GMX Resources (GMXRW) 10-Q 2007 Q2 Quarterly report

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

þ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For The Quarterly Period Ended June 30, 2007

o TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For The Transition Period From                    to                    

Commission File Number 001-32977

GMX RESOURCES INC.

(Exact name of registrant as specified in its charter)

Oklahoma (State or other jurisdiction of incorporation or organization)	73-1534474 (IRS Employer Identification No.)
One Benham Place, 9400 North Broadway, Suite 600 Oklahoma City, Oklahoma (Address of principal executive offices)	73114 (Zip Code)

(Registrants’ telephone number, including area code):(405) 600-0711

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yesþ      Noo

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. Check one:

Large accelerated filero     Accelerated filerþ     Non-accelerated fileo

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Check one:

Yeso      Noþ

The number of shares outstanding of the registrant’s common stock as of August 2, 2007 was 13,267,886.

GMX Resources Inc.

Form 10-Q

For the Quarter Ended June 30, 2007

TABLE OF CONTENTS

	PAGE
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements		1
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		11
Item 3. Quantitative and Qualitative Disclosures About Market Risk		19
Item 4. Controls and Procedures		20
PART II. OTHER INFORMATION
Item 1. Legal Proceedings		21
Item 1A. Risk Factors		21
Item 2. Unregistered Sale of Equity Securities and Use of Proceeds		21
Item 3. Defaults Upon Senior Securities		21
Item 4. Submission of Matters to a Vote of Security Holders		21
Item 5. Other Information		22
Item 6. Exhibits		22
Signature Page		22
Exhibit Index		23
Exhibit 10.4(b)
Exhibit 10.4(c)
Exhibit 10.4(d)
Exhibit 10.4(e)
Exhibit 10.6(a)
Exhibit 10.6(b)
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2

 i

PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements

GMX Resources Inc. and Subsidiaries
Consolidated Balance Sheets

	December 31,			June 30,
	2006			2007
					(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	4,959,749		$	5,520,423
Accounts receivable—interest owners		64,185			88,382
Accounts receivable—oil and gas revenues		5,766,286			7,217,186
Derivative instruments		1,175,669			121,901
Inventories		373,420			1,118,174
Prepaid expenses and deposits		1,284,904			1,022,929
Total current assets		13,624,213			15,088,995
OIL AND GAS PROPERTIES, AT COST, BASED ON THE FULL COST METHOD OF ACCOUNTING FOR OIL AND GAS PROPERTIES		174,175,157			257,572,322
Less accumulated depreciation, depletion, and amortization		(16,874,796	)		(23,839,845	)
		157,300,361			233,732,477
OTHER PROPERTY AND EQUIPMENT		43,097,326			52,575,613
Less accumulated depreciation		(3,742,057	)		(5,719,639	)
		39,355,269			46,855,974
OTHER ASSETS		42,680			17,299
TOTAL ASSETS	$	210,322,523		$	295,694,745
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable	$	24,658,305		$	27,005,758
Accrued expenses		3,236,536			4,460,941
Accrued interest		314,181			351,359
Revenue distributions payable		513,416			475,380
Derivative instruments		—			722,686
Current portion of long-term debt		251,447			152,800
Total current liabilities		28,973,885			33,168,924
LONG-TERM DEBT, LESS CURRENT PORTION		41,568,836			46,555,016
OTHER LIABILITIES		3,271,933			5,056,665
LONG-TERM DERIVATIVE INSTRUMENTS		—			657,475
DEFERRED INCOME TAXES		5,026,927			7,936,990
SHAREHOLDERS’ EQUITY
Preferred stock, par value $.001 per share, 10,000,000 shares authorized:
Series A Junior Participating Preferred Stock 25,000 shares authorized, none issued and outstanding		—			—
9.25% Series B Cumulative Preferred Stock, 3,000,000 shares authorized, 2,000,000 shares issued and outstanding (aggregate liquidation preference $50,000,000)		2,000			2,000
Common stock, par value $.001 per share—authorized 50,000,000 shares; issued and outstanding 11,242,136 shares in 2006 and 13,267,886 shares in 2007		11,242			13,268
Additional paid-in capital		113,265,614			179,570,379
Retained earnings		17,426,144			23,564,478
Other comprehensive income		775,942			(830,450	)
Total shareholders’ equity		131,480,942			202,319,675
TOTAL LIABILITES AND SHAREHOLDERS’ EQUITY	$	210,322,523		$	295,694,745

See accompanying notes to consolidated financial statements.

1

GMX Resources Inc. and Subsidiaries
Consolidated Statements of Operations
(Unaudited)

	Three Months Ended June 30,				Six Months Ended June 30,
	2006		2007		2006		2007
REVENUE
Oil and gas sales	$	6,467,631	$	16,467,863	$	13,157,042	$	29,642,417
Interest income		25,885		49,420		52,042		127,664
Other income		—		1,497		322		1,749
Total revenue		6,493,516		16,518,780		13,209,406		29,771,830
EXPENSES
Lease operations		950,571		2,133,078		1,653,928		3,718,161
Production and severance taxes		508,585		695,508		962,482		1,187,830
Depreciation, depletion, and amortization		1,581,202		4,256,610		3,113,444		7,934,393
Interest		162,295		521,754		204,668		866,215
General and administrative		1,348,746		2,113,257		2,552,963		3,876,795
Total expenses		4,551,399		9,720,207		8,487,485		17,583,394
Income before income taxes		1,942,117		6,798,573		4,721,921		12,188,436
INCOME TAXES		349,623		2,161,600		995,100		3,737,600
NET INCOME		1,592,494		4,636,973		3,726,821		8,450,836
Preferred Stock Dividends		—		1,156,252		—		2,312,502
NET INCOME APPLICABLE TO COMMON STOCK	$	1,592,424	$	3,480,721	$	3,726,821	$	6,138,334
EARNINGS PER SHARE – Basic	$	0.14	$	0.26		0.34	$	0.48
EARNINGS PER SHARE – Diluted	$	0.14	$	0.26		0.33	$	0.47
WEIGHTED AVERAGE COMMON SHARES – Basic		11,210,188		13,267,767		11,012,818		12,878,577
WEIGHTED AVERAGE COMMON SHARES – Diluted		11,388,435		13,407,477		11,193,210		13,014,414

See accompanying notes to consolidated financial statements.

2

GMX Resources Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)

	Six Months Ended June 30
	2006			2007
CASH FLOWS DUE TO OPERATING ACTIVITIES
Net Income	$	3,726,821		$	8,450,836
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion, and amortization		3,644,124			7,934,393
Deferred income taxes		995,100			3,737,600
Non cash compensation expense		307,735			595,920
Amortization of loan fees		3,470			25,381
Decrease (increase) in:
Accounts receivable		1,551,600			(1,475,097	)
Inventory and prepaid expenses		(844,615	)		(482,779	)
Increase (decrease) in:
Accounts payable		4,132,411			2,347,453
Accrued expenses and liabilities		(113,765	)		1,261,583
Revenue distributions payable		735,975			1,541,315
Net cash provided by operating activities		14,138,856			23,936,605
CASH FLOWS DUE TO INVESTING ACTIVITIES
Additions to oil and gas properties		(37,390,268	)		(82,183,547	)
Purchase of property and equipment		(11,395,768	)		(9,478,287	)
Net cash used in investing activities		(48,786,036	)		(91,661,834	)
CASH FLOW DUE TO FINANCING ACTIVITIES
Advance on borrowings		30,338,733			51,042,575
Payments on debt		(10,252,244	)		(46,155,040	)
Proceeds from sale of common stock		14,207,473			65,710,870
Dividends paid on Series B preferred stock		—			(2,312,502	)
Net cash provided by financing activities		34,293,962			68,285,903
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(353,218	)		560,674
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		2,392,497			4,959,749
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	2,039,279		$	5,520,423
CASH PAID FOR INTEREST	$	226,628		$	850,055

See accompanying notes to consolidated financial statements

3

GMX Resources Inc. and Subsidiaries
Consolidated Statements of Comprehensive Income
(Unaudited)

	Three Months Ended June 30,					Six Months Ended June 30,
	2006		2007			2006		2007
Net Income	$	1,592,494	$	4,636,973		$	3,726,821	$	8,450,836
Other comprehensive income (loss):
Change in fair value of derivative instruments		—		2,753,032			—		(1,439,929	)
Adjustment for derivative gains reclassified into oil and gas sales		—		(343,500	)		—		(994,000	)
Other comprehensive income (loss) before income tax		—		2,409,532			—		(2,433,929	)
Income tax benefit (provision) related to items of other comprehensive income		—		(819,241	)		—		827,537
Other comprehensive income (loss), net of income tax		—		1,590,291			—		(1,606,392	)
Comprehensive income	$	1,592,494	$	6,227,264		$	3,726,821	$	6,844,444

See accompanying notes to consolidated financial statements.

4

GMX RESOURCES INC.

CONDENSED NOTES TO INTERIM FINANCIAL STATEMENTS

Six months ended June 30, 2006 and June 30, 2007

(unaudited)

1. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements and notes thereto have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, certain footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted. The accompanying consolidated financial statements and notes thereto should be read in conjunction with the consolidated financial statements and notes thereto included in GMX Resources Inc.’s (“GMX” or the “Company”) 2006 Annual Report on Form 10-K.

In the opinion of GMX’s management, all adjustments (all of which are normal and recurring) have been made which are necessary to fairly state the consolidated financial position of GMX as of June 30, 2007, and the results of its operations for the three and six month periods ended June 30, 2006 and 2007, and its cash flows for the six month periods then ended.

Stock Based Compensation

Effective January 1, 2006, GMX adopted Statement of Financial Accounting Standard No. 123(R),Share-Based Payment, (“SFAS No. 123(R)”), using the modified prospective transition method. SFAS No. 123(R) requires equity-classified share-based payments to employees, including grants of employee stock options, to be valued at fair value on the date of grant and to be expensed over the applicable vesting period. Under the modified prospective transition method, share-based awards granted or modified on or after January 1, 2006, are recognized in compensation expense over the applicable vesting period. Also, any previously granted awards that are not fully vested as of January 1, 2006 are recognized as compensation expense over the remaining vesting period. No retroactive or cumulative effect adjustments were required upon GMX’s adoption of SFAS No. 123(R).

The fair value of each option grant is estimated on the date of grant using the Black-Scholes model. This model incorporates various assumptions with respect to historical stock price volatility computed at the date of grant which has varied over time, expected dividends which are zero, expected term of the options which is the vesting period of 4 years from the date of grant, and the risk free rate of return which is based on the five year U.S. treasury bond rate at the date of the grant.

For the three and six months ended June 30, 2007, GMX recognized stock-based compensation of $338,175 and $595,920, respectively. For the three and six months ended June 30, 2006, GMX recognized stock based compensation of $152,668 and $307,735, respectively.

5

The following table provides information related to stock option activity during the six months ended June 30, 2007:

				Weighted		Weighted
	Number of			Average		Average
	Shares			Exercise		Remaining		Aggregate
	Underlying			Price		Contract Term		Intrinsic
	Options			Per Share		In Years		Value(a)
Outstanding at January 1, 2007		270,250		$	14.89
Granted		336,000			38.14
Exercised		(25,750	)		3.00
Forfeited or Expired		—			—
Outstanding at June 30, 2007		580,500		$	28.89		9.0	$	3,315,222
Exercisable at June 30, 2007		70,750		$	8.85		7.1	$	1,822,027

(a) The intrinsic value of a stock option is the amount by which the market value of the underlying stock as of the end of the period presented exceeds the exercise price of the option.

The aggregate intrinsic value of stock options exercised during the three and six months ended June 30, 2007 was approximately $23,715 and $797,965, respectively. The aggregate intrinsic value of stock options exercised during the three and six months ended June 30, 2006 was approximately $708,868 and $2,532,868, respectively.

As of June 30, 2007 there was $7,818,770 of total unrecognized compensation costs related to non-vested stock options granted under the Company’s stock option plan. That cost is expected to be recognized over a weighted average period of 3.6 years.

GMX received $2,250 and $77,250 in cash for option exercises in the second quarter of 2007 and the first half of 2007, respectively. No current tax benefits were realized due to availability of a net operating loss carryforward for tax purposes, but deferred tax liability was reduced by $121,189 and $174,541, respectively.

GMX received $130,400 and $234,650 in cash for option exercises in the second quarter of 2006 and the first half of 2006, respectively. No current tax benefits were realized due to availability of a net operating loss carryforward for tax purposes, but deferred tax liability was reduced by $44,336 and $79,781, respectively.

On May 22, 2007, the shareholders approved an amendment to GMX’s stock option plan that increased the maximum number of shares of common stock in respect of which options may be granted under the stock option plan from 550,000 shares to 850,000 shares.

6

Asset Retirement Obligations

Below is a reconciliation of the beginning and ending aggregate carrying amount of the Company’s asset retirement obligations.

	Six Months
	Ended June 30,
	2006		2007
Beginning of the period	$	2,212,233	$	2,162,885
Liabilities incurred in the current period		269,680		116,163
Liabilities settled in the current period		—		—
Accretion		40,823		89,219
End of the period	$	2,522,736	$	2,368,267

2. Earnings Per Share

Net income applicable to common stock was used as the numerator in computing basic and diluted income per common share for the three and six months ended June 30, 2007. The following table reconciles the weighted average shares outstanding used for these computations:

	Three Months Ended				Six Months Ended
	June 30				June 30
	2006		2007		2006		2007
Weighted average shares outstanding – basic		11,210,188		13,267,767		11,012,818		12,878,577
Effect of dilutive securities – stock options		178,247		139,710		180,392		135,837
Weighted average shares outstanding-diluted		11,388,435		13,407,477		11,193,210		13,014,414

3. Commitments and Contingencies

None

4. Common Stock Offering

On February 7, 2007, GMX sold 2 million shares of common stock in a public offering. The net proceeds to GMX were approximately $65.5 million. GMX expects to use the net proceeds to fund drilling and development of its East Texas properties and for other general corporate purposes. Pending such uses, a portion of the net proceeds were used to reduce indebtedness under GMX’s revolving bank credit facility, which will permit additional borrowings in the future under the terms of the credit facility.

5. Hedging Activity

In the first quarter of 2007, GMX entered into a 23 month hedging transaction for 200,000 MMBtus per month at $7.46 per MMBtu effective February 1, 2007, and a 17 month hedging transaction for 100,000 MMBtus per month at $7.60 per MMBtu effective August 1, 2007. The transactions are in the form of a fixed-price swap agreement, pursuant to which GMX receives (if the index price is lower than the fixed price) or pays (if the index price is higher than the fixed price) the difference between the contract price and the index price, which is the Inside FERC – Houston Ship channel price. In addition to the hedges entered into during the first quarter of 2007, GMX has an additional hedge for 100,000 MMBtus per month for $8.005 per MMBtu which expires July 31, 2007. GMX entered into these hedges to partially reduce its exposure to natural gas price risk for the period of the hedges.

7

As a result of GMX’s hedging activities, GMX recognized $343,500 and $994,000, respectively, of additional oil and gas sales for the three and six months ended June 30, 2007. There were no oil and gas hedging activities during the first six months of 2006.

By using derivative instruments to hedge exposures to changes in commodity prices, GMX exposes itself to credit risk and market risk. Credit risk is the failure of the counterparty to perform under the terms of the derivative contract. To mitigate this risk, the hedging instruments are usually placed with counterparties that GMX believes are minimal credit risks.

Market risk is the adverse effect on the value of a derivative instrument that results from a change in interest rates or commodity prices. The market risk associated with commodity price is managed by establishing and monitoring parameters that limit the types and degree of market risk that may be undertaken.

GMX periodically enters into financial hedging activities with respect to a portion of its projected oil and natural gas production through various financial transactions to manage its exposure to oil and gas price volatility. These transactions include financial price swaps whereby GMX will receive a fixed price for its production and pay a variable market price to the contract counterparty. These financial hedging activities are intended to support oil and natural gas prices at targeted levels and to manage GMX’s exposure to oil and gas price fluctuations. The oil and gas reference prices upon which these price hedging instruments are based reflect various market indices that have a high degree of historical correlation with actual prices received by GMX.

GMX does not hold or issue derivative instruments for trading purposes. GMX’s commodity price financial swaps were designated as cash flow hedges. Changes in the fair value of these derivatives were reported in “other comprehensive income” net of deferred income tax. These amounts are reclassified to oil and gas sales when the forecasted transaction takes place.

7. Recently Issued Accounting Standards

The Financial Accounting Standards Board (FASB) recently issued the following standards which were reviewed by GMX to determine the potential impact on its financial statements upon adoption. GMX has concluded that the following new accounting standards are applicable.

In July 2006, the FASB issued FASB Interpretation (FIN) No. 48, “Accounting for Uncertainty in Income Taxes-an Interpretation of FASB Statement No. 109” (“FIN 48”). FIN 48 provides guidance for recognizing and measuring uncertain tax positions, as defined in SFAS 109, “Accounting for Income Taxes.” FIN 48 prescribes a threshold condition that a tax position must meet for any of the benefit of the uncertain tax position to be recognized in the financial statements. Guidance is also provided regarding de-recognition, classification and disclosure of these uncertain tax positions. FIN 48 was effective for fiscal years beginning after December 15, 2006. The adoption by the Company of FIN 48 did not have a material impact on its financial position, results of operations or cash flows.

8

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS 157”). SFAS 157 establishes a framework for fair value measurements in the financial statements by providing a single definition of fair value, provides guidance on the methods used to estimate fair value and increases disclosures about estimates of fair value. SFAS 157 is effective for fiscal years beginning after November 15, 2007. We do not expect that SFAS 157 will have a material impact on our consolidated financial position, results from operations or cash flows.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (“SFAS 159”). SFAS 159 permits entities to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. In addition, it also establishes presentation and disclosure requirements designed to facilitate comparisons between entities that choose different measurement attributes for similar types of assets and liabilities. SFAS 159 does not affect any existing accounting literature that requires certain assets and liabilities to be carried at fair value. SFAS 159 is effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007. Early adoption is permitted as of the beginning of a fiscal year that begins on or before November 15, 2007, provided the entity also elects to apply the provisions of SFAS 157. GMX does not expect that SFAS 159 will have a material impact on its consolidated financial position, results from operations or cash flows.

8. Subsequent Event

On July 31, 2007, GMX entered into a Note Purchase Agreement (“Note Agreement”) with The Prudential Insurance Company of America (“Prudential”) providing for the issuance and sale from time to time of up to $100 million in senior subordinated secured notes (the “Subordinated Notes”) and sold to Prudential an initial tranche of $30 million of 7.58% Series A fixed rate notes due July 31, 2012 (the “Series A Notes”) with interest payable quarterly. Proceeds from the sale of the Series A Notes will be used for general corporate purposes including additional funding of drilling and development costs in the Cotton Valley Sands in East Texas. The Subordinated Notes are secured by a second lien on all of the assets of GMX and its subsidiaries and are guaranteed by GMX’s subsidiaries, subject to the terms of an Intercreditor Agreement between GMX’s senior bank lenders and the collateral agent for the Noteholders, including Prudential. The principal covenants contained in the Note Agreement, in addition to customary covenants for similar transactions are:

• The ratio of Adjusted PV10 (as defined in the Note Agreement based on prescribed pricing and other parameters, which prescribes prices for oil production to be the lesser of the NYMEX strip price or $50.00 and for gas production of a fixed $6.50 per mcf) to Total Debt at the end of each quarter may not be less than 1.5 to 1;

• The ratio of Total Debt to EBITDA for the immediately preceding four quarters may not be greater than 4.0 to 1;

• The ratio of EBITDA to interest expense (which is defined to include dividends on outstanding preferred stock) for the immediately preceding four quarters may not be less than 2.5 to 1;

• Tangible net worth may not be less than $136 million as of March 31, 2007 plus 50% of net income and 100% of net cash proceeds from the sale of equity securities thereafter;

9

• GMX may not incur senior bank debt in excess of $125 million without the consent of the Noteholders;

• Neither GMX nor any subsidiaries may incur any liens other than under GMX’s senior bank loan agreement and the Subordinated Notes, other than certain permitted liens;

• GMX may not issue Subordinated Notes in excess of the Series A Notes without the consent of Prudential and pro forma compliance with the financial covenants, which additional debt would also require the consent of GMX’s senior bank lenders under the senior bank loan agreement;

• GMX may not incur any other indebtedness without pro forma compliance with the financial covenants, which additional debt would also require the consent of GMX’s senior bank lenders under the senior bank loan agreement;

• GMX is required to maintain commodity price hedges with a term of not greater than three years and with notional amounts (i) greater than 25% of projected production for the following 12 months from proved developed producing reserves and (ii) not more than the lesser of (a) 75% of projected production for the following 12 months from all proved reserves or (b) 90% of projected production for the following 12 months from proved developed reserves; and

• GMX may not issue any additional redeemable preferred stock without the consent of Noteholders, which would also require the consent of GMX’s senior bank lenders under the senior bank loan agreement.

In the event of a change in control (other than an acquisition by a public company meeting specified financial requirements) or change in management (defined as either Ken L. Kenworthy, Jr. or Ken L. Kenworthy, Sr. not being the chief executive officer and chief financial officer, respectively, (other than in the case of Ken L. Kenworthy, Sr. due to death, disability or retirement if he is replaced with an acceptable replacement within four months)), GMX is required to give notice to the Noteholders and offer to repurchase the Subordinated Notes at the outstanding principal amount plus accrued interest plus, in the case of any fixed rate notes, including the Series A Notes, a yield maintenance amount.

In connection with the execution of the Note Agreement, GMX entered into an amendment to its senior bank loan agreement with Capital One, National Association, and Union Bank of California, N.A. (“Bank Agreement”) to permit the issuance of the Series A Notes and to modify the Bank Agreement and certain of the security documents to conform to the Note Agreement.

10

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Summary Operating Data

The following table presents an unaudited summary of certain operating data for the periods indicated.

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2006		2007		2006		2007
Production:
Oil production (MBbls)		16		32		28		58
Natural gas production (MMcf)		826		1,856		1,608		3,491
Equivalent production (Mmcfe)		925		2,049		1,781		3,839
Average Sales Price:
Oil price (per Bbl)	$	66.35	$	61.27	$	63.58	$	57.85
Natural gas price (per Mcf)(1)	$	6.51	$	7.81	$	7.04	$	7.53
Average sales price (per Mcfe)	$	7.00	$	8.04	$	7.39	$	7.72
Operating and Overhead Costs (per Mcfe):
Lease operating expenses	$	1.03	$	1.04	$	.93	$	.97
Production and severance taxes		.55		.34		.54		.31
General and administrative		1.46		1.03		1.43		1.01
Total	$	3.04	$	2.41	$	2.90	$	2.29
Cash Operating Margin (per Mcfe)	$	3.96	$	5.63	$	4.49	$	5.43
Other (per Mcfe):
Depreciation, depletion and amortization (oil and gas property only)	$	1.50	$	1.82	$	1.46	$	1.81

(1) Net results of hedging activities increased the average natural gas price by $0.18 for the three months ended June 30, 2007 and $0.28 for the six months ended June 30, 2007. There were no gas hedging activities in the 2006 periods.

Results of Operations—Three Months Ended June 30, 2007 Compared to Three Months Ended June 30, 2006

Oil and Gas Sales.Oil and gas sales in the three months ended June 30, 2007 increased 155% to $16,467,863 compared to the three months ended June 30, 2006. This increase was due to an increase in production of gas and oil, accounting for 122% of the increase, and an increase in oil and gas prices of 15%. The average price per barrel of oil and mcf of gas received in the three months ended June 30, 2007 was $61.27 and $7.81, respectively, compared to $66.35 and $6.51, respectively, in the three months ended June 30, 2006. Production of oil for the three months ended June 30, 2007 increased to 32 MBbls compared to 16 MBbls for the three months ended June 30, 2006. Gas production for the three months ended June 30, 2007 increased to 1,856 MMcf compared to 826 MMcf for the three months ended June 30, 2006, an increase of 125%. Increased production of oil and gas in the three months ended June 30, 2007 resulted primarily from an increase in the number of producing wells in 2007. We expect continued increases in production and revenues, assuming no significant decline in prices, for the rest of the year resulting from continued drilling.

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Lease Operations.Lease operations expense increased $1,182,507, or 125%, for the three months ended June 30, 2007 to $2,133,078, compared to the three months ended June 30, 2006. The increased expense resulted from an increase in the number of producing wells. Lease operations expense on an equivalent unit of production basis was $1.04 per Mcfe in the three months ended June 30, 2007 compared to $1.03 per Mcfe for the three months ended June 30, 2006. Lease operations expense will continue to increase throughout the year as the number of producing wells increase. However, we expect that lease operations expense will continue at this level on a per unit basis.

Production and Severance Taxes.Production and severance taxes increased 37% to $695,508 in the three months ended June 30, 2007 compared to $508,585 in the three months ended June 30, 2006. Production and severance taxes are assessed on the value of the oil and gas produced. As a result, the increase resulted primarily from increased oil and gas sales and sales price as described above, off-set by a severance tax refund of approximately $190,000 recorded in the second quarter of 2007 and a growing number of wells with natural gas production that are exempt from severance taxes. Upon approval from the State of Texas, certain wells are exempt from severance taxes for a period of ten years and this exemption will reduce our expense on a per unit basis going forward.

Depreciation, Depletion and Amortization.Depreciation, depletion and amortization expense increased $2,675,408, or 169%, to $4,256,610 in the three months ended June 30, 2007. This increase is due primarily to higher production levels and higher costs. The oil and gas properties depreciation, depletion and amortization rate per equivalent unit of production was $1.82 per Mcfe in the three months ended June 30, 2007 compared to $1.50 per Mcfe in the three months ended June 30, 2006. The depletion rate increased primarily from the effects of higher drilling and completion costs. Depreciation, depletion and amortization expense is also expected to increase for the remainder of the year as production increases.

Interest.Interest expense for the three months ended June 30, 2007 was $521,754 compared to $162,295 for the three months ended June 30, 2006. This increase was primarily attributable to increased borrowings during the three months ended June 30, 2007. We expect interest expense to increase throughout the year as we borrow on our credit facility to fund drilling. Interest on the Subordinated Notes issued on July 31, 2007 will also increase interest expense going forward.

General and Administrative Expense.General and administrative expense for the three months ended June 30, 2007 was $2,113,257 compared to $1,348,746 for the three months ended June 30, 2006. This increase of $764,511, or 57%, was the result of an increase in non-cash compensation expense relating to accounting for stock options and an increase in administrative and supervisory personnel. General and administrative expense per equivalent unit of production was $1.03 per Mcfe for the three months ended June 30, 2007 compared to $1.46 per Mcfe for the comparable period in 2006. We expect general and administrative expense will increase for the remainder of the year due to increases in personnel and related employee benefit costs, but we expect these costs to decline on a per unit basis as our production and revenues increase.

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Results of Operations—Six Months Ended June 30, 2007 Compared to Six Months Ended June 30, 2006

Oil and Gas Sales.Oil and gas sales in the six months ended June 30, 2007 increased 125% to $29,642,417 compared to the six months ended June 30, 2006. This increase is due to an increase in production of gas and oil, accounting for 116% of the increase, and an increase in oil and gas prices of 4%. The average prices per barrel of oil and mcf of gas received in the six months ended June 30, 2007 were $57.85 and $7.53, respectively, compared to $63.58 and $7.04, respectively, in the six months ended June 30, 2006. Production of oil for the first six months ended 2007 increased to 58 MBbls compared to 28 MBMbls for the first six months of 2006. Gas production increased to 3,491 MMcf for the first six months of 2007 compared to 1,608 MMcf for the first six months ended June 30, 2006, an increase of 117%.

Lease Operations.Lease operations expense increased $2,064,233 in the six months ended June 30, 2007 to $3,718,161, a 125% increase compared to the six months ended June 30, 2006. Increased expense resulted from an increase in the number of producing wells. Lease operations expense on an equivalent unit of production basis was $0.97 per Mcfe in the six months ended June 30, 2007 compared to $0.93 per Mcfe for the six months ended June 30, 2006.

Production and Severance Taxes.Production and severance taxes increased 23% to $1,187,830 in the six months ended June 30, 2007 compared to $962,482 in the six months ended June 30, 2006. Production and severance taxes are assessed on the value of the oil and gas produced. As a result, the increase resulted primarily from increased oil and gas sales described above off-set by severance tax refunds of approximately $369,000 recorded in the first six months of 2007 and a growing number of wells with natural gas production that are exempt from severance taxes. Upon approval from the State of Texas certain wells are exempt from severance taxes for a period of ten years and this will reduce our expense on a per unit basis going forward.

Depreciation, Depletion and Amortization.Depreciation, depletion and amortization expense increased $4,820,949 to $7,934,393 in the six months ended June 30, 2007, up 155% from the six months ended June 30, 2006. This increase is due primarily to higher production levels and higher costs. The oil and gas properties depreciation, depletion and amortization rate per equivalent unit of production was $1.81 per Mcfe in the six months ended June 30, 2007 compared to $1.46 per Mcfe in the six months ended June 30, 2006. The depletion rate increased primarily from the effect of higher drilling and completion costs. Depreciation, depletion and amortization expense is also expected to increase for the remainder of the year as production increases.

Interest.Interest expense for the six months ended June 30, 2007 was $866,215 compared to $204,668 for the six months ended June 30, 2006. This increase is primarily attributable to increased borrowing during the first six months of 2007. We expect interest expense to increase throughout the year as we borrow on our credit facility to fund drilling. Interest on the Subordinated Notes issued on July 31, 2007 will also increase interest expense going forward.

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General and Administrative Expense.General and administrative expense for the six months ended June 30, 2007 was $3,876,795 compared to $2,552,963 for the six months ended June 30, 2006, an increase of 52%. This increase of $1,323,832 was the result of an increase in salaries and expenses of administrative and supervisory personnel and an increase in non-cash compensation expense relating to accounting for stock options. General and administrative expense per equivalent unit of production was $1.01 per Mcfe for the six months ended June 30, 2007 compared to $1.43 per Mcfe for the comparable period in 2006.

Capital Resources and Liquidity

Our business is capital intensive. Our ability to grow our reserve base is dependent upon our ability to obtain outside capital and generate cash flows from operating activities to fund our investment activities. Our cash flows from operating activities are substantially dependent upon oil and gas prices and significant decreases or increases in market prices result in variations of cash flow and affect the amount of our liquidity. We do not expect to enter into drilling commitments unless we have the funding available.

We have established a capital expenditure budget of approximately $145 million for 2007. This would fund the drilling of 119 gross/69 net wells, including as many as 106 gross/60 net Upper Cotton Valley wells. We expended $91.7 million in the first six months of 2007 which included additions to our pipeline and the purchase of other property and equipment.

Funding for these budgeted capital expenditures are expected to be primarily provided by the $65.5 million received from the February 2007 common stock offering and from cash flow and working capital which is expected to be approximately $50 million. Additional debt may be necessary to fund the remaining capital expenditure budget. As of June 30, 2007, GMX has drawn $45,000,000 on its credit facility that has a current borrowing base of $62,000,000. In May 2007, GMX’s borrowing base increased from $50,000,000 to $62,000,000 under its existing credit facility. Additional increases in the borrowing base may occur during 2007 as additional production is established. On July 31, 2007, GMX issued $30,000,000 of 7.58% senior subordinated secured notes due 2012 to The Prudential Insurance Company of America.

At June 30, 2007, we had a working capital deficit of $18,079,929. Including availability under our credit facility, and the proceeds from our recently issued senior subordinated secured notes, our working capital as of June 30, 2007 would have been $28,920,071.

Cash Flow—Six Months Ended June 30, 2007 Compared to Six Months Ended June 30, 2006

In the six months ended June 30, 2007 and 2006, we spent $91.7 million and $48.8 million, respectively, in oil and gas acquisitions and development activities, including the acquisition of property and equipment. These investments were funded for the six months ended June 30, 2007 by proceeds of $65.5 million from the sale of two million common shares in February 2007, working capital borrowings under our credit facility, and cash flow. Cash flow provided by operating activities in the six months ended June 30, 2007 was $23.9 million compared to cash flow provided by operating activities in the six months ended June 30, 2006 of $14.1 million, primarily as a result of increased production from new wells drilled.

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Credit Facility

We have a secured credit facility, which matures on July 29, 2008 and provides for a line of credit of up to $100,000,000 (the “Commitment”), subject to a borrowing base which is based on a periodic evaluation of oil and gas reserves which is reduced monthly to account for production (“Borrowing Base”). The amount of credit available at any one time under the credit facility is the lesser of the Borrowing Base or the amount of the Commitment. At June 30, 2007, our debt amount was $45,000,000 with a borrowing base of $62,000,000. The terms of the credit facility are more fully described in our Annual Report on Form 10-K for the year ended December 31, 2006.

The credit facility contains various affirmative and restrictive covenants. These covenants, among other things, prohibit additional indebtedness, sale of assets, mergers and consolidations, dividends and distributions, changes in management and require the maintenance of various financial ratios.

Senior Subordinated Secured Notes

On July 31, 2007, we entered into a Note Purchase Agreement (“Note Agreement”) with The Prudential Insurance Company of America (“Prudential”) providing for the issuance and sale from time to time of up to $100 million in senior subordinated secured notes (the “Subordinated Notes”) and sold to Prudential an initial tranche of $30 million of 7.58% Series A fixed rate notes due July 31, 2012 (the “Series A Notes”) with interest payable quarterly. Proceeds from the sale of the Series A Notes will be used for general corporate purposes including additional funding of drilling and development costs in the Cotton Valley Sands in East Texas. The Subordinated Notes are secured by a second lien on all of our and our subsidiaries’ assets and are guaranteed by our subsidiaries, subject to the terms of an Intercreditor Agreement between our senior bank lenders and the collateral agent for the Noteholders, including Prudential. The principal covenants contained in the Note Agreement, in addition to customary covenants for similar transactions are:

• The ratio of Adjusted PV10 (as defined in the Note Agreement based on prescribed pricing and other parameters, which prescribes prices for oil production to be the lesser of the NYMEX strip price or $50.00 and for gas production of a fixed $6.50 per mcf) to Total Debt at the end of each quarter may not be less than 1.5 to 1;

• The ratio of Total Debt to EBITDA for the immediately preceding four quarters may not be greater than 4.0 to 1;

• The ratio of EBITDA to interest expense (which is defined to include dividends on outstanding preferred stock) for the immediately preceding four quarters may not be less than 2.5 to 1;

• Tangible net worth may not be less than $136 million as of March 31, 2007 plus 50% of net income and 100% of net cash proceeds from the sale of equity securities thereafter;

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• We may not incur senior bank debt in excess of $125 million without the consent of the Noteholders;

• Neither we nor any subsidiaries may incur any liens other than under our senior bank loan agreement, other than certain permitted liens.

• We may not issue Subordinated Notes in excess of the Series A Notes without the consent of Prudential and pro forma compliance with the financial covenants, which additional debt would also require the consent of our senior bank lenders under the senior bank loan agreement;

• We may not incur any other indebtedness without pro forma compliance with the financial covenants, which additional debt would also require the consent of our senior bank lenders under the senior bank loan agreement;

• We are required to maintain commodity price hedges with a term of not greater than three years and with notional amounts (i) greater than 25% of projected production for the following 12 months from proved developed producing reserves and (ii) not more than the lesser of (a) 75% of projected production for the following 12 months from all proved reserves or (b) 90% of projected production for the following 12 months from proved developed reserves; and

• We may not issue any additional redeemable preferred stock without the consent of Noteholders, which would also require the consent of our senior bank lenders under the senior bank loan agreement.

In the event of a change in control (other than an acquisition by a public company meeting specified financial requirements) or change in management (defined as either Ken L. Kenworthy, Jr. or Ken L. Kenworthy, Sr. not being the chief executive officer and chief financial officer, respectively, (other than in the case of Ken L. Kenworthy, Sr. due to death, disability or retirement if he is replaced with an acceptable replacement within four months)), we are required to give notice to the Noteholders and offer to repurchase the Subordinated Notes at the outstanding principal amount plus accrued interest plus, in the case of any fixed rate notes, including the Series A Notes, a yield maintenance amount.

In connection with the execution of the Note Agreement, we entered into an amendment to our senior bank loan agreement with Capital One, National Association, and Union Bank of California, N.A. (“Bank Agreement”) to permit the issuance of the Series A Notes and to modify the Bank Agreement and certain of the security documents to conform to the Note Agreement.

Hedging Activity

In the first quarter of 2007, we entered into a 23 month hedging transaction for 200,000 MMBtus per month at $7.46 per MMBtu effective February 1, 2007 and a 17 month hedging transaction for 100,000 MMBtus per month at $7.60 per MMBtu effective August 1, 2007. The transactions are in the form of a fixed-price swap agreement, pursuant to which we receive (if the index price is lower than the fixed price) or pays (if the index price is higher than the fixed price) the difference between the contract price and the index price, which is the Inside FERC – Houston Ship channel price. In addition to the hedges entered into during the first quarter of 2007, we have an additional hedge for 100,000 MMBtus per month for $8.005 per MMBtu which expires July 31, 2007. We entered into these hedges to partially reduce our exposure to natural gas price risk for the period of the hedges.

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As a result of our hedging activities, we recognized $343,500 and $994,000 of additional oil and gas sales for the three and six months ended June 30, 2007, respectively. There were no oil and gas hedging activities during the first six months of 2006.

Production Guidance

We estimate total production for 2007 will be 8.6 Bcfe. We estimate total production for the third quarter of 2007 will be 2.25 Bcfe.

Critical Accounting Policies

Our critical accounting policies are summarized in our annual report on Form 10-K for the year ended December 31, 2006. There have been no changes in those policies.

Contractual Obligations

In the three and six months ended June 30, 2007, there have been no material changes outside the ordinary course of business in the contractual obligations listed in our Annual Report on Form 10-K for the year ended December 31, 2006.

Recently Issued Accounting Standards

The Financial Accounting Standards Board (FASB) recently issued the following standards which were reviewed by us to determine the potential impact on its financial statements upon adoption. We have concluded that the following new accounting standards are applicable.

In July 2006, the FASB issued FASB Interpretation (FIN) No. 48, “Accounting for Uncertainty in Income Taxes-an Interpretation of FASB Statement No. 109” (“FIN 48”). FIN 48 provides guidance for recognizing and measuring uncertain tax positions, as defined in SFAS 109, “Accounting for Income Taxes.” FIN 48 prescribes a threshold condition that a tax position must meet for any of the benefit of the uncertain tax position to be recognized in the financial statements. Guidance is also provided regarding de-recognition, classification and disclosure of these uncertain tax positions. FIN 48 was effective for fiscal years beginning after December 15, 2006. The adoption of FIN 48 did not have a material impact on our financial position, results of operations or cash flows.

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS 157”). SFAS 157 establishes a framework for fair value measurements in the financial statements by providing a single definition of fair value, provides guidance on the methods used to estimate fair value and increases disclosures about estimates of fair value. SFAS 157 is effective for fiscal years beginning after November 15, 2007. We do not expect that SFAS 157 will have a material impact on our consolidated financial position, results from operations or cash flows.

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In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (“SFAS 159”). SFAS 159 permits entities to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. In addition, it also establishes presentation and disclosure requirements designed to facilitate comparisons between entities that choose different measurement attributes for similar types of assets and liabilities. SFAS 159 does not affect any existing accounting literature that requires certain assets and liabilities to be carried at fair value. SFAS 159 is effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007. Early adoption is permitted as of the beginning of a fiscal year that begins on or before November 15, 2007, provided the entity also elects to apply the provisions of SFAS 157. We do not expect that SFAS 159 will have a material impact on our consolidated financial position, results from operations or cash flows.

Forward-Looking Statements

All statements made in this document and accompanying supplements other than purely historical information are ‘‘forward looking statements’’ within the meaning of the federal securities laws. These statements reflect expectations and are based on historical operating trends, proved reserve positions and other currently available information. Forward looking statements include statements regarding future plans and objectives, future exploration and development expenditures and number and location of planned wells, statements regarding the quality of our properties and potential reserve and production levels. These statements may be preceded or followed by or otherwise include the words ‘‘believes’’, ‘‘expects’’, ‘‘anticipates’’, ‘‘intends’’, “continues”, ‘‘plans’’, ‘‘estimates’’, ‘‘projects’’ or similar expressions or statements that events ‘‘will’’, “should”, “could”, “might”, or ‘‘may’’ occur. Except as otherwise specifically indicated, these statements assume that no significant changes will occur in the operating environment for oil and gas properties and that there will be no material acquisitions or divestitures except as otherwise described.

The forward looking statements in this report are subject to all the risks and uncertainties which are described in our annual report on Form 10-K for the year ended December 31, 2006 and in this document. We may also make material acquisitions or divestitures or enter into financing transactions. None of these events can be predicted with certainty or not taken into consideration in the forward-looking statements.

For all of these reasons, actual results may vary materially from the forward looking statements and we cannot assure you that the assumptions used are necessarily the most likely. We will not necessarily update any forward looking statements to reflect events or circumstances occurring after the date the statement is made except as may be required by federal securities laws.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

Commodity Price Risk

We are subject to price fluctuations for natural gas and crude oil. Prices received for natural gas sold on the spot market are volatile due primarily to seasonality of demand and other factors beyond our control. Reductions in crude oil and gas prices could have a material adverse effect on our financial position, results of operations and quantities of reserves recoverable on an economic basis.

In the past, we have entered into financial price risk management activities with respect to a portion of projected natural gas production through financial price swaps whereby we received a fixed price for our production and pay a variable market price to the contract counterparty. These activities are intended to reduce our exposure to oil and gas price fluctuations. We have entered into these instruments in 2006 and 2007. In addition, our credit facility requires us to maintain a hedging program on mutually acceptable terms whenever the loan amount outstanding exceeds 75% of the Borrowing Base, which could occur in 2007 and the Note Agreement relating to our Subordinated Notes requires us to maintain hedges at specific levels. The gains and losses realized as a result of these activities are substantially offset in the cash market when the commodity is delivered. Following is a summary of the current natural gas swaps we have in place as of June 30, 2007:

				Notional
				Amount Per		Remaining Notional
Effective		Maturity		Month		Amount as of June		Fixed Price		Fair Value at
Date		Date		(MMBtu)		30, 2007 (MMBtu)		per MMBtu		June 30, 2007
	8/1/2006		7/31/2007		100,000		100,000	$	8.005		121,901
	2/1/2007		12/31/2008		200,000		3,600,000	$	7.460		(1,027,334	)
	8/1/2007		12/31/2008		100,000		1,700,000	$	7.600		(352,827	)
										$	(1,258,260	)

All contracts are based on Houston Ship Channel Index Prices which historically have had a high degree of correlations with the actual prices received by the Company.

The fair value of our natural gas swaps in effect at June 30, 2007 was $(1,258,260), assuming that gas prices in effect at June 30, 2007 remain in effect for the life of the swap. Based on the monthly notional amount in effect at June 30, 2007, a hypothetical $1 increase in natural gas prices would have decreased the cash flow and earnings from our swap by $300,000 per month and a $1 decrease in natural gas prices would increase the cash flow and earnings from our swap by $300,000 per month.

As a result of our hedging activities, we recognized $343,500 and $994,000 of additional oil and gas sales for the three and six months ended June 30, 2007, respectively. There were no oil and gas hedging activities during the first six months of 2006. After adjustment for hedging activities reclassified into oil and gas sales, the change in the fair value of the derivative instruments during the first six months of 2007 was a decrease of $1,439,929. The decrease in the fair value resulted from an increase in natural gas prices.

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Interest Rate Risk

We are exposed to market risk related to changes in interest rates. As of June 30, 2007, we had $45 million in bank debt outstanding at an interest rate indexed to the 90 day LIBOR rate that exposes us to the risk of increased interest costs if interest rates rise. Assuming a 100 basis point increase in interest rates on the floating rate debt, annual interest expense would increase by approximately $450,000. We expect to borrow additional funds later in the year to pay drilling and development costs. As of June 30, 2007, we had not entered into any interest rate swap agreements with respect to this debt.

Item 4. Controls and Procedures

Evaluation of disclosure controls and procedures.Our Principal Executive Officer and Principal Financial Officer have reviewed and evaluated the effectiveness of our disclosure controls and procedures (as defined in rules adopted by the Securities and Exchange Commission) as of the end of the period covered by this report. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our Principal Executive and Financial Officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosures. Based on that evaluation, our Principal Executive Officer and Principal Financial Officer have concluded that our current disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms.

Changes in internal controls over financial reporting.There were no changes in our internal control over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II — OTHER INFORMATION

Item 1. Legal Proceedings

None

ITEM 1A. Risk Factors

There have been no material changes in the risk factors applicable to us from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2006.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Submission of Matters to a Vote of Security Holders

The annual meeting of shareholders was held on May 22, 2007. The following sets forth the matters considered and the voting results: Election of directors for terms expiring at the 2008 annual meeting. All directors were elected.

	VOTES
Name	For		Withheld
Ken L. Kenworthy, Jr.		12,418,019		151,233
Ken L. Kenworthy, Sr.		12,219,905		349,347
T. J. Boismier		12,519,269		49,983
Steven Craig		12,514,133		55,119
Jon W. “Tucker” McHugh		12,519,233		50,019

1. Ratify selection of Smith, Carney & Co., P.C. as registered public accounting firm for 2007. This proposal received sufficient votes to be approved.

For	Against	Abstain
12,425,392	140,432	3,427

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2. Amendment to the Company’s Stock Option Plan to increase the shares available for options from 550,000 to 850,000 shares.

For	Against	Abstain
9,256,159	162,789	14,521

Item 5. Other Information

None.

Item 6. Exhibits

See Exhibit Index.

SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: August 9, 2007	GMX RESOURCES INC. (Registrant)
	/s/ Ken L. Kenworthy, Sr.
	Ken L. Kenworthy, Sr., Executive Vice
	President and Chief Financial Officer (Principal Financial and Accounting Officer)

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EXHIBIT INDEX

Exhibit No.	Description
3.1	Amended and Restated Certificate of Incorporation of GMX Resources Inc. (Incorporated by reference to Exhibit 3.1 to the Registration Statement on Form SB-2, File No. 333-49328)
3.2	Amended Bylaws of GMX Resources Inc. (Incorporated by reference to Exhibit 3.2 to Annual Report on Form  10-KSB for the year ended December 31, 2004)
3.3	Certificate of Designation of Series A Junior Participating Preferred Stock of GMX Resources Inc. dated May 17, 2005 (incorporated by reference to Exhibit 3.1 to Form 8-K filed May 18, 2005)
3.4	Certificate of Designation of 9.25% Series B Cumulative Preferred Stock (incorporated by reference to Exhibit 4.1 to Form 8-A filed on August 5, 2006)
4.4	Rights Agreement dated May 17, 2005 by and between GMX Resources Inc. and UMB Bank, N.A., as Rights Agent (Incorporated by reference to Exhibit 4.1 to Form 8-K filed May 18, 2005)
10.1	Stock Option Plan, as amended (Incorporated by reference to Exhibit 10.2 to the Registration Statement on Form  SB-2, File No. 333-49328)
10.2	Form of Director Indemnification Agreement (Incorporated by reference to Exhibit 10.5 to the Registration Statement on Form SB-2, File No. 333-49328)
10.3	Participation Agreement dated December 29, 2003 by and among Penn Virginia Oil & Gas Company, the Company and its wholly owned subsidiaries (Incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K dated December 29, 2003)
10.3(a)	First Amendment dated February 27, 2004 to Participation Agreement between GMX Resources Inc. and Penn Virginia Oil & Gas Corporation (Incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed September 14, 2004)
10.3(b)	Second Amendment dated May 9, 2004 to Participation Agreement between GMX Resources Inc. and Penn Virginia Oil & Gas Corporation (Incorporated by reference to Exhibit 10.2 to Current Report on Form 8-K filed September 14, 2004)

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Exhibit No.	Description
10.3(c)	Third Amendment dated April 6, 2004 to Participation Agreement between GMX Resources Inc. and Penn Virginia Oil & Gas Corporation (Incorporated by reference to Exhibit 10.3 to Current Report on Form 8-K filed September 14, 2004)
10.3(d)	Fourth Amendment dated August 11, 2004 to Participation Agreement between GMX Resources Inc. and Penn Virginia Oil & Gas Corporation (Incorporated by reference to Exhibit 10.4 to Current Report on Form 8-K filed September 14, 2004)
10.3(e)	Fifth Amendment dated effective January 1, 2005 to Participation Agreement between GMX Resources Inc. and Penn Virginia Oil & Gas L.P., successor to Penn Virginia Oil & Gas Corporation (Incorporated by reference to Exhibit 10.6(e) to Quarterly Report on Form 10-QSB for the quarter ended March 31, 2005, filed May 12, 2005)
10.3(f)	Sixth Amendment dated effective January 1, 2006, to Participation Agreement between GMX Resources Inc. and Penn Virginia Oil & Gas L.P., successor to Penn Virginia Oil & Gas Corporation (Incorporated by reference to Exhibit 10.1 to Form 8-K filed January 20, 2006)
10.4	Amended and Restated Loan Agreement dated June 7, 2006 between GMX Resources Inc., Capital One, National Association, and Union Bank of California, N.A. (Incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed on June 9, 2006)
10.4(a)	First Amendment to Loan Agreement dated August 4, 2006, between GMX Resources Inc., Capital One, National Association and Union Bank of California, N.A. (Incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed August 9, 2006)
10.4(b)*	Second Amendment to Loan Agreement dated August 14, 2006 between GMX Resources Inc., Capital One, National Association and Union Bank of California, N.A.
10.4(c)*	Third Amendment to Loan Agreement dated December 21, 2006 between GMX Resources Inc., Capital One, National Association and Union Bank of California, N.A.
10.4(d)*	Fourth Amendment to Loan Agreement dated March 13, 2007 between GMX Resources Inc., Capital One, National Association and Union Bank of California, N.A.
10.4(e)*	Fifth Amendment to Loan Agreement dated July 31, 2007 between GMX Resources Inc., Capital One, National Association and Union Bank of California, N.A.
10.5	Asset Purchase Agreement dated December 8, 2005 between GMX Resources Inc. and McLachlan Drilling Co. (Incorporated by reference to Exhibit 10.1 to Form 8-K filed December 12, 2005)

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Exhibit No.	Description
10.6(a)*	Note Purchase Agreement dated July 31, 2007 between GMX Resources Inc. and The Prudential Insurance Company of America
10.6(b)*	Intercreditor Agreement dated July 31, 2007 between the Noteholders, Capital One, National Association, Union Bank of California, N.A. and The Bank of New York Trust Company, N.A., as collateral agent
14	Code of Business Conduct and Ethics (Incorporated by reference to Exhibit 14 to Annual Report on Form 10-KSB for the year ended December 31, 2003)
21	List of Subsidiaries (Incorporated by reference to Exhibit 21 to Annual Report on Form 10-KSB for the year ended December 31, 2005)
31.1*	Rule 13a-14(a) Certification of Chief Executive Officer
31.2*	Rule 13a-14(a) Certification of Chief Financial Officer
32.1*	Certification of Chief Executive Officer pursuant to 18 U.S.C. § 1350.
32.2*	Certification of Chief Financial Officer pursuant to 18 U.S.C. § 1350.

* Filed herewith

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