GeoResources completes the acquisition of additional working interests in the Giddings Field, Texas, and provided an operations update.

On May 29, 2009, but effective May 1, 2009, the Company closed the acquisition of undivided working interests in 68 producing wells located in the Giddings Field, Texas, from an affiliated partnership. In addition, the Company will immediately increase its sharing ratio in the partnership from 2% to 30%. GeoResources is the operator of the subject wells and the general partner of the affiliated partnership. Prior to the acquisition, GeoResources had direct working interests in the properties ranging from about 6.5% to 7.8%.

Now, its direct working interests in the producing wells will range from approximately 34% to 37%. The acquired direct working interests total an estimated 25 Bcfe of proved reserves, 88% natural gas and 73% developed, with daily production currently totaling 10,625 Mcf and 85 Bbls of associated liquids. In addition, the immediate increase in the Company's partnership sharing ratio to 30% amounts to approximately 13.2 Bcfe. Further, the Company's share of the partnership's daily production currently amounts to 5,618 Mcf and 45 Bbls of associated liquids. The net cash consideration for both the direct working interests and increased partnership interests was $48.4 million, prior to adjustments for post effective date net revenues. The Company will remain the general partner of the affiliated partnership and operator of the properties. The acquisition provides additional development opportunities and exposure to upside associated with the Eagleford Shale and other prospective targets.

The acquisition was funded with borrowings from the Company's Senior Secured Revolving Credit Facility. Borrowings for this acquisition and the recently announced acquisition in the Williston Basin totaled $58.0 million. In order to seek to maintain predictable cash flows and underwrite growth, commencing July 1, 2009, the Company entered into new commodity price hedges for 2009 and 2010. The quantities hedged are 1,080 Mmcf for the remaining six months of 2009 and 1,440 Mmcf for the calendar year 2010, both at a price of $5.155 per Mcf.

Tags: GeoResources