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GMX Resources Inc. Message Board

  • wist2000 wist2000 Nov 12, 2012 2:52 PM Flag

    Funding

    I have been on the road but did catch quarterly earnings and the transcript on the CC. Management seemed to agressively compliment themselves on execution and there definitely was a lot of hype regarding forward value statements. An awful lot of "risk-off" and full speed ahead toward untold riches. I never have disputed significant asset values but didn't some of you notice that GMXR was essentially broke at the end of Q3. It seems strange for such a brilliant management team that they allowed the balance sheet to deteriorate to the point where they give up a HUGE common voting block for pennies per share and allow GSO to solidify their dictatorial position in debt. Maybe I missed a portion of the news releases but I didn't see any firm funding commitment from GSO. Instead I saw a dominant reorg position in both debt and common should things go south for GMXR. Isn't it strange that for such a brilliant bunch of guys that they didn't sell off just a small wee portion of their massive assets and avoid the terms of the GSO loan and the fire-sale common giveaway. Essentially (IMO) GMXR gives away an awful lot of the farm for a $27 loan, no firm drilling/funding commitment and GSO gains additional control at the existing common shareholder expense. The next step for GSO is to fund drilling/operations at loan shark rates + return guarantees on JVs. This may be in addition to increased common ownership at "below market" prices. There is still a long way to go for GMXR to prove up assets, fund drilling, clean-up their balance sheet and realize significant value per common share. I would like to see firm funding, insider buying, step-ladder stock price appreciation and some outside interests (not GSO) taking a sizable position in the stock. At that point, I will become a firm believer in GMXR.

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    • You have no idea what your talking about. They sold asets for $70 MM after the 10Q, and the dilution is minor compared to many deals I have seen.

    • No surprised at your response to what was a significant move by Gmxr. In addition, the release of a very good well. The new drilling process will reap larger benefits from the wells. Somethig they have proved over the past two wells. That info as conviently left out of your rant.

      They used zero cash to handle the short term debt issue. No debt issues for 30 months when the 2015 comes due.

      They need to keep pumping out the wells at good ip rates ( with ave decline rates).

      I would also like to hear them tell us how they plan on funding capex when the 55 mill they will have going into 2013 is gone.

      Wist, I look forward to having you as a buyer when this hits $8 a share. Based on your demands to buy this, that is where it will be when you finally do.

      • 1 Reply to stevegrogan04
      • Can't dispute the good well results..we will see what the rates are 120 days out (and their original projections that their Bakken wells would average 500 EURs). GMXR essentially borrowed $27.1 million at very expensive rates and sweetened the deal with a massive amount of common at pennies. If you look at their Q3 balance sheet GMXR strung out their payables and when you net out current assets (inclusive of restricted stock) vs. current liabilities....GMXR is in the hole in excess of $20 million. You may whitewash this issue but balance sheets and available cash are extremely important, especially if they are wildcat drilling in the Niobrara or drilling the Bakken at $9 million a well. When you look at grading the GSO-GMXR debt/common deal..GSO gets an A+ and GMXR avoids BK. When GSO steps up with concrete funding on equitable terms for drilling, I will rerate. So far GMXR has re-upped the value hype but done little or nothing to secure funding...Who was it Cuba Gooding Jr., who said "show me the money". As far as a "significant" move by GMXR... sure, it banged up from a $.50 cent stock with a huge percentage increase. The current stock price is still below $1. If GSO was a true supportive funding partner and the asset value of GMXR holdings were in the stratosphere that management wants you to believe...GMXR should be well over $1 and on it's way to $3. IMO Wall Street hasn't bought into this story yet. I think the biggest question is what does GSO do if they decline to fund future drilling, GMXR has difficulty funding existence beyond issuing common and GMXR starts running out of funds. I think they offer up another devilish deal or just take the company to reorg with a dominant position in debt. Then their virtually free common holding doesn't matter as they will own the company and then fund a robust drilling program and take advantage of asset values.

 

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