The first one was no cash for 2013 capex ($150M) and all 2013 interests and divi ($50M). This made it looks like no more development and stop ALL operations.
The sencond shocker is even bigger, the Feb 19 PR released the most CONSERVATIVE (may be purposely using very low numerical variables) in-house calculations of estimated PV-10 values of $194.6M for all GMXR leases. That figure is not even enough to pay the $423M debts (2015, 2017 & 2018), not to mention the $45M of prefs, if in the case of BK then auctioned by court orders.
The second shocker meant the debtors get up to 3 years without pay, tangled court fights, then auctioned at the very low PV-10 value. in a way, when I go to hell, I will drag ALL of you with me. Just like the 1968 Tat Offense or the suicide bombers, unless you accept my terms. I have plenty of ammo, 160M ready to issue common shares in the ammo dump.
It is a very interesting drama conducted by Jefferies. While Chatham and Balckstone fight for the control of GMXR with their majority common ( 20%) holder positions. Let's see what it will end.
Joe, in the recent past you've made very specific estimates of the values for all of GMXR's leases/assets, coming up with estimates in the $600M range. While GMXR doesn't appear to have the requisite capital to develop the leases themselves, that shouldn't impact the value of the leases to a well-capitalized buyer. Are you now reconsidering these estimates? PV-10 only deals with proved reserves, and most of GMXR's Bakken land and 100% of Niobrara isn't proved -- but that doesn't mean it doesn't have value (in a bankruptcy or otherwise).
If you are reconsidering your estimate, it would be a favor to the board for you to go back to your specific area by area estimate and put your new values on the assets, and see what they add up to.
Goblue, the fair market values I guesstimated based on net acreges remain the same at $600M, on the conservative side. You have siad the key word "proved" (PDP= proved developed or PUD=proved undeveloped) leases were used for PV-10 value calculation. When in court, the un-proven leases do not stand too much ground, no dollar velues but a percentage of it assigned to each party upon court decision. Thus anything beyond the PV-10 values is unkonwn wealth.
In calculating the PV-10 values the petro engrs have many ways to up or down the results, because there are too many numerical variables and extrapolations. For example, oiler-A has a 80% WI 1280-acre unit (two adjacent sections) sandwiched between a west unit belongs to major WI Oiler-B and an east unit belongs to major WI oiler-C. In each of the B & C unit oiler-A has 5% WI, both oiler B & C have drilled big gusher test wells but oiler-A has not drilled any yet.
Some PV-10 value calc would claim the 80% WI unit-A as PUD, and each 5% WI in unit-B & C as PDP. However, the engr could also claim the 80% Wi unit-A as potential only, if the mgmt desires.
Another example is ATPG. In 2012 it has 4 adjacent offshore GOM tracts (each is 9 sq miles= 5760 acres) where two test wells are producing. It claimed the entire 23000 acres as PDP. In another 6 adjacent units it has one producing well but claimed 2 units as PDP, 4 units as PUD. It could be done to its advantage, either up or down.
Very good analysis of the situation. If the 2017 note holders try to drag them into court they will lose at least half their money and be without any income from their investment for as long as the bankruptcy lasts and there is no guarantee that 3 years is how long it will take. If it's a messy BK, then it could end up taking much longer. That gives management a position of strength to bargain from. Bail us out, or we'll see to it that you all go down with us in one of the longest and messiest BK proceedings in history. Rather than go through all that, it is in the interest of the note holders to renegotiate the terms of their notes or do a debt for equity swap for a large portion of the total debt.
IMO this will not be a messy BK in the slightest. GSO/Blackstone has run the show dating back to last year and with their legal team and foresight they have the best playing hand. GMXR and Kenny have an established track record of value destruction, lack funds for protracted litigation and will not hold anyone hostage. GMXR's obligations are clear, upside asset values speculative and there is a need to preserve value for the structured debt holders. When you run out of money the health of existing wells may be threatened and there may be an obvious need for DIP financing. Kenny will be lucky to get indemnity but he might be part of a structured transition. I foresee an adjustment in the size of GMXR , major house cleaning and BK acting as a cleansing process for the future owners. GMXR lops off common, potentially the preferred, potentially pays pennies on the dollar for lower tiered debt, goes private and a year down the road a new IPO comes out. The magic of Wall Street. Kenny was in over his head a long time ago. His multiple Hail Mary's didn't work and the clock has nearly run out. One has to consider why there haven't been asset sales to "rescue" the company nor have there been any insider buys. The destruction of GMXR is nearly complete and Ken will go down as one of the worst if not the worst CEO in the oil patch (deservedly so). For those longs, your recovery of invested money's is remote. I think betting on the 2013 world series has better chances. I like the Nats and the Giants.....
And if that is the cards they are playing, I believe you are on to something and we all win. If the note holders continue to help out GMXR CAN TAP THESE RESOURCES AND MAKE THEM MORE MONEY.
great post , correct me if i am wrong about this ....
blackstone/gso just loaned like 29million & took possesion of some 2.9M common shares
without knowing 1 quarter ahead of Gmxr's operational & financials?
would it not be more logical that:
Gmxr found thier intended whiteKnight in gso/blackstone.
took the common knowing of the r/s planned as well as jefferies would be required.
allowing current management to put the rubber to the road for the follow -thru
This allows the statement by gso/blsckstone to still standby thier pledge of future capex but as heavy owner
and streamline the company's outlook to complete the turnaround.
looking forward to the News and the drama Next week.
Enjoy your Investments-
Sentiment: Strong Buy