GMX RESOURCES INC. Announces Successful Bakken Well; Provides an Operational Update; Protection of Cash Flow With Additional Hedges
Posted on June 14, 2012 at 16:01 PM EDT
OKLAHOMA CITY, June 14, 2012 (GLOBE NEWSWIRE) -- GMX RESOURCES INC. (NYSE:GMXR) today announces that the Company has successfully drilled and completed its sixth operated horizontal Bakken well, the Johnston 31-4-1H, 55% working interest, located in Sections 4&9 Township 146N Range 99W in McKenzie County, North Dakota. The Johnston 31-4-1H was drilled to a measured depth of 20,979' with a lateral length of 8,869'. It was completed as a 34-stage frac Middle Bakken producer achieving a peak rate of 1,479 boepd. The Johnston 31-4-1H had a spud to total depth of 29 days, a spud to rig release of 31 days and a spud to sales of 58 days.
The Company's seventh operated well, the Fairfield State 21-16-1H, was spud on May 13, 2012. GMXR currently projects a 96% working interest in the Fairfield State 21-16-1H, which is located in Sections 16&21, Township 143N, Range 99W in Billings County, North Dakota. The Fairfield State 21-16-1H is a Three Forks well and has been successfully drilled to a total measured depth of 20,979' and a lateral length of 9,510'. The Company expects to fracture stimulate the well in July 2012.
The Company's eighth operated well, the Basaraba 24-35-1H, is located in Sections 26&35, Township 144N, Range 100W in Billings County, North Dakota. The Company has received the necessary federal and states permits in this 50% working interest well, which we expect to spud in June 2012.
The Company has elected to participate in a number of non-operated wells within our Bakken leaseholds, and we continue to expect additional proposals for participation based on operators' permits obtained from the North Dakota Industrial Commission. An update on the non-operated wells follows:
The Logan 24-8H well, in which the Company has an approximate 17% working interest, located in Sections 5&8 Township 148N Range 98W in McKenzie County, North Dakota, was successfully drilled and fracture stimulated by Burlington Resources. The Logan 24-8H was drilled into the Middle Bakken and produced a peak flow rate of 1,170 boepd.
The Pojorlie 21-2-1H well, in which the Company has a 34% working interest, located in Sections 2&11, Township 146N, Range 98W in McKenzie County, North Dakota, has been successfully drilled and fracture stimulated via "plug and perforate" method by Continental Resources. The Pojorlie 21-2-1H was drilled into the Three Forks formation and is in early flowback with IP rate pending.
The Joliet 1-18H well, in which the Company has an approximate 14% working interest, located in Sections 18&19, Township 146N, Range 98W in McKenzie County, North Dakota, will be operated by Continental Resources. This well will target the Three Forks formation and has a planned total measured depth of 21,364'. The well is expected to spud in June 2012.
The Wilson 31-6H well, in which the Company has an approximate 14% working interest, located in Sections 6&7 Township 148N, Range 98W in McKenzie County, North Dakota, has been permitted by Burlington Resources (Conoco Phillips). We have elected to participate in the well and expect it to spud in early July 2012.
The Jair 31-28H well, in which the Company has less than a 1% working interest, located in Sections 28&33, Township 148N, Range 98W in McKenzie County, North Dakota, has been proposed by Burlington Resources (Conoco Phillips). We have elected to participate in the well and expect it to spud in early July 2012.
The following wells have received permits from the North Dakota Industrial Commission by other operators where GMXR has a working interest. These locations are permitted but have as of yet not been proposed to the Company.
The second quarter 2012 production is expected to be in a range of 539,000 to 543,000 BOE, which includes 60,000 to 65,000 Bbls of oil.
During the second quarter 2012 we continued to sell a portion of our unprocessed gas in the Carthage Texas area for a total price that is greater than the combined estimated price of residue gas and the net processing upgrade. Since the NGLs can be left in or extracted from the gas stream, we will continue to make gas dispatch decisions based on maximizing the total sales value of the hydrocarbons for GMXR.
Our current strategy is to use swaps and costless collars to protect the cash flow from our proved developed production, and use puts and put spreads to establish floors for our proved undeveloped production. In our first quarter 2012 earnings release, we stated that as we bring on new wells, we planned to increase our hedges, establish floors and protect revenues. The following table summarizes the natural gas and crude oil derivative contracts the Company currently has in place:
Michael J. Rohleder, President said "the Johnston result is our sixth consecutive successful completion and continues to demonstrate the productivity of our acreage base. In addition, we continue to see other major operators obtain permits and submit proposals for our participation in wells in both McKenzie and Billings Counties. This activity by other operators validates the value of our Bakken leaseholds. As we add more wells, operated and non-operated, our production will become more predictable. This quarter we will double our oil production from the previous quarter despite changes in completion and work over rig scheduling. Given the recent decline in crude oil prices, it's relevant to report that we executed hedges and protected our revenues ahead of the decline, and we plan to continue being proactive in the use of oil and gas hedges to protect revenues."
GMXR is a resource play rich E&P company. Oil shale resources are located in the Williston Basin, North Dakota & Montana targeting the Bakken Petroleum System and in the DJ Basin, Wyoming targeting the Niobrara Petroleum System; both plays are estimated 90% oil. Our natural gas resources are located in the East Texas Basin, in the Haynesville/Bossier gas shale and the Cotton Valley Sand Formation, where the majority of our acreage is contiguous, with infrastructure in place and substantially all held by production. We believe these oil and natural gas resource plays provide a substantial inventory of operated, high probability, repeatable, organic growth opportunities. The Company's multiple basin strategy provides flexibility to allocate capital to achieve the highest risk adjusted rate of return, with both oil and natural gas resources throughout our portfolio. Please visit www.gmxresources.com for more information on the Company.
The GMX RESOURCES INC. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=5158
This press release includes certain statements that may be deemed to be "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that the Company expects, believes or anticipates will or may occur in the future are forward-looking statements. They include statements regarding the Company's financing plans and objectives, drilling plans and objectives, related exploration and development costs, number and location of planned wells, reserve estimates and values, statements regarding the quality of the Company's properties and potential reserve and production levels. These statements are based on certain assumptions and analysis made by the Company in light of its experience and perception of historical trends, current conditions, expected future developments, and other factors it believes appropriate in the circumstances, including the assumption that there will be no material change in the operating environment for the Company's properties. Such statements are subject to a number of risks, including but not limited to commodity price risks, drilling and production risks, risks relating to the Company's ability to obtain financing for its planned activities, risks related to weather and unforeseen events, governmental regulatory risks and other risks, many of which are beyond the control of the Company. Reference is made to the Company's reports filed with the Securities and Exchange Commission for a more detailed disclosure of the risks. For all these reasons, actual results or developments may differ materially from those projected in the forward-looking statements.
CONTACT: Alan Van Horn Manager, Investor Relations 405.254.5839
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