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GeoMet Announces Financial and Operating Results for the Quarter and Year Ended December 31, 2012

GeoMet Announces Financial and Operating Results for the Quarter and Year Ended 
December 31, 2012 
HOUSTON, TX -- (Marketwire) -- 03/29/13 --  GeoMet, Inc. (OTCQB:
GMET) (NASDAQ: GMETP) ("GeoMet" or the "Company") today announced its
financial and operating results for the quarter and year ended
December 31, 2012. 
William C. Rankin, GeoMet's President and Chief Executive Officer,
commented, "2012 was a challenging year for the Company. The
precipitous and significant decline in both our realized natural gas
prices and the forward curve for natural gas during the year put the
Company under distress and had material adverse consequences on our
business. Our borrowing base under our credit facility was reduced by
more than a third resulting in a borrowing base deficiency requiring
the credit facility to be restructured and substantially all
subsequent cash flows dedicated to reducing the deficiency. Further,
additional borrowings were prohibited and capital expenditures were
significantly limited. The restructured credit facility expires on
April 1, 2014. As a result, we were unable to drill new wells and our
activities were primarily focused upon maintaining our production
levels, reducing costs and seeking a solution to resolve the
borrowing base deficiency under our credit facility." Mr. Rankin
added, "We recently announced an initiative in this regard, an effort
to sell all of our coalbed methane assets in Alabama." 
Going Concern 
Our audited financial statements for the fiscal year ended December
31, 2012 were prepared on a going concern basis in accordance with
United States generally accepted accounting principles. The going
concern basis of presentation assumes that we will continue in
operation for the next twelve months and will be able to realize our
assets and discharge our liabilities and commitments in the normal
course of business and do not include any adjustments to reflect the
possible future effects on the recoverability and classification of
assets or the amounts and classification of liabilities that may
result from our inability to continue as a going concern. Our credit
facility matures on April 1, 2014. As a result, all borrowings under
our credit facility will be classified as current on April 2, 2013.
Our operating and capital
 plans for the next twelve months call for
dedication of substantially all of our excess cash flow to the
repayment of indebtedness and the possible sale of assets to reduce
indebtedness, with the goal of eliminating our borrowing base
deficiency, and refinancing our credit facility. Therefore, we
concluded that due to the uncertainties surrounding our ability to
sell assets at acceptable prices, to reduce our indebtedness to an
amount less than the borrowing base and to refinance our credit
facility before its maturity date, substantial doubt exists as to our
ability to continue as a going concern. If we were unable to continue
as a going concern, the values we receive for our assets on
liquidation or dissolution could be significantly lower than the
values reflected in our financial statements. 
Fourth Quarter 2012 Financial and Operating Results 
For the quarter ended December 31, 2012, GeoMet reported a net loss
of $8.7 million. Included in the net loss was a $12.3 million
impairment to the Company's gas properties and a $0.8 million asset
impairment, offset by a $4.1 million gain on natural gas derivatives.
For the quarter ended December 31, 2011, GeoMet reported a net loss
of $1.1 million. Included in the net loss was a $7.9 million
impairment to the Company's gas properties and $0.6 million in
acquisition costs relating to the purchase of certain coalbed methane
gas properties, offset by a $7.0 million gain on natural gas
derivatives. 
For the quarter ended December 31, 2012, GeoMet reported a net loss
available to common stockholders of $10.4 million, or $0.26 per fully
diluted share. Included in the net loss available to common
stockholders for the quarter ended December 31, 2012 were charges of
$0.5 million for accretion of preferred stock and $1.2 million for
paid-in-kind ("PIK") dividends on preferred stock. For the quarter
ended December 31, 2011, GeoMet reported a net loss available to
common stockholders of $3.9 million, or $0.10 per fully diluted
share. Included in the net loss available to common stockholders for
the quarter ended December 31, 2012 were charges of $0.5 million for
accretion of preferred stock and $2.3 million for PIK dividends on
preferred stock. 
For the quarter ended December 31, 2012, Adjusted EBITDA increased to
$7.2 million from $6.5 million in the prior year quarter. Adjusted
EBITDA is a non-GAAP measure. See the accompanying table for a
reconciliation of Adjusted EBITDA to Net (Loss) Income.  
Revenues for the quarter ended December 31, 2012 were $11.7 million,
as compared to $10.7 million for the prior year quarter. The average
natural gas price for the quarter ended December 31, 2012 was $3.50
per Mcf as compared to the prior year quarter average of $3.68 per
Mcf. 
Average net gas sales volumes for the quarter ended December 31, 2012
were 36.3 MMcf per day, a 16% increase from the same quarter in 2011
primarily due to the properties acquired in the November 2011 asset
purchase. 
Year Ended December 31, 2012 Financial and Operating Results 
For the year ended December 31, 2012, GeoMet reported a net loss of
$150.0 million. Included in the net loss was a $95.7 million
impairment of gas properties, a $44.0 million write off of our
deferred tax asset, a $1.4 million write off of debt issuance costs,
a $1.1 million charge for restructuring costs, a $0.8 million asset
impairment and a $0.7 million loss on the disposal of our Canadian
operations. For the year ended December 31, 2011, GeoMet reported net
income of $2.8 million. Included in net income was a $7.9 million
impairment of gas properties and $1.0 million in acquisition costs
relating to the purchase of certain coalbed methane gas properties,
offset by a $13.6 million gain on natural gas derivatives.  
For the year ended December 31, 2012, GeoMet reported a net loss
available to common stockholders of $155.8 million, or $3.88 per
fully diluted share. Included in the net loss available to common
stockholders for the year ended December 31, 2012 were charges of
$1.9 million for accretion of preferred stock and $3.9 million for
PIK dividends on preferred stock. For the year ended December 31,
2011, GeoMet reported a net loss available to common stockholders of
$5.2 million, or $0.13 per fully diluted share. Included in net loss
available to common stockholders for the year ended December 31, 2011
were non-cash charges of $1.8 million for accretion of preferred
stock and $6.3 million for PIK dividends paid on preferred stock. 
For the year ended December 31, 2012, Adjusted EBITDA increased to
$23.4 million from $21.8 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) Income.  
Revenues for the year ended December 31, 2012, were $39.4 million, as
compared to $35.6 million for the prior year period. The average
natural gas price for the year ended December 31, 2012 was $2.83 per
Mcf as compared to the prior year period average of $4.15 per Mcf. 
Average net gas sales volumes for the year ended December 31, 2012
were 37.7 MMcf per day, a 62% increase from the same period in 2011
primarily due to the properties acquired in the November 2011 asset
purchase. 
Forward-Looking Statements Notice 
This press release contains "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.
Except for statements of historical facts, all statements included in
the document, including those preceded by, followed by or that
otherwise include the words "believe," "expects," "anticipates,"
"intends," "estimates," "projects," "target," "goal," "plans,"
"objective," "should" or similar expressions or variations on such
words are forward-looking statements. 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 volatility
of future natural gas prices, 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 natural gas reserves,
reductions in the borrowing base under our credit facility made by
our lenders, 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 and year ended December 31, 2012 on April 1, 2013 at
10:30 a.m. Central Time. To participate, dial (888) 455-2263 a few
minutes before the call begins. Please reference GeoMet, Inc.
conference ID 5349212. 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 accessible shortly after the end of the
call on April 1, 2013 and will be available through April 15, 2013.
To access the conference call replay, please dial 888-203-1112 and
enter replay pass code 5349212 when prompted. 
About GeoMet, Inc. 
GeoMet, Inc. is engaged in the exploration for and development and
production of natural gas from coal seams ("coalbed methane"). Our
principal operations and producing properties are located in the
Cahaba and Black Warrior Basins in Alabama and the Central
Appalachian Basin in Virginia and West Virginia. We also control
additional coalbed methane and oil and gas development rights,
principally in Alabama, Virginia, and West Virginia. 


 
                                                                            
                                GEOMET, INC.                                
              CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS               
                  (In thousands, except per share amounts)                  
                                                                            
                               Three Months Ended          Year Ended       
                                  December 31,            December 31,      
                             ----------------------  ---------------------- 
                                2012        2011        2012        2011    
Revenues:                                                                   
  Gas sales                  $   11,682  $   10,633  $   39,147  $   35,335 
  Operating fees and other           46          70         236         280 
                             ----------  ----------  ----------  ---------- 
Total revenues                   11,728      10,703      39,383      35,615 
                                                                            
Expenses:                                                                   
  Total production expenses       6,410       5,887      27,795      18,718 
  Depreciation, depletion                                                   
   and amortization               2,071       3,007      11,532       7,908 
  Impairment of gas                                                         
   properties and other          13,044       7,940      96,511       7,940 
  General and administrative      1,086         778       4,851       4,861 
  Restructuring costs               130           -       1,083           - 
  Acquisition costs                   -         585           -         956 
  Gains on derivative                                                       
   contracts                     (4,074)     (7,032)     (4,416)    (13,638)
                             ----------  ----------  ----------  ---------- 
Total operating expenses         18,667      11,165     137,356      26,745 
                                                                            
Operating (loss) income          (6,939)       (462)    (97,973)      8,870 
                                                                            
Write off of debt issuance                                                  
 costs                                -           -      (1,378)          - 
Other expenses & interest,                                                  
 net                             (1,768)     (1,168)     (5,823)     (3,680)
                             ----------  ----------  ----------  ---------- 
                                                                            
(Loss) income before income                                                 
 taxes and discontinued                                                     
 operations                      (8,707)     (1,630)   (105,174)      5,190 
Income tax (expense) benefit         (6)        531     (44,043)     (1,996)
                             ----------  ----------  ----------  ---------- 
                                                                            
(Loss) income before                                                        
 discontinued operations         (8,713)     (1,099)   (149,217)      3,194 
Discontinued operations, net                                                
 of tax                             (14)        (39)       (736)       (380)
                             ----------  ----------  ----------  ---------- 
                                                                            
Net (loss) income            $   (8,727) $   (1,138) $ (149,953) $    2,814 
                             ==========  ==========  ==========  ========== 
                                                                            
Accretion of Preferred Stock       (495)       (458)     (1,913)     (1,766)
Cash Dividends on Preferred                                                 
 Stock                               (1)         (1)         (3)         (3)
PIK Dividends on Preferred                                                  
 Stock                           (1,170)     (2,283)     (3,934)     (6,293)
                             ----------  ----------  ----------  ---------- 
                                                                            
Net loss available to common                                                
 stockholders                $  (10,393) $   (3,880) $ (155,803) $   (5,248)
                             ==========  ==========  ==========  ========== 
                                                                            
Net loss per common share:                                                  
Basic                        $    (0.26) $    (0.10) $    (3.88) $    (0.13)
                             ==========  ==========  ==========  ========== 
Diluted                      $    (0.26) $    (0.10) $    (3.88) $    (0.13)
                             ==========  ==========  ==========  ========== 
                                                                            
Weighted average number of                                                  
 common shares:                                                             
Basic                            40,436      39,712      40,124      39,611 
                             ==========  ==========  ==========  ========== 
Diluted                          40,436      39,712      40,124      39,611 
                             ==========  ==========  ==========  ========== 
                                                                            
                                                                            
                                                                            
                                GEOMET, INC.                                
                    CONDENSED CONSOLIDATED BALANCE SHEETS                   
                               (In thousands)                               
                                                                            
                                                 December 31,   December 31,
                                                     2012           2011    
                                                -------------  -------------
                     ASSETS                                                 
Current Assets:                                                             
  Cash and cash equivalents                     $       7,234  $         458
  Accounts receivable                                   6,248          4,402
  Inventory                                               263            597
  Derivative asset - natural gas hedges                 3,930         20,685
  Other current assets                                  1,438          1,141
                                                -------------  -------------
                                                                            
Total current assets                                   19,113         27,283
                                                -------------  -------------
                                                                            
Property and equipment - net                           75,125        176,393
                                                -------------  -------------
                                                                            
Other noncurrent assets:                                                    
  Derivative asset - natural gas hedges                     -          1,766
  Deferred income taxes                                 1,126         48,171
  Other                                                   962          3,533
                                                -------------  -------------
                                                                            
Total other noncurrent assets                           2,088         53,470
                                                -------------  -------------
                                                                            
TOTAL ASSETS                                    $      96,326  $     257,146
                                                =============  =============
                                                                            
    LIABILITIES, MEZZANINE AND STOCKHOLDERS'                                
                (DEFICIT) EQUITY                                            
Current Liabilities:                                                        
  Accounts payable                              $       9,559  $       7,500
  Accrued liabilities                                   1,794          3,936
  Deferred income taxes                                 1,126          4,153
  Derivative liability - natural gas contracts            920              -
  Asset retirement liability                               74             32
  Current portion of long-term debt                    10,300             92
                                                -------------  -------------
                                                                            
Total current liabilities                              23,773         15,713
                                                -------------  -------------
                                                                            
Long-term debt                                        129,000        158,172
Asset retirement liability                             13,235          8,139
Derivative liability - natural gas contracts            1,636              -
Other long-term accrued liabilities                       144              8
                                                -------------  -------------
                                                                            
TOTAL LIABILITIES                                     167,788        182,032
                                                -------------  -------------
                                                                            
Mezzanine equity:                                                           
Series A Convertible Redeemable Preferred Stock        35,852         28,483
                                                                            
Stockholders' (deficit) equity                       (107,314)        46,631
                                                -------------  -------------
                                                                            
TOTAL LIABILITIES, MEZZANINE AND STOCKHOLDERS'                              
 (DEFICIT) EQUITY                               $      96,326  $     257,146
                                                =============  =============
                                                                            
                                                                            
                                                                            
                                GEOMET, INC.                                
              CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS               
                                                                            
                               (In thousands)                               
                                                                            
                                                          Year Ended        
                                                         December 31,       
                                                   ------------------------ 
                                                       2012         2011    
                                                   -----------  ----------- 
Net cash provided by operating activities          $    18,361  $    16,015 
Net cash provided by (used in) investing                                    
 activities (1)                                          8,036      (91,856)
Net cash (used in) provided by in financing                                 
 activities (2)                                        (19,626)      75,762 
Effect of exchange rates changes on cash                     5            - 
                                                   -----------  ----------- 
Increase (decrease) in cash and cash equivalents         6,776          (79)
Cash and cash equivalents at beginning of period           458          537 
                                                   -----------  ----------- 
Cash and cash equivalents at end of period         $     7,234  $       458 
                                                   ===========  =========== 
                                                                            
(1) Net cash provided by investing activities for the year ended December   
    31, 2012 primarily consists of the return of basis in the settlement of 
    natural gas derivative contracts acquired in the November 2011 asset    
    purchase. Net cash used in investing activities for the year ended      
    December 31, 2011 included $78.7 million for the November 2011 asset    
    purchase.                                                               
(2) Net cash used in financing activities for the year ended December 31,   
    2012 primarily consisted of reduction of bank debt. Net cash provided by
    financing activities for the year ended December 31, 2011 primarily     
    consisted of the proceeds for the November 2011 asset purchase.         
                                                                            
                                                                            
                                                                            
                                GEOMET, INC.                                
                            OPERATING STATISTICS                            
                                                                            
                                                                            
                                      Three Months Ended Year Ended December
                                         December 31,            31,        
                                     ------------------- -------------------
                                        2012      2011      2012      2011  
                                     --------- --------- --------- --
-------
Gas sales                            $  11,682 $  10,633 $  39,147 $  35,335
                                     ========= ========= ========= =========
Lease operating expenses             $   4,132 $   3,842 $  17,489 $  12,713
Compression and transportation                                              
 expenses                                1,592     1,626     8,356     4,591
Production taxes                           686       458     1,962     1,536
                                     --------- --------- --------- ---------
Total production expenses            $   6,410 $   5,926 $  27,807 $  18,840
                                     ========= ========= ========= =========
Net sales volumes (Consolidated)                                            
 (MMcf)                                  3,340     2,891    13,808     8,511
  Pond Creek and Lasher fields           1,498     1,528     6,025     5,796
  Pinnate wells (Central Appalachian                                        
   Basin)                                  875       591     3,692       591
  Gurnee field (Cahaba Basin)              418       473     1,743     1,803
  Black Warrior Basin fields               549       299     2,349       308
Per Mcf data ($/Mcf):                                                       
Average natural gas sales price                                             
 (Consolidated)                      $    3.50 $    3.68 $    2.83 $    4.15
  Pond Creek and Lasher fields       $    3.59 $    3.87 $    2.92 $    4.28
  Pinnate wells (Central Appalachian                                        
   Basin)                            $    3.38 $    3.40 $    2.69 $    3.40
  Gurnee field (Cahaba Basin)        $    3.47 $    3.57 $    2.83 $    4.10
  Black Warrior Basin fields         $    3.46 $    3.40 $    2.86 $    3.43
Average natural gas sales price                                             
 realized (Consolidated)(1)          $    4.33 $    4.67 $    4.02 $    5.28
Lease operating expenses                                                    
 (Consolidated)                      $    1.24 $    1.33 $    1.27 $    1.49
  Pond Creek and Lasher fields       $    1.03 $    1.15 $    1.07 $    1.17
  Pinnate wells (Central Appalachian                                        
   Basin)                            $    1.20 $    1.21 $    1.35 $    1.21
  Gurnee field (Cahaba Basin)        $    2.73 $    2.47 $    2.68 $    2.67
  Black Warrior Basin fields         $    0.70 $    0.48 $    0.57 $    0.47
Compression and transportation                                              
 expenses (Consolidated)             $    0.47 $    0.56 $    0.60 $    0.54
  Pond Creek and Lasher fields       $    0.53 $    0.52 $    0.58 $    0.55
  Pinnate wells (Central Appalachian                                        
   Basin)                            $    0.66 $    1.12 $    1.07 $    1.12
  Gurnee field (Cahaba Basin)        $    0.23 $    0.28 $    0.26 $    0.34
  Black Warrior Basin fields         $    0.20 $    0.17 $    0.19 $    0.16
Production taxes (Consolidated)      $    0.21 $    0.16 $    0.14 $    0.18
  Pond Creek and Lasher fields       $    0.19 $    0.18 $    0.16 $    0.19
  Pinnate wells (Central Appalachian                                        
   Basin)                            $    0.27 $    0.06 $    0.11 $    0.06
  Gurnee field (Cahaba Basin)        $    0.16 $    0.17 $    0.12 $    0.20
  Black Warrior Basin fields         $    0.19 $    0.21 $    0.17 $    0.21
Total production expenses                                                   
 (Consolidated)                      $    1.92 $    2.05 $    2.01 $    2.21
  Pond Creek and Lasher fields       $    1.75 $    1.85 $    1.81 $    1.91
  Pinnate wells (Central Appalachian                                        
   Basin)                            $    2.13 $    2.39 $    2.53 $    2.39
  Gurnee field (Cahaba Basin)        $    3.12 $    2.92 $    3.06 $    3.21
  Black Warrior Basin fields         $    1.09 $    0.86 $    0.93 $    0.84
Depletion (Consolidated)             $    0.59 $    1.06 $    0.81 $    0.91
                                                                            
(1) Average natural gas sales price realized includes the effects of        
    realized gains and losses on derivative contracts.                      
                                                                            
                                                                            
                                                                            
                                GEOMET, INC.                                
                 CONSOLIDATED DERIVATIVE CONTRACT POSITIONS                 

 
At December 31, 2012, the Company had the following natural gas swap
positions: 


 
                                                           
                                            Volume         
                Period                      (MMBtu)   Price
                ------------------------- ---------- ------
                First Quarter of 2013      2,880,000 $ 4.42
                Second Quarter of 2013     2,912,000 $ 3.60
                Third Quarter of 2013      2,944,000 $ 3.60
                Fourth Quarter of 2013     2,944,000 $ 3.60
                First Quarter of 2014      1,440,000 $ 3.82
                                          ----------       
                                          13,120,000       
                                          ==========       

 
At December 31, 2012, we had the following natural gas collar
positions: 


 
                                                                     
                                               Volume    Sold  Bought
       Period                                 (MMBtu)  Ceiling  Floor
       ------------------------------------- --------- ------- ------
       January 2014 through December 2015    3,650,000 $  4.30 $ 3.60
       January 2014 through December 2015    3,650,000 $  4.20 $ 3.50
                                             ---------               
                                             7,300,000               
                                             =========               

 
As of December 31, 2012, we had the following forward sales at NYMEX
plus a fixed basis: 


 
                                                            
                                               Volume  Fixed
                Period                        (MMBtu)  Basis
                ---------------------------- --------- -----
                                                            
                January through March 2013     450,000 $0.19
                January through March 2013     918,000 $0.22
                                             ---------      
                                             1,368,000      
                                             =========      
                                                            
                                                            
                                                            
                                GEOMET, INC.                                
           RECONCILIATION OF ADJUSTED EBITDA TO NET (LOSS) INCOME           
                                                                            
                               (In thousands)                               
                                                                            
                                  Three Months Ended        Year Ended      
                                     December 31,          December 31,     
                                 --------------------  -------------------- 
                                    2012       2011       2012       2011   
                                 ---------  ---------  ---------  --------- 
                                                                            
Net (loss) income                $  (8,727) $  (1,138) $(149,953) $   2,814 
Add: Interest expense, net of                                               
 interest income and amounts                                                
 capitalized and amortization of                                            
 loan fees                           1,769      1,162      7,200      3,681 
(Deduct) Add: Other expense                                                 
 (income)                               (1)         5          2         (2)
Add (Deduct): Income tax expense                                            
 (benefit)                               6       (531)    44,043      1,997 
Add: Impairment of gas                                                      
 properties and other               13,044      7,940     96,511      7,940 
Add : Depreciation, depletion                                               
 and amortization (1)                2,071      3,003     11,530      8,145 
(Deduct) Add: Unrealized (gains)                                            
losses on derivative contracts      (1,292)    (4,176)    11,967     (4,067)
Add: Loss on the sale Hudson's                                              
 Hope Gas, Ltd.                          -          -        683          - 
Add: Stock based compensation           69        120        581        697 
Add: Accretion expense - asset                                              
 retirement obligations                243        157        828        564 
                                 ---------  ---------  ---------  --------- 
Adjusted EBITDA                  $   7,182  $   6,542  $  23,392  $  21,769 
                                 =========  =========  =========  ========= 
                                                                            
(1) Depreciation, depletion and amortization include amounts reported in    
    Discontinued operations, net of tax on the Condensed Consolidated       
    Statements of Operations.                                               

 
The table above reconciles Adjusted EBITDA to net (loss) income.
Adjusted EBITDA is defined as net (loss) income before net interest
expense, other non-operating expense (income), income taxes,
depreciation, depletion, amortization, impairment of gas properties
and other, unrealized (gains) losses on natural gas derivative
contracts, loss on the sale Hudson's Hope Gas, Ltd., 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 cash flows and operating performance. 
Stephen M. Smith
(713) 287-2251
ssmith@geometcbm.com
www.geometinc.com