Wall Street expects a year-over-year increase in earnings on lower revenues when Gulfport Energy (GPOR) reports results for the quarter ended March 2024. While this widely-known consensus outlook is important in gauging the company's earnings picture, a powerful factor that could impact its near-term stock price is how the actual results compare to these estimates.The earnings report, which is expected to be released on April 30, 2024, might help the stock move higher if these key numbers are better than ex ...

Part I [Item 1. Business](index=13&type=section&id=ITEM%201.%20BUSINESS) Gulfport is a natural gas E&P company focused on its Appalachia and Anadarko assets to generate free cash flow [Business Overview and Strategy](index=13&type=section&id=Business%20Overview%20and%20Strategy) The company focuses on developing its Ohio and Oklahoma assets to generate cash flow and return capital to shareholders - Gulfport is an independent natural gas-weighted exploration and production company with principal properties in the **Utica/Marcellus** (eastern Ohio) and **SCOOP** (central Oklahoma) formations[58](index=58&type=chunk) - The company's strategy is to develop its assets to generate **sustainable cash flow**, improve margins, and return capital to shareholders[62](index=62&type=chunk) - Emerged from **Chapter 11 bankruptcy** on May 17, 2021, and began trading on the NYSE under the symbol "GPOR"[61](index=61&type=chunk) [2024 Outlook](index=13&type=section&id=2024%20Outlook) The company projects 2024 capital expenditures of $380-$420 million to support production of 1,045-1,080 MMcfe/day 2024 Guidance | Metric | Value | | :--- | :--- | | **Capital Expenditures** | $380 million - $420 million | | **Net Production** | 1,045 - 1,080 MMcfe/day | - The company plans to continue shareholder returns through its Repurchase Program, with **$250.4 million remaining** authorized as of year-end 2023[65](index=65&type=chunk) [Operating Areas and Reserves](index=14&type=section&id=Operating%20Areas%20and%20Reserves) As of year-end 2023, the company held 4.2 Tcfe of proved reserves with a PV-10 value of $2.4 billion Proved Reserves by Area (Dec 31, 2023) | Area | Total Proved (Bcfe) | % of Total | | :--- | :--- | :--- | | Utica & Marcellus | 3,160 | ~75% | | SCOOP | 1,053 | ~25% | | **Total** | **4,214** | **100%** | 2023 Proved Reserves Summary | Metric | Value | | :--- | :--- | | Total Proved Reserves | 4,214 Bcfe | | Proved Developed | 2,203 Bcfe | | Proved Undeveloped (PUD) | 2,011 Bcfe | | Standardized Measure | $2.38 billion | | PV-10 | $2.41 billion | - Changes in 2023 proved reserves included **+996 Bcfe** from extensions and discoveries, **-385 Bcfe** from production, and **-445 Bcfe** from net downward revisions[74](index=74&type=chunk) - Downward revisions were mainly due to development schedule changes and lower commodity prices, which saw the average Henry Hub price fall from **$6.36/MMBtu in 2022 to $2.64/MMBtu in 2023**[76](index=76&type=chunk) [Acreage, Wells, and Drilling Activity](index=19&type=section&id=Acreage%2C%20Wells%2C%20and%20Drilling%20Activity) At year-end 2023, Gulfport held approximately 235,000 net acres and 599.3 net productive wells Net Acreage Summary (Dec 31, 2023) | Area | Developed Net Acres | Undeveloped Net Acres | Total Net Acres | | :--- | :--- | :--- | :--- | | Utica & Marcellus | 121,387 | 72,058 | 193,445 | | SCOOP | 35,844 | 6,035 | 41,879 | | **Total** | **157,231** | **78,093** | **235,324** | - The company had a total of 1,533 gross (**599.3 net**) productive wells as of year-end 2023[90](index=90&type=chunk) - In 2023, Gulfport drilled **24 gross (21.9 net)** operated development wells, all of which were productive[93](index=93&type=chunk) [Production, Prices, and Costs](index=21&type=section&id=Production%2C%20Prices%2C%20and%20Costs) Production increased 7% in 2023, but average realized prices fell 58% due to a sharp decline in natural gas prices Production and Price Comparison (2023 vs. 2022) | Metric | 2023 | 2022 | | :--- | :--- | :--- | | **Production (MMcfe/day)** | 1,054 | 983 | | **Avg. Price w/o derivatives ($/Mcfe)** | $2.73 | $6.49 | | **Avg. Price w/ derivatives ($/Mcfe)** | $3.13 | $3.55 | | **Total Unit Production Costs ($/Mcfe)** | $1.17 | $1.34 | - The Utica & Marcellus region accounted for **74% of total production** in 2023, while the SCOOP region accounted for 26%[66](index=66&type=chunk)[68](index=68&type=chunk) [Human Capital Management](index=26&type=section&id=Human%20Capital%20Management) The company employed 226 people at year-end 2023, focusing on talent retention, diversity, and safety - Employee headcount was **226** as of December 31, 2023, a slight increase from 223 in the prior year[114](index=114&type=chunk) - The company is focused on diversity and inclusion, with diverse candidates representing almost **39% of new hires** in 2023 and over **60% of independent directors** being gender or ethnically diverse[116](index=116&type=chunk)[117](index=117&type=chunk) - Safety and environmental performance are emphasized, with key metrics being a component of every employee's annual incentive compensation[120](index=120&type=chunk) [Item 1A. Risk Factors](index=29&type=section&id=ITEM%201A.%20RISK%20FACTORS) The company faces significant risks from commodity price volatility, operational uncertainties, and extensive government regulation [Financial, Liquidity and Commodity Price Risks](index=29&type=section&id=Financial%2C%20Liquidity%20and%20Commodity%20Price%20Risks) Financial performance is highly sensitive to volatile commodity prices, hedging outcomes, and interest rate fluctuations - Revenues, cash flows, and profitability are significantly dependent on volatile natural gas, oil, and NGL prices; the Henry Hub spot price ranged from **$1.74 to $3.78 per MMBtu** in 2023[132](index=132&type=chunk)[133](index=133&type=chunk) - Commodity hedging may limit benefits from price increases and exposes the company to **counterparty default risk**[136](index=136&type=chunk)[137](index=137&type=chunk) - Total principal debt was approximately **$668.0 million** at year-end 2023; debt covenants and commitments may limit financial and operating flexibility[139](index=139&type=chunk) - Under the full cost accounting method, declines in commodity prices may trigger **non-cash write-downs (impairments)** of oil and natural gas properties[144](index=144&type=chunk)[145](index=145&type=chunk) [Industry, Business and Operational Risks](index=32&type=section&id=Industry%2C%20Business%20and%20Operational%20Risks) Operational risks include inaccurate reserve estimates, geographic concentration, and reliance on third-party infrastructure - Estimates of proved reserves are complex and subject to revision; approximately **48% of total estimated proved reserves were proved undeveloped (PUDs)** as of December 31, 2023, which require significant capital to recover[149](index=149&type=chunk)[151](index=151&type=chunk) - The company's producing properties are **geographically concentrated** in eastern Ohio and central Oklahoma, increasing vulnerability to regional risks[168](index=168&type=chunk) - Operations depend on third-party pipelines, gathering systems, and oilfield services, which are subject to **capacity constraints and cost fluctuations**[170](index=170&type=chunk)[171](index=171&type=chunk) - The company has minimum volume commitments with midstream providers, obligating it to pay fees regardless of actual throughput; as of Dec 31, 2023, this long-term obligation was approximately **$1.4 billion**[174](index=174&type=chunk) [Environmental, Legal and Regulatory Risks](index=39&type=section&id=Environmental%2C%20Legal%20and%20Regulatory%20Risks) Extensive and evolving regulations regarding emissions, hydraulic fracturing, and climate change could increase costs and restrict operations - Operations are subject to extensive federal, state, and local regulations, including new and proposed rules from the EPA and BLM to **reduce methane emissions**, which could significantly impact costs[180](index=180&type=chunk) - Regulatory initiatives concerning **seismic activity**, particularly related to wastewater disposal, could lead to operational delays and increased costs[183](index=183&type=chunk)[193](index=193&type=chunk) - **Climate change policies** and increasing attention to **ESG matters** could increase operating costs, reduce demand for oil and gas, and make securing capital more difficult[186](index=186&type=chunk)[188](index=188&type=chunk)[195](index=195&type=chunk) [Item 1C. Cybersecurity](index=45&type=section&id=ITEM%201C.%20CYBERSECURITY) Cybersecurity risk is managed through an ERM program and third-party monitoring, with no material incidents identified to date - Cybersecurity is identified as a key risk within the company's Enterprise Risk Management (ERM) program, which is based on the **NIST and CIS frameworks**[210](index=210&type=chunk) - The program is overseen by the Chief Information Officer, with the **Audit Committee** receiving detailed updates annually and quarterly through the ERM program[217](index=217&type=chunk)[218](index=218&type=chunk) - The company leverages third-party partners for **24/7 security operations monitoring** and annual vulnerability assessments[213](index=213&type=chunk) - As of year-end 2023, **no security incidents or breaches** have been identified that are considered material to the company's business strategy, results, or financial condition[215](index=215&type=chunk) Part II [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=47&type=section&id=ITEM%205.%20MARKET%20FOR%20REGISTRANT'S%20COMMON%20EQUITY%2C%20RELATED%20STOCKHOLDER%20MATTERS%20AND%20ISSUER%20PURCHASES%20OF%20EQUITY%20SECURITIES) The company's stock trades on the NYSE as "GPOR" and it repurchased $148.9 million of shares in 2023 - The company's Board of Directors approved an increase to the stock Repurchase Program, bringing the total authorization to **$650 million** and extending it through December 31, 2024[228](index=228&type=chunk)[243](index=243&type=chunk) Share Repurchase Activity (2023) | Metric | Value | | :--- | :--- | | **Shares Repurchased** | 1.5 million | | **Total Cost** | $148.9 million | | **Weighted Avg. Price** | $101.53 per share | - Since the program's inception, the company has repurchased **4.4 million shares for $399.6 million** at an average price of $91.53 per share[228](index=228&type=chunk)[243](index=243&type=chunk) [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=48&type=section&id=ITEM%207.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Net income rose to $1.5 billion due to derivative gains and a tax benefit, despite lower revenues from weak commodity prices [Overview and Recent Developments](index=49&type=section&id=Overview%20and%20Recent%20Developments) In 2023, the company appointed new leadership, expanded its credit facility, and increased its share repurchase program - Key leadership changes occurred in 2023, with **John Reinhart appointed as President and CEO** and Michael Hodges as Executive Vice President and CFO[235](index=235&type=chunk)[236](index=236&type=chunk) - The credit facility was amended to increase the borrowing base to **$1.1 billion**, increase commitments to **$900 million**, and extend the maturity date to May 2027[238](index=238&type=chunk) - The stock repurchase program was increased from $400 million to **$650 million** and extended through December 31, 2024[243](index=243&type=chunk) - 2023 operational highlights include producing **1,054 MMcfe/day**, generating **$723.2 million in operating cash flow**, and returning **$148.9 million** to shareholders via buybacks[247](index=247&type=chunk) [Results of Operations](index=53&type=section&id=Results%20of%20Operations) Net income increased to $1.5 billion in 2023, driven by a large gain on derivatives and a significant income tax benefit Key Financial Results (2023 vs. 2022) | Metric (in millions) | 2023 | 2022 | | :--- | :--- | :--- | | **Total Commodity Sales** | $1,051.4 | $2,330.9 | | **Net Gain (Loss) on Derivatives** | $740.3 | $(999.7) | | **Total Revenues** | $1,791.7 | $1,331.1 | | **Income from Operations** | $974.8 | $543.1 | | **Income Tax Benefit** | $525.2 | $0 | | **Net Income** | $1,470.9 | $494.7 | - The decrease in commodity sales was driven by a **62% decrease** in realized natural gas prices, a **20% decrease** in realized oil prices, and a **34% decrease** in realized NGL prices[254](index=254&type=chunk)[255](index=255&type=chunk)[256](index=256&type=chunk) - Total DD&A expense increased 19% to **$319.7 million**, or $0.83/Mcfe, due to drilling and development activities[263](index=263&type=chunk) - The company recognized a **$525.2 million income tax benefit** in 2023 due to the partial release of the valuation allowance against its net deferred tax assets[270](index=270&type=chunk) [Liquidity and Capital Resources](index=58&type=section&id=Liquidity%20and%20Capital%20Resources) The company funded $537.4 million in property additions and $149.2 million in buybacks primarily with operating cash flow Sources and Uses of Cash (FY 2023, in millions) | Category | Amount | | :--- | :--- | | **Net cash from operating activities** | $723.2 | | **Additions to oil & gas properties** | $(537.4) | | **Repurchases of Common Stock** | $(149.2) | | **Net debt activity** | $(27.0) | | **Preferred Stock dividends** | $(4.8) | - As of December 31, 2023, the company had $1.9 million in cash, a net working capital of $52.4 million, and total principal debt of **$668.0 million**[275](index=275&type=chunk) - Total incurred capital expenditures for 2023 were **$491.5 million**, including $388.6 million for drilling and completion[293](index=293&type=chunk) - The 2024 capital expenditure budget is estimated to be **$330-$360 million** for drilling and completion, plus $50-$60 million for leasehold/land investment[294](index=294&type=chunk) [Critical Accounting Policies and Estimates](index=63&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Significant estimates include oil and gas reserves under the full cost method, which impacts impairment tests and depletion - The company uses the **full cost method** of accounting, capitalizing all costs related to oil and gas property acquisition, exploration, and development[308](index=308&type=chunk) - A quarterly **ceiling test** is performed to assess for impairment of oil and gas properties; key factors are reserve estimates and the 12-month average commodity price, and **no impairment was recorded in 2023 or 2022**[310](index=310&type=chunk)[311](index=311&type=chunk) - Estimates of oil and natural gas reserves are the most significant estimates, affecting **depletion, depreciation, amortization, and impairment** calculations[312](index=312&type=chunk) - Accounting for income taxes requires significant judgment, especially in assessing the realizability of **deferred tax assets** and the need for a valuation allowance[313](index=313&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=65&type=section&id=ITEM%207A.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company's primary market risks are commodity price volatility, managed via derivatives, and interest rate risk - The company uses derivative instruments (swaps, collars, options) to manage **commodity price risk** for its forecasted production[318](index=318&type=chunk)[320](index=320&type=chunk) - As of December 31, 2023, the company had a net asset derivative position of **$240.2 million**; a 10% decrease in commodity prices would increase this asset value by approximately **$86.5 million**[326](index=326&type=chunk) - The company is exposed to interest rate risk on its Credit Facility; based on the $118.0 million outstanding at year-end 2023, a **1% increase in interest rates** would increase annual interest expense by approximately **$1.2 million**[328](index=328&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=67&type=section&id=ITEM%208.%20FINANCIAL%20STATEMENTS%20AND%20SUPPLEMENTARY%20DATA) This section contains the company's audited consolidated financial statements, notes, and supplementary oil and gas data [Consolidated Financial Statements](index=71&type=section&id=Consolidated%20Financial%20Statements) The financial statements show total assets of $3.27 billion, net income of $1.47 billion, and operating cash flow of $723.2 million for 2023 Consolidated Balance Sheet Highlights (Dec 31, 2023) | Metric (in thousands) | Value | | :--- | :--- | | **Total Current Assets** | $396,806 | | **Total Property and Equipment, net** | $2,252,299 | | **Total Assets** | $3,267,613 | | **Total Current Liabilities** | $344,454 | | **Total Long-Term Debt** | $667,382 | | **Total Liabilities** | $1,061,719 | | **Total Stockholders' Equity** | $2,161,680 | Consolidated Statement of Operations Highlights (FY 2023) | Metric (in thousands) | Value | | :--- | :--- | | **Total Revenues** | $1,791,702 | | **Total Operating Expenses** | $816,855 | | **Income Before Income Taxes** | $945,760 | | **Income Tax Benefit** | $(525,156) | | **Net Income** | $1,470,916 | Consolidated Statement of Cash Flows Highlights (FY 2023) | Metric (in thousands) | Value | | :--- | :--- | | **Net Cash from Operating Activities** | $723,181 | | **Net Cash used in Investing Activities** | $(537,227) | | **Net Cash used in Financing Activities** | $(191,284) | [Notes to Consolidated Financial Statements](index=78&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail accounting policies, fresh start accounting, debt facilities, derivative positions, and supplemental reserve data - The company emerged from Chapter 11 on May 17, 2021, and applied **fresh start accounting**, which materially reset the carrying values of assets and liabilities, making post-emergence financial statements not comparable to pre-emergence periods (Note 2 & 3)[366](index=366&type=chunk)[402](index=402&type=chunk)[403](index=403&type=chunk) - Long-term debt as of Dec 31, 2023, consisted of **$550 million in 8.0% senior notes** due 2026 and **$118 million drawn** on its credit facility; the credit facility has a $1.1 billion borrowing base and $900 million in commitments (Note 5)[434](index=434&type=chunk)[439](index=439&type=chunk)[440](index=440&type=chunk) - The company had significant derivative positions at year-end 2023, including natural gas swaps covering **325,000 MMBtu/d for 2024** at an average price of **$4.05/MMBtu** (Note 13)[518](index=518&type=chunk)[520](index=520&type=chunk) - Supplemental data shows total proved reserves of **4,214 Bcfe** at year-end 2023, with a standardized measure of discounted future net cash flows of **$2.38 billion** (Note 20)[566](index=566&type=chunk)[573](index=573&type=chunk) [Item 9A. Controls and Procedures](index=123&type=section&id=ITEM%209A.%20CONTROLS%20AND%20PROCEDURES) Management and the independent auditor concluded that the company's disclosure controls and internal controls were effective - The CEO and CFO concluded that the company's **disclosure controls and procedures were effective** as of December 31, 2023[578](index=578&type=chunk) - Management concluded that the company's **internal control over financial reporting was effective** as of December 31, 2023, based on the COSO framework[582](index=582&type=chunk) - The independent registered public accounting firm, Grant Thornton LLP, issued an **unqualified opinion** on the effectiveness of the company's internal control over financial reporting as of December 31, 2023[583](index=583&type=chunk)[587](index=587&type=chunk) Part III [Items 10-14. Directors, Executive Compensation, Security Ownership, and Related Party Transactions](index=126&type=section&id=ITEMS%2010-14) Details on directors, compensation, and security ownership are incorporated by reference from the 2024 Proxy Statement - Information for Items 10, 11, 12, 13, and 14 is **incorporated by reference** from the company's forthcoming 2024 Proxy Statement[598](index=598&type=chunk)[599](index=599&type=chunk)[600](index=600&type=chunk)[601](index=601&type=chunk)[602](index=602&type=chunk) Part IV [Item 15. Exhibits and Financial Statement Schedules](index=127&type=section&id=ITEM%2015.%20EXHIBITS%20AND%20FINANCIAL%20STATEMENT%20SCHEDULES) This section lists all financial statements, schedules, and exhibits filed as part of the Form 10-K - This section provides an index of all exhibits filed with the Form 10-K, including corporate governance documents, debt agreements, and management compensation plans[605](index=605&type=chunk)[606](index=606&type=chunk)

[Production Volumes by Asset Area](index=2&type=section&id=Production%20Volumes%20by%20Asset%20Area) The company's production volumes for natural gas, oil, and NGLs are detailed across various asset areas [Quarterly Production Volumes (Q4 2023)](index=2&type=section&id=Production%20Volumes%20by%20Asset%20Area%20%3A%20Quarter%20ended%2C%20December%2031%2C%202023) In Q4 2023, total combined production increased slightly to 1,063,341 Mcfe/day from 1,051,637 Mcfe/day in Q4 2022, driven by a significant increase in natural gas production from Utica & Marcellus assets offsetting declines in SCOOP and lower overall oil and NGL production Q4 2023 Production Volumes | Production (per day) | Q4 2023 | Q4 2022 | Change | | :--- | :--- | :--- | :--- | | **Total Natural Gas (Mcf/day)** | **976,820** | **934,763** | **+4.5%** | | - Utica & Marcellus | 795,776 | 702,041 | +13.3% | | - SCOOP | 181,044 | 232,722 | -22.2% | | **Total Oil (Bbl/day)** | **3,498** | **4,959** | **-29.5%** | | **Total NGL (Bbl/day)** | **10,923** | **14,520** | **-24.8%** | | **Total Combined (Mcfe/day)** | **1,063,341** | **1,051,637** | **+1.1%** | [Annual Production Volumes (FY 2023)](index=3&type=section&id=Production%20Volumes%20by%20Asset%20Area%20%3A%20Year%20ended%2C%20December%2031%2C%202023) For the full year 2023, total combined production increased by 7.2% year-over-year to 1,054,251 Mcfe/day, primarily due to a 13.5% increase in natural gas production from Utica & Marcellus assets, while SCOOP and total liquids saw modest declines FY 2023 Production Volumes | Production (per day) | FY 2023 | FY 2022 | Change | | :--- | :--- | :--- | :--- | | **Total Natural Gas (Mcf/day)** | **959,743** | **883,195** | **+8.7%** | | - Utica & Marcellus | 765,556 | 674,314 | +13.5% | | - SCOOP | 194,187 | 208,881 | -7.0% | | **Total Oil (Bbl/day)** | **3,733** | **4,412** | **-15.4%** | | **Total NGL (Bbl/day)** | **12,018** | **12,281** | **-2.1%** | | **Total Combined (Mcfe/day)** | **1,054,251** | **983,354** | **+7.2%** | [Production and Pricing](index=4&type=section&id=Production%20and%20Pricing) This section analyzes the company's sales revenue, average realized commodity prices, and production costs [Quarterly Production and Pricing (Q4 2023)](index=4&type=section&id=Production%20and%20Pricing%20%3A%20Quarter%20ended%2C%20December%2031%2C%202023) In Q4 2023, total sales revenue fell sharply to $263.1 million from $545.9 million in Q4 2022, primarily due to a 54.7% drop in the average realized natural gas price before derivatives, though the average realized price including settled derivatives increased to $3.20/Mcfe due to significant derivative gains, and total production costs decreased by 12.1% to $1.16/Mcfe Q4 2023 Production and Pricing Metrics | Metric | Q4 2023 | Q4 2022 | | :--- | :--- | :--- | | **Total Sales ($ million)** | **$263.1** | **$545.9** | | **Avg. Price (w/o derivatives, $/Mcfe)** | **$2.69** | **$5.64** | | **Avg. Price (with derivatives, $/Mcfe)** | **$3.20** | **$3.01** | | **Total Production Costs ($/Mcfe)** | **$1.16** | **$1.32** | - The average realized price for natural gas, before the impact of derivatives, plummeted to **$2.37/Mcf** in Q4 2023 from **$5.45/Mcf** in Q4 2022[7](index=7&type=chunk) [Annual Production and Pricing (FY 2023)](index=5&type=section&id=Production%20and%20Pricing%20%3A%20Year%20ended%2C%20December%2031%2C%202023) For the full year 2023, total sales revenue was $1.05 billion, a 54.9% decrease from $2.33 billion in 2022, driven by a steep decline in commodity prices, with the average realized price before derivatives falling to $2.73/Mcfe from $6.49/Mcfe, partially offset by gains from settled derivatives, resulting in a final average price of $3.13/Mcfe, and total production costs per unit decreased by 12.7% to $1.17/Mcfe FY 2023 Production and Pricing Metrics | Metric | FY 2023 | FY 2022 | | :--- | :--- | :--- | | **Total Sales ($ million)** | **$1,051.4** | **$2,330.9** | | **Avg. Price (w/o derivatives, $/Mcfe)** | **$2.73** | **$6.49** | | **Avg. Price (with derivatives, $/Mcfe)** | **$3.13** | **$3.55** | | **Total Production Costs ($/Mcfe)** | **$1.17** | **$1.34** | - The average realized price for natural gas, before derivatives, fell by **61.8%** to **$2.37/Mcf** in 2023 from **$6.20/Mcf** in 2022[8](index=8&type=chunk) [Consolidated Statements of Income](index=6&type=section&id=Consolidated%20Statements%20of%20Income) This section presents the company's financial performance, including revenues, expenses, and net income, for quarterly and annual periods [Quarterly Income Statement (Q4 2023)](index=6&type=section&id=Consolidated%20Statements%20of%20Income%3A%20Quarter%20ended%2C%20December%2031%2C%202023) In Q4 2023, Gulfport reported a Net Income of $245.7 million, a significant decrease from $748.6 million in Q4 2022, primarily due to lower revenues from commodity sales, partially offset by lower operating expenses and a smaller gain on derivatives, with Diluted EPS falling to $11.13 from $32.35 year-over-year Q4 2023 Consolidated Income Statement | Metric | Q4 2023 ($ thousands) | Q4 2022 ($ thousands) | | :--- | :--- | :--- | | **Total Revenues** | **$489,108** | **$982,492** | | **Income from Operations** | **$282,493** | **$764,699** | | **Net Income** | **$245,731** | **$748,568** | | **Net Income Attributable to Common Stockholders** | **$208,980** | **$625,601** | | **Diluted EPS ($)** | **$11.13** | **$32.35** | [Annual Income Statement (FY 2023)](index=7&type=section&id=Consolidated%20Statements%20of%20Income%3A%20Year%20ended%2C%20December%2031%2C%202023) For the full year 2023, Net Income surged to $1.47 billion from $494.7 million in 2022, primarily driven by a $740.3 million net gain on derivatives compared to a $999.7 million loss in the prior year, and a $525.2 million deferred income tax benefit, which more than compensated for lower revenues from commodity sales, with Diluted EPS rising to $66.46 from $20.32 FY 2023 Consolidated Income Statement | Metric | FY 2023 ($ thousands) | FY 2022 ($ thousands) | | :--- | :--- | :--- | | **Total Revenues** | **$1,791,702** | **$1,331,112** | | **Net (gain) loss on derivatives** | **$740,319** | **($999,747)** | | **Income from Operations** | **$974,847** | **$543,126** | | **Total income tax benefit** | **($525,156)** | **$0** | | **Net Income** | **$1,470,916** | **$494,701** | | **Diluted EPS ($)** | **$66.46** | **$20.32** | [Consolidated Balance Sheets](index=8&type=section&id=Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's financial position, detailing assets, liabilities, and equity at year-end [Balance Sheet Summary (as of Dec 31, 2023)](index=8&type=section&id=Consolidated%20Balance%20Sheets_summary) As of December 31, 2023, total assets increased to $3.27 billion from $2.53 billion at year-end 2022, largely due to a new $525.2 million deferred tax asset and higher net property and equipment value, while total liabilities decreased significantly to $1.06 billion from $1.65 billion, mainly from a reduction in derivative liabilities, consequently, total stockholders' equity more than doubled to $2.16 billion Consolidated Balance Sheet as of December 31 | Metric | Dec 31, 2023 ($ thousands) | Dec 31, 2022 ($ thousands) | | :--- | :--- | :--- | | **Total Current Assets** | **$396,806** | **$402,270** | | **Total Property and Equipment, net** | **$2,252,299** | **$2,057,730** | | **Deferred Tax Asset** | **$525,156** | **$0** | | **Total Assets** | **$3,267,613** | **$2,534,479** | | **Total Current Liabilities** | **$344,454** | **$793,320** | | **Total Liabilities** | **$1,061,719** | **$1,653,349** | | **Total Stockholders' Equity** | **$2,161,680** | **$828,835** | - A significant driver of the balance sheet change was the recognition of a **$525.2 million** deferred tax asset in 2023, which was not present in 2022[14](index=14&type=chunk) - Current liabilities were more than halved, primarily due to a decrease in short-term derivative instrument liabilities from **$343.5 million** in 2022 to **$22.0 million** in 2023[16](index=16&type=chunk) [Consolidated Statement of Cash Flows](index=10&type=section&id=Consolidated%20Statement%20of%20Cash%20Flows) This section outlines the company's cash inflows and outflows from operating, investing, and financing activities for quarterly and annual periods [Quarterly Cash Flow Statement (Q4 2023)](index=10&type=section&id=Consolidated%20Statement%20of%20Cash%20Flows%3A%20Quarter%20ended%2C%20December%2031%2C%202023) In Q4 2023, net cash from operating activities was $155.5 million, down from $188.0 million in Q4 2022, net cash used in investing was $117.2 million primarily for additions to oil and gas properties, and net cash used in financing was $44.7 million driven by common stock repurchases, with the company ending the quarter with $1.9 million in cash Q4 2023 Consolidated Cash Flow Statement | Metric | Q4 2023 ($ thousands) | Q4 2022 ($ thousands) | | :--- | :--- | :--- | | **Net cash provided by operating activities** | **$155,501** | **$187,995** | | **Net cash used in investing activities** | **($117,246)** | **($128,975)** | | **Net cash used in financing activities** | **($44,651)** | **($60,048)** | | **Cash and cash equivalents at end of period** | **$1,929** | **$7,259** | [Annual Cash Flow Statement (FY 2023)](index=11&type=section&id=Consolidated%20Statement%20of%20Cash%20Flows%3A%20Year%20ended%2C%20December%2031%2C%202023) For the full year 2023, net cash from operating activities was $723.2 million, slightly down from $739.1 million in 2022, net cash used in investing increased to $537.2 million due to higher capital expenditures, and net cash used in financing was $191.3 million, reflecting debt repayments and $149.2 million in common stock repurchases, resulting in a $5.3 million decrease in the company's cash position during the year FY 2023 Consolidated Cash Flow Statement | Metric | FY 2023 ($ thousands) | FY 2022 ($ thousands) | | :--- | :--- | :--- | | **Net cash provided by operating activities** | **$723,181** | **$739,077** | | **Net cash used in investing activities** | **($537,227)** | **($458,295)** | | **Net cash used in financing activities** | **($191,284)** | **($276,783)** | | **Cash and cash equivalents at end of period** | **$1,929** | **$7,259** | - The company repurchased **$149.2 million** of common stock in 2023 (**$108.7 million** + **$40.4 million** related party), compared to **$250.5 million** in 2022[20](index=20&type=chunk) [2024E Guidance](index=12&type=section&id=2024E%20Guidance) This section provides the company's operational and financial outlook for the upcoming fiscal year 2024 [2024 Full Year Guidance](index=12&type=section&id=2024E%20Guidance_summary) For 2024, Gulfport anticipates average daily production between 1,045 and 1,080 MMcfe/day, with approximately 92% being natural gas, and total base capital expenditures are projected to be between $380 million and $420 million, primarily allocated to drilling and completion (D&C) activities 2024 Full Year Guidance | Guidance Metric | Low | High | | :--- | :--- | :--- | | **Avg. Daily Production (MMcfe/day)** | 1,045 | 1,080 | | **Lease Operating Expense ($/Mcfe)** | $0.17 | $0.19 | | **Transportation & Midstream ($/Mcfe)** | $0.90 | $0.94 | | **Total Base Capital Expenditures ($ millions)** | $380 | $420 | - The company expects natural gas to constitute approximately **92%** of its total production in 2024[22](index=22&type=chunk) [Derivatives](index=13&type=section&id=Derivatives) This section details the company's commodity hedging positions to mitigate price risk for future periods [Hedging Positions](index=13&type=section&id=Derivatives_summary) As of February 27, 2024, Gulfport has significant hedging positions for 2024 and 2025 to manage commodity price risk, with 792 BBtupd of natural gas hedged for 2024 through a combination of swaps, collars, and sold calls, in addition to hedged oil and NGL production 2024 Natural Gas Hedging Positions | 2024 Natural Gas Hedges (NYMEX) | Volume (BBtupd) | Avg. Price / Range ($/MMBtu) | | :--- | :--- | :--- | | **Fixed Price Swaps** | 365 | $3.89 | | **Fixed Price Collars** | 225 | $3.36 - $5.14 | | **Fixed Price Calls Sold** | 202 | $3.33 | - The company has also hedged basis differentials for a portion of its natural gas production, including Rex Zone 3, Tetco M2, and NGPL TX OK[26](index=26&type=chunk) - For 2025, the company has already hedged **503 BBtupd** of natural gas and **2,000 Bblpd** of C3 Propane[26](index=26&type=chunk) [Non-GAAP Reconciliations](index=14&type=section&id=Non-GAAP%20Reconciliations) This section provides reconciliations of non-GAAP financial measures to their most directly comparable GAAP counterparts [Definitions of Non-GAAP Measures](index=15&type=section&id=Definitions) The company uses several non-GAAP financial measures for internal evaluation and to provide investors with useful metrics for assessing operating performance, including Adjusted Net Income, Adjusted EBITDA, Adjusted Free Cash Flow, and Recurring General and Administrative Expense, which typically exclude non-cash items like deferred taxes and derivative gains/losses, as well as non-recurring costs such as restructuring expenses - Adjusted Net Income excludes items like deferred income tax, non-cash derivative gains/losses, and non-recurring G&A expenses[30](index=30&type=chunk) - Adjusted EBITDA is calculated by adding back interest, taxes, DD&A, and other non-cash or non-recurring items to net income[31](index=31&type=chunk) - Adjusted Free Cash Flow is defined as Adjusted EBITDA plus certain non-cash items, less interest expense and capital expenditures[32](index=32&type=chunk) [Adjusted Net Income Reconciliation](index=16&type=section&id=Adjusted%20Net%20Income) For the full year 2023, Adjusted Net Income was $345.5 million, a decrease from $438.2 million in 2022, with the reconciliation from GAAP Net Income ($1.47 billion) involving subtracting a large deferred income tax benefit and a significant non-cash derivative gain, while for Q4 2023, Adjusted Net Income was $94.5 million, up from $60.7 million in Q4 2022 FY 2023 Adjusted Net Income Reconciliation | Metric | FY 2023 ($ thousands) | FY 2022 ($ thousands) | | :--- | :--- | :--- | | **Net Income (GAAP)** | **$1,470,916** | **$494,701** | | Deferred income tax (benefit) | ($525,156) | $0 | | Non-cash derivative gain | ($588,120) | ($54,063) | | **Adjusted Net Income (Non-GAAP)** | **$345,479** | **$438,165** | Q4 2023 Adjusted Net Income Reconciliation | Metric | Q4 2023 ($ thousands) | Q4 2022 ($ thousands) | | :--- | :--- | :--- | | **Net Income (GAAP)** | **$245,731** | **$748,568** | | **Adjusted Net Income (Non-GAAP)** | **$94,511** | **$60,686** | [Adjusted EBITDA Reconciliation](index=18&type=section&id=Adjusted%20EBITDA) Full-year 2023 Adjusted EBITDA was $725.0 million, a slight decrease from $768.4 million in 2022, with the reconciliation from GAAP Net Income involving adding back interest, DD&A, and other items, while subtracting the deferred tax benefit and non-cash derivative gains, and for Q4 2023, Adjusted EBITDA increased to $190.8 million from $155.9 million in Q4 2022 FY 2023 Adjusted EBITDA Reconciliation | Metric | FY 2023 ($ thousands) | FY 2022 ($ thousands) | | :--- | :--- | :--- | | **Net Income (GAAP)** | **$1,470,916** | **$494,701** | | DD&A and accretion | $322,497 | $270,507 | | Deferred income tax benefit | ($525,156) | $0 | | Non-cash derivative gain | ($588,120) | ($54,063) | | **Adjusted EBITDA (Non-GAAP)** | **$725,045** | **$768,445** | Q4 2023 Adjusted EBITDA Reconciliation | Metric | Q4 2023 ($ thousands) | Q4 2022 ($ thousands) | | :--- | :--- | :--- | | **Net Income (GAAP)** | **$245,731** | **$748,568** | | **Adjusted EBITDA (Non-GAAP)** | **$190,811** | **$155,925** | [Adjusted Free Cash Flow Reconciliation](index=20&type=section&id=Adjusted%20Free%20Cash%20Flow) Adjusted Free Cash Flow for the full year 2023 was $198.9 million, down from $240.6 million in 2022, reflecting lower Adjusted EBITDA and higher capital expenditures, while for Q4 2023, Adjusted Free Cash Flow was $85.4 million, a significant increase from $33.2 million in the prior-year quarter, driven by higher Adjusted EBITDA and lower capital expenditures in the quarter FY 2023 Adjusted Free Cash Flow Reconciliation | Metric | FY 2023 ($ thousands) | FY 2022 ($ thousands) | | :--- | :--- | :--- | | **Adjusted EBITDA (Non-GAAP)** | **$725,045** | **$768,445** | | Interest expense | ($57,069) | ($59,773) | | Capital expenditures incurred | ($446,202) | ($450,879) | | **Adjusted Free Cash Flow (Non-GAAP)** | **$198,863** | **$240,585** | Q4 2023 Adjusted Free Cash Flow Reconciliation | Metric | Q4 2023 ($ thousands) | Q4 2022 ($ thousands) | | :--- | :--- | :--- | | **Adjusted EBITDA (Non-GAAP)** | **$190,811** | **$155,925** | | **Adjusted Free Cash Flow (Non-GAAP)** | **$85,446** | **$33,191** | [Recurring General and Administrative Expenses Reconciliation](index=22&type=section&id=Recurring%20General%20and%20Administrative%20Expenses) For the full year 2023, total recurring G&A expenses (before capitalization) were $58.6 million, an increase from $52.3 million in 2022, and for Q4 2023, recurring G&A was $17.6 million, up from $15.2 million in Q4 2022, with the calculation adjusting GAAP G&A by adding back capitalized G&A and removing non-recurring expenses FY 2023 Recurring G&A Expenses Reconciliation | Metric | FY 2023 ($ thousands) | FY 2022 ($ thousands) | | :--- | :--- | :--- | | **G&A expense (GAAP)** | **$38,600** | **$35,304** | | Capitalized G&A expense | $22,810 | $20,157 | | Non-recurring G&A expense | ($2,844) | ($3,152) | | **Recurring G&A (Non-GAAP)** | **$58,566** | **$52,309** | Q4 2023 Recurring G&A Expenses Reconciliation | Metric | Q4 2023 ($ thousands) | Q4 2022 ($ thousands) | | :--- | :--- | :--- | | **G&A expense (GAAP)** | **$11,362** | **$11,176** | | **Recurring G&A (Non-GAAP)** | **$17,577** | **$15,226** |

[Definitions](index=3&type=section&id=Definitions) This section defines key terms and abbreviations used in the Quarterly Report, covering financial instruments, accounting standards, operational metrics, and geographical areas - Key terms and abbreviations defined include **financial instruments** (e.g., 1145 Indenture, 4(a)(2) Indenture, Credit Facility, 2026 Senior Notes), **accounting standards** (ASC, GAAP), **operational metrics** (Bbl, Btu, Mcf, MMBtu, NGL, WI), and **geographical areas** (Marcellus, SCOOP, Utica)[10](index=10&type=chunk)[12](index=12&type=chunk)[13](index=13&type=chunk) [Cautionary Note Regarding Forward-Looking Statements](index=5&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Statements) This section cautions that forward-looking statements in the Form 10-Q are subject to risks and uncertainties, potentially causing actual results to differ materially - The Form 10-Q contains **forward-looking statements** subject to risks and uncertainties, which may cause actual results to differ materially from expectations[27](index=27&type=chunk)[28](index=28&type=chunk)[29](index=29&type=chunk) - Forward-looking statements include expectations regarding global conflicts (Ukraine, Israel-Hamas), estimated future net revenues from oil and gas reserves, future capital expenditures, share repurchases, business strategy, competitive strength, and growth plans[27](index=27&type=chunk)[29](index=29&type=chunk) PART I FINANCIAL INFORMATION [Item 1. Consolidated Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Consolidated%20Financial%20Statements%20(Unaudited)) This section presents Gulfport Energy's unaudited consolidated financial statements, including balance sheets, statements of operations, stockholders' equity, and cash flows, with explanatory notes [Consolidated Balance Sheets](index=6&type=section&id=Consolidated%20Balance%20Sheets) Consolidated Balance Sheet Highlights (in thousands USD) | Metric | Sep 30, 2023 | Dec 31, 2022 | Change (YoY) | % Change (YoY) | | :--------------------------------------- | :----------- | :----------- | :----------- | :------------- | | Total current assets | $272,299 | $402,270 | $(129,971) | -32.3% | | Total property and equipment, net | $2,223,085 | $2,057,730 | $165,355 | 8.0% | | Total assets | $3,136,946 | $2,534,479 | $602,467 | 23.8% | | Total current liabilities | $374,463 | $793,320 | $(418,857) | -52.8% | | Total liabilities | $1,111,611 | $1,653,349 | $(541,738) | -32.8% | | Total stockholders' equity | $1,980,006 | $828,835 | $1,151,171 | 138.9% | - **Total stockholders' equity** significantly increased, primarily driven by a substantial increase in **retained earnings from $381.9 million to $1,603.3 million** from December 31, 2022, to September 30, 2023[34](index=34&type=chunk) [Consolidated Statements of Operations](index=7&type=section&id=Consolidated%20Statements%20of%20Operations) Consolidated Statements of Operations Highlights (in thousands USD, except per share) | Metric | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | Change (YoY) | % Change (YoY) | | :--------------------------------------- | :-------------------------- | :-------------------------- | :----------- | :------------- | | Total revenues | $266,667 | $191,102 | $75,565 | 39.5% | | Income (loss) from operations | $67,184 | $(3,868) | $71,052 | -1836.8% | | Net income (loss) | $608,444 | $(18,472) | $626,916 | -3393.9% | | Net income (loss) attributable to common stockholders | $517,555 | $(19,781) | $537,336 | -2716.4% | | Basic EPS | $27.72 | $(1.01) | $28.73 | -2844.6% | | Diluted EPS | $27.37 | $(1.01) | $28.38 | -2809.9% | | Metric | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | Change (YoY) | % Change (YoY) | | :--------------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Total revenues | $1,302,594 | $348,620 | $953,974 | 273.7% | | Income (loss) from operations | $692,354 | $(221,573) | $913,927 | -412.5% | | Net income (loss) | $1,225,185 | $(253,867) | $1,479,052 | -582.6% | | Net income (loss) attributable to common stockholders | $1,041,073 | $(258,003) | $1,299,076 | -503.5% | | Basic EPS | $55.72 | $(12.58) | $68.30 | -543.0% | | Diluted EPS | $55.08 | $(12.58) | $67.66 | -537.8% | - **Net income and EPS** significantly increased for both periods, primarily due to a substantial **income tax benefit of $554.7 million** and a **net gain on derivative instruments**, contrasting with prior year losses[36](index=36&type=chunk)[38](index=38&type=chunk) [Consolidated Statements of Stockholders' Equity](index=9&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity) Stockholders' Equity Changes (in thousands USD) | Metric | Balance at Jan 1, 2023 | Net Income | Stock Compensation | Repurchase of Common Stock | Dividends on Preferred Stock | Balance at Sep 30, 2023 | | :--------------------------------------- | :--------------------- | :--------- | :----------------- | :------------------------- | :--------------------------- | :---------------------- | | Total Stockholders' Equity | $828,835 | $1,225,185 | $10,424 | $(82,912) | $(3,718) | $1,980,006 | - **Retained Earnings** significantly increased from **$381.9 million to $1,603.3 million** from January 1, 2023, to September 30, 2023, primarily due to net income[42](index=42&type=chunk) - The company repurchased **977 thousand common shares for $82.9 million** under its Repurchase Program during the nine months ended September 30, 2023[42](index=42&type=chunk) [Consolidated Statements of Cash Flows](index=11&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Consolidated Cash Flow Highlights (in thousands USD) | Metric | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | Change (YoY) | % Change (YoY) | | :--------------------------------------- | :-------------------------- | :-------------------------- | :----------- | :------------- | | Net cash provided by operating activities | $567,680 | $551,082 | $16,598 | 3.0% | | Net cash used in investing activities | $(419,981) | $(329,320) | $(90,661) | 27.5% | | Net cash used in financing activities | $(146,633) | $(216,735) | $70,102 | -32.3% | | Net increase in cash and cash equivalents | $1,066 | $5,027 | $(3,961) | -78.8% | | Cash and cash equivalents at end of period | $8,325 | $8,287 | $38 | 0.5% | - **Operating cash flows** increased slightly, while **investing activities** saw a significant increase in cash used, primarily due to higher additions to oil and natural gas properties[45](index=45&type=chunk) - **Financing activities** used less cash, mainly due to lower net principal payments on the Credit Facility and reduced common stock repurchases compared to the prior year[45](index=45&type=chunk) [Notes to Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) [1. Basis of Presentation](index=12&type=section&id=1.%20Basis%20of%20Presentation) - Gulfport Energy Corporation is an independent **natural gas-weighted exploration and production company** focused on Utica, Marcellus, and SCOOP Woodford and Springer formations[48](index=48&type=chunk) - The financial statements are **unaudited**, prepared in accordance with **GAAP and SEC rules**, and reflect all normal recurring adjustments[49](index=49&type=chunk)[50](index=50&type=chunk) Accounts Payable and Accrued Liabilities (in thousands USD) | Category | Sep 30, 2023 | Dec 31, 2022 | | :--------------------------------------- | :----------- | :----------- | | Revenue payable and suspense | $154,200 | $222,721 | | Accounts payable | $45,526 | $37,807 | | Accrued transportation, gathering, processing and compression | $34,368 | $56,138 | | Accrued capital expenditures | $25,501 | $36,464 | | Accrued contract rejection damages and shares held in reserve | $1,996 | $40,996 | | Other accrued liabilities | $48,993 | $43,258 | | Total | $310,584 | $437,384 | - Other, net income for the nine months ended September 30, 2023, included a **$17.8 million TC claim distribution** and a **$5.0 million recoupment of collateral** for firm transportation commitments[52](index=52&type=chunk) [2. Property and Equipment](index=13&type=section&id=2.%20Property%20and%20Equipment) Property and Equipment (in thousands USD) | Category | Sep 30, 2023 | Dec 31, 2022 | | :--------------------------------------- | :----------- | :----------- | | Proved oil and natural gas properties | $2,802,653 | $2,418,666 | | Unproved properties | $196,947 | $178,472 | | Total property and equipment, net | $2,223,085 | $2,057,730 | - The company recorded **no impairment** of its oil and natural gas properties for the three or nine months ended September 30, 2023 or 2022[55](index=55&type=chunk) - **Capitalized general and administrative costs** for exploration and development activities were **$16.2 million** for the nine months ended September 30, 2023, up from **$14.6 million** in the prior year period[56](index=56&type=chunk) Asset Retirement Obligation (in thousands USD) | Metric | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :--------------------------------------- | :-------------------------- | :-------------------------- | | Beginning of period | $33,171 | $28,264 | | Liabilities incurred | $505 | $53 | | Liabilities settled | $(604) | — | | Liabilities removed due to divestitures | $(919) | $(7) | | Accretion expense | $2,117 | $2,057 | | End of period | $34,270 | $30,367 | [3. Debt](index=14&type=section&id=3.%20Debt) Debt Composition (in thousands USD) | Debt Type | Sep 30, 2023 | Dec 31, 2022 | | :--------------------------------------- | :----------- | :----------- | | 8.0% senior unsecured notes due 2026 | $550,000 | $550,000 | | Credit Facility due 2027 | $95,000 | $145,000 | | Total long-term debt, net | $644,324 | $694,155 | - The Credit Facility's elected commitments increased from **$700 million to $900 million**, and the borrowing base increased from **$1 billion to $1.1 billion** on May 1, 2023, with maturity extended to May 1, 2027[65](index=65&type=chunk) - As of September 30, 2023, the company had **$95.0 million outstanding borrowings** under the Credit Facility and was in compliance with all covenants[70](index=70&type=chunk) - The **weighted average interest rate** on the Credit Facility increased from **5.41% (Q3 2022) to 8.28% (Q3 2023)** and from **4.42% (YTD 2022) to 8.05% (YTD 2023)** due to the inflationary environment[70](index=70&type=chunk) - The **fair value of the 2026 Senior Notes** was **$550.6 million** at September 30, 2023, compared to a carrying value of **$549.3 million**[74](index=74&type=chunk) [4. Mezzanine Equity](index=16&type=section&id=4.%20Mezzanine%20Equity) - The company has **110,000 authorized preferred shares** with a **$1,000 liquidation preference per share**, classified as mezzanine equity due to redemption features[75](index=75&type=chunk)[80](index=80&type=chunk) - Preferred stock holders are entitled to **cumulative quarterly dividends at 10% per annum for cash dividends or 15% for PIK Dividends**[76](index=76&type=chunk) - Preferred stock holders have a conversion right into common stock, with **45,329 shares outstanding** at September 30, 2023, convertible into approximately **3.2 million common shares**[77](index=77&type=chunk) Preferred Stock Activity (in thousands of shares) | Period | Preferred Stock | | :--------------------- | :-------------- | | Dec 31, 2022 | 52,295 | | Q2 2023 Conversion | (5,836) | | Q3 2023 Conversion | (1,130) | | Sep 30, 2023 | 45,329 | [5. Equity](index=17&type=section&id=5.%20Equity) - The company has **42 million authorized common shares** with a **$0.0001 par value**[83](index=83&type=chunk) - As of September 30, 2023, approximately **62,000 common shares** remain held in the Disputed Claims Reserve[84](index=84&type=chunk) - The Board of Directors increased the common stock Repurchase Program authorization to **$650 million**, extending through December 31, 2024[87](index=87&type=chunk) Common Stock Repurchase Program Activity (9 Months Ended Sep 30, 2023) | Period | Shares Purchased (thousands) | Dollar Value (thousands) | Average Price Per Share | | :--------------------- | :--------------------------- | :----------------------- | :---------------------- | | First quarter 2023 | 459 | $32,873 | $71.61 | | Second quarter 2023 | 442 | $41,358 | $93.67 | | Third quarter 2023 | 76 | $8,681 | $113.97 | | Total | 977 | $82,912 | $84.88 | - Since inception, **3.9 million shares** have been repurchased for **$333.7 million** at a weighted average price of **$86.07 per share**[88](index=88&type=chunk) [6. Stock-Based Compensation](index=18&type=section&id=6.%20Stock-Based%20Compensation) - The Incentive Plan has a share reserve of **2.8 million common shares**, used for restricted stock units (RSUs) and performance vesting restricted stock units (PVRUs)[89](index=89&type=chunk) Stock-Based Compensation Expense (in thousands USD) | Period | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :--------------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Total stock-based compensation expense | $3,500 | $2,400 | $9,200 | $6,300 | | Capitalized portion | $1,200 | $800 | $3,000 | $2,100 | - **Unrecognized compensation expense for RSUs** was **$13.5 million** as of September 30, 2023, expected to be recognized over **2.05 years**[92](index=92&type=chunk) - PVRUs are based on TSR and RTSR performance over a three-year period, with **unrecognized compensation expense of $6.3 million** as of September 30, 2023, recognized over **1.81 years**[93](index=93&type=chunk)[94](index=94&type=chunk) [7. Restructuring Costs](index=20&type=section&id=7.%20Restructuring%20Costs) - Gulfport recognized **$4.8 million in personnel-related restructuring expenses** during the nine months ended September 30, 2023, due to organizational and leadership changes, including **$1.3 million in non-cash share-based grant vesting**[95](index=95&type=chunk) Personnel-Related Restructuring Expenses (in thousands USD) | Period | Expenses | | :--------------------- | :------- | | First quarter 2023 | $1,869 | | Second quarter 2023 | $2,893 | | Third quarter 2023 | — | | Total | $4,762 | [8. Earnings (Loss) Per Share](index=20&type=section&id=8.%20Earnings%20(Loss)%20Per%20Share) - **Basic EPS** is calculated by subtracting preferred stock dividends and participating securities' attributable income/loss from net income/loss, then dividing by weighted average basic shares outstanding[97](index=97&type=chunk) - **Diluted EPS** considers the dilutive impact of convertible preferred stock (if-converted method) and unvested restricted stock (treasury stock method)[97](index=97&type=chunk) Net Income (Loss) Per Common Share (in thousands USD, except per share) | Metric | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :--------------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net income (loss) attributable to common stockholders | $517,555 | $(19,781) | $1,041,073 | $(258,003) | | Basic EPS | $27.72 | $(1.01) | $55.72 | $(12.58) | | Diluted EPS | $27.37 | $(1.01) | $55.08 | $(12.58) | | Weighted average common shares outstanding—Basic | 18,670 | 19,635 | 18,686 | 20,514 | | Weighted average common shares outstanding—Diluted | 18,954 | 19,635 | 18,937 | 20,514 | - For the nine months ended September 30, 2023, there were **0.3 million dilutive restricted stock shares** and **3.2 million potential common shares** from convertible preferred stock[98](index=98&type=chunk) [9. Commitments and Contingencies](index=22&type=section&id=9.%20Commitments%20and%20Contingencies) Future Firm Transportation and Gathering Commitments (in thousands USD) | Period | Amount | | :--------------------- | :----------- | | Remaining 2023 | $56,061 | | 2024 | $219,434 | | 2025 | $137,795 | | 2026 | $134,324 | | 2027 | $136,492 | | Thereafter | $737,104 | | Total | $1,421,210 | - Other operational commitments for inventory and materials total **$19.8 million for the remainder of 2023** and **$23.5 million for 2024**[104](index=104&type=chunk) - In Q1 2023, Gulfport finalized a settlement with Rover Pipeline LLC, resulting in an **$85.9 million unsecured claim for Rover** and a **$1.0 million administrative payment** by Gulfport, also receiving an additional **$17.8 million interim distribution** for its TC claim[106](index=106&type=chunk) - The company is involved in various lawsuits, including allegations of trespass and illegal production, but management believes **no pending matter is likely to have a material adverse effect**[107](index=107&type=chunk)[108](index=108&type=chunk)[110](index=110&type=chunk) [10. Derivative Instruments](index=23&type=section&id=10.%20Derivative%20Instruments) - Gulfport uses **fixed price swaps, basis swaps, costless collars, and option contracts** to mitigate risks from volatile natural gas, oil, and NGL prices, typically hedging **30% to 70% of forecasted current year production** for the next 12 to 36 months[111](index=111&type=chunk)[112](index=112&type=chunk) Open Fixed Price Swap Positions as of Sep 30, 2023 | Commodity | Index | Daily Volume | Weighted Average Price | | :--------------------- | :---------------- | :----------- | :--------------------- | | Natural Gas (2024) | NYMEX Henry Hub | 324,973 MMBtu/d | $4.05/MMBtu | | Oil (2024) | NYMEX WTI | 500 Bbl/d | $77.50/Bbl | | NGL (2024) | Mont Belvieu C3 | 2,000 Bbl/d | $30.30/Bbl | Open Costless Collar Positions as of Sep 30, 2023 | Commodity | Index | Daily Volume | Weighted Average Floor Price | Weighted Average Ceiling Price | | :--------------------- | :---------------- | :----------- | :--------------------------- | :----------------------------- | | Natural Gas (2024) | NYMEX Henry Hub | 180,000 MMBtu/d | $3.43/MMBtu | $5.49/MMBtu | | Oil (2024) | NYMEX WTI | 1,000 Bbl/d | $62.00/Bbl | $80.00/Bbl | Total Commodity Derivative Position (in thousands USD) | Metric | Sep 30, 2023 | Dec 31, 2022 | | :--------------------------------------- | :----------- | :----------- | | Total commodity derivative position | $64,426 | $(347,893) | - The company reported a **net gain on natural gas, oil, and NGL derivatives of $39.4 million** for the three months ended September 30, 2023 (compared to a net loss of $474.9 million in the prior year), and a **net gain of $514.3 million** for the nine months ended September 30, 2023 (compared to a net loss of $1,436.3 million in the prior year)[122](index=122&type=chunk)[123](index=123&type=chunk) [11. Fair Value Measurements](index=28&type=section&id=11.%20Fair%20Value%20Measurements) - Fair value measurements are categorized into **Level 1** (quoted prices in active markets), **Level 2** (observable inputs other than Level 1), and **Level 3** (unobservable inputs)[127](index=127&type=chunk) Financial Assets and Liabilities by Valuation Level (in thousands USD) | Category | Sep 30, 2023 (Level 2) | Dec 31, 2022 (Level 2) | | :--------------------------------------- | :--------------------- | :--------------------- | | Derivative instruments (assets) | $169,393 | $114,033 | | Derivative instruments (liabilities) | $104,967 | $461,926 | - The fair value of derivative instruments is estimated using industry-standard models with observable market inputs, classifying them as **Level 2**[128](index=128&type=chunk) - The contingent consideration arrangement from the SCOOP water infrastructure sale is valued at **$3.1 million (Level 3)** as of September 30, 2023, based on unobservable inputs like future development and water production levels[129](index=129&type=chunk) [12. Revenue from Contracts with Customers](index=29&type=section&id=12.%20Revenue%20from%20Contracts%20with%20Customers) - Revenues are primarily from **natural gas, oil condensate, and NGL sales**, recognized when control of the product is transferred to the customer, with variable consideration based on market indices[132](index=132&type=chunk) - Gathering, processing, compression, and transportation fees are presented as **operating expenses**[133](index=133&type=chunk) - **Receivables from contracts with customers** were **$106.7 million** at September 30, 2023, a decrease from **$278.4 million** at December 31, 2022[136](index=136&type=chunk) [13. Leases](index=30&type=section&id=13.%20Leases) - The company has **operating leases for equipment and drilling rigs**, recognizing right-of-use assets and lease liabilities for terms greater than one year[138](index=138&type=chunk)[139](index=139&type=chunk) Future Operating Lease Liabilities (in thousands USD) | Period | Amount | | :--------------------- | :----------- | | Remaining 2023 | $3,423 | | 2024 | $13,439 | | 2025 | $836 | | 2026 | $561 | | 2027 | $10 | | Total lease payments | $18,269 | Total Lease Cost (in thousands USD) | Period | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :--------------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Total lease cost | $8,555 | $8,222 | $32,739 | $27,104 | - The **weighted-average remaining lease term was 1.45 years**, and the **weighted-average discount rate was 6.71%** as of September 30, 2023[143](index=143&type=chunk) [14. Income Taxes](index=31&type=section&id=14.%20Income%20Taxes) - For the nine months ended September 30, 2023, the company recorded an **income tax benefit of $554.7 million**, resulting in an **effective tax rate of (83)%**, primarily due to the partial release of the valuation allowance on deferred tax assets[145](index=145&type=chunk)[146](index=146&type=chunk) - The company estimates a **$701.5 million reduction in federal** and **$17.4 million reduction in state valuation allowance** for deferred tax assets[146](index=146&type=chunk) - **No income tax expense** was recorded for the three or nine months ended September 30, 2022, due to a full valuation allowance against net deferred tax assets[146](index=146&type=chunk)[186](index=186&type=chunk)[202](index=202&type=chunk) [15. Related Party Transactions](index=32&type=section&id=15.%20Related%20Party%20Transactions) - Concurrent with a public offering on June 26, 2023, Gulfport purchased **215,060 common shares** from Silver Point Capital, L.P. for approximately **$20.4 million** as part of its Repurchase Program[148](index=148&type=chunk) [16. Subsequent Events](index=32&type=section&id=16.%20Subsequent%20Events) - On October 27, 2023, the company's semi-annual borrowing base redetermination reaffirmed the Credit Facility at **$1.1 billion** with elected commitments remaining at **$900 million**[149](index=149&type=chunk) Derivative Contracts Entered Subsequent to Sep 30, 2023 (as of Oct 26, 2023) | Period | Type | Index | Daily Volume | Weighted Average Price | | :--------------------- | :---------------- | :---------------- | :----------- | :--------------------- | | Natural Gas (2024) | Costless Collars | NYMEX Henry Hub | 45,000 MMBtu/d | $3.10 / $3.77 | | Natural Gas (2025) | Swaps | NYMEX Henry Hub | 40,000 MMBtu/d | $4.04 | | NGL (2025) | Swaps | Mont Belvieu C3 | 1,000 Bbl/d | $30.03 | [Item 2. Management's Discussion and Analysis of Financial Conditions and Results of Operations](index=31&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Conditions%20and%20Results%20of%20Operations) This section provides management's analysis of Gulfport's financial condition, operational results, liquidity, and performance factors, including strategy, developments, and financial comparisons [Introduction](index=33&type=section&id=Introduction) - The MD&A section updates the financial condition discussion from the 2022 Form 10-K and analyzes changes in results of operations for the three and nine months ended September 30, 2023, compared to the same periods in 2022[151](index=151&type=chunk)[152](index=152&type=chunk) [Overview](index=33&type=section&id=Overview) - Gulfport is a **natural gas-weighted E&P company** with assets in the Appalachia and Anadarko basins, primarily targeting Utica, Marcellus, SCOOP Woodford, and Springer formations[153](index=153&type=chunk) - The company's strategy focuses on **safe, environmentally responsible asset development**, generating **sustainable cash flow**, improving **margins and operating efficiencies**, and **returning capital to shareholders**[153](index=153&type=chunk) [Recent Developments](index=33&type=section&id=Recent%20Developments) - **John Reinhart** was named CEO and Director in January 2023, and **Michael Hodges** became Executive Vice President and Chief Financial Officer in April 2023[154](index=154&type=chunk)[155](index=155&type=chunk) - The Credit Facility was amended on May 1, 2023, increasing elected commitments to **$900 million**, borrowing base to **$1.1 billion**, and extending maturity to May 1, 2027[157](index=157&type=chunk) - The common stock Repurchase Program authorization was increased to **$650 million** and extended through December 31, 2024, on September 20, 2023[161](index=161&type=chunk) - Interest rates on the Credit Facility increased from **5.41% (Q3 2022) to 8.28% (Q3 2023)** due to inflation, impacting the company's business strategy[162](index=162&type=chunk) [2023 Operational and Financial Highlights](index=34&type=section&id=2023%20Operational%20and%20Financial%20Highlights) - Total net production: **1,056.9 MMcfe per day** (Q3 2023)[165](index=165&type=chunk) - Drilled and completed a **Marcellus two-well pad** in Belmont County, Ohio[165](index=165&type=chunk) - Turned to sales: **5 gross (4.87 net) operated wells**[165](index=165&type=chunk) - Generated **$156.3 million of operating cash flows**[165](index=165&type=chunk) - Repurchase Program authorization expanded to **$650 million**[165](index=165&type=chunk) - Repurchased **76,170 shares for $8.7 million** at **$113.97 per share**[165](index=165&type=chunk) - Reaffirmed **$1.1 billion borrowing base** and **$900 million elected commitment** under Credit Facility[165](index=165&type=chunk) [2023 Production and Drilling Activity](index=35&type=section&id=2023%20Production%20and%20Drilling%20Activity) Production Volumes (MMcfe/day) | Area | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | Change (YoY) | % Change (YoY) | | :--------------------- | :-------------------------- | :-------------------------- | :----------- | :------------- | | Utica | 811,985 | 615,649 | 196,336 | 31.9% | | SCOOP | 244,902 | 299,239 | (54,337) | -18.2% | | Total | 1,056,887 | 914,888 | 141,999 | 15.5% | | Area | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | Change (YoY) | % Change (YoY) | | :--------------------- | :-------------------------- | :-------------------------- | :----------- | :------------- | | Utica | 773,512 | 682,611 | 90,901 | 13.3% | | SCOOP | 277,676 | 277,730 | (54) | 0.0% | | Total | 1,051,188 | 960,341 | 90,847 | 9.5% | - **Total net production increased by 16%** for the three months and **9%** for the nine months ended September 30, 2023, primarily due to 2022 and 2023 development programs, with significant growth in Utica production[167](index=167&type=chunk)[170](index=170&type=chunk) - In Q3 2023, **five gross (4.99 net) wells were spud** and **five gross (4.87 net) operated wells commenced sales in the Utica**, with no operated wells spud or commenced sales in the SCOOP during this period[170](index=170&type=chunk)[171](index=171&type=chunk) [Comparison of the Three Month Periods Ended September 30, 2023 and 2022](index=37&type=section&id=Comparison%20of%20the%20Three%20Month%20Periods%20Ended%20September%2030,%202023%20and%202022) Production and Pricing (3 Months Ended Sep 30, 2023 vs 2022) | Metric | Sep 30, 2023 | Sep 30, 2022 | Change (YoY) | % Change (YoY) | | :--------------------------------------- | :----------- | :----------- | :----------- | :------------- | | Natural gas sales (without derivatives) | $177,401 | $585,596 | $(408,195) | -69.7% | | Average natural gas price (without derivatives) | $1.99/Mcf | $7.80/Mcf | $(5.81) | -74.5% | | Oil and condensate sales (without derivatives) | $22,896 | $36,050 | $(13,154) | -36.5% | | Average oil price (without derivatives) | $77.90/Bbl | $89.75/Bbl | $(11.85) | -13.2% | | NGL sales (without derivatives) | $26,953 | $44,351 | $(17,398) | -39.2% | | Average NGL price (without derivatives) | $26.49/Bbl | $39.61/Bbl | $(13.12) | -33.1% | | Total sales (without derivatives) | $227,250 | $665,997 | $(438,747) | -65.9% | | Net gain (loss) on derivatives | $39,417 | $(474,895) | $514,312 | -108.3% | | Lease operating expenses ($/Mcfe) | $0.16 | $0.18 | $(0.02) | -11.1% | | Taxes other than income ($/Mcfe) | $0.07 | $0.20 | $(0.13) | -65.0% | | Transportation, gathering, processing and compression ($/Mcfe) | $0.89 | $1.06 | $(0.17) | -16.0% | | Depreciation, depletion and amortization ($/Mcfe) | $0.82 | $0.77 | $0.05 | 6.5% | | General and administrative expenses, net | $9,894 | $8,752 | $1,142 | 13.0% | | Interest expense | $14,919 | $15,461 | $(542) | -3.5% | - **Natural gas sales decreased significantly** due to a **75% decrease in realized prices**, partially offset by a **19% increase in sales volumes**; oil and NGL sales also decreased due to lower prices and volumes[176](index=176&type=chunk)[177](index=177&type=chunk)[178](index=178&type=chunk) - A substantial shift from a **net loss to a net gain on derivatives** was observed, primarily due to a decrease in futures pricing for oil, natural gas, and NGLs[179](index=179&type=chunk) - Per-unit **lease operating expenses, taxes other than income, and transportation costs decreased**, while **depreciation, depletion, and amortization per Mcfe increased** due to drilling and development activities[180](index=180&type=chunk)[181](index=181&type=chunk)[182](index=182&type=chunk)[183](index=183&type=chunk) - **General and administrative expenses increased** due to higher employee headcount and compensation; **interest expense decreased slightly**, despite increased Credit Facility interest rates, due to capitalized interest[184](index=184&type=chunk)[185](index=185&type=chunk) [Comparison of the Nine Month Periods Ended September 30, 2023 and 2022](index=41&type=section&id=Comparison%20of%20the%20Nine%20Month%20Periods%20Ended%20September%2030,%202023%20and%202022) Production and Pricing (9 Months Ended Sep 30, 2023 vs 2022) | Metric | Sep 30, 2023 | Sep 30, 2022 | Change (YoY) | % Change (YoY) | | :--------------------------------------- | :----------- | :----------- | :----------- | :------------- | | Natural gas sales (without derivatives) | $619,181 | $1,529,898 | $(910,717) | -59.5% | | Average natural gas price (without derivatives) | $2.38/Mcf | $6.47/Mcf | $(4.09) | -63.2% | | Oil and condensate sales (without derivatives) | $76,212 | $111,298 | $(35,086) | -31.5% | | Average oil price (without derivatives) | $73.21/Bbl | $96.42/Bbl | $(23.21) | -24.1% | | NGL sales (without derivatives) | $92,935 | $143,741 | $(50,806) | -35.3% | | Average NGL price (without derivatives) | $27.48/Bbl | $45.68/Bbl | $(18.20) | -39.8% | | Total sales (without derivatives) | $788,328 | $1,784,937 | $(996,609) | -55.8% | | Net gain (loss) on derivatives | $514,266 | $(1,436,317) | $1,950,583 | -135.8% | | Lease operating expenses ($/Mcfe) | $0.18 | $0.18 | $0.00 | 0.0% | | Taxes other than income ($/Mcfe) | $0.09 | $0.17 | $(0.08) | -47.1% | | Transportation, gathering, processing and compression ($/Mcfe) | $0.91 | $1.00 | $(0.09) | -9.0% | | Depreciation, depletion and amortization ($/Mcfe) | $0.83 | $0.72 | $0.11 | 15.3% | | General and administrative expenses, net | $27,238 | $24,128 | $3,110 | 12.9% | | Restructuring costs | $4,762 | — | $4,762 | N/A | | Interest expense | $42,402 | $43,679 | $(1,277) | -2.9% | | Other, net | $(20,492) | $(11,385) | $(9,107) | 80.0% | - **Total sales without derivatives decreased by 56%** due to significant declines in realized prices across all commodities, despite a **10% increase in natural gas sales volumes** and a **7% increase in NGL sales volumes**[189](index=189&type=chunk)[190](index=190&type=chunk)[191](index=191&type=chunk) - A substantial positive swing in **net gain on derivative instruments** (from a **$1.4 billion loss to a $514.3 million gain**) was the primary driver of the overall revenue increase, reflecting decreased futures pricing[192](index=192&type=chunk) - Per-unit **lease operating expenses remained flat**, while **taxes other than income and transportation costs decreased**; **depreciation, depletion, and amortization per Mcfe increased by 15%** due to drilling and development activities[193](index=193&type=chunk)[194](index=194&type=chunk)[195](index=195&type=chunk)[196](index=196&type=chunk) - **General and administrative expenses increased by 13%** due to higher headcount, compensation, and legal expenses; **restructuring costs of $4.8 million** were recognized in 2023[197](index=197&type=chunk)[198](index=198&type=chunk) - **Other, net income increased significantly**, primarily due to a **$17.8 million TC claim distribution** and a **$5.0 million recoupment of collateral**[200](index=200&type=chunk) [Liquidity and Capital Resources](index=46&type=section&id=Liquidity%20and%20Capital%20Resources) - Gulfport aims to maintain sufficient liquidity through **operating cash flows, cash on hand, and Credit Facility borrowings** to fund development projects, operations, capital expenditures, and share repurchases[204](index=204&type=chunk)[206](index=206&type=chunk) Liquidity Position (in millions USD) | Metric | Sep 30, 2023 | Oct 26, 2023 | | :--------------------------------------- | :----------- | :----------- | | Cash and cash equivalents | $8.3 | $8.8 | | Borrowings under Credit Facility | $95.0 | $59.0 | | Letters of credit outstanding | $66.9 | $60.9 | | Outstanding 2026 Senior Notes | $550.0 | $550.0 | | Total principal amount of funded debt | $645.0 | $609.0 | - The Credit Facility's borrowing base was reaffirmed at **$1.1 billion** with **$900 million in elected commitments** on October 27, 2023[213](index=213&type=chunk) - **Capital expenditures** for the nine months ended September 30, 2023, totaled **$385.5 million**, including **$319.2 million for drilling and completion**, **$41.4 million for maintenance leasehold**, and **$24.9 million for discretionary acreage acquisitions**[221](index=221&type=chunk) - Projected 2023 capital expenditures are **$385-$395 million for drilling and completion**, **$50-$60 million for maintenance leasehold**, and **$40 million for discretionary acreage acquisitions**, aiming for **1,045-1,055 MMcfe/day production**[222](index=222&type=chunk)[223](index=223&type=chunk) Sources and Uses of Cash (in thousands USD) | Category | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :--------------------------------------- | :-------------------------- | :-------------------------- | | Net cash provided by operating activities | $567,680 | $551,082 | | Additions to oil and natural gas properties | $(421,132) | $(331,994) | | Debt activity, net | $(50,000) | $15,000 | | Repurchases of common stock | $(82,757) | $(225,791) | | Preferred stock dividends | $(3,718) | $(4,136) | | Net change in cash and cash equivalents | $1,066 | $5,027 | - **Off-balance sheet arrangements** include **$66.9 million in letters of credit** and **$37.5 million in surety bonds**, primarily for firm transportation agreements, and commitments to purchase **$19.8 million in materials for 2023** and **$23.5 million for 2024**[231](index=231&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=48&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section details Gulfport's market risk exposure, mainly commodity price and interest rate volatility, and its mitigation strategies using derivative instruments [Natural Gas, Oil and Natural Gas Liquids Derivative Instruments](index=50&type=section&id=Natural%20Gas,%20Oil%20and%20Natural%20Gas%20Liquids%20Derivative%20Instruments) - Gulfport uses **derivative instruments** (swaps, options, costless collars, basis swaps) to mitigate exposure to volatile natural gas, oil, and NGL prices, aiming to protect short-term cash flow and achieve risk management objectives[234](index=234&type=chunk)[236](index=236&type=chunk)[240](index=240&type=chunk) - The company does not enter into derivative contracts for speculative purposes and continuously reviews and adjusts positions based on market conditions[112](index=112&type=chunk)[238](index=238&type=chunk) - As of September 30, 2023, the company had a **net asset derivative position of $64.4 million**, a significant shift from a **net liability position of $347.9 million** at December 31, 2022[241](index=241&type=chunk) - A hypothetical **10% increase in underlying commodity prices** would increase derivative liabilities by approximately **$112.8 million**, while a **10% decrease** would decrease liabilities by **$109.5 million**, with realized derivative gains/losses largely offset by changes in actual sales value[241](index=241&type=chunk) [Interest Rate Risk](index=51&type=section&id=Interest%20Rate%20Risk) - The Credit Facility has **floating interest rates**, making interest expense sensitive to fluctuations in prime rates or term benchmark rates[242](index=242&type=chunk) - As of September 30, 2023, **$95.0 million was outstanding** under the Credit Facility, bearing a **weighted average interest rate of 8.05%** for the nine months ended September 30, 2023[242](index=242&type=chunk) - The company did not have any interest rate swaps to hedge interest rate risks as of September 30, 2023[242](index=242&type=chunk) [Item 4. Controls and Procedures](index=49&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of the company's disclosure controls and procedures as of September 30, 2023, with no material changes in internal control over financial reporting [Evaluation of Disclosure Control and Procedures](index=51&type=section&id=Evaluation%20of%20Disclosure%20Control%20and%20Procedures) - As of September 30, 2023, the CEO and CFO concluded that the company's **disclosure controls and procedures were effective** in ensuring timely and accurate reporting of information required by the Exchange Act[243](index=243&type=chunk)[244](index=244&type=chunk) - Management acknowledges that control systems provide only **reasonable, not absolute, assurance** due to inherent limitations and judgments in design[245](index=245&type=chunk) [Changes in Internal Control over Financial Reporting](index=51&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) - There have been **no material changes in internal control over financial reporting** during the last fiscal quarter[246](index=246&type=chunk) PART II OTHER INFORMATION [Item 1. Legal Proceedings](index=52&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 9 of the consolidated financial statements for details on legal proceedings and business-related disputes - Information regarding legal proceedings is detailed in **Note 9 of the consolidated financial statements**[249](index=249&type=chunk) [Item 1A. Risk Factors](index=52&type=section&id=Item%201A.%20Risk%20Factors) This section directs readers to the Annual Report on Form 10-K for a comprehensive discussion of risk factors that could materially affect the company's business and financial performance - Risk factors that could materially adversely affect the business are described in **Item 1A of the Annual Report on Form 10-K** for the year ended December 31, 2022, and elsewhere in this Form 10-Q[250](index=250&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=52&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports on the company's common stock repurchase activity for the three months ended September 30, 2023, under its authorized program [Unregistered Sales of Equity Securities](index=52&type=section&id=Unregistered%20Sales%20of%20Equity%20Securities) - There were **no unregistered sales of equity securities** during the period[251](index=251&type=chunk) [Issuer Repurchases of Equity Securities](index=52&type=section&id=Issuer%20Repurchases%20of%20Equity%20Securities) Common Stock Repurchase Activity (3 Months Ended Sep 30, 2023) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Approximate Maximum Dollar Value Remaining | | :--------------------- | :------------------------------- | :--------------------------- | :----------------------------------------- | | July 1 - July 31 | 8,709 | $106.40 | $75,000,000 | | August 1 - August 31 | 44,323 | $111.94 | $70,463,000 | | September 1 - September 30 | 36,078 | $116.53 | $316,319,000 | | Total | 89,110 | $113.26 | | - The Board of Directors increased the authorized stock repurchase program to **$650 million** in September 2023, extending through December 31, 2024, with approximately **$316.3 million remaining available** for repurchase as of September 30, 2023[253](index=253&type=chunk) - Repurchases included shares to satisfy tax withholding requirements upon vesting of restricted stock unit awards[252](index=252&type=chunk) [Item 3. Defaults Upon Senior Securities](index=52&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section confirms no defaults occurred on senior securities during the reporting period - **No defaults upon senior securities** were reported[254](index=254&type=chunk) [Item 4. Mine Safety Disclosures](index=52&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section states that mine safety disclosures are not applicable to the company - Mine safety disclosures are **not applicable** to Gulfport Energy Corporation[255](index=255&type=chunk) [Item 5. Other Information](index=52&type=section&id=Item%205.%20Other%20Information) This section provides additional information, specifically concerning trading arrangements by officers and directors [Trading Arrangements](index=52&type=section&id=Trading%20Arrangements) - None of the company's officers or directors adopted or terminated any **Rule 10b5-1(c) trading arrangements** during the three months ended September 30, 2023[256](index=256&type=chunk) [Item 6. Exhibits](index=51&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including certifications and XBRL documents - Exhibits include **certifications from the CEO and CFO** (31.1, 31.2, 32.1, 32.2), **XBRL instance and taxonomy documents** (101.INS, 101.SCH, 101.CAL, 101.DEF, 101.LAB, 101.PRE), and the **cover page interactive data file** (104)[260](index=260&type=chunk) [Signatures](index=55&type=section&id=Signatures) This section contains the required signatures for the Form 10-Q, confirming its submission on behalf of Gulfport Energy Corporation - The report was signed by **Michael Hodges, Chief Financial Officer**, on November 1, 2023, in accordance with Section 13 or 15(d) of the Exchange Act[262](index=262&type=chunk)[263](index=263&type=chunk)

Financial Highlights - Gulfport's estimated FCF for 2024 is ~$2.1 Billion, and for 2025 is ~$2.9 Billion[2] - Gulfport has a meaningful adjusted free cash flow profile, generating 80% - 130%+ of market capitalization over the next five years[55] - Gulfport's 2023 Adjusted Free Cash Flow Yield is estimated to be ~9%[63] - Gulfport has a common share repurchase program authorizing purchases up to $650 million of its outstanding shares[54] - As of October 26, 2023, Gulfport repurchased ~$335 million of shares at an average price of $86.14 per share, retiring ~3.9 million shares[54,76] Operational Performance - Gulfport plans to allocate ~$40 million toward accretive acreage that extends high quality resource depth and provides optionality for near term development[9] - Gulfport's Utica footprint provides for future Marcellus development[17] - Gulfport's recent development plan has yielded strong results, with 60%+ improvement since 2020 in gross 2-Stream Volume (Bcfe / 1,000' of Lateral)[22] - Gulfport is focused on continuously improving cycle times and reducing operating costs[64] - Gulfport improved methane intensity rate by 25% in 2022 compared to 2021[27]

Financial Performance & Valuation - Gulfport's 2023 adjusted free cash flow yield is estimated to be around 10%[7] - The company's market capitalization is approximately $1.9 billion[27] - The enterprise value is $2.5 billion, with an EV/2023 adjusted EBITDA multiple of 3.5x[27] - Gulfport has liquidity of approximately $732 million[27] - As of July 27, 2023, Gulfport repurchased approximately $325 million of its shares at an average price of $85.51 per share[22] Production & Capital Allocation - Gulfport's Q2 2023 net production was approximately 769.2 MMcfe/day in Utica/Marcellus and 270.1 MMcfe/day in SCOOP[15] - The company plans to allocate approximately $40 million towards discretionary acreage acquisitions in 2023[23] - The total base capital expenditure for 2023 is projected to be between $425 million and $475 million[27] - Gulfport expects to turn-to-sales 20 gross Utica wells and 2 gross Marcellus wells[50] Reserves & Hedging - Gulfport's YE22 proved reserves were 2.9 net Tcfe in Utica/Marcellus and 1.1 net Tcfe in SCOOP[15] - Approximately 55% of the company's projected 2023 production is hedged[72, 74]

Financial Data and Key Metrics Changes - The company reported adjusted EBITDA of approximately $145 million during the second quarter, with net cash provided by operating activities before changes in working capital totaling approximately $134 million, which funded capital expenditures despite a soft gas macro environment [9][24][47] - The average daily production totaled 1.039 billion cubic feet equivalent per day, exceeding analyst expectations, driven by accelerated well completions and strong performance from the development program [41][67] - The company has reduced its operating unit cost guidance for the full year 2023 to $1.16 to $1.24 per million cubic feet equivalent, an improvement of approximately 4% based on the midpoint of previously issued guidance [6][67] Business Line Data and Key Metrics Changes - The company drilled and rig released eight gross wells during the second quarter, with seven in the Utica, and completed 13 gross wells, including 11 in the Utica and two in the SCOOP [41][63] - The company’s three well Barber Ridge pad in Monroe County continues to outperform historic results, producing in excess of 70 million cubic feet equivalent per day [65] - The average EUR for 1000 feet of lateral in the Utica has improved by over 50% since 2020, while the SCOOP area has seen a 75% improvement in program average EUR per 1000 feet of lateral since 2020 [43][32] Market Data and Key Metrics Changes - The company expects its natural gas basis differential before hedges to average $0.20 to $0.35 below NYMEX for the full year, with current forward prices suggesting a wider differential towards the end of the year [10][33] - The all-in realized price during the second quarter was $2.76 per Mcfe, which is $0.66 above the NYMEX Henry Hub Index price, highlighting the benefits of the company’s diverse marketing portfolio [71] Company Strategy and Development Direction - The company remains focused on disciplined growth, lowering costs, improving operational cycle times, and enhancing returns while maintaining a strong balance sheet [27][69] - The company plans to allocate approximately $40 million from its adjusted free cash flow towards discretionary acreage acquisitions to enhance its high-quality resource depth [28] - The company is committed to returning capital to shareholders through common stock repurchases, having reduced outstanding shares by over 13% since initiating the program [8][13] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the volatility in the natural gas macro environment but expressed confidence in the company’s valuation and operational execution capabilities, viewing the current landscape as a significant investment opportunity [14] - The company anticipates accelerating adjusted free cash flow in the second half of the year, driven by improved commodity prices and operational efficiencies [24][72] - Management emphasized the importance of developing assets efficiently and sustainably, focusing on enhancing margins and optimizing efficiencies [69] Other Important Information - The company incurred capital expenditures of $110.6 million related to drilling and completion activity and $18.7 million related to leasehold and land investment during the second quarter [48] - The company’s liquidity remains strong, totaling $732 million, providing flexibility for future development needs [50][73] Q&A Session Summary Question: What should be expected regarding Marcellus de-risking results? - Management indicated that early results are as expected and they are looking to delineate the liquids content to better understand the economic viability and production profiles [76][77] Question: Is the current hedge position satisfactory for 2024? - Management expressed comfort with the existing hedge position for 2024, indicating flexibility to adjust based on market conditions [83] Question: What is the outlook for capital allocation in the SCOOP area? - Management noted plans to allocate more capital to the Oklahoma SCOOP area in 2024, with expectations of returning to a more historic level of development activity [32][84]

PART I FINANCIAL INFORMATION [Item 1. Consolidated Financial Statements (Unaudited)](index=6&type=section&id=Item%201.%20Consolidated%20Financial%20Statements%20(Unaudited)) Presents unaudited consolidated financial statements, highlighting increased assets and equity, decreased liabilities, and a net income turnaround [Consolidated Balance Sheets](index=6&type=section&id=Consolidated%20Balance%20Sheets) Metric | Dec 31, 2022 (in thousands) | Jun 30, 2023 (in thousands) | Change (in thousands) | :------------------------------------------------------ | :-------------------------- | :-------------------------- | :-------------------- | | Total Assets | $2,534,479 | $2,555,724 | $21,245 | | Total Liabilities | $1,653,349 | $1,131,149 | $(522,200) | | Total Stockholders' Equity | $828,835 | $1,378,116 | $549,281 | | Cash and cash equivalents | $7,259 | $5,269 | $(1,990) | | Accounts receivable—oil, natural gas, and natural gas liquids sales | $278,404 | $92,104 | $(186,300) | | Short-term derivative instruments (asset) | $87,508 | $140,686 | $53,178 | | Short-term derivative instruments (liability) | $343,522 | $59,367 | $(284,155) | | Long-term debt | $694,155 | $648,267 | $(45,888) | | Retained Earnings | $381,872 | $996,028 | $614,156 | [Consolidated Statements of Operations](index=7&type=section&id=Consolidated%20Statements%20of%20Operations) Three Months Ended June 30 | Metric | 2023 (in thousands) | 2022 (in thousands) | Change (in thousands) | % Change | | :--------------------------------------- | :------------------ | :------------------ | :-------------------- | :------- | | Natural gas sales | $159,246 | $539,090 | $(379,844) | -70.46% | | Oil and condensate sales | $22,602 | $45,009 | $(22,407) | -49.78% | | Natural gas liquid sales | $26,070 | $54,106 | $(28,036) | -51.82% | | Net gain (loss) on natural gas, oil and NGL derivatives | $96,788 | $(172,871) | $269,659 | N/A | | Total revenues | $304,706 | $465,334 | $(160,628) | -34.52% | | Total operating expenses | $202,123 | $190,238 | $11,885 | 6.25% | | Income from operations | $102,583 | $275,096 | $(172,513) | -62.71% | | NET INCOME | $93,687 | $256,580 | $(162,893) | -63.49% | | NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS | $78,365 | $215,610 | $(137,245) | -63.65% | | Basic EPS | $4.23 | $10.42 | $(6.19) | -59.40% | | Diluted EPS | $4.18 | $10.34 | $(6.16) | -59.57% | Six Months Ended June 30 | Metric | 2023 (in thousands) | 2022 (in thousands) | Change (in thousands) | % Change | | :--------------------------------------- | :------------------ | :------------------ | :-------------------- | :------- | | Natural gas sales | $441,780 | $944,302 | $(502,522) | -53.22% | | Oil and condensate sales | $53,316 | $75,248 | $(21,932) | -29.15% | | Natural gas liquid sales | $65,982 | $99,390 | $(33,408) | -33.61% | | Net gain (loss) on natural gas, oil and NGL derivatives | $474,849 | $(961,422) | $1,436,271 | N/A | | Total revenues | $1,035,927 | $157,518 | $878,409 | 557.65% | | Total operating expenses | $410,757 | $375,223 | $35,534 | 9.47% | | INCOME (LOSS) FROM OPERATIONS | $625,170 | $(217,705) | $842,875 | N/A | | NET INCOME (LOSS) | $616,741 | $(235,395) | $852,136 | N/A | | NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS | $521,545 | $(238,223) | $759,768 | N/A | | Basic EPS | $27.91 | $(11.36) | $39.27 | N/A | | Diluted EPS | $27.60 | $(11.36) | $38.96 | N/A | [Consolidated Statements of Stockholders' Equity](index=9&type=section&id=Consolidated%20Statements%20of%20Stockholders%27%20Equity) Metric | Jan 1, 2023 (in thousands) | Jun 30, 2023 (in thousands) | Change (in thousands) | :----------------------------------- | :------------------------- | :-------------------------- | :-------------------- | | Total Stockholders' Equity | $828,835 | $1,378,116 | $549,281 | | Retained Earnings | $381,872 | $996,028 | $614,156 | | Net income (Q1 2023) | N/A | $523,054 | N/A | | Net income (Q2 2023) | N/A | $93,687 | N/A | | Repurchase of common stock | N/A | $(74,231) | N/A | | Dividends on preferred stock | N/A | $(2,585) | N/A | [Consolidated Statements of Cash Flows](index=11&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Metric | Six Months Ended Jun 30, 2023 (in thousands) | Six Months Ended Jun 30, 2022 (in thousands) | Change (in thousands) | :--------------------------------------- | :------------------------------------------- | :------------------------------------------- | :-------------------- | | Net cash provided by operating activities | $411,406 | $383,200 | $28,206 | | Net cash used in investing activities | $(281,593) | $(181,265) | $(100,328) | | Net cash used in financing activities | $(131,803) | $(198,614) | $66,811 | | Net (decrease) increase in cash and cash equivalents | $(1,990) | $3,321 | $(5,311) | | Cash and cash equivalents at end of period | $5,269 | $6,581 | $(1,312) | [Notes to Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) [1. Basis of Presentation](index=12&type=section&id=1.%20Basis%20of%20Presentation) - Gulfport is an independent natural gas-weighted E&P company operating in the Utica, Marcellus, and SCOOP Woodford and Springer formations[49](index=49&type=chunk) - Financial statements are unaudited, prepared under GAAP and SEC rules, and assume going concern[50](index=50&type=chunk)[51](index=51&type=chunk) Accounts Payable and Accrued Liabilities (in thousands) | Category | June 30, 2023 | December 31, 2022 | | :------------------------------------------ | :------------ | :---------------- | | Revenue payable and suspense | $149,232 | $222,721 | | Accounts payable | $59,382 | $37,807 | | Accrued transportation, gathering, processing and compression | $34,135 | $56,138 | | Accrued capital expenditures | $30,640 | $36,464 | | Accrued contract rejection damages and shares held in reserve | $1,996 | $40,996 | | Other accrued liabilities | $32,335 | $43,258 | | Total accounts payable and accrued liabilities | $307,720 | $437,384 | - "Other, net" for H1 2023 included **$17.8 million** from an interim TC claim distribution and a **$5.0 million** recoupment of previously placed collateral[53](index=53&type=chunk) [2. Property and Equipment](index=13&type=section&id=2.%20Property%20and%20Equipment) Property and Equipment (in thousands) | Category | June 30, 2023 | December 31, 2022 | | :------------------------------------------ | :------------ | :---------------- | | Proved oil and natural gas properties | $2,695,104 | $2,418,666 | | Unproved properties | $188,461 | $178,472 | | Total property and equipment, net | $2,185,831 | $2,057,730 | | Accumulated DD&A | $(705,153) | $(545,771) | - **No impairment** of **oil and natural gas properties** recorded for Q2 or H1 2023/2022[56](index=56&type=chunk) - Capitalized G&A costs were **$10.5 million** for H1 2023, up from **$9.7 million** for H1 2022[57](index=57&type=chunk) Asset Retirement Obligation (in thousands) | Metric | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--------------------------------------- | :----------------------------- | :----------------------------- | | Asset retirement obligation, beginning of period | $33,171 | $28,264 | | Liabilities incurred | $73 | $22 | | Liabilities settled | $(165) | $0 | | Liabilities removed due to divestitures | $(919) | $(7) | | Accretion expense | $1,478 | $1,384 | | Total asset retirement obligation, end of period | $33,638 | $29,663 | [3. Debt](index=14&type=section&id=3.%20Debt) Debt (in thousands) | Category | June 30, 2023 | December 31, 2022 | | :----------------------------------- | :------------ | :---------------- | | 8.0% senior unsecured notes due 2026 | $550,000 | $550,000 | | Credit Facility due 2027 | $99,000 | $145,000 | | Total long-term debt, net | $648,267 | $694,155 | - **Credit Facility elected commitments increased** from **$700 million** to **$900 million**, **borrowing base increased** from **$1 billion** to **$1.1 billion**, and **maturity extended** to May 2027[66](index=66&type=chunk)[217](index=217&type=chunk) - As of June 30, 2023, **$99.0 million** was **outstanding** under the **Credit Facility**, with a weighted average interest rate of **8.13%** for Q2 2023 and **7.85%** for H1 2023[71](index=71&type=chunk) - Fair value of 2026 **Senior Notes** was **$554.3 million** at June 30, 2023, compared to a carrying value of **$549.3 million**[75](index=75&type=chunk) [4. Mezzanine Equity](index=16&type=section&id=4.%20Mezzanine%20Equity) - **Preferred stock decreased** from **52,295 shares** (Dec 31, 2022) to **46,459 shares** (Jun 30, 2023) due to conversions[83](index=83&type=chunk) - **Preferred stock** holders receive **10%** cash or **15%** PIK cumulative quarterly dividends[77](index=77&type=chunk) - **Preferred stock outstanding** at June 30, 2023, could convert to approximately **3.3 million common shares**[78](index=78&type=chunk) [5. Equity](index=17&type=section&id=5.%20Equity) - **Common stock outstanding** was **18.7 million shares** at June 30, 2023, compared to **19.1 million** at December 31, 2022[33](index=33&type=chunk) - The Board approved an **increase** to the share repurchase program from **$300 million** to **$400 million**, expiring March 31, 2024[90](index=90&type=chunk)[163](index=163&type=chunk) Share Repurchase Program Activity (in thousands, except per share) | Period | Shares Purchased | Dollar Value | Average Price Paid | | :----------------- | :--------------- | :----------- | :----------------- | | First quarter 2023 | 459 | $32,873 | $71.61 | | Second quarter 2023 | 442 | $41,358 | $93.67 | | Total H1 2023 | 901 | $74,231 | $82.42 | - As of June 30, 2023, approximately **$75 million remained authorized** under the **$400 million** repurchase program[257](index=257&type=chunk) [6. Stock-Based Compensation](index=19&type=section&id=6.%20Stock-Based%20Compensation) - H1 2023 **stock-based compensation expense** was **$5.6 million** (**$1.9 million** capitalized), up from **$3.9 million** (**$1.3 million** capitalized) in H1 2022[92](index=92&type=chunk) - **Unrecognized compensation expense** for restricted stock units was **$15.7 million** (**2.23 years** weighted average) and for performance vesting restricted shares was **$7.4 million** (**1.99 years** weighted average) as of June 30, 2023[94](index=94&type=chunk)[96](index=96&type=chunk) [7. Restructuring Costs](index=21&type=section&id=7.%20Restructuring%20Costs) - H1 2023 **restructuring costs totaled $4.8 million**, including **$1.3 million** from accelerated vesting of share-based grants, due to CEO change and organizational restructuring[97](index=97&type=chunk)[202](index=202&type=chunk) [8. Earnings (Loss) Per Share](index=21&type=section&id=8.%20Earnings%20(Loss)%20Per%20Share) Net Income (Loss) Per Common Share (in thousands, except per share) | Metric | Q2 2023 | Q2 2022 | H1 2023 | H1 2022 | | :--------------------------------------- | :------ | :------ | :------ | :------- | | Net income (loss) attributable to common stockholders | $78,365 | $215,610 | $521,545 | $(238,223) | | Basic EPS | $4.23 | $10.42 | $27.91 | $(11.36) | | Diluted EPS | $4.18 | $10.34 | $27.60 | $(11.36) | | Weighted average common shares outstanding—Basic | 18,518 | 20,684 | 18,688 | 20,961 | | Weighted average common shares outstanding—Diluted | 18,805 | 20,877 | 18,930 | 20,961 | - **3.3 million potential common shares** from convertible **preferred stock** were dilutive for Q2/H1 2023, and **3.8 million** for Q2/H1 2022[99](index=99&type=chunk) [9. Commitments and Contingencies](index=22&type=section&id=9.%20Commitments%20and%20Contingencies) Future Firm Transportation and Gathering Commitments (in thousands) | Period | Amount | | :------------- | :----------- | | Remaining 2023 | $113,028 | | 2024 | $218,797 | | 2025 | $137,795 | | 2026 | $134,324 | | 2027 | $136,492 | | Thereafter | $737,104 | | Total | $1,477,540 | - Other **operational commitments** for inventory and materials are **$39.6 million** for 2023 and **$31.2 million** for 2024[105](index=105&type=chunk) - Received **$17.8 million interim distribution** for TC claim in Q1 2023; **finalized settlement** with Rover including a **$1.0 million** administrative claim payment[107](index=107&type=chunk)[204](index=204&type=chunk) - **Ongoing litigation** includes disputes over restrictive covenants on mineral rights and alleged trespass for production beyond specified shale formations[109](index=109&type=chunk)[110](index=110&type=chunk) [10. Derivative Instruments](index=25&type=section&id=10.%20Derivative%20Instruments) - Company uses **derivatives** (swaps, basis swaps, costless collars, options) to mitigate natural gas, oil, and NGL price risks, hedging **30-70%** of current year production and for **12-36 months**[114](index=114&type=chunk)[115](index=115&type=chunk)[238](index=238&type=chunk) Total Commodity Derivative Position (in thousands) | Metric | June 30, 2023 | December 31, 2022 | | :-------------------------- | :------------ | :---------------- | | Short-term derivative asset | $140,686 | $87,508 | | Long-term derivative asset | $54,308 | $26,525 | | Short-term derivative liability | $(59,367) | $(343,522) | | Long-term derivative liability | $(61,557) | $(118,404) | | Total commodity derivative position | $74,070 | $(347,893) | - **Net gain on derivatives** for H1 2023 was **$474.8 million**, a significant **turnaround** from a **$961.4 million net loss** in H1 2022, driven by **decreased** futures pricing[126](index=126&type=chunk)[196](index=196&type=chunk) - Subsequent to June 30, 2023, the company entered into additional basis swaps, swaps, and costless collars for 2024 and 2025[152](index=152&type=chunk) [11. Fair Value Measurements](index=29&type=section&id=11.%20Fair%20Value%20Measurements) - **Fair value measurements** are classified into **Level 1** (quoted prices in active markets), **Level 2** (observable inputs), and **Level 3** (unobservable inputs)[130](index=130&type=chunk)[131](index=131&type=chunk) Financial Assets and Liabilities by Valuation Level (June 30, 2023, in thousands) | Category | Level 1 | Level 2 | Level 3 | | :------------------------------------------ | :------ | :-------- | :-------- | | Derivative instruments (assets) | $0 | $194,994 | $0 | | Contingent consideration arrangement (assets) | $0 | $0 | $3,100 | | Derivative instruments (liabilities) | $0 | $120,924 | $0 | - **Contingent consideration arrangement** fair value was **$3.1 million** at June 30, 2023 (**Level 3**), with a **$1.2 million** loss recognized for H1 2023[132](index=132&type=chunk) [12. Revenue from Contracts with Customers](index=30&type=section&id=12.%20Revenue%20from%20Contracts%20with%20Customers) - **Revenues** from natural gas, oil, and NGL sales are recognized when control of the product is transferred to the customer[135](index=135&type=chunk) - Most contracts are short-term or have variable consideration, exempting disclosure of **remaining** performance obligations[137](index=137&type=chunk)[138](index=138&type=chunk) - **Receivables** from contracts with customers **decreased** from **$278.4 million** (Dec 31, 2022) to **$92.1 million** (Jun 30, 2023)[139](index=139&type=chunk) [13. Leases](index=31&type=section&id=13.%20Leases) - **Operating leases** for equipment, drilling rigs, and office space are recognized on the balance sheet for terms over one year[141](index=141&type=chunk)[142](index=142&type=chunk)[143](index=143&type=chunk) Total Lease Cost (in thousands) | Metric | H1 2023 | H1 2022 | | :---------------- | :-------- | :-------- | | Operating lease cost | $6,886 | $100 | | Short-term lease cost | $17,298 | $18,782 | | Total lease cost | $24,184 | $18,882 | - **Weighted-average remaining lease term** was **1.68 years**, and the **weighted-average discount rate** was **6.71%** as of June 30, 2023[146](index=146&type=chunk) [14. Income Taxes](index=32&type=section&id=14.%20Income%20Taxes) - **Effective tax rate** was **0%** for H1 2023 due to a full valuation allowance on net deferred tax assets[148](index=148&type=chunk) - A full valuation allowance is maintained as it's more likely than not that some or all deferred tax asset benefits won't be realized, but future positive evidence could lead to adjustment[149](index=149&type=chunk)[150](index=150&type=chunk) [15. Related Party Transactions](index=33&type=section&id=15.%20Related%20Party%20Transactions) - Gulfport repurchased **215,060 common shares** from Silver Point Capital, L.P. for **$20.4 million** on June 26, 2023, as part of its share repurchase program[151](index=151&type=chunk) [16. Subsequent Events](index=33&type=section&id=16.%20Subsequent%20Events) - As of July 27, 2023, new **derivatives** contracts include **2024 basis swaps** (Rex Zone 3, NGPL TXOK), **2024 Mont Belvieu C3 swaps**, and **2024/2025 NYMEX WTI/Henry Hub costless collars**[152](index=152&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Conditions and Results of Operations](index=34&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Conditions%20and%20Results%20of%20Operations) Management discusses financial condition, operations, and liquidity, covering recent developments, production, and financial results influenced by commodity prices [2023 Operational and Financial Highlights](index=35&type=section&id=2023%20Operational%20and%20Financial%20Highlights) - Q2 2023 highlights include **1,039.3 MMcfe/day net production**, **13 gross** (**11.9 net**) **wells turned to sales**, **$107.4 million operating cash flow**, and repurchase of **441,512 shares** for **$41.4 million**[167](index=167&type=chunk) - **Credit Facility borrowing base increased** to **$1.1 billion**, **elected commitment** to **$900 million**, and **maturity extended** to May 2027[167](index=167&type=chunk) [2023 Production and Drilling Activity](index=36&type=section&id=2023%20Production%20and%20Drilling%20Activity) Production Volumes (Q2 2023 vs Q2 2022) | Metric | Q2 2023 | Q2 2022 | % Change | | :-------------------------- | :-------- | :-------- | :------- | | Natural gas (Mcf/day) | 945,910 | 858,481 | 10.18% | | Oil and condensate (Bbl/day) | 3,533 | 4,678 | -24.48% | | NGL (Bbl/day) | 12,036 | 12,093 | -0.47% | | Combined (Mcfe/day) | 1,039,323 | 959,106 | 8.36% | Production Volumes (H1 2023 vs H1 2022) | Metric | H1 2023 | H1 2022 | % Change | | :-------------------------- | :-------- | :-------- | :------- | | Natural gas (Mcf/day) | 945,163 | 891,306 | 6.04% | | Oil and condensate (Bbl/day) | 4,128 | 4,158 | -0.72% | | NGL (Bbl/day) | 13,060 | 11,198 | 16.63% | | Combined (Mcfe/day) | 1,048,292 | 983,444 | 6.59% | - In Q2 2023, **2 gross** (**1.67 net**) **Utica wells** were spud, and **11 gross** (**10.15 net**) **Utica wells** and **2 gross** (**1.74 net**) **SCOOP wells** commenced sales[171](index=171&type=chunk)[172](index=172&type=chunk) [Comparison of Quarter-to-Date](index=38&type=section&id=Comparison%20of%20Quarter-to-Date) Q2 Sales and Pricing (YoY Change) | Metric | Q2 2023 (Avg Price w/o derivatives) | Q2 2022 (Avg Price w/o derivatives) | % Change (Price) | % Change (Volume) | | :----------------------------------- | :---------------------------------- | :---------------------------------- | :--------------- | :---------------- | | Natural gas ($/Mcf) | $1.85 | $6.90 | -73.19% | 10.18% | | Oil and condensate ($/Bbl) | $70.30 | $105.72 | -33.50% | -24.48% | | NGL ($/Bbl) | $23.80 | $49.17 | -51.59% | -0.47% | | Total sales (in thousands) | $207,918 | $638,205 | -67.42% | N/A | Q2 Operating Expenses (YoY Change) | Metric | Q2 2023 (in thousands) | Q2 2022 (in thousands) | % Change | | :----------------------------------- | :--------------------- | :--------------------- | :------- | | Lease operating expenses | $16,155 | $14,239 | 13.46% | | Taxes other than income | $7,938 | $16,682 | -52.42% | | Transportation, gathering, processing and compression | $85,664 | $87,752 | -2.38% | | Depreciation, depletion and amortization | $80,148 | $62,602 | 28.00% | | General and administrative expenses, net | $8,611 | $8,271 | 4.11% | | Restructuring costs | $2,893 | $0 | N/A | | Interest expense | $13,727 | $14,234 | -3.56% | - **Net gain on derivatives** was **$96.8 million** in Q2 2023, compared to a **net loss** of **$172.9 million** in Q2 2022, primarily due to **decreased** futures pricing[179](index=179&type=chunk) [Comparison of Year-to-Date](index=43&type=section&id=Comparison%20of%20Year-to-Date) H1 Sales and Pricing (YoY Change) | Metric | H1 2023 (Avg Price w/o derivatives) | H1 2022 (Avg Price w/o derivatives) | % Change (Price) | % Change (Volume) | | :----------------------------------- | :---------------------------------- | :---------------------------------- | :--------------- | :---------------- | | Natural gas ($/Mcf) | $2.58 | $5.85 | -55.90% | 6.04% | | Oil and condensate ($/Bbl) | $71.36 | $99.99 | -28.59% | -0.72% | | NGL ($/Bbl) | $27.91 | $49.03 | -43.08% | 16.63% | | Total sales (in thousands) | $561,078 | $1,118,940 | -49.86% | N/A | H1 Operating Expenses (YoY Change) | Metric | H1 2023 (in thousands) | H1 2022 (in thousands) | % Change | | :----------------------------------- | :--------------------- | :--------------------- | :------- | | Lease operating expenses | $36,017 | $31,883 | 13.09% | | Taxes other than income | $18,633 | $29,150 | -36.08% | | Transportation, gathering, processing and compression | $173,281 | $172,544 | 0.43% | | Depreciation, depletion and amortization | $159,242 | $124,886 | 27.51% | | General and administrative expenses, net | $17,344 | $15,376 | 12.79% | | Restructuring costs | $4,762 | $0 | N/A | | Interest expense | $27,483 | $28,218 | -2.59% | - **Net gain on derivatives** was **$474.8 million** in H1 2023, compared to a **net loss** of **$961.4 million** in H1 2022, primarily due to a significant **decrease** in futures pricing[196](index=196&type=chunk) [Liquidity and Capital Resources](index=48&type=section&id=Liquidity%20and%20Capital%20Resources) - Gulfport maintains **liquidity** through **operating cash flows**, **cash on hand**, and **Credit Facility**, using **derivatives** to manage **commodity price** volatility[208](index=208&type=chunk)[209](index=209&type=chunk) - As of June 30, 2023, cash and cash equivalents were **$5.3 million**, **Credit Facility** borrowings were **$99.0 million**, and 2026 **Senior Notes outstanding** were **$550 million**[212](index=212&type=chunk) Sources and Uses of Cash (H1 2023 vs H1 2022, in thousands) | Metric | H1 2023 | H1 2022 | Change | | :--------------------------------------- | :-------- | :-------- | :------- | | Net cash provided by operating activities | $411,406 | $383,200 | $28,206 | | Additions to oil and natural gas properties | $(283,406) | $(181,787) | $(101,619) | | Repurchases of common stock | $(74,516) | $(155,212) | $80,696 | | Preferred stock dividends | $(2,587) | $(2,828) | $241 | - 2023 **capital expenditures** are estimated at **$375-$400 million** for **drilling/completion**, **$50-$75 million** for **maintenance leasehold/land**, and **$40 million** for **discretionary acreage acquisitions**[226](index=226&type=chunk)[227](index=227&type=chunk) - **Off-balance sheet arrangements** include **$74.4 million** in **letters of credit** and **$37.8 million** in **surety bonds**, plus **$39.6 million** (2023) and **$31.2 million** (2024) in **operational commitments for inventory/materials**[235](index=235&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=52&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Manages commodity price risk via derivatives, shifting to a net asset position, and addresses interest rate risk on its floating-rate Credit Facility - Gulfport uses **derivative instruments** (swaps, options, costless collars) to mitigate exposure to volatile natural gas, oil, and NGL prices[238](index=238&type=chunk)[240](index=240&type=chunk)[244](index=244&type=chunk) - **Net derivative position changed** from a **$347.9 million liability** (Dec 31, 2022) to a **$74.1 million asset** (Jun 30, 2023)[245](index=245&type=chunk) - A **10% increase** in **commodity prices** would **increase derivative liability** by approximately **$119.5 million**, while a **10% decrease** would **decrease** it by approximately **$115.6 million**[245](index=245&type=chunk) - **Credit Facility** has **floating interest rates**; weighted average rate was **7.85%** for H1 2023. No interest rate swaps were in place as of June 30, 2023[246](index=246&type=chunk) [Item 4. Controls and Procedures](index=53&type=section&id=Item%204.%20Controls%20and%20Procedures) Management confirmed effective disclosure controls and no material changes in internal control over financial reporting as of June 30, 2023 - CEO and CFO concluded that **disclosure controls and procedures** were **effective** as of June 30, 2023[248](index=248&type=chunk) - **No material changes** in **internal control over financial reporting** occurred during the last fiscal quarter[250](index=250&type=chunk) PART II OTHER INFORMATION [Item 1. Legal Proceedings](index=54&type=section&id=Item%201.%20Legal%20Proceedings) Legal proceedings are detailed in Note 9 of the consolidated financial statements, covering commitments and contingencies - **Legal proceedings** information is provided in Note 9 of the consolidated financial statements[253](index=253&type=chunk) [Item 1A. Risk Factors](index=54&type=page&id=Item%201A.%20Risk%20Factors) Business risks are detailed in this section and the 2022 Annual Report on Form 10-K - **Business risks** are detailed in this section and the 2022 Annual Report on Form 10-K[254](index=254&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=54&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered equity sales; Q2 2023 saw 457,919 common shares repurchased, with $75 million remaining in the program - **No unregistered sales of equity securities**[255](index=255&type=chunk) Common Stock Repurchase Activity (Q2 2023) | Period | Total Number of Shares Purchased | Average Price Paid per Share | | :----------------- | :----------------------------- | :--------------------------- | | April 1 - April 30 | 62,209 | $81.26 | | May 1 - May 31 | 89,709 | $95.01 | | June 1 - June 30 | 306,001 | $95.66 | | Total | 457,919 | $93.58 | - Approximately **$75 million remained authorized** under the **$400 million** repurchase program as of June 30, 2023[257](index=257&type=chunk) [Item 3. Defaults Upon Senior Securities](index=54&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities were reported - **No defaults upon senior securities**[258](index=258&type=chunk) [Item 4. Mine Safety Disclosures](index=54&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - **Not applicable**[259](index=259&type=chunk) [Item 5. Other Information](index=55&type=section&id=Item%205.%20Other%20Information) Board changes include a director resignation, a new appointment to the Board and committees, and a promotion to Chief Accounting Officer - Guillermo (Bill) Martinez **resigned** from the **Board of Directors effective** July 31, 2023[261](index=261&type=chunk) - Jeannie Powers was **appointed** to the **Board**, **Audit Committee**, and **Nominating, Environmental, Social & Governance Committee**, **effective** July 31, 2023[262](index=262&type=chunk) - Matthew B. Willrath was **promoted** to Vice President and **Chief Accounting Officer effective** August 2, 2023[266](index=266&type=chunk) [Item 6. Exhibits](index=56&type=section&id=Item%206.%20Exhibits) Lists all exhibits filed with the Form 10-Q, including organizational documents, credit agreement amendments, and certifications - **Exhibits** include **organizational documents**, **credit agreement amendments**, **officer certifications**, and **XBRL data files**[269](index=269&type=chunk) [Signatures](index=58&type=section&id=Signatures) Report signed by Michael Hodges, Chief Financial Officer, on August 2, 2023 - Report signed by Michael Hodges, **Chief Financial Officer**, on August 2, 2023[274](index=274&type=chunk)

Table of Contents 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 March 31, 2023 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) (State or Other Jurisdiction of Incor ...

Total Capital Expenditures Total Net Production $0 $25 $50 $75 $100 $125 $150 1Q2023 2Q2023 3Q2023 4Q2023 $ Millions Utica / Marcellus SCOOP Land Actual - 250 500 750 1,000 1Q2023 2Q2023 3Q2023 4Q2023 MMcfepd Utica / Marcellus SCOOP Actual Production GPOR | 10 Key Highlights • Plan to turn-to-sales 18 to 20 gross Utica wells and 2 gross Marcellus wells • Potential for 40 – 50 locations across Gulfport's existing acreage Gulfport Utica Well Performance by Vintage Bcfe / 1,000' of Lateral Gulfport's proved re ...