GEOI Georesources, Inc. (MM)

GeoResources, Inc., (NASDAQ:GEOI), today announced its financial and operating results for the twelve and three month periods ended December 31, 2009. The following tables summarize the results of operations compared to similar periods in 2008.

 

Twelve Months Ended December 31,(In thousands, except Earnings per share)

2009   2008   Total revenue $ 80,428 $ 94,607 Net income $ 9,775 $ 13,522 Earnings per share (diluted) $ 0.59 $ 0.86

Adjusted EBITDAX (1)

$ 48,159 $ 54,150    

Three Months Ended December 31,(In thousands, except Earnings per share)

2009   2008   Total revenue $ 23,616 $ 18,863 Net income $ 2,371 $ (4,291) Earnings per share (diluted) $ 0.14 $ (0.26)

Adjusted EBITDAX (1)

$ 14,080 $ 9,186

_________

(1) See additional detail below.

 

PercentIncrease(Decrease)

 

Twelve Months EndedDecember 31,

2009   2008   Gas Production (MMcf) 67 % 4,944 2,962 Oil Production (MBbls) 15 % 851 743 Barrel of oil equivalent (MBOE) 36 % 1,675 1,236

Average Price Gas before Hedge Settlements (per Mcf)

(61 %) $ 3.28 $ 8.36 Average Price Oil before Hedge Settlements (per Bbl) (41 %) $ 56.37 $ 94.88

Average Price Gas after Hedge Settlements (per Mcf)

(51 %) $ 3.97 $ 8.12 Average Price Oil after Hedge Settlements (per Bbl) (26 %) $ 61.09 $ 82.42    

PercentIncrease(Decrease)

 

Three Months EndedDecember 31,

2009  

2008

  Gas Production (MMcf) 113 % 1,514 711 Oil Production (MBbls) 32 % 250 190 Barrel of oil equivalent (MBOE) 63 % 503 308 Average Price Gas before Hedge Settlements (per Mcf) (32 %) $ 3.77 $ 5.57 Average Price Oil before Hedge Settlements (per Bbl) 33 % $ 68.19 $ 51.37 Average Price Gas after Hedge Settlements (per Mcf) (32 %) $ 4.02 $ 5.91 Average Price Oil after Hedge Settlements (per Bbl) 6 % $ 65.57 $ 61.78  

Adjusted EBITDAX (see definition below) increased 53% to approximately $14.1 million for the fourth quarter 2009 compared to $9.2 million for the fourth quarter 2008. Adjusted EBITDAX for the year 2009 decreased 11% to approximately $48.2 million compared to $54.2 million in 2008.

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

    Twelve Months Ended December 31, 2009   2008

Adjusted EBITDAX (1)

    Net income $ 9,775 $ 13,522 Add back: Interest expense 4,984 4,820 Income taxes: Current 412 866 Deferred 4,655 6,903 Depreciation, depletion and amortization 22,409 16,007 Hedge and derivative contracts 299 440 Non-cash compensation 1,424 661 Exploration and impairments   4,201     10,931  

Adjusted EBITDAX (1)

$ 48,159   $ 54,150         Three Months Ended December 31, 2009   2008   Net income (loss) $ 2,371 $ (4,291 ) Add back: Interest expense 1,435 962

Income taxes:

Current 588 (3,573 ) Deferred (637 ) 372 Depreciation, depletion and amortization 6,906 4,724 Hedge and derivative contracts (28 ) 392 Non-cash compensation 360 199 Exploration and impairments   3,085       10,401  

Adjusted EBITDAX (1)

$ 14,080     $ 9,186    

(1) As used herein, adjusted EBITDAX is calculated as earnings before interest, income taxes, depreciation, depletion and amortization, and exploration expense and further includes non-cash compensation, impairments and hedge ineffectiveness and income or loss on derivative contracts. Adjusted 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

Frank A. Lodzinski, CEO and President, commented, “Our results for the fourth quarter and year ended December 31, 2009 continue to reflect our growth. Our production increased 36% over the prior year and our reserves increased 42% over the prior year using the SEC pricing methodology. This represented a 467% production replacement rate. A comparison of the 4th quarter of 2009 vs. 2008 underscores our considerable growth. Our gas production was up 113% and our oil production was up 32%. Revenues, adjusted EBITDAX and net income were all up appreciably. A contributing factor to increased earnings was lower lease operating expenses. On a unit-of-production basis, our lease operating expenses were down about 40%, both for comparative quarter and annual periods, largely as a result of our re-engineering and development drilling activities. Our increased production is a direct result of our successful drilling programs in the Bakken Shale and Austin Chalk and from the strategic acquisitions we have made in these core areas. As recently announced we have further increased our acreage position in the Bakken Shale Trend of the Williston Basin and expect our drilling programs to continue to contribute to our growth.”

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 our 10-K for the year ended December 31, 2009 and the other 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)         December 31, 2009 2008 ASSETS   Current assets:   Cash $ 12,660 $ 13,967 Accounts Receivable Oil and gas revenues 14,860 11,439 Joint interest billings and other 13,734 7,172 Affiliated partnerships 933 2,905 Notes receivable 120 120 Derivative financial instruments 764 8,200 Income taxes receivable 2,077 2,165 Prepaid expenses and other 2,297 3,923     Total current assets   47,445     49,891     Oil and gas properties, successful efforts method:   Proved properties 285,363 204,536 Unproved properties 10,281 2,409 Office and other equipment 828 1,025 Land   96     96   296,568 208,066  

Less accumulated depreciation, depletion and amortization

(48,182 ) (26,486 )     Net property and equipment   248,386     181,580       Equity in oil and gas limited partnerships 3,532 3,266   Derivative financial instruments 1,360 6,409   Deferred financing costs and other 3,574 2,388     $ 304,297   $ 243,534     GEORESOURCES, INC and SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share amounts)         December 31, 2009 2008   LIABILITIES AND STOCKHOLDERS' EQUITY   Current liabilities:   Accounts payable $ 6,452 $ 10,750 Accounts payable to affiliated partnerships 8,361 10,310 Revenue and royalties payable 13,928 11,701 Drilling advances 390 2,169 Accrued expenses 1,574 1,506 Derivative financial instruments 4,794 1,572       Total current liabilities   35,499     38,008     Long-term debt 69,000 40,000   Deferred income taxes 15,778 17,868   Asset retirement obligations 6,110 5,418   Derivative financial instruments 3,233 1,245   Stockholders' equity:

Common stock, par value $0.01 per share; authorized 100,000,000 shares; issued and outstanding: 19,705,362 shares in 2009 and 16,236,717 in 2008

197 162 Additional paid-in capital 146,966 112,523 Accumulated other comprehensive income (loss) (3,288 ) 7,283 Retained earnings 30,802 21,027       Total stockholders' equity   174,677     140,995    

 

  $ 304,297   $ 243,534     GEORESOURCES, INC. and SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In thousands, except share and per share amounts)           Year Ended December 31, 2009 2008 2007   Revenue: Oil and gas revenues $ 71,618 $ 85,263 $ 36,518 Partnership management fees 1,007 1,725 969 Property operating income 1,710 1,430 1,251 Gain on sale of property and equipment 1,355 4,362 49 Partnership income 4,318 1,061 184 Interest and other   420     765     1,144     Total revenue 80,428 94,606 40,115   Expenses: Lease operating expense 18,763 22,914 10,818 Severance taxes 3,623 7,517 2,880 Re-engineering and workovers 2,807 3,518 2,092 Exploration expense 1,406 2,592 153 Impairment of oil and gas properties 2,795 8,339 - General and administrative expense 8,500 7,168 6,513 Depreciation, depletion and amortization 22,409 16,007 7,507 Hedge ineffectiveness 137 (123 ) 287 Loss on derivative contracts 162 563 - Interest   4,984     4,820     1,916     Total expense 65,586 73,315 32,166   Income before income taxes 14,842 21,291 7,949   Income taxes: Current 412 866 1,472 Deferred   4,655     6,903     3,408   5,067 7,769 4,880           Net income $ 9,775   $ 13,522   $ 3,069     Net income per share (basic) $ 0.59   $ 0.87   $ 0.25     Net income per share (diluted) $ 0.59   $ 0.86   $ 0.25     Weighted average shares outstanding: Basic   16,532,003     15,598,244     12,404,771     Diluted   16,559,431     15,751,185     12,404,771     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: 2009 2008 2007 Net income $ 9,775 $ 13,522 $ 3,069

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

Depreciation, depletion and amortization 22,409 16,007 7,507 Exploratory dry holes and unproved property impairments - 2,241 - Impairment of proved properties 2,795 8,339 - Gain on sale of property and equipment (1,355 ) (4,362 ) (49 ) Accretion of asset retirement obligations 368 391 232 Unrealized loss on derivative contracts (238 ) 563 - Amortization of loss on cancelled hedges 482 - - Hedge ineffectiveness (gain) loss 137 (123 ) 287 Partnership income (4,318 ) (1,061 ) (184 ) Partnership distributions 2,406 653 204 Deferred income taxes 4,655 6,903 3,408 Non-cash compensation 1,424 661 553 Changes in assets and liabilities: Decrease (increase) in accounts receivable (7,923 ) 3,958 (13,872 ) Decrease in notes receivable 275 480 - Decrease (increase) in prepaid expense and other (1,116 ) (1,990 ) (347 ) Increase (decrease) in accounts payable and accrued expense   (5,732 )   (3,844 )   20,056   Net cash provided by operating activities 24,044 42,338 20,864 Cash flows from investing activities: Proceeds from sale of property and equipment 1,991 26,789 2,419 Additions to property and equipment (89,396 ) (51,824 ) (110,148 ) Investment in oil and gas limited partnership - (978 ) (1,632 ) Cancellation of hedge contracts - (2,975 ) - Increase in other assets   -     -     (565 ) Net cash used in investing activities (87,405 ) (28,988 ) (109,926 ) Cash flows from financing activities: Issuance of common stock 33,054 32,187 23,518 Distributions to stockholders - - (4,007 ) Issuance of long-term debt 64,000 - 99,000 Reduction of long-term debt (35,000 ) (56,000 ) (9,800 ) Debt issuance costs   -     -     (1,436 ) Net cash provided by (used in) financing activities   62,054     (23,813 )   107,275   Net increase (decrease) in cash and cash equivalents (1,307 ) (10,463 ) 18,213 Cash and cash equivalents at beginning of period   13,967     24,430     6,217   Cash and cash equivalents at end of period $ 12,660   $ 13,967   $ 24,430     Supplementary information: Interest paid $ 4,064 $ 5,073 $ 835 Income taxes paid $ 664 $ 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