HOUSTON, TX--(Marketwire - Aug 10, 2011) - GeoMet, Inc. (
J. Darby Seré, GeoMet's Chairman and Chief Executive Officer, had the following comments, "Despite a continuing low gas price environment, we are pleased to report a sixth consecutive quarter of Adjusted Net Income. Gas sales volumes are rising as a result of our development program at Pond Creek. We continue to be encouraged with the results of our new hydraulic fracturing testing efforts at our Gurnee field with early production rates from our testing averaging multiple times the field wide average production rate per foot of coal completed. We hope to establish the commerciality of further development of the field by the end of the year."
Second Quarter 2011 Financial and Operating Results
For the quarter ended June 30, 2011, GeoMet reported net income of $1.1 million. Included in net income was a $0.2 million pre-tax, non-cash, mark-to-market gain on derivative contracts. The Company received net cash payments of $1.5 million from derivative contracts during the current quarter. For the quarter ended June 30, 2010, GeoMet reported a net loss of $1.8 million. Included in the net loss for the quarter ended June 30, 2010 was a $3.0 million pre-tax, non-cash, mark-to-market loss on derivative contracts. The Company received net cash payments of $2.2 million from derivative contracts during the prior year quarter.
For the quarter ended June 30, 2011, GeoMet reported a net loss available to common stockholders of $0.7 million, or $0.02 per fully diluted share. Included in net loss available to common stockholders for the quarter ended June 30, 2011 were non-cash charges of $0.4 million for accretion of preferred stock and $1.3 million for paid-in-kind ("PIK") dividends paid on preferred stock. For the quarter ended June 30, 2010, GeoMet reported a net loss available to common stockholders of $1.8 million, or $0.04 per fully diluted share. No adjustments to the net loss were required to arrive at net loss available to common stockholders as there were no preferred shares outstanding during the quarter ended June 30, 2010.
Adjusted Net Income remained constant at $950,000 for the quarter ended June 30, 2011 as compared to $943,000 in the prior year quarter. Adjusted Net Income is a non-GAAP measure. See the accompanying table for a reconciliation of Adjusted Net Income to Net Income (Loss).
Adjusted EBITDA for the quarter increased to $4.7 million from $3.3 million in the prior year quarter. Adjusted EBITDA is a non-GAAP measure. See the accompanying table for a reconciliation of Adjusted EBITDA to Net Income (Loss).
Revenues, including the effects of realized gains from gas derivative contracts, remained constant at $9.9 million for the quarter ended June 30, 2011 as compared to the prior year quarter. The average natural gas price, adjusted for realized gains on derivative contracts, was $5.36 per Mcf during the quarter ended June 30, 2011 versus $5.41 per Mcf for the prior year quarter. Revenues, as reported for the quarter ended June 30, 2011 which excludes the impact of hedges, were $8.4 million, as compared to $7.7 million for the prior year quarter. The average natural gas price, unadjusted for hedging activity, for the quarter ended June 30, 2011 was $4.53 per Mcf as compared to the prior year quarter average of $4.20 per Mcf.
Average net gas sales volumes for the quarter ended June 30, 2011 were 20.2 MMcf per day, a 1% increase from the same quarter in 2010. Net gas sales volumes for the quarter were reduced by approximately 0.5 MMcf per day as a result of a temporary reduction in pipeline delivery capacity resulting from a mechanical accident at one of our compressor stations in our Pond Creek field. Capacity was fully restored by the end of the quarter.
Capital expenditures for the quarter ended June 30, 2011 were $5.5 million as compared to $3.2 million for the same quarter in the prior year, reflecting the increase in activities at our two major fields.
Six Months Ended June 30, 2011 Financial and Operating Results
For the six months ended June 30, 2011, GeoMet reported net income of $1.5 million. Included in net income was a $2.7 million pre-tax, non-cash, mark-to-market loss on derivative contracts. The Company received net cash payments of $5.0 million from derivative contracts during the current period. For the six months ended June 30, 2010, GeoMet reported net income of $4.3 million. Included in net income for the six months ended June 30, 2010 was a $4.7 million pre-tax, non-cash, mark-to-market gain on derivative contracts. The Company received net cash payments of $3.7 million from derivative contracts during the prior year period.
For the six months ended June 30, 2011, GeoMet reported a net loss available to common stockholders of $2.0 million, or $0.05 per fully diluted share. Included in net loss available to common stockholders for the six months ended June 30, 2011 were non-cash charges of $0.9 million for accretion of preferred stock and $2.6 million for PIK dividends paid on preferred stock. For the six months ended June 30, 2010, GeoMet reported net income available to common stockholders of $4.3 million, or $0.11 per fully diluted share. No adjustments to net income were required to arrive at net income available to common stockholders as there were no preferred shares outstanding during the six months ended June 30, 2010.
Adjusted Net Income for the six months ended June 30, 2011 increased to $3.2 million from $2.2 million in the prior year period. Adjusted Net Income is a non-GAAP measure. See the accompanying table for a reconciliation of Adjusted Net Income to Net Income (Loss).
Adjusted EBITDA for the six months ended June 30, 2011 increased to $10.7 million from $9.0 million in the prior year period. Adjusted EBITDA is a non-GAAP measure. See the accompanying table for a reconciliation of Adjusted EBITDA to Net Income (Loss).
Revenues, including the effects of realized gains from gas derivative contracts, remained constant at $21.2 million for the six months ended June 30, 2011 as compared to the prior year period. The average natural gas price, adjusted for realized gains on derivative contracts, was $5.77 per Mcf during the six months ended June 30, 2011 versus $5.82 per Mcf for the prior year period. Revenues, as reported for the six months ended June 30, 2011 which excludes the impact of hedges, were $16.3 million, as compared to $17.7 million for the prior year period. The average natural gas price, unadjusted for hedging activity, for the six months ended June 30, 2011 was $4.40 per Mcf as compared to the prior year period average of $4.81 per Mcf.
Average net gas sales volumes for the six months ended June 30, 2011 were 20.3 MMcf per day, a 1% increase from the same period in 2010. Net gas sales volumes for the six month period were reduced by approximately 0.2 MMcf per day as a result of a temporary reduction in pipeline delivery capacity resulting from a mechanical accident at one of our compressor stations in our Pond Creek field. Capacity was fully restored by the end of the period.
Capital expenditures for the six months ended June 30, 2011 were $8.6 million as compared to $4.8 million for the same period in 2010, reflecting the sustained increase in activities at our two major fields.
Forward-Looking Statements Notice
This press release may contain "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. 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 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 oil and natural gas reserves, 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. GeoMet undertakes no duty to update or revise these forward-looking statements.
Conference Call Information
GeoMet will hold its quarterly conference call to discuss the results for the quarter and year ended June 30, 2011 on August 10, 2011 at 10:30 a.m. Central Time. To participate, dial (888) 403-8872 a few minutes before the call begins. Please reference GeoMet, Inc. conference ID 9246859. The call will also be broadcast live over the Internet from the Company's website at www.geometinc.com. A replay of the conference call will be accessible shortly after the end of the call on August 10, 2011 and will be available through August 24, 2011. To access the conference call replay, please dial (888) 203-1112 and enter replay passcode 9246859 when prompted.
About GeoMet, Inc.
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") and non-conventional shallow gas. Our principal operations and producing properties are located in the Cahaba Basin in Alabama and the Central Appalachian Basin in West Virginia and Virginia. We also control additional coalbed methane and oil and gas development rights, principally in Alabama, British Columbia, Virginia, and West Virginia.
| GEOMET, INC. | ||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
| (In thousands, except per share amounts) | ||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
| Revenues: | ||||||||||||||||
| Gas sales | $ | 8,331 | $ | 7,661 | $ | 16,182 | $ | 17,545 | ||||||||
| Operating fees and other | 73 | 71 | 145 | 145 | ||||||||||||
| Total revenues | 8,404 | 7,732 | 16,327 | 17,690 | ||||||||||||
| Expenses: | ||||||||||||||||
| Total production expenses | 4,210 | 4,176 | 8,421 | 8,495 | ||||||||||||
| Depreciation, depletion and amortization | 1,622 | 1,450 | 3,255 | 3,096 | ||||||||||||
| General and administrative | 1,503 | 1,315 | 2,942 | 2,793 | ||||||||||||
| Terminated transaction costs | 1,403 | 1,403 | ||||||||||||||
| Realized gains on derivative contracts | (1,536 | ) | (2,211 | ) | (5,033 | ) | (3,671 | ) | ||||||||
| Unrealized (gains) losses on derivative contracts |
(197 | ) | 2,974 | 2,653 | (4,668 | ) | ||||||||||
| Total operating expenses | 5,602 | 9,107 | 12,238 | 7,448 | ||||||||||||
| Operating income (loss) | 2,802 | (1,375 | ) | 4,089 | 10,242 | |||||||||||
| Other expenses & interest, net | (828 | ) | (1,418 | ) | (1,659 | ) | (2,654 | ) | ||||||||
| Income (loss) before income taxes | 1,974 | (2,793 | ) | 2,430 | 7,588 | |||||||||||
| Income tax (expense) benefit | (902 | ) | 1,031 | (907 | ) | (3,323 | ) | |||||||||
| Net income (loss) | $ | 1,072 | $ | (1,762 | ) | $ | 1,523 | $ | 4,265 | |||||||
| Accretion of Preferred Stock | (436 | ) | -- | (860 | ) | -- | ||||||||||
| Cash Dividends Paid on Preferred Stock | (1 | ) | -- | (1 | ) | -- | ||||||||||
| PIK Dividends on Preferred Stock | (1,336 | ) | -- | (2,632 | ) | -- | ||||||||||
| Net (loss) income available to common stockholders | $ | (701 | ) | $ | (1,762 | ) | $ | (1,970 | ) | $ | 4,265 | |||||
| Net (loss) income per common share: | ||||||||||||||||
| Basic | $ | (0.02 | ) | $ | (0.04 | ) | $ | (0.05 | ) | $ | 0.11 | |||||
| Diluted | $ | (0.02 | ) | $ | (0.04 | ) | $ | (0.05 | ) | $ | 0.11 | |||||
| Weighted average number of common shares: | ||||||||||||||||
| Basic | 39,618 | 39,241 | 39,544 | 39,200 | ||||||||||||
| Diluted | 39,618 | 39,241 | 39,544 | 39,291 | ||||||||||||
| GEOMET, INC. | |||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||
| (In thousands) | |||||||
| June 30, 2011 |
December 31, 2010 |
||||||
| ASSETS | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 784 | $ | 537 | |||
| Accounts receivable | 2,666 | 2,600 | |||||
| Inventory | 867 | 1,002 | |||||
| Derivative asset - natural gas hedges | 5,060 | 7,088 | |||||
| Other current assets | 831 | 952 | |||||
| Total current assets | 10,208 | 12,179 | |||||
| Property and equipment - net | 111,411 | 106,087 | |||||
| Other noncurrent assets: | |||||||
| Derivative asset - natural gas hedges | 1,562 | 2,187 | |||||
| Deferred income taxes | 46,784 | 48,203 | |||||
| Other | 1,158 | 1,430 | |||||
| Total other noncurrent assets | 160,902 | 157,907 | |||||
| TOTAL ASSETS | $ | 171,123 | $ | 170,086 | |||
| LIABILITIES, MEZZANINE AND STOCKHOLDERS' EQUITY | |||||||
| Current Liabilities: | |||||||
| Accounts payable | $ | 6,258 | $ | 5,950 | |||
| Accrued liabilities | 2,541 | 2,306 | |||||
| Deferred income taxes | 1,689 | 2,207 | |||||
| Derivative liability - interest rate swaps | 5 | ||||||
| Asset retirement liability | 34 | 33 | |||||
| Current portion of long-term debt | 88 | 133 | |||||
| Total current liabilities | 10,610 | 10,634 | |||||
| Long-term debt | 79,719 | 80,863 | |||||
| Asset retirement liability | 5,763 | 5,466 | |||||
| Other long-term accrued liabilities | 24 | 41 | |||||
| Total liabilities | 96,116 | 86,370 | |||||
| Mezzanine equity: | |||||||
| Series A Convertible Redeemable Preferred Stock | 25,437 | 22,074 | |||||
| Stockholders' equity | 49,570 | 51,008 | |||||
| TOTAL LIABILITIES, MEZZANINE AND STOCKHOLDERS' EQUITY | $ | 171,123 | $ | 170,086 | |||
| GEOMET, INC. | ||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
| (In thousands) | ||||||||
| Six Months Ended | ||||||||
| June 30, | ||||||||
| 2011 | 2010 | |||||||
| Net cash provided by operating activities | $ | 8,152 | $ | 8,475 | ||||
| Net cash used in investing activities | (6,576 | ) | (4,061 | ) | ||||
| Net cash used in financing activities | (1,332 | ) | (4,906 | ) | ||||
| Effect of exchange rate changes on cash | 3 | 12 | ||||||
| Increase (decrease) in cash and cash equivalents | 247 | (480 | ) | |||||
| Cash and cash equivalents at beginning of period | 537 | 974 | ||||||
| Cash and cash equivalents at end of period | $ | 784 | $ | 494 | ||||
| GEOMET, INC. | ||||||||||||
| OPERATING STATISTICS | ||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||
| June 30, | June 30, | |||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||
| Net sales volumes (MMcf) | 1,840 | 1,824 | 3,679 | 3,644 | ||||||||
| Per Mcf data ($/Mcf): | ||||||||||||
| Average natural gas sales price | $ | 4.53 | $ | 4.20 | $ | 4.40 | $ | 4.81 | ||||
| Differential to NYMEX (1) | $ | 0.21 | $ | 0.11 | $ | 0.19 | $ | 0.12 | ||||
| Average natural gas sales price realized (2) | $ | 5.36 | $ | 5.41 | $ | 5.77 | $ | 5.82 | ||||
| Adjusted lease operating expense (3) | $ | 1.53 | $ | 1.50 | $ | 1.55 | $ | 1.58 | ||||
| Compression expenses | $ | 0.35 | $ | 0.42 | $ | 0.34 | $ | 0.40 | ||||
| Transportation expense | $ | 0.17 | $ | 0.17 | $ | 0.17 | $ | 0.18 | ||||
| Production taxes (4) | $ | 0.20 | $ | 0.16 | $ | 0.19 | $ | 0.14 | ||||
| Total production expenses, as adjusted (3) | $ | 2.25 | $ | 2.25 | $ | 2.25 | $ | 2.30 | ||||
| Depletion | $ | 0.83 | $ | 0.72 | $ | 0.83 | $ | 0.78 | ||||
| Three Months Ended | Six Months Ended | |||||||||||
| June 30, | June 30, | |||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||
| POND CREEK FIELD | ||||||||||||
| Net sales volumes (MMcf) | 1,347 | 1,319 | 2,709 | 2,614 | ||||||||
| Per Mcf data ($/Mcf): | ||||||||||||
| Lease operating expense | $ | 1.14 | $ | 1.27 | $ | 1.18 | $ | 1.30 | ||||
| Compression expense | $ | 0.32 | $ | 0.42 | $ | 0.32 | $ | 0.38 | ||||
| Transportation expense | $ | 0.23 | $ | 0.23 | $ | 0.23 | $ | 0.24 | ||||
| Production taxes | $ | 0.20 | $ | 0.15 | $ | 0.18 | $ | 0.16 | ||||
| Total production expenses | $ | 1.89 | $ | 2.07 | $ | 1.91 | $ | 2.08 | ||||
| GURNEE FIELD | ||||||||||||
| Net sales volumes (MMcf) | 441 | 466 | 877 | 941 | ||||||||
| Per Mcf data ($/Mcf): | ||||||||||||
| Adjusted lease operating expense (3) | $ | 2.59 | $ | 2.12 | $ | 2.59 | $ | 2.05 | ||||
| Compression expense | $ | 0.38 | $ | 0.38 | $ | 0.35 | $ | 0.38 | ||||
| Production taxes (4) | $ | 0.22 | $ | 0.20 | $ | 0.22 | $ | 0.06 | ||||
| Total production expenses, as adjusted (3) | $ | 3.19 | $ | 2.70 | $ | 3.16 | $ | 2.49 | ||||
| (1) | The difference between the average natural gas price for the period, before the impact of gains and losses on derivative contracts, and the final average settlement price for natural gas contracts on the New York Mercantile Exchange ("NYMEX") for each month during the applicable period weighted by gas sales volumes. | |
| (2) | Average realized price includes the effects of realized gains on derivative contracts. | |
| (3) | Produced water disposal fees are recorded as operating fees and other on the Statement of Operations. Lease operating expense per Mcf has been adjusted for produced water disposal fees because the fees are not reflected in the net gas sales volumes. See Reconciliation of Adjusted Lease Operating Expense. | |
| (4) | The increase in production taxes per Mcf was due to a refund received in March 2010 for production taxes related to our Gurnee field. | |
| GEOMET, INC. | |||||
| CONSOLIDATED DERIVATIVE CONTRACT POSITIONS | |||||
| At June 30, 2011, the Company had the following natural gas swap position: | |||||
| Period | Volume (MMBtu) |
Price |
|||
| July through October 2011 | 492,000 | $ | 6.37 | ||
| July through October 2011 | 492,000 | $ | 5.37 | ||
| July through October 2011 | 492,000 | $ | 5.43 | ||
| November 2011 through March 2012 | 608,000 | $ | 7.12 | ||
| November 2011 through March 2012 | 608,000 | $ | 6.12 | ||
| November 2011 through March 2012 | 912,000 | $ | 5.08 | ||
| April 2012 through October 2012 | 856,000 | $ | 5.73 | ||
| April 2012 through October 2012 | 1,712,000 | $ | 4.94 | ||
| November 2012 through March 2013 | 604,000 | $ | 6.42 | ||
| November 2012 through March 2013 | 906,000 | $ | 5.50 | ||
| 7,682,000 | |||||
Our production is sold at an "all-in" price which includes the market price for natural gas plus a "basis differential." 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 a basis differential of $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:
| Period | Volume (MMBtu) |
Fixed Market Price |
Fixed Basis Differential |
All-In Price |
|||||||
| July through October 2011 | 492,000 | $ | 4.80 | $ | 0.115 | $ | 4.915 | ||||
| November 2011 through March 2012 | 456,000 | $ | 5.20 | $ | 0.130 | $ | 5.330 | ||||
| 948,000 | |||||||||||
The remaining volumes giving effect for the fixed amounts denoted above are as follows:
| Period | Volume (MMBtu) |
Fixed Basis Differential |
|||
| July through October 2011 | 1,476,000 | $ | 0.115 | ||
| November 2011 through March 2012 | 1,976,000 | $ | 0.130 | ||
| 3,452,000 | |||||
| GEOMET, INC. | |||||||||||||||
| RECONCILIATION OF ADJUSTED EBITDA TO NET INCOME (LOSS) | |||||||||||||||
| (In thousands) | |||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||
| June 30, | June 30, | ||||||||||||||
| 2011 | 2010 | 2011 | 2010 | ||||||||||||
| Net income (loss) | $ | 1,072 | $ | (1,762 | ) | $ | 1,523 | $ | 4,265 | ||||||
| Add: Interest expense, net of interest income and amounts capitalized | 820 | 1,419 | 1,655 | 2,637 | |||||||||||
| Add (Deduct): Other expense (income) | 8 | (1 | ) | 4 | 17 | ||||||||||
| Add (Deduct): Income tax expense (benefit) | 902 |
(1,031 |
) | 907 |
3,323 |
||||||||||
| Add: Depreciation, depletion and amortization |
1,622 |
1,450 |
3,255 |
3,096 |
|||||||||||
| (Deduct) Add: Unrealized (gains) losses on derivative contracts | (197 | ) | 2,974 | 2,653 | (4,668 | ) | |||||||||
| Add: Stock based compensation | 317 | 90 | 452 | 80 | |||||||||||
| Add: Accretion expense - asset retirement obligations | 136 | 121 | 271 | 241 | |||||||||||
| Adjusted EBITDA | $ | 4,680 | $ | 3,260 | $ | 10,720 | $ | 8,991 | |||||||
The table above reconciles Adjusted EBITDA to net income (loss). Adjusted EBITDA is defined as net income (loss) before net interest expense, other non-operating income, income taxes, depreciation, depletion and amortization before unrealized (gains) losses on derivative contracts, stock-based compensation and accretion expense. Although Adjusted EBITDA is not a measure of performance calculated in accordance with accounting principles generally accepted in the United States of America (GAAP), management believes that it is useful to GeoMet and to an investor in evaluating our company because it is a widely used measure to evaluate a company's operating performance.
| GEOMET, INC. | ||||||||||||||||
| RECONCILIATION OF ADJUSTED NET INCOME TO NET INCOME (LOSS) | ||||||||||||||||
| (In thousands) | ||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
| Net income (loss) | $ | 1,072 | $ | (1,762 | ) | $ | 1,523 | $ | 4,265 | |||||||
| Unrealized (gains) losses on derivative contracts, net of tax | (197 |
) | 2,974 |
2,653 |
(4,668 |
) | ||||||||||
| Terminated transaction costs | -- | 1,403 | -- | 1,403 | ||||||||||||
| Effect of income taxes | 75 | (1,672 | ) | (1,014 | ) | 1,247 | ||||||||||
| Adjusted Net Income | $ | 950 | $ | 943 | $ | 3,162 | $ | 2,247 | ||||||||
The table above reconciles Adjusted Net Income to net income (loss). Adjusted Net Income is calculated by eliminating unrealized (gains) losses on derivative contracts from net income (loss), terminated transaction costs, and their related tax effects to arrive at Adjusted Net Income. The tax effects are determined by calculating the tax provision for GAAP net income (loss) and comparing the results to the tax provision for Adjusted Net Income, which excludes the adjusting items. The difference in the tax provision calculations represents the effect of income taxes. The calculation is performed at the end of each quarter and, as a result, the tax rates for each discrete period are different. Although Adjusted Net Income is a non-GAAP measure, we believe it is useful information for investors because the unrealized (gains) losses relate to derivative contracts that hedge our production in future months. The gains associated with derivative contracts that hedge current production are recognized in net income (loss) and are not eliminated in determining Adjusted Net Income. The adjustment better matches (gains) losses on derivative contracts with the period when the underlying hedged production occurs.
| GEOMET, INC. | ||||||||||||
| RECONCILIATION OF ADJUSTED LEASE OPERATING EXPENSE | ||||||||||||
| (In thousands) | ||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||
| June 30, | June 30, | |||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||
| Lease operating expense | $ | 2,880 | $ | 2,813 | $ | 5,852 | $ | 5,920 | ||||
| Deduct: Produced water disposal fees | 73 | 71 | 146 | 145 | ||||||||
| Adjusted lease operating expense | $ | 2,807 | $ | 2,742 | $ | 5,706 | $ | 5,775 | ||||
The table above reconciles lease operating expense to adjusted lease operating expense. Adjusted lease operating expense is calculated by eliminating the produced water disposal fees from lease operating expense to arrive at adjusted lease operating expense. Although adjusted lease operating expense is a non-GAAP measure, we believe it is useful information for investors because produced water disposal fees are recorded as operating fees and other on the Statement of Operations. Lease operating costs per Mcf are adjusted for produced water disposal fees because the fees are not reflected in the net gas sales price. The adjustment better matches lease operating expense to the natural gas sales revenue with which it is associated.
Contact Information:
For more information please contact:
Stephen M. Smith
(713) 287-2251
www.geometinc.com