Quarterly report pursuant to Section 13 or 15(d)

PROPERTY AND EQUIPMENT

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PROPERTY AND EQUIPMENT
 6 Months Ended
Jun. 30, 2022
Property, Plant and Equipment [Abstract]  
PROPERTY AND EQUIPMENT PROPERTY AND EQUIPMENT
The major categories of property and equipment and related accumulated DD&A and impairment as of June 30, 2022 and December 31, 2021 are as follows (in thousands):
Successor
June 30, 2022 December 31, 2021
Proved oil and natural gas properties $ 2,145,712  $ 1,917,833 
Unproved properties 198,229  211,007 
Other depreciable property and equipment 5,287  4,943 
Land 386  386 
Total property and equipment 2,349,614  2,134,169 
Accumulated DD&A and impairment (403,065) (278,341)
Property and equipment, net $ 1,946,549  $ 1,855,828 
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 June 30, 2022, the net book value of the Company's oil and gas properties was below the calculated ceiling for the period leading up to June 30, 2022. As a result, the Company did not record an impairment of its oil and natural gas properties for the Current Successor Quarter. The Company recorded impairment of its oil and natural gas properties of $117.8 million for the Prior Successor Period. Upon the application of fresh start accounting, the value of Gulfport’s oil and natural gas properties were determined using forward strip oil and natural gas prices as of the Emergence Date. These prices were higher than the 12-month weighted average prices used in the full cost ceiling limitation at June 30, 2021, which led to the Prior Successor Period impairment charge.
Certain general and administrative costs are capitalized to the full cost pool and represent management’s estimate of costs incurred directly related to exploration and development activities. All general and administrative costs not capitalized are charged to expense as they are incurred. Capitalized general and administrative costs were approximately $5.0 million, $2.2 million, and $2.5 million for the Current Successor Quarter, Prior Successor Period, and Prior Predecessor Quarter, respectively.
The Company evaluates the costs excluded from its amortization calculation at least annually. Individually insignificant unevaluated properties are grouped for evaluation and periodically transferred to evaluated properties over a timeframe consistent with their expected development schedule.
The following table summarizes the Company’s non-producing properties excluded from amortization by area as of June 30, 2022:
Successor
June 30, 2022
(In thousands)
Utica $ 164,609 
SCOOP 33,620 
Total unproved properties $ 198,229 
Asset Retirement Obligation
The following table provides a reconciliation of the Company’s asset retirement obligation for the Current Successor YTD Period (in thousands):
Asset retirement obligation at January 1, 2022 (Successor) $ 28,264 
Liabilities incurred 22 
Liabilities removed due to divestitures (7)
Accretion expense 1,384 
Asset retirement obligation at June 30, 2022 $ 29,663 
The following table provides a reconciliation of the Company’s asset retirement obligation for the Prior Predecessor YTD Period and Prior Successor Period (in thousands):
Asset retirement obligation at January 1, 2021 (Predecessor) $ 63,566 
Liabilities incurred 546 
Accretion expense 1,229 
Ending balance as of May 17, 2021 (Predecessor) 65,341 
Fresh start adjustments(1)
(46,257)
Asset retirement obligation at May 18, 2021 (Successor) 19,084 
Liabilities incurred 37 
Accretion expense 226 
Asset retirement obligation at June 30, 2021 $ 19,347 
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(1)    The Company recorded its asset retirement obligation at fair value as of the Emergence Date.