GMX Resources ($GMXR) Investor Presentation at Global Hunter Securties Energy Conference 100 Tuesday, June 26, 2012
Today, GMXR gave a presentation at the Global Hunter Securties Energy Conference 100.
Basically, you can cut through the whole analysis by asking one question: what is the rate of return (IRR) on the company's Bakken wells? Do they have positive or negative net present value? That is, does the present value of the hydrocarbons they will produce exceed the cost of drilling each well?
The company doesn't like to dwell on those concerns. Instead, the metrics they ask you to focus on are things like total oil production (never mind the capital cost of producing it), or number of days to complete a well, or anything besides measures that indicate the true economic performance of the wells.
On slide 5, "Multiple Alternatives for Liquidity Being Pursued", they acknowledge that they will use "cash, equity and exchanges to retire the remaining notes". I've been pounding the table about their need to attack those maturities. I wonder how much longer they will wait?
On slide 20, they are helpfully showing the "Average 30 day BOE/Day" in addition to the initial production numbers. This helps to show something I have mentioned earlier: these wells have very sharp production declines.