GeoResources, Inc., (NASDAQ: GEOI), today announced its proved
reserves of crude oil and natural gas as of January 1, 2011. Based
on the prescribed Securities and Exchange Commission (“SEC”) rules,
proved reserves were estimated at 24.0 million barrels of oil
equivalent (“Mmboe”), being 60% oil and 74% proved developed. The
Company produced 1,060,000 barrels of oil and 4,789 Mmcf of gas or
approximately 1,858,000 barrels of oil equivalent for a production
growth of 11% for calendar year 2010 versus 2009. Overall our
production replacement rate was 280%. After production, on a net
basis, our proved reserves increased 3.3 Mmboe for an overall
growth rate of 16%, from January 1, 2010 to January 1, 2011. Oil
reserves increased 26% and gas reserves increased 4%, both net of
production. The GeoResources proved reserves as of January 1, 2011
were prepared by the independent reservoir engineering firm of
Cawley, Gillespie & Associates, Inc. in accordance with SEC
guidelines.
The following table indicates estimated proved SEC reserves by
category along with the present value of future cash flows before
income taxes, discounted at 10% (“PV 10%”), as of January 1,
2011.
SEC Proved Reserves – January 1, 2011
Barrels of
Oil Oil Gas Equivalents PV 10%
Value Reserve category: (Mbbl) (Mmcf)
(Mboe) (M$) Proved developed 11,231 39,097 17,748 $
308,113 Proved undeveloped 3,162 18,457 6,237 $ 70,186
Total 14,393 57,554 23,985 $
378,299
The current SEC rules require that the reserve calculations
utilize the unweighted average price on the first day of the month,
for the prior twelve months. Calculated prices used for reporting
at January 1, 2011 were $79.43 per barrel of crude oil and $4.37
per Mmbtu for natural gas, prior to adjusting for quality and basis
differentials.
The table below provides a reconciliation of PV 10% to
standardized measure of discounted future net cash flows (in
thousands) as of January 1, 2011. PV 10% is not a measure of
financial or operating performance under GAAP, nor should it be
considered in isolation or as a substitute for the standardized
measure of discounted future net cash flows as defined under
GAAP.
PV 10% Reconciliation to GAAP Standardized Measure
Present value of estimated future net revenues (PV
10%) $ 378,299 Future income taxes discounted at 10% 101,284
Standardized measure of discounted future net cash flows $
277,015
In addition to the proved reserves determined using SEC pricing,
we prepared estimates of our January 1, 2011 proved reserves
utilizing the five-year NYMEX forward curve prices. The following
table summarizes our total proved reserves as of January 1, 2011
under the NYMEX based pricing methodology:
NYMEX Forward Price Proved Reserves January 1, 2011
Barrels
of Oil Oil Gas Equivalents PV
10% Value Reserve category: (Mbbl) (Mmcf)
(MBOE) (M$) Proved developed 11,553 41,531 18,475 $
387,365 Proved undeveloped 3,320 19,551 6,578 $ 98,476
Total 14,873 61,082 25,053 $
485,841
The reserve estimates summarized in the above table are based on
the five year NYMEX forward prices for oil and natural gas quoted
on December 30, 2010. For crude oil, the prices from 2011-2015 were
$93.85, $93.71, $92.74, $92.27 and $92.48. For natural gas the
prices from 2011-2015 were $4.59, $5.08, $5.33, $5.49 and $5.64.
Thereafter, prices were held constant during the remaining life of
the reserves. Such prices were adjusted for estimated location and
quality differentials, as well as other factors that Company
management believes will impact realizable prices. Future
production and development costs are based on year-end costs with
no escalations. The reconciliation of NYMEX PV 10% value to GAAP
standardized measure results in the same standardized measure as
set forth above.
Partnership Reserves
In addition to the direct working interests reflected above,
GeoResources also holds a general partner and operating interest in
two legacy limited partnerships. The Company’s share of partnership
reserves are not reflected in its direct interests shown above. The
Company’s estimated net share of the affiliated partnerships’
reserves, PV 10% and standardized measure using SEC guidelines is
1.4 Mmboe (96% gas and 89% developed), $12.0 million and $8.1
million, respectively. Using the NYMEX forward curve, with the same
assumptions as above, reserves and PV 10% value are 1.4 Mmboe (96%
gas and 89% developed) and $15.9 million.
Comments
Frank A. Lodzinski, Chief Executive Officer of GeoResources,
said, “We are pleased with the increases for our proved reserves.
During 2010, we increased production 11%; replaced 280% of our
production and year-over-year increased our overall reserves by
16%, net of record production, with oil reserves growing by 26%.
The increase was achieved in spite of suspending our natural gas
drilling program and significant industry-wide delays for
completion equipment and services which impacted our Bakken
activities. As previously disclosed, we have increased our operated
acreage positions in the Bakken and Eagle Ford trends and recently
initiated drilling. We believe that these two projects have the
potential to provide significant reserve increases, as only nominal
proved reserves have been booked through December 31, 2010.”
About GeoResources, Inc.GeoResources, Inc. is an
independent oil and gas company engaged in the development and
acquisition of oil and gas reserves through an active and
diversified program that includes the acquisition, drilling and
development of undeveloped leases, purchases of reserves,
exploration and re-engineering activities, currently focused in the
Southwest, Gulf Coast, and the Williston Basin. For more
information, visit our website at www.georesourcesinc.com.
Disclosure Statement - The reserve and financial information
in the release is unaudited and subject to revision. Audited
financial results will be provided in our Annual Report on Form
10-K for the year ended December 31, 2010 currently planned to
be filed with the Securities and Exchange Commission by the middle
of March 2011.
Cautionary Statement - The SEC has established specific
guidelines related to reserve disclosures, including prices
used in calculating PV 10% and the standardized measure of
discounted future net cash flows. PV 10% is not a measure of
financial or operating performance under Generally Accepted
Accounting Principles (GAAP), nor should it be considered in
isolation or as a substitute for the standardized measure of
discounted future net cash flows as defined under GAAP. In
addition, alternate pricing methodologies, such as the Nymex
forward curve as set forth above are not provided for under SEC
guidelines and therefore do not represent GAAP.
Forward Looking Statements - Information included herein
contains forward-looking statements that involve significant risks
and uncertainties, including our need to replace production and
acquire or develop additional oil and gas reserves, intense
competition in the oil and gas industry, our dependence on our
management, volatile oil and gas prices and costs, uncertain
effects of hedging activities and uncertainties of our oil and gas
estimates of proved reserves and reserve potential, all of which
may be substantial. In addition, past performance is no
guarantee of future performance and results. All statements
or estimates made by the Company, other than statements of
historical fact, related to matters that may or will occur in the
future are forward-looking statements. Readers are encouraged to
read our December 31, 2009 Annual Report on Form 10-K and Form
10-K/A and our other documents subsequently 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 copies of filings
containing information about GeoResources, without charge, at the
SEC’s internet site (http://www.sec.gov).
There is no duty to update the statements herein.
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