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

GeoMet, Inc (Home)

Investor Relations

GeoMet Announces Increase in Year-End Estimated Proved Reserves Preliminary 2010 Operational Information Guidance for 2011 Capital Expenditures and Hedging Update   

Houston, Texas— March 30, 2011-GeoMet, Inc. (NASDAQ: GMET) (“GeoMet” or the “Company”) today announced its Preliminary financial and operating results for the quarter and year ended December 31, 2010 as well as additional information on its estimated natural gas reserves.

J. Darby Seré, GeoMet’s Chairman and Chief Executive Officer, had the following comments, “After no drilling in 2009 and adding only three wells to sales in the first half of 2010, the Company has begun to grow again. Adjusted Net Income and Adjusted EBITDA are up significantly over the prior year on both a quarterly and full year basis driven primarily by reduced costs. Estimated proved natural gas reserves increased in 2010 and gas sales volumes have increased for three consecutive quarters. We ramped up our drilling activity in the second half of 2010 and expect this higher level of activity to continue. We expect growth in production to accelerate over the next few years.”

Preliminary Fourth Quarter 2010 Financial and Operating Results

For the quarter ended December 31, 2010, GeoMet reported a net loss available to common stockholders of $4.7 million, or $0.12 per fully diluted share. Included in net loss available to common stockholders was a $3.8 million, or $0.10 per fully diluted share, pre-tax, non-cash, mark-to-market loss on natural gas derivative contracts. Also included in net loss available to common stockholders was a $3.8 million, or $0.10 per fully diluted share, pre-tax, non-cash, unrealized loss from the change in fair value of the embedded derivative liability associated with our Series A Convertible Redeemable Preferred Stock. The Company received net cash payments of $3.5 million from the settlement of natural gas derivative contracts during the quarter.

For the quarter ended December 31, 2009, GeoMet reported a net loss available to common stockholders of $11.7 million, or $0.30 per fully diluted share. Included in the net loss available to common stockholders for the quarter ended December 31, 2009 was a $20.8 million, or $0.53 per fully diluted share, pre-tax, non-cash impairment to the Company’s natural gas properties and a $1.5 million, or $0.04 per fully diluted share, pre-tax, non-cash, mark-to-market gain on natural gas derivative contracts. The non-cash impairment to the Company’s natural gas properties recorded for the quarter ended December 31, 2009 was solely due to the application of the new SEC rules that became effective December 31, 2009. The Company received net cash payments of $2.1 million from the settlement of natural gas derivative contracts during the prior year quarter.

Adjusted Net Income for the quarter was $1.7 million as compared to $0.2 million in the prior year quarter. Adjusted Net Income (Loss) is a non-GAAP financial measure. See the accompanying table for a reconciliation of Adjusted Net Income (Loss) to Net (Loss) Income Available to Common Stockholders.

Adjusted EBITDA for the quarter increased to $5.7 million from $4.9 million in the prior year quarter. Adjusted EBITDA is a non-GAAP financial measure. See the accompanying table for a reconciliation of Adjusted EBITDA to Net (Loss) Income Available to Common Stockholders.

Gas sales for the quarter were $7.3 million as compared to gas sales of $7.9 million in the prior year quarter. The average natural gas price during the quarter was $3.90 per Mcf as compared to $4.26 per Mcf in the prior year quarter. The average natural gas price, adjusted for realized gains on natural gas derivative contracts, was $5.78 per Mcf during the fourth quarter of 2010 versus $5.37 per Mcf for the prior year quarter.

Average net gas sales volumes for the quarter ended December 31, 2010 were 20.3 MMcf per day, an approximate 1% increase from the prior year quarter.

Capital expenditures for the quarter ended December 31, 2010 were $5.1 million as compared to $1.5 million for the prior year quarter.

Preliminary Year-End 2010 Financial and Operating Results

For the year ended December 31, 2010, GeoMet reported net income available to common stockholders of $3.8 million, or $0.10 per fully diluted share. Included in net income available to common stockholders was a $5.9 million, or $0.15 per fully diluted share, pre-tax, non-cash, mark-to-market gain on natural gas derivative contracts. Also included in net income available to common stockholders was a $2.2 million, or $0.06 per fully diluted share, pre-tax, non-cash, unrealized loss from the change in fair value of the embedded derivative liability associated with our Series A Convertible Redeemable Preferred Stock. Net income available to common stockholders for the year was reduced by $1.4 million, or $0.04 per fully diluted share, from a non-recurring charge relating to a terminated financing transaction and a terminated effort to sell certain natural gas properties. The Company received net cash payments of $9.0 million from the settlement of natural gas derivative contracts during 2010.

For the year ended December 31, 2009, GeoMet reported a net loss available to common stockholders of $167.1 million, or $4.28 per fully diluted share. Included in the net loss available to common stockholders for the year ended December 31, 2009 was a $257.3 million, or $6.58 per fully diluted share, pre-tax, non-cash impairment to the Company’s natural gas properties and a $4.0 million, or $0.10 per fully diluted share, pre-tax, non-cash, mark-to-market loss on natural gas derivative contracts. $20.8 million of the non-cash impairment to the Company’s natural gas properties recorded was solely due to the application of the new SEC rules that became effective December 31, 2009. The Company received net cash payments of $10.7 million from the settlement of natural gas derivative contracts during 2009.

Adjusted Net Income for the year ended December 31, 2010 was $4.3 million as compared to Adjusted Net Loss of $2.3 million in the prior year. Adjusted Net Income (Loss) is a non-GAAP financial measure. See the accompanying table for a reconciliation of Adjusted Net Income (Loss) to Net (Loss) Income Available to Common Stockholders.

Adjusted EBITDA for the year ended December 31, 2010 increased to $19.8 million from $14.4 million in the prior year. Adjusted EBITDA for the current year included the impact of a $1.4 million, or $0.04 per fully diluted share, non-recurring charge related to a terminated financing transaction and a terminated effort to sell certain natural gas properties. Adjusted EBITDA is a non-GAAP financial measure. See the accompanying table for a reconciliation of Adjusted EBITDA to Net (Loss) Income Available to Common Stockholders.

Gas sales for the year ended December 31, 2010 were $33.1 million as compared to gas sales of $30.6 million in the prior year. The average natural gas price during the year ended December 31, 2010 was $4.49 per Mcf as compared to $4.05 per Mcf in the prior year. The average natural gas price, adjusted for realized gains on natural gas derivative contracts, was $5.72 per Mcf during the year ended December 31, 2010 versus $5.47 per Mcf in the prior year.

Average net gas sales volumes for the year ended December 31, 2010 were 20.2 MMcf per day, a 2.5% decrease from the prior year.

Capital expenditures for the year ended December 31, 2010 were $13.5 million as compared to $9.3 million in the prior year.

4Q and YE 2010 Financial and Operating Results

Additional Information on Estimated Natural Gas Reserves

As previously reported, the Company’s estimated proved natural gas reserves as of December 31, 2010, prepared in accordance with SEC guidelines and using a natural gas price of $4.49 per Mcf, were approximately 216 Bcf with a present value of future net cash flows before income taxes from such reserves of approximately $126 million.

Using a sensitivity gas price based on a recent NYMEX natural gas forward curve, adjusted for the Company’s current hedge position and historical location differentials, with all other assumptions unchanged, these reserves at December 31, 2010 would have been approximately 229 Bcf with a present value of future cash flows before income taxes from such reserves of approximately $225 million. The NYMEX forward price curve used for this projection averaged $5.31 per Mcf for the first five year period and $6.26 per Mcf for the second five year period. The tenth year price of $6.66 per Mcf was held constant thereafter.

12b-25 Filing

The Company will not file its 2010 Annual Report on Form 10-K by the March 31, 2011 deadline because of a routine review of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2009 and its quarterly report on Form 10-Q for the fiscal quarter ended June 30, 2010 that is underway by the Division of Corporate Finance of the SEC.  The SEC inquired as to the ultimate realization of the Company’s Deferred Tax Assets.  We are continuing to work with the SEC on our position with regard to our Deferred Tax Assets.  The Company will file for an automatic fifteen-day extension for the filing of its Annual Report on Form 10-K for the fiscal year ended December 31, 2010 and will file the report as soon as practicable within the fifteen-day extension period ending April 15, 2011.

At this time, it is premature to conclude as to the impact, if any, from our ultimate resolution of the outstanding issue regarding our Deferred Tax Assets; however, assuming we determine to record a non-cash full valuation allowance of $51.8 million on our Deferred Tax Assets in the consolidated financial statements for the year ended December 31, 2009, such an adjustment would not have any impact on our Operations, Operating Income, Pretax Income (loss), cash flows, liquidity or our ability to use the Deferred Tax Assets to reduce income taxes in the future.  Recording a non-cash valuation allowance on our Deferred Tax Assets in 2009 would reduce shareholders’ equity, net income and earnings per share initially and thereafter have a tendency to increase net income, earnings per share and shareholders’ equity going forward as the temporary tax differences reverse.  For example, if a non-cash full valuation allowance on our Deferred Tax Assets were made in 2009, 2010 deferred income tax expense would decrease and 2010 net income would increase by $5.7 million as compared to the preliminary results. In addition, Adjusted EBITDA for 2009 and 2010 and Adjusted Net Loss for 2009 would be unchanged.

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, which have been depressed recently, 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 preliminary results for the quarter and year ended December 31, 2010 on April 4, 2011 at 10:30 a.m. Central Time. To participate, dial (877) 780-3381 and reference GeoMet, Inc. conference ID 6522117 The call will also be broadcast over the Internet from the Company’s website at www.geometinc.com. A replay of the conference call will be available for replay through April 15, 2011. The replay dial in number is (888) 203-1112 Pass code 6522117.

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 ) or visit our website at www.geometinc.com .