GeoMet Announces Financial and Operating Results for the Quarter and Six Months Ended June 30, 2013

GeoMet Announces Financial and Operating Results for the Quarter and Six Months 
Ended June 30, 2013 
HOUSTON, TX -- (Marketwired) -- 08/15/13 --  GeoMet, Inc. (OTCQB:
GMET) (NASDAQ: GMETP) ("GeoMet" or the "Company") today announced its
financial and operating results for the quarter and six months ended
June 30, 2013. 
William C. Rankin, GeoMet's President and Chief Executive Officer,
commented, "On June 14, the Company closed the sale of all of its
coalbed methane assets in the state of Alabama resulting in proceeds
of approximately $62 million. The proceeds were used to reduce bank
indebtedness by $57 million and $5 million was earmarked for
transaction related costs. As a result, the deficiency under the
Company's credit agreement was eliminated; however, the maturity date
of April 1, 2014 is unchanged. In connection with the sale, the
Company recorded a gain of $37.1 million during the quarter," Mr.
Rankin further stated, "Natural gas prices have continued to recover
over the last year and therefore the company was not required to
further impair its gas properties during the current quarter."
Lastly, Mr. Rankin stated, "The combination of the sale, the
elimination of the borrowing deficiency and the recovery of natural
gas prices allows the Company, with the assistance and advice of FBR
Capital Markets, to continue to evaluate its strategic alternatives." 
Second Quarter 2013 Financial and Operating Results 
For the quarter ended June 30, 2013, GeoMet reported net income of
$42.4 million. Included in net income was a $37.1 million
non-recurring gain on the sale of our Alabama properties and a $4.1
million gain on natural gas derivatives. For the quarter ended June
30, 2012, GeoMet reported a net loss of $53.9 million. Included in
the net loss was a $42.3 million impairment to the Company's gas
properties and a $4.9 million loss on natural gas derivatives.  
For the quarter ended June 30, 2013, GeoMet reported net income
available to common stockholders of $40.5 million, or $0.51 per fully
diluted share. Included in net income available to common
stockholders for the quarter ended June 30, 2013 were non-cash
charges of $0.5 million for accretion of preferred stock and $1.4
million for paid-in-kind ("PIK") dividends paid on preferred stock.
For the quarter ended June 30, 2012, GeoMet reported a net loss
available to common stockholders of $55.0 million, or $1.37 per fully
diluted share. Included in the net loss available to common
stockholders for the quarter ended June 30, 2012 were non-cash
charges of $0.5 million for accretion of preferred stock and $0.6
million for PIK dividends paid on preferred stock.  
For the quarter ended June 30, 2013, Adjusted EBITDA decreased to
$1.7 million from $3.6 million in the prior year quarter which
resulted partially from a decrease in daily production volumes and
partially from $1.2 million in realized losses from terminated
natural gas swap positions. The positions were terminated in order to
prevent the Company from being over-hedged after the closing of the
sale of its coalbed methane properties in Alabama. Adjusted EBITDA is
a non-GAAP measure. See the accompanying table for a reconciliation
of Adjusted EBITDA to Net Income (Loss).  
Revenues for the quarter ended June 30, 2013 were $12.1 million, as
compared to $7.8 million for the prior year quarter. The average
natural gas price for the quarter ended June 30, 2013 was $4.14 per
Mcf as compared to the prior year quarter average of $2.24 per Mcf. 
Average net gas sales volumes for the quarter ended June 30, 2013
were 32.0 MMcf per day, a 16% decrease from the same quarter in 2012
which primarily resulted from 11% lower daily production volumes and
5% lower total volume resulting from the sale of our Alabama
properties on June 14, 2013. 
Six Months Ended June 30, 2013 Financial and Operating Results 
For the six months ended June 30, 2013, GeoMet reported net income of
$36.6 million. Included in net income was a $37.1 million
non-recurring gain on the sale of our Alabama properties offset by a
$1.4 million loss on natural gas derivatives. For the six months
ended June 30, 2012, GeoMet reported a net loss of $106.9 million.
Included in the net loss was a $58.0 million impairment to the
Company's gas properties and a $44.0 million income tax expense
related to the valuation allowance recorded against the Company's
entire deferred tax asset, partially offset by a $5.1 million gain on
natural gas derivatives.  
For the six months ended June 30, 2013, GeoMet reported net income
available to common stockholders of $33.1 million, or $0.45 per fully
diluted share. Included in net income available to common
stockholders for the six months ended June 30, 2013 were non-cash
charges of $1.0 million for accretion of preferred stock and $2.4
million for paid-in-kind ("PIK") dividends paid on preferred stock.
For the six months ended June 30, 2012, GeoMet reported a net loss
available to common stockholders of $109.6 million, or $2.75 per
fully diluted share. Included in the net loss available to common
stockholders for the six months ended June 30, 2012 were non-cash
charges of $0.9 million for accretion of preferred stock and $1.9
million for PIK dividends paid on preferred stock.  
For the six months ended June 30, 2013, Adjusted EBITDA decreased to
$8.2 million from $10.4 million in the prior year period which
resulted partially from a decrease in daily production volumes and
partially from $1.2 million in realized losses from terminated
natural gas swap positions. The positions were terminated in order to
prevent the Company from being over-hedged after the closing of the
sale of its coalbed methane properties in Alabama. Adjusted EBITDA is
a non-GAAP measure. See the accompanying table for a reconciliation
of Adjusted EBITDA to Net Income (Loss).  
Revenues for the six months ended June 30, 2013 were $23.0 million,
as compared to $18.0 million for the prior year period. The average
natural gas price for the six months ended June 30, 2013 was $3.81
per Mcf as compared to the prior year period average of $2.52 per
Mcf. 
Average net gas sales volumes for the six months ended June 30, 2013
were 33.2 MMcf per day, a 15% decrease from the same period in 2012
which primarily resulted from 12% lower daily production volumes and
3% lower total volume resulting from the sale of our Alabama
properties on June 14, 2013. 
Management's Current Business Plan 
Management's current business plan is to continue to evaluate its
strategic alternatives. Additionally, management is seeking to divest
properties with limited value and will consider additional asset sale
opportunities as they arise. Management also remains focused on
maintaining compliance with the Credit Agreement, as amended,
maintaining production levels, and keeping costs under control. 
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 actu
al 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 and six months ended June 30, 2013 on August 15, 2013
at 10:30 a.m. Central Time. To participate, dial (888) 430-8694 a few
minutes before the call begins. Please reference GeoMet, Inc.
conference ID 8051971. 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 August 15, 2013 and will be available through August 31,
2013. To access the conference call replay, please dial (888)
203-1112 and enter replay pass code 8051971 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").
Subsequent to the asset sale, our core area of operations is the
Central Appalachian Basin of Virginia and West Virginia. We also
control additional coalbed methane and oil and gas development
rights, principally in Virginia, and West Virginia. 
For more information please contact Stephen M. Smith at (713)
287-2251 (ssmith@geometcbm.com) or visit our website at
www.geometinc.com. 


 
                                                                            
                                                                            
                                GEOMET, INC.                                
              CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS               
                  (In thousands, except per share amounts)                  
                                                                            
                                  Three Months Ended     Six Months Ended   
                                       June 30,              June 30,       
                                 --------------------  -------------------- 
                                    2013       2012       2013       2012   
                                 ---------  ---------  ---------  --------- 
Total revenues                   $  12,091  $   7,771  $  23,016  $  17,990 
Operating expenses:                                                         
  Production costs                   6,638      7,157     13,497     14,307 
  Depreciation, depletion and                                               
   amortization                      1,371      3,290      2,877      6,921 
  Impairment of gas properties           -     42,256          -     58,035 
  General, administrative and                                               
   restructuring                     1,426      2,131      2,495      3,433 
  (Gains) losses on natural gas                                             
   derivatives                      (4,150)     4,892      1,385     (5,125)
                                 ---------  ---------  ---------  --------- 
Total operating expenses             5,285     59,726     20,254     77,571 
Gain on the sale of Properties in                                           
 Alabama                            37,136          -     37,136          - 
Operating income (loss)             43,942    (51,955)    39,898    (59,581)
Other income (expense):                                                     
  Interest expense, net             (1,559)    (1,267)    (3,234)    (2,540)
  Other                                 (7)         -        (36)        (4)
                                 ---------  ---------  ---------  --------- 
Total other income (expense):       (1,566)    (1,267)    (3,270)    (2,544)
                                 ---------  ---------  ---------  --------- 
Income (loss) before income taxes                                           
 from continuing operations         42,376    (53,222)    36,628    (62,125)
Income tax expense                      (6)        (6)       (13)   (44,031)
                                 ---------  ---------  ---------  --------- 
Income (loss) from continuing                                               
 operations                         42,370    (53,228)    36,615   (106,156)
Discontinued operations, net of                                             
 tax                                     -       (676)         -       (696)
                                 ---------  ---------  ---------  --------- 
Net income (loss)                $  42,370  $ (53,904) $  36,615  $(106,852)
                                 =========  =========  =========  ========= 
Accretion of Series A Convertible                                           
 Redeemable Preferred Stock           (533)      (470)    (1,027)      (934)
Dividends on Series A Convertible                                           
 Redeemable Preferred Stock         (1,368)      (621)    (2,444)    (1,861)
                                 ---------  ---------  ---------  --------- 
Net income (loss) available to                                              
 common stockholders             $  40,469  $ (54,995) $  33,144  $(109,647)
                                 =========  =========  =========  ========= 
                                                                            
Net income (loss) per common                                                
 share--basic                    $    1.00  $   (1.37) $    0.82  $   (2.75)
                                 =========  =========  =========  ========= 
Net income (loss) per common                                                
 share--diluted                  $    0.51  $   (1.37) $    0.45  $   (2.75)
                                 =========  =========  =========  ========= 
Weighted average number of common                                           
 shares:                                                                    
Basic                               40,477     40,004     40,467     39,883 
                                 =========  =========  =========  ========= 
Diluted                             82,683     40,004     82,039     39,883 
                                 =========  =========  =========  ========= 
                                                                            
                                                                            
                                    
                                        
                                GEOMET, INC.                                
                    CONDENSED CONSOLIDATED BALANCE SHEETS                   
                               (In thousands)                               
                                                                            
                                                   June 30,    December 31, 
                                                     2013          2012     
                                                 ------------  ------------ 
                      ASSETS                                                
Current Assets:                                                             
  Cash and cash equivalents                      $     11,533  $      7,234 
  Accounts receivable, net                              4,817         6,249 
  Derivative asset--natural gas contracts                 361         3,930 
  Other current assets                                    955         1,701 
                                                 ------------  ------------ 
Total current assets                                   17,666        19,114 
Property and equipment--net                            44,533        75,125 
Deferred income taxes                                      99         1,126 
Total other noncurrent assets                             841           961 
                                                 ------------  ------------ 
                                                                            
TOTAL ASSETS                                     $     63,139  $     96,326 
                                                 ============  ============ 
 LIABILITIES, MEZZANINE AND STOCKHOLDERS' DEFICIT                           
Current Liabilities:                                                        
  Current portion of long-term debt              $     77,000  $     10,300 
  Paid in-kind dividend payable on Series A                                 
   Convertible Redeemable Preferred Stock               1,367            -- 
  Deferred income taxes                                    99         1,126 
  Derivative liability--natural gas contracts              --           920 
  Other current liabilities                            10,478        11,426 
                                                 ------------  ------------ 
Total current liabilities                              88,944        23,772 
                                                 ------------  ------------ 
Long-term debt                                             --       129,000 
Asset retirement obligations                            9,388        13,235 
Derivative liability--natural gas contracts               825         1,636 
Other long-term accrued liabilities                       128           143 
                                                 ------------  ------------ 
TOTAL LIABILITIES                                      99,285       167,786 
                                                 ------------  ------------ 
Series A Convertible Redeemable Preferred Stock        37,954        35,852 
Total stockholders' deficit                           (74,100)     (107,312)
                                                 ------------  ------------ 
TOTAL LIABILITIES, MEZZANINE AND STOCKHOLDERS'                              
 DEFICIT                                         $     63,139  $     96,326 
                                                 ============  ============ 
                                                                            
                                                                            
                                                                            
                                GEOMET, INC.                                
               CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS              
                                                                            
                               (In thousands)                               
                                                                            
                                                          6 Months Ended    
                                                             June 30,       
                                                       -------------------- 
                                                          2013       2012   
                                                       ---------  --------- 
Net cash provided by operating activities              $   6,346  $  10,414 
Net cash (used in) provided by investing activities (1)   60,258      4,421 
Net cash used in financing activities (2)                (62,305)    (9,874)
Effect of exchange rates changes on cash                      --          5 
                                                       ---------  --------- 
                                                                            
Increase in cash and cash equivalents                      4,299      4,966 
Cash and cash equivalents at beginning of period           7,234        458 
                                                       ---------  --------- 
                                                                            
Cash and cash equivalents at end of period             $  11,533  $   5,424 
                                                       =========  ========= 
                                                                            
(1) Net cash provided by investing activities for the six months ended June 
    30, 2013 primarily consisted of the net proceeds from the sale of       
    Properties in Alabama. Net cash provided by investing activities for the
    six months ended June 30, 2012 primarily consisted of 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 for the six months ended June 30, 
    2013 and 2012 primarily consisted of the net repayment of amounts       
    outstanding under the Credit Agreement.                                 
                                                                            
                                                                            
                                                                            
                                GEOMET, INC.                                
                            OPERATING STATISTICS                            
                   (in thousands, except per Mcf amounts)                   
                                                                            
                                      Three Months Ended   Six Months Ended 
                                           June 30,            June 30,     
                                      ------------------  ------------------
                                        2013      2012      2013      2012  
                                      --------  --------  --------  --------
                                                                            
Gas sales                             $ 12,053  $  7,712  $ 22,932  $ 17,855
                                                                            
Lease operating expenses              $  4,123  $  4,492  $  8,592  $  8,933
Compression and transportation                                              
 expenses                                1,868     2,301     3,707     4,540
Production taxes                           647       364     1,198       834
                                      --------  --------  --------  --------
Total production expenses             $  6,638  $  7,157  $ 13,497  $ 14,307
                                                                            
Net sales volumes (Consolidated)                                            
 (MMcf)                                  2,908     3,448     6,016     7,078
  Pond Creek field (Central                                                 
   Appalachian Basin) (MMcf)             1,411     1,459     2,822     2,925
  Other Central Appalachian Basin                                           
   fields (MMcf)                           744       996     1,539     2,045
  Disposed Alabama properties (MMcf)       753       993     1,655     2,108
                                                                            
Per Mcf data ($/Mcf):                                                       
Average natural gas sales price                                             
 (Consolidated)                       $   4.14  $   2.24  $   3.81  $   2.52
  Pond Creek field (Central                                                 
   Appalachian Basin)                 $   4.14  $   2.26  $   3.87  $   2.61
  Other Central Appalachian Basin               
                            
   fields                             $   4.18  $   2.14  $   3.77  $   2.38
  Disposed Alabama properties         $   4.12  $   2.29  $   3.75  $   2.54
Average natural gas sales price                                             
 realized (Consolidated)(1)(2)        $   3.23  $   3.78  $   3.89  $   3.95
Lease operating expenses                                                    
 (Consolidated)                       $   1.42  $   1.29  $   1.43  $   1.26
  Pond Creek field (Central                                                 
   Appalachian Basin)                 $   1.11  $   1.05  $   1.15  $   1.04
  Other Central Appalachian Basin                                           
   fields                             $   1.68  $   1.41  $   1.69  $   1.42
  Disposed Alabama properties         $   1.73  $   1.54  $   1.65  $   1.40
Compression and transportation                                              
 expenses (Consolidated)              $   0.64  $   0.67  $   0.61  $   0.64
  Pond Creek field (Central                                                 
   Appalachian Basin)                 $   0.67  $   0.64  $   0.62  $   0.58
  Other Central Appalachian Basin                                           
   fields                             $   1.02  $   1.14  $   1.02  $   1.16
  Disposed Alabama properties         $   0.21  $   0.22  $   0.23  $   0.22
Production taxes (Consolidated)       $   0.22  $   0.10  $   0.20  $   0.12
  Pond Creek field (Central                                                 
   Appalachian Basin)                 $   0.22  $   0.13  $   0.21  $   0.15
  Other Central Appalachian Basin                                           
   fields                             $   0.22  $   0.06  $   0.18  $   0.06
  Disposed Alabama properties         $   0.22  $   0.12  $   0.20  $   0.13
Total production expenses                                                   
 (Consolidated)                       $   2.28  $   2.06  $   2.24  $   2.02
  Pond Creek field (Central                                                 
   Appalachian Basin)                 $   2.00  $   1.82  $   1.98  $   1.77
  Other Central Appalachian Basin                                           
   fields                             $   2.92  $   2.61  $   2.89  $   2.64
  Disposed Alabama properties         $   2.16  $   1.88  $   2.08  $   1.75
Depletion (Consolidated)              $   0.48  $   0.92  $   0.46  $   0.95
                                                                            
(1)  Average natural gas sales price realized includes the effects of       
     realized gains and losses on derivative contracts.                     
(2)  Average natural gas sales prices realized for the three and six months 
     ended June 30, 2013 would have been $3.65/Mcf and $4.09/Mcf when       
     excluding $1.2 million in realized losses on derivative contracts      
     related to natural gas swap positions terminated in order to prevent   
     the Company from being over-hedged after the closing of the sale of its
     coalbed methane properties in Alabama.                                 
                                                                            
                                                                            
                                                                            
                                GEOMET, INC.                                
                 CONSOLIDATED DERIVATIVE CONTRACT POSITIONS                 

 
At June 30, 2013, the Company had the following natural gas swap
positions: 


 
                                                                 
                                                 Volume          
          Period                                 (MMBtu)    Price
          -----------------------------------  ---------  -------
          Third Quarter of 2013                2,024,000  $  3.76
          Fourth Quarter of 2013               2,024,000  $  3.76
          First Quarter of 2014                1,080,000  $  3.81
                                               ---------         
                                               5,128,000         
                                               =========         

 
At June 30, 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 INCOME (LOSS)           
                                                                            
                               (In thousands)                               
                                                                            
                                  Three Months Ended     Six Months Ended   
                                       June 30,              June 30,       
                                 --------------------  -------------------- 
                                    2013       2012       2013       2012   
                                 ---------  ---------  ---------  --------- 
                                                                            
Net income (loss)                $  42,370  $ (53,904) $  36,615  $(106,852)
Add: Interest expense, net of                                               
 interest income and amounts                                                
 capitalized                         1,559      1,267      3,234      2,540 
(Deduct) Add: Other (income)                                                
 expense                                 7         --         35          4 
Add: Income tax expense                  6          6         13     44,031 
Add: Impairment of gas properties       --     42,256         --     58,035 
Add: Depreciation, depletion and                                            
 amortization                        1,371      3,290      2,877      6,921 
(Deduct) Add: Unrealized (gains)                                            
 losses on derivative contracts     (6,797)    10,203      1,838      4,979 
(Deduct): Gain on the sale of the                                           
 Alabama properties                (37,136)        --    (37,136)        -- 
Add: Stock based compensation           60        280        120        393 
Add: Accretion expense - asset                                              
 retirement obligations                296        195        613        392 
                                 ---------  ---------  ---------  --------- 
Adjusted EBITDA                  $   1,736  $   3,593  $   8,209  $  10,443 
                                 =========  =========  =========  ========= 

 
The table above reconciles Adjusted EBITDA to net income (loss).
Adjusted EBITDA is defined as net income (loss) before net interest
expense, other non-operating (income) expense,
 income taxes,
depreciation, depletion, amortization, impairment of gas properties,
unrealized (gains) losses on natural gas derivative contracts, Gain
on the sale of the Alabama properties, 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. 
Contact:
Stephen M. Smith
(713) 287-2251
ssmith@geometcbm.com
www.geometinc.com 
 
 
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