Natural gas explorer and producer Gulfport Energy Corp filed for Chapter 11 bankruptcy on Nov. 13, becoming the latest company in the U.S. energy sector to succumb to weak crude prices as the COVID-19 pandemic crimps fuel demand.
In a statement on Nov. 14, Gulfport said it has secured $262.5 million in debtor-in-possession financing from its existing lenders under its revolving credit facility, including $105 million in new money that will be available upon court approval.
Weak demand due to the coronavirus pandemic and a price war between major oil producers resulted in a historic plunge in oil prices.
“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,” David M. Wood, president and CEO of Gulfport Energy, said.
Wood continued: “We expect to exit the chapter 11 process with leverage below two times and rapidly deliver 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.”
As part of the restructuring plan, Gulfport said it expected to eliminate about $1.25 billion in funded debt and significantly reduce annual cash interest expense.
Gulfport had interest payments on its debt due on Oct. 15, Nov. 1 and Nov. 15.
Gulfport said it also received a commitment from existing lenders to provide $580 million in exit financing upon emergence from Chapter 11.
As of Sept. 30, the company had total debt of about $2.5 billion, according to a filing with the United States Bankruptcy Court for the Southern District of Texas.
The company said it would also issue $550 million of new senior unsecured notes under the restructuring agreement to existing unsecured creditors of certain Gulfport subsidiaries.
Kirkland & Ellis LLP and Jackson Walker LLP served as legal co-counsel and Alvarez & Marsal was restructuring adviser to the company.
2022-05-16 - Grey Rock will contribute oil and gas assets in the Permian Basin, Bakken, Eagle Ford Shale, D-J Basin and Haynesville Shale plays to form Granite Ridge Resources.
2022-03-23 - Hess also opted to pay roughly $325 million to remove Brent $105 call options and WTI $100 call options in a bid to profit off a steep rise in oil prices, CEO John Hess said at the Scotia Howard Weil Energy Conference.
2022-03-23 - Permex Petroleum’s Mehran Ehsan discusses why low-cost production and $65-$75 WTI prices are vital to the industry’s future.
2022-03-24 - ConocoPhillips is offering about 261,000 net acres in the Anadarko Basin and 17,700 acres of nonoperated assets in the SCOOP and STACK shale plays.
2022-02-25 - Despite significantly higher oil prices, here’s what’s limiting drilling and completion activity by U.S. independent E&P companies from ramping up.