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GeoMet, Inc. Announces Financial and Operating Results for the Quarter Ended June 30, 2009

Houston, Texas—August 10, 2009-GeoMet, Inc. (NASDAQ: GMET) (“GeoMet” or the “Company”) today announced its financial and operating results for the quarter ended June30, 2009.

J. Darby Seré, GeoMet’s Chairman and Chief Executive Officer, had the following comments, “Realized natural gas prices for the second quarter declined almost 30% from the first quarter and almost 70% from the second quarter of 2008. As a result, revenues declined significantly and the Company incurred another ceiling test impairment. The impact on cash flows as compared to the first quarter was largely mitigated by the success of our cost reduction program, as production and administrative costs were cut by more than 25%, and by our hedging position which generated over $2.7 million in realized gains during the second quarter. Our hedging position was strengthened for the June through October time period so, depending on price levels, we expect a similar or greater impact from our hedges in the third quarter. We also reduced our capital spending to restrain indebtedness and to protect our liquidity.”

Second Quarter 2009 Financial and Operating Results

For the quarter ended June30, 2009, GeoMet reported a net loss of $19.4 million, or a loss of $0.50 per diluted share. Included in the net loss was a $27.6 million, or $0.71 per fully diluted share, pre-tax, non-cash impairment to the Company’s natural gas properties and a $2.1 million, or $0.05 per fully diluted share, pre-tax, non-cash, mark-to-market loss on derivative contracts. The Company received net cash payments of $2.7 million from derivative contracts during the current quarter. For the quarter ended June30, 2008, GeoMet reported a net loss of $3.2 million, or $0.08 per diluted share. Included in the net loss for the quarter ended June30, 2008 was a $12.1 million, or $0.31 per fully diluted share, pre-tax, non-cash, mark-to-market loss on derivative contracts. The Company made net cash payments of $1.5 million on derivative contracts during the prior year quarter.

Adjusted Net Loss for the second quarter of 2009 was $0.8 million as compared to Adjusted Net Income of $5.5 million in the second 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 $2.8 million from $11.5 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.

Gas sales for the quarter were $6.8 million as compared to gas sales of $20.7 million in the second quarter of 2008. The average natural gas price during the quarter was $3.59 per Mcf as compared to the prior year quarter average of $11.15 per Mcf. The average natural gas price, adjusted for realized gains and losses on derivative contracts, was $5.03 per Mcf during the second quarter of 2009 versus $10.35 per Mcf for the same period in 2008.

Average net gas sales volumes for the quarter ended June30, 2009 were 20.9 MMcf per day, a 3% increase from the same quarter in 2008. The increase in net gas sales volumes for the quarter ended June30, 2009 over the same quarter in 2008 was 7% when the net gas sales volumes for the quarter ended June30, 2008 exclude volumes from an overriding royalty interest that was sold effective July1, 2008.

Capital expenditures for the quarter ended June30, 2009 were $2.2 million, compared to $13.1 million for the same quarter in the prior year.

Six Months Ended June 30, 2009 Financial and Operating Results

For the six months ended June30, 2009, GeoMet reported a net loss of $107.1 million, or a loss of $2.75 per diluted share. Included in the net loss was a $167.3 million, or $4.29 per fully diluted share, pre-tax, non-cash impairment to the Company’s natural gas properties and a $2.0 million, or $0.05 per fully diluted share, pre-tax, non-cash, mark-to-market loss on derivative contracts. The Company received net cash payments of $5.5 million on derivative contracts during the current period. For the six months ended June30, 2008, GeoMet reported a net loss of $5.3 million, or $0.14 per diluted share. Included in the net loss for the six months ended June30, 2008 was a $20.7 million, or $0.53 per fully diluted share, pre-tax, non-cash, mark-to-market loss on derivative contracts. The Company made net cash payments of $0.6 million on derivative contracts during the prior year period.

Adjusted Net Loss for the six months ended June 30, 2009 was $1.8 million as compared to Adjusted Net Income of $8.8 million in the prior year period. 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 six months ended June 30, 2009 decreased to $6.1 million from $20.8 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 six months ended June 30, 2009 were $16.3 million as compared to gas sales of $36.3 million in the second quarter of 2008. The average natural gas price during the six months ended June 30, 2009 was $4.30 per Mcf as compared to the prior year period average of $9.73 per Mcf. The average natural gas price, adjusted for realized gains and losses on derivative contracts, was $5.74 per Mcf during the six months ended June 30, 2009 versus $9.57 per Mcf for the same period in 2008.

Average net gas sales volumes for the six months ended June30, 2009 were 20.9 MMcf per day, a 2% increase from the same period in 2008. The increase in net gas sales volumes for the six months ended June30, 2009 over the same period in 2008 was 6% when the net gas sales volumes for the six months ended June30, 2008 exclude volumes from an overriding royalty interest that was sold effective July1, 2008.

Capital expenditures for the six months ended June30, 2009 were $5.4 million, compared to $21.2 million for the same period in the prior year.

Second Quarter 2009 Financial Schedules

 

Forward-Looking Statements Notice

This press release may contain “forward-looking statements” within the meaning of Section27A of the Securities Act of 1933, as amended, and Section21E 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
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Conference Call Information

GeoMet will hold its quarterly conference call to discuss the results for the quarter ended June30, 2009 on August10, 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 19076895. 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 August10, 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.