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FRESH START ACCOUNTING (Tables) | 12 Months Ended
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Dec. 31, 2022
Reorganizations [Abstract] |
Reconciliation of Enterprise Value and Reorganization Value | The following table reconciles the enterprise value to the implied fair value of the Successor's equity as of the Emergence Date (in thousands):
Enterprise Value | $ | 1,600,000 |
Plus: Cash and cash equivalents(1) | 1,526 |
Less: Fair value of debt | (852,751) |
Successor equity value(2) | $ | 748,775 |
_____________________ (1) Restricted cash is not included in the above table. (2) Inclusive of $55 million of mezzanine equity. The following table reconciles the enterprise value to the reorganization value as of the Emergence Date (in thousands):
Enterprise Value | $ | 1,600,000 |
Plus: Cash and cash equivalents(1) | 1,526 |
Plus: Current and other liabilities | 686,489 |
Plus: Asset retirement obligations | 19,084 |
Less: Common stock held in reserve for settlement of claims post Emergence Date | (54,109) |
Reorganization value of Successor assets | $ | 2,252,990 |
_____________________ (1) Restricted cash is not included in the above table.
Fresh Start Adjustments | The explanatory notes following the table below provide further details on the adjustments, including the assumptions and methods used to determine fair value for its assets and liabilities.
|  | As of May 17, 2021
|  | Predecessor |  | Reorganization Adjustments |  | Fresh Start Adjustments |  | Successor
|  | (In thousands)
Assets |  |  |  |  |  |  |  |
Current assets: |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 146,545 |  |  | $ | (145,019) |  | (a) | $ | — |  |  | $ | 1,526 |
Restricted cash |  | — |  | 57,891 | (b) | — |  | 57,891
Accounts receivable—oil and natural gas sales |  | 180,711 |  | — |  | — |  | 180,711
Accounts receivable—joint interest and other |  | 15,431 |  | — |  | — |  | 15,431
Prepaid expenses and other current assets |  | 86,189 |  | (60,894) | (c) | — |  | 25,295
Short-term derivative instruments |  | 3,324 |  | — |  | 141 | (r) | 3,465
Total current assets |  | 432,200 |  | (148,022) |  | 141 |  | 284,319
Property and equipment: |  |  |  |  |  |  |  |
Oil and natural gas properties, full-cost method |  |  |  |  |  |  |  |
Proved oil and natural gas properties |  | 9,558,121 |  | — |  | (7,860,713) | (s) | 1,697,408
Unproved properties |  | 1,375,681 |  | — |  | (1,145,507) | (s) | 230,174
Other property and equipment |  | 38,026 |  | — |  | (31,133) | (t) | 6,893
Total property and equipment |  | 10,971,828 |  | — |  | (9,037,353) |  | 1,934,475
Accumulated depletion, depreciation and amortization |  | (8,870,723) |  | — |  | 8,870,723 | (u) | —
Total property and equipment, net |  | 2,101,105 |  | — |  | (166,630) |  | 1,934,475
Other assets: |  |  |  |  |  |  |  |
Equity investments |  | 27,044 |  | — |  | (27,044) | (v) | —
Long-term derivative instruments |  | 7,468 |  | — |  | 715 | (w) | 8,183
Operating lease assets |  | 47 |  | — |  | — |  | 47
Other assets |  | 18,866 |  | 7,100 | (d) | — |  | 25,966
Total other assets |  | 53,425 |  | 7,100 |  | (26,329) |  | 34,196
Total assets |  | $ | 2,586,730 |  |  | $ | (140,922) |  |  | $ | (192,818) |  |  | $ | 2,252,990 |
|  | Predecessor |  | Reorganization Adjustments |  | Fresh Start Adjustments |  | Successor
|  | (In thousands)
Liabilities and Stockholders’ Equity (Deficit) |  |  |  |  |  |  |  |
Current liabilities: |  |  |  |  |  |  |  |
Accounts payable and accrued liabilities |  | $ | 384,200 |  |  | $ | 122,599 |  | (e) | $ | — |  |  | $ | 506,799 |
Short-term derivative instruments |  | 96,116 |  |  | — |  |  | 2,784 |  | (x) | 98,900 |
Current portion of operating lease liabilities |  | — |  |  | 38 |  | (f) | — |  |  | 38 |
Current maturities of long-term debt |  | 280,251 |  |  | (220,251) |  | (g) | — |  |  | 60,000 |
Total current liabilities |  | 760,567 |  |  | (97,614) |  |  | 2,784 |  |  | 665,737 |
Non-current liabilities: |  |  |  |  |  |  |  |
Long-term derivative instruments |  | 69,331 |  |  | — |  |  | 11,411 |  | (y) | 80,742 |
Asset retirement obligation |  | — |  |  | 65,341 |  | (h) | (46,257) |  | (z) | 19,084 |
Non-current operating lease liabilities |  | — |  |  | 9 |  | (i) | — |  |  | 9 |
Long-term debt, net of current maturities |  | — |  |  | 792,751 |  | (j) | — |  |  | 792,751 |
Total non-current liabilities |  | 69,331 |  |  | 858,101 |  |  | (34,846) |  |  | 892,586 |
Liabilities subject to compromise |  | 2,224,449 |  |  | (2,224,449) |  | (k) | — |  |  | — |
Total liabilities |  | $ | 3,054,347 |  |  | $ | (1,463,962) |  |  | $ | (32,062) |  |  | $ | 1,558,323 |
Commitments and contingencies |  |  |  |  |  |  |  |
Mezzanine Equity: |  |  |  |  |  |  |  |
Preferred Stock |  | $ | — |  |  | $ | 55,000 |  | (l) | $ | — |  |  | $ | 55,000 |
Stockholders’ equity (deficit): |  |  |  |  |  |  |  |
Predecessor common stock |  | 1,609 |  |  | (1,609) |  | (m) | — |  |  | — |
Common Stock |  | — |  |  | 2 |  | (n) | — |  |  | 2 |
Additional paid-in capital |  | 4,215,838 |  |  | (3,522,064) |  | (o) | — |  |  | 693,774 |
Common Stock held in reserve |  | — |  |  | (54,109) |  | (p) | — |  |  | (54,109) |
Accumulated other comprehensive loss |  | (40,430) |  |  | 40,430 |  | (q) | — |  |  | — |
Retained earnings (accumulated deficit) |  | (4,644,634) |  |  | 4,805,390 |  | (q) | (160,756) |  | (aa) | — |
Total stockholders’ equity (deficit) |  | $ | (467,617) |  |  | $ | 1,268,040 |  |  | $ | (160,756) |  |  | $ | 639,667 |
Total liabilities, mezzanine equity and stockholders’ equity (deficit) |  | $ | 2,586,730 |  |  | $ | (140,922) |  |  | $ | (192,818) |  |  | $ | 2,252,990 |
Reorganization Adjustments (in thousands) (a)The table below reflects changes in cash and cash equivalents on the Emergence Date from implementation of the Plan:
Release of escrow funds by counterparties as a result of the Plan |  | $ | 63,068 |
Preferred Stock rights offering proceeds |  | 50,000 |
Funds required to rollover the DIP Credit Facility and Pre-Petition Revolving Credit Facility into the Exit Facility |  | (175,000) |
Payment of accrued Pre-Petition Revolving Credit Facility and DIP Credit Facility interest |  | (1,022) |
Payment of issuance costs related to the Exit Credit Facility |  | (10,250) |
Funding of the Professional Fee Escrow |  | (43,891) |
Payment of professional fees at Emergence Date |  | (7,964) |
Transfer to restricted cash for the Unsecured Claims Distribution Trust |  | (1,000) |
Transfer to restricted cash for the Convenience Claims Cash Pool |  | (3,000) |
Transfer to restricted cash for the Parent Cash Pool |  | (10,000) |
Payment of severance costs at Emergence Date |  | (5,960) |
Net change in cash and cash equivalents |  | $ | (145,019) |
(b)Changes in restricted cash reflect the net effect of transfers from cash and cash equivalents for the Professional Fee Escrow and various claims class cash pools. (c)Changes in prepaid expenses and other current assets include the following:
Release of escrow funds as a result of the Plan |  | $ | (63,068) |
Recognition of counterparty credits due to settlements effectuated at Emergence |  | 4,247 |
Prepaid compensation earned at Emergence |  | (2,073) |
Net change in prepaid expenses and other current assets |  | $ | (60,894) |
(d)Changes in other assets were due to capitalization of debt issuance costs related to the Exit Credit Facility. (e)Changes in accounts payable and accrued liabilities included the following:
Payment of accrued Pre-Petition Revolving Credit Facility and DIP Credit Facility interest |  | $ | (1,022) |
Payment of professional fees at emergence |  | (7,964) |
Accrued payable for claims to be settled via Unsecured Claims Distribution Trust |  | 1,000 |
Accrued payable for claims to be settled via Convenience Claims Cash Pool |  | 3,000 |
Accrued payable for claims to be settled via Parent Cash Pool |  | 10,000 |
Professional fees payable at Emergence |  | 18,047 |
Accrued payable for General Unsecured Claims against Gulfport Parent to be settled via 4A Claims distribution from common shares held in reserve |  | 23,894 |
Accrued payable for General Unsecured Claims against Gulfport Subsidiary to be settled via 4B Claims distribution from common shares held in reserve |  | 30,216 |
Reinstatement of payables due to Plan effects |  | 45,428 |
Net change in accounts payable and accrued liabilities |  | $ | 122,599 |
(f)Changes to current operating lease liabilities reflect the reinstatement of lease liabilities due to contract assumptions. (g)Changes in the current maturities of long-term debt include the following:
Current portion of Term Notes issued under the Exit Facility |  | $ | 60,000 |
Payment of DIP Facility to effectuate Exit Facility |  | (157,500) |
Transfer of post-petition RBL borrowings to Exit Facility |  | (122,751) |
Net changes to current maturities of long-term debt |  | $ | (220,251) |
(h)Reflects the reclassification of asset retirement obligations from liabilities subject to compromise. (i)Changes to non-current operating lease liabilities reflect the reinstatement of lease liabilities due to contract assumptions. (j)Changes in long-term debt include the following:
Emergence Date draw on Exit Facility |  | $ | 122,751 |
Noncurrent portion of First-Out Term Loan issued under the Exit Credit Facility |  | 120,000 |
Issuance of 2026 Senior Notes |  | 550,000 |
Net impact to long-term debt, net of current maturities |  | $ | 792,751 |
(k)On the Emergence Date, liabilities subject to compromise were settled in accordance with the Plan as follows:
General Unsecured Claims settled via Class 4A, 4B, and 5B distributions |  | $ | 74,098 |
Predecessor Senior Notes and associated interest |  | 1,842,035 |
Pre-Petition Revolving Credit Facility |  | 197,500 |
Reinstatement of Predecessor Claims as Successor liabilities |  | 45,475 |
Reinstatement of Predecessor asset retirement obligations |  | 65,341 |
Total liabilities subject to compromise settled in accordance with the Plan |  | $ | 2,224,449 |
The resulting gain on liabilities subject to compromise was determined as follows:
Pre-petition General Unsecured Claims Settled at Emergence |  | $ | 74,098 |
Predecessor Senior Notes Claims settled at Emergence |  | 1,842,035 |
Pre-Petition Revolving Credit Facility |  | 197,500 |
Rollover of Pre-Petition Revolving Credit Facility into Exit RBL Facility |  | (197,500) |
Accrued payable for claims to be settled via Unsecured Claims Distribution Trust |  | (1,000) |
Accrued payable for claims to be settled via Convenience Claims Cash Pool |  | (3,000) |
Accrued payable for claims to be settled via Parent Cash Pool |  | (10,000) |
Accrued payable for shares to be transferred to trust |  | (54,109) |
Issuance of Common Stock to settle Predecessor liabilities |  | (639,666) |
Issuance of 2026 Senior Notes in settlement of Class 4B and 5B claims |  | (550,000) |
Gain on settlement of liabilities subject to compromise |  | $ | 658,358 |
(l)Changes to Preferred Stock reflect the fair value of preferred shares issued in the Rights Offering. (m)Changes in Predecessor common stock reflect the extinguishment of Predecessor equity as per the Plan. (n)Changes in Common Stock included the following:
Issuance of Common Stock to settle General Unsecured Claims against Gulfport Parent (par value) |  | $ | — |
Issuance of Common Stock to settle General Unsecured Claims against Gulfport Subsidiaries (par value) |  | 2 |
Common stock reserved for settlement of claims post Emergence Date (par value) |  | — |
Net change to Common Stock |  | $ | 2 |
(o)Changes to paid in capital included the following:
Issuance of Common Stock to settle General Unsecured Claims against Gulfport Parent |  | $ | 27,751 |
Issuance of Common Stock to settle General Unsecured Claims against Gulfport Subsidiaries |  | 666,022 |
Extinguishment of Predecessor stock-based compensation |  | 4,419 |
Extinguishment of Predecessor paid in capital |  | (4,220,256) |
Net change to paid in capital |  | $ | (3,522,064) |
(p)Common Stock held in reserve to settle Allowed General Unsecured Claims include:
Shares held in reserve to settle Allowed Claims against Gulfport Parent |  | (23,894) |
Shares held in reserve to settle Allowed Claims against Gulfport Subsidiary |  | (30,215) |
Total Common Stock held in reserve |  | (54,109) |
(q)Change to retained earnings (accumulated deficit) included the following:
Gain on settlement of liabilities subject to compromise |  | $ | 658,358 |
Extinguishment of Predecessor common stock and paid in capital |  | 4,221,864 |
Recognition of counterparty credits due to settlements effectuated at Emergence |  | 4,247 |
Deferred compensation earned at Emergence |  | (2,073) |
Extinguishment of Predecessor accumulated other comprehensive income |  | (40,430) |
Write-off of debt issuance costs related to First-Out Term Loan |  | (3,150) |
Severance costs incurred as a result of the Plan |  | (5,961) |
Professional fees earned at Emergence |  | (18,047) |
Rights offering backstop commitment fee |  | (5,000) |
Extinguishment of Predecessor stock-based compensation |  | (4,418) |
Net change to retained earnings (accumulated deficit) |  | $ | 4,805,390 |
Fresh Start Adjustments (r)The change in fair value of short-term derivative instruments is due to the change in the Company's post-emergence credit rating. (s)The change in oil and natural gas properties represents the fair value adjustment to the Company's properties due to the adoption of fresh start accounting. (t)Predecessor accumulated depreciation and amortization for other property and equipment was net against the gross value of the assets with the adoption of fresh start accounting. (u)Predecessor accumulated depreciation and amortization was eliminated with the adoption of fresh start accounting. (v)The change in equity investments is due to the fair value adjustment to the Company's Grizzly investment. (w)The change in fair value of long-term derivative instruments is due to the change in the Company's post-emergence credit rating. (x)The change in fair value of liabilities related to short-term derivative instruments is due to the change in the Company's post-emergence credit rating. (y)The change in fair value of liabilities related to long-term derivative instruments is due to the change in the Company's post-emergence credit rating. (z)The fair value of asset retirement obligations was reduced due to the change in the Company's credit adjusted risk-free rate and expected economic life estimates. (aa)Changes to retained earnings represent the total impact of fresh start adjustments to the post-reorganization balance sheet. The following table summarizes the components in reorganization items, net included in the Company's consolidated statements of operations (in thousands):
| Successor |  |  |  |  | Predecessor
| Year Ended December 31, 2022 |  | Period from May 18, 2021 through December 31, 2021 |  |  |  |  | Period from January 1, 2021 through May 17, 2021
Legal and professional advisory fees | $ | — |  |  | $ | — |  |  |  |  |  | $ | 81,565 |
Net gain on liabilities subject to compromise | — |  |  | — |  |  |  |  |  | (575,182) |
Fresh start adjustments, net | — |  |  | — |  |  |  |  |  | 160,756 |
Elimination of Predecessor accumulated other comprehensive income | — |  |  | — |  |  |  |  |  | 40,430 |
Debt issuance costs | — |  |  | — |  |  |  |  |  | 3,150 |
Other items, net | — |  |  | — |  |  |  |  |  | 22,383 |
Total reorganization items, net | $ | — |  |  | $ | — |  |  |  |  |  | $ | (266,898) |

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