GEOI Georesources, Inc. (MM)

HOUSTON, Oct. 18 /PRNewswire-FirstCall/ -- GeoResources, Inc., (NASDAQ:GEOI), today announced that it has acquired all of the limited partner interest in an affiliated partnership, from an undisclosed financial institution, for $91.1 million. This acquisition effectively doubles the reserves and production base of the Company and includes oil and gas properties located in Louisiana, the Gulf Coast, South Texas, the Permian Basin and the Black Warrior Basin. As of October 1, 2007, the acquired proved reserves are estimated, by the Company, at 16.3 Bcf and 4.9 MMBLS or 7.6 MMBOE and current production from the properties is 5,194 Mcfd and 1,096 BOPD or 1,962 BOEPD. The Company was the general partner of the affiliated partnership and operator of a majority of the properties, and accordingly, no additional staffing is required to operate the properties. The Company intends to dissolve the partnership in the normal course of business. In addition, the Company expects to divest certain existing and acquired non-core properties. (Logo: http://www.newscom.com/cgi-bin/prnh/20051114/CGM073LOGO) In connection with the transaction, the Company paid approximately $12.95 million to unwind certain commodity price hedges and, in addition, the Company assumed certain natural gas hedges with an estimated current unwind cost of approximately $4.8 million. The majority of those hedges apply to 2009 and the Company will consider replacing those hedges. Further, in order to attract its financing and maintain predictable cash flows, the Company entered into new commodity price hedges, for four years commencing January 1, 2008, for approximately 77% of projected production, from currently producing reserves excluding expected divestitures. The Company entered into fixed price swaps for oil and costless collars for natural gas as follows: Oil Swap, Gas Floor, Gas Cap, Year $/bbl $/mmbtu $/mmbtu 2008 $80.19 $7.00 $9.80 2009 $76.00 $7.00 $10.75 2010 $74.71 $7.00 $9.90 2011 $74.37 $7.00 $9.20 The net cost of the oil & gas reserves acquired was approximately $97.4 million and was funded with cash and borrowings of $96.0 million from an amendment and restatement of the Company's Senior Secured Revolving Credit Facility ("Facility"), which was underwritten by Wachovia Capital Markets, LLC, as sole lead arranger and sole book runner. The increased $200 million Facility, has an initial available borrowing base of $110 million. Frank A. Lodzinski, Chief Executive Officer of GeoResources, said, "This acquisition is immediately accretive and doubles the size of the Company in terms of reserves, production, revenues and cash flow. Importantly, it can be operated without additional staffing. Further, the acquisition has been financed entirely with reasonable levels of senior secured debt under our increased Facility, at favorable interest rates. We have also entered into commodity price hedges to take advantage of high oil prices and to negotiate favorable financing terms. We expect to sell or trade certain properties to reduce debt, streamline operations and to focus our personnel on the upside in our portfolio and generate additional opportunities for growth." "Fiscal 2007 has been truly a transitional and defining year for the Company," Lodzinski added. "We closed a significant merger and two property acquisitions, expanded our drilling inventory and implemented our drilling and development programs -- actions consistent with our business strategy. Now, having built our reserve and cash flow foundation, we can turn our attention to our capital expenditure program and generation of additional drilling opportunities. We will continue to search for accretive acquisitions and mergers. We believe our diversified approach will allow the Company to continue to grow profitably." About GeoResources, Inc. On April 17, 2007, the Company completed its mergers with Southern Bay Oil & Gas L.P. and Chandler Energy, LLC. The management of Southern Bay and Chandler became the principal management of the combined entity. Corporate headquarters are located in Houston, Texas. The Company conducts its exploration development and production operations through wholly owned subsidiaries. Activities in the Southern Region are conducted through Southern Bay Energy, LLC, located in Houston, Texas and Northern Region operations are conducted through G3 Energy LLC, located in Denver, Colorado. The Company also maintains a regional office in Williston, North Dakota. For more information, visit our website at http://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, particularly its Form 10-KSB for the Fiscal Year Ended December 31, 2006, for meaningful cautionary language disclosure. http://www.newscom.com/cgi-bin/prnh/20051114/CGM073LOGO http://photoarchive.ap.org/ DATASOURCE: GeoResources, Inc. CONTACT: Cathy Kruse of GeoResources, Inc., +1-701-572-2020 ext 113, Web site: http://www.georesourcesinc.com/

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