NEWS RELEASE
FOR IMMEDIATE RELEASE
For:
GeoResources, Inc.
Contact:
Cathy Kruse
P. O. Box 1505
Telephone:
(701) 572-2020
Williston, ND 58802
cathyk@geoi.net
GEORESOURCES, INC. REPORTS 2006 RESULTS
WILLISTON, N.D. -- April 3, 2007 -- GeoResources, Inc., (Nasdaq: GEOI), today reported net income of $1,742,337, or $0.46 per basic share, on revenue of $8,877,506 for the year ended December 31, 2006. This compares to net income of $2,179,473 or $0.58 per basic share, on revenue of $7,183,921 in 2005. In 2005, net income included a one time gain of $348,743, on the involuntary conversion of the Company’s leonardite facility and 2006 net income included $407,993 of expense related to the merger agreement with Southern Bay Oil & Gas, L.P. and Chandler Energy, LLC. Operating income for 2006 was $2,807,485 versus $2,244,016 in 2005. Earnings before interest, taxes, depreciation, depletion and amortization (EBITDA) for the year was $3,283,248 compared to $3,272,837 during 2005. 1
Oil and gas revenue in 2006 was $7,235,423 on production of 137,347 net BOE, for an average realized price of $52.68 per BOE. In 2005 the company generated $5,824,049 of revenue on 120,714 BOE, an average of $48.25 per BOE. The oil and gas business segment generated $3,661,727 of operating income before SG&A in 2006 versus $2,964,640 of operating income before SG&A in 2005. Proved reserves were 2,766,000 barrels of oil and 1,130,000 Mcf of natural gas or 2,954,000 BOE at year-end 2006 versus 3,045,000 BOE at year-end 2005. The standardized measure of discounted future cash flows was $28,891,000.
For the quarter ended December 31, 2006, GeoResources sold a total of 36,772 BOE, versus 34,894 BOE sold during the same period in 2005 and 33,548 BOE sold during the third quarter of 2006.
GeoResources’ subsidiary, Western Star Drilling Company (WSDC), reported 126 operating days for the year generating drilling revenue of $1,642,083, a 21% increase compared to $1,359,872 of drilling revenue in 2005.
J.P. Vickers, President of GeoResources, said, “Increases in revenue and operating income were driven by higher production volumes and strong oil prices that were somewhat offset by slightly lower natural gas prices. Much of the production increase came from the Hammond Field in Carter County Montana, which we successfully brought online in late September.”
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:
Year Ended | Year Ended | ||
December 31, 2006 | December 31, 2005 | ||
Net Income. | $ 1,742,337 | $ 2,179,473 | |
Add back: | |||
Interest expense | 25,445 | 87,592 | |
Income tax | 523,043 | 263,087 | |
Depreciation and amortization | 992,423 | 742,685 | |
EBITDA | $ 3,283,248 | $ 3,272,837 | |
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, 2006, for meaningful cautionary language disclosure.
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GEORESOURCES, INC., AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2006 AND 2005
ASSETS | |||
CURRENT ASSETS: | 2006 | 2005 | |
Cash and equivalents | $ 889,766 | $ 1,669,882 | |
Trade receivables, net | 1,437,093 | 1,109,202 | |
Crude oil inventory | 141,549 | 113,648 | |
Prepaid expenses | 47,268 | 25,827 | |
Total current assets | 2,515,676 | 2,918,556 | |
PROPERTY, PLANT AND EQUIPMENT, at cost: | |||
Oil and gas properties, using the full cost method | |||
of accounting: | |||
Properties being amortized | 30,685,572 | 27,842,549 | |
Properties not subject to amortization | 224,297 | 202,257 | |
Drilling rig and equipment | 1,923,035 | 1,607,094 | |
Other | 861,078 | 849,834 | |
33,693,982 | 30,501,734 | ||
Less accumulated depreciation, depletion, | |||
amortization and impairment | (20,058,541) | (19,001,585) | |
Net property, plant and equipment | 13,635,441 | 11,500,149 | |
LEONARDITE ASSETS HELD FOR SALE | 590,225 | 281,015 | |
TOTAL ASSETS | $ 16,741,342 | $ 14,699,720 | |
LIABILITIES AND STOCKHOLDERS' EQUITY | |||
CURRENT LIABILITIES: | |||
Accounts payable | $ 1,649,972 | $ 1,152,532 | |
Accrued expenses | 320,692 | 293,505 | |
Income taxes payable | 60,551 | 64,000 | |
Current portions of capital lease obligations | 13,298 | 41,549 | |
Current maturities of long-term debt | -- | 523,941 | |
Total current liabilities | 2,044,513 | 2,075,527 | |
CAPITAL LEASE OBLIGATIONS, less current portions | -- | 13,298 | |
LONG-TERM DEBT, less current maturities | -- | 177,638 | |
ASSET RETIREMENT OBLIGATIONS | 2,521,840 | 2,324,690 | |
DEFFERED INCOME TAXES: | |||
Related to continuing operations | 768,000 | 521,000 | |
Related to discontinued operations | 268,000 | 232,000 | |
Total liabilities | 5,602,353 | 5,344,153 | |
CONTINGENCIES (NOTE J) | |||
STOCKHOLDERS' EQUITY: | |||
Common stock, par value $.01 per share; authorized | |||
10,000,000 shares; issued and outstanding, 3,782,769 | |||
and 3,765,269 shares, respectively | 37,828 | 37,653 | |
Additional paid-in capital | 432,791 | 391,881 | |
Retained earnings | 10,668,370 | 8,926,033 | |
Total stockholders' equity | 11,138,989 | 9,355,567 | |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ 16,741,342 | $ 14,699,720 | |
GEORESOURCES, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004
2006 | 2005 | 2004 | |||
OPERATING REVENUES: | |||||
Oil and gas | $ 7,235,423 | $ 5,824,049 | $ 4,452,114 | ||
Drilling | 1,642,083 | 1,359,872 | 1,077,367 | ||
8,877,506 | 7,183,921 | 5,529,481 | |||
OPERATING COSTS AND EXPENSES: | |||||
Oil and gas production | 2,798,329 | 2,303,238 | 1,922,479 | ||
Drilling costs | 1,485,101 | 1,258,258 | 1,009,051 | ||
Depreciation, depletion and amortization | 992,423 | 742,685 | 743,246 | ||
Selling, general and administrative | 794,168 | 635,724 | 560,391 | ||
6,070,021 | 4,939,905 | 4,235,167 | |||
Operating income | 2,807,485 | 2,244,016 | 1,294,314 | ||
OTHER INCOME (EXPENSE): | |||||
Interest expense | (25,445) | (87,592) | (91,363) | ||
Interest income | 67,665 | 18,649 | 10,697 | ||
Professional fees related to proposed merger | (407,933) | -- | -- | ||
Other, net | 20,818 | 17,178 | 20,027 | ||
(344,895) | (51,765) | (60,639) | |||
Income before income taxes | 2,462,590 | 2,192,251 | 1,233,675 | ||
INCOME TAX EXPENSE | 523,043 | 263,087 | 114,287 | ||
Income from continuing operations | 1,939,547 | 1,929,164 | 1,119,388 | ||
DISCONTINUED OPERATIONS: | |||||
Loss from leonardite operations | (299,498) | (216,920) | (10,542) | ||
Income tax (expense) benefit | 102,288 | 118,486 | (3,000) | ||
Gain on involuntary conversion of leonardite facility, net of tax of $149,000 | -- | 348,743 | -- | ||
(197,210) | 250,309 | (13,542) | |||
Net Income | $ 1,742,337 | $ 2,179,473 | $ 1,105,846 | ||
EARNINGS PER SHARE: | |||||
Income from continuing operations | $ .51 | $ .51 | $ .30 | ||
Income (loss) from discontinued operations | (.05) | .07 | -- | ||
Net Income, basic | $ .46 | $ .58 | $ .30 | ||
Income from continuing operations | $ .50 | $ .50 | $ .30 | ||
Income (loss) from discontinued operations | (.05) | .07 | -- | ||
Net income, diluted | $ .45 | $ .57 | $ .30 | ||
Weighted average number of shares outstanding | 3,776,720 | 3,744,488 | 3,723,977 | ||
Dilutive potential shares – | |||||
Stock options | 62,028 | 81,942 | -- | ||
Adjusted weighted average shares | 3,838,748 | 3,826,430 | 3,723,977 |
