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

Annual report pursuant to Section 13 and 15(d)

Supplemental Information On Oil And Gas Exploration And Production Activities

Supplemental Information On Oil And Gas Exploration And Production Activities

12 Months Ended

Dec. 31, 2011

Supplemental Information On Oil And Gas Exploration And Production Activities [Abstract]

Supplemental Information On Oil And Gas Exploration And Production Activities

20.

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


	2011			2010
Proven properties	$	897,130,000		$	730,566,000
Unproven properties		132,912,000			11,756,000

		1,030,042,000			742,322,000
Accumulated depreciation, depletion, amortization and impairment reserve		(571,213,000	)		(509,248,000	)

Net capitalized costs	$	458,829,000		$	233,074,000

Costs Incurred in Oil and Gas Property Acquisition and Development Activities


	2011		2010		2009
Acquisition	$	119,522,000	$	17,627,000	$	1,885,000
Development of proved undeveloped properties		123,489,000		64,652,000		28,652,000
Exploratory		3,994,000		—		502,000
Recompletions		17,259,000		16,917,000		8,980,000
Capitalized asset retirement obligation		1,390,000		1,328,000		361,000

Total	$	265,654,000	$	100,524,000	$	40,380,000

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.


	2011			2010			2009
Revenues	$	228,953,000		$	127,636,000		$	85,576,000
Production costs		(47,230,000	)		(31,580,000	)		(26,113,000	)
Depletion		(61,965,000	)		(38,600,000	)		(28,939,000	)

		119,758,000			57,456,000			30,524,000

Income tax expense (benefit)
Current		282,000			40,000			28,000
Deferred		(372,000	)		—			—

		(90,000	)		40,000			28,000

Results of operations from producing activities	$	119,848,000		$	57,416,000		$	30,496,000

Depletion per barrel of oil equivalent (BOE)	$	26.56		$	19.54		$	17.25

Oil and Gas Reserves (Unaudited)

The following table presents estimated volumes of proved developed and undeveloped oil and gas reserves as of December 31, 2011, 2010 and 2009 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, 2011, 2010 and 2009, in accordance with revised guidelines of the SEC applicable to reserves estimates as of year-end 2009. 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 2011 reserve report are $96.19 per barrel and $4.12 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, 2010 and 2009 for reserve report purposes are $76.16 per barrel and $4.38 per MMbtu and $57.90 per barrel and $3.87 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.


	2011						2010						2009
	Oil			Gas			Oil			Gas			Oil			Gas
Proved Reserves
Beginning of the period		19,704			16,158			17,488			14,332			21,771			22,235
Purchases in oil and gas reserves in place		2			19			3,913			3,482			1,728			1,135
Extensions and discoveries		3,940			2,091			5,574			5,303			2,614			2,874
Sales of oil and gas reserves in place		—			—			—			—			(736	)		(282	)
Revisions of prior reserve estimates		(4,714	)		(1,662	)		(5,426	)		(6,171	)		(6,294	)		(11,139	)
Current production		(2,187	)		(878	)		(1,845	)		(788	)		(1,595	)		(491	)

End of period		16,745			15,728			19,704			16,158			17,488			14,332

Proved developed reserves		7,485			6,152			7,230			6,068			6,165			4,325

Proved undeveloped reserves		9,260			9,576			12,474			10,090			11,323			10,007

The Company experienced downward reserve revisions in estimated proved reserves 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. The Company experienced downward reserve revisions in estimated proved reserves in 2009. These downward revisions were primarily the result of implementing 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, 2011, 2010 and 2009 using an unweighted average first-of-the-month price for the period January through December for 2011, 2010 and 2009.

Standardized Measure of Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserves (Unaudited)


	Year ended December 31,
	2011			2010			2009
Future cash flows	$	1,594,050,000		$	1,479,295,000		$	1,005,029,000
Future development and abandonment costs		(306,810,000	)		(301,651,000	)		(209,975,000	)
Future production costs		(295,383,000	)		(305,814,000	)		(236,003,000	)
Future production taxes		(124,739,000	)		(136,323,000	)		(97,841,000	)
Future income taxes		(229,649,000	)		(159,171,000	)		(50,229,000	)

Future net cash flows		637,469,000			576,336,000			410,981,000
10% discount to reflect timing of cash flows		(260,788,000	)		(260,849,000	)		(170,207,000	)

Standardized measure of discounted future net cash flows	$	376,681,000		$	315,487,000		$	240,774,000

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 $52,855,000, $49,897,000 and $55,364,000 during years 2012, 2013 and 2014, respectively.

Changes in Standardized Measure of Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserves (Unaudited)


	Year ended December 31,
	2011			2010			2009
Sales and transfers of oil and gas produced, net of production costs	$	(181,723,000	)	$	(96,056,000	)	$	(59,463,000	)
Net changes in prices, production costs, and development costs		136,071,000			122,147,000			183,426,000
Acquisition of oil and gas reserves in place		72,000			63,043,000			20,981,000
Extensions and discoveries		107,110,000			88,227,000			32,638,000
Revisions of previous quantity estimates, less related production costs		(112,553,000	)		(89,155,000	)		(77,531,000	)
Sales of reserves in place		—			—			(13,185,000	)
Accretion of discount		31,549,000			24,077,000			12,624,000
Net changes in income taxes		(36,674,000	)		(54,879,000	)		(22,238,000	)
Change in production rates and other		117,342,000			17,309,000			37,282,000

Total change in standardized measure of discounted future net cash flows	$	61,194,000		$	74,713,000		$	114,534,000