GEOI Georesources, Inc. (MM)

GeoResources, Inc., (NASDAQ:GEOI), today announced net income of $13.5 million or $0.86 per diluted common share on revenue of $94.7 million for the year ended December 31, 2008, versus net income of $3.1 million or $0.25 per diluted common share on revenue of $40.1 million for 2007. GeoResources� results include a non-cash impairment of the carrying value of certain oil and gas properties, required under generally accepted accounting principles, in the amount of $8.3 million, before tax ($5.2 million, after tax) which resulted from lower oil and gas prices prevailing at year-end 2008.

The Company reported a fourth quarter 2008 net loss of $4.3 million or $0.26 per diluted common share on revenue of $18.9 million versus net income of $2.1 million or $0.14 per diluted common share on revenue of $19.1 million for the fourth quarter of 2007. The fourth quarter loss was primarily due to the non-cash impairment discussed above and increased depletion and depreciation. The foregoing information is summarized below in tabular form (in thousands, except per share information):

� Year Ended December 31, 2008 � 2007 � Total revenue $ 94,607 $ 40,115 Net income $ 13,522 $ 3,069 Earnings per share (diluted) $ 0.86 $ 0.25 EBITDAX (See below) $ 53,049 $ 17,525

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Three Months Ended December 31,

2008 � 2007 � Total revenue $ 18,863 $ 19,078 Net income (loss) $ (4,291 ) $ 2,120 Earnings (loss) per share (diluted) $ (0.26 ) $ 0.14 EBITDAX (See below) $ 8,595 $ 8,818 �

For the year ended December 31, 2008, oil sales increased 90% to 743 Mbbls from 392 Mbbls for 2007, while natural gas sales totaled 2,962 MMcf or 80% greater than the 1,648 MMcf sold during 2007. These totals reflect production increases resulting from acquisitions and drilling and development operations offset by divestitures and normal field declines.

For the fourth quarter of 2008, oil sales increased to 190 MBbls from 176 MBbls in the prior year�s period, an increase of 8%, while natural gas sales decreased to 711 MMcf from 766 MMcf, a decrease of 7%. Production in the 4th quarter of 2008 reflected the sale of a number of properties acquired in 2007. In 2008, consistent with the business strategy of high-grading its asset portfolio, the Company sold a number of fields which had sizable daily production rates, but limited upside potential and significant plugging and abandonment obligations. These properties produced approximately 316 BOPD and 742 MCFD at the time of their sale or approximately 40,000 BOE per quarter. Proceeds from divestitures were used to fund capital expenditures and reduce debt.

For the year ended December 31, 2008, the average realized price of natural gas was $8.12 per Mcf or 31% greater than the prior year, while the average realized price of oil was $82.42 per barrel or 23% more than the prior year. The average realized price of natural gas was $5.91 per Mcf for the fourth quarter of 2008, 3% less than the fourth quarter of 2007, while the average realized price of oil for the fourth quarter of 2008 was $61.78 per barrel or 21% less than the fourth quarter of the prior year. Production and price information is shown below in tabular form:

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PercentIncrease(Decrease)

� � Year Ended December 31, 2008 � 2007 � Gas Production (MMcf) 80 % 2,962 1,648 Oil Production (MBbls) 90 % 743 392 Barrel of oil Equivalent (MBOE) 85 % 1,236 666 Average Realized Price Gas (per Mcf) 31 % $ 8.12 $ 6.19 Average Realized Price Oil (per Bbl) 23 % $ 82.42 $ 67.20 Average Price Gas before Hedge Settlements (per Mcf) 27 % $ 8.36 $ 6.56 Average Price Oil before Hedge Settlements (per Bbl) 30 % $ 94.88 $ 73.06

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PercentIncrease(Decrease)

Three Months EndedDecember 31

2008 � 2007 � Gas Production (MMcf) (7 %) 711 766 Oil Production (MBbls) 8 % 190 176 Barrel of oil equivalent (MBOE) 1 % 308 304 Average Realized Price Gas (per Mcf) (3 %) $ 5.91 $ 6.12 Average Realized Price Oil (per Bbl) (21 %) $ 61.78 $ 77.97 Average Price Gas before Hedge Settlements (per Mcf) (19 %) $ 5.57 $ 6.88 Average Price Oil before Hedge Settlements (per Bbl) (39 %) $ 51.37 $ 84.06 �

Earnings before interest, income taxes, depreciation, depletion and amortization, and exploration expense (�EBITDAX�) for 2008 increased 203% to approximately $53.0 million compared to $17.5 million for 2007. For the fourth quarter of 2008, EBITDAX decreased 2% to approximately $8.6 million compared to $8.8 million for fourth quarter 2007.

The following tables reconcile reported net income to EBITDAX for the periods indicated (in thousands):

� Year Ended December 31, 2008 � 2007 EBITDAX (1) � � Net income $ 13,522 $ 3,069 Add back: Interest 4,820 1,916 Income taxes: Current 866 1,472 Deferred 6,903 3,408 Impairment of oil and gas properties 8,339 -- Depreciation, depletion and amortization 16,007 7,507 Exploration � 2,592 � � 153 $ 53,049 � $ 17,525 � � Three Months Ended December 31, 2008

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2007

� Net income (loss) $ (4,291 )

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$

2,120 Add back: Interest 962 1,536 Income taxes: Current (3,573 ) 823 Deferred 372 1,269 Impairment of oil and gas properties 8,339 ? Depreciation, depletion and amortization 4,724 2,917 Exploration � 2,062 � � � 153 $ 8,595 �

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$

8,818 �

(1) EBITDAX is defined as earnings before interest, income taxes, depreciation, depletion and amortization, impairment of oil and gas properties and exploration expense. It is specifically advised that 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.

RESERVES

Under the SEC reserve reporting guidelines using year-end prices, the Company's third-party engineering firm has estimated proved reserves at December 31, 2008 of 8.8 Million barrels of oil and 34.8 Billion Cubic Feet of gas and natural gas liquids for a total of 14.6 Million barrels of oil equivalent (�MMBOE�). The reserves are approximately 60% oil and 40% gas and are about 80% proved developed. Under the SEC guidelines, the discounted present value at 10% is approximately $150.6 million, before tax and $120.6 million after tax.

In addition, the Company has interests in two affiliated partnerships for which it is the general partner and operator. Under the SEC reserve reporting guidelines using year-end prices, estimated proved partnership reserves, net to the Company�s interest at December 31, 2008, total 2.9 MMBOE with a discounted present value at 10% of approximately $30.3 million, before tax and $17.9 million after tax. At December 31, 2008, the Company�s investment in such partnerships using the equity method of accounting, was $3.3 million.

Comments

Mr. Frank Lodzinski, CEO and President, commented, �We have reported significant earnings and cash flows for the year ended December 31, 2008. Our revenues and net income totaled $94.7 million and $13.5 million, respectively, both significantly exceeding prior year results. As a result of non-cash impairments of oil and gas properties and incremental depletion and depreciation expense, we recognized a loss in the fourth quarter of $4.3 million. Like most in the industry, we have recognized certain impairments of oil and gas properties. However, our calculated impairments are small in relation to our peers. Another significant and favorable difference from our peers is our debt level. While we have never been over-leveraged, we significantly reduced our debt during 2008 from $96.0 million at the beginning of the year to $40.0 million at year end. Execution of our business strategy in 2008 has put us in a favorable position to effectively face the challenges of 2009 and hopefully, take advantage of attractive acquisition opportunities and reduced drilling costs.�

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, our Annual Report on Form 10-K for the year ended December 31, 2008, 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) � � December 31, 2008 2007 ASSETS � Current assets: � Cash $ 13,967 $ 24,430 Accounts Receivable Oil and gas revenues 11,439 20,365 Joint interest billings and other 7,172 3,913 Affiliated partnerships 2,905 3,360 Notes receivable 120 600 Derivative financial instruments 8,200 - Income taxes receivable 2,165 - Prepaid expenses and other 3,923 1,430 � � Total current assets � 49,891 � � 54,098 � � Oil and gas properties, successful efforts method: � Proved properties 204,536 187,640 Unproved properties 2,409 5,142 Office and other equipment 1,025 995 Land � 96 � � 96 � 208,066 193,873 � Less accumulated depreciation, depletion and amortization (26,486 ) (12,430 ) � � Net property and equipment � 181,580 � � 181,443 � � � Equity in oil and gas limited partnerships 3,266 1,880 � Derivative financial instruments 6,409 - � Deferred financing costs and other 2,388 2,937 � � $ 243,534 � $ 240,358 � � GEORESOURCES, INC and SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share amounts) � � December 31, 2008 2007 � LIABILITIES AND STOCKHOLDERS' EQUITY � Current liabilities: � Accounts payable $ 10,750 $ 11,374 Accounts payable to affiliated partnerships 10,310 9,538 Revenue and royalties payable 11,701 14,567 Drilling advances 2,169 882 Accrued expenses 1,506 3,839 Derivative financial instruments � 1,572 � 6,527 � � Total current liabilities 38,008 46,727 � Long-term debt 40,000 96,000 � Deferred income taxes 17,868 6,476 � Asset retirement obligations 5,418 7,827 � Derivative financial instruments 1,245 15,296 � Stockholders' equity:

Common stock, par value $0.01 per share; authorized 10,000,000 shares; issued and outstanding: 16,241,717 shares in 2008 and 14,703,383 in 2007

162 147 Additional paid-in capital 112,523 79,690 Accumulated other comprehensive income (loss) 7,283 (19,310 ) Retained earnings � 21,027 � 7,505 � � Total stockholders' equity 140,995 68,032 � � $ 243,534 $ 240,358 � � GEORESOURCES, INC. and SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In thousands, except share and per share amounts) � � � Year Ended December 31, 2008 2007 2006 � Revenue: Oil and gas revenues $ 85,263 $ 36,518 $ 13,978 Partnership management fees 1,725 969 260 Property operating income 1,430 1,251 1,076 Gain on sale of property and equipment 4,362 49 335 Partnership income 1,061 184 91 Interest and other � 765 � � 1,144 � 1,065 � � Total revenue 94,606 40,115 16,805 � Expenses: Lease operating expense 22,914 10,818 4,252 Severance taxes 7,517 2,880 1,066 Re-engineering and workovers 3,518 2,092 384 Exploration expense 2,592 153 558 Impairment of oil and gas properties 8,339 - 184 General and administrative expense 7,168 6,513 2,804 Depreciation, depletion and amortization 16,007 7,507 3,382 Hedge ineffectiveness (123 ) 287 (393 ) Loss on derivative contracts 563 - - Interest � 4,820 � � 1,916 � 288 � � Total expense 73,315 32,166 12,525 � Income before income taxes 21,291 7,949 4,280 � Income taxes: Current 866 1,472 - Deferred � 6,903 � � 3,408 � 33 � 7,769 4,880 33 � � � Net income $ 13,522 � $ 3,069 $ 4,247 � � Net income per share (basic) $ 0.87 � $ 0.25 $ 0.87 � � Net income per share (diluted) $ 0.86 � $ 0.25 $ 0.87 � � Weighted average shares outstanding: Basic � 15,598,244 � � 12,404,771 � 4,858,000 � � Diluted � 15,751,185 � � 12,404,771 � 4,858,000 � � GEORESOURCES, INC. and SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands, except share and per share amounts) � � � Year Ended December 31, Cash flows from operating activities: 2008 2007 2006 Net income $ 13,522 $ 3,069 $ 4,247

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation, depletion and amortization 16,007 7,507 3,382 Exploratory dry holes and unproved property impairments 2,241 - - Impairment of properties 8,339 - 184 Gain on sale of property and equipment (4,362 ) (49 ) (335 ) Accretion of asset retirement obligations 391 232 88 Unrealized loss on derivative contracts 563 - - Hedge ineffectiveness (gain) loss (123 ) 287 (393 ) Partnership income (1,061 ) (184 ) (91 ) Partnership distributions 653 204 - Deferred income taxes 6,903 3,408 32 Non-cash compensation 661 553 422 Changes in assets and liabilities: Decrease (increase) in accounts receivable 3,958 (13,872 ) 3,307 Decrease in notes receivable 480 - - Decrease (increase) in prepaid expense and other (1,990 ) (347 ) 110 Increase (decrease) in accounts payable and accrued expense � (3,844 ) � 20,056 � � (1,801 ) Net cash provided by operating activities 42,338 20,864 9,152 Cash flows from investing activities: Proceeds from sale of property and equipment 26,789 2,419 335 Additions to property and equipment (51,824 ) (110,148 ) (14,725 ) Investment in oil and gas limited partnership (978 ) (1,632 ) - Cancelation of hedge contracts (2,975 ) - - Increase in other assets � - � � (565 ) � - � Net cash used in investing activities (28,988 ) (109,926 ) (14,390 ) Cash flows from financing activities: Issuance of common stock 32,187 23,518 - Distributions to stockholders - (4,007 ) (1,023 ) Issuance of long-term debt - 99,000 7,000 Reduction of long-term debt (56,000 ) (9,800 ) (2,100 ) Debt issuance costs � - � � (1,436 ) � - � Net cash provided by (used in) financing activities � (23,813 ) � 107,275 � � 3,877 � Net increase (decrease) in cash and cash equivalents (10,463 ) 18,213 (1,361 ) Cash and cash equivalents at beginning of period � 24,430 � � 6,217 � � 7,578 � Cash and cash equivalents at end of period $ 13,967 � $ 24,430 � $ 6,217 � � Supplementary information: Interest paid $ 5,073 $ 835 $ 154 Income taxes paid $ 3,970 $ 1,533 - Non-cash net assets acquired in merger transactions: GeoResources $ 23,827 PICA Energy, LLC $ 11,703 Yuma property interests $ 3,120 Other property interests $ 218