Gulfport Energy (GPOR) Update - Nov 14

[dan_s]

Gulfport Enters Into Restructuring Support Agreement for Pre-Arranged Plan of Reorganization to Reduce Debt by Approximately $1.25 Billion and Significantly Improve its Cost Structure
Gulfport Energy Corporation
Sat, November 14, 2020, 11:47 AM CST
Commences Voluntary Chapter 11 Process to Implement Financial Restructuring

Obtains Commitment for $105 Million in New Money Debtor-In-Possession Financing to Support Continued Ordinary Course Operations, Including Payments for Wages and Benefits, Vendors and Suppliers

OKLAHOMA CITY, Nov. 14, 2020 (GLOBE NEWSWIRE) -- Gulfport Energy Corporation (NASDAQ: GPOR) (the “Company” and together with its wholly owned subsidiaries, “Gulfport”) today announced that it has entered into a Restructuring Support Agreement (the “RSA”) with over 95% of its revolving credit facility lenders and certain noteholders holding over two-thirds of the outstanding aggregate principal amount of its senior unsecured notes. Attached to the RSA is a “pre-negotiated” restructuring plan (the “Plan”) that will strengthen Gulfport’s balance sheet, significantly reduce its funded debt, and lower ongoing operational costs. Pursuant to the RSA and the Plan, Gulfport expects to eliminate approximately $1.25 billion in funded debt and significantly reduce annual cash interest expense going forward. Gulfport will also issue $550 million of new senior unsecured notes under the Plan to existing unsecured creditors of certain Gulfport subsidiaries. Certain of Gulfport’s noteholders have committed to backstop a minimum new money investment of $50 million in the form of convertible preferred stock. The RSA is designed to allow Gulfport to move through the restructuring process as expeditiously as possible.

To implement the restructuring contemplated by the RSA and the Plan, Gulfport has filed petitions for voluntary relief under chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Texas (“the Court”). Gulfport intends to use the proceedings to strengthen its balance sheet, restructure certain debt obligations, significantly reduce its midstream cost structure, and achieve a more sustainable capital structure. Gulfport intends to continue to operate in the ordinary course of business during the restructuring process.

Gulfport Energy Corporation
Sat, November 14, 2020, 11:47 AM CST
Commences Voluntary Chapter 11 Process to Implement Financial Restructuring

Obtains Commitment for $105 Million in New Money Debtor-In-Possession Financing to Support Continued Ordinary Course Operations, Including Payments for Wages and Benefits, Vendors and Suppliers

OKLAHOMA CITY, Nov. 14, 2020 (GLOBE NEWSWIRE) -- Gulfport Energy Corporation (NASDAQ: GPOR) (the “Company” and together with its wholly owned subsidiaries, “Gulfport”) today announced that it has entered into a Restructuring Support Agreement (the “RSA”) with over 95% of its revolving credit facility lenders and certain noteholders holding over two-thirds of the outstanding aggregate principal amount of its senior unsecured notes. Attached to the RSA is a “pre-negotiated” restructuring plan (the “Plan”) that will strengthen Gulfport’s balance sheet, significantly reduce its funded debt, and lower ongoing operational costs. Pursuant to the RSA and the Plan, Gulfport expects to eliminate approximately $1.25 billion in funded debt and significantly reduce annual cash interest expense going forward. Gulfport will also issue $550 million of new senior unsecured notes under the Plan to existing unsecured creditors of certain Gulfport subsidiaries. Certain of Gulfport’s noteholders have committed to backstop a minimum new money investment of $50 million in the form of convertible preferred stock. The RSA is designed to allow Gulfport to move through the restructuring process as expeditiously as possible.

To implement the restructuring contemplated by the RSA and the Plan, Gulfport has filed petitions for voluntary relief under chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Texas (“the Court”). Gulfport intends to use the proceedings to strengthen its balance sheet, restructure certain debt obligations, significantly reduce its midstream cost structure, and achieve a more sustainable capital structure. Gulfport intends to continue to operate in the ordinary course of business during the restructuring process.

Gulfport also announced that it has secured $262.5 million in debtor-in-possession (“DIP”) financing from Gulfport’s existing lenders under its revolving credit facility, including $105 million in new money that will be available upon Court approval. The financing is structured to fund Gulfport’s ordinary course operations during the chapter 11 proceedings, including employee wages and benefits and payments to suppliers and vendors. Gulfport has also received a commitment from its existing lenders to provide $580 million in exit financing upon emergence from chapter 11.

David M. Wood, President and Chief Executive Officer of Gulfport Energy, stated, “Since Gulfport’s leadership team was reconstituted in 2019, we have taken decisive actions to streamline our business, strengthen our balance sheet, focus on cash flow generation, exercise capital discipline, and drive operational efficiencies and cost reductions across the Company. Despite these efforts, our large legacy debt burden in addition to significant legacy firm transportation commitments created a balance sheet and cost structure that was unsustainable in the current market environment. After working diligently to explore all strategic and financial options available, Gulfport’s Board of Directors determined that commencing a chapter 11 process is in the best interest of the Company and its stakeholders.”

Mr. Wood continued, “We expect to exit the chapter 11 process with leverage below two times and rapidly delever thereafter due to a much-improved cost structure driven by reduced legacy firm transport commitments and costs. These improvements will significantly improve our ability to generate cash flow and value for our stakeholders going forward.”

Mr. Wood continued, “I want to thank our creditors, financing partners and other stakeholders for their support. We also deeply appreciate the hard work of our dedicated employees and their commitment to each other and to our valued business partners. We hope to move through the restructuring process quickly and efficiently and emerge as a stronger company positioned for future success.”

To ensure its ability to continue operating in the ordinary course of business, Gulfport has filed customary “first day” motions with the Court seeking a variety of relief, including authority to maintain operations in accordance with pre-petition practices and to pay certain pre-petition claims for, among other things, employee wages and benefits, royalties, and certain vendor and suppliers obligations.

Additional information regarding Gulfport’s chapter 11 filing will be available at www.gulfportenergy.com/restructuring. Court filings and information about the claims process are available at https://dm.epiq11.com/Gulfport. Questions should be directed to the Company’s claims agent by email to GulfportInfo@epiqglobal.com or by phone at (888) 905-0409 (toll free) or +1 (503) 597-7687 (international).

Kirkland & Ellis LLP and Jackson Walker L.L.P. are serving as legal co-counsel, Perella Weinberg Partners and its affiliate, Tudor Pickering Holt & Co. are serving as financial advisors, and Alvarez & Marsal is serving as restructuring advisor to the Company.

About Gulfport
Gulfport Energy is an independent returns-oriented, gas-weighted, exploration and development company and is one of the largest producers of natural gas in the contiguous United States. Headquartered in Oklahoma City, Gulfport holds significant acreage positions in the Utica Shale of Eastern Ohio and the SCOOP Woodford and SCOOP Springer plays in Oklahoma. Gulfport has 259 employees.

[k1f]

What happens to GPOR common shares?

Everybody knows these bankruptcies are caused by surges in production and lack of pricing power—the boom/bust cycle. The Industry wants the surge in production and pricing power too. But they’re incompatible, and the industry seems unable to control the cycle. As you keep saying, the “low-hanging fruit” has been picked, and that should make for higher prices.

Here’s a problem. All presidents need to keep energy prices low in order to encourage prosperity, yet in your analyses, you keep explicitly rooting for Trump. But as Andrew Hecht says, << In 2016, President Trump ran on a drill-baby-drill and frack-baby-frack platform, promising to eliminate many regulations to expand production. He delivered on those promises.>> And Trump kept the price of energy low, even before the pandemic started.

The industry’s politics seem to contradict its business goals. Shouldn’t an analyst examine those contradictions? For example,

https://www.brookings.edu/blog/the-aven ... ic-divide/

https://www.brookings.edu/blog/the-aven ... ging-fast/

[mkarpoff]

If Trump had anything to do with the price of energy it was strictly on the margins. Keep in mind, energy pricing was going up until Saudi Arabia increased production. Prices crashed. Then when the recovery was underway the pandemic hit. Again prices crashed. Trump was simply making reactive statements that benefited his agenda.
I am more concerned that Biden will lift sanctions on Iran. That will allow much more oil into the mkt.

[dan_s]

I want Trump to win re-election because I love America and don't want to go down the path of Socialism. I don't like his style, but I think he has done a great job. IMO blaming Trump for Covid-19 is childish and used by the Far Left to draw attention away from other issues. Prior to the pandemic, the U.S. economy was kicking butt and we had record low unemployment. In early January, WTI ran up to $65/bbl and likely headed a lot higher.

Prior to voting I make a list of ten things that are important to me as a citizen. Rising oil and gas prices was not on the list. Presidents have very little to do with commodity prices IMHO. I don't vote for the person, I vote for the party that is most inline with my idea of what is best for America. I will NEVER vote for a party that supports "Defund the police" or violent protest each time they don't get their way. Living in South Texas, I want tight border security. I love Mexico and most of their citizen. Susan & I go to Mexico several times each year. We were there just a week ago. I hate drugs and the criminals that pour across our southern border each day. I have voted for Democrats in the past, but I'm afraid the party is heading in a very dangerous direction.

Regarding Gulfport: I think the Company moved too quickly to restructure the debt because we could see much higher gas and NGL prices in the near future. Gulfport is generating free cash flow from operations and using it to pay down debt. Keep in mind that the package must be approved by a Bankruptcy Court. Some large equity holders might show up to protest.

Also, GPOR's share price probably had this already priced in since they announced a move to restructure their debt months ago. The "Devil is in the Details".

Details of the restructuring plan should be available on the Gulfport website tomorrow. See: https://ir.gulfportenergy.com/all-sec-filings