Gulfport energy's accounts payable and accrued liabilities

Gulfport Energy reports later this week. Strangely one of the balance sheet items that most intrigues me is their accounts payable and accrued liabilities.

Here is the current liability section from the last 10-Q.

GULFPORT ENERGY CORPORATION CONSOLIDATED BALANCE SHEETS (Unaudited)
	September 30, 2012				December 31, 2011
Current liabilities:
Accounts payable and accrued liabilities	$	107,058,000			$	43,872,000
Asset retirement obligation - current	60,000				620,000
Short-term derivative instruments	8,816,000				—
Current maturities of long-term debt	147,000				141,000
Total current liabilities	116,081,000				44,633,000

I just want you to note that accounts payable and accrued liabilities are just over 107 million. That is up from 44 million at December 2011 and from 96 million in the second quarter.

And here is the profit loss statement listing all expenses for the past nine months.

GULFPORT ENERGY CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
	Three Months Ended September 30,								Nine Months Ended September 30,
	2012				2011				2012				2011
Revenues:
Oil and condensate sales	$	58,609,000			$	56,447,000			$	187,633,000			$	154,559,000
Gas sales	973,000				923,000				2,127,000				3,155,000
Natural gas liquids sales	874,000				653,000				2,374,000				2,346,000
Other income	81,000				58,000				189,000				248,000
	60,537,000				58,081,000				192,323,000				160,308,000
Costs and expenses:
Lease operating expenses	6,638,000				5,744,000				18,201,000				15,103,000
Production taxes	7,070,000				6,281,000				22,411,000				18,520,000
Depreciation, depletion, and amortization	25,377,000				14,736,000				70,424,000				40,606,000
General and administrative	3,098,000				2,034,000				9,370,000				6,209,000
Accretion expense	176,000				168,000				529,000				491,000
	42,359,000				28,963,000				120,935,000				80,929,000
INCOME FROM OPERATIONS:	18,178,000				29,118,000				71,388,000				79,379,000

I want you to notice that the only expenses in the past nine months are:

• 18.2 million of lease operating expenses
• 22.4 million of production taxes
• 70.4 million of depreciation, depletion and amortization
• 9.4 million of general administrative expenses, and
• 0.5 million of accretion expense (though I am not sure I know what that is).

The depreciation, depletion and amortization is - I presume - non cash. Cash expenses for the nine months add up to about $50 million.

I presume most of those were paid relatively promptly. (It does not endear you to regulators for instance if you do not pay your production taxes.)

Simple question

What sort of business is it that accrues $107 million in (unpaid) current liabilities but incurs only about $50 million of expense over the past nine months?

I have spent a bit of time puzzling out the answer - but I will leave that for another post.






John

Disclosure: short Gulfport.