Gulfport Energy Corporation (NYSE:GPOR) Q3 2021 Earnings Conference Call November 3, 2021 9:00 AM ET Company Participants Tommy Renouard – Senior Analyst, Investor Relations Tim Cutt - Chief Executive Officer Bill Buese - Executive Vice President & Chief Financial Officer Conference Call Participants Neal Dingmann - Truist Zach Parham – JP Morgan Tarek Hamid - JPMorgan Steven Dechert - KeyBanc Operator Greetings. Welcome to the Gulfport Energy Corp Third Quarter 2021 Conference Call. At this time, all parti ...

Financial Highlights - The company's market capitalization is $1.7 billion[9] - The company's enterprise value is $2.5 billion[10] - The company has liquidity of $388 million[11] - The company's leverage is 1.2x[12] - The company estimates 2021 free cash flow to be $345 - $365 million[16] - The company estimates 2021 free cash flow yield to be approximately 21%[17] Operational Overview - The company estimates 2021 total capital expenditure to be $290 - $310 million[13] - The company estimates 2021 total net production to be 980 – 1,000 MMcfepd[14] - The company's production mix is 90% natural gas, 7% NGL, and 3% oil[15]

[FORM 10-Q Cover Page](index=1&type=section&id=FORM%2010-Q%20Cover%20Page) Presents Gulfport Energy Corporation's Q2 2021 Form 10-Q cover page, detailing filing status and registrant information - Gulfport Energy Corporation filed a Quarterly Report on Form 10-Q for the period ended **June 30, 2021**[1](index=1&type=chunk) Registrant Information | Field | Value | | :--- | :--- | | Exact Name | Gulfport Energy Corporation | | State of Incorporation | Delaware | | IRS Employer ID | 86-3684669 | | Principal Executive Offices | 3001 Quail Springs Parkway, Oklahoma City, Oklahoma 73134 | | Telephone Number | (405) 252-4600 | | Trading Symbol | GPOR | | Exchange | The New York Stock Exchange | | Common Stock Outstanding (July 29, 2021) | 20,585,599 shares | [Table of Contents](index=2&type=section&id=Table%20of%20Contents) Outlines the Form 10-Q's structure, including financial statements, MD&A, market risk, and controls and procedures - The report is divided into two main parts: **Part I (Financial Information)** and **Part II (Other Information)**[5](index=5&type=chunk) - Key financial statements and notes are located in **Part I, Item 1**, starting on **page 4**[5](index=5&type=chunk) - Management's Discussion and Analysis of Financial Conditions and Results of Operations is in **Part I, Item 2**, starting on **page 46**[5](index=5&type=chunk) [DEFINITIONS](index=3&type=section&id=DEFINITIONS) Provides a glossary of abbreviations and terms used in the Form 10-Q, clarifying company, monetary, and industry-specific definitions - References to 'us,' 'we,' 'our,' 'ours,' 'Gulfport,' the 'Company' and 'Registrant' refer to Gulfport Energy Corporation and its consolidated subsidiaries[8](index=8&type=chunk) - All monetary values, other than per unit and per share amounts, are stated in **thousands of U.S. dollars** unless otherwise specified[8](index=8&type=chunk) - Key terms defined include those related to the company's bankruptcy proceedings (e.g., Bankruptcy Code, Emergence Date, Plan, Restructuring) and oil and gas industry metrics (e.g., Bbl, Mcf, MMBtu, NGL, SCOOP, Utica)[9](index=9&type=chunk)[11](index=11&type=chunk)[14](index=14&type=chunk)[17](index=17&type=chunk)[18](index=18&type=chunk)[20](index=20&type=chunk)[21](index=21&type=chunk)[22](index=22&type=chunk)[23](index=23&type=chunk) [PART I FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) [Item 1. Consolidated Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Consolidated%20Financial%20Statements%20(Unaudited)) Presents Gulfport's unaudited consolidated financial statements and notes, detailing Chapter 11 emergence and fresh start accounting [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) Reflects significant asset and liability decreases for the Successor period, driven by Chapter 11 reorganization and fresh start accounting Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2021 (Successor) | December 31, 2020 (Predecessor) | | :--- | :--- | :--- | | Total Assets | $2,066,188 | $2,539,871 | | Total Liabilities | $1,557,238 | $2,840,371 | | Total Stockholders' Equity (Deficit) | $453,090 | $(300,500) | | Cash and Cash Equivalents | $9,389 | $89,861 | | Property and Equipment, net | $1,818,731 | $2,086,269 | | Liabilities Subject to Compromise | $0 | $2,293,480 | - The company emerged from Chapter 11, leading to a revaluation of assets and liabilities under fresh start accounting, and the cancellation of Predecessor common stock and issuance of New Common Stock and Preferred Stock[29](index=29&type=chunk)[45](index=45&type=chunk)[66](index=66&type=chunk)[67](index=67&type=chunk) [Consolidated Statements of Operations](index=6&type=section&id=Consolidated%20Statements%20of%20Operations) Reflects Chapter 11 impact, showing Successor net loss from derivatives and impairment, contrasting with Predecessor net income Consolidated Statements of Operations Highlights (in thousands, except per share data) | Metric | Successor (May 18 - Jun 30, 2021) | Predecessor (Apr 1 - May 17, 2021) | Predecessor (Jan 1 - May 17, 2021) | Predecessor (Apr 1 - Jun 30, 2020) | Predecessor (Jan 1 - Jun 30, 2020) | | :--- | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $5,724 | $25,679 | $273,037 | $186,301 | $485,639 | | Total Operating Expenses | $207,467 | $94,194 | $290,695 | $742,051 | $1,521,476 | | Net (Loss) Income | $(209,586) | $242,214 | $250,996 | $(561,068) | $(1,078,606) | | Net (Loss) Income Attributable to Common Stockholders | $(210,617) | $242,214 | $250,996 | $(561,068) | $(1,078,606) | | Basic EPS | $(10.36) | $1.51 | $1.56 | $(3.51) | $(6.75) | - Net loss in the Successor Period was significantly impacted by net losses on natural gas, oil, and NGL derivatives (**$139.7 million**) and impairment of oil and natural gas properties (**$117.8 million**)[31](index=31&type=chunk) - The Predecessor periods show substantial reorganization items, net, contributing to income in the Current Predecessor Quarter (**$305.6 million**) and YTD Period (**$266.9 million**)[31](index=31&type=chunk)[34](index=34&type=chunk) [Consolidated Statements of Comprehensive Income (Loss)](index=8&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) Shows Successor comprehensive loss equal to net loss, with Predecessor periods also reporting losses and minor foreign currency impact Consolidated Statements of Comprehensive Income (Loss) Highlights (in thousands) | Metric | Successor (May 18 - Jun 30, 2021) | Predecessor (Apr 1 - May 17, 2021) | Predecessor (Jan 1 - May 17, 2021) | Predecessor (Jun 30, 2020) | | :--- | :--- | :--- | :--- | :--- | | Net income (loss) | $(209,586) | $242,214 | $250,996 | $(561,068) | | Foreign currency translation adjustment | $0 | $0 | $0 | $6,872 | | Comprehensive income (loss) | $(209,586) | $242,214 | $250,996 | $(554,196) | [Consolidated Statements of Stockholders' Equity (Deficit)](index=9&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity%20(Deficit)) Illustrates Chapter 11 impact, with Predecessor equity cancellation and new equity issuance, transforming deficit to positive equity Stockholders' Equity (Deficit) Evolution (in thousands) | Metric | Balance at Jan 1, 2021 (Predecessor) | Balance at May 17, 2021 (Predecessor) | Balance at May 18, 2021 (Successor) | Balance at Jun 30, 2021 (Successor) | | :--- | :--- | :--- | :--- | :--- | | Total Stockholders' Equity (Deficit) | $(300,500) | $639,667 | $639,667 | $453,090 | | Predecessor Common Stock | $1,607 | $2 | $2 | $2 | | New Common Stock | $0 | $2 | $2 | $2 | | Additional Paid-in Capital | $4,213,752 | $693,774 | $693,774 | $693,921 | | Accumulated Deficit | $(4,472,859) | $0 | $0 | $(210,617) | | New Preferred Stock | $0 | $55,000 | $55,000 | $55,860 | - The cancellation of Predecessor Equity and issuance of New Common Stock and Preferred Stock on **May 17, 2021**, significantly altered the equity structure, moving from a deficit to positive equity[40](index=40&type=chunk) [Consolidated Statements of Cash Flows](index=11&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Operating activities generated positive cash flow, with significant investing cash use and financing impacted by Chapter 11 reorganization Consolidated Statements of Cash Flows Highlights (in thousands) | Metric | Successor (May 18 - Jun 30, 2021) | Predecessor (Jan 1 - May 17, 2021) | Predecessor (Jan 1 - Jun 30, 2020) | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | $38,365 | $172,155 | $247,222 | | Net cash used in investing activities | $(40,276) | $(97,831) | $(230,090) | | Net cash used in financing activities | $(18,982) | $(104,768) | $(20,375) | | Net decrease in cash, cash equivalents and restricted cash | $(20,893) | $(30,444) | $(3,243) | | Cash, cash equivalents and restricted cash at end of period | $38,524 | $59,417 | $2,817 | - Operating cash flow decreased from **$247.2 million** in H1 2020 to **$210.5 million** (combined Successor and Predecessor H1 2021), primarily due to reorganization items[42](index=42&type=chunk)[292](index=292&type=chunk) - Financing activities in 2021 included significant borrowings (**$113.2 million** Successor, **$302.8 million** Predecessor) and principal payments on the Exit Credit Facility (**$131.0 million** Successor) and DIP Credit Facility (**$157.5 million** Predecessor)[42](index=42&type=chunk) [Notes to Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Provides detailed explanations for financial statements, covering basis, Chapter 11 impact, debt, equity, and critical accounting policies [Note 1. BASIS OF PRESENTATION](index=14&type=section&id=Note%201.%20BASIS%20OF%20PRESENTATION) Details Gulfport's identity, Chapter 11 reorganization, and fresh start accounting, distinguishing 'Successor' and 'Predecessor' periods - Gulfport Energy Corporation is an independent natural gas-weighted exploration and production company with assets in the Appalachia and Anadarko basins[45](index=45&type=chunk) - The company filed for Chapter 11 bankruptcy on **November 13, 2020**, and emerged on **May 17, 2021**, leading to the adoption of fresh start accounting[45](index=45&type=chunk)[49](index=49&type=chunk)[50](index=50&type=chunk) - Financial statements distinguish between '**Successor**' (post-**May 17, 2021**) and '**Predecessor**' (on or prior to **May 17, 2021**) periods, with fresh start accounting making post-emergence statements not comparable to prior periods[45](index=45&type=chunk)[47](index=47&type=chunk)[67](index=67&type=chunk) - The company early adopted ASU No. 2020-06, simplifying accounting for convertible instruments, effective on the Emergence Date[58](index=58&type=chunk)[59](index=59&type=chunk) [Note 2. CHAPTER 11 EMERGENCE](index=17&type=section&id=Note%202.%20CHAPTER%2011%20EMERGENCE) Outlines significant transactions upon Chapter 11 emergence, including old stock cancellation, new equity/debt, and new Board composition - On **May 17, 2021**, all Predecessor common stock was cancelled, and **19,845,780 shares** of New Common Stock and **55,000 shares** of New Preferred Stock were issued[62](index=62&type=chunk) - All outstanding obligations under the Predecessor Senior Notes were cancelled[62](index=62&type=chunk) - The company entered into a new Exit Credit Agreement, providing for a **$1.5 billion** Exit Facility and a **$180 million** First-Out Term Loan Facility, with an initial borrowing base of up to **$580 million**[62](index=62&type=chunk) - Issued up to **$550 million** aggregate principal amount of **8.000%** senior notes due 2026 (Successor Senior Notes)[62](index=62&type=chunk) - The post-emergence Board of Directors is comprised of **five directors**, including the Interim CEO, **Timothy Cutt**[64](index=64&type=chunk) [Note 3. FRESH START ACCOUNTING](index=18&type=section&id=Note%203.%20FRESH%20START%20ACCOUNTING) Explains fresh start accounting post-Chapter 11, revaluing assets/liabilities to fair value, with reorganization value at $2.3 billion - Gulfport qualified for and applied fresh start accounting on **May 17, 2021**, because existing voting shareholders received less than **50%** of new equity and reorganization value (**$2.3 billion**) was less than post-petition liabilities (**$3.1 billion**)[66](index=66&type=chunk) - The enterprise value of the Successor was estimated at **$1.6 billion**, leading to a reorganization value of Successor assets of **$2.25 billion**[68](index=68&type=chunk)[69](index=69&type=chunk)[71](index=71&type=chunk) - Significant fair value adjustments were made to oil and natural gas properties (reduced by **$9.04 billion** in total property and equipment, net), derivative instruments, and equity investments (Grizzly investment reduced by **$27 million**)[71](index=71&type=chunk)[72](index=72&type=chunk)[75](index=75&type=chunk)[76](index=76&type=chunk)[79](index=79&type=chunk) Reorganization Items, Net (in thousands) | Item | Predecessor (Apr 1 - May 17, 2021) | Predecessor (Jan 1 - May 17, 2021) | | :--- | :--- | :--- | | Legal and professional advisory fees | $(40,782) | $(81,565) | | Net gain on liabilities subject to compromise | $571,032 | $575,182 | | Fresh start adjustments, net | $(160,756) | $(160,756) | | Total reorganization items, net | $305,617 | $266,898 | [Note 4. PROPERTY AND EQUIPMENT](index=27&type=section&id=Note%204.%20PROPERTY%20AND%20EQUIPMENT) Details property and equipment, primarily oil/gas, highlighting a $117.8 million impairment charge and asset retirement obligations Property and Equipment, Net (in thousands) | Category | June 30, 2021 (Successor) | December 31, 2020 (Predecessor) | | :--- | :--- | :--- | | Proved oil and natural gas properties | $1,737,778 | $9,359,866 | | Unproved properties | $224,214 | $1,457,043 | | Total property and equipment, net | $1,818,731 | $2,086,269 | | Accumulated DD&A and impairment | $(150,175) | $(8,819,178) | - A **$117.8 million** impairment of oil and natural gas properties was recorded for the Successor Period (ended **June 30, 2021**) due to the ceiling test, following **$532.9 million** and **$1.1 billion** impairments in prior Predecessor periods[91](index=91&type=chunk) - Unevaluated properties at **June 30, 2021**, totaled **$224.2 million**, primarily in Utica (**$186.0 million**) and SCOOP (**$38.2 million**)[94](index=94&type=chunk) Asset Retirement Obligation (in thousands) | Item | Amount | | :--- | :--- | | Asset retirement obligation at Jan 1, 2021 (Predecessor) | $63,560 | | Fresh start adjustments | $(46,257) | | Asset retirement obligation at May 18, 2021 (Successor) | $19,084 | | Asset retirement obligation at Jun 30, 2021 | $19,347 | [Note 5. LONG-TERM DEBT](index=28&type=section&id=Note%205.%20LONG-TERM%20DEBT) Details Gulfport's post-Chapter 11 long-term debt, including Exit Credit Facility and Successor Senior Notes, outlining terms and rates Long-Term Debt Structure (in thousands) | Debt Instrument | June 30, 2021 (Successor) | December 31, 2020 (Predecessor) | | :--- | :--- | :--- | | Exit Facility | $105,000 | $0 | | First-Out Term Loan | $180,000 | $0 | | 8.000% senior unsecured notes due 2026 | $550,000 | $0 | | DIP Credit Facility | $0 | $157,500 | | Pre-petition revolving credit facility | $0 | $292,910 | | Predecessor Senior Notes (various) | $0 | $1,786,688 | | Total Debt | $833,847 | $2,258,962 | - The Exit Credit Facility has an initial borrowing base of **$580 million**, matures on **May 17, 2024**, and includes a **$150 million** sublimit for letters of credit and a **$40 million** availability blocker[99](index=99&type=chunk)[100](index=100&type=chunk)[101](index=101&type=chunk) - The Exit Facility bore interest at a weighted average rate of **4.50%** and the First-Out Term Loan at **5.50%** as of **June 30, 2021**[102](index=102&type=chunk) - The company issued **$550 million** aggregate principal amount of **8.000%** senior notes due 2026, payable semi-annually[109](index=109&type=chunk)[111](index=111&type=chunk) - Predecessor Senior Notes and the Building Loan were cancelled upon emergence from bankruptcy[119](index=119&type=chunk)[120](index=120&type=chunk) [Note 6. EQUITY](index=31&type=section&id=Note%206.%20EQUITY) Details Gulfport's equity changes post-Chapter 11, including Predecessor stock cancellation, new common/preferred stock issuance, and preferred terms - On the Emergence Date, all Predecessor common stock was cancelled, and approximately **19.8 million shares** of New Common Stock and **55,000 shares** of New Preferred Stock were issued[124](index=124&type=chunk)[125](index=125&type=chunk) - New Preferred Stock holders are entitled to cumulative quarterly dividends at **10% per annum** (cash) or **15% per annum** (PIK Dividends), with PIK dividends mandatory if the Total Net Funded Debt to EBITDAX ratio is **1.50 or greater**[126](index=126&type=chunk) - Preferred Stock has conversion rights into common stock at the holder's option and redemption rights for Gulfport under certain conditions[127](index=127&type=chunk)[128](index=128&type=chunk)[129](index=129&type=chunk) - On **June 30, 2021**, dividends on New Preferred Stock included **1,006 shares** paid in kind and **$25 thousand** cash-in-lieu of fractional shares[131](index=131&type=chunk) [Note 7. STOCK-BASED COMPENSATION](index=32&type=section&id=Note%207.%20STOCK-BASED%20COMPENSATION) Explains Chapter 11 impact on stock-based compensation, with Predecessor awards cancelled and a new Incentive Plan adopted - All Predecessor stock-based compensation awards were cancelled upon emergence, resulting in the recognition of **$4.4 million** in previously unamortized expense[132](index=132&type=chunk) - The company adopted the Gulfport Energy Corporation 2021 Stock Incentive Plan, reserving **2,828,123 shares** of New Common Stock for future awards, with no grants made as of **June 30, 2021**[133](index=133&type=chunk) Predecessor Stock-Based Compensation Costs (in thousands) | Period | Stock-Based Compensation Cost | Capitalized Amount | | :--- | :--- | :--- | | Current Predecessor Quarter | $1,500 | $300 | | Current Predecessor YTD Period | $4,400 | $900 | | Prior Predecessor Quarter | $2,200 | $1,000 | | Prior Predecessor YTD Period | $4,300 | $1,900 | [Note 8. EARNINGS (LOSS) PER SHARE](index=33&type=section&id=Note%208.%20EARNINGS%20(LOSS)%20PER%20SHARE) Details EPS calculation, highlighting New Preferred Stock as participating securities and anti-dilutive effect during net loss periods - Basic EPS for the Successor Period was **$(10.36)**, while for the Current Predecessor Quarter and YTD Period, it was **$1.51** and **$1.56**, respectively[31](index=31&type=chunk)[34](index=34&type=chunk)[141](index=141&type=chunk) - New Preferred Stock is considered a participating security but does not participate in undistributed net losses[141](index=141&type=chunk) - Potential common shares from convertible New Preferred Stock (**4.0 million shares**) and unvested restricted stock (**1.3-1.6 million shares**) were anti-dilutive during periods of net loss[140](index=140&type=chunk) [Note 9. COMMITMENTS AND CONTINGENCIES](index=34&type=section&id=Note%209.%20COMMITMENTS%20AND%20CONTINGENCIES) Outlines Gulfport's significant commitments, including firm transportation and sales contracts, and various contingencies like litigation Future Firm Transportation and Gathering Commitments (in thousands) | Period | Amount | | :--- | :--- | | Remaining 2021 | $112,881 | | 2022 | $226,544 | | 2023 | $224,737 | | 2024 | $217,873 | | 2025 | $139,124 | | Thereafter | $1,013,822 | | Total | $1,934,981 | Future Firm Sales Commitments (MMBtu per day) | Period | Volume | | :--- | :--- | | Remaining 2021 | 16,000 | | 2022 | 4,000 | | 2023-Thereafter | 0 | - The company is litigating motions to reject certain firm transportation agreements, with potential liability exceeding **$80 million** if not granted[148](index=148&type=chunk) - Ongoing litigation includes environmental claims in Louisiana, a derivative action related to Mammoth Energy, a federal securities class action, and breach of contract claims with Stingray Pressure Pumping LLC and Muskie[149](index=149&type=chunk)[150](index=150&type=chunk)[151](index=151&type=chunk)[152](index=152&type=chunk)[153](index=153&type=chunk) [Note 10. DERIVATIVE INSTRUMENTS](index=38&type=section&id=Note%2010.%20DERIVATIVE%20INSTRUMENTS) Details Gulfport's use of derivative instruments to mitigate commodity price volatility, presenting fair values and a significant net liability - Gulfport uses fixed price swaps, sold call options, costless collars, and basis swaps to manage commodity price volatility for natural gas, oil, and NGL[160](index=160&type=chunk)[161](index=161&type=chunk)[162](index=162&type=chunk)[164](index=164&type=chunk)[166](index=166&type=chunk) Summary of Open Fixed Price Swap Positions (as of June 30, 2021) | Commodity | Location | Daily Volume | Weighted Average Price | | :--- | :--- | :--- | :--- | | Natural Gas (MMBtu/day) | NYMEX Henry Hub | 221,500 (2021), 80,411 (2022) | $2.79 (2021), $2.80 (2022) | | Oil (Bbl/day) | NYMEX WTI | 3,250 (2021), 1,000 (2022) | $57.35 (2021), $67.00 (2022) | | NGL (Bbl/day) | Mont Belvieu C3 | 3,100 (2021), 496 (2022) | $27.80 (2021), $27.30 (2022) | Fair Value of Derivative Instruments (in thousands) | Category | June 30, 2021 (Successor) | December 31, 2020 (Predecessor) | | :--- | :--- | :--- | | Short-term derivative asset | $2,223 | $27,146 | | Long-term derivative asset | $3,014 | $322 | | Short-term derivative liability | $(192,730) | $(11,641) | | Long-term derivative liability | $(113,470) | $(36,604) | | Total commodity derivative position | $(300,963) | $(20,777) | - The company had a net liability derivative position of **$301.0 million** at **June 30, 2021**, compared to a net asset position of **$3.3 million** at **June 30, 2020**[170](index=170&type=chunk)[174](index=174&type=chunk)[318](index=318&type=chunk) [Note 11. FAIR VALUE MEASUREMENTS](index=41&type=section&id=Note%2011.%20FAIR%20VALUE%20MEASUREMENTS) Describes Gulfport's fair value measurements, categorizing assets/liabilities into Level 1, 2, or 3 inputs, with derivatives primarily Level 2 - Fair value measurements are classified into **Level 1** (quoted prices in active markets), **Level 2** (observable inputs other than Level 1), and **Level 3** (unobservable inputs)[177](index=177&type=chunk) Fair Value of Financial Instruments (in thousands) | Category | Level 1 | Level 2 | Level 3 | | :--- | :--- | :--- | :--- | | **Assets (June 30, 2021):** | | | | | Derivative Instruments | $0 | $5,237 | $0 | | Contingent consideration arrangement | $0 | $0 | $6,500 | | **Liabilities (June 30, 2021):** | | | | | Derivative Instruments | $0 | $306,200 | $0 | - The fair value of the contingent consideration arrangement (**$6.5 million** at **June 30, 2021**) is calculated using discounted cash flow techniques with Level 3 inputs[179](index=179&type=chunk) - Fresh start accounting adjustments for oil and natural gas properties and asset retirement obligations involved significant Level 3 unobservable inputs, such as future production estimates, commodity prices, and discount rates[183](index=183&type=chunk) [Note 12. REVENUE FROM CONTRACTS WITH CUSTOMERS](index=42&type=section&id=Note%2012.%20REVENUE%20FROM%20CONTRACTS%20WITH%20CUSTOMERS) Outlines Gulfport's revenue recognition policies for natural gas, oil, and NGL sales, recognized upon transfer of control - Revenue from natural gas, oil, and NGL sales is recognized when control of the product is transferred to the customer, typically based on market indices and volumes delivered[184](index=184&type=chunk)[185](index=185&type=chunk) - Gathering, processing, and compression fees are presented as operating expenses, not deductions from revenue[186](index=186&type=chunk) - Receivables from contracts with customers were **$140.7 million** at **June 30, 2021**, and **$119.9 million** at **December 31, 2020**[189](index=189&type=chunk) [Note 13. EQUITY INVESTMENTS](index=44&type=section&id=Note%2013.%20EQUITY%20INVESTMENTS) Details Gulfport's equity investments, including a 24.5% interest in Grizzly Oil Sands ULC, reduced to zero post-emergence - Gulfport owns an approximate **24.5%** interest in Grizzly Oil Sands ULC, which was reduced to **zero** upon the Emergence Date due to suspended operations and no anticipated future funding[195](index=195&type=chunk)[197](index=197&type=chunk) - The investment in Mammoth Energy Services, Inc. was reduced to **zero** in Q1 2020 and its shares were used to settle Class 4A claims upon emergence[198](index=198&type=chunk) Summarized Financial Information for Equity Investments (in thousands) | Metric | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Current assets | $462,478 | $483,300 | | Noncurrent assets | $1,079,557 | $1,092,490 | | Current liabilities | $125,359 | $132,970 | | Noncurrent liabilities | $124,628 | $148,240 | | Gross revenue (Q2 2021) | $66,805 | $60,109 (Q2 2020) | | Net loss (Q2 2021) | $(13,606) | $(14,922) (Q2 2020) | [Note 14. LEASES](index=45&type=section&id=Note%2014.%20LEASES) Describes Gulfport's operating leases for equipment and offices, recognizing right-of-use assets and lease liabilities - Gulfport has operating leases for equipment and field offices, recognizing right-of-use assets and lease liabilities for leases over **one year**[199](index=199&type=chunk)[201](index=201&type=chunk) Maturities of Operating Lease Liabilities (in thousands, as of June 30, 2021) | Period | Amount | | :--- | :--- | | Remaining 2021 | $20 | | 2022 | $25 | | Total lease payments | $45 | | Less: Imputed interest | $(1) | | Total | $44 | - The weighted-average remaining lease term was **1.14 years**, and the weighted-average discount rate was **3.98%** as of **June 30, 2021**[204](index=204&type=chunk) - Total lease cost for the Successor Period was **$2.168 million**, with the majority capitalized to the full cost pool[204](index=204&type=chunk) [Note 15. INCOME TAXES](index=46&type=section&id=Note%2015.%20INCOME%20TAXES) Explains Chapter 11 impact on income taxes, including **$708.8 million** CODI reducing NOLs, and a full valuation allowance on deferred tax assets - The Chapter 11 emergence resulted in approximately **$708.8 million** in Cancellation of Indebtedness Income (CODI), which will reduce the company's net operating losses[205](index=205&type=chunk) - As of **June 30, 2021**, Gulfport had an estimated federal net operating loss carryforward of approximately **$1.1 billion** after CODI reduction[205](index=205&type=chunk) - A full valuation allowance was deemed necessary against net deferred tax assets as of **May 17, 2021**, and **June 30, 2021**, leading to a **0%** effective tax rate and no income tax expense for the Successor Period[207](index=207&type=chunk)[209](index=209&type=chunk) - The company expects to apply IRC Section 382(l)(5) rules to mitigate limitations on its remaining tax attributes, but future ownership changes could further limit their realization[206](index=206&type=chunk) [Note 16. SUBSEQUENT EVENTS](index=47&type=section&id=Note%2016.%20SUBSEQUENT%20EVENTS) Discloses natural gas and oil derivative contracts entered into by Gulfport subsequent to **June 30, 2021** Natural Gas and Oil Derivative Contracts Entered After June 30, 2021 (as of July 31, 2021) | Commodity | Type of Derivative Instrument | Index | Daily Volume | Weighted Average Price | | :--- | :--- | :--- | :--- | :--- | | Natural Gas (MMBtu/day) | Fixed price swap | NYMEX Henry Hub | 80,073 (Apr-Dec 2022), 20,000 (Jan-Mar 2023) | $2.99 (2022), $3.13 (2023) | | Oil (Bbl/day) | Fixed price swap | NYMEX WTI | 1,104 (Jan-Dec 2022) | $65.54 (2022) | [Item 2. Management's Discussion and Analysis of Financial Conditions and Results of Operations](index=48&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Conditions%20and%20Results%20of%20Operations) Management's perspective on Gulfport's financial condition, operations, and liquidity, emphasizing Chapter 11 emergence and fresh start accounting [Introduction](index=48&type=section&id=Introduction) Overview of Gulfport's business, strategy for sustainable cash flow, and reporting approach for combined Predecessor and Successor periods - Gulfport is an independent natural gas-weighted exploration and production company with assets primarily in the Appalachia (Utica formation) and Anadarko (SCOOP Woodford and Springer formations) basins[213](index=213&type=chunk) - The company's strategy focuses on developing assets to generate sustainable cash flow, improve margins and operating efficiencies, and enhance ESG and safety performance[213](index=213&type=chunk) - Management combines Successor and Predecessor period results for the three and six months ended **June 30, 2021**, to provide a more meaningful comparison and understand operational trends, despite GAAP requiring separate reporting[214](index=214&type=chunk) [Recent Developments](index=48&type=section&id=Recent%20Developments) Highlights Gulfport's Chapter 11 emergence, **$1.4 billion** debt reduction, executive changes, and ongoing COVID-19 uncertainties - Gulfport emerged from Chapter 11 bankruptcy on **May 17, 2021**, reducing total indebtedness by **$1.4 billion** through equity issuance to unsecured noteholders and claimants[215](index=215&type=chunk)[217](index=217&type=chunk)[218](index=218&type=chunk) - **Timothy Cutt** was appointed Interim Chief Executive Officer and Chair of the Board, and **William Buese** was appointed Chief Financial Officer on **May 17, 2021**[219](index=219&type=chunk)[220](index=220&type=chunk)[221](index=221&type=chunk) - The COVID-19 pandemic continues to pose uncertainties regarding its impact on business operations, cash flows, liquidity, and commodity markets, despite no significant disruptions in H1 2021[221](index=221&type=chunk)[222](index=222&type=chunk) [2021 Operational and Financial Highlights](index=49&type=section&id=2021%20Operational%20and%20Financial%20Highlights) Gulfport achieved operational efficiencies and cost reductions, including **3%** Utica spud-to-rig time improvement and **13%** lease operating expense decrease - Emergence from Chapter 11 proceedings was a key achievement[223](index=223&type=chunk) - Operational efficiencies improved, with average spud-to-rig release time in Utica at **18.1 days**, a **3% improvement** from full year 2020[223](index=223&type=chunk) - Lease operating expenses per Mcfe decreased by **13%** for the Current Combined Quarter compared to the Prior Predecessor Quarter due to cost reduction initiatives[223](index=223&type=chunk) [2021 Production and Drilling Activity](index=50&type=section&id=2021%20Production%20and%20Drilling%20Activity) Total net production decreased by **4-5%** due to reduced development, aligning with sustainable free cash flow; drilling activity detailed Total Net Production Volumes (MMcfe/day) | Period | Current Combined Quarter (2021) | Prior Predecessor Quarter (2020) | Current Combined YTD Period (2021) | Prior Predecessor YTD Period (2020) | | :--- | :--- | :--- | :--- | :--- | | Total | 989,053 | 1,027,060 | 985,909 | 1,040,430 | | Change YoY | -4% | - | -5% | - | - The decrease in production is attributed to reduced development activities in 2020 and H1 2021, aligning with the strategy to generate sustainable free cash flow[224](index=224&type=chunk)[226](index=226&type=chunk) - In the Utica, **10 gross and net wells** were spud and **9 completed** during the Current Combined YTD Period; in the SCOOP, **2 gross (1.97 net) wells** were spud and **11 gross (9.3 net) completed**[227](index=227&type=chunk)[228](index=228&type=chunk) - As of **July 31, 2021**, Gulfport had no operated drilling rigs in Utica but expected to add one in Q3 2021; one rig was running in SCOOP, expected to continue through 2021[227](index=227&type=chunk)[228](index=228&type=chunk) [RESULTS OF OPERATIONS](index=51&type=section&id=RESULTS%20OF%20OPERATIONS) Analyzes Gulfport's financial performance, comparing Successor and Predecessor periods, focusing on production, pricing, and operating expenses [Successor Period and Current Predecessor Quarter Compared to Prior Predecessor Quarter](index=52&type=section&id=Successor%20Period%20and%20Current%20Predecessor%20Quarter%20Compared%20to%20Prior%20Predecessor%20Quarter) Compares Q2 2021 to Q2 2020, showing significant increases in realized commodity prices, offset by production decreases and derivative losses Average Commodity Prices (without derivatives) | Commodity | Combined Current Quarter (Q2 2021) | Prior Predecessor Quarter (Q2 2020) | Change | | :--- | :--- | :--- | :--- | | Natural Gas ($/Mcf) | $2.71 | $1.66 | +63.25% | | Oil and Condensate ($/Bbl) | $62.95 | $20.14 | +212.56% | | NGL ($/Bbl) | $29.89 | $10.29 | +190.48% | Net (Loss) Gains on Derivatives (in thousands) | Derivative Type | Combined Current Quarter (Q2 2021) | Prior Predecessor Quarter (Q2 2020) | | :--- | :--- | :--- | | Natural gas derivatives | $(227,982) | $35,689 | | Oil and condensate derivatives | $(9,752) | $(7,937) | | NGL derivatives | $(9,185) | $(781) | | Total | $(246,919) | $26,971 | Key Operating Expenses per Mcfe | Expense Category | Combined Current Quarter (Q2 2021) | Prior Predecessor Quarter (Q2 2020) | Change | | :--- | :--- | :--- | :--- | | Lease operating expenses | $0.12 | $0.14 | -14.29% | | Taxes other than income | $0.10 | $0.07 | +42.86% | | Transportation, gathering, processing and compression | $1.07 | $1.22 | -12.29% | - General and administrative expenses increased in Q2 2021 due to legal and professional fees associated with restructuring, now presented in G&A post-emergence[246](index=246&type=chunk) - Interest expense decreased in the Current Predecessor Quarter due to the cessation of interest accrual on borrowings subject to compromise[247](index=247&type=chunk) [Successor Period and Current Predecessor YTD Period Compared to Prior Predecessor YTD Period](index=59&type=section&id=Successor%20Period%20and%20Current%20Predecessor%20YTD%20Period%20Compared%20to%20Prior%20Predecessor%20YTD%20Period) Compares H1 2021 to H1 2020, showing substantial increases in realized commodity prices despite production decreases, and derivative losses Average Commodity Prices (without derivatives) | Commodity | Current Combined YTD Period (H1 2021) | Prior Predecessor YTD Period (H1 2020) | Change | | :--- | :--- | :--- | :--- | | Natural Gas ($/Mcf) | $2.79 | $1.76 | +58.52% | | Oil and Condensate ($/Bbl) | $58.66 | $33.26 | +76.37% | | NGL ($/Bbl) | $30.54 | $12.92 | +136.38% | Net (Loss) Gains on Derivatives (in thousands) | Derivative Type | Current Combined YTD Period (H1 2021) | Prior Predecessor YTD Period (H1 2020) | | :--- | :--- | :--- | | Natural gas derivatives | $(253,395) | $81,542 | | Oil and condensate derivatives | $(11,483) | $44,937 | | NGL derivatives | $(12,019) | $139 | | Total | $(276,897) | $125,237 | Key Operating Expenses per Mcfe | Expense Category | Current Combined YTD Period (H1 2021) | Prior Predecessor YTD Period (H1 2020) | Change | | :--- | :--- | :--- | :--- | | Lease operating expenses | $0.13 | $0.15 | -13.33% | | Taxes other than income | $0.10 | $0.07 | +42.86% | | Transportation, gathering, processing and compression | $1.13 | $1.18 | -4.24% | - Impairment of oil and gas properties was **$117.8 million** in the Successor Period (H1 2021) compared to **$1.1 billion** in Prior Predecessor YTD Period (H1 2020)[264](index=264&type=chunk) - General and administrative expenses decreased in H1 2021 due to cost reduction focus and lower non-recurring legal/consulting expenses[266](index=266&type=chunk) [Liquidity and Capital Resources](index=65&type=section&id=Liquidity%20and%20Capital%20Resources) Details Gulfport's post-emergence liquidity and capital resources, including new debt structure, capital expenditure plans, and cash flow - As of **August 2, 2021**, Gulfport had available liquidity of **$161.9 million**[276](index=276&type=chunk) - Total principal amount of funded debt as of **June 30, 2021**, was **$835.0 million**, comprising **$105.0 million** from Exit Facility, **$180.0 million** from First-Out Term Loan, and **$550 million** from Successor Senior Notes[276](index=276&type=chunk) - Capital expenditures for 2021 are estimated at **$270 million to $290 million** for drilling and completion, plus **$20 million** for non-D&C expenses[290](index=290&type=chunk) - Net cash flow from operating activities was **$38.4 million** for the Successor Period and **$172.2 million** for the Current Predecessor YTD Period, a decrease from **$247.2 million** in the Prior Predecessor YTD Period, primarily due to reorganization items[292](index=292&type=chunk) - Off-balance sheet arrangements include **$114.8 million** in letters of credit and **$90.7 million** in surety bonds outstanding as of **June 30, 2021**[298](index=298&type=chunk) [Critical Accounting Policies and Estimates](index=69&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) No significant changes in Gulfport's critical accounting policies and estimates as of **June 30, 2021**, compared to its 2020 Annual Report on Form 10-K - No significant changes in critical accounting policies and estimates as of **June 30, 2021**, compared to the 2020 Annual Report on Form 10-K[300](index=300&type=chunk) [Cautionary Note Regarding Forward-Looking Statements](index=70&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Statements) Cautionary note on forward-looking statements in Form 10-Q, emphasizing risks and uncertainties that could cause actual results to differ - The Form 10-Q contains forward-looking statements subject to known and unknown risks and uncertainties[302](index=302&type=chunk) - Actual results may differ materially from anticipated outcomes due to factors listed in 'Risk Factors' and MD&A[304](index=304&type=chunk) - The company disclaims any duty to update forward-looking statements, which are qualified in their entirety by this cautionary statement[305](index=305&type=chunk)[306](index=306&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=70&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Details Gulfport's exposure to market risks, primarily commodity price and interest rate volatility, and use of derivatives for mitigation - Gulfport uses derivative instruments (fixed price swaps, basis swaps, call options, costless collars) to mitigate exposure to volatile natural gas, oil, and NGL prices[308](index=308&type=chunk)[310](index=310&type=chunk)[314](index=314&type=chunk) - As of **June 30, 2021**, the company had a net liability derivative position of **$301.0 million**[318](index=318&type=chunk) - A **10% increase** in underlying commodity prices would reduce derivative fair value by approximately **$160.3 million**, while a **10% decrease** would increase it by **$145.1 million**[318](index=318&type=chunk) - The company is exposed to interest rate risk on its floating-rate Exit Facility and First-Out Term Loan, which bore weighted average interest rates of **4.50%** and **5.50%** respectively, as of **June 30, 2021**[319](index=319&type=chunk) [Item 4. Controls and Procedures](index=71&type=section&id=Item%204.%20Controls%20and%20Procedures) Confirms Gulfport's disclosure controls and procedures were effective as of **June 30, 2021**, with no material changes in internal control - Disclosure controls and procedures were evaluated and deemed effective as of **June 30, 2021**, ensuring information required for SEC reports is recorded, processed, summarized, and reported timely[320](index=320&type=chunk)[321](index=321&type=chunk) - Management acknowledges that control systems provide reasonable, not absolute, assurance[322](index=322&type=chunk) - No material changes in internal control over financial reporting occurred during the last fiscal quarter[323](index=323&type=chunk) [PART II OTHER INFORMATION](index=72&type=section&id=PART%20II%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=72&type=section&id=Item%201.%20Legal%20Proceedings) Refers to **Note 9** for information on Gulfport's legal proceedings, including litigation related to firm transportation agreements - Information on legal proceedings is detailed in **Note 9** of the consolidated financial statements[326](index=326&type=chunk) [Item 1A. Risk Factors](index=72&type=section&id=Item%201A.%20Risk%20Factors) Outlines risks related to Chapter 11 emergence, including adverse effects on business relationships, stock volatility, and potential dilution - Emergence from bankruptcy may adversely affect business relationships with customers, vendors, contractors, and employees, potentially leading to contract terminations or difficulties in attracting talent[328](index=328&type=chunk)[330](index=330&type=chunk) - Actual financial results post-bankruptcy may not be comparable to historical information due to the Plan's implementation and fresh start accounting, and projections should not be relied upon[329](index=329&type=chunk) - The market price of New Common Stock is subject to volatility due to the new capital structure, limited trading history, and general market conditions[330](index=330&type=chunk)[331](index=331&type=chunk) - Changes in the board of directors post-emergence may lead to different strategic initiatives and plans[332](index=332&type=chunk) - Future sales of substantial amounts of common stock, or the perception thereof, could adversely affect the trading price and ability to raise capital[333](index=333&type=chunk)[334](index=334&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=75&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Reports no unregistered sales of equity securities and details common stock repurchase activity for tax withholding during Predecessor Period - No unregistered sales of equity securities occurred[337](index=337&type=chunk) Common Stock Repurchase Activity (Predecessor Period) | Month | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April | 10,470 | $0.05 | - Shares were repurchased and canceled to satisfy tax withholding requirements upon vesting of restricted stock unit awards[339](index=339&type=chunk) [Item 3. Defaults Upon Senior Securities](index=74&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) States bankruptcy filing constituted an event of default for Pre-Petition Revolving Credit Facility and Predecessor Senior Notes - The bankruptcy filing triggered an event of default for Pre-Petition Revolving Credit Facility and Predecessor Senior Notes, accelerating obligations[340](index=340&type=chunk) - Section 362 of the Bankruptcy Code stayed creditors from taking action due to the default[340](index=340&type=chunk) - Additional details are provided in **Note 3** and **Note 5** of the financial statements[340](index=340&type=chunk) [Item 4. Mine Safety Disclosures](index=74&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Mine Safety Disclosures are not applicable to Gulfport Energy Corporation - Mine Safety Disclosures are not applicable[341](index=341&type=chunk) [Item 5. Other Information](index=75&type=section&id=Item%205.%20Other%20Information) Reports a change in **Mr. Craine's** title to Chief Legal and Administrative Officer and a **$450,000** annual base salary increase - **Mr. Craine's** title changed to Chief Legal and Administrative Officer[343](index=343&type=chunk) - His base salary increased to **$450,000** annually due to additional responsibilities[343](index=343&type=chunk) [Item 6. Exhibits](index=76&type=section&id=Item%206.%20Exhibits) Provides an index of exhibits filed with the Form 10-Q, including key legal and corporate documents related to the company's reorganization - The exhibits include the Amended Joint Chapter 11 Plan of Reorganization, Amended and Restated Certificate of Incorporation and Bylaws, and new indentures for senior notes[346](index=346&type=chunk) - Key agreements such as the Second Amended and Restated Credit Agreement, Registration Rights Agreement, and executive employment agreements are also listed[346](index=346&type=chunk) [Signatures](index=78&type=section&id=Signatures) Contains official signatures for the Form 10-Q, certifying its submission by CFO **William Buese** on **August 9, 2021** - The report was signed by **William Buese**, Chief Financial Officer of Gulfport Energy Corporation, on **August 9, 2021**[352](index=352&type=chunk)

Financial Data and Key Metrics Changes - The company reported a net income of $33 million and generated $157 million of adjusted EBITDA for the second quarter [39] - Free cash flow for the same period was $74 million, defined as adjusted EBITDA minus capital expenditures, interest expense, and capitalized G&A [40] - Total assets at the end of the second quarter were approximately $2.1 billion, with total shareholders' equity around $453 million [42] Business Line Data and Key Metrics Changes - Production averaged 989 million cubic feet of gas equivalent per day during the second quarter, with expectations of a slight drop in production in the third quarter [13] - The Utica program produced 744 million cubic feet equivalent per day during the quarter, outperforming historical averages [16] - The 2021 SCOOP program is expected to yield rates of return of approximately 80% at $2.75 gas and $60 oil [18] Market Data and Key Metrics Changes - Midstream volume commitments have been reduced to 900,000 decatherm per day gross capacity, providing diversified takeaway capacity [21] - The company has entered into commodity derivative contracts totaling approximately 800 million cubic feet per day with an average floor price of $2.64 per Mcf for the remaining six months of 2021 [41] Company Strategy and Development Direction - The company has adopted a new business model focused on free cash flow generation and returns over production growth [9] - A maintenance-level capital spend of approximately $300 million per year is targeted, expected to result in roughly 1 Bcf equivalent per day of production [15] - The company aims to reduce outstanding debt using excess cash flow before returning capital to shareholders [9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to generate significant free cash flow going forward, which is currently underappreciated [33] - The company is focused on continuous improvement and cost-effective production, supported by a strong balance sheet [30] - Management indicated that while they are focused on paying down debt, they are also studying options for future capital allocation based on market conditions [59][75] Other Important Information - The company has made significant progress in reducing greenhouse gas and methane emissions, with a renewed focus on sustainability [11][12] - Fresh start accounting was adopted upon emergence from bankruptcy, resulting in a new entity for financial reporting purposes [35] Q&A Session Summary Question: Potential non-core sales and inventory assessment - Management is currently assessing the standalone case for the business and does not see any non-core assets at this time [50][52] Question: Capital allocation focus between Utica and SCOOP - The company is targeting dry gas in the Utica while also taking advantage of liquid production opportunities in the SCOOP [53][54] Question: Utica production decline and midstream issues - Management explained that the production decline was due to a small development program and the timing of new wells coming online [64][68] Question: Remaining inventory in SCOOP and drilling focus - The company plans to focus on liquid-rich locations in the condensate window in the near term while maintaining a steady activity level [71][72] Question: Long-term growth and capital allocation strategy - Management emphasized the importance of steady operations and efficient capital spending, with a focus on paying down debt before considering growth investments [75]

Investor Presentation August 2021 Forward Looking Statements & Non-GAAP Financial Measures This presentation includes "forward-looking statements" for purposes of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are statements other than statements of historical fact. They include statements regarding Gulfport's current expectations, man ...

Table of Contents Index to Financial Statements UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2020 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 Ot ...

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 September 30, 2020 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 I ...

PART I FINANCIAL INFORMATION [Item 1. Consolidated Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Consolidated%20Financial%20Statements%20(Unaudited)) Presents unaudited consolidated financial statements for Q2 and H1 2020, highlighting a going concern warning, property impairments, and debt structure [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) Total assets decreased to $2.58 billion as of June 30, 2020, driven by property impairments, causing stockholders' equity to fall to $231.3 million Consolidated Balance Sheet Summary (in thousands) | Account | June 30, 2020 (Unaudited) | December 31, 2019 | | :--- | :--- | :--- | | **Total Current Assets** | $151,901 | $305,877 | | **Property and equipment, net** | $2,370,366 | $3,463,794 | | **Total Assets** | **$2,580,257** | **$3,882,819** | | **Total Current Liabilities** | $328,120 | $451,198 | | **Long-term debt, net** | $1,910,318 | $1,978,020 | | **Total Liabilities** | **$2,348,917** | **$2,568,227** | | **Total Stockholders' Equity** | **$231,340** | **$1,314,592** | | **Total Liabilities and Stockholders' Equity** | **$2,580,257** | **$3,882,819** | [Consolidated Statements of Operations](index=7&type=section&id=Consolidated%20Statements%20of%20Operations) Reports a Q2 2020 net loss of $561.1 million, driven by a $532.9 million impairment charge and a 63% decline in revenue Statement of Operations Highlights (in thousands, except per share data) | Metric | Q2 2020 | Q2 2019 | Six Months 2020 | Six Months 2019 | | :--- | :--- | :--- | :--- | :--- | | **Total Revenues** | $132,410 | $458,994 | $379,287 | $779,572 | | **Impairment of oil and natural gas properties** | $532,880 | $0 | $1,086,225 | $0 | | **(Loss) Income from Operations** | ($555,750) | $218,456 | ($1,035,837) | $311,467 | | **Net (Loss) Income** | **($561,068)** | **$234,956** | **($1,078,606)** | **$297,198** | | **Diluted EPS** | **($3.51)** | **$1.47** | **($6.75)** | **$1.84** | [Consolidated Statements of Cash Flows](index=10&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net operating cash flow for H1 2020 decreased to $247.2 million due to lower commodity prices, with reduced capital expenditures lowering investing cash use Cash Flow Summary (in thousands) | Activity | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $247,222 | $399,769 | | **Net cash used in investing activities** | ($230,090) | ($510,225) | | **Net cash (used in) provided by financing activities** | ($20,375) | $78,936 | | **Net decrease in cash** | ($3,243) | ($31,520) | | **Cash at end of period** | $2,817 | $20,777 | [Notes to Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Provides critical context including a going concern warning, COVID-19 impacts, a $1.1 billion impairment charge, and details on debt and derivatives - **Going Concern Warning**: Management concluded there is substantial doubt about the Company's ability to continue as a going concern due to decreased commodity prices, reduced ability to access capital markets, and risk that its revolving credit facility may not be refinanced before it becomes a current liability at year-end 2020[28](index=28&type=chunk)[30](index=30&type=chunk) - **COVID-19 Impact**: The pandemic has led to decreased demand for oil and gas, significantly impairing the Company's ability to access capital; in response, Gulfport shut-in some production, reduced salaries, and implemented furloughs to preserve liquidity[23](index=23&type=chunk)[25](index=25&type=chunk)[27](index=27&type=chunk) - **Property Impairment**: The Company recorded a significant impairment of its oil and natural gas properties of **$532.9 million for Q2 2020** and **$1.1 billion for the first six months of 2020**, primarily due to reduced commodity prices[35](index=35&type=chunk) - **Debt Repurchases**: The Company repurchased $73.3 million in aggregate principal of its senior notes for $22.8 million during the first six months of 2020, recognizing a **$49.6 million gain on debt extinguishment**[59](index=59&type=chunk) - **Subsequent Event - Credit Facility Amendment**: On July 27, 2020, the Company amended its credit agreement to, among other things, permit the issuance of up to **$750 million in second lien debt**, subject to certain conditions[52](index=52&type=chunk)[159](index=159&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=45&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Conditions%20and%20Results%20of%20Operations) Discusses severe challenges from the COVID-19 pandemic, including a going concern warning, production decreases, a quarterly net loss, and strained liquidity [Overview and COVID-19 Impact](index=45&type=section&id=Overview%20and%20COVID-19%20Impact) Details significant headwinds from the COVID-19 pandemic, leading to a going concern warning and cost-saving actions to preserve liquidity - The company's ability to access capital markets and refinance existing debt has been significantly impaired by the COVID-19 pandemic and low commodity prices, leading to a **substantial doubt about its ability to continue as a going concern**[182](index=182&type=chunk)[234](index=234&type=chunk) - In response to market conditions, the company shut-in a portion of its low-margin, liquids-weighted production in Q2 2020 and implemented tiered salary reductions and furloughs[178](index=178&type=chunk)[181](index=181&type=chunk) - The company expects it will be unable to meet its minimum volume obligations under existing firm transportation contracts due to reduced production, which will result in significant fees[183](index=183&type=chunk)[302](index=302&type=chunk) [Production and Drilling Activity](index=49&type=section&id=Production%20and%20Drilling%20Activity) Q2 2020 net production decreased 24% YoY to 1,027.1 MMcfe/day due to reduced development and voluntary shut-ins Average Daily Production by Area (Q2 2020 vs Q2 2019) | Area | Q2 2020 (Mcfe/day) | Q2 2019 (Mcfe/day) | % Change | | :--- | :--- | :--- | :--- | | Utica Shale | 792,106 | 1,050,724 | (25)% | | SCOOP | 234,396 | 298,343 | (21)% | | **Total** | **1,027,065** | **1,358,989** | **(24)%** | - In the first half of 2020, Gulfport spud 12 gross (11.1 net) wells in the Utica Shale and 6 gross (5.2 net) wells in the SCOOP[189](index=189&type=chunk)[191](index=191&type=chunk) [Results of Operations](index=51&type=section&id=Results%20of%20Operations) Financial results deteriorated in H1 2020, with a Q2 net loss of $561.1 million driven by a large non-cash impairment charge Key Operational Metrics per Mcfe (Q2 2020 vs Q2 2019) | Metric ($/Mcfe) | Q2 2020 | Q2 2019 | | :--- | :--- | :--- | | Avg. sales price (w/o derivatives) | $1.13 | $2.33 | | Lease operating expenses | $0.17 | $0.18 | | Midstream gathering & processing | $0.64 | $0.58 | | DD&A | $0.69 | $1.01 | - A non-cash impairment charge of **$532.9 million in Q2 2020** and **$1.1 billion for the first six months of 2020** was the primary driver of the net loss, resulting from a significant decline in commodity prices[194](index=194&type=chunk)[206](index=206&type=chunk)[228](index=228&type=chunk) - The decrease in loss from equity method investments was primarily due to a $125.4 million impairment charge on the Mammoth Energy investment taken in Q2 2019, which was not repeated in 2020 as the investment value was written down to zero in Q1 2020[47](index=47&type=chunk)[208](index=208&type=chunk) [Liquidity and Capital Resources](index=63&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity is severely constrained with $2.8 million in cash, a working capital deficit, and substantial doubt about its going concern status - As of June 30, 2020, the company had **$2.8 million in cash**, a net working capital deficit of $176.2 million, and $252.9 million of borrowing capacity under its revolving credit facility[236](index=236&type=chunk) - The 2020 capital expenditure budget for drilling and completion is estimated at **$265.0 million to $285.0 million**, a reduction of more than 50% from 2019 levels[246](index=246&type=chunk) - Net cash from operating activities for the first six months of 2020 was **$247.2 million**, down from $399.8 million in the prior-year period, due to lower realized prices and production volumes[248](index=248&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=68&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Exposed to significant market risk from commodity prices and interest rates, mitigated through derivative instruments like swaps and collars Open Derivative Positions as of June 30, 2020 | Year | Type | Commodity | Daily Volume | Avg. Price/Spread | | :--- | :--- | :--- | :--- | :--- | | 2020 | Swaps | Natural Gas (NYMEX) | 357,000 MMBtu | $2.86 | | 2021 | Collars | Natural Gas (NYMEX) | 250,000 MMBtu | $2.46 / $2.81 | | 2022 | Sold Calls | Natural Gas (NYMEX) | 628,000 MMBtu | $2.90 | | 2023 | Sold Calls | Natural Gas (NYMEX) | 628,000 MMBtu | $2.90 | | 2020 | Swaps | Oil (WTI) | 3,000 Bbls | $35.49 | | 2020 | Swaps | NGL (C3) | 1,500 Bbls | $20.27 | - The company is exposed to interest rate risk on its revolving credit facility, which had **$123.0 million in borrowings outstanding** at a weighted average rate of 2.44% as of June 30, 2020[269](index=269&type=chunk) - In August 2020, the company entered into additional natural gas fixed price swaps for Q4 2020, covering 100,000 MMBtu/day at an average price of $2.38 per MMBtu[162](index=162&type=chunk)[266](index=266&type=chunk) [Item 4. Controls and Procedures](index=70&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were deemed not effective as of June 30, 2020, due to a previously disclosed material weakness - The CEO and CFO concluded that **disclosure controls and procedures were not effective** as of June 30, 2020[271](index=271&type=chunk) - The ineffectiveness is due to a **material weakness** identified in Q4 2019 concerning the accounting for unevaluated oil and gas property costs[271](index=271&type=chunk)[272](index=272&type=chunk) - Management is actively implementing a remediation plan to address the material weakness[272](index=272&type=chunk) PART II OTHER INFORMATION [Item 1. Legal Proceedings](index=71&type=section&id=Item%201.%20Legal%20Proceedings) Involved in multiple legal proceedings, including environmental lawsuits, shareholder actions, a contract dispute, and an SEC investigation - Gulfport is a defendant in lawsuits filed by the State of Louisiana concerning alleged environmental damage to the coastal zone[83](index=83&type=chunk)[277](index=277&type=chunk) - The company is involved in a contract dispute with Stingray Pressure Pumping (a subsidiary of Mammoth Energy), with Stingray seeking approximately **$28 million in damages** as of June 2020[89](index=89&type=chunk)[284](index=284&type=chunk) - The SEC has an ongoing investigation into actions by former company management, including alleged improper use of company assets[92](index=92&type=chunk)[287](index=287&type=chunk) [Item 1A. Risk Factors](index=73&type=section&id=Item%201A.%20Risk%20Factors) Highlights severe financial stability threats, including credit facility refinancing risk, COVID-19 impacts, and penalties from unmet contract obligations - There is a substantial risk that the company will be **unable to refinance its revolving credit facility**, which matures in December 2021, on reasonable terms, contributing to the 'going concern' uncertainty[296](index=296&type=chunk) - The COVID-19 outbreak poses numerous risks, including reduced revenue from lower demand, operational disruptions, and difficulty accessing capital markets[297](index=297&type=chunk) - The company expects to be unable to meet its delivery obligations under firm transportation contracts due to reduced production, which will result in **significant fees** and may materially harm operations[302](index=302&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=74&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Repurchased 27,294 shares in Q2 2020 to satisfy tax withholding on vested employee stock units, while the formal buyback program remains suspended Issuer Repurchases of Equity Securities (Q2 2020) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 2020 | 18,338 | $0.72 | | May 2020 | 0 | $0.00 | | June 2020 | 8,956 | $1.69 | | **Total** | **27,294** | **$1.04** | - The shares were repurchased to satisfy tax withholding requirements upon the vesting of restricted stock unit awards[305](index=305&type=chunk) - The company's formal stock repurchase program was suspended in Q4 2019, and a May 2020 credit facility amendment prohibits further repurchases under it[306](index=306&type=chunk) [Item 3. Defaults Upon Senior Securities](index=75&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities were reported during the period - Not applicable; no defaults were reported[307](index=307&type=chunk) [Item 4. Mine Safety Disclosures](index=75&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section is not applicable to the company's operations - Not applicable[308](index=308&type=chunk) [Item 5. Other Information](index=76&type=section&id=Item%205.%20Other%20Information) The Board authorized a redesigned incentive compensation program for its workforce in response to unprecedented industry disruption - On August 4, 2020, the Board authorized a redesigned incentive compensation program to retain and motivate employees amid industry disruption[310](index=310&type=chunk) - Executives participating must forfeit previous 2020 incentive awards; the new compensation is subject to repayment clauses based on continued employment and the achievement of new performance metrics[310](index=310&type=chunk) [Item 6. Exhibits](index=77&type=section&id=Item%206.%20Exhibits) Lists all exhibits filed with the Form 10-Q, including credit agreement amendments and executive certifications - Lists key documents filed with the report, including the Fifteenth and Sixteenth Amendments to the Credit Agreement[313](index=313&type=chunk)[316](index=316&type=chunk) - Includes certifications from the CEO and CFO pursuant to Rule 13a-14(a) and Section 1350 of the U.S. Code[316](index=316&type=chunk)

Gulfport Energy Corporation (NYSE:GPOR) Q2 2020 Earnings Conference Call August 5, 2020 10:00 AM ET Company Participants Jessica Antle – Director-Investor Relations David Wood – Chief Executive Officer and President Quentin Hicks – Executive Vice President and Chief Financial Officer Conference Call Participants Operator Greetings, and welcome to Gulfport's Second Quarter 2020 Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal pres ...

Gul INVESTOR PRESENTATION JUNE 2020 FORWARD LOOKING STATEMENT This presentation includes "forward-looking statements" for purposes of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act. All statements, other than statements of historical facts, included in this presentation that address activities, events or developments that Gulfport expects or anticipates will or may occur in the fut ...