______________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 5, 2009
GEORESOURCES, INC.
(Exact name of registrant as specified in its charter)
| | | | | |
| COLORADO | | 0-8041 | | 84-0505444 |
| | | | | |
| (State or other jurisdiction | | (Commission | | (IRS Employer |
| of incorporation) | | File Number) | | Identification No.) |
110 Cypress Station Drive, Suite 220
Houston, Texas 77090
(Address of principal executive offices) (Zip Code)
(281) 537-9920
(Registrant’s telephone number, including area code)
| Not Applicable |
| |
| (Former Name or Former Address, if Changed Since Last Report) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
___ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
___ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
___ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
___ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
______________________________________________________________________________
On November 5, 2009, GeoResources, Inc. issued a press release announcing financial results for the third quarter ended September 30, 2009. A copy of the press release is furnished with this report as Exhibit 99.9, and is incorporated herein by reference.
The information in this report is being furnished, not filed, for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and will not be incorporated by reference into any filing under the Securities Act of 1933, as amended.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
| | | (d) | | Exhibits: |
| | | | | |
| | | | | The following exhibit is included with this Current Report on Form 8-K: |
| | | |
| Exhibit No. | | Description |
| | | |
| 99.9 | | GeoResources, Inc. Press Release dated November 5, 2009. |
SIGNATURE
Pursuant to the requirement of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| | | | | | | |
| | | GEORESOURCES, INC | | |
| | | | | | | |
| | | By: | | /s/ Frank A. Lodzinski Frank A. Lodzinski, President | | |
Date: November 9, 2009
EXHIBIT INDEX
| | | |
| Exhibit No. | | Description |
| 99.9 | | GeoResources, Inc. Press Release dated November 5, 2009. |
EXHIBIT 99.9
Contact: Cathy Kruse
Telephone: 701-572-2020 ext 113
cathyk@geoi.net
FOR IMMEDIATE RELEASE
GeoResources, Inc. Reports Third Quarter and
Nine-Month Financial Results
Reports nine-month earnings of $7.4 million and EBITDAX of $33.0 million.
Houston, Texas November 5, 2009 – GeoResources, Inc., (NASDAQ:GEOI), today announced its financial and operating results for the three and nine months ended September 30, 2009. The following tables summarize the results of operations as compared to similar periods in 2008.
| | | Three Months Ended September 30, (In thousands, except Earnings per share) | |
| | | 2009 | | | 2008 | |
| | | | | | | |
| Total revenue | | $ | 22,985 | | | $ | 23,593 | |
| Net income | | $ | 3,428 | | | $ | 5,799 | |
| Earnings per share (diluted) | | $ | 0.21 | | | $ | 0.35 | |
| EBITDAX (See below) | | $ | 14,678 | | | $ | 13,574 | |
| | | Nine Months Ended September 30, (In thousands, except Earnings per share) | |
| | | 2009 | | | 2008 | |
| | | | | | | |
| Total revenue | | $ | 56,812 | | | $ | 75,745 | |
| Net income | | $ | 7,404 | | | $ | 17,813 | |
| Earnings per share (diluted) | | $ | 0.46 | | | $ | 1.14 | |
| EBITDAX (See below) | | $ | 33,015 | | | $ | 44,502 | |
| | | Percent Increase (Decrease) | | | Three Months Ended September 30, |
| | | | | 2009 | | | 2008 |
| | | | | | | | | | | |
| Gas Production (MMcf) | | 132% | | | | 1,678 | | | | 723 |
| Oil Production (MBbls) | | 27% | | | | 212 | | | | 167 |
| Barrel of oil equivalent (MBOE) | | 71% | | | | 492 | | | | 288 |
| Average Price Gas before Hedge Settlements (per Mcf) | | -71% | | | $ | 2.67 | | | $ | 9.13 |
| Average Price Oil before Hedge Settlements (per Bbl) | | -47% | | | $ | 61.65 | | | $ | 116.01 |
| Average Price Gas after Hedge Settlements (per Mcf) | | -58% | | | $ | 3.87 | | | $ | 9.12 |
| Average Price Oil after Hedge Settlements (per Bbl) | | -30% | | | $ | 63.55 | | | $ | 90.60 |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | Percent Increase (Decrease) | | | Nine Months Ended September 30, |
| | | | | 2009 | | | | 2008 |
| | | | | | | | | | | |
| Gas Production (MMcf) | | 52% | | | | 3,430 | | | | 2,251 |
| Oil Production (MBbls) | | 9% | | | | 601 | | | | 553 |
| Barrel of oil equivalent (MBOE) | | 26% | | | | 1,173 | | | | 928 |
| Average Price Gas before Hedge Settlements (per Mcf) | | -67% | | | $ | 3.06 | | | $ | 9.24 |
| Average Price Oil before Hedge Settlements (per Bbl) | | -53% | | | $ | 51.45 | | | $ | 109.81 |
| Average Price Gas after Hedge Settlements (per Mcf) | | -55% | | | $ | 3.95 | | | $ | 8.82 |
| Average Price Oil after Hedge Settlements (per Bbl) | | -34% | | | $ | 59.23 | | | $ | 89.50 |
For the three months ended September 30, 2009, the Company reported total revenues of $23.0 million and net income of $3.4 million, or $0.21 per basic and diluted common share. Oil and natural gas production increased substantially in the third quarter 2009 compared to the same period in 2008. Natural gas production increased to 1,678 MMcf from 723 MMcf, an increase of 132%. Oil production for the third quarter increased to 212 MBbls from 167 MBbls in the prior year’s period, an increase of 27%. The average realized price of natural gas after hedge settlements was $3.87 per Mcf for the third quarter of 2009, 58% less than the third quarter of 2008. The average realized price of oil after hedge settlements for the third quarter of 2009 was $63.55 per barrel or 30% less than the third quarter in the prior year.
For the first nine-months of 2009, revenues totaled $56.8 million and net income was $7.4 million or $0.46 per basic and diluted common share. For the nine months ended September 30, 2009, natural gas production totaled 3,430 MMcf or 52% greater than the 2,251 MMcf produced during the first nine months of 2008. Oil production for the first nine months of 2009 increased 9% to 601 Mbbls from 553 Mbbls in the first nine months of 2008. The average realized price of natural gas was $3.95 per Mcf for the first nine months of 2009 or 55% less than the first nine months of the prior year. The average realized price of oil was $59.23 per barrel or 34% less for the first nine months of 2009 than the first nine months in the prior year.
Earnings before interest, income taxes, depreciation, depletion and amortization, and exploration expense (“EBITDAX”) increased 8% to approximately $14.7 million for the third quarter 2009 compared $13.6 for the third quarter 2008. EBITDAX for the first nine months of 2009 decreased 26% to approximately $33.0 million compared to $44.5 million for the same period in 2008.
The following tables reconcile reported net income to EBITDAX for the periods indicated (in thousands):
| | | Three Months Ended September 30, | |
| | | 2009 | | | 2008 | |
| EBITDAX (1) | | | | | | |
| | | | | | | |
| Net income | | $ | 3,428 | | | $ | 5,799 | |
| Add back: | | | | | | | | |
| Interest expense | | | 1,586 | | | | 975 | |
| Income taxes: | | | | | | | | |
| Current | | | 356 | | | | 1,679 | |
| Deferred | | | 2,184 | | | | 2,149 | |
| Depreciation, depletion and amortization | | | 6,310 | | | | 3,833 | |
| Hedge and derivative contracts | | | 194 | | | | (890 | ) |
| Exploration and impairments | | | 620 | | | | 29 | |
| EBITDAX | | $ | 14,678 | | | $ | 13,574 | |
| | | Nine Months Ended September 30, | |
| | | 2009 | | | 2008 | |
| | | | | | | |
| Net income | | $ | 7,404 | | | $ | 17,813 | |
| Add back: | | | | | | | | |
| Interest expense | | | 3,549 | | | | 3,858 | |
| Income taxes : | | | | | | | | |
| Current | | | (176 | ) | | | 4,438 | |
| Deferred | | | 5,292 | | | | 6,532 | |
| Depreciation, depletion and amortization | | | 15,503 | | | | 11,283 | |
| Hedge and derivative contracts | | | 327 | | | | 47 | |
| Exploration and impairments | | | 1,116 | | | | 531 | |
| EBITDAX | | $ | 33,015 | | | $ | 44,502 | |
(1) As used herein, EBITDAX is calculated as earnings before interest, income taxes, depreciation, depletion and amortization, and exploration expense and further includes impairments and hedge ineffectiveness and income or loss on derivative contracts. EBITDAX 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 evaluation of our operating performance.
Comments
Mr. Frank A. Lodzinski, CEO and president, commented “Our results for the third quarter reflect our continued profitable growth. The third quarter comparison to last year is particularly relevant, as it demonstrates our production growth excluding prior year divestitures and also demonstrates the considerable improvement in per unit lease operating expenses. On a unit-of-production basis, costs decreased by 54%. While part of this decrease is a result of general cost reductions within the industry, the greater impact is a direct result of our business strategy and reflects re-engineering projects, development drilling, acquisitions of properties with lower operating costs and divestitures of properties with higher operating costs. Increased production is a direct result of our successful drilling programs in the Bakken Shale of the Williston Basin and our Giddings Austin Chalk program and of the acquisitions we have made in these core areas. These programs are expected to continue to contribute to our growth through continuous drilling. To that end, our joint venture in the Bakken is currently running three rigs and a fourth rig may be added from time to time. In addition, we will spud our next Austin Chalk well this month after a suspension of drilling for the past several months. While our eastern Grimes County wells were predominately gas, our next several locations are located in western Grimes County and are expected to yield approximately 50% oil and natural gas liquids. We realized substantial net income and EBITDAX for the third quarter, in the amounts of $3.4 million and $14.7 million, respectively. We expect our future earnings to benefit from further increases in production and lower per-unit lease operating expenses. While reductions in the costs of materials and services favorably impacted lease operating expenses, the bulk of the reductions are a direct result of our field re-engineering and development drilling activities. We will continue to focus on cash flow and our bottom line while we pursue our business plan.”
Lodzinski further commented, “In July, we entered into our Second Amended and Restated Credit Agreement. The facility was increased to $250 million and extended to October 16, 2012. The initial borrowing base was set at $135 million and provided for interest rates of (a) LIBOR plus 2.25% to 3.00% or (b) the prime lending rate plus 1.25% to 2.00%, depending upon the amount borrowed. The increased and extended facility requires a redetermination of the borrowing base as of November 1 and May 1 of each year. Accordingly, our borrowing base redetermination is currently pending and we expect our borrowing base to, at least, be maintained until the next redetermination. The participating banks include, Wachovia Bank, Comerica Bank, BBVA Compass, U.S. Bank, Frost National Bank, Bank of Texas and Natixis. Our strong cash flows, working capital and liquidity, position us favorably to continue our growth.”
About GeoResources, Inc.
GeoResources, Inc. is an independent oil and gas company engaged in the acquisition and development of oil and gas reserves through an active and diversified program which includes purchases of reserves, re-engineering, and development and exploration activities primarily focused in three core areas – the Southwest, Gulf Coast, and the Williston Basin. For more information, visit our website at www.georesourcesinc.com.
Forward-Looking Statements
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. 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 our 10-K/A for the year ended December 31, 2008 and the other SEC reports of the Company and any and all other documents filed with the SEC regarding information about GeoResources for meaningful cautionary language in respect of the forward-looking statements herein. Interested persons are able to obtain free copies of filings containing information about GeoResources, without charge, at the SEC’s Internet site (http://www.sec.gov).
| GEORESOURCES, INC and SUBSIDIARIES | |
| CONSOLIDATED BALANCE SHEETS | |
| (In thousands, except share and per share amounts) | |
| | | | | | | | |
| | | | September 30, | | | December 31, | |
| | | | 2009 | | | 2008 | |
| ASSETS | | (unaudited) | | | | |
| | | | | | | | |
| Current assets: | | | | | | |
| | | | | | | | |
| | Cash | | $ | 11,936 | | | $ | 13,967 | |
| | Accounts receivable | | | | | | | | |
| | Oil and gas revenues | | | 11,131 | | | | 11,439 | |
| | Joint interest billings and other | | | 14,298 | | | | 7,172 | |
| | Affiliated partnerships | | | 289 | | | | 2,905 | |
| | Notes receivable | | | 120 | | | | 120 | |
| | Derivative financial instruments | | | 722 | | | | 8,200 | |
| | Income taxes receivable | | | 2,962 | | | | 2,165 | |
| | Prepaid expenses and other | | | 2,650 | | | | 3,923 | |
| | | | | | | | | | |
| | Total current assets | | | 44,108 | | | | 49,891 | |
| | | | | | | | | | |
| Oil and gas properties, successful efforts method: | | | | | | | | |
| | | | | | | | | | |
| | Proved properties | | | 279,240 | | | | 204,536 | |
| | Unproved properties | | | 9,890 | | | | 2,409 | |
| Office and other equipment | | | 797 | | | | 1,025 | |
| Land | | | | 96 | | | | 96 | |
| | | | | 290,023 | | | | 208,066 | |
| | | | | | | | | | |
| | Less accumulated depreciation, depletion and amortization | | | (41,277 | ) | | | (26,486 | ) |
| | | | | | | | | | |
| | Net property and equipment | | | 248,746 | | | | 181,580 | |
| | | | | | | | | | |
| | | | | | | | | | |
| Equity in oil and gas limited partnerships | | | 4,099 | | | | 3,266 | |
| | | | | | | | | | |
| Derivative financial instruments | | | 755 | | | | 6,409 | |
| | | | | | | | | | |
| Deferred financing costs and other | | | 3,768 | | | | 2,388 | |
| | | | | | | | | | |
| | | | $ | 301,476 | | | $ | 243,534 | |
| GEORESOURCES, INC and SUBSIDIARIES | |
| CONSOLIDATED BALANCE SHEETS | |
| (In thousands, except share and per share amounts) | |
| | | | | | | |
| | | September 30, | | | December 31, | |
| | | 2009 | | | 2008 | |
| | | (unaudited) | | | | |
| LIABILITIES AND STOCKHOLDERS' EQUITY | | | | | | |
| | | | | | | |
| Current liabilities: | | | | | | |
| | | | | | | |
| Accounts payable | | $ | 4,066 | | | $ | 10,750 | |
| Accounts payable to affiliated partnerships | | | 9,172 | | | | 10,310 | |
| Revenues and royalties payable | | | 13,898 | | | | 11,701 | |
| Drilling advances | | | 38 | | | | 2,169 | |
| Accrued expenses | | | 1,859 | | | | 1,506 | |
| Derivative financial instruments | | | 3,364 | | | | 1,572 | |
| | | | | | | | | |
| Total current liabilities | | | 32,397 | | | | 38,008 | |
| | | | | | | | | |
| Long-term debt | | | 104,000 | | | | 40,000 | |
| | | | | | | | | |
| Deferred income taxes | | | 17,410 | | | | 17,868 | |
| | | | | | | | | |
| Asset retirement obligations | | | 5,741 | | | | 5,418 | |
| | | | | | | | | |
| Derivative financial instruments | | | 1,066 | | | | 1,245 | |
| | | | | | | | | |
| Stockholders' equity: | | | | | | | | |
| Common stock, par value $0.01 per share; authorized 100,000,000 | | | | | | | | |
| shares; issued and outstanding: 16,241,717 | | | 162 | | | | 162 | |
| Additional paid-in capital | | | 113,587 | | | | 112,523 | |
| Accumulated other comprehensive (loss) income | | | (1,318 | ) | | | 7,283 | |
| Retained earnings | | | 28,431 | | | | 21,027 | |
| | | | | | | | | |
| Total stockholders' equity | | | 140,862 | | | | 140,995 | |
| | | | | | | | | |
| | | $ | 301,476 | | | $ | 243,534 | |
| | | | | | | | | |
| GEORESOURCES, INC. and SUBSIDIARIES | |
| CONSOLIDATED STATEMENTS OF INCOME | |
| (In thousands, except share and per share amounts) | |
| (unaudited) | |
| | | | | | | | | | | | | |
| | | Three Months Ended September 30, | | | Nine Months Ended September 30, | |
| | | 2009 | | | 2008 | | | 2009 | | | 2008 | |
| | | | | | | | | | | | | |
| Revenue: | | | | | | | | | | | | |
| Oil and gas revenues | | $ | 19,980 | | | $ | 21,763 | | | $ | 49,109 | | | $ | 69,344 | |
| Partnership management fees | | | 151 | | | | 585 | | | | 847 | | | | 1,419 | |
| Property operating income | | | 398 | | | | 381 | | | | 1,312 | | | | 1,052 | |
| Gain on sale of property and equipment | | | 57 | | | | 308 | | | | 1,545 | | | | 2,269 | |
| Partnership income | | | 2,374 | | | | 366 | | | | 3,834 | | | | 1,021 | |
| Interest and other | | | 25 | | | | 190 | | | | 165 | | | | 640 | |
| | | | | | | | | | | | | | | | | |
| Total revenue | | | 22,985 | | | | 23,593 | | | | 56,812 | | | | 75,745 | |
| | | | | | | | | | | | | | | | | |
| Expenses: | | | | | | | | | | | | | | | | |
| Lease operating expense | | | 4,395 | | | | 5,594 | | | | 13,202 | | | | 17,174 | |
| Severance taxes | | | 1,200 | | | | 2,088 | | | | 2,562 | | | | 6,405 | |
| Re-engineering and workovers | | | 761 | | | | 649 | | | | 2,057 | | | | 2,331 | |
| Exploration expense | | | 620 | | | | 29 | | | | 988 | | | | 531 | |
| Impairment of oil and gas properties | | | - | | | | - | | | | 128 | | | | - | |
| General and administrative expense | | | 1,951 | | | | 1,688 | | | | 5,976 | | | | 5,333 | |
| Depreciation, depletion and amortization | | | 6,310 | | | | 3,833 | | | | 15,503 | | | | 11,283 | |
| Hedge ineffectiveness | | | 111 | | | | (890 | ) | | | 186 | | | | 47 | |
| Loss on derivative contracts | | | 83 | | | | - | | | | 141 | | | | - | |
| Interest | | | 1,586 | | | | 975 | | | | 3,549 | | | | 3,858 | |
| | | | | | | | | | | | | | | | | |
| Total expense | | | 17,017 | | | | 13,966 | | | | 44,292 | | | | 46,962 | |
| | | | | | | | | | | | | | | | | |
| Income before income taxes | | | 5,968 | | | | 9,627 | | | | 12,520 | | | | 28,783 | |
| | | | | | | | | | | | | | | | | |
| Income tax expense (benefit): | | | | | | | | | | | | | | | | |
| Current | | | 356 | | | | 1,679 | | | | (176 | ) | | | 4,438 | |
| Deferred | | | 2,184 | | | | 2,149 | | | | 5,292 | | | | 6,532 | |
| | | | 2,540 | | | | 3,828 | | | | 5,116 | | | | 10,970 | |
| | | | | | | | | | | | | | | | | |
| Net income | | $ | 3,428 | | | $ | 5,799 | | | $ | 7,404 | | | $ | 17,813 | |
| | | | | | | | | | | | | | | | | |
| Net income per share (basic) | | $ | 0.21 | | | $ | 0.36 | | | $ | 0.46 | | | $ | 1.16 | |
| | | | | | | | | | | | | | | | | |
| Net income per share (diluted) | | $ | 0.21 | | | $ | 0.35 | | | $ | 0.46 | | | $ | 1.14 | |
| | | | | | | | | | | | | | | | | |
| Weighted average shares outstanding: | | | | | | | | | | | | | | | | |
| Basic | | | 16,241,717 | | | | 16,236,716 | | | | 16,241,717 | | | | 15,384,864 | |
| | | | | | | | | | | | | | | | | |
| Diluted | | | 16,323,353 | | | | 16,440,755 | | | | 16,241,717 | | | | 15,582,284 | |
| CONSOLIDATED STATEMENTS OF CASH FLOWS | |
| (In thousands, except share and per share amounts) | |
| (unaudited) | |
| | | | | | | |
| | | | | | | |
| | | Nine Months Ended September 30, | |
| Cash flows from operating activities: | | 2009 | | | 2008 | |
| Net income | | $ | 7,404 | | | $ | 17,813 | |
| Adjustments to reconcile net income to net cash provided | | | | | | | | |
| by operating activities: | | | | | | | | |
| Depreciation, depletion and amortization | | | 15,503 | | | | 11,283 | |
| Unproved property impairments | | | - | | | | 483 | |
| Proved property impairments | | | 128 | | | | - | |
| Gain on sale of property and equipment | | | (1,545 | ) | | | (2,269 | ) |
| Accretion of asset retirement obligations | | | 271 | | | | 304 | |
| Unrealized gain on derivative contracts | | | (153 | ) | | | - | |
| Amortization of loss on canceled hedge contract | | | 363 | | | | - | |
| Hedge ineffectiveness loss | | | 186 | | | | 47 | |
| Partnership income | | | (3,834 | ) | | | (1,021 | ) |
| Partnership distributions | | | 1,355 | | | | 551 | |
| Deferred income taxes | | | 5,292 | | | | 6,532 | |
| Non-cash compensation | | | 1,064 | | | | 462 | |
| Changes in assets and liabilities: | | | | | | | | |
| Increase in accounts receivable | | | (5,593 | ) | | | (155 | ) |
| Decrease in notes receivable | | | 245 | | | | 555 | |
| Increase in prepaid expense and other | | | (355 | ) | | | (1,499 | ) |
| Increase (decrease) in accounts payable and accrued expense | | | (7,403 | ) | | | 5,514 | |
| Net cash provided by operating activities | | | 12,928 | | | | 38,600 | |
| | | | | | | | | |
| Cash flows from investing activities: | | | | | | | | |
| Proceeds from sale of property and equipment | | | 2,660 | | | | 20,960 | |
| Additions to property and equipment | | | (81,619 | ) | | | (43,012 | ) |
| Investment in oil and gas limited partnership | | | - | | | | (978 | ) |
| Net cash used in investing activities | | | (78,959 | ) | | | (23,030 | ) |
| | | | | | | | | |
| Cash flows from financing activities: | | | | | | | | |
| Issuance of common stock | | | - | | | | 32,187 | |
| Issuance of long-term debt | | | 64,000 | | | | - | |
| Reduction of long-term debt | | | - | | | | (46,000 | ) |
| Net cash provided by (used in) financing activities | | | 64,000 | | | | (13,813 | ) |
| | | | | | | | | |
| Net (decrease) increase in cash and cash equivalents | | | (2,031 | ) | | | 1,757 | |
| | | | | | | | | |
| Cash and cash equivalents at beginning of period | | | 13,967 | | | | 24,430 | |
| | | | | | | | | |
| Cash and cash equivalents at end of period | | $ | 11,936 | | | $ | 26,187 | |
| | | | | | | | | |
| Supplementary information: | | | | | | | | |
| Interest paid | | $ | 2,938 | | | $ | 3,708 | |
| Income taxes paid | | $ | 677 | | | $ | 4,210 | |
