Georesources (MM) (NASDAQ:GEOID)
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HOUSTON, May 11 /PRNewswire-FirstCall/ -- GeoResources, Inc. (NASDAQ:GEOID) announced its first quarter 2007 (pre-mergers) operating results.
(Logo: http://www.newscom.com/cgi-bin/prnh/20051114/CGM073LOGO )
On April 17, 2007, the Company completed its mergers with Southern Bay Oil & Gas L.P. and Chandler Energy, LLC. Although GeoResources is the legal acquirer, under generally accepted accounting principles, Southern Bay, being the largest party to the mergers, is deemed to have acquired the Company and the other net assets contributed by Chandler and its related parties. Accordingly, future SEC filings and earnings releases, commencing with the 2nd quarter of 2007, will reflect the current and historical financial statements of Southern Bay with the net assets of the Company and other net assets contributed in the mergers, treated as an acquisition on the date of mergers.
The first quarter results discussed herein reflect only the operations of the Company and do not reflect the operations of the combined entity. The Company intends to file required pro forma combined financial information on Form 8-K as soon as reasonably possible, but not later than July 3, 2007, which is the filing deadline for such information.
On a pre-mergers basis GeoResources, Inc. announced total revenues of $1,508,028 for the first quarter ended March 31, 2007, compared to $2,164,395 for the same quarter of 2006. Net income for the first quarter of 2007 was $153,788 or $0.04 per share versus net income of $527,688 or $0.14 per share for the comparable 2006 period. Earnings before interest, taxes, depreciation, depletion and amortization (EBITDA) for the quarter were $365,808, down from $825,681 in the same quarter of 2006. The reduction was largely due to non-recurring costs associated with the mergers and costs associated with discontinued operations.
GeoResources' oil and gas revenue during the first quarter of 2007 was $1,508,028 generating a gross profit of $644,314 versus revenue of $1,646,149 and gross profit of $856,796 for the same period in 2006. Commodity prices during the 2007 first quarter averaged $46.14 per barrel of oil equivalent (BOE), a 6% decline from the first quarter of 2006. GeoResources sold 32,686 BOE or 363 BOE per day during the first quarter of 2007 compared to 33,500 BOE or 372 BOE per day during the first quarter of 2006, a 2% decline.
GeoResources' drilling subsidiary, Western Star Drilling Company, was inactive during the first quarter of 2007 and incurred a loss of $83,232, resulting from fixed costs and depreciation. This compares to revenue of $518,246 generating gross profit of $43,911 for the first quarter of 2006. In connection with the recently completed mergers and the expected significant increase in oil and gas operations, management is considering future alternatives for Western Star Drilling Company, including continued operations or its possible divestiture.
(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, 2007 March 31, 2006
Net Income $153,788 $527,688
Add back:
Interest expense 2,769 12,945
Income tax 5,000 71,000
Depreciation and amortization 204,251 214,048
EBITDA $365,808 $825,681
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. GeoResources cannot make any assurances that the agreement referenced in this release will close. 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, 2006, for meaningful cautionary language disclosure.
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
GEORESOURCES, INC., AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31, December 31,
2007 2006
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and equivalents $ 443,162 $ 889,766
Trade receivables, net 1,396,454 1,437,093
Inventories 149,319 141,549
Income tax receivable 39,449 --
Prepaid expenses 70,481 47,268
Total current assets 2,098,865 2,515,676
PROPERTY, PLANT AND EQUIPMENT, at cost:
Oil and gas properties, using the
full cost method of accounting:
Properties being amortized 31,338,474 30,685,572
Properties not subject to
amortization 226,212 224,297
Drilling rig and equipment 1,926,535 1,923,035
Other 868,552 861,078
34,359,773 33,693,982
Less accumulated depreciation,
depletion amortization
and impairment (20,282,075) (20,058,541)
Net property,
plant and equipment 14,077,698 13,635,441
LEONARDITE ASSETS HELD FOR SALE 550,803 590,225
TOTAL ASSETS $16,727,366 $16,741,342
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $1,539,048 $1,649,972
Accrued expenses 277,551 320,692
Income taxes payable -- 60,551
Current portions of
capital lease obligations -- 13,298
Total current liabilities 1,816,599 2,044,513
LONG-TERM DEBT, less current maturities 50,000 --
ASSET RETIREMENT OBLIGATION 2,551,990 2,521,840
DEFERRED INCOME TAXES
Related to continuing operations 773,000 768,000
Related to discontinued operations 243,000 268,000
Total liabilities 5,434,589 5,602,353
STOCKHOLDERS' EQUITY:
Common stock, par value $.01 per share;
authorized 10,000,000 shares;
issued and outstanding, 3,782,769
and 3,782,769 shares, respectively 37,828 37,828
Additional paid-in capital 432,791 432,791
Retained earnings 10,822,158 10,668,370
Total stockholders' equity 11,292,777 11,138,989
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $16,727,366 $16,741,342
GEORESOURCES, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
March 31,
2007 2006
OPERATING REVENUES:
Oil and gas sales $1,508,028 $1,646,149
Drilling revenue -- 518,246
1,508,028 2,164,395
OPERATING COSTS AND EXPENSES:
Oil and gas production costs and taxes 671,966 627,516
Drilling costs 81,419 474,335
Depreciation and depletion 204,251 214,048
Selling, general and administrative 204,429 170,801
1,162,065 1,486,700
Operating income 345,963 677,695
OTHER INCOME (EXPENSE):
Interest expense (2,769) (12,945)
Interest income 2,389 4,321
Professional fees related to mergers (140,855) --
Other income, net 4,650 5,390
(136,585) (3,234)
Income before income taxes 209,378 674,461
Income tax expense (5,000) (71,000)
Income from continuing
operations 204,378 603,461
DISCONTINUED OPERATIONS:
Loss from leonardite operations (75,590) (91,773)
Income tax (expense) benefit 25,000 16,000
(50,590) (75,773)
Net Income $153,788 $527,688
EARNINGS PER SHARE:
Income from continuing operations .05 .16
Income (loss) from discontinued
operations (.01) (.02)
Net Income, basic and diluted $.04 $.14
GEORESOURCES, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
March 31,
2007 2006
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $153,788 $527,688
Adjustments to reconcile net income
to net cash provided
by operating activities:
Depreciation and depletion 216,620 215,761
Accretion of asset
retirement obligation 30,150 27,700
Deferred income taxes (20,000) 27,000
Other 1,250 1,250
Changes in assets and liabilities:
Decrease (increase) in:
Trade receivables 40,639 84,293
Inventories 18,082 (33,977)
Income taxes receivable (39,449) --
Prepaid expenses and other (22,013) (124,794)
Increase (decrease) in:
Accounts payable 130,749 156,721
Accrued expenses (43,141) (68,764)
Income taxes payable (60,551) 18,000
Net cash provided by
operating activities 406,124 830,878
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and
equipment (908,714) (733,137)
Proceeds from sale of property,
plant and equipment 19,284 18,133
Net cash used in
investing activities (889,430) (715,004)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on
long-term capital lease obligation (13,298) (10,146)
Proceeds from long-term borrowings 50,000 --
Proceeds from stock options exercised -- 4,620
Principal payments on long-term debt -- (254,632)
Net cash provided by
(used in) financing activities 36,702 (260,158)
NET DECREASE IN CASH AND EQUIVALENTS (446,604) (144,284)
CASH AND EQUIVALENTS, beginning of period 889,766 1,669,882
CASH AND EQUIVALENTS, end of period $443,162 $1,525,598
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION:
Cash paid for:
Interest $2,769 $12,945
Income taxes 100,000 10,000
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DATASOURCE: GeoResources, Inc.
CONTACT: Cathy Kruse of GeoResources, Inc., +1-701-572-2020 x113,
Web site: http://www.georesources.net/