Activist investor Firefly Value Partners has renewed its attacks on US shale gas producer Gulfport Energy nearly a year after it began pressing for change at the company, writes Caroline Evans.

The investment firm, which owns 9.9% of Gulfport's oustanding stock, said in a letter last week that conditions in the company's management had not improved and pushed for Gulfport to add a Firefly principal to its board.

In January, following a private dialogue started in late 2018, Firefly called on Gulfport to launch a buyback programme or face scrutiny from dissatisfied stockholders.

The company conceded hours later, announcing a $400 million plan that would be executed over 24 months. The scheme promised returns to investors from asset sales and free cash flow.

However, in its letter, Firefly said Gulfport has "not even come close to fulfilling its commitments to urgently pursue non-core asset sales and return cash proceeds to shareholders".

"While the company has issued presentations and press releases regarding its plans, these steps have been half-measures at best and do not show real progress or strategic direction."

Firefly said Gulfport’s shares had plummeted 66% since the first public letter in January and 95% over the past six years.

The latest letter came days after Gulfport announced two of its directors would step down at the end of the year, while chairman David Houston will not seek re-election at the 2020 annual meeting. The company also confirmed it would slash 13% of its headcount.

Firefly said it had recently been in talks with Gulfport to discuss the need for a "board refresh", and proposed the entities "collaborate" to identify three candidates, including a Firefly appointee.

It called the announcement of the board members' resignations "rushed" and "half-baked," and once again called for the immediate appointment of a Firefly principal to the board.

"This representative would work collaboratively with the remaining board members to select the best candidates to fill the upcoming vacancies and complete the belated board refresh, then help establish improved capital allocation and governance oversight at the company," according to the letter.

A Gulfport spokesman said: "Gulfport values shareholder dialogue. Our announced initiatives, including the suspension of our share repurchase programme and our continued focus on accretive debt repurchases, reflect the collective input from many of our large stakeholders and we are confident that these efforts will drive shareholder value.

"Similarly, the board of directors has an ongoing rigorous process in place to identify the best candidates for the company and is happy to consider individuals that meet the board’s requirements for skillset, diversity and experience.

"While we disagree with Firefly’s demands for additional share repurchases at this time, we have repeatedly invited them to provide criteria and/or resumes for qualified new director candidates, which they have declined to do."

Shale

Firefly stepping up pressure at Gulfport