GeoMet Announces 2006 Proved Reserves and Preliminary Gas Sales Volumes, 2007 Gas Sales Volume Estimates and Capital Spending Plans and Engagement of Financial Advisor
Houston, Texas – January 26, 2007 - GeoMet, Inc. (NASDAQ: GMET) today announced 2006 year end proved reserves; preliminary 2006 gas sales volumes; estimated 2007 gas sales volumes; current capital spending plans for 2007; and the engagement of a financial advisor to evaluate and advise as to strategic alternatives.
2006 Year-end Proved Reserves
The Company’s 2006 year-end proved reserves, as estimated by DeGolyer and MacNaughton, an independent reservoir engineering firm, were approximately 325.7 Bcf, an increase of 24% from year-end 2005 proved reserves of 262.5 Bcf. The 2006 year-end proved reserves were 100% coalbed methane and 75% developed. The PV-10 was $526 million using SEC pricing of $5.63 per MMBtu at December 31, 2006. Proved reserves at year-end 2005 were calculated using SEC pricing of $9.52 per MMBtu. Approximately 59% of year-end 2006 proved reserves are in the Gurnee Field in Alabama and 40% in the Pond Creek Field in Virginia and West Virginia.
2006 Sales Volumes and Estimates for 2007 Sales Volume Growth
Preliminary average daily sales volumes for 2006 were 17.1 MMcf, a 36% increase over 2005.
As a result of a reduction in development drilling planned for 2007, as more fully discussed below; a lower than anticipated beginning level of production in the Gurnee Field, together with the previously reported potential loss of gas sales volumes associated with its White Oak Creek overriding royalty, the Company currently estimates that its rate of growth in sales volumes of coalbed methane gas in 2007 will be between 14% and 18%. These revised estimates assume timely and satisfactory resolution of the previously disclosed gas transportation issues relating to the Company’s Pond Creek Field.
2007 Capital Expenditure Budget
As a result of the lowered sales volume estimates, uncertain natural gas price expectations and a desire to lower the reliance on borrowings to fund capital expenditures, the Company has reduced its 2007 capital expenditure budget to approximately $69 million which includes the drilling of approximately 92 development wells. Previously the Company had anticipated 2007 capital expenditures of approximately $100 million. The current 2007 capital expenditure budget includes approximately $57 million for development projects, $4 million for exploration and evaluation projects and $8 million for leasehold acquisition and other.
Approximately $34 million of the 2007 capital budget is allocated to drill, complete and equip 52 wells in the Gurnee Field in Alabama where the reduction in development drilling will take place and approximately $23 million to drill, complete and equip 40 wells in the Pond Creek Field in Virginia and West Virginia.
Engagement of Financial Advisor
The Company also announced that it has engaged Merrill Lynch & Co. to advise it as to appropriate strategic opportunities or alternatives.
About GeoMet, Inc.
GeoMet, Inc. is an independent energy company engaged in the exploration for and development and production of natural gas from coal seams (“coalbed methane” or “CBM”). 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 development rights, principally in Alabama, British Columbia, Colorado, Louisiana, Virginia, and West Virginia.
For more information, please visit the Company’s web site at www.geometinc.com or contact Steve Smith at (713) 287-2251 or email@example.com.
All statements, other than statements of historical fact, included in this release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based upon current expectations and are subject to a number of risks, uncertainties and assumptions that could cause actual results to differ materially from those described in the forward-looking statements. GeoMet, Inc. assumes no obligation and expressly disclaims any duty to update the information contained herein except as required by law.