INSERTING and REPLACING GeoResources, Inc. Reports Third Quarter and Nine-Month Financial Results

HOUSTON - (BUSINESS WIRE) - Insert before final table:

GEORESOURCES, INC. and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except share and per share amounts)
(unaudited)
		Three Months Ended September 30,							Nine Months Ended September 30,
		2009			2008				2009				2008
Revenue:
Oil and gas revenues		$	19,980		$	21,763			$	49,109			$	69,344
Partnership management fees			151			585				847				1,419
Property operating income			398			381				1,312				1,052
Gain on sale of property and equipment			57			308				1,545				2,269
Partnership income			2,374			366				3,834				1,021
Interest and other			25			190				165				640
Total revenue			22,985			23,593				56,812				75,745
Expenses:
Lease operating expense			4,395			5,594				13,202				17,174
Severance taxes			1,200			2,088				2,562				6,405
Re-engineering and workovers			761			649				2,057				2,331
Exploration expense			620			29				988				531
Impairment of oil and gas properties			-			-				128				-
General and administrative expense			1,951			1,688				5,976				5,333
Depreciation, depletion and amortization			6,310			3,833				15,503				11,283
Hedge ineffectiveness			111			(890	)			186				47
Loss on derivative contracts			83			-				141				-
Interest			1,586			975				3,549				3,858
Total expense			17,017			13,966				44,292				46,962
Income before income taxes			5,968			9,627				12,520				28,783
Income tax expense (benefit):
Current			356			1,679				(176	)			4,438
Deferred			2,184			2,149				5,292				6,532
			2,540			3,828				5,116				10,970
Net income		$	3,428		$	5,799			$	7,404			$	17,813
Net income per share (basic)		$	0.21		$	0.36			$	0.46			$	1.16
Net income per share (diluted)		$	0.21		$	0.35			$	0.46			$	1.14
Weighted average shares outstanding:
Basic			16,241,717			16,236,716				16,241,717				15,384,864
Diluted			16,323,353			16,440,755				16,241,717				15,582,284

The corrected release reads:

GEORESOURCES, INC. REPORTS THIRD QUARTER AND NINE-MONTH FINANCIAL RESULTS

Reports nine-month earnings of $7.4 million and EBITDAX of $33.0 million.

GeoResources, Inc., (NASDAQ:GEOI), today announced its financial and operating results for the three and nine months ended September 30, 2009. The following tables summarize the results of operations as compared to similar periods in 2008.

							Three Months Ended September 30,
							(In thousands, except Earnings per share)
							2009							2008
Total revenue							$	22,985						$	23,593
Net income							$	3,428						$	5,799
Earnings per share (diluted)							$	0.21						$	0.35
EBITDAX (See below)							$	14,678						$	13,574
							Nine Months Ended September 30,
							(In thousands, except Earnings per share)
							2009							2008
Total revenue							$	56,812						$	75,745
Net income							$	7,404						$	17,813
Earnings per share (diluted)							$	0.46						$	1.14
EBITDAX (See below)							$	33,015						$	44,502

							Percent Increase (Decrease)						Three Months Ended September 30,
													2009						2008
Gas Production (MMcf)							132	%						1,678						723
Oil Production (MBbls)							27	%						212						167
Barrel of oil equivalent (MBOE)							71	%						492						288
Average Price Gas before Hedge Settlements (per Mcf)							-71	%					$	2.67					$	9.13
Average Price Oil before Hedge Settlements (per Bbl)							-47	%					$	61.65					$	116.01
Average Price Gas after Hedge Settlements (per Mcf)							-58	%					$	3.87					$	9.12
Average Price Oil after Hedge Settlements (per Bbl)							-30	%					$	63.55					$	90.60
							Percent Increase (Decrease)						Nine Months Ended September 30,
													2009						2008
Gas Production (MMcf)							52	%						3,430						2,251
Oil Production (MBbls)							9	%						601						553
Barrel of oil equivalent (MBOE)							26	%						1,173						928
Average Price Gas before Hedge Settlements (per Mcf)							-67	%					$	3.06					$	9.24
Average Price Oil before Hedge Settlements (per Bbl)							-53	%					$	51.45					$	109.81
Average Price Gas after Hedge Settlements (per Mcf)							-55	%					$	3.95					$	8.82
Average Price Oil after Hedge Settlements (per Bbl)							-34	%					$	59.23					$	89.50

For the three months ended September 30, 2009, the Company reported total revenues of $23.0 million and net income of $3.4 million, or $0.21 per basic and diluted common share. Oil and natural gas production increased substantially in the third quarter 2009 compared to the same period in 2008. Natural gas production increased to 1,678 MMcf from 723 MMcf, an increase of 132%. Oil production for the third quarter increased to 212 MBbls from 167 MBbls in the prior year's period, an increase of 27%. The average realized price of natural gas after hedge settlements was $3.87 per Mcf for the third quarter of 2009, 58% less than the third quarter of 2008. The average realized price of oil after hedge settlements for the third quarter of 2009 was $63.55 per barrel or 30% less than the third quarter in the prior year.

For the first nine-months of 2009, revenues totaled $56.8 million and net income was $7.4 million or $0.46 per basic and diluted common share. For the nine months ended September 30, 2009, natural gas production totaled 3,430 MMcf or 52% greater than the 2,251 MMcf produced during the first nine months of 2008. Oil production for the first nine months of 2009 increased 9% to 601 Mbbls from 553 Mbbls in the first nine months of 2008. The average realized price of natural gas was $3.95 per Mcf for the first nine months of 2009 or 55% less than the first nine months of the prior year. The average realized price of oil was $59.23 per barrel or 34% less for the first nine months of 2009 than the first nine months in the prior year.

Earnings before interest, income taxes, depreciation, depletion and amortization, and exploration expense ("EBITDAX" ) increased 8% to approximately $14.7 million for the third quarter 2009 compared $13.6 for the third quarter 2008. EBITDAX for the first nine months of 2009 decreased 26% to approximately $33.0 million compared to $44.5 million for the same period in 2008.

The following tables reconcile reported net income to EBITDAX for the periods indicated (in thousands):

							Three Months Ended September 30,
							2009						2008
EBITDAX (1)
Net income							$	3,428					$	5,799
Add back:
Interest expense								1,586						975
Income taxes:
Current								356						1,679
Deferred								2,184						2,149
Depreciation, depletion and amortization								6,310						3,833
Hedge and derivative contracts								194						(890	)
Exploration and impairments								620						29
EBITDAX							$	14,678					$	13,574
							Nine Months Ended September 30,
							2009						2008
Net income							$	7,404					$	17,813
Add back:
Interest expense								3,549						3,858
Income taxes:
Current								(176	)					4,438
Deferred								5,292						6,532
Depreciation, depletion and amortization								15,503						11,283
Hedge and derivative contracts								327						47
Exploration and impairments								1,116						531
EBITDAX							$	33,015					$	44,502

(1) As used herein, EBITDAX is calculated as earnings before interest, income taxes, depreciation, depletion and amortization, and exploration expense and further includes impairments and hedge ineffectiveness and income or loss on derivative contracts. EBITDAX should not be considered as an alternative to net income (as an indicator of operating performance) or as an alternative to cash flow (as a measure of liquidity or ability to service debt obligations) and is not in accordance with, nor superior to, generally accepted accounting principles, but provides additional information for evaluation of our operating performance.

Comments

Mr. Frank A. Lodzinski, CEO and president, commented "Our results for the third quarter reflect our continued profitable growth. The third quarter comparison to last year is particularly relevant, as it demonstrates our production growth excluding prior year divestitures and also demonstrates the considerable improvement in per unit lease operating expenses. On a unit-of-production basis, costs decreased by 54%. While part of this decrease is a result of general cost reductions within the industry, the greater impact is a direct result of our business strategy and reflects re-engineering projects, development drilling, acquisitions of properties with lower operating costs and divestitures of properties with higher operating costs. Increased production is a direct result of our successful drilling programs in the Bakken Shale of the Williston Basin and our Giddings Austin Chalk program and of the acquisitions we have made in these core areas. These programs are expected to continue to contribute to our growth through continuous drilling. To that end, our joint venture in the Bakken is currently running three rigs and a fourth rig may be added from time to time. In addition, we will spud our next Austin Chalk well this month after a suspension of drilling for the past several months. While our eastern Grimes County wells were predominately gas, our next several locations are located in western Grimes County and are expected to yield approximately 50% oil and natural gas liquids. We realized substantial net income and EBITDAX for the third quarter, in the amounts of $3.4 million and $14.7 million, respectively. We expect our future earnings to benefit from further increases in production and lower per-unit lease operating expenses. While reductions in the costs of materials and services favorably impacted lease operating expenses, the bulk of the reductions are a direct result of our field re-engineering and development drilling activities. We will continue to focus on cash flow and our bottom line while we pursue our business plan."

Lodzinski further commented, "In July, we entered into our Second Amended and Restated Credit Agreement. The facility was increased to $250 million and extended to October 16, 2012. The initial borrowing base was set at $135 million and provided for interest rates of (a) LIBOR plus 2.25% to 3.00% or (b) the prime lending rate plus 1.25% to 2.00%, depending upon the amount borrowed. The increased and extended facility requires a redetermination of the borrowing base as of November 1 and May 1 of each year. Accordingly, our borrowing base redetermination is currently pending and we expect our borrowing base to, at least, be maintained until the next redetermination. The participating banks include, Wachovia Bank, Comerica Bank, BBVA Compass, U.S. Bank, Frost National Bank, Bank of Texas and Natixis. Our strong cash flows, working capital and liquidity, position us favorably to continue our growth."

About GeoResources, Inc.

GeoResources, Inc. is an independent oil and gas company engaged in the acquisition and development of oil and gas reserves through an active and diversified program which includes purchases of reserves, re-engineering, and development and exploration activities primarily focused in three core areas - the Southwest, Gulf Coast, and the Williston Basin. For more information, visit our website at www.georesourcesinc.com.

Forward-Looking Statements

Information herein contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which can be identified by words such as "may," "will," "expect," "anticipate," "estimate" or "continue," or comparable words. All statements other than statements of historical facts that address activities that the Company expects or anticipates will or may occur in the future are forward-looking statements. Readers are encouraged to read our 10-K/A for the year ended December 31, 2008 and the other SEC reports of the Company and any and all other documents filed with the SEC regarding information about GeoResources for meaningful cautionary language in respect of the forward-looking statements herein. Interested persons are able to obtain free copies of filings containing information about GeoResources, without charge, at the SEC's Internet site (http://www.sec.gov).

GEORESOURCES, INC and SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
							September 30,							December 31,
							2009							2008
ASSETS							(unaudited)
Current assets:
Cash							$	11,936						$	13,967
Accounts receivable
Oil and gas revenues								11,131							11,439
Joint interest billings and other								14,298							7,172
Affiliated partnerships								289							2,905
Notes receivable								120							120
Derivative financial instruments								722							8,200
Income taxes receivable								2,962							2,165
Prepaid expenses and other								2,650							3,923
Total current assets								44,108							49,891
Oil and gas properties, successful efforts method:
Proved properties								279,240							204,536
Unproved properties								9,890							2,409
Office and other equipment								797							1,025
Land								96							96
								290,023							208,066
Less accumulated depreciation, depletion and amortization								(41,277	)						(26,486	)
Net property and equipment								248,746							181,580
Equity in oil and gas limited partnerships								4,099							3,266
Derivative financial instruments								755							6,409
Deferred financing costs and other								3,768							2,388
							$	301,476						$	243,534

GEORESOURCES, INC and SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
							September 30,							December 31,
							2009							2008
							(unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable							$	4,066						$	10,750
Accounts payable to affiliated partnerships								9,172							10,310
Revenues and royalties payable								13,898							11,701
Drilling advances								38							2,169
Accrued expenses								1,859							1,506
Derivative financial instruments								3,364							1,572
Total current liabilities								32,397							38,008
Long-term debt								104,000							40,000
Deferred income taxes								17,410							17,868
Asset retirement obligations								5,741							5,418
Derivative financial instruments								1,066							1,245
Stockholders' equity:
Common stock, par value $0.01 per share; authorized 100,000,000
shares; issued and outstanding: 16,241,717								162							162
Additional paid-in capital								113,587							112,523
Accumulated other comprehensive (loss) income								(1,318	)						7,283
Retained earnings								28,431							21,027
Total stockholders' equity								140,862							140,995
							$	301,476						$	243,534

GEORESOURCES, INC. and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except share and per share amounts)
(unaudited)
		Three Months Ended September 30,							Nine Months Ended September 30,
		2009			2008				2009				2008
Revenue:
Oil and gas revenues		$	19,980		$	21,763			$	49,109			$	69,344
Partnership management fees			151			585				847				1,419
Property operating income			398			381				1,312				1,052
Gain on sale of property and equipment			57			308				1,545				2,269
Partnership income			2,374			366				3,834				1,021
Interest and other			25			190				165				640
Total revenue			22,985			23,593				56,812				75,745
Expenses:
Lease operating expense			4,395			5,594				13,202				17,174
Severance taxes			1,200			2,088				2,562				6,405
Re-engineering and workovers			761			649				2,057				2,331
Exploration expense			620			29				988				531
Impairment of oil and gas properties			-			-				128				-
General and administrative expense			1,951			1,688				5,976				5,333
Depreciation, depletion and amortization			6,310			3,833				15,503				11,283
Hedge ineffectiveness			111			(890	)			186				47
Loss on derivative contracts			83			-				141				-
Interest			1,586			975				3,549				3,858
Total expense			17,017			13,966				44,292				46,962
Income before income taxes			5,968			9,627				12,520				28,783
Income tax expense (benefit):
Current			356			1,679				(176	)			4,438
Deferred			2,184			2,149				5,292				6,532
			2,540			3,828				5,116				10,970
Net income		$	3,428		$	5,799			$	7,404			$	17,813
Net income per share (basic)		$	0.21		$	0.36			$	0.46			$	1.16
Net income per share (diluted)		$	0.21		$	0.35			$	0.46			$	1.14
Weighted average shares outstanding:
Basic			16,241,717			16,236,716				16,241,717				15,384,864
Diluted			16,323,353			16,440,755				16,241,717				15,582,284

CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, except share and per share amounts)
(unaudited)
						Nine Months Ended September 30,
Cash flows from operating activities:						2009							2008
Net income						$	7,404						$	17,813
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation, depletion and amortization							15,503							11,283
Unproved property impairments							-							483
Proved property impairments							128							-
Gain on sale of property and equipment							(1,545	)						(2,269	)
Accretion of asset retirement obligations							271							304
Unrealized gain on derivative contracts							(153	)						-
Amortization of loss on canceled hedge contract							363							-
Hedge ineffectiveness loss							186							47
Partnership income							(3,834	)						(1,021	)
Partnership distributions							1,355							551
Deferred income taxes							5,292							6,532
Non-cash compensation							1,064							462
Changes in assets and liabilities:
Increase in accounts receivable							(5,593	)						(155	)
Decrease in notes receivable							245							555
Increase in prepaid expense and other							(355	)						(1,499	)
Increase (decrease) in accounts payable and accrued expense							(7,403	)						5,514
Net cash provided by operating activities							12,928							38,600
Cash flows from investing activities:
Proceeds from sale of property and equipment							2,660							20,960
Additions to property and equipment							(81,619	)						(43,012	)
Investment in oil and gas limited partnership							-							(978	)
Net cash used in investing activities							(78,959	)						(23,030	)
Cash flows from financing activities:
Issuance of common stock							-							32,187
Issuance of long-term debt							64,000							-
Reduction of long-term debt							-							(46,000	)
Net cash provided by (used in) financing activities							64,000							(13,813	)
Net (decrease) increase in cash and cash equivalents							(2,031	)						1,757
Cash and cash equivalents at beginning of period							13,967							24,430
Cash and cash equivalents at end of period						$	11,936						$	26,187
Supplementary information:
Interest paid						$	2,938						$	3,708
Income taxes paid						$	677						$	4,210

GeoResources, Inc.
Cathy Kruse, 701-572-2020 ext 113
cathyk@geoi.net