NEWS RELEASE
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 SECOND QUARTER AND
SIX-MONTH RESULTS
Williston, ND August 16, 2004 – GeoResources, Inc., (Nasdaq: GEOI), today reported second quarter 2004 net income of $234,000, or $0.06 per basic and diluted share, on revenue of $1,634,000, compared to a 2003 net income of $67,000, or $0.02 per basic and diluted share, on revenue of $1,035,000. Earnings before interest, taxes, depreciation, depletion and amortization (EBITDA) for the second quarter 2004 was $483,000, compared to $292,000 for the second quarter 2003. 1
First-half 2004 net income was $317,000, or $0.09 per basic and diluted share, on revenue of $2,786,000, versus a net income of $229,000, or $0.06 per basic and diluted share, on revenue of $2,170,000 in the first half of 2003. EBITDA for the first half 2004 was $748,000, compared to $627,000 the first half 2003. Higher commodity prices, which averaged $31.95 per barrel of oil equivalent (BOE) for the first half of the year, were the primary driver of the improved results.
GeoResources sold a total of 31,000 BOE, or 337 BOE per day, during the second quarter 2004, compared to 34,000 BOE, or 374 BOE per day, in the second quarter 2003. The reduced production sold was attributable to normal production declines that were not offset by new production.
Although sales volumes were lower, the company received substantially higher average oil value per BOE resulting in an increase of $187,000, or 22%, for the three-months ended June 30, 2004, and $163,000, or 9%, for the six-months ended June 30, 2004, compared to the same periods in 2003 in spite of the lower sales volumes.
Leonardite revenue increased $94,000, or 46%, and $135,000, or 32%, respectively, for the three-and six-month periods ended June 30, 2004, compared to the prior periods due to higher production sold. Production increased 722 tons, or 42%, and 1,074 tons, or 32%, respectively, for the three- and six-month periods ended June 30, 2004 compared to the equivalent periods in 2003.
During the first half of 2004, Western Star Drilling Company drilled one well for GeoResources, one for another operator and initiated another well for a second operator. This compares to two wells drilled for GeoResources in the first half of 2003.
J.P. Vickers, President of GeoResources, said, “Continued strength in the oil and gas market led to a successful second quarter at GeoResources. We increased production at our Leonardite operations by 722 tons, or 42%. Our customer-base continues to drill using Western Star Drilling Company, which further bodes well for GeoResources. We continue to explore new opportunities to strengthen our operations and make 2004 a highly 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
June 30, 2004
June 30, 2003
Net income
$
234,000
$
67,000
Add back
Accounting change
--
--
Interest expense
20,000
22,000
Income tax
23,000
27,000
Depreciation and amortization
206,000
176,000
EBITDA
$
483,000
$
292,000
Six Months Ended
Six Months Ended
June 30, 2004
June 30, 2003
Net Income.
$
317,000
$
229,000
Add back:
Accounting change
--
23,000
Interest expense
39,000
45,000
Income tax
29,000
(6,000)
Depreciation and amortization
363,000
336,000
EBITDA
$
748,000
$
627,000
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.
--30--
GEORESOURCES, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| | Three Months Ended June 30, | | Six Months Ended June 30, |
| |
| | 2004 | | 2003 | | 2004 | | 2003 |
OPERATING REVENUES: | | | | | | | |
Oil and gas sales | $ 1,020,635 | | $ 833,396 | | $ 1,916,960 | | $ 1,753,970 |
Leonardite sales | 295,296 | | 201,668 | | 550,532 | | 416,001 |
Drilling revenue | 318,081 | | -- | | 318,081 | | -- |
| | | |
| |
| |
|
| | 1,634,012 | | 1,035,064 | | 2,785,573 | | 2,169,971 |
| | | |
| |
| |
|
OPERATING COSTS AND EXPENSES: | | |
| |
| |
|
Oil and gas production | 403,256 | | 391,410 | | 863,740 | | 836,522 |
Cost of leonardite sold | 245,297 | | 201,270 | | 503,431 | | 428,359 |
Drilling costs | 316,898 | | -- | | 365,053 | | -- |
Depreciation and depletion | 206,110 | | 175,760 | | 362,968 | | 335,949 |
Selling, general and administrative | 200,366 | | 162,560 | | 325,354 | | 296,432 |
| | | | | |
| |
|
| | 1,371,927 | | 931,000 | | 2,420,546 | | 1,897,262 |
| | | | | |
| |
|
Operating income | 262,085 | | 104,064 | | 365,027 | | 272,709 |
| | | |
| |
| |
|
OTHER INCOME (EXPENSE): | | |
| |
| |
|
Interest expense | (20,231) | | (22,461) | | (38,626) | | (44,591) |
Interest income | 9,852 | | 7,530 | | 10,158 | | 7,707 |
Other income, net | 4,950 | | 4,950 | | 9,900 | | 10,350 |
| | | | |
| |
|
| | (5,429) | | (9,981) | | (18,568) | | (26,534) |
| | | | | |
| |
|
Income before income taxes | 256,656 | | 94,083 | | 346,459 | | 246,175 |
| | | | | |
| |
|
Income tax (expense) benefit | (23,000) | | (27,000) | | (29,000) | | 6,000 |
| |
| |
| |
| |
|
Income before cumulative effect of change in |
| |
| |
| |
|
accounting principle | 233,656 | | 67,083 | | 317,459 | | 252,175 |
| |
| |
| |
| |
|
Cumulative effect on prior years accounting change, net of tax | -- | | -- | | -- | | (23,000) |
| | | | | | | | |
Net income | $ 233,656 | | $ 67,083 | | $ 317,459 | | $ 229,175 |
| | | | | | | | |
EARNINGS PER SHARE:
| | | | | | | |
| | | | | | | | |
Income before cumulative effect of accounting change | $ .06 | | $ .02 | | $ .09 | | $ .07 |
Cumulative effect of accounting change | -- | | -- | | -- | | (.01) |
| | | | | | | | |
Net income, basic and diluted | $ .06 | | $ .02 | | $ .09 | | $ .06 |
| | | | | | | | |
| |
See Notes to Consolidated Financial Statements. |
