Pipe Dreams & Pipelines
“We expect to exit the Chapter 11 process with leverage below two times & rapidly delever thereafter…” - David Wood [Gulfport CEO]
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Gulfport Filing Links:
Prepetition Capital Structure:
Rights Offering of at least $50MM
Unsecured gets $550MM of new notes + 100% of New Equity
Existing Equity gets $0.00
GULFPORT CH 11.
After 6 pages of describing the series events that led to Gulfport’s Ch.11 filing, CFO Quentin Hicks signed off on this gem of a statement:
“Even worse, the sole counterparty that agreed to an amendment during the summer period, Midship Pipeline Company (“Midship”), after pleading with the Debtors to preserve that amendment before beginning a renegotiation, breached its agreements and further depleted the Debtors’ liquidity.
“Upon receiving a $32.9MM prepayment as provided under the recent amendment, Midship refused to reduce its credit support and drew down in full the $75.6MM letter of credit under the prior agreement. This resulted in Midship receiving $108.5MM in cash from the Debtors when it was only entitled to $79.2MM.
“Midship’s brazen breach, for the bald purpose of obtaining leverage against the Debtors during their restructuring” - Docket 40, (pg 8)
Midship v Gulfport - a Midstream Contract Battle:
Midship (a Cheniere sub) is seeking a exemption to the right of rejection to break contract via FERC:
Gulfport wants to break contract in Ch.11
Jurisdiction btw FERC & bankruptcy courts is currently being heard in the Federal Court of Appeals
But FERC aside - based on Hicks’ statement - it appears that Midship pulled a fast one on Gulfport & their creditors w/ the LC draw.
All of this over a pipeline that went into service *in Q2*…
What brought down Gulfport was the unrealized (pipe) dreams from this presentation.
We took a look Gulfport’s SCOOP operations - we found 72 operated wells.
SCOOP Assets Summary:
PV10 remaining wells ID’d is ~$105MM
Conservatively, they’ve probably lost $55MM+, net, drilling these SCOOP wells
Acquired it for ~$1.8BN (did come w/ some production)
Gulfport - *on their own website* - claims that their SCOOP operations have 1.3 Net Tcfe of net *proved reserves* from 400+ net locations…
Yeah, *right*, and we have a bridge in Brooklyn to sell you -
Today, OPEC’s Joint Ministerial Monitoring Committee meets. On Nov 30th, OPEC meets, followed by an OPEC+ meeting on Dec 1st.
PNC buys BBVA’s US business