OKLAHOMA CITY, Nov. 30, 2011 (GLOBE NEWSWIRE) -- GMX RESOURCES INC., (NYSE:GMXR) (the "Company" or "GMXR"), reports today that the Company has agreed to sell an overriding royalty interest in certain long-lived producing assets in the Haynesville Bossier ("H/B") layer in Harrison County in East Texas to EDF Trading North America, LLC, the trading group for the French owned power conglomerate EDF S.A. The VPP will be for approximately 14.8 Bcf to be produced over the next ninety-four months commencing January 1, 2011. GMXR will retain all of its oil and NGL production associated with the VPP interests and all of its undeveloped locations. Production of natural gas from these properties attributed to the VPP for 2012 will be approximately 4.0 Bcf. The $50 million transaction, based on the natural gas futures prices, is expected to close before the end of the year. The VPP will be treated as a sale for accounting purposes and the Company's oil and natural gas properties will be reduced accordingly. The reduction from the VPP on the Company's year-end 2010 PV-10 of $249.9 million is approximately $46 million.
As previously announced, the Company has commenced an exchange offer of its existing 11.375% Senior Notes due 2019 in exchange for new 11.00% Senior Secured Notes due 2017. The Exchange is expected to close and fund in mid-December 2011. If 100% of the existing Senior Notes participate in the exchange offer the transactions will result in $120 million in new cash proceeds. Combined, the VPP and Bond Exchange will have created approximately $150-$170 million in liquidity and fund the Company's drilling program into 2013.
The Company's second Bakken Petroleum System (Bakken) well, the Frank 31-4-1H, drilled in Sections 4 & 9 Township 148N Range 98W in Stark County, reached a total depth of 21,058' with a horizontal (Hz) length of 10,183' in the Three Forks. The Frank well is currently in the process of being fracture stimulated with Halliburton's 40 stages Rapid Frac System™.
The Company's third Bakken well, the Evoniuk 21-2-1H, is located in Sections 2 &11 Township 142N Range 100W in Billings County. The Evoniuk well is a Middle Bakken test expected to reach a total depth of 19,850' with a lateral length of 9,473' and we expect to TD the well within a week.
The Company has 5 additional locations permitted in McKenzie County and 9 locations that are currently in process between Billings County and McKenzie County. The Company expects to spud our fourth Bakken well, the Lange 11-30-1H, in December 2011. The Lange well is located in Sections 30 & 31 Township 147N Range 99W in McKenzie County and is expected to reach a total depth of 20,600' with a targeted lateral length of 9,100'. Most if not all of our operated focus in 2012 will be directed at Billings and McKenzie Counties where the Company has 32 units and 127 potential locations.
The Company has elected to participate in six Non-Operated Bakken Petroleum System wells with an average working interest of 8%. The Company has a 2% working interest in the Whiting Petroleum Company's Marsh 21-16TFH well located in Sections 16 & 21 Township 140N Range 97W in Stark County. The Marsh well is 1 mile south and four miles east of our Wock well; the Marsh has been successfully completed with a Peak Initial Production rate of 4,020 BOE/D. This rate is the highest reported rate in the entire county.
Other non-operated wells which are scheduled for completion over the next month include Burlington's Logan 24-8H in Sections 5 & 8 Township 148N Range 98W in McKenzie County (17% WI) and Slawson's Taboo 1-25-36H located in Sections 25 & 36 Township 147N Range 100W in McKenzie County (25% WI).
In the Niobrara, the Company is a non-operating participant in the Devon Energy Newton Ranches 14-3444H well located in Section 34 Township 24N Range 64W. The Company has 29.2% working interest in the well which is scheduled for completion in early December.
The Company's 3D seismic shoot ("Crossroads") of 33 square miles, covering almost all of the Company's contiguous operated acreage in Harrison County, Texas has been completed and the data is in the initial stages of being processed. The Crossroads shoot is expected to aid in a more complete assessment of several oil targets and proven natural gas developments.
GMXR is a resource play rich E&P company with Potential Reserves of 186 MMBOE + 1.6 TCF. Oil shale resources are located in the Williston Basin, North Dakota & Montana targeting the Bakken Petroleum System and in the DJ Basin, Wyoming targeting the Niobrara Petroleum System; both plays are 90% oil. Our natural gas resources are located in the East Texas Basin, in the Haynesville/Bossier gas shale and the Cotton Valley Sand Formation, where the majority of our acreage is contiguous, with infrastructure in place and mostly held by production. We believe these oil and natural gas resource plays provide a substantial inventory of operated, high probability, repeatable, organic growth opportunities. The Company's multiple basin strategy provides flexibility to allocate capital to achieve the highest risk adjusted rate of return, with both oil and natural gas resources throughout our portfolio. Please visit www.gmxresources.com for more information on the Company.
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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 the completion of announced acquisitions, 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.