Quarterly report pursuant to Section 13 or 15(d)

Property And Equipment

v2.4.0.8
Property And Equipment
9 Months Ended
Sep. 30, 2014
Property, Plant and Equipment [Abstract]  
Property And Equipment
PROPERTY AND EQUIPMENT
The major categories of property and equipment and related accumulated depletion, depreciation, amortization and impairment as of September 30, 2014 and December 31, 2013 are as follows:
 
 
September 30, 2014
 
December 31, 2013
 
(In thousands)
Oil and natural gas properties
$
3,586,016

 
$
2,477,178

Office furniture and fixtures
9,741

 
6,093

Building
4,942

 
4,626

Land
2,197

 
412

Total property and equipment
3,602,896

 
2,488,309

Accumulated depletion, depreciation, amortization and impairment
(969,962
)
 
(784,717
)
Property and equipment, net
$
2,632,934

 
$
1,703,592


Included in oil and natural gas properties at September 30, 2014 is the cumulative capitalization of $66.6 million 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 $5.9 million and $19.1 million for the three and nine months ended September 30, 2014, respectively, and $3.5 million and $9.6 million for the three and nine months ended September 30, 2013, respectively.
The following table summarizes the Company’s non-producing properties excluded from amortization by area at September 30, 2014:
 
September 30, 2014
 
(In thousands)
Colorado
$
5,842

Bakken
295

Southern Louisiana
708

Ohio
1,445,840

Other
45

 
$
1,452,730


At December 31, 2013, approximately $950.6 million 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 is expected to occur within three to five years.
A reconciliation of the Company's asset retirement obligation for the nine months ended September 30, 2014 and 2013 is as follows:
 
 
 
September 30, 2014
 
September 30, 2013
 
(In thousands)
Asset retirement obligation, beginning of period
$
15,083

 
$
13,275

Liabilities incurred
5,713

 
1,771

Liabilities settled
(4,972
)
 
(807
)
Accretion expense
569

 
529

Asset retirement obligation as of end of period
16,393

 
14,768

Less current portion
75

 
780

Asset retirement obligation, long-term
$
16,318

 
$
13,988


On May 7, 2012, the Company entered into a contribution agreement with Diamondback Energy Inc. ("Diamondback"). Under the terms of the contribution agreement, the Company agreed to contribute to Diamondback, prior to the closing of the Diamondback initial public offering (“Diamondback IPO”), all its oil and natural gas interests in the Permian Basin (the "Contribution"). The Contribution was completed on October 11, 2012. At the closing of the Contribution, Diamondback issued to the Company (i) 7,914,036 shares of Diamondback common stock and (ii) a promissory note for $63.6 million, which was repaid to the Company at the closing of the Diamondback IPO on October 17, 2012. This aggregate consideration was subject to a post-closing cash adjustment based on changes in the working capital, long-term debt and certain other items of Diamondback O&G LLC, formerly Windsor Permian LLC ("Diamondback O&G"), as of the date of the Contribution. In January 2013, the Company received an additional payment from Diamondback of approximately $18.6 million as a result of this post-closing adjustment. Diamondback O&G is a wholly-owned subsidiary of Diamondback. Under the contribution agreement, the Company is generally responsible for all liabilities and obligations with respect to the contributed properties arising prior to the Contribution and Diamondback is responsible for such liabilities and obligations with respect to the contributed properties arising after the Contribution.
Immediately upon completion of the Contribution, the Company owned a 35% equity interest in Diamondback, rather than leasehold interests in the Company’s Permian Basin acreage. Upon completion of the Diamondback IPO in October 2012, Gulfport owned approximately 21.4% of Diamondback's outstanding common stock. Following the Contribution, the Company has accounted for its interest in Diamondback as an equity investment. See Note 3, "Equity Investments - Diamondback Energy, Inc." As of September 30, 2014, Gulfport owned 942,000 shares representing approximately 1.7% of Diamondback's outstanding common stock.