A&D Intelligence

While company after company cuts capex in the midst of the present financial storm and are thinking more about selling assets than buying them, GeoResources took a look at its balance sheet and decided, “Hey, we’ve got game.”

The company declared that it had no intentions of cutting its capital budget like so many others and that it could continue at its present burn from cash flow with oil at $50 a barrel and gas at $5 per Mcf. That said, GeoResources says the “rapid and steep reductions in commodity prices has made the acquisitions market more attractive and accordingly is increasing efforts to pursue asset or corporate acquisitions.”

Deal them in.

GeoResources states that acquisitions, “when favorably priced,” are an integral part of its business strategy and, as most of its acreage is already held by production, “drilling and development can be deferred if favorable acquisitions are located.” Sounds like a case of acquisitions over drillbit when assets go on sale.

The company is working with a $100-million borrowing base and believes it can acquire incremental capital through partnerships or corporate finance.

CEO Frank Lodzinski says, “In spite of the recent steep decline in commodity prices, we are forging ahead with our drilling programs and are continuing our plans. We expect to continue to develop our assets and expand our acreage and prospect inventory, particularly in this environment when many are cutting back and acreage and asset valuations are declining…Our borrowing capacity and access to additional capital can be used to fund acquisitions of acreage, producing assets or corporate entities, should attractive opportunities be located.”

Steve Toon, Editor, A&D Watch; The A&D Center, www.A-Dcenter.com; Contributing Editor, Oil and Gas Investor; www.OilandGasInvestor.com; stoon@hartenergy.com

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