GeoMet, Inc. Announces Third Quarter 2006 Results
Houston, Texas – November 9, 2006 - GeoMet, Inc. (NASDAQ: GMET) (“GeoMet” or the “Company”) today announced financial and operating results for the quarter and nine months ended September 30, 2006. Performance highlights for the third quarter of 2006 as compared to the same period in 2005 include:
- Average daily gas sales of 18.0 MMcf, up 37% over third quarter 2005 levels
- Net income of $4.2 million, as compared to a loss of $(11.3) million in the prior year
- Adjusted EBITDA of $5.9 million, up 45% from the same period in 2005
For the quarter ended September 30, 2006, GeoMet’s net income increased to $4.2 million or $0.11 per fully diluted share, compared to a loss of $(11.3) million, or $(0.41) per fully diluted share, for the same period in 2005. EBITDA, defined as net income before net interest expense, other non-operating income or losses, income taxes and depreciation, depletion and amortization (a non-GAAP measure, see reconciliation of net income to EBITDA attached) was $9.9 million for the quarter as compared to $(15.1) million in the same period of 2005. Adjusted EBITDA, defined as EBITDA before non-cash charges (a non-GAAP measure, see reconciliation of EBITDA to Adjusted EBITDA attached) for the quarter increased 45% to $5.9 million compared to $4.1 million for the prior year period. Net sales volumes for the quarter increased 37% to 1.7 Bcf compared to 1.2 Bcf for the same period in 2005. Average natural gas prices, adjusted for realized hedging gains or losses, were $6.96 per Mcf during the quarter versus $6.95 for the same period in 2005. Excluding the impact of hedging, average natural gas prices during the quarter decreased by $2.11 per Mcf compared to the prior year period to an average of $6.63 per Mcf. During the quarter, GeoMet recorded an unrealized gain from the change in the market value of its derivative contracts of $4.1 million compared to a $(19.2) million unrealized loss for the same period in 2005. Capital expenditures incurred during the quarter were $24.2 million compared to $14.4 million for the prior year period.
For the nine months ended September 30, 2006, GeoMet’s net income increased to $13.7 million or $0.39 per fully diluted share, compared to a loss of $(11.0) million, or $(0.40) per fully diluted share, for the same period in 2005. EBITDA was $31.8 million for the nine months ended September 30, 2006, versus $(10.9) million in the prior year. Adjusted EBITDA of $17.6 million for the nine months ended September 30, 2006 increased 61% as compared to $10.9 million for the same period in 2005. Net sales volumes for the nine months ended September 30, 2006 increased 37% to 4.5 Bcf compared to 3.3 Bcf for the same period in 2005. Average natural gas prices, adjusted for realized hedging gains or losses, were $7.51 per Mcf during the nine months ended September 30, 2006 versus $6.69 for the same period in 2005. Excluding the impact of hedging, average natural gas prices for the nine month period increased $0.04 per Mcf from the prior year period to average $7.43 per Mcf. During the nine months ended September 30, 2006, GeoMet recorded an unrealized gain from the change in market value of its derivative contracts of $14.6 million compared to a $(21.8) million unrealized loss for the prior year period. Capital expenditures incurred during the nine months ended September 30, 2006 were $61.9 million compared to $49.7 million for the same period in 2005.
Commenting on the quarter, Darby Seré, Chairman, President and Chief Executive Officer of GeoMet stated, “As has been previously reported, we completed our initial public offering in July which raised $53 million in new equity. This capital has strengthened our financial position and leaves us positioned to continue our growth strategy. Additionally, we are pleased with the results for the quarter. We expect to continue this trend of rapid production growth and declining unit operating costs.”
In December 2003, the Financial Accounting Standards Board issued Interpretation No.46 revised (“FIN46 (R)”), which requires variable interest entities to be consolidated by their primary beneficiaries. In conjunction with the option agreement we entered into in June 2006 regarding the possible acquisition of Shamrock Energy, LLC (“Shamrock”) who markets all of our gas, and in accordance with FIN46 (R) we consolidated Shamrock into our financial statements, effective August 1, 2006. As is described in more detail in our form 10-Q for the quarter ended September 30, 2006, consolidation of Shamrock did not have a material impact on our results for the three and nine months recently ended. A summary of the impact of consolidating Shamrock into our financial statements for the three and nine months ended September 30, 2006 is as follows (in 000’s):
Operating Loss: $ (31)
The Company intends to exercise its option to acquire Shamrock effective January 1, 2007 and, as such, will continue to consolidate Shamrock into its financial statements. Under the terms of the agreement no additional consideration is due upon exercise of the option.
Conference Call Information
GeoMet will hold its quarterly conference call to discuss third quarter 2006 results on Friday, November 10, 2006 at 10:00 a.m. Central Time. To participate, dial (888) 571-8168 a few minutes before the call begins. Please reference GeoMet Inc. conference ID 9955149. The call will also be broadcast live over the Internet from the Company’s web site at www.geometinc.com. A replay of the conference call will be available approximately two hours after the end of the call until Friday, November 17, 2006. To access the replay, dial (800) 642-1687 and reference conference ID 9955149. In addition, the web cast will also be archived on the Company’s web site.
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 contact Stephen M. Smith at (713) 287-2251 or firstname.lastname@example.org or visit our website at www.geometinc.com.
Forward Looking Statements Notice
This press release contains “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 Securities and Exchange Commission. GeoMet undertakes no duty to update or revise these forward looking statements.
Third Quarter 2006 Financial Attachements