Annual report pursuant to Section 13 and 15(d)

MEZZANINE EQUITY

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MEZZANINE EQUITY
 12 Months Ended
Dec. 31, 2023
Equity [Abstract]  
MEZZANINE EQUITY MEZZANINE EQUITY
As discussed in Note 2, the Company filed an amended and restated certificate of incorporation with the Delaware Secretary of State on the Emergence Date to provide for, among other things, (i) the authority to issue 42 million shares of Common Stock with a par value of $0.0001 per share and (ii) the designation of 110,000 shares of Preferred Stock, with a par value of $0.0001 per share and a liquidation preference of $1,000 per share (the "Liquidation Preference").
Preferred Stock
On the Emergence Date, the Successor issued 55,000 shares of Preferred Stock.
Holders of Preferred Stock are entitled to receive cumulative quarterly dividends at a rate of 10% per annum of the Liquidation Preference with respect to cash dividends and 15% per annum of the Liquidation Preference with respect to dividends paid in kind as additional shares of Preferred Stock (“PIK Dividends”). Gulfport currently has the option to pay either cash dividends or PIK dividends on a quarterly basis.
Each holder of shares of Preferred Stock has the right (the “Conversion Right”), at its option and at any time, to convert all or a portion of the shares of Preferred Stock that it holds into a number of shares of Common Stock equal to the quotient obtained by dividing (x) the product obtained by multiplying (i) the Liquidation Preference times (ii) an amount equal to one (1) plus the Per Share Makewhole Amount (as defined in the Preferred Terms) on the date of conversion, by (y) $14.00 per share (as may be adjusted under the Preferred Terms). The shares of Preferred Stock outstanding at December 31, 2023 would convert to 3.2 million shares of Common Stock if all holders of Preferred Stock exercised their Conversion Right.
Gulfport shall have the right, but not the obligation, to redeem all, but not less than all, of the outstanding shares of Preferred Stock by notice to the holders of Preferred Stock, at the greater of (i) the aggregate value of the Preferred Stock, calculated by the Current Market Price (as defined in the Preferred Terms) of the number of shares of Common Stock into which, subject to redemption, such Preferred Stock would have been converted if such shares were converted pursuant to the Conversion Right at the time of such redemption and (ii) (y) if the date of such redemption is on or prior to the three year anniversary of the Emergence Date, the sum of the Liquidation Preference plus the sum of all unpaid PIK Dividends through the three year anniversary of the Emergence Date, or (x) if the date of such redemption is after the three year anniversary of the Emergence Date, the Liquidation Preference (the “Redemption Price”).
Following the Emergence Date, if there is a Fundamental Change (as defined in the Preferred Terms), Gulfport is required to redeem all, but not less than all, of the outstanding shares of Preferred Stock by cash payment of the Redemption Price per share of Preferred Stock within three (3) business days of the occurrence of such Fundamental Change. Notwithstanding the foregoing, in the event of a redemption pursuant to the preceding sentence, if Gulfport lacks sufficient cash to redeem all outstanding shares of Preferred Stock, the Company is required to redeem a pro rata portion of each holder’s shares of Preferred Stock.
The Preferred Stock has no stated maturity and will remain outstanding indefinitely unless repurchased or redeemed by Gulfport or converted into Common Stock.
The Preferred Stock has been classified as mezzanine equity in the accompanying consolidated balance sheets due to the redemption features noted above.
Dividends and Conversions
During the years ended December 31, 2023 and December 31, 2022, the Company paid $4.8 million and $5.4 million, respectively, of cash dividends to holders of our Preferred Stock. During the Prior Successor Period, the Company paid dividends on our Preferred Stock, which included 3,071 shares of Preferred Stock paid in kind, approximately $55 thousand of cash-in-lieu of fractional shares, and $1.5 million of cash dividends to holders of our Preferred Stock.
The following table summarizes activity of the Company’s Preferred Stock for the years ended December 31, 2023, December 31, 2022 and Prior Successor Period:
Successor
Year Ended December 31, 2023 Year Ended December 31, 2022 Period from May 18, 2021 through December 31, 2021
Preferred Stock, beginning of period 52,295  57,896  55,000 
Issuance of Preferred Stock —  —  3,071 
Conversion of Preferred Stock (8,081) (5,601) (175)
Preferred Stock, end of period 44,214  52,295  57,896 
EQUITY
As discussed in Note 2, the Company filed an amended and restated certificate of incorporation with the Delaware Secretary of State on the Emergence Date to provide for, among other things, (i) the authority to issue 42 million shares of Common Stock with a par value of $0.0001 per share and (ii) the designation of 110,000 shares of Preferred Stock, with a par value of $0.0001 per share and a Liquidation Preference of $1,000 per share.
Common Stock
On the Emergence Date, all existing shares of the Predecessor's common stock were cancelled. The Successor issued approximately 19.8 million shares of Common Stock and 1.7 million shares of Common Stock were issued to the Disputed Claims Reserve.
In January 2022 approximately 876,000 shares in the Disputed Claims Reserve at December 31, 2021 were issued to certain claimants. As of December 31, 2023, approximately 62,000 shares continue to be held in the Disputed Claims Reserve. The 62,000 remaining shares were issued in January 2024.
Common Stock Offering
On June 26, 2023, Gulfport completed an underwritten public offering of 1.5 million shares of its common stock by certain stockholders at a price to the public of $95.00 per share. Gulfport did not sell any of its common stock as part of this offering and did not receive any proceeds from the sale of the shares sold by the selling stockholders.
Concurrent with the closing of the offering, Gulfport purchased 263,158 shares of its common stock at $95.00 per share. The repurchase was part of the Company's existing Repurchase Program discussed below.
On December 14, 2023, Gulfport completed an underwritten public offering of 653,464 shares of its common stock by certain stockholders at a price to the public of $128.21 per share. Gulfport did not sell any of its common stock as part of this offering and did not receive any proceeds from the sale of the shares sold by the selling stockholders.
Stock Repurchase Program
In November 2021 the Company's Board of Directors approved the Repurchase Program to acquire up to $100 million of common stock, which has subsequently been increased up to $650 million and extended through December 31, 2024. Purchases under the Repurchase Program may be made from time to time in open market or privately negotiated transactions, and will be subject to available liquidity, market conditions, credit agreement restrictions, applicable legal requirements, contractual obligations and other factors. The Repurchase Program does not require the Company to acquire any specific number of shares of common stock. The Company intends to purchase shares under the Repurchase Program with available funds while maintaining sufficient liquidity to fund its capital development program. The Repurchase Program may be suspended from time to time, modified, extended or discontinued by the Board of Directors at any time.
The following table summarizes activity under the Repurchase Program for the year ended December 31, 2023 (number of shares and dollar value of shares purchased shown in thousands):
Total Number of Shares Purchased Dollar Value of Shares Purchased Average Price Paid Per Share
First quarter 2023 459  $ 32,873  $ 71.61 
Second quarter 2023 442  41,358  93.67 
Third quarter 2023 76  8,681  113.97 
Fourth quarter 2023 490  65,968  134.72 
Total 1,467  $ 148,880  $ 101.53 
As of December 31, 2023, the Company has repurchased 4.4 million shares for $399.6 million at a weighted average price of $91.53 per share since the inception of the Repurchase Program.