GMX RESOURCES INC. GMXR and GSO Capital Partners Announce Commitment to Purchase Senior Secured Notes and Common Equity, and Relationship to Support Future Operations


OKLAHOMA CITY, Nov. 7, 2012 (GLOBE NEWSWIRE) -- GMX RESOURCES INC. (NYSE:GMXR), a leading oil and gas exploration and production Company with assets in the Williston, Denver Julesburg and East Texas Basins ("GMXR"), and GSO Capital Partners LP ("GSO"), the credit arm of The Blackstone Group (NYSE:BX), announced today the entry by GSO and certain other holders of the existing first-lien secured notes of GMXR to Commitment Agreements (the "Committed Holders") with respect to financing commitments by the Committed Holders that would result in GSO becoming the beneficial owner of approximately 7% of the common stock of GMXR, as well as the largest debt holder, of GMXR. GSO and the other Committed Holders committing to the transactions currently own an aggregate of 72% of the existing first-lien secured notes of GMXR.

In the transactions:

  • GMXR is expected to issue to the Committed Holders an aggregate of $30.0 million principal amount of new first-lien senior secured notes due 2017, the proceeds of which will be approximately $27.1 million and will be used to retire the outstanding balance of the Company's 5.00% Convertible Senior Notes due in February 2013;
  • GMXR is also expected to issue shares of its common stock to the Committed Holders equal to approximately 7.4% of its currently outstanding shares of common stock to the investors at a price of $0.48 per share; and
  • At the closing of the transactions, GMXR will issue to the Committed Holders as consideration for the commitment restricted shares of common stock (for $0.01 per share) equal to approximately 12.5% of its currently outstanding shares of common stock. GMXR will pay a customary commitment fee in connection with this financing.

The closing of the transactions is subject to the completion of definitive documents, customary closing conditions and the condition that the consent of the holders of GMXR's existing first-lien secured notes is obtained to amend the first-lien secured notes indenture to permit the issuance of the new notes and the proposed transactions. The Committed Holders have indicated their intent to vote their existing first-lien secured notes in favor of the consent when solicited.

In addition to these transactions, GSO and GMXR anticipate discussions on further future transactions designed to capitalize on GMXR's extensive and high-quality drilling inventory in the Williston, Denver Julesburg Basins and East Texas Basins.

"We are extremely pleased to announce our deepening relationship with GSO," commented Ken Kenworthy, Jr., Chairman of the Board of Directors, Chief Executive Officer and Co-Founder of GMX Resources Inc. "GSO and The Blackstone Group are long-term investors who share our vision for generating value and upside potential from these assets. By combining the financial power and investment experience of GSO with the asset quality, diversification and operating strength of GMXR, this relationship creates an exciting investment opportunity for both organizations. More importantly, the GSO relationship allows us to continue increasing our Williston Basin asset value by maximizing use of our resources to expand our drilling program in the Bakken and Niobrara shale plays. We look forward to working with GSO in the future on additional ways to optimize our capital structure and enhance common equity value."

Doug Ostrover, Founding Member and Partner of GSO, said, "Our cooperation with GMXR fits perfectly with our strategy of financing valuable businesses and supporting their growth and success by giving them access to long-term capital and partnering with high-quality, proven management teams. GMXR is extremely well-positioned to capitalize on a recovery in natural gas prices while drilling an exceptional inventory of oil-rich acreage in the Williston Basin that generates substantial rates of return at today's economics. We are excited to team up with a first class exploration and production partner and look forward to leveraging GMXR's industry expertise and track record of success to drive value creation for equity and debt investors alike. We are very pleased GMXR agreed to partner with us on these transactions, and we view this as the first step in what we hope to be many successful ventures with GMXR."

GMXR is a resource play rich exploration and production Company. Oil shale resources are located in the Williston Basin, North Dakota & Montana targeting the Bakken Petroleum System and in the DJ Basin, Wyoming targeting the Niobrara Petroleum System. GMXR's natural gas resources are located in the East Texas Basin, in the Haynesville/Bossier gas shale and the Cotton Valley Sand Formation, where the majority of GMXR's acreage is contiguous, with infrastructure in place and substantially all held by production. GMXR believes these oil and natural gas resource plays provide a substantial inventory of operated, high probability, repeatable, organic growth opportunities. GMXR's multiple basin strategy provides flexibility to allocate capital to achieve the highest risk adjusted rate of return, with both oil and natural gas resources throughout its portfolio.

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This press release includes certain statements that may be deemed to be "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that GMXR expects, believes or anticipates will or may occur in the future are forward-looking statements. They include statements regarding the proposed financing, the number and location of planned wells, statements regarding the quality of GMXR's properties and resource potential. These statements are based on certain assumptions and analysis made by GMXR in light of its experience and perception of historical trends, current conditions, expected future developments, and other factors it believes appropriate in the circumstances, including the assumption that there will be no material change in the operating environment for GMXR's properties. Such statements are subject to a number of risks, including but not limited to obtaining requisite consents for the proposed financing, the closing of the proposed financing, commodity price risks, drilling and production risks, risks relating to GMXR's ability to obtain other financing for its planned activities, risks related to weather and unforeseen events, governmental regulatory risks and other risks, many of which are beyond the control of GMXR. Reference is made to GMXR's reports filed with the Securities and Exchange Commission for a more detailed disclosure of the risks. For all these reasons, actual results or developments may differ materially from those projected in the forward-looking statements.

CONTACT: Alan Van Horn Manager, Investor Relations 405.254.5839