GeoMet Announces Financial and Operating Results for the Quarter Ended March 31, 2013

GeoMet Announces Financial and Operating Results for the Quarter Ended March 
31, 2013 
HOUSTON, TX -- (Marketwired) -- 05/16/13 --  GeoMet, Inc. (OTCQB:
GMET) (NASDAQ: GMETP) ("GeoMet" or the "Company") today announced its
financial and operating results for the quarter ended March 31, 2013. 
William C. Rankin, GeoMet's President and Chief Executive Officer,
commented, "Operating results for the quarter were generally in line
with expectations. Although the prices received for our natural gas
were much improved from the lows in 2012, the impact on the quarterly
results was minimal due to the high level of hedges the Company had
in place. More importantly, the sentiment related to natural gas has
improved markedly since 2012." Mr. Rankin went on to say, "As
announced last week, we have executed an agreement for the sale of
all of our coalbed methane assets in the State of Alabama for a
purchase price of $63.2 million. In connection with this sale, we
also executed the Fifth Amendment to our Credit Agreement. Upon the
closing of the sale, we expect to eliminate the borrowing base
deficiency under our Credit Agreement and alleviate many of the
constraints which the non-conforming tranche has placed on the
Company; however, the maturity date of April 2, 2014 is unchanged." 
First Quarter 2013 Financial and Operating Results 
For the quarter ended March 31, 2013, GeoMet reported a net loss of
$5.8 million. Included in the net loss was a $5.5 million loss on
natural gas derivatives. For the quarter ended March 31, 2012, GeoMet
reported a net loss of $52.9 million. Included in the net loss was a
charge of $44.0 million to provide a full valuation allowance for the
net deferred tax asset, net of the 2012 income tax benefit, and a
$15.8 million impairment to the Company's gas properties, offset by a
$10.0 million gain on natural gas derivatives. 
For the quarter ended March 31, 2013, GeoMet reported a net loss
available to common stockholders of $7.3 million, or $0.18 per fully
diluted share. Included in the net loss available to common
stockholders for the quarter ended March 31, 2013 were non-cash
charges of $0.5 million for accretion of preferred stock and $1.1
million for paid-in-kind ("PIK") dividends paid on preferred stock.
For the quarter ended March 31, 2012, GeoMet reported a net loss
available to common stockholders of $54.7 million, or $1.37 per fully
diluted share. Included in the net loss available to common
stockholders for the quarter ended March 31, 2012 were non-cash
charges of $0.5 million for accretion of preferred stock and $1.2
million for PIK dividends paid on preferred stock.  
For the quarter ended March 31, 2013, Adjusted EBITDA decreased to
$6.5 million from $6.8 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.  
Revenues for the quarter ended March 31, 2013 were $10.9 million, as
compared to $10.2 million for the prior year quarter. The average
natural gas price for the quarter ended March 31, 2013 was $3.50 per
Mcf as compared to the prior year quarter average of $2.79 per Mcf. 
Average net gas sales volumes for the quarter ended March 31, 2013
were 34.5 MMcf per day, a 13% decrease from the same quarter in 2012.
Production for the quarter was negatively impacted by high line
pressure and compression and mechanical downtime in our Pinnate wells
in Central Appalachia, as well as mining activities and cost saving
initiatives in our non-operated wells in the Black Warrior Basin. 
Management's Current Business Plan  
Management's current business plan is primarily focused on
eliminating the borrowing base deficiency, maintaining compliance
with the Credit Agreement, as amended, maintaining production levels
and controlling costs. In addition, the Company recently executed a
purchase and sale agreement for all of the Company's coalbed methane
properties in Alabama that were being marketed for sale by an asset
divestiture firm. Management will continue to evaluate the viability
of additional asset sales or strategic corporate transactions.  
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 GeoMet's
ability to close the sale of the Alabama properties, the amount of
net proceeds GeoMet expects to receive after purchase price
adjustments, 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
agreement 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 ended March 31, 2013 on May 16, 2013 at 10:30 a.m.
Central Time. To participate, dial (888) 539-3678 a few minutes
before the call begins. Please reference GeoMet, Inc. conference ID
1303393. 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 May 16, 2013 and will be available through May 31, 2013. To access
the conference call replay, please dial (888) 203-1112 and enter
replay pass code 1303393 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)                  
                                                                            
                                                      2013          2012    
                                                  -----------   ----------- 
Revenues:                                                                   
  Gas sales                                       $    10,879   $    10,143 
  Other                                                    45            76 
                                                  -----------   ----------- 
Total revenues                                         10,924        10,219 
                                                  -----------   ----------- 
Expenses:                                                                   
  Production expenses                                   6,859         7,150 
  Depreciation, depletion and amortization              1,506         3,630 
  Impairment of gas properties                             --        15,779 
  General and administrative                              998         1,303 
  Restructuring costs                                      70            -- 
  Losses (gains) on natural gas derivatives             5,535       (10,017)
                                                  -----------   ----------- 
Total operating expenses                               14,968        17,845 
                                                  -----------   ----------- 
Operating loss                                         (4,044)       (7,626)
Total other income (expense):                          (1,705)       (1,277)
                                                  -----------   ----------- 
Loss before income taxes from continuing                                    
 operations                                            (5,749)       (8,903)
  Income tax expense                                        6        44,024 
                                                  -----------   ----------- 
Loss from continuing operations                        (5,755)      (52,927)
  Discontinued operations                                  --           (21)
                                                  -----------   ----------- 
Net loss                                          $    (5,755)  $   (52,948)
                                                  ===========   =========== 
Accretion of discount on Series A Convertible                               
 Redeemable Preferred Stock                              (493)         (462)
Paid-in-kind dividends on Series A Convertible                              
 Redeemable Preferred Stock                            (1,076)       (1,240)
Cash dividends paid on Series A Convertible                                 
 Redeemable Preferred Stock                                (1)           (1)
                                                  -----------   ----------- 
Net loss available to common stockholders         $    (7,325)  $   (54,651)
                                                  ===========   =========== 
Net loss per common share:                                                  
                                                  -----------   ----------- 
  Net loss per common share -- basic              $     (0.18)  $     (1.37)
                                                  ===========   =========== 
  Net loss per common share -- diluted            $     (0.18)  $     (1.37)
                                                  ===========   =========== 
Weighted average number of common shares:                                   
  Basic                                                40,457        39,748 
                                                  ===========   =========== 
  Diluted                                              40,457        39,748 
                                                  ===========   =========== 
                                                                            
                                                                            
                                                                            
                                GEOMET, INC.                                
                   CONDENSED CONSOLIDATED BALANCE SHEETS                    
                               (In thousands)                               
                                                                            
                                                  March 31,    December 31, 
                                                    2013           2012     
                                                ------------   ------------ 
                    ASSETS                                                  
Current Assets:                                                             
  Cash and cash equivalents                     $      7,382   $      7,234 
  Accounts receivable                                  4,514          6,249 
  Inventory                                              270            263 
  Derivative asset -- natural gas contracts               --          3,930 
  Other current assets                                 1,234          1,437 
                                                ------------   ------------ 
Total current assets                                  13,400         19,113 
                                                                            
Property and equipment -- net                         73,662         75,125 
                                                                            
Total other noncurrent assets                            795          2,088 
                                                ------------   ------------ 
                                                                            
TOTAL ASSETS                                    $     87,857   $     96,326 
                                                ============   ============ 
                                                                            
   LIABILITIES, MEZZANINE AND STOCKHOLDERS'                                 
                    DEFICIT                                                 
                                                                            
Current Liabilities:                                                        
  Accounts payable                              $      3,248   $      5,729 
  Royalties payable                                    3,537          3,831 
  Accrued liabilities                                  3,502          1,794 
  Deferred income taxes                                   --          1,126 
  Derivative liability -- natural gas                                       
   contracts                                           5,543            920 
  Asset retirement obligations                            44             73 
  Current portion of long-term debt                    5,800         10,300 
                                                ------------   ------------ 
Total current liabilities                             21,674         23,773 
                                                ------------   ------------ 
                                                                            
Long-term debt                                       129,000        129,000 
Asset retirement obligations                          13,542         13,235 
Derivative liability -- natural gas contracts          1,718          1,636 
Other long-term accrued liabilities                      136            144 
                                                ------------   ------------ 
TOTAL LIABILITIES                                    166,070        167,788 
                                                ------------   ------------ 
Mezzanine equity:                                                           
Series A Convertible Redeemable Preferred                                   
 Stock                                                36,345         35,852 
Stockholders' Deficit:                                                      
Total stockholders' deficit                         (114,558)      (107,314)
                                                ------------   ------------ 
TOTAL LIABILITIES, MEZZANINE AND STOCKHOLDERS'                              
 DEFICIT                                        $     87,857   $     96,326 
                                                ============   ============ 
                                                                            
                                                                            
                                                                            
                                GEOMET, INC.                                
              CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS               
                               (In thousands)                               
                                                                            
                                                         3 Months Ended     
                                                           March 31,        
                                                    ----------------------- 
                                                       2013         2012    
                                                    ----------   ---------- 
Net cash provided by operating activities           $    4,815   $    6,525 
Net cash (used in) provided by investing                                    
 activities (1)                                           (163)       2,265 
Net cash used in financing activities (2)               (4,504)      (8,458)
Effect of exchange rates changes on cash                    --            1 
                                                    ----------   ---------- 
Increase in cash and cash equivalents                      148          333 
Cash and cash equivalents at beginning of period         7,234          458 
                                                    ----------   ---------- 
Cash and cash equivalents at end of period          $    7,382   $      791 
                                                    ==========   ========== 
                                                                            
(1)  Net cash provided by investing activities for the three months ended   
     March 31, 2012 primarily consisted of the return of basis in the       
     settlement of natural gas derivative contracts acquired in a November  
     2011 asset purchase.                                                   
(2)  Net cash used in financing activities primarily consisted of reduction 
     of bank debt.                                                          
                                                                            
                                                                            
                                                                            
                                GEOMET, INC.                                
                            OPERATING STATISTICS                            
                                                                            
                                                Three Months Ended March 31,
                                                ----------------------------
                                                     2013           2012    
                                                -------------  -------------
Gas sales                                       $      10,879  $      10,143
                                                =============  =============
Lease operating expenses                        $       4,469  $       4,461
Compression and transportation expenses                 1,839          2,241
Production taxes                                          550            470
                                                -------------  -------------
Total production expenses                       $       6,858  $       7,172
                                                =============  =============
Net sales volumes (Consolidated) (MMcf)                 3,108          3,629
  Pond Creek and Lasher fields                          1,452          1,507
  Pinnate wells (Central Appalachian Basin)               753          1,008
  Gurnee field (Cahaba Basin)                             396            457
  Black Warrior Basin fields                              507            657
Per Mcf data ($/Mcf):                                                       
Average natural gas sales price (Consolidated)  $        3.50  $        2.79
  Pond Creek and Lasher fields                  $        3.60  $        2.94
  Pinnate wells (Central Appalachian Basin)     $        3.40  $        2.60
  Gurnee field (Cahaba Basin)                   $        3.44  $        2.77
  Black Warrior Basin fields                    $        3.43  $        2.76
Average natural gas sales price realized                                    
 (Consolidated)(1)                              $        4.50  $        4.12
Lease operating expenses (Consolidated)         $        1.44  $        1.23
  Pond Creek and Lasher fields                  $        1.21  $        1.05
  Pinnate wells (Central Appalachian Basin)     $        1.68  $        1.42
  Gurnee field (Cahaba Basin)                   $        2.77  $        2.46
  Black Warrior Basin fields                    $        0.67  $        0.45
Compression and transportation expenses                                     
 (Consolidated)                                 $        0.59  $        0.62
  Pond Creek and Lasher fields                  $        0.58  $        0.53
  Pinnate wells (Central Appalachian Basin)     $        1.04  $        1.18
  Gurnee field (Cahaba Basin)                   $        0.31  $        0.28
  Black Warrior Basin fields                    $        0.19  $        0.18
Production taxes (Consolidated)                 $        0.18  $        0.13
  Pond Creek and Lasher fields                  $        0.19  $        0.16
  Pinnate wells (Central Appalachian Basin)     $        0.15  $        0.06
  Gurnee field (Cahaba Basin)                   $        0.15  $        0.12
  Black Warrior Basin fields                    $        0.20  $        0.16
Total production expenses (Consolidated)        $        2.21  $        1.98
  Pond Creek and Lasher fields                  $        1.98  $        1.74
  Pinnate wells (Central Appalachian Basin)     $        2.87  $        2.66
  Gurnee field (Cahaba Basin)                   $        3.23  $        2.86
  Black Warrior Basin fields                    $        1.06  $        0.79
Depletion (Consolidated)                        $        0.47  $        0.97
                                                                            
(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 March 31, 2013, the Company had the following natural gas swap
positions: 


 
                                                                            
                                                    Volume                  
Period                                              (MMBtu)         Price   
                                                 ------------  -------------
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
                                                 ------------               
                                                   10,240,000               
                                                 ============               

 
At March 31, 2013, 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                          
                                        ==========                          
                                                                            
                                                                            
                                                                            
                                GEOMET, INC.                                
               RECONCILIATION OF ADJUSTED EBITDA TO NET LOSS                
                               (In thousands)                               
                                                                            
                                                      Three Months Ended    
                                                          March 31,         
                                                  ------------------------- 
                                                      2013          2012    
                                                  -----------   ----------- 
                                                                            
Net loss                                          $    (5,755)  $   (52,948)
Add: Interest expense, net of interest income                               
 and amounts capitalized and amortization of                                
 loan fees                                               1676         1,272 
Add: Other expense (income)                                29             5 
Add: Income tax expense                                     6        44,024 
Add: Impairment of gas properties and other                --        15,779 
Add: Depreciation, depletion and amortization           1,506         3,631 
Add (Deduct): Unrealized losses                                             
(gains) on derivative contracts                         8,635        (5,224)
Add: Stock based compensation                              59           115 
Add: Accretion expense - asset                                              
retirement obligations                                    317           196 
                                                  -----------   ----------- 
Adjusted EBITDA                                   $     6,473   $     6,850 
                                                  ===========   =========== 

 
The table above reconciles Adjusted EBITDA to net loss. Adjusted
EBITDA is defined as net loss before net interest expense, other
non-operating expense (income), income taxes, depreciation,
depletion, amortization, impairment of gas properties and other,
unrealized losses (gains) on natural gas 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, 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. 
For more information please contact 
Stephen M. Smith 
(713) 287-2251 
ssmith@geometcbm.com 
or visit our website at www.geometinc.com 
 
 
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