GULFPORT ENERGY CORP

Comparison of the Six Month Periods Ended June 30, 2024 and 2023

Natural Gas, Oil and Condensate and NGL Production and Pricing (sales totals in thousands)

The following table summarizes our natural gas, oil and condensate, and NGL production and related pricing for the six months ended June 30, 2024 as compared to the six months ended June 30, 2023. Some totals below may not sum or recalculate due to rounding.

Natural Gas, Oil and Condensate and NGL Sales (in thousands)

The decrease in natural gas sales without the impact of derivatives when comparing the six months ended June 30, 2024, to the six months ended June 30, 2023 was due to a 27% decrease in realized prices, partially offset by a 4% increase in sales volumes. The realized price change was primarily driven by the decrease in the average Henry Hub gas index from $2.76 per Mcf in the six months ended June 30, 2023, to $2.07 per Mcf in the six months ended June 30, 2024. The 4% increase in natural gas production was primarily due to our 2023 and 2024 development programs in the Utica/Marcellus partially offset by natural declines and limited activity in the SCOOP.

The decrease in oil and condensate sales without the impact of derivatives when comparing the six months ended June 30, 2024, to the six months ended June 30, 2023, was due to a 26% decrease in sales volumes, partially offset by a 3% increase in realized prices. The 26% decrease in oil and condensate production was primarily due to natural declines and limited 2023 development activity in the SCOOP. The realized price change was driven by the increase in the average WTI crude index from $74.95 per barrel in the six months ended June 30, 2023, to $78.77 per barrel in the six months ended June 30, 2024.

The decrease in NGL sales without the impact of derivatives when comparing the six months ended June 30, 2024, to the six months ended June 30, 2023, was due to a 22% decrease in NGL sales volumes, partially offset by a 6% increase in realized prices. The 22% decrease in NGL production was primarily due to natural declines and limited 2023 development in the SCOOP. The realized price change was driven by the increase in the average Mont Belvieu NGL index from $30.61 per barrel in the six months ended June 30, 2023, to $33.08 per barrel in the six months ended June 30, 2024.

Natural Gas, Oil and NGL Derivatives (in thousands)

We recognize fair value changes on our natural gas, oil and NGL derivative instruments in each reporting period. The changes in fair value resulted from new positions and settlements that occurred during each period, as well as the relationship between contract prices and the associated forward curves. The significant change in the total gain (loss) for the six months ended June 30, 2024 compared to the six months ended June 30, 2023, was primarily the result of changes in futures pricing for oil, natural gas, and NGLs during each period. See Note 10 of our consolidated financial statements for hedged volumes and pricing.

Lease Operating Expenses (in thousands, except per unit)

The decrease in our total and per unit LOE for the six months ended June 30, 2024 compared to the six months ended June 30, 2023, was primarily the result of a decrease in water hauling, surface rental and labor expenses throughout our SCOOP operations and non-operated expenses in Utica/Marcellus.

Taxes Other Than Income (in thousands, except per unit)

The decrease in total and per unit taxes other than income for the six months ended June 30, 2024 compared to the six months ended June 30, 2023, was primarily related to a decrease in production taxes resulting from the decrease in our natural gas, oil and NGL revenues excluding the impact of hedges discussed above.

Transportation, Gathering, Processing and Compression (in thousands, except per unit)

Transportation, gathering, processing and compression for the six months ended June 30, 2024 compared to the six months ended June 30, 2023 decreased on a per unit basis primarily as a result of lower minimum volume commitments.

Depreciation, Depletion and Amortization (in thousands, except per unit)

Depreciation, depletion and amortization of our oil and gas properties for the six months ended June 30, 2024 compared to the six months ended June 30, 2023, decreased 1% primarily as a result of a decrease in our depletion rate.

General and Administrative Expenses (in thousands, except per unit)

The increase in general and administrative expenses for the six months ended June 30, 2024 compared to the six months ended June 30, 2023, was primarily driven by increases in employee compensation.

Restructuring costs

During the six months ended June 30, 2023, Gulfport recognized $4.8 million in personnel-related restructuring expenses associated with changes in the organizational structure and leadership team resulting from the appointment of Gulfport's new CEO in January 2023. Of these expenses, $1.3 million resulted from accelerated vesting of share-based grants, which are non-cash charges. As of June 30, 2023, there were no remaining employee termination liabilities for the impacted employees.

Interest Expense (in thousands, except per unit)

Interest expense on our Credit Facility increased 30% for the six months ended June 30, 2024 compared to the six months ended June 30, 2023, as a result of a higher average balance outstanding. Amortization of loan costs increased 36% for the six months ended June 30, 2024 compared to the six months ended June 30, 2023, as a result of the Third Amendment to the Credit Facility which increased the elected commitments and borrowing base. The Company also capitalized $2.4 million and $1.8 million in interest expense for the six months ended June 30, 2024 and June 30, 2023, respectively.

Other, net (in thousands)

As part of its Chapter 11 Cases and restructuring efforts, the Company filed motions to reject certain firm transportation agreements between the Company and affiliates of TC Energy Corporation ("TC") and Rover Pipeline LLC ("Rover"). During the first quarter of 2023, Gulfport finalized a settlement agreement with Rover that was approved by the Bankruptcy Court on February 21, 2023. Pursuant to the settlement agreement, Gulfport and Rover agreed that the firm transportation contracts between them would be rejected. As part of the settlement, Gulfport paid a $1.0 million administrative claim, which is included in Other, net. Additionally, on February 24, 2023, Gulfport received an additional $17.8 million interim distribution for its TC claim, which is also included in Other, net. Other, net in the second quarter of 2023 included a $5.0 million recoupment of previously placed collateral for certain firm transportation commitments during our Chapter 11 Cases.

Income Taxes

We recorded income tax expense of $7.3 million for the six months ended June 30, 2024. We did not record any income tax expense for the six months ended June 30, 2023, as a result of maintaining a full valuation allowance against our net deferred tax asset. See Note 14 of our consolidated financial statements for further discussion of our income tax expense.