GeoResources, Inc. Reports First Quarter Financial Results

Reports earnings of $477,000 and EBITDAX of $6.2 million in a significantly
reduced commodity price environment.

Houston, Texas May 11, 2009 – GeoResources, Inc., (NASDAQ:GEOI), today announced its financial results for the quarter ended March 31, 2009, compared to the results for the same period in 2008. 

For the three months ended March 31, 2009, the Company reported net income of $477,000, or $0.03 per share compared to $4.2 million or $0.29 per share in 2008.  Total revenue decreased 39% to $14.6 million in the first quarter of 2009 compared to $23.9 million the same quarter in 2008. The average realized price of oil, including hedges, for the first quarter of 2009 was $54.00 per barrel compared to $81.00 per barrel in the first quarter of 2008, a decrease of 33%. The average realized price of natural gas, including hedges, was $4.12 per Mcf for the first quarter of 2009, compared to $7.73 per Mcf or 47% less than the first quarter of 2008.

Primarily, as a result of non-core planned property divestitures in 2008 and 2009, oil production in the first quarter of 2009 decreased to 177 MBbls from 200 MBbls in the prior year’s period, a decrease of 12%. Natural gas production decreased to 665 MMcf in the first quarter of 2009 from 809 MMcf in the first quarter of 2008.  As reported in prior press releases, since the beginning of 2008, consistent with the business strategy of high-grading its asset portfolio, the Company sold non-core properties in Michigan, Louisiana, Oklahoma and Texas.  These fields had sizable daily production rates, but limited upside potential and significant plugging and abandonment obligations. These properties produced approximately 400 BOPD and 750 MCFD at the time of their sale or approximately 47,000 BOE per quarter.  Proceeds from divestitures were used to fund capital expenditures and reduce debt.

Earnings before interest, income taxes, depreciation, depletion and amortization, and exploration expense (“EBITDAX”) decreased 49% to approximately $6.2 million for the first quarter 2009 compared to $12.3 million in the prior year’s similar quarter.  The following table reconciles reported net income to EBITDAX for the periods indicated and is summarized below in tabular form (in thousands, except per share information):

(1) EBITDAX is defined as earnings before interest, income taxes, depreciation, depletion and amortization, and exploration expense.  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 Lodzinski, CEO and President commented, “Our results for the first quarter were in line with our expectations in this dramatically reduced commodity price environment and we have been able to achieve positive net income and substantial EBITDAX, in the amounts of $477,000 and $6.2 million, respectively. Our production in the first quarter declined from the prior year due to planned divestitures which have been previously announced and have improved our portfolio. We achieved approximately 95% of our production targets. This modest shortfall is a direct result of our first quarter divestiture and drilling and production activities in the Williston Basin. As previously announced, given prevailing economics in the first quarter, our Bakken development activities were reduced to a single rig and certain production was curtailed. In addition, completion of several new wells was deferred pending improved weather and cost reductions. We believe that our profitability and our EBITDAX will improve as a result of underlying reductions in lease operating expenses and additional hedging and forward sales arrangements which took effect on April 1, 2009. Specifically, we entered into certain forward sales contracts related to our oil production in the Williston Basin which provides for a fixed net realized price, after transportation and differentials, of $43.85 per Bbl on approximately 108,000 Bbls. This represents almost a $13.00 improvement over average realized prices in the first quarter. In addition, we have hedged additional gas quantities produced in our Southern Region at about $4.87, representing an increase of over $1.00 per Mcf.  Reference is made to notes in our 10-Q describing these arrangements more fully. Financially, we have maintained positive working capital, substantial EBITDAX and we have retained a $100.0 million borrowing base with only $40.0 million outstanding. Accordingly, we believe we have the requisite “staying power” to survive and prosper in this cycle. We will continue to focus on cash flow and our bottom line while we continue to pursue our business plan.     

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 the 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).

Copyright (C) 2009, GeoResources, Inc . All right reserved.
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