GMXR (GMX Resources Inc.)

[thegreatgate]

Current PPS: $7.75
52-week high: $88.35 on 7/14/08
52-week low: $5.57 on 4/1/09
Website: GMX Resources Inc.

3-month chart:

Shares outstanding date: 02/26/2009
Shares Outstanding: 18,794,691
File date: 03/02/2009

March 12, 2009:
GMX's largest shareholder says sale needed.(Centennial Energy Partners)(GMX Resources Inc.).....A sharp drop in the prices of the shares of GMX Resources over the past weeks prompts Centennial Energy Partners to suggest sale of the company. Centennial Energy Partners hold the largest stake in GMX.

March 9, 2009:
OKLAHOMA CITY, Mar 9, 2009 (GlobeNewswire via COMTEX) -- GMX Resources Inc. (Nasdaq:GMXR) (please visit GMX Resources Inc. to view the latest corporate presentation) today announces a reduced capital expenditure plan for 2009 and corresponding adjustments to its production guidance for 2009. Additionally, the Company announced the acquisition of additional Haynesville/Bossier prospective acreage in East Texas, and that the Company and its lenders have agreed to modify certain covenants in the Company's credit agreements. The Company has also declared a regular quarterly cash dividend on its 9.25% Series B Cumulative Preferred Stock.

2009 Capital Expenditures and Revised Guidance

GMXR has reduced its 2009 CAPEX budget by $70 million to $150 million. Under this modified CAPEX budget, the Company expects to drill fourteen and complete sixteen net Haynesville Bossier horizontal ("H/B Hz") wells (100% GMXR operated) including the two completions that have already occurred in the first quarter. There are four rigs currently drilling with completions expected in April. Once these four rigs finish drilling, the Company will release the two rigs on well-to-well contracts and lay down the other two rigs which are owned by a subsidiary of the Company. The Company will transition to two new H&P FlexRigs(tm) for drilling its H/B Hz wells in the second quarter of 2009. The Company will be focused on the Haynesville/Bossier horizontal drilling program (98% of 2009's CAPEX) that has a rate of return of 25% at current natural gas prices.

New guidance for 2009 production is 14.6 billion cubic feet equivalent ("Bcfe") of gas, an estimated 13% growth over 2008, and 2.8 Bcfe in 1Q09, with only two H/B Hz completions. Four H/B Hz completions are projected for 2Q09, five in 3Q09 and five in 4Q09. The Company expects the estimated sixteen H/B Hz completions in 2009 should add 80 Bcfe to its Proved Developed Producing ("PDP") reserves.

Based on the revised 2009 capital expenditure budget, cash flow and EBITDA for 2009 are projected to be approximately $50 million and $62 million, respectively. Based on the Company's 2009 expected production of 14.6 Bcfe, the current natural gas strip price and our current hedges, we expect our average Mcfe price to be $7.20 for 2009.

As of December 31, 2009, the Company had $110 million available under its current borrowing base of $190 million. The Company has a borrowing base redetermination scheduled for early April. As a result of significantly lower commodity prices, the Company could potentially see a reduction in its borrowing base at its next bank redetermination. As the additional HB Hz wells are completed during the year, including four scheduled completions during the second quarter of 2009, the Company should realize a significant increase in PDP reserves which should increase the borrowing base.

The Company continuously monitors its capital expenditure budget and available liquidity and capital resources. After reviewing the Company's estimated PDP reserve growth in 2009 at a current bank price deck that includes the effects of reducing the capital expenditure budget and a potential near-term reduction in bank borrowing base, the Company estimates based on historical experience with its bank group that it will have the following availability under its revolving bank credit facility as of the end of each quarter in 2009:

Excess available bank borrowing base as of the end of each quarter:
-------------------------------------------------------------------
1Q09 - $ 82 million
2Q09 - $ 36 million
3Q09 - $ 25 million
4Q09 - $ 24 million

Update on Haynesville/Bossier Production Data

GMXR continues to have outstanding results from its first three H/B Hz wells. The first full month average daily production for the Callison #9H and the Bosh #11H was 4,100 Mcfgpd for each well. The 16-day average daily production for GMXR's most recent H/B Hz well, the Baldwin#17H, is 6,000 Mcfgpd.

Improvements to Bank and Credit Covenants

GMXR, as previously announced in a Form 8-K filed with the Securities and Exchange Commission on March 2, 2009, has reached agreements with the banks under the revolving credit facility and the lenders under the Senior Subordinated Secured Notes to amend the covenants pertaining to these credit agreements. These industry common covenant amendments provide more flexibility relating to the non-cash impairment charges the Company reported in the YE2008 financial results and help ensure the Company is in compliance with all debt covenants.

Acreage Acquisitions

GMXR continues to expand its Haynesville Bossier prospective acreage in East Texas with contracts in place for 3,900 gross (3,700 net) acres of acquired and drill to earn leasehold representing 49 gross (46 net) H/B Hz locations. GMXR is currently drilling on 1,100 gross acres of the drill to earn leasehold. GMXR has also obtained first right of refusal on an additional 5,000 gross acres which could add as many as 62 gross H/B Hz locations.

Management Comment

James A. Merrill, Chief Financial Officer, said, "In light of the economic environment we feel it is prudent to reduce our 2009 CAPEX to ensure our spending fits within our current liquidity. Our assumptions are fairly conservative: natural gas prices will remain flat for the year, our well results will be at least as good as our first three and the banks will remain open and willing to lend to the energy sector. With four H/B Hz well completions scheduled for the second quarter of 2008 and five more in the third quarter, we believe we will more than offset any short-term decrease in our borrowing base with growth in our proved producing reserves. Our banks remain steadfast in their support of us, as evidenced by their willingness to amend the loan covenants."

Ken L. Kenworthy, Jr., President and CEO said, "We have stated in the past that we have operational flexibility. We are laying down a total of five rigs this quarter and cutting our capital expenditure budget by $70 million. We will spend less than our cash flow and available credit every quarter. If prices improve, or if we continue to improve our completions and as we continue to lower well costs the cash flow and credit versus CAPEX picture gets even better. We have successfully drilled three H/B Hz wells that have a 25% or greater return at today's prices. All fourteen of our 2009 wells will be drilled inside our H/B acreage that we believe is substantially de-risked. Additionally our current banks and lenders have confirmed their support to provide additional borrowing base capacity as our reserves grow."

Company: GMX Resources Inc. (NASD:GMXR)
Actual EPS for FY End (12/2008): -5.66
Current FY High EPS Estimate: 1.03
Current FY Low EPS Estimate: -0.40
Current FY Consensus Estimate: 0.17
Change from Previous Consensus Estimate: 0.00
Current P/E Ratio: 41.1
P/E Ratio for Next FY: 14.5
Current Industry P/E Ratio: NA
52 Week High Price: 88.35
52 Week Low Price: 5.57
Financial

Company: GMX RESOURCES INC.
Consensus Recommendation: BUY
(Strong Buy: 2, Buy: 4, Hold: 3, Underperform: 0, Sell: 0)
Quarter Consensus Estimate [Q2]: 0.02
FY Consensus Estimate [FY2009]: 0.17
Next FY Consensus Estimate [FY2010]: 0.48
Industry: ENERGY/OIL
Estimates reported in USD

From Friday, February 6th, 2009:
When speculating in the energy sector, it pays to look at how cheap a stock is relative to its net asset value, which is the amount left after liabilities are subtracted from total assets. GMX Resources closed at $23.84, and its net asset value range is between $20 and $50. This is not taking into account its reserves which might bring the value to the range of $60-$85 a share. Cramer thinks GMX Resources could potentially be worth even three or four times its current value and may be an attractive takeover target. The company has a sizeable portion of the very rich Hanesville shale; 435 billion cubic feet in proven reserves and 3.2 trillion cubic feet in total reserves. The company is expected to increase production while lowering production costs. Cramer thinks GMX Resources has a lot in common with Chesapeake and Anadarko, but its production costs are lower. While Cramer thinks GMX is a buy, he still thinks it is speculative and would wait for a drop before buying and recommends using limit orders.

[thegreatgate]

3-month chart:


Friday's gain lifted GMXR through both the 8 and 32-day moving averages on roughly 2X the average volume. The 50-day m.a. is $12.51 and that's where I hope GMXR is headed next.....

[Klipper22]

My thoughts on the GMXR chart that GG posted.

[thegreatgate]

April 20, 2009:

GMXR began 5 successive Haynesville/Bossier Horizontal (H/B Hz) completions, Monday April 13, 2009.

* Baldwin 14H 4,620' Lateral 12 Stages 1st Sales est. 4/25/09
* Verhalen A2H 4,198' Lateral 12 Stages 1st Sales est. 5/07/09
* Blocker Ware 19H 4,446' Lateral 12 Stages 1st Sales est. 5/30/09
* Blocker Heirs 12H 4,934' Lateral 12 Stages 1st Sales est. 6/08/09
* TJT Simpson 1H 4,606' Lateral 12 Stages 1st Sales est. 6/18/09

"The Blocker Heirs 12H has nearly reached total depth; all other wells have casing cemented and are ready for completion. The production from these five completions could double our current production in June, 2009. The production growth achieved from the H/B Hz wells is unprecedented in our company's history," added Ken Kenworthy, Chairman, CEO and President of GMXR.

[thegreatgate]

From a May 7, 2008, seeking alpha article:

GMX Resources: Strong Growth Should Continue

Oil and gas really pushed the revenues and earnings up for GMX Resources (GMXR). Their first quarter earnings were spectacular. They beat earnings estimates by 25%. They beat revenue estimates by 14%. The highest analyst estimate was beaten by 14% with respect to earnings. Production was up 60% year-over-year. Sales more than doubled. EPS was up 90% year-over-year. This company not only has realized the increase in oil and gas prices in its bottom line but is also increasing production. They have realized production growth for 16 straight quarters. They will add one more leased rig this year and a second in 2009 to continue this trend.

GMXR has benefited from increased prices that have allowed them to utilize some of their horizontal wells. Some of the shales have massive reserves and now it is profitable to tap them. Since 2003 reserve growth has also been spectacular as the replace current production with growth down the road. 2003 had a reserve of 53 Bcfe and today that stands at 1970 Bcfe. Last year they also had the best operational performance of any company in their class, plus they were second with respect to their entire industry. They are also number one in their sector with respect to reserve replacement. Their total operating costs were 3rd behind UPL and SWN.

This company continues to beat the competition in many areas, and has just kept flying under the radar. Going forward they are going to grow production and reduce costs. They will continue to hedge (which they have done a very good job of) to lower commodity fluctuations. Use increased production to fuel capital expenditures.

Looking over their current estimates, the analysts are all over the board as full year projections are anywhere from $1.03 to $1.72. I believe they are going to come in at around $1.70 for the full year, mostly on their increased production and my belief oil will have a pretty tough bottom at $100. This number places current PE at 24 through December.

Since they currently have a one year PEG of .67, we see $1.70 would be 2008 earnings growth of 85%, and that would equate to a PE ratio of approximately 57. That puts a 96 dollar price target for the end of the year, but if you use the current PE the stock would still grow to $74. The chart is experiencing a major breakout and will not see resistance until $48. If you buy now get out at $47 and see if the stock pulls back a little as it has had quite a run.

[justin_502]

Very nice!

[Aufan 1983]

Originally Posted by thegreatgate

April 20, 2009:

Wow... GREAT FIND!!!!!!!!!! On that I just bought another 150 shares.

This is a monster walking!!!!!!!!!!!!!!!

[thegreatgate]

GMXR on 4/22/09:

[BadThad]

Congrat on this play....up big today!

[thegreatgate]

Natural gas is down to 7 year lows. It is down 37 percent YTD. Now if NG gets a rally this summer GMXR will have no problem reaching $20. And how much lower can NG go?

April 23, 2009:

10:30AM Nat gas drops to fresh lows, at $3.397, following inventory data; now off 10 cents to $3.432 .

Gas May Fall to New Lows, Remain in Range: Technical Analysis
April 23 (Bloomberg) -- Natural gas prices, which hit a six-year low earlier this week, are poised to reach a new bottom, barring the biggest one-day rally in more than a month. If natural gas for June delivery remains below $3.864 per million British thermal units today and $3.832 tomorrow, it “will remain positioned to continue its slow grind lower and make new recent lows,” said Veronique Lashinski, a senior research analyst for Newedge USA LLC in Chicago, in a report. A move above $3.864 per million Btu for the June contract would require a one-day rally of 6 percent or more, something gas hasn’t done since March 19. The contract added 1 cent, or 0.3 percent, to $3.645 yesterday. “I don’t see any reason to say this market is going to rally,” Lashinski said in a telephone interview, adding that the down trend is “very, very slow.” The market may see short- term spikes because of the number of orders in place to buy gas when it reaches certain levels, she said. A government report today may show that U.S. inventories expanded by 44 billion cubic feet in the week ended April 17, according to the median of a Bloomberg survey of 14 analysts. That would exceed the typical change for the week, an increase of 35 billion cubic feet. Gas for May delivery fell to $3.511 per million Btu on April 21, the lowest closing price since Sept. 25, 2002. Lashinski said she sees a key support level at $3.50. Gas rose 2.1 cents, or 0.6 percent, to $3.532 yesterday. It’s down 37 percent this year.

I found a widely traded ETF that tracks natural gas. Symbol is UNG.
Current PPS: $13.67
52-week low: $13.59
52-week high: $63.89

Here's a 9-month chart, not promising but we are literally at the bottom for now, although it looks like UNG will be making new lows before going up: