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

Quarterly report pursuant to Section 13 or 15(d)

BASIS OF PRESENTATION

BASIS OF PRESENTATION

3 Months Ended

Mar. 31, 2022

Description of Company

Gulfport Energy Corporation (the "Company" or "Gulfport") is an independent natural gas-weighted exploration and production company focused on the production of natural gas, crude oil and NGL in the United States. The Company's principal properties are located in eastern Ohio targeting the Utica and in central Oklahoma targeting the SCOOP Woodford and SCOOP Springer formations. Gulfport filed for voluntary reorganization under Chapter 11 of the Bankruptcy Code on November 13, 2020, and subsequently operated as a debtor-in-possession, in accordance with applicable provisions of the Bankruptcy Code, until its emergence on May 17, 2021. The Company refers to the post-emergence reorganized organization in the condensed financial statements and footnotes as the "Successor" for periods subsequent to May 17, 2021, and the pre-emergence organization as "Predecessor" for periods on or prior to May 17, 2021.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of Gulfport were prepared in accordance with GAAP and the rules and regulations of the SEC.

This Quarterly Report on Form 10-Q (this “Form 10-Q”) relates to the financial position and periods as of and for the three months ended March 31, 2022 ("Successor Quarter") and the three months ended March 31, 2021 (“Predecessor Quarter”). The Company's annual report on Form 10-K for the year ended December 31, 2021 (“2021 Form 10-K”) should be read in conjunction with this Form 10-Q. The accompanying unaudited consolidated financial statements reflect all normal recurring adjustments which, in the opinion of management, are necessary for a fair statement of our condensed consolidated financial statements and accompanying notes and include the accounts of our wholly-owned subsidiaries. Intercompany accounts and balances have been eliminated. The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern.

Voluntary Reorganization Under Chapter 11 of the Bankruptcy Code

In connection with the Company's emergence from bankruptcy and in accordance with ASC 852, the Company qualified for and applied fresh start accounting on the Emergence date. For further information on the Company’s reorganization value and the resulting fresh start adjustments made on the Emergence Date, refer to the “Fresh Start Accounting” footnote in the notes to the consolidated financial statements in Item 8 of the Company’s 2021 Form 10-K.

Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities consisted of the following at March 31, 2022 and December 31, 2021 (in thousands):


	Successor
	March 31, 2022		December 31, 2021
Accounts payable and other accrued liabilities	$	183,786	$	143,938
Revenue payable and suspense	173,285		180,857
Accrued contract rejection damages and shares held in reserve	40,996		69,216
Total accounts payable and accrued liabilities	$	398,067	$	394,011

Reorganization Items, Net

In the Predecessor Quarter, the Company incurred significant expenses related to its Chapter 11 filing. The amount of these items, which were incurred in reorganization items, net within the Company's accompanying consolidated statements of

operations, significantly affected the Company's statements of operations. The Company also incurred adjustments for allowable claims related to its legal proceedings and executory contracts approved for rejection by the Bankruptcy Court.

The following table summarizes the components in reorganization items, net included in the Company's consolidated statements of operations for the Predecessor Quarter (in thousands):


	Predecessor
	Three Months Ended March 31, 2021
Legal and professional fees	$	40,783
Adjustment to allowed claims	2,088


Gain on settlement of pre-petition accounts payable	(4,150)
Reorganization items, net	$	38,721

Other Income

Other, net included in the Company's consolidated statements of operations for the Successor Quarter included $11.5 million related to the TC claim distribution received as discussed in Note 7.

Supplemental Cash Flow and Non-Cash Information (in thousands)


	Successor		Predecessor
	Three Months Ended March 31, 2022		Three Months Ended March 31, 2021
Supplemental disclosure of cash flow information:
Cash paid for reorganization items, net	$	—	$	21,367
Interest payments	$	2,110	$	4,763
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable - oil and natural gas sales	$	25,985	$	(14,117)
Increase in accounts receivable - joint interest and other	(17,722)		(478)
Increase in accounts payable and accrued liabilities	2,135		15,555
Decrease in prepaid expenses	6,811		26,356
Increase in other assets	(17)		(655)
Total changes in operating assets and liabilities	$	17,192	$	26,661
Supplemental disclosure of non-cash transactions:
Capitalized stock-based compensation	$	597	$	630
Asset retirement obligation capitalized	$	16	$	483
Release of common stock held in reserve	$	28,220	$	—


Foreign currency translation gain on equity method investments	$	—	$	2,570