Tuesday, August 5, 2008

GMX Resources ( GMXR ) Haynesville Shale Update

GMXR came out with earnings last night.....here are the following Haynesville Shale highlights:

The second quarter of 2008 has marked records in production, revenue, earnings and cash flow for the Company and positions us to continue to accelerate our successful drilling program, add meaningful operated acreage in the ArkLaTex region and deliver shareholder value,'' commented Ken Kenworthy, Jr. Chairman, President and Chief Executive Officer.

``Acceleration of the Haynesville/Bossier development, funded by our growing cash flow and credit line is expected to increase the present value of our 1P & 2P reserves. We have grown our operated acreage over 130% in 2008 through July 31, 2008, including the addition of 7,300 net operated acres in Q2 and an additional 10,955 in Q3. We now operate 81% of our gas shale development and expect to add additional operated acreage in the remainder of 2008. As of July 30, 2008, the Company has 43,032 net operated acres including 38,455 acres of Haynesville/Bossier shale giving us the most Haynesville shale acres per share as compared to all other public companies. The GMXR team continues to focus on the successful development of our asset base and executing our strategy of investing in profitable growth,'' Kenworthy added.
Production for the quarter ending June 30, 2008 averaged 35.7 MMcfe per day for a total of 3.25 Bcfe. This marks the 17th consecutive quarter of production growth.

For the quarter ending June 30, 2008 GMXR drilled a total of 30 gross/19.2 net Cotton Valley and Travis Peak vertical wells. Capital expenditures for the quarter were $70.1 million. Drilling activity is expected to increase this year as the Company brings two additional third party leased rigs on-line in the second half of 2008. This will increase rigs drilling on the Company's operated acreage to six and total rig count on the property base to ten. The Company intends to drill Haynesville/Bossier horizontal shale wells with four of its six rigs beginning in the third quarter and Cotton Valley vertical wells with the remaining two. The Company expects to drill in our 100% owned acreage 4-6 gross and net Haynesville/Bossier horizontal wells in the second half of 2008. We also expect GMXR's joint development partner, Penn Virginia Oil and Gas, L.P. (``PVOG'') to drill 2 gross/.8 net Haynesville/Bossier horizontal wells in jointly owned acreage in the second half of 2008. This shift in drilling focus to Haynesville/Bossier versus Cotton Valley wells and the extended drilling time for horizontal wells will bring our planned wells to a range of 68.3 to 78.8 net wells for 2008. In 2006, GMXR and PVOG drilled and completed 19 vertical test wells across its acreage completing the Haynesville/Bossier Shale in most of the wells. These tests confirmed the presence of significant amounts of natural gas with 24 hour IP rates between 1 and 2 Mmcfe/d.

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