US-based natural gas producer Gulfport Energy has filed for bankruptcy after a series of acquisitions over the past decade weakened its balance sheet.
The company, which filed a Chapter 11 petition in the US Bankruptcy Court for the Southern District of Texas, had a total debt of approximately $2.5bn as of 30 September.
Gulfport Energy president and CEO David M Wood said: “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.
“We expect to exit the chapter 11 process with leverage below two times and rapidly delever thereafter due to a much-improved cost structure driven by reduced legacy firm transport commitments and costs. These improvements will significantly improve our ability to generate cash flow and value for our stakeholders going forward.”
The company also signed a restructuring support agreement with more than 95% of its existing lenders under its revolving credit facility.
As part of the restructuring plans, Gulfport said that it expects to eliminate about ‘$1.25bn in funded debt’, as well as reduce annual cash interest expense.
The company, which produces gas from fields in Ohio and Oklahoma, also intends to use a portion of the funds to strengthen its balance sheet.
Gulfport Energy is the latest company to join the list of energy companies that have sought protection under Chapter 11 after oil prices crashed following the outbreak of the Covid-19 pandemic.
In a press statement, the company stated that it also received existing lenders’ commitment ‘to provide $580m in exit financing’ upon emergence from the bankruptcy.
Kirkland & Ellis and Jackson Walker acted as legal co-counsel, while Alvarez & Marsal served as restructuring adviser to Gulfport.
E&P company Oasis Petroleum filed for Chapter 11 bankruptcy protection in September this year.
In June, Chesapeake Energy voluntarily filed for bankruptcy in the US Bankruptcy Court for the Southern District of Texas.