GMX Resources Chart of Truth ($GMXR)

This is the chart of truth, the accountability tablet for the promises that GMXR made this year. Each colored line represents the production guidance promises for a particular period's production of oil (in bbl). The maroon FY 2012 line is graphed on the right axis. The final point on the line is the actual production for periods that have already occurred.

I call this the trail of disappointment. See at the beginning of the year (prediction made on Feb 1), there were going to be 52k bbl of oil in Q1 and 373k for the year. It ended up being 31k in Q1.

Even though Q1 was a disappointment, Q2 was going to be much better: 83k bbl predicted in mid April. That got ratcheted down bigtime in June and ended up being 64k.

And so on, throughout the year.

Let's keep one other thing in perspective here. If the company achieved its goal of ~110k bbl of oil produced in Q1 2013 (and it always lowers lowers lowers the guidance numbers along the way), that would be less than $10 million in revenue for the quarter. Meanwhile, interest expense in the most recent quarter was $10.1 million, and it is growing. More of the company's debt is pay-in-kind (meaning it compounds), and the refinancing of the 2013 notes is going to be with much higher coupon PIK debt.

So how I would interpret is: giving the company credit for their current projections, the company will lose significant money in the Bakken in Q4 and Q1. And the projections have a history of being optimistic, meaning that there is further risk to the downside.

Now is it seeming clearer why the company sold equity for 18 cents a share in the recent deal?