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Gulfport Pose Out Energy Too Wexford Upper-Case Missive Of The Alphabet Business Office V: Parsing Gulfport's Cash Menstruation Statement

From the final 10Q hither are Gulfport Energy's revenue numbers for the past times 3 months:



  
Three Months Ended March 31, 
   2012  2011 
Revenues:
   
Oil together with condensate sales
  $64,004,000   $45,196,000  
Gas sales
   613,000    720,000  
Natural gas liquids sales
   806,000    659,000  
Other income
   38,000    63,000  
  


  


 
   65,461,000    46,638,000 


They had $65 1000000 inwards revenue.

Net income was $26.7 1000000 dollars.

Here is the cash menstruum disputation for operating cash flows:


   Three Months Ended March 31, 
   2012  2011 
Cash flows from operating activities:
   
Net income
  $26,869,000   $21,174,000  
Adjustments to reconcile internet income to internet cash provided past times operating activities:
   
Accretion of discount - Asset Retirement Obligation
   176,000    159,000  
Depletion, depreciation together with amortization
   21,395,000    12,158,000  
Stock-based compensation expense
   681,000    77,000  
Loss from equity investments
   268,000    316,000  
Interest income - authorities annotation receivable
   —      (36,000
Unrealized loss on derivative instruments
   266,000    —    
Amortization of loan commitment fees
   112,000    110,000  
Changes inwards operating assets together with liabilities:
   
Increase inwards accounts receivable
   (1,718,000  (5,419,000
Increase inwards accounts receivable - related party
   (463,000  (160,000
(Increase) decrease inwards prepaid expenses
   (57,000  618,000  
Increase (decrease) inwards accounts payable together with accrued liabilities
   22,431,000    (709,000
Settlement of asset retirement obligation
   (531,000  —    
  


  


 
Net cash provided past times operating activities
   69,429,000    28,288,000  
  


  


 


The cash generated was - believe it or non - slightly larger than the revenue - together with over xl 1000000 higher than profits. Part of that was depletion (depreciation adds to cash flow). Most the residual was merely an growth inwards accounts payable of 22 million.

Here is the cash menstruum from investing for that 3 months:


Cash flows from investing activities:
   
Additions to other property, found together with equipment
   (82,000  (13,000
Additions to fossil oil together with gas properties
   (84,778,000  (33,285,000
Proceeds from sale of other property, found together with equipment
   140,000    —    
Proceeds from sale of fossil oil together with gas properties
   —      1,384,000  
Advances on authorities annotation receivable to related party
   —      (1,319,000
Contributions to investment inwards Grizzly Oil Sands ULC
   (67,063,000  (4,878,000
Distributions from investment inwards Tatex Thailand II, LLC
   200,000    —    
Contributions to investment inwards Tatex Thailand III, LLC
   (483,000  (895,000
Contributions to investment inwards Muskie Holdings LLC
   (312,000  —    
Contributions to investment inwards Timber Wolf Terminals LLC
   (1,000,000  —    
Contributions to investment inwards Windsor Midstream LLC
   (7,021,000  —    
  


  


 
Net cash used inwards investing activities
   (160,399,000  (39,006,000
  


  


 


In those 3 months they invested $160 1000000 but alone had cash flows of $69 1000000 together with earnings of $26.7 million.

How did they finance this?

As noted the fellowship had to finance $160 1000000 of investing activities from alone $26.7 1000000 inwards operating earnings. This presents financing issues.

Firstly the fellowship (as noted) ran upward its accrued liabilities.

Then the fellowship borrowed $10 1000000 dollars.

But to a greater extent than oft than non the fellowship ran downward its cash holdings from $93 1000000 to $13 million.

Where did those cash holdings come upward from?

The cash holdings did non stand upward for past times profits. What they were was proceeds from equity issuance. The fellowship cash menstruum disputation inwards 2011 shows $307 1000000 inwards equity issuance - much of which has gone into investing inwards diverse quarters. The cash is at in i lawsuit heavily depleted (note alone $13 1000000 is left).

If they intend on investing at these rates they volition need to enhance to a greater extent than capital.

What were the investments?

In the final quarter they invested $67 1000000 inwards Grizzly Oil Sands. That is controlled past times Wexford.

They every bit good invested inwards Tatex, Muskie, Timberwolf together with Windsor. All of these are Wexford entities.

Indeed they invested to a greater extent than than their entire revenue inwards Wexford Entities.

But they every bit good added $85 1000000 to fossil oil together with gas properties. Influenza A virus subtype H5N1 fair flake of that was amongst honor to the Permian Basin properties (they drilled wells together with acquired acreage). Those assets are every bit good beingness sold to a Wexford controlled entity. Other releases accept envisaged a sale of that entity which volition enhance roughly cash allowing them to proceed to invest.

I read many 10K together with 10Q filings. Few are this fascinating.






John

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