GeoMet Inc. (GMET, Financial) filed Annual Report for the period ended 2011-12-31.
Geomet Inc has a market cap of $26.9 million; its shares were traded at around $0.64 with a P/E ratio of 33.7 and P/S ratio of 0.8.
Under full cost accounting rules, total capitalized costs are limited to a ceiling equal to the present value of estimated future net revenues, discounted at 10% per annum, plus cost of properties not being amortized plus the lower of cost or fair value of unevaluated properties less income tax effects. The estimated future net revenues are estimated in accordance with SEC rules and regulations which include using a flat price throughout the life of our reserves calculated by taking the unweighted arithmetic average of the natural gas price for the first day of each month during the year. We perform a quarterly ceiling test to evaluate whether the net book value of our full cost pool exceeds the ceiling limitation. Future adverse changes to any of these factors could lead to an impairment of all or a portion of our full cost pool in future periods which could significantly reduce earnings during the period in which the impairment occurs, and would result in a corresponding reduction to the full cost pool and stockholders equity. In addition, based on the natural gas prices received thus far this year and the current natural gas futures price curve for the remainder of 2012, we expect to have significant non-cash impairments to our capitalized gas properties, potentially in excess of our total stockholders equity as reported herein in the Consolidated Balance Sheet at December 31, 2011.
Gas sales. Gas sales increased by $2.3 million, or 7%, to $35.3 million compared to the prior year. The increase in gas sales was primarily the result of higher production volumes, of which 0.9 Bcf was due to our recent acquisition of coalbed methane gas properties, while 0.3 Bcf was due to increased production in our previously existing properties, partially offset by an 8% decrease in natural gas prices, excluding hedging transactions.
Gas sales. Gas sales increased by $2.5 million, or 8%, to $33.1 million compared to the prior year. The increase in gas sales was a result of higher natural gas prices, which increased approximately 11% excluding hedging transactions, partially offset by a 0.2 Bcf, or 3% decrease in production principally attributable to normal production declines with no drilling in 2009 to offset such normal production declines.
In January 2011, we agreed to sell gross volumes of 16,000 MMBtu/day of natural gas from our Pond Creek field for the period February 2011 through March 2012 through a forward physical sale contract with our existing purchaser at a price equal to the last day settlement price for the NYMEX contract for the month of sale plus $0.15, $0.115, and $0.13 for the periods February 2011 through March 2011, April 2011 through October 2011, and November 2011 through March 2012, respectively. Additionally, we fixed the NYMEX settle on a portion of the aforementioned forward sale as follows: (1) 4,000 MMBtu /day for the period April 2011 through October 2011 was fixed at a total price for physical gas sales, including the aforementioned basis, of $4.915/ MMBtu and (2) 3,000 MMBtu /day for the period November 2011 through March 2012 was fixed at a total price for physical gas sales, including the aforementioned basis, of $5.33/ MMBtu. These contracted volumes represent approximately 89% of total expected gross production volumes for the contract period from the Pond Creek field. If we are unable to fulfill our commitment, or a portion thereof, we are obligated to reimburse our counterparty for any price paid to replace the quantity of natural gas we failed to deliver which is in excess of the contract price. This obligation is limited to the spot price for natural gas at the delivery point on the day we fail to deliver.
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Geomet Inc has a market cap of $26.9 million; its shares were traded at around $0.64 with a P/E ratio of 33.7 and P/S ratio of 0.8.
Highlight of Business Operations:
In the Central Appalachian Basin, we are the operator of 300 vertical wells in which we own a 99.0% average working interest. Additionally, we are the operator of 89 horizontal wells in which we own a 66.0% average working interest. We also have a 33.0% average working interest in 67 non-operated horizontal wells. In Central Appalachia, we are party to six firm transportation agreements with total maximum daily quantities of approximately 54,000 MMBtu per day and primary terms expiring from April 2012 through November 2024 which can be automatically extended from time to time at the maximum tariff rate. In some cases, our gas sales volumes are delivered to market under transportation agreements controlled by our working interest partners. Generally, our gas sales volumes are sold at a delivery point into the respective interstate pipeline system utilized.Under full cost accounting rules, total capitalized costs are limited to a ceiling equal to the present value of estimated future net revenues, discounted at 10% per annum, plus cost of properties not being amortized plus the lower of cost or fair value of unevaluated properties less income tax effects. The estimated future net revenues are estimated in accordance with SEC rules and regulations which include using a flat price throughout the life of our reserves calculated by taking the unweighted arithmetic average of the natural gas price for the first day of each month during the year. We perform a quarterly ceiling test to evaluate whether the net book value of our full cost pool exceeds the ceiling limitation. Future adverse changes to any of these factors could lead to an impairment of all or a portion of our full cost pool in future periods which could significantly reduce earnings during the period in which the impairment occurs, and would result in a corresponding reduction to the full cost pool and stockholders equity. In addition, based on the natural gas prices received thus far this year and the current natural gas futures price curve for the remainder of 2012, we expect to have significant non-cash impairments to our capitalized gas properties, potentially in excess of our total stockholders equity as reported herein in the Consolidated Balance Sheet at December 31, 2011.
Gas sales. Gas sales increased by $2.3 million, or 7%, to $35.3 million compared to the prior year. The increase in gas sales was primarily the result of higher production volumes, of which 0.9 Bcf was due to our recent acquisition of coalbed methane gas properties, while 0.3 Bcf was due to increased production in our previously existing properties, partially offset by an 8% decrease in natural gas prices, excluding hedging transactions.
Gas sales. Gas sales increased by $2.5 million, or 8%, to $33.1 million compared to the prior year. The increase in gas sales was a result of higher natural gas prices, which increased approximately 11% excluding hedging transactions, partially offset by a 0.2 Bcf, or 3% decrease in production principally attributable to normal production declines with no drilling in 2009 to offset such normal production declines.
In January 2011, we agreed to sell gross volumes of 16,000 MMBtu/day of natural gas from our Pond Creek field for the period February 2011 through March 2012 through a forward physical sale contract with our existing purchaser at a price equal to the last day settlement price for the NYMEX contract for the month of sale plus $0.15, $0.115, and $0.13 for the periods February 2011 through March 2011, April 2011 through October 2011, and November 2011 through March 2012, respectively. Additionally, we fixed the NYMEX settle on a portion of the aforementioned forward sale as follows: (1) 4,000 MMBtu /day for the period April 2011 through October 2011 was fixed at a total price for physical gas sales, including the aforementioned basis, of $4.915/ MMBtu and (2) 3,000 MMBtu /day for the period November 2011 through March 2012 was fixed at a total price for physical gas sales, including the aforementioned basis, of $5.33/ MMBtu. These contracted volumes represent approximately 89% of total expected gross production volumes for the contract period from the Pond Creek field. If we are unable to fulfill our commitment, or a portion thereof, we are obligated to reimburse our counterparty for any price paid to replace the quantity of natural gas we failed to deliver which is in excess of the contract price. This obligation is limited to the spot price for natural gas at the delivery point on the day we fail to deliver.
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