WILLISTON, N.D., Nov. 15 /PRNewswire-FirstCall/ -- GeoResources, Inc., (NASDAQ:GEOI), today reported third quarter 2006 net income of $523,415, or $0.14 per share, on revenue of $2,482,041, compared to third quarter 2005 net income of $575,927, or $0.15 per share, on revenue of $2,375,086. Operating income for the quarter was $758,472 in 2006 versus $709,726 in 2005. Earnings before interest, taxes, depreciation, depletion and amortization (EBITDA) for the third quarter of 2006 was $864,706 compared to $927,622 for the third quarter of 2005.(1) (Logo: http://www.newscom.com/cgi-bin/prnh/20051114/CGM073LOGO ) For the first nine months of 2006 net income was $1,905,228, or $0.50 per share, on revenue of $7,162,875 versus net income of $1,697,326, or $0.44 per share, on revenue of $6,083,670 during the first nine months of 2005. Operating income for the nine months increased 54% to $2,351,560. EBITDA for the first nine months was $2,916,184, compared to $2,615,387 during the same period in 2005. Increased production combined with higher commodity prices generated greater revenue. However, third quarter 2006 net income declined $53,000 as a result of $169,000 of costs associated with the previously announced merger agreement with Southern Bay Oil & Gas, L.P. and Chandler energy, LLC.
GeoResources sold a total of 33,548 BOE during the third quarter 2006, a 12% increase compared to 29,978 BOE in the third quarter 2005. For the nine months ended September 30, 2006, GeoResources sold a total of 100,575 BOE a 17% increase over the 85,820 BOE sold during the same period in 2005.
GeoResources' subsidiary, Western Star Drilling Company (WSDC), reported 45 operating days in the second quarter and 128 days in the first nine months of 2006. WSDC drilled three wells for third parties during the third quarter of 2006, generating drilling revenue of $523,555 compared to $694,452 in the third quarter 2005. For the first nine months, drilling revenue increased 36% to $1,565,200 in 2006 compared to $1,155,095 for same period in 2005.
J.P. Vickers, President of GeoResources, said, "We are continuing to benefit from higher production volumes and strong commodity prices and we expect further gains in production in the fourth quarter when we will have production from the Hammond Field, Carter County, Montana which was brought out of shut-in status in late September. Also, we are drilling a shallow 3,400 foot exploratory well on our Kramer Prospect in Bottineau County, North Dakota and expect we will make an announcement of our findings in the near future." (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
Sept. 30, 2006 Sept. 30, 2005 Net income $523,415 $575,927
Add back
Interest expense 3,991 22,419
Income tax 74,095 110,000
Depreciation and amortization 263,205 219,276
EBITDA $864,706 $927,622
Nine Months Ended Nine Months Ended
Sept. 30, 2006 Sept. 30, 2005 Net Income. $1,905,228 $1,697,326
Add back:
Interest expense 25,571 70,125
Income tax 287,645 239,000
Depreciation and amortization 697,740 608,936
EBITDA $2,916,184 $2,615,387
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 September 30, 2006 December 31, 2005
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and equivalents $1,399,861 $1,669,882
Trade receivables, net 1,396,736 1,109,202
Inventories 429,762 236,081
Prepaid expenses 89,398 38,738
Total current assets 3,315,757 3,053,903 PROPERTY, PLANT AND EQUIPMENT, at cost:
Oil and gas properties, using the
full cost method of accounting:
Properties being amortized 29,215,750 27,842,549
Properties not subject to
amortization 196,999 202,257
Drilling rig and equipment 1,868,613 1,607,094
Leonardite plant and equipment 924,984 854,789
Other 798,745 790,100
33,005,091 31,296,789
Less accumulated depreciation,
depletion amortization and
impairment (20,375,729) (19,650,972)
Net property, plant and
equipment 12,629,362 11,645,817 TOTAL ASSETS $15,945,119 $14,699,720 LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $967,939 $1,152,532
Accrued expenses 274,255 293,505
Income taxes payable 119,441 64,000
Current portions of capital lease
obligations 23,929 41,549
Current maturities of long-term debt -- 523,941
Total current liabilities 1,385,564 2,075,527 CAPITAL LEASE OBLIGATIONS, less current
portions -- 13,298
LONG-TERM DEBT, less current maturities -- 177,638
ASSET RETIREMENT OBLIGATION 2,409,070 2,324,690
DEFERRED INCOME TAXES 859,000 753,000
Total liabilities 4,653,634 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 10,831,261 8,926,033
Total stockholders' equity 11,291,485 9,355,567 TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $15,945,119 $14,699,720 GEORESOURCES, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) Three Months Ended Nine Months Ended
September 30, September 30, 2006 2005 2006 2005
OPERATING REVENUES:
Oil and gas sales $1,942,072 $1,654,831 $5,538,966 $4,129,992
Leonardite sales 16,414 25,803 58,709 798,583
Drilling revenue 523,555 694,452 1,565,200 1,155,095 2,482,041 2,375,086 7,162,875 6,083,670 OPERATING COSTS AND EXPENSES:
Oil and gas
production 701,798 693,882 2,021,672 1,637,924
Leonardite operations 55,962 76,421 194,023 744,143
Drilling costs 508,708 527,384 1,329,306 1,064,320
Depreciation and
depletion 263,205 219,276 697,740 608,936
Selling, general and
administrative 193,896 148,397 568,574 496,644 1,723,569 1,665,360 4,811,315 4,551,967 Operating income 758,472 709,726 2,351,560 1,531,703 OTHER INCOME (EXPENSE):
Interest expense (3,991) (22,419) (25,571) (70,125)
Interest income 6,803 2,979 20,251 14,543
Gain on involuntary
conversion of
Leonardite facility -- -- -- 497,743
Professional fees
related to proposed
merger (169,289) -- (169,289) --
Other, net 5,515 (4,359) 15,922 (37,538) (160,962) (23,799) (158,687) 404,623 Income before
income taxes 597,510 685,927 2,192,873 1,936,326 Income tax expense 74,095 110,000 287,645 239,000 Net income $523,415 $575,927 $1,905,228 $1,697,326 EARNINGS PER SHARE: Basic $.14 $.15 $.50 $.45 Diluted $.14 $.15 $.50 $.44
GEORESOURCES, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) Nine Months Ended
September 30,
2006 2005
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $1,905,228 $1,697,326
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and depletion 697,740 608,936
Accretion of asset retirement obligation 84,380 68,720
Deferred income taxes 106,000 88,000
Gain on involuntary conversion of
Leonardite facility -- (497,743)
Other 3,750 6,425
Changes in assets and liabilities:
Decrease (increase) in:
Trade receivables (287,534) 175,460
Inventories (193,681) (11,317)
Prepaid expenses and other (50,660) (31,731)
Increase (decrease) in:
Accounts payable (196,572) (357,898)
Accrued expenses (19,250) 6,739
Income taxes payable 55,441 151,000 Net cash provided by operating
activities 2,104,842 1,903,917 CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment (1,745,841) (855,797)
Proceeds from insurance claim -- 694,151
Proceeds from sale of property, plant and
equipment 2,785 26,946 Net cash used in investing activities (1,673,056) (134,700) CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term capital
lease obligations (30,918) (50,815)
Proceeds from stock options exercised 30,690 96,363
Proceeds from long-term borrowings -- 10,006
Principal payments on long-term debt (701,579) (516,673) Net cash used in financing activities (701,807) (461,119) NET INCREASE IN CASH AND EQUIVALENTS (270,021) 1,308,098 CASH AND EQUIVALENTS, beginning of period 1,669,882 715,551 CASH AND EQUIVALENTS, end of period $1,399,861 $2,023,649 SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION:
Cash paid for:
Interest $25,271 $70,125
Income taxes 126,204 1,120
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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