Annual report [Section 13 and 15(d), not S-K Item 405]

PROPERTY AND EQUIPMENT

v3.25.4
PROPERTY AND EQUIPMENT
 12 Months Ended
Dec. 31, 2025
Property, Plant and Equipment [Abstract]  
PROPERTY AND EQUIPMENT PROPERTY AND EQUIPMENT
The major categories of property and equipment and related accumulated DD&A are as follows (in thousands):
December 31, 2025 December 31, 2024
Proved oil and natural gas properties $ 3,902,539  $ 3,349,805 
Unproved properties 232,959  221,650 
Other depreciable property and equipment 12,622  10,905 
Land 386  386 
Total property and equipment 4,148,506  3,582,746 
Accumulated DD&A and impairment (1,868,481) (1,564,475)
Property and equipment, net $ 2,280,025  $ 2,018,271 
Oil and Natural Gas Properties
Under the full cost method of accounting, the Company is required to perform a ceiling test each quarter. The test determines a limit, or ceiling, on the book value of the Company's oil and natural gas properties. At December 31, 2025, the net book value of the Company's oil and gas properties was below the calculated ceiling. As a result, the Company did not record an impairment of its oil and natural gas properties for the year ended December 31, 2025. During the year ended December 31, 2024, the net book value of the Company's oil and gas properties exceeded the calculated ceiling. As a result, the Company recorded a non-cash ceiling test impairment of its oil and natural gas properties of $30.5 million in the third quarter of 2024 and $342.7 million in the fourth quarter of 2024. The impairments resulted from declines in the full cost ceiling, which primarily resulted from the significant decrease in the 12-month average trailing price for natural gas. The Company did not record an impairment of its oil and natural gas properties during 2023.
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 $25.2 million, $25.3 million and $22.8 million for the years ended December 31, 2025, 2024 and 2023, respectively. The average depletion rate per Mcfe, which is a function of capitalized costs, future development costs and the related underlying reserves in the periods presented, was $0.80, $0.84 and $0.83 per Mcfe for the years ended December 31, 2025, 2024 and 2023, respectively.
The following table summarizes the Company’s non-producing properties excluded from amortization by area (in thousands):
December 31, 2025 December 31, 2024
Utica & Marcellus $ 210,185  $ 197,513 
SCOOP 22,774  24,137 
Total unproved properties $ 232,959  $ 221,650 
The following is a summary of Gulfport’s oil and natural gas properties not subject to amortization as of December 31, 2025 (in thousands):
Costs Incurred in
2025 2024 2023 Prior to 2023 Total
Acquisition costs $ 65,239  $ 58,722  $ 58,002  $ 41,715  $ 223,678 
Exploration costs —  —  —  —  — 
Development costs 3,820  1,246  418  —  5,484 
Capitalized interest 3,612  185  —  —  3,797 
Total oil and natural gas properties not subject to amortization $ 72,671  $ 60,153  $ 58,420  $ 41,715  $ 232,959 
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 years to five years. However, the majority of the Company's non-producing leases in the Utica/Marcellus have five-year extension terms, which could extend this time frame beyond five years.
Asset Retirement Obligation
The following table provides a reconciliation of the Company's asset retirement obligation for the years ended December 31, 2025 and 2024 (in thousands):
Year Ended December 31, 2025 Year Ended December 31, 2024
Asset retirement obligation, beginning of period $ 32,949  $ 29,941 
Liabilities incurred 559  682 
Liabilities settled (3,026) — 
Accretion expense 2,421  2,307 
Revisions in estimated cash flows(1)
9  19 
Asset retirement obligation, end of period $ 32,912  $ 32,949 
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(1)    Revisions represent changes in the present value of liabilities resulting from changes in estimated costs.