EPS Doubles on 26% Production Increase
WILLISTON, N.D., May 15 /PRNewswire-FirstCall/ -- GeoResources, Inc. (NASDAQ:GEOI) today reported first quarter 2006 net income of $527,688 or $0.14 per share on revenue of $2,172,523 compared to a 2005 first quarter net income of $273,355 or $0.07 per share on revenue of $1,855,185. Earnings before interest, taxes, depreciation, depletion and amortization (EBITDA) for the quarter was $811,394, a 57% increase from the same quarter of the prior year.(1) (Logo: http://www.newscom.com/cgi-bin/prnh/20051114/CGM073LOGO ) Oil and gas revenue during the first quarter was $1,646,149 generating gross profit of $1,018,633 versus revenue of $1,158,448 and gross profit of $721,664 for the same period in 2005. The improved results are attributable to a 26% increase in production and a 14% increase in the average oil and natural gas sales prices. GeoResources sold 33,500 barrels of oil equivalent (BOE) or 372 BOE per day during the first quarter 2006 compared to 26,519 BOE or 295 BOE per day in the first quarter 2005. The revenue and BOE increase was attributed to workovers performed in 2005 and new production from the Company's 100% working interest in the Anderson 41-25 #3 well that began production in mid-January, 2006.
The Company reports that more workovers and remedial projects are in progress primarily targeted at returning shut-in wells to production. The largest project is returning nine small shut-in gas wells (9 gross, 9 net) in our Hammond Gas Field, Carter County, Montana to production on our 100% owned gathering and compression system during 2006.
GeoResources' drilling subsidiary, Western Star Drilling Company, reported that drilling revenue during the first quarter was $518,246 generating gross profit of $43,911 for the first quarter of 2006 versus revenue of $203,753 and a loss of $86,153 for the same quarter in 2005. WSDC's operations consisted of 46 operating days drilling three wells for other operators. Currently we have contracts for four wells, two for another operator and two for GeoResources.
Company President J. P. Vickers said, "We are very pleased to report an increase in production as a result of our successful work performed in 2005. We expect the recompletion work we are currently undertaking to add more gas production to our mix and these relatively low cost projects should payout quickly given to current price of natural gas. If commodity prices remain strong, our first quarter results should be the beginning of a very good year for GeoResources." As a result of a fire in the Company's leonardite processing plant in the second quarter of 2005, production of finished leonardite products was suspended. Although insurance proceeds are available to rebuild the plant, the Company has not yet determined how it will do so, and sales have been of only a relatively small amount of leonardite mined since the fire. As a result, Leonardite revenue decreased 98% to $8,000 in the first quarter 2006 compared to $493,000 in the same period in 2005, resulting in a decrease in gross profit from leonardite operations of $57,000 for the first quarter of 2005 to a gross loss of $90,000 in the first quarter of 2006.
(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 March 31, 2006 March 31, 2005 Net Income $527,688 $273,355
Add back:
Interest expense 12,945 24,247
Income tax 55,000 31,000
Depreciation and amortization 215,761 189,092
EBITDA $811,394 $517,694
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, 2005, for meaningful cautionary language disclosure.
CONSOLIDATED BALANCE SHEETS
(Unaudited) March 31, December 31,
2006 2005
ASSETS
CURRENT ASSETS:
Cash and equivalents $1,525,598 $1,669,882
Trade receivables, net 1,024,909 1,109,202
Inventories 270,058 236,081
Prepaid expenses 163,532 38,738
Total current assets 2,984,097 3,053,903 PROPERTY, PLANT AND EQUIPMENT, at cost:
Oil and gas properties, using the
full cost method of accounting:
Properties being amortized 28,251,086 27,842,549
Properties not subject to
amortization 149,511 202,257
Drilling rig and equipment 1,634,437 1,607,094
Leonardite plant and equipment 882,092 854,789
Other 797,945 790,100
31,715,071 31,296,789
Less accumulated depreciation,
depletion amortization and
impairment (19,878,836) (19,650,972)
Net property, plant and
equipment 11,836,235 11,645,817 TOTAL ASSETS $14,820,332 $14,699,720 LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $1,001,678 $1,152,532
Accrued expenses 224,741 293,505
Income taxes payable 82,000 64,000
Current portions of capital
lease obligations 41,549 41,549
Current maturities of long-term debt 446,947 523,941
Total current liabilities 1,796,915 2,075,527 CAPITAL LEASE OBLIGATIONS, less
current portions 3,152 13,298
LONG-TERM DEBT, less current maturities -- 177,638
ASSET RETIREMENT OBLIGATION 2,352,390 2,324,690
DEFERRED INCOME TAXES 780,000 753,000
Total liabilities 4,932,457 5,344,153 STOCKHOLDERS' EQUITY:
Common stock, par value $.01 per share;
authorized 10,000,000 shares;
issued and outstanding, 3,767,269
and 3,765,269 shares, respectively 37,673 37,653
Additional paid-in capital 396,481 391,881
Retained earnings 9,453,721 8,926,033
Total stockholders' equity 9,887,875 9,355,567 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $14,820,332 $14,699,720 GEORESOURCES, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) Three Months Ended
March 31,
2006 2005
OPERATING REVENUES:
Oil and gas sales $1,646,149 $1,158,448
Leonardite sales 8,128 492,984
Drilling revenue 518,246 203,753 2,172,523 1,855,185 OPERATING COSTS AND EXPENSES:
Oil and gas production 627,516 436,784
Leonardite operations 98,188 435,975
Drilling costs 474,335 289,906
Depreciation and depletion 215,761 189,092
Selling, general and administrative 170,801 178,244 1,586,601 1,530,001 Operating income 585,922 325,184 OTHER INCOME (EXPENSE):
Interest expense (12,945) (24,247)
Interest income 4,321 1,143
Other income, net 5,390 2,275 (3,234) (20,829) Income before income taxes 582,688 304,355 Income tax expense (55,000) (31,000) Net income $527,688 $273,355 EARNINGS PER SHARE: Net income, basic and diluted $.14 $.07
http://www.newscom.com/cgi-bin/prnh/20051114/CGM073LOGO http://photoarchive.ap.org/ DATASOURCE: GeoResources, Inc.
CONTACT: Cathy Kruse of GeoResources, Inc., +1-701-572-2020, Web site: http://www.georesources.net/
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