GeoMet, Inc (Home) Home   |   Contact Us    
Corporate Governance News

GeoMet, Inc (Home)

Investor Relations

GeoMet Announces Financial and Operating Results for the Quarter and Nine months ended September 30, 2012

Houston, Texas— November 13, 2012-GeoMet, Inc. (OTCQ: GMET; NASDAQ: GMETP) (“GeoMet” or the “Company”) today announced its financial and operating results for the quarter and nine months ended September 30, 2012.

William C. Rankin, GeoMet’s President and Chief Executive Officer, commented, “In August, we amended our bank credit agreement to address the borrowing base deficiency that then existed and have recently begun a scheduled borrowing base determination which should be complete in December. Year to date, we have reduced bank debt by approximately $15 million through internally generated cash flow. We are currently in compliance with all the terms of our amended credit agreement. Our search for strategic alternatives continues. We intend to explore all options.”

Third Quarter 2012 Financial and Operating Results

For the quarter ended September 30, 2012, GeoMet reported a net loss of $34.4 million. Included in the net loss was a $25.4 million impairment to the Company’s gas properties, a $4.8 million loss on natural gas derivatives, and a $1.4 million write off of debt issuance costs. For the quarter ended September 30, 2011, GeoMet reported net income of $2.4 million. Included in net income was a $4.2 million gain on natural gas derivatives.

For the quarter ended September 30, 2012, GeoMet reported a net loss available to common stockholders of $35.8 million, or $0.89 per fully diluted share. Included in the net loss available to common stockholders for the quarter ended September 30, 2012 were charges of $0.5 million for accretion of preferred stock and $0.9 million for paid-in-kind (“PIK”) dividends on preferred stock. For the quarter ended September 30, 2011, GeoMet reported net income available to common stockholders of $0.6 million, or $0.02 per fully diluted share. Included in net income available to common stockholders for the quarter ended September 30, 2011 were charges of $0.4 million for accretion of preferred stock and $1.4 million for PIK dividends on preferred stock.

For the quarter ended September 30, 2012, Adjusted EBITDA increased to $5.1 million from $4.3 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.  Adjusted EBITDA, including the return of basis in the settlement of natural gas derivative contracts in the amount of $2.2 million acquired in the November 2011 asset purchase, totaled $7.3 million for the current year quarter. We believe this non-GAAP measure is also important for the reporting period because it includes the total cash flows being generated by the hedges acquired in the November 2011 asset purchase. Such hedges were integral and a critical component of the value related to acquired gas properties. 

Revenues combined with all cash settlements of natural gas derivative contracts increased to $15.4 million for the quarter ended September 30, 2012 from $10.3 million in the prior year quarter. The average natural gas price, adjusted for all cash settlements of natural gas derivative contracts, was $4.52 per Mcf during the quarter ended September 30, 2012 versus $5.26 per Mcf for the prior year quarter. Revenues, as reported for the quarter ended September 30, 2012, which excludes the effects of all cash settlements of natural gas derivative contracts, were $9.7 million, as compared to $8.6 million for the prior year quarter. The average natural gas price, excluding the effects of all cash settlements of natural gas derivative contracts, for the quarter ended September 30, 2012 was $2.83 per Mcf as compared to the prior year quarter average of $4.39 per Mcf.

Average net gas sales volumes for the quarter ended September 30, 2012 were 36.9 MMcf per day, a 75% increase from the same quarter in 2011 primarily due to the properties acquired in the November 2011 asset purchase.

Nine Months Ended September 30, 2012 Financial and Operating Results

For the nine months ended September 30, 2012, GeoMet reported a net loss of $141.2 million. Included in the net loss was an $83.5 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 $1.0 million charge for restructuring costs and a $0.7 million loss on the disposal of our Canadian operations. For the nine months ended September 30, 2011, GeoMet reported net income of $4.0 million. Included in net income was a $6.6 million gain on natural gas derivatives.

For the nine months ended September 30, 2012, GeoMet reported a net loss available to common stockholders of $145.4 million, or $3.63 per fully diluted share. Included in the net loss available to common stockholders for the nine months ended September 30, 2012 were charges of $1.4 million for accretion of preferred stock and $2.8 million for PIK dividends on preferred stock. For the period ended September 30, 2011, GeoMet reported a net loss available to common stockholders of $1.4 million, or $0.03 per fully diluted share. Included in the net loss available to common stockholders for the period ended September 30, 2011 were charges of $1.3 million for accretion of preferred stock and $4.0 million for PIK dividends on preferred stock.

For the nine months ended September 30, 2012, Adjusted EBITDA increased to $16.2 million from $15.0 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.  Adjusted EBITDA, including the return of basis in the settlement of natural gas derivative contracts in the amount of $7.2 million acquired in the November 2011 asset purchase, totaled $23.4 million for the current year period. We believe this non-GAAP measure is also important for the reporting period because it includes the total cash flows being generated by the hedges acquired in the November 2011 asset purchase.  Such hedges were integral and a critical component of the value related to acquired gas properties. 

Revenues combined with all cash settlements of natural gas derivative contracts, increased to $48.4 million for the nine months ended September 30, 2012 from $31.6 million in the prior year period. The average natural gas price, adjusted for all cash settlements of natural gas derivative contracts, was $4.61 per Mcf during the nine months ended September 30, 2012 versus $5.59 per Mcf for the prior year period. Revenues, as reported for the nine months ended September 30, 2012, which excludes the effects of all cash settlements of natural gas derivative contracts, were $27.7 million, as compared to $24.9 million for the prior year period. The average natural gas price, excluding the effects of all cash settlements of natural gas derivative contracts, for the nine months ended September 30, 2012 was $2.62 per Mcf as compared to the prior year period average of $4.40 per Mcf.

Average net gas sales volumes for the nine months ended September 30, 2012 were 38.2 MMcf per day, an 86% increase from the same period in 2011 primarily due to the properties acquired in the November 2011 asset purchase.

As of September 30, 2012, we had a working capital deficit of $7.9 million.  The working capital deficit as of September 30, 2012 was primarily the result of the classification of $14.1 million of our borrowings under our credit agreement as a current liability for scheduled payments over the next twelve months. We believe that our cash flows generated by the Company, will provide us with sufficient resources to fund our working capital deficit and to meet our obligations in connection with operating our properties. However, there can be no assurance that future borrowing base determinations will not result in additional payment obligations under the credit agreement or that our cash flows will not be adversely impacted by events beyond our control. 

3Q 2012 Financial and Operating Statements


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, 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 nine months ended September 30, 2012 on November 13, 2012 at 10:30 a.m. Central Time. To participate, dial (888) 452-4023 a few minutes before the call begins. Please reference GeoMet, Inc. conference ID 5354330. 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 November 13, 2012 and will be available through November 24, 2012. To access the conference call replay, please dial (888) 203-1112 and enter replay pass code 5354330 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.

For more information please contact Stephen M. Smith at (713) 287-2251 (ssmith@geometcbm.com) or visit our website at www.geometinc.com.