Quarterly report pursuant to Section 13 or 15(d)

Acquisitions

v3.7.0.1
Acquisitions
 3 Months Ended
Mar. 31, 2017
Business Combinations [Abstract]  
Acquisitions
ACQUISITIONS
Vitruvian Acquisition
In December 2016, the Company, through its wholly-owned subsidiary Gulfport MidCon LLC (“Gulfport MidCon”) (formerly known as SCOOP Acquisition Company, LLC), entered into an agreement to acquire certain assets of Vitruvian II Woodford, LLC (“Vitruvian”), an unrelated third-party seller (the “Vitruvian Acquisition”). The assets included in the Vitruvian Acquisition include 46,400 net surface acres located in Grady, Stephens and Garvin Counties, Oklahoma. On February 17, 2017, the Company completed the Vitruvian Acquisition for a total initial purchase price of approximately $1.85 billion, consisting of $1.35 billion in cash, subject to certain adjustments, and approximately 23.9 million shares of the Company’s common stock (of which approximately 5.2 million shares were placed in an indemnity escrow). The cash portion of the purchase price was funded with the net proceeds from the December 2016 common stock and senior note offerings and cash on hand. Acquisition costs of $1.3 million were incurred during the three months ended March 31, 2017 related to the Vitruvian Acquisition.
Allocation of Purchase Price    
The Vitruvian Acquisition qualified as a business combination for accounting purposes and, as such, the Company estimated the fair value of the acquired properties as of the February 17, 2017 acquisition date. The fair value of the assets acquired and liabilities assumed was estimated using assumptions that represent Level 3 inputs. See Note 11 for additional discussion of the measurement inputs.
The Company estimated that the consideration paid in the Vitruvian Acquisition for these properties approximated the fair value that would be paid by a typical market participant. As a result, no goodwill or bargain purchase gain was recognized in conjunction with the purchase.
The following table summarizes the consideration paid in the Vitruvian Acquisition to acquire the properties and the fair value amount of the assets acquired as of February 17, 2017. Both the consideration paid and the fair value assigned to the assets is preliminary and subject to adjustment.
 
 
(In thousands)
Consideration:
 
 
     Cash, net of purchase price adjustments
 
$
1,354,093

     Fair value of Gulfport’s common stock issued
 
464,639

Total Consideration
 
$
1,818,732

 
 
 
Estimated Fair value of identifiable assets acquired and liabilities assumed:
 
 
     Oil and natural gas properties
 
 
       Proved properties
 
$
362,264

       Unproved properties
 
1,462,957

     Asset retirement obligations
 
(6,489
)
Total fair value of net identifiable assets acquired
 
$
1,818,732



The equity consideration included in the initial purchase price was based on an equity offering price of $20.96 on December 15, 2016. The decrease in the price of Gulfport’s common stock from $20.96 on December 15, 2016 to $19.48 on February 17, 2017 resulted in a decrease to the fair value of the total consideration paid as compared to the initial purchase price of approximately $35.3 million, which resulted in a closing date fair value lower than the initial purchase price.
Post-Acquisition Operating Results
    
For the period from the acquisition date of February 17, 2017 to March 31, 2017, the assets acquired in the Vitruvian Acquisition have contributed the following amounts of revenue to the Company’s consolidated statements of operations. The amount of net income contributed by the assets acquired is not presented below as it is impracticable to calculate due to the Company integrating the acquired assets into its overall operations using the full cost method of accounting.
 
 
(In thousands)
Revenue
 
$
26,226

Pro Forma Information (Unaudited)

The following unaudited pro forma combined financial information presents the Company’s results as though the Vitruvian Acquisition had been completed at January 1, 2016. The pro forma combined financial information has been included for comparative purposes and is not necessarily indicative of the results that might have actually occurred had the Vitruvian Acquisition taken place on January 1, 2016; furthermore, the financial information is not intended to be a projection of future results.
 
 
Three months ended March 31,
 
 
2017
 
2016
 
 
(In thousands, except share data)
Pro forma revenue
 
$
368,903

 
$
203,712

Pro forma net income (loss)
 
$
175,881

 
$
(274,207
)
Pro forma earnings (loss) per share (basic)
 
$
1.03

 
$
(2.03
)
Pro forma earnings (loss) per share (diluted)
 
$
1.03

 
$
(2.03
)