GMX Resources Inc. (GMXR, Financial) filed Annual Report for the period ended 2011-12-31.
Gmx Rsrcs Inc has a market cap of $111.3 million; its shares were traded at around $1.76 with and P/S ratio of 1. The dividend yield of Gmx Rsrcs Inc stocks is 33.4%.
Oil and Natural Gas Sales. Oil and natural gas sales during the year ended December 31, 2011 increased 21% to $116.7 million compared to $96.5 million during the year ended December 31, 2010. Oil and natural gas sales included gains (losses) from the ineffectiveness from derivatives of $0.1 million and $(1.3) million for the year ended December 31, 2011 and 2010, respectively, and are the result of a difference in the fair value of our cash flow hedges and the fair value of the projected cash flows of a hypothetical derivative based on our expected sales point. The increase in oil and natural gas sales was due to a 35% increase in production on a Bcfe-basis, a 20% increase in oil prices, a 24% increase in the average realized price of NGLs, offset by a 16% decrease in the average realized price of natural gas, excluding ineffectiveness of hedging activities. The average price per barrel of oil, per gallon of natural gas liquids NGLs and Mcf of natural gas received (excluding ineffectiveness from derivatives) in the year ended December 31, 2011 was $92.33, $0.98 and $4.50, respectively, compared to $76.77, $0.79 and $5.33, respectively, for the year ended December 31, 2010. Our realized sales price for natural gas, excluding the effect of hedges of $0.90 and $1.60, for the year ended December 31, 2011 and 2010, respectively, was approximately 89% and 85% of the average NYMEX closing contract price for the respective periods. During the year ended December 31, 2011 and 2010 , the conversion of natural gas to NGLs produced an upgrade of approximately $0.67 per Mcf and $0.81 per Mcf, respectively, for every Mcf of natural gas produced. This upgrade in value was previously included in the realized price of our natural gas sales.
Impairment of oil and natural gas properties. For the $205.8 million non-cash impairment charge recorded in the year ended 2011, $196.4 million of the charge was related to the impairment of oil and gas properties subject to the full cost ceiling test and $9.3 million was related to a change in value of assets held for sale. The primary factors impacting the full cost method ceiling test are expenditures added to the full cost pool, reserve levels, value of cash flow hedges and natural gas and oil prices, and their associated impact on the present value of estimated future net revenues. Any excess of the net book value is generally written off as an expense. Revisions to estimates of natural gas and oil reserves and/or an increase or decrease in prices can have a material impact on the present value of estimated future net revenues. Natural gas represents 96% of the Company's total proved reserves, and as a result, a decrease in natural gas prices can significantly impact the Company's ceiling test. During the year ended December 31, 2011, the 12-month average of the first day of the month natural gas price decreased 6% from $4.38 per MMbtu at December 31, 2010 to $4.12 per MMbtu at December 31, 2011. Of the $196.4 million related to the impairment of oil and gas properties, $121.4 million resulted from the net book value of oil and gas properties exceeding the net present value of future net revenues, $52.3 million related to the monetization of the cash flow hedges that were used in the full cost ceiling test and $22.7 million related to the acquisition cost of East Texas and North Louisiana undeveloped acreage outside of our primary development area being subject to the full cost method ceiling test. Approximately $9.3 million of the $205.8 million impairment charge was related to impairment on the Company's three drilling rigs and other inventory and equipment, previously classified in assets held for sale and that were sold in 2011.
Oil and Natural Gas Sales. Oil and natural gas sales in the year ended December 31, 2010 increased 2% to $96.5 million compared to the year ended December 31, 2009. This sales increase is primarily due to an increase in natural gas and oil production of 28%, offset by a decrease in natural gas and oil prices of 18%, net of effect of hedging. The average prices per barrel of oil and mcf of natural gas received in the year ended December 31, 2010 were $76.77 and $5.35, respectively, compared to $76.02 and $6.53, respectively, in the year ended December 31, 2009. Oil production in 2010 decreased to 95 MBbls compared to 119 MBbls for 2009. The decrease in oil production is due to the natural decline in the Company s Cotton Valley Sands vertical well production, which has historically provided most of the Company s oil production. H/B Hz wells typically do not have oil production. Natural gas production in 2010 increased to 16,901 MMcf for 2010 compared to 12,908 MMcf for the year ended December 31, 2009, an increase of 31%. The increase in natural gas production resulted from 19 additional producing H/B Hz wells that were completed and brought on-line during 2010 and the respective production exceeding the normal decline in production for wells producing at the beginning of the period. Production from H/B Hz wells accounted for 63% of total production for 2010 compared to 33% for 2009.
In the year ended December 31, 2010, as a result of hedging activities, we recognized an increase in oil and natural gas sales of $22.3 million, compared to an increase in oil and natural gas sales of $37.9 million in the year ended December 31, 2009. In the year ended December 31, 2010, hedging, excluding ineffectiveness, increased the average natural gas sales price by $1.39 per Mcf compared to an increase of the average natural gas and oil sales price by $2.68 per Mcf and $19.41 per Bbl in the year ended December 31, 2009. Oil related derivative instruments had no impact on oil and natural gas sales in 2010.
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Gmx Rsrcs Inc has a market cap of $111.3 million; its shares were traded at around $1.76 with and P/S ratio of 1. The dividend yield of Gmx Rsrcs Inc stocks is 33.4%.
Highlight of Business Operations:
The full cost method of accounting, which we follow, requires that we periodically compare the net book value of our oil and natural gas properties, including related deferred income taxes, to a calculated “ceiling.” The ceiling is the estimated after-tax present value of the future net revenues from proved reserves using a 10% annual discount rate and using constant prices and costs. Any excess of net book value of oil and natural gas properties is written off as an expense and may not be reversed in subsequent periods even though higher oil and natural gas prices may have increased the ceiling in these future periods. The full cost ceiling is evaluated at the end of each quarter using the 12-month average of the first day of the month SEC prices for oil and natural gas as adjusted for our derivative positions deemed “cash flow hedge positions.” A write-off constitutes a charge to earnings and reduces equity, but does not impact our cash flows from operating activities. Once incurred, a write-down of oil and natural gas properties is not reversible at a later date. During 2009, we recorded impairment charges of $188.2 million on our oil and natural gas properties due to a ceiling test write-down based on the 12-month average of the first day of the month SEC price for natural gas of $3.87 per MMBtu and a crude oil price of $61.19 per barrel. In connection with our December 31, 2010 financial statements, we recorded an impairment charge of approximately $132.8 million on our oil and natural gas properties due to a ceiling test writedown based on a natural gas price of $4.38 per MMBtu and a crude oil price of $79.43 per barrel. The 2010 impairment charge was a result of our decision to remove approximately 290 net proved undrilled Cotton Valley locations that had proved reserves totaling 219.6 Bcfe at December 31, 2009. Due to the drilling opportunities we have in the Haynesville/Bossier Shale, Bakken and Niobrara Formations, we do not believe we would develop our Cotton Valley Sands proved undeveloped locations within the required five-year timeframe under SEC requirements for including estimated proved reserves. In addition, future development in the Cotton Valley Sands will be on a horizontal basis. During 2011, we recorded an impairment charge of approximately $195.6 million on our oil and natural gas properties due to a ceiling test writedown based on the 12-month average of the first day of the month SEC price for natural gas of $4.12 per MMBtu and a crude oil price of $96.19 per barrel. If commodity prices continue to remain low, we may be subject to additional ceiling test write-downs. Future write-offs may occur that would have a material adverse effect on our net income in the period taken, but would not affect our cash flows. Even though such write-offs do not affect cash flow, they could have an adverse effect on our financial conditions and results of operations.Oil and Natural Gas Sales. Oil and natural gas sales during the year ended December 31, 2011 increased 21% to $116.7 million compared to $96.5 million during the year ended December 31, 2010. Oil and natural gas sales included gains (losses) from the ineffectiveness from derivatives of $0.1 million and $(1.3) million for the year ended December 31, 2011 and 2010, respectively, and are the result of a difference in the fair value of our cash flow hedges and the fair value of the projected cash flows of a hypothetical derivative based on our expected sales point. The increase in oil and natural gas sales was due to a 35% increase in production on a Bcfe-basis, a 20% increase in oil prices, a 24% increase in the average realized price of NGLs, offset by a 16% decrease in the average realized price of natural gas, excluding ineffectiveness of hedging activities. The average price per barrel of oil, per gallon of natural gas liquids NGLs and Mcf of natural gas received (excluding ineffectiveness from derivatives) in the year ended December 31, 2011 was $92.33, $0.98 and $4.50, respectively, compared to $76.77, $0.79 and $5.33, respectively, for the year ended December 31, 2010. Our realized sales price for natural gas, excluding the effect of hedges of $0.90 and $1.60, for the year ended December 31, 2011 and 2010, respectively, was approximately 89% and 85% of the average NYMEX closing contract price for the respective periods. During the year ended December 31, 2011 and 2010 , the conversion of natural gas to NGLs produced an upgrade of approximately $0.67 per Mcf and $0.81 per Mcf, respectively, for every Mcf of natural gas produced. This upgrade in value was previously included in the realized price of our natural gas sales.
Impairment of oil and natural gas properties. For the $205.8 million non-cash impairment charge recorded in the year ended 2011, $196.4 million of the charge was related to the impairment of oil and gas properties subject to the full cost ceiling test and $9.3 million was related to a change in value of assets held for sale. The primary factors impacting the full cost method ceiling test are expenditures added to the full cost pool, reserve levels, value of cash flow hedges and natural gas and oil prices, and their associated impact on the present value of estimated future net revenues. Any excess of the net book value is generally written off as an expense. Revisions to estimates of natural gas and oil reserves and/or an increase or decrease in prices can have a material impact on the present value of estimated future net revenues. Natural gas represents 96% of the Company's total proved reserves, and as a result, a decrease in natural gas prices can significantly impact the Company's ceiling test. During the year ended December 31, 2011, the 12-month average of the first day of the month natural gas price decreased 6% from $4.38 per MMbtu at December 31, 2010 to $4.12 per MMbtu at December 31, 2011. Of the $196.4 million related to the impairment of oil and gas properties, $121.4 million resulted from the net book value of oil and gas properties exceeding the net present value of future net revenues, $52.3 million related to the monetization of the cash flow hedges that were used in the full cost ceiling test and $22.7 million related to the acquisition cost of East Texas and North Louisiana undeveloped acreage outside of our primary development area being subject to the full cost method ceiling test. Approximately $9.3 million of the $205.8 million impairment charge was related to impairment on the Company's three drilling rigs and other inventory and equipment, previously classified in assets held for sale and that were sold in 2011.
Oil and Natural Gas Sales. Oil and natural gas sales in the year ended December 31, 2010 increased 2% to $96.5 million compared to the year ended December 31, 2009. This sales increase is primarily due to an increase in natural gas and oil production of 28%, offset by a decrease in natural gas and oil prices of 18%, net of effect of hedging. The average prices per barrel of oil and mcf of natural gas received in the year ended December 31, 2010 were $76.77 and $5.35, respectively, compared to $76.02 and $6.53, respectively, in the year ended December 31, 2009. Oil production in 2010 decreased to 95 MBbls compared to 119 MBbls for 2009. The decrease in oil production is due to the natural decline in the Company s Cotton Valley Sands vertical well production, which has historically provided most of the Company s oil production. H/B Hz wells typically do not have oil production. Natural gas production in 2010 increased to 16,901 MMcf for 2010 compared to 12,908 MMcf for the year ended December 31, 2009, an increase of 31%. The increase in natural gas production resulted from 19 additional producing H/B Hz wells that were completed and brought on-line during 2010 and the respective production exceeding the normal decline in production for wells producing at the beginning of the period. Production from H/B Hz wells accounted for 63% of total production for 2010 compared to 33% for 2009.
In the year ended December 31, 2010, as a result of hedging activities, we recognized an increase in oil and natural gas sales of $22.3 million, compared to an increase in oil and natural gas sales of $37.9 million in the year ended December 31, 2009. In the year ended December 31, 2010, hedging, excluding ineffectiveness, increased the average natural gas sales price by $1.39 per Mcf compared to an increase of the average natural gas and oil sales price by $2.68 per Mcf and $19.41 per Bbl in the year ended December 31, 2009. Oil related derivative instruments had no impact on oil and natural gas sales in 2010.
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