GMX Resources Inc. (GMXR, Financial) filed Quarterly Report for the period ended 2010-06-30.
Gmx Resources Inc. has a market cap of $190.6 million; its shares were traded at around $6.19 with a P/E ratio of 16.8 and P/S ratio of 2.1. GMXR is in the portfolios of Ruane Cunniff of Ruane & Cunniff & Goldfarb Inc, Steven Cohen of SAC Capital Advisors.
General and Administrative Expense. General and administrative expense for the second quarter of 2010 was $6.2 million compared to $5.3 million for the second quarter of 2009, an increase of 17%. General and administrative expense per equivalent unit of production was $1.44 per Mcfe for the second quarter of 2010 compared to $1.61 per Mcfe for the comparable period in 2009. A significant portion of the Companys general and administrative expense is related to non-cash compensation expense. During the three months ended June 30, 2009 and 2010, the Company recognized $1.2 million and $0.9 million of non-cash compensation expense. General and administrative expense has not historically varied in direct proportion to oil and natural gas production because certain types of general and administrative expenses are non-recurring or fixed in nature. The Company expects general and administrative expenses on a per Mcfe basis to decrease as production increases.
Interest. Interest expense for the second quarter of 2010 was $4.7 million compared to $4.1 million for the first quarter of 2009. For the three months ended June 30, 2010 and 2009, interest expense includes non-cash interest expense of $2.3 million and $1.2 million, respectively. As a result of the accounting for convertible bonds, share lending agreement and deferred premiums on derivative instruments, the Companys non-cash interest expense related to these financial instruments was $1.7 million and $0.8 million for the three months ended June 30, 2010 and 2009, respectively. Cash interest expense for the three months ended June 30, 2010 and 2009 was $2.3 million and $2.9 million, respectively. The decrease in cash interest expense of $0.6 million is due to the reduction in borrowing under the revolving credit agreement in the second quarter of 2010 compared to the second quarter of 2009.
Oil and Natural Gas Sales. Oil and natural gas sales in the six months ended June 30, 2010 decreased 3% to $44.5 million compared to $45.7 million for the six months ended June 30, 2009. Excluding the non-cash effects of ineffectiveness from derivatives, oil and gas sales increased 2% from the first six months of 2009 compared to the first six months of 2010. Ineffectiveness of derivatives recognized in oil and gas sales of $1.0 million and $(1.3) million for the six months ended June 30, 2009 and 2010, respectively, is the result of a difference in the fair value of the Companys cash flow hedges and the fair value of the projected cash flows of a hypothetical derivative based on the Companys expected sales point. The increase in sales, excluding ineffectiveness of derivatives, was due to a 15% increase in production offset by an 11% decrease in the average realized price of oil and natural gas. The average price per barrel of oil and Mcf of natural gas received (exclusive of ineffectiveness from derivatives) for the six months ended June 30, 2010 was $75.73 and $5.84, respectively, compared to $68.49 and $6.55, respectively, for the six months ended June 30, 2009. Production of oil for the six months ended June 30, 2010 decreased to 46 MBbls compared to 63 MBbls for the six months ended June 30, 2009, a decrease of 27%. Natural gas production for the six months ended June 30, 2010 increased to 7,231 MMcf compared to 6,155 MMcf for the six months ended June 30, 2009, an increase of 17%. The increase in natural gas production resulted from production related to 19 producing Haynesville/Bossier (H/B) horizontal wells that were on-line during 2010. During the first half of 2010, the Company brought on-line eight H/B horizontal wells and production from H/B horizontal wells accounted for 55% of total production in the first six months of 2010 compared to 23% in the first six months of 2009.
General and Administrative Expense. General and administrative expense for the six months ended June 30, 2010 was $13.4 million compared to $9.8 million for the six months ended June 30, 2009, an increase of $3.6 million, or 37%. The Company incurred approximately $1.5 million in severance costs of which $0.9 million or 62% was a non-cash expense. Adjusting for the severance costs incurred in the first six months of 2010, general and administrative expense per equivalent unit of production was $1.58 per Mcfe for the first six months of 2010 compared to $1.50 per Mcfe for the comparable period in 2009. A significant portion of the Companys general and administrative expense is related to non-cash compensation expense. In addition to the $0.9 million in non-cash compensation mentioned above, the Company incurred an additional $2.6 million in non-cash compensation costs during the first six months of 2010 or 22% of general and administrative expenses excluding severance costs in the first six months of 2010 compared to $2.3 million or 23% in the first six months of 2009. General and administrative expense has not historically varied in direct proportion to oil and natural gas production because certain types of general and administrative expenses are non-recurring or fixed in nature. In the second half of 2009, the Company added key employees to execute a H/B horizontal drilling program. As a result, personnel costs have increased in comparison to the first six months of 2009. The Company expects general and administrative expenses on a per Mcfe basis to decrease as production increases.
Interest. Interest expense for the first six months of 2010 was $8.9 million compared to $8.2 million for the first six months of 2009. For the six months ended June 30, 2010 and 2009, interest expense includes non-cash interest expense of $4.5 million and $2.2 million, respectively. As a result of the accounting for convertible bonds, share lending agreement and deferred premiums on derivative instruments, the Companys non-cash interest expense related to these financial instruments was $3.2 million and $1.6 million for the six months ended June 30, 2010 and 2009, respectively. Cash interest expense for the three months ended June 30, 2010 and 2009 was $4.3 million and $5.7 million, respectively. The decrease in cash interest expense of $1.4 million is due to the reduction in borrowing under the revolving credit agreement in the first six months of 2010 compared to the first six months of 2009.
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Gmx Resources Inc. has a market cap of $190.6 million; its shares were traded at around $6.19 with a P/E ratio of 16.8 and P/S ratio of 2.1. GMXR is in the portfolios of Ruane Cunniff of Ruane & Cunniff & Goldfarb Inc, Steven Cohen of SAC Capital Advisors.
Highlight of Business Operations:
Oil and Natural Gas Sales. Oil and natural gas sales in the three months ended June 30, 2010 increased 2% to $23.2 million compared to $22.8 million for the three months ended June 30, 2009. Excluding the non-cash effects of ineffectiveness from derivatives, oil and gas sales increased 10% from the second quarter of 2009 compared to the second quarter of 2010. Ineffectiveness of derivatives recognized in oil and gas sales of $0.2 million and $(1.8) million for the three months ended June 30, 2009 and 2010, respectively, is the result of a difference in the fair value of the Companys cash flow hedges and the fair value of the projected cash flows of a hypothetical derivative based on the Companys expected sales point. The increase in oil and natural gas sales was due to a 30% increase in production offset by a 15% decrease in the average realized price of oil and natural gas, excluding ineffectiveness of hedging activities. The average price per barrel of oil and Mcf of natural gas received (exclusive of ineffectiveness from derivatives) in the three months ended June 30, 2010 was $75.98 and $5.57, respectively, compared to $75.88 and $6.48, respectively, in the three months ended June 30, 2009. Production of oil for the three months ended June 30, 2010 decreased to 24 MBbls compared to 33 MBbls for the three months ended June 30, 2009, a decrease of 27%. Natural gas production for the three months ended June 30, 2010 increased to 4,164 MMcf compared to 3,113 MMcf for the three months ended June 30, 2009, an increase of 34%. The increase in natural gas production resulted from production related to 19 producing Haynesville/Bossier (H/B) horizontal wells that were on-line during 2010. During the second quarter of 2010, the Company brought on-line six H/B horizontal wells and production from H/B horizontal wells accounted for 61% of total production in the second quarter of 2010 compared to 31% in the second quarter of 2009.General and Administrative Expense. General and administrative expense for the second quarter of 2010 was $6.2 million compared to $5.3 million for the second quarter of 2009, an increase of 17%. General and administrative expense per equivalent unit of production was $1.44 per Mcfe for the second quarter of 2010 compared to $1.61 per Mcfe for the comparable period in 2009. A significant portion of the Companys general and administrative expense is related to non-cash compensation expense. During the three months ended June 30, 2009 and 2010, the Company recognized $1.2 million and $0.9 million of non-cash compensation expense. General and administrative expense has not historically varied in direct proportion to oil and natural gas production because certain types of general and administrative expenses are non-recurring or fixed in nature. The Company expects general and administrative expenses on a per Mcfe basis to decrease as production increases.
Interest. Interest expense for the second quarter of 2010 was $4.7 million compared to $4.1 million for the first quarter of 2009. For the three months ended June 30, 2010 and 2009, interest expense includes non-cash interest expense of $2.3 million and $1.2 million, respectively. As a result of the accounting for convertible bonds, share lending agreement and deferred premiums on derivative instruments, the Companys non-cash interest expense related to these financial instruments was $1.7 million and $0.8 million for the three months ended June 30, 2010 and 2009, respectively. Cash interest expense for the three months ended June 30, 2010 and 2009 was $2.3 million and $2.9 million, respectively. The decrease in cash interest expense of $0.6 million is due to the reduction in borrowing under the revolving credit agreement in the second quarter of 2010 compared to the second quarter of 2009.
Oil and Natural Gas Sales. Oil and natural gas sales in the six months ended June 30, 2010 decreased 3% to $44.5 million compared to $45.7 million for the six months ended June 30, 2009. Excluding the non-cash effects of ineffectiveness from derivatives, oil and gas sales increased 2% from the first six months of 2009 compared to the first six months of 2010. Ineffectiveness of derivatives recognized in oil and gas sales of $1.0 million and $(1.3) million for the six months ended June 30, 2009 and 2010, respectively, is the result of a difference in the fair value of the Companys cash flow hedges and the fair value of the projected cash flows of a hypothetical derivative based on the Companys expected sales point. The increase in sales, excluding ineffectiveness of derivatives, was due to a 15% increase in production offset by an 11% decrease in the average realized price of oil and natural gas. The average price per barrel of oil and Mcf of natural gas received (exclusive of ineffectiveness from derivatives) for the six months ended June 30, 2010 was $75.73 and $5.84, respectively, compared to $68.49 and $6.55, respectively, for the six months ended June 30, 2009. Production of oil for the six months ended June 30, 2010 decreased to 46 MBbls compared to 63 MBbls for the six months ended June 30, 2009, a decrease of 27%. Natural gas production for the six months ended June 30, 2010 increased to 7,231 MMcf compared to 6,155 MMcf for the six months ended June 30, 2009, an increase of 17%. The increase in natural gas production resulted from production related to 19 producing Haynesville/Bossier (H/B) horizontal wells that were on-line during 2010. During the first half of 2010, the Company brought on-line eight H/B horizontal wells and production from H/B horizontal wells accounted for 55% of total production in the first six months of 2010 compared to 23% in the first six months of 2009.
General and Administrative Expense. General and administrative expense for the six months ended June 30, 2010 was $13.4 million compared to $9.8 million for the six months ended June 30, 2009, an increase of $3.6 million, or 37%. The Company incurred approximately $1.5 million in severance costs of which $0.9 million or 62% was a non-cash expense. Adjusting for the severance costs incurred in the first six months of 2010, general and administrative expense per equivalent unit of production was $1.58 per Mcfe for the first six months of 2010 compared to $1.50 per Mcfe for the comparable period in 2009. A significant portion of the Companys general and administrative expense is related to non-cash compensation expense. In addition to the $0.9 million in non-cash compensation mentioned above, the Company incurred an additional $2.6 million in non-cash compensation costs during the first six months of 2010 or 22% of general and administrative expenses excluding severance costs in the first six months of 2010 compared to $2.3 million or 23% in the first six months of 2009. General and administrative expense has not historically varied in direct proportion to oil and natural gas production because certain types of general and administrative expenses are non-recurring or fixed in nature. In the second half of 2009, the Company added key employees to execute a H/B horizontal drilling program. As a result, personnel costs have increased in comparison to the first six months of 2009. The Company expects general and administrative expenses on a per Mcfe basis to decrease as production increases.
Interest. Interest expense for the first six months of 2010 was $8.9 million compared to $8.2 million for the first six months of 2009. For the six months ended June 30, 2010 and 2009, interest expense includes non-cash interest expense of $4.5 million and $2.2 million, respectively. As a result of the accounting for convertible bonds, share lending agreement and deferred premiums on derivative instruments, the Companys non-cash interest expense related to these financial instruments was $3.2 million and $1.6 million for the six months ended June 30, 2010 and 2009, respectively. Cash interest expense for the three months ended June 30, 2010 and 2009 was $4.3 million and $5.7 million, respectively. The decrease in cash interest expense of $1.4 million is due to the reduction in borrowing under the revolving credit agreement in the first six months of 2010 compared to the first six months of 2009.
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