After a long struggle with low prices and increasing debt, Gulfport Energy Corp. has filed for bankruptcy on Saturday, following the collapse of a series of other US oil and gas companies hit by the pandemic.
The Oklahoma City-based natural gas company declared an evaluated $2.5 billion in liabilities as of 30 September as it filed a Chapter 11 petition on 13 November in Houston's US Bankruptcy Court.
In a statement on Saturday, the firm outlined a restructuring plan which is expected by the company to reduce its debt payments by $1.25 billion.
“We expect to exit the Chapter 11 process with leverage below two times and rapidly deliver thereafter”, said Chief Executive Officer David M. Wood.
“These improvements will significantly improve our ability to generate cash flow and value for our stakeholders going forward."
In the statement, the company said it has $262.5 million available in debtor-in-possession funds from current lenders as part of its revolving credit facility. This includes $105 million in funding that will be accessible following court approval.
Gulfport said that current lenders are committed to providing $580 million in exit financing after the gas firm's emergence from Chapter 11.
Shares, which reached $3.38 in December 2019, were valued at 24 cents as of the corporation's Chapter 11 filing.
One of Many?
Gulfport, which produces gas from fields in Ohio and Oklahoma, has been struggling to stay in business since even before the coronavirus pandemic, as a number of acquisitions during the previous decade left it too shackled with debt to survive.
On the pressure of activist investor Firefly Value Partners to restructure its board, on 7 August, the corporation warned that an inability to refinance its debt could see the gas firm go under.
Investors have tended to avoid producers who operate outside of the Permian Basin of West Texas and New Mexico - the most bountiful of US oil regions.
This comes as doubts grow about the ability to be profitable, with BlackRock Inc., securing 12.9%, now the biggest controller of vote shares in Gulfport.
Gulfport suffered from its Oklahoma's Scoop shale play investments, which changed from an exploration centre a few years ago and become nearly irrelevant as a hot spot after its geology became too challenging. Drilling rig numbers in the state collapsed, falling from more than 200 in 2014, Baker Hughes data claims.
Global demand for fuels collapsed due to the coronavirus pandemic, which led to widespread lockdowns. More than 230 oil and gas explorers have filed for bankruptcy since 2015, with debt reaching beyond $150 billion, Law firm Haynes and Boone claimed in a July report.
The capability of Gulfport to deny gas transportation service agreements with Rockies Express Pipeline LLC throughout its bankruptcy period could be restricted following the Federal Energy Regulatory Commission recently determining them to be in the public interest.
According to the filing, UBM Financial Corp is among the largest unsecured creditors, which possesses around $1.8 billion of notes due in 2023 - 2026.
