GMX files for Chapter 11 bankruptcy protection
From the Houston Chronicle.
Oil and gas producer GMX Resources Inc. said Monday that it filed for Chapter 11 bankruptcy protection, blaming low prices for natural gas.
The Oklahoma City company filed in the Western District of Oklahoma. The filing includes its Endeavor Pipeline and Diamond Blue Drilling units. It does not include Endeavor Gathering LLC, a business in which GMX holds a 60-percent interest.
GMX says it pursued several strategies to increase oil production, make its supply chain and production more efficient, and reduce costs. However the price of natural gas has remained low and the company’s oil and gas businesses require more spending. GMX said it hasn’t been able to find any long-term solutions to its financing needs.
GMX says it agreed to sell its operating assets and undeveloped acreage to the owners of company senior notes that are due in 2017. Those assets will later be subject to a public auction.
The senior note holders have committed $50 million in debt financing to cover its operating expenses.
The company expects the New York Stock Exchange to begin delisting procedures for its stock. It does not plan to contest those proceedings.
Shares of GMX Resources have traded between $1.80 and $21.84 in the last year, and they closed at $2.19 on Friday.
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Replies to This Discussion
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Permalink Reply by Krkyoldhag on
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Maybe not...didn't they go for OIL and plan for nat gas income to pay for that?
Nat gas is double the price of a year ago..
bad decisions are just that and the CEO blames the price of nat gas.
Too bad it wasn't their farm they bet ...rather the people who signed their leases.
Chapter 11 is a time out for them and there is a very good chance they can pull out of it if they have enough operating funds. Their creditors will have to wait...then if they go into chapter 7 depending on how much those creditors advanced them..they will lose big time.
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Permalink Reply by Francis Mayo on
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It could be they were buying in to the meme last summer that we would see it at over five bucks before the end of 2012. Remember that wise assumption?
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Permalink Reply by Krkyoldhag on
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I really thought it would hit $5 by end of year..but real analysts didn't predict that rise..they all predicted that ng would not go much over $3 ..so why would a huge company even glance at what a 75 year old woman has to say?
If government has put as much money in developing natural gas vehicles as they did solar panels then we would be driving them today.
The front gate is Solar and the sun has not shined enough recently to keep the thing charged...sure glad not depending on it for all my needs.
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No, Krkyoldhag, you were not alone. You were not that far off base but there were many who bet plenty on it. Perhaps these people involved had what they thought to be more than an hunch. I sure did not think it would be over four bucks at present. You were closer than I.
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Permalink Reply by Skip Peel - Mineral Consultant on -
Remind me again when the price goes over $4.
Monthly Settlement Price for April - $3.976. Maybe May. Hopefully.
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Permalink Reply by Skip Peel - Mineral Consultant on
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I'm thinking they will not wait for $4.50. And wonder if $4 will be sustainable once they ramp up drilling.
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They need to put down the crack pipe. Try something more organic.
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Permalink Reply by Andrew on
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The problem for natural gas is the US has a LOT of recoverable gas left in the ground. The Haynesville, Marcellus, Utica, and Barnett (and look out for the Piceance Niobrara) have mind-blowing amounts of recoverable gas waiting for prices to recover - and drilling to get cheaper - just enough to make a decent return on invested drilling dollars.
The potential supply from those plays is a heavy ceiling to short-term prices, particularly as the tight-oil boom is bringing a lot of associated gas to the market (or into the atmosphere above North Dakota in enough quantities to illiuminate the dark side of the moon).
I can't say I'm terribly bullish on natural gas in the short to medium term, because every time prices inch up another operator will be there to resume drilling. I don't think exports will make much of a difference in the future either. I'm not going to expect much higher prices on a sustainable basis beyond short-term volatility until the US hits a "tipping point" on using nat gas for transportation fuel, which is the only structural increase in demand I can foresee combating new supply over the next couple decades.
In other words, pray for oil or liquids.
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Permalink Reply by dbob on
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Andrew
Slight disagreement - we are probably locked into a bearish range ($3-4.5) for the next 18 months to 2 years, but the longer it stays in that range, the more likely we are to have continued structural shifts in the power generation market. That price will also increase investment in the transportation sector. Low pricing relative to heating oil will increase the drive to modernize heating in the northeast. New synthetic chemical manufacturing plants driven by low gas prices and abundant NGL will be another big user coming on line. Then we get export to existing free trade countries, and potentially export to other countries.
I do like the lighting up of the dark side of the moon comment...
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Permalink Reply by Andrew on
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Dbob,
I'm hoping all of those factors will coalesce into a potent driver of the market. But they all are price-sensitive: they establish a low floor probably around $3.50, but as we approach $5 I think much of the power investment will dwindle as coal is historically cheap as well. Overall, we haven't seen the consumption numbers that promise to overcome the HUGE recoverable supply.
I guess I'd sum up my view by saying I'm cognizant of the potential for increased consumption, but my mind continues to be blown by the ocean of gas beneath much of the US. To me it seems so abundant that only widespread adoption of Nat gas as a consumer transportation fuel will have enough "oomph" to raise the structural floor to $8+.
In the meantime, ill be sunning myself in the Sea of Tranquility as the sleeping transportation giant awakens...
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Permalink Reply by Skip Peel - Mineral Consultant on
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IMO wide spread use of CNG/LNG as a vehicle fuel is a loooong way off. What will evolve sooner is a reshuffling of existing markets and growth of demand from new end users. The Haynesville Shale for example will become the primary supply for industrial users along the Gulf Coast and LNG global export. The list of projects that use natural gas as fuel and/or feed stock is stunning. The last one I saw was a page and a half single spaced. And represented capital investment in excess of $50B. And many of the those projects did not as yet have a cost projection. The eventual total could quite easily be north of $100B.
Andrew, be careful that you don't pull a Rip Van Winkle waiting for significant transportation demand to develop. The industrial demand however will only require a short nap.
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