HOUSTON, TX -- (Marketwire) -- 03/29/13 -- GeoMet, Inc. (OTCQB: GMET) (NASDAQ: GMETP) ("GeoMet" or the "Company") today announced its financial and operating results for the quarter and year ended December 31, 2012.
William C. Rankin, GeoMet's President and Chief Executive Officer, commented, "2012 was a challenging year for the Company. The precipitous and significant decline in both our realized natural gas prices and the forward curve for natural gas during the year put the Company under distress and had material adverse consequences on our business. Our borrowing base under our credit facility was reduced by more than a third resulting in a borrowing base deficiency requiring the credit facility to be restructured and substantially all subsequent cash flows dedicated to reducing the deficiency. Further, additional borrowings were prohibited and capital expenditures were significantly limited. The restructured credit facility expires on April 1, 2014. As a result, we were unable to drill new wells and our activities were primarily focused upon maintaining our production levels, reducing costs and seeking a solution to resolve the borrowing base deficiency under our credit facility." Mr. Rankin added, "We recently announced an initiative in this regard, an effort to sell all of our coalbed methane assets in Alabama."
Our audited financial statements for the fiscal year ended December 31, 2012 were prepared on a going concern basis in accordance with United States generally accepted accounting principles. The going concern basis of presentation assumes that we will continue in operation for the next twelve months and will be able to realize our assets and discharge our liabilities and commitments in the normal course of business and do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from our inability to continue as a going concern. Our credit facility matures on April 1, 2014. As a result, all borrowings under our credit facility will be classified as current on April 2, 2013. Our operating and capital plans for the next twelve months call for dedication of substantially all of our excess cash flow to the repayment of indebtedness and the possible sale of assets to reduce indebtedness, with the goal of eliminating our borrowing base deficiency, and refinancing our credit facility. Therefore, we concluded that due to the uncertainties surrounding our ability to sell assets at acceptable prices, to reduce our indebtedness to an amount less than the borrowing base and to refinance our credit facility before its maturity date, substantial doubt exists as to our ability to continue as a going concern. If we were unable to continue as a going concern, the values we receive for our assets on liquidation or dissolution could be significantly lower than the values reflected in our financial statements.
Fourth Quarter 2012 Financial and Operating Results
For the quarter ended December 31, 2012, GeoMet reported a net loss of $8.7 million. Included in the net loss was a $12.3 million impairment to the Company's gas properties and a $0.8 million asset impairment, offset by a $4.1 million gain on natural gas derivatives. For the quarter ended December 31, 2011, GeoMet reported a net loss of $1.1 million. Included in the net loss was a $7.9 million impairment to the Company's gas properties and $0.6 million in acquisition costs relating to the purchase of certain coalbed methane gas properties, offset by a $7.0 million gain on natural gas derivatives.
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