Gulfport Energy
Annual Report 2000

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. FORM 10-K FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTIONS 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF SECURITIES EXCHANGE ACT OF 1934 FOR THE YEAR ENDED DECEMBER 31, 2000 Commission File Number 1-10192 Gulfport Energy Corporation ----------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 73-1521290 ------------------------------- --------------------- (State or other jurisdiction of (IRS Employer Incorporation or organization) Identification Number) 6307 Waterford Blvd., Suite 100 Oklahoma City, Oklahoma 73118 (405) 848-8807 ---------------------------------------------------------------- (Address, including zip code, and telephone number, including area code, of registrant's principal executive office) Securities registered pursuant to Section 12(b) of the Act: Not Applicable Securities registered pursuant to Section 12(g) of the Act: NAME OF EACH EXCHANGE ON WHICH TITLE OF EACH CLASS REGISTERED Preferred Stock, $0.01 par value None Common Stock, $0.01 par value None Indicate by a check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X ] No [ ]. 1 Indicate by a check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] All shares of common and preferred stock outstanding prior to the Effective Date of the Plan of Reorganization (July 11, 1997) were canceled on the Effective Date. The number of shares of the registrant's Common Stock, $0.01 par value, outstanding at March 31, 2001 was 10,145,400. The aggregate market value of the voting stock held by non-affiliates of Gulfport using an average trading price in December 2000 was $10,562,000. APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes X No ----- ----- APPLICABLE ONLY TO CORPORATE REGISTRANTS Common Stock Issued Outstanding December 31, 2000: 10,145,400 Common Stock Issued Outstanding February 1, 2001: 10,145,400 DOCUMENTS INCORPORATED BY REFERENCE 2 TABLE OF CONTENTS Page Disclosure Regarding Forward-Looking Statements........................... 4 Part I Item 1. Business ........................................................ 4 Item 2. Properties ........................................................ 13 Item 3. Legal Proceedings.................................................. 15 Item 4. Submission of Matters to a Vote of Security Holders................ 15 PART II Item 5. Market for the Registrant's Common Stock and Related Shareholder Matters ............................................ 16 Item 6. Selected Financial Data ........................................... 16 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.............................. 18 Item 8. Financial Statements and Supporting Data........................... 24 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure......................................... 24 PART III Item 10. Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of the Exchange Act................ 24 Item 11. Executive Compensation............................................ 26 Item 12. Security Ownership of Certain Beneficial Owners and Management.... 29 Item 13. Certain Relationships and Related Transactions.................... 30 PART IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8K............................................... 30 Signatures ...................................................... 32 3 DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS This Form 10-K includes "forward-looking statements" within the meaning of Section 27A of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). All statements other than statements of historical facts, included in this Form 10-K that address activities, events or developments that Gulfport Energy Corporation ("Gulfport" or the "Company"), a Delaware corporation, formerly known as WRT Energy Corporation ("WRT"), expects or anticipates will or may occur in the future, including such things as estimated future net revenues from oil and gas reserves and the present value thereof, future capital expenditures (including the amount and nature thereof), business strategy and measures to implement strategy, competitive strength, goals, expansion and growth of Gulfport's business and operations, plans, references to future success, reference to intentions as to future matters and other such matters are forward-looking statements. These statements are based on certain assumptions and analyses made by Gulfport in light of its experience and its perception of historical trends, current conditions and expected future developments as well as other factors it believes are appropriate in the circumstances. However, whether actual results and developments will conform with Gulfport's expectations and predictions is subject to a number of risks and uncertainties, general economic, market, or business conditions; the opportunities (or lack thereof) that may be presented to and pursued by Gulfport; competitive actions by other oil and gas companies; changes in laws or regulations; and other factors, many of which are beyond the control of Gulfport. Consequently, all of the forward-looking statements made in the Form 10-K are qualified by these cautionary statements and there can be no assurances that the actual results or developments anticipated by Gulfport will be realized, or even if realized, that they will have the expected consequences to or effects on Gulfport, its business or operations. PART I Item 1. Business Description of Business Gulfport is an independent oil and gas exploration and production company with properties located in the Louisiana Gulf Coast. Gulfport has a market enterprise value of approximately $41.0 million dollars and generated EBITDA of $8.4 million dollars for the twelve months ended December 31, 2000. As of December 31, 2000, the Company had in excess of 25 MMBOE proved reserves with a present value (10%) of estimated future net reserves of $280 million dollars. Gulfport is actively pursuing further development of its properties in order to fully exploit its reserves. The Company has a substantial portfolio of low risk developmental projects for the next several years providing the opportunity to increase production and cash flow. Gulfport's developmental program is designed to reach the Company's high impact, higher potential rate of return prospects through the penetration of several producing horizons. Additionally, Gulfport owns 3-D seismic data, which along with the Company's technical expertise, will be used to identify exploratory prospects and test undrilled fault blocks in this existing fields. 4 Background Gulfport is the successor of WRT Energy Corporation ("WRT"). WRT filed for bankruptcy in February 1996. Gulfport emerged as the reorganized company in July 1997. Principal Oil and Gas Properties Gulfport owns interests in a number of producing oil and gas properties located along the Louisiana Gulf Coast. The following is a map showing the locations of Gulfport's principal oil and gas properties. (MAP OMITTED) Gulfport serves as the operator of substantially all of the properties in which it holds a working interest with the exception of the Texaco well and deep rights at West Cote Blanche Bay. The following table presents certain information as of January 1, 2001 reflecting Gulfport's net interest in its producing oil and gas properties.

(1) The following wells produce on an intermittent basis: East Hackberry - 3; West Hackberry - 1; and West Cote Blanche Bay - 6. (2) All of Gulfport's acreage is Developed Acreage. (3) Includes 1 producing well and 3 shut-in wells attributable to depths below the Rob "C" Marker ("Deep Rights"). Gulfport has a 7.45% non-operated working interest (5.84% NRI) in the Deep Rights. The Deep Rights are operated by Texaco Exploration and Production, Inc. (4) In the future, Gulfport will have to plug and abandon almost 500 wellbores. Gulfport's strategy to meet this obligation is to plug at twenty wells a year at WCBB, three at Hackberry and to invest in plugging escrow accounts. The Company continually deposits money in the West Cote Blanche Bay Escrow Account, which currently has a balance in excess of $1.7 million dollars. Additionally, Gulfport has a $200,000 letter of credit dedicated to the plugging operations at East Hackberry. All of the oil and gas leases in which Gulfport owns an interest have been perpetuated by production. The operator may surrender the leases at any time by notice to the lessors, or by the cessation of production. 5 East Hackberry Field (Map Omitted) Location and Land The East Hackberry Field is located along the western shore of Lake Calcasieu in Cameron Parish, Louisiana approximately 80 miles west of Lafayette and 15 miles inland from the Gulf of Mexico. In February 1994, Gulfport purchased a 100% working interest (approximately 79% average NRI) in certain producing oil and gas properties situated in the East Hackberry Field. The purchase included two separate lease blocks, the Erwin Heirs Block which is located on land originally developed by Gulf Oil Company (now Chevron Corporation), and the adjacent State Lease 50 Block which is located primarily in the shallow waters of Lake Calcasieu, originally developed by Texaco. The two lease blocks together contain 3,147 acres. In September 1994, Gulfport sold an overriding royalty interest equal to a 50% working interest in certain producing oil and gas wells situated in the East Hackberry Field to Milam Royalty Corporation a subsidiary of J. P. Morgan and Company. In April 1999, Gulfport purchased the overriding royalty interest back from the then current owner, Queen Sand Resources, Inc. giving Gulfport a 100% working interest in the field. Geology The Hackberry Field is a major salt intrusive feature, elliptical in shape as opposed to a classic "dome," divided into East and West field entities by a saddle. Structurally, Gulfport's East Hackberry acreage is located on the eastern end of the Hackberry salt ridge. There are over 30 pay zones at this field. The salt intrusion trapped Oligocene through Lower Miocene rocks in a series of complex, steeply dipping fault blocks. The Camerina sand series is a prolific producer with 1-2 MMBL per well of oil potential. Gulfport's wells currently produce from perforations found between 5,100' and 12,200'. Area History and Production The East Hackberry field was discovered in 1926 by Gulf Oil Company (now Chevron Corporation) by a gravitational anomaly survey. The massive shallow salt stock presented an easily recognizable gravity anomaly indicating a productive field. Initial production began in 1927 and has continued to the present. The estimated cumulative oil and condensate production through 2000 was 111 million barrels of oil with casinghead gas production being 60 billion cubic feet of gas. There have been a total of 170 wells drilled on Gulfport's portion of the field with 13 having current daily production; three produce intermittently; 77 wells are shut-in and 4 wells have been converted to salt water disposal wells. The remaining 72 wells have been plugged and abandoned. During 2000 daily net production averaged 306 barrels of oil and 4,404 barrels of water with a limited amount of gas. Facilities Gulfport has land-based production and processing facilities located at the East Hackberry Field. The facility is comprised of two dehydrating units and four disposal pumps. Gulfport also has a field office that serves both the East and West Hackberry fields. Due to the high cost of gas, Gulfport converted the Erwin Heirs Block from gas lift to other lifting methods in 2000 and returned the rental compressors. Gulfport reactivated three pumping units from inventory and purchased an additional surface unit and two electric submersible pumps. 6 2000 Activity Gulfport successfully recompleted one well on the Erwin Heirs portion of East Hackberry. In addition to the recompletions, the Company also conducted several remedial operations that included repairing holes in tubing and casing, the repair and replacement of downhole pumps and replacing parted tubing. West Hackberry Field Location and Land The West Hackberry Field is located on land and is five miles West of Lake Calcasieu in Cameron Parish, Louisiana approximately 85 miles west of Lafayette and 15 miles inland from the Gulf of Mexico. In November 1992, Gulfport purchased a 100% working interest (approximately 80% average NRI, subsequently increased to approximately 87.5% NRI) in 592 acres within the West Hackberry Field. Gulfport's leases at West Hackberry are located within two miles of one of the United States' Department of Energy's Strategic Petroleum Reserves. The West Hackberry storage facility occupies 525 acres and has capacity to store 222 million barrels of oil in underground salt caverns. Geology Structurally, Gulfport's West Hackberry acreage is located on the western end of the Hackberry salt ridge. (See graphic above.) There are over 30 pay zones at this field. West Hackberry consists of a series of fault-bounded traps in the Oligocene-age Vincent and Keough sands associated with the Hackberry Salt Ridge. Recoveries from these thick, porous, water-drive reservoirs have resulted in per well cumulatives of almost 700 BOE. Area History and Production The first discovery well at West Hackberry was drilled in 1938 and was developed by Superior Oil Company (now Exxon-Mobil Corporation) between 1938 and 1988. The estimated cumulative oil and condensate production through 2000 was 170 million barrels of oil with casinghead gas production of 120 billion cubic feet of gas. There have been 36 wells drilled to date on Gulfport's portion of West Hackberry and currently 3 are producing, 24 are shut-in and 1 well has been converted to a saltwater disposal well. The remaining 8 wells have been plugged and abandoned. During 2000, daily net production averaged 46 barrels of oil and 167 barrels of water with a limited amount of gas. Facilities Gulfport has land-based production and processing facilities located at the West Hackberry field. Gulfport has two dehydrating units and one disposal pump. During 2000, due to the high cost of gas, Gulfport converted the West Hackberry field from gas lift to other lifting methods. The Company reactivated two pumping units from inventory and sold a company owned compressor. Gulfport maintains a field office that serves both the East and West Hackberry fields. 2000 Activity Gulfport had one unsuccessful recompletion at West Hackberry. In addition to the recompletion, the Company also conducted remedial operations that included repairing holes in tubing and casing, the repair and replacement of downhole pumps and replacing parted tubing. 7 West Cote Blanche Bay Field (Map Omitted) (Type Log Omitted) Location and Land The West Cote Blanche Bay (WCBB) Field lies approximately five miles off the coast of Louisiana primarily in St. Mary Parish in a shallow bay, with water depths averaging eight to ten feet. Gulfport originally acquired from Texaco a 6.25% working interest in all zones in the WCBB field in July 1988. In April 1995, Gulfport completed the purchase of an additional 43.75% working interest in the WCBB field from an affiliate of Benton Oil and Gas Company and two affiliates of Tenneco, Inc. as to those rights lying above the base of the Rob "C" marker, located at approximately 10,500'. The sellers retained their interests in all depths below the base of the Rob "C" marker. In July, 1997 Gulfport acquired the remaining 50% working interest in the WCBB field in depths above the Rob "C" marker from Texaco and became the operator of the shallow rights in the field. In 1999 Gulfport exercised a preferential right to purchase an additional 1.00% working interest in the rights below the Rob "C" marker. Currently Gulfport owns a 100% working interest (78.66% NRI) and is the operator in the depths above the Rob "C" marker and owns a 7.45% non-operated working interest (5.84% NRI) in depths below the Rob "C" marker. Texaco is the operator below the base of the Rob "C" marker. Gulfport's leasehold at WCBB covers a portion of Louisiana State Lease 340 and contains 4,590 acres. Geology WCBB overlies one of the largest salt dome structures on the Gulf Coast. The field is characterized by a piercement salt dome, which created traps from the Pleistocene through the Miocene. The relative movements affected deposition and created a complex system of fault traps. The compensating fault sets generally trend NW-SE and are intersected by sets having a major radial component. Later-stage movement caused extension over the dome and a large graben system was formed. There are over 100 distinct sandstone reservoirs recognized throughout most of the field and nearly 200 major and minor discrete intervals have been tested. Within the over 800 wellbores that have been drilled to date in the field, over 4,000 potential zones have been penetrated. These sands are highly porous and permeable reservoirs primarily with a strong water drive. Area History and Production Texaco drilled the discovery well in 1940 based on a seismic and gravitational anomaly. WCBB was subsequently developed on an even 160-acre pattern for much of the remainder of the decade. Developmental drilling continued and reached its peek in the 1970's when over 300 of the over 800 total wells were drilled in the field. Of the over 800 wells drilled, only 80 were dry holes and many of these were capable of hydrocarbon production. As a result, the field has an historic success rate of over 90% for all wells drilled. The cumulative gross production for the average producer in the field was 237 MBO, with over 100 of those wells (14% of total wells) producing in excess of 500 MBO. As of January 1, 2001, field cumulative gross production was 190.5 MMBO and 232 BCF of gas. There have been 864 wells drilled in WCBB. Of these, 54 are currently producing, 306 are shut-in and five have been converted to salt water disposal wells. The balance of the wells (or 499) have been plugged and abandoned. During 2000, Gulfport's net current daily production averaged 1,066 barrels of oil, 255 MCF of gas and 2,213 barrels of water at WCBB. 8 In 1991 Texaco conducted a 70 square mile 3-D seismic survey with 1,100 shot points per mile that processed out 100 fold. In 1993, an undershoot survey around the crest and production facilities was added. Gulfport owns the rights to the seismic data. In December of 1999 Gulfport completed the re-processing of the seismic data and currently has its technical staff developing prospects from the data. The reprocessed data will enable Gulfport to identify prospects in areas of the field that would otherwise remain obscure. Facilities Gulfport owns and operates a production facility at WCBB. The platform stretches over a mile and is equipped with a 30 MMCF capacity dehydrating system, three compressors totaling 4000 horsepower and three 225 horsepower triplex saltwater disposal pumps. Gulfport has made continual improvements to this facility to enable it to function more efficiently and lower lease operating expense at WCBB. Some of the improvements in 2000 include repairing and replacing flowlines and gas lift lines, installing electric flow meters to more accurately measure gas, cleaning out existing salt water disposal wells and converting a shut-in well to a saltwater disposal well. Gulfport generates cash flow by handling other companies' saltwater and gas through the facility for a fee. In 2000, Gulfport earned an average of $63,000 a month from facility charges. 2000 Activity During 2000, Gulfport successfully drilled two developmental oil wells and one developmental gas well. An unsuccessful well was drilled to a shallow exploratory target. Gulfport successfully re-completed three wells at WCBB and had no unsuccessful recompletions. The Company plugged 24 wells at WCBB during 2000 at an average cost of $13,700 per well. Gulfport has plugged 64 wells in this field since beginning its plugging program in 1997. 2001 Field Activity West Cote Blanche Bay In 2001, Gulfport continues to use the re-processed 3-D seismic data to identify and confirm intermediate and shallow prospects at WCBB. Gulfport planned to begin a new drilling program in October of 2000 but was delayed due to industry wide equipment and crew unavailability. The drilling program did commence in early January 2001 and to date Gulfport has drilled, logged and run pipe on four intermediate depth wells, with total depths averaging approximately 9,000 feet, and is in the process of drilling a fifth well to 9,000 feet. All wells drilled in this program to date appear productive and are in the process of being completed. Gulfport has an additional two to four wells to drill in this program depending on cash flow, product prices, results and rig availability. The Company anticipates that these wells will access significant oil and gas deposits with all of the wells having multiple targets ranging from relatively low risk proven undeveloped objectives to higher potential exploratory targets. Gulfport believes that by taking most current and future wells to a 9,000 feet target depth range increases the serendipity factor, i.e. giving a well the chance to encounter otherwise unknown reserves. Gulfport also has plans to begin another four to six intermediate depth well drilling program during the summer of 2001. 9 East and West Hackberry Gulfport has plans to workover or re-complete six wells and test fourteen shut-in wells in the State Lease 50 portion of East Hackberry during 2001. Gulfport also plans to re-activate a satellite tank battery plus additional facility upgrades at State Lease 50 and the Erwin Heirs portions of East Hackberry. Gulfport successfully sidetracked a well in the West Hackberry Field in February of 2001 and the well is currently waiting on completion. Texaco Operated Well In June of 1999, Gulfport executed a sublease in favor of Texaco of an approximate 72 acre block below the base of the 8 Sand, located at approximately 9,060 feet, at WCBB and reserved a 25% back-in working interest after the proceeds of the well totaled $1,000,000. Texaco has informed Gulfport that the well reached the payout point in December 1999. Overriding Royalty Interests Gulfport owns overriding royalty interests in an additional 14 producing oil and gas wells lying in four fields. When Gulfport sold its interest in the Bayou Penchant Field to Castex Energy 1996 Limited Partnership effective April 1, 1998, Gulfport retained a 10% overriding royalty interest in this field. The Bayou Penchant field is located in Terrebonne Parish, Louisiana and the 2000 average daily gross production from nine producing wells was over 2,000 MCF of gas. Gulfport also owns a 2.5% overriding royalty interest in three producing wells at the Napoleonville Field retained when Gulfport sold its interest to Plymouth Operating Company in 1998. The Napoleonville field is located in Assumption Parish, Louisiana and averaged 160 barrels of oil per day in 2000. Additionally, Gulfport owns a net profits interest in one producing well and all the leasehold rights in the South Atchafalaya Bay Field located in St. Mary Parish, Louisiana. This well was placed on production in late 1999. These interests provided $57,000 in net revenue to Gulfport in 2000. The land occupied by a warehouse owned by Gulfport in Lafayette, LA covers approximately one acre. The mineral rights underlying the building were included in a unit drilled by Newfield Exploration Company. In April 2000, effective June 1999, Gulfport backed into a working interest in the Gladys Garber #1 well. During 2000, the well generated over $58,000 net to Gulfport's interest. Fee Minerals and Surface Interest Gulfport owns 230 net acres of fee minerals and surface interest adjacent to its West Hackberry Field in Cameron Parish, Louisiana. This property currently contains six producing wells. Castex Energy 1996 Limited Partnership In 1998, Gulfport sold a package of oil and gas properties to Castex Energy 1996 LP for $8.8 million dollars. As additional consideration for the sale, Gulfport was granted a 25% interest in the limited partnership that vests once the investment in the partnership pays out. The Limited Partnership owns and operates several oil and gas fields located along the Gulf Coast. 10 Other Interests Litigation Trust Gulfport owns a 12% interest in the Trust (the "Litigation Trust") that was established in WRT's bankruptcy to pursue litigation connected with the WRT. The Litigation Trust filed approximately 400 preference actions and several substantive actions alleging fraud, malpractice and other wrongdoings. At this time, Gulfport cannot estimate what the potential future recovery from the litigation will be. Oil and Gas Marketing Gulfport sells its oil and gas at the wellhead and does not refine petroleum products. Other than normal production facilities, Gulfport does not own an interest in any bulk storage facilities or pipelines. As is customary in the industry, Gulfport sells its production in any one area to relatively few purchasers, including transmission companies that have pipelines near Gulfport's producing wells. Gas purchase contracts are generally on a short-term "spot market" basis and usually contain provisions by which the prices and delivery quantities for future deliveries will be determined. The majority of Gulfport's crude oil production in 2000 was sold on contracts based on postings plus a premium. These premiums are based on an average paid by several purchasers minus a handling charge per barrel of oil. During 2000, oil sales to Black Hills Energy Co. and Equiva Trading Company accounted for 74% and 17%, respectively of Gulfport's oil sales. Gulfport had no other purchasers that accounted for greater than 10% of it's oil sales. Gulfport had no gas purchaser's that accounted for more than 10% of it's total sales. Competition and Markets Availability of Markets. The availability of a ready market for any oil and/or gas produced by Gulfport depends on numerous factors beyond the control of management, including but not limited to, the extent of domestic production and imports of oil, the proximity and capacity of gas pipelines, the availability of skilled labor, materials and equipment, the effect of state and federal regulation of oil and gas production and federal regulation of gas sold in interstate commerce. Oil and gas produced by Gulfport in Louisiana is sold to various purchasers who service the areas where Gulfport's wells are located. Gulfport's wells are not subject to any agreements that would prevent Gulfport from either selling its production on the spot market or committing such gas to a long-term contract; however, there can be no assurance that Gulfport will continue to have ready access to suitable markets for its future oil and gas production. Impact of Energy Price Changes. Oil and gas prices can be extremely volatile and are subject to substantial seasonal, political and other fluctuations. The prices at which oil and gas produced by Gulfport may be sold is uncertain and it is possible that under some market conditions the production and sale of oil and gas from some or all of its properties may not be economical. The availability of a ready market for oil and gas and the prices obtained for such oil and gas, depend upon numerous factors beyond the control of Gulfport, including competition from other oil and gas suppliers and national and international economic and political developments. Because of all of the factors influencing the price of oil and gas, it is impossible to accurately predict future prices. 11 Environmental Regulation Operations of Gulfport are subject to numerous federal, state and local laws and regulations governing environmental protection. Over the last several years, state and federal environmental laws and regulations have become more stringent and may continue to become more stringent in the future. These laws and regulations may affect Gulfport's operations and costs as a result of their affect on oil and gas development, exploration, and production operations. It is not anticipated that Gulfport will be required in the near future to expend amounts that are material in relation to its total capital expenditures program by reason of environmental laws and regulations, but inasmuch as such laws and regulations are frequently changed, Gulfport is unable to predict the ultimate cost of compliance. Operational Hazards and Insurance Gulfport's operations are subject to all of the risks normally incident to the production of oil and gas, including blowouts, cratering, pipe failure, casing collapse, oil spills and fires, each of which could result in severe damage to or destruction of oil and gas wells, production facilities or other property, or injury to persons. The energy business is also subject to environmental hazards, such as oil spills, gas leaks, and ruptures and discharge of toxic substances or gases that could expose Gulfport to substantial liability due to pollution and other environmental damage. Although Gulfport maintains insurance coverage considered to be customary in the industry for a company its size, it is not fully insured against certain of these risks, either because such insurance is not available or because of high premium costs. The occurrence of a significant event that is not fully insured against could have a material adverse effect on Gulfport's financial position. Headquarters and Other Facilities Gulfport lease office space in Oklahoma City, Oklahoma under a lease covering approximately 7,000 square feet that expires in 2001. The monthly rent is approximately $9,300. In 1996, Gulfport purchased a building in Lafayette, Louisiana to be used as Gulfport's Louisiana headquarters. The 16 year-old building contains 12,480 total square feet with 8,180 square feet of finished office area and 6,300 square feet of clear span warehouse area. The mortgage balance was approximately $178,600 as of January 1, 2001 with an estimated fair market value of $350,000.00. This building allows Gulfport to provide office space for Louisiana personnel, have access to meeting space close to the fields and to maintain a corporate presence in Louisiana. Employees At December 31, 2000, Gulfport had 11 employees. A Louisiana well servicing company serves as contract operator of the fields and provides all necessary field personnel. 12 Item 2. Properties Oil & Gas Reserves The oil and gas reserve information set forth below represents estimates as prepared by the independent engineering firm of Netherland, Sewell and Associates, Inc. Reserve engineering is a subjective process of estimating volumes of economically recoverable oil and gas that cannot be measured in an exact manner. The accuracy of any reserve estimate is a function of the quality of available data and of engineering and geological interpretation. As a result, the estimates of different engineers often vary. In addition, the results of drilling, testing, and production may justify revisions of such estimates. Accordingly, reserve estimates often differ from the quantities of oil and gas that are ultimately recovered. Estimates of economically recoverable oil and gas and of future net revenues are based on a number of variables and assumptions, all of which may vary from actual results, including geologic interpretation, prices, and future production rates and costs. The following table sets forth estimates of the proved oil and gas reserves of Gulfport at December 31, 2000, as estimated by Netherland, Sewell & Associates, and independent engineering firm.

Total proved reserves decreased to 25,129 MBOE at January 1, 2001 from 26,967 at January 1, 2000. This decrease in reserves is mainly attributable to natural production declines. The estimated future net revenues as prepared by the independent engineering firm of Netherland, Sewell and Associates, Inc. set forth above were determined by using reserve quantities of proved reserves and the periods in which they are expected to be developed and produced based on economic conditions prevailing at December 31, 2000. The estimated future production is priced at December 31, 2000 without escalation using $26.80 per BBL and $9.52 per MCF. In compliance with federal law, Gulfport files annual reports with the Energy Information Agency of the U.S. Department of Energy with respect to its production of oil and gas during each calendar year and its estimated oil and gas reserves at the end of each year. Production, Prices, and Production Costs The following is a table and graph of Gulfport's monthly net production in 2000. (Table and Graph Omitted) The following table demonstrates the oil and gas production volumes, average sales prices and average lease operating expenses received for production years ended 2000, 1999 and 1998. 13

Drilling and Recompletion Activities The following table contains data with respect to certain of Gulfport's field operations during the years ended December 31, 2000, 1999 and 1998. Gulfport drilled no exploratory wells during the periods presented.

Title to Oil and Gas Properties It is customary in the oil and gas industry to make only a cursory review of title to undeveloped oil and gas leases at the time they are acquired and to obtain more extensive title examinations when acquiring producing properties. In future acquisitions, Gulfport will conduct title examinations on material portions of such properties in a manner generally consistent with industry practice. Certain of Gulfport's oil and gas properties may be subject to title defects, encumbrances, easements, servitudes or other restrictions, none of which, in management's opinion, will in the aggregate materially restrict Gulfport's operations. 14 Item 3. Legal Proceedings Gulfport has been named as a defendant in various lawsuits. The ultimate resolution of these matters is not expected to have a material adverse affect on the Company's financial condition or results of operations for the periods presented in the financial statements. Item 4. Submission of Matters to a Vote of Security Holders On August 24, 2000 the Board of Directors nominated five persons to serve on the Board of Gulfport. On September 1, 2000, the holders of a majority of the outstanding shares of Gulfport's common stock executed a written consent electing the five nominated persons as directors of Gulfport. Each director will serve until the next annual meeting or until he is succeeded by another qualified director who has been elected. The annual shareholder meeting for Gulfport has not been scheduled as of the date of this filing. Item 4a. Executive Officers of the Registrant. The officers of Gulfport are as follows: Name Age Position ---- --- -------- Mike Liddell 47 Chairman of the Board, Chief Executive Officer, President and Director Michael G. Moore 44 Vice President and Chief Financial Officer Lisa Holbrook 30 Vice President, General Counsel and Secretary Mike Liddell has served as a director of Gulfport since July 11, 1997, as Chief Executive Officer since April 28, 1998 and as Chairman of the Board since July 28, 1998. Mr. Liddell has served as President of Gulfport since July 2000. In addition, Mr. Liddell served as Chief Executive Officer of DLB from October 1994 to April 28, 1998, and as 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. He is the brother of Mickey Liddell. Michael G. Moore has served as Vice President and Chief Financial Officer since July 2000. From May 1998 through July 2000, Mr. Moore served as Vice President and Chief Financial Officer of Indian Oil Company. From September 1995 through May 1998, Mr. Moore served as Controller of DLB Oil & Gas, Inc. Prior to that, Mr. Moore served as Controller of LEDCO, Inc., a Houston based gas marketing company. Mr. Moore received both his B.B.A degree in finance and his M.B.A. from the University of Central Oklahoma. Lisa Holbrook has served as Vice President and Secretary of Gulfport since November 5, 1999, and as General Counsel since April 28, 1998. In addition, Ms. Holbrook served as Assistant General Counsel of DLB until April 1998. Ms. Holbrook received a B.A. in political science from Southwestern Oklahoma State University. In 1996, Ms. Holbrook received her J.D. from Oklahoma City University Law School where she graduated with highest distinction. 15 PART II Item 5. Market for Registrant's Common Equity and Related Stockholder Matters Gulfport's Common Stock is traded on the NASD OTC Bulletin Board under the symbol GPOR. The following table sets forth the high and low sales prices for the Common Stock in each quarter: YEAR ENDED DECEMBER 31, 2000 LOW HIGH ---------------------------- ----- ----- First Quarter $2.125 $2.875 Second Quarter $2.50 $5.375 Third Quarter $4.125 $4.937 Fourth Quarter $3.750 $4.875 Holders of Record At the close of business on February 1, 2001 there were 10,145,400 shares of Common Stock outstanding held by 381 shareholders of record. Dividend Policy Gulfport has never paid dividends on the Common Stock. Gulfport currently intends to retain all earnings to fund its operations. Therefore, Gulfport does not intend to pay any cash dividends on the Common Stock in the foreseeable future. Item 6. Selected Financial Data As a result of the Reorganization Case and Plan, which was consummated and became effective on July 11, 1997, Gulfport was required to present its financial statements pursuant to fresh start reporting standards. Accordingly, the financial statements of Gulfport are not comparable to the financial statements of WRT. However, in the case of the statement of operations, the Company believes that comments comparing calendar years are appropriate in order to provide a more meaningful understanding of Gulfport's operations. 16 The following selected financial data as of and for the years ended December 31, 2000, 1999 and 1998, and as of and for the five months 21 days ended December 31, 1997, for Gulfport and for the six months and 10 days ended July 10, 1997, for the Predecessor Company are derived from the consolidated financial statements of Gulfport included elsewhere in the Annual Report. The selected financial data at December 31, 1996 and for the year then ended have been derived from historical consolidated financial statements of WRT. The financial data set forth below should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the consolidated financial statements of Gulfport and the notes thereto included elsewhere in this Annual Report.

(1) Operating expenses for 1998 include non-cash charges of $50,131,000 for impairment of oil and gas properties, $271,000 for abandonment of long- lived assets and a $244,000 provision for doubtful accounts. See "Management's Discussion and Analysis of Financial Condition and Results of Operations." 17 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis of the Company's financial condition and results of operations is based in part on the consolidated financial statements and the notes thereto included elsewhere in this Annual Report and should be read in conjunction therewith. Credit Facility On July 11, 1997 Gulfport entered into a $15,000,000 credit facility with ING (U.S.) Capital Corporation. During 1998 and 1999, there were two amendments to the facility and the maturity date was reset to June 30, 2000. On June 28, 2000, the Company repaid in full its credit facility at ING and established a new credit facility at Bank of Oklahoma ("BOK"). Gulfport was advanced $1.6 million on this new facility, which calls for interest payments to be made monthly in addition to twelve monthly principal payments of $100,000, with the remaining unpaid balance due on August 31, 2001. On March 22, 2001, Gulfport executed a new note with BOK increasing the availability to $1,760,000, increasing the monthly payments slightly to $110,000 beginning July 1, 2001 and extending the maturity date to October 1, 2002. This new note replaces the original BOK note dated June 28, 2000. Accounting Change Before July 11, 1997, Gulfport used the successful efforts method for reporting oil and gas operations. On July 11, 1997, Gulfport converted to the full cost pool method of accounting for its oil and gas operations. Due to the restating of property values to comply with fresh start accounting and the conversion from the successful efforts method to the full cost pool method for reporting oil and gas operations as of July 1997, comparison of depreciation, depletion, and amortization expense for the years ended December 31, 2000, 1999 and 1998, with prior years will not be meaningful. Results of Operations The markets for oil and gas have historically been, and will continue to be, volatile. Prices for oil and gas may fluctuate in response to relatively minor changes in supply and demand, market uncertainty and a variety of factors beyond the control of Gulfport. Set forth in the table below are the average prices received by the Company and production volumes during the periods indicated. 18

(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) Gulfport provides various perquisites to certain employees, including the named executives. In each case, the aggregate value of the perquisite provided to the named executives did not exceed 10% of such named executive's annual salary and bonus. (3) Mike Liddell and Mark Liddell each received stock options exercisable at $2.00 per share for 253,635 shares. These options had no readily determinable market value at the date of issuance. Mark Liddell's options were surrendered to Gulfport upon his death at December 24, 1999. (4) Mike Liddell received stock options exercisable at $2.00 per share for 203,635 shares. These options had no readily determinable market value at the date of issue. (5) Mr. Mike Liddell became the Chief Executive Officer of Gulfport on April 28, 1998. From April 28, 1998 until June 1999 Mr. Liddell's services were provided pursuant to the Administrative Services Agreement. The Administrative Services Agreement was terminated in June 1999 and all services previously rendered there under were transferred to Gulfport. The compensation shown represents $100,000 paid under the Administrative Services Agreement from January 1999 until May 1999 and $100,000 paid directly from Gulfport from June 1999 until December 1999. See "Certain Transactions". (6) Mr. Mark Liddell became the President of Gulfport on April 28, 1998. From April 28, 1998 until June 1999 Mr. Liddell's services were provided pursuant to the Administrative Services Agreement. The Administrative Services Agreement was terminated in June 1999 and all services previously rendered there under were transferred to Gulfport. The compensation shown represents $100,000 paid under the Administrative Services Agreement and $100,000 paid directly from the Company from June 1999 until December 1999. See "Certain Transactions". 26 Stock Options Granted On June 1, 1999, Mike Liddell, Chief Executive Officer and Chairman of the Board, received a grant of options for 2.5% of the issued shares of Common Stock at an exercise price of $2.00 per share. The options shall be exercisable and vest as to 35% of the shares on June 1, 2000, an additional 35% of the shares will become exercisable and vest on June 1, 2001, and the remaining shares will become exercisable and vest on June 1, 2002. On January 17, 2000, Mr.Liddell was granted an additional 203,635 giving him a total of 457,270 options at the date of this filing. On June 1, 1999, Mark Liddell, President, received a grant of options for 2.5% of the outstanding shares of Common Stock at an exercise price of $2.00 per share. The options were scheduled to be exercisable and vest as to 35% of the shares on June 1, 2000, an additional 35% of the shares will become exercisable and vest on June 1, 2001, and the remaining shares will become exercisable and vest on June 1, 2002. On December 24, 1999, Mr. Liddell died. Pursuant to the terms of Mr. Liddell's Stock Option Agreement, all of his options were surrendered to Gulfport. On January 17, 2000 and July 15, 2000, respectively, Lisa Holbrook and Mike Moore each received 10,000 options. The options vest in three equal installments and are exercisable at $2.00 a share. The Option Agreements for Mike Liddell, Lisa Holbrook and Mike Moore provide that if the Company at any time increases the number of outstanding shares of the Company or alters the capitalization of Gulfport in any other way, the stock options shall be adjusted to reflect such changes. The following table sets forth information concerning the grant of stock options during 2000 to the named executives.

(1) The assumed annual rates of increase are based on an annually compounded increase of the exercise price through a presumed ten-year option term. Stock Option Holdings The following table sets forth the number of unexercised options held by named executives as of December 31, 2000. No options were exercised in 1997 or 1998. 27

(1) These options are exercisable at $2.00 per share. Director Compensation Up to the Effective Date, each director who was not a salaried employee of Gulfport 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. Currently, each outside director receives compensation in the amount of $1,000 per month, $500 for attendance at each meeting of the Board of Directors and reimbursement for expenses incurred in connection with attending such meetings. Employment Agreements On June 1, 1999, the Company entered into a five-year employment agreement with Mike Liddell, Chief Executive Officer and Chairman of the Board. The employment agreement provides for a salary of $200,000 per year. Compensation Committee Interlocks and Insider Trading The Compensation Committee of the Company is comprised of all non-employee directors of Gulfport, which include Robert Brooks, David Houston and Mickey Liddell. Mickey Liddell is the President of Banner Entertainment, LLC. Mike Liddell is a member of Banner Entertainment, LLC and assists in making compensation decisions for Mickey Liddell. Prior to his death in December 1999, Mark Liddell was also a member of the compensation committee. Other than herein disclosed, no member of the Committee is a former or current officer or employee of the Company 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 this Committee. 28 Item 12. Security Ownership of Certain Beneficial Owners and Management

* Less than one percent. (1) Unless otherwise indicated, each person or group has sole voting power with respect to all listed shares. (2) Each listed person's percentage ownership is determined by assuming that options, warrants and other convertible securities that are held by such Person and that are exercisable or convertible within sixty (60) days have been exercised. 29 (3) Includes shares of Common Stock held of record by Liddell Investments, L.L.C. Mr. Liddell is the sole member of Liddell Investments, L.L.C. (4) Includes 3,574,722 shares of Common Stock held of record by CD Holding, L.L.C. and 784,273 shares of Common Stock held in an IRA for Mr. Davidson. Mr. Davidson is the sole member of CD Holding, L.L.C. does not include 1,795,860 shares of Common Stock held by the Wexford Entities (as defined below). Mr. Davidson is the Chairman and controlling member of Wexford Management, L.L.C. Mr. Davidson disclaims beneficial ownership of the 1,795,860 shares owned by the Wexford Entities. However, Mr. Davidson controls 61% of the issued stock of Gulfport. As a result, Mr. Davidson is able to influence significantly and possibly control matters requiring approval of the shareholders including the election of directors. (5) Includes 1,795,860 shares of Common Stock owned by the following investment funds (the "Wexford Entities") that are affiliated with Wexford Management: Wexford Special Situations 1996, L.P.; Wexford Special Situations 1996 Institutional, L.P.; Wexford Special Situations 1996, Limited; Wexford-Euris Special Situations 1996, L.P.; Wexford Spectrum Investors, L.L.C.; Wexford Capital Partners II, L.P.; Wexford Overseas Partners I, L.P. (6) Includes shares of Common Stock owned by the following investment funds: PMF Partners, L.L.C., Rumpere Capital, L.P., and Rumpere Capital Fund, Ltd. Item 13. Certain Relationships and Related Transactions In March 2001, a company that shares common ownership with Gulfport acquired a majority of the oil and natural gas properties of a mid-continent exploration and production company. Subsequent to the acquisition, Gulfport will begin providing administrative services to effectively manage the day-to-day operations of this acquisition and in turn will receive an administrative service fee for such services. PART IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K. (a) 1. Financial Statements. The following Financial Statements of the Company, the Notes thereto, and the reports thereon are filed under Item 8 of this Report. Independent Auditors Report..............................................F-2 Balance Sheets, December 31, 2000 and 1999...............................F-3 Statements of Operations, Years Ended December 31, 2000, 1999 and 1998...F-4 Statements of Stockholders' Equity, Years Ended December 31, 2000, 1999 and 1998.......................................................F-5 Statements of Cash Flows, Years Ended December 31, 2000, 1999 and 1998...F-6 Notes to Financial Statements............................................F-7 30 2. Financial Statement Schedules. All financial statement schedules have been omitted, as the required information is inapplicable or is not present in amounts sufficient to require submission of the schedule or the information is presented in the Financial Statements or related notes. 3. Exhibits. 10.1 Credit Agreement Dated June 28, 2000 between Registrant and Bank of Oklahoma 10.2 Stock Option Plan (b). Reports on Form 8-K June 30, 2000 - Disclosure of bank debt reduction and hiring of new CFO 31 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934 as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: March _____, 2001. GULFPORT ENERGY CORPORATION By:/s/Mike Liddell ------------------------------------ Mike Liddell, Chief Executive Officer Pursuant to the requirements of the Securities and Exchange Act of 1934 as amended, this report has been signed below by the following persons on behalf of the Registrant and in the capacity and on the date indicated. Date: March ____, 2001 By:/s/Mike Liddell ------------------------------------- Mike Liddell, Chief Executive Officer And Director Date: March ____, 2001 By:/s/Robert Brooks ------------------------------------ Robert Brooks, Director Date: March ____, 2001 By:/s/David L. Houston ------------------------------------ David L. Houston, Director Date: March ____, 2001 By:/s/Mickey Liddell ----------------------------------- Mickey Liddell, Director Date: March _____, 2001 By:/s/Dan Noles ----------------------------------- Dan Noles, Director Date: March _____, 2001 By:/s/Michael G. Moore ----------------------------------- Michael G. Moore, Vice President and Chief Financial Officer 32 EXHIBIT INDEX 10.1 Credit Agreement Dated June 28, 2000 between Registrant and Bank Of Oklahoma 10.2 Stock Option Plan 33 Item 8. Financial Statements and Supplementary Data INDEX TO FINANCIAL STATEMENTS Page ---- Independent Auditors' Report F-2 Balance Sheets, December 31, 2000 and 1999 F-3 Statements of Operations, Years Ended December 31, 2000, 1999 and 1998 F-4 Statements of Shareholders' Equity, Years Ended December 31, 2000 and 1999 F-5 Statements of Cash Flows, Years Ended December 31, 2000, 1999 and 1998 F-6 Notes to Financial Statements F-7 All financial statement schedules are omitted, as the required information is inapplicable or the information is presented in the financial statements or related notes. F-1 INDEPENDENT AUDITORS' REPORT The Board of Directors and Shareholders of Gulfport Energy Corporation: We have audited the accompanying balance sheets of Gulfport Energy Corporation (a Delaware corporation) (formerly WRT Energy Corporation) (the"Company") as of December 31, 2000 and 1999, and the related statements of operations, shareholders' equity, and cash flows for the years ended December 31, 2000, 1999 and 1998. These financial statements are the responsibility of Gulfport's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Gulfport Energy Corporation as of December 31, 2000 and 1999, and the results of its operations and its cash flows for the years ended December 31, 2000, 1999 and 1998, in conformity with generally accepted accounting principles in the United States of America. HOGAN & SLOVACEK Oklahoma City, OK March 27, 2001 F-2 GULFPORT ENERGY CORPORATION BALANCE SHEETS - --------------------------------------------------------------------------------

See accompanying notes to financial statements. F-3 GULFPORT ENERGY CORPORATION STATEMENTS OF OPERATIONS

See accompanying notes to financial statements. F-4 GULFPORT ENERGY CORPORATION Statements of Stockholders' Equity (Deficit)

See accompanying notes to financial statements. F-5 GULFPORT ENERGY Statements of Cash Flows

See accompanying notes to financial statements. F-6 GULFPORT ENERGY CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2000, 1999 AND 1998 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Business Gulfport Energy Corporation (the "Company"), formerly known as WRT Energy Corporation ("WRT"), is a domestic independent energy company engaged in the exploration, development and production of crude oil and gas. On March 30, 1998, the Company changed its name from WRT Energy Corporation to Gulfport Energy Corporation. Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents for purposes of the statement of cash flows. Oil and Gas Properties The Company uses the Full Cost method of accounting for oil and gas operations. Accordingly, all costs, including nonproductive costs and certain general and administrative costs associated with acquisition, exploration and development of oil and gas properties, are capitalized. Net capitalized costs are limited to the estimated future net revenues, after income taxes, discounted at 10% per year, from proven oil and gas reserves and the cost of the properties not subject to amortization. Such capitalized costs, including the estimated future development costs and site remediation costs, if any, are depleted by an equivalent units-of-production method, converting gas to barrels at the ratio of six MCF of gas to one barrel of oil. No gain or loss is recognized upon the disposal of oil and gas properties, unless such dispositions significantly alter the relationship between capitalized costs and proven oil and gas reserves. Oil and gas properties not subject to amortization consist of the cost of undeveloped leaseholds. These costs are reviewed periodically by management for impairment, with the impairment provision included in the cost of oil and gas properties subject to amortization. Factors considered by management in its impairment assessment include drilling results by Gulfport and other operators, the terms of oil and gas leases not held by production, and available funds for exploration and development. Other Property and Equipment Depreciation of other property and equipment is provided on a straight- line basis over estimated useful lives of the related assets, which range from seven to 30 years. Net Income (Loss) per Common Share Basic net income (loss) per common share is computed by dividing income (loss) attributable to common stock by the weighted average number of common shares outstanding for the period. Diluted net income per common share reflects the potential dilution that could occur if options or other contracts to issue common stock were exercised or converted into common stock. Diluted net loss per common share does not reflect dilution from potential common shares, because to do so would be anti-dilutive. Calculations of basic and diluted net income (loss) per common share are illustrated in Note 9. F-7 GULFPORT ENERGY CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2000, 1999 AND 1998 CONTINUED Income Taxes Gulfport uses the asset and liability method of accounting for income taxes, under which, deferred tax assets and liabilities are recognized for the future tax consequences of (1) temporary differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities and (2) operating loss and tax credit carryforwards. Deferred income tax assets and liabilities are based on enacted tax rates applicable to the future period when those temporary differences are expected to be recovered or settled. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income during the period the rate change is enacted. Deferred tax assets are recognized as income in the year in which realization becomes determinable. Revenue Recognition Gas revenues are recorded in the month produced using the entitlement method, whereby any production volumes received in excess of the Company's ownership percentage in the property are recorded as a liability. If less than Gulfport's entitlement is received, the underproduction is recorded as a receivable. There is no such liability or asset recorded at December 31, 2000 or December 31, 1999. Oil revenues are recognized in the month produced. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and revenues and expenses during the reporting period. Actual results could differ materially from those estimates. Significant estimates with regard to these financial statements include the estimate of proved oil and gas reserve quantities and the related present value of estimated future net cash flows there from. Commitments and Contingencies Liabilities for loss contingencies arising from claims, assessments, litigation or other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. F-8 GULFPORT ENERGY CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMETNS DECEMBER 31, 2000, 1999 AND 1998 CONTINUED 2. PROVISION FOR ALLOWANCE FOR DOUBTFUL ACCOUNTS A summary of the activity in the allowance for doubtful accounts for the years ended December 31, 2000 and 1999 is as follows:

No charges to bad debt expense were made during the year ended December 31, 2000. During the years ended December 31, 1999 and 1998, the Company charged $56,000 and $244,000, respectively, to bad debt expense. The 1999 bad debt expense related to receivables on properties no longer owned by Gulfport. 3. PROPERTY AND EQUIPMENT The major categories of property and equipment and related accumulated depreciation, depletion and amortization as of December 31 are as follows:

F-9 GULFPORT ENERGY CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2000, 1999 AND 1998 CONTINUED Included in oil and gas properties at December 31, 2000 and 1999, are $801,000 and $413,000, respectively, in general and administrative costs incurred and capitalized to the full cost pool. General and administrative costs capitalized to the full cost pool are those incurred directly related to exploration and development activities such as geological costs and other administrative costs associated with overseeing the exploration and development activities. All general and administrative costs not directly associated with exploration and development activities were charged to expense as they were incurred. During 1998, no general and administrative costs were capitalized to the full cost pool. During 1998, the Company recorded a loss impairment on its oil and gas properties of $50,130,000. At December 31, 2000 and 1999, due mainly to increases in prevailing sales prices and to the write down of properties recorded during 1998, the 10% discounted future cash flow from oil and gas properties, as computed by the Company, well exceeded carrying value. Therefore, no loss impairments related to oil and gas properties were recorded during 2000 or 1999. During 1998, $5,097,000 of undeveloped leasehold cost, previously not considered to be subject to amortization, was determined to be impaired and was included in the cost of oil and gas properties subject to amortization, and in the $50,130,000 impairment of oil and gas properties. The Company had no oil and gas properties not subject to amortization at December 31, 2000 or December 31, 1999. During 2000, the Company sold equipment related to oil and gas properties totaling $100,000. During 1998, the Company sold oil and gas properties totaling $8,800,000. The sale of these properties was treated as a reduction to the full cost pool. Additionally, during 1998, the Company abandoned $271,000 in software costs. 4. OTHER ASSETS Other assets as of December 31 consist of the following:

F-10 GULFPORT ENERGY CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2000, 1999 AND 1998 CONTINUED 5. SETTLEMENT OF CLAIMS In accordance with a reorganization that took place during 1997, Gulfport has accrued certain tax claims, which are included in the accompanying balance sheets as current liabilities. These unpaid claims totaled $372,000 at December 31, 2000 and 1999. 6. LONG-TERM DEBT Long-term debt as of December 31 is as follows:

Following are the maturities of long-term debt for each of the next five years: 2001 878,000 2002 160,000 2003 22,000 2004 24,000 2005 26,000 Thereafter 69,000 ------------ $1,179,000 ============ F-11 GULFPORT ENREGY CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2000, 1999 AND 1998 CONTINUED Note Payable Refinancing On March 1, 2001, Gulfport refinanced its $1,000,000 note payable which was outstanding at December 31, 2000. Additional borrowings were also made at the time of the refinancing, bringing the total note payable at March 1, 2001 to $1,760,000. Under the terms of the new agreement, monthly principal payments of $110,000 are to be made beginning July 1, 2001, with the remaining outstanding principal due October 1, 2002. The refinanced note bears interest at Chase Manhattan Prime rate plus 1%. Principal payments made after December 31, 2000, but prior to the refinancing totaled $200,000 and are included, along with monthly payments to be made from July 1, 2001 to December 31, 2001, in current maturities of long -term debt at December 31, 2000. Building Loan In 1996, the Company purchased a building in Lafayette, Louisiana to be used as Gulfport's Louisiana headquarters. The building is 12,480 square feet with approximately 6,180 square feet of finished office area and 6,300 square feet of warehouse space. This building allows Gulfport to provide office space for Louisiana personnel, have access to meeting space close to the fields and to maintain a corporate presence in Louisiana. In connection with the purchase of the building, the Company entered into a loan agreement with MC Bank & Trust Company. The original loan balance was $215,000 and called for monthly principal and interest payments totaling $3,000 per month through 2005 with the unpaid balance due at that time. During 1998, the Company renegotiated this loan agreement with MC Bank & Trust Company. The Company borrowed an additional $35,000 for building improvements. The loan agreement calls for monthly principal and interest payments of $2,900 per month through March 2008. The loan bears interest at 9.5% per annum and is collateralized by the land and building. 7. COMMON STOCK OPTIONS, WARRANTS AND CHANGES IN CAPITALIZATION Options The Company granted its Chief Financial Officer 10,000 stock options with an exercise price of $2.00 per share and an effective date of July 15, 2000. The options vest 35% in July 2001, and 35% in July 2002 with the remaining shares vesting in 2003. The option agreement provides for pro rata adjustments to the options granted if the Company at any time increases the number of outstanding shares or otherwise alters its capitalization. The Company did not recognize any compensation expense related to these options as fair value at the grant date approximated the exercise price. During January, 2000, the Company's Chief Executive Officer, employees, and non-employee directors were granted a total of 313,635 stock options with an exercise price of $2.00 per share. The options vest 35% in January 2001, and 35% in January 2002, with the remaining options vesting in January 2003. The option agreements provide for pro-rata adjustments to options granted if the Company at any time increases the number of outstanding shares or otherwise alters its capitalization. F-12 GULFPORT ENERGY CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2000, 1999 AND 1998 CONTINUED On June 1, 1999, Gulfport's Chief Executive Officer and President were each granted stock options for the purchase of 2.5% of the outstanding shares of Common Stock at an exercise price of $2.00 per share. The options vest 35% on June 1, 2000, and 35% on June 1, 2001, with the remaining options vesting on June 1, 2002. The option agreements provide for pro-rata adjustments to options granted if Gulfport at any time increases the number of outstanding shares or otherwise alters its capitalization. Stock options previously granted to the President were surrendered to Gulfport upon his death in December 1999. On September 15, 1999, all non-employee board members were each granted 10,000 options with an exercise price of $2.00. The options vest 33% on October 1, 1999, and 33% on October 1, 2000, with the remaining options vesting on October 1, 2001. These options granted to non-employee board members will be adjusted on a pro-rata basis to reflect any change in the capitalization of the Company. Options outstanding at December 31, 2000 totaled 609,087. Of this total, 108,769 options were exercisable at December 31, 2000, with the remaining options vesting in future periods. Warrants At December 31, 2000, a total of 1,163,195 warrants, each for the purchase of one share of Gulfport's common stock, were outstanding. All of these warrants were issued pursuant to a 1997 warrant agreement, stemming from a reorganization which occurred that year. The warrants will expire on July 11, 2002 and are exercisable at $10 per warrant. The related agreement contains several anti-dilutive provisions that provide for adjustments to the terms of the warrants in the event of any recapitalization by Gulfport. As a result of Gulfport's capitalization changes as described below, which occurred subsequent to the issuance of these warrants, each warrant outstanding at December 31, 2000 can purchase .234 shares of common stock. Rights Offering On November 20, 1998, Gulfport completed a $7,500,000 Rights Offering. Gulfport distributed 4,000,000 nontransferable rights at an exercise price of $2.50 per right, after the effect of the reverse stock split, to Gulfport's existing shareholders. Each right entitled the holder thereof to subscribe to purchase one share of common stock at the exercise price. Each shareholder who exercised in full his basic subscription privilege was entitled to oversubscribe for additional rights. A total of 3,000,000 rights were exercised for $7,509,000. As of the date of the Rights Offering, affiliated Shareholders were owed $4,600,000 by the Company. In the Rights Offering, the Affiliated Shareholders exercised 1,752,195 rights through the forgiveness of $4,380,000 of debt. The balance of $220,000 was repaid in cash during 1998. Reverse Stock Split On March 5, 1999, the Board of Directors authorized a 50-to-1 reverse stock split, thereby decreasing the number of issued and outstanding shares to 3,445,400, and increasing the par value of each share to $.50. Subsequent to this reverse stock split, the par value was reduced to $.01. F-13 GULFPORT ENERGY CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2000, 1999 AND 1998 CONTINUED Regulation D Private Placement Offering During September 1999, Gulfport conducted a private placement of stock (the "Regulation D Offering"). In accordance with the provisions of certain exemptions, the Regulation D Offering was made only to Accredited Investors as defined in Regulation D. Gulfport offered 6,700,000 shares of common stock at an exercise price of $.75 per share. Each shareholder exercising his basic subscription privilege in full was entitled to oversubscribe for additional shares. A total of 6,700,000 shares were subscribed, yielding $5,016,000, net of offering costs. As of the date of the Regulation D Offering, affiliated Shareholders were owed $3,238,000 by the Company. In the Regulation D Offering, the Affiliated Shareholders acquired 4,040,011 common shares through the forgiveness of $3,030,000 of this debt, with the remaining balance of $208,000 paid in cash during 1999. 8. INCOME TAXES A reconciliation of the statutory federal income tax amount to the recorded expense follows:

The tax effects of temporary differences and net operating loss carryforwards, which give rise to deferred tax assets at December 31 are as follows: F-14 GULFPORT ENERGY CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2000, 1999 AND 1998 CONTINUED

The Company has an available tax net operating loss carry forward of approximately $68,912,000 as of December 31, 2000. This carryforward will begin to expire in the year 2013. 9. NET INCOME (LOSS) PER COMMON SHARE A reconciliation of the components of basic and diluted net income (loss) per common share is presented in the table below:

Not included in the calculation of diluted income (loss) above are 1,163,195 warrants issued in 1997. Also, not included in the calculation of the 1999 diluted income per share are 253,635 stock options issued to an officer of Gulfport in June, 1999 and 30,000 stock options issued to certain directors in September 1999. These potential common shares were not considered in the calculations due to their anti-dilutive effect during the periods presented. 10. RELATED PARTY TRANSACTIONS In the ordinary course of business, the Company conducts business activities with a substantial number of its shareholders. DLB Oil & Gas, Inc. ("DLB") and Wexford Management LLC ("Wexford") were, along with Gulfport, co-proponents in a 1997 plan of reorganization. During April of 1998, DLB distributed all of its shares in the Company to its shareholders prior to DLB's acquisition by Chesapeake Energy Corporation. As a result of this distribution, Charles Davidson, Mike Liddell and Mark Liddell collectively received 37.5% of the Company's stock. As of December 31, 2000, Wexford and its affiliates owned approximately 17.7% of Gulfport's issued outstanding stock. Charles Davidson, Mike Liddell and the Estate of Mark Liddell own collectively 52% of the Company's outstanding stock as of December 31, 2000. F-15 GULPFORT ENERGY CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 21, 2000, 1999 AND 1998 CONTINUED Administrative Service Agreement Pursuant to the terms and conditions of an Administrative Services Agreement, DLB agreed to make available to the Company personnel, services, facilities, supplies, and equipment as needed, including executive and managerial, accounting, auditing and tax, engineering, geological and geophysical, legal, land and administrative and clerical services. The initial term was one year beginning on the date of the Administrative Services Agreement. The Administrative Services Agreement was to continue for successive one-year periods unless terminated by either party. On April 28, 1998, in connection with the acquisition of DLB, Inc. by Chesapeake Energy Corporation, the obligations of DLB under the Administrative Services Agreement were assigned to DLB Equities, L.L.C. Gulfport paid fees under this agreement totaling $21,000 and $969,000 in 1999 and 1998, respectively, and believes that such fees are comparable to those that would have been charged by an independent third party. Effective June of 1999, this Administrative Service Agreement was terminated. At December 31, 1997, Gulfport owed DLB approximately $1,600,000 for services rendered pursuant to the Administrative Services Agreement. In March 1998, in order to facilitate the acquisition of DLB by Chesapeake Energy Corp., Mike Liddell, Mark Liddell and Charles Davidson purchased the receivable from DLB for its then outstanding amount of approximately $1,600,000. Each of Messrs. Mike and Mark Liddell and Mr. Davidson subsequently transferred his portion of the receivable to Liddell Investments, L.L.C., Liddell Holdings, L.L.C. and CD Holdings, L.L.C., respectively. The receivable accrued interest at the rate of LIBOR plus 3% per annum and was satisfied with the exercise of 632,484 rights in the November 20, 1998 Rights Offering through debt forgiveness. Sales During the year ended December 31, 1998, Gulfport sold $2,058,000 in oil to a DLB subsidiary. These sales occurred at prices which the Company could be expected to obtain from an unrelated third party. No sales to related parties were made during 2000 or 1999. Stockholder Credit Facility On August 18, 1998, Gulfport entered into a $3,000,000 revolving credit facility with Liddell Investments, L.L.C., Liddell Holdings, L.L.C., CD Holdings, L.L.C. and Wexford Entities (collectively "Affiliated Stockholders"). Borrowing under the Stockholder Credit Facility was due on August 17, 1999 and bore interest at LIBOR plus 3%. Pursuant to the facility agreement, Gulfport paid the eligible Affiliated Stockholders an aggregate commitment fee equal to $60,000. Gulfport repaid $2,000,000 of principal under the Amended ING Credit Agreement with borrowings under the Stockholder Credit Facility. The remaining $1,000,000 was used for working capital and general corporate purposes. The Affiliated Stockholders paid the subscription price for 1,200,000 Shares pursuant to their Basic Subscription Privilege in the Rights Offering through the forgiveness of the amount owed to them under this stockholder credit facility. F-16 GULFPORT ENERGY CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2000, 1999 AND 1998 CONTINUED On August 5, 1999, Gulfport entered into a $3,255,000 revolving credit facility with the "Affiliated Stockholders". Borrowing under this agreement was due on August 1, 2000, and bore interest at LIBOR plus 3%. Pursuant to the terms of the agreement, Gulfport paid aggregate commitment fees equal to $65,000 or 2% of the related borrowings in stock. This debt was extinguished through the issuance of 4,040,011 shares of common stock to the Affiliated Stockholders in the Regulation D Offering in August 1999, and through the payment of additional funds totaling $208,000. 11. COMMITMENTS Leases As of December 31, 2000 and 1999, the Company had no long-term, non-cancelable operating lease commitments. Rental expense for all operating leases for the years ended December 31, 2000, 1999 and 1998, totaled $112,000, $119,000 and $120,000, respectively. Plugging and Abandonment Funds In connection with the acquisition of the remaining 50% interest in the WCBB properties, Gulfport assumed the obligation to contribute approximately $18,000 per month through March 2004, to a plugging and abandonment trust and the obligation to plug a minimum of 20 wells per year for 20 years commencing March 11, 1997. Texaco Exploration and Production, Inc. ("Texaco") retained a security interest in production from these properties and the plugging and abandonment trust until such time as the Company's plugging and abandonment obligations to Texaco have been fulfilled. Once the plugging and abandonment trust is fully funded, the Company can access it for use in plugging and abandonment charges associated with the property. As of December 31, 2000, the plugging and abandonment trust totaled $1,739,000 including interest received during 2000 of $88,000. Gulfport was in arrears on its escrow payments in the amounts of $275,000 as of December 31, 2000. During March 2001, Gulfport began to fulfill its yearly plugging commitment of 20 wells at WCBB for the twelve month period ending march 2001. Texaco Global Settlement Pursuant to the terms of a global settlement between Texaco and the State of Louisiana which includes the State Lease No. 50 portion of Gulfport's East Hackberry Field, Gulfport was obligated to commence drilling a well or other qualifying development operation on certain non-producing acreage in the field prior to March 1998. Because of prevailing market conditions during 1998, the Company believed it was commercially impractical to shoot seismic or commence drilling operations on the subject property. As a result, Gulfport has agreed to surrender approximately 440 non-producing acres in this field to the State of Louisiana. At December 31, 2000, Gulfport was in the process of releasing these properties to the State of Louisiana. F-17 GULFPORT ENERGY CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2000, 1999 AND 1998 CONTINUED Contributions to 401(k) Plan During 1999 and 1998, Gulfport sponsored a 401(k) savings plan under which eligible employees could chose to contribute up to 15% of salary income on a pre-tax basis, subject to certain IRS limits. During the year ended December 31, 1998, Gulfport incurred $4,000, in matching contributions expense associated with this plan. Gulfport did not incur any expense related to this plan during the year ended December 31, 1999. On February 17, 1999, this 401(k) savings plan was terminated and all contributions were distributed to the participants. Effective January 1, 2000, Gulfport began sponsoring new 401(k) and Profit Sharing plans under which eligible employees may contribute up to 15% of pay through salary deferrals. Also under these plans, the Company will make a contribution each calendar year on behalf of each employee equal to at least 3% of his or her salary, regardless of the employee's participation in salary deferrals. During the year ended December 31, 2000, Gulfport incurred $24,000 in contributions expense related to this plan. Employment Agreement At December 31, 2000, Gulfport had an employment agreement with its Chief Executive Officer. This agreement expires June 1, 2004, and calls for an annual salary of $200,000, which may be adjusted for cost of living increases. 11. CONTINGENCIES The Company owns and operates a production facility at WCBB. Pursuant to facility use agreements, Gulfport charges third parties including Texaco for using the facility. Gulfport and Texaco are currently negotiating past due amounts related to the facility. Gulfport believes that it has adequately recorded in its financial statements all material obligations arising from the operations of WCBB as well as revenues earned attributed to operating these facilities. Other Litigation The Company has been named as a defendant on various other litigation matters. The ultimate resolution of these matters is not expected to have a material adverse effect on the Company's financial condition or results of operations for the periods presented in the financial statements. Concentration of Credit Risk Gulfport operates in the oil and gas industry principally in the state of Louisiana with sales to refineries, re-sellers such as pipeline companies, and local distribution companies. While certain of these customers are affected by periodic downturns in the economy in general or in their specific segment of the oil and gas industry, Gulfport believes that its level of credit-related losses due to such economic fluctuations has been immaterial and will continue to be immaterial to the Company's results of operations in the long term. No bad debt expense was incurred during 2000. During 1999 and 1998, Gulfport incurred bad debts of $56,000 and $244,000, respectively. The bad debt incurred during 1998 related to a disputed pre-bankruptcy receivable which was determined to be uncollectible. F-18 GULFPORT ENERGY CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2000, 1999 AND 1998 CONTINUED The Company maintains cash balances at several banks. Accounts at each institution are insured by the Federal Deposit Insurance Corporation up to $100,000. At December 31, 2000 and 1999, Gulfport held cash in excess of insured limits in these banks totaling $3,556,000 and $5,962,000 respectively. During the year ended December 31, 2000, approximately 91% of Gulfport's revenues from oil and gas sales were attributable to two primary customers: Black Hills Energy and Equiva Trading Company. During the year ended December 31, 1999, approximately 99% of Gulfport's revenues from oil and gas sales were attributable to five primary customers: Equiva Trading Company, Black Hills Energy Resources, Inc., Flash Oil & Gas Southwest, Inc., Burlington Resources, and Plains All American, Inc. During the year ended December 31, 1998, approximately 76% of the Company's revenues from oil and gas sales were attributable to sales to five primary customers: Equiva Trading Company, Gathering and Energy Marketing Corp., Black Hills Energy Resources, Inc., Prior Energy Company, and Plains Marketing, L.P. Included in accounts payable and accrued liabilities in the accompanying balance sheets at December 31, 2000 and 1999, is approximately $795,000 and $1,000,000, respectively, in production revenues remitted to the Company by certain of the above-named customers. Gulfport has not recognized these receipts as sales revenue in the accompanying statements of operations because it believes these funds exceed its share of revenues on the related properties. 12. LITIGATION TRUST ENTITY Pursuant to the Company's 1997 plan of reorganization, all of Gulfport's possible causes of action against third parties (with the exception of certain litigation related to recovery of marine and rig equipment assets and claims against Tri-Deck), existing as of the effective date of that plan, were transferred into a "Litigation Trust" controlled by an independent party for the benefit of most of the Company's existing unsecured creditors. The litigation related to recovery of marine and rig equipment and the Tri-Deck claims were subsequently transferred to the Litigation Trust as described below. The Litigation Trust was funded by a $3,000,000 cash payment from the Company, which was made on the effective date of reorganization. Gulfport owns a 12% interest in the Litigation Trust with the other 88% being owned by the former general unsecured creditors of Gulfport. For financial statement reporting purposes, Gulfport has not recognized the potential value of recoveries which may ultimately be obtained, if any, as a result of the actions of the Litigation Trust, treating the entire $3,000,000 payment as a reorganization cost at the time of Gulfport's reorganization. On January 20, 1998, Gulfport and the Litigation Trust entered into a Clarification Agreement whereby the rights to pursue various claims reserved by Gulfport under the plan of reorganization were assigned to the Litigation Trust. In connection with this agreement, the Litigation Trust agreed to reimburse the Company $100,000 for legal fees Gulfport had incurred in connection these claims. As additional consideration for the contribution of this claim to the Litigation Trust, Gulfport is entitled to 20% to 80% of the net proceeds from these claims. F-19 GULFPORT ENERGY CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2000, 1999 AND 1998 CONTINUED There were no funds received from the Litigation Trust during the year ended December 31, 2000 or the year ended December 31, 1998. During 1999, Gulfport received $1,342,000 in proceeds from the Litigation Trust. 13. SUPPLEMENTAL INFORMATION ON OIL AND GAS EXPLORATION AND PRODUCTION ACTIVITIES (UNAUDITED) The following is historical revenue and cost information relating to the Company's oil and gas operations located entirely in the southeastern United States: Capitalized Costs Related to Oil and Gas Producing Activities

Costs Incurred in Oil and Gas Property Acquisition and Development Activities

Results of Operations for Producing Activities The following schedule sets forth the revenues and expenses related to the production and sale of oil and gas. The income tax expense is calculated by applying the current statutory tax rates to the revenues after deducting costs, which include depreciation, depletion and amortization allowances, after giving effect to the permanent differences. The results of operations exclude general office overhead and interest expense attributable to oil and gas production.

F-20 GULFPORT ENERGY CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2000, 1999 AND 1998 CONTINUED Oil and Gas Reserves The following table presents estimated volumes of proven and proven undeveloped oil and gas reserves as of December 31, 2000, 1999, and 1998 and changes in proven reserves during the last three years, assuming continuation of economic conditions prevailing at the end of each year. Volumes for oil are stated in thousands of barrels (MBbls) and volumes for gas are stated in millions of cubic feet (MMCF). The weighted average prices at December 31, 2000 used for reserve report purposes are $26.80 and $9.52 for oil and gas reserves, respectively. Gulfport emphasizes that the volumes of reserves shown below are estimates which, by their nature, are subject to revision. The estimates are made using all available geological and reservoir data, as well as production performance data. These estimates are reviewed annually and revised, either upward or downward, as warranted by additional performance data.

F-21 GULFPORT ENERGY CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2000, 1999 AND 1998 CONTINUED Discounted Future Net Cash Flows Estimates of future net cash flows from proven oil and gas reserves were made in accordance with SFAS No. 69, "Disclosures about Oil and Gas Producing activities." The following tables present the estimated future cash flows, and changes therein, from Gulfport's proven oil and gas reserves as of December 31, 2000, 1999, and 1998, assuming continuation of economic conditions prevailing at the end of each year. F-22 GULFPORT ENERGY CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2000, 1999 AND 1998 CONTINUED Standardized Measure of Discounted Future Net Cash Flows Relating to Proven Oil and Gas Reserves

Changes in Standardized Measure of Discounted Future Net Cash Flows Relating to Proven Oil and Gas Reserves

F-23 GULFPORT ENERGY CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2000, 1999 AND 1998 CONTINUED Comparison of Standardized Measure of Discounted Future Net Cash Flows to the Net Carrying Value of Proven Oil and Gas Properties at December 31, 2000 and 1999 is as follows:

5 Year DEC-31-2000 JAN-31-2000 DEC-31-2000 3,657 0 3,852 244 0 7,436 92,559 (65,867) 36,178 7,304 0 0 0 101 28,472 36,178 16,118 16,690 0 11,635 0 0 596 4,459 0 4,459 0 0 0 4,459 0.44 0.43

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Gulfport Energy Annual Report 2000

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Gulfport Energy
Annual Report 2000