OKLAHOMA CITY, July 7, 2008 (PRIME NEWSWIRE) -- GMX Resources Inc. (Nasdaq:GMXR) (visit www.gmxresources.com to view the most recent Company presentation and for more information on the Company) today announced the commencement of a Haynesville/Bossier drilling program, beginning in Q3 2008. The Company expects to spud four rigs drilling horizontal wells in the Haynesville/Bossier Shale in its 100% acreage in 3Q08. GMXR will change its drilling program to development of the gas shale. Additionally the Company expects to deploy two Flex "purpose built" rigs in early 2009. "The early successful results of nearby and offsetting Haynesville/Bossier wells warrant our company's conversion to focus the majority of our efforts drilling horizontal wells. This plan will fully develop our underlying gas shale over the next five years at 80 acre density. Production rates from the shale and rates of return appear to be far superior, which should increase GMXR's production, cashflow and return on equity over the period. We will continue to add shale acreage around our core area and will also add additional rigs to develop the shale during this period of high natural gas prices," stated Ken Kenworthy, Jr., the Company's Chief Executive Officer.
Increase in Capital Expenditure Budget
GMXR also announced an increase in its 2008 capital expenditure budget from a previously announced $195 million to $271 million. This increase will allow the Company to drill up to 4 to 6 net horizontal Haynesville/Bossier shale wells in its 27,500 net Haynesville acres. The new capital expenditure budget also includes acreage acquisition cost, infrastructure build-out and equipment upgrades. The Company expects to fund its entire capital expenditure budget with cash flow and its forecasted bank borrowing base. Additionally, the Company has increased its 2008 guidance for discretionary cash flow to $100 million, up from $80 million, revenue to $140 million, up from $125 million and EBITDA to $115 million, up from $95 million. Production guidance will also be raised to 7.8 BCFE for 2H08 and 13.8 BCFE for the full year. 3Q08 production will be flattened somewhat to 3.3 BCFE due to longer drilling times for the horizontal wells, but 4Q08 should increase to 4.5 BCFE and raising daily production rate expectations to 60 Mmcfe/d by year end, up from previous guidance of 42 Mmcfe/d.
Successful Completion of Haynesville Acreage Addition
GMXR successfully closed its previously announced acreage acquisition. Effective July 1, 2008, the Company has added an additional 7300 net acres in Harrison, Marion, and Cass counties in East Texas plus acreage in Caddo Parish, Louisiana. The Company now operates a total of 28,000 net acres with 27,500 Haynesville/Bossier acres with 344 locations on 80 acre spacing.
Upcoming Conference and Webcast
GMXR will be a presenter at the Collins Stewart Fourth Annual Growth Conference in New York on Tuesday, July 8, 2008 at 10:00 AM EDT to discuss its strategy for increasing production, reserves and shareholder value. To access the webcast, log on to http://www.wsw.com/webcast/clst/gmrx/ at least 20 minutes prior to the scheduled start of the webcast to download and install any necessary audio software. The webcast will also be available on the Company's website at www.gmxresources.com. You can find the Internet webcast link in the Events & Presentations section under the Investor Relations tab. You must have either Microsoft Media Player or Real Player to access the webcast. During the webcast, the Company's most recent presentation will be utilized. An on-demand replay of the webcast will be available on GMXR's website for 30 days.
GMXR is a 'Pure Play', E & P company with 435 BCFE in proved reserves and 3.1 TCFE in total 3P reserves that are 94% natural gas; consisting of 294 gross / 163.9 net Cotton Valley ("CV") producers with 344 Haynesville /Bossier 80 acre horizontal locations and 1,500 gross / 930 net CV un-drilled locations; drilled at a 100% success rate. Eight drilling rigs are currently developing this contiguous, multi-layer gas resource play on the Sabine Uplift; Carthage, North Field, in Panola & Harrison County of East Texas, where the Company has invested $60 million in infrastructure; which has contributed to 'Best In Class' finding and development costs; which also contains 38 gross / 31 net Travis Peak/Hosston Sands & Pettit producers on the property. These multiple resource layers provide high probability, repeatable, organic growth. The Company, headquartered in Oklahoma City, Oklahoma, has interests in 351 gross / 207 net producing wells and operates 74% of its reserves. The Company's strategy is to grow shareholder value through acceleration of development and acreage additions achieving operational growth around its core area, converting its natural gas reserves to proved, while maintaining balanced prudent financial management.
The GMX Resources Inc. logo is available at http://www.primenewswire.com/newsroom/prs/?pkgid=5158
This press release includes certain statements that may be deemed to be "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that the Company expects, believes or anticipates will or may occur in the future are forward-looking statements. They include statements regarding the Company's financing plans and objectives, drilling plans and objectives, related exploration and development costs, number and location of planned wells, reserve estimates and values, statements regarding the quality of the Company's properties and potential reserve and production levels. These statements are based on certain assumptions and analysis made by the Company in light of its experience and perception of historical trends, current conditions, expected future developments, and other factors it believes appropriate in the circumstances, including the assumption that there will be no material change in the operating environment for the company's properties. Such statements are subject to a number of risks, including but not limited to commodity price risks, drilling and production risks, risks relating to the Company's ability to obtain financing for its planned activities, risks related to weather and unforeseen events, governmental regulatory risks and other risks, many of which are beyond the control of the Company. Reference is made to the Company's reports filed with the Securities and Exchange Commission for a more detailed disclosure of the risks. For all these reasons, actual results or developments may differ materially from those projected in the forward-looking statements.