2022NYMEX Henry Hub152,675 $2.90 
2023NYMEX Henry Hub627,675 $2.90 
The Company entered into costless collars based off the NYMEX WTI and Henry Hub oil and natural gas indices. Each two-way price collar has a set floor and ceiling price for the hedged production. If the applicable monthly price indices are outside of the ranges set by the floor and ceiling prices in the various collars, the Company will cash-settle the difference with the hedge counterparty.
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Below is a summary of the Company's costless collar positions as of September 30, 2021.
LocationDaily VolumeWeighted Average Floor PriceWeighted Average Ceiling Price
Natural Gas(MMBtu/d)($/MMBtu)($/MMBtu)
Remaining 2021NYMEX Henry Hub610,000 $2.59 $3.02 
2022NYMEX Henry Hub406,747 $2.58 $2.91 
Oil(Bbl/d)($/Bbl)($/Bbl)
2022NYMEX WTI1,500 $55.00 $60.00 
In addition, the Company entered into natural gas basis swap hedge contracts. If the applicable monthly price indices are outside of the ranges set forth in the various natural gas basis swap contracts, the Company will cash-settle the difference with the hedge counterparty.
Below is a summary of the Company's natural gas basis swap positions as of September 30, 2021.
Gulfport PaysGulfport ReceivesDaily VolumeWeighted Average Fixed Spread
Natural Gas(MMBtu/d)($/MMBtu)
Remaining 2021Rex Zone 3NYMEX Plus Fixed Spread83,152 $(0.12)
2022Rex Zone 3NYMEX Plus Fixed Spread24,658 $(0.10)
Balance Sheet Presentation
The Company reports the fair value of derivative instruments on the consolidated balance sheets as derivative instruments under current assets, noncurrent assets, current liabilities and noncurrent liabilities on a gross basis. The Company determines the current and noncurrent classification based on the timing of expected future cash flows of individual trades.
The following table presents the fair value of the Company’s derivative instruments on a gross basis at September 30, 2021 and December 31, 2020:
SuccessorPredecessor
September 30, 2021December 31, 2020
Short-term derivative asset$2,142 $27,146 
Long-term derivative asset961 322 
Short-term derivative liability(560,722)(11,641)
Long-term derivative liability(272,935)(36,604)
Total commodity derivative position$(830,554)$(20,777)
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Gains and Losses
The following tables present the gain and loss recognized in net (loss) gain on natural gas, oil and NGL derivatives in the accompanying consolidated statements of operations:
Net loss on derivative instruments
SuccessorPredecessor
Three Months Ended September 30, 2021Three Months Ended September 30, 2020
Natural gas derivatives - fair value losses$(517,799)$(84,390)
Natural gas derivatives - settlement (losses) gains(82,566)31,742 
Total losses on natural gas derivatives(600,365)(52,648)
Oil and condensate derivatives - fair value (losses) gains(1,590)723 
Oil and condensate derivatives - settlement losses(4,336)(1,505)
Total losses on oil and condensate derivatives(5,926)(782)
NGL derivatives - fair value losses(10,201)(288)
NGL derivatives - settlement losses(5,984)(105)
Total losses on NGL derivatives(16,185)(393)
Total losses on natural gas, oil and NGL derivatives$(622,476)$(53,823)
Net (loss) gain on derivative instruments
SuccessorPredecessor
Period from May 18, 2021 through September 30, 2021Period from January 1, 2021 through May 17, 2021Nine Months Ended September 30, 2020
Natural gas derivatives - fair value losses$(638,063)$(123,080)$(147,661)
Natural gas derivatives - settlement (losses) gains(89,255)(3,362)176,555 
Total (losses) gains on natural gas derivatives(727,318)(126,442)28,894 
Oil and condensate derivatives - fair value losses(6,947)(6,126)(4,289)
Oil and condensate derivatives - settlement (losses) gains(4,336) 48,444 
Total (losses) gains on oil and condensate derivatives(11,283)(6,126)44,155 
NGL derivatives - fair value losses(17,549)(4,671)(620)
NGL derivatives - settlement (losses) gains(5,984) 366 
Total losses on NGL derivatives(23,533)(4,671)(254)
Contingent consideration arrangement - fair value losses  (1,381)
Total (losses) gains on natural gas, oil and NGL derivatives$(762,134)$(137,239)$71,414 
Offsetting of Derivative Assets and Liabilities
As noted above, the Company records the fair value of derivative instruments on a gross basis. The following table presents the gross amounts of recognized derivative assets and liabilities in the consolidated balance sheets and the amounts that are subject to offsetting under master netting arrangements with counterparties, all at fair value.
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Successor
As of September 30, 2021
Gross Assets (Liabilities)Gross Amounts
Presented in theSubject to MasterNet
Consolidated Balance SheetsNetting AgreementsAmount
Derivative assets$3,103 $(3,103)$ 
Derivative liabilities$(833,657)$3,103 $(830,554)
Predecessor
As of December 31, 2020
Gross Assets (Liabilities)Gross Amounts
Presented in theSubject to MasterNet
Consolidated Balance SheetsNetting AgreementsAmount
Derivative assets$27,468 $(25,730)$1,738 
Derivative liabilities$(48,245)$25,730 $(22,515)
Concentration of Credit Risk
By using derivative instruments that are not traded on an exchange, the Company is exposed to the credit risk of its counterparties. Credit risk is the risk of loss from counterparties not performing under the terms of the derivative instrument. When the fair value of a derivative instrument is positive, the counterparty is expected to owe the Company, which creates credit risk. To minimize the credit risk in derivative instruments, it is the Company’s policy to enter into derivative contracts only with counterparties that are creditworthy financial institutions deemed by management as competent and competitive market makers. The Company’s derivative contracts are spread between multiple counterparties to lessen its exposure to any individual counterparty. Additionally, the Company uses master netting agreements to minimize credit risk exposure. The creditworthiness of the Company’s counterparties is subject to periodic review. None of the Company’s derivative instrument contracts contain credit-risk related contingent features. Other than as provided by the Company’s revolving credit facility, the Company is not required to provide credit support or collateral to any of its counterparties under its derivative instruments, nor are the counterparties required to provide credit support to the Company.
11.FAIR VALUE MEASUREMENTS
The Company measures and discloses certain financial and non-financial assets and liabilities on the balance sheet at fair value in accordance with the provisions of ASC Topic 820, Fair Value Measurements and Disclosures. Fair value is the price that would be received to sell an asset or paid to transfer a liability (exit price) in an orderly transaction between market participants at the measurement date. Market or observable inputs are the preferred sources of values, followed by assumptions based on hypothetical transactions in the absence of market inputs. Fair value measurements are classified and disclosed in one of the following categories:

Level 1 – Quoted prices in active markets for identical assets and liabilities.
Level 2 – Quoted prices in active markets for similar assets and liabilities, quoted prices for identical or similar instruments in markets that are not active and model-derived valuations whose inputs are observable or whose significant value drivers are observable.
Level 3 – Significant inputs to the valuation model are unobservable.
Valuation techniques that maximize the use of observable inputs are favored. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the placement of assets and liabilities within the levels of the fair value hierarchy. Reclassifications of fair value between Level 1, Level 2 and Level 3 of the fair value hierarchy, if applicable, are made at the end of each quarter.
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Financial assets and liabilities
The following tables summarize the Company’s financial and non-financial assets and liabilities by valuation level as of September 30, 2021 and December 31, 2020:
Successor
 September 30, 2021
Level 1Level 2Level 3
Assets:
Derivative Instruments$ $3,103 $ 
Contingent consideration arrangement  5,300 
Total assets$ $3,103 $5,300 
Liabilities:
Derivative Instruments $ $833,657 $ 
Predecessor
 December 31, 2020
Level 1Level 2Level 3
Assets:
Derivative Instruments$ $27,468 $ 
Contingent consideration arrangement  6,200 
Total assets$ $27,468 $6,200 
Liabilities:
Derivative Instruments $ $48,245 $ 

The Company estimates the fair value of all derivative instruments using industry-standard models that consider various assumptions, including current market and contractual prices for the underlying instruments, implied volatility, time value, nonperformance risk, as well as other relevant economic measures. Substantially all of these inputs are observable in the marketplace throughout the full term of the instrument and can be supported by observable data. As discussed in Note 3, the Company adjusted the fair value of its derivative instruments as a fresh start adjustment at the Emergence Date as a result of changes in the Company's credit adjustment to reflect its new credit standing at emergence.
The Company's SCOOP water infrastructure sale, which closed in the first quarter of 2020, included a contingent consideration arrangement. As of September 30, 2021, the fair value of the contingent consideration was $5.3 million, of which $0.8 million is included in prepaid expenses and other assets and $4.5 million is included in other assets in the accompanying consolidated balance sheets. The fair value of the contingent consideration arrangement is calculated using discounted cash flow techniques and is based on internal estimates of the Company's future development program and water production levels. Given the unobservable nature of the inputs, the fair value measurement of the contingent consideration arrangement is deemed to use Level 3 inputs. The Company has elected the fair value option for this contingent consideration arrangement and, therefore, records changes in fair value in earnings. The Company recognized a $1.2 million loss for the Current Successor Quarter, a $0.1 million loss for the Current Successor YTD Period, and a nominal gain for the Current Predecessor YTD Period, respectively, which is included in other expense (income) in the accompanying consolidated statements of operations. The Company recognized losses of $0.2 million and $3.1 million on changes in fair value of the contingent consideration during the Prior Predecessor Quarter and Prior Predecessor YTD Period, respectively. Settlements under the contingent consideration arrangement totaled $0.6 million during the Current Successor YTD Period, $0.2 million during the Current Predecessor YTD Period, and $0.3 million during the Prior Predecessor YTD Period, respectively.
Non-financial assets and liabilities
The initial measurement of asset retirement obligations at fair value is calculated using discounted cash flow techniques and based on internal estimates of future retirement costs associated with oil and gas properties. Given the unobservable nature of the inputs, including plugging costs and reserve lives, the initial measurement of the asset retirement obligation liability is deemed to use Level 3 inputs. See Note 4 for further discussion of the Company’s asset retirement obligations.
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As discussed in Note 4, the Company recorded an impairment during the Current Predecessor YTD Period on its corporate headquarters. The estimated fair value of the building was primarily based on third party estimates and, therefore, is deemed to use Level 3 inputs.
Fair value of other financial instruments
The carrying amounts on the accompanying consolidated balance sheet for cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, and current debt are carried at cost, which approximates market value due to their short-term nature. Long-term debt related to the Company's building loan is carried at cost, which approximates market value based on the borrowing rates currently available to the Company with similar terms and maturities.
Chapter 11 Emergence and Fresh Start Accounting
On the Emergence Date, the Company adopted fresh start accounting, which resulted in the Company becoming a new entity for financial reporting purposes. Upon the adoption of fresh start accounting, the Company’s assets and liabilities were recorded at their fair values as of May 17, 2021. The inputs utilized in the valuation of the Company’s most significant asset, its oil and natural gas properties and related assets, included mostly unobservable inputs which fall within Level 3 of the fair value hierarchy. Such inputs included estimates of future oil and gas production from the Company’s reserve reports, commodity prices based on forward strip price curves (adjusted for basis differentials) as of May 17, 2021, operating and development costs, expected future development plans for the properties and discount rates based on a weighted-average cost of capital computation. The Company also recorded its asset retirement obligations at fair value as a result of fresh start accounting. The inputs utilized in valuing the asset retirement obligations were mostly Level 3 unobservable inputs, including estimated economic lives of oil and natural gas wells as of the Emergence Date, anticipated future plugging and abandonment costs and an appropriate credit-adjusted risk free rate to discount such costs. Refer to Note 3 for a detailed discussion of the fair value approaches used by the Company.
12.REVENUE FROM CONTRACTS WITH CUSTOMERS
Revenue Recognition
The Company’s revenues are primarily derived from the sale of natural gas, oil and condensate and NGL. Sales of natural gas, oil and condensate and NGL are recognized in the period that the performance obligations are satisfied. The Company generally considers the delivery of each unit (MMBtu or Bbl) to be separately identifiable and represents a distinct performance obligation that is satisfied at the time control of the product is transferred to the customer. Revenue is measured based on consideration specified in the contract with the customer, and excludes any amounts collected on behalf of third parties. These contracts typically include variable consideration that is based on pricing tied to market indices and volumes delivered in the current month. As such, this market pricing may be constrained (i.e., not estimable) at the inception of the contract but will be recognized based on the applicable market pricing, which will be known upon transfer of the goods to the customer. The payment date is usually within 30 days of the end of the calendar month in which the commodity is delivered.
Gathering, processing and compression fees attributable to gas processing, as well as any transportation fees, including firm transportation fees, incurred to deliver the product to the purchaser, are presented as transportation, gathering, processing and compression expense in the accompanying consolidated statements of operations.
Transaction Price Allocated to Remaining Performance Obligations
A significant number of the Company's product sales are short-term in nature generally through evergreen contracts with contract terms of one year or less. These contracts typically automatically renew under the same provisions. For those contracts, the Company has utilized the practical expedient allowed in the new revenue accounting standard that exempts the Company from disclosure of the transaction price allocated to remaining performance obligations if the performance obligation is part of a contract that has an original expected duration of one year or less.
For product sales that have a contract term greater than one year, the Company has utilized the practical expedient that exempts the Company from disclosure of the transaction price allocated to remaining performance obligations if the variable consideration is allocated entirely to a wholly unsatisfied performance obligation. Under these sales contracts, each unit of product generally represents a separate performance obligation; therefore, future volumes are wholly unsatisfied and disclosure
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of the transaction price allocated to remaining performance obligations is not required. Currently, the Company's product sales that have a contractual term greater than one year have no long-term fixed consideration.
Contract Balances
Receivables from contracts with customers are recorded when the right to consideration becomes unconditional, generally when control of the product has been transferred to the customer. Receivables from contracts with customers were $185.9 million and $119.9 million as of September 30, 2021 and December 31, 2020, respectively, and are reported in accounts receivable - oil and natural gas sales on the consolidated balance sheets. The Company currently has no assets or liabilities related to its revenue contracts, including no upfront or rights to deficiency payments.
Prior-Period Performance Obligations
The Company records revenue in the month production is delivered to the purchaser. However, settlement statements for certain sales may be received for 30 to 90 days after the date production is delivered, and as a result, the Company is required to estimate the amount of production that was delivered to the purchaser and the price that will be received for the sale of the product. The differences between the estimates and the actual amounts for product sales is recorded in the month that payment is received from the purchaser. For the Current Predecessor YTD Period and the Current Successor YTD Period, revenue recognized in the reporting periods related to performance obligations satisfied in prior reporting periods was not material.
13.EQUITY INVESTMENTS
Investments accounted for by the equity method during the periods presented consisted of the following:
Carrying valueLoss from equity method investments
PredecessorPredecessor
December 31, 2020Three Months Ended September 30, 2020Period from January 1, 2021 through May 17, 2021Nine Months Ended September 30, 2020
Investment in Grizzly Oil Sands ULC$24,816 $(153)$(342)$(341)
Investment in Mammoth Energy   (10,646)
$24,816 $(153)$(342)$(10,987)
Grizzly Oil Sands ULC
The Company, through its wholly owned subsidiary Grizzly Holdings, owns an approximate 24.5% interest in Grizzly, a Canadian unlimited liability company. As of September 30, 2021, Grizzly had approximately 830,000 acres under lease in the Athabasca, Peace River and Cold Lake oil sands regions of Alberta, Canada. The Company has not paid any cash calls since its decision to cease funding further capital calls in 2019. Grizzly’s functional currency is the Canadian dollar. For the Prior Predecessor Quarter and the Prior Predecessor YTD Period, the Company's investment in Grizzly increased by $3.7 million and decreased by $4.1 million, respectively, as a result of foreign currency translation gains and losses.
Effective as of the Emergence Date, the Company evaluated its investment in Grizzly and determined that the Company no longer has the ability to exercise significant influence over operating and financial policies of Grizzly. As such, the equity method of accounting for its investment was no longer applicable. As a result, the Company will use its previous carrying value of zero (as discussed below) as its initial basis and will subsequently measure at fair value while recording any changes in fair value in earnings.
As discussed in Note 3, the Company reduced the carrying value of its investment in Grizzly to zero upon the Emergence Date. The reduction in valuation was based upon the Company's new management's assessment of the investment and its priority for future funding in its portfolio. In particular, Grizzly’s operations remained suspended, even with improvements in the pricing environment since its initial suspension in 2015. Additionally, the Company does not anticipate funding future capital calls, which will lead to further dilution of its equity ownership interest.
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Mammoth Energy Services, Inc.
As discussed in Note 2, the Company's previously owned shares of the outstanding common stock of Mammoth Energy were used to settle Class 4A claims. The Company's investment carrying value was reduced to zero in the first quarter of 2020 due to the Company's share of cumulative net loss and impairments and the carrying value remained at zero through the Emergence Date.
14.RESTRUCTURING AND LIABILITY MANAGEMENT
In the third quarter of 2021, the Company announced and completed a workforce reduction representing approximately 3% of its headcount. Charges related to the reduction in workforce primarily consisted of one-time employee-related termination benefits. Additionally, the Company incurred charges related to financial and legal advisors engaged to assist with the evaluation of a range of liability management alternatives during the Prior Predecessor Quarter and Prior Predecessor YTD Period.
The following table summarizes the restructuring and liability management charges incurred:
SuccessorPredecessor
Three months ended September 30, 2021Three months ended September 30, 2020
Reduction in workforce$2,858 $1,460 
Liability management 7,524 
Total restructuring and liability management$2,858 $8,984 
SuccessorPredecessor
Period from May 18, 2021 through September 30, 2021Period from January 1, 2021 through May 17, 2021Nine months ended September 30, 2020
Reduction in workforce$2,858 $ $1,460 
Liability management  8,141 
Total restructuring and liability management$2,858 $ $9,601 
15.LEASES
Nature of Leases
The Company has operating leases on certain equipment and field offices with remaining lease durations in excess of one year. The Company recognizes a right-of-use asset and lease liability on the balance sheet for all leases with lease terms of greater than one year. Short-term leases that have an initial term of one year or less are not capitalized.
The Company has entered into contracts with varying terms for drilling rigs. The Company has concluded its drilling rig contracts are operating leases as the assets are identifiable and the Company has the right to control the identified assets. However, at September 30, 2021, the Company did not have any active long-term drilling rig contracts in place.
The Company rents office space for its corporate headquarters and field locations and certain other equipment from third parties, which expire at various dates through 2022. These agreements are typically structured with non-cancelable terms of one to five years. The Company has determined these agreements represent operating leases with a lease term that equals the primary non-cancelable contract term. The Company has included any renewal options that it has determined are reasonably certain of exercise in the determination of the lease terms. The lease for the Company's corporate headquarters has a primary term of one year and is classified as a short-term operating lease.
Discount Rate
As most of the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company's
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incremental borrowing rate reflects the estimated rate of interest that it would pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment.
Maturities of operating lease liabilities as of September 30, 2021 were as follows:
(In thousands)
Remaining 2021$10 
202225 
Total lease payments$35 
Less: Imputed interest(1)
Total$34 
The table below summarizes lease cost for the periods presented:
SuccessorPredecessor
Three Months Ended September 30, 2021Three Months Ended September 30, 2020
Operating lease cost$10 $1,692 
Variable lease cost 245 
Short-term lease cost2,873 2,259 
Total lease cost(1)
$2,883 $4,196 
SuccessorPredecessor
Period from May 18, 2021 through September 30, 2021Period from January 1, 2021 through May 17, 2021Nine Months Ended September 30, 2020
Operating lease cost$18 $41 $7,970 
Variable lease cost  705 
Short-term lease cost5,033 4,496 7,698 
Total lease cost(1)
$5,051 $4,537 $16,373 
(1)
The majority of the Company's total lease cost was capitalized to the full cost pool, and the remainder was included in either lease operating expenses or general and administrative expenses in the accompanying consolidated statements of operations.
Supplemental cash flow information related to leases was as follows:
SuccessorPredecessor
Period from May 18, 2021 through September 30, 2021Period from January 1, 2021 through May 17, 2021Nine Months Ended September 30, 2020
Cash paid for amounts included in the measurement of lease liabilities
     Operating cash flows from operating leases$46 $48 $109 
     Investing cash flow from operating leases  9,786 
     Investing cash flow from operating leases—related party  6,800 
The weighted-average remaining lease term as of September 30, 2021 was 0.89 years. The weighted-average discount rate used to determine the operating lease liability as of September 30, 2021 was 3.98%.
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16.INCOME TAXES
As discussed in Note 2, elements of the Plan provided that the Company’s indebtedness related to Predecessor Senior Notes and certain general unsecured claims were exchanged for New Common Stock in settlement of those claims. Absent an exception, a debtor recognizes CODI upon discharge of its outstanding indebtedness for an amount of consideration that is less than its adjusted issue price. The IRC provides that a debtor in a Chapter 11 bankruptcy case may exclude CODI from taxable income, but must reduce certain of its tax attributes by the amount of any CODI realized as a result of the consummation of a plan of reorganization. The amount of CODI realized by a taxpayer is determined based on the fair market value of the consideration received by the creditors in settlement of outstanding indebtedness. As a result of the market value of equity upon emergence from Chapter 11 bankruptcy proceedings, the estimated amount of CODI is approximately $708.8 million, which will reduce the value of the Company’s net operating losses. The actual reduction in tax attributes does not occur until the first day of the Company’s tax year subsequent to the date of emergence, or January 1, 2022. The reduction of net operating losses is expected to be fully offset by a corresponding decrease in valuation allowance. As of September 30, 2021, the Company had an estimated federal net operating loss carryforward of approximately $1.2 billion after giving effect to the estimated reduction in tax attributes as discussed above.

Emergence from Chapter 11 bankruptcy proceedings resulted in a change in ownership for purposes of IRC Section 382. The Company currently expects to apply rules under IRC Section 382(l)(5) that would allow the Company to mitigate the limitations imposed under the regulations with respect to the Company’s remaining tax attributes. The Company’s deferred tax assets and liabilities, prior to the valuation allowance, have been computed on such basis. Taxpayers who qualify for this provision may, at their option, elect not to apply the election. If the provision does not apply, the Company’s ability to realize the value of its tax attributes would be subject to limitation and the amount of deferred tax assets and liabilities, prior to the valuation allowance, may differ. Additionally, under IRC Section 382(l)(5), an ownership change subsequent to the Company’s emergence could severely limit or effectively eliminate its ability to realize the value of its tax attributes.

At each reporting period, the Company weighs all available positive and negative evidence to determine whether its deferred tax assets are more likely than not to be realized. A valuation allowance for deferred tax assets, including net operating losses, is recognized when it is more likely than not that some or all of the benefit from the deferred tax assets will not be realized. To assess that likelihood, the Company uses estimates and judgment regarding future taxable income and considers the tax laws in the jurisdiction where such taxable income is generated, to determine whether a valuation allowance is required. Such evidence can include current financial position, results of operations, both actual and forecasted, the reversal of deferred tax liabilities and tax planning strategies as well as the current and forecasted business economics of the oil and gas industry. Based upon the Company’s analysis, the Company determined a full valuation allowance was necessary against its net deferred tax assets as of both May 17, 2021 and September 30, 2021.

The Company will continue to evaluate whether the valuation allowance is needed in future reporting periods. The valuation allowance will remain until it is determined that the net deferred tax assets are more likely than not to be realized. Future events or new evidence which may lead us to conclude that it is more likely than not that its net deferred tax assets will be realized include, but are not limited to, cumulative historical pre-tax earnings, improvements in oil prices, and taxable events that could result from one or more transactions. The valuation allowance does not prevent future utilization of the tax attributes if the Company recognizes taxable income. As long as the Company concludes that the valuation allowance against its net deferred tax assets is necessary, the Company likely will not have any additional deferred income tax expense or benefit.

For the Current Predecessor YTD Period, the Company has an effective tax rate of (3.4)% and an income tax benefit of $8.0 million. The tax benefit is entirely attributable to an Oklahoma refund claim associated with an examination relating to historical tax returns. The effective tax rate differs from the statutory tax rate due to the Company’s valuation allowance position and the permanent adjustments relating to the Chapter 11 Emergence. For the Current Successor YTD Period, the Company has an effective tax rate of (0.01)% and tax expense of $0.7 million. The tax expense is entirely attributable to the Oklahoma refund claim that was filed during the third quarter of 2021, resulting in an adjustment to the benefit recorded during the Current Predecessor YTD Period. We did not record any additional income tax expense for the Current Successor YTD Period as a result of maintaining a full valuation allowance against our net deferred tax asset. For the Prior Predecessor Quarter, the Company had an effective tax rate of 0% and tax expense of zero due to the Company’s valuation allowance position. For the Prior Predecessor YTD Period, the Company had an effective tax rate of (0.5)% and tax expense of $7.3 million as a result of the sale of assets and a corresponding adjustment to the valuation allowance on remaining state net operating loss carryforwards.
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17.SUBSEQUENT EVENTS
New Credit Facility
On October 14, 2021, the Company entered into the Third Amended and Restated Credit Agreement with JPMorgan Chase Bank, N.A., as administrative agent, and various lender parties ("New Credit Facility"). The New Credit Facility provides for an aggregate maximum principal amount of up to $1.5 billion, an initial borrowing base of $850.0 million and an initial aggregate elected commitment amount of $700.0 million. The credit agreement also provides for a $175.0 million sublimit of the aggregate commitments that is available for the issuance of letters of credit. The New Credit Facility amended and refinanced the Exit Credit Facility.
The borrowing base will be redetermined semiannually on or around May 1 and November 1 of each year, with the first scheduled redetermination to be on or around May 1, 2022. The New Credit Facility matures in October 2025.
The New Credit Facility bears interest at a rate equal to, at the Company’s election, either (a) LIBOR plus an applicable margin that varies from 2.75% to 3.75% per annum or (b) a base rate plus an applicable margin that varies from 1.75% to 2.75% per annum, based on borrowing base utilization. The New Credit Facility will mature on October 14, 2025. The Company is required to pay a commitment fee of 0.50% per annum on the average daily unused portion of the current aggregate commitments under the New Credit Facility. The Company is also required to pay customary letter of credit and fronting fees.
The credit agreement requires the Company to maintain as of the last day of each fiscal quarter (i) a net funded leverage ratio of less than or equal to 3.25 to 1.00, and (ii) a current ratio of greater than or equal to 1.00 to 1.00.
The obligations under the New Credit Facility, certain swap obligations and certain cash management obligations, are guaranteed by the Company and the wholly-owned domestic material subsidiaries of the Borrower (collectively, the “Guarantors” and, together with the Borrower, the “Loan Parties”) and secured by substantially all of the Loan Parties’ assets (subject to customary exceptions).
The credit agreement also contains customary affirmative and negative covenants, including, among other things, as to compliance with laws (including environmental laws and anti-corruption laws), delivery of quarterly and annual financial statements and borrowing base certificates, conduct of business, maintenance of property, maintenance of insurance, entry into certain derivatives contracts, restrictions on the incurrence of liens, indebtedness, asset dispositions, restricted payments, and other customary covenants. These covenants are subject to a number of limitations and exceptions.
Share Repurchase Program
On November 1, 2021, the Company's Board of Directors approved a stock repurchase program to acquire up to $100.0 million of its New Common Stock ("Repurchase Program"). Purchases under the Repurchase Program may be made from time to time in open market or privately negotiated transactions, and will be subject to available liquidity, market conditions, credit agreement restrictions, applicable legal requirements, contractual obligations and other factors. The Repurchase Program does not require the Company to acquire any specific number of shares of New Common Stock. The Company intends to purchase shares under the Repurchase Program opportunistically with available funds while maintaining sufficient liquidity to fund its capital development program. The Repurchase Program is authorized to extend through December 31, 2022 and may be suspended from time to time, modified, extended or discontinued by the board of directors at any time. Any shares of New Common Stock repurchased are expected to be cancelled.
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Natural Gas and Oil Derivative Instruments
Subsequent to September 30, 2021 and as of October 28, 2021, the Company entered into the following natural gas derivative contracts:
Type of Derivative InstrumentIndexDaily VolumeWeighted
Average Price
Natural Gas(MMBtu/d)($/MMBtu)
November 2021 - December 2021Basis SwapONG Minus Inside FERC20,000 $0.50
January 2022 - March 2022Basis SwapONG Minus Inside FERC20,000 $0.50
January 2023 - December 2023Fixed price swapNYMEX Henry Hub30,000 $3.58


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ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Introduction
Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is intended to provide the reader of the financial statements with a narrative from the perspective of management on the financial condition, results of operations, liquidity and certain other factors that may affect the Company's operating results. MD&A should be read in conjunction with the financial statements and related Notes included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
The following information updates the discussion of Gulfport’s financial condition provided in its Annual Report on Form 10-K for the year ended December 31, 2020 (“2020 Form 10-K”), and analyzes the changes in the results of operations between the periods of May 18, 2021 through September 30, 2021 (“Current Successor YTD Period”), January 1, 2021, through May 17, 2021 (“Current Predecessor YTD Period”), the three months ended September 30, 2021 ("Current Successor Quarter"), the three months ended September 30, 2020 (“Prior Predecessor Quarter”) and the nine months ended September 30, 2020 ("Prior Predecessor YTD Period"). For definitions of commonly used natural gas and oil terms found in this Quarterly Report on Form 10-Q, please refer to the “Definitions” provided in this report and in our 2020 Form 10-K.
Gulfport is an independent natural gas-weighted exploration and production company with assets primarily located 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. Our strategy is to develop our assets in a manner that generates sustainable cash flow and improves margins and operating efficiencies, while improving our Environmental, Social and Governance ("ESG") and safety performance. To accomplish these goals, we allocate capital to projects we believe offer the highest rate of return and we deploy leading drilling and completion techniques and technologies in our development efforts. We believe our plan to generate free cash flow on an annual basis will allow us to further strengthen our balance sheet and ultimately return capital to shareholders.
Our results of operations as reported in our consolidated financial statements for the Current Successor Quarter, Current Successor YTD Period, and the Current Predecessor YTD Period are in accordance with GAAP. Although GAAP requires that we report on our results for these periods separately, management views our operating results for the nine months ended September 30, 2021 by combining the results of the Current Successor YTD Period and the Current Predecessor YTD Period ("Current Combined YTD Period") because management believes such presentation provides the most meaningful comparison of our results to prior periods. We do not believe reviewing these periods in isolation would be useful in identifying any trends in or reaching any conclusions regarding our overall operating performance. We believe the key performance indicators such as operating revenues and operating expenses for the Current Successor YTD Period combined with the Current Predecessor YTD Period provide more meaningful comparisons to other periods and are useful in understanding operational trends. Additionally, there were no changes in policies between the periods and any material impacts as a result of fresh start accounting were included within the discussion of these changes. These combined results do not comply with GAAP and have not been prepared as pro forma results under applicable regulations, but are presented because we believe they provide the most meaningful comparison of our results to prior periods.
Recent Developments
Emergence from voluntary reorganization under Chapter 11
On November 13, 2020, we and our subsidiaries filed voluntary petitions for relief under Chapter 11 of Title 11 of the United States Code in the United States Bankruptcy Court for the Southern District of Texas. The Chapter 11 Cases were being administered jointly under the caption In re Gulfport Energy Corporation, et al., Case No. 20-35562 (DRJ). The Bankruptcy Court confirmed the Plan and entered the confirmation order on April 28, 2021, and the Debtors emerged from the Chapter 11 Cases on the Emergence Date. On May 18, 2021, we began trading on the New York Stock Exchange under the symbol "GPOR".

Although we are no longer a debtor-in-possession, we operated as debtors-in-possession through the pendency of the Chapter 11 Cases. See Note 1 and Note 2 of the notes to our consolidated financial statements included in Item 1 of Part I of this report for a complete discussion of the Chapter 11 Cases.

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We believe we have emerged from the Chapter 11 Cases as a fundamentally stronger company, built to generate sustainable free cash flow with a strengthened balance sheet. As a result of the Chapter 11 Cases, we reduced our total indebtedness by $1.4 billion by issuing equity in a reorganized entity to the holders of our unsecured notes and allowed general unsecured claimants.

Chief Executive Officer
On September 2, 2021, we reached agreement with Timothy Cutt, effective immediately, to fully assume the role of Chief Executive Officer, dropping the "Interim" designation from his title.

New Credit Facility

On October 14, 2021, we entered into the New Credit Facility for an aggregate maximum principal amount of up to $1.5 billion, an initial borrowing base of $850.0 million and an initial aggregate elected commitment amount of $700.0 million. The New Credit Facility amends and refinances the Exit Credit Facility. See Note 17 for additional discussion of the New Credit Facility.
Share Repurchase Program
On November 1, 2021, our board of directors has approved a stock Repurchase Program to acquire up to $100.0 million of our outstanding New Common Stock. 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 us to acquire any specific number of shares of New Common Stock. We intend to purchase shares under the Repurchase Program opportunistically with available funds while maintaining sufficient liquidity to fund our capital development program. The Repurchase Program is authorized to extend through December 31, 2022 and may be suspended from time to time, modified, extended or discontinued by the board of directors at any time. Any shares of New Common Stock repurchased are expected to be cancelled.
COVID-19 Pandemic and Impact on Global Demand for Oil and Natural Gas

As a result of our business continuity measures, we have not experienced significant disruptions in executing our business operations due to COVID-19. While we did not experience significant disruptions to our operations in the first nine months of 2021, we are unable to predict the impact on our business, including our cash flows, liquidity, and results of operations in future periods due to numerous uncertainties. Restrictions may cause us, our suppliers and other business counterparties to experience operational delays, or delays in the delivery of materials and supplies. We expect the principal areas of operational risk for us are the availability and reliability of service providers and potential supply chain disruption. Additionally, the operations of our midstream service providers, on whom we rely for the transmission, gathering and processing of a significant portion of our produced natural gas, NGL and oil, may be disrupted or suspended in response to containing the outbreak, or the difficult economic environment may lead to the bankruptcy or closing of the facilities and infrastructure of our midstream service providers. This may result in substantial discount in the prices we receive for our produced natural gas, NGL and oil or result in the shut-in of producing wells or the delay or discontinuance of development plans for our properties.
We cannot predict the full impact that COVID-19 or the significant disruption and volatility currently being experienced in the oil and natural gas markets will have on our business, cash flows, liquidity, financial condition and results of operations at this time, due to numerous uncertainties. The ultimate impacts will depend on future developments and the timing and extent to which normal economic and operating conditions resume.
2021 Operational and Financial Highlights
During the third quarter of 2021, we had the following notable achievements:
In September 2021, we finalized a settlement agreement with TC Energy Corporation ("TC") which rejected the firm transportation contracts between us and TC without any further payment or obligation by us or TC. As a result of the settlement agreement, TC assigned its damages claims from such rejection to us. In exchange, we agreed to make a payment of $43.8 million in cash to TC. We expect to recover all, or substantially all, of such amount through future
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distributions with respect to the assigned claims, with a material portion expected to be received in the next twelve months.
In September 2021, we also reached an agreement in principle with Stingray Pressure Pumping LLC that fully resolves the longstanding litigation between the parties.
In September 2021, we completed the six-well Angelo pad in the Utica. In early October 2021, we brought the pad online at a combined gross production rate of 250 MMcfe per day.
On October 14, 2021, we amended and refinanced our Exit Credit Facility with the New Credit Facility. The amendment increased our elected commitment from $580 million to $700 million and increased our liquidity by more than $160 million.
2021 Production and Drilling Activity
Production Volumes
SuccessorPredecessor
Three Months Ended September 30, 2021Three Months Ended September 30, 2020
Natural gas (Mcf/day)
Utica 678,154 763,387 
SCOOP188,292 139,233 
Other— 40 
Total866,446 902,660 
Oil and condensate (Bbl/day)
Utica 958 1,579 
SCOOP4,335 3,204 
Other78 57 
Total5,371 4,840 
NGL (Bbl/day)
Utica2,516 2,917 
SCOOP9,918 7,128 
Other— 
Total12,434 10,047 
Combined (Mcfe/day)
Utica698,998 790,363 
SCOOP273,812 201,227 
Other471 393 
Total973,281 991,983 
Our total net production averaged approximately 973.3 MMcfe per day during the Current Successor Quarter, as compared to 992.0 MMcfe per day during the Prior Predecessor Quarter. The 2% decrease in production is largely the result of a decrease in the Utica due to timing of development activity in 2021 compared to the Prior Predecessor Quarter. We anticipate an increase in total net production during the fourth quarter of 2021 driven by our six-well Angelo development in the Utica turning to sales.
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SuccessorPredecessorNon-GAAP CombinedPredecessor
Period from May 18, 2021 through September 30, 2021Period from January 1, 2021 through May 17, 2021Nine Months Ended September 30, 2021Nine Months Ended September 30, 2020
Natural gas (Mcf/day)
Utica682,596 780,791 731,873 774,705 
SCOOP190,305 126,294 158,182 152,595 
Other38 63 51 44 
Total872,939 907,148 890,106 927,344 
Oil and condensate (Bbl/day)
Utica1,012 1,336 1,175 829 
SCOOP4,493 2,508 3,497 4,185 
Other76 35 55 73 
Total5,581 3,879 4,727 5,087 
NGL (Bbl/day)
Utica2,588 2,638 2,613 2,882 
SCOOP9,645 6,200 7,916 8,167 
Other— 
Total12,233 8,841