GEOI Georesources, Inc. (MM)

EPS Doubles on 26% Production Increase WILLISTON, N.D., May 15 /PRNewswire-FirstCall/ -- GeoResources, Inc. (NASDAQ:GEOI) today reported first quarter 2006 net income of $527,688 or $0.14 per share on revenue of $2,172,523 compared to a 2005 first quarter net income of $273,355 or $0.07 per share on revenue of $1,855,185. Earnings before interest, taxes, depreciation, depletion and amortization (EBITDA) for the quarter was $811,394, a 57% increase from the same quarter of the prior year.(1) (Logo: http://www.newscom.com/cgi-bin/prnh/20051114/CGM073LOGO ) Oil and gas revenue during the first quarter was $1,646,149 generating gross profit of $1,018,633 versus revenue of $1,158,448 and gross profit of $721,664 for the same period in 2005. The improved results are attributable to a 26% increase in production and a 14% increase in the average oil and natural gas sales prices. GeoResources sold 33,500 barrels of oil equivalent (BOE) or 372 BOE per day during the first quarter 2006 compared to 26,519 BOE or 295 BOE per day in the first quarter 2005. The revenue and BOE increase was attributed to workovers performed in 2005 and new production from the Company's 100% working interest in the Anderson 41-25 #3 well that began production in mid-January, 2006. The Company reports that more workovers and remedial projects are in progress primarily targeted at returning shut-in wells to production. The largest project is returning nine small shut-in gas wells (9 gross, 9 net) in our Hammond Gas Field, Carter County, Montana to production on our 100% owned gathering and compression system during 2006. GeoResources' drilling subsidiary, Western Star Drilling Company, reported that drilling revenue during the first quarter was $518,246 generating gross profit of $43,911 for the first quarter of 2006 versus revenue of $203,753 and a loss of $86,153 for the same quarter in 2005. WSDC's operations consisted of 46 operating days drilling three wells for other operators. Currently we have contracts for four wells, two for another operator and two for GeoResources. Company President J. P. Vickers said, "We are very pleased to report an increase in production as a result of our successful work performed in 2005. We expect the recompletion work we are currently undertaking to add more gas production to our mix and these relatively low cost projects should payout quickly given to current price of natural gas. If commodity prices remain strong, our first quarter results should be the beginning of a very good year for GeoResources." As a result of a fire in the Company's leonardite processing plant in the second quarter of 2005, production of finished leonardite products was suspended. Although insurance proceeds are available to rebuild the plant, the Company has not yet determined how it will do so, and sales have been of only a relatively small amount of leonardite mined since the fire. As a result, Leonardite revenue decreased 98% to $8,000 in the first quarter 2006 compared to $493,000 in the same period in 2005, resulting in a decrease in gross profit from leonardite operations of $57,000 for the first quarter of 2005 to a gross loss of $90,000 in the first quarter of 2006. (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, 2006 March 31, 2005 Net Income $527,688 $273,355 Add back: Interest expense 12,945 24,247 Income tax 55,000 31,000 Depreciation and amortization 215,761 189,092 EBITDA $811,394 $517,694 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. CONSOLIDATED BALANCE SHEETS (Unaudited) March 31, December 31, 2006 2005 ASSETS CURRENT ASSETS: Cash and equivalents $1,525,598 $1,669,882 Trade receivables, net 1,024,909 1,109,202 Inventories 270,058 236,081 Prepaid expenses 163,532 38,738 Total current assets 2,984,097 3,053,903 PROPERTY, PLANT AND EQUIPMENT, at cost: Oil and gas properties, using the full cost method of accounting: Properties being amortized 28,251,086 27,842,549 Properties not subject to amortization 149,511 202,257 Drilling rig and equipment 1,634,437 1,607,094 Leonardite plant and equipment 882,092 854,789 Other 797,945 790,100 31,715,071 31,296,789 Less accumulated depreciation, depletion amortization and impairment (19,878,836) (19,650,972) Net property, plant and equipment 11,836,235 11,645,817 TOTAL ASSETS $14,820,332 $14,699,720 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $1,001,678 $1,152,532 Accrued expenses 224,741 293,505 Income taxes payable 82,000 64,000 Current portions of capital lease obligations 41,549 41,549 Current maturities of long-term debt 446,947 523,941 Total current liabilities 1,796,915 2,075,527 CAPITAL LEASE OBLIGATIONS, less current portions 3,152 13,298 LONG-TERM DEBT, less current maturities -- 177,638 ASSET RETIREMENT OBLIGATION 2,352,390 2,324,690 DEFERRED INCOME TAXES 780,000 753,000 Total liabilities 4,932,457 5,344,153 STOCKHOLDERS' EQUITY: Common stock, par value $.01 per share; authorized 10,000,000 shares; issued and outstanding, 3,767,269 and 3,765,269 shares, respectively 37,673 37,653 Additional paid-in capital 396,481 391,881 Retained earnings 9,453,721 8,926,033 Total stockholders' equity 9,887,875 9,355,567 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $14,820,332 $14,699,720 GEORESOURCES, INC., AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended March 31, 2006 2005 OPERATING REVENUES: Oil and gas sales $1,646,149 $1,158,448 Leonardite sales 8,128 492,984 Drilling revenue 518,246 203,753 2,172,523 1,855,185 OPERATING COSTS AND EXPENSES: Oil and gas production 627,516 436,784 Leonardite operations 98,188 435,975 Drilling costs 474,335 289,906 Depreciation and depletion 215,761 189,092 Selling, general and administrative 170,801 178,244 1,586,601 1,530,001 Operating income 585,922 325,184 OTHER INCOME (EXPENSE): Interest expense (12,945) (24,247) Interest income 4,321 1,143 Other income, net 5,390 2,275 (3,234) (20,829) Income before income taxes 582,688 304,355 Income tax expense (55,000) (31,000) Net income $527,688 $273,355 EARNINGS PER SHARE: Net income, basic and diluted $.14 $.07 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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