The number of energy companies either headquartered or operating within Oklahoma filing for bankruptcy continues to climb.
Gulfport Energy became the latest and at least the ninth just in the past couple of years to seek the assistance on Saturday, when it filed a case seeking Chapter 11 status in the U.S. Bankruptcy Court for the Southern District of Texas.
Gulfport’s filing is based upon a Restructuring Support Agreement (RSA) its petition states it negotiated with lenders. It said the agreement also has been accepted by investors who hold more than two thirds of its senior unsecured debt. Plus, certain noteholders have committed to backstop a minimum new money investment of $50 million by agreeing to take convertible preferred stock in exchange.
The company also proposes to issue $550 million of new senior unsecured notes under the plan to existing unsecured creditors of certain Gulfport subsidiaries.
Gulfport intends to use the process to strengthen its balance sheet, restructure certain debt obligations, significantly reduce its midstream cost structure and achieve a more sustainable capital structure. Officials stated it intends to continue operating normally as the case continues, noting it has secured $262.5 million in financing from Gulfport’s existing lenders under its revolving credit facility. Gulfport also has received a commitment from its existing lenders to provide $580 million in exit financing upon emergence from Chapter 11, officials added.
In the filing, company officials stated the bankruptcy will enable Gulfport to eliminate about $1.25 billion in debt, significantly reducing its future expected annual cash interest expenses.
“Since Gulfport’s leadership team was reconstituted in 2019, we have taken decisive actions to streamline our business, strengthen our balance sheet, focus on cash flow generation, exercise capital discipline, and drive operational efficiencies and cost reductions across the company,” David M. Wood, Gulfport’s CEO, stated in a release announcing the filing.
“Despite these efforts, our large legacy debt burden in addition to significant legacy firm transportation commitments created a balance sheet and cost structure that was unsustainable in the current market environment. After working diligently to explore all strategic and financial options available, Gulfport’s board of directors determined that commencing a Chapter 11 process is in the best interest of the company and its stakeholders.”