GMXR announced 4Q09 operating EPS/CFPS of $0.20/$0.54 compared with our estimates of $0.09/$0.42, consensus of $0.09/$0.53 and the year-ago quarter of $0.03/$0.71. Reported EPS of ($1.90) included an impairment of oil and gas properties ($1.87), an unrealized hedge gain and a loss on extinguishment of debt. The company is currently operating three rigs, has subleased its 4th rig to another operator and is negotiating with potential partners to reduce its 2010 capital exposure, which is projected to be $175 mn. In addition, Management narrowed 2010 guidance to 17.5 Bcfe, from its previous range of 17 to 19 Bcfe. Although it reduced the cost of its Haynesville Shale wells last year by 54% (from $10.1 mn to $6.1 mn), most of GMXR's first 10 wells in the play appear to be marginally economic at best, based on proved reserves assigned by an independent engineer. Despite recently completing its best well, the Mia Austin #1H, which had an IP rate of 14.1 MMcfe/d, the company is now redesigning its wellbores to accommodate 5 ½" production casing (typical for the play) compared to 4 ½" previously. Given that well costs are expected to increase to $8 mn with the new design, we believe that 30-day rates and EURs need to consistently exceed 7 MMcf/d and 5 Bcf for the play to generate viable economic returns. Valued at a 29% discount to our peer group based on EV/2010E EBITDA and price/NAV, the stock is the least expensive in our peer group.