OilVoice - GMX Resources Announces Revised 2009 CAPEX and Production Guidance

GMX Resources Announces Revised 2009 CAPEX and Production Guidance

Monday, December 08, 2008

GMX Resources Inc. has chosen to reduce its previously announced Capital Expenditure Budget to $220 million from $400 million, a 45% reduction. The reduction is due to continued peril in the global and domestic credit markets and lower commodity prices. As a result of reducing the H/B development plan for 2009, the Company now expects to drill 27 net H/B wells (including 5 net wells in the JD) with an average initial rate of 4.0 mmcfepd per well. Using this starting rate, the Company expects to have production of 24.7 Bcfe, a 93% increase over 2008's revised production estimate. PVOG has indicated that they will have 2 rigs scheduled for 2009 to be operating in the JD drilling H/B horizontals. "Based on this revised CAPEX Budget, we expect to be able to fund 2009's CAPEX based on cash flow and our existing $190 million bank credit facility and to exit 2009 with $16 million of unused bank capacity," stated Ken Kenworthy, Jr, CEO. Based on a Henry Hub price of $6.00 per mmbtu for natural gas and $50 per bbl of oil, the Company expects to generate oil and natural gas sales revenue of approximately $158.2 million, discretionary cash flow of $116.1 million and EBITDA of approximately $128.3 million. The Company will be operating 4 to 5 rigs throughout 2009 drilling H/B horizontals.