Monday, October 19, 2009

GMX Update

GMX provided an operational update lite this evening, but the big news was reported last week when the company traded 40% of its gathering pipeline to Kinder Morgan for enough dough ($36 million) to engage a second rig to drill the Haynesville Shale. GMX expects to expand its 2009 capital expenditures from $157 million to $175 million, and not just by transposing the last two numbers, but by spending the Kinder Morgan proceeds (presumably).

What is interesting in today's report is that the company hopes to expand its rig count from two to four in 2010. Preliminary estimates of 2010 capex are $180 million if the company runs three rigs and $220 if it runs four.

GMX also said that results of operating wells with greater than 4,000 foot laterals (seven wells of the eleven Haynesville wells) generally affirm the company's Haynesville decline curve and its estimated ultimate recovery (EUR) estimate of between 5. 4 and 6.5 Bcf per well.

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