GEOI Georesources, Inc. (MM)

GeoResources, Inc., (NASDAQ:GEOI), today announced its financial results for the quarter ended March 31, 2009, compared to the results for the same period in 2008.

For the three months ended March 31, 2009, the Company reported net income of $477,000, or $0.03 per share compared to $4.2 million or $0.29 per share in 2008. Total revenue decreased 39% to $14.6 million in the first quarter of 2009 compared to $23.9 million the same quarter in 2008. The average realized price of oil, including hedges, for the first quarter of 2009 was $54.00 per barrel compared to $81.00 per barrel in the first quarter of 2008, a decrease of 33%. The average realized price of natural gas, including hedges, was $4.12 per Mcf for the first quarter of 2009, compared to $7.73 per Mcf or 47% less than the first quarter of 2008.

Primarily, as a result of non-core planned property divestitures in 2008 and 2009, oil production in the first quarter of 2009 decreased to 177 MBbls from 200 MBbls in the prior year�s period, a decrease of 12%. Natural gas production decreased to 665 MMcf in the first quarter of 2009 from 809 MMcf in the first quarter of 2008. As reported in prior press releases, since the beginning of 2008, consistent with the business strategy of high-grading its asset portfolio, the Company sold non-core properties in Michigan, Louisiana, Oklahoma and Texas. These fields had sizable daily production rates, but limited upside potential and significant plugging and abandonment obligations. These properties produced approximately 400 BOPD and 750 MCFD at the time of their sale or approximately 47,000 BOE per quarter. Proceeds from divestitures were used to fund capital expenditures and reduce debt.

Earnings before interest, income taxes, depreciation, depletion and amortization, and exploration expense (�EBITDAX�) decreased 49% to approximately $6.2 million for the first quarter 2009 compared to $12.3 million in the prior year�s similar quarter. The following table reconciles reported net income to EBITDAX for the periods indicated and is summarized below in tabular form (in thousands, except per share information):

� EBITDAX (1) � � � � � Three Months Ended March 31, 2009 � � � 2008 � � � � Net income $ 477 $ 4,226 Add back: Interest expense 819 1,569 Income tax 360 2,596 Depreciation, depletion and amortization 4,468 3,877 Exploration expense � 80 � � � � � EBITDAX $ 6,204 � � � $ 12,268

(1) EBITDAX is defined as earnings before interest, income taxes, depreciation, depletion and amortization, and exploration expense. EBITDAX 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.

Comments

Mr. Frank Lodzinski, CEO and President commented, �Our results for the first quarter were in line with our expectations in this dramatically reduced commodity price environment and we have been able to achieve positive net income and substantial EBITDAX, in the amounts of $477,000 and $6.2 million, respectively. Our production in the first quarter declined from the prior year due to planned divestitures which have been previously announced and have improved our portfolio. We achieved approximately 95% of our production targets. This modest shortfall is a direct result of our first quarter divestiture and drilling and production activities in the Williston Basin. As previously announced, given prevailing economics in the first quarter, our Bakken development activities were reduced to a single rig and certain production was curtailed. In addition, completion of several new wells was deferred pending improved weather and cost reductions. We believe that our profitability and our EBITDAX will improve as a result of underlying reductions in lease operating expenses and additional hedging and forward sales arrangements which took effect on April 1, 2009. Specifically, we entered into certain forward sales contracts related to our oil production in the Williston Basin which provides for a fixed net realized price, after transportation and differentials, of $43.85 per Bbl on approximately 108,000 Bbls. This represents almost a $13.00 improvement over average realized prices in the first quarter. In addition, we have hedged additional gas quantities produced in our Southern Region at about $4.87, representing an increase of over $1.00 per Mcf. Reference is made to notes in our 10-Q describing these arrangements more fully. Financially, we have maintained positive working capital, substantial EBITDAX and we have retained a $100.0 million borrowing base with only $40.0 million outstanding. Accordingly, we believe we have the requisite �staying power� to survive and prosper in this cycle. We will continue to focus on cash flow and our bottom line while we continue to pursue our business plan.

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 primarily focused in three core areas � the Southwest, Gulf Coast, and the Williston Basin. 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 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).

� � GEORESOURCES, INC and SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share amounts) � � � � � � � � March 31, � � � December 31, 2009 2008 ASSETS (unaudited) � Current assets: Cash $ 7,059 $ 13,967 Accounts Receivable Oil and gas revenues 9,381 11,439 Joint interest billings and other 6,046 7,172 Affiliated partnerships 3,707 2,905 Notes receivable 120 120 Derivative financial instruments 8,309 8,200 Income taxes receivable 2,887 2,165 Prepaid expenses and other � 4,564 � � 3,923 � Total current assets � 42,073 � � 49,891 � � Oil and gas properties, successful efforts method: Proved properties 208,517 204,536 Unproved properties 2,415 2,409 Office and other equipment 752 1,025 Land � 96 � � 96 � 211,780 208,066 Less accumulated depreciation, depletion and amortization � (30,242 ) � (26,486 ) Net property and equipment � 181,538 � � 181,580 � � Equity in oil and gas limited partnerships 3,148 3,266 Derivative financial instruments 7,107 6,409 Deferred financing costs and other � 3,108 � � 2,388 � � $ 236,974 � $ 243,534 � � � � GEORESOURCES, INC and SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share amounts) � � � � � � March 31, � � � December 31, 2009 2008 (unaudited) LIABILITIES AND STOCKHOLDERS' EQUITY � Current liabilities: Accounts payable $ 6,702 $ 10,750 Accounts payable to affiliated partnerships 5,464 10,310 Revenue and royalties payable 11,591 11,701 Drilling advances 1,395 2,169 Accrued expenses 2,079 1,506 Derivative financial instruments � 2,220 � 1,572 Total current liabilities � 29,451 � 38,008 � Long-term debt 40,000 40,000 Deferred income taxes 19,198 17,868 Asset retirement obligations 5,291 5,418 Derivative financial instruments 916 1,245 � Stockholders' equity:

Common stock, par value $0.01 per share;

authorized 100,000,000 shares; issued and outstanding: 16,241,717

162 162 Additional paid-in capital 112,788 112,523 Accumulated other comprehensive income 7,664 7,283 Retained earnings 21,504 21,027 � � Total stockholders' equity � 142,118 � 140,995 � $ 236,974 $ 243,534 � GEORESOURCES, INC. and SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In thousands, except share and per share amounts) (unaudited) � � � � � � � � Three Months Ended March 31, 2009 2008 � Revenue: Oil and gas revenues $ 12,300 $ 22,463 Partnership management fees 298 312 Property operating income 458 314 Gain on sale of property and equipment 1,399 410 Partnership income 5 225 Interest and other � 105 � � 223 � Total revenue 14,565 23,947 � Expenses: Lease operating expense 4,390 5,791 Severance taxes 794 1,889 Re-engineering and workovers 981 697 Exploration expense 80 - General and administrative expense 2,095 1,784 Depreciation, depletion and amortization 4,468 3,877 Hedge ineffectiveness 49 1,518 Loss on derivative contracts 52 - Interest � 819 � � 1,569 � Total expense 13,728 17,125 � Income before income taxes 837 6,822 � Income tax expense (benefit): Current (734 ) 1,429 Deferred � 1,094 � � 1,167 360 2,596 � � Net income $ 477 � $ 4,226 � Net income per share (basic and diluted) $ 0.03 � $ 0.29 � Weighted average shares outstanding: Basic and diluted � 16,241,717 � � 14,703,383 � � GEORESOURCES, INC. and SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands, except share and per share amounts) (unaudited) � � � � � � � � Three Months Ended March 31, Cash flows from operating activities: 2009 2008 Net income $ 477 $ 4,226

Adjustments to reconcile net income to net cash provided

by operating activities:

Depreciation, depletion and amortization 4,468 3,877 Gain on sale of property and equipment (1,399 ) (410 ) Accretion of asset retirement obligations 61 131 Unrealized gain on derivative contracts (42 ) - Amortization of loss on canceled hedge contract 122 - Hedge ineffectiveness loss 49 1,518 Partnership income (5 ) (225 ) Partnership distributions 122 102 Deferred income taxes 1,094 1,167 Non-cash compensation 265 149 Changes in assets and liabilities: Decrease (increase) in accounts receivable 1,660 (4,306 ) Increase in prepaid expense and other (1,360 ) (74 ) Increase (decrease) in accounts payable and accrued expense � (9,378 ) � 1,086 � Net cash (used in) provided by operating activities (3,866 ) 7,241 � Cash flows from investing activities: Proceeds from sale of property and equipment 2,015 8,532 Additions to property and equipment � (5,057 ) � (13,039 ) Net cash used in investing activities (3,042 ) (4,507 ) � Cash flows from financing activities: Reduction of long-term debt � - � � (10,000 ) Net cash used in financing activities � - � � (10,000 ) � Net decrease in cash and cash equivalents � (6,908 ) � (7,266 ) � Cash and cash equivalents at beginning of period � 13,967 � � 24,430 � Cash and cash equivalents at end of period $ 7,059 � $ 17,164 � � Supplementary information: Interest paid $ 694 $ 1,584 Income taxes paid $ 25 $ 1,762