Gmx Resources Inc. announced a reduction in capital expenditure guidance for 2011 and 2012 down from $200 million in each year to $175 million in each year. Capital expenditure guidance for 2010 remains unchanged at $175 million. GMXR's current plan is to continue to run a two rig program. Based on increases in well performance, previously announced production guidance remains unchanged at 17.5 to 19.0 Bcfe for 2010, 28.0 to 30.0 Bcfe for 2011, and 32.0 to 34.0 Bcfe for 2012.
The Company has agreed to extend the sublease of one of its H&P FlexRig 3(TM) with a major operator for the remaining term of the original rig contract which expires on March 25, 2013. Under the extension, the Company's remaining obligation under the rig contract is reduced by $22 million to approximately $5 million which will be paid over the remaining term of the rig contract.
The Company's two newest Haynesville/Bossier (H/B) horizontal wells with at least 30 days of production history are the Mercer #11H and the Verhalen F #1H. The Mercer #11H first day of sales was July 27, and has averaged 8,170 Mcf/day for the first 30 days of production. The Verhalen F #1H first day of sales was July 7, and has averaged 5,740 Mcf/day for the first 60 days of production. These well results represent a continuation of upgraded performances seen since refinement of the Company's completion schemes in early 2010. We expect to continue to see improved well results this year.
GMX Resources Inc. is a 'Pure Play', E & P Company with one of the most concentrated Haynesville/Bossier (H/B) Horizontal Shale Operations in East Texas. The Company has 355 Bcfe in proved reserves (YE2009). Of the total production guidance, approximately 4% is oil. Of the remaining 96%, 85% is natural gas and 11% is natural gas that is converted to natural gas liquids (NGLs). The Company's proved reserves are 81% operated and consist of 23 gross /22.46 net H/B producers, 324 gross / 186.9 net Cotton Valley Sand ("CVS") producers; and 47 net Travis Peak/Hosston Sands & Pettit producers. These multiple resource layers provide high probability and the potential for repeatable, organic growth and contain 269 net H/B Hz undrilled locations and 1,382 net CVS un-drilled locations.
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