Shareholders Deserve to Have Individuals in
the Boardroom who Appreciate the Value of Gulfport’s Assets
Believes Recently Disclosed 2020 Incentive
Plan Demonstrates the Board’s Continued Disregard for the Massive
Value Destruction Endured by Shareholders
Firefly Value Partners, LP (together with its affiliates,
“Firefly”), which manages funds that, together with affiliates,
collectively beneficially own 13.1% of the outstanding common stock
of Gulfport Energy Corporation (“Gulfport” or the “Company”)
(Nasdaq:GPOR), today issued the following statement:
“We are large, long-term Gulfport shareholders because we
believe Gulfport has great assets and significant opportunities for
value creation. But, after years of bewildering capital allocation
and governance decisions, Firefly advocated for the Board to be
refreshed, in collaboration with shareholders, with directors who
possess the expertise and focus on shareholder concerns needed to
effectively steer Gulfport’s strategy and drive long-term value.
Gulfport’s Board had a different plan: it has attempted to do a
‘self-refresh’ by adding directors hand-picked by the incumbents to
try to stave-off the addition of new voices that would seek to
effect meaningful change. Recent decisions by the newly constituted
Board show yet again why direct shareholder representation and
truly independent perspectives on the Gulfport Board are urgently
needed.
Gulfport could be much more valuable than it is today, given its
great assets and strong free cash flow. The Company had $693
million in liquidity as of February 26, 2020, and told shareholders
it expects to be free cash flow positive in 2020. Since that
February guidance, the fundamentals for the natural gas business
have improved – the decline in oil prices has resulted in a
significant curtailment of drilling and capital expenditures in the
Permian basin by liquid-dominant drillers. With substantially less
supply of natural gas from the Permian, we believe natural gas
prices should increase in late 2020 and into 2021. For this reason,
Gulfport’s low-cost dry gas peers (EQT, CNX and Cabot) have all
seen their stock prices increase substantially in March, even as
the capital markets have experienced significant dislocation. With
leverage of less than 3x, no bond maturities until 2023, and
improving fundamentals, Gulfport too is in a terrific position to
create value for all stakeholders.
Despite its position and opportunities, and the performance of
its peers, Gulfport stock has lost nearly 80% of its value in 2020,
including nearly 25% in March. We believe that shareholders simply
do not have confidence in the Board – with its tone-deaf
‘self-refreshment’ strategy – nor in the management team.
It is particularly troubling that, in light of a share price
decline that we believe is the result of a crisis in confidence
among shareholders, the Board appears focused on retaining and
locking-in the executive team, while taking steps to fend off
shareholder nominees. Earlier this week, the Board announced it was
modifying its executive compensation plans to make generous,
off-cycle “retention” cash awards to executives, some of which
would fully vest upon a change in the composition of the Board. We
can think of few acts that signal so explicitly that this Board
lacks confidence in the business and feels insecure about its
support among shareholders.
The Board’s initial awards to executives under the Board’s Plan
are puzzling. The Board has awarded cash equal to approximately 3%
of the market capitalization of the Company, including a
substantial portion that was immediately paid to executives,
despite the stated “retention” rationale. Vesting for some of these
initial awards will be accelerated upon certain changes in the
Board’s composition, even if those changes are approved by
shareholders. This Board has truly stretched itself to find new
ways to frustrate the will of shareholders.
It is time for Gulfport to schedule its annual meeting of
shareholders and allow shareholders to elect directors who
appreciate the true value of Gulfport’s assets and who can instill
confidence in all stakeholders.”
About Firefly Value Partners, LP
Founded in 2006, Firefly is an investment partnership focused on
fundamental primary research and business analysis. Firefly invests
with a long-term time horizon in a concentrated portfolio of deeply
undervalued companies.
CERTAIN INFORMATION CONCERNING THE PARTICIPANTS
Firefly Value Partners, LP and the other participants named
herein (collectively, “Firefly”) intend to file a preliminary proxy
statement and an accompanying WHITE proxy card with the Securities
and Exchange Commission (“SEC”) to be used to solicit votes for the
election of its slate of highly-qualified director nominees at the
2020 annual meeting of stockholders of Gulfport Energy Corporation,
a Delaware corporation (the “Company”).
FIREFLY STRONGLY ADVISES ALL STOCKHOLDERS OF THE COMPANY TO READ
THE PROXY STATEMENT AND OTHER PROXY MATERIALS, INCLUDING A PROXY
CARD, AS THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION. SUCH PROXY MATERIALS WILL BE AVAILABLE AT NO CHARGE ON
THE SEC’S WEB SITE AT HTTP://WWW.SEC.GOV. IN ADDITION, THE
PARTICIPANTS IN THIS PROXY SOLICITATION WILL PROVIDE COPIES OF THE
PROXY STATEMENT WITHOUT CHARGE, WHEN AVAILABLE, UPON REQUEST.
REQUESTS FOR COPIES SHOULD BE DIRECTED TO THE PARTICIPANTS’ PROXY
SOLICITOR.
The participants in the proxy solicitation are anticipated to be
FVP Master Fund, L.P. (“FVP Master Fund”), Firefly Value Partners,
LP (“Firefly Value Partners”), FVP GP, LLC (“FVP GP”), Firefly
Management Company GP, LLC (“Firefly Management”), Ariel
Warszawski, Ryan Heslop and Samantha Holroyd.
As of the date hereof, FVP Master Fund beneficially owns
20,906,000 shares of common stock, par value $0.01 per share (the
“Common Stock”), of the Company. Firefly Value Partners, as the
investment manager of FVP Master Fund, may be deemed the beneficial
owner of the 20,906,000 shares of Common Stock owned by FVP Master
Fund. FVP GP, as the general partner of FVP Master Fund, may be
deemed the beneficial owner of the 20,906,000 shares of Common
Stock owned by FVP Master Fund. Firefly Management, as the general
partner of Firefly Value Partners, may be deemed the beneficial
owner of the 20,906,000 shares of Common Stock owned by FVP Master
Fund. Each of Messrs. Heslop and Warszawski, as a Managing Member
of each of FVP GP and Firefly Management, may be deemed the
beneficial owner of the 20,906,000 shares of Common Stock owned by
FVP Master Fund. As of the date hereof, Ms. Holroyd does not
beneficially own any shares of Common Stock.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200319005414/en/
Investors: John Ferguson / Joe Mills Saratoga Proxy
Consulting LLC 212-257-1311 jferguson@saratogaproxy.com /
jmills@saratogaproxy.com
Media: Dan Zacchei /
Joe Germani Sloane &
Company 212-486-9500 dzacchei@sloanepr.com / jgermani@sloanepr.com
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