Oklahoma Natural Gas Producer Enters Restructuring
Gulfport Energy is seeking to eliminate more than $1 billion in debt and to cancel or renegotiate firm transportation contracts that it said drove it to enter bankruptcy protection.
Oklahoma City-based Gulfport Energy plans to shed nearly $1.25 billion in debt as it enters a court-supervised Chapter 11 bankruptcy process, according to a company statement on 14 November.
Gulfport operates in the Oklahoma’s SCOOP and Ohio’s Utica Shale and as of the second quarter of this year was operating a single rig in each play.
The company formed a new executive team in 2019 which was tasked with trimming costs and improving cash flow.
However, Gulfport’s large debt load combined with long-term pipeline contracts meant it was on an unsustainable footing given current natural gas prices, ultimately driving its decision to enter bankruptcy, David Wood, president and CEO of Gulfport, said in the announcement.
“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,” he added.
A prepackaged restructuring agreement was reached with most of the natural gas producer’s credit lenders and senior noteholders.
The restructuring package includes more than $262 million in debtor-in-possession financing from existing credit lenders, $105 million that will be dispersed imminently, pending court approval.
After exiting bankruptcy, the company also expects to have access to $580 million in new financing available. The agreement also notes that common shareholders may see their equity cancelled during the process.
Gulfport was founded in 1997 and acquired its current unconventional positions after 2012. The company also owns a 22% nonoperating interest in noncore assets operated by Oklahoma City-based Mammoth Energy and a 25% stake in Canadian operator Grizzly Oil Sands.