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Equity Investments
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Dec. 31, 2013
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| Equity Method Investments and Joint Ventures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity Investments |
EQUITY INVESTMENTS
Investments accounted for by the equity method consist of the following as of December 31, 2013 and 2012:
The tables below summarize financial information for the Company's equity investments, excluding Diamondback, as of December 31, 2013 and 2012.
Summarized balance sheet information:
Summarized results of operations:
Tatex Thailand II, LLC
The Company has an indirect ownership interest in Tatex Thailand II, LLC (“Tatex”). Tatex holds 85,122 of the 1,000,000 outstanding shares of 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 243,000 acres which includes the Phu Horm Field.
Tatex Thailand III, LLC
The Company has an ownership interest in Tatex Thailand III, LLC ("Tatex III"). Tatex III owns a concession covering approximately 245,000 acres in Southeast Asia. During the year ended December 31, 2013 and 2012, the Company paid cash calls of $2.4 million and $0.6 million, 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 are owned by Grizzly Oil Sands Inc. ("Oil Sands"), an entity owned by certain investment funds managed by Wexford Capital LP ("Wexford"). As of December 31, 2013, Grizzly had approximately 830,000 acres under lease in the Athabasca and Peace River oil sands regions of Alberta, Canada. During the years ended December 31, 2013 and 2012, Gulfport paid $33.9 million and $103.9 million, respectively, in cash calls. Grizzly’s functional currency is the Canadian dollar. The Company's investment in Grizzly was decreased by $12.2 million and $0.9 million as a result of a foreign currency translation loss for the years ended December 31, 2013 and 2011, respectively, and increased by $1.4 million as a result of a foreign currency translation gain for the year ended December 31, 2012.
The Company, through Grizzly Holdings, entered into a loan agreement with Grizzly effective January 1, 2008, under which Grizzly borrowed funds from the Company. Borrowed funds initially bore interest at LIBOR plus 400 basis points and had an original maturity date of December 31, 2012. Effective April 1, 2010, the loan agreement was amended to modify the interest rate to 0.69% and change the maturity date to December 31, 2011. Effective October 15, 2010, the loan agreement was further amended to change the maturity date to December 31, 2012. Interest was paid on a paid-in-kind basis by increasing the outstanding balance of the loan. The Company loaned Grizzly approximately $3.2 million during the year ended December 31, 2011. The Company recognized interest income of approximately $0.1 million for the year ended December 31, 2011, which is included in interest income in the consolidated statements of operations. Effective December 7, 2011, Grizzly Holdings Inc., entered into a debt settlement agreement with Grizzly under which Grizzly agreed to satisfy the entire outstanding debt by issuing additional common shares of Grizzly with no effect to the composition of ownership structure of Grizzly. At such date, the Company’s investment in Grizzly increased by the total $22.3 million outstanding advances and accrued interest due from Grizzly, the cumulative $0.1 million currency translation loss for the note receivable was adjusted through accumulated other comprehensive income and the note receivable was considered paid in full.
Bison Drilling and Field Services LLC
During 2011, the Company invested in Bison Drilling and Field Services LLC (“Bison”). Bison owns and operates drilling rigs. During the years ended December 31, 2013 and 2012, Gulfport paid $2.3 million and $7.5 million, respectively, in cash calls.
The Company entered into a loan agreement with Bison effective May 15, 2012, under which Bison may borrow funds from the Company. Interest accrues at LIBOR plus 0.28% or 8%, whichever is lower, and shall be paid on a paid-in-kind basis by increasing the outstanding balance of the loan. The loan has a maturity date of January 31, 2015. The Company loaned Bison $1.6 million during the first nine months of 2012, all of which was repaid by Bison during the third quarter of 2012. The Company has made no loans to Bison since that time.
Muskie Proppant LLC
During 2011, the Company invested in Muskie Proppant LLC (“Muskie”), formerly known as Muskie Holdings LLC. Muskie processes and sells sand for use in hydraulic fracturing by the oil and natural gas industry and holds certain rights in a lease covering land in Wisconsin for mining oil and natural gas fracture grade sand. During the years ended December 31, 2013 and 2012, Gulfport paid $2.2 million and $6.2 million, respectively, in cash calls.
The Company entered into a loan agreement with Muskie effective July 1, 2013, under which it loaned Muskie $0.9 million. Interest accrues at the prime rate plus 2.5%. The loan has a maturity date of July 31, 2014. At December 31, 2013, the outstanding balance on the loan is included in notes receivable-related party on the accompanying consolidated balance sheets.
Timber Wolf Terminals LLC
During 2012, the Company invested in Timber Wolf Terminals LLC (“Timber Wolf”). The Company's initial investment during 2012 was $1.0 million. Timber Wolf will operate a crude/condensate terminal and a sand transloading facility in Ohio. During the year ended December 31, 2013, Gulfport paid $0.1 million in cash calls.
Windsor Midstream LLC
During 2012, the Company purchased an ownership interest in Windsor Midstream LLC (“Midstream”) at a cost of $7.0 million. Midstream owns a 28.4% interest in MidMar Gas LLC, a gas processing plant in West Texas. During the year ended December 31, 2013, Gulfport paid an immaterial amount in net cash calls to Midstream. During the year ended December 31, 2012, Gulfport paid $1.8 million in cash calls.
Stingray Pressure Pumping LLC
During 2012, the Company invested in Stingray Pressure Pumping LLC ("Stingray Pressure"). Stingray Pressure provides well completion services. During the years ended December 31, 2013 and 2012, the Company paid $1.8 million and $14.5 million, respectively, in cash calls. The (income) loss from equity method investments presented in the table above reflects any intercompany profit eliminations.
Stingray Cementing LLC
During 2012, the Company invested in Stingray Cementing LLC ("Stingray Cementing"). Stingray Cementing provides well cementing services. During the year ended December 31, 2013, the Company did not pay any cash calls related to Stingray Cementing. During the year ended December 31, 2012, the Company paid $3.3 million in cash calls. The (income) loss from equity method investments presented in the table above reflects any intercompany profit eliminations.
Blackhawk Midstream LLC
During 2012, the Company invested in Blackhawk Midstream LLC ("Blackhawk"). Blackhawk coordinates gathering, compression, processing and marketing activities for the Company in connection with the development of its Utica Shale acreage. During the years ended December 31, 2013 and 2012, the Company paid $0.7 million and $0.4 million, respectively, in cash calls related to Blackhawk. On January 28, 2014, Blackhawk closed on the sale of its equity interest in Ohio Gathering Company, LLC and Ohio Condensate Company, LLC for a purchase price of $190.0 million, of which $14.3 million was placed in escrow. Gulfport received $84.8 million in net proceeds from this transaction.
Stingray Logistics LLC
During 2012, the Company invested in Stingray Logistics LLC ("Stingray Logistics"). Stingray Logistics provides well services. During the year ended December 31, 2012, the Company paid $1.0 million in cash calls.
Diamondback Energy, Inc.
As noted above in Note 4, on May 7, 2012, the Company entered into a contribution agreement with Diamondback. Following the closing of the Diamondback IPO, the Company owned approximately 21.4% of Diamondback's outstanding common stock for an initial investment in Diamondback of $138.5 million. On June 24, 2013, the Company sold 1,951,781 shares of its Diamondback common stock for net proceeds of $65.1 million in an underwritten public offering in which certain entities controlled by Wexford also participated as selling stockholders. On July 5, 2013, the underwriters purchased an additional 282,755 shares of Diamondback common stock from Gulfport pursuant to an option to purchase additional shares from the selling stockholders granted to the underwriters resulting in net proceeds to the Company of $9.4 million. The shares were sold to the public at $34.75 per share. On November 11, 2013, the Company sold 2,000,000 shares of its Diamondback common stock for net proceeds of $102.8 million in an underwritten public offering. On November 18, 2013, the underwriters purchased an additional 300,000 shares of Diamondback common stock from Gulfport pursuant to an option to purchase additional shares from the selling stockholder granted to the underwriters resulting in net proceeds to the Company of $15.4 million. The shares were sold to the public at $51.39 per share. As of December 31, 2013, the Company owned approximately 7.2% of Diamondback's outstanding common stock.
The Company accounts for its interest in Diamondback as an equity method investment and has elected the fair value option of accounting for this investment. While the investment in Diamondback is below 20% ownership at December 31, 2013, the Company has appointed a member of Diamondback's Board as discussed in Note 4; as the Company continues to have influence through this board seat, the investment in Diamondback will continue to be accounted for as an equity method investment. The Company valued its investment in Diamondback using the quoted closing market price of Diamondback's stock on December 31, 2013 of $52.88 per share multiplied by the number of outstanding shares of Diamondback's stock held by the Company. The Company recognized an aggregate gain of approximately $220.1 million and $12.8 million on its investment in Diamondback for years ended December 31, 2013 and 2012, respectively, which is included in (income) loss from equity method investments in the consolidated statements of operations.
The Company has determined that for the periods presented in its consolidated financial statements, Diamondback has met the conditions of a significant subsidiary under Rule 1-02(w) of Regulation S-X, for which the Company is required, pursuant to Rule 3-09 of Regulation S-X, to attach separate financial statements as exhibits to its Annual Report on Form 10-K.
Stingray Energy Services LLC
During 2013, the Company invested in Stingray Energy Services LLC ("Stingray Energy") at a cost of $2.9 million. Stingray Energy provides rental tools for land-based oil and natural gas drilling, completion and workover activities as well as the transfer of fresh water to wellsites.The (income) loss from equity method investments presented in the table above reflects any intercompany profit eliminations.
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