GeoMet Inc. (GMET, Financial) filed Quarterly Report for the period ended 2009-03-31.
GEOMET INC. is an independent energy company primarily engaged in the exploration for and development and production of natural gas from coal seams (coalbed methane or CBM) and non-conventional shallow gas. Geomet's principal operations and producing properties are located in the Cahaba Basin in Alabama and the Central Appalachian Basin in West Virginia and Virginia. Geomet also controls additional coalbed methane and oil and gas development rights principally in Alabama British Columbia Virginia and West Virginia. GeoMet Inc. has a market cap of $63.7 million; its shares were traded at around $1.62 with a P/E ratio of 2.4 and P/S ratio of 1.
Gas sales. Gas sales decreased by $6.13 million, or 39%, to $9.45 million compared to the prior year quarter. The decrease in gas sales was a result of decreased gas prices partially offset by increased production. Production increased 1% and average gas prices decreased 40%, excluding hedging transactions. The $6.13 million decrease in gas sales consisted of a $6.26 million decrease in prices, a $0.82 million increase in production, and a $0.69 million decrease related to the sale of an overriding royalty interest in July of 2008. The increase in production was principally attributable to the continued development activities at our Pond Creek field.
Lease operating expenses. Lease operating expenses increased by $0.82 million, or 22%, to $4.57 million compared to the prior year quarter. The increase in lease operating expenses consisted of a $0.79 million increase in costs and a $0.03 million increase in production. The $0.79 increase in costs was primarily due to the commencement of gas sales in our Garden City field in July 2008, Lasher field in October 2008, and Peace River field in December 2008. Generally, initial lease operating expenses are higher in the early life of a prospect.
Compression expense. Compression expense increased by $0.14 million, or 20%, to $0.83 million compared to the prior year quarter. The $0.14 million increase was comprised of a $0.13 million increase in costs and a $0.01 increase in production. The $0.13 increase in costs was primarily due to routine maintenance of some of the compressors in our Cahaba field.
Depreciation, depletion and amortization. Depreciation, depletion and amortization increased by $0.67 million, or 27%, to $3.13 million compared to the prior year quarter. The depreciation, depletion and amortization increase consisted of a $0.02 million increase in production and a $0.65 million increase in the depletion rate.
Cash flows provided by operations for the three months ended March 31, 2009 and 2008 were $2.2 million and $3.8 million, respectively. Cash flows from operations of $2.2 million for the three months ended March 31, 2009, combined together with net cash provided by financing activities of $4.4 million, were sufficient to fund net cash used in investing activities of $7.1 million, which primarily includes capital expenditures for the exploration and development of our gas properties. Net cash provided by financing activities was related to credit facility net borrowings.
Read the The complete Report
GEOMET INC. is an independent energy company primarily engaged in the exploration for and development and production of natural gas from coal seams (coalbed methane or CBM) and non-conventional shallow gas. Geomet's principal operations and producing properties are located in the Cahaba Basin in Alabama and the Central Appalachian Basin in West Virginia and Virginia. Geomet also controls additional coalbed methane and oil and gas development rights principally in Alabama British Columbia Virginia and West Virginia. GeoMet Inc. has a market cap of $63.7 million; its shares were traded at around $1.62 with a P/E ratio of 2.4 and P/S ratio of 1.
Highlight of Business Operations:
At March 31, 2009, the carrying value of the Companys gas properties in the U.S. and Canada exceeded the full cost ceiling limitation by $112.9 million, net of income tax of $68.5 million, based upon a natural gas price of approximately $3.73 per Mcf in effect at that date. However, as allowed by the guidelines of the SEC, since gas prices have significantly increased subsequent to March 31, 2009, a recalculation of the ceiling limitation has been performed. At May 7, 2009, the carrying value of the Companys gas properties in the U.S. and Canada exceeded the full cost ceiling limitation by $86.9 million, net of income tax of $52.8 million, based upon a natural gas price of approximately $4.21 per Mcf in effect at that date. A decline in prices received for gas sales or an increase in operating costs or reductions in estimated economically recoverable quantities could result in the recognition of an impairment of our gas properties in a future period. Holding all factors constant other than natural gas prices, a 10% and 20% decline in the price of $4.21 per Mcf used as of March 31, 2009 would have resulted in an additional ceiling test impairment of approximately 19% and 38%, respectively, of our full cost pool.Gas sales. Gas sales decreased by $6.13 million, or 39%, to $9.45 million compared to the prior year quarter. The decrease in gas sales was a result of decreased gas prices partially offset by increased production. Production increased 1% and average gas prices decreased 40%, excluding hedging transactions. The $6.13 million decrease in gas sales consisted of a $6.26 million decrease in prices, a $0.82 million increase in production, and a $0.69 million decrease related to the sale of an overriding royalty interest in July of 2008. The increase in production was principally attributable to the continued development activities at our Pond Creek field.
Lease operating expenses. Lease operating expenses increased by $0.82 million, or 22%, to $4.57 million compared to the prior year quarter. The increase in lease operating expenses consisted of a $0.79 million increase in costs and a $0.03 million increase in production. The $0.79 increase in costs was primarily due to the commencement of gas sales in our Garden City field in July 2008, Lasher field in October 2008, and Peace River field in December 2008. Generally, initial lease operating expenses are higher in the early life of a prospect.
Compression expense. Compression expense increased by $0.14 million, or 20%, to $0.83 million compared to the prior year quarter. The $0.14 million increase was comprised of a $0.13 million increase in costs and a $0.01 increase in production. The $0.13 increase in costs was primarily due to routine maintenance of some of the compressors in our Cahaba field.
Depreciation, depletion and amortization. Depreciation, depletion and amortization increased by $0.67 million, or 27%, to $3.13 million compared to the prior year quarter. The depreciation, depletion and amortization increase consisted of a $0.02 million increase in production and a $0.65 million increase in the depletion rate.
Cash flows provided by operations for the three months ended March 31, 2009 and 2008 were $2.2 million and $3.8 million, respectively. Cash flows from operations of $2.2 million for the three months ended March 31, 2009, combined together with net cash provided by financing activities of $4.4 million, were sufficient to fund net cash used in investing activities of $7.1 million, which primarily includes capital expenditures for the exploration and development of our gas properties. Net cash provided by financing activities was related to credit facility net borrowings.
Read the The complete Report
