GMX Resources Announces Year-End Reserves, 2009 Production, and First Quarter 2010 Production Guidance

OKLAHOMA CITY, Feb. 4, 2010 (GLOBE NEWSWIRE) -- GMX Resources (NYSE:GMXR) (visitwww.gmxresources.comto view the most recent Company presentation and for more information on the Company) today announced 2009 year-end reserves, 2009 production and first quarter 2010 production guidance.

Proved Reserves

GMXR's total proved reserves for natural gas and crude oil reserves as of December 31, 2009 were 355.3 Bcfe, consisting of 3.7 million barrels (MMBbls) of crude oil and 333.2 billion cubic feet (Bcf) of natural gas as prepared in accordance with the definitions and guidelines of the U.S. Securities and Exchange Commission (SEC).

The following table summarizes GMXR's proved reserves as of December 31, 2009:

The proved reserves as of December 31, 2009 are calculated based on new SEC guidelines that went into effect for GMXR's year-end 2009 oil and gas reserve reporting. The commodity prices used in the estimate were based on the 12-month unweighted arithmetic average of the first-day-of-the-month price during the period from January through December 2009. For natural gas volumes, the average Henry Hub spot price of $3.87 per million British thermal units (MMBTU) was adjusted for energy content, transportation fees, regional price differences, and system shrinkage. For crude oil, the average West Texas Intermediate posted price of $61.19 per barrel was adjusted for quality, transportation fees, and regional price differentials. GMXR refers to this pricing scenario as the "2009 SEC Pricing".

Due to the changes in the SEC's reserve reporting guidelines and the low natural gas price used to calculate reserves compared with last year, the Company believes it is beneficial to investors to also present proved reserves using the December 31, 2009 market prices that would have been used under the old SEC rules (December 31, 2009 Pricing Case), as well as proved reserves based on the 3 year NYMEX strip price as of January 25, 2010 including the impact of the Company's revenue floors as of December 31, 2009 (Revenue Floors  plus 3 Year NYMEX Strip Pricing Case).

(1)  PV-10 represents the present value, discounted at 10% per annum, of estimated future net revenue before income tax of the Company's estimated proved reserves. The PV-10 value is different than the standardized measure of discounted estimated future net cash flows which is calculated after income taxes. The Company believes the PV-10 is a useful measure for evaluating the relative monetary significance of their proved reserves. Investors may use the PV-10 as a basis for comparison of the relative size and value of the Company's reserves to its peers. 

(2)  The December 31, 2009 Pricing Case scenario was based on the posted spot prices as of December 31, 2009 for both oil and natural gas. For oil, the spot price was $79.39 and was adjusted for quality, transportation fees, and regional price differentials. For natural gas volumes, the Henry Hub spot price of $5.79 per MMBTU was adjusted for energy content, transportation fees, regional price differences, and system shrinkage.

(3)  The Revenue Floors Plus 3 Year NYMEX Strip Pricing Case scenario was based on the 3 year NYMEX strip price as of January 25, 2010 for both oil and natural gas. For oil, the NYMEX 3 year strip price was $81.43 and was adjusted for quality, transportation fees, and regional price differentials. For natural gas volumes, the NYMEX 3 year strip price was $6.255 per MMBTU and was adjusted for energy content, transportation fees, regional price differences, and system shrinkage. For, 2010, 2011, and 2012, the Company has 13.3 Bcf, 14.9 Bcf, and 16.7 Bcf of natural gas revenue floors at a weighted average Mmbtu price of $6.43, $6.14, and $6.08, respectively.

The following table reflects the changes in the proved reserve estimates under the SEC Pricing and Year End 2009 Pricing Scenarios:

GMXR, like other operators, reviewed all our existing proved undeveloped reserves (PUDs) in light of the SEC's new 5-year rule and decided to drop PUD locations in the Cotton Valley where we had 30% working interests in non-operated PUDs. None of these locations were actually beyond the 5-year limit, but would have presented scheduling and capital priority issues under the new SEC guidelines going forward, especially in the context of our focus on the Haynesville/Bossier and our substantial number of operated and 50% working interest non-operated Cotton Valley PUD locations. We still believe the dropped locations to be geologically and economically viable, but felt our forward guidance would be improved without those locations in the mix for the next several years. If the price environment should change for the better, we would consider funding that development. This determination resulted in the reduction of proved reserves by 53 Bcfe. The remaining proved undeveloped reserves correspond to Cotton Valley drilling locations in both the Company's operated area and areas where we have 50% working interest in non-operated PUDS that are planned to be drilled within the next 5 years. The Company currently plans to resume CVS drilling in 2011 using either a vertical or horizontal drilling program.

Additionally in preparing the 2009 year-end SEC report, the Company's outside reserve engineer reduced proved reserve bookings by 53.6 Bcfe using modified decline assumptions for the longer life Cotton Valley producers.

2009 Production and First Quarter 2010 Production Guidance

The Company's production for the three months ended December 31, 2009 was 3.5 Bcfe compared to 3.3 Bcfe in the fourth quarter of 2008, an increase of 6%. Production was flat when comparing the third and fourth quarters of 2009. The Company drilled with only one H/B horizontal rig for much of the year. The Company added a second H/B Horizontal rig in late October. The first well drilled by the second rig did not start producing until the last week of December. 

 The Company's production was 13.5 Bcfe for the twelve months ended December 31, 2009, a 5% increase from 12.9 Bcfe in 2008. Drilling in 2009 was primarily with one H&P FlexRig(TM) which resulted in estimated capital expenditures of $168 million, a 48% reduction from 2008.   

The first H/B Hz well with a large diameter hole has reached total depth and we are setting 5 ½" casing. The next two wells will also have the same sized casing. The Company expects to improve completion results with this change and completed well costs are expected to be approximately $8 million on these first few wells. Completed well costs are expected to trend lower due to improved efficiencies throughout the year to approximately $7 million.

The Company expects production for the first quarter of 2010 to range from 3.5 to 3.8 Bcfe. The Company's third H/B horizontal rig spudded its first well in late January 2010. Production from this rig is not expected until the second quarter of 2010.

GMXR is a 'Pure Play', E & P Company with one of the most leveraged Haynesville / Bossier (H/B) Horizontal Shale Operations in East Texas. The Company has 355 Bcfe in proved reserves (YE2009), 94% of which are natural gas. The Company's proved reserves are 81% operated and consist of 279 net "Capital Core" H/B Hz un-drilled locations; 12 gross / 11.9 net H/B producers, and 324 gross / 186.9 net Cotton Valley Sand ("CVS") producers; 1,382 net CVS acre un-drilled locations; and 47 net Travis Peak / Hosston Sands & Pettit producers. These multiple resource layers provide high probability and the potential for repeatable, organic growth.

The GMX Resources Inc. logo is available at http://www.globenewswire.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.