GeoMet Announces Financial and Operating Results for the

GeoMet Announces Financial and Operating Results for the Quarter Ended March 31, 2009  HOUSTON, TX -- (MARKET WIRE) -- 05/08/09 --  GeoMet, Inc. (NASDAQ: GMET) ("GeoMet" or the "Company") today announced its financial and operating results for the quarter ended March 31, 2009.  J. Darby Sere, GeoMet's Chairman and Chief Executive Officer, had the following comments, "In response to the significant decline in natural gas prices since July 2008 and the tight bank credit markets, we have reduced our capital expenditure plans for 2009 and intend to fund them with our internally generated cash flows. In addition, we have taken aggressive steps to lower capital, operating and overhead costs to align them with current natural gas prices and protect our operating margins. The results of these actions will be evidenced in the second quarter and the remainder of 2009. Furthermore, we intend to deleverage our capital structure through a sale of a non-operating interest in one or more of our projects, a long-term gas prepayment arrangement or the sale of a volumetric production payment. Our long-lived, shallow decline reserves and the upward-sloping futures market for natural gas prices should allow us to achieve our debt reduction objective.  Despite the challenges that the downturn in the natural gas industry and tight credit markets create, we are confident that we will emerge stronger and positioned to take advantage of the opportunities that exist in our projects as natural gas prices recover."  First Quarter 2009 Financial and Operating Results  For the quarter ended March 31, 2009, GeoMet reported a net loss of $87.7 million, or a loss of $2.25 per diluted share. Included in the net loss was a $139.7 million, or $3.59 per fully diluted share, pre-tax non-cash impairment to the Company's natural gas properties and a $0.2 million, or $0.01 per fully diluted share, pre-tax, non-cash, mark-to-market gain on derivative contracts. The Company received net cash payments of $2.7 million from derivative contracts during the period. For the quarter ended March 31, 2008, GeoMet reported a net loss of $2.1 million, or $0.05 per diluted share. Included in the net loss for the quarter ended March 31, 2008 was an $8.6 million, or $0.02 per fully diluted share, pre-tax non-cash mark-to-market loss on derivative contracts. The Company received net cash payments of $0.9 million from derivative contracts during the period.  Adjusted Net Loss for the first quarter of 2009 was $1.0 million as compared to Adjusted Net Income of $3.2 million in the first quarter of 2008. Adjusted Net (Loss) Income is a non-GAAP measure. See the accompanying table for a reconciliation of Adjusted Net (Loss) Income to Net Loss.  Adjusted EBITDA for the quarter decreased to $3.3 million from $9.3 million in the prior year period. Adjusted EBITDA is a non-GAAP measure. See the accompanying table for a reconciliation of Adjusted EBITDA to net loss.  Gas sales for the quarter were $9.5 million as compared to gas sales of $15.6 million in the first quarter of 2008. The average natural gas price during the quarter was $5.01 per Mcf as compared to the prior year period average of $8.33 per Mcf. The average natural gas price, adjusted for realized gains and losses on derivative contracts, was $6.45 per Mcf during the first quarter of 2009 versus $8.79 per Mcf for the same period in 2008.  Average net gas sales volumes for the quarter ended March 31, 2009 were 21.0 MMcf per day, a 2% increase from the same period in 2008. The increase in net gas sales volumes for the quarter ended March 31, 2009 over the same period in 2008 was 5% when the net gas sales volumes for the quarter ended March 31, 2008 exclude volumes from an overriding royalty interest that was sold effective July 1, 2008.  Accrued capital expenditures incurred for the quarter ended March 31, 2009 were $3.3 million, compared to $7.5 million for the same period in the prior year.  Forward-Looking Statements Notice  This press release may contain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are subject to certain risks, trends and uncertainties that could cause actual results to differ materially from those projected. Among those risks, trends and uncertainties are our estimate of the sufficiency of our existing capital sources, our ability to raise additional capital to fund cash requirements for future operations, the uncertainties involved in estimating quantities of proved oil and natural gas reserves, in prospect development and property acquisitions and in projecting future rates of production, the timing of development expenditures and drilling of wells, and the operating hazards attendant to the oil and gas business. In particular, careful consideration should be given to cautionary statements made in the various reports the Company has filed with the SEC. GeoMet undertakes no duty to update or revise these forward-looking statements.  Conference Call Information  GeoMet will hold its quarterly conference call to discuss the results for the quarter ended March 31, 2009 on May 11, 2009 at 10:30 a.m. Central Time. To participate, dial (888) 571-8168 a few minutes before the call begins. Please reference GeoMet, Inc. conference ID 93618518. The call will also be broadcast live over the Internet from the Company's website at www.geometinc.com. A replay of the conference call will be archived on the Company's website shortly after the end of the call on May 11, 2009.  About GeoMet, Inc.  GeoMet, Inc. is an independent energy company primarily engaged in the exploration for and development and production of natural gas from coal seams ("coalbed methane") and non-conventional shallow gas. Our principal operations and producing properties are located in the Cahaba Basin in Alabama and the Central Appalachian Basin in West Virginia and Virginia. We also control additional coalbed methane and oil and gas development rights, principally in Alabama, British Columbia, Virginia, and West Virginia.  For more information please contact Stephen M. Smith at (713) 287-2251 (ssmith@geometcbm.com), John Baldissera with BPC Financial at (800) 368-1217, or visit our website at www.geometinc.com.                                    GEOMET, INC.               CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS                  (In thousands, except per share amounts)                                                   Three Months Ended                                                       March 31,                                           -------------------------------                                                2009            2008                                           ---------------  --------------- Revenues: Gas sales                                 $         9,453  $        15,581 Operating fees and other                               98              298                                           ---------------  --------------- Total revenues                                      9,551           15,879 Expenses: Total production expenses                           6,386            5,216 Depreciation, depletion and amortization            3,037            2,459 Impairment of gas properties                      139,713               -- General and administrative                          2,973            2,493 Realized gains on derivative contracts             (2,723)            (862) Unrealized (gains) losses on derivative  contracts                                           (186)           8,647                                           ---------------  --------------- Total operating expenses                          149,200           17,953                                           ---------------  --------------- Operating loss                                   (139,649)          (2,074) Other expenses & interest, net                       (974)          (1,302)                                           ---------------  --------------- Loss before income taxes                         (140,623)          (3,376) Income tax (benefit) expense                      (52,897)           1,234                                           ---------------  --------------- Net loss                                  $       (87,726) $        (2,142)                                           ===============  =============== Loss per share:    Net loss      Basic                                $         (2.25) $         (0.05)                                           ===============  ===============      Diluted                              $         (2.25) $         (0.05)                                           ===============  ===============    Weighted average number of common     shares:      Basic                                         38,924           39,004                                           ===============  ===============      Diluted                                       38,924           39,004                                           ===============  ===============                                 GEOMET, INC.                   CONDENSED CONSOLIDATED BALANCE SHEETS                               (In thousands)                                                     March 31, December 31,                                                      2009        2008                                                    ---------  --------- Assets: Current assets                                     $  15,142  $  17,938 Properties and equipment, net of accumulated  depreciation, depletion, amortization and  impairment of gas properties                        218,827    358,299 Other assets                                           9,809      1,363                                                    ---------  --------- Total assets                                       $ 243,778  $ 377,600                                                    =========  ========= Liabilities and stockholders' equity: Current liabilities                                $  12,428  $  19,379 Long-term debt                                       121,554    117,118 Other long-term liabilities                            4,808     48,671                                                    ---------  --------- Total liabilities                                    138,790    185,168                                                    ---------  --------- Total stockholders' equity                           104,988    192,432                                                    ---------  --------- Total liabilities and stockholders' equity         $ 243,778  $ 377,600                                                    =========  =========                                 GEOMET, INC.               CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                               (In thousands)                                                       Three Months Ended                                                           March 31,                                                     ---------------------                                                       2009        2008                                                     ----------  ---------- Net cash provided by operating activities           $    2,193  $    3,846 Net cash used in investing activities                   (7,131)     (7,210) Net cash provided by financing activities                4,441       4,514 Effect of exchange rates changes on cash                   (56)        144                                                     ----------  ---------- (Decrease) increase in cash and cash equivalents          (553)      1,294 Cash and cash equivalents at beginning of period         2,097       1,541                                                     ----------  ---------- Cash and cash equivalents at end of period          $    1,544  $    2,835                                                     ==========  ==========                                 GEOMET, INC.                            OPERATING STATISTICS                                                             Three Months                                                               Ended                                                           --------------                                                            2009     2008                                                           ------  ------ Net sales volumes (MMcf)                                   1,887   1,871 Per Mcf data ($/Mcf): Average natural gas sales price                           $ 5.01  $ 8.33 Differential to NYMEX (1)                                 $ 0.11  $ 0.30 Average natural gas sales price realized (2)              $ 6.45  $ 8.79 Adjusted lease operating expense (3)                      $ 2.37  $ 1.85 Compression expenses                                      $ 0.44  $ 0.37 Transportation expense                                    $ 0.33  $ 0.19 Production taxes                                          $ 0.19  $ 0.23 Total production expenses, as adjusted (3)                $ 3.33  $ 2.64 Depreciation, depletion and amortization                  $ 1.61  $ 1.31                                 POND CREEK FIELD                                                             Three Months                                                               Ended                                                           --------------                                                            2009     2008                                                           ------  ------ Net sales volumes (MMcf)                                   1,291   1,223 Per Mcf data ($/Mcf): Lease operating expense                                   $ 1.76  $ 1.61 Compression expense                                       $ 0.31  $ 0.35 Transportation expense                                    $ 0.46  $ 0.28 Production taxes                                          $ 0.15  $ 0.08 Total production expenses                                 $ 2.68  $ 2.32                                   GURNEE FIELD                                                             Three Months                                                               Ended                                                           --------------                                                            2009     2008                                                           ------  ------ Net sales volumes (MMcf)                                     557     559 Per Mcf data ($/Mcf): Adjusted lease operating expense (3)                      $ 2.98  $ 2.65 Compression expense                                       $ 0.59  $ 0.48 Production taxes                                          $ 0.31  $ 0.51 Total production expenses, as adjusted (3)                $ 3.88  $ 3.64  (1)   The difference between the average natural gas price for the       period, before the impact of gain and losses on derivative contract,       and the final average settlement price for natural gas contracts on       the New York Mercantile Exchange ("NYMEX") for each month during the       applicable period weighted by gas sales volumes. (2)   Average realized price includes the effects of realized gains on       derivative contracts. (3)   Produced water disposal fees are recorded as operating fees and other       on the Statement of Operations. Lease operating expense per Mcf has       been adjusted for produced water disposal fees because the fees are       not reflected in the net gas sales volumes. See Reconciliation of       Adjusted Lease Operating Expense.                                 GEOMET, INC.                 CONSOLIDATED DERIVATIVE CONTRACT POSITIONS  At March 31, 2009, the Company had the following natural gas collar  positions:                                     Volume     Sold      Bought   Sold Period                             (MMBtu)   Ceiling     Floor   Floor                                   ---------  -------    ------   ------ April through October 2009        1,284,000  $ 10.00(1) $ 7.50   $ 5.25 April through October 2009        1,284,000  $ 10.00(1) $ 8.50   $ 6.50 November 2009 through March 2010    906,000  $ 11.20    $ 9.50   $ 7.00 November 2009 through March 2010    604,000  $  6.65    $ 5.50   $ 3.50 April through October 2010          856,000  $  6.80    $ 5.50   $ 3.50  On May 6, 2009, the Company entered into the following natural gas collar position:                                     Volume     Sold      Bought Period                             (MMBtu)   Ceiling     Floor                                   ---------  -------    ------ June through October 2009 (1)     1,836,000  $  4.50    $ 3.70  (1)   In connection with the natural gas collar entered into on May 6,       2009, the Company eliminated the existing $10.00 sold ceilings with       respect to all three-way-colla rs for the period April through October       2009.  At March 31, 2009, the Company had the following natural gas swap position:                                                            Volume Period                                                    (MMBtu)   Price                                                           -------  ------- April through October 2009                                856,000  $  4.47  At March 31, 2009, the Company had the following interest rate swap positions:                                           Designate     Fixed    Notational Description            Effective date  maturity date  rate (2)     amount                        --------------  -------------  -------   ----------- Floating-to-fixed swap     12/14/2007     12/14/2010     3.86%  $15,000,000 Floating-to-fixed swap       1/3/2008       1/4/2010     3.95%  $10,000,000 Floating-to-fixed swap      3/25/2008      3/25/2010     2.38%  $10,000,000 Floating-to-fixed swap      5/13/2008      5/13/2010     3.07%  $ 5,000,000 Floating-to-fixed swap       1/6/2009       1/6/2011     1.38%  $ 5,000,000  (2)   The floating rate paid by the counterparty is the British Bankers'       Association LIBOR rate.                                 GEOMET, INC.               RECONCILIATION OF ADJUSTED EBITDA TO NET LOSS                               (In thousands)                                                    Three Months Ended                                                        March 31,                                             -------------------------------                                                  2009            2008                                             --------------  -------------- Net loss                                    $      (87,726) $       (2,142) Add: Interest expense, net of interest  income and amounts capitalized                        973           1,296 Add: Other expense                                       1               6 (Deduct): Income tax benefit                       (52,897)         (1,234) Add: Depreciation, depletion and  amortization                                        3,037           2,459 Add: Impairment of gas properties                  139,713               - (Deduct) Add: Unrealized (gains) losses on  derivative contracts                                 (186)          8,647 Add: Stock based compensation                          312             188 Add: Accretion expense                                 107              84                                             --------------  -------------- Adjusted EBITDA                             $        3,334  $        9,304                                             ==============  ==============   The table above reconciles net loss to Adjusted EBITDA. Adjusted EBITDA is defined as net loss before net interest expense, other non-operating income or losses, income taxes, depreciation, depletion and amortization, and minority interest before unrealized (gains) losses on derivative contracts, stock-based compensation and accretion expense. Although Adjusted EBITDA is not a measure of performance calculated in accordance with accounting principles generally accepted in the United States of America (GAAP), management believes that it is useful to GeoMet and to an investor in evaluating our company because it is a widely used measure to evaluate a company's operating performance.                                    GEOMET, INC.           RECONCILIATION OF ADJUSTED NET (LOSS) INCOME TO NET LOSS                              (In thousands)                                        Three Months Ended                                            March 31,                                    --------------------------                                         2009          2008                                    ------------    ---------- Net loss                           $    (87,726)   $   (2,142) Impairment of gas properties            139,713             - Unrealized (gains) losses on  derivative contracts, net of tax          (186)        8,647 Effect of income taxes                  (52,787)       (3,303)                                    ------------    ----------  Adjusted Net (Loss) Income         $       (986)   $    3,202                                    ============    ==========   The table above reconciles net loss to Adjusted Net (Loss) Income. Adjusted Net (Loss) Income is calculated by eliminating unrealized (gains) losses on derivative contracts from net loss, non-cash impairments to our gas properties, and their related tax effects to arrive at Adjusted Net (Loss) Income. The tax effects are determined by calculating the tax provision for GAAP net loss and comparing the results to the tax provision for Adjusted Net (Loss) Income, which excludes the adjusting items. The difference in the tax provision calculations represents the effect of income taxes. The calculation is performed at the end of each quarter and, as a result, the tax rates for each discrete period are different. Although Adjusted Net (Loss) Income is a non-GAAP measure, we believe it is useful information for investors because the unrealized (gains) losses relates to derivative contracts that hedge our production in future months. The (gains) losses associated with derivative contracts that hedge current production are recognized in net loss and are not eliminated in determining Adjusted Net (Loss) Income. The adjustment better matches (gains) losses on derivative contracts with the period when the underlying hedged production occurs.                                    GEOMET, INC.             RECONCILIATION OF ADJUSTED LEASE OPERATING EXPENSE                               (In thousands)                                                           Three Months Ended                                                               March 31,                                                            ---------------                                                              2009    2008                                                            -------  ------- Lease operating expense                                    $ 4,569  $ 3,751 Deduct: Produced water disposal fees                            98      297                                                            -------  -------  Adjusted lease operating expense                           $ 4,471  $ 3,454                                                            =======  =======   The table above reconciles lease operating expense to adjusted lease operating expense. Adjusted lease operating expense is calculated by eliminating the produced water disposal fees from lease operating expense to arrive at adjusted lease operating expense. Although adjusted lease operating expense is a non-GAAP measure, we believe it is useful information for investors because produced water disposal fees are recorded as operating fees and other on the Statement of Operations. Lease operating costs per Mcf are adjusted for produced water disposal fees because the fees are not reflected in the net gas sales price. The adjustment better matches lease operating expense with the natural gas sales revenues it is associated with.  Contacts:  Stephen M. Smith (713) 287-2251 Email Contact  John Baldissera BPC Financial (800) 368-1217  www.geometinc.com    
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