A. MANAGEMENTS EFFECTIVENESS - BELOW AVERAGE

How well a company performs generally - in its business operations, controlling costs,  the success of its products and services in the market place, profitability, and the like - depends on its management's efficiency. Return on Equity ( ROE) is used as a general indication of the company's efficiency.

GMXR's ROE (ttm) of 8.5% is lower than the Industry's ROE of 22.0 and the S&P 500's ROE of 15.0%. (Ref.: MSN Finance\Ratios).

ACE'S gives a preferential rating to a company that has a comparable or relatively higher ROE than the Industry. ACE'S rating of GMXR's Management's Effectiveness: BELOW AVERAGE.
 

B. PRODUCTS & SERVICES - GOOD LINE-UP

Products and services are the elements that enables a company to have a presence in its target market and generate sales. What products and services the company has and how successful those products and services performs in the target market are very important factors in considering a company's stock for investment.

GMX's line-up of Products. As of December 31, 2004, the Company's principal drilling and development activities were focused on its property in the East Texas, which the Company is drilling in a joint development agreement with Penn Virginia Oil & Gas, L.P. (PVOG), a wholly owned subsidiary of Penn Virginia Corporation. During the year ended December 31, 2004, the Company had proved reserves of 64.3 billion cubic feet of natural gas equivalent (Bcfe) and 66 gross (44.3 net) producing wells. In the other areas of East Texas the Company also holds an inventory of development prospects, including 67 gross (39 net) proved undeveloped locations and an additional 113 gross (74 net) probable and 275 gross (150 net) possible drilling locations depending on the area of well spacing. GMX also owns interests in properties in Northwestern Louisiana and Southeast New Mexico. (Excerpted from Reuters.com)

The Louisiana properties contain approximately 600 gross (369 net) acres. GMX  has five gross (2.6 net) producing wells, three of which it operates. Production is predominately oil. Louisiana proved reserves are 0.4 Bcfe and represent approximately 1% of proved reserves as of December 31, 2004. (Excerpted from Reuters.com)

GMX's  New Mexico properties consists of approximately 1,760 gross (1,478 net) acres. Proved reserves in New Mexico are 1.3 Bcfe and represent 1% of GMX's  total proved reserves as of December 31, 2004. For 2004, average daily production net to GMX's  interests from its seven gross (5.6 net) producing wells in this area was 31 Mcf of gas and 19 Bbls of oil. (Excerpted from Reuters.com)

In 2004, GMX  entered into a farm-out with Yates Petroleum Corporation, which completed three-dimensional (3D) seismic evaluations of these formations. GMX  plans to participate with Yates in a 12,000-foot Morrow sand test expected to commence in April 2005. GMX  will have a 23% working interest in this well and also have retained a 5.75% overriding royalty interest. (Excerpted from Reuters.com)

ACE'S  gives a preferential rating to a company who  have more than one products and services  that have present and continued  utility in a broad and dynamic  market. An estimation of the latter products' utility, distinctive qualities and competitiveness would be subjective assessments. However, there is one objective data that indicates how well the subjective elements of GMX's products and services are assessed and used by its target market - the company's sales.

ACE'S rating of GMX's line-up of Products & Services:  GOOD


C. SALES - GOOD

Sales is an important indicator on how a company's products and services performs in its target market. Generally, a high sales figure is preferred than a lower figure. Also, a steady and appreciable growth in a company's total sales from one year to the next is a key indicator on how a company is able (or unable) to sustain and improve the utility of its products and services in the marketplace.

GMX'S annual sales was $4.2M in 2000, $5.9M in 2001, $6.0M in 2002, $5.4M in 2003, and $7.8M in 2004. (Ref.: MSN Money\Financials).  GMX'S past 12-months annual Sales of $11M is lower  compared to the Industry's $2,847M. However, in terms of growth, GMX'S past 12-months Sales had a growth rate of 108% is approximately double the Industry's rate of 57% (Ref.: MSN Money\Research).

ACE'S gives a preferential rating to a company that have demonstrated the ability to sustain a high and progressively increasing level of total sales  from year-to-year.  ACE'S rating of GMX'S Sales: EXCELLENT.
 

In terms of EPS, the Company Earnings/Share for 5 years past are: $0.48 in 2000; $0.21 in 2001; -$0.07 in 2002; $0.09 in 2003 ; and $0.19 in 2004. The Company's EPS (YTD) growth rate of 1,632%, an outstanding growth rate,  have outperformed the Industry's rate of 57.60%. (Refs.: MSN Money\Financials\Statements;  MSN Money\Financials\Ratios)

ACE'S gives a preferential rating to a company that have demonstrated the ability to sustain a positive, appreciable and increasing net  income.. ACE'S rating of GMX'S Profitability: OUTSTANDING GROWTH RATE.

F. PRICE-EARNINGS RATIO (P/E) - HIGHER THAN INDUSTRY'S AVERAGE

A stock's Price-Earnings ratio tells us roughly how much investors are willing to pay per dollar of earnings. Price-Earnings is a ratio of a company's current share price compared to its per-share earnings. The P/E ratio is a much better indicator of the value of a stock than the market price alone.

In general, a high P/E means high projected earnings in the future. As such, the P/E ratio could be interpreted as the reflection of the market's optimism concerning a firm's growth prospects. To determine whether a particular P/E is high or low, take into account a company's growth rates; and the P/Es of other companies in the same industry. Historically, the average P/E ratio in the market has been around 15-25.

GMX has a P/E ratio of 70.09 (ttm) which is approximately 4 times the Industry's P/E of 18.20 (ttm) (Ref.: Yahoo! Finance\Competitors)

ACE'S gives a preferential rating to a company that has a comparable or relatively lower P/E than the Industry.  ACE'S rating of GMX'S P/E Ratio: HIGHER THAN INDUSTRY'S AVERAGE.


G. FINANCIAL HEALTH - EXCELLENT

The assumption of debt, i.e., financial leverage, are used by companies to finance its assets. The magnitude of the debt's expense component affects the company's net income.

A company with significantly more debt than equity is considered to be highly leveraged. A popular measure of financial leverage is the "debt/equity ratio". A higher debt/equity ratio generally means that a company has been aggressive in financing its growth with debt. This higher ratio can result in volatile or negative earnings as a result of the additional interest expense. Thus, the Debt/Equity Ratio is popularly used as a measure of a company's financial health.

GMX'S Debt/Equity Ratio (latest 12 months), is 0.24. Compared to the Industry's, GMX'S ratio is approximately 50% lower than the Industry's 0.54, and approximately 75% lower than the S&P 500's.. (Refs.: MSN Money\Ratios)

ACE'S gives a preferential rating to a company that has a comparable or relatively lower debt ratio than the Industry.  ACE'S rating of GMX'S  Debt Ratio: EXCELLENT.
 

H. MARKET CAPITALIZATION - GOOD

Market Capitalization (or market cap for short) is a measure of a company's size. The market cap provides a broad gauge of the growth-versus-risk potential of a company. Historically, large caps have experienced slower growth with lower risk; whereas small caps have experienced higher growth potential, but with higher risk.

The market cap of a company is calculated by multiplying the number of its outstanding shares by the shares' current market price. There are presently six classes of Market Cap: Mega Cap, Big/Large Cap, Mid Cap, Small Cap, Micro Cap and Nano Cap.

GMXR is a small cap company with a market capitalization of $244.18M with outstanding shares of 9.93M. .(Refs.: Yahoo! Finance\Statistics)

ACE'S gives a preferential rating to small and mid cap companies.  ACE'S rating of GMX'S  Market Cap: GOOD.


I. TRADED VOLUME - GOOD

A stock's price goes up or down based on the laws of supply and demand. Simply stated, when a stock's price goes up, there must be significant buying demand for the stock. Volume is the actual number of shares traded daily. Traded volume could be used as a gauge of the demand for a stock.

GMXR has an 3-month Average Volume of 269,245 shares; and a 10-day Average Volume of 186,400 shares. GMX traded 298,200 shares on 10/13/2005. (Refs.: Yahoo! Finance\Statistics)

ACE'S gives a preferential rating to a company that sustains a lively trade volume from week-to-week and month-to-month.  ACE'S rating of GMX'S  Traded Volume: GOOD.

J. PRICE GROWTH - EXCELLENT

Price growth  is the 12-month increase in the price of a stock (displayed as a percentage). As of 10/30/05, GMXR had a 3-month growth of 37.5%, a 6-month growth of 123.6%, and  a 12-month Price Growth of 237%. (Refs.: MSN Money\Research).

ACE'S gives a preferential rating to a company that have demonstrated a solid capacity for high price growth. ACE'S rating of GMX'S  Price Growth: EXCELLENT.