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?