CONDENSED CONSOLIDATING FINANCIAL INFORMATION

Shown below are condensed consolidating financial statements for GMX Resources Inc. on a stand-alone, unconsolidated basis, its combined guarantor subsidiaries and its non-guarantor subsidiary as of September 30, 2011 and December 31, 2010 and for the three and nine months ended September 30, 2011 and 2010. The financial information may not necessarily be indicative of results of operations, cash flows or financial position had the subsidiaries operated as independent entities.

Condensed Consolidating Balance Sheets



	September 30, 2011
	Parent			Guarantors		Non-Guarantor		Eliminations			Consolidated
						(In thousands)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	2,260		$	74	$	894	$	—		$	3,228
Accounts receivable – interest owners	4,762			—		—		—			4,762
Accounts receivable – oil and natural gas revenues, net	16,066			390		—		(10,180		)	6,276
Accounts receivable - intercompany	6,288			12,407		926		(19,621		)	—
Derivative instruments	21,648			—		—		—			21,648
Inventories	326			—		—		—			326
Prepaid expenses and deposits	5,328			37		—		—			5,365
Assets held for sale	820			2,431		3,024		—			6,275
Total current assets	57,498			15,339		4,844		(29,801		)	47,880
OIL AND NATURAL GAS PROPERTIES, BASED ON THE FULL COST METHOD
Properties being amortized	1,069,288			713		90		—			1,070,091
Properties not subject to amortization	158,448			—		—		—			158,448
Less accumulated depreciation, depletion, and impairment	(786,700		)	—		—		—			(786,700		)
	441,036			713		90		—			441,839
PROPERTY AND EQUIPMENT, AT COST, NET	15,621			5,077		45,929		—			66,627
DERIVATIVE INSTRUMENTS	6,185			—		—		—			6,185
OTHER ASSETS	13,451			—		—		—			13,451
INVESTMENT IN SUBSIDIARIES	40,601			—		—		(40,601		)	—
TOTAL ASSETS	$	574,392		$	21,129	$	50,863	$	(70,402	)	$	575,982
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Accounts payable	15,683			—		81		—			15,764
Accounts payable - intercompany	12,640			6,874		107		(19,621		)	—
Accrued expenses	21,793			10,542		328		(10,180		)	22,483
Accrued interest	5,221			—		—		—			5,221
Revenue distributions payable	6,931			—		—		—			6,931
Current maturities of long-term debt	26			—		—		—			26
Total current liabilities	62,294			17,416		516		(29,801		)	50,425
LONG-TERM DEBT, LESS CURRENT MATURITIES	372,793			—		—		—			372,793
DEFERRED PREMIUMS ON DERIVATIVE INSTRUMENTS	1,883			—		—		—			1,883
OTHER LIABILITIES	7,557			—		—		—			7,557
(DEFICIT) EQUITY
Total GMX (deficit) equity	129,865			3,713		50,347		(54,060		)	129,865
Noncontrolling interest	—			—				13,459			13,459
Total equity	129,865			3,713		50,347		(40,601		)	143,324
TOTAL LIABILITIES AND EQUITY	$	574,392		$	21,129	$	50,863	$	(70,402	)	$	575,982



	December 31, 2010
	Parent			Guarantors		Non-Guarantor		Eliminations			Consolidated
						(In thousands)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	1,468		$	564	$	325	$	—		$	2,357
Accounts receivable – interest owners	5,338			—		1		—			5,339
Accounts receivable – oil and natural gas revenues, net	6,463			366		—		—			6,829
Accounts receivable - intercompany	15,450			4,195		1,786		(21,431		)	—
Derivative instruments	19,486			—		—		—			19,486
Inventories	326			—		—		—			326
Prepaid expenses and deposits	5,532			149		86		—			5,767
Assets held for sale	1,085			16,817		8,716		—			26,618
Total current assets	55,148			22,091		10,914		(21,431		)	66,722
OIL AND NATURAL GAS PROPERTIES, BASED ON THE FULL COST METHOD
Properties being amortized	937,858			713		130		—			938,701
Properties not subject to amortization	39,694			—		—		—			39,694
Less accumulated depreciation, depletion, and impairment	(630,632		)	—		—		—			(630,632		)
	346,920			713		130		—			347,763
PROPERTY AND EQUIPMENT, AT COST, NET	15,879			5,518		47,640		—			69,037
DERIVATIVE INSTRUMENTS	17,484			—		—		—			17,484
OTHER ASSETS	6,084			—		—		—			6,084
INVESTMENT IN SUBSIDIARIES	48,773			—		—		(48,773		)	—
TOTAL ASSETS	$	490,288		$	28,322	$	58,684	$	(70,204	)	$	507,090
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Accounts payable	24,635			—		284		—			24,919
Accounts payable - intercompany	5,533			15,331		567		(21,431		)	—
Accrued expenses	32,796			116		136		—			33,048
Accrued interest	3,317			—		—		—			3,317
Revenue distributions payable	4,839			—		—		—			4,839
Current maturities of long-term debt	26			—		—		—			26
Total current liabilities	71,146			15,447		987		(21,431		)	66,149
LONG-TERM DEBT, LESS CURRENT MATURITIES	284,943			—		—		—			284,943
DEFERRED PREMIUMS ON DERIVATIVE INSTRUMENTS	10,622			—		—		—			10,622
OTHER LIABILITIES	7,157			—		—		—			7,157
(DEFICIT) EQUITY
Total GMX (deficit) equity	116,420			12,875		57,697		(70,572		)	116,420
Noncontrolling interest	—			—		—		21,799			21,799
Total equity	116,420			12,875		57,697		(48,773		)	138,219
TOTAL LIABILITIES AND EQUITY	$	490,288		$	28,322	$	58,684	$	(70,204	)	$	507,090

Condensed Consolidating Statements of Operations




	Parent			Guarantors			Non-Guarantor			Eliminations			Consolidated
							(In thousands)
Nine Months Ended September 30, 2011
TOTAL REVENUES	$	89,106		$	2,500		$	8,943		$	(9,920	)	$	90,629
COSTS AND EXPENSES
Lease operating	13,686			3,223			1,395			(9,339		)	8,965
Production taxes	859			—			—			—			859
Depreciation, depletion, and amortization	37,661			554			1,868			—			40,083
Impairment of oil and natural gas properties and other fixed assets	120,680			6,404			647			—			127,731
General and administrative	21,162			1,448			255			(581		)	22,284
Total expenses	194,048			11,629			4,165			(9,920		)	199,922
Income (loss) from operations	(104,942		)	(9,129		)	4,778			—			(109,293		)
NON-OPERATING INCOME (EXPENSE)
Interest expense	(23,533		)	—			(1		)	—			(23,534		)
Write off of unamortized revolver fees	(176		)	—			—			—			(176		)
Interest and other income	215			—			76			—			291
Unrealized gains (losses) on derivatives	3,654			—			—			—			3,654
Equity income (loss) of subsidiaries	(8,615		)							8,615			—
Total non-operating expense	(28,455		)	—			75			8,615			(19,765		)
Income (loss) before income taxes	(133,397		)	(9,129		)	4,853			8,615			(129,058		)
INCOME TAX (PROVISION) BENEFIT	(481		)	—			—			—			(481		)
NET INCOME (LOSS)	(133,878		)	(9,129		)	4,853			8,615			(129,539		)
Net income attributable to noncontrolling interest	—			—			—			4,339			4,339
NET (LOSS) INCOME APPLICABLE TO GMX RESOURCES	(133,878		)	(9,129		)	4,853			4,276			(133,878		)
Preferred stock dividends	4,884			—			—			—			4,884
NET (LOSS) INCOME APPLICABLE TO COMMON SHAREHOLDERS	$	(138,762	)	$	(9,129	)	$	4,853		$	4,276		$	(138,762	)

Three Months Ended September 30, 2011
TOTAL REVENUES	$	27,838		$	1,063		$	2,859		$	(3,396	)	$	28,364
COSTS AND EXPENSES
Lease operating	4,511			1,198			662			(3,177		)	3,194
Production taxes	310			—			—			—			310
Depreciation, depletion, and amortization	13,183			180			626			—			13,989
Impairment of oil and natural gas properties and other fixed assets	60,941			1,054			555			—			62,550
General and administrative	7,290			444			94			(219		)	7,609
Total expenses	86,235			2,876			1,937			(3,396		)	87,652
Income (loss) from operations	(58,397		)	(1,813		)	922			—			(59,288		)
NON-OPERATING INCOME (EXPENSE)
Interest expense	(7,680		)	—			—			—			(7,680		)
Interest and other income	9			—			—			—			9
Unrealized gains (losses) on derivatives	(1,338		)	—			—			—			(1,338		)
Equity income (loss) of subsidiaries	(2,072		)							2,072			—
Total non-operating expense	(11,081		)	—			—			2,072			(9,009		)
Income (loss) before income taxes	(69,478		)	(1,813		)	922			2,072			(68,297		)
INCOME TAX (PROVISION) BENEFIT	2,386			—			—			—			2,386
NET INCOME (LOSS)	(67,092		)	(1,813		)	922			2,072			(65,911		)
Net income attributable to noncontrolling interest	—			—			—			1,181			1,181
NET (LOSS) INCOME APPLICABLE TO GMX RESOURCES	(67,092		)	(1,813		)	922			891			(67,092		)
Preferred stock dividends	1,837			—			—			—			1,837
NET (LOSS) INCOME APPLICABLE TO COMMON SHAREHOLDERS	$	(68,929	)	$	(1,813	)	$	922		$	891		$	(68,929	)




	Parent			Guarantors			Non-Guarantor			Eliminations			Consolidated
							(In thousands)
Nine Months Ended September 30, 2010
TOTAL REVENUES	$	68,341		$	1,536		$	5,895		$	(6,426	)	$	69,346
COSTS AND EXPENSES
Lease operating	11,057			1,754			1,226			(5,893		)	8,144
Production taxes	447			—			—			—			447
Depreciation, depletion, and amortization	22,398			550			1,756			—			24,704
General and administrative	19,164			1,154			272			(533		)	20,057
Total expenses	53,066			3,458			3,254			(6,426		)	53,352
Income (loss) from operations	15,275			(1,922		)	2,641			—			15,994
NON-OPERATING INCOME (EXPENSE)
Interest expense	(13,676		)	—			(2		)	—			(13,678		)
Interest and other income	36			(17		)	—			—			19
Unrealized gains (losses) on derivatives	(103		)	—			—			—			(103		)
Equity income (loss) of subsidiaries	(1,411		)	—			—			1,411			—
Total non-operating expense	(15,154		)	(17		)	(2		)	1,411			(13,762		)
Income (loss) before income taxes	121			(1,939		)	2,639			1,411			2,232
INCOME TAX (PROVISION) BENEFIT	6,354			—			—			—			6,354
NET INCOME (LOSS)	6,475			(1,939		)	2,639			1,411			8,586
Net income attributable to noncontrolling interest	—			—			—			2,111			2,111
NET (LOSS) INCOME APPLICABLE TO GMX RESOURCES	6,475			(1,939		)	2,639			(700		)	6,475
Preferred stock dividends	3,469			—			—						3,469
NET (LOSS) INCOME APPLICABLE TO COMMON SHAREHOLDERS	$	3,006		$	(1,939	)	$	2,639		$	(700	)	$	3,006

Three Months Ended September 30, 2010
TOTAL REVENUES	$	24,460		$	567		$	2,163		$	(2,357	)	$	24,833
COSTS AND EXPENSES
Lease operating	3,711			847			386			(2,154		)	2,790
Production taxes	(578		)	—			—			—			(578		)
Depreciation, depletion, and amortization	8,814			185			603			—			9,602
General and administrative	6,313			442			100			(203		)	6,652
Total expenses	18,260			1,474			1,089			(2,357		)	18,466
Income (loss) from operations	6,200			(907		)	1,074			—			6,367
NON-OPERATING INCOME (EXPENSE)
Interest expense	(4,794		)	—			—			—			(4,794		)
Interest and other income	4			(17		)	—			—			(13		)
Unrealized gains (losses) on derivatives	10			—			—			—			10
Equity income (loss) of subsidiaries	(1,030		)	—			—			1,030			—
Total non-operating expense	(5,810		)	(17		)	—			1,030			(4,797		)
Income (loss) before income taxes	390			(924		)	1,074			1,030			1,570
INCOME TAX (PROVISION) BENEFIT	2,934			—			—			—			2,934
NET INCOME (LOSS)	3,324			(924		)	1,074			1,030			4,504
Net income attributable to noncontrolling interest	—			—			—			1,180			1,180
NET (LOSS) INCOME APPLICABLE TO GMX RESOURCES	3,324			(924		)	1,074			(150		)	3,324
Preferred stock dividends	1,156			—			—			—			1,156
NET (LOSS) INCOME APPLICABLE TO COMMON SHAREHOLDERS	$	2,168		$	(924	)	$	1,074		$	(150	)	$	2,168

Condensed Consolidating Statements of Cash Flows




	Parent			Guarantors			Non-Guarantor			Eliminations		Consolidated
							(In thousands)
Nine Months Ended September 30, 2011
Net cash provided by (used in) operating activities	$	40,692		$	(377	)	$	7,767		$	—	$	48,082
Net cash provided by (used in) investing activities	(230,832		)	(113		)	5,004			—		(225,941		)
Net cash provided by (used in) financing activities	190,932			—			(12,202		)	—		178,730
Net increase (decrease) in cash	792			(490		)	569			—		871
Cash and cash equivalents at beginning of period	1,468			564			325			—		2,357
Cash and cash equivalents at end of period	$	2,260		$	74		$	894		$	—	$	3,228

Nine Months Ended September 30, 2010
Net cash provided by (used in) operating activities	$	35,611		$	1,251		$	4,110		$	—	$	40,972
Net cash provided by (used in) investing activities	(125,983		)	(1,725		)	(3,977		)	—		(131,685		)
Net cash provided by (used in) financing activities	58,940			—			288			—		59,228
Net increase (decrease) in cash	(31,432		)	(474		)	421			—		(31,485		)
Cash and cash equivalents at beginning of period	31,573			3,884			97			—		35,554
Cash and cash equivalents at end of period	$	141		$	3,410		$	518		$	—	$	4,069