Exhibit 99.1
GeoMet Announces Fourth Quarter & Year-end 2006 Results
Houston, Texas – March 19, 2007—GeoMet, Inc. (NASDAQ: GMET) (“GeoMet” or the “Company”) today announced financial and operating results for the fourth quarter and the year ended December 31, 2006.
Fourth Quarter 2006
For the quarter ended December 31, 2006, GeoMet’s net income decreased to $3.6 million or $0.09 per fully diluted share, compared to $9.4 million, or $0.34 per fully diluted share, for the same period in 2005. EBITDA, a non-GAAP measure, was $7.4 million for the quarter as compared to $17.1 million in the same period of 2005. Adjusted EBITDA, a non-GAAP measure, for the quarter decreased 30% to $5.1 million compared to $7.3 million for the prior year period. See attached reconciliation of EBITDA and Adjusted EBITDA to net income (loss). Sales volumes for the quarter increased 31% to 1.7 Bcf compared to 1.3 Bcf for the same period in 2005. Average natural gas prices, adjusted for realized hedging gains or losses, were $7.09 per Mcf during the quarter versus $9.27 for the same period in 2005. Excluding the impact of hedging, the average natural gas price realized during the quarter was $6.68 per Mcf versus $13.21 per Mcf in 2005. During the quarter, GeoMet recorded an unrealized gain from the change in the market value of its derivative contracts of $2.3 million compared to a $9.8 million unrealized gain for the same period in 2005. Capital expenditures incurred during the quarter were $19.5 million compared to $9.5 million for the prior year period.
Year-end 2006
For the year ended December 31, 2006, GeoMet’s net income increased to $17.3 million or $0.48 per fully diluted share, compared to a loss of $1.6 million or $0.06 per fully diluted share for the year ended in 2005. EBITDA, a non-GAAP measure, was $39.1 million for the year ended December 31, 2006, versus $5.7 million in the prior year. Adjusted EBITDA, a non-GAAP measure, of $22.8 million for the year 2006 increased 28% as compared to $17.8 million in 2005. See attached reconciliation of EBITDA and Adjusted EBITDA to net income (loss). Sales volumes for the year increased 36% to 6.2 Bcf compared to 4.6 Bcf in 2005. Average natural gas prices, adjusted for realized hedging gains or losses, were $7.40 per Mcf for 2006 versus $7.43 for 2005. Excluding the impact of hedging, the actual natural gas price realized for the year was $7.22 per Mcf versus $9.06 per Mcf for the year 2005. During 2006, GeoMet recorded an unrealized gain from the change in the market value of its derivative contracts of $16.9 million compared to a $12.1 million unrealized loss for the prior year. In 2006, capital expenditures totaled $81.6 million compared to $59.2 million in 2005.
Conference Call Information
GeoMet will hold its quarterly conference call to discuss fourth quarter and year-end 2006 results on Monday, March 19, 2007 at 3:00 p.m. Central Time. To participate, dial (888) 571-8168 a few minutes before the call begins. Please reference GeoMet Inc. conference ID 3045068. The call will also be broadcast live over the Internet from the Company’s website at www.geometinc.com. A replay of the conference call will be available approximately two hours after the end of the call through Monday, March 26, 2007. To access the replay, dial (800) 642-1687 and reference conference ID 3045068. In addition, the web cast will also be archived on the Company’s website.
About GeoMet, Inc.
GeoMet, Inc. is an independent energy company engaged in the exploration for and development and production of natural gas from coal seams (“coalbed methane” or “CBM”). Our principal operations and producing properties are located in the Cahaba Basin in Alabama and the Central Appalachian Basin in West Virginia and Virginia. We also control additional coalbed methane development rights, principally in Alabama, British Columbia, Colorado, Louisiana, Virginia, and West Virginia.
For more information please contact Stephen M. Smith at (713) 287-2251 orssmith@geometcbm.com or visit our website at www.geometinc.com.
Forward Looking Statements Notice
This press release may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are subject to certain risks, trends and uncertainties that could cause actual results to differ materially from those projected. Among those risks, trends and uncertainties are our estimate of the sufficiency of our existing capital sources, our ability to raise additional capital to fund cash requirements for future operations, the uncertainties involved in estimating quantities of proved oil and natural gas reserves, in prospect development and property acquisitions and in projecting future rates of production, the timing of development expenditures and drilling of wells, and the operating hazards attendant to the oil and gas business. In particular, careful consideration should be given to cautionary statements made in the various reports the Company has filed with the Securities and Exchange Commission. GeoMet undertakes no duty to update or revise these forward-looking statements.
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GEOMET, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||||||
Gas sales | $ | 11,533 | $ | 17,364 | $ | 44,952 | $ | 41,604 | ||||||||
Gas marketing | 8,015 | — | 13,043 | — | ||||||||||||
Other fees and other | 141 | — | 141 | 376 | ||||||||||||
Total Revenues | 19,689 | 17,364 | 58,136 | 41,980 | ||||||||||||
Expenses: | ||||||||||||||||
Purchased gas | 7,923 | — | 12,899 | — | ||||||||||||
Total production expenses | 4,995 | 3,872 | 17,115 | 12,934 | ||||||||||||
Depreciation, depletion and amortization | 2,127 | 1,489 | 7,876 | 4,867 | ||||||||||||
Research and development | 15 | 70 | 129 | 608 | ||||||||||||
General and administrative | 2,399 | 931 | 6,807 | 3,208 | ||||||||||||
Realized (gains) losses on derivative contracts | (723 | ) | 5,184 | (1,118 | ) | 7,473 | ||||||||||
Unrealized (gains) losses on derivative contracts | (2,298 | ) | (9,774 | ) | (16,877 | ) | 12,059 | |||||||||
Total operating expenses | 14,438 | 1,772 | 26,831 | 41,149 | ||||||||||||
Income (loss) from operations | 5,251 | 15,592 | 31,305 | 831 | ||||||||||||
Other expenses & interest, net | (760 | ) | (1,339 | ) | (3,106 | ) | (3,839 | ) | ||||||||
Income tax expense (benefit) | 867 | 4,849 | 10,880 | (993 | ) | |||||||||||
Net income (loss) before minority interest, net of income tax | 3,624 | 9,404 | 17,319 | (2,015 | ) | |||||||||||
Minority interest, net of income tax | 10 | — | 23 | (442 | ) | |||||||||||
Net income (loss) | $ | 3,614 | $ | 9,404 | $ | 17,296 | $ | (1,573 | ) | |||||||
Net income (loss) per share - basic | $ | 0.09 | $ | 0.34 | $ | 0.49 | $ | (0.06 | ) | |||||||
Net income (loss) per share - diluted | $ | 0.09 | $ | 0.34 | $ | 0.48 | $ | (0.06 | ) | |||||||
Weighted average shares outstanding - basic | 38,635 | 27,659 | 35,018 | 28,165 | ||||||||||||
Weighted average shares outstanding - diluted: | 39,414 | 27,659 | 35,964 | 28,165 |
GEOMET, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
December 31, 2006 | December 31, 2005 | |||||
Assets: | ||||||
Current assets | $ | 17,316 | $ | 9,829 | ||
Properties and equipment, net | 315,873 | 236,649 | ||||
Other assets | 2,006 | 1,431 | ||||
Total assets | $ | 335,195 | $ | 247,909 | ||
Liabilities and stockholders’ equity | ||||||
Current liabilities | $ | 18,940 | $ | 17,197 | ||
Long-term debt | 60,832 | 99,926 | ||||
Other long-term liabilities | 45,415 | 35,364 | ||||
Total liabilities | 125,187 | 152,487 | ||||
Total stockholders’ equity | 210,008 | 95,422 | ||||
Total liabilities and stockholders’ equity | $ | 335,195 | $ | 247,909 | ||
GEOMET, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Twelve Months Ended December 31, | ||||||||
2006 | 2005 | |||||||
Net cash provided by operating activities | $ | 21,472 | $ | 12,433 | ||||
Net cash used in investing activities | (78,669 | ) | (59,661 | ) | ||||
Net cash provided by financing activities | 58,086 | 44,905 | ||||||
Effect of exchange rates changes on cash | (91 | ) | (75 | ) | ||||
Increase (decrease) in cash and cash equivalents | 798 | (2,398 | ) | |||||
Cash and cash equivalents at beginning of period | 616 | 3,014 | ||||||
Cash and cash equivalents at end of period | $ | 1,414 | $ | 616 | ||||
GeoMet, Inc.
Reconciliation of EBITDA and ADJUSTED EBITDA to NET INCOME (LOSS)
($000)
Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||||||
Net Income (loss) | $ | 3,614 | $ | 9,404 | $ | 17,296 | $ | (1,573 | ) | |||||||
Add: Interest expense, net of interest income and amounts capitalized | 754 | 1,318 | 3,097 | 3,818 | ||||||||||||
Add (Deduct): Other expense (income) loss | 5 | 21 | 10 | 21 | ||||||||||||
Add (Deduct): Expense (benefit) for income taxes | 867 | 4,849 | 10,880 | (993 | ) | |||||||||||
Add: Depreciation, depletion and amortization | 2,127 | 1,490 | 7,876 | 4,867 | ||||||||||||
Add: Minority interest | 10 | — | 23 | (442 | ) | |||||||||||
EBITDA | 7,377 | 17,082 | 39,182 | 5,698 | ||||||||||||
Add (Deduct): Unrealized losses (gains) on derivative contracts | (2,298 | ) | (9,774 | ) | (16,877 | ) | 12,059 | |||||||||
Add: Stock based compensation | 30 | — | 317 | — | ||||||||||||
Add: Accretion expense | 40 | 26 | 157 | 72 | ||||||||||||
Adjusted EBITDA | $ | 5,149 | $ | 7,334 | $ | 22,779 | $ | 17,829 | ||||||||
The Table above reconciles net income (loss) to EBITDA and ADJUSTED EBITDA. EBITDA is defined as net income before net interest expense, other non-operating income or losses, income taxes, depreciation, depletion and amortization, and minority interest. ADJUSTED EBITDA is defined as EBITDA before unrealized losses (gains) on derivative contracts, stock-based compensation and accretion expense. Although EBITDA and ADJUSTED EBITDA are not measures of performance calculated in accordance with generally accepted accounting principles (GAAP), management believes that it is useful to Geomet and to an investor in evaluating our company because it is a widely used measure to evaluate a company's operating performance.
GEOMET, INC.
OPERATING STATISTICS
Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||
Net Sales Volume | ||||||||||||
Total (Bcf) | 1.7 | 1.3 | 6.2 | 4.6 | ||||||||
Daily Average (Mcf) | 18,780 | 14,287 | 17,064 | 12,585 | ||||||||
Average natural gas price | $ | 6.68 | $ | 13.21 | $ | 7.22 | $ | 9.06 | ||||
Differential to NYMEX(1) | $ | 0.12 | $ | 0.26 | $ | 0.07 | $ | 0.20 | ||||
Average natural gas price - realized(2) | $ | 7.09 | $ | 9.27 | $ | 7.40 | $ | 7.43 | ||||
Expenses: ($ per Mcf) | ||||||||||||
Lease operating costs | $ | 1.97 | $ | 1.88 | $ | 1.86 | $ | 1.89 | ||||
Transportation costs | $ | 0.44 | $ | 0.34 | $ | 0.38 | $ | 0.33 | ||||
Compression costs | $ | 0.32 | $ | 0.42 | $ | 0.34 | $ | 0.39 | ||||
Production taxes | $ | 0.16 | $ | 0.30 | $ | 0.17 | $ | 0.20 | ||||
Total Production Costs | $ | 2.89 | $ | 2.94 | $ | 2.75 | $ | 2.81 | ||||
(1) The difference between the average natural gas price for the period, before the impact of hedging, and the final average settlement price for natural gas contracts on the NewYork Mercantile Exchange (“NYMEX”) for each month during the applicable period weighted by gas sales volumes
(2) Average realized price includes the effects of realized gains or losses on derivative contracts
GEOMET, INC.
OPERATING STATISTICS
Pond Creek Field
Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||
Net Sales Volume | ||||||||||||
Total (Bcf) | 1.1 | 0.8 | 3.8 | 2.9 | ||||||||
Daily Average (Mcf) | 11,534 | 9,073 | 10,531 | 8,007 | ||||||||
Expenses: ($ per Mcf) | ||||||||||||
Lease operating costs | $ | 1.98 | $ | 1.61 | $ | 1.54 | $ | 1.52 | ||||
Transportation costs | $ | 0.72 | $ | 0.54 | $ | 0.62 | $ | 0.52 | ||||
Compression costs | $ | 0.35 | $ | 0.45 | $ | 0.36 | $ | 0.43 | ||||
Production taxes | $ | 0.02 | $ | 0.03 | $ | 0.02 | $ | 0.03 | ||||
Total Production Costs | $ | 3.07 | $ | 2.63 | $ | 2.54 | $ | 2.50 | ||||
GEOMET, INC.
OPERATING STATISTICS
Gurnee Field
Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||
2006 | 2005 | 2006 | 2005 | |||||||||
Net Sales Volume | ||||||||||||
Total (Bcf) | 0.6 | 0.4 | 2.0 | 1.2 | ||||||||
Daily Average (Mcf) | 6,133 | 3,975 | 5,343 | 3,238 | ||||||||
Expenses: ($ per Mcf) | ||||||||||||
Lease operating costs | $ | 2.29 | $ | 3.10 | $ | 2.90 | $ | 3.55 | ||||
Transportation costs | $ | — | $ | — | $ | — | $ | — | ||||
Compression costs | $ | 0.33 | $ | 0.46 | $ | 0.38 | $ | 0.43 | ||||
Production taxes | $ | 0.40 | $ | 0.78 | $ | 0.40 | $ | 0.54 | ||||
Total Production Costs | $ | 3.02 | $ | 4.34 | $ | 3.68 | $ | 4.52 | ||||
Geomet, Inc.
Consolidated Hedge Position
For Periods Subsequent to December 31, 2006
Type | Volume MMBtu | Weighted Average Price per MMBtu | Swap Price | |||||||||||||
Period | Cap | Floor | Protection * | |||||||||||||
Jan.-Mar. 2007 | 3 Way Collar | 900,000 | $ | 11.02 | $ | 8.20 | $ | 1.50 | ||||||||
Summer 2007 | 3 Way Collar | 1,712,000 | $ | 10.50 | $ | 7.38 | $ | 1.63 | ||||||||
Winter 2007 / 2008 | 3 Way Collar | 1,216,000 | $ | 14.80 | $ | 9.00 | $ | 3.00 | ||||||||
Summer 2008 | 3 Way Collar | 1,712,000 | $ | 10.50 | $ | 7.00 | $ | 2.00 | ||||||||
Summer 2007 | Traditional | 856,000 | $ | 9.75 | $ | 7.50 | n/a | |||||||||
Winter 2007 / 2008 | Traditional | 608,000 | $ | 11.25 | $ | 8.25 | n/a | |||||||||
Jan.-Mar. 2007 | Swaps | 360,000 | n/a | n/a | n/a | $ | 7.75 |
Summer- April through October
Winter- November through March