Stock To Watch: GMX Resources, Inc. NYSE: GMXR

“Be fearful when others are greedy, and be greedy when others are fearful.” – Warren Buffett

A dividend paying company on the biggest exchange in the world that gets no love is exactly the kind of penny stock that screening results beg to find out why. GMX Resources, Inc. (NYSE: GMXR), far off its $6.48 52 week high, could soon see an instant boost with the supply worries in Nigeria and the escalating pressure to ban global purchasing of Iranian oil. Warnings from OPEC have already been publicized that if the E.U. turmoil gets any worse the 2012 oil demand could decline with a ripple effect in the emerging markets.

Founded in 1998 and publicly traded since 2001, GMX Resources has 264 net producing wells in east Texas as of a year ago. In a statement from the company’s website by their CEO, Ken Kenworthy, Jr., GMX Resources’ 2012 plan is Execution! The company, which generated 88% of their revenue from natural gas, will focus on timely, quality drilling, completion and production operations of their Bakken acreage.

Company Strengths

  • Large, continuous acreage position in three high-quality Basins
  • Strong historical growth profile with multi-year, lower risk crude oil and natural gas resources drilling inventory
  • Ability to allocate capital to either crude oil or natural gas and higher rate of return opportunities
  • High degree of horizontal drilling experience combined with operational control
  • Significant infrastructure in place in the East Texas core area

Company Production

  • The Bakken properties: Approximately 600 undrilled, 9,500′ lateral length locations, 52 potential operated 1280-acre units and 208 operated locations, with between 50% and 75% working interest.
  • The Niobrara properties: 584 undrilled, 4,000′ lateral length locations, 95 potential operated 640-acre units and 380 operated locations, with an average working interest of 70%.
  • The Haynesville/Bossier and the Cotton Valley Sand locations include 253 (6,500’) net Haynesville/Bossier horizontal locations, and 83(7,500’) net Cotton Valley Sand horizontal locations.

Based in Oklahoma City, Oklahoma, GMX Resources’ stock is traded under the symbol GMXR on the New York Stock Exchange (NYSE) and has 109 listed full time employees.


Company Snapshot:

Trading Symbol: NASDAQ: GMXR
Last Price: $1.15
Avg Vol (3 month): 1,325,910
Avg Vol (10 day): 987,643
Market Cap: 66.81M
EBITDA (ttm)6: 79.47M
Total Cash (mrq): $3.23M
Shares Outstanding: 58.09 million shares
Shares Short (12/30/11): 9.18 million shares
Shares Held by Insiders: 4.62%
Institutions Holding Shares: 93
Top Institutional Holder: 3,339,752 shares
Kennedy Capital Management, Inc.
(as of 9/30/2011)
Top Mutual Fund Holder: 864,778 shares
iShares Russell 2000 Index Fund
(as of 9/30/2011)
Contact Information: One Benham Place
9400 North Broadway Suite 600
Oklahoma City, OK 73114
Investor/Analyst inquiries: Alan Van Horn
Next Earnings Date:  March 1, 2012
Profit Margin (ttm) -239.17%
Operating Margin(ttm): 22.09%
Return On Assets(ttm): 2.72%
Return On Equity(ttm): -128.35%
Qtrly Revenue Growth (yoy): 14.20%
Operating Cash Flow(ttm): $-65.85M
Levered Free Cash Flow(ttm): $-235.33B

GMXR closing price for the week that ended Friday, January 20, 2012 was $1.15, down 0.08, on volume of 1,457,051.
GMXR is trading -15.06% below its 50 day moving average and -53.59% below its 200 day moving average.
GMXR is -82.25% below its 52-week high of $6.48 and 6.48% above its 52-week low of $1.08.
GMXR‘s PE ratio is N/A and its market cap is $66.81M.

GMX Resources’ Governance Risk Indicator (GRI®) as of Jan 1, 2012 is:

  • Audit (Medium Concern)
  • Board (Low Concern)
  • Compensation (Medium Concern)
  • Shareholder Rights (Low Concern)

GMX Resources, payer of a $0.578125 cash dividend on December 9, 2011 to all shareholders of record on their 9.25% Series B Cumulative Preferred Stock, is leveraged to the “hilt”. The companies oil operations are not seeing much profits having reported operating income of only $1.9 million as of the 3rd quarter of 2011. That, with a drop in gas prices in 2011 of 19%, GMX continues to borrow money at an extraordinary rate to stay afloat. Unless there is a sharp turnaround in natural gas prices, GMX will likely continue their borrowing trend until the company can affectively cut costs and increase production.

It’s been a rough transition generating revenue from natural gas to oil since the company changed direction in 2010 with the stock losing -91.96% since January 1, 2010. If successful, GMXR could be a safe long-play penny stock to pay out some huge profits to traders willing to take the chance. With 319.3 billion cubic feet of proven natural gas reserves and 264 net producing wells, GMXR is a viable buyout candidate.

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