Higher Production and Prices Drive 121% Increase in Operating Income
WILLISTON, N.D., Aug. 11 /PRNewswire-FirstCall/ -- GeoResources, Inc., (NASDAQ:GEOI), today reported second quarter 2006 net income of $854,125, or $0.23 per share, on revenue of $2,508,311, compared to a second quarter 2005 net income of $848,044, or $0.23 per share, on revenue of $1,853,399. The second quarter of 2005 included a gain of $497,743 on the involuntary conversion of the company's leonardite facility which was damaged by fire in May 2005. Operating income for the quarter was $1,007,166 in 2006 versus $456,389 in 2005, a 121% increase. Earnings before interest, taxes, depreciation, depletion and amortization (EBITDA) for the second quarter of 2006 was $1,240,084, compared to $1,170,071 for the second quarter of 2005.(1) (Logo: http://www.newscom.com/cgi-bin/prnh/20051114/CGM073LOGO ) First half 2006 net income was $1,381,813, or $0.37 per share, on revenue of $4,680,834, versus net income of $1,121,399, or $0.30 per share, on revenue of $3,708,584 in the first half of 2005. Operating income for the six months increased 104% to $1,593,088. EBITDA for the first half of 2006 was $2,051,478, compared to $1,687,765 the first half of 2005. Higher commodity prices, which averaged $58.18 per barrel of oil equivalent (BOE) for the first half of the year, and increased production were the primary drivers of the improved results.
GeoResources sold a total of 33,527 BOE, or 368 BOE per day, during the second quarter of 2006, a 14% increase compared to 29,323 BOE, or 322 BOE per day, in the second quarter of 2005. For the six months ended June 30, 2006, GeoResources sold a total of 67,027 BOE a 20% increase over the 55,842 BOE sold during the first six months of 2005.
Higher production and substantially higher average oil prices resulted in an increase in oil and gas sales to $1,950,745 for the quarter and $3,596,894 for the six-months ended June 30, 2006, a 48% and 45% increase respectively, compared to the same periods in 2005.
GeoResources' subsidiary, Western Star Drilling Company (WSDC) operations consisted of 37 operating days in the second quarter and 83 days in the first half of 2006. WSDC drilled two wells for third parties during the second quarter of 2006, generating drilling revenue of $523,399 compared to $256,890 the second quarter 2005. First half 2006 revenue increased 126% to $1,041,645 in 2006 compared to $460,643 for same period in 2005.
J.P. Vickers, President of GeoResources, said, "We are pleased with our results for the first six months of the year. Higher prices and production have enabled us to retire long-term debt while building our working capital position to more than $2 million. Operationally, the successful completion of the Anderson 41-25 #3 in the Leonard Field in Bottineau County, North Dakota and successful workovers on several shut-in wells have delivered a 20% increase in our production for the first six months. We plan to drill two more wells before year-end and we are in the process of repairing and upgrading the gathering and compression infrastructure in our Hammond Gas Field in Montana. We expect to return nine wells in the Hammond Field to production before year end and we could potentially add seven other wells to the system." (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
June 30, 2006 June 30, 2005 Net income $854,125 $848,044
Add back
Interest expense 8,635 23,459
Income tax 158,550 98,000
Depreciation and amortization 218,774 200,568
EBITDA $1,240,084 $1,170,071
Six Months Six Months
Ended Ended
June 30, 2006 June 30, 2005 Net Income. $1,381,813 $1,121,399
Add back:
Interest expense 21,580 47,706
Income tax 213,550 129,000
Depreciation and amortization 434,535 389,660
EBITDA $2,051,478 $1,687,765
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.
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
GEORESOURCES, INC., AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
June 30, December 31,
2006 2005
ASSETS
CURRENT ASSETS:
Cash and equivalents $1,535,498 $1,669,882
Trade receivables, net 1,509,823 1,109,202
Inventories 365,133 236,081
Prepaid expenses 135,296 38,738
Total current assets 3,545,750 3,053,903 PROPERTY, PLANT AND EQUIPMENT, at cost:
Oil and gas properties, using the
full cost method of accounting:
Properties being amortized 28,489,833 27,842,549
Properties not subject to amortization 170,074 202,257
Drilling rig and equipment 1,580,624 1,607,094
Leonardite plant and equipment 917,300 854,789
Other 799,995 790,100
31,957,826 31,296,789
Less accumulated depreciation, depletion
amortization and impairment (20,077,961) (19,650,972)
Net property, plant and equipment 11,879,865 11,645,817 TOTAL ASSETS $15,425,615 $14,699,720 LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $880,926 $1,152,532
Accrued expenses 249,173 293,505
Income taxes payable 118,500 64,000
Current portions of capital lease obligations 34,396 41,549
Current maturities of long-term debt 200,000 523,941
Total current liabilities 1,482,995 2,075,527 CAPITAL LEASE OBLIGATIONS, less current portions -- 13,298
LONG-TERM DEBT, less current maturities -- 177,638
ASSET RETIREMENT OBLIGATION 2,380,550 2,324,690
DEFERRED INCOME TAXES 794,000 753,000
Total liabilities 4,657,545 5,344,153 STOCKHOLDERS' EQUITY:
Common stock, par value $.01 per share;
authorized 10,000,000 shares; issued and
outstanding 3,778,269 and 3,765,269 shares,
respectively 37,783 37,653
Additional paid-in capital 422,441 391,881
Retained earnings 10,307,846 8,926,033
Total stockholders' equity 10,768,070 9,355,567 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $15,425,615 $14,699,720 See Notes to Consolidated Financial Statements.
GEORESOURCES, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2006 2005 2006 2005
OPERATING REVENUES:
Oil and gas sales $1,950,745 $1,316,713 $3,596,894 $2,475,161
Leonardite sales 34,167 279,796 42,295 772,780
Drilling revenue 523,399 256,890 1,041,645 460,643 2,508,311 1,853,399 4,680,834 3,708,584 OPERATING COSTS AND
EXPENSES:
Oil and gas production 692,358 507,258 1,319,874 944,042
Cost of leonardite sold 39,873 272,151 138,061 708,126
Drilling costs 346,263 247,030 820,598 536,936
Depreciation and
depletion 218,774 200,568 434,535 389,660
Selling, general and
administrative 203,877 170,003 374,678 348,247 1,501,145 1,397,010 3,087,746 2,927,011 Operating income 1,007,166 456,389 1,593,088 781,573 OTHER INCOME (EXPENSE):
Interest expense (8,635) (23,459) (21,580) (47,706)
Interest income 9,127 10,421 13,448 11,564
Gain on involuntary
conversion of
Leonardite facility -- 497,743 -- 497,743
Other income, net 5,017 4,950 10,407 7,225
5,509 489,655 2,275 468,826 Income before income
taxes 1,012,675 946,044 1,595,363 1,250,399 Income tax expense (158,550) (98,000) (213,550) (129,000) Net income $854,125 $848,044 $1,381,813 $1,121,399 EARNINGS PER SHARE: Basic $.23 $.23 $.37 $.30 Diluted $.22 $.22 $.36 $.29
See Notes to Consolidated Financial Statements. 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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