GMX Reduces Expenditures, Acquires East Texas Assets
GMX Resources Inc. announced a reduced capital expenditure plan for 2009 and corresponding adjustments to its production guidance for 2009. Additionally, the Company announced the acquisition of additional Haynesville/Bossier prospective acreage in East Texas.
2009 Capital Expenditures and Revised Guidance
GMXR has reduced its 2009 CAPEX budget by $70 million to $150 million. Under this modified CAPEX budget, the Company expects to drill fourteen and complete sixteen net Haynesville Bossier horizontal ("H/B Hz") wells (100% GMXR operated) 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. The Company will transition to two new H&P FlexRigs(tm) for drilling its H/B Hz wells in the second quarter of 2009. The Company will be focused on the Haynesville/Bossier horizontal drilling program (98% of 2009's CAPEX) that has a rate of return of 25% at current natural gas prices.
New guidance for 2009 production is 14.6 billion cubic feet equivalent ("Bcfe") of gas, an estimated 13% growth over 2008, and 2.8 Bcfe in 1Q09, with only two H/B Hz completions. Four H/B Hz completions are projected for 2Q09, five in 3Q09 and five in 4Q09. The Company expects the estimated sixteen H/B Hz completions in 2009 should add 80 Bcfe to its Proved Developed Producing ("PDP") reserves.
Update on Haynesville/Bossier Production Data
GMXR continues to have outstanding results from its first three H/B Hz wells. The first full month average daily production for the Callison #9H and the Bosh #11H was 4,100 Mcfgpd for each well. The 16-day average daily production for GMXR's most recent H/B Hz well, the Baldwin#17H, is 6,000 Mcfgpd.
GMXR continues to expand its Haynesville Bossier prospective acreage in East Texas with contracts in place for 3,900 gross (3,700 net) acres of acquired and drill to earn leasehold representing 49 gross (46 net) H/B Hz locations. GMXR is currently drilling on 1,100 gross acres of the drill to earn leasehold. GMXR has also obtained first right of refusal on an additional 5,000 gross acres which could add as many as 62 gross H/B Hz locations.