Value Investing Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Value Investing

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

From: E_K_S	9/24/2010 2:06:03 PM
	Read Replies (1) of 78748

Increased my GMXR by 50%. Stock trading near an all time low. Re:GMX Resources Inc. (GMXR) EXCO Resources Inc. (XCO) I) Didn't realize that GMXR has JV partner XCO. XCO will need to use GMXR's gathering facilities at this JV project location. From GMXR's April 13, 2010 Press release: GMXR Signs Joint Operating Agreement w/ EXCO ir.gmxresources.com "...The Company has executed a Joint Operating Agreement ("JOA") with EXCO Operating Company, LP to jointly develop H/B leasehold rights in the Scottsville area of Harrison County, Texas. Under the JOA, the Company is contributing its H/B leasehold rights in the Verhalen Prospect and EXCO is contributing its H/B leasehold rights in the Hamilton Unit, creating a 3,850 acre block of contiguous leasehold with a potential of 49 H/B Horizontal locations on 80 acre spacing. The JOA adds an additional 9 H/B Hz drilling locations. The Company will operate the joint leasehold with an 84.3% working interest and EXCO will participate with a 15.7% working interest representing the pro rata shares of each company's leasehold contribution under the JOA. The reduction in the Company's capital expenditures, production, and operating cash flow and the increase in liquidity related to the JOA already has been included in the published production guidance of 17.5 Bcfe, capital expenditures of $175 million, and operating cash flow of $62 million. ================================================================== II) GMXR Subleases H&P FlexRig 3(TM) for Remainder of Contract period (3/25/2013) saving them $22 million. I suspect the major operator taking over the sub lease might be XCO but the press release did not state this. Any successful well drilled and brought into production at this location will again utilize the gathering facilities owned and operated by GMXR. files.shareholder.com III) The Company expects full year 2010 production growth of 28% over 2009. They bought Puts to hedge 57% their 2011 production and 50% or their 2012 production at $6.00 per MMBtu. This implies a 50% increase in the NG price over the next 24 months. This protects them if NG prices increase significantly over this 2 year period (ie. >$6.00/MMBtu). ir.gmxresources.com ----------------------------------------------------------------- I do not think the stock should be selling at it's all time low. Worst case is their JV partner XCO could acquire some or all of their assets as they own property contiguous to wells already in production. They should save over $22 million ($0.76/share) by leasing out one of their two production Rigs. This savings should go right to the bottom line. Any well developed for production at this lease site will still earn GMXR as much as $0.12/MMbtu as the lessee must pay the gathering and transportation fees to move the NG to processing facilities. I believe the stock could easily double from current levels if NG prices increase and/or company hits their 28% growth target w/ their reduced $175 million 2011 CAPX budget. EKS

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next