Company: GPOR
Filing Date: 2025-02-26
Form Type: 10-K
Source: 0001628280-25-008043
Chunk: 149

Company: GULFPORT ENERGY CORP
Filing Date: 2025-02-26
Form: 10-K
Item: Item 1A
Chunk 149
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 based in part on our view of current and future market conditions and our desire to stabilize cash flows necessary for the development of our proved reserves. We may choose not to enter into derivatives if the pricing environment for certain time periods is not deemed to be favorable. Additionally, we may choose to liquidate existing derivative positions prior to the expiration of their contractual maturities to monetize gain positions for the purpose of funding our capital program. 

Natural gas, oil and NGL derivative transactions expose us to the risk that our counterparties, which are generally financial institutions, may be unable to satisfy their obligations to us. During periods of declining commodity prices, the value of our commodity derivative asset positions increase, which increases our counterparty exposure. Although the counterparties to our hedging arrangements are required to secure their obligations to us under certain scenarios, if any of our counterparties were to default on its obligations to us under the derivative contracts or seek bankruptcy protection, it could have an adverse effect on our ability to fund our planned activities and could result in a larger percentage of our future cash flows being exposed to commodity price changes.

Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase.

Our earnings are exposed to interest rate risk associated with borrowings under our Credit Facility, which is structured under floating rate terms. As such, our interest expense is sensitive to fluctuations in the SOFR benchmark. For the year ended December 31, 2024, amounts borrowed under our Credit Facility bore interest at the weighted average rate of 8.23%. A 1% increase in the average interest rate would increase our interest expense by approximately $0.4 million based on outstanding borrowings under our Credit Facility at December 31, 2024. An increase in our interest rate at the time we have variable interest rate borrowings outstanding under our Credit Facility will increase our costs, which may have a material adverse effect on our results of operations and financial condition. As of December 31, 2024, we did not hedge our interest rate risk.

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Table of ContentsIndex to Financial Statements

Our debt and other financial commitments may limit our financial and operating flexibility.

Our total principal debt was approximately $713.7 million at December 31, 2024. We also had various commitments for leases, drilling contracts, derivative contracts, firm transportation, and purchase obligations for services, products and properties. Our financial commitments could have important consequences to our business, including, but not limited to, limiting our ability to