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Book value is nonsense. The real value of the leases depends on well results and energy prices. Bakken well results are improving and nat gas prices are rising. They just did a 69 mil sale and a 30 mil deal to take care of the remaining 2013 notes. Bankruptcy is now less likely than it was: The dilution arguments are much better if you want to make the short case.
Disc: long 2015 notes, 2018 notes and some common.
P.S. If you are short, you better hope that GMXR doesn't actually come through with the oil production guidance they've given for Q3 and Q4. That's not a production ramp up that I would want to be short.
Too bad their oil production guidance track record has been atrocious.
Q1 production was supposed to be 52k bbl. Ended up 31k.
Q2 was supposed to be 83k. Ended up being 64k.
Q3 was supposed to be 64k. Ended up being 53k.
Now Q4 is supposed to be 75k. Uh huh, where have I heard that before?
By the way, just how much is the revenue if oil production is 75k, about $6 million? And their quarterly interest expense is now over $10 million and rising? So they'll continue burning cash operationally EVEN IF they make their guidance?
[Rising due to the PIK-notes feature on the notes. Just the refinancing of the 27mm in 5% notes is going to add $675k in quarterly interest expense if they PIK them, plus several million in one time financing fees.]
You know how many barrels of oil you need to sell to make $10 million a quarter to cover interest? Over 100,000 bbl per quarter!
Can someone point to ONE well from their Bakken experience that's been on production more than four months that hasn't been a total failure?
We're already in Q4 and Q1 is just around the quarter. You have to really think that management is full of #$%$ to miss those production estimates.
Natural gas prices were up more than 5% yesterday. The oil production ramp up is great, but GMXR is really still a nat gas company. That has a major impact on their revenues and they have cut back on nat gas production and can ramp up it back up quickly as prices rise. You my friend are playing with fire, shorting a stock like this. Maybe you ought to figure out how fast this short can bury you if nat gas prices spike up a bit more. How did GMXR trade the last time nat gas prices were high? How fast can they cover your 10 mil quarter in overhead with higher nat gas prices? Pretty darn fast I would say.
The best argument you have is dilution. That's why I am primarily a note holder. My 2015 and 2018 notes don't get diluted when more shares get issued. However, to short a leveraged commodity play like this with nat gas prices headed higher - not so smart. Your wife might not be so happy when the car gets repossessed because you were short a nat gas stock and prices spiked because the winter was a little colder than expected, coal plants are being converted and companies are switching their fleets to NG vehicles.
not one, went north for this and what will be worst when they do the RS in about a month or less all at the expense of the shareholders that stuck by them thur this whole mess, and natural gas goes back to 5.00 dollars and oil stays in the low to mid eighties thanks JR.
Sentiment: Strong Sell
Sorry CTX... too much reality in your posts. Actual earnings, balance sheets, cash, fulfillment of forward looking statements, fulfilled sources of liquidity, etc...all that is unimportant when you have a brilliant management team and pie-in-the-sky visions. I have pointed out continuously the perilous balance sheet that GMXR has and all I got back were boos and hisses. Management makes a horrid loan to stave off an impending 2013 debt and most everyone is excited that the dilution wasn't "that bad" and GMXR was able to pay off 2013 debt at no cash expense. What?? You take the discount GMXR absorbed + the restricted shares to sweeten the loan terms and what do you have.. a note rate over 20%?? Brilliant.. Additionally GMXR ended up Q3 with a negative $20+ million position if you wash out payables and receivables. This does not include the 2013 debt but DID include restricted cash. Sure, GMXR picks up probably around $67 million from the CVS sale but most cash flow will go to cash G and A, debt and preferred. How much is left over to drill $9 million Bakken wells let alone wildcatting remains to be seen. I will be accused of a "rant" by Steve (for a real definition of a rant Steve should reread his posts with Checkerboard) but the one GMXR constant over the last nine months has been unfulfilled promises on almost every metric. I expect more of the same and more excuses from both management and shareholders. There has been one winner...Wall Street and their controlling interest in the debt and now significant common at pennies. This combo makes them King if there are any future hiccups and they decide to pull the plug.