GeoResources, Inc. Reports 1st Quarter 2005 Earnings and Provides
an Operations Update WILLISTON, N.D., May 13 /PRNewswire-FirstCall/
-- GeoResources, Inc. (NASDAQ:GEOI) today reported first quarter
2005 net income of $273,355 or $0.07 per share on revenue of
$1,855,185 compared to a 2004 first quarter net income of $83,803
or $0.02 per share on revenue of $1,151,561. Earnings before
interest, taxes, depreciation, depletion and amortization (EBITDA)
for the quarter was $517,694, a 95% increase from the same quarter
of the prior year(1). Oil and gas revenue during the first quarter
was $1,158,448 generating gross profit of $721,664 versus revenue
of $896,325 and gross profit of $435,841 for the same period in
2004. The improved results are attributable to higher oil prices
and lower oil and gas production expenses. GeoResources sold 26,519
barrels of oil equivalent (BOE) or 295 BOE per day during the first
quarter 2005 compared to 29,290 BOE or 322 BOE per day in the first
quarter 2004. In late April 2005 the Company initiated water
injection in its Landa West Madison Unit in one of two injection
wells in the unit. Conversion to injection into the second well is
expected to occur later in the second quarter. The Company believes
the unitization and water injection program will increase both
reserves and production from the field with minimal incremental
cost. The Company plans to begin drilling an exploratory well on
its Kramer prospect in Bottineau County, North Dakota utilizing our
Western Star Drilling Rig E-25. The Company also plans to drill an
identified development location in the Leonard Field, also in
Bottineau County. The timing of the wells will depend on the
availability of the rig, which is contracted to other operators
until early July. GeoResources owns a 100% working interest in each
of these projects. During the first quarter 2005 sales from
leonardite operations increased 93% to $492,984 generating gross
profit of $57,009. This compares to sales of $255,236 and gross
loss of $2,898 during the same period in 2004. The current demand
for drilling mud products remains strong. The Company's Western
Star Drilling subsidiary drilled two wells for other operators in
the first quarter 2005 compared to no wells drilled in the same
quarter of 2004. Although the drilling segment generated $203,753
of revenue in the first quarter 2005 drilling costs were $86,153
higher than revenue due primarily to repairs and maintenance needed
before the rig moved to its next project. Currently, Western Star
has contracts for two wells for other operators, one of which is a
horizontal lateral in an existing cased well where GeoResources has
a 10% working interest. Company President J. P. Vickers said, "Our
first quarter 2005 earnings and cash flow were strong due primarily
to higher oil prices. We used part of this cash flow to prepay
$125,000 of our long-term debt over and above our regularly
scheduled payments. We are pleased with our financial performance
and optimistic about our future." (1) EBITDA is defined as earnings
before interest, income taxes, depreciation and amortization,
EBITDA should not be considered as an alternative to net income (as
an indicator of operating performance) or as an alternative to cash
flow (as a measure of liquidity or ability to service debt
obligations) and is not in accordance with, nor superior to,
generally accepted accounting principles, but provides additional
information for evaluating us. Our measure of EBITDA may not be the
same as similar measures described by other companies. EBITDA is
calculated as follows: Quarter Ended March 31, 2005 March 31, 2004
Net Income $273,355 $83,803 Add back: Interest expense 24,247
18,395 Income tax 31,000 6,000 Depreciation and amortization
189,092 156,858 EBITDA $517,694 $265,056 Information herein
contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995, which can be
identified by words such as "may," "will," "expect," "anticipate,"
"estimate" or "continue," or comparable words. In addition, all
statements other than statements of historical facts that address
activities that the Company expects or anticipates will or may
occur in the future are forward-looking statements. Readers are
encouraged to read the SEC reports of the Company, particularly its
Form 10-KSB for the Fiscal Year Ended December 31, 2004, for
meaningful cautionary language disclosure. PART I. FINANCIAL
INFORMATION ITEM 1. Financial Statements GEORESOURCES, INC., AND
SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited) March 31,
December 31, 2005 2004 ASSETS CURRENT ASSETS: Cash and equivalents
$701,377 $715,551 Trade receivables, net 912,100 1,030,716
Inventories 223,833 235,405 Prepaid expenses 97,563 65,762 Total
current assets 1,934,873 2,047,434 PROPERTY, PLANT AND EQUIPMENT,
at cost: Oil and gas properties, using the full cost method of
accounting: Properties being amortized 26,169,856 25,997,466
Properties not subject to amortization 213,282 213,921 Drilling rig
and equipment 1,550,528 1,533,838 Leonardite plant and equipment
3,299,041 3,284,466 Other 748,792 756,535 31,981,499 31,786,226
Less accumulated depreciation, depletion amortization and
impairment (21,295,569) (21,113,489) Net property, plant and
equipment 10,685,930 10,672,737 TOTAL ASSETS $12,620,803
$12,720,171 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT
LIABILITIES: Accounts payable $899,504 $996,624 Accrued expenses
324,515 382,693 Current portions of capital lease obligations
57,143 64,286 Current maturities of long-term debt 527,057 518,750
Total current liabilities 1,808,219 1,962,353 CAPITAL LEASE
OBLIGATIONS, less current portions 45,315 54,847 LONG-TERM DEBT,
less current maturities 951,042 1,205,729 ASSET RETIREMENT
OBLIGATION 1,916,140 1,893,510 DEFERRED INCOME TAXES 547,000
524,000 Total liabilities 5,267,716 5,640,439 STOCKHOLDERS' EQUITY:
Common stock, par value $.01 per share; authorized 10,000,000
shares; issued and outstanding 3,723,977 shares 37,240 37,240
Additional paid-in capital 295,932 295,932 Retained earnings
7,019,915 6,746,560 Total stockholders' equity 7,353,087 7,079,732
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $12,620,803 $12,720,171
GEORESOURCES, INC., AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF
OPERATIONS (Unaudited) Three Months Ended March 31, 2005 2004
OPERATING REVENUES: Oil and gas sales $1,158,448 $896,325
Leonardite sales 492,984 255,236 Drilling revenue 203,753 --
1,855,185 1,151,561 OPERATING COSTS AND EXPENSES: Oil and gas
production 436,784 460,484 Cost of leonardite sold 435,975 258,134
Drilling costs 289,906 48,155 Depreciation and depletion 189,092
156,858 Selling, general and administrative 178,244 124,988
1,530,001 1,048,619 Operating income 325,184 102,942 OTHER INCOME
(EXPENSE): Interest expense (24,247) (18,395) Interest income 1,143
306 Other income, net 2,275 4,950 (20,829) (13,139) Income before
income taxes 304,355 89,803 Income tax expense (31,000) (6,000) Net
income $273,355 $83,803 EARNINGS PER SHARE: Net income, basic and
diluted $.07 $.02 DATASOURCE: GeoResources, Inc. CONTACT: Cathy
Kruse of GeoResources, Inc., +1-701-572-2020, Web site:
http://www.georesources.net/
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