GPOR » Topics » Business

These excerpts taken from the GPOR 10-K filed Mar 16, 2009.

Business

Gulfport Energy Corporation (“Gulfport” or the “Company”) is an independent oil and gas exploration, development and production company with its principal properties located in the Louisiana Gulf Coast and in West Texas in the Permian Basin and has investments in companies operating in Canada and Thailand.

Business

Gulfport Energy Corporation (“Gulfport” or the “Company”) is an independent oil and gas exploration, development and production company with its principal properties located in the Louisiana Gulf Coast and in West Texas in the Permian Basin and has investments in companies operating in Canada and Thailand.

Business

Gulfport Energy Corporation (“Gulfport” or the “Company”) is an independent oil and gas exploration, development and production company with its principal properties located in the Louisiana Gulf Coast and in West Texas in the Permian Basin and has investments in companies operating in Canada and Thailand.

Business

Gulfport Energy Corporation (“Gulfport” or the “Company”) is an independent oil and gas exploration, development
and production company with its principal properties located in the Louisiana Gulf Coast and in West Texas in the Permian Basin and has investments in companies operating in Canada and Thailand.

STYLE="margin-top:18px;margin-bottom:0px">Cash and Cash Equivalents

The Company considers all
highly liquid investments with an original maturity of three months or less to be cash equivalents for purposes of the statement of cash flows.

SIZE="2">Principles of Consolidation

The consolidated financial statements include the Company and its wholly owned subsidiaries,
Grizzly Holdings Inc. and Jaguar Resources LLC. All intercompany balances and transactions are eliminated in consolidation.

Accounts Receivable

The Company’s accounts receivable—oil and gas primarily are from companies in the oil and gas industry. The majority of its
receivables are from two purchasers of the Company’s oil and gas and one operator of certain of the Company’s properties. Credit is extended based on evaluation of a customer’s payment history and, generally, collateral is not
required. Accounts receivable are due within 30 days and are stated at amounts due from customers, net of an allowance for doubtful accounts when the Company believes collection is doubtful. Accounts outstanding longer than the contractual payment
terms are considered past due. The Company determines its allowance by considering a number of factors, including the length of time accounts receivable are past due, the Company’s previous loss history, the customer’s current ability to
pay its obligation to the Company, amounts which may be obtained by an offset against production proceeds due the customer and the condition of the general economy and the industry as a whole. The Company writes off specific accounts receivable when
they become uncollectible, and payments subsequently received on such receivables are credited to the allowance for doubtful accounts. No allowance was deemed necessary at December 31, 2008 and December 31, 2007.

STYLE="margin-top:18px;margin-bottom:0px">Oil and Gas Properties

The Company uses the full
cost method of accounting for oil and gas operations. Accordingly, all costs, including nonproductive costs and certain general and administrative costs directly associated with acquisition, exploration and development of oil and gas properties, are
capitalized. Net capitalized costs are limited to the estimated future net revenues, based on year-end prices and costs as adjusted for the Company’s cash flow hedge positions and net of tax effects, discounted at 10% per year, from proven
oil and gas reserves and the cost of the properties not subject to amortization. Such capitalized costs, including the estimated future development costs and site remediation costs of proved undeveloped properties are depleted by an equivalent
units-of-production method, converting gas to barrels at the ratio of six Mcf of gas to one barrel of oil. No gain or loss is recognized upon the disposal of oil and gas properties, unless such dispositions significantly alter the relationship
between capitalized costs and proven oil and gas reserves. Oil and gas properties not subject to amortization consist of the cost of unproved leaseholds and totaled $22,543,000 and $37,278,000 at December 31, 2008 and December 31, 2007,
respectively. These costs are reviewed quarterly by management for impairment. If an impairment has

 


F-7







Table of Contents


GULFPORT ENERGY CORPORATION

ALIGN="center">NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

DECEMBER 31,
2008, 2007 AND 2006

(Amounts rounded to nearest thousand)

SIZE="1"> 


occurred, the portion of cost in excess of the current value is transferred to the cost of oil and gas properties subject to amortization. Factors considered
by management in its impairment assessment include drilling results by Gulfport and other operators, the terms of oil and gas leases not held by production, and available funds for exploration and development.

STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%">The Company accounts for its abandonment and restoration liabilities under Statement of Financial Accounting Standards No. 143, “Accounting
for Asset Retirement Obligations
” (“SFAS No. 143”), which requires the Company to record a liability equal to the fair value of the estimated cost to retire an asset. The asset retirement liability is recorded in the period
in which the obligation meets the definition of a liability, which is generally when the asset is placed into service. When the liability is initially recorded, the Company increases the carrying amount of the related long-lived asset by an amount
equal to the original liability. The liability is accreted to its present value each period, and the capitalized cost is depreciated over the useful life of the related long-lived asset. Upon settlement of the liability or the sale of the well, the
liability is reversed. These liability amounts may change because of changes in asset lives, estimated costs of abandonment or legal or statutory remediation requirements.

FACE="Times New Roman" SIZE="2">Other Property and Equipment

Depreciation of other property and equipment is provided on a
straight-line basis over estimated useful lives of the related assets, which range from 3 to 30 years.

Business

Gulfport Energy Corporation (“Gulfport” or the “Company”) is an independent oil and gas exploration, development
and production company with its principal properties located in the Louisiana Gulf Coast and in West Texas in the Permian Basin and has investments in companies operating in Canada and Thailand.

STYLE="margin-top:18px;margin-bottom:0px">Cash and Cash Equivalents

The Company considers all
highly liquid investments with an original maturity of three months or less to be cash equivalents for purposes of the statement of cash flows.

SIZE="2">Principles of Consolidation

The consolidated financial statements include the Company and its wholly owned subsidiaries,
Grizzly Holdings Inc. and Jaguar Resources LLC. All intercompany balances and transactions are eliminated in consolidation.

Accounts Receivable

The Company’s accounts receivable—oil and gas primarily are from companies in the oil and gas industry. The majority of its
receivables are from two purchasers of the Company’s oil and gas and one operator of certain of the Company’s properties. Credit is extended based on evaluation of a customer’s payment history and, generally, collateral is not
required. Accounts receivable are due within 30 days and are stated at amounts due from customers, net of an allowance for doubtful accounts when the Company believes collection is doubtful. Accounts outstanding longer than the contractual payment
terms are considered past due. The Company determines its allowance by considering a number of factors, including the length of time accounts receivable are past due, the Company’s previous loss history, the customer’s current ability to
pay its obligation to the Company, amounts which may be obtained by an offset against production proceeds due the customer and the condition of the general economy and the industry as a whole. The Company writes off specific accounts receivable when
they become uncollectible, and payments subsequently received on such receivables are credited to the allowance for doubtful accounts. No allowance was deemed necessary at December 31, 2008 and December 31, 2007.

STYLE="margin-top:18px;margin-bottom:0px">Oil and Gas Properties

The Company uses the full
cost method of accounting for oil and gas operations. Accordingly, all costs, including nonproductive costs and certain general and administrative costs directly associated with acquisition, exploration and development of oil and gas properties, are
capitalized. Net capitalized costs are limited to the estimated future net revenues, based on year-end prices and costs as adjusted for the Company’s cash flow hedge positions and net of tax effects, discounted at 10% per year, from proven
oil and gas reserves and the cost of the properties not subject to amortization. Such capitalized costs, including the estimated future development costs and site remediation costs of proved undeveloped properties are depleted by an equivalent
units-of-production method, converting gas to barrels at the ratio of six Mcf of gas to one barrel of oil. No gain or loss is recognized upon the disposal of oil and gas properties, unless such dispositions significantly alter the relationship
between capitalized costs and proven oil and gas reserves. Oil and gas properties not subject to amortization consist of the cost of unproved leaseholds and totaled $22,543,000 and $37,278,000 at December 31, 2008 and December 31, 2007,
respectively. These costs are reviewed quarterly by management for impairment. If an impairment has

 


F-7







Table of Contents


GULFPORT ENERGY CORPORATION

ALIGN="center">NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

DECEMBER 31,
2008, 2007 AND 2006

(Amounts rounded to nearest thousand)

SIZE="1"> 


occurred, the portion of cost in excess of the current value is transferred to the cost of oil and gas properties subject to amortization. Factors considered
by management in its impairment assessment include drilling results by Gulfport and other operators, the terms of oil and gas leases not held by production, and available funds for exploration and development.

STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%">The Company accounts for its abandonment and restoration liabilities under Statement of Financial Accounting Standards No. 143, “Accounting
for Asset Retirement Obligations
” (“SFAS No. 143”), which requires the Company to record a liability equal to the fair value of the estimated cost to retire an asset. The asset retirement liability is recorded in the period
in which the obligation meets the definition of a liability, which is generally when the asset is placed into service. When the liability is initially recorded, the Company increases the carrying amount of the related long-lived asset by an amount
equal to the original liability. The liability is accreted to its present value each period, and the capitalized cost is depreciated over the useful life of the related long-lived asset. Upon settlement of the liability or the sale of the well, the
liability is reversed. These liability amounts may change because of changes in asset lives, estimated costs of abandonment or legal or statutory remediation requirements.

FACE="Times New Roman" SIZE="2">Other Property and Equipment

Depreciation of other property and equipment is provided on a
straight-line basis over estimated useful lives of the related assets, which range from 3 to 30 years.

Business

Gulfport Energy Corporation (“Gulfport” or the “Company”) is an independent oil and gas exploration, development
and production company with its principal properties located in the Louisiana Gulf Coast and in West Texas in the Permian Basin and has investments in companies operating in Canada and Thailand.

STYLE="margin-top:18px;margin-bottom:0px">Cash and Cash Equivalents

The Company considers all
highly liquid investments with an original maturity of three months or less to be cash equivalents for purposes of the statement of cash flows.

SIZE="2">Principles of Consolidation

The consolidated financial statements include the Company and its wholly owned subsidiaries,
Grizzly Holdings Inc. and Jaguar Resources LLC. All intercompany balances and transactions are eliminated in consolidation.

Accounts Receivable

The Company’s accounts receivable—oil and gas primarily are from companies in the oil and gas industry. The majority of its
receivables are from two purchasers of the Company’s oil and gas and one operator of certain of the Company’s properties. Credit is extended based on evaluation of a customer’s payment history and, generally, collateral is not
required. Accounts receivable are due within 30 days and are stated at amounts due from customers, net of an allowance for doubtful accounts when the Company believes collection is doubtful. Accounts outstanding longer than the contractual payment
terms are considered past due. The Company determines its allowance by considering a number of factors, including the length of time accounts receivable are past due, the Company’s previous loss history, the customer’s current ability to
pay its obligation to the Company, amounts which may be obtained by an offset against production proceeds due the customer and the condition of the general economy and the industry as a whole. The Company writes off specific accounts receivable when
they become uncollectible, and payments subsequently received on such receivables are credited to the allowance for doubtful accounts. No allowance was deemed necessary at December 31, 2008 and December 31, 2007.

STYLE="margin-top:18px;margin-bottom:0px">Oil and Gas Properties

The Company uses the full
cost method of accounting for oil and gas operations. Accordingly, all costs, including nonproductive costs and certain general and administrative costs directly associated with acquisition, exploration and development of oil and gas properties, are
capitalized. Net capitalized costs are limited to the estimated future net revenues, based on year-end prices and costs as adjusted for the Company’s cash flow hedge positions and net of tax effects, discounted at 10% per year, from proven
oil and gas reserves and the cost of the properties not subject to amortization. Such capitalized costs, including the estimated future development costs and site remediation costs of proved undeveloped properties are depleted by an equivalent
units-of-production method, converting gas to barrels at the ratio of six Mcf of gas to one barrel of oil. No gain or loss is recognized upon the disposal of oil and gas properties, unless such dispositions significantly alter the relationship
between capitalized costs and proven oil and gas reserves. Oil and gas properties not subject to amortization consist of the cost of unproved leaseholds and totaled $22,543,000 and $37,278,000 at December 31, 2008 and December 31, 2007,
respectively. These costs are reviewed quarterly by management for impairment. If an impairment has

 


F-7







Table of Contents


GULFPORT ENERGY CORPORATION

ALIGN="center">NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

DECEMBER 31,
2008, 2007 AND 2006

(Amounts rounded to nearest thousand)

SIZE="1"> 


occurred, the portion of cost in excess of the current value is transferred to the cost of oil and gas properties subject to amortization. Factors considered
by management in its impairment assessment include drilling results by Gulfport and other operators, the terms of oil and gas leases not held by production, and available funds for exploration and development.

STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%">The Company accounts for its abandonment and restoration liabilities under Statement of Financial Accounting Standards No. 143, “Accounting
for Asset Retirement Obligations
” (“SFAS No. 143”), which requires the Company to record a liability equal to the fair value of the estimated cost to retire an asset. The asset retirement liability is recorded in the period
in which the obligation meets the definition of a liability, which is generally when the asset is placed into service. When the liability is initially recorded, the Company increases the carrying amount of the related long-lived asset by an amount
equal to the original liability. The liability is accreted to its present value each period, and the capitalized cost is depreciated over the useful life of the related long-lived asset. Upon settlement of the liability or the sale of the well, the
liability is reversed. These liability amounts may change because of changes in asset lives, estimated costs of abandonment or legal or statutory remediation requirements.

FACE="Times New Roman" SIZE="2">Other Property and Equipment

Depreciation of other property and equipment is provided on a
straight-line basis over estimated useful lives of the related assets, which range from 3 to 30 years.

These excerpts taken from the GPOR 10-K filed Mar 17, 2008.

Business

Gulfport Energy Corporation (“Gulfport” or the “Company”) is a domestic independent oil and gas exploration, development and production company with its principal properties located in the Louisiana Gulf Coast. Gulfport also recently acquired strategic assets in West Texas in the Permian Basin and has investments in companies operating in Canada and Thailand.

Business

Gulfport Energy Corporation (“Gulfport” or the “Company”) is a domestic independent oil and gas exploration,
development and production company with its principal properties located in the Louisiana Gulf Coast. Gulfport also recently acquired strategic assets in West Texas in the Permian Basin and has investments in companies operating in Canada and
Thailand.

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