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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Tapcon who wrote (45281)	11/3/2011 2:00:27 PM
From: E_K_S	Read Replies (1) \| Respond to of 78476

Yes I saw it. The company is spending more money than they are earning. Also they are asking some of their Note holders to trade in their notes (at a discount) for a new issue so they can free up money to continue their drilling program. This is a risky deal. I own a small amount of the GMXR preferred and a small amount of the common shares. I may buy a bit more of the preferred if I can get at a deep discount (perhaps around $10.00/share). It could be a long time to get your money back (if at all) because they have to finish drilling, get the wells producing and need NG prices to move higher. There is value in the land holdings they have and in the reserves they own but any buyer will want to buy at a discount. GMXR is in no position to sell at a premium to BV. They will be lucky to get BV. On the positive side, the company has a few good well prospects that if their money does not run out, and they can get them producing, future cash flows will be much better. In this environment, you are probably better off on staying with those E&P companies that are near breaking even or already booking profits. It also helps to own a basket of these companies since the big winners can off set the losses from the losers. It's hard (if not impossible) to just pick out the winners. EKS