GEOI Georesources, Inc. (MM)

Our Board of Directors has nominated seven directors for election at this Annual Meeting to hold office until the next annual meeting and the election of their successors. All of the nominees currently are directors. Each agreed to be named in this proxy statement and to serve if elected. All of the nominees are expected to attend the 2011 Annual Meeting.

Our Articles of Incorporation provide that the number of directors shall not be less than three or more than ten. Our Bylaws allow the Board to set the number of directors subject to our Articles of Incorporation. In the election of directors, each proxy will be voted for each of the nominees listed in the table below unless the proxy withholds authority to vote for one or more of the nominees.

We have no reason to believe that any of the nominees will be unable or unwilling for good cause to serve if elected. However, Mr. Chandler has indicated that he will likely pursue personal interests within the next year and therefore it is unlikely that he will be able to fill his full term on the Board. Furthermore, if any nominee should become unable for any reason or unwilling for good cause to serve, proxies may be voted for another person nominated as a substitute by the Board, or the Board may reduce the number of directors.

Below is information about each nominee, including biographical data for at least the past five years and an assessment of the skills and qualifications of each nominee.

We are committed to high quality corporate governance, which helps us compete more effectively, sustain our success and build long-term shareholder value. The Board reviews the Company’s policies and business strategies, and advises and counsels the executive officers who manage the Company.

The full text of the charters of our Audit, Nominating and Compensation Committees and our Business Conduct and Code of Ethics can be found at www.georesourcesinc.com . Copies of these documents also may be obtained from our Corporate Secretary.

Governance is a continuing focus at the Company, starting with the Board and extending to management and all employees. In this section, we describe our key governance policies and practices. The Company is governed by a Board of Directors and committees of the Board that meet throughout the year. Directors discharge their responsibilities at Board and committee meetings and also through telephone contact and other communications with management.

Director Attendance

During 2010, our Board of Directors held two meetings. Each of the incumbent directors attended 100% of the meetings of the full Board and meetings of the committee(s) on which he served in 2010. In addition, the Board acts from time to time by unanimous written consent in lieu of holding a meeting. During 2010, the Board effected two actions by unanimous written consent.

While we do not have a formal policy regarding our Board members’ attendance at the Annual Meeting of Shareholders, we have historically scheduled a meeting of the Board on the same day as our annual meeting so our Board members typically attend the Annual Meeting of Shareholders, except in 2010. In 2010, Mr. Lodzinski and Mr. Chandler were the only members of our Board of Directors in attendance at our Annual Meeting of Shareholders.

Director Independence

The current Board consists of seven directors, two of whom are currently employed by the Company (Messrs. Lodzinski and Chandler). In April 2011, the Board conducted an annual review and affirmatively determined that all of the non-employee directors (Messrs. Joliat, Seaman, Vlasic, Voller and Whelley) are “independent” as that term is defined in the listing standards of NASDAQ. The Board made a subjective determination as to each independent director that no relationship exists; which, in the opinion of the Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. In making these determinations, the Board reviewed and discussed information provided by the Board and the Company with regard to each director’s business and personal activities as they may relate to the Company and its management. Further, the Board determined that Mr. Lodzinski is not independent because he is the President and Chief Executive Officer of the Company

and Mr. Chandler is not independent because he is an executive officer of the Company.

Board of Directors Diversity

The Board of Directors does not have a formal diversity policy. The Board considers candidates that will make the board as a whole reflective of a range of talents, skills, diversity and expertise.

Shareholder-Recommended Director Candidates

Our Nominating Committee will consider director candidates recommended by shareholders who are highly qualified in terms of business experience and be both willing and expressly interested in serving on the Board. Shareholders recommending candidates for consideration should send their recommendations, including the candidate’s name and information about the candidate’s qualifications to the GeoResources, Inc., Board of Directors, Nominating Committee, c/o Cathy Kruse, Corporate Secretary, P.O. Box 1505, Williston, North Dakota 58801-1505. Submissions must include sufficient biographical information concerning the recommended individual, including age, educational background, employment history for at least the past five years indicating employer’s names and description of the employer’s business and any other biographical information that would assist the Nominating Committee in determining the qualifications of the individual. The Nominating Committee will consider all candidates, whether recommended by shareholders or members of management. The Nominating Committee will consider recommendations received by a date not later than 120 calendar days before the date our proxy statement was released to shareholders in connection with the prior year’s annual meeting for nomination at that annual meeting. The Board will consider nominations received beyond that date at the annual meeting subsequent to the next annual meeting.

Board Leadership

The Board is responsible for the control and direction of the Company. The Board represents the Company’s shareholders and its primary purpose is to build long-term shareholder value. Mr. Lodzinski serves as Chairman of the Board, President and Chief Executive Officer of the Company. The Board believes that Mr. Lodzinski is best situated to serve as Chairman because he is the director most familiar with the Company’s business and industry and is also the person most capable of effectively identifying strategic priorities and leading the discussion and execution of corporate strategy. In this combined role, Mr. Lodzinski is able to foster clear accountability and effective decision making. The Board believes that the combined role of Chairman and CEO strengthens the communication between the Board and management and provides a clear roadmap for shareholder communications. Further, as the individual with primary responsibility for managing day-to-day operations, Mr. Lodzinski is best positioned to chair regular Board meetings

and ensure that key business issues and risks are brought to the attention of our Board and Audit Committee. We therefore believe that the creation of a lead independent director position is not necessary at this time.

Board Risk Oversight

Our Board has ultimate responsibility for general oversight of risk management processes. The Board receives regular reports from Mr. Lodzinski on areas of risk facing the Company. Our risk management processes are intended to identify, manage and control risks so that they are appropriate considering our scope, operations and business objectives. The full Board (or the appropriate Committee in the case of risks in areas for which responsibility has been delegated to a particular Committee) engages with the appropriate members of management to enable its members to understand and provide input to and oversight of our risk identification, risk management and risk mitigation strategies. The Audit Committee also meets without management present to, among other things, discuss the Company’s risk management culture and processes. In the event, a Committee receives a report from a member of management regarding areas of risk, the Chairman of the relevant Committee will report on the discussion to the full Board to the extent necessary or appropriate. This enables the Board to coordinate risk oversight, particularly with respect to interrelated or cumulative risks that may involve multiple areas for which more than one committee has responsibility.

Compensation Committee Risk Assessment

The Compensation Committee reviewed and discussed an internal risk assessment of the Company’s executive and non-executive compensation programs and the outcomes of such assessment. Based on such review, the Compensation Committee believes that the Company’s compensation programs (i) do not motivate our executives or our non-executive employees to take excessive risks, (ii) are aligned with shareholders’ best interests, and (iii) are not reasonably likely to have a material adverse effect on the Company. Our

compensation programs are designed to support and reward appropriate risk taking and include the following:

Communications with Directors

Shareholders and other interested parties may communicate with any of our independent directors, including Committee Chairs, by using the following address:

GeoResources, Inc.

Board of Directors

c/o Cathy Kruse, Corporate Secretary

P.O. Box 1505

Williston, North Dakota 58801-1505

Email: independentdirectors@georesourcesinc.com

The Corporate Secretary of the Company reviews communications to the independent directors and forwards the communications to the independent directors as appropriate. All such communications should identify the author as a shareholder and clearly state whether the intended recipients are all members of the Board or just certain specified individual directors. Our Corporate Secretary will make copies of all such communications and circulate them to the appropriate director or directors. Communications involving substantive accounting or auditing matters will be immediately forwarded to the Chair of the Audit Committee. Communications that pertain to non-financial matters will be forwarded promptly to the appropriate committee. Certain items that are unrelated to the duties and responsibilities of the Board will not be forwarded such as: business solicitation or advertisements; product related inquiries; junk mail or mass mailings; resumes or other job related inquiries; spam and overly hostile, threatening, potentially illegal or similarly unsuitable communications.

Overview. To assist it in carrying out its duties, the Board has delegated certain authority to an Audit Committee,

Nominating Committee, Compensation Committee and Executive Committee as the functions of each are described

below. Each member of the Audit, Compensation and Nominating Committees has been determined by the Board to be “independent” for purposes of the listing standards of NASDAQ and the rules of the SEC, including the heightened “independence” standard required for members of the Audit Committee.

Audit Committee. The Audit Committee provides oversight of: the Company’s accounting policies, internal controls, financial reporting practices and legal and regulatory compliance. Among other things, the Audit Committee: appoints the independent auditor and evaluates its independence and performance; maintains a line of communication between the Board, the Company’s financial management and the independent auditor; and oversees compliance with the Company’s policies for conducting business, including ethical business standards. Our Board of Directors has determined that Mr. Voller qualifies as an “audit committee financial expert” as that term is defined in the listing standards of NASDAQ and the applicable rules of the SEC.

Nominating Committee. The Nominating Committee nominates board candidates based on whom they believe will be effective in serving the long-term interests of the Company and its shareholders. Candidates are evaluated based upon their backgrounds and the need for any required expertise on the Board and its committees.

Compensation Committee. The Compensation Committee oversees the development and administration of the Company’s compensation policies and programs. The primary function of this Committee is to review and approve executive compensation and benefit programs. Additionally, this Committee approves the compensation of our named executive officers, including the Chief Executive Officer and reviews the Compensation Discussion and Analysis and prepares a compensation committee report for inclusion in our proxy statements. The Compensation Committee has not utilized any compensation consultants to date, but it expects to retain such a consultant during 2011 to assist the Committee in oversight and review of compensation policies of the Company as it goes forward with its growth strategy. Our Chief Executive Officer is expected to recommend to the Compensation Committee the compensation for our other named executive officers.

Executive Committee. The Executive Committee is a working committee that is assigned regular tasks by our Board. A charter has not been adopted for the Executive Committee.

Business Conduct and Code of Ethics

Our Board of Directors has adopted a Business Conduct and Code of Ethics (“Code of Ethics”), which provides general statements of our expectations regarding ethical standards that we expect our directors, officers and employees to adhere to

while acting on our behalf. Among other things, the Code of Ethics provides that:

Our Code of Ethics also contains procedures for employees to report, anonymously or otherwise, violations of the Code of Ethics.

Policies and Procedures for Approval of Related Party Transactions

Our officers and directors are required to obtain Audit Committee approval for any proposed related party transactions. In addition, our Code of Ethics requires that each director, officer and employee must do everything he or she reasonably can to avoid conflicts of interest or the appearance of conflicts of interest. Our Code of Ethics states that a conflict of interest exists when an individual’s private interest interferes in any way or even appears to interfere with our interests and sets forth a list of broad categories of the types of transactions that must be reported to our Board. Under our Code of Ethics, we reserve the right to determine when an actual or potential conflict of interest exists and then to take any action we deem appropriate to prevent the conflict of interest from occurring.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), requires the Company’s directors and named executive officers, and persons who beneficially own more than ten percent of our common stock, to file initial reports of ownership and reports of changes in ownership of our common stock and our other equity securities with the SEC. As a practical matter, the Company assists its directors and officers by monitoring transactions and completing and filing Section 16 reports on their behalf. Based solely on a review of the copies of such forms in our possession and on written representations from reporting persons, we believe that during 2010 all of our named executive officers and directors filed the required reports on a timely basis under Section 16(a) of the Exchange Act.

Reasons for and Explanation of Proposal

Our Board has unanimously approved for submission to a vote of the shareholders a proposal to amend the GeoResources, Inc. Amended and Restated 2004 Employees’ Stock Incentive Plan (as it presently exists prior to the proposed amendments, the “2004 Plan”). As proposed to be amended pursuant to this Item 2, the plan will be referred to as the “Restated 2004 Plan” and is attached to this proxy statement as Annex A.

Our Board continues to believe that stock-based and other types of incentives are important factors in attracting, retaining and rewarding officers, employees, directors and consultants, and closely aligning their financial interests with those of our shareholders. Our Board further believes that the added flexibility made available as a result of the proposed amendments to the 2004 Plan will enhance the ability to attract and retain effective and capable officers, employees, directors and consultants who will add to our continued growth and success.

Summary of the Amendments

The Restated 2004 Plan will, among other things, increase the number of shares of common stock reserved for issuance under the plan from 2,000,000 shares (under the 2004 Plan) to 3,250,000 shares (as provided in the Restated 2004 Plan). As of April 25, 2011, we have 447,500 shares remaining under the 2004 Plan that may be used for grants. One of the major reasons for increasing the number of shares authorized for issuance, as provided in the Restated 2004 Plan, is to accommodate the new and additional employees of the Company as we continue grow.

In addition to this increase in the number of shares, the Board is proposing other amendments to the Restated 2004 Plan to add flexibility and bring the Restated 2004 Plan’s benefits more in line with current industry practices among our peer group with regard to stock-based and other types of incentive compensation.

Among other things, the Restated 2004 Plan will allow for recipients of awards to be granted performance units, including restricted stock units. Under these types of awards, recipients will be provided with the right to receive a specified amount of cash and/or shares of our common stock upon achieving performance goals established by the Compensation Committee. At this time the Compensation Committee has no plans to award performance units in the event the amendments to the 2004 Plan are approved and adopted by the shareholders. For the full language of the sections of the Restated 2004 Plan relating to performance units, see Section 12 of Annex A attached hereto.

In addition the 2004 Plan is proposed to be amended such that in the event of a change in control of the Company in which the Company is not the surviving corporation or which results in the acquisition of substantially all of the Company’s outstanding common stock by third parties or a sale of all or substantially all

of the Company’s assets, the Compensation Committee will have the discretion to provide for the termination of all outstanding options granted under the 2004 Plan. Provided, however, if any of the foregoing transactions follow a change in control of the Company or would give rise to a change in control, no outstanding option may be terminated prior to the expiration of 20 days following the latter of (i) the date the award become fully exercisable and (ii) the date on which the award recipient received written notice of such a transaction.

Further, the proposed amendments to the 2004 Plan provide that a 2004 Plan participant’s rights with respect to awards will be subject in all events to (i) any rights the Company may have under any recoupment policy or (ii) any right or obligation that the Company may have regarding the “clawback” of “incentive-based compensation” under Section 10(D) of the Securities Exchange Act of 1934 and regulations adopted thereunder.

Our management, employees, directors and consultants will be eligible to participate in the Restated 2004 Plan. However, it is not determinable at this time who will receive what stock options or other awards under the Restated 2004 Plan, nor what their participation would have been for the past year if the Restated 2004 Plan had been in place.

Summary of the Restated 2004 Plan

The principal provisions of the Restated 2004 Plan are summarized below. This summary is qualified in its entirety by reference to the actual Restated 2004 Plan, which includes the amendments as proposed in this proxy statement.

Administration. The Restated 2004 Plan vests broad powers in our Compensation Committee, which is comprised solely of directors who the Board has determined, are “independent” pursuant to the listing standards of NASDAQ. Except when limited by the terms of the Restated 2004 Plan, the Compensation Committee has the authority to, among other things: select the persons to be granted awards; determine the type, size and term of awards; determine the time when awards will be granted and any conditions for receiving awards; establish performance objectives and conditions for earning awards; determine whether such performance objectives and conditions have been met; and amend the plan at any time.

Under the Restated 2004 Plan, the Compensation Committee has discretion in making adjustments to outstanding awards under the Restated 2004 Plan; provided, however, that without shareholder approval, the Board is not permitted to increase the number of shares of common stock available for issuance under the Restated 2004 Plan, reduce the exercise price of a previously granted stock option or replace a previously granted stock option with a substitute stock option having a lower exercise price. Nevertheless, the Restated 2004 Plan specifically provides the Compensation Committee with discretion to make equitable

adjustments or substitutions with respect to the number, kind and price of shares subject to outstanding awards and to the number of shares available for issuance under the Restated 2004 Plan in the event of certain corporate events or transactions, including, but not limited to, stock splits, mergers, consolidations, spin-offs or other distribution of stock or property of the Company, reorganization, or liquidation.

The Restated 2004 Plan is not a tax-qualified deferred compensation plan under Section 401(a) of the Internal Revenue Code of 1986, as amended (the “Code”) and is not subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended.

Types of Awards. The Restated 2004 Plan provides for the grant of five basic types of awards to key participants selected by the Compensation Committee: (i) stock options; (ii) restricted stock; (iii) performance units, including restricted stock units (“RSUs”); (iv) stock appreciation rights (“SARs”); and (v) management incentive awards, payable in cash, stock and/or restricted stock, or any combination thereof. In addition, the Restated 2004 Plan gives the Compensation Committee discretion to craft other types of awards as it deems appropriate.

Stock Options . Options granted under the Restated 2004 Plan may be “incentive stock options” within the meaning of Section 422 of the Code or nonqualified stock options. The Restated 2004 Plan provides for grants of stock options with an exercise price of not less than 100% of the fair market value (or not less than 110% of the fair market value in the case of incentive stock options granted to persons holding more than 10% of the Company’s total combined voting power) of a share of common stock on the date of grant. It is intended that options granted under the Restated 2004 Plan will qualify as “performance-based compensation” under Section 162(m) of the Code; therefore, we should be entitled to a tax deduction for amounts paid under the Restated 2004 Plan, subject to the other conditions of Section 162(m) of the Code. Options may be exercised by giving written notice to the Company and by tendering payment of the exercise price. The option exercise price is payable in cash or, with the consent of the Compensation Committee, in the form of shares of common stock or through a net cashless exercise of the option, which involves the cancellation of a portion of the option to cover the cost of exercising the balance of the option. All unexercised options terminate ten years after the date of grant, or earlier in the event of termination of employment.

Restricted Stock and RSUs . The Restated 2004 Plan allows for the grant of shares of restricted stock as well as RSUs. An award of restricted stock is a grant of outstanding shares of common stock which are subject to contractual restrictions, such as vesting conditions. RSUs represent a right to receive from the Company, upon fulfillment of any applicable conditions, either a specified number of shares of common stock or a cash payment equal to the market value (at the time of the distribution) of a specified number of shares of common stock. Whether RSUs are payable in cash and/or common stock is determined by the Compensation Committee in its discretion. Generally, shares of restricted stock and RSUs that are not vested at the time of an employee’s termination of employment will then be forfeited.

Performance Units . The Restated 2004 Plan provides for the grant of performance units to participants under the Restated 2004 Plan selected by the Compensation Committee. Performance units, which include RSUs, provide the recipient with the right to receive a specified amount of cash and/or shares of common stock upon achievement of performance goals specified by the Compensation Committee.

SARs . The Restated 2004 Plan provides for the grant of SARs to key employees selected by the Compensation Committee. These awards are intended to mirror the benefit the employee would have received if the Compensation Committee granted the employee a stock option, may be awarded independently or in tandem with a stock option and may be settled in cash or common stock.

Management Incentive Awards . The Restated 2004 Plan provides for the grant of management incentive awards to key employees as approved by the Compensation Committee. Management incentive awards consist of the right to receive a specified amount of cash, common stock or restricted stock upon the achievement of performance goals approved by the Compensation Committee. It is expected that these awards would consist of two types of awards. One type of management incentive award would be an annual incentive award payable as all cash or partly in cash and partly in stock and/or restricted stock. The performance measure for this type of award consists of a combination of individual performance and business performance targets approved by the Compensation Committee at the beginning of each award cycle. The second type of management incentive award would contain a long-term incentive award payable partly in cash based on the achievement of corporate objectives over a several year period, and partly in restricted stock with a several year vesting period. This second type of award is generally coupled with a grant of stock options that vest over a several year period.

Eligibility. Key employees, directors and consultants of the Company and its divisions, subsidiaries and affiliates (including partnerships, joint ventures or other entities in which the Company has a substantial investment) are eligible to be granted awards under the Restated 2004 Plan.

Shares of Stock Subject to the Restated 2004 Plan. As set forth above, the number of shares of our common stock reserved for issuance under the Restated 2004 Plan will be increased from 2,000,000 to 3,250,000 shares.

No participant may receive an award under the Restated 2004 Plan in any calendar year with respect to more than 500,000 shares of common stock, or the dollar value of more than 500,000 shares of common stock.

On April 25, 2011, the closing price per share of our common stock on the Nasdaq Global Select Market was $28.30.

Recycling of Shares. If an award is forfeited, if an option or SAR expires prior to being exercised or if an award is settled in cash, the shares subject to that award will again become available for issuance under the Restated 2004 Plan.

Similarly, if a number of shares of common stock otherwise

deliverable pursuant to an award are not delivered to a participant (as in the case of stock options, SARs, or RSUs) or are tendered to the Company (as in the case of restricted stock) because such shares are used to satisfy any tax withholding obligation arising in connection with the award, such number of shares will again become available for issuance under the Restated 2004 Plan. Outstanding shares of common stock delivered by a participant to pay the exercise price of stock options will not be recycled and will accordingly not again become available for issuance under the Restated 2004 Plan.

Federal Tax Consequences. Under the Code as currently in effect, a grant under the Restated 2004 Plan of stock options, restricted stock, RSUs, performance units or SARs would have no federal income tax consequence at the time of grant. The payment of incentive awards in shares of common stock or cash, or both, is taxable to a participant as ordinary income. Upon exercise of a nonqualified stock option, the excess of the fair market value of the stock at the date of exercise over the exercise price is taxable to a participant as ordinary income. Exercise of an incentive stock option has no federal income tax consequences at the time of exercise absent a “disqualifying disposition,” or the imposition of the alternative minimum tax. A “disqualifying disposition” occurs if the participant disposes of stock acquired upon exercise of an incentive stock option within one year after the date it was acquired or within two years after the date of grant of the incentive stock option through exercise of which the participant acquired the stock. Unless the participant elects to recognize its value as income at the time of the grant, restricted stock is taxable to a participant as ordinary income in the year it becomes vested. RSUs are taxable to the participant as ordinary income when the shares of common stock or cash with respect to the award are delivered to the participant. Delivery of shares or cash to participants under RSUs occurs either upon vesting or upon conclusion of any applicable deferral period, such as upon retirement from (or other termination of service on) the Board in the case of RSUs granted to Board members. Upon a sale of common stock acquired under the

Restated 2004 Plan that is not a disqualifying disposition, participants realize long-term or short-term gain or loss, and the Company receives no further deduction. Performance units will generally result in taxable income to the recipient upon payment of compensation pursuant to the award, or, if earlier, when such compensation is credited, set aside, or otherwise made available to the employee. Generally, no income will be recognized by the holder of an SAR until the appreciation is transferred to the employee pursuant to the exercise of the SAR. All amounts taxable as ordinary income to participants under the Restated 2004 Plan in respect of awards are expected to be deductible by the Company as compensation, subject to the limitations of Section 162(m) of the Code.

Adjustments. The Compensation Committee may adjust the awards of any participant or performance measures. To the extent that such discretion subjects the Company to the limitation on its tax deduction of a participant’s compensation as set forth in Section 162(m) of the Code, the Compensation Committee believes that it is in the best interest of the Company and its shareholders to preserve the Compensation Committee’s authority to so act and that, in any event, such limitation should not have a material effect on the Company’s tax liability or earnings.

Change in Control. In the event of a change in control of the Company, the vesting of awards granted under the Restated 2004 Plan will be fully accelerated and the Compensation Committee may, in its discretion, make adjustments, substitutions and/or settlements of outstanding awards.

Equity Compensation Plan Information

The following table provides information as of April 29, 2011, regarding compensation plans (including individual compensation arrangements) under which our equity securities are authorized for issuance. The table includes information regarding the 2004 Plan.

There were not any employee options exercised during fiscal years 2007, 2008 or 2009. In fiscal year 2010, options to acquire 33,150 shares were exercised at prices ranging from $8.50 to $10.00 per share. From January 1, 2011 through April 7, 2011, options to acquire 566,864 shares were exercised at prices ranging from $8.27 to $22.50. At this time, the Compensation Committee has not determined whether any awards will be granted under the Restated 2004 Plan to directors, named executive officers or employees.

Approval by the Shareholders of the Amendment

Approval of the Restated 2004 Plan will require the affirmative vote of a majority of the shares represented in person or by proxy at the Annual Meeting and entitled to vote thereon, assuming a quorum is present. In the event that the Restated 2004 Plan is not approved by our shareholders at the Annual Meeting, the Amendment to the 2004 Plan will not go into effect.

Our Board is committed to high quality governance. As a part of that commitment, and in accordance with SEC rules, our shareholders are being asked to approve an advisory resolution on the compensation of our named executive officers, as reported in this proxy statement.

As described in detail under the heading “Compensation Discussion and Analysis,” we seek to closely align the interests of our named executive officers with the interests of our shareholders. Our compensation programs are designed to reward our named executive officers for the achievement of short-term and long-term strategic and operational goals and the achievement of increased total shareholder returns, while at the same time avoiding the encouragement of unnecessary or excessive risk-taking.

The Company set many records in fiscal year 2010. Our activities added to our positive operating results, including:

This proposal, commonly known as a “say on pay” proposal, gives you the opportunity to endorse or not endorse our fiscal year 2010 executive compensation program and policies for the named executive officers through the following resolution:

RESOLVED, that shareholders of GeoResources approve, on an advisory basis, the compensation of the Company’s named executive officers set forth in the Compensation Discussion and Analysis, the Summary Compensation Table and the related compensation tables and narrative in this proxy statement.

This vote is not intended to address any specific item of compensation, but rather our overall compensation policies and procedures relating to our named executive officers. Accordingly, your vote will not directly affect or otherwise limit any existing compensation or award arrangement of any of our named executive officers. Because your vote is advisory, it will not be binding upon the Board and the Compensation Committee. Our Board, including the Compensation Committee, will, however, take into account the outcome of the “say on pay” vote when considering future compensation arrangements.

In Item 3 above, we are asking shareholders to vote on an advisory resolution on executive compensation. Pursuant to recently adopted Section 14A of the Exchange Act, in this Item 4 we are asking shareholders to vote on whether future advisory votes on executive compensation should occur every year, every two years or every three years. Shareholders will be able to specify one of four choices for this proposal on the proxy card: one year, two years, three years or abstain. Shareholders are not voting to approve or disapprove the Board’s recommendation. This advisory vote on the

frequency of future advisory votes on executive compensation is non-binding on our Board.

Our Board understands that there are different views as to what is an appropriate frequency for advisory votes on executive compensation. Our Board has discussed this issue and believes that a majority of our shareholders would prefer an annual vote. Our Board of Directors is therefore recommending that shareholders vote FOR holding the advisory vote on executive compensation EVERY YEAR.

Directors who are employees of the Company receive no additional compensation for serving on the Board. Non-employee directors are compensated for their service on the Board as described below. One of our non-employee directors, Mr. Seaman is not currently permitted by his employer to accept any compensation for his service on our Board.

Retainer Fees

The Compensation Committee reviews our director compensation periodically and recommends changes to the Board, when it deems them appropriate.

The following table describes the components of compensation for non-employee directors in effect during 2010:

Stock Option Grants

On February 3, 2009, each then non-employee director was granted stock options under the 2004 Plan to purchase 40,000 shares of common stock with exercise prices of $8.50 for 20,000 shares and $10.00 per share for the remaining 20,000 shares. The stock options vest equally between the two exercise prices in equal annual installments over a period of four years from the date of grant. The options have a term of 10 years and are subject to the terms and conditions of the 2004 Plan. The February 3, 2009, closing price of our common stock was $7.62 per share.

On April 7, 2010, the Compensation Committee granted stock options under the 2004 Plan to Mr. Whelley, a non-employee director who was appointed to the Board of Directors on March 30, 2010, to purchase 40,000 shares of common stock with exercise prices of $17.50 per share for 20,000 shares and $20.00 per share for the remaining 20,000 shares. The stock options vest equally between the two exercise prices in equal annual installments over a period of four years from the date of grant. The options have a term of 10 years and are subject to the terms and conditions of the 2004 Plan. The April 7, 2010, closing price of our common stock was $17.27 per share.

Overview

The following Compensation Discussion and Analysis, or CD&A, provides information about the compensation program for our principal executive officer, principal financial officer and our other three most highly-compensated executive officers (collectively, the “named executive officers” or “NEOs”), and is intended to place in perspective the information contained in the executive compensation tables that follow this discussion. This CD&A provides a general description of the material elements of our compensation program and specific information about its various components.

Although this CD&A focuses on the information in the tables below and related footnotes, as well as the supplemental narratives relating to the fiscal year ended December 31, 2010, we also describe compensation actions taken after the last completed fiscal year to the extent such discussion enhances the understanding of our named executive officer compensation disclosure.

Compensation Philosophy and Objectives

We operate in a highly competitive and challenging environment and must attract, motivate and retain highly talented individuals with the requisite technical and managerial skills to implement our business strategy. The objectives of our compensation program are to:

Base Salary. Base salary is the principal fixed component of our compensation program and is generally reviewed in the first quarter each year. It provides our named executive officers with a regular source of income to compensate them for their day-to-day efforts in managing the Company. Base salary is primarily used to attract and retain highly talented individuals. Base salary varies depending on the named executive officer’s experience, responsibilities, education, professional standing in the industry, changes in the competitive marketplace and the importance of the position to the Company.

In April 2011, the Compensation Committee reviewed the compensation of our named executive officers in relation to the compensation of executive officers of companies in our peer group and determined that our named executive officers received compensation that was materially less than the executive officers in the peer group. Accordingly, the Compensation Committee adjusted the salaries of our named executive officers primarily to maintain salaries in the range of the peer group. Although increases in base salary for Messrs. Lodzinski, Ehler, Anderson and Mury were significant, the Compensation Committee believes adjustments were required as our base salaries lagged behind competitors and the adjusted base salaries are well within reason. The following table shows the base salaries for our named executive officers in 2010 and 2011 (effective beginning April 1, 2011):

Short-Term Incentives. Short-term incentive compensation is the short-term variable portion of our compensation program and is based on the principle of pay-for-performance. Short-term incentives have historically been reviewed in the first quarter of each year or at the end of the fourth quarter. The

objective of short-term incentives is to reward our named executive officers based on the performance of the Company as a whole and the contributions of the individual named executive officer in relation to our success.

The evaluation of the Company’s performance is based on a macro review of the Company at year-end in comparison to the prior year, including the following financial metrics: share price, production; reserve growth; cash flow per share; earnings before interest, tax, depreciation, depletion, amortization and exploration expenses (“EBITDAX”) per share; earnings per share; and cost containment. Additionally, the price of oil and gas will be considered as a result of their cyclical nature and correlation to our business. The Compensation Committee reviews all of these factors without assigning any specific weight to any of them.

The second part of the evaluation is the individual contribution by the named executive officer in relation to the Company’s performance. This includes an analysis of each named executive officer’s hard work, individual responsibility and productivity in relation to the Company’s reserve growth, performance and profitability for the fiscal year. These are broad parameters and any given individual’s contribution to increases in reserve growth, Company performance and profitability ultimately is determined qualitatively. The Compensation Committee subjectively reviews all of the above factors without assigning any specific weight to any factor and without using any specific formula or calculation to determine and approve short-term incentive grants as it deems appropriate.

In December 2010, the Compensation Committee reviewed the performance of the Company over the course of 2010 in relation to 2009 and determined that the Company had successfully expanded activities relating to the Bakken shale and Eagle Ford shale, as well as successfully achieving increases in production, cash flow and net income. Accordingly, the Compensation Committee awarded cash bonuses to our named executive officers in recognition of their individual efforts and performance, in recognition of the financial and operating results realized by the Company in 2010 and also as consideration of the fact that our compensation program has lagged behind our

competitors. The following table shows the cash bonuses paid to our named executive officers in 2009 and 2010.

Long-Term Incentives. Long-term incentives are provided to our named executive officers under the Amended and Restated 2004 Employees’ Stock Incentive Plan (the “2004 Plan”), which was approved by our shareholders in March 2007. These incentives are intended to align the interests of shareholders with employees by providing employees with incentive to perform technically and financially in a manner that promotes total shareholder return. Furthermore, we believe that long-term incentives create an incentive for future performance and create a retention incentive. In determining long-term incentives, the Compensation Committee considers a named executive officer’s potential for future successful performance and leadership as part of the executive management team, taking into account past performance and leadership as a key indicator.

Under our 2004 Plan, the Compensation Committee has the flexibility to choose between a number of forms of long-term incentive compensation, including stock options, stock appreciation rights, restricted stock awards, performance units, performance shares, or other incentive awards. Historically, the Compensation Committee has primarily used stock options. In April 2011, consistent with past practice of periodically addressing long-term incentive compensation, the Compensation Committee reviewed the modifications to the base salaries and the status of the outstanding unvested stock options of our named executive officers in relation to the total compensation to be received by our named executive officers. As a result, the Compensation Committee granted restricted stock awards under our 2004 Plan to four of our named executive officers. One-third of the shares will vest on the first anniversary of the grant date and the remaining two-thirds will vest on a pro-rata monthly basis over the remaining two years subject to the named executive officer’s continued employment. Recognizing that we are constantly competing for the most talented individuals in our industry, we granted these restricted stock awards, to promote retention and future long-term performance. The restricted stock awards were granted to our named executive officers on April 29, 2011, as set forth below:

Other Benefits . All employees may participate in our 401(k) Retirement Savings Plan (“401(k) Plan”) established many years ago. Each employee may make before-tax contributions in accordance with the limits of the Internal Revenue Service. We provide this 401(k) Plan to help our employees attain financial security by providing them with a program to save a portion of their cash compensation for retirement in a tax efficient manner. Our matching contribution is an amount equal to 100% of the employee’s elective deferral contribution not to exceed 4% of the employee’s compensation.

All full time employees, including our named executive officers, may participate in our health and welfare benefit programs, including medical, dental and vision care coverage, disability insurance and life insurance.

Roles of our CEO and the Compensation Committee

Our Compensation Committee is comprised solely of independent directors and has overall responsibility for the compensation of our named executive officers. The Compensation Committee monitors our director and named executive officer compensation and benefit plans, policies and programs to insure that they are consistent with our compensation philosophy and objectives, along with our corporate governance guidelines. Our Chief Executive Officer, Mr. Lodzinski, makes recommendations to the Compensation Committee regarding the base salary, short-term and long-term incentive compensation with respect to the named executive officers (other than himself) based on his analysis and assessment of their performance. Such officers are not present at the time of these deliberations. The Compensation Committee, in its discretion, may accept, modify or reject any or all such recommendations. The Compensation Committee independently determines the salary, short-term and long-term incentive compensation for our Chief Executive Officer with limited input from him. The Compensation Committee makes periodic awards to our named executive officers under our 2004 Plan.

Factors Considered in Setting Executive Compensation

To achieve the objectives of our compensation program, the Compensation Committee believes that the compensation of each of our named executive officers should reflect the performance of the Company as a whole and the contributions of the individual named executive officer in relation to our success. In other words, our compensation program is based on the idea of pay for performance. The following is a summary of the factors considered in setting compensation for our named executive officers in addition to the factors discussed above under each element of our compensation program.

Review of Peer Group Compensation Data. The Compensation Committee periodically reviews survey and peer group compensation information in monitoring our compensation program, including the types and levels of compensation of executives in a peer group of companies in the exploration and production sector. The peer group was selected based on an assessment and determination that they are reasonably comparable to the Company in terms of business scope, market capitalization, total annual revenues and which

compete with the Company for talent. We use this peer group information as a point of reference, but do not benchmark or target our compensation levels against our peer group. The following companies comprise the peer group reviewed by the Compensation Committee: Abraxas Petroleum Corporation; Approach Resources, Inc.; Callon Petroleum Company; Carrizo Oil & Gas, Inc.; Crimson Exploration Inc.; Endeavour International Corporation; Evolution Petroleum Corporation; Gastar Exploration Ltd., GeoMet, Inc.; GMX Resources Inc.; Goodrich Petroleum Corporation; Kodiak Oil & Gas Corp; Magnum Resources Corporation; NGAS Resources, Inc.; Petroleum Development Corporation; RAM Energy Resources, Inc.; Rex Energy Corporation; Resolute Energy Corporation; U.S. Energy Corp; and Warren Resources, Inc. The Compensation Committee may make modifications to the peer group from time to time due to consolidations within, and to accommodate new companies entering, the oil and gas exploration industry, or for other reasons.

After review of the peer group compensation programs, the Compensation Committee believes that the elements of our compensation program, which include base salary, short-term incentive compensation in the form of cash bonuses, long-term incentive compensation in the form of stock options or restricted stock (or other stock based compensation as allowed by the 2004 Plan) and our benefits compensation, including 401(k) retirement savings plan and other benefits, are comparable to those offered by our industry competitors. However, our Compensation Committee concluded that the base salary levels and the levels of total compensation of our named executive officers were lower than those of comparable executive officers in the peer group.

Compensation Risks. The Compensation Committee reviewed the policies and practices of our compensation program, including, among other things, the types and level of our compensation in relation to the Company as a whole and on a per division basis and the fixed and variable aspects of our compensation. The Compensation Committee believes that the ownership stake in the Company provided by our long-term incentive compensation, including vesting of these awards over several years, is designed to align the interests of our named executive officers and employees with our shareholders and promote executive officer and employee retention. At the same time, the Compensation Committee believes that, as a result of our focus on long-term incentive compensation, our compensation program does not encourage our named executive officers to take unreasonable risks related to our business. Based upon this review, the Compensation Committee concluded that there are no risks that are reasonably likely to have a material adverse effect on the Company.

Lean Management Team. The Compensation Committee takes into consideration that the Company operates with a lean management team requiring each named executive officer to have significant responsibility.

Other Compensation Practices

Accounting and Tax Considerations. Our Compensation Committee reviews and takes into account current tax, accounting and securities regulations as they relate to the design

of our compensation programs and related decisions. Section 162(m) of the Internal Revenue Code imposes a limit, with certain exceptions, on the amount that a publicly held corporation may deduct in any tax year for individual compensation to certain executives of such corporation exceeding $1,000,000 in any taxable year, unless the compensation is performance-based. We have no individuals with non-performance based compensation paid in excess of the Internal Revenue Code Section 162(m) tax deduction limit.

Awards of stock options, performance units, restricted shares and restricted stock units under our 2004 Plan are accounted for under FASB ASC Topic 718.

Stock Ownership Guidelines and Hedging Prohibition. We do not currently have ownership requirements or a stock retention policy for our named executive officers or non-management directors. Our Board has adopted a policy restricting all employees, including our named executive officers, and members of the Board from engaging in any hedging transactions with respect to our common stock held by them, which includes the purchase of any financial instrument (including prepaid variable forward contracts, equity swaps, collars and exchange funds) designed to hedge or offset any decrease in the market value of such equity securities. The Board has also adopted a policy restricting our named executive officers and members of the Board from pledging, or using as collateral, our common stock in order to secure personal loans or other obligations, which includes holding shares of our common stock in a margin account.

We will continue to periodically review best practices and re-evaluate our position with respect to stock ownership guidelines and hedging prohibitions.

Equity Grant Practices. The Compensation Committee generally awards stock options or restricted stock during our Board meeting in the spring after our Annual Report on Form 10-K is filed. Stock option grants are issued with exercise prices above the closing price of our common stock on the date of the grant, which is the date the Compensation Committee approves the stock option grants for the named executive officers. Our 2004 Plan prohibits the repricing of stock options without the consent of our shareholders. Historically, each stock option grant is issued with half of the option shares with an exercise price at or slightly greater than the closing price of our common stock and the other half with an even greater exercise price.

Clawback Provisions . Although we do not presently have any formal policies or practices that provide for the recovery of prior incentive compensation awards that were based on financial information later restated as a result of the Company’s material non-compliance with financial reporting requirements, in such event we reserve the right to seek all recoveries currently available under law. Beginning with our equity grants after April 1, 2011, the Compensation Committee expects to introduce a provision into our equity grant agreements whereby the equity grants to named executive officers are subject to any clawback policies the Company may adopt which may result in the reduction, cancellation, forfeiture or recoupment of such grants if certain specified events occur, including, but not limited to, an accounting restatement due to any material noncompliance with

financial reporting regulations by the Company. Although we have not yet adopted such a policy, we anticipate doing so upon promulgation of final rules by the SEC and are continuing to monitor the relevant laws and regulations regarding clawback policies.

No Employment Agreements. We have no employment contracts in place with any of our named executive officers, who serve at the will of our Board. We also have no compensatory plan or arrangement with respect to any executive officer where such plan or arrangement will result in payments to such officer upon or following his resignation, retirement, or other termination of employment with us and our subsidiaries.

Payments Triggered Upon a Change in Control. Unvested stock options and restricted stock awards become immediately exercisable and payable upon the occurrence of a change in control and do not require termination of employment. A “change in control” is defined in our 2004 Plan attached hereto as Annex A. Also, see Section titled “Potential Payments Triggered Upon a Change in Control” for discussion and calculation of the value of the immediate vesting of outstanding options for our named executive officers.

COMPENSATION COMMITTEE REPORT

The Compensation Committee of our Board of Directors oversees GeoResources, Inc.’s compensation program on behalf of the Board. In fulfilling its oversight responsibilities, the Compensation Committee reviewed and discussed with management the Compensation Discussion and Analysis set forth in this proxy statement. In reliance on this review and discussion, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis set forth above under “Compensation Discussion and Analysis” be

included in this proxy statement and incorporated into our Annual Report on Form 10-K for the fiscal year ended December 31, 2010.

Respectfully submitted,

COMPENSATION COMMITTEE

Bryant W. Seaman (Chair)

Jay F. Joliat

Michael A. Vlasic

The following table presents, for the years ended December 31, 2010, December 31, 2009, and December 31, 2008, the compensation of Mr. Lodzinski, our principal executive officer, Mr. Ehler, our principal financial officer, and Messrs. Anderson, Chandler and Mury, our three most highly-compensated executive officers (other than the principal executive officer and principal financial officer) who were serving as executive officers (collectively, the “named

executive officers” or “NEOs”) as of December 31, 2010. We do not have any employment contracts with any of our named executive officers. There has been no compensation awarded to, earned by or paid to any employees required to be reported in any table or column in the fiscal years covered by any table, other than what is set forth in the following table.