Annual report pursuant to Section 13 and 15(d)

Property and Equipment

v3.8.0.1
Property and Equipment
 12 Months Ended
Dec. 31, 2017
Property, Plant and Equipment [Abstract]  
Property and Equipment
PROPERTY AND EQUIPMENT
The major categories of property and equipment and related accumulated depletion, depreciation, amortization and impairment as of December 31, 2017 and 2016 are as follows:
 
December 31,
 
2017
 
2016
 
(In thousands)
Oil and natural gas properties
$
9,169,156

 
$
6,071,920

Office furniture and fixtures
37,369

 
21,204

Building
44,565

 
42,530

Land
4,820

 
5,252

Total property and equipment
9,255,910

 
6,140,906

Accumulated depletion, depreciation, amortization and impairment
(4,153,733
)
 
(3,789,780
)
Property and equipment, net
$
5,102,177

 
$
2,351,126


No impairment of oil and natural gas properties was required under the ceiling test for the year ended December 31, 2017. At December 31, 2016 and 2015, the net book value of the Company's oil and natural gas properties was above the calculated ceiling as a result of the reduced commodity prices during the years ended December 31, 2016 and 2015, respectively. As a result, the Company recorded an impairment of its oil and natural gas properties under the full cost method of accounting in the amount of $715.5 million and $1.4 billion for the years ended December 31, 2016 and 2015, respectively.
Included in oil and natural gas properties at December 31, 2017 and 2016 is the cumulative capitalization of $165.6 million and $129.9 million, respectively, in general and administrative costs incurred and capitalized to the full cost pool. General and administrative costs capitalized to the full cost pool represent management’s estimate of costs incurred directly related to exploration and development activities such as geological and other administrative costs associated with overseeing the exploration and development activities. All general and administrative costs not directly associated with exploration and development activities were charged to expense as they were incurred. Capitalized general and administrative costs were approximately $35.7 million, $29.3 million and $27.9 million for the years ended December 31, 2017, 2016 and 2015, respectively. The average depletion rate per Mcfe, which is a function of capitalized costs, future development costs and the related underlying reserves in the periods presented, was $0.90, $0.92 and $1.68 per Mcfe for the years ended December 31, 2017, 2016 and 2015, respectively.
The following is a summary of Gulfport’s oil and natural gas properties not subject to amortization as of December 31, 2017:
 
Costs Incurred in
 
2017
 
2016
 
2015
 
Prior to 2015
 
Total
 
(In thousands)
Acquisition costs
$
1,511,685

 
$
129,741

 
$
429,897

 
$
824,363

 
$
2,895,686

Exploration costs
—

 
—

 
—

 
—

 
—

Development costs
5,076

 
4,607

 
3,635

 
2,214

 
15,532

Capitalized interest
3,871

 
(536
)
 
(1,141
)
 
(438
)
 
1,756

Total oil and natural gas properties not subject to amortization
$
1,520,632

 
$
133,812

 
$
432,391

 
$
826,139

 
$
2,912,974


The following table summarizes the Company’s non-producing properties excluded from amortization by area as of December 31, 2017:
 
December 31, 2017
 
(In thousands)
Utica
$
1,513,452

MidContinent
1,396,642

Niobrara
2,184

Southern Louisiana
552

Bakken
99

Other
45

 
$
2,912,974


As of December 31, 2016, approximately $1.6 billion of non-producing leasehold costs was not subject to amortization.
The Company evaluates the costs excluded from its amortization calculation at least annually. Subject to industry conditions and the level of the Company’s activities, the inclusion of most of the above referenced costs into the Company’s amortization calculation typically occurs within three to five years. However, the majority of the Company's non-producing leases in the Utica Shale have five year extension terms which could extend this time frame beyond five years.
A reconciliation of the Company's asset retirement obligation for the years ended December 31, 2017 and 2016 is as follows:
 
December 31,
 
2017
 
2016
 
(In thousands)
Asset retirement obligation, beginning of period
$
34,276

 
$
26,437

Liabilities incurred
16,300

 
10,971

Liabilities settled
(3,057
)
 
(4,189
)
Accretion expense
1,611

 
1,057

Revisions in estimated cash flows
25,970

 
—

Asset retirement obligation as of end of period
75,100

 
34,276

Less current portion
120

 
195

Asset retirement obligation, long-term
$
74,980

 
$
34,081