GeoResources, Inc. Reports First Quarter Financial Results

Reports earnings of $477,000 and EBITDAX of $6.2 million in a significantly
reduced commodity price environment.
HOUSTON--(Business Wire)--
GeoResources, Inc., (NASDAQ:GEOI), today announced its financial results for the
quarter ended March 31, 2009, compared to the results for the same period in
2008.

For the three months ended March 31, 2009, the Company reported net income of
$477,000, or $0.03 per share compared to $4.2 million or $0.29 per share in
2008. Total revenue decreased 39% to $14.6 million in the first quarter of 2009
compared to $23.9 million the same quarter in 2008. The average realized price
of oil, including hedges, for the first quarter of 2009 was $54.00 per barrel
compared to $81.00 per barrel in the first quarter of 2008, a decrease of 33%.
The average realized price of natural gas, including hedges, was $4.12 per Mcf
for the first quarter of 2009, compared to $7.73 per Mcf or 47% less than the
first quarter of 2008.

Primarily, as a result of non-core planned property divestitures in 2008 and
2009, oil production in the first quarter of 2009 decreased to 177 MBbls from
200 MBbls in the prior year`s period, a decrease of 12%. Natural gas production
decreased to 665 MMcf in the first quarter of 2009 from 809 MMcf in the first
quarter of 2008. As reported in prior press releases, since the beginning of
2008, consistent with the business strategy of high-grading its asset portfolio,
the Company sold non-core properties in Michigan, Louisiana, Oklahoma and Texas.
These fields had sizable daily production rates, but limited upside potential
and significant plugging and abandonment obligations. These properties produced
approximately 400 BOPD and 750 MCFD at the time of their sale or approximately
47,000 BOE per quarter. Proceeds from divestitures were used to fund capital
expenditures and reduce debt.

Earnings before interest, income taxes, depreciation, depletion and
amortization, and exploration expense ("EBITDAX") decreased 49% to approximately
$6.2 million for the first quarter 2009 compared to $12.3 million in the prior
year`s similar quarter. The following table reconciles reported net income to
EBITDAX for the periods indicated and is summarized below in tabular form (in
thousands, except per share information):

EBITDAX (1) Three Months Ended March 31,
2009 2008

Net income $ 477 $ 4,226
Add back:
Interest expense 819 1,569
Income tax 360 2,596
Depreciation, depletion and amortization 4,468 3,877
Exploration expense 80

EBITDAX $ 6,204 $ 12,268

(1) EBITDAX is defined as earnings before interest, income taxes, depreciation,
depletion and amortization, and exploration expense. 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 Lodzinski, CEO and President commented, "Our results for the first
quarter were in line with our expectations in this dramatically reduced
commodity price environment and we have been able to achieve positive net income
and substantial EBITDAX, in the amounts of $477,000 and $6.2 million,
respectively. Our production in the first quarter declined from the prior year
due to planned divestitures which have been previously announced and have
improved our portfolio. We achieved approximately 95% of our production targets.
This modest shortfall is a direct result of our first quarter divestiture and
drilling and production activities in the Williston Basin. As previously
announced, given prevailing economics in the first quarter, our Bakken
development activities were reduced to a single rig and certain production was
curtailed. In addition, completion of several new wells was deferred pending
improved weather and cost reductions. We believe that our profitability and our
EBITDAX will improve as a result of underlying reductions in lease operating
expenses and additional hedging and forward sales arrangements which took effect
on April 1, 2009. Specifically, we entered into certain forward sales contracts
related to our oil production in the Williston Basin which provides for a fixed
net realized price, after transportation and differentials, of $43.85 per Bbl on
approximately 108,000 Bbls. This represents almost a $13.00 improvement over
average realized prices in the first quarter. In addition, we have hedged
additional gas quantities produced in our Southern Region at about $4.87,
representing an increase of over $1.00 per Mcf. Reference is made to notes in
our 10-Q describing these arrangements more fully. Financially, we have
maintained positive working capital, substantial EBITDAX and we have retained a
$100.0 million borrowing base with only $40.0 million outstanding. Accordingly,
we believe we have the requisite "staying power" to survive and prosper in this
cycle. We will continue to focus on cash flow and our bottom line while we
continue to pursue our business plan.

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 the 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)

March 31, December 31,
2009 2008
ASSETS (unaudited)

Current assets:
Cash $ 7,059 $ 13,967
Accounts Receivable
Oil and gas revenues 9,381 11,439
Joint interest billings and other 6,046 7,172
Affiliated partnerships 3,707 2,905
Notes receivable 120 120
Derivative financial instruments 8,309 8,200
Income taxes receivable 2,887 2,165
Prepaid expenses and other 4,564 3,923
Total current assets 42,073 49,891

Oil and gas properties, successful efforts method:
Proved properties 208,517 204,536
Unproved properties 2,415 2,409
Office and other equipment 752 1,025
Land 96 96
211,780 208,066
Less accumulated depreciation, depletion and amortization (30,242 ) (26,486 )
Net property and equipment 181,538 181,580

Equity in oil and gas limited partnerships 3,148 3,266
Derivative financial instruments 7,107 6,409
Deferred financing costs and other 3,108 2,388

$ 236,974 $ 243,534

GEORESOURCES, INC and SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)

March 31, December 31,
2009 2008
(unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Accounts payable $ 6,702 $ 10,750
Accounts payable to affiliated partnerships 5,464 10,310
Revenue and royalties payable 11,591 11,701
Drilling advances 1,395 2,169
Accrued expenses 2,079 1,506
Derivative financial instruments 2,220 1,572
Total current liabilities 29,451 38,008

Long-term debt 40,000 40,000
Deferred income taxes 19,198 17,868
Asset retirement obligations 5,291 5,418
Derivative financial instruments 916 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 112,788 112,523
Accumulated other comprehensive income 7,664 7,283
Retained earnings 21,504 21,027

Total stockholders' equity 142,118 140,995

$ 236,974 $ 243,534

GEORESOURCES, INC. and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except share and per share amounts)
(unaudited)

Three Months Ended March 31,
2009 2008

Revenue:
Oil and gas revenues $ 12,300 $ 22,463
Partnership management fees 298 312
Property operating income 458 314
Gain on sale of property and equipment 1,399 410
Partnership income 5 225
Interest and other 105 223

Total revenue 14,565 23,947

Expenses:
Lease operating expense 4,390 5,791
Severance taxes 794 1,889
Re-engineering and workovers 981 697
Exploration expense 80 -
General and administrative expense 2,095 1,784
Depreciation, depletion and amortization 4,468 3,877
Hedge ineffectiveness 49 1,518
Loss on derivative contracts 52 -
Interest 819 1,569

Total expense 13,728 17,125

Income before income taxes 837 6,822

Income tax expense (benefit):
Current (734 ) 1,429
Deferred 1,094 1,167
360 2,596

Net income $ 477 $ 4,226

Net income per share (basic and diluted) $ 0.03 $ 0.29

Weighted average shares outstanding:
Basic and diluted 16,241,717 14,703,383

GEORESOURCES, INC. and SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, except share and per share amounts)
(unaudited)

Three Months Ended March 31,
Cash flows from operating activities: 2009 2008
Net income $ 477 $ 4,226
Adjustments to reconcile net income to net cash provided

by operating activities:
Depreciation, depletion and amortization 4,468 3,877
Gain on sale of property and equipment (1,399 ) (410 )
Accretion of asset retirement obligations 61 131
Unrealized gain on derivative contracts (42 ) -
Amortization of loss on canceled hedge contract 122 -
Hedge ineffectiveness loss 49 1,518
Partnership income (5 ) (225 )
Partnership distributions 122 102
Deferred income taxes 1,094 1,167
Non-cash compensation 265 149
Changes in assets and liabilities:
Decrease (increase) in accounts receivable 1,660 (4,306 )
Increase in prepaid expense and other (1,360 ) (74 )
Increase (decrease) in accounts payable and accrued expense (9,378 ) 1,086
Net cash (used in) provided by operating activities (3,866 ) 7,241

Cash flows from investing activities:
Proceeds from sale of property and equipment 2,015 8,532
Additions to property and equipment (5,057 ) (13,039 )
Net cash used in investing activities (3,042 ) (4,507 )

Cash flows from financing activities:
Reduction of long-term debt - (10,000 )
Net cash used in financing activities - (10,000 )

Net decrease in cash and cash equivalents (6,908 ) (7,266 )

Cash and cash equivalents at beginning of period 13,967 24,430
Cash and cash equivalents at end of period $ 7,059 $ 17,164

Supplementary information:
Interest paid $ 694 $ 1,584
Income taxes paid $ 25 $ 1,762

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

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