Company: GPOR
Filing Date: 2025-02-26
Form Type: 10-K
Source: 0001628280-25-008043
Chunk: 203

Company: GULFPORT ENERGY CORP
Filing Date: 2025-02-26
Form: 10-K
Item: Item 1A
Chunk 203
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 the call option, no payment is due from either party.

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Table of ContentsIndex to Financial Statements

Our hedge arrangements may expose us to risk of financial loss in certain circumstances, including instances where production is less than expected or commodity prices increase. At December 31, 2024, we had a net liability derivative position of $12.9 million, compared to a net asset derivative position of $240.2 million as of December 31, 2023. Utilizing actual derivative contractual volumes, a 10% increase in underlying commodity prices would have increased our liability by approximately $82.3 million, while a 10% decrease in underlying commodity prices would have decreased our liability by approximately $81.8 million. However, any realized derivative gain or loss would be substantially offset by a decrease or increase, respectively, in the actual sales value of production covered by the derivative instrument. For more information regarding the Company's commodity derivative transactions, refer to Note 12 of our consolidated financial statements. 

Counterparty Credit Risk. The Company routinely monitors and manages its exposure to counterparty risk related to derivative contracts by requiring specific minimum credit standards for all counterparties, actively monitoring counterparties public credit ratings, and avoiding concentration of credit exposure by transacting with multiple counterparties. The Company's commodity derivative contract counterparties are typically financial institutions with investment-grade credit ratings. The Company enters into International Swap Dealers Association Master Agreements (“ISDA”) with each of its derivative counterparties prior to executing derivative contracts. The terms of the ISDA provide, among other things, the Company and the counterparties with rights of set-off upon the occurrence of defined acts of default by either the Company or counterparty to a derivative contract.

Interest Rate Risk. Our Credit Facility is structured under floating rate terms, as advances under these facilities may be in the form of either base rate loans or term benchmark loans. As such, our interest expense is sensitive to fluctuations in the prime rates in the United States or, if the term benchmark rates are elected, the term benchmark rates. At December 31, 2024, we had $38.0 million in borrowings outstanding under our Credit Facility which bore interest at the weighted average rate of 8.23% for the year ended December 31, 2024. A 1% increase in the average interest rate would increase interest expense by approximately $0.4 million based on outstanding borrowings under our Credit Facility at December 31, 2024. As of December 31,