Description

Gulfport Energy Corporation ("Gulfport" or the "Company") is an oil and gas exploration and production company. The Company's reserves consist primarily of a mature oil field located in West Cote Blanche Bay, LA. The Company is the successor to WRT Energy, which emerged form Chapter 11 in July 1997.

The WRT Chapter 11 Plan of Reorganization was sponsored by DLBI Oil & Gas which--was controlled by Mike and Mark Liddell and Wexford Management and Charles Davidson [I don't quite recall the exact ownership splits--had accumulated enough WRT bonds and trade claims to give it over 50% of the newly reorganized company common stock.

Gulfport's reserves consist of mature fields and currently have a very low proved developed and producing percentage of only 6% (1,554 MBOE[thousands of barrels of oil equivalents]0. Total reserves are 25,130 MBOE, with a 12/31/00 SEC PV-10 of $280.9 million. At current oil prices, the Company says SEC-PV10 is probably $210 million.

Net daily average production in 2000 was 1,066 barrels of oil and 255 mcf of gas.

The West Cote Blanche Bay Field holds 20,208 MBOE of the Company’s total reserves. The field overlies one of the largest salt dome structures on the Gulf Coast; to simplify matters, this means there are thousands of potential pockets of oil. Texaco began drilling here in 1940. To date, 864 wells have been drilled of which 54 are currently producing.


The Company was hurt by the precipitous drop that occurred in oil prices at the end of 1998 and through early 1999. Management slashed costs and raised about $12.5 million through two rights offerings: a publicly registered one, at $2.50, on 11/20/98; and a private stock right offerings, at $.75, in September 1999. On 3/5/99, the Company's common stock was split 50-to-1.

The Company’s common stock is thinly traded. Ownership is as follows: Mike Liddell, CEO, 9.04%; Charles E. Davidson, for himself and various investment vehicles he controls like Wexford, 60.66%

Catalyst

Gulfport has significant proven reserves, but lacks the financial ability to explore them fully. The more Gulfport can increase its proved developed and producing percentage, the more valuable it makes itself.

Merger and acquisition activity in the oil sector has recently picked up. I think Gulfport has to engage in some type of resource conversion to maximize shareholder value; form being an acquirer to being acquired. Right now, Gulfport is a great acquisition for any company that wants to increase its reserves quickly management is very well versed in financial matters and well connected in the oil industry. In a Company press release date 4/24/01, management alluded to some of the above-mentioned topics.

The Company is definitely cheap at $2.42/BOE. Acquisitions of other exploration and production companies have been taking place at around $4-8/BOE. However, it must be noted that Gulfport’s low percentage of proved developed and producing make it harder to compare to current transactions.