GeoMet, Inc. Announces Proved Reserves of 209 Bcf at December 31, 2009
Houston, Texas – March 8, 2010 - GeoMet, Inc. (NASDAQ: GMET) today announced that its proved natural gas reserves as of December 31, 2009 prepared by DeGolyer and MacNaughton (“D&M”), independent petroleum engineers, totaled 209 billion cubic feet (Bcf). After consideration of production for the period, proved reserves decreased less than 1% from the 213 Bcf of reserves as of September 30, 2009 which were audited by D&M and reported by the Company in its filing on Form 10-Q with the SEC for that period. Proved reserves at year-end 2009 were calculated using the average first-day-of-the-month Henry Hub natural gas price for the prior twelve months of $3.87 per thousand cubic feet (Mcf) and adjusting for regional pricing differentials. The resulting price of $4.07 per Mcf was 8% lower than the $4.43 natural gas price used to calculate proved reserves at September 30, 2009.
As compared to September 30, 2009, proved reserves at year-end 2009 include negative adjustments of approximately 5 Bcf related to the impact of applying the new SEC rules, offset by approximately 3 Bcf of positive performance revisions.
J. Darby Seré, GeoMet's Chairman and Chief Executive Officer, commented, "Although we did not drill any wells in 2009, our production increased slightly year-over-year. We believe this reflects the low production decline rates of our proved reserves. In addition, we implemented significant cost reduction initiatives which lessened the negative impact of lower natural gas prices. The average price of natural gas reported by the Company during 2009 was $4.05 per Mcf, 56% lower than the average price of $9.17 per Mcf reported in 2008. Since the end of 2009 we have drilled three wells in the Virginia portion of our Pond Creek field and plan to drill at least another five wells in that area by August.”
The present value of proved reserves discounted at 10% (PV-10 value) was approximately $98 million at December 31, 2009 as compared to approximately $119 million at September 30, 2009. Using a year-end price of $6.00 per Mcf, which includes adjustments for regional pricing differentials, (pursuant to SEC pricing guidelines in effect on September 30, 2009), the year-end proved reserves would have totaled 221 Bcf with a PV-10 value of approximately $215 million.
The Company's proved reserves at December 31, 2009 are 100% coalbed methane and 75% developed. Approximately 62% of total year-end 2009 proved reserves are in the Pond Creek and Lasher fields in West Virginia and Virginia, and 38% are in the Gurnee field in Alabama.
In addition to proved reserves, D&M estimated the Company had probable reserves of 108 Bcf at December 31, 2009. The probable reserves were calculated using a sensitivity natural gas price case, including adjustments for regional pricing differentials, of $6.00 per Mcf held constant over the life of the reserves.
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 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.
The Securities and Exchange Commission (“SEC”) permits oil and gas companies, in filings made with the SEC, to disclose proved reserves, which are estimates that geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions. Beginning with year-end reserves for 2009, the SEC permits the optional disclosure of probable and possible reserves. Probable reserves are those additional reserves that are less certain to be recovered than proved reserves but which, in sum with proved reserves, are as likely as not to be recovered. Possible reserves include those additional reserves that are less certain to be recovered than probable reserves. GeoMet has elected not to disclose the Company’s probable and possible reserves in its filings with the SEC; however, the Company’s probable reserves are disclosed above. Actual quantities that may be ultimately recovered from the Company’s interests may differ substantially. Factors affecting ultimate recovery include the scope of our ongoing drilling program, which will be directly affected by the availability of capital, drilling and production costs, availability of drilling services andequipment, drilling results, lease expirations, transportation constraints, regulatory approvals and other factors; and actual drilling results, including geological and mechanical factors affecting recovery rates. In addition, our production forecasts and expectations for future periods are dependent upon many assumptions, including estimates of production decline rates from existing wells and the undertaking and outcome of future drilling activity, which may be affected by significant commodity price declines or drilling cost increases.
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 (firstname.lastname@example.org); John Baldissers with BPC Financial at (800) 667-0938; or visit our website at www.geometinc.com.