Exhibit 99.1
FOR IMMEDIATE RELEASE
For: GeoResources, Inc. Contact: Cathy Kruse
P. O. Box 1505 (701) 572-2020
Williston, ND 58802 ir@geoi.net
GeoResources, Inc. Reports Third Quarter and Nine Months Results
WILLISTON, N.D.- November 17, 2003 - GeoResources, Inc.,
(NASDAQ: GEOI) today announced financial results for the quarter and nine
months ended September 30, 2003. The company reported net income for the
quarter of $171,153 or $0.05 per share on revenue of $1,216,015 versus net
income of $103,994 or $0.03 per share on revenue of $1,063,495 in the
comparable quarter of 2002. Earnings before interest, taxes, depreciation,
depletion and amortization (EBITDA) for the quarter was $431,154 versus
EBITDA of $361,806 in the third quarter of 2002.(1) Oil and natural
gas prices received during the quarter averaged $25.87 per barrel of oil
equivalent (BOE), an increase of 8% over the year ago quarter. The price
increase completely offset a small sales volume decline to 33,976 BOE for
the quarter. The company sold 1,468 tons of leonardite during the quarter
at an average price of $88.79 per ton. Drilling revenue was $206,787
during the quarter versus $3,188 a year ago.
For the nine-month period, the company reported a net income of
$400,328 or $0.11 per share versus a net loss of $34,789 or $0.01 per share
for the nine months ended September 30, 2002. EBITDA for the nine months
was $1,057,869 versus $631,488 for the same period in 2002. Year-to-date
sales of 100,516 BOE at an average price of $26.19 per BOE represents an
increase in price of 31% from the prior year, contributing to a 26% revenue
increase. Leonardite sales for the nine months equaled 4,871 tons, just 1%
less than the same period in 2002. The average price of $91.36 per ton was
flat when compared to first nine months of 2002. Drilling revenue for the
nine months totaled $206,787 as compared to $177,599 during the same
period in 2002.
During the third quarter, GeoResources began drilling the Anderson et
al #3-24 in the Leonard Field in Bottineau County. The well is currently
being completed in the Madison formation and should be connected to sales
before year-end. A second well planned for the Leonard field may not
commence before year-end because the Western Star drilling rig is currently
under contract with another operator. Western Star has drilled a total of
five wells this year, three for GeoResources and two for third party
operators.
Commenting on the results, company President J. P. Vickers said,
"During this period of high commodity prices we are focused on maintaining
our cost structure and improving profitability. Although our lease
operating expenses have increased slightly as a result of higher production
taxes and increased workover activity, we have kept our general and
administrative costs flat while our depreciation expense has declined. We
continue to implement secondary recovery strategies that we believe will
ultimately add to our production and extend the life of our properties."
GeoResources, Inc. is a Williston, North Dakota-based diversified
natural resources company engaged in three principal business segments -
oil and gas exploration, development and production; oil and gas drilling;
and leonardite mining and the manufacture of leonardite-based products.
GeoResources, Inc. is traded on the NASDAQ Small Cap Market under the
symbol "GEOI."
(1) EBITDA 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
September 30, 2003 September 30, 2002
------------------ ------------------
Income (loss) before
cumulative effect of change
in accounting principles. $ 171,153 $ 103,994
Add back:
Interest expense 21,837 25,443
Income tax 19,000 7,000
Depreciation and amortization 219,164 225,369
------------------ ------------------
EBITDA $ 431,154 $ 361,806
================== ==================
Nine Months Ended Nine Months Ended
September 30, 2003 September 30, 2002
------------------ ------------------
Income (loss) before
cumulative effect of change
in accounting principles. $ 423,328 $ (34,789)
Add back:
Interest expense 66,428 66,397
Income tax 13,000 (43,000)
Depreciation and amortization 555,113 642,880
------------------ ------------------
EBITDA $ 1,057,869 $ 631,448
================== ==================
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, 2002, for meaningful cautionary language disclosure.
--30--
GEORESOURCES, INC., AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30, December 31,
2003 2002
ASSETS ------------ ------------
CURRENT ASSETS:
Cash and equivalents $ 413,492 $ 329,302
Trade receivables, net 662,158 821,459
Inventories 256,055 207,998
Income tax receivable -- 50,192
Prepaid expenses 30,358 28,326
------------ ------------
Total current assets 1,362,063 1,437,277
------------ ------------
PROPERTY, PLANT AND EQUIPMENT, at cost:
Oil and gas properties, using the
full cost method of accounting:
Properties being amortized 24,351,868 22,636,316
Properties not subject to amortization 258,894 251,714
Drilling rig and equipment 1,166,683 1,077,551
Leonardite plant and equipment 3,267,634 3,262,200
Other 757,273 757,431
------------ ------------
29,802,352 27,985,212
Less accumulated depreciation, depletion,
amortization and impairment (20,105,319) (20,386,789)
------------ ------------
Net property, plant and equipment 9,697,033 7,598,423
------------ ------------
OTHER ASSETS 6,875 12,500
------------ ------------
TOTAL ASSETS $ 11,065,971 $ 9,048,200
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 787,647 $ 659,282
Accrued expenses 333,297 335,219
Current maturities of long-term debt 462,611 132,260
------------ ------------
Total current liabilities 1,583,555 1,126,761
LONG-TERM DEBT, less current maturities 1,483,665 1,910,228
ASSET RETIREMENT OBLIGATION 1,667,100 --
DEFERRED INCOME TAXES 404,000 395,000
------------ ------------
Total liabilities 5,138,320 3,431,989
------------ ------------
STOCKHOLDERS' EQUITY:
Common stock, par value $.01 per share;
authorized 10,000,000 shares;
issued and outstanding 3,723,977
and 3,787,477 shares, respectively 37,240 37,875
Additional paid-in capital 295,932 384,185
Retained earnings 5,594,479 5,194,151
------------ ------------
Total stockholders' equity 5,927,651 5,616,211
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 11,065,971 $ 9,048,200
============ ============
See Notes to Consolidated Financial Statements.
GEORESOURCES, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------ ------------------------
2003 2002 2003 2002
----------- ----------- ----------- -----------
OPERATING REVENUES:
Oil and gas $ 878,889 $ 858,197 $ 2,632,859 $ 2,096,737
Leonardite 130,339 202,110 445,029 446,180
Drilling 206,787 3,188 206,787 177,599
----------- ----------- ----------- -----------
1,216,015 1,063,495 3,284,675 2,720,516
----------- ----------- ----------- -----------
OPERATING COSTS AND EXPENSES:
Oil and gas production 426,967 396,925 1,263,489 1,159,452
Cost of leonardite sold 133,620 161,106 460,668 429,611
Drilling costs 118,702 7,378 118,702 131,459
Depreciation and depletion 219,164 225,369 555,113 642,880
Selling, general
and administrative 109,531 141,681 405,963 394,164
----------- ----------- ----------- -----------
1,007,984 932,459 2,803,935 2,757,566
----------- ----------- ----------- -----------
Operating
income (loss) 208,031 131,036 480,740 (37,050)
----------- ----------- ----------- -----------
OTHER INCOME (EXPENSE):
Interest expense (21,837) (25,443) (66,428) (66,397)
Interest income 461 451 8,168 11,558
Other income, net 3,498 4,950 13,848 14,100
----------- ----------- ----------- -----------
(17,878) (20,042) (44,412) (40,739)
----------- ----------- ----------- -----------
Income (loss) before
income taxes 190,153 110,994 436,328 (77,789)
Income tax (expense) benefit (19,000) (7,000) (13,000) 43,000
----------- ----------- ----------- -----------
Income (loss) before
cumulative effect
of change in
accounting principle 171,153 103,994 423,328 (34,789)
Cumulative effect on prior
years accounting change,
net of tax -- -- (23,000) --
----------- ----------- ----------- -----------
Net income (loss) $ 171,153 $ 103,994 $ 400,328 $ (34,789)
=========== =========== =========== ===========
EARNINGS PER SHARE:
Income (loss) before
cumulative effect of
accounting change $ .05 $ .03 $ .12 $ (.01)
Cumulative effect of
accounting change -- -- (.01) --
----------- ----------- ----------- -----------
Net income (loss),
basic and diluted $ .05 $ .03 $ .11 $ (.01)
=========== =========== =========== ===========
PRO FORMA AMOUNTS, assuming
retroactive application
of new accounting method:
Net income (loss) $ 171,153 $ 87,170 $ 423,328 $ (75,965)
=========== =========== =========== ===========
Net income (loss) per share,
basic and diluted $ .05 $ .02 $ .12 $ (.02)
=========== =========== =========== ===========
See Notes to Consolidated Financial Statements.
GEORESOURCES, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
September 30,
----------------------------
2003 2002
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 400,328 $ (34,789)
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and depletion 547,530 642,880
Cumulative effect of accounting change 23,000 --
Accretion of asset retirement obligation 56,100 --
Deferred income taxes 13,000 2,000
Other 5,625 8,743
Changes in assets and liabilities:
Decrease (increase) in:
Trade receivables 159,301 (212,693)
Inventories (48,057) (46,751)
Income tax receivable 50,192 (27,032)
Prepaid expenses and other (2,032) (8,963)
Increase (decrease) in:
Accounts payable 39,128 (207,937)
Accrued expenses (1,922) 10,324
------------ ------------
Net cash provided by
operating activities 1,242,193 125,782
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant
and equipment (972,903) (976,922)
------------ ------------
Net cash used in
investing activities (972,903) (976,922)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term borrowings -- 1,010,000
Principal payments on long-term debt (96,212) (95,724)
Cost to purchase common stock (88,888) (11,172)
------------ ------------
Net cash provided by (used in)
financing activities (185,100) 903,104
------------ ------------
NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS 84,190 51,964
CASH AND EQUIVALENTS, beginning of period 329,302 191,328
------------ ------------
CASH AND EQUIVALENTS, end of period $ 413,492 $ 243,292
============ ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid (received) for:
Interest $ 66,428 $ 66,397
Income taxes (49,119) 1,758
See Notes to Consolidated Financial Statements.