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 2005 EARNINGS AND PROVIDES AN OPERATIONS UPDATE
Williston, ND, May 13, 2005 – GeoResources, Inc. (Nasdaq: GEOI) today reported first quarter 2005 net income of $273,355 or $0.07 per share on revenue of $1,855,185 compared to a 2004 first quarter net income of $83,803 or $0.02 per share on revenue of $1,151,561. Earnings before interest, taxes, depreciation, depletion and amortization (EBITDA) for the quarter was $517,694, a 95% increase from the same quarter of the prior year. 1
Oil and gas revenue during the first quarter was $1,158,448 generating gross profit of $721,664 versus revenue of $896,325 and gross profit of $435,841 for the same period in 2004. The improved results are attributable to higher oil prices and lower oil and gas production expenses. GeoResources sold 26,519 barrels of oil equivalent (BOE) or 295 BOE per day during the first quarter 2005 compared to 29,290 BOE or 322 BOE per day in the first quarter 2004.
In late April 2005 the Company initiated water injection in its Landa West Madison Unit in one of two injection wells in the unit. Conversion to injection into the second well is expected to occur later in the second quarter. The Company believes the unitization and water injection program will increase both reserves and production from the field with minimal incremental cost. The Company plans to begin drilling an exploratory well on its Kramer prospect in Bottineau County, North Dakota utilizing our Western Star Drilling Rig E-25. The Company also plans to drill an identified development location in the Leonard Field, also in Bottineau County. The timing of the wells will depend on the availability of the rig, which is contracted to other operators until early July. GeoResources owns a 100% working interest in each of these projects.
During the first quarter 2005 sales from leonardite operations increased 93% to $492,984 generating gross profit of $57,009. This compares to sales of $255,236 and gross loss of $2,898 during the same period in 2004. The current demand for drilling mud products remains strong.
The Company’s Western Star Drilling subsidiary drilled two wells for other operators in the first quarter 2005 compared to no wells drilled in the same quarter of 2004. Although the drilling segment generated $203,753 of revenue in the first quarter 2005 drilling costs were $86,153 higher than revenue due primarily to repairs and maintenance needed before the rig moved to its next project. Currently, Western Star has contracts for two wells for other operators, one of which is a horizontal lateral in an existing cased well where GeoResources has a 10% working interest.
Company President J. P. Vickers said, “Our first quarter 2005 earnings and cash flow were strong due primarily to higher oil prices. We used part of this cash flow to prepay $125,000 of our long-term debt over and above our regularly scheduled payments. We are pleased with our financial performance and optimistic about our future.”
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 |
| | |
| | March 31, 2005 | | March 31, 2004 |
| | | | |
Net Income | $ 273,355 | | $ 83,803 |
Add back: | | |
|
Interest expense | 24,247 |
| 18,395 |
Income tax | 31,000 |
| 6,000 |
Depreciation and amortization | 189,092 |
| 156,858 |
EBITDA | $ 517,694 | | $ 265,056 |
| | | | |
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, 2004, for meaningful cautionary language disclosure.
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PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
GEORESOURCES, INC., AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
| | March 31, | | December 31, |
| | 2005 | | 2004 |
ASSETS | | | |
CURRENT ASSETS: | | | |
Cash and equivalents | $ 701,377 | | $ 715,551 |
Trade receivables, net | 912,100 | | 1,030,716 |
Inventories | 223,833 | | 235,405 |
Prepaid expenses | 97,563 | | 65,762 |
Total current assets | 1,934,873 | | 2,047,434 |
PROPERTY, PLANT AND EQUIPMENT, at cost: |
| |
|
Oil and gas properties, using the |
| |
|
full cost method of accounting: |
| |
|
Properties being amortized | 26,169,856 | | 25,997,466 |
Properties not subject to amortization | 213,282 | | 213,921 |
Drilling rig and equipment | 1,550,528 | | 1,533,838 |
Leonardite plant and equipment | 3,299,041 | | 3,284,466 |
Other | 748,792 | | 756,535 |
| | 31,981,499 | | 31,786,226 |
Less accumulated depreciation, depletion |
| |
|
amortization and impairment | (21,295,569) | | (21,113,489) |
Net property, plant and equipment | 10,685,930 | | 10,672,737 |
TOTAL ASSETS | $ 12,620,803 | | $ 12,720,171 |
| |
| |
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
| |
|
CURRENT LIABILITIES: |
| |
|
Accounts payable | $ 899,504 | | $ 996,624 |
Accrued expenses | 324,515 | | 382,693 |
Current portions of capital lease obligations | 57,143 | | 64,286 |
Current maturities of long-term debt | 527,057 | | 518,750 |
Total current liabilities | 1,808,219 | | 1,962,353 |
CAPITAL LEASE OBLIGATIONS, less current portions | 45,315 | | 54,847 |
LONG-TERM DEBT, less current maturities | 951,042 | | 1,205,729 |
ASSET RETIREMENT OBLIGATION | 1,916,140 | | 1,893,510 |
DEFERRED INCOME TAXES | 547,000 | | 524,000 |
Total liabilities | 5,267,716 | | 5,640,439 |
STOCKHOLDERS' EQUITY: |
| |
|
Common stock, par value $.01 per share; |
| |
|
authorized 10,000,000 shares; |
| |
|
issued and outstanding |
| |
|
3,723,977 shares | 37,240 | | 37,240 |
Additional paid-in capital | 295,932 | | 295,932 |
Retained earnings | 7,019,915 | | 6,746,560 |
Total stockholders' equity | 7,353,087 | | 7,079,732 |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ 12,620,803 | | $ 12,720,171 |
| |
| |
|
| |
| |
|
GEORESOURCES, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| | Three Months Ended March 31, |
| |
| | 2005 | | 2004 |
OPERATING REVENUES: |
| |
|
Oil and gas sales | $ 1,158,448 | | $ 896,325 |
Leonardite sales | 492,984 | | 255,236 |
Drilling revenue | 203,753 | | -- |
| |
| |
|
| | 1,855,185 | | 1,151,561 |
| |
| |
|
OPERATING COSTS AND EXPENSES: |
| |
|
Oil and gas production | 436,784 | | 460,484 |
Cost of leonardite sold | 435,975 | | 258,134 |
Drilling costs | 289,906 | | 48,155 |
Depreciation and depletion | 189,092 | | 156,858 |
Selling, general and administrative | 178,244 | | 124,988 |
| |
| |
|
| | 1,530,001 | | 1,048,619 |
| |
| |
|
Operating income | 325,184 | | 102,942 |
| |
| |
|
OTHER INCOME (EXPENSE): |
| |
|
Interest expense | (24,247) | | (18,395) |
Interest income | 1,143 | | 306 |
Other income, net | 2,275 | | 4,950 |
|
| |
|
| | (20,829) | | (13,139) |
| |
| |
|
Income before income taxes | 304,355 | | 89,803 |
| |
| |
|
Income tax expense | (31,000) | | (6,000) |
| |
| |
|
Net income | $ 273,355 | | $ 83,803 |
| |
| |
|
EARNINGS PER SHARE:
|
| |
|
| |
| |
|
Net income, basic and diluted | $ .07 | | $ .02 |
| |
| |
|
| |
| |
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