Gulfport investor Firefly Value Partners puts forward candidates to join the oil and gas company's board of directors
Firefly Value Partners announced Monday it intends to nominate two people for Gulfport Energy Corp.’s board of directors later this year.
Firefly, which manages funds owning 13.1% of Gulfport’s outstanding stock, stated it notifed Gulfport it will ask shareholders to appoint investment specialist and petroleum engineer Samantha Holroyd and Ryan Heslop, Firefly’s co-founder and a co-portfolio manager.
It let other shareholders know about its plans in an open letter published Monday.
Firefly’s letter states it has held a significant amount of Gulfport stock since 2013 and asserts it and other investors in the company lost $3.4 billion on their investments in the company the past five years.
“While it is true that natural gas prices have declined and put pressure on all companies in the sector, Gulfport has suffered much more severely than its peers because of the board’s failures and bad decisions,” it states.
In particular, Firefly questions Guflport’s decision to acquire noncore assets in the SCOOP play of the Anadarko Basin and its investment in Mammoth Energy Services, an energy services company that has also been hurt by declining share values. It accused the board of not adequately screening the qualifications of some past members, not properly overseeing the activities of a former Gulfport executive and not properly notifying investors of asset value write-downs it announced last week.
“The board’s inattention and poor decisions have cost shareholders immensely,” it states.
While Firefly acknowledges in its letter that Gulfport’s board indeed is working on bringing in new board members, it criticized the company for not having replacements ready to go to replace departing members it adds “had no business being on the board in the first place.”
Firefly describes Holroyd as a former energy banker, private equity investor and oil and gas engineer who recently was honored as one of “25 Influential Women in Energy” for 2020 by Oil and Gas Investor and Hart Energy.
Holroyd is a former managing director at Lantana Energy Advisors and TPG Sixth Street Partners who also had been a global reserves audit and business opportunity manager at Royal Dutch Shell, vice president of EIG Global Energy Partners and vice president of Ryder Scott Co. Earlier, she worked as a senior reservoir engineer with Tenneco Ventures Corp. and as a reservoir engineer with Atlantic Richfield Co. Holroyd obtained her bachelor’s of science in petroleum engineering from the Colorado School of Mines.
Heslop, Firefly’s co-founder, helps decide where to allocate the firm’s capital to long-term value investment opportunities across industries and often works with management teams to provide long-term stockholder views and improve capital allocation decisions.
Before co-founding Firefly, he was an analyst at Elm Ridge Capital Management LLC, an equity research associate at Fidelity Investments and an investment associate at Putnam Investments.
Heslop earned a bachelor’s in economics from Harvard University and a master’s degree in business administration from Northwestern University.
“Change is clearly needed at Gulfport to restore confidence and drive value creation,” the letter states. “We look forward to communicating with our fellow shareholders about the strength of our nominees and the significant opportunities and potential at Gulfport.”
On Monday, Gulfport issued a response to Firefly’s letter that questioned its timing.
It noted Gulfport board’s nominating and governance committee already scheduled an interview with Heslop to consider appointing him to the board, though Firefly issued a response later the same day disputing that assertion.
Gulfport stated Monday the committee would review Firefly’s notice, and expects to present its own recommended director nominees in a proxy statement it will file with the U.S. Securities and Exchange Commission before its annual meeting this year.
“Gulfport has a highly qualified new management team and is in the midst of a comprehensive board refreshment process, with five of eight directors having joined in the last three years,” the company stated in its release, adding that seven of its eight current directors are independent.
As part of last week’s earnings report, Gulfport also announced a plan to reduce its capital expenditures by 50% to enable it to both operate within cash flow and to retain valuable drilling inventory for future better prices. It noted it took those steps based upon the collective input from all of its stakeholders, including Firefly and other investors.
“Gulfport is taking timely and decisive actions to position the company for future value creation amidst industry-wide challenges and a multiyear low point for natural gas prices,” it stated. “Gulfport is confident the timely and decisive actions it has and will continue to take will drive long-term value.”