Gulfport buys $105 million notes for cash spend of $80 million in Q3

By Devika Patel

Knoxville, Tenn., Nov. 1 – Gulfport Energy Corp. plans to keep reducing outstanding senior debt.

The company repurchased $105 million of senior notes last quarter at a “meaningful” discount, according to its chief executive officer.

“During July, we repurchased approximately $105 million principal amount of senior notes for a total cash spend of $80 million,” president and CEO David M. Wood said on the company’s third quarter ended Sept. 30 earnings conference call on Friday.

“At the levels at which our bonds have been trading, we continue to see an attractive opportunity to retire senior debt at a meaningful discount and expect to continue reducing a portion of our outstanding debt,” Wood said.

The company aims to keep its leverage manageable and intends to keep reducing debt at a discount.

“As we look forward to 2020, we are focused on keeping our balance sheet in good shape,” executive vice president and chief financial officer Quentin R. Hicks said on the call.

“Accordingly, we are creating our 2020 budget with a focus on not materially drawing our revolver to fund drilling and ensuring that leverage remains at manageable levels.

“The market has presented us with a unique opportunity to reduce our debt at attractive prices.

“Over the past several months, we have seen a shift in investors’ sentiment with liquidity and leverage becoming a primary focus for companies such as ours.

“Our strong current and projected liquidity provides us with the unique opportunity to retire notes at a meaningful discount while maintaining adequate liquidity going forward.

“Retiring senior notes at a discount provides three benefits to us,” Hicks said.

“First, it reduces our annual cash interest cost, thereby improving our cash flow profile; second, it allows us to chip away at our outstanding debt balance and improve our leverage ratios in an accelerated way; and third, it allows us to capture discount, which is pure value accretion to our equity holders.

“As we look at capital allocation decisions going forward, including debt and share repurchases, we will continue to evaluate all options available to us with careful consideration of the implications of these decisions on our balance sheet health,” Hicks said.

Adjusted EBITDA was $219.4 million for the third quarter.

The company generated $103.4 million of free cash flow for the quarter.

As of the end of the quarter, the company had $626.5 million of total liquidity, including cash on hand of approximately $10.1 million and approximately $616.4 million of borrowing capacity under Gulfport’s $1.4 billion revolving credit facility.

Gulfport is an Oklahoma City-based oil and gas exploration and production company.

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