<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for use of the
Commission only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.1a-11(c) or ss.240.1a-12
GULFPORT ENERGY CORPORATION
(Name of Registrant as Specified In Its Charter)
n/a
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount previously paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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GULFPORT ENERGY CORPORATION
6307 Waterford Blvd., Suite 100
Oklahoma City, Oklahoma 73118
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JULY 10, 1998
To the Stockholders:
Gulfport Energy Corporation (the "Company") will hold its 1998 Annual
Meeting of Stockholders (the "Annual Meeting") on Friday, July 10, 1998, at 3:30
p.m., CT, on the 21st Floor, 1601 N.W. Expressway, Oklahoma City, Oklahoma. The
Stockholders will meet to consider:
(1) Electing five directors for the coming year; and
(2) Transacting other business incident to the Annual Meeting.
The record date for the Annual Meeting is June 16, 1998. Only
Stockholders of record at the close of business on that date can vote at the
Annual Meeting.
We hope you will attend the Annual Meeting. IF YOU DO NOT PLAN TO
ATTEND, PLEASE SIGN AND RETURN THE ENCLOSED PROXY. TO ENCOURAGE THE USE OF
PROXIES, WE HAVE ENCLOSED A SELF-ADDRESSED, POSTAGE-PAID ENVELOPE FOR YOUR USE.
Sincerely,
Ronald D. Youtsey
Secretary
June 19, 1998
<PAGE> 3
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
JULY 10, 1998
Gulfport Energy Corporation ("Gulfport", the "Company" or "We")
furnishes this Proxy Statement to inform its Stockholders about the upcoming
Annual Meeting. To encourage Stockholder participation, Gulfport's Board of
Directors is soliciting proxies to be used at the Annual Meeting.
We are mailing this Proxy Statement and the accompanying proxy card to
Stockholders beginning June 19, 1998.
GENERAL INFORMATION
Who Votes. If you hold shares as of the Record Date, June 16, 1998, you
may vote at the Annual Meeting. On June 16, 1998, the Company had 22,076,315
shares of common stock outstanding. Each share is entitled to one vote.
How To Vote. We will vote your shares for you if you send us a signed
proxy before the Annual Meeting. You can tell us to vote for all, some, or none
of the nominees for director. You can also tell us to approve, disapprove, or
abstain from transacting incidental business at the Annual Meeting. We have
provided information about the director nominees in the following pages of this
proxy statement.
IF YOU DO NOT TELL US HOW YOU WANT TO VOTE, WE SHALL VOTE YOUR SHARES
"FOR" ALL DIRECTOR NOMINEES.
Canceling Your Proxy. You can cancel your proxy at any time before we
vote your shares in any of three ways:
(1) by giving the Secretary a written cancellation;
(2) by giving a later signed proxy; or
(3) by voting in person at the Annual Meeting.
Counting the Necessary Votes. Directors are elected by a plurality of
votes, which means that the five director nominees (the number of positions to
be filled) receiving the highest number of votes will be elected. If any
incidental business is transacted at the Annual Meeting, the incidental business
must receive a majority of the votes that could be cast at the Annual Meeting.
The votes that could be cast are the votes actually cast plus
abstentions. Abstentions are counted as "shares present" at the Annual Meeting
for purposes of determining whether a quorum exists and have the effect of a
vote "against" any proposal. Proxies submitted by brokers that do not
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indicate a vote for some or all of the proposals (usually because the brokers
don't have discretionary voting authority and haven't received instructions as
to how to vote) are not considered "shares present" and will not affect the
outcome of the vote. These broker proxies are referred to as "broker non-votes".
Incidental Business. Proxies customarily ask for authority to transact
other business that may come before the Annual Meeting. Much of this business is
procedural, such as a vote on adjournment. Except for the election of directors,
we do not know of any substantive business to be presented or acted upon at the
Annual Meeting. Under our Bylaws, no substantive business besides that stated in
the meeting notice may be transacted at any meeting of Stockholders. If any
matter is presented at the Annual Meeting on which a vote may properly be taken,
the designated proxies will vote your shares as they think best unless you
otherwise direct.
BACKGROUND ON THE COMPANY
On July 11, 1997, the Company was reorganized under Chapter 11 of the
United States Bankruptcy Code when its Second Amended Joint Plan of
Reorganization (the "Plan") became effective. DLB Oil & Gas, Inc., a
publicly-held, Oklahoma-based oil and gas company ("DLB"), and Wexford
Management LLC, a privately held investment firm ("Wexford"), were co-proponents
of the Plan and together received an aggregate of 12,580,000 shares of the
Company's Common Stock for various claims, assets and cash. These shares
represented approximately 57.0% of the outstanding Common Stock.
On October 22, 1997, Chesapeake Energy Corporation agreed to acquire
DLB in a merger (the "Merger"). When the Merger was closed and became effective
on April 28, 1998, the 10,354,198 shares of the Company's Common Stock held by
DLB were distributed to DLB's stockholders and DLB became a wholly-owned
subsidiary of Chesapeake.
This Annual Meeting is the first stockholder meeting since confirmation
of the Company's Plan.
ELECTION OF DIRECTORS
Five directors will be elected at this year's Annual Meeting. Each
director will serve until the next annual meeting or until he or she is
succeeded by another qualified director who has been elected.
We shall vote your shares as you tell us on the enclosed proxy form. If
you sign, date, and return the proxy form, but don't tell us how you want your
shares voted, we shall vote your shares for the election of the following
nominees. If unforeseen circumstances (such as death or disability) make it
necessary for the Board of Directors to substitute another person for any of the
nominees, we will vote your shares for that other person.
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Four of the nominees for director are now members of the Board of
Directors. The following information about the nominees was provided by the
nominees.
THE COMPANY RECOMMENDS VOTING "FOR" THE NOMINEES.
BIOGRAPHICAL INFORMATION
The following table sets forth the name and age of each nominee listed
in the enclosed form of proxy, his principal position with the Company, and the
year he became a director.
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE SINCE POSITION
---- --- ----- --------
<S> <C> <C> <C>
Charles E. Davidson 44 1997 Chairman of the Board
Mike Liddell 44 1997 Director
Mark Liddell 43 1997 Director
Robert E. Brooks 50 1997 Director
David L. Houston 45 - * Director nominee
</TABLE>
-------------
* Mr. Houston has not previously served as a director of the Company.
Charles E. Davidson has served as a director of the Company since July
11, 1997. Mr. Davidson was Chairman of the Board of Directors of DLB from July
1995 through April 1998. Since 1994, he has also served as managing partner of
Wexford Capital Corporation, a private investment firm and affiliate of Wexford.
From 1984 to 1994, he was a partner in Steinhardt Partners, L.P., a private
investment firm. From 1977 to 1984, Mr. Davidson was employed by Goldman, Sachs
& Co., last serving as Vice President of corporate bond trading. Mr. Davidson is
Chairman of the Board of Resurgence Properties, Inc. and is also a director of
Presido Capital, Inc., both of which are publicly held real estate companies. He
holds a BA degree and a MBA degree from the University of California at Los
Angeles.
Mike Liddell has served as a director of the Company since July 11,
1997, and became its Chief Executive Officer on April 28, 1998. Mr. Liddell was
the Chief Executive Officer of DLB from October 1994 through April 1998, and a
director of DLB from 1991 through April 1998. From 1991 to 1994, Mr. Liddell was
President of DLB. From 1979 to 1991, he was President and Chief Executive
Officer of DLB Energy. He received a B.S. degree in education from Oklahoma
State University.
Mark Liddell has served as a director of the Company since July 11,
1997, and became its President on April 28, 1998. Mr. Liddell was President of
DLB from October 1994 through April 1998 and was Vice President of DLB from 1991
to 1994. He was a director of DLB from 1991 through April 1998. From 1985 to
1991, he was Vice President of DLB Energy. From 1991 to May 1995, Mr. Liddell
served as a director of TGX Corporation, a publicly held oil and gas company,
and
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from 1989 to 1990, he served as a director of Kaneb Services, Inc., a
publicly held industrial services and pipeline transportation company. He
received a BS degree in education and a JD degree from the University of
Oklahoma. He is the brother of Mike Liddell.
Robert E. Brooks has served as a director of the Company since July 11,
1997. Mr. Brooks is currently a Senior Vice President in charge of Asset Finance
and Managed Assets for Bank One, Louisiana. Mr. Brooks is a Certified Public
Accountant and has worked as a banker for large commercial banks since 1974. He
received his BS degree from Purdue University in mechanical engineering in 1969.
He obtained graduate degrees in finance and accounting from the Graduate School
of Business at the University of Chicago in 1974.
David L. Houston has been since 1991 the principal of Houston &
Associates, which offers life and disability insurance, compensation and
benefits plans and estate planning. Prior to 1991, he was President and Chief
Executive Officer of Equity Bank for Savings, F.A., a $600 million,
Oklahoma-based savings bank. He currently serves on the board of directors and
executive committee of Deaconess Hospital, Oklahoma City, Oklahoma, and is the
former chair of the Oklahoma State Ethics Commission and the Oklahoma League of
Savings Institutions. He received a BS degree in business from Oklahoma State
University and a graduate degree in banking from Louisiana State University.
SERVICE ON THE BOARD
Term of Board Service. The existing directors were appointed on July
11, 1997 (the "Plan Confirmation Date"), which was the confirmation date of the
Company's Second Amended Joint Plan of Reorganization (the "Plan"). At that
time, all of the then existing directors were terminated.
Board Meetings and Committees. The Board of Directors held one meeting
in 1997. The single meeting was a meeting of the new Board (appointed at the
Plan Confirmation Date). All directors were in attendance.
The Board of Directors established an Audit Committee, which held its
first meeting in March 1998 with all members participating. The Audit Committee
recommends to the whole Board of Directors the selection of independent
certified public accountants to audit annually the books and records of the
Company, reviews the activities and report of the independent certified public
accountants, and reports the results of such review to the whole Board of
Directors. The Audit Committee also monitors the internal controls of the
Company. It was composed of Charles E. Davidson (chair), Robert E. Brooks and
Mark Liddell, all of whom were non-employee directors at the time of the first
meeting. Mr. Liddell has since become the Company's President and no longer
serves on the Audit Committee.
The Board has not delegated its functions to any other standing
committees, and thus has not created executive, compensation, nominating, or
other similar committees.
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Director Compensation. The Company pays its non-employee directors a
monthly retainer of $1,000 and a per meeting fee of $500 (which includes
telephonic board meetings and committee meetings not held in conjunction with a
board meeting), and reimburses all ordinary and necessary expenses incurred in
the conduct of the Company's business. Until the Plan Confirmation Date, each
non-employee director received $500 for his attendance at each meeting of the
Board of Directors and was reimbursed for expenses incurred in connection with
attending each such meeting. Employee directors receive no compensation.
Liability of Directors and Officers and Indemnification. As permitted
by the Delaware General Corporation Law (the "DGCL"), the Company's Certificate
of Incorporation eliminates in certain circumstances the monetary liability of
the directors for a breach of their fiduciary duty. These provisions do not
eliminate the liability of a director for (i) a breach of the director's duty of
loyalty to the Company or its Stockholders, (ii) acts or omissions by a director
not in good faith or which involve intentional misconduct or a knowing violation
of law, (iii) liability arising under Section 174 of the DGCL (relating to the
declaration of dividends and purchase or redemption of shares in violation of
the DGCL) or (iv) any transaction from which the director derived an improper
personal benefit. In addition, these provisions do not eliminate the liability
of a director for violations of Federal securities laws, nor do they limit the
rights of the Company or its Stockholders, in appropriate circumstances, to seek
equitable remedies such as injunctive or other forms of non-monetary relief.
Such remedies may not be effective in all cases.
The Bylaws provide that the Company shall indemnify its directors and
officers to the fullest extent permitted by the DGCL. Under such provisions, any
director or officer, who in his capacity as such, is made or threatened to be
made, a party to any suit or proceeding, may be indemnified if the Board of
Directors determines such director or officer acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interest of
the Company. The Bylaws and the DGCL further provide that such indemnification
is not exclusive of any other rights to which such individuals may be entitled
under the Certificate of Incorporation, the Bylaws, any agreement, vote of
Stockholders or disinterested directors or otherwise.
OTHER INFORMATION ABOUT DIRECTORS, OFFICERS
AND CERTAIN STOCKHOLDERS
BENEFICIAL OWNERSHIP OF DIRECTORS, OFFICERS AND CERTAIN STOCKHOLDERS
The following table sets forth certain information regarding the
beneficial ownership of the Company's Common Stock as of May 31, 1998, by (i)
each director and director nominee of the Company, (ii) each named executive
officer in the Summary Compensation Table, (iii) each person known or believed
by the Company to own beneficially five percent or more of the Common Stock and
(iv) all directors and executive officers as a group. Unless indicated
otherwise, each person has sole voting and dispositive power with respect to
such shares.
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<TABLE>
<CAPTION>
NAME OF STOCKHOLDERS BENEFICIAL OWNERSHIP(1)
HOLDING 5% OR MORE, -------------------------------
DIRECTOR OR EXECUTIVE OFFICER NUMBER OF SHARES PERCENT
----------------------------- ---------------- -------
<S> <C> <C>
Wexford Management LLC (2) 8,538,629 38.7
411 West Putnam Avenue
Greenwich, Connecticut 06830
Charles E. Davidson (3) 8,538,629 38.7
411 West Putnam Avenue
Greenwich, Connecticut 06830
Mike Liddell 1,076,647 4.9
6307 Waterford Blvd., Suite 100
Oklahoma City, Oklahoma 73112
Mark Liddell 1,062,618 4.8
6307 Waterford Blvd., Suite 100
Oklahoma City, Oklahoma 73112
The Equitable Companies Incorporated 2,212,077 9.8
1290 Avenue of the Americas
New York, New York 10104
Robert E. Brooks - -
David L. Houston - -
Ronald D. Youtsey 208 *
Gary C. Hanna 2,745 *
Raymond P. Landry (4) 60,000 *
All directors and officers 10,740,847 48.5
as a group (8 persons)
</TABLE>
- --------------
* Less than one percent.
(1) Shares of Common Stock that are not outstanding but that can be
acquired by a person upon exercise of an option within 60 days are
included in computing the percentage for such person, but are not
included in computing the percentage for any other person.
(2) Wexford holds of record 2,311,692 shares and is deemed to beneficially
own the shares held by Mr. Davidson. Mr. Davidson is the managing
partner of Wexford Capital Corporation, which manages Wexford
Management LLC.
(3) Mr. Davidson holds of record 6,226,937 shares and is deemed to
beneficially own the shares held by Wexford.
(4) Mr. Landry's share ownership reflects options for 60,000 shares, which
are currently exercisable.
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EXECUTIVE COMPENSATION
The following table sets forth the compensation paid or accrued to the
Chief Executive Officer and any other executive officer whose annual
compensation exceeded $100,000 (the "named executives") through the three years
ended December 31, 1997, in all capacities in which they served during that
period.
Summary Compensation Table
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION ALL OTHER
ANNUAL COMPENSATION (1)(2) AWARDS COMPEN-
NAME AND --------------------------------- -------------- SATION
PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS (#) ($)(2)
------ --------------- ---------------- -------------- ----------------
<S> <C> <C> <C> <C> <C>
Gary C. Hanna, President (3) 1997 31,250 - - -
Raymond P. Landry, 1997 156,000 78,000 60,000 -
Executive Vice President (4) 1996 161,962 25,000 - -
1995 90,558 - - -
</TABLE>
- --------------
(1) Amounts shown include cash and non-cash compensation earned and
received by the named executives as well as amounts earned but deferred
at their election.
(2) The Company provides various perquisites to certain employees including
the named executives. In each case, the aggregate value of the
perquisites provided to the named executives did not exceed 10% of such
named executives' annual salary and bonus.
(3) Mr. Hanna became President of the Company on July 11, 1997, and
resigned on April 28, 1998. During such period, Mr. Hanna was
compensated by DLB. The compensation amount reflects the portion of his
DLB compensation that was allocated to the Company under the Services
Agreement and covers the period beginning July 11, 1997 (the Plan
Confirmation Date), and ending December 31, 1997. See Certain
Transactions - Administrative Services Agreement below.
(4) Mr. Landry's employment was terminated on May 5, 1998.
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Stock Options Granted in 1997
The following table sets forth information concerning the grant of
stock options during 1997 to the named executives.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------------------------------------------- POTENTIAL REALIZABLE VALUE AT
NUMBER OF % OF TOTAL ASSUMED ANNUAL RATES OF
SECURITIES OPTIONS STOCK PRICE APPRECIATION FOR
UNDERLYING GRANTED OPTION TERMS (1)
OPTIONS EMPLOYEES EXERCISE EXPIRATION -----------------------------
NAME GRANTED (#) IN 1997 PRICE ($/SH) DATE (2) 5% ($) 10% ($)
---- ----------- ------- ------------ ------------- ------ --------
<S> <C> <C> <C> <C> <C> <C>
Raymond P. Landry 60,000 100% $3.50 - $132,068 $334,686
</TABLE>
(1) The assumed annual rates of increase are based on an annually
compounded increase of the exercise price of $3.50 per share through a
presumed ten year option term.
(2) Mr. Landry's options were granted under an employment agreement that
was part of the Plan, which was confirmed on July 11, 1997. No
expiration term was specified under the agreement.
Stock Option Holdings
The following table sets forth the number of unexercised options held
by named executives as of December 31, 1997. No options were exercised in 1997
and no options were in-the-money as of December 31, 1997.
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED
OPTIONS AT FY-END (1)
-----------------------------------------
NAME EXERCISABLE UNEXERCISABLE
---- ----------- -------------
<S> <C> <C>
Raymond P. Landry 60,000 -
</TABLE>
(1) These options are exercisable at $3.50 per share.
Compensation Report
Administrative Services Agreement. When the Company was reorganized
effective July 11, 1997, it entered into an administrative services agreement
with DLB (the "Services Agreement"), which was then a publicly traded, oil and
gas company and the Company's largest stockholder. By entering into the Services
Agreement, the Company shared management and personnel costs with DLB and
substantially reduced the general and administrative costs it had historically
paid. When DLB was subsequently acquired in the Merger with Chesapeake Energy
Corporation (see Background On the Company), the Company shares that DLB had
held were distributed to the former DLB shareholders and DLB ceased to hold
shares in the Company. The Merger also required that DLB be relieved of its
obligations under the Services Agreement and that all amounts due it be
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paid. To satisfy this requirement, Mark Liddell and Mike Liddell, directors,
executive officers and principal stockholders of the Company, formed DLB
Equities, LLC ("DLB Equities"), which assumed the DLB obligations and paid DLB
the amounts due it, including amounts due under the Services Agreement. The
Company then became obligated to DLB Equities and DLB Equities undertook to
provide management and administrative services to the Company. See Certain
Transactions - Administrative Services Agreement below.
Under the Services Agreement, DLB Equities allocates that portion of
its general and administrative overhead attributable to the Company's operations
to the Company, which reimburses DLB Equities on a monthly basis. General and
administrative overhead is composed of the actual cost of personnel and services
and third party charges. The allocation is to be made on bases that DLB Equities
shall reasonably estimate in good faith. The Company's disinterested directors
have determined that this arrangement is more cost-effective than hiring
executive and other personnel directly and will result in lower general and
administrative costs. Mark Liddell and Mike Liddell, co-owners of DLB Equities,
did not participate in approving DLB Equities' assumption of the Services
Agreement.
The Board periodically reviews amounts paid under the Services
Agreement and will continue to assess the performance and effectiveness of the
Company's management under this arrangement. It has caused the Company to
implement accounting controls to test the reasonableness of the allocated costs
and has directed the independent auditors to test the reasonableness of the
total and allocated costs on a quarterly basis and to report to the Audit
Committee. The Board recognizes that periodic checks are necessary to control
the reasonableness of cost increases and allocations and the quality of assigned
personnel, and believes these checks provide adequate protections to ensure the
fairness of the arrangement to the Company and its shareholders. While the Board
believes that the arrangement is beneficial to the Company, it recognizes that
the arrangement relies on the provider's decisions to incur costs and the
provider's allocations, offers limited incentives for the provider to minimize
costs, affords the Company limited opportunities to terminate the arrangement
and poses inherent conflicts of interest. Although it has no present plans to do
so, the Board may implement equity-based compensation plans for management if it
determines that such plans are appropriate and cost-effective incentives to
enhance performance.
Dated: June 17, 1998 The Board of Directors of
Gulfport Energy Corporation
Mr. Charles E. Davidson, Chairman
Compensation Committee Interlocks and Insider Participation
The Company's executive officers are compensation indirectly through a
Services Agreement with DLB Equities. See Compensation Report above and Certain
Transactions - Administrative Services Agreement below. No executive officer or
employee of the Company
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participated in Board decisions about the Services Agreement or executive
compensation. No member of the Board and no employee of the Company serves or
has served on the compensation committee (or board of directors of a corporation
lacking a compensation committee) of a corporation employing a member of the
Board.
Employment Contracts
As required in the Company's reorganization, the Company and Mr. Landry
entered into a two-year employment agreement commencing July 11, 1997 (the Plan
Confirmation Date). This employment agreement provided for a salary of $156,000
per year and stock options to purchase 60,000 shares of the Company's common
stock at $3.50 per share pursuant to a stock option agreement to be established
by the Company. In addition, the Company assumed the rights and obligations of
existing employment contracts with Wayne A. Beninger and Thomas C. Stewart, both
of which expired on August 31, 1997, and called for annual salaries of $125,000
and $100,000, respectively. The employment contracts of Mr. Beninger and Mr.
Stewart were not renewed upon expiration, and the Company has terminated Mr.
Landry, although it continues to pay his salary as required under the employment
agreement.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires executive
officers and directors, and persons beneficially owning more than 10% of the
Company's stock to file initial reports of ownership and reports of changes in
ownership with the Securities and Exchange Commission and with the Company.
Based solely on a review of the reports sent to the Company and written
responses from the executive officers and directors, the Company believes that
each of its directors and executive officers met his Section 16(a) filing
obligations.
CERTAIN TRANSACTIONS
Acquisition of Control. During 1996, DLB and Wexford entered into an
oral agreement to acquire the debt securities of and secured claims against the
Company. Pursuant to such agreement, DLB and Wexford acquired an aggregate of
approximately $34.3 million principal face amount of senior notes and through a
jointly owned entity, approximately $4.7 million aggregate amount of asserted
secured claims against the Company.
The Company, DLB and Wexford filed with the Bankruptcy Court a joint
plan of reorganization for the Company, which provided, among other things, for
an exchange of the notes and secured claims for common stock in the reorganized
Company. On July 11, 1997, DLB and
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Wexford received an aggregate of 12,580,000 million shares of the
Company's Common Stock for various claims, assets and cash as detailed below:
<TABLE>
<S> <C>
Unsecured debt of $34.3 million 2.88 million shares
Contribution of DLB's interest in WCBB properties 5.62 million shares
Cash of $5,000,000 1.43 million shares
Contribution of $9.3 million in secured and asserted 2.65 million shares
secured claims
Total shares issued to DLB and Wexford 12.58 million shares
</TABLE>
Upon the Merger of DLB and Chesapeake Energy Corporation on April 28,
1998 (See Background on the Company above), the DLB shares were distributed to
the former shareholders of DLB. As former DLB shareholders, Charles E. Davidson,
Mark Liddell and Mike Liddell received 6,226,937, 1,062,618 and 1,076,647 shares
of the Company's Common Stock. Charles E. Davidson, Mark Liddell and Mike
Liddell are each directors and Mark Liddell and Mike Liddell are executive
officers of the Company.
Transactions During the Reorganization. DLB paid $1,515,000 in
reorganization costs incurred on the Company's behalf, $1,500,000 of which
amount was repaid upon confirmation of the Plan.
From May 1, 1997 through July 10, 1997, DLB was the operator on certain
West Cote Blanche Bay, Louisiana properties in which the Company had a 50%
working interest at that time. Subsequent to that date, DLB contributed its
interest in these properties along with the related obligations to the Company
for 5,620,000 shares of common stock, and the Company became the operator of
these properties. DLB retained a receivable from the Company for joint interest
billings relating to the properties.
As of December 31, 1997, the Company owed DLB approximately $1,728,000
for joint interest billings on the West Cote Blanche Bay properties and for
amounts under the Services Agreement. Upon closing the Merger of DLB and
Chesapeake Energy Corporation on April 28, 1998 (See Background on the Company
above), DLB Equities paid DLB $1,574,799 in satisfaction of all amounts that the
Company owed DLB (including amounts due under the Services Agreement described
below), and the Company became obligated to DLB Equities for such amount. The
amounts the Company owes DLB Equities are carried as accounts payable and do not
accrue interest.
Sale of Oil. From July 11, 1997 through December 31, 1997, the Company
sold $4,335,000 in oil to a DLB natural gas and oil marketing subsidiary. These
sales occurred at prices that the Company believes it could expect to obtain
from an unrelated third party.
Administrative Services Agreement. Under an Administrative Services
Agreement dated as of July 10, 1997, between the Company and DLB (the "Services
Agreement"), DLB agreed to make available to the Company personnel, services,
facilities, supplies, and equipment as the Company needed, including executive
and managerial, accounting, auditing and tax, engineering, geological
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and geophysical, legal, land, and administrative and clerical services. The
initial term was one year beginning from the date of the Services Agreement with
one year automatic renewals unless terminated by either party by written notice
no less than 60 days prior to the anniversary date of the Services Agreement.
In return for the services rendered, the Company was to pay DLB a
monthly service charge based on the pro rata proportion of the Company's use of
DLB services, personnel, facilities, supplies, and equipment as determined by
DLB in a good-faith, reasonable manner. The service charge was based on (i)
DLB's fully allocated internal costs of providing personnel and/or performing
services, (ii) the actual costs to DLB of any third-party services required,
(iii) the equipment, occupancy, rental, usage, or depreciation and interest
charges, and (iv) the actual cost to DLB of supplies.
Upon closing the Merger of DLB and Chesapeake Energy Corporation on
April 28, 1998 (See Background on the Company above), DLB assigned its rights
and obligations under the Services Agreement to DLB Equities. In the assignment,
DLB Equities paid DLB $603,981 in satisfaction of all amounts that the Company
owed DLB under the Services Agreement, the Company consented to the assignment
and affirmed its obligation to pay that amount to DLB Equities, and DLB Equities
assumed DLB's obligations under the Services Agreement. Following the Merger,
the Company was required to change offices and acquire new equipment and
furniture. It pays all of the office lease costs, has paid for the new equipment
and furniture, and provides its own supplies. DLB Equities continues to provide
management and administrative services under the Services Agreement. A ratable
portion of the office, equipment, furniture and supply costs are allocated to
DLB Equities, and offset amounts due to DLB Equities for management and
administrative services under the Services Agreement.
Registration Rights Agreement. The Company granted certain demand
registration rights to Wexford and DLB pursuant to terms and conditions of a
Registration Rights Agreement, dated July 10, 1997, by and among the Company,
DLB and Wexford, on behalf of its affiliated investment funds (the "Registration
Rights Agreement"). The registration rights relating to the DLB shares of Common
Stock terminated as of the Merger. Wexford has advised the Company that it does
not intend to exercise its registration rights in the immediate future.
Wexford's registration rights have no term limit.
PERFORMANCE GRAPH
The following graph compares the market values of the Company's Common
Stock to the Nasdaq Market Index and a group of companies selected by the
Company and with whom the Company competes (the "Peer Group"). The graph assumes
an investment of $100 on July 11, 1997 (the Plan Confirmation Date), and that
all dividends were reinvested and are weighted on a market capitalization basis.
Following confirmation of the Company's Plan on July 11, 1997, through December
31, 1997, the Company's Common Stock traded sporadically in the over-the-counter
market. During the period, no bid/ask prices were posted. For purposes of this
graph, the Company
12
<PAGE> 15
has used the price of $3.50 per share as the initial per share price on July 11,
1997. The $3.50 per share price was used for the settlement of claims in the
Company's Plan. The closing trade price in December occurred on December 22,
1997, and was $3.50 per share. Given the brief period, the absence of bid/ask
quotations and the lack of significant trading volume, the results shown on the
graph may not necessarily be indicative of long-term results.
<TABLE>
<CAPTION>
GRAPH DOLLAR VALUES 7/11/97 12/31/97
------------------------------------------------- ----------------- -----------------
<S> <C> <C>
Gulfport Energy Corporation 100 100.0
Nasdaq Market Index 100 109.2
Peer Group 100 105.5
</TABLE>
The Peer Group is composed of Kelley Oil & Gas, Inc., National Energy
Group, Inc., PetroCorp Incorporated, St. Mary Land & Exploration Company, Stone
Energy Corporation and Texas Meridian Resources Corporation. Pursuant to SEC
rules, this section of the Proxy Statement is not deemed "filed" with the SEC
and is not incorporated by reference into the Company's Annual Report on Form
10-K.
OTHER INFORMATION ABOUT THE ANNUAL MEETING
INDEPENDENT ACCOUNTANTS
The firm of Hogan & Slovacek LLP served as the Company's independent
auditors for 1997. This firm has advised the Company that it has no direct or
indirect financial interest in the Company. Representatives of Hogan & Slovacek
LLP are expected to be present at the Annual Meeting, with the opportunity to
make a statement should they desire to do so, and will be available to respond
to appropriate questions from stockholders. The Board has not ask Stockholders
to ratify its selection of auditors, believing that stockholder ratification is
anachronous and unnecessary.
13
<PAGE> 16
OTHER MATTERS COMING BEFORE THE MEETING
As of the date of this Proxy Statement, the Company knows of no
business to come before the Annual Meeting other than that referred to above.
The Company's rules of conduct for the Annual Meeting prohibit the introduction
of substantive matters not previously presented to the Stockholders in a proxy
statement. As to other business, such as procedural matters, that may come
before the meeting, the person or persons holding proxies will vote those
proxies in the manner they believe to be in the best interests of the Company
and its Stockholders.
STOCKHOLDER PROPOSALS FOR THE NEXT ANNUAL MEETING
Any Stockholder who wishes to present a proposal at the Company's 1999
Annual Meeting of Stockholders must deliver such proposal to the Secretary of
the Company by January 23, 1999, for inclusion in the Company's proxy, notice of
meeting, and proxy statement for the 1999 Annual Meeting.
ADDITIONAL INFORMATION
The Company will bear the cost of soliciting proxies. Officers and
regular employees of the Company may solicit proxies by further mailings,
personal conversations, or by telephone, facsimile or other electronic
transmission. They will do so without compensation other than their regular
compensation. The Company will, upon request, reimburse brokerage firms and
others for their reasonable expenses in forwarding solicitation material to the
beneficial owners of stock.
THE COMPANY'S ANNUAL REPORT ON FORM 10-K, INCLUDING THE FINANCIAL
STATEMENTS AND SCHEDULES THERETO, FOR THE YEAR ENDED DECEMBER 31, 1997, AS FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION, WILL BE FURNISHED WITHOUT CHARGE TO
ANY STOCKHOLDER UPON WRITTEN REQUEST ADDRESSED TO MR. RONALD D. YOUTSEY,
SECRETARY, GULFPORT ENERGY CORPORATION, 6307 WATERFORD BLVD., SUITE 100,
OKLAHOMA CITY, OKLAHOMA 73118. STOCKHOLDERS REQUESTING EXHIBITS TO THE FORM 10-K
WILL BE PROVIDED THE SAME UPON PAYMENT OF REPRODUCTION EXPENSES.
By Order of the Board of Directors
Ronald D. Youtsey
Secretary
June 19, 1998
14
<PAGE> 17
<TABLE>
<S> <C>
GULFPORT ENERGY CORPORATION THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
6307 Waterford Blvd., Suite 100 The undersigned hereby appoints Charles E. Davidson, Mike Liddell and
Oklahoma City, Oklahoma 73118 Mark Liddell as Proxies, each with the power to appoint his
substitute, and hereby authorizes them to represent and to vote, as
designated below, all the shares of common stock of Gulfport Energy
Corporation held of record by the undersigned on June 16, 1998, at the
Annual Meeting of Shareholders to be held on July 10, 1998, or any
adjournment thereof
1. ELECTION OF DIRECTORS FOR all nominees listed below WITHHOLD AUTHORITY
(except as marked to the contrary to vote for all nominees listed
below) below
</TABLE>
(INSTRUCTION: To withhold authority to vote for any individual nominee strike
through the nominee's name below.)
Robert E. Brooks, Charles E. Davidson, David L. Houston
Mark Liddell and Mike Liddell
(over)
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR EACH OF THE DIRECTOR NOMINEES.
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
DATED: 1998
--------------------,
-------------------------------
(Signature)
-------------------------------
(Signature if held jointly)
Please mark, sign, date and
return this Proxy Card promptly
using the enclosed envelope.
