Gulfport Energy Corporation Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Property And Equipment

Property And Equipment

12 Months Ended

Dec. 31, 2015

Property, Plant and Equipment [Abstract]

The major categories of property and equipment and related accumulated depletion, depreciation, amortization and impairment as of December 31, 2015 and 2014 are as follows:



	December 31,
	2015			2014
	(In thousands)
Oil and natural gas properties	$	5,424,342		$	3,923,154
Office furniture and fixtures	12,589			10,752
Building	16,915			5,398
Land	3,667			2,194
Total property and equipment	5,457,513			3,941,498
Accumulated depletion, depreciation, amortization and impairment	(2,829,110		)	(1,050,879		)
Property and equipment, net	$	2,628,403		$	2,890,619

At December 31, 2015, the net book value of the Company's oil and natural gas properties was above the calculated ceiling as a result of the reduced commodity prices during the year ended December 31, 2015. As a result, the Company recorded an impairment of its oil and natural gas properties under the full cost method of accounting in the amount of $1.4 billion for the year ended December 31, 2015. No impairment of oil and natural gas properties was required under the ceiling test for the years ended December 31, 2014 or 2013.

Included in oil and natural gas properties at December 31, 2015 and 2014 is the cumulative capitalization of $100.6 million and $72.7 million, respectively, in general and administrative costs incurred and capitalized to the full cost pool. General and administrative costs capitalized to the full cost pool represent management’s estimate of costs incurred directly related to exploration and development activities such as geological and other administrative costs associated with overseeing the exploration and development activities. All general and administrative costs not directly associated with exploration and development activities were charged to expense as they were incurred. Capitalized general and administrative costs were approximately $27.9 million, $25.2 million and $14.9 million for the years ended December 31, 2015, 2014 and 2013, respectively.

The following is a summary of Gulfport’s oil and gas properties not subject to amortization as of December 31, 2015:



	Costs Incurred in
	2015		2014			2013		Prior to 2013		Total
	(in thousands)
Acquisition costs	$	621,519	$	361,167		$	273,146	$	522,872	$	1,778,704
Exploration costs	—		—			—		—		—
Development costs	28,833		4,688			1,436		457		35,414
Capitalized interest	3,674		(2,353		)	2,262		—		3,583
Total oil and gas properties not subject to amortization	$	654,026	$	363,502		$	276,844	$	523,329	$	1,817,701

The following table summarizes the Company’s non-producing properties excluded from amortization by area as of December 31, 2015:



	December 31, 2015
	(In thousands)
Utica	$	1,812,256
Niobrara	4,932
Southern Louisiana	372
Bakken	96
Other	45
	$	1,817,701

As of December 31, 2014, approximately $1.5 billion of non-producing leasehold costs was not subject to amortization.

The Company evaluates the costs excluded from its amortization calculation at least annually. Subject to industry conditions and the level of the Company’s activities, the inclusion of most of the above referenced costs into the Company’s amortization calculation typically occurs within three to five years. However, the majority of the Company's non-producing leases have five year extension terms which could extend this time frame beyond five years.

A reconciliation of the Company's asset retirement obligation for the years ended December 31, 2015 and 2014 is as follows:



	December 31,
	2015			2014
	(In thousands)
Asset retirement obligation, beginning of period	$	17,938		$	15,083
Liabilities incurred	8,800			9,295
Liabilities settled	(1,121		)	(7,201		)
Accretion expense	820			761
Asset retirement obligation as of end of period	26,437			17,938
Less current portion	75			75
Asset retirement obligation, long-term	$	26,362		$	17,863