Monday, March 9, 2009

GMX Resources: Lower Capex, Haynesville Results

Today, GMX issued a news release noting changes to its capital expenditure (“capex”) budget and detailing results from recent Haynesville wells.

First, the bad news: GMXR has reduced its 2009 CAPEX budget by $70 million to $150 million. Under this modified budget, the Company expects to drill 14 and complete 16 net Haynesville horizontal wells, including the two completions that have already occurred in the first quarter. There are four rigs currently drilling with completions expected in April. Once these four rigs finish drilling, the Company will release the two rigs on well-to-well contracts and lay down the other two rigs which are owned by a subsidiary of the Company. This is pretty big news since Haynesville represents 98% of GMX’s 2009 capex.

Second, the not so bad news: a report on the company’s first three Haynesville Shale horizontal wells. The first full month average daily production for the Callison #9H and the Bosh #11H was 4.1 Mmcfe/day for each well. The 16-day average daily production for GMXR's most recent Haynesville well, the Baldwin#17H, is 6.0 Mmcfe/day. Those results don’t exactly make the top ten list, but they are still pretty strong.

GMX has continued to pick up acreage in east Texas, with contracts in place to lease an additional 3,900 acres (49 drilling locations). They have also obtained first right of refusal on another 5,000 acres (62 potential drill sites).

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