GeoMet Announces Fourth Quarter & Year-End 2007 Results

Business Wire, March 17, 2008

HOUSTON -- GeoMet, Inc. (NASDAQ:GMET) ("GeoMet" or the "Company") today announced financial and operating results for the fourth quarter and the year ended December 31, 2007.

Fourth Quarter 2007 Results

For the quarter ended December 31, 2007, GeoMet recorded net income of $1.6 million, or $0.04, per fully diluted share as compared to net income of $3.6 million, or $0.09, per fully diluted share for the same period in 2006. During both periods, net income was impacted by unrealized gains or losses from the change in the market value of its derivative contracts. In the current quarter, the Company experienced an unrealized loss from such derivative contracts of $0.76 million ($0.44 million after income taxes or $0.01 per fully diluted share) as compared to an unrealized gain $2.30 million ($1.86 million after income taxes or $0.05 per fully diluted share) for the same period in 2006.

EBITDA was $6.7 million for the quarter as compared to $7.4 million in the same period of 2006. Adjusted EBITDA for the quarter was $7.6 million compared to $5.1 million for the prior year period. EBITDA and Adjusted EBITDA are non-GAAP measures. See the accompanying table for reconciliations of net income to EBITDA and of EBITDA to Adjusted EBITDA.

Average net gas sales volumes for the quarter were 20.2 MMcf per day, a 7% increase from the fourth quarter of 2006. The average natural gas price, adjusted for realized hedging gains, was $7.80 per Mcf during the fourth quarter of 2007 versus $7.04 per Mcf for the same period in 2006. Excluding the impact of hedging, the average natural gas price during the quarter was $7.07 per Mcf as compared to the prior year period average of $6.64 per Mcf.

Capital expenditures for the quarter ended December 31, 2007 were $9.0 million, compared to $19.5 million for the same period in the prior year.

Year-End 2007 Results

For the year ended December 31, 2007, GeoMet recorded net income of $5.2 million, or $0.13, per fully diluted share as compared to net income of $17.3 million, or $0.48, per fully diluted share for the same period in 2006. During both periods, net income was impacted by unrealized gains or losses from the change in the market value of its derivative contracts. In the current year, the Company experienced an unrealized loss from such derivative contracts of $3.00 million ($1.88 million after income taxes or $0.05 per fully diluted share) as compared to an unrealized gain of $16.88 million ($10.37 million after income taxes or $0.29 per fully diluted share) for 2006.

EBITDA was $22.4 million for the year ended December 31, 2007 as compared to $39.1 million in the same period of 2006. Adjusted EBITDA for the year end was $26.1 million as compared to $22.8 million for the prior year period. EBITDA and Adjusted EBITDA are non-GAAP measures. See the accompanying table for reconciliations of net income to EBITDA and of EBITDA to Adjusted EBITDA.

Net gas sales volumes for the year ended 2007 averaged 19.5 MMcf per day, a 14% increase compared to 2006. The average natural gas price, adjusted for realized hedging gains, was $7.52 per Mcf during 2007 versus $7.37 per Mcf for 2006. Excluding the impact of hedging, the average natural gas price for 2007 decreased to $6.97 per Mcf as compared to the prior year period average of $7.19 per Mcf.

Capital expenditures for the year ended 2007 were $53.9 million, compared to $81.6 million for the prior year.

Commenting on the year just ended, Darby Sere, Chairman, President & Chief Executive Officer stated, "Although we faced several challenges in 2007, we never lost our focus. Our three-year finding and development cost for the period ended December 31, 2007 was $1.25 per Mcf, and our reserve replacement over the same period was 882%. In January, we announced year-end 2007 proved reserves of 350 Bcf, an increase of 8% over 2006, as detailed in a report prepared by DeGolyer & McNaughton ("D&M"), an independent petroleum engineering firm. Since the release of that information, D&M prepared a report which identified approximately 480 net additional unproved drilling locations in the Pond Creek, Gurnee and Lasher fields, assigning 189 Bcf of net probable reserves to these additional unproved drilling locations. In addition, considering the significant resource potential in our Peace River coalbed methane project in British Columbia and our Garden City Chattanooga Shale prospect in Alabama, I believe that we are in excellent position to continue significant growth in production, reserves and cash flows." Finding and development cost is a non-GAAP measure.

Disclosure Statements

Reserve Disclosure

The Securities and Exchange Commission ("SEC") permits oil and gas companies, in filings made with the SEC, to disclose only proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. GeoMet and the independent petroleum engineering firm that GeoMet engaged use the term "probable reserves" to describe volumes of reserves potentially recoverable through additional drilling that the SEC's guidelines do not allow to be included in filings with the SEC. These estimates are by their nature more speculative than estimates of proved reserves. All estimates of probable reserves in this news release have been prepared by an independent petroleum engineering firm.