GMX Resources: modeFinance Credit Report

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modeFinance’s credit report.

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’ sMORE Credit Ratings and MORE CreditLimit to help you in the decision making.It covers all essential information includingfinancial statements of the last three yearsand descriptive information including tradedescription and sector analysis.This report type is ideally suited fordecisions on transactions with each levelof credit risk.

modeFinanceTM HeadquarterBuilding A - AREA Science ParkPadriciano 99 - 34149 Trieste - ItalyPh.: +39 040 375 5337Fax: +39 040 375 [email protected]

askMORETM is a registered mark of modeFinanceTM

GMX RESOURCES INCThursday, 04 April 2013

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D C CC CCC B BB BBB A AA AAA

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D C CC CCC B BB BBB A AA AAAnot

available

non return extremlypathological

pathological highdanger

weak sufficient adequate good very

strongextremely

strong

Company name GMX RESOURCES INC

Identification number Not available

Country United States of America

ZIP code and city 73114 - OKLAHOMA CITY

Address SUITE 600

+1 405 600 0711

www.gmxresources.com

Not available

Legal form Not available

Account Consolidated

Incorporation date 1998

NACE 2 Sector 0610 - Extraction of crude petroleum

Listed

Status Active

MORE Credit limit 750,000 e

31/12/2011 31/12/2010 31/12/2009

Turnover (th e) 90,224 72,199 65,455

Rating CCC CCC B

Probability of default 16.00% 16.00% 3.80%

Confidence Level 100% 100% 100%

Solvency ratios

Leverage ratio 8.73 3.36 1.12

Total asset/Total liabilities 1.11 1.30 1.89

Liquidity ratios

Current Ratio 3.14 1.01 1.58

Quick Ratio 3.13 1.00 1.57

Profitability and economic equili-

brium ratios

Return on investement ROI (%) -32.08 -24.43 -31.48

Return on equity ROE (%) -392.10 -125.44 -75.45

Asset turnover 0.22 0.19 0.18

Interest paid weight -0.18 -0.15 -0.10

Gross Profit/Operating revenue 0.89 0.89 0.88

Interest Coverage ratios

EBIT interest coverage ratio -5.73 -6.64 -9.38

Analysis and trend of financial

strength


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modeFinance TM srlVAT number [email protected]

Area Science Park,Padriciano 99. 34149 Trieste, ItalyTel. +39 040 3755337Fax +39 040 3756741

Sector Analysis

Company Healthy Balanced Vulnerable Risky

Solvency ratios

Leverage ratio 8.73 0.40 1.33 2.07 -2.90

Total asset/Total liabilities 1.11 3.52 1.74 1.26 0.90

Liquidity ratios

Current Ratio 3.14 2.53 1.13 1.00 0.52

Quick Ratio 3.13 2.20 0.91 0.87 0.42

Profitability and economic equilibrium ratios

Return on investement ROI (%) -32.08 25.01 8.57 -0.48 -10.32

Return on equity ROE (%) -392.10 24.43 12.65 -10.66 -76.89

Asset turnover 0.22 0.80 0.46 0.30 0.29

Interest paid weight -0.18 0.01 0.09 0.00 -0.02

Gross Profit/Operating revenue 0.89 0.57 0.48 0.27 0.04

Interest Coverage ratios

EBIT interest coverage ratio -5.73 138.40 7.91 -0.31 -18.84

Cash Conversion Cycle (days)

Days Sales Of Inventory (DIO) 1 11 18 24 24

Days Sales Outstanding (DSO) 49 42 48 40 32

Days Payable Outstanding (DPO) 42 27 37 59 56

Cash Conversion Cycle (DIO + DSO - DPO) 8 31 31 17 7

Numer of analyzed companies - 226 328 180 53

(Average) Rating CCC A BBB B C

The sector has been chosen according to:

international companies in the sector NACE 2 0610 with financial data of year 2011.


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Sector Analysis - Graphs


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Balance Sheet

BALANCE SHEET (th e) 31/12/2011 31/12/2010 31/12/2009

Accounting practice Local GAAP Local GAAP Local GAAP

Exchange rate USD - EUR 0.7729 0.748 0.6942

Number of months 12 12 12

Total assets 419,044 379,303 362,398

Fixed assets 320,479 329,395 318,520

Intangible fixed assets 0 0 0

Tangible fixed assets 312,649 311,766 300,627

Other fixed assets 7,830 17,629 17,893

Current assets 98,565 49,908 43,878

Stocks 252 244 226

Debtors 12,125 9,102 7,339

Other current assets 86,187 40,563 36,313

Cash & cash equivalent 79,212 1,763 24,680

Shareholders funds 43,079 87,082 171,026

Capital 51 25 23

Other shareholders funds 43,028 87,057 171,003

Total liabilities 375,965 292,221 191,372

Non current liabilities 344,551 242,742 163,655

Long term debt 329,859 213,137 132,049

Other non-current liabilities 14,691 29,604 31,606

Current liabilities 31,414 49,479 27,718

Loans 20 19 33

Creditors 10,472 18,639 13,314

Other current liabilities 20,922 30,821 14,370

Total shareh. funds & liab. 419,044 379,303 362,398

NET DEBT (th e) 31/12/2011 31/12/2010 31/12/2009

Short term debts 20 19 33

Long term debt 329,859 213,137 132,049

Cash & cash equivalent 79,212 1,763 24,680

Net debt 250,667 211,394 107,402

31/12/2011 31/12/2010 31/12/2009

Working capital 1,905 -9,294 -5,748

Net Current Assets 67,150 429 16,161

31/12/2011 31/12/2010 31/12/2009

Days Sales Of Inventory (DIO) 1 1 1

Days Sales Outstanding (DSO) 49 46 41

Days Payable Outstanding (DPO) 42 94 74

Cash Conversion Cycle (DIO + DSO - DPO) 8 -47 -32


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Income Statement

INCOME STATEMENT (th e) 31/12/2011 31/12/2010 31/12/2009

Accounting practice Local GAAP Local GAAP Local GAAP

Exchange rate USD - EUR 0.7729 0.748 0.6942

Number of months 12 12 12

Sales 90,224 72,199 65,455

Revenues growth (%) 25 10 -

Other revenues +/- variation in inventories and contract in progress + Fixed assets

own construction capitalized0 0 0

Operating revenue / turnover 90,224 72,199 65,455

Total operating costs 231,473 164,774 174,505

Costs growth (%) 40 -6 -

Service costs - - -

Material costs - - -

Costs of employees - - -

EBITDA 56,621 43,391 43,078

Depreciation 197,870 135,966 152,128

EBIT -141,249 -92,575 -109,050

Financial P/L -17,831 -14,038 -16,675

Financial revenue 158 -3 50

Financial expenses 17,989 14,035 16,725

Interest paid 24,635 13,944 11,626

P/L before tax -159,080 -106,613 -125,725

Extr. and other P/L -9,359 -5,795 -3,331

Extr. and other revenue - - -

Extr. and other expenses - - -

P/L before tax + Extr. and other P/L -168,438 -112,408 -129,056

Taxation 475 -3,171 -23

P/L for period -168,913 -109,237 -129,033

31/12/2011 31/12/2010 31/12/2009

Costs of Good Sold 10,372 7,967 8,174

Gross Profit 79,852 64,232 57,280

Other Operating Expenses 221,101 156,807 166,331

31/12/2011 31/12/2010 31/12/2009

Cash flow 28,957 26,729 23,095

Added value - - -

31/12/2011 31/12/2010 31/12/2009

Number of employees 112 109 95


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Evolutions and trends


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Qualitative information

Full overview It is an American - based independent oil and gas company engaged in the development and exploration of

natural gas and oil properties. The company was founded in 1998, and has its registered office in Oklahoma City,

Oklahoma. Through its subsidiaries, the company acquires, explores, and develops properties for the production

of crude oil and natural gas in Texas, Louisiana, and New Mexico. Its activities primarily focus on the Cotton Valley

Sands in Carthage, North Field of Harrison and Panola counties of eastern Texas. In 2006, the company had proved

reserves of 258,403 million cubic feet of natural gas equivalent and 95.8 net producing wells. It also has a joint

development agreement with Penn Virginia Oil & Gas, L. P. for the development of properties in Carthage, North

Field. The company’s natural gas customers include marketing affiliates of the major pipeline companies, natural

gas marketing companies, and a variety of commercial and public authorities, industrial and institutional end -

users that ultimately consume the gas. Its strategy is to steady production growth, prove its natural gas reserves in

its resource play with 7 - 8 rigs, and continually grow shareholder value.

History Not available.

Primary business line An American - based independent oil and gas company engaged in the development and exploration of natural

gas and oil properties.

Secondary business line Not available.

Main activity Services.

Secondary activity Not available.

Main products and services Development and exploration of natural gas and oil properties.

Size estimate Not available.

Strategy, organization and policy Not available.

Strategic alliances Not available.

Membership of a network Not available.

Main brand names Not available.

Main domestic country United States of America.

Main foreign countries or regions Not available.

Main production sites Not available.

Main distribution sites Not available.

Main sales representation sites Not available.

Main customers Not available.


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Auditor/Advisor/Bank

name type address

GRANT THORNTON LLP Auditor -

UMB Bank Transfer Agent -

Board

name date of birth nationality function

Mr. Ken L Kenworthy - United States CHAIRMAN OF THE BOARD, CHIEF EXECUTIVE Officer

T. J Boismier - - Independent Director

Mr. Thomas G Casso - - Independent Director

Mr. Michael G Cook - - Independent Director

Mr. Steven Craig - - Independent Director

Mr. J. David Lucke - - Independent Director

Mr. Jon W McHugh - - Independent Director

Mr. Michael J Rohleder - - President, Director

Sharehoders (the first twenty shareholders ordered by Direct %)

CHATHAM ASSET MANAGEMENT, LLC Rating:

Country ISO code US Operating Revenue (MIL $) 0.3

NACE Rev. 2, Core code - Total Assets (MIL $) -

Direct % - Number of Employees 4

Total % 7.90 Information date 2012/12

Address : Not available

BLACKSTONE HOLDINGS I LP Rating:

Country ISO code US Operating Revenue (MIL $) -


Direct % 6.90 Number of Employees 0

Total % - Information date 2012/12


BLACKSTONE GROUP L.P. (THE) via its funds Rating: AA


NACE Rev. 2, Core code - Total Assets (MIL $) 28931.55





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CHATHAM ASSET MANAGEMENT, LLC via its funds Rating:






KENWORTHY KEN L. JR Rating:

Country ISO code - Operating Revenue (MIL $) -


Direct % 1.19 Number of Employees -



OMEGA ADVISORS, INC. via its funds Rating:






KENWORTHY KEN L. SR FAMILY Rating:



Direct % 0.99 Number of Employees -



BLACKROCK, INC. via its funds Rating: AA

Country ISO code US Operating Revenue (MIL $) 9337

NACE Rev. 2, Core code - Total Assets (MIL $) 200451




VANGUARD GROUP, INC. THE via its funds Rating:






E. I. DU PONT DE NEMOURS AND COMPANY via its funds Rating: BB







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SUSQUEHANNA INTL GROUP via its funds Rating:






JP MORGAN CHASE & CO. via its funds Rating:






DIMENSIONAL FUND ADVISORS LP via its funds Rating: A






STATE OF CALIFORNIA via its funds Rating:



Direct % - Number of Employees -



KGT CAPITAL LP via its funds Rating:






GEODE CAPITAL MANAGEMENT, LLC via its funds Rating:







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Subsidiaries (the first twenty subsidiaries ordered by Direct %)

ENDEAVOR PIPELINE INC Rating:



Direct % WO Number of Employees -


DIAMOND BLUE DRILLING CO Rating:



Direct % MO Number of Employees -


ENDEAVOR PIPELINE INC. Rating:



Direct % MO Number of Employees -



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ASKMORE rating guide

General vision A credit rating is an opinion of the general creditworthiness of an obligor (issuer rating), or the creditworthiness of

an obligor in respect of a specific debt security, or other financial obligation (issue rating), based on relevant risk

factors.

The Multi Objective Rating Evaluation (MORE) model is essentially used to assess the level of distress of industrial

companies by using data included in financial statements.

The basic idea of the model is to analyze a set of financial and economic ratios in a predictive corporate bankruptcy

model with the purpose of creating a fundamental credit rating model for each industrial sector. Results of the

model are obtained by applying newly developed numerical methodologies, drawing together financial theory,

data mining and engineering design methodologies. The heart of MORE is a multi dimensional and multi objective

algorithm that produces a classification of each company, by taking into account any attributes (such as sector and

country) characterizing a firm.

The model gives the opportunity to assign a rating to a company even without considering a complete data analysis

and allows to process quality information. It induces a better understanding of a company’s strength and weakness

thanks to sophisticated data mining tools and taking into account the analyst knowledge.

The MORE rating vision is to look at the fundamental economics of the company. The main idea is to evaluate the

rating observing every aspect of the economical and financial behavior of the company: better is the equilibrium

between the different aspects, better will be the final rating.

This is done studying, evaluating and aggregating the most important sections of the financial and economic

behavior of a company such as: profitability, liquidity, solvency, interest coverage and efficiency.


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Rating scale

Rating class Rating macro class Assessment

AAA

Healthy

The company’s capacity to meet its financial commitments is extremely strong. The company shows an excellent

economic and financial flow and fund equilibrium.

AAThe company has very strong creditworthiness. It also has a good capital structure and economic and financial

equilibrium. Difference from AAA is slight.

AThe company has a high solvency. The company is however more susceptible to the adverse effects of changes in

circumstances and economic conditions than companies in higher rated categories.

BBB

Balanced

Capital structure and economic equilibrium are considered adequate. The company’s capacity to meet its financial

commitments could be affected by serious unfavourable events.

BBA company rated BB is more vulnerable than companies rated BBB. Furthermore the company faces major ongoing

uncertainties or exposure to adverse business, financial, or economic conditions.

B

Vulnerable

The company presents vulnerable signals with regards to its fundamentals. Adverse business, financial, or economic

conditions will be likely to impair the company’s capacity or willingness to meet its financial commitments.

CCC

A company rated CCC has a dangerous disequilibrium on the capital structure and on its economic and financial

fundamentals. Adverse market events and an inadequate management could affect with high probability the

company’s solvency.

CC

Risky

The company shows signals of high vulnerability. In the event of adverse market and economic conditions, the

company’s strong disequilibrium could increase.

CThe company shows considerable pathological situations. The company’s capacity to meet its financial

commitments is very low.

D The company has not any longer the capacity to meet its financial commitments.


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Fundamental Credit Rating Ratios

Analysis area Ratio Assessment

Solvency ratios

Leverage ratioThis measures the level of total liabilities of the company in comparison

with equity.

Assets to debtThis indicates company’s solvency. The company shows a level of deficit

when the value of this ratio is under one unit.

Financial ratios Fixed Assets coverage ratioThis is calculated only for holdings. It measures the capital structure i.e.

whether a company covers the fixed assets with long term capital.

Liquidity ratios

Current ratioThis measures whether a company has sufficient short-term assets to cover

its short-term liabilities.

Quick ratioThis compares current liabilities only to those assets that can be readily

turned into cash.

Profitability and economic ratios

Return on Investement(ROI)This measures the profitability of company investments without regard to

the way the investment is financed.

Return on Equity(ROE) This measures the profitability of the equity.

Asset turnover

This indicates the investments turnover with regards to sales. The level

assumed from the ratio depends on the sector in which the company

operates.

Profit margin This indicates the profitability of sales.

Interest coverage ratio Interest Paid coverage

This indicate the ability of the company to cover interest expenses through

the economic margins (Gross profit and EBIT) and through the cash flow

from operating activities.


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MORE Credit Limit, Probability of default and Confidence Level

MORE Credit Limit MORE Credit limit is the estimation of the amount of maximum credit that is possible to assign on a commercial

relationship with the analyzed company with an outlook of one year.

modeFinance used the following values associated with the company analyzed while computing the credit limit:

• Size;

• Years in Business;

• Average number of suppliers;

• Liquidity of the company and the comparison with its sector;

• The funds dedicated to be paid to suppliers;

• The likelihood that a company may pay its debts in the next 12 months (MORE Ratings).

The credit limit in this report is merely a suggested value of commercial credit limit calculated on the basis of annual

public data. This value should be reviewed by paying attention to the Confidence Level value and by using other

information such as other business information, news... etc; and private information such as the relationship with

client, history of payments, guarantees and the knowledge of the sector.

Probability of default e Confidence

Level

In addition to the MORE Rating, modeFinance also estimates the probability of default and provides a level of

confidence. The probability of default is the degree of certainty (in quantitative terms) that the company will go

into default.

As the probability of default is strongly affected by the economic climate that the company is operating in,

companies in the same MORE class will not necessarily have the same probability of default.

The MORE model can produce a MORE rating even if there is missing data by using an associated confidence level:

Confidence =

∑Available Information∑

Total Information

The level of confidence does not indicate financial confidence in the company. It is a reflection of the variations in

availability of financial data across Europe due to filing regulations and suggests the degree of financial detail the

MORE rating is able to take into account for each company.

For companies with fully populated records a confidence level of 100% would be applied: companies where no

financial data is provided, 0%. This puts the MORE rating in a context for the user and aids interpretation.


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Notes and disclaimer

NOTES modeFinance has based the present analysis on the company available financial statements, coming from one or

more of the following sources: local providers, Commercial Register (Companies House), websites, modeFinance’s

database etc.

DISCLAIMER All Rights Reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any

form by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of

the publisher modeFinance. The facts of this report are believed to be correct at the time of publication but cannot

be guaranteed. Please note that the findings, conclusions and recommendations that modeFinance delivers will

be based on information gathered in good faith from both primary and secondary sources, whose accuracy we

are not always in a position to guarantee. As such modeFinance can accept no liability whatever for actions taken

based on any information that may subsequently prove to be incorrect.

Contacts

Company modeFinance

Products MORE rating

Where AREA Science Park

34149 Trieste, via Padriciano 99 - ITALY

Info [email protected]

web www.modefinance.com

Phone +39 040 3755337

GMX Resources: modeFinance Credit Report

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