Plugging and Abandonment Funds

In connection with the acquisition in 1997 of the remaining 50% interest in the WCBB properties, the Company assumed the seller's (Chevron) obligation to contribute approximately $18,000 per month through March 2004, to a plugging and abandonment trust and the obligation to plug a minimum of 20 wells per year for 20 years commencing March 11, 1997. Chevron retained a security interest in production from these properties until abandonment obligations to Chevron have been fulfilled. Beginning in 2009, the Company could access the trust for use in plugging and abandonment charges associated with the property, although it has not yet done so. As of December 31, 2011, the plugging and abandonment trust totaled approximately $3,121,000. At December 31, 2011, the Company has plugged 320 wells at WCBB since it began its plugging program in 1997, which management believes fulfills its current minimum plugging obligation.

Contributions to 401(k) Plan

Gulfport sponsors a 401(k) and Profit Sharing plan under which eligible employees may contribute up to 15% of their total compensation through salary deferrals. Also under these plans, the Company will make a contribution each calendar year on behalf of each employee equal to at least 3% of his or her salary, regardless of the employee's participation in salary deferrals. During the years ended December 31, 2011, 2010 and 2009, Gulfport incurred $310,000, $316,000 and $279,000, respectively, in contributions expense related to this plan.

Employment Agreement

In May 1999, Gulfport entered into an employment agreement with its Chairman of the Board. The original term of the agreement expired on May 31, 2004, but automatically renews for successive terms of one year unless Gulfport or the Chairman elects otherwise. The employment agreement calls for an annual salary of $200,000, subject to adjustment for cost of living increases.

The Company has entered into an oral agreement the Company's Chief Executive Officer, with respect to his compensation and benefits, pursuant to which he is entitled to an annual salary of $200,000 and, at the discretion of the Company's board of directors, an annual cash incentive bonus. The compensation committee of the Board of Directors may make upward adjustments to this salary.