GMX Resources on Monday reduced its 2009 capital expenditure budget 45 percent, citing credit market woes and lower natural gas prices.

GMX reduced planned capital spending for 2009 to $220 million from a previously announced $400 million.

The Oklahoma City-based company now expects to finance 2009 capital spending with cash flow and an existing $190 million bank credit facility and to end 2009 with $16 million of unused bank capacity, said Ken Kenworthy Jr., CEO.

Oil and gas sales for 2009 are expected to total $158.2 million.

Oil and gas sales for the first nine months of 2008 totaled $101.6 million, up 118 percent from $46.8 million for the first nine months of 2007. GMX's proved reserves are 94-percent natural gas.

In Nasdaq trading Monday, GMX closed up $1.77, or 9.6 percent, at $20.14 after trading as high as $20.42 during the session. The 52- week range is $88.35 and $16.84.

GMX also revised its production outlook.

Production for 2008 is now expected to total 12.5 billion cubic feet equivalent, up 44 percent from 8.7 billion cubic feet for 2007. In September, GMX estimated 2008 production of 13 billion cubic feet equivalent. Oil and natural gas production for the first nine months of 2008 totaled 9.6 billion cubic feet equivalent.

Expected production for 2008 from the previous guidance was reduced because of decreased activity in a joint development area with Penn Virginia Oil and Gas, a subsidiary of Penn Virginia Corp. Penn Virginia reduced the number of operating rigs in the Haynesville/Bossier shale development area in east Texas from four rigs in the first half of 2008 to none in the second half, according to GMX.

GMX has drilled and completed one Haynesville/Bossier well and two additional wells are expected to be completed during the first quarter. GMX now expects to drill 27 Haynesville/Bossier wells in 2009, including five wells in the joint development area.

Penn Virginia expected to operate two rigs drilling horizontal wells in the joint development area in 2009. GMX plans to operate four to five rigs in the area during the year.

GMX declared a quarterly dividend of 57.8125 cents per share on 9.25 percent Series B cumulative preferred stock. The dividend is payable Jan. 1 to shareholders of record on Dec. 22.

GMX reported a 186-percent increase in net income for the third quarter to $10.3 million, or 53 cents per diluted share, up from $3.6 million, or 18 cents per diluted share, for the third quarter of 2007. Net income for the first nine months of 2008 totaled $29.3 million, up 144 percent from $12 million for the first nine months of 2007.

Originally published by David Page.

(c) 2008 Journal Record - Oklahoma City. Provided by ProQuest LLC. All rights Reserved.

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