CONDENSED CONSOLIDATING FINANCIAL INFORMATION | CONDENSED CONSOLIDATING FINANCIAL INFORMATION On October 17, 2012 , December 21, 2012 and August 18, 2014 , the Company issued an aggregate of $600.0 million of its 7.75% Senior Notes. The October Notes and the December Notes were exchanged for substantially identical notes in the same aggregate principal amount that were registered under the Securities Act. The October Notes, December Notes and the August Notes are collectively referred to as the "2020 Notes". The 2020 Notes are guaranteed on a senior unsecured basis by all existing consolidated subsidiaries that guarantee the Company's secured revolving credit facility or certain other debt (the "Guarantors"). The 2020 Notes are not guaranteed by Grizzly Holdings, Inc., (the "Non-Guarantor"). The Guarantors are 100% owned by Gulfport (the "Parent"), and the guarantees are full, unconditional, joint and several. There are no significant restrictions on the ability of the Parent or the Guarantors to obtain funds from each other in the form of a dividend or loan. In connection with the issuance of the 2020 Notes, the Company and the subsidiary guarantors entered into registration rights agreements with the initial purchasers, pursuant to which the Company and the subsidiary guarantors agreed to file a registration statement with respect to an offer to exchange the 2020 Notes for a new issue of substantially identical debt securities registered under the Securities Act. The exchange offer for the October Notes and December Notes was completed in October 2013 and the exchange offer for the August Notes was completed in March 2015 . On April 21, 2015 , the Company issued $350.0 million in aggregate principal amount of its 6.625% Senior Notes due 2023 to qualified institutional buyers pursuant to Rule 144A under the Securities Act and to certain non-U.S. persons in accordance with Regulation S under the Securities Act. In connection with the April Notes Offering, the Company and its subsidiary guarantors entered into a registration rights agreement, dated as of April 21, 2015 , pursuant to which the Company agreed to file a registration statement with respect to an offer to exchange the April Notes for a new issue of substantially identical debt securities registered under the Securities Act. The exchange offer for the April Notes was completed on October 13, 2015 . The following condensed consolidating balance sheets, statements of operations, statements of comprehensive (loss) income and statements of cash flows are provided for the Parent, the Guarantors and the Non-Guarantor and include the consolidating adjustments and eliminations necessary to arrive at the information for the Company on a condensed consolidated basis. The information has been presented using the equity method of accounting for the Parent's ownership of the Guarantors and the Non-Guarantor. CONDENSED CONSOLIDATING BALANCE SHEETS (Amounts in thousands) December 31, 2015 Parent Guarantors Non-Guarantor Eliminations Consolidated Assets Current assets: Cash and cash equivalents $ 112,494 $ 479 $ 1 $ — $ 112,974 Accounts receivable - oil and gas 72,241 54 — (423 ) 71,872 Accounts receivable - related parties 16 — — — 16 Accounts receivable - intercompany 326,475 60 — (326,535 ) — Prepaid expenses and other current assets 3,905 — — — 3,905 Short-term derivative instruments 142,794 — — — 142,794 Total current assets 657,925 593 1 (326,958 ) 331,561 Property and equipment: Oil and natural gas properties, full-cost accounting 5,108,258 316,813 — (729 ) 5,424,342 Other property and equipment 33,128 43 — — 33,171 Accumulated depletion, depreciation, amortization and impairment (2,829,081 ) (29 ) — — (2,829,110 ) Property and equipment, net 2,312,305 316,827 — (729 ) 2,628,403 Other assets: Equity investments and investments in subsidiaries 231,892 — 50,644 (40,143 ) 242,393 Long-term derivative instruments 51,088 — — — 51,088 Deferred tax asset 74,925 — — — 74,925 Other assets 6,364 — — — 6,364 Total other assets 364,269 — 50,644 (40,143 ) 374,770 Total assets $ 3,334,499 $ 317,420 $ 50,645 $ (367,830 ) $ 3,334,734 Liabilities and Stockholders' Equity Current liabilities: Accounts payable and accrued liabilities $ 264,893 $ 527 $ — $ (292 ) $ 265,128 Accounts payable - intercompany — 326,541 124 (326,665 ) — Asset retirement obligation - current 75 — — — 75 Short-term derivative instruments 437 — — — 437 Deferred tax liability 50,697 — — — 50,697 Current maturities of long-term debt 179 — — — 179 Total current liabilities 316,281 327,068 124 (326,957 ) 316,516 Long-term derivative instrument 6,935 — — — 6,935 Asset retirement obligation - long-term 26,362 — — — 26,362 Long-term debt, net of current maturities 946,084 — — — 946,084 Total liabilities 1,295,662 327,068 124 (326,957 ) 1,295,897 Stockholders' equity: Common stock 1,082 — — — 1,082 Paid-in capital 2,824,303 322 241,553 (241,875 ) 2,824,303 Accumulated other comprehensive (loss) income (55,177 ) — (55,177 ) 55,177 (55,177 ) Retained (deficit) earnings (731,371 ) (9,970 ) (135,855 ) 145,825 (731,371 ) Total stockholders' equity 2,038,837 (9,648 ) 50,521 (40,873 ) 2,038,837 Total liabilities and stockholders' equity $ 3,334,499 $ 317,420 $ 50,645 $ (367,830 ) $ 3,334,734 CONDENSED CONSOLIDATING BALANCE SHEETS (Amounts in thousands) December 31, 2014 Parent Guarantors Non-Guarantor Eliminations Consolidated Assets Current assets Cash and cash equivalents $ 141,535 $ 804 $ 1 $ — $ 142,340 Accounts receivable - oil and gas 103,762 96 — — 103,858 Accounts receivable - related parties 46 — — — 46 Accounts receivable - intercompany 45,222 27 — (45,249 ) — Prepaid expenses and other current assets 3,714 — — — 3,714 Short-term derivative instruments 78,391 — — — 78,391 Total current assets 372,670 927 1 (45,249 ) 328,349 Property and equipment: Oil and natural gas properties, full-cost accounting, 3,887,874 35,990 — (710 ) 3,923,154 Other property and equipment 18,301 43 — — 18,344 Accumulated depletion, depreciation, amortization and impairment (1,050,855 ) (24 ) — — (1,050,879 ) Property and equipment, net 2,855,320 36,009 — (710 ) 2,890,619 Other assets: Equity investments and investments in subsidiaries 360,238 — 180,217 (170,874 ) 369,581 Long-term derivative instruments 24,448 — — — 24,448 Other assets 6,476 — — — 6,476 Total other assets 391,162 — 180,217 (170,874 ) 400,505 Total assets $ 3,619,152 $ 36,936 $ 180,218 $ (216,833 ) $ 3,619,473 Liabilities and Stockholders' Equity Current liabilities: Accounts payable and accrued liabilities $ 371,089 $ 321 $ — $ — $ 371,410 Accounts payable - intercompany — 45,143 106 (45,249 ) — Asset retirement obligation - current 75 — — — 75 Deferred tax liability 27,070 — — — 27,070 Current maturities of long-term debt 168 — — — 168 Total current liabilities 398,402 45,464 106 (45,249 ) 398,723 Asset retirement obligation - long-term 17,863 — — — 17,863 Deferred tax liability 203,195 — — — 203,195 Long-term debt, net of current maturities 703,396 — — — 703,396 Total liabilities 1,322,856 45,464 106 (45,249 ) 1,323,177 Stockholders' equity: Common stock 856 — — — 856 Paid-in capital 1,828,602 322 227,079 (227,401 ) 1,828,602 Accumulated other comprehensive (loss) income (26,675 ) — (26,675 ) 26,675 (26,675 ) Retained earnings (deficit) 493,513 (8,850 ) (20,292 ) 29,142 493,513 Total stockholders' equity 2,296,296 (8,528 ) 180,112 (171,584 ) 2,296,296 Total liabilities and stockholders' equity $ 3,619,152 $ 36,936 $ 180,218 $ (216,833 ) $ 3,619,473 CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS (Amounts in thousands) Year Ended December 31, 2015 Parent Guarantors Non-Guarantor Eliminations Consolidated Total revenues $ 709,525 $ 1,468 $ — $ (1,518 ) $ 709,475 Costs and expenses: Lease operating expenses 68,632 843 — — 69,475 Production taxes 14,618 122 — — 14,740 Midstream gathering and processing 138,526 64 — — 138,590 Depreciation, depletion and amortization 337,689 5 — — 337,694 Impairment of oil and gas properties 1,440,418 — — — 1,440,418 General and administrative 41,892 55 20 — 41,967 Accretion expense 820 — — — 820 2,042,595 1,089 20 — 2,043,704 (LOSS) INCOME FROM OPERATIONS (1,333,070 ) 379 (20 ) (1,518 ) (1,334,229 ) OTHER (INCOME) EXPENSE: Interest expense 51,221 — — — 51,221 Interest income (643 ) — — — (643 ) Insurance proceeds (10,015 ) — — — (10,015 ) Loss (income) from equity method investments and investments in subsidiaries 107,252 — 115,544 (116,703 ) 106,093 147,815 — 115,544 (116,703 ) 146,656 (LOSS) INCOME BEFORE INCOME TAXES (1,480,885 ) 379 (115,564 ) 115,185 (1,480,885 ) INCOME TAX BENEFIT (256,001 ) — — — (256,001 ) NET (LOSS) INCOME $ (1,224,884 ) $ 379 $ (115,564 ) $ 115,185 $ (1,224,884 ) CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS (Amounts in thousands) Year Ended December 31, 2014 Parent Guarantors Non-Guarantor Eliminations Consolidated Total revenues $ 669,067 $ 2,199 $ — $ — $ 671,266 Costs and expenses: Lease operating expenses 51,238 953 — — 52,191 Production taxes 23,803 203 — — 24,006 Midstream gathering and processing 64,402 65 — — 64,467 Depreciation, depletion and amortization 265,428 3 — — 265,431 General and administrative 37,846 446 (2 ) — 38,290 Accretion expense 761 — — — 761 Gain on sale of assets (11 ) — — — (11 ) 443,467 1,670 (2 ) — 445,135 INCOME FROM OPERATIONS 225,600 529 2 — 226,131 OTHER (INCOME) EXPENSE: Interest expense 23,986 — — — 23,986 Interest income (195 ) — — — (195 ) Litigation settlement 25,500 — — — 25,500 Gain on contribution of investments (84,470 ) — — — (84,470 ) (Income) loss from equity method investments and investments in subsidiaries (139,965 ) — 13,159 (12,628 ) (139,434 ) (175,144 ) — 13,159 (12,628 ) (174,613 ) INCOME (LOSS) BEFORE INCOME TAXES 400,744 529 (13,157 ) 12,628 400,744 INCOME TAX EXPENSE 153,341 — — — 153,341 NET INCOME (LOSS) $ 247,403 $ 529 $ (13,157 ) $ 12,628 $ 247,403 CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS (Amounts in thousands) Year Ended December 31, 2013 Parent Guarantors Non-Guarantor Eliminations Consolidated Total revenues $ 261,809 $ 1,517 $ — $ (573 ) $ 262,753 Costs and expenses: Lease operating expenses 25,971 732 — — 26,703 Production taxes 26,848 85 — — 26,933 Midstream gathering and processing 10,999 31 — — 11,030 Depreciation, depletion and amortization 118,878 2 — — 118,880 General and administrative 22,359 159 1 — 22,519 Accretion expense 717 — — — 717 Loss on sale of assets 508 — — — 508 206,280 1,009 1 — 207,290 INCOME (LOSS) FROM OPERATIONS 55,529 508 (1 ) (573 ) 55,463 OTHER (INCOME) EXPENSE: Interest expense 17,490 — — — 17,490 Interest income (297 ) — — — (297 ) (Income) loss from equity method investments and investments in subsidiaries (212,992 ) — 2,999 (3,065 ) (213,058 ) (195,799 ) — 2,999 (3,065 ) (195,865 ) INCOME (LOSS) BEFORE INCOME TAXES 251,328 508 (3,000 ) 2,492 251,328 INCOME TAX EXPENSE 98,136 — — — 98,136 NET INCOME (LOSS) $ 153,192 $ 508 $ (3,000 ) $ 2,492 $ 153,192 CONDENSED CONSOLIDATING STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (Amounts in thousands) Year Ended December 31, 2015 Parent Guarantors Non-Guarantor Eliminations Consolidated Net (loss) income $ (1,224,884 ) $ 379 $ (115,564 ) $ 115,185 $ (1,224,884 ) Foreign currency translation adjustment (28,502 ) — (28,502 ) 28,502 (28,502 ) Other comprehensive (loss) income (28,502 ) — (28,502 ) 28,502 (28,502 ) Comprehensive (loss) income $ (1,253,386 ) $ 379 $ (144,066 ) $ 143,687 $ (1,253,386 ) Year Ended December 31, 2014 Parent Guarantors Non-Guarantor Eliminations Consolidated Net income (loss) $ 247,403 $ 529 $ (13,157 ) $ 12,628 $ 247,403 Foreign currency translation adjustment (16,894 ) — (16,894 ) 16,894 (16,894 ) Other comprehensive (loss) income (16,894 ) — (16,894 ) 16,894 (16,894 ) Comprehensive income (loss) $ 230,509 $ 529 $ (30,051 ) $ 29,522 $ 230,509 Year Ended December 31, 2013 Parent Guarantors Non-Guarantor Eliminations Consolidated Net income (loss) $ 153,192 $ 508 $ (3,000 ) $ 2,492 $ 153,192 Foreign currency translation adjustment (12,223 ) — (12,223 ) 12,223 (12,223 ) Change in fair value of derivative instruments, net of taxes (4,419 ) — — — (4,419 ) Reclassification of settled contracts, net of taxes 10,290 — — — 10,290 Other comprehensive (loss) income (6,352 ) — (12,223 ) 12,223 (6,352 ) Comprehensive income (loss) $ 146,840 $ 508 $ (15,223 ) $ 14,715 $ 146,840 CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS (Amounts in thousands) Year Ended December 31, 2015 Parent Guarantors Non-Guarantor Eliminations Consolidated Net cash provided by (used in) operating activities $ 344,018 $ (21,839 ) $ (2 ) $ 2 $ 322,179 Net cash (used in) provided by investing activities (1,595,767 ) 21,514 (14,472 ) 14,472 (1,574,253 ) Net cash provided by (used in) financing activities 1,222,708 — 14,474 (14,474 ) 1,222,708 Net decrease in cash and cash equivalents (29,041 ) (325 ) — — (29,366 ) Cash and cash equivalents at beginning of period 141,535 804 1 — 142,340 Cash and cash equivalents at end of period $ 112,494 $ 479 $ 1 $ — $ 112,974 Year Ended December 31, 2014 Parent Guarantors Non-Guarantor Eliminations Consolidated Net cash provided by (used in) operating activities $ 388,177 $ 21,698 $ (2 ) $ — $ 409,873 Net cash (used in) provided by investing activities (1,108,241 ) (28,419 ) (18,799 ) 18,802 (1,136,657 ) Net cash provided by (used in) financing activities 410,168 — 18,802 (18,802 ) 410,168 Net (decrease) increase in cash and cash equivalents (309,896 ) (6,721 ) 1 — (316,616 ) Cash and cash equivalents at beginning of period 451,431 7,525 — — 458,956 Cash and cash equivalents at end of period $ 141,535 $ 804 $ 1 $ — $ 142,340 Year Ended December 31, 2013 Parent Guarantors Non-Guarantor Eliminations Consolidated Net cash provided by operating activities $ 182,961 $ 8,104 $ — $ — $ 191,065 Net cash (used in) provided by investing activities (661,886 ) (2,374 ) (33,929 ) 33,929 (664,260 ) Net cash provided by (used in) financing activities 765,063 — 33,929 (33,929 ) 765,063 Net increase in cash and cash equivalents 286,138 5,730 — — 291,868 Cash and cash equivalents at beginning of period 165,293 1,795 — — 167,088 Cash and cash equivalents at end of period $ 451,431 $ 7,525 $ — $ — $ 458,956 |