GEOI Georesources, Inc. (MM)

WILLISTON, N.D., Aug. 12 /PRNewswire-FirstCall/ -- GeoResources, Inc., (NASDAQ:GEOI), today reported second quarter 2005 net income of $848,044, or $0.23 per share, on revenue of $1,853,399, compared to a second quarter 2004 net income of $233,656, or $0.06 per share, on revenue of $1,634,012. Earnings before interest, taxes, depreciation, depletion and amortization (EBITDA) for the second quarter of 2005 were $1,170,071, compared to $482,997 for the second quarter of 2004.(1) First-half 2005 net income was $1,121,399, or $0.30 per share, on revenue of $3,708,584, versus net income of $317,459, or $0.09 per share, on revenue of $2,785,573 in the first half of 2004. EBITDA for the first half 2005 was $1,687,765, compared to $748,053 the first half 2004. Higher commodity prices, which averaged $44.32 per barrel of oil equivalent (BOE) for the first half of the year, were the primary driver of the improved results. GeoResources sold a total of 29,323 BOE, or 322 BOE per day, during the second quarter 2005, compared to 30,707 BOE, or 337 BOE per day, in the second quarter 2004. The company received substantially higher average oil prices resulting in an increase in oil and gas sales of $296,000, or 29% for the quarter, and $558,000, or 29%, for the six-months ended June 30, 2005, compared to the same periods in 2004. Leonardite sales generated $279,796 of revenue for the quarter and $772,780 for the first half of the year; however, the Leonardite business segment generated only $7,645 and $64,654 of gross margin for the three-month and six-month periods. For the quarter ended June 30, 2005, the Company recognized a Leonardite related gain of $497,743 consisting of an insurance claim receivable of $735,374 less associated costs of $23,487 and $213,144, the net book value of the facility before the fire. As previously announced, the Company is evaluating strategic alternatives for its Leonardite assets following a fire on May 17, 2005 that significantly damaged the facility. GeoResources' subsidiary, Western Star Drilling Company (WSDC), drilled two wells for third parties during the second quarter of 2005, generating drilling revenue of $256,890 and gross margin of $9,860 for the quarter. For the first six months of 2005 WSDC drilled four third party wells, generating $460,643 of revenue and a negative gross margin of $76,293. Repairs and maintenance on the rig during the first quarter produced the negative gross margin, which should be minimized as the rig utilization increases during the remainder of the year. WSDC has three contracts to drill four third party wells during the next two months and one contract to drill two wells for GeoResources. Before year-end, the Company plans to drill the Kramer prospect and a development location in the Leonard Field, both located in Bottineau County, North Dakota. The Company owns a 100% working interest in each of these projects. J.P. Vickers, President of GeoResources, said, "Activity in the Williston Basin is accelerating significantly and we expect improved results in our drilling operations as our rig utilization increases. We also expect the water injection initiated in the Landa West Madison Unit during the second quarter will increase reserves and production from that field. With the two additional wells we plan to drill before year-end we are seeking to stabilize our production to take advantage of current oil prices." (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 Quarter Ended June 30, 2005 June 30, 2004 Net income $848,044 $233,656 Add back Interest expense 23,459 20,231 Income tax 98,000 23,000 Depreciation and amortization 200,568 206,110 EBITDA $1,170,071 $482,997 Six Months Six Months Ended Ended June 30, 2005 June 30, 2004 Net Income $1,121,399 $317,459 Add back: Interest expense 47,706 38,626 Income tax 129,000 29,000 Depreciation and amortization 389,660 362,968 EBITDA $1,687,765 $748,053 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) June 30, December 31, 2005 2004 ASSETS CURRENT ASSETS: Cash and equivalents $923,414 $715,551 Trade receivables, net 742,416 1,030,716 Insurance claim receivable 735,374 -- Inventories 231,726 235,405 Prepaid expenses 116,869 65,762 Total current assets 2,749,799 2,047,434 PROPERTY, PLANT AND EQUIPMENT, at cost: Oil and gas properties, using the full cost method of accounting: Properties being amortized 26,441,929 25,997,466 Properties not subject to amortization 215,089 213,921 Drilling rig and equipment 1,558,953 1,533,838 Leonardite plant and equipment 828,213 3,284,466 Other 753,009 756,535 29,797,193 31,786,226 Less accumulated depreciation, depletion amortization and impairment (19,199,000) (21,113,489) Net property, plant and equipment 10,598,193 10,672,737 TOTAL ASSETS $13,347,992 $12,720,171 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $756,476 $996,624 Accrued expenses 428,134 382,693 Current portions of capital lease obligations 49,888 64,286 Current maturities of long-term debt 527,057 518,750 Total current liabilities 1,761,555 1,962,353 CAPITAL LEASE OBLIGATIONS, less current portions 35,632 54,847 LONG-TERM DEBT, less current maturities 821,354 1,205,729 ASSET RETIREMENT OBLIGATION 1,939,080 1,893,510 DEFERRED INCOME TAXES 580,000 524,000 Total liabilities 5,137,621 5,640,439 STOCKHOLDERS' EQUITY: Common stock, par value $.01 per share; authorized 10,000,000 shares; issued and outstanding 3,727,977 and 3,723,977 shares, respectively 37,280 37,240 Additional paid-in capital 305,132 295,932 Retained earnings 7,867,959 6,746,560 Total stockholders' equity 8,210,371 7,079,732 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $13,347,992 $12,720,171 GEORESOURCES, INC., AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended Six Months Ended June 30, June 30, 2005 2004 2005 2004 OPERATING REVENUES: Oil and gas sales $1,316,713 $1,020,635 $2,475,161 $1,916,960 Leonardite sales 279,796 295,296 772,780 550,532 Drilling revenue 256,890 318,081 460,643 318,081 1,853,399 1,634,012 3,708,584 2,785,573 OPERATING COSTS AND EXPENSES: Oil and gas production 507,258 403,256 944,042 863,740 Cost of leonardite sold 272,151 245,297 708,126 503,431 Drilling costs 247,030 316,898 536,936 365,053 Depreciation and depletion 200,568 206,110 389,660 362,968 Selling, general and administrative 170,003 200,366 348,247 325,354 1,397,010 1,371,927 2,927,011 2,420,546 Operating income 456,389 262,085 781,573 365,027 OTHER INCOME (EXPENSE): Interest expense (23,459) (20,231) (47,706) (38,626) Interest income 10,421 9,852 11,564 10,158 Gain on involuntary conversion of Leonardite facility 497,743 -- 497,743 -- Other income, net 4,950 4,950 7,225 9,900 489,655 (5,429) 468,826 (18,568) Income before income taxes 946,044 256,656 1,250,399 346,459 Income tax expense (98,000) (23,000) (129,000) (29,000) Net income $848,044 $233,656 $1,121,399 $317,459 EARNINGS PER SHARE: Basic $.23 $.06 $.30 $.09 Diluted $.22 $.06 $.29 $.09 DATASOURCE: GeoResources, Inc. CONTACT: Cathy Kruse of GeoResources, +1-701-572-2020, Web site: http://www.georesources.net/

Copyright