GeoMet Inc. (GMET, Financial) filed Quarterly Report for the period ended 2009-06-30.
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 $48.2 million; its shares were traded at around $1.22 with a P/E ratio of 2 and P/S ratio of 0.7.
Gas sales. Gas sales decreased by $13.86 million, or 67%, to $6.84 million compared to the prior year quarter. The decrease in gas sales was a result of significantly lower natural gas prices partially offset by increased production. Production increased 3% and average natural gas prices decreased 68%, excluding hedging transactions. The $13.86 million decrease in gas sales consisted of a $14.39 million decrease in prices, offset by a $0.53 million increase in production. The increase in production was principally attributable to the prior year development activities at our Pond Creek field.
Lease operating expenses. Lease operating expenses decreased by $0.29 million, or 8%, to $3.35 million compared to the prior year quarter. The decrease in lease operating expenses consisted of a $0.39 million decrease in costs, offset by a $0.10 million increase in production. The $0.39 million decrease in costs was primarily due to a company-wide cost reduction strategy implemented in April 2009 and a credit for prior period ad valorem taxes, partially offset by increased expenses related 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.
Compression expense. Compression expense increased by $0.22 million, or 29%, to $0.95 million compared to the prior year quarter. The $0.22 million increase was comprised of a $0.20 million increase in costs and a $0.02 increase in production. The $0.20 million increase in costs was primarily due to the commencement of gas sales in our Garden City, Lasher, and Peace River fields in 2008 combined with an increase in the rates for electricity used to power compressors at our Pond Creek field, as well as unscheduled repair and maintenance costs.
Gas sales. Gas sales decreased by $19.99 million, or 55%, to $16.29 million compared to the prior year period. The decrease in gas sales was a result of significantly lower natural gas prices partially offset by increased production. Production increased 2% and average natural gas prices decreased 56%, excluding hedging transactions. The $19.99 million decrease in gas sales consisted of a $20.61 million decrease in prices, offset by a $0.62 million increase in production. The increase in production was principally attributable to the prior year development activities at our Pond Creek field.
Lease operating expenses. Lease operating expenses increased by $0.53 million, or 7%, to $7.92 million compared to the prior year period. The increase in lease operating expenses consisted of a $0.41 million increase in costs and a $0.12 million increase in production. The $0.41 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, offset by a credit for prior period ad valorem taxes. Generally, lease operating expenses are higher in the early life of a prospect.
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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 $48.2 million; its shares were traded at around $1.22 with a P/E ratio of 2 and P/S ratio of 0.7.
Highlight of Business Operations:
At June 30, 2009, the carrying value of the Companys gas properties in the U.S. and Canada exceeded the full cost ceiling limitation by $17.2 million, net of tax of $10.3 million, based upon the natural gas prices per Mcf in effect as of the balance sheet date, adjusted for location differentials, which were approximately $4.00 and $3.57, respectively. 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 prices used at June 30, 2009 would have resulted in an additional ceiling test impairment of approximately 18% and 36%, respectively, of our full cost pool.Gas sales. Gas sales decreased by $13.86 million, or 67%, to $6.84 million compared to the prior year quarter. The decrease in gas sales was a result of significantly lower natural gas prices partially offset by increased production. Production increased 3% and average natural gas prices decreased 68%, excluding hedging transactions. The $13.86 million decrease in gas sales consisted of a $14.39 million decrease in prices, offset by a $0.53 million increase in production. The increase in production was principally attributable to the prior year development activities at our Pond Creek field.
Lease operating expenses. Lease operating expenses decreased by $0.29 million, or 8%, to $3.35 million compared to the prior year quarter. The decrease in lease operating expenses consisted of a $0.39 million decrease in costs, offset by a $0.10 million increase in production. The $0.39 million decrease in costs was primarily due to a company-wide cost reduction strategy implemented in April 2009 and a credit for prior period ad valorem taxes, partially offset by increased expenses related 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.
Compression expense. Compression expense increased by $0.22 million, or 29%, to $0.95 million compared to the prior year quarter. The $0.22 million increase was comprised of a $0.20 million increase in costs and a $0.02 increase in production. The $0.20 million increase in costs was primarily due to the commencement of gas sales in our Garden City, Lasher, and Peace River fields in 2008 combined with an increase in the rates for electricity used to power compressors at our Pond Creek field, as well as unscheduled repair and maintenance costs.
Gas sales. Gas sales decreased by $19.99 million, or 55%, to $16.29 million compared to the prior year period. The decrease in gas sales was a result of significantly lower natural gas prices partially offset by increased production. Production increased 2% and average natural gas prices decreased 56%, excluding hedging transactions. The $19.99 million decrease in gas sales consisted of a $20.61 million decrease in prices, offset by a $0.62 million increase in production. The increase in production was principally attributable to the prior year development activities at our Pond Creek field.
Lease operating expenses. Lease operating expenses increased by $0.53 million, or 7%, to $7.92 million compared to the prior year period. The increase in lease operating expenses consisted of a $0.41 million increase in costs and a $0.12 million increase in production. The $0.41 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, offset by a credit for prior period ad valorem taxes. Generally, lease operating expenses are higher in the early life of a prospect.
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