This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

GMX RESOURCES INC. Announces Financial And Operational Results For The Three And Six Months Ended June 30, 2012

Stocks in this article: GMXR

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.

East Texas Liquids Rich Natural Gas Assets

  • 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. 

  Niobrara DJ Basin Update

  • 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. 

(1) Adjusted net loss available to common shareholders, adjusted EBITDA and discretionary cash flow are non-GAAP measures that are further described and reconciled below in this press release.

Management Comments

James A. Merrill, Chief Financial Officer said "The Company is continuing to make progress on the transition to an oil focused producer outlined in January 2011 when we announced the acquisition of our Bakken and Niobrara positions.  We forecasted that 2012 was going to be financially challenging as we worked to grow our oil production which would lead to higher revenues to cover interest and operating costs. During the last 18 months, we have focused on the incremental steps necessary to achieve our goals particularly related to a disciplined and Bakken focused capital expenditure plan, reducing overall G & A expenses by at least 20% and keeping lease operating expenses flat to slightly declining in 2012 despite the higher overall lease operating expenses associated with oil wells.   I am pleased to report that our current and expected 2012 capital expenditures are in-line with our $97 million capex budget announced earlier in the year and G&A expenses have decreased in the first half of 2012 and we expect to see greater savings in the second half of the year. We did not forecast the unprecedented pricing pressure that we have had to incorporate into our business plan and as a result we have been forced to account for larger than expected impairments. The Company continues to pro-actively address the need for even better drilling results, more liquidity and debt reduction through a variety of means."

1 of 12

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,760.66 -17.49 -0.10%
S&P 500 2,064.00 +2.77 0.13%
NASDAQ 4,753.0850 +4.6890 0.10%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs