SOURCE: GeoMet, Inc.

GeoMet, Inc.

April 01, 2014 08:30 ET

GeoMet Announces Financial and Operating Results for the Quarter and Year Ended December 31, 2013

HOUSTON, TX--(Marketwired - Apr 1, 2014) -  GeoMet, Inc. (OTCQB: GMET) (NASDAQ: GMETP) ("GeoMet" or the "Company") today announced its financial and operating results for the quarter and year ended December 31, 2013.

Financial and Operating Results

On June 14, 2013, the Company closed the sale of all of its coal bed methane properties located in the state of Alabama (the "Asset Sale"). The Asset Sale resulted in a $36.9 million gain. The properties sold represented approximately 29% of GeoMet's total production. As such, the current year results are not comparable to the prior year as presented below.

Fourth Quarter 2013 Financial and Operating Results

For the quarter ended December 31, 2013, GeoMet reported a net loss of $2.1 million. Included in the net loss was a $1.1 million loss on natural gas derivatives. For the quarter ended December 31, 2012, GeoMet reported a net loss of $8.7 million. Included in the net loss was a $12.3 million impairment to the Company's gas properties and a $0.8 million asset impairment, offset by a $4.1 million gain on natural gas derivatives.

For the quarter ended December 31, 2013, GeoMet reported net loss available to common stockholders of $4.3 million, or $0.11 per fully diluted share. Included in net income available to common stockholders for the quarter ended December 31, 2013 were non-cash charges of $0.6 million for accretion of preferred stock and $1.6 million for paid-in-kind ("PIK") dividends paid on preferred stock. For the quarter ended December 31, 2012, GeoMet reported a net loss available to common stockholders of $10.4 million, or $0.26 per fully diluted share. Included in the net loss available to common stockholders for the quarter ended December 31, 2012 were charges of $0.5 million for accretion of preferred stock and $1.2 million for PIK dividends on preferred stock.

Revenues for the quarter ended December 31, 2013 were $7.8 million, as compared to $11.7 million for the prior year quarter. The average natural gas price for the quarter ended December 31, 2013 was $3.71 per Mcf as compared to the prior year quarter average of $3.50 per Mcf.

Average net gas sales volumes for the quarter ended December 31, 2013 were 22.7 MMcf per day, a 37% decrease from the same quarter in 2012 of which 29% resulted from the Asset Sale and 8% resulted from decreased production related to our horizontal Pinnate wells in our remaining properties.

Year ended December 31, 2013 Financial and Operating Results

For the year ended December 31, 2013, GeoMet reported net income of $35.3 million. Included in net income was a $36.9 million non-recurring gain on the sale of our Alabama properties offset by a $1.8 million loss on natural gas derivatives. For the year ended December 31, 2012, GeoMet reported a net loss of $150.0 million. Included in the net loss was a $95.7 million impairment of gas properties, a $44.0 million write off of our deferred tax asset, a $1.4 million write off of debt issuance costs, a $1.1 million charge for restructuring costs, a $0.8 million asset impairment and a $0.7 million loss on the 2012 disposal of our Canadian operations.

For the year ended December 31, 2013, GeoMet reported net income available to common stockholders of $27.8 million, or $0.42 per fully diluted share. Included in net income available to common stockholders for the year ended December 31, 2013 were non-cash charges of $2.3 million for accretion of preferred stock and $5.3 million for PIK dividends paid on preferred stock. For the year ended December 31, 2012, GeoMet reported a net loss available to common stockholders of $155.8 million, or $3.88 per fully diluted share. Included in the net loss available to common stockholders for the year ended December 31, 2012 were charges of $1.9 million for accretion of preferred stock and $3.9 million for PIK dividends on preferred stock.

Revenues for the year ended December 31, 2013 were $38.2 million, as compared to $39.4 million for the prior year period. The average natural gas price for the year ended December 31, 2013 was $3.74 per Mcf as compared to the prior year period average of $2.83 per Mcf.

Average net gas sales volumes for the year ended December 31, 2013 were 27.9 MMcf per day, a 26% decrease from the same period in 2012 of which 18% resulted from the Asset Sale and 8% resulted from decreased production related to our horizontal Pinnate wells in our remaining properties.

Forward-Looking Statements Notice

This press release contains "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. Except for statements of historical facts, all statements included in the document, including those preceded by, followed by or that otherwise include the words "believe," "expects," "anticipates," "intends," "estimates," "projects," "target," "goal," "plans," "objective," "should" or similar expressions or variations on such words, are forward-looking statements. 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 volatility of future natural gas prices, 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 natural gas reserves, reductions in the borrowing base under our credit agreement made by our lenders, the sale of all or substantially all of our assets, 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. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained from time to time in the Company's SEC filings, which may be obtained by contacting the Company or the SEC. These filings are also available through the Company's web site at http://www.geometinc.com or through the SEC's Electronic Data Gathering and Analysis Retrieval System (EDGAR) at http://www.sec.gov. GeoMet undertakes no duty to update or revise these forward-looking statements.

About GeoMet, Inc.

GeoMet, Inc. is engaged in the production of natural gas from coal seams ("coalbed methane"). Our core area of operations is the Central Appalachian Basin of Virginia and West Virginia. We also control additional coalbed methane and oil and gas development rights, principally in Virginia, and West Virginia.

   
GEOMET, INC.  
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS  
(In thousands, except per share amounts)  
   
    Three Months Ended     Year Ended  
    December 31,     December 31,  
    2013     2012     2013     2012  
                         
Total revenues   $ 7,780     $ 11,728     $ 38,209     $ 39,383  
Expenses:                                
  Total production expenses     5,227       6,410       22,945       27,795  
  Depreciation, depletion and amortization     847       2,071       4,594       11,532  
  Impairment of gas properties and other     --       13,044       --       96,511  
  General and administrative     1,555       1,216       5,105       5,934  
  Losses (gains) on derivative contracts     1,051       (4,074 )     1,811       (4,416 )
Total operating expenses     8,680       18,667       34,455       137,356  
Gain on the sale of gas properties     --       --       36,948       --  
Operating (loss) income     (900 )     (6,939 )     40,702       (97,973 )
Other income (expense):                                
Write off of debt issuance costs     --       --       --       (1,378 )
Other expenses & interest, net     (1,221 )     (1,768 )     (5,358 )     (5,823 )
(Loss) income before income taxes from continuing operations     (2,121 )     (8,707 )     35,344       (105,174 )
Income tax expense     (6 )     (6 )     (25 )     (44,043 )
(Loss) income from continuing operations     (2,127 )     (8,713 )     35,319       (149,217 )
Discontinued operations, net of tax     --       (14 )     --       (736 )
Net (loss) income   $ (2,127 )   $ (8,727 )   $ 35,319     $ (149,953 )
Accretion of Preferred Stock     (633 )     (495 )     (2,258 )     (1,913 )
Dividends on Preferred Stock     (1,576 )     (1,171 )     (5,298 )     (3,937 )
Net (loss) income available to common stockholders   $ (4,336 )   $ (10,393 )   $ 27,763     $ (155,803 )
Net (loss) income per common share:                                
Basic   $ (0.11 )   $ (0.26 )   $ 0.69     $ (3.88 )
Diluted   $ (0.11 )   $ (0.26 )   $ 0.42     $ (3.88 )
Weighted average number of common shares:                                
Basic     40,505       40,436       40,481       40,124  
Diluted     40,505       40,436       83,385       40,124  
                                 
                                 
GEOMET, INC.  
CONDENSED CONSOLIDATED BALANCE SHEETS  
(In thousands)  
   
    December 31, 2013     December 31, 2012  
ASSETS            
             
Current Assets:                
  Cash and cash equivalents   $ 8,108     $ 7,234  
  Accounts receivable, net     2,901       6,249  
  Derivative asset--natural gas contracts     --       3,930  
  Other current assets     693       1,701  
Total current assets     11,702       19,114  
Property and equipment--net     42,329       75,125  
Deferred income taxes     --       1,126  
Total other noncurrent assets     769       961  
                 
TOTAL ASSETS   $ 54,800     $ 96,326  
                 
LIABILITIES, MEZZANINE AND STOCKHOLDERS' DEFICIT                
                 
Current Liabilities:                
  Current portion of long-term debt   $ 71,550     $ 10,300  
  Deferred income taxes     --       1,126  
  Derivative liability--natural gas contracts     834       920  
  Other current liabilities     8,537       11,427  
Total current liabilities     80,921       23,773  
Long-term debt     --       129,000  
Asset retirement obligations     8,915       13,235  
Derivative liability--natural gas contracts     710       1,636  
Other long-term accrued liabilities     113       144  
TOTAL LIABILITIES     90,659       167,788  
Series A Convertible Redeemable Preferred Stock     43,405       35,852  
Total stockholders' deficit     (79,264 )     (107,314 )
TOTAL LIABILITIES, MEZZANINE AND STOCKHOLDERS' DEFICIT   $ 54,800     $ 96,326  
                 
                 
GEOMET, INC.  
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  
(In thousands)  
   
    Year Ended
December 31,
 
    2013     2012  
Net cash provided by operating activities   $ 8,798     $ 18,361  
Net cash provided by investing activities (1)     59,833       8,036  
Net cash used in financing activities (2)     (67,757 )     (19,626 )
Effect of exchange rates changes on cash     --       5  
                 
Increase in cash and cash equivalents     874       6,776  
Cash and cash equivalents at beginning of period     7,234       458  
                 
Cash and cash equivalents at end of period   $ 8,108     $ 7,234  
                 
(1) Net cash provided by investing activities for the year ended December 31, 2013 primarily consisted of the net proceeds from the sale of Properties in Alabama. Net cash provided by investing activities for the year ended December 31, 2012 primarily consisted of return of basis in the settlement of natural gas derivative contracts acquired in a November 2011 asset purchase.
   
(2) Net cash used in financing activities for the year ended December 31, 2013 and 2012 primarily consisted of the net repayment of amounts outstanding under the Credit Agreement.
   
 
GEOMET, INC.
OPERATING STATISTICS
(in thousands, except per Mcf amounts)
 
    Three Months Ended
December 31,
  Year Ended
December 31,
    2013   2012   2013   2012
                         
Gas sales   $ 7,762   $ 11,682   $ 38,087   $ 39,147
Lease operating expenses   $ 2,517   $ 4,132   $ 13,132   $ 17,483
Compression and transportation expenses     2,231     1,592     7,716     8,349
Production taxes     479     686     2,097     1,962
Total production expenses   $ 5,227   $ 6,410   $ 22,945   $ 27,794
                         
Net sales volumes (Consolidated) (MMcf)     2,091     3,340     10,179     13,808
  Pond Creek field (Central Appalachian Basin) (MMcf)     1,399     1,458     5,607     5,866
  Other Central Appalachian Basin fields (MMcf)     692     915     2,917     3,850
  Gurnee field (Cahaba Basin) (MMcf)     --     418     723     1,743
  Black Warrior Basin fields (MMcf)     --     549     932     2,349
                         
Per Mcf data ($/Mcf):                        
                         
Average natural gas sales price realized (Consolidated)(1)   $ 3.85   $ 4.33   $ 3.85   $ 4.02
                         
Average natural gas sales price (Consolidated)   $ 3.71   $ 3.50   $ 3.74   $ 2.83
  Pond Creek field (Central Appalachian Basin)   $ 3.80   $ 3.59   $ 3.79   $ 2.92
  Other Central Appalachian Basin fields   $ 3.53   $ 3.73   $ 3.65   $ 2.69
  Gurnee field (Cahaba Basin) (2)   $ --   $ 3.47   $ 3.77   $ 2.83
  Black Warrior Basin fields (2)   $ --   $ 3.46   $ 3.73   $ 2.86
                         
Lease operating expenses (Consolidated)   $ 1.20   $ 1.24   $ 1.29   $ 1.27
  Pond Creek field (Central Appalachian Basin)   $ 1.11   $ 1.01   $ 1.12   $ 1.06
  Other Central Appalachian Basin fields   $ 1.37   $ 1.81   $ 1.40   $ 1.36
  Gurnee field (Cahaba Basin) (2)   $ --   $ 2.73   $ 2.85   $ 2.68
  Black Warrior Basin fields (2)   $ --   $ 0.70   $ 0.73   $ 0.57
Compression and transportation expenses (Consolidated)   $ 1.07   $ 0.47   $ 0.75   $ 0.60
  Pond Creek field (Central Appalachian Basin)   $ 0.64   $ 0.54   $ 0.66   $ 0.57
  Other Central Appalachian Basin fields   $ 1.94   $ 0.98   $ 1.25   $ 1.05
  Gurnee field (Cahaba Basin) (2)   $ --   $ 0.23   $ 0.28   $ 0.26
  Black Warrior Basin fields (2)   $ --   $ 0.20   $ 0.19   $ 0.19
Production taxes (Consolidated)   $ 0.23   $ 0.21   $ 0.21   $ 0.14
  Pond Creek field (Central Appalachian Basin)   $ 0.22   $ 0.19   $ 0.21   $ 0.16
  Other Central Appalachian Basin fields   $ 0.24   $ 0.16   $ 0.20   $ 0.11
  Gurnee field (Cahaba Basin) (2)   $ --   $ 0.16   $ 0.18   $ 0.12
  Black Warrior Basin fields (2)   $ --   $ 0.19   $ 0.21   $ 0.17
Total production expenses (Consolidated)   $ 2.50   $ 1.92   $ 2.25   $ 2.01
  Pond Creek field (Central Appalachian Basin)   $ 1.97   $ 1.74   $ 1.99   $ 1.79
  Other Central Appalachian Basin fields   $ 3.55   $ 2.95   $ 2.85   $ 2.52
  Gurnee field (Cahaba Basin) (2)   $ --   $ 3.12   $ 3.31   $ 3.06
  Black Warrior Basin fields (2)   $ --   $ 1.09   $ 1.13   $ 0.93
Depletion (Consolidated)   $ 0.39   $ 0.59   $ 0.44   $ 0.81
                         

(1) Average natural gas sales price realized includes the effects of realized gains and losses on derivative contracts.
(2) On June 14, 2013, the Company closed the sale of all of its coal bed methane properties located in the state of Alabama.

 
GEOMET, INC.
CONSOLIDATED DERIVATIVE CONTRACT POSITIONS
 
At December 31, 2013, we had the following natural gas swap position:
 
Period   Volume
 (MMBtu)
  Average
 Price
First Quarter of 2014   360,000   $ 3.82
           
           
At December 31, 2013, we had the following natural gas collar positions:
Period   Volume
(MMBtu)
  Sold
Ceiling
  Bought
Floor
January 2014 through December 2015   3,650,000   $ 4.30   $ 3.60
January 2014 through December 2015   3,650,000   $ 4.20   $ 3.50
    7,300,000            
                 

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