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