GEOI Georesources, Inc. (MM)

WILLISTON, N.D., March 30 /PRNewswire-FirstCall/ -- GeoResources, Inc. (NASDAQ:GEOI) today reported 2005 net income increased to $2,179,473 or $0.58 per share on revenue of $7,994,659 compared to 2004 net income of $1,105,846 or $0.30 per share on revenue of $6,820,125. Earnings before interest, taxes, depreciation, depletion and amortization (EBITDA) for the year was $3,346,822, a 55% increase from the prior year. (Logo: http://www.newscom.com/cgi-bin/prnh/20051114/CGM073LOGO ) For the fourth quarter, the company reported net income of $482,147 or $0.13 per share on revenue of $1,910,989 versus net income of $369,459 or $0.10 per share on revenue of $2,227,885 in the fourth quarter of 2004. EBITDA for the quarter was $731,435. Oil and gas revenue was $5,824,049 on production of 120,714 net BOE, for an average realized price of $48.25 per BOE. In 2004 the company generated $4,452,114 of revenue on 123,831 BOE, an average of $35.95 per BOE. The oil and gas business segment generated $2,964,640 of operating income before SG&A in 2005 versus $1,949,529 of operating income before SG&A in 2004. Proved reserves increased 26% to 3,045,000 BOE at year-end 2005 versus 2,407,000 BOE at year-end 2004. The standardized measure of discounted future cash flows increased to $30,756,000 due to higher year-end commodity prices. The Company's leonardite business reported an operating loss before SG&A of $167,567 on $810,738 of revenue in 2005. However, net income includes a gain of $497,743 on involuntary conversion of the leonardite facility, which was damaged by a fire in May 2005. The Company is reviewing engineering and design work to determine the most cost effective way to repair the leonardite facility. At this time, the Company has not determined an actual date to begin restoration. Management expects insurance proceeds to cover substantially all of the restoration costs. GeoResources' drilling subsidiary, Western Star Drilling Company, reported an operating loss before SG&A of $50,233 on revenue of $1,359,872 in 2005 versus an operating loss before SG&A of $60,019 on revenue of $1,077,367 in 2004. Western Star drilled a total of 10 wells in 2005, including two wells for GeoResources' account, up from six wells drilled in 2004 with one for GeoResources. Both of the wells drilled for GeoResources in 2005 were drilled in the fourth quarter. The company also reported the drilling and completion of the Anderson 41- 25 #3. This development well is located in the Leonard Field of Bottineau County, North Dakota and was completed in January 2006. The Anderson 41-25 #3 produced 28 days in February resulting in 2,130 barrels of oil and 6,374 barrels of water. The company owns a 100% working interest in this well. 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 Year Ended December 31, 2005 December 31, 2005 Net Income (Unaudited) $ 482,147 $ 2,179,473 Add back: Interest expense 17,467 87,592 Income tax expense 54,601 293,601 Depreciation and amortization 177,220 786,156 EBITDA $ 731,435 $ 3,346,822 About GeoResources, Inc. GeoResources, Inc., a Williston, North Dakota based natural resources company is engaged in three principal business segments -- oil and gas exploration and production; oil and gas drilling; and mining and processing to make leonardite-based products. 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, 2005, for meaningful cautionary language disclosure. GEORESOURCES, INC., AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2005 AND 2004 ASSETS CURRENT ASSETS: 2005 2004 Cash and equivalents $1,669,882 $715,551 Trade receivables, net 1,109,202 1,030,716 Inventories 236,081 235,405 Prepaid expenses 38,738 65,762 Total current assets 3,053,903 2,047,434 PROPERTY, PLANT AND EQUIPMENT, at cost: Oil and gas properties, using the full cost method of accounting: Properties being amortized 27,842,549 25,997,466 Properties not subject to amortization 202,257 213,921 Drilling rig and equipment 1,607,094 1,533,838 Leonardite plant and equipment 854,789 3,284,466 Other 790,100 756,535 31,296,789 31,786,226 Less accumulated depreciation, depletion, amortization and impairment (19,650,972) (21,113,489) Net property, plant and equipment 11,645,817 10,672,737 TOTAL ASSETS $14,699,720 $12,720,171 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $1,152,532 $996,624 Accrued expenses 293,505 382,693 Income taxes payable 64,000 -- Current portions of capital lease obligations 41,549 64,286 Current maturities of long-term debt 523,941 518,750 Total current liabilities 2,075,527 1,962,353 CAPITAL LEASE OBLIGATIONS, less current portions 13,298 54,847 LONG-TERM DEBT, less current maturities 177,638 1,205,729 ASSET RETIREMENT OBLIGATIONS 2,324,690 1,893,510 DEFERRED INCOME TAXES 753,000 524,000 Total liabilities 5,344,153 5,640,439 CONTINGENCIES (NOTE J) STOCKHOLDERS' EQUITY: Common stock, par value $.01 per share; authorized 10,000,000 shares; issued and outstanding, 3,765,269 and 3,723,977 shares, respectively 37,653 37,240 Additional paid-in capital 391,881 295,932 Retained earnings 8,926,033 6,746,560 Total stockholders' equity 9,355,567 7,079,732 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $14,699,720 $12,720,171 GEORESOURCES, INC., AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS YEARS ENDED DECEMBER 31, 2005, 2004 AND 2003 2005 2004 2003 OPERATING REVENUES: Oil and gas $5,824,049 $4,452,114 $3,614,592 Leonardite 810,738 1,290,644 822,219 Drilling 1,359,872 1,077,367 406,141 7,994,659 6,820,125 4,842,952 OPERATING COSTS AND EXPENSES: Oil and gas production 2,303,238 1,922,479 1,786,379 Leonardite operations 907,943 1,168,148 850,373 Drilling costs 1,258,258 1,009,051 369,869 Depreciation, depletion and amortization 786,156 842,658 759,907 Selling, general and administrative 660,204 594,017 537,141 5,915,799 5,536,353 4,303,669 Operating income 2,078,860 1,283,772 539,283 OTHER INCOME (EXPENSE): Interest expense (87,592) (91,363) (84,432) Interest income 18,649 10,697 8,362 Gain on involuntary conversion of Leonardite facility 497,743 -- -- Other, net (34,586) 20,027 18,898 394,214 (60,639) (57,172) Income before income taxes 2,473,074 1,223,133 482,111 INCOME TAX EXPENSE 293,601 117,287 12,548 Income before cumulative effect of change in accounting principle 2,179,473 1,105,846 469,563 Cumulative effect on prior years of accounting change, net of tax -- -- (23,000) Net income $2,179,473 $1,105,846 $446,563 EARNINGS PER SHARE: Income before cumulative effect of accounting change $.58 $.30 $.13 Cumulative effect of accounting change -- -- (.01) Net income, basic $.58 $.30 $.12 Income before cumulative effect of accounting change $.57 $.30 $.13 Cumulative effect of accounting change -- -- (.01) Net income, diluted $.57 $.30 $.12 Weighted average number of shares outstanding 3,744,488 3,723,977 3,748,396 Dilutive potential shares - Stock options 81,942 -- -- Adjusted weighted average shares 3,826,430 3,723,977 3,748,396 http://www.newscom.com/cgi-bin/prnh/20051114/CGM073LOGO http://photoarchive.ap.org/ DATASOURCE: GeoResources, Inc. CONTACT: Cathy Kruse of GeoResources, Inc., +1-701-572-2020, Web site: http://www.georesources.net/

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