Annual report pursuant to Section 13 and 15(d)

Property and Equipment

v3.20.4
Property and Equipment
 12 Months Ended
Dec. 31, 2020
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, 2020 and 2019 are as follows:
December 31,
2020 2019
(In thousands)
Oil and natural gas properties $ 10,816,909  $ 10,595,735 
Other depreciable property and equipment 85,530  91,198 
Land 3,008  5,521 
Total property and equipment 10,905,447  10,692,454 
Accumulated depletion, depreciation, amortization and impairment (8,819,178) (7,228,660)
Property and equipment, net $ 2,086,269  $ 3,463,794 
Under the full cost method of accounting, capitalized costs of oil and natural gas properties are subject to a quarterly full cost ceiling test, which is discussed in Note 1. During the years ended December 31, 2020 and 2019, the Company incurred $1.4 billion and $2.0 billion of impairments, respectively, as a result of its oil and natural gas properties exceeding its calculated
ceiling. The lower ceiling values resulted primarily from significant decreases in the 12-month average trailing prices for natural gas, oil and NGL, which significantly reduced proved reserves values and proved reserves. No impairment of oil and natural gas properties was required under the ceiling test for the year ended December 31, 2018.
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 $25.0 million, $30.1 million and $37.7 million for the years ended December 31, 2020, 2019 and 2018, 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 $0.61, $1.08 and $0.96 per Mcfe for the years ended December 31, 2020, 2019 and 2018, respectively.
The following is a summary of Gulfport’s oil and natural gas properties not subject to amortization as of December 31, 2020:
  Costs Incurred in
  2020 2019 2018 Prior to 2018 Total
(In thousands)
Acquisition costs $ 18,485  $ 8,067  $ 98,876  $ 1,330,895  $ 1,456,323 
Exploration costs —  —  —  —  — 
Development costs —  —  —  —  — 
Capitalized interest —  121  172  427  720 
Total oil and natural gas properties not subject to amortization $ 18,485  $ 8,188  $ 99,048  $ 1,331,322  $ 1,457,043 
The following table summarizes the Company’s non-producing properties excluded from amortization by area as of December 31, 2020:
December 31, 2020
(In thousands)
Utica $ 793,441 
SCOOP 662,614 
Other 988 
$ 1,457,043 
As of December 31, 2019, approximately $1.7 billion of non-producing property costs were 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 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, 2020 and 2019 is as follows:
December 31,
2020 2019
(In thousands)
Asset retirement obligation, beginning of period $ 60,355  $ 79,952 
Liabilities incurred 2,358  5,935 
Liabilities settled —  (273)
Liabilities removed due to divestitures (2,213) (30,146)
Accretion expense 3,066  3,939 
Revisions in estimated cash flows —  948 
Total asset retirement obligation as of end of period 63,566  60,355 
Less: amounts reclassified to liabilities subject to compromise (63,566) — 
Total asset retirement obligation reflected as non-current liabilities $ —  $ 60,355