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By David French
NEW YORK (Reuters) – U.S. gas exploration and production company Gulfport Energy Corp (O:) on Monday confirmed that it would cut jobs, change its board and end its share buybacks, in a bid to reverse a slide in its stock price.
Reuters had reported the news earlier in the day, citing sources.
Gulfport shares, which fell 7.8% to $2.85 in morning trading, have lost about 67% of their market value in the last 12 months, as weak prices have eroded its profitability and forced it to slash capital investment.
Gulfport, whose production is focused primarily in the Utica Shale in Ohio and SCOOP acreage in Oklahoma, also made a new commitment to use excess cash to pay down debt, which totaled $2.1 billion as of the end of September.
The company said it would shed about 13% of its workforce. It also said that Chairman David Houston will not seek reelection to the company’s board when his term ends in 2020, with two other directors – Craig Groeschel and Scott Streller – stepping down from Gulfport’s board by the end of this year.
Gulfport has been under pressure from hedge fund Firefly Value Partners, its second-largest shareholder, to improve its stock performance. Firefly said in March it would not mount a challenge to Gulfport’s board after the company agreed to a share buyback program.
Firefly had asked Gulfport to buy back $500 million worth of stock, but the company responded with a smaller $400 million program. It ended up buying only $30 million worth of stock in the first nine months of this year, according to company filings.
However, Gulfport spent $80 million to buy back $105 million of its debt in the third quarter, Chief Executive David Wood said on a Nov. 1 analysts call, noting the discount at which the bonds traded made repurchasing them an attractive option. The company also managed to report positive free cash flow in the third quarter.
Firefly declined to comment on the changes announced by Gulfport on Monday.
Some other oil and gas producers, who once spearheaded the U.S. shale revolution, have also struggled with their profitability.
Debt-laden Chesapeake Energy Corp (N:) warned earlier this month that its ability to survive was dependent on gas prices improving in 2020. Antero Resources Corp (N:) announced a $1 billion write-down on its Utica position on Oct. 29.
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