GEORESOURCES, INC. 
By GeoResources, Inc. (NASDAQ: GEOI), today announced financial and operating results for the three and twelve month periods ended December 31, 2011.
Full Year 2011 Highlights
- Generated Adjusted EBITDAX(1) of $89.2 million for the year, a 34% increase over 2010.
- Generated Adjusted Net Income(1) of $34.9 million for the year, a 43% increase over 2010.
- Generated Adjusted Earnings Per Share (Diluted)(1) of $1.36/share for the year, a 12% increase over 2010.
- Ended the year with $219 million in Liquidity(1).
Fourth Quarter 2011 Highlights
- Generated Adjusted EBITDAX(1) of $26.8 million in the quarter, a 76% increase over the fourth quarter 2010 and an 11% increase over the third quarter 2011.
- Generated Adjusted Net Income(1) of $10.6 million in the quarter, a 99% increase over the fourth quarter 2010 and a 14% increase over the third quarter 2011.
- Generated Adjusted Earnings Per Share (Diluted)(1) of $0.41/share in the quarter, a 58% increase over the fourth quarter 2010 and a 14% increase over the third quarter 2011.
(1) See calculations in section titled "Supplemental Non-GAAP Reconciliations and Measurements."
The following tables summarize the Company's financial results for the three and twelve month periods ending December 31, 2011 and December 31, 2010.
| Three Mos. Ended Dec. 31, | Twelve Mos. Ended Dec. 31, | |||||||||||||||||||||||
| ($ in thousands except per share amounts) | 2011 | 2010 | ? % | 2011 | 2010 | ? % | ||||||||||||||||||
| Revenue | $ | 41,127 | $ | 27,106 | 52 | % | $ | 137,748 | $ | 107,017 | 29 | % | ||||||||||||
| Reported Net Income Attributable to GeoResources | 6,744 | 5,178 | 30 | % | 31,338 | 23,331 | 34 | % | ||||||||||||||||
| Reported Earnings Per Share (diluted) | 0.26 | 0.26 | 0 | % | 1.22 | 1.16 | 5 | % | ||||||||||||||||
| Adjusted Net Income (1) | 10,554 | 5,312 | 99 | % | 34,896 | 24,326 | 43 | % | ||||||||||||||||
| Adjusted Earnings Per Share (diluted) | 0.41 | 0.26 | 58 | % | 1.36 | 1.21 | 12 | % | ||||||||||||||||
| Adjusted EBITDAX (1) | 26,801 | 15,193 | 76 | % | 89,214 | 66,670 | 34 | % | ||||||||||||||||
| Three Mos. Ended Dec. 31, | Twelve Mos. Ended Dec. 31, | |||||||||||||||||||||||
| 2011 | 2010 | ? % | 2011 | 2010 | ? % | |||||||||||||||||||
| Oil Production (Mbbls) | 376 | 280 | 34 | % | 1,222 | 1,060 | 15 | % | ||||||||||||||||
| Gas Production (MMcf) | 1,122 | 1,132 | -1 | % | 4,209 | 4,789 | -12 | % | ||||||||||||||||
| Barrel of Equivalent Production (MBOE) | 563 | 469 | 20 | % | 1,924 | 1,858 | 4 | % | ||||||||||||||||
| Avg. Oil Price Before Hedge Settlements (per Bbl) | $ | 93.33 | $ | 72.83 | 28 | % | $ | 94.21 | $ | 72.05 | 31 | % | ||||||||||||
| Avg. Oil Price After Hedge Settlements (per Bbl) | 89.48 | 69.82 | 28 | % | 88.42 | 70.33 | 26 | % | ||||||||||||||||
| Avg. Gas Price Before Hedge Settlements (per Mcf) | 3.96 | 3.48 | 14 | % | 4.15 | 4.07 | 2 | % | ||||||||||||||||
| Avg. Gas Price After Hedge Settlements (per Mcf) | 5.22 | 5.00 | 4 | % | 5.36 | 5.30 | 1 | % | ||||||||||||||||
(1) See calculations in section titled "Supplemental Non-GAAP Reconciliations and Measurements."
Management Comments
Frank A. Lodzinski, President and CEO of GeoResources, Inc. commented, "We are pleased with our financial and operating results for 2011. We ended the year with a record net production level of over 6,100 boe/d. We also generated record revenue, EBITDAX and adjusted net income for both the 4th quarter and year ended December 31, 2011. Since our management team was put in place at GeoResources in April 2007, we have consistently increased revenues, EBITDAX, net income, production and reserves. In 2011, our results were largely driven by increased activity in our Bakken and Eagle Ford focus areas. We expect these two project areas, complimented by the Austin Chalk, to continue to drive profitable growth for us going forward."
Audited Financial Statements
| GEORESOURCES, INC. and SUBSIDIARIES | ||||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||||
| (In thousands, except share and per share amounts) | ||||||||||
| December 31, | December 31, | |||||||||
| 2011 | 2010 | |||||||||
| ASSETS | ||||||||||
| Current assets: | ||||||||||
| Cash | $ | 39,144 | $ | 9,370 | ||||||
| Accounts receivable: | ||||||||||
| Oil and gas revenues | 26,485 | 17,627 | ||||||||
| Joint interest billings and other | 21,328 | 16,021 | ||||||||
| Affiliated partnerships | 371 | 969 | ||||||||
| Notes receivable | 545 | 120 | ||||||||
| Derivative financial instruments | 4,037 | 4,282 | ||||||||
| Income taxes receivable | 7,753 | 222 | ||||||||
| Prepaid expenses and other | 3,681 | 2,645 | ||||||||
| Total current assets | $ | 103,344 | $ | 51,256 | ||||||
| Oil and gas properties, successful efforts method: | ||||||||||
| Proved properties | $ | 428,871 | $ | 341,582 | ||||||
| Unproved properties | 44,613 | 32,403 | ||||||||
| Office and other equipment | 1,675 | 1,140 | ||||||||
| Land | 146 | 146 | ||||||||
| $ | 475,305 | $ | 375,271 | |||||||
| Less accumulated depreciation, depletion and amortization | (96,753 | ) | (72,380 | ) | ||||||
| Net property and equipment | $ | 378,552 | $ | 302,891 | ||||||
| Equity in oil and gas limited partnerships | $ | 2,240 | $ | 2,272 | ||||||
| Derivative financial instruments | 868 | 851 | ||||||||
| Deferred financing costs and other | 2,687 | 2,420 | ||||||||
| $ | 487,691 | $ | 359,690 | |||||||
| GEORESOURCES, INC. and SUBSIDIARIES | |||||||||
| CONSOLIDATED BALANCE SHEETS | |||||||||
| (In thousands, except share and per share amounts) | |||||||||
| December 31, | December 31, | ||||||||
| 2011 | 2010 | ||||||||
| LIABILITIES AND EQUITY | |||||||||
| Current liabilities: | |||||||||
| Accounts payable | $ | 25,483 | $ | 14,616 | |||||
| Accounts payable to affiliated partnerships | 3,597 | 2,931 | |||||||
| Revenue and royalties payable | 17,043 | 12,450 | |||||||
| Drilling advances | 12,965 | 4,203 | |||||||
| Accrued expenses | 5,073 | 1,331 | |||||||
| Derivative financial instruments | 2,890 | 7,433 | |||||||
| Total current liabilities | $ | 67,051 | $ | 42,964 | |||||
| Long-term debt | - | $ | 87,000 | ||||||
| Deferred income taxes | $ | 44,389 | 19,289 | ||||||
| Asset retirement obligations | 7,940 | 7,052 | |||||||
| Derivative financial instruments | - | 1,650 | |||||||
| Equity: | |||||||||
| Common stock, par value $0.01 per share; authorized 100,000,000 | |||||||||
| shares; issued and outstanding: 25,571,480 in 2011 and | |||||||||
| 19,726,566 in 2010 | $ | 256 | $ | 197 | |||||
| Additional paid-in capital | 281,515 | 148,172 | |||||||
| Accumulated other comprehensive income | 1,069 | (3,000 | ) | ||||||
| Retained earnings | 85,471 | 54,133 | |||||||
| Total GeoResources, Inc. stockholders' equity | $ | 368,311 | $ | 199,502 | |||||
| Noncontrolling interest | - | 2,233 | |||||||
| Total equity | $ | 368,311 | $ | 201,735 | |||||
| $ | 487,691 | $ | 359,690 | ||||||
| GEORESOURCES, INC. and SUBSIDIARIES | ||||||||||||||||||||
| CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||||||
| (In thousands, except share and per share amounts) | ||||||||||||||||||||
| Three Months Ended Dec. 31, | Twelve Mos Ended Dec. 31, | |||||||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||||||
| Revenue: | ||||||||||||||||||||
| Oil and gas revenues | $ | 39,473 | $ | 25,229 | $ | 130,608 | $ | 99,913 | ||||||||||||
| Partnership management fees | 138 | 127 | 507 | 550 | ||||||||||||||||
| Property operating income | 1,361 | 583 | 3,562 | 1,865 | ||||||||||||||||
| Gain on sale of property and equipment | (79 | ) | 565 | 865 | 953 | |||||||||||||||
| Partnership income | 210 | 469 | 1,759 | 2,240 | ||||||||||||||||
| Interest and other | 24 | 133 | 447 | 1,496 | ||||||||||||||||
| Total revenue | $ | 41,127 | $ | 27,106 | $ | 137,748 | $ | 107,017 | ||||||||||||
| Expenses: | ||||||||||||||||||||
| Lease operating expense | $ | 7,227 | $ | 5,581 | $ | 24,806 | $ | 20,944 | ||||||||||||
| Production taxes | 2,142 | 1,746 | 8,028 | 6,589 | ||||||||||||||||
| Re-engineering and workovers | 492 | 573 | 2,628 | 1,962 | ||||||||||||||||
| Exploration expense | 355 | 83 | 989 | 849 | ||||||||||||||||
| Impairment of oil and gas properties | 6,043 | 697 | 6,043 | 3,440 | ||||||||||||||||
| General and administrative expense | 5,169 | 3,593 | 13,875 | 9,474 | ||||||||||||||||
| Depreciation, depletion and amortization | 8,340 | 6,169 | 27,659 | 24,686 | ||||||||||||||||
| Hedge ineffectiveness | 31 | 85 | 569 | (891 | ) | |||||||||||||||
| (Gain) / loss on derivative contracts | - | (2 | ) | - | (2 | ) | ||||||||||||||
| Interest | 389 | 763 | 1,909 | 4,712 | ||||||||||||||||
| Total expense | $ | 30,188 | $ | 19,288 | $ | 86,506 | $ | 71,763 | ||||||||||||
| Income before income taxes | $ | 10,939 | $ | 7,818 | $ | 51,242 | $ | 35,254 | ||||||||||||
| Income tax expense (benefit): | ||||||||||||||||||||
| Current | $ | (3,758 | ) | $ | (1,838 | ) | $ | (2,644 | ) | $ | 8,861 | |||||||||
| Deferred | 7,953 | 4,478 | 22,635 | 3,062 | ||||||||||||||||
| $ | 4,195 | $ | 2,640 | $ | 19,991 | $ | 11,923 | |||||||||||||
| Net income | $ | 6,744 | $ | 5,178 | $ | 31,251 | $ | 23,331 | ||||||||||||
| Less: Net loss attributable to noncontrolling interest | $ | - | $ | - | $ | (87 | ) | $ | - | |||||||||||
| Net income attributable to GeoResources, Inc. | $ | 6,744 | $ | 5,178 | $ | 31,338 | $ | 23,331 | ||||||||||||
| Net income per share (basic) | $ | 0.26 | $ | 0.26 | $ | 1.24 | $ | 1.18 | ||||||||||||
| Net income per share (diluted) | $ | 0.26 | $ | 0.26 | $ | 1.22 | $ | 1.16 | ||||||||||||
| Weighted average shares outstanding: | ||||||||||||||||||||
| Basic | 25,580,498 | 19,723,916 | 25,171,896 | 19,720,652 | ||||||||||||||||
| Diluted | 25,952,855 | 20,080,670 | 25,598,770 | 20,142,297 | ||||||||||||||||
| GEORESOURCES, INC. and SUBSIDIARIES | ||||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||
| (In thousands) | ||||||||||
| Twelve Months Ended Dec. 31, | ||||||||||
| Cash flows from operating activities: | 2011 | 2010 | ||||||||
| Net income | $ | 31,251 | $ | 23,331 | ||||||
| Adjustments to reconcile net income to net cash provided | ||||||||||
| by operating activities: | ||||||||||
| Depreciation, depletion and amortization | 27,659 | 24,686 | ||||||||
| Proved property impairments | 6,043 | 3,440 | ||||||||
| Gain on sale of property and equipment | (865 | ) | (953 | ) | ||||||
| Provision for doubtful accounts | 300 | - | ||||||||
| Accretion of asset retirement obligations | 444 | 405 | ||||||||
| Settlement of asset retirement obligations | (213 | ) | - | |||||||
| Unrealized gain on derivative contracts | - | (325 | ) | |||||||
| Hedge ineffectiveness (gain) loss | 569 | (891 | ) | |||||||
| Partnership income | (1,759 | ) | (2,240 | ) | ||||||
| Partnership distributions | 1,791 | 3,500 | ||||||||
| Deferred income taxes | 22,635 | 3,062 | ||||||||
| Non-cash compensation | 2,115 | 1,071 | ||||||||
| Excess tax benefit from share-based compensation | (2,531 | ) | - | |||||||
| Changes in assets and liabilities: | ||||||||||
| (Increase) decrease in accounts receivable | (19,036 | ) | (499 | ) | ||||||
| (Increase) decrease in prepaid expense and other | (1,472 | ) | 707 | |||||||
| Increase (decrease) in revenue and royalties payable | 4,801 | (1,478 | ) | |||||||
| Increase (decrease) in accounts payable and accrued expense | 24,607 | 5,715 | ||||||||
| Net cash provided by operating activities | $ | 96,339 | $ | 59,531 | ||||||
| Cash flows from investing activities: | ||||||||||
| Proceeds from sale of property and equipment | $ | 442 | $ | 1,018 | ||||||
| Additions to property and equipment net of acreage | - | - | ||||||||
| cost recoveries of $0 in 2011 and $20,230 in 2010 | (111,294 | ) | (70,126 | ) | ||||||
| Purchase of Trigon Energy Partners, LLC | - | (11,848 | ) | |||||||
| Net cash used in investing activities | $ | (110,852 | ) | $ | (80,956 | ) | ||||
| Cash flows from financing activities: | ||||||||||
| Proceeds from sale of stock options exercised | $ | 6,270 | $ | 135 | ||||||
| Excess tax benefit from share-based compensation | 2,531 | - | ||||||||
| Issuance of common stock | 122,486 | - | ||||||||
| Issuance of long-term debt | - | 38,000 | ||||||||
| Reduction of long-term debt | (87,000 | ) | (20,000 | ) | ||||||
| Net cash provided by financing activities | $ | 44,287 | $ | 18,135 | ||||||
| Net increase (decrease) in cash and cash equivalents | $ | 29,774 | $ | (3,290 | ) | |||||
| Cash and cash equivalents at beginning of period | 9,370 | 12,660 | ||||||||
| Cash and cash equivalents at end of period | $ | 39,144 | $ | 9,370 | ||||||
| Supplementary information: | ||||||||||
| Interest paid | $ | 909 | $ | 3,958 | ||||||
| Income taxes paid | $ | 2,498 | $ | 8,629 | ||||||
| Stock issued for services | $ | - | $ | 2 | ||||||
Supplemental Non-GAAP Reconciliations and Measurements
The following tables present certain Non-GAAP reconciliations and measurements which the Company believes are informative about its operations and relevant to the markets. As further indicated below, these measures are not in accordance with, nor superior to, generally accepted accounting principles.
Adjusted Net Income
Adjusted Net Income represents the Company's calculation of net income adjusted for non-recurring and/or unusual items. The following tables reconcile reported net income to adjusted net income for the periods indicated (in thousands):
| Three Mos. Ended Dec. 31, | Twelve Mos. Ended Dec. 31, | |||||||||||||||||||
| ($ in thousands except per share amounts) | 2011 | 2010 | 2011 | 2010 | ||||||||||||||||
| Net Income Attributable to GeoResources, Inc. | $ | 6,744 | $ | 5,178 | $ | 31,338 | $ | 23,331 | ||||||||||||
| Add Back: | ||||||||||||||||||||
| Hedge ineffectiveness loss / (gain) | 31 | 85 | 569 | (891 | ) | |||||||||||||||
| Hedge loss / (gain) | (2 | ) | (2 | ) | ||||||||||||||||
| Impairment expense | 6,043 | 697 | 6,043 | 3,440 | ||||||||||||||||
| Loss / (gain) on sale of properties | 79 | (565 | ) | (865 | ) | (953 | ) | |||||||||||||
| Tax Impact(1) | (2,343 | ) | (81 | ) | (2,189 | ) | (599 | ) | ||||||||||||
| Adjusted Net Income (2) | $ | 10,554 | $ | 5,312 | $ | 34,896 | $ | 24,326 | ||||||||||||
| Adjusted Net Income / Share (Basic) | $ | 0.41 | $ | 0.27 | $ | 1.39 | $ | 1.23 | ||||||||||||
| Adjusted Net Income / Share (Diluted) | $ | 0.41 | $ | 0.26 | $ | 1.36 | $ | 1.21 | ||||||||||||
| (1) | Tax impact is estimated as 38.1% and 37.6% of the pre-tax adjustment amounts in 2011 and 2010, respectively. |
| (2) | As used herein, adjusted net income is calculated as net income attributable to GeoResources, Inc. excluding (gains) and losses on property sales, impairment of proved and unproved properties and an unrealized (gains) and losses related to hedge ineffectiveness and income or loss on derivative contracts. Adjusted net income 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. | |
Adjusted EBITDAX
The following tables reconcile reported net income to Adjusted EBITDAX for the periods indicated (in thousands):
| Three Mos. Ended Dec. 31, | Twelve Mos. Ended Dec. 31, | |||||||||||||||||||
| ($ in thousands except per share amounts) | 2011 | 2010 | 2011 | 2010 | ||||||||||||||||
| Net Income Attributable to GeoResources, Inc. | $ | 6,744 | $ | 5,178 | $ | 31,338 | $ | 23,331 | ||||||||||||
| Adjustments: | ||||||||||||||||||||
| Loss / (gain) on sale of property and equipment | 79 | (565 | ) | (865 | ) | (953 | ) | |||||||||||||
| Interest and other expense | (24 | ) | (133 | ) | (447 | ) | (1,496 | ) | ||||||||||||
| Interest expense | 389 | 763 | 1,909 | 4,712 | ||||||||||||||||
| Income tax expense: | ||||||||||||||||||||
| Current | (3,758 | ) | (1,838 | ) | (2,644 | ) | 8,861 | |||||||||||||
| Deferred | 7,953 | 4,478 | 22,635 | 3,062 | ||||||||||||||||
| DD&A expense | 8,340 | 6,169 | 27,659 | 24,686 | ||||||||||||||||
| Hedge ineffectiveness loss / (gain) | 31 | 85 | 569 | (891 | ) | |||||||||||||||
| Hedge loss / (gain) | - | (2 | ) | - | (2 | ) | ||||||||||||||
| Non-cash compensation expense | 649 | 278 | 2,115 | 1,071 | ||||||||||||||||
| Exploration expense | 355 | 83 | 902 | (2) | 849 | |||||||||||||||
| Impairment expense | 6,043 | 697 | 6,043 | 3,440 | ||||||||||||||||
| Adjusted EBITDAX (1) | $ | 26,801 | $ | 15,193 | $ | 89,214 | $ | 66,670 | ||||||||||||
| (1) | As used herein, Adjusted EBITDAX is calculated as net income attributable to GeoResources, Inc. before interest, income taxes, depreciation, depletion and amortization, and exploration expense and further excludes non-cash compensation, impairments, hedge ineffectiveness and income or loss on derivative contracts. Adjusted 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. |
| (2) | Excludes $87, which is the non-controlling interest's portion of exploration expense. | |
Liquidity
Liquidity is calculated by adding the net funds expected to be available under the new senior credit facility to our cash and cash equivalents. We use liquidity as an indicator, along with our ongoing cash flow, of our ability to satisfy our future capital expenditures.
The table below summarizes our liquidity at December 31, 2011 and December 31, 2010.
| ($ in thousands) | |||||||||
| Liquidity at | Liquidity at | ||||||||
| December 31, 2011 | December 31, 2010 | ||||||||
| Borrowing base available on new senior revolving credit facility | $ | 180,000 | $ | 145,000 | |||||
| Cash and cash equivalents | 39,144 | 9,370 | |||||||
| Amounts borrowed on Senior Revolving Credit Facility | - | (87,000 | ) | ||||||
| Liquidity (1) | $ | 219,144 | $ | 67,370 | |||||
| (1) | Liquidity can vary from period to period for GeoResources, Inc. and can vary among companies as to what is or is not included in liquidity. This measurement 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. As of March 9, 2012, the Company had drawn approximately $60 million on its senior revolving credit facility to fund acquisitions and capital expenditures. | |
About GeoResources, Inc.
GeoResources, Inc. is an independent oil and gas company engaged in the development and acquisition of oil and gas reserves through an active and diversified program that includes the acquisition, drilling and development of undeveloped leases, purchases of reserves and exploration activities, currently focused in the Southwest, Gulf Coast, and the Williston Basin. For more information, visit our website at www.georesourcesinc.com.
Cautionary Note Regarding Forward-Looking Statements
This release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which are subject to risks and uncertainties. The forward-looking statements, which address the GeoResources' expected business and financial performance, among other matters, contain words such as "believe," "expect," "estimate," "anticipate," "optimistic," "intend," "plan," "aim," "will," "may," "should," "could," "would," "likely," "continue," and similar expressions. Examples of forward-looking statements, include, but are not limited to: (i) changes in production volumes and prices, future production and development costs, (ii) projections of capital expenditures, revenues, income or loss, earnings or loss per share, capital structure, and other financial items, (iii) statements of our plans and objectives of our management or board of directors including those relating to planned development of our oil and gas properties, (iv) statements of future economic performance and (v) statements of assumptions underlying such statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. GeoResources undertakes no obligation to update or revise any forward-looking statements.
A further description of these uncertainties and other risks can be found in the GeoResources Annual Report on Form 10-K for the year ended December 31, 2010 and other reports filed by GeoResources with the SEC.
GeoResources, Inc.
Cathy Kruse, 701-572-2020 Ext. 1
cathy@georesourcesinc.com
