As GSO/Blk and Chatham took control of GMXR'x commons and Sr debts, their objectives are being accomplished. GMXR has successfully transformed to oiler by their 100% economic hits of oil from all ND wells.
Their objectives are : (1) $150M of 2013 capex; (2) block external raiders; (3) stop all interets & divi payments; (4) stop all bills; (5) continue opt & drill; (6) increase total EV to $1B by YE; (7) Take custidy of all assets; (8) re-emerge from Chpt-11.
The revolving $50M DIP loans (super prioity in court filing) met (1), (5) & (6), yet NO doc has spelled out the exact interests of the DIP. Chpt-11 filing met (3)& (4), by filing PLAN for re-org and seek relief. Issued 23.5M add'l shelved commons to the internal raiders, without completing the transaction, thus no need to file Form 8-K until the plan is approved by the court. This act met (2). To purchase the assets with $X, between $281M(Dec 2012) to $565M (1Q 2013), again without completing the transaction, thus no filing until court approval. This would stop ANY creditors (i.e. non-secured & pref) from claiming a lien on the assets, if Chpt-7 follows.
As the DIP loan was described in the court doc's, it is a REVOLING at least $50M per pop loan for capex and opt. All drilling and other expenditures will be controlled by GSO/Blk, and other strings. Upon court approval of this plan, the DIP loans can be counted toward the costs for the add'l 23.5M commons issued in March and for assets purchase $X, thus these transactions can be completed.
More details for objective (5) & (6). All the existing wells need to be maintaned and operated, oil sales need to continue, etc. Then there is revenue comes in and the staff will work on further drillings to increase leases values.
The next step of ND drilling will be the closely spaced pad-pattern drilling & completion which would cut avg costs by at least $1M per well. (Details to be continued)
Joe, first thank-you for all your work! But at the end of the day can I ask your prediction are the common going to survive.As history shows the vast majority of companies that have gone through this very very few come out with the common intact. Thank-you p.s. I had my whole IRA in this thing, I sure believed this was a success story in the making. I was about to retire in 5 yrs, but that is a dead horse now.
Stinger, sorry for the late resposnse.
The most unique features of this pre-pack Chpt-11 are ; the major sr debt & common owners added 4 times more commons just before the Chpt-11 filing, and, to purchase all assets at a price $X. Then offer revolving DIP loans at $50M a pop. I have not seen any Chpt-11 filings like this.
I started accumulate GMXR commons and prefs two years ago, but took some losses when the pps went down last year. Then I added more after the RS, avg $2.4 before Chpt-11 filing, had about 25k commons. But my hope on GMXR's external raider bids to raise pps did not play out in Feb & March, since there were 23.5M commons issued (not transacted yet) to the internal raiders (GSO/Blk & Chatham). Now my only chance is to add more, as low as possible, to bring down avg. Currently @ $0.4.
The future is 50/50. If emerge from Chpt-11, GMXR got over this hump, the commons & prefs will be very valuable. If it go private, then there will be a conversion for both common & pref, we may get most money back. The worst could happen is GMXR lost oil production and found many new dry holes, EV drops like a rock. Then GSO/Blk may just auction out assets on the cheap and take total loss of the 30m commons they own.
GSO/Blk and Chatham have more than $500M sank in GMXR, they are in the same boat with us retailers.
Stinger I am in the same boat on this investment.
will the stock survive for the common holder is all about the bk court judgement.
but then it will be too late to purchase common for it will fly upon ruling.(degrees of clarity)
My strategy is to purchase a 10k common & perferred position from now until the ruling.
& believe that the company is fllowing a laid out pre-plan on emerging from ch11.
either that happens or this will be ch7 or worse lawsuits till eternity.. they all know it.
(cont'd) For two end-to-end adjacent units (each is 5280' X 10,560'), a large pad can be placed at the border line and the skid rig will be moved on the pad to drill 4 wells at the north unit and 4 wells at the south unit, for each pay zone. The wells will be 1400' apart, E-W, thus can be drill and completed on the same pad by just skidding 100' each way. 8 total wells can be drilled EACH for mid Bakken pay zone, 1st bench 3-Fork (TF), 2nd bench TF, 3rd bench TF and 4th bench TF + Nasku pay zones.
Thus in the 10 year development plan (of CLR, WLL, etc.) there would be at least 32 wells operated from each pad (very large pad). This is like the deepsea platform hub which can serve up to 60 wells. Thus each 1280-acre unit is worth 16 producing wells in 10 years. GMXR has 12 opt units (WI 50%) and 24 TBD (to be developed) units in McKenzie cnty; 14 opt units and 15 TBD units in Billings cnty; 6 opt units and 4 TBD units in north Stark cnty; 12 TBD units in south Stark cnty.
So if GSO/Blk plan to drill 1 well/month on each pad, the 12 McKenzie opt units will have 7 + 7 mid Bakken wells by YE. In 10-year plan, there would be 48 mid Bakken wells and 144 TF (4 benches) wells producing in Mckenzie opt leases alone. Each mid Bakken EUR is 350,000 BO, each TF bench EUR is 200,000 BO, conservatively (by CLR's Williston avg). For the McKenzie 12 opt units there would be 45.6 MMBO (million BO) produced in 10 yr. The 24 TBD units are of lower WI, i.e.
i.e. less than 10% WI.
The TBD units can bring in 9 MMBO in Mckenzie. Based on $40/BBL net (after all costs) profit, the 10 yr net would be @2.2B for McKenzie leases alone. Fot the total ND leases there could be a net profit of $5B or more in 10 yr. No wonder GSO/Blk and Chatham bought add'l 23.5M commons in March and to purchase all the assets by paying with few DIP loans.
They can easily flip (sell) the assets for $1B in 2014, if go private. OR, emerge from Chpt-11 with their 30M total commons worth $300M and get all debt interests paid. They can't lose in either case.