Annual report pursuant to Section 13 and 15(d)

Supplemental Information On Oil And Gas Exploration And Production Activities

v2.4.0.6
Supplemental Information On Oil And Gas Exploration And Production Activities
 12 Months Ended
Dec. 31, 2012
Oil and Gas Exploration and Production Industries Disclosures [Abstract]  
Supplemental Information On Oil And Gas Exploration And Production Activities
SUPPLEMENTAL INFORMATION ON OIL AND GAS EXPLORATION AND PRODUCTION ACTIVITIES
The following is historical revenue and cost information relating to the Company’s oil and gas operations located entirely in the United States:
Capitalized Costs Related to Oil and Gas Producing Activities
 
 
2012
 
2011
Proven properties
$
984,795,000

 
$
897,130,000

Unproven properties
626,295,000

 
132,912,000

 
1,611,090,000

 
1,030,042,000

Accumulated depreciation, depletion, amortization and impairment reserve
(661,442,000
)
 
(571,213,000
)
Net capitalized costs
$
949,648,000

 
$
458,829,000


Costs Incurred in Oil and Gas Property Acquisition and Development Activities
 
 
2012
 
2011
 
2010
Acquisition
$
513,904,000

 
$
119,522,000

 
$
17,627,000

Development of proved undeveloped properties
121,787,000

 
123,489,000

 
64,652,000

Exploratory
93,397,000

 
3,994,000

 
—

Recompletions
24,643,000

 
17,259,000

 
16,917,000

Capitalized asset retirement obligation
2,195,000

 
1,390,000

 
1,328,000

Total
$
755,926,000

 
$
265,654,000

 
$
100,524,000


Results of Operations for Producing Activities
The following schedule sets forth the revenues and expenses related to the production and sale of oil and gas. The income tax expense is calculated by applying the current statutory tax rates to the revenues after deducting costs, which include depreciation, depletion and amortization allowances, after giving effect to the permanent differences. The results of operations exclude general office overhead and interest expense attributable to oil and gas production.
 
 
2012
 
2011
 
2010
Revenues
$
248,601,000

 
$
228,953,000

 
$
127,636,000

Production costs
(53,708,000
)
 
(47,230,000
)
 
(31,580,000
)
Depletion
(90,230,000
)
 
(61,965,000
)
 
(38,600,000
)
 
104,663,000

 
119,758,000

 
57,456,000

Income tax expense (benefit)

 

 

Current
730,000

 
282,000

 
40,000

Deferred
25,633,000

 
(372,000
)
 
—

 
26,363,000

 
(90,000
)
 
40,000

Results of operations from producing activities
$
78,300,000

 
$
119,848,000

 
$
57,416,000

Depletion per barrel of oil equivalent (BOE)
$
35.07

 
$
26.56

 
$
19.54


Oil and Gas Reserves (Unaudited)
The following table presents estimated volumes of proved developed and undeveloped oil and gas reserves as of December 31, 2012, 2011 and 2010 and changes in proved reserves during the last three years. The reserve reports use an average price equal to the unweighted arithmetic average of hydrocarbon prices received on a field-by-field basis on the first day of each month within the 12-month period ended December 31, 2012, 2011 and 2010, in accordance with guidelines of the SEC applicable to reserves estimates. Volumes for oil are stated in thousands of barrels (MBbls) and volumes for gas are stated in millions of cubic feet (MMcf). The prices used for the 2012 reserve report are $91.32 per barrel and $2.76 per MMbtu, adjusted by lease for transportation fees and regional price differentials, and for oil and gas reserves, respectively. The prices used at December 31, 2011 and 2010 for reserve report purposes are $96.19 per barrel and $4.12 per MMbtu and $76.16 per barrel and $4.38 per MMbtu, respectively.
Gulfport emphasizes that the volumes of reserves shown below are estimates which, by their nature, are subject to revision. The estimates are made using all available geological and reservoir data, as well as production performance data. These estimates are reviewed annually and revised, either upward or downward, as warranted by additional performance data.
 
 
2012
 
2011
 
2010
 
Oil
 
Gas
 
Oil
 
Gas
 
Oil
 
Gas
 
(MBbls)
 
(MMcf)
 
(MBbls)
 
(MMcf)
 
(MBbls)
 
(MMcf)
Proved Reserves

 

 

 

 

 

Beginning of the period
16,745

 
15,728

 
19,704

 
16,158

 
17,488

 
14,332

Purchases in oil and gas reserves in place
—

 
—

 
2

 
19

 
3,913

 
3,482

Extensions and discoveries
4,880

 
31,265

 
3,940

 
2,091

 
5,574

 
5,303

Sales of oil and gas reserves in place
(10,604
)
 
(11,757
)
 
—

 
—

 
—

 
—

Revisions of prior reserve estimates
(382
)
 
(357
)
 
(4,714
)
 
(1,662
)
 
(5,426
)
 
(6,171
)
Current production
(2,388
)
 
(1,108
)
 
(2,187
)
 
(878
)
 
(1,845
)
 
(788
)
End of period
8,251

 
33,771

 
16,745

 
15,728

 
19,704

 
16,158

Proved developed reserves
5,219

 
18,482

 
7,485

 
6,152

 
7,230

 
6,068

Proved undeveloped reserves
3,032

 
15,289

 
9,260

 
9,576

 
12,474

 
10,090


The Company contributed its Permian Basin assets to Diamondback in 2012, as discussed in Note 4, resulting in a decrease of 12,564 thousand barrels of oil equivalent (MBOE) in estimated proved reserves in 2012. In addition, the Company experienced downward reserve revisions of 442 MBOE in estimated proved reserves in 2012 primarily due to a change in the drilling schedule of its Niobrara acreage. The Company also experienced downward reserve revisions in 2011. These downward revisions were primarily the result of the drilling of PUDs during the Company’s 2011 drilling program and ethane takeaway issues in the Permian Basin. The Company experienced downward reserve revisions in estimated proved reserves in 2010. These downward revisions were primarily the result of the five-year schedule for proved undeveloped reserves from the SEC’s “Modernization of Oil and Gas Reporting” Final Rule.
Discounted Future Net Cash Flows (Unaudited)
The following tables present the estimated future cash flows, and changes therein, from Gulfport’s proven oil and gas reserves as of December 31, 2012, 2011 and 2010 using an unweighted average first-of-the-month price for the period January through December for 2012, 2011 and 2010.
Standardized Measure of Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserves (Unaudited)
 
 
Year ended December 31,
 
2012
 
2011
 
2010
Future cash flows
$
954,833,000

 
$
1,594,050,000

 
$
1,479,295,000

Future development and abandonment costs
(159,113,000
)
 
(306,810,000
)
 
(301,651,000
)
Future production costs
(147,024,000
)
 
(295,383,000
)
 
(305,814,000
)
Future production taxes
(89,175,000
)
 
(124,739,000
)
 
(136,323,000
)
Future income taxes
(114,867,000
)
 
(229,649,000
)
 
(159,171,000
)
Future net cash flows
444,654,000

 
637,469,000

 
576,336,000

10% discount to reflect timing of cash flows
(96,013,000
)
 
(260,788,000
)
 
(260,849,000
)
Standardized measure of discounted future net cash flows
$
348,641,000

 
$
376,681,000

 
$
315,487,000


In order to develop its proved undeveloped reserves according to the drilling schedule used by the engineers in Gulfport’s reserve report, the Company will need to spend $82,772,000, $16,416,000 and $4,335,000 during years 2013, 2014 and 2015, respectively.
Changes in Standardized Measure of Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserves (Unaudited)
 
 
Year ended December 31,
 
2012
 
2011
 
2010
Sales and transfers of oil and gas produced, net of production costs
$
(194,893,000
)
 
$
(181,723,000
)
 
$
(96,056,000
)
Net changes in prices, production costs, and development costs
108,941,000

 
136,071,000

 
122,147,000

Acquisition of oil and gas reserves in place
—

 
72,000

 
63,043,000

Extensions and discoveries
151,654,000

 
107,110,000

 
88,227,000

Revisions of previous quantity estimates, less related production costs
(10,504,000
)
 
(112,553,000
)
 
(89,155,000
)
Sales of reserves in place
(214,867,000
)
 
—

 
—

Accretion of discount
37,668,000

 
31,549,000

 
24,077,000

Net changes in income taxes
25,585,000

 
(36,674,000
)
 
(54,879,000
)
Change in production rates and other
68,376,000

 
117,342,000

 
17,309,000

Total change in standardized measure of discounted future net cash flows
$
(28,040,000
)
 
$
61,194,000

 
$
74,713,000