HOUSTON, Texas, Nov. 12 /PRNewswire-FirstCall/ -- GeoResources,
Inc., (NASDAQ:GEOI), today announced its operating results for the
three month and nine month periods ended September 30, 2007. The
Company announced net income, for the third quarter, of $1,412,000,
or $.10 per share, on revenue of $8,635,000. Earnings before
interest, taxes, depreciation, depletion and amortization (EBITDA)
for the quarter was $4,100,000. The operating results represent a
significant increase over the second quarter of 2007. (Logo:
http://www.newscom.com/cgi-bin/prnh/20051114/CGM073LOGO )
Management advises interested parties that the Company consummated
a merger ("Merger") in April 2007 and current period earnings and
related information contained in this release are not entirely
comparable to corresponding periods in 2006 for several reasons
including: (1) the financial statements presented for corresponding
periods in 2006, in accordance with generally accepted accounting
principles, are those of the largest party to the Merger, Southern
Bay Oil & Gas LP ("Southern Bay"), which was a private
partnership and not a taxable entity, therefore no income tax
expense was reported in 2006, (2) Southern Bay's operating results
in 2006 included significant non-recurring income and (3) the
combined entity incurred significant charges related to the Merger
in 2007, which management believes are largely non-recurring. For
further clarification, management also advises that the results
announced herein for the periods in 2007 do not include the
recently announced acquisition of producing oil and gas properties,
which effectively doubles the size of the Company in terms of
reserves, production and cash flows. Accordingly, interested
parties should review (1) the SEC Form 10-QSB for the period ended
September 30, 2007, which discusses the Merger and the recent
acquisition, (2) the press releases issued on October 18, 2007 and
October 23, 2007 related to the aforementioned acquisitions and
operations, respectively and (3) all related SEC filings. Subject
to the above comments, GeoResources is reporting the results of
operations for the three month and nine month periods ended
September 30, 2007 and corresponding periods in the prior year. For
the third quarter 2007 net income was $1,412,000, or $.10 per
share, on revenue of $8,635,000. Third quarter 2006 net income was
$1,945,000 on revenue of $4,927,000. Income before income taxes for
the quarter was $2,346,000 in 2007 versus $1,945,000 in 2006.
EBITDA for the third quarter of 2007 was $4,100,000. EBITDA was
$2,814,000 for the third quarter of 2006. Net income for the nine
months ended September 30, 2007 was $949,000 or $0.08 per share, on
revenue of $21,038,000. Year to date net income was reduced by
significant charges related to the Merger totaling $2,904,000. As
shown in the table below, such charges include the actual costs of
the Merger and non-cash charges related to equity based
compensation and net deferred income taxes. Reported net income for
the nine months ended September 30, 2006 was $4,688,000, on revenue
of $13,191,000. Income before income taxes for the first nine
months of 2007 was $3,738,000 and $ 4,688,000 for the similar
period in 2006. Without any adjustments for the non-recurring
charges shown below, EBITDA for the first nine months of 2007 was
$8,707,000. EBITDA was $7,035,000 for the similar period in 2006.
Without certain non-recurring charges associated with the Merger,
as listed in the table below, EBITDA for the first nine months of
2007 would have been $10,056,000. See the table below for a
reconciliation of actual net income to EBITDA for the respective
periods. In the third quarter of 2007, natural gas sales totaled
330 MMcf and were 136 MMcf in the third quarter of 2006. Oil sales
for the third quarter of 2007 totaled 88 Mbbls and were 47 Mbbls in
the third quarter of 2006. The average realized price of natural
gas was $5.63 per Mcf for the third quarter of 2007, or 12% less
than the third quarter of the prior year. The average realized
price of oil was $64.08 per barrel or 9% more than the third
quarter in the prior year. For the nine months ended September 30,
2007, natural gas sales totaled 883 MMcf or 89% greater than the
467 MMcf sold during the first nine months of 2006. Oil sales for
the first nine months of 2007 increased 61% to 216 Mbbls from 134
Mbbls in the first nine months of 2006. The average realized price
of natural gas was $6.26 per Mcf for the first nine months of 2007
or 11 % less than the first nine months of the prior year. The
average realized price of oil was $58.40 per barrel or 5% more for
the first nine months of 2007 than the first nine months in the
prior year. The significant increases in production in the three
and nine months periods ended September 30, 2007 over the same
periods of 2006, are a direct result of the Merger, certain
producing property acquisitions and drilling activities , offset by
production declines in Gulf Coast wells. Frank A. Lodzinski,
President and Chief Executive Officer of GeoResources, Inc., said,
"We are pleased to report that our earnings for the third quarter
of 2007 increased over the second quarter. Our earnings and cash
flows from continuing operations have increased as a direct result
of our Merger, acquisition and drilling activities. We expect
increased future earnings as a result of our recently announced
producing property acquisition, which closed in October 2007.
Fiscal 2007 has been a transitional and defining year for the
Company. We now produce over 3,400 BOE per day. Having built our
reserve and cash flow foundation, we can now focus our attention to
our capital expenditure program and further expansion of our
acreage and drilling inventory. In addition, we will continue to
search for accretive acquisitions and mergers. We believe our
diversified approach will provide continued profitable growth for
the Company. The following tables reconcile our EBITDA to our
reported net income for the periods indicated: Three Months Ended
September 30, 2007 2006 EBITDA (1) Net income $ 1,412,091 $
1,945,051 Add back: Interest expense 25,096 135,958 Income tax (2)
934,376 - Depreciation, depletion and amortization 1,728,336
732,656 EBITDA $ 4,099,899 $ 2,813,665 Nine Months Ended September
30, 2007 2006 Net income $949,466 $ 4,687,652 Add back: Interest
expense 380,423 174,074 Income tax (2) 2,788,075 - Depreciation,
depletion and amortization 4,589,243 2,172,856 EBITDA $ 8,707,207 $
7,034,582 (1) EBITDA is defined as earnings before interest, income
taxes, depreciation, depletion 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
evaluation of our operating performance. (2) Includes deferred
income tax expense of $381,217 and $2,138,885 recognized in the
quarter and year to date periods, respectively. The effect of
Southern Bay becoming a taxable entity gave rise to a nonrecurring
deferred tax of $1,555,000, which, as required under generally
accepted accounting principles, was charged to expense in the
second quarter. Non recurring charges: During the nine months ended
September 30, 2007, the Company recognized certain significant
charges which it believes are largely non-recurring. The table
lists such costs. Nine Months Ended September 30, 2007 Non-cash
equity based compensation (1) $523,598 Professional fees 467,472
NASDAQ Global Market entry fee 100,000 Merger related proxy costs
86,937 Western Star Drilling (2) 96,114 Other 75,000 Subtotal
1,349,121 Income taxes (3) 1,555,000 Total $2,904,121 (1)
Represents non-cash required charge to expense resulting from
acceleration of certain vesting requirements associated with
Southern Bay's equity incentive plan which was eliminated pursuant
to the Merger, and stock bonuses issued to employees of
GeoResources. (2) Costs associated with sold operations. (3)
Represents a nonrecurring charge, attributable to Southern Bay
becoming a taxable entity. Generally accepted accounting principles
require that when an entity's tax status changes from nontaxable to
taxable, the deferred taxes related to differences in the
accounting basis of net assets and their tax basis be recognized in
the period of that change in status. About GeoResources, Inc.
GeoResources, Inc. is an independent oil and gas company engaged in
the acquisition and development of oil and gas reserves through an
active and diversified program which includes purchases of
reserves, re-engineering, and development and exploration
activities, currently focused in Texas, Louisiana, North Dakota,
Montana and Colorado. In April 2007, the Company completed its
Merger with Southern Bay and Chandler Energy, LLC. The Company
conducts its exploration development and production operations
through wholly owned subsidiaries. Activities in the Southern
Region are conducted through Southern Bay Energy, LLC, located in
Houston, Texas and Northern Region operations are conducted through
G3 Energy LLC, located in Denver, Colorado. The Company also
maintains a regional office in Williston, North Dakota. For more
information, visit our website at http://www.georesourcesinc.com/.
Forward-Looking Statements 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. 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, Readers are encouraged to read the December
31, 2006 Annual Report on Form 10-KSB, the March 31, 2007 and the
June 30, 2007 quarterly reports on Form 10-QSB, and the proxy
statement dated February 23, 2007 and any and all other relevant
documents filed with the SEC regarding information about
GeoResources for meaningful cautionary language in respect of the
forward-looking statements herein. Interested persons are able to
obtain free copies of filings containing information about
GeoResources, without charge, at the SEC's Internet site
(http://www.sec.gov/). GEORESOURCES, INC. and SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (unaudited) September 30, December 31,
2007 2006 ASSETS Current assets: Cash $ 17,372,026 $6,216,822
Accounts receivable: Oil and gas revenues 15,505,694 7,201,902
Joint interest billings and other 5,543,145 2,294,237 Accounts
receivable from affiliated partnerships 3,484,948 1,742,174 Notes
receivable 860,000 - Prepaid expenses and other 466,734 352,515
Total current assets 43,232,547 17,807,650 Oil and gas properties,
successful efforts method: Proved properties 83,561,738 34,204,118
Unproved properties 4,369,539 1,643,041 Office and other equipment
996,574 292,297 Land 96,462 96,462 89,024,313 36,235,918 Less
accumulated depreciation, depletion and amortization (9,596,338)
(5,007,095) Net property and equipment 79,427,975 31,228,823 Other
assets: Equity in oil and gas limited partnerships 3,356,493
1,517,430 Notes receivable and other 1,323,174 113,123 $127,340,189
$ 50,667,026 LIABILITIES AND STOCKHOLDERS' EQUITY Current
liabilities: Accounts payable $5,944,391 $5,225,291 Accounts
payable to affiliated partnerships 5,934,142 2,201,141 Revenues and
royalties payable 16,798,617 7,347,702 Drilling advances 2,888,180
2,120,770 Accrued expenses payable 1,754,204 915,445 Commodity
hedges 941,987 1,685,938 Total current liabilities 34,261,521
19,496,287 Long-term debt - 5,000,000 Deferred income taxes
3,725,420 32,535 Asset retirement obligations 5,198,656 2,478,205
Stockholders' equity: Common stock, par value $.01 per share;
authorized 100,000,000 shares; issued and outstanding: 14,703,383
shares in 2007 and 4,858,000 shares in 2006 147,034 48,580
Additional paid-in capital 79,558,527 16,848,643 Accumulated other
comprehensive income (935,647) (1,679,388) Retained earnings
5,384,678 8,442,164 Total stockholders' equity 84,154,592
23,659,999 $127,340,189 $ 50,667,026 GEORESOURCES, INC. and
SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
Three Months Ended Nine Months Ended September 30, September 30,
2007 2006 2007 2006 Revenue: Oil and gas revenues $7,512,616
$3,661,985 $18,110,424 $10,687,455 Partnership management fees
300,915 63,651 712,735 247,189 Property operating income 399,803
368,090 1,082,093 766,560 Gain (loss) on sale of property and
equipment - 20,454 (15,218) 335,294 Partnership income (loss)
115,856 36,320 329,203 116,619 Interest and other 306,205 776,408
818,403 1,037,435 Total revenue 8,635,395 4,926,908 21,037,640
13,190,552 Expenses: Lease operating expense 2,367,829 1,018,179
5,683,099 2,892,956 Severance taxes 604,758 349,711 1,407,499
831,760 Re-engineering and workovers 301,354 152,003 734,426
330,477 Exploration - 52,287 - 483,808 General and administrative
expense 1,258,361 729,709 4,505,619 1,982,844 Depreciation,
depletion, and amortization 1,728,336 732,656 4,589,243 2,172,856
Hedge ineffectiveness 3,194 (188,646) (210) (365,875) Interest
25,096 135,958 380,423 174,074 Total expense 6,288,928 2,981,857
17,300,099 8,502,900 Income before income taxes 2,346,467 1,945,051
3,737,541 4,687,652 Income taxes: Current 553,159 - 649,190 -
Deferred 381,217 - 2,138,885 - 934,376 - 2,788,075 - Net income
$1,412,091 $1,945,051 $949,466 $4,687,652 Net income per share
(basic and diluted) $ 0.10 $0.40 $0.08 $0.96 Weighted average
shares outstanding (basic and diluted) 14,703,383 4,858,000
11,638,567 4,858,000
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 ext. 113, Web
site: http://www.georesourcesinc.com/
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