| Supplemental Information On Oil And Gas Exploration And Production Activities |
SUPPLEMENTAL INFORMATION ON OIL AND GAS EXPLORATION AND PRODUCTION ACTIVITIES (UNAUDITED)
As discussed above in Notes 4 and 5, the Company did not own any of Diamondback's common stock at December 31, 2014. However, at December 31, 2013 and December 31, 2012, the Company owned a 7.2% and 21.4% equity interest in Diamondback, respectively, which interest is shown below. The Company also owns a 24.9999% interest in Grizzly, which interest is shown below. Grizzly achieved first production in 2014, therefore, interest in Grizzly is shown only for 2014.
The following is historical revenue and cost information relating to the Company’s oil and gas operations located entirely in the United States:
Capitalized Costs Related to Oil and Gas Producing Activities
|
|
|
|
|
|
|
|
|
|
2014 |
|
2013 |
|
(In thousands) |
Proven properties |
$ |
2,457,616 |
|
|
$ |
1,526,588 |
|
Unproven properties |
1,465,538 |
|
|
950,590 |
|
|
3,923,154 |
|
|
2,477,178 |
|
Accumulated depreciation, depletion, amortization and impairment reserve |
(1,044,273 |
) |
|
(779,561 |
) |
Net capitalized costs |
$ |
2,878,881 |
|
|
$ |
1,697,617 |
|
|
|
|
|
Equity investment in Diamondback Energy, Inc. |
|
|
|
Proven properties |
$ |
— |
|
|
$ |
92,074 |
|
Unproven properties |
— |
|
|
26,608 |
|
|
— |
|
|
118,682 |
|
Accumulated depreciation, depletion, amortization and impairment reserve |
— |
|
|
(15,180 |
) |
Net capitalized costs |
$ |
— |
|
|
$ |
103,502 |
|
|
|
|
|
Equity investment in Grizzly Oil Sand ULC |
|
|
|
Proven properties |
$ |
96,859 |
|
|
$ |
— |
|
Unproven properties |
103,160 |
|
|
— |
|
|
200,019 |
|
|
— |
|
Accumulated depreciation, depletion, amortization and impairment reserve |
(1,248 |
) |
|
— |
|
Net capitalized costs |
$ |
198,771 |
|
|
$ |
— |
|
Costs Incurred in Oil and Gas Property Acquisition and Development Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014 |
|
2013 |
|
2012 |
|
(In thousands) |
Acquisition |
$ |
440,288 |
|
|
$ |
338,153 |
|
|
$ |
513,904 |
|
Development of proved undeveloped properties |
864,511 |
|
|
408,121 |
|
|
121,787 |
|
Exploratory |
2,249 |
|
|
26,174 |
|
|
93,397 |
|
Recompletions |
45,658 |
|
|
44,633 |
|
|
24,643 |
|
Capitalized asset retirement obligation |
2,095 |
|
|
3,556 |
|
|
2,195 |
|
Total |
$ |
1,354,801 |
|
|
$ |
820,637 |
|
|
$ |
755,926 |
|
|
|
|
|
|
|
Equity investment in Diamondback Energy, Inc. |
|
|
|
|
|
Acquisition |
$ |
— |
|
|
$ |
44,534 |
|
|
$ |
49,895 |
|
Development of proved undeveloped properties |
— |
|
|
6,369 |
|
|
22,740 |
|
Exploratory |
— |
|
|
17,491 |
|
|
3,755 |
|
Capitalized asset retirement obligation |
— |
|
|
50 |
|
|
203 |
|
Total |
$ |
— |
|
|
$ |
68,444 |
|
|
$ |
76,593 |
|
|
|
|
|
|
|
Equity investment in Grizzly Oil Sands ULC |
|
|
|
|
|
Acquisition |
$ |
1,230 |
|
|
$ |
— |
|
|
$ |
— |
|
Development of proved undeveloped properties |
7,107 |
|
|
— |
|
|
— |
|
Exploratory |
— |
|
|
— |
|
|
— |
|
Capitalized asset retirement obligation |
1,055 |
|
|
— |
|
|
— |
|
Total |
$ |
9,392 |
|
|
$ |
— |
|
|
$ |
— |
|
Results of Operations for Producing Activities
The following schedule sets forth the revenues and expenses related to the production and sale of oil and gas. The income tax expense is calculated by applying the current statutory tax rates to the revenues after deducting costs, which include depreciation, depletion and amortization allowances, after giving effect to the permanent differences. The results of operations exclude general office overhead and interest expense attributable to oil and gas production.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014 |
|
2013 |
|
2012 |
|
(In thousands) |
Revenues |
$ |
670,762 |
|
|
$ |
262,225 |
|
|
$ |
248,601 |
|
Production costs |
(140,664 |
) |
|
(64,666 |
) |
|
(53,708 |
) |
Depletion |
(263,946 |
) |
|
(118,118 |
) |
|
(90,230 |
) |
|
266,152 |
|
|
79,441 |
|
|
104,663 |
|
Income tax expense (benefit) |
|
|
|
|
|
Current |
— |
|
|
— |
|
|
730 |
|
Deferred |
96,061 |
|
|
49,447 |
|
|
25,633 |
|
|
96,061 |
|
|
49,447 |
|
|
26,363 |
|
Results of operations from producing activities |
$ |
170,091 |
|
|
$ |
29,994 |
|
|
$ |
78,300 |
|
Depletion per Mcf of gas equivalent (Mcfe) |
$ |
3.01 |
|
|
$ |
4.78 |
|
|
$ |
5.85 |
|
|
|
|
|
|
|
Results of Operations from equity method investment in Diamondback Energy, Inc. |
|
|
|
|
|
Revenues |
$ |
— |
|
|
$ |
14,976 |
|
|
$ |
16,042 |
|
Production costs |
— |
|
|
(2,518 |
) |
|
(4,474 |
) |
Depletion |
— |
|
|
(4,754 |
) |
|
(5,515 |
) |
|
— |
|
|
7,704 |
|
|
6,053 |
|
Income tax expense |
— |
|
|
2,286 |
|
|
2,158 |
|
Results of operations from producing activities |
$ |
— |
|
|
$ |
5,418 |
|
|
$ |
3,895 |
|
|
|
|
|
|
|
Results of Operations from equity method investment in Grizzly Oil Sands ULC |
|
|
|
|
|
Revenues |
$ |
5,449 |
|
|
$ |
— |
|
|
$ |
— |
|
Production costs |
(10,113 |
) |
|
— |
|
|
— |
|
Depletion |
(1,195 |
) |
|
— |
|
|
— |
|
|
(5,859 |
) |
|
— |
|
|
— |
|
Income tax expense |
— |
|
|
— |
|
|
— |
|
Results of operations from producing activities |
$ |
(5,859 |
) |
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
Oil and Gas Reserves
The following table presents estimated volumes of proved developed and undeveloped oil and gas reserves as of December 31, 2014, 2013 and 2012 and changes in proved reserves during the last three years. The reserve reports use an average price equal to the unweighted arithmetic average of hydrocarbon prices received on a field-by-field basis on the first day of each month within the 12-month period ended December 31, 2014, 2013 and 2012, in accordance with guidelines of the SEC applicable to reserves estimates. Volumes for oil are stated in thousands of barrels (MBbls) and volumes for gas are stated in millions of cubic feet (MMcf). The prices used for the 2014 reserve report are $94.99 per barrel of oil, $4.35 per MMbtu and $44.84 per barrel for NGLs, adjusted by lease for transportation fees and regional price differentials, and for oil and gas reserves, respectively. The prices used at December 31, 2013 and 2012 for reserve report purposes are $96.78 per barrel, $3.67 per MMbtu and $41.23 per barrel for NGLs and $91.32 per barrel and $2.76 per MMbtu, respectively.
Gulfport emphasizes that the volumes of reserves shown below are estimates which, by their nature, are subject to revision. The estimates are made using all available geological and reservoir data, as well as production performance data. These estimates are reviewed annually and revised, either upward or downward, as warranted by additional performance data.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014 |
|
2013 |
|
2012 |
|
Oil |
|
Gas |
|
NGL |
|
Oil |
|
Gas |
|
NGL |
|
Oil |
|
Gas |
|
NGL |
|
(MBbls) |
|
(MMcf) |
|
(MBbls) |
|
(MBbls) |
|
(MMcf) |
|
(MBbls) |
|
(MBbls) |
|
(MMcf) |
|
(MBbls) |
Proved Reserves |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning of the period |
8,346 |
|
|
146,446 |
|
|
5,675 |
|
|
8,106 |
|
|
33,771 |
|
|
145 |
|
|
13,954 |
|
|
15,728 |
|
|
2,791 |
|
Purchases in oil and gas reserves in place |
173 |
|
|
8,863 |
|
|
353 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Extensions and discoveries |
4,975 |
|
|
629,151 |
|
|
22,594 |
|
|
2,765 |
|
|
123,597 |
|
|
5,850 |
|
|
4,732 |
|
|
31,265 |
|
|
148 |
|
Sales of oil and gas reserves in place |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(7,875 |
) |
|
(11,757 |
) |
|
(2,729 |
) |
Revisions of prior reserve estimates |
(1,313 |
) |
|
(6,136 |
) |
|
(304 |
) |
|
(208 |
) |
|
(2,031 |
) |
|
— |
|
|
(382 |
) |
|
(357 |
) |
|
— |
|
Current production |
(2,684 |
) |
|
(59,318 |
) |
|
(2,050 |
) |
|
(2,317 |
) |
|
(8,891 |
) |
|
(320 |
) |
|
(2,323 |
) |
|
(1,108 |
) |
|
(65 |
) |
End of period |
9,497 |
|
|
719,006 |
|
|
26,268 |
|
|
8,346 |
|
|
146,446 |
|
|
5,675 |
|
|
8,106 |
|
|
33,771 |
|
|
145 |
|
Proved developed reserves |
5,719 |
|
|
345,166 |
|
|
12,379 |
|
|
5,609 |
|
|
94,552 |
|
|
3,527 |
|
|
5,175 |
|
|
18,482 |
|
|
44 |
|
Proved undeveloped reserves |
3,778 |
|
|
373,840 |
|
|
13,889 |
|
|
2,737 |
|
|
51,894 |
|
|
2,148 |
|
|
2,931 |
|
|
15,289 |
|
|
101 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity investment in Diamondback Energy, Inc. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proved Reserves |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning of the period |
— |
|
|
— |
|
|
— |
|
|
5,606 |
|
|
7,398 |
|
|
1,766 |
|
|
3,874 |
|
|
4,398 |
|
|
1,080 |
|
Change in ownership interest in Diamondback |
— |
|
|
— |
|
|
— |
|
|
(3,720 |
) |
|
(4,909 |
) |
|
(1,171 |
) |
|
— |
|
|
— |
|
|
— |
|
Purchases in oil and gas reserves in place |
— |
|
|
— |
|
|
— |
|
|
528 |
|
|
752 |
|
|
120 |
|
|
1,543 |
|
|
2,292 |
|
|
540 |
|
Extensions and discoveries |
— |
|
|
— |
|
|
— |
|
|
1,227 |
|
|
1,741 |
|
|
331 |
|
|
665 |
|
|
804 |
|
|
186 |
|
Revisions of prior reserve estimates |
— |
|
|
— |
|
|
— |
|
|
(428 |
) |
|
(417 |
) |
|
(249 |
) |
|
(314 |
) |
|
82 |
|
|
(1 |
) |
Current production |
— |
|
|
— |
|
|
— |
|
|
(146 |
) |
|
(124 |
) |
|
(26 |
) |
|
(162 |
) |
|
(178 |
) |
|
(39 |
) |
End of period |
— |
|
|
— |
|
|
— |
|
|
3,067 |
|
|
4,441 |
|
|
771 |
|
|
5,606 |
|
|
7,398 |
|
|
1,766 |
|
Proved developed reserves |
— |
|
|
— |
|
|
— |
|
|
1,425 |
|
|
2,263 |
|
|
358 |
|
|
1,539 |
|
|
2,753 |
|
|
641 |
|
Proved undeveloped reserves |
— |
|
|
— |
|
|
— |
|
|
1,642 |
|
|
2,178 |
|
|
413 |
|
|
4,068 |
|
|
4,645 |
|
|
1,124 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity investment in Grizzly Oil Sands ULC |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning of the period |
13,637 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Purchases in oil and gas reserves in place |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Extensions and discoveries |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Revisions of prior reserve estimates |
990 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Current production |
(69 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
End of period |
14,558 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Proved developed reserves |
1,632 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Proved undeveloped reserves |
12,926 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
In 2014, the Company experienced extensions and discoveries of 786,347 million cubic feet of gas equivalent (MMcfe) of proved reserves attributable to the development of the Company's Utica Shale acreage. In addition, the Company experienced downward revisions of 15,837 MMcfe in estimated proved reserves in 2014 primarily due to the exclusion of PUD locations in our Southern Louisiana and Utica fields that were not expected to be drilled within five years of initial booking. The Company also purchased 12,019 MMcfe of proved reserves as a result of its acquisition from Rhino discussed in Note 2. In 2013, the Company experienced extensions and discoveries of 166,832 MMcfe of proved reserves attributable to the development of the Company's Utica Shale acreage. The Company contributed its Permian Basin assets to Diamondback in 2012, as discussed in Note 4, resulting in a decrease of 75,384 MMcfe in estimated proved reserves in 2012. The Company experienced extensions and discoveries of proved reserves of 40,049 MMcfe in 2012 attributable to the discovery and development of the Company's Utica Shale acreage. In addition, the Company experienced downward reserve revisions of 2,649 MMcfe in estimated proved reserves in 2012 primarily due to a change in the drilling schedule of its Niobrara acreage.
Discounted Future Net Cash Flows
The following tables present the estimated future cash flows, and changes therein, from Gulfport’s proven oil and gas reserves as of December 31, 2014, 2013 and 2012 using an unweighted average first-of-the-month price for the period January through December 31, 2014, 2013 and 2012.
Standardized Measure of Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserves
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, |
|
2014 |
|
2013 |
|
2012 |
|
(In thousands) |
Future cash flows |
$ |
4,667,678 |
|
|
$ |
1,657,708 |
|
|
$ |
954,833 |
|
Future development and abandonment costs |
(719,898 |
) |
|
(272,500 |
) |
|
(159,113 |
) |
Future production costs |
(880,427 |
) |
|
(274,428 |
) |
|
(147,024 |
) |
Future production taxes |
(71,229 |
) |
|
(78,647 |
) |
|
(89,175 |
) |
Future income taxes |
(693,154 |
) |
|
(172,691 |
) |
|
(114,867 |
) |
Future net cash flows |
2,302,970 |
|
|
859,442 |
|
|
444,654 |
|
10% discount to reflect timing of cash flows |
(875,803 |
) |
|
(280,976 |
) |
|
(96,013 |
) |
Standardized measure of discounted future net cash flows |
$ |
1,427,167 |
|
|
$ |
578,466 |
|
|
$ |
348,641 |
|
|
|
|
|
|
|
Equity investment in Diamondback Energy, Inc. Standardized measure of discounted cash flows |
|
|
|
|
|
Future cash flows |
$ |
— |
|
|
$ |
331,505 |
|
|
$ |
592,669 |
|
Future development and abandonment costs |
— |
|
|
(37,229 |
) |
|
(115,869 |
) |
Future production costs |
— |
|
|
(58,096 |
) |
|
(165,553 |
) |
Future production taxes |
— |
|
|
(22,925 |
) |
|
(30,122 |
) |
Future income taxes |
— |
|
|
(48,547 |
) |
|
(71,669 |
) |
Future net cash flows |
— |
|
|
164,708 |
|
|
209,456 |
|
10% discount to reflect timing of cash flows |
— |
|
|
(94,462 |
) |
|
(130,871 |
) |
Standardized measure of discounted future net cash flows |
$ |
— |
|
|
$ |
70,246 |
|
|
$ |
78,585 |
|
|
|
|
|
|
|
Equity investment in Grizzly Oil Sands ULC Standardized measure of discounted cash flows |
|
|
|
|
|
Future cash flows |
$ |
754,720 |
|
|
$ |
— |
|
|
$ |
— |
|
Future development and abandonment costs |
(205,242 |
) |
|
— |
|
|
— |
|
Future production costs |
(291,988 |
) |
|
— |
|
|
— |
|
Future production taxes |
— |
|
|
— |
|
|
— |
|
Future income taxes |
(11,250 |
) |
|
— |
|
|
— |
|
Future net cash flows |
246,240 |
|
|
— |
|
|
— |
|
10% discount to reflect timing of cash flows |
(152,494 |
) |
|
— |
|
|
— |
|
Standardized measure of discounted future net cash flows |
$ |
93,746 |
|
|
$ |
— |
|
|
$ |
— |
|
In order to develop its proved undeveloped reserves according to the drilling schedule used by the engineers in Gulfport’s reserve report, the Company will need to spend $221.0 million, $93.1 million and $215.4 million during years 2015, 2016 and 2017, respectively.
Changes in Standardized Measure of Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserves
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, |
|
2014 |
|
2013 |
|
2012 |
|
(In thousands) |
Sales and transfers of oil and gas produced, net of production costs |
$ |
(530,098 |
) |
|
$ |
(197,559 |
) |
|
$ |
(194,893 |
) |
Net changes in prices, production costs, and development costs |
97,716 |
|
|
65,573 |
|
|
108,941 |
|
Acquisition of oil and gas reserves in place |
14,266 |
|
|
— |
|
|
— |
|
Extensions and discoveries |
790,533 |
|
|
130,826 |
|
|
151,654 |
|
Previously estimated development costs incurred during the period |
68,227 |
|
|
43,478 |
|
|
10,211 |
|
Revisions of previous quantity estimates, less related production costs |
(37,801 |
) |
|
(3,591 |
) |
|
(10,504 |
) |
Sales of reserves in place |
— |
|
|
— |
|
|
(214,867 |
) |
Accretion of discount |
57,847 |
|
|
34,864 |
|
|
37,668 |
|
Net changes in income taxes |
(295,226 |
) |
|
(30,239 |
) |
|
25,585 |
|
Change in production rates and other |
683,237 |
|
|
186,473 |
|
|
58,165 |
|
Total change in standardized measure of discounted future net cash flows |
$ |
848,701 |
|
|
$ |
229,825 |
|
|
$ |
(28,040 |
) |
|
|
|
|
|
|
Equity investment in Diamondback Energy, Inc. Changes in standardized measure of discounted cash flows |
|
|
|
|
|
Change in ownership interest in Diamondback |
$ |
— |
|
|
$ |
(52,145 |
) |
|
$ |
— |
|
Sales and transfers of oil and gas produced, net of production costs |
— |
|
|
(12,524 |
) |
|
(11,601 |
) |
Net changes in prices, production costs, and development costs |
— |
|
|
3,312 |
|
|
(14,596 |
) |
Acquisition of oil and gas reserves in place |
— |
|
|
21,968 |
|
|
23,090 |
|
Extensions and discoveries |
— |
|
|
39,776 |
|
|
16,969 |
|
Previously estimated development costs incurred during the period |
— |
|
|
5,517 |
|
|
19,014 |
|
Revisions of previous quantity estimates, less related production costs |
— |
|
|
(9,143 |
) |
|
(4,897 |
) |
Accretion of discount |
— |
|
|
4,175 |
|
|
7,803 |
|
Net changes in income taxes |
— |
|
|
(12,137 |
) |
|
(26,866 |
) |
Change in production rates and other |
— |
|
|
2,862 |
|
|
(8,358 |
) |
Total change in standardized measure of discounted future net cash flows |
$ |
— |
|
|
$ |
(8,339 |
) |
|
$ |
558 |
|
|
|
|
|
|
|
Equity investment in Grizzly Oil Sands ULC Changes in standardized measure of discounted cash flows |
|
|
|
|
|
Sales and transfers of oil and gas produced, net of production costs |
$ |
4,664 |
|
|
$ |
— |
|
|
$ |
— |
|
Net changes in prices, production costs, and development costs |
(76,518 |
) |
|
— |
|
|
— |
|
Acquisition of oil and gas reserves in place |
— |
|
|
— |
|
|
— |
|
Extensions and discoveries |
7,107 |
|
|
— |
|
|
— |
|
Previously estimated development costs incurred during the period |
— |
|
|
— |
|
|
— |
|
Revisions of previous quantity estimates, less related production costs |
10,659 |
|
|
— |
|
|
— |
|
Accretion of discount |
14,946 |
|
|
— |
|
|
— |
|
Net changes in income taxes |
9,162 |
|
|
— |
|
|
— |
|
Change in production rates and other |
(25,738 |
) |
|
— |
|
|
— |
|
Total change in standardized measure of discounted future net cash flows |
$ |
(55,718 |
) |
|
$ |
— |
|
|
$ |
— |
|
|