GMX Resources (ticker: GMXR) is an oil and natural gas exploration and production company targeting oil prospects in the Williston Basin Bakken/Three Forks, and the DJ Basin Niobrara. GMXR also operates in the Haynesville/Bossier Formation and the Cotton Valley Sand Formation in the East Texas Basin.
On July 17, 2012, GMXR proposed a sale of a portion of its Cotton Valley Sand liquids rich natural gas properties located in East Texas. GMXR reported in the news release they expect a sale to occur during Q3’12.
OAG360 Comments:
GMXR plans to sell a portion of its 17,200 net acres Cotton Valley Sand Formation assets in East Texas. We expect the asset monetization will ultimately be a positive given the high cost of operating the Cotton Valley, and its 82% natural gas content. As of year-end 2011, GMXR’s Cotton Valley assets had a PV-10 of $99.3 million (using a $4.12 per MMBtu natural gas price). A few data points to consider regarding GMXR’s Cotton Valley Position:
- 100% working interest/81% NRI
- 65% operated
- 83 net horizontal drilling locations
- 348 producing wells
- 82% natural gas/18% liquids
The Street does not have recent production data from GMXR’s Cotton Valley Sands. Based on public data, SandRidge (ticker: SD) divested its East Texas Cotton Valley assets to NFR Energy for $231 million, or $9,239 per flowing Mcfe in September 2011.
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The company estimates horizontal well EURS in the 7.5 Bcfe (18% liquids) range with an estimated well cost of approximately $7.5MM per well. GMXR provided a cumulative resource gas potential of 410 Bcf and liquids resource potential of 15 MMBO for the Cotton Valley Sands in its recent investment presentation.
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