Tag - Gmxr

Small-cap stocks pushed lower into mid-session activity as financial stocks, homebuilder shares and commodity themes cast a pall over the GSE euphoria that dominated investor psychology Monday. The Russell is now back below the opening gush fueled by Monday’s warm embrace of the GSE takeover. At 12:42 p.m. ET, the Russell 2000 (NYSE:IWM) was down 6.92, or 0.94%, at 725.94.

Within the financial arena, shares of Lehman Brothers Holdings Inc. (NYSE:LEH) were in freefall mode, collapsing more than 30% amid concerns that the financial services firm was struggling to raise needed capital and that potential investors have pulled out of the process. Lehman denied comment on the share collapse, as did government regulators.

Commodity stocks were getting pummeled, with oil plunging to five-month lows as Hurricane Ike appears to be shifting course south away from the key energy production zones. In addition, OPEC leaders are expected to keep output levels unchanged at their meeting in Vienna, which is going on today. Among broad market sectors, steel, coal and oil exploration stocks were some of the worst performers.

Money flow also appeared to dent upside momentum in stocks, with Treasury products absolutely soaring. The yield on the benchmark 10-year note was down 2.3% in midday action, and appeared to be on course for the lowest close since early April. Yields move inversely to price in credit instruments, which means strong demand for Treasury investments was boosting the price and lowering the yield. That type of action in tandem with sinking equities typically reflects investor safe-haven . . .

It would be great to be the emir of Qatar, sitting atop massive reserves of natural gas as prices for the commodity parallel the rise in crude oil prices and top $13 per million Btu.

But as a small-cap investor you can get the next best thing with GMX Resources, Inc. (Nasdaq:GMXR), a “pure play” exploration and production company based in Oklahoma City. 

“Pure play” is when a company’s stock price correlates highly with a single product or investment theme — in this case, natural gas. Much of the play in this pure play is the next big thing in U.S. gas production — the Haynesville Shale in eastern Texas and western Louisiana, which some experts think may turn out to be as big as the Barnett Shale under the Dallas Fort Worth metro area.

A test in late May of a well owned by Penn Virginia (NYSE:PVA) that lies just west of GMX’s acreage showed strong production potential at relatively low cost and is prompting GMX to accelerate its own plans for development.

Tests on Haynesville and Bossier shale sites neighboring that of GMX's acreage have been running so positive that analysts at Jefferies & Co. decided to raise their target on GMXR to $63 from $48 on June 2, 2008. On June 17, GMX announced the acquisition of 9,865 gross / 7231 net operated developed and undeveloped acres mostly in Harrison County, East  Texas and Caddo Parish North Louisiana, which includes an average of 85% working interest in 11 units, producing 1,900 mcfepd. The news sent the stock price up to new highs over $70.    

To reflect the increased acreage position and rig development in Haynesville, on June 18, Jefferies raised their price target on GMXR to $82 from $63. This price target upgrade was on the heels of Collins Stewart's June 17th increase in price target to $86 from $67, also to reflect GMX's increased acreage position.   

Referring to the Penn Virginia test, GMX chief executive Ken Kenworthy said on a May 7 earnings conference call that indications are that the GMX properties have even bigger seams of porosity — that is, where gas is likely to be . . .