FOR IMMEDIATE RELEASE
For:
GeoResources, Inc.
Contact:
Cathy Kruse
P. O. Box 1505
Telephone:
(701) 572-2020
Williston, ND 58802
ir@geoi.net
GEORESOURCES, INC. REPORTS 1st QUARTER 2004 EARNINGS
AND PROVIDES AN OPERATIONS UPDATE
Williston, ND, May 20, 2004 – GeoResources, Inc. (Nasdaq: GEOI) today reported first quarter 2004 net income of $84,000 or $0.02 per share on revenue of $1,152,000 compared to a 2003 first quarter net income of $162,000 or $0.04 per share on revenue of $1,135,000. Net income declined primarily due to increased maintenance expense in Western Star Drilling and increased income tax expense. Earnings before interest, taxes, depreciation, depletion and amortization (EBITDA) for the year was $265,000, a 21% decrease from the prior year. 1
GeoResources sold 29,000 BOE or 322 BOE per day during the first quarter 2004 compared to 32,000 BOE or 359 BOE per day in the first quarter 2003. The reduced production sold was attributable to normal production declines that were not offset by new production and approximately 1,000 extra barrels that remained in tanks at the end of the quarter due to delayed pickups from some of our lease tank batteries because of later winter weather conditions.
Very early in the second quarter the Company drilled the Grann et al 28-33 well in the Landa Field, Bottineau County, ND. The well provided essential technical information to make an application for a new secondary recovery unit in the Landa Field. On May 18, 2004 the Company petitioned the North Dakota Industrial Commission for the unitized management, operation and development of a portion of the field. Our proposed name of the new unit is the Northwest Landa Madison Unit (NWLMU) and GeoResources would be the Unit Operator with an approximate 90% working interest. As proposed, the NWLMU would have a total of nine wells, one of which would be converted to water injection. We believe the unitization and water injection program would increase both reserves and production from the field at minimal incremental cost.
During the first quarter 2004 sales from our leonardite operations increased 21% over the same period in 2003. Although our leonardite operations barely missed a positive gross margin during the quarter, we believe sales will continue to increase with sustained higher oil prices resulting in a positive gross margin in the near future.
Our Western Star Drilling subsidiary did not drill any wells for others or us during the first quarter a seasonally slow period due to weather conditions in the region. The rig was moved and maintenance was completed during the quarter allowing the rig to commence drilling our Landa Field well on April 1. After completion of our Landa Field well the rig was contracted to another operator and is currently drilling for that operator.
Company President J. P. Vickers said “Our first quarter 2004 earnings were not quite the level we had hoped, but operationally we believe our fundamental measures are strong and we see 2004 as being both a very busy and profitable year”.
1EBITDA is defined as earnings before interest, income taxes, depreciation and amortization, EBITDA 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 evaluating us. Our measure of EBITDA may not be the same as similar measures described by other companies. EBITDA is calculated as follows:
| | Quarter Ended | | Quarter Ended | |
| | March 31, 2004 | | March 31, 2003 | |
| | | | | |
Net Income (loss)
| $ 84,000 | | $ 185,000 | |
(Net income before cumulative | | | | |
effect of changes in accounting principles.) | | | | |
Add back: | | | | |
Interest expense
| 18,000 | | 22,000 | |
Income tax
| 6,000 | | (33,000) | |
Depreciation and amortization
| 157,000 | | 160,000 | |
EBITDA
| $ 265,000 | | $ 334,000 | |
| | | | | |
| | | | | |
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. In addition, 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, 2003, for meaningful cautionary language disclosure.
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GEORESOURCES, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| | Three Months Ended March 31, |
| |
| | 2004 | | 2003 |
OPERATING REVENUES: |
| |
|
Oil and gas sales | $ 896,325 | | $ 920,574 |
Leonardite sales | 255,236 | | 214,333 |
Drilling revenue | -- | | -- |
| |
| |
|
| | 1,151,561 | | 1,134,907 |
| |
| |
|
OPERATING COSTS AND EXPENSES: |
| |
|
Oil and gas production | 460,484 | | 445,112 |
Cost of leonardite sold | 258,134 | | 227,089 |
Drilling costs | 48,155 | | -- |
Depreciation and depletion | 156,858 | | 160,189 |
Selling, general and administrative | 124,988 | | 133,872 |
| |
| |
|
| | 1,048,619 | | 966,262 |
| |
| |
|
Operating income | 102,942 | | 168,645 |
| |
| |
|
OTHER INCOME (EXPENSE): |
| |
|
Interest expense | (18,395) | | (22,130) |
Interest income | 306 | | 177 |
Other income, net | 4,950 | | 5,400 |
|
| |
|
| | (13,139) | | (16,553) |
| |
| |
|
Income before income taxes | 89,803 | | 152,092 |
| |
| |
|
Income tax (expense) benefit | (6,000) | | 33,000 |
| |
| |
|
Income before cumulative effect of |
| |
|
change in accounting principle | 83,803 | | 185,092 |
| |
| |
|
Cumulative effect on prior years accounting change, net of tax | -- | | (23,000) |
| |
| |
|
Net income | $ 83,803 | | $ 162,092 |
| |
| |
|
EARNINGS PER SHARE:
|
| |
|
| |
| |
|
Income before cumulative effect of accounting change | $ .02 | | $ .05 |
Cumulative effect of accounting change | -- | | (.01) |
| |
| |
|
Net income, basic and diluted | $ .02 | | $ .04 |
| |
| |
|
PRO FORMA AMOUNTS, assuming retroactive application |
| |
|
of new accounting method: |
| |
|
| |
| |
|
Net income | $ 83,803 | | $ 185,092 |
| |
| |
|
Net income per share, basic and diluted | $ .02 | | $ .05 |
