April 16, 2010 (FinancialWire) — GMX Resources Inc. (NYSE: GMXR) has executed a joint operating agreement with Exco Operating Company, LP to jointly develop H/B leasehold rights in the Scottsville area of Harrison County, Texas.

Under the JOA, the company is contributing its H/B leasehold rights in the Verhalen Prospect and Exco is contributing its H/B leasehold rights in the Hamilton Unit, creating a 3,850 acre block of contiguous leasehold with a potential of 49 H/B Horizontal locations on 80 acre spacing. The JOA adds an additional 9 H/B Hz drilling locations. The company will operate the joint leasehold with an 84.3% working interest and Exco will participate with a 15.7% working interest representing the pro rata shares of each company's leasehold contribution under the JOA. The reduction in the company's capital expenditures, production, and operating cash flow and the increase in liquidity related to the JOA already has been included in the published production guidance of 17.5 Bcfe, capital expenditures of $175 million, and operating cash flow of $62 million.

The company has completed some of the work on the Bosh #19H Haynesville/Bossier (H/B) horizontal well, which is showing a 10.1 million cubic feet of gas per day (MMCF/D) initial production rate.

The well was drilled with a 4,153 foot lateral, and stimulated with 12 frac stages, however during the process of drilling out the plugs an obstruction prevented the last 5 ½ stages from being accessed. After several attempts the company made a decision to cease current efforts to drill out the remaining plugs and produce the well from approximately 6 ½ stages across 2,174 feet of the open lateral. The well test was over 24 hours on a 14/64 choke with 4,526 pounds of Flowing Casing Pressure (FCP) into a sales line with 590 pounds per square inch (PSI) of Line Pressure . Plans are to re-attempt to access the entire lateral in the future when pressures are favorable.

Additionally, the Blocker Heirs 20H has been successfully completed with a 4,450 foot lateral, stimulated with 11 frac stages and 11 perforations per stage. All the plugs have been successfully drilled out and the well is currently flowing back and is expected to have an IP test by April 16, 2010.

The company expects to drill and complete five additional H/B horizontal wells for a total of seven completions in Q2 2010. All the wells drilled and completed will be constructed using 5 ½" casing, will have an average lateral length of 4,500 feet and are scheduled for 10 to 12 frac stages. The company expects Q1 production to meet previously announced guidance of 3.2 Bcfe to 3.3 Bcfe and reconfirms Q2 2010 production guidance of 4.2 Bcfe to 4.4 Bcfe which will be a sequential growth of approximately 34%. Completed Well Costs (CWC) are expected to decline from Q1 2010 to Q2 2010 by approximately 10% to $8.2 million. The cost reductions reflect increased drilling efficiencies, redesigned completion plans and continued focus on cost management.

The company has agreed to sublease its fourth Helmerich and Payne FlexRig 3™ to another major operator for a period of 180 days. This sublease agreement entitles the company to receive a day rate which will be applied to its previously contracted day rate and the sublease period will be deducted from the three year contract. The primary term of the sublease began on March 25, 2010.

GMXR began developing the Verhalen Prospect in 2009 and has previously drilled and completed 7 H/B Hz wells in this prospect that are not part of the JOA. The company spud the first well under the JOA, the Verhalen F #1H on March 29, 2010 with an AFE of $8 million.

GMXR is a Pure Play, E & P company with one of the most concentrated Haynesville / Bossier Horizontal Shale Operations in East Texas.

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