Gulfport Energy Corporation Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

EQUITY INVESTMENTS

EQUITY INVESTMENTS

3 Months Ended

Mar. 31, 2019

Equity Method Investments and Joint Ventures [Abstract]

Investments accounted for by the equity method consist of the following as of March 31, 2019 and December 31, 2018:



			Carrying value				(Income) loss from equity method investments
	Approximate ownership %		March 31, 2019		December 31, 2018		Three months ended March 31,
	Approximate ownership %		March 31, 2019		December 31, 2018		2019			2018
			(In thousands)
Investment in Tatex Thailand II, LLC	23.5	%	$	—	$	—	$	(140	)	$	(41	)
Investment in Grizzly Oil Sands ULC	24.9999	%	48,004		44,259		393			330
Investment in Timber Wolf Terminals LLC⁽¹⁾	—	%	—		—		—			2
Investment in Windsor Midstream LLC	22.5	%	39		39		—			—
Investment in Mammoth Energy Services, Inc.	21.9	%	196,076		191,823		(4,526		)	(13,470		)
Investment in Strike Force Midstream LLC⁽²⁾	—	%	—		—		—			(357		)
			$	244,119	$	236,121	$	(4,273	)	$	(13,536	)



(1)	On June 5, 2018, the Company received its final distribution from Timber Wolf Terminals LLC ("Timber Wolf"). See below under Timber Wolf Terminals LLC for information regarding this distribution.
(2)	On May 1, 2018, the Company sold its 25% interest in Strike Force Midstream LLC ("Strike Force") to EQT Midstream Partners, LP. See below under under Strike Force Midstream LLC for information regarding this transaction.

The tables below summarize financial information for the Company’s equity investments as of March 31, 2019 and December 31, 2018.

Summarized balance sheet information:



	March 31, 2019		December 31, 2018
	March 31, 2019		December 31, 2018
	(In thousands)
Current assets	$	516,169	$	471,733
Noncurrent assets	$	1,363,785	$	1,302,488
Current liabilities	$	188,896	$	239,975
Noncurrent liabilities	$	215,093	$	94,575

Summarized results of operations:



	Three months ended March 31,
	2019		2018
	(In thousands)
Gross revenue	$	264,844	$	511,133
Net income	$	24,756	$	64,452

Tatex Thailand II, LLC

The Company has an indirect ownership interest in Tatex Thailand II, LLC (“Tatex II”). Tatex II holds an 8.5% interest in APICO, LLC (“APICO”), an international oil and gas exploration company. APICO has a reserve base located in Southeast Asia through its ownership of concessions covering approximately 108,000 acres which includes the Phu Horm Field. The Company received $0.1 million and an immaterial amount in distributions from Tatex II during the three months ended March 31, 2019 and 2018, respectively.

Grizzly Oil Sands ULC

The Company, through its wholly-owned subsidiary Grizzly Holdings Inc. (“Grizzly Holdings”), owns an interest in Grizzly Oil Sands ULC (“Grizzly”), a Canadian unlimited liability company. The remaining interest in Grizzly is owned by Grizzly Oil Sands Inc. (“Oil Sands”). As of March 31, 2019, Grizzly had approximately 830,000 acres under lease in the Athabasca, Peace River and Cold Lake oil sands regions of Alberta, Canada. The Company reviewed its investment in Grizzly for impairment at March 31, 2019 and 2018 and determined no impairment was required. If commodity prices decline in the future however, impairment of the investment in Grizzly may be necessary. During the three months ended March 31, 2019, Gulfport paid $0.4 million in cash calls. Grizzly’s functional currency is the Canadian dollar. The Company’s investment in Grizzly was increased by a $3.7 million foreign currency translation gain and decreased by a $5.3 million foreign currency translation loss for the three months ended March 31, 2019 and 2018, respectively.

Timber Wolf Terminals LLC

During 2012, the Company invested in Timber Wolf. Timber Wolf was formed to operate a crude/condensate terminal and a sand transloading facility in Ohio. During the three months ended March 31, 2018, the Company paid no cash calls to Timber Wolf. Timber Wolf was dissolved in 2018.

Windsor Midstream LLC

At March 31, 2019, the Company held a 22.5% interest in Windsor Midstream LLC (“Midstream”), an entity controlled and managed by an unrelated third party. The Company received no distributions from Midstream during the three months ended March 31, 2019 and 2018.

Mammoth Energy Services, Inc.

At March 31, 2019, the Company owned 9,831,770 shares, or approximately 21.9%, of the outstanding common stock of Mammoth Energy Services, Inc. ("Mammoth Energy"). The Company’s investment in Mammoth Energy was increased by a $0.1 million foreign currency translation gain and decreased by a $0.2 million foreign currency translation loss resulting from Mammoth Energy’s foreign subsidiary for the three months ended March 31, 2019 and 2018, respectively. During the three months ended March 31, 2019, Gulfport received distributions of $1.2 million from Mammoth Energy as a result of a $0.125 per share dividend in February 2019. The approximate fair value of the Company's investment in Mammoth Energy's common stock at March 31, 2019 was $163.7 million based on the quoted market price of Mammoth Energy's common stock. The (income) loss from equity method investments presented in the table above reflects any intercompany profit eliminations.

Strike Force Midstream LLC

In February 2016, the Company, through its wholly-owned subsidiary Gulfport Midstream Holdings, LLC (“Midstream Holdings”), entered into an agreement with Rice Midstream Holdings LLC (“Rice”), then a subsidiary of Rice Energy Inc., to develop natural gas gathering assets in eastern Belmont County and Monroe County, Ohio through Strike Force. In 2017, Rice was acquired by EQT Corporation ("EQT"). The Company owned a 25% interest in Strike Force, which was sold to EQT Midstream Partners, LP in May 2018. The (income) loss from equity method investments presented in the table above reflects any intercompany profit eliminations. During the three months ended March 31, 2018, Gulfport received distributions of $0.8 million from Strike Force.