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Gulfport Ch.11

www.reservereport.com

Gulfport Ch.11

Pipe Dreams & Pipelines

Matt Sterett
and
Pierre Follea
Nov 17, 2020
1
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Gulfport Ch.11

www.reservereport.com

“We expect to exit the Chapter 11 process with leverage below two times & rapidly delever thereafter…” - David Wood [Gulfport CEO]


***If you enjoy this newsletter, do us a favor - send it to a friend or colleague***



Gulfport Filing Links:

  • Gulfport Restructuring links

  • 10K, RSA & other exhibits

  • Ch.11 Case Files

Prepetition Capital Structure:

RSA Notes:

  • $262.5MM DIP

  • Rights Offering of at least $50MM

  • Unsecured gets $550MM of new notes + 100% of New Equity

  • Existing Equity gets $0.00

Twitter Commentary:

  • @WAR527

  • @rachel_butt


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

  • Midship attempted FERC intervention

  • 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.

It’s ugly…

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)

  • Ultimately (w/ favorable assumptions), they’ll make money on ~2/5 wells drilled

Output data from ShaleProfile’s economics dashboard, message Enno & start a trial

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 -


OTHER NEWS.

Today, OPEC’s Joint Ministerial Monitoring Committee meets. On Nov 30th, OPEC meets, followed by an OPEC+ meeting on Dec 1st.

Cuts are expected to be extended. Amena & Javier will almost certainly be covering all three meetings live, on Twitter -

  • More good vaccine news, from Moderna

  • Fka Encana is trying to sell its EF assets

  • SM’s STX DrillCo deal & borrowing base reaffirmation

  • PNC buys BBVA’s US business

  • If Barings brings back bad memories, then *don’t* read this tweet (h/t to @james_ritzema for the find)


That’s it for this week - DeAndre Hopkins caught the best game-winning Hail Mary since the Miracle in Motown… it’s worth watching twice - catch y’all next week -

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Gulfport Ch.11

www.reservereport.com
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