GEOI Georesources, Inc. (MM)

GeoResources, Inc., (Nasdaq: GEOI), today provided an operations update. The Company is continuing its full capital budget as planned. DRILLING RESULTS GeoResources continues its successful exploitation of the Austin Chalk formation in the Giddings Field, Grimes County, Texas and is presently completing the Bax #1 which is the fourth dual lateral well which was drilled to a vertical depth of 14,395 ft and included two horizontal laterals of 6,528 ft and 6,241 ft. The previously reported Keisler #2-H horizontal dual lateral well had an initial production rate in excess of 20 MMCFPD commencing on August 9, 2008, has produced in excess of 1.3 Bcf to date and is currently producing approximately 8 MMCFPD. Previously, the Company reported that the Jeff Haynie was completed for 17 MMCFPD. Since initial production on May 23, 2008, this well has produced 1.67 BCF and is still making about 5 MMCFPD. The Company has achieved a 100% success rate in drilling these Austin Chalk horizontal wells. The Company continues to pursue its development strategy and expects to spud the Hurst-Bay 1-H as a dual lateral within the next two weeks. The Company is the operator of these wells and holds a direct 7.2% working interest. In addition, an affiliated partnership owns an 82.8% working interest. The Company holds a 2% general partner interest in the partnership, which interest increases significantly in accordance with economic performance parameters under the terms of the partnership agreement. At present the Company has at least nine additional locations, including both dual and single laterals and pending continued technical evaluation, commodity price levels, successful leasing and acceptable well performance, GeoResources expects to retain the current drilling rig and crew and spud a new well approximately every 60-75 days. Drilling activity in the Bakken Shale play of Mountrail County, North Dakota remains active and successful, as reported by numerous operators and participants. Likewise, the Company continues to benefit from favorable results. After a recent period of production cutbacks due to oil pipeline capacity limitations, the Pathfinder #1-9H (5.1% WI) and Prowler #1-16H (6.2% WI) were returned to full production at the beginning of September at 1,297 BOPD and 539 BOPD, respectively. Additionally, the following wells commenced production since our last operations update: the Prospector #1-36H (5.1% WI) at 274 BOPD in July; Payara #1-21H (6.2% WI) at 403 BOPD in August; Voyager #1-28H (9.4% WI) at 743 BOPD in October and the Golden Eye #1-2H (4.1% WI) at 650 BOPD also in October. We currently are drilling the Bandit #1-29H (7.35% WI), moving on location to drill the Nightcrawler #1-17H (4.7% WI), and awaiting completion of the Peacemaker #1-28H (3.8% WI). The Company presently has an additional seven wells scheduled in this play with numerous others in process of being planned and permitted. The Company holds a 10-15% working interest in more than 26,000 acres in Mountrail County, North Dakota and is participating in numerous Bakken Shale wells through a joint venture with Slawson Exploration. Continuous drilling is anticipated throughout the remainder of 2008 and 2009. In addition, GeoResources presently has minor interests in 15 wells that are producing or in various stages of completion as well as an additional 19 that are scheduled or permitted by other operators. These small participations should result in valuable engineering and geological data, and while the Company concentrates on Slawson operated wells, it evaluates all available technical information while seeking to increase its position in this expanding play. As previously announced, the Company has unitized certain producing shallow oil fields in Bottineau County, ND for water-flood operations and is continuing these activities. The Company is continuing its capital expenditures, as planned. Phase two of the development plan, consisting of drilling additional injection and recovery wells and installation of facilities, is underway at the Starbuck Madison Unit which includes 6,619 gross acres and 6,346 net acres. The Company has a 95.88 % working interest and 81.22 % net revenue interest. Phase one, which included drilling injection wells and installing a water plant and flow lines for initial water injection, was completed in early 2008. The flood design includes two productive zones: the Midale (Mississippian Charles) and the Berentson (Mississippian Charles B-1) Zones, which are being flooded separately. Concurrent flood installation provides significant development cost economies. The Starbuck Midale has produced 584,000 Bbls on primary and the Berenson has produced 754,000 Bbls on primary, for total field production of 1,338,000 Bbls. The flood installation will capture and accelerate recovery of existing primary reserves, as well as capture incremental water flood reserves. Collectively, management estimates that the project has remaining primary and secondary reserves of more than 1.5 million Bbls and a development cost of under $5.00 per Bbl. The Company has also successfully unitized its SW Starbuck Field and intends to unitize its 71% owned NE Landa Field. The SW Starbuck Field, which includes 560 gross acres with a 97.52 % working interest and 75.42 % net revenue interest is being developed in connection with phase two of the larger Starbuck Madison Unit, which is in close proximity and can share certain facilities, thereby enhancing economics. Management believes that the economics of these projects remain attractive at reduced commodity prices. The West Sherwood prospect, the vertical Knox Farm 13-33 (75% Company working interest (�WI�)) was drilled and abandoned as a dry hole. At East Landa Field, a step out vertical well (Kjelshus 5-3: 100% WI) was drilled and plugged. The well encountered hydrocarbons in a structurally high position in the prospective zone, but the zone lacked sufficient reservoir qualities to result in commercial production. However, the geologic information obtained is being processed and may set up additional prospective drilling at an offsetting location. OKLAHOMA ACQUISITION The previously announced Oklahoma acquisition, which closed in June 2008, added approximately 100 drilling locations with the vast majority being proved undeveloped locations. The Company believes that the acreage provides significant exploration and development opportunities directly associated with the acquired interests and in regional proximity thereto. The Company has scheduled the first four wells for drilling commencing in the first quarter of 2009. HURRICANES GUSTAV AND IKE Production volumes for the third quarter were down approximately 15,800 net barrels of oil due to the subject hurricanes. Oil production started to be phased back in beginning in late October but is still not fully restored. At present, about 180 net BOPD is still shut in but is expected to be fully restored by mid-December. The Company has incurred additional operating and capital expenses as a result of the hurricanes. Estimated expenditures in the third and fourth quarter are expected to total about $1.1 million and we believe a significant portion will be covered by insurance. Amounts can not be determined with certainty at this time. CAPITAL BUDGET At present, the Company will continue its previously announced capital budget. Based on internal projections, Management believes the Company should be able to continue its capital budget out of discretionary cash flow, even if Nymex prices drop to $50.00 per Bbl and $5.00 per Mcf. ACQUISITIONS The Company believes that rapid and steep reductions in commodity prices has made the acquisitions market more attractive and accordingly is increasing efforts to pursue asset or corporate acquisitions. While there can be no assurance that the Company will acquire additional assets, acquisitions, when favorably priced, are an integral and important part of the Company�s business strategy. Further, a large portion of the Company�s capital budget is held by production operations and accordingly, drilling and development can be deferred if favorable acquisitions are located and closed. On November 5, 2008, the Company received notice from its bank that the Company�s borrowing base was being increased to $100 million. For more information, please refer to the Form 10-Q as and for the period ended September 30, 2008. Furthermore, the Company believes it has access to incremental capital either in the form of partnerships or corporate finance or both if it can locate favorable transactions. COMMENTS Frank A. Lodzinski, Chief Executive Officer of GeoResources, said, �Our drilling and development program continues to deliver positive results. We are pleased with our entry into Oklahoma, where we have considerable prior experience. Initial Oklahoma drilling will commence in the first quarter of 2009. In spite of the recent steep decline in commodity prices, we are forging ahead with our drilling programs and are continuing with our plans. We expect to continue to develop our assets and expand our acreage and prospect inventory, particularly in this environment when many are cutting back and acreage and asset valuations are declining. Even in this reduced price environment, our cash flows remain strong and it is probable that we will not have to reduce our capital program even if prices fall to $50 per Bbl. A large portion of our inventory is �held by production� and accordingly, can be deferred in favor of opportunities with lease expirations. We believe we can remain cash flow positive and fulfill all of our current lease obligations, without incremental borrowings, even with prices below $50 per Bbl. Accordingly, our borrowing capacity and access to additional capital can be used to fund acquisitions of acreage, producing assets or corporate entities, should attractive opportunities be located. We believe our diversified approach contributes to our strength and staying power and will allow the Company to continue to grow profitably.� 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 the Southwest and Gulf Coast, the Williston Basin and the Rocky Mountains. For more information, visit our website at 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, our Annual Report on Form 10-KSB/A for the year ended December 31, 2007, and any and all other 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).