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 March 31, 2012 and December 31, 2011 and for the three months ended March 31, 2012 and 2011. 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



	March 31, 2012
	Parent			Guarantors		Non-Guarantor		Eliminations			Consolidated
						(In thousands)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	67,088		$	3,268	$	723	$	—		$	71,079
Restricted cash	4,325			—		—		—			4,325
Short term investments	2,000			—		—		—			2,000
Accounts receivable – interest owners	7,904			—		—		—			7,904
Accounts receivable – oil and natural gas revenues, net	8,398			198		—		(2,901		)	5,695
Accounts receivable - intercompany	18,153			13,144		922		(32,219		)	—
Derivative instruments	778			—		—		—			778
Inventories	326			—		—		—			326
Prepaid expenses and deposits	2,156			2		53		—			2,211
Assets held for sale	1,910			—		—		—			1,910
Total current assets	113,038			16,612		1,698		(35,120		)	96,228
OIL AND NATURAL GAS PROPERTIES, BASED ON THE FULL COST METHOD
Properties being amortized	1,084,521			713		127		—			1,085,361
Properties not subject to amortization	153,085			—		—		—			153,085
Less accumulated depreciation, depletion, and impairment	(906,232		)	—		—		—			(906,232		)
	331,374			713		127		—			332,214
PROPERTY AND EQUIPMENT, AT COST, NET	14,881			5,095		44,488		—			64,464
DERIVATIVE INSTRUMENTS	500			—		—		—			500
OTHER ASSETS	8,983			—		—		—			8,983
INVESTMENT IN SUBSIDIARIES	35,313			—		—		(35,313		)	—
TOTAL ASSETS	$	504,089		$	22,420	$	46,313	$	(70,433	)	$	502,389
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Accounts payable	12,883			—		36		—			12,919
Accounts payable - intercompany	13,365			18,726		128		(32,219		)	—
Accrued expenses	14,080			3,046		260		(2,901		)	14,485
Accrued interest	12,557			—		—		—			12,557
Revenue distributions payable	5,411			—		—		—			5,411
Current maturities of long-term debt	58,151			—		—		—			58,151
Total current liabilities	116,447			21,772		424		(35,120		)	103,523
LONG-TERM DEBT, LESS CURRENT MATURITIES	356,958			—		—		—			356,958
DEFERRED PREMIUMS ON DERIVATIVE INSTRUMENTS	312			—		—		—			312
OTHER LIABILITIES	7,684			—		—		—			7,684
EQUITY
Total GMX equity	22,688			648		45,889		(46,537		)	22,688
Noncontrolling interest	—			—				11,224			11,224
Total equity	22,688			648		45,889		(35,313		)	33,912
TOTAL LIABILITIES AND EQUITY	$	504,089		$	22,420	$	46,313	$	(70,433	)	$	502,389



	December 31, 2011
	Parent			Guarantors		Non-Guarantor		Eliminations			Consolidated
						(In thousands)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	98,118		$	3,672	$	703	$	—		$	102,493
Restricted cash	4,325			—		—		—			4,325
Accounts receivable – interest owners	8,607			—		—		—			8,607
Accounts receivable – oil and natural gas revenues, net	12,564			295		—		(5,777		)	7,082
Accounts receivable - intercompany	15,205			13,033		790		(29,028		)	—
Derivative instruments	—			—		—		—			—
Inventories	326			—		—		—			326
Prepaid expenses and deposits	2,574			2		79		—			2,655
Assets held for sale	1,999			46		—		—			2,045
Total current assets	143,718			17,048		1,572		(34,805		)	127,533
OIL AND NATURAL GAS PROPERTIES, BASED ON THE FULL COST METHOD
Properties being amortized	1,061,961			713		127		—			1,062,801
Properties not subject to amortization	147,224			—		—		—			147,224
Less accumulated depreciation, depletion, and impairment	(871,346		)	—		—		—			(871,346		)
	337,839			713		127		—			338,679
PROPERTY AND EQUIPMENT, AT COST, NET	15,531			5,216		45,111		—			65,858
DERIVATIVE INSTRUMENTS	—			—		—		—			—
OTHER ASSETS	10,131			—		—		—			10,131
INVESTMENT IN SUBSIDIARIES	35,980			—		—		(35,980		)	—
TOTAL ASSETS	$	543,199		$	22,977	$	46,810	$	(70,785	)	$	542,201
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Accounts payable	13,527			—		23		—			13,550
Accounts payable - intercompany	13,126			15,684		218		(29,028		)	—
Accrued expenses	17,263			6,056		293		(5,777		)	17,835
Accrued interest	3,256			—		—		—			3,256
Revenue distributions payable	5,980			—		—		—			5,980
Current maturities of long-term debt	26			—		—		—			26
Total current liabilities	53,178			21,740		534		(34,805		)	40,647
LONG-TERM DEBT, LESS CURRENT MATURITIES	426,805			—		—		—			426,805
DEFERRED PREMIUMS ON DERIVATIVE INSTRUMENTS	—			—		—		—			—
OTHER LIABILITIES	7,476			—		—		—			7,476
EQUITY
Total GMX equity	55,740			1,237		46,276		(47,513		)	55,740
Noncontrolling interest	—			—		—		11,533			11,533
Total equity	55,740			1,237		46,276		(35,980		)	67,273
TOTAL LIABILITIES AND EQUITY	$	543,199		$	22,977	$	46,810	$	(70,785	)	$	542,201

Condensed Consolidating Statements of Operations




	Parent			Guarantors			Non-Guarantor		Eliminations			Consolidated
							(In thousands)
Three Months Ended March 31, 2012
TOTAL REVENUES	$	17,132		$	427		$	2,202	$	(2,360	)	$	17,401
COSTS AND EXPENSES
Lease operating	4,530			477			393		(2,292		)	3,108
Production taxes	(237		)	—			—		—			(237		)
Depreciation, depletion, and amortization	6,660			178			627		—			7,465
Impairment of oil and natural gas properties and assets held for sale	28,999			—			—		—			28,999
General and administrative	6,631			361			71		(68		)	6,995
Total expenses	46,583			1,016			1,091		(2,360		)	46,330
Income (loss) from operations	(29,451		)	(589		)	1,111		—			(28,929		)
NON-OPERATING INCOME (EXPENSE)
Interest expense	(10,702		)	—			—		—			(10,702		)
Gain (loss) on conversion/extinguishment of debt	2,781			—			—		—			2,781
Interest and other income	72			—			—		—			72
Unrealized gains (losses) on derivatives	790			—			—		—			790
Equity income (loss) of subsidiaries	(367		)	—			—		367			—
Total non-operating expense	(7,426		)	—			—		367			(7,059		)
Income (loss) before income taxes	(36,877		)	(589		)	1,111		367			(35,988		)
INCOME PROVISION BENEFIT	(1,887		)	—			—		—			(1,887		)
NET INCOME (LOSS)	(38,764		)	(589		)	1,111		367			(37,875		)
Net income attributable to noncontrolling interest	—			—			—		889			889
NET (LOSS) INCOME APPLICABLE TO GMX RESOURCES	(38,764		)	(589		)	1,111		(522		)	(38,764		)
Preferred stock dividends	1,837			—			—		—			1,837
NET (LOSS) INCOME APPLICABLE TO COMMON SHAREHOLDERS	$	(40,601	)	$	(589	)	$	1,111	$	(522	)	$	(40,601	)




	Parent			Guarantors			Non-Guarantor		Eliminations			Consolidated
							(In thousands)
Three Months Ended March 31, 2011
TOTAL REVENUES	$	28,897		$	691		$	2,910	$	(3,122	)	$	29,376
COSTS AND EXPENSES
Lease operating	4,525			837			463		(2,927		)	2,898
Production taxes	383			—			—		—			383
Depreciation, depletion, and amortization	11,985			186			618		—			12,789
Impairment of oil and natural gas properties and assets held for sale	48,230			(4		)	94		—			48,320
General and administrative	6,644			564			64		(195		)	7,077
Total expenses	71,767			1,583			1,239		(3,122		)	71,467
Income (loss) from operations	(42,870		)	(892		)	1,671		—			(42,091		)
NON-OPERATING INCOME (EXPENSE)
Interest expense	(8,022		)	—			—		—			(8,022		)
Gain (loss) on conversion/extinguishment of debt	(108		)	—			—		—			(108		)
Interest and other income	123			58			88		—			269
Unrealized gains (losses) on derivatives	(444		)	—			—		—			(444		)
Equity income (loss) of subsidiaries	(487		)	—			—		487			—
Total non-operating expense	(8,938		)	58			88		487			(8,305		)
Income (loss) before income taxes	(51,808		)	(834		)	1,759		487			(50,396		)
INCOME PROVISION BENEFIT	(1,432		)	—			—		—			(1,432		)
NET INCOME (LOSS)	(53,240		)	(834		)	1,759		487			(51,828		)
Net income attributable to noncontrolling interest	—			—			—		1,412			1,412
NET (LOSS) INCOME APPLICABLE TO GMX RESOURCES	(53,240		)	(834		)	1,759		(925		)	(53,240		)
Preferred stock dividends	1,210			—			—					1,210
NET (LOSS) INCOME APPLICABLE TO COMMON SHAREHOLDERS	$	(54,450	)	$	(834	)	$	1,759	$	(925	)	$	(54,450	)

Condensed Consolidating Statements of Cash Flows




	Parent			Guarantors			Non-Guarantor			Eliminations		Consolidated
							(In thousands)
Three Months Ended March 31, 2012
Net cash provided by (used in) operating activities	$	(2,297	)	$	(397	)	$	1,520		$	—	$	(1,174	)
Net cash provided by (used in) investing activities	(27,096		)	(7		)	(3		)	—		(27,106		)
Net cash provided by (used in) financing activities	(1,637		)	—			(1,497		)	—		(3,134		)
Net decrease in cash	(31,030		)	(404		)	20			—		(31,414		)
Cash and cash equivalents at beginning of period	98,118			3,672			703			—		102,493
Cash and cash equivalents at end of period	$	67,088		$	3,268		$	723		$	—	$	71,079

Three Months Ended March 31, 2011
Net cash provided by (used in) operating activities	$	5,485		$	8,277		$	2,785		$	—	$	16,547
Net cash provided by (used in) investing activities	(86,525		)	(38		)	1,835			—		(84,728		)
Net cash provided by (used in) financing activities	147,537			—			(4,072		)	—		143,465
Net decrease in cash	66,497			8,239			548			—		75,284
Cash and cash equivalents at beginning of period	1,468			564			325			—		2,357
Cash and cash equivalents at end of period	$	67,965		$	8,803		$	873		$	—	$	77,641