GMX RESOURCES INC. Announces Financial And Operational Results For The Three And Six Months Ended June 30, 2012
OKLAHOMA CITY, Aug. 8, 2012 (GLOBE NEWSWIRE) -- GMX RESOURCES INC ., (NYSE:GMXR ) (the "Company" or "GMXR"), reports today on the financial and operating results for the second quarter ended June 30, 2012.
Company Highlights for the Three and Six Months Ended June 30, 2012
Record Oil Production
- In the second quarter of 2012, the Company achieved an average oil production of 705 barrels/day (Bbls/d). For the month of June 2012, oil production was 720 Bbls/d, representing a 111% increase over the 2012 first quarter average.
- Total production for the second quarter 2012 was 536,000 barrels of oil equivalent (Boe), which includes 64,115 Bbls of oil and 50,000 Bbls of NGLs. Oil production for the second quarter 2012 represents a 164% increase over second quarter 2011, and NGL production in the second quarter 2012 represents a 43% decrease over the second quarter of 2011. During the second quarter 2012 we continued to see limitations in third party NGL capacity and infrastructure, and elected to sell a portion of our unprocessed gas in the Carthage Texas area for a total price that was a premium to the local index and was greater than the combined estimated price of residue gas and the net processing upgrade on the gas that was processed. Since the NGLs can be left in or extracted from the gas stream, we will continue to make gas dispatch decisions based on maximizing the total sales value of the hydrocarbons for the Company.
- Natural gas production for the three months ended June 30, 2012 decreased to 2.5 billion cubic feet (Bcf) compared to 5.9 Bcf for the three months ended June 30, 2011, a decrease of 57%. Including the VPP volumes of 1.0 Bcfe, natural gas production decreased by 2.4 Bcfe, or 41%. The decrease in natural gas production resulted primarily from the natural decline in the Company's Haynesville/Bossier (H/B) wells as a result of the Company's suspension of its H/B horizontal drilling program in mid-2011.
- The Company engaged Global Hunter Securities on July 17, 2012 as the financial advisor in connection with a proposed sale of a portion of the Company's Cotton Valley Sand liquids rich natural gas properties located in East Texas. The Proved Developed and Producing wells are in the mature stage of production with shallow decline rates. The assets being sold have additional upside through infill horizontal development on acreage that is all held by production. The Company currently expects the sale of these properties to occur during the third quarter of 2012, with the proceeds to be used for our Bakken drilling program.
- The Company spud its eighth operated well on July 2, 2012. The Basaraba 24-35-1H is located in Sections 26&35, Township 144N, Range 100W in Billings County, North Dakota. The Company has an 89% working interest in the Basaraba 24-35-1H which has a proposed total depth of 20,950' and a proposed total vertical depth of 11,221'. We are currently drilling in the lateral portion of the well and expect to reach total depth within the next few days.
- During the second quarter of 2012, the focus of our drilling program was on the area in McKenzie County that had been de-risked by GMXR and other operators. In the second quarter we had three operated and one non-operated well successfully completed and brought to sales. The Lange 11-30-1H, the Akovenko 24-34-1H and the Johnston 31-4-1H were operated wells that were completed as Middle Bakken wells, while the Pojorlie 21-2-1H was drilled and completed as a first bench Three Forks well by Continental Resources. The average peak 24-hour initial production rate for our operated wells in McKenzie County during the second quarter was 1,837 Boe per day (Boe/d).
- The Pojorlie 21-2-1H well, in which the Company has an approximate 34% working interest, located in Sections 2&11, Township 146N, Range 98W in McKenzie County, North Dakota, is a Three Forks target that was successfully drilled by Continental Resources to a measured depth of 21,210' with a lateral length of 9,597'. The average 30-day gross production from the well is 257 Boe/d. This well also included a core sample taken from the Middle Bakken through the Three Forks.
- The Company's seventh operated well, the Fairfield State 21-16-1H, is located in Sections 16&21, Township 143N, Range 99W in Billings County, North Dakota, and the Company has a 96% working interest in the well. The well experienced screen out four stages into the process, and the stimulation process was temporarily suspended. After evaluating available options, the Company will now finish out completion of this well using plug & perf on the balance of the lateral in order to bring the well to sales.
- The Company has received the initial processing of the seismic program covering 172 square miles of its ongoing 226 square mile program in the Chugwater area. With the addition of the previous seismic project (North Mustang area), owned jointly by the Company, Devon and Chesapeake, the Company now has over 300 square miles of high quality 3D seismic, across and proximal to approximately 40,000 leasehold acres, that confirms targets in the Niobrara Petroleum System. Joints and fractures will be essential elements of the Niobrara Petroleum System. Additional targets are also being evaluated in the Pennsylvanian-Permian sections. Previous scientific studies confirm that thermal maturity and geological settings are present for oil saturated reservoirs and the 3D seismic indicates the existence of multiple pay zones. Significant drilling opportunities appear to be present on the Company's acreage.
- Net loss applicable to common shareholders was $106.1 million, or $1.52 per basic and fully diluted share, and $146.7 million, or $2.23 per basic and fully diluted share, for the three and six months ended June 30, 2012, respectively.
- As detailed below, non-GAAP adjusted net loss applicable to common shareholders (1) was $12.7 million, or $0.18 per basic and fully diluted share, and $24.7 million, or $0.38 per basic and fully diluted share, for the three and six months ended June 30, 2012, respectively.
- Impairment expenses were $91.7 million and $120.7 million for the three and six months ended June 30, 2012, respectively, compared to $16.9 million and $65.2 million for the three and six months ended June 30, 2011, respectively.
- Lease operating expenses were $2.9 million and $6.0 million for the three and six months ended June 30, 2012, respectively, compared to $2.8 million and $5.7 million for the three and six months ended June 30, 2011, respectively.
- General and administrative expenses were $6.8 million and $13.8 million for the three and six months ended June 30, 2012, respectively, compared to $7.6 million and $14.7 million for the three and six months ended June 30, 2011, respectively.
- Adjusted EBITDA (1) was $6.0 million and $13.0 million for the three and six months ended June 30, 2012, respectively, compared to $21.3 million and $40.4 million for the three and six months ended June 30, 2011, respectively.
- Discretionary cash flow (1) was $(5.7) million and $(13.9) million for the three and six months ended June 30, 2012, respectfully, compared to $13.7 million and $25.5 million and for the three and six months ended June 30, 2011, respectively.
- The 2012 capital expenditure plan is estimated to be approximately $100 million (including capitalized interest expense and G&A), which will fund our Bakken oil focused drilling and development plans. As of June 30, 2012, we have made $51.6 million of these planned capital expenditures.
- The Company's outstanding principal balance of its 5.00% Senior Convertible Notes due 2013 ("2013 Convertible Notes") at year-end 2011 was $72.8 million. The Company completed a total of six separately negotiated debt-for-equity exchange transactions with holders of the 2013 Convertible Notes during the six months ended June 30, 2012. The debt-for-equity transactions have resulted in the issuance of 11,271,510 shares of common stock and have reduced the principal amount of the 2013 Convertible Notes by $20.8 million, leaving an outstanding principal balance of $52.0 million as of July 1, 2012.
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