GeoResources, Inc. Reports Second Quarter Financial Results and Provides an Operational Update

GeoResources, Inc. (NASDAQ: GEOI), today announced its financial and operating results for the three and six month periods ended June 30, 2011. Highlights for the second quarter 2011 include:

• Initiated successful commercial production operations on its first three wells in its Eagle Ford project area in Fayette County, Texas
• Continued the successful development and de-risking of its Bakken operated project area in Williams County, North Dakota with the completion of the Muller 1-21-16H
• Generated Adjusted EBITDAX⁽¹⁾ (non-GAAP) of $20.1 million in the quarter, a 21% increase over the second quarter 2010 and a 11% increase over the first quarter 2011
• Generated Adjusted Net Income⁽¹⁾ (non-GAAP) of $7.9 million in the quarter, a 29% increase over the second quarter 2010 and a 9% increase over the first quarter 2011
• Generated Diluted Adjusted Earnings Per Share⁽¹⁾ (non-GAAP) of $0.31/share for the quarter
• Ended the quarter with $193 million in Liquidity⁽¹⁾ (non-GAAP)

(1) See calculation in section titled "Supplemental Non-GAAP Reconciliations and Measurements” in this release.

The following tables summarize the company’s financial results for the three and six month periods ending June 30, 2011 and June 30, 2010.

(1) See calculation in section titled Supplemental Non-GAAP Reconciliations and Measurements in this release.

Operational Update

Eagle Ford
GeoResources recently completed its third well in its Eagle Ford project area, the Black Jack Springs #1H (44.1% working interest ("W.I.”)). This well was drilled with a 5,900 foot lateral and was completed with 16 frac stages. This well averaged 460 boe/d of production over an initial 10 day period while being produced on a restricted choke of 14/64” to 16/64”. The Black Jack Springs well is located further northeast in the Company’s acreage block and therefore further de-risks the Company’s Eagle Ford acreage. The table below summarizes the production data through early August from the Company’s first three Eagle Ford wells which are still flowing up the production casing.

(1) Excludes non-producing days and initial "flow-back" days when well was cleaning up and producing frac fluid.
(2) Represents average daily rate for first 22 days of production.

GeoResources is currently preparing to drill its fourth Eagle Ford well in Fayette County, the Peebles Unit #1H (39.8% W.I.), which is anticipated to have an approximate 5,000 foot lateral. The Company has identified a second rig for its Eagle Ford project and this rig could begin drilling operations early in the fourth quarter.

Operated Bakken
The Company’s most recently completed well on its operated Bakken acreage block in Williams County, North Dakota, the Muller 1-21-16H (31.1% W.I.), had an initial 24 hour production rate of 682 bopd and 260 mcf/d on a 40/64” choke. This well is located in the northwest portion of the block and was completed in mid-July. This well was drilled with a vertical pilot hole that cored the Bakken and Three Forks formations and was put on production within 75 days. The table below summarizes the production data through early August from GeoResources’ first four wells in its operated Bakken project area. As of early August, the Carlson and Siirtola wells were on rod pump while the Anderson and Muller wells were still flowing.

(1) Excludes non-producing days and initial "flow-back" days when well was cleaning up and producing frac fluid.
(2) Represents average daily rate for first 12 days of production.

Earlier this summer, the Company contracted a second dedicated drilling rig in this play, which recently completed drilling the Rasmussen 1-21-16H (30.9% W.I.). GeoResources also recently completed drilling the Rasmussen 1-25-36H (39.5% W.I.) and is preparing to frac both of these Rasmussen wells in late August with production expected to commence in September. One rig is preparing to move to the Peterson Trust 1-5-8H (31.6% W.I.), while the other rig has been moved to Montana to complete drilling operations on the Olson 1-21-16H well (27.0% W.I.). After drilling the Olson well, this rig is expected to move back to Williams County at which time the Company will have two rigs running in Williams County for the remainder of 2011 and into 2012. The Company is also planning to add additional rigs to accelerate development of its Bakken acreage position in 2012.

Other Drilling Activity
In relation to the Company’s previously announced discovery well at Quarantine Bay, Louisiana (22.0% non-op working interest), GeoResources’ partner is finalizing pipeline right-of-way and facility enhancements. This well is anticipated to be on production in late August. GeoResources also completed drilling the West Cannon Unit #1H Austin Chalk well in the Giddings field in early August in which it has a 48.5% working interest. We expect this well to begin producing by mid-August.

Unaudited Financial Statements

Supplemental Non-GAAP Reconciliations and Measurements

Adjusted Net Income
The following tables reconcile reported net income to adjusted net income for the periods indicated (in thousands):

Adjusted EBITDAX
The following tables reconcile reported net income to Adjusted EBITDAX for the periods indicated (in thousands):

(1) As used herein, Adjusted EBITDAX is calculated as net income attributable to GeoResources, Inc. before interest, income taxes, depreciation, depletion and amortization, and exploration expense and further excludes non-cash compensation, impairments, hedge ineffectiveness and income or loss on derivative contracts. Adjusted EBITDAX should not be considered as an alternative to net income (as an indicator of operating performance) or as an alternative to cash flow (as a measure of liquidity or ability to service debt obligations) and is not in accordance with, nor superior to, generally accepted accounting principles, but provides additional information for evaluation of our operating performance.

Liquidity
Liquidity is calculated by adding the net funds available under our credit facility to our cash and cash equivalents. We use liquidity as an indicator, along with our ongoing cash flow, of our ability to satisfy our future capital expenditures.

The table below summarizes our liquidity position at June 30, 2011 and December 31, 2010.

(1) Liquidity can vary from period to period for GeoResources, Inc. and can vary among companies as to what is or is not included in liquidity. This measurement should not be considered as an alternative to net income (as an indicator of operating performance) or as an alternative to cash flow (as a measure of liquidity or ability to service debt obligations) and is not in accordance with, nor superior to, generally accepted accounting principles, but provides additional information for evaluation of our operating performance.

About GeoResources, Inc.
GeoResources, Inc. is an independent oil and gas company engaged in the development and acquisition of oil and gas reserves through an active and diversified program that includes the acquisition, drilling and development of undeveloped leases, purchases of reserves and exploration activities, currently focused in the Southwest, Gulf Coast, and the Williston Basin. For more information, visit our website at www.georesourcesinc.com.

Cautionary Note Regarding Forward-Looking Statements
This release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which are subject to risks and uncertainties. The forward-looking statements, which address the GeoResources’ expected business and financial performance, among other matters, contain words such as "believe,” "expect,” "estimate,” "anticipate,” "optimistic,” "intend,” "plan,” "aim,” "will,” "may,” "should,” "could,” "would,” "likely,” "continue,” and similar expressions. Examples of forward-looking statements, include, but are not limited to: (i) changes in production volumes and prices, future production and development costs, (ii) projections of capital expenditures, revenues, income or loss, earnings or loss per share, capital structure, and other financial items, (iii) statements of our plans and objectives of our management or board of directors including those relating to planned development of our oil and gas properties, (iv) statements of future economic performance and (v) statements of assumptions underlying such statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. GeoResources undertakes no obligation to update or revise any forward-looking statements.

A further description of these uncertainties and other risks can be found in the GeoResources Annual Report on Form 10-K for the year ended December 31, 2010 and other reports filed by GeoResources with the SEC.