gpor-20240630-体育平台

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 June 30, 2024


☐			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)


Delaware		86-3684669
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)
713 Market Drive
Oklahoma City,	Oklahoma	73114
(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 class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.0001 par value per share

GPOR

The 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.

Large Accelerated filer ý Accelerated filer ¨ 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 July 29, 2024, 18,107,078 shares of the registrant’s common stock were outstanding.

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GULFPORT ENERGY CORPORATION

TABLE OF CONTENTS


		Page
PART I FINANCIAL INFORMATION

Item 1.	Consolidated Financial Statements (Unaudited):	4

	Consolidated Balance Sheets	4

	Consolidated Statements of Operations	5

	Consolidated Statements of Stockholders’ Equity	7

	Consolidated Statements of Cash Flows	9

	Notes to Consolidated Financial Statements	10

	1. Summary of Significant Accounting Policies	10

	2. Property and Equipment	12

	3. Long-Term Debt	13

	4. Mezzanine Equity	14

	5. Equity	15

	6. Stock-Based Compensation	16

	7. Restructuring Costs	18

	8. Earnings (Loss) Per Share	18

	9. Commitments and Contingencies	19

	10. Derivative Instruments	22

	11. Fair Value Measurements	26

	12. Revenue from Contracts with Customers	28

	13. Leases	28

	14. Income Taxes	30

	15. Related Party Transactions	30

	16. Subsequent Events	31

Item 2.	Management’s Discussion and Analysis of Financial Conditions and Results of Operations	32

	2024 Operational and Financial Highlights	32

	2024 Production and Drilling Activity	33

	Comparison of Quarter-to-Date	35

	Comparison of Year-to-Date	39

	Liquidity and Capital Resources	44

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	48

Item 4.	Controls and Procedures	49

PART II OTHER INFORMATION

Item 1.	Legal Proceedings	50

Item 1A.	Risk Factors	50

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	50

Item 3.	Defaults Upon Senior Securities	50

Item 4.	Mine Safety Disclosures	50

Item 5.	Other Information	50

Item 6.	Exhibits	51

Signatures		52

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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:

1145 Indenture. Agreement dated May 17, 2021 between the Company, UMB Bank, National Association, as trustee, and the guarantors party thereto, under section 1145 of the Bankruptcy Code for our 8.0% Senior Notes due 2026.

2026 Senior Notes. 8.0% Senior Notes due 2026.

4(a)(2) Indenture. Certain eligible holders made an election entitling such holders to receive senior notes issued pursuant to an indenture, dated as of May 17, 2021, by and among the Company, UMB Bank, National Association, as trustee, and the guarantors party thereto, under Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”) as opposed to its share of the up to $550 million aggregate principal amount of our Senior Notes due 2026. The 4(a)(2) Indenture’s terms are substantially similar to the terms of the 1145 Indenture. The primary differences between the terms of the 4(a)(2) Indenture and the terms of the 1145 Indenture are that (i) affiliates of the Issuer holding 4(a)(2) Notes are permitted to vote in determining whether the holders of the required principal amount of indenture securities have concurred in any direction or consent under the 4(a)(2) Indenture, while affiliates of the Issuer holding 1145 Notes will not be permitted to vote on such matters under the 1145 Indenture, (ii) the covenants of the 1145 Indenture (other than the payment covenant) require that the Issuer comply with the covenants of the 4(a)(2) Indenture, as amended, and (iii) the 1145 Indenture requires that the 1145 Securities be redeemed pro rata with the 4(a)(2) Securities and that the 1145 Indenture be satisfied and discharged if the 4(a)(2) Indenture is satisfied and discharged.

ASC. Accounting Standards Codification.

Bbl. One stock tank barrel, or 42 U.S. gallons liquid volume, used herein in reference to crude oil or other liquid hydrocarbons.

Board of Directors (Board). The board of directors of Gulfport Energy Corporation.

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.

Completion. The process of treating a drilled well followed by the installation of permanent equipment for the production of natural gas, oil and NGL.

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 senior secured reserve-based revolving credit facility effective as of October 14,2021, as amended by the Joinder, Commitment Increase and Borrowing Base Redetermination Agreement, and Third Amendment to Credit Agreement dated as of May 1, 2023 and reaffirmed as of April 18, 2024.

DD&A. Depreciation, depletion and amortization.

Disputed Claims Reserve. Reserve used to settle any pending claims of unsecured creditors that were in dispute as of the effective date of the Plan.

Emergence Date. 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.

GAAP. Accounting principles generally accepted in the United States of America.

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 Credit Facility or certain other debt.

Incentive Plan. Gulfport Energy Corporation Stock Incentive Plan effective on the Emergence Date.

Indentures. Collectively, the 1145 Indenture and the 4(a)(2) Indenture governing the 2026 Senior Notes.

LIBOR. London Interbank Offered Rate.

LOE. Lease operating expenses.

Marcellus. Refers to the Marcellus Play that includes the hydrocarbon bearing rock formations commonly referred to as the Marcellus formation located in the Appalachian Basin of the United States and Canada. Our acreage is located primarily in Belmont County in eastern Ohio.

MBbl. One thousand barrels of crude oil, condensate or natural gas liquids.

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Mcf. One thousand cubic feet of natural gas.

Mcfe. One thousand cubic feet of natural gas equivalent, with one barrel of NGL and crude oil being equivalent to 6,000 cubic feet of natural gas.

MMBtu. One million British thermal units.

MMcf. One million cubic feet of natural gas.

MMcfe. One million cubic feet of natural gas equivalent, with one barrel of NGL and crude oil being equivalent to 6,000 cubic feet of natural gas.

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.

Net Acres or Net Wells. Refers to the sum of fractional working interests owned in gross acres or gross wells.

NYMEX. New York Mercantile Exchange.

Parent. Gulfport Energy Corporation.

Plan. The Amended Joint Chapter 11 Plan of Reorganization of Gulfport Energy Corporation and Its Debtor Subsidiaries.

Repurchase Program. A stock repurchase program to acquire up to $650 million of Gulfport's outstanding common stock. It is authorized to extend through December 31, 2024, and may be suspended from time to time, modified, extended or discontinued by the Board of Directors at any time.

RTSR. Relative total shareholder return.

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.

SOFR. Secured Overnight Financing Rate.

TSR. Total shareholder return.

Utica. Refers to the Utica Play that includes the hydrocarbon bearing rock formations commonly referred to as the Utica 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.

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Cautionary Note Regarding Forward-Looking Statements

This Form 10-Q may include forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the Private Securities Litigation Reform Act of 1995, that are subject to risks and uncertainties. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. In some cases, you can identify forward looking statements by terms such as “may,” “will,” “should,” “could,” “would,” “expects,” “plans,” “anticipates,” “intends,” “believes,” “estimates,” “projects,” “predicts,” “potential” and similar expressions intended to identify forward-looking statements. All statements, other than statements of historical facts, included in this Form 10-Q that address activities, events or developments that we expect or anticipate will or may occur in the future, including the expected impact of the war in Ukraine and the conflict in the Middle East on our business, our industry and the global economy, estimated future production and net revenues from oil and gas reserves and the present value thereof, future capital expenditures (including the amount and nature thereof), share repurchases, business strategy and measures to implement strategy, competitive strength, goals, expansion and growth of our business and operations, plans, references to future success, reference to intentions as to future matters and other such matters are forward-looking statements.

These forward-looking statements are largely based on our expectations and beliefs concerning future events, which reflect estimates and assumptions made by our management. These estimates and assumptions reflect our best judgment based on currently known market conditions and other factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control.

Although we believe our estimates and assumptions to be reasonable, they are inherently uncertain and involve a number of risks and uncertainties that are beyond our control. In addition, management's assumptions about future events may prove to be inaccurate. Management cautions all readers that the forward-looking statements contained in this Form 10-Q are not guarantees of future performance, and we cannot assure any reader that those statements will be realized or the forward-looking events and circumstances will occur. Actual results may differ materially from those anticipated or implied in the forward-looking statements due to the factors listed in Item 1A. “Risk Factors” and Item 7. “Management's Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2023 and elsewhere in this Form 10-Q. All forward-looking statements speak only as of the date of this Form 10-Q.

All forward-looking statements, expressed or implied, included in this Quarterly Report are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that we or persons acting on our behalf may issue.

Except as otherwise required by applicable law, we disclaim any duty to update any forward-looking statements, all of which are expressly qualified by the statements in this section, to reflect events or circumstances after the date of this Quarterly Report.

We may use the Investors section of our website (5if.hkinternetwebcentre.com) to communicate with investors. It is possible that the financial and other information posted there could be deemed to be material information. The information on our website is not part of this Quarterly Report on Form 10-Q.

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GULFPORT ENERGY CORPORATION

CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)


	June 30, 2024		December 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	1,233	$	1,929
Accounts receivable—oil, natural gas, and natural gas liquids sales	94,346		122,479
Accounts receivable—joint interest and other	21,210		22,221
Prepaid expenses and other current assets	6,239		16,951
Short-term derivative instruments	147,243		233,226
Total current assets	270,271		396,806
Property and equipment:
Oil and natural gas properties, full-cost method
Proved oil and natural gas properties	3,171,811		2,904,519
Unproved properties	218,399		204,233
Other property and equipment	10,810		9,165
Total property and equipment	3,401,020		3,117,917
Less: accumulated depletion, depreciation and amortization	(1,024,142)		(865,618)
Total property and equipment, net	2,376,878		2,252,299
Other assets:
Long-term derivative instruments	38,220		47,566
Deferred tax asset	517,890		525,156
Operating lease assets	7,844		14,299
Other assets	27,140		31,487
Total other assets	591,094		618,508
Total assets	$	3,238,243	$	3,267,613
Liabilities, Mezzanine Equity and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued liabilities	$	290,978	$	309,532
Short-term derivative instruments	43,838		21,963
Current portion of operating lease liabilities	6,888		12,959
Total current liabilities	341,704		344,454
Non-current liabilities:
Long-term derivative instruments	20,941		18,602
Asset retirement obligation	31,438		29,941
Non-current operating lease liabilities	956		1,340
Long-term debt	679,503		667,382
Total non-current liabilities	732,838		717,265
Total liabilities	$	1,074,542	$	1,061,719
Commitments and contingencies (Note 9)
Mezzanine equity:
Preferred stock - $0.0001 par value, 110.0 thousand shares authorized, 43.8 thousand issued and outstanding at June 30, 2024, and 44.2 thousand issued and outstanding at December 31, 2023	43,788		44,214
Stockholders’ equity:
Common stock - $0.0001 par value, 42.0 million shares authorized, 18.1 million issued and outstanding at June 30, 2024, and 18.3 million issued and outstanding at December 31, 2023	2		2
Additional paid-in capital	249,038		315,726
Common stock held in reserve, 0 shares at June 30, 2024 and 62.0 thousand shares at December 31, 2023	—		(1,996)
Retained earnings	1,871,571		1,847,948
Treasury stock, at cost - 4.6 thousand shares at June 30, 2024 and 0 shares at December 31, 2023	(698)		—
Total stockholders’ equity	$	2,119,913	$	2,161,680
Total liabilities, mezzanine equity and stockholders’ equity	$	3,238,243	$	3,267,613

See accompanying notes to consolidated financial statements.

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GULFPORT ENERGY CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands)

(Unaudited)


	Three Months Ended June 30, 2024		Three Months Ended June 30, 2023
REVENUES:
Natural gas sales	$	144,458	$	159,246
Oil and condensate sales	19,127		22,602
Natural gas liquid sales	26,147		26,070
Net (loss) gain on natural gas, oil and NGL derivatives	(8,615)		96,788
Total revenues	181,117		304,706
OPERATING EXPENSES:
Lease operating expenses	15,817		16,155
Taxes other than income	7,018		7,938
Transportation, gathering, processing and compression	86,529		85,664
Depreciation, depletion and amortization	78,553		80,148
General and administrative expenses	10,752		8,611
Restructuring costs	—		2,893
Accretion expense	567		714
Total operating expenses	199,236		202,123
(LOSS) INCOME FROM OPERATIONS	(18,119)		102,583
OTHER EXPENSE (INCOME):
Interest expense	15,158		13,727
Other, net	522		(4,831)
Total other expense	15,680		8,896
(LOSS) INCOME BEFORE INCOME TAXES	(33,799)		93,687
INCOME TAX BENEFIT:
Current	—		—
Deferred	(7,587)		—
Total income tax benefit	(7,587)		—
NET (LOSS) INCOME	$	(26,212)	$	93,687
Dividends on preferred stock	(1,095)		(1,278)
Participating securities - preferred stock	—		(14,044)
NET (LOSS) INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS	$	(27,307)	$	78,365
NET (LOSS) INCOME PER COMMON SHARE:
Basic	$	(1.51)	$	4.23
Diluted	$	(1.51)	$	4.18
Weighted average common shares outstanding—Basic	18,144		18,518
Weighted average common shares outstanding—Diluted	18,144		18,805

See accompanying notes to consolidated financial statements.

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GULFPORT ENERGY CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands)

(Unaudited)


	Six Months Ended June 30, 2024		Six Months Ended June 30, 2023
REVENUES:
Natural gas sales	$	332,744	$	441,780
Oil and condensate sales	40,828		53,316
Natural gas liquid sales	54,253		65,982
Net gain on natural gas, oil and NGL derivatives	36,521		474,849
Total revenues	464,346		1,035,927
OPERATING EXPENSES:
Lease operating expenses	32,625		36,017
Taxes other than income	15,278		18,633
Transportation, gathering, processing and compression	173,148		173,281
Depreciation, depletion and amortization	158,576		159,242
General and administrative expenses	19,950		17,344
Restructuring costs	—		4,762
Accretion expense	1,122		1,478
Total operating expenses	400,699		410,757
INCOME FROM OPERATIONS	63,647		625,170
OTHER EXPENSE (INCOME):
Interest expense	30,161		27,483
Other, net	397		(19,054)
Total other expense	30,558		8,429
INCOME BEFORE INCOME TAXES	33,089		616,741
INCOME TAX EXPENSE:
Current	—		—
Deferred	7,266		—
Total income tax expense	7,266		—
NET INCOME	$	25,823	$	616,741
Dividends on preferred stock	(2,200)		(2,585)
Participating securities - preferred stock	(3,469)		(92,611)
NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS	$	20,154	$	521,545
NET INCOME PER COMMON SHARE:
Basic	$	1.11	$	27.91
Diluted	$	1.09	$	27.60
Weighted average common shares outstanding—Basic	18,169		18,688
Weighted average common shares outstanding—Diluted	18,573		18,930

See accompanying notes to consolidated financial statements.

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GULFPORT ENERGY CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands)

(Unaudited)


	Common Stock			Common Stock Held in Reserve			Treasury Stock		Paid-in Capital		Retained Earnings		Total Stockholders’ Equity
	Shares	Amount		Shares	Amount
Balance at January 1, 2023	19,097	$	2	(62)	$	(1,996)	$	(286)	$	449,243	$	381,872	$	828,835
Net income	—	—		—	—		—		—		523,054		523,054
Stock compensation	—	—		—	—		—		3,069		—		3,069
Repurchase of common stock under Repurchase Program	(457)	—		—	—		(201)		(33,001)		—		(33,202)
Issuance of common stock upon vesting of share-based awards	5	—		—	—		—		—		—		—
Common stock withheld for income taxes on share-based awards	(2)	—		—	—		—		(287)		—		(287)
Dividends on preferred stock	—	—		—	—		—		—		(1,307)		(1,307)
Balance at March 31, 2023	18,643	$	2	(62)	$	(1,996)	$	(487)	$	419,024	$	903,619	$	1,320,162
Net income	—	—		—	—		—		—		93,687		93,687
Conversion of preferred stock	431	—		—	—		—		5,836		—		5,836
Stock compensation	—	—		—	—		—		3,834		—		3,834
Repurchase of common stock under Repurchase Program	(448)	—		—	—		487		(43,117)		—		(42,630)
Issuance of common stock upon vesting of share-based awards	50	—		—	—		—		—		—		—
Common stock withheld for income taxes on share-based awards	(18)	—		—	—		—		(1,493)		—		(1,493)
Dividends on preferred stock	—	—		—	—		—		(2)		(1,278)		(1,280)
Balance at June 30, 2023	18,658	$	2	(62)	$	(1,996)	$	—	$	384,082	$	996,028	$	1,378,116

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GULFPORT ENERGY CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY CONTINUED

(In thousands)

(Unaudited)


	Common Stock			Common Stock Held in Reserve			Treasury Stock		Paid-in Capital		Retained Earnings		Total Stockholders’ Equity
	Shares	Amount		Shares	Amount
Balance at January 1, 2024	18,288	$	2	(62)	$	(1,996)	$	—	$	315,726	$	1,847,948	$	2,161,680
Net income	—	—		—	—		—		—		52,035		52,035
Conversion of preferred stock	1	—		—	—		—		11		—		11
Stock compensation	—	—		—	—		—		3,587		—		3,587
Repurchase of common stock under Repurchase Program	(210)	—		—	—		—		(29,788)		—		(29,788)
Issuance of common stock held in reserve	—	—		62	1,996		—		—		—		1,996
Issuance of common stock upon vesting of share-based awards	18	—		—	—		—		—		—		—
Common stock withheld for income taxes on share-based awards	(8)	—		—	—		—		(1,086)		—		(1,086)
Dividends on preferred stock	—	—		—	—		—		—		(1,105)		(1,105)
Balance at March 31, 2024	18,089	$	2	—	$	—	$	—	$	288,450	$	1,898,878	$	2,187,330
Net loss	—	—		—	—		—		—		(26,212)		(26,212)
Conversion of preferred stock	30	—		—	—		—		415		—		415
Stock compensation	—	—		—	—		—		4,990		—		4,990
Repurchase of common stock under Repurchase Program	(156)	—		—	—		(698)		(24,319)		—		(25,017)
Issuance of common stock upon vesting of share-based awards	303	—		—	—		—		—		—		—
Common stock withheld for income taxes on share-based awards	(129)	—		—	—		—		(20,498)		—		(20,498)
Dividends on preferred stock	—	—		—	—		—		—		(1,095)		(1,095)
Balance at June 30, 2024	18,137	$	2	—	$	—	$	(698)	$	249,038	$	1,871,571	$	2,119,913

See accompanying notes to consolidated financial statements.

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GULFPORT ENERGY CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Six Months Ended June 30, 2024		Six Months Ended June 30, 2023
Cash flows from operating activities:
Net income	$	25,823	$	616,741
Adjustments to reconcile net income to net cash provided by operating activities:
Depletion, depreciation and amortization	158,576		159,242
Net gain on derivative instruments	(36,522)		(474,849)
Net cash receipts on settled derivative instruments	156,065		52,886
Deferred income tax expense	7,266		—
Stock-based compensation expense	5,746		5,043
Other, net	3,024		4,184
Changes in operating assets and liabilities, net	(8,491)		48,159
Net cash provided by operating activities	311,487		411,406
Cash flows from investing activities:
Additions to oil and natural gas properties	(244,851)		(283,406)
Proceeds from sale of oil and natural gas properties	—		2,648
Other, net	(1,647)		(835)
Net cash used in investing activities	(246,498)		(281,593)
Cash flows from financing activities:
Principal payments on Credit Facility	(511,000)		(518,000)
Borrowings on Credit Facility	523,000		472,000
Debt issuance costs and loan commitment fees	(106)		(6,920)
Dividends on preferred stock	(2,200)		(2,587)
Repurchase of common stock under Repurchase Program	(38,793)		(54,085)
Repurchase of common stock under Repurchase Program - related party	(15,002)		(20,431)
Shares exchanged for tax withholdings	(21,584)		(1,780)
Net cash used in financing activities	(65,685)		(131,803)
Net change in cash and cash equivalents	(696)		(1,990)
Cash and cash equivalents at beginning of period	1,929		7,259
Cash and cash equivalents at end of period	$	1,233	$	5,269

See accompanying notes to consolidated financial statements.

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GULFPORT ENERGY CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Company

Gulfport Energy Corporation (the "Company" or "Gulfport") is an independent natural gas-weighted exploration and production company focused on the production of natural gas, crude oil and NGL in the United States. The Company's principal properties are located in eastern Ohio targeting the Utica and Marcellus and in central Oklahoma targeting the SCOOP Woodford and Springer formations.

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 six months ended June 30, 2024, and the six months ended June 30, 2023. The Company's annual report on Form 10-K for the year ended December 31, 2023, should be read in conjunction with this Form 10-Q. 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.

Recently Issued Accounting Pronouncements and Disclosure Rules

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (Topic 280). The amendments require disclosure for each reportable segment, the significant expense categories and amounts that are regularly provided to the chief operating decision-maker (CODM) and included in each reported measure of a segment’s profit or loss. Additionally, this ASU enhances interim disclosure requirements and provides new segment disclosure requirements for entities with a single reportable segment. ASU 2023-07 is effective retrospectively for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the impact of this standard on our disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes: Improvements to Income Tax Disclosures (Topic 740). The amendment requires annual disclosure of additional categories of information about federal, state, and foreign income taxes in the rate reconciliation table and to provide more details about the reconciling items in some categories if the items meet a quantitative threshold. Additionally, the amendment requires disclosure of annual income taxes paid (net of refunds received) disaggregated by federal, state, and foreign taxes and to disaggregate the information by jurisdiction based on a quantitative threshold. ASU 2023-09 is effective for the Company’s annual reporting periods beginning after December 15, 2024, with early adoption permitted, and should be applied on a prospective basis, with a retrospective option. We are currently evaluating the effect that adoption of ASU 2023-09 will have on our disclosures.

In March 2024, the Securities and Exchange Commission ("SEC") issued final climate-related disclosure rules that will require disclosure of material climate-related risks and material direct greenhouse gas emissions from operations owned or controlled (Scope 1) and/or material indirect greenhouse gas emissions from purchased energy consumed in owned or controlled operations (Scope 2). Additionally, the rules require disclosure in the notes to the financial statements of the effects of severe weather events and other natural conditions, subject to certain materiality thresholds. In April 2024, the SEC issued an order to stay the rules pending the completion of judicial review of multiple petitions challenging the rules. The SEC has indicated that it will publish a new effective date for the rules, if ultimately implemented, at the conclusion of the stay. We are in the process of analyzing the impact of the rules on our related disclosures.

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Reclassification

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 income or total operating cash flows.

Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities consisted of the following (in thousands):


	June 30, 2024		December 31, 2023
Revenue payable and suspense	$	119,769	$	148,598
Accounts payable	53,492		43,517
Accrued capital expenditures	39,597		38,322
Accrued transportation, gathering, processing and compression	36,138		32,849
Accrued contract rejection damages and shares held in reserve	—		1,996
Other accrued liabilities	41,982		44,250
Total accounts payable and accrued liabilities	$	290,978	$	309,532

Other, net

As part of its Chapter 11 Cases and restructuring efforts, 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"). During the first quarter of 2023, Gulfport finalized a settlement agreement with Rover that was approved by the Bankruptcy Court on February 21, 2023. Pursuant to the settlement agreement, Gulfport and Rover agreed that the firm transportation contracts between them would be rejected. As part of the settlement, Gulfport paid a $1.0 million administrative claim, which is included in Other, net. Additionally, on February 24, 2023, Gulfport received an additional $17.8 million interim distribution for its TC claim, which is also included in Other, net. Other, net in the second quarter of 2023 included a $5.0 million recoupment of previously placed collateral for certain firm transportation commitments during our Chapter 11 Cases.

Supplemental Cash Flow and Non-Cash Information (in thousands)


	Six Months Ended June 30, 2024		Six Months Ended June 30, 2023
Supplemental disclosure of cash flow information:
Interest payments, net of amounts capitalized	$	28,263	$	26,122
Changes in operating assets and liabilities, net:
Accounts receivable - oil, natural gas, and natural gas liquid sales	$	28,133	$	186,300
Accounts receivable - joint interest and other	1,011		3,595
Accounts payable and accrued liabilities	(37,017)		(140,832)
Prepaid expenses	(649)		(973)
Other assets	31		69
Total changes in operating assets and liabilities, net	$	(8,491)	$	48,159
Supplemental disclosure of non-cash transactions:
Capitalized stock-based compensation	$	2,830	$	1,861
Asset retirement obligation capitalized	$	375	$	73
Asset retirement obligation removed due to divestiture and settlements	$	—	$	(919)
Release of common stock held in reserve	$	1,996	$	—

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2.PROPERTY AND EQUIPMENT

The major categories of property and equipment and related accumulated DD&A are as follows (in thousands):


	June 30, 2024		December 31, 2023
Proved oil and natural gas properties	$	3,171,811	$	2,904,519
Unproved properties	218,399		204,233
Other depreciable property and equipment	10,424		8,779
Land	386		386
Total property and equipment	3,401,020		3,117,917
Accumulated DD&A	(1,024,142)		(865,618)
Property and equipment, net	$	2,376,878	$	2,252,299

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 June 30, 2024 and 2023, the net book value of the Company's oil and gas properties was below the calculated ceiling. As a result, the Company did not record an impairment of its oil and natural gas properties for the three or six months ended June 30, 2024 or 2023.

Lower natural gas, oil and NGL prices can reduce the value of the Company’s assets. In addition to commodity prices, the Company’s production rates, levels of proved reserves, future development costs, transfers of unevaluated properties and other factors will determine its actual ceiling test calculation and impairment analysis in future periods. Given the decline of commodity prices in 2023 and 2024 and the current pricing outlook for the remainder of 2024, the Company believes a non-cash impairment of its assets is reasonably likely to occur in the third quarter of 2024. Any such ceiling test impairment could be material to our net earnings; however, given the inter-relationship of the various judgements made to estimate proved reserves, it is impractical to estimate the potential changes in these estimates and their impact on the impairment.

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 $6.3 million and $12.0 million, for the three and six months ended June 30, 2024, respectively, and $5.4 million and $10.5 million for the three and six months ended June 30, 2023, 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 non-producing properties excluded from amortization by area (in thousands):


	June 30, 2024		December 31, 2023
Utica & Marcellus	$	193,309	$	177,888
SCOOP	25,090		26,345
Total unproved properties	$	218,399	$	204,233

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Asset Retirement Obligation

The following table provides a reconciliation of the Company’s asset retirement obligation for the six months ended June 30, 2024 and 2023 (in thousands):


	Six Months Ended June 30, 2024		Six Months Ended June 30, 2023
Asset retirement obligation, beginning of period	$	29,941	$	33,171
Liabilities incurred	375		73
Liabilities settled	—		(165)
Liabilities removed due to divestitures	—		(919)
Accretion expense	1,122		1,478
Total asset retirement obligation, end of period	$	31,438	$	33,638

3.LONG-TERM DEBT

Long-term debt consisted of the following items as of June 30, 2024 and December 31, 2023 (in thousands):


	June 30, 2024		December 31, 2023
8.0% senior unsecured notes due 2026	$	550,000	$	550,000
Credit Facility due 2027	130,000		118,000
Net unamortized debt issuance costs	(497)		(618)
Total debt, net	679,503		667,382
Less: current maturities of long-term debt	—		—
Total long-term debt, net	$	679,503	$	667,382

Credit Facility

On May 1, 2023, the Company entered into that certain Joinder, Commitment Increase and Borrowing Base Redetermination Agreement, and Third Amendment to Credit Agreement (the “Third Amendment”) which amended the Company’s Credit Facility. The Third Amendment, among other things, (a) increased the aggregate elected commitment amounts under the Credit Facility from $700 million to $900 million, (b) increased the borrowing base under the Credit Facility from $1 billion to $1.1 billion, (c) increased the excess cash threshold under the Credit Facility from $45 million to $75 million, and (d) extended the maturity date under the Credit Facility from October 14, 2025 to the earlier of (i) four years from the closing date of the Third Amendment and (ii) the 91st day prior to the maturity date of the 2026 Senior Notes or any other permitted senior notes or any permitted refinancing debt under the Credit Facility having an aggregate outstanding principal amount equal to or exceeding $100 million; provided that such notes have not been refinanced, redeemed or repaid in full on or prior to such 91st day. On April 18, 2024, Gulfport completed its semi-annual borrowing base redetermination under its Credit Facility during which the borrowing base was reaffirmed at $1.1 billion with elected commitments remaining at $900 million.

The Credit Facility bears interest at a rate equal to, at the Company’s election, either (a) SOFR benchmark 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 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 Credit Facility. The Company is also required to pay customary letter of credit and fronting fees.

The Credit Facility 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 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).

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The Credit Facility 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.

As of June 30, 2024, the Company had $130.0 million outstanding borrowings under the Credit Facility, $63.8 million in letters of credit outstanding and was in compliance with all covenants under the credit agreement.

For the three and six months ended June 30, 2024, the Credit Facility bore interest at a weighted average rate of 8.33% and 8.33%, respectively.

The borrowing base is redetermined semiannually on or around May 1 and November 1 of each year.

2026 Senior Notes

In May 2021, the Company issued $550 million aggregate principal amount of its 8.0% senior notes due 2026. The notes are guaranteed on a senior unsecured basis by each of the Company's subsidiaries that guarantee the Credit Facility. Interest on the 2026 Senior Notes is payable semi-annually, on June 1 and December 1 of each year. The 2026 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 and mature on May 17, 2026.

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 2026 Senior Notes are rated investment grade, certain covenants will be terminated and cease to apply.

Capitalization of Interest

The Company capitalized $1.2 million and $2.4 million in interest expense for the three and six months ended June 30, 2024, respectively and $1.0 million and $1.8 million for the three and six months ended June 30, 2023, respectively.

Fair Value of Debt

At June 30, 2024, the carrying value of the outstanding debt represented by the 2026 Senior Notes was $549.5 million. Based on the quoted market prices (Level 1), the fair value of the 2026 Senior Notes was determined to be $556.1 million at June 30, 2024.

4.MEZZANINE EQUITY

The Company's amended and restated certificate of incorporation with the Delaware Secretary of State provides for, among other things, (i) the authority to issue 42 million shares of common stock with a par value of $0.0001 per share and (ii) the designation of 110,000 shares of preferred stock, with a par value of $0.0001 per share and a liquidation preference of $1,000 per share (the "Liquidation Preference").

Preferred Stock

In May 2021, the Company issued 55,000 shares of preferred stock.

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Holders of preferred stock are entitled to receive cumulative quarterly dividends at a rate of 10% per annum of the Liquidation Preference with respect to cash dividends and 15% per annum of the Liquidation Preference with respect to dividends paid in kind as additional shares of preferred stock (“PIK Dividends”). Gulfport currently has the option to pay either cash dividends or PIK Dividends on a quarterly basis.

Each holder of shares of 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 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 shares of preferred stock outstanding at June 30, 2024 would convert to approximately 3.1 million shares of common stock if all holders of preferred stock exercised their Conversion Right.

Gulfport may redeem all, but not less than all, of the outstanding shares of preferred stock by notice to the holders of preferred stock, at the greater of (i) the aggregate value of the 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 preferred stock would have been converted if such shares were converted pursuant to the Conversion Right at the time of such redemption and (ii) 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 preferred stock by cash payment of the Redemption Price per share of 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 preferred stock, the Company is required to redeem a pro rata portion of each holder’s shares of preferred stock.

The preferred stock has no stated maturity and will remain outstanding indefinitely unless repurchased or redeemed by Gulfport or converted into common stock.

The preferred stock has been classified as mezzanine equity in the accompanying consolidated balance sheets due to the redemption features noted above.

Dividends and Conversions

The Company paid $1.1 million and $2.2 million of cash dividends to holders of our preferred stock during the three and six months ended June 30, 2024, respectively, and $1.3 million and $2.6 million during the three and six months ended June 30, 2023, respectively.

The following table summarizes activity of the Company’s preferred stock for the six months ended June 30, 2024 and 2023:


	Six Months Ended June 30, 2024	Six Months Ended June 30, 2023
Preferred stock, beginning of period	44,214	52,295
Conversion of preferred stock	(426)	(5,836)
Preferred stock, end of period	43,788	46,459

5.EQUITY

In May 2021, the Company filed an amended and restated certificate of incorporation with the Delaware Secretary of State to provide for, among other things, (i) the authority to issue 42 million shares of common stock with a par value of $0.0001 per share and (ii) the designation of 110,000 shares of preferred stock, with a par value of $0.0001 per share and a Liquidation Preference of $1,000 per share.

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Common Stock

In May 2021, Gulfport issued approximately 19.8 million shares of common stock and 1.7 million shares of common stock were issued to the Disputed Claims Reserve.

In January 2024, the remaining 62,000 shares in the Disputed Claims Reserve were issued to certain claimants. There are no remaining shares in the Disputed Claims Reserve subsequent to the January 2024 issuance.

Common Stock Offering

On June 26, 2023, Gulfport completed an underwritten public offering of 1.5 million shares of its common stock by certain stockholders at a price to the public of $95.00 per share. Gulfport did not sell any of its common stock as part of this offering and did not receive any proceeds from the sale of the shares sold by the selling stockholders.

Concurrent with the closing of the offering, Gulfport purchased 263,158 shares of its common stock at $95.00 per share. The repurchase was part of the Company's existing Repurchase Program discussed below.

Share Repurchase Program

In November 2021 the Company's Board of Directors approved the Repurchase Program to acquire up to $100 million of common stock, which was subsequently increased to $650 million and extended through December 31, 2024. 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 common stock. The Company intends to purchase shares under the Repurchase Program with available funds while maintaining sufficient liquidity to fund its capital development program. The Repurchase Program may be suspended from time to time, modified, extended or discontinued by the Board of Directors at any time.

The following table summarizes activity under the Repurchase Program for the six months ended June 30, 2024 (number of shares and dollar value of shares purchased shown in thousands):


	Total Number of Shares Purchased	Dollar Value of Shares Purchased		Average Price Paid Per Share
First quarter 2024	210	$	29,492	$	140.39
Second quarter 2024	161	25,000		155.65
Total	371	$	54,492	$	147.00

As of June 30, 2024, the Company has repurchased 4.7 million shares for $454.1 million at a weighted average price of $95.87 per share since the inception of the Repurchase Program.

6.STOCK-BASED COMPENSATION

In May 2021, the Board of Directors adopted the Incentive Plan with a share reserve equal to 2.8 million shares of 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 both restricted stock units and performance vesting restricted stock units to employees and directors pursuant to the Incentive Plan, as discussed below. During the three and six months ended June 30, 2024, the Company's stock-based compensation expense was $5.0 million and $8.6 million, respectively, of which the Company capitalized $1.6 million and $2.8 million, respectively, relating to its exploration and development efforts. During the three and six months ended June 30, 2023, the Company's stock-based compensation expense was $3.0 million and $5.6 million, respectively, of which the Company capitalized $1.0 million and $1.9 million, respectively, 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. As of June 30, 2024, the Company has awarded an aggregate of approximately 444,493 restricted stock units and approximately 462,982 performance vesting restricted stock units under the Incentive Plan.

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The vesting for certain share-based awards was accelerated in the first three months of 2023 in conjunction with the restructuring activities described in Note 7 and is included in restructuring costs in the accompanying consolidated statement of operations.

The following tables summarizes activity for the six months ended June 30, 2024 and 2023:


	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, 2024	193,602	$	83.89	255,578	$	54.40
Granted	69,436	152.54		58,346	156.00
Vested	(17,720)	75.96		—	—
Forfeited/canceled	(747)	99.88		—	—
Unvested shares as of March 31, 2024	244,571	$	103.91	313,924	$	73.28
Granted(1)	6,040	155.61		130,012	48.65
Vested	(37,665)	95.83		(265,797)	48.65
Forfeited/canceled	(989)	117.19		—	—
Unvested shares as of June 30, 2024	211,957	$	106.75	178,139	$	92.06

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(1) The table includes the impacts of performance share units granted in a prior year that vested higher than 100% of target due to the Company's TSR performance compared to peers.


	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, 2023	197,772	$	77.49	190,804	$	52.15
Granted	43,415	77.84		68,726	56.57
Vested	(11,608)	70.86		—	—
Forfeited/canceled	(971)	87.68		(5,069)	47.67
Unvested shares as of March 31, 2023	228,608	$	77.85	254,461	$	53.43
Granted	55,041	94.53		15,094	66.66
Vested	(43,088)	86.28		—	—
Forfeited/canceled	(1,401)	89.08		(10,731)	50.69
Unvested shares as of June 30, 2023	239,160	$	80.10	258,824	$	54.32

The aggregate fair value of share-based awards that vested during the three and six months ended June 30, 2024, was approximately $48.1 million and $49.2 million, respectively, based on the stock price at the time of vesting. During the three and six months ended June 30, 2023, the aggregate fair value of share-based awards that vested was approximately $3.9 million and $4.8 million, respectively, based on the stock price at the time of vesting.

Restricted Stock Units

Restricted stock units awarded under the Incentive Plan generally vest over a period of 3 or 4 years in the case of employees and 1 or 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 June 30, 2024, was $17.3 million. The expense is expected to be recognized over a weighted average period of 2.06 years.

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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 TSR and (ii) the Company's 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 at the end of a three-year performance period, subject to earlier termination of the performance period in the event of a change in control. The grant date fair values were determined using the Monte Carlo simulation method and are being recorded ratably over the performance period.

The table below summarizes the assumptions used in the Monte Carlo simulation to determine the grant date fair value of awards granted during the six months ended June 30, 2024:


Grant date	January 24, 2023	March 3, 2023	April 3, 2023	March 1, 2024
Forecast period (years)	3	3	3	3
Risk-free interest rates	3.88%	4.64%	3.79%	4.36%
Implied equity volatility	87.2%	86.4%	70.8%	46.70%
Stock price on the date of grant	$72.99	$82.20	$79.50	$142.00

Unrecognized compensation expense as of June 30, 2024, related to performance vesting restricted shares was $10.8 million. The expense is expected to be recognized over a weighted average period of 2.17 years.

7.RESTRUCTURING COSTS

During the three and six months ended June 30, 2023, Gulfport recognized $2.9 million and $4.8 million, respectively, in personnel-related restructuring expenses associated with changes in the organizational structure and leadership team resulting from the appointment of Gulfport's new CEO in January 2023. Of these expenses, $0.8 million and $1.3 million, for the three and six months ended June 30, 2023, respectively, resulted from accelerated vesting of certain share-based grants, which are non-cash charges. As of June 30, 2023, there were no remaining employee termination liabilities for the impacted employees.

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 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 preferred stock and the treasury stock method is used to determine the dilutive impact of unvested restricted stock.

There were 0.3 million share-based awards that were considered anti-dilutive for the three months ended June 30, 2024, and 0.4 million share-based awards that were considered dilutive for the six months ended June 30, 2024. There were 0.3 million and 0.2 million share-based awards that were considered dilutive for the three months and six months ended June 30, 2023, respectively. There were 3.1 million potential shares of common stock issuable due to the Company's convertible preferred stock for each of the three and six months ended June 30, 2024. There were 3.3 million potential shares of common stock issuable due to the Company's convertible preferred stock for each of the three and six months ended June 30, 2023.

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Reconciliations of the components of basic and diluted net income (loss) per common share are presented in the tables below (in thousands):


	Three Months Ended June 30, 2024		Three Months Ended June 30, 2023
Net (loss) income	$	(26,212)	$	93,687
Dividends on preferred stock	(1,095)		(1,278)
Participating securities - preferred stock(1)	—		(14,044)
Net (loss) income attributable to common stockholders	$	(27,307)	$	78,365
Re-allocation of participating securities	—		182
Diluted net (loss) income attributable to common stockholders	$	(27,307)	$	78,547
Basic Shares	18,144		18,518
Dilutive Shares	18,144		18,805
Basic EPS	$	(1.51)	$	4.23
Dilutive EPS	$	(1.51)	$	4.18

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(1) Preferred stock represents participating securities because it participates in any dividends on shares of common stock on a pari passu, pro rata basis. However, preferred stock does not participate in undistributed net losses.


	Six Months Ended June 30, 2024		Six Months Ended June 30, 2023
Net income	$	25,823	$	616,741
Dividends on preferred stock	(2,200)		(2,585)
Participating securities - preferred stock(1)	(3,469)		(92,611)
Net income attributable to common stockholders	$	20,154	$	521,545
Re-allocation of participating securities	64		1,008
Diluted net income attributable to common stockholders	$	20,218	$	522,553
Basic Shares	18,169		18,688
Dilutive Shares	18,573		18,930
Basic EPS	$	1.11	$	27.91
Dilutive EPS	$	1.09	$	27.60

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9.COMMITMENTS AND CONTINGENCIES

Commitments

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 June 30, 2024, are set forth in the table below (in thousands):


Remaining 2024	$	111,569
2025	137,728
2026	134,257
2027	136,425
2028	136,581
Thereafter	600,031
Total	$	1,256,591

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 June 30, 2024, are set forth in the table below (MMBtu per day):


Remaining 2024			10,000
2025			68,000
2026			75,000
2027			12,000
Thereafter			—
Total			165,000

Other Operational Commitments

The Company entered into various contractual commitments to purchase inventory and other material to be used in future activities. The Company's commitment to purchase these materials spans 2024, with approximately $7.2 million remaining.

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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

The Company, along with other oil and gas companies, have been named as a defendant in a number of lawsuits where Plaintiffs assert their respective leases are limited to the Utica/Marcellus shale geological formations and allege that Defendants have willfully trespassed and illegally produced oil, natural gas, and other hydrocarbon products beyond these respective formations. They also allege that Defendants engaged in conversion and were unjustly enriched. Plaintiffs seek the full value of any production from below the Utica/Marcellus 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. On April 27, 2021, the Bankruptcy Court for the Southern District of Texas approved a settlement agreement in which the plaintiffs fully released the Company from all claims that accrued and any damages related to the period before the effective date of the Company’s Chapter 11 plan, which occurred on May 17, 2021. The plaintiffs are continuing to pursue alleged damages after May 17, 2021.

The Company received Notice and Finding of Violations ("NOV/FOVs") from the United States Environmental Protection Agency ("USEPA") alleging violations of the Clean Air Act at 17 locations in Ohio between 2013 and 2019. On January 22, 2020, the Company entered a Consent Decree with the Department of Justice and USEPA addressing Gulfport's failure to capture and control air emissions from storage vessels and to comply with associated inspection, recordkeeping, and reporting requirements. During the process of terminating the Consent Decree, the Company was informed that there were untimely repairs on a number of locations subject to the Company's Consent Decree that failed to comply with Subpart OOOO or Permit to Install and Operate Applications. On July 31, the Company received a NOV/FOV from USEPA related to the alleged untimely repairs. While these repairs have been completed, resolution of the matter may result in monetary sanctions exceeding $300,000.

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 its 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, it may, among other things, exclude a property from the transaction, require the seller to remediate the property to its satisfaction in an acquisition or agree to assume liability for the remediation of the property.

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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 NGL 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, costless collars and various types of option contracts. These contracts allow the Company to mitigate the impact of declines in future natural gas, oil and NGL prices by effectively locking in a floor price for a certain level of the Company’s production. However, these hedge contracts also limit the benefit to the Company in periods of favorable price movements.

The volume of production subject to commodity derivative instruments and the mix of the instruments are frequently evaluated and adjusted by management in response to changing market conditions. Gulfport may enter into commodity derivative contracts up to limitations set forth in its Credit Facility. The Company generally enters into commodity derivative contracts for approximately 30% to 70% of its forecasted current year annual production by the end of the first quarter of each fiscal year. The Company typically enters into commodity derivative contracts for the next 12 to 36 months. Gulfport does not enter into commodity derivative contracts for speculative purposes.

The Company does not currently have any commodity derivative transactions that have margin requirements or collateral provisions that would require payments prior to the scheduled settlement dates. The Company's commodity derivative contract counterparties are typically financial institutions and energy trading firms with investment-grade credit ratings. Gulfport routinely monitors and manages its exposure to counterparty risk by requiring specific minimum credit standards for all counterparties, actively monitoring counterparties' public credit ratings and avoiding the concentration of credit exposure by transacting with multiple counterparties. The Company has master netting agreements with some counterparties that allow the offsetting of receivables and payables in a default situation. As of June 30, 2024, our commodity derivative contracts were spread among 12 counterparties.

Fixed price swaps require that the Company receive a fixed price and pay a floating market price to the counterparty for the hedged commodity. They 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 Company has entered into natural gas, crude oil and NGL fixed price swap contracts based off the NYMEX Henry Hub, NYMEX WTI and Mont Belvieu C3 indices. Below is a summary of the Company’s open fixed price swap positions as of June 30, 2024.


	Index	Daily Volume	Weighted Average Price
Natural Gas		(MMBtu/d)	($/MMBtu)
Remaining 2024	NYMEX Henry Hub	400,000	$	3.77
2025	NYMEX Henry Hub	210,000	$	3.92
2026	NYMEX Henry Hub	30,000	$	3.62

Oil		(Bbl/d)	($/Bbl)
Remaining 2024	NYMEX WTI	500	$	77.50
2025	NYMEX WTI	2,000	$	74.50

NGL		(Bbl/d)	($/Bbl)
Remaining 2024	Mont Belvieu C3	2,500	$	30.25
2025	Mont Belvieu C3	2,000	$	30.09

Each two-way costless collar has a set floor and ceiling price for the hedged production. They are settled monthly based on differences between the floor and ceiling prices specified in the contract and the referenced settlement price. If the applicable monthly price indices are outside of the ranges set by the floor and ceiling prices in the collar contracts, the Company will cash-settle the difference with the hedge counterparty. When the referenced settlement price is less than the floor price in the contract, the Company receives an amount from the counterparty based on the price difference multiplied by the hedged contract volume. Similarly, when the referenced settlement price exceeds the ceiling price specified in the contract, the Company pays the counterparty an amount based on the price difference multiplied by the hedged contract volume. No payment is due from either party if the referenced settlement price is within the range set by the floor and ceiling prices.

The Company has entered into natural gas and crude oil costless collars based off the NYMEX Henry Hub and NYMEX WTI indices. Below is a summary of the Company's costless collar positions as of June 30, 2024.


	Index	Daily Volume	Weighted Average Floor Price		Weighted Average Ceiling Price
Natural Gas		(MMBtu/d)	($/MMBtu)		($/MMBtu)
Remaining 2024	NYMEX Henry Hub	225,000	$	3.36	$	5.14
2025	NYMEX Henry Hub	220,000	$	3.37	$	4.23

Oil		(Bbl/d)	($/Bbl)		($/Bbl)
Remaining 2024	NYMEX WTI	1,000	$	62.00	$	80.00

From time to time, the Company has sold natural gas call options in exchange for a premium, and used the associated premiums received to enhance the fixed price for a portion of the fixed price natural gas swaps. Each sold call option has an established ceiling price. If at the time of settlement the referenced settlement price exceeds the ceiling price, the Company pays its counterparty an amount equal to the difference between the referenced settlement price and the price ceiling multiplied by the hedged contract volumes. No payment is due from either party if the referenced settlement price is below the price ceiling. Below is a summary of the Company's open sold call option positions as of June 30, 2024.


	Index	Daily Volume	Weighted Average Price
Natural Gas		(MMBtu/d)	($/MMBtu)
Remaining 2024	NYMEX Henry Hub	202,000	$	3.33
2025	NYMEX Henry Hub	193,315	$	5.80

In addition, the Company has entered into natural gas basis swap positions. These instruments are arrangements that guarantee a fixed price differential to NYMEX Henry Hub from a specified delivery point. The Company receives the fixed price differential and pays the floating market price differential to the counterparty for the hedged commodity. As of June 30, 2024, the Company had the following natural gas basis swap positions open:


	Gulfport Pays	Gulfport Receives	Daily Volume	Weighted Average Fixed Spread
Natural Gas			(MMBtu/d)	($/MMBtu)
Remaining 2024	Rex Zone 3	NYMEX Plus Fixed Spread	150,000	$	(0.15)
Remaining 2024	NGPL TXOK	NYMEX Plus Fixed Spread	70,000	$	(0.31)
Remaining 2024	TETCO M2	NYMEX Plus Fixed Spread	230,000	$	(0.94)
2025	Rex Zone 3	NYMEX Plus Fixed Spread	90,000	$	(0.21)
2025	NGPL TXOK	NYMEX Plus Fixed Spread	40,000	$	(0.29)
2025	TETCO M2	NYMEX Plus Fixed Spread	210,000	$	(0.96)
2026	TETCO M2	NYMEX Plus Fixed Spread	40,000	$	(1.06)

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 June 30, 2024 and December 31, 2023 (in thousands):


	June 30, 2024		December 31, 2023
Short-term derivative asset	$	147,243	$	233,226
Long-term derivative asset	38,220		47,566
Short-term derivative liability	(43,838)		(21,963)
Long-term derivative liability	(20,941)		(18,602)
Total commodity derivative position	$	120,684	$	240,227

Gains and Losses

The following table presents the gain and loss recognized in net gain (loss) on natural gas, oil and NGL derivatives in the accompanying consolidated statements of operations for the three and six months ended June 30, 2024 and 2023 (in thousands):


	Net gain (loss) on derivative instruments
	Three Months Ended June 30, 2024		Three Months Ended June 30, 2023
Natural gas derivatives - fair value (losses) gains	$	(99,871)	$	37,792
Natural gas derivatives - settlement gains	91,251		49,444
Total (losses) gains on natural gas derivatives	(8,620)		87,236

Oil derivatives - fair value gains	595		2,258
Oil derivatives - settlement (losses) gains	(271)		369
Total gains on oil and condensate derivatives	324		2,627

NGL derivatives - fair value (losses) gains	(82)		4,218
NGL derivatives - settlement (losses) gains	(237)		2,707
Total (losses) gains on NGL derivatives	(319)		6,925

Total (losses) gains on natural gas, oil and NGL derivatives	$	(8,615)	$	96,788


	Net gain (loss) on derivative instruments
	Six Months Ended June 30, 2024		Six Months Ended June 30, 2023
Natural gas derivatives - fair value (losses) gains	$	(111,349)	$	411,940
Natural gas derivatives - settlement gains	157,702		49,271
Total gains on natural gas derivatives	46,353		461,211

Oil derivatives - fair value (losses) gains	(1,865)		6,990
Oil derivatives - settlement losses	(259)		(74)
Total (losses) gains on oil and condensate derivatives	(2,124)		6,916

NGL derivatives - fair value (losses) gains	(6,330)		3,033
NGL derivatives - settlement (losses) gains	(1,378)		3,689
Total (losses) gains on NGL derivatives	(7,708)		6,722

Total gains on natural gas, oil and NGL derivatives	$	36,521	$	474,849

Offsetting of Derivative Assets and Liabilities

As noted above, the Company records the fair value of derivative instruments on a gross basis. The following tables present 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 (in thousands):


	As of June 30, 2024
	Gross Assets (Liabilities) Presented in the Consolidated Balance Sheets		Gross Amounts Subject to Master Netting Agreements		Net Amount
Derivative assets	$	185,463	$	(61,343)	$	124,120
Derivative liabilities	$	(64,779)	$	61,343	$	(3,436)


	As of December 31, 2023
	Gross Assets (Liabilities) Presented in the Consolidated Balance Sheets		Gross Amounts Subject to Master Netting Agreements		Net Amount
Derivative assets	$	280,792	$	(30,866)	$	249,926
Derivative liabilities	$	(40,565)	$	30,866	$	(9,699)

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 records certain financial and non-financial assets and liabilities on the balance sheet at fair value. 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 (unadjusted) in active markets for identical assets and liabilities that the Company has the ability to access at the measurement date.

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 June 30, 2024 and December 31, 2023 (in thousands):


	June 30, 2024
	Level 1		Level 2		Level 3
Assets:
Derivative instruments	$	—	$	185,463	$	—
Contingent consideration arrangement	—		—		2,900
Total assets	$	—	$	185,463	$	2,900
Liabilities:
Derivative instruments	$	—	$	64,779	$	—


	December 31, 2023
	Level 1		Level 2		Level 3
Assets:
Derivative instruments	$	—	$	280,792	$	—
Contingent consideration arrangement	—		—		2,900
Total assets	$	—	$	280,792	$	2,900
Liabilities:
Derivative instruments	$	—	$	40,565	$	—

The Company estimates the fair value of all derivative instruments using industry-standard models that consider various assumptions, including current market and contractual prices