 Corporate Presentation September 2006 |
Issuer Free Writing Prospectus
Filed Pursuant To Rule 433
Registration Statement No. 333-131716
September 18, 2006
The issuer has filed a registration statement (including a prospectus) with the SEC for the offering to which this communication relates. Before you invest, you should read the prospectus in that registration statement and other documents the issuer has filed with the SEC for more complete information about the issuer and this offering. You may get these documents for free by visiting EDGAR on the SEC Web site at www.sec.gov. Alternatively, the issuer, any underwriter or any dealer participating in the offering will arrange to send you the prospectus if you request it by calling (713) 287 2261. The prospectus relating to this offering is available by clicking on the following link:
http://www.sec.gov/Archives/edgar/data/1352302/000119312506154235/ds1a. htm
 2 Forward Looking Statements This presentation includes forward-looking statements made in reliance on the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Words such as "believes," "anticipates," "expects," "intends,“ "targeted," and similar expressions, generally identify forward-looking statements and should be read carefully. These statements are based on GeoMet's current expectations and beliefs and are subject to a number of risks, uncertainties and assumptions that could cause actual results to differ materially from those described in the forward-looking statements. Risks, uncertainties and assumptions include (i) risks inherent in the exploration for and development and production of coalbed methane and in estimating reserves, (ii) the presence or recoverability of estimated reserves, (iii) the ability to replace reserves, (iv) unexpected future capital expenditures, (v) general economic conditions, (vi) gas price volatility, (vii) the success of our hedging and other risk management activities, (viii) competition, (ix) regulatory changes, (x) the ability of management to execute its plans to meet its goals, (xi) cost and availability of transportation to get our gas to market, and (xii) other factors discussed in GeoMet's filings with the United States Securities and Exchange Commission. GeoMet assumes no obligation to publicly update or revise any forward-looking statements contained in this presentation, whether as a result of new information, future events, or otherwise. |
 3 Corporate Highlights Coalbed Methane is Our Only Business • Experienced technical team of CBM professionals • Track record of success (Black Warrior, Raton, Central Appalachia and Cahaba
Basins) • Comparative advantage Characteristics of Coalbed Methane Availability of large scale, high-impact resource projects at attractive
costs • Attractive CBM operating profile – Low geologic risks – Low F&D costs – Low production costs – Long-lived reserves – Initially inclining production rates Positioned for Growth • 646 identified additional drilling locations (148 pud, 498 probable) • Increase in recovery factors • Exploration projects |
 4 Coalbed Methane – An Unconventional Resource Coalbeds exist over large geographic expanses Significant resource potential Low geologic and development risks (corehole drilling, gas desorption tests) Higher gas in place at shallow depths Incremental investment decisions drive down development and operating risk “Gas Manufacturing” business Large-scale projects Economies of scale drive down costs Long-lived reserves with low decline rates after initial production incline
Success is not dependent on identifying coals, but on optimizing production Technical issues require experienced personnel |
 Undeveloped Resources in Established Resource Plays ( As of June 30, 2006, except for reserve and production data) Peace River (British Columbia) 18,287 net CBM acres 3 coreholes drilled 3 test wells producing Houston, TX – Corporate Headquarters Birmingham, AL – Technical Headquarters Production and Development Area Exploration and Evaluation Area North Central Louisiana 119,244 net CBM acres 17 exploration / production wells drilled Cahaba (Alabama) 145 Bcf of estimated proved reserves (YE 05) 42,326 net CBM acres Est. current net sales of 6,300 Mcf/d 2006 capex of $45 MM to drill 75 wells 335 additional drill sites Appalachia (Virginia/West Virginia) 114 Bcf of estimated proved reserves (YE 05) 55,631 net CBM acres Est. current net sales of 11,300 Mcf/d 2006 capex of $20 MM to drill 40 wells 311 additional drill sites 5 |
 6 Resource Plays with Significant Upside (1) Based on the December 31, 2005 reserve report prepared by DeGolyer and MacNaughton,
independent petroleum engineers. (2) The PV-10 was calculated using a flat gas price of $9.66 per Mcf. (3) Net productive wells in developing projects Proved Reserves at (12/31/05) Drilling and Acreage Inventory at (6/30/06) Proved Proved Developed Percent PV-10 (2) (MMcf) (MMcf) Developed ($MM) Appalachia: Pond Creek 114,458 79,864 70% 366 $ Alabama: Gurnee Field (Cahaba Basin) 145,062 112,517 78% 497 Other 2,991 2,758 92% 17 Total 262,511 195,139 74% 880 $ NOTE: R/P - 39.7 years (8.4 year half life) Estimated Proved Reserves (1) Field Net Additional Productive Drilling Basin Wells (3) Locations Total Developed Undeveloped Appalachia 178 311 55,631 12,659 42,972 Cahaba 176 335 42,326 11,000 31,326 North Central Louisiana - - 119,244 - 119,244 British Columbia - - 18,287 - 18,287 Piceance - - 16,949 - 16,949 Other (United States) - - 13,880 - 13,880 Total 354 646 266,317 23,659 242,658 Estimated Net CBM Acres |
 7 Track Record of Growth Daily Sales Proved Reserves (2) Capital Expenditures (2) Net Wells Drilled (2) (1) Excludes $27 million for acquisition of producing properties in Pond Creek. (2) Proved reserves, capital expenditures and net wells drilled include White Oak Creek
Field working interest, sold in 2004. (1) E E 5,837 6,806 8,709 2,024 3,246 7,226 12,585 3,813 3,560 1,483 15,721 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 2002 2003 2004 2005 1H 2006 Other Sales Production Sold in 2004 17 36 104 210 263 0 50 100 150 200 250 300 2001 2002 2003 2004 2005 $13 $36 $59 $59 $90 0 20 40 60 80 100 2002 2003 2004 2005 2006 12 63 92 98 125 0 20 40 60 80 100 120 140 2002 2003 2004 2005 2006 |
 8 Project Inventory Lifecycle GeoMet has a deep inventory of resource play development projects at all stages of the
asset lifecycle EARLY STAGE MATURE Exploration / Evaluation Development / Production HIGHER RISK LOWER RISK Emerging Projects North Central Louisiana Lasher Peace River Cahaba / Pond Creek Increased Density Drilling Cahaba Pond Creek White Oak Creek Mature Production |
 Development Projects |
       10 Cahaba Project (Gurnee Field) A Significant Development Opportunity Other Operators Water Discharge Pipeline SONAT Interstate Pipeline SONAT Bessemer Calera Pipeline GeoMet12”High Pressure Pipeline Black Warrior Methane El Paso Energen Energen Constellation Dominion Resources El Paso White Oak Creek Dominion Resources GeoMetInc. Projects N 0 4 8 Miles Black Warrior Basin Cahaba Basin GeoMet Cahaba Operations Black Warrior River Cahaba River Other Operators Water Discharge Pipeline SONAT Interstate Pipeline SONAT Bessemer Calera Pipeline GeoMet12”High Pressure Pipeline Black Warrior Methane El Paso Energen Energen Constellation Dominion Resources El Paso White Oak Creek Dominion Resources GeoMetInc. Projects N 0 4 8 Miles Black Warrior Basin Cahaba Basin GeoMet Cahaba Operations Black Warrior River Cahaba River Southeast of Black Warrior Basin with thicker coal seams and similar gas content Pennsylvanian Age Pottsville coals (same as Warrior Basin) Twice average coal thickness (50 feet) / twice average resource in place 42,326 net acres under lease Operator - GeoMet – 100% WI Other operators in the basin - CDX |
 11 Cahaba Project (Gurnee Field) Project Profile First gas sales in January 2004 Full scale development commenced March 2005 after completion of 38.5 mile water disposal pipeline to Black Warrior River 145 Bcf of estimated proved reserves (Recovery factor approximately 55%) at YE 05 31 coreholes and 540 gas desorption tests allows for accurate estimate of gas in place Estimated current net sales – 6,300 Mcf /day 176 wells drilled with 335 additional undrilled locations remaining 9.2 mile (expanding to 17 mile) 12-inch high- pressure steel pipeline interconnecting with Sonat Projected 2006 capex – Approximately $45 MM (75 wells, including 10 infill wells) Approximately 100 new wells each year starting in 2007 -Compressor Sites - Well Locations - Drilled Coreholes GeoMet, Inc. - Potential Drill Locations - Proved Developed - Proved Undeveloped 0 2 mi. 1 mi. - Sonat Gas Line - High Pressure Line - Water Disposal Line 38.5 mile water discharge line to Black Warrior River 12” High Pressure Pipeline Compressor Sites Cahaba River |
 12 0 1000 2000 3000 4000 5000 6000 7000 8000 0 2000 4000 6000 8000 10000 12000 14000 16000 18000 20000 GeoMet Daily Gas Sales Daily Water Production Cahaba Project (Gurnee field) Increasing Daily Sales 144A Roadshow Completion of water discharge pipeline IPO Roadshow |
           13 CDX Wise Scott 0 10 Miles 20 GeoMet Operations Other Operations Cardinal II Pipeline Columbia KA -20 Pipeline N Equitable Resources Dickinson CNX Gas Buchanan McDowell Wyoming Raleigh GeoMet Pond Creek Project Penn Virginia Lasher Prospect CDX Wise Scott 0 10 Miles 20 0 10 Miles 20 GeoMet Operations Other Operations Cardinal II Pipeline Columbia KA -20 Pipeline N N Equitable Resources Dickinson CNX Gas Buchanan McDowell Wyoming Raleigh GeoMet Pond Creek Project Penn Virginia Lasher Prospect Pond Creek Project West Virginia, Virginia border Pennsylvanian Age Pottsville coals Coal thickness ranges from 10 – 30 feet 34,982 net acres under lease Operator - GeoMet – 100% WI Other operators in the basin – CNX Gas, Equitable Resources, Penn Virginia, and CDX Lasher Prospect Additional development project 16,548 net acres under lease 2 test wells drilled 4 coreholes drilled |
 14 Pond Creek Project Project Profile First gas sales – February 2003 114 Bcf of estimated proved reserves (Recovery factor approximately 64%) at YE 05 12 coreholes and 205 gas desorption tests allow for accurate estimate of gas in place Estimated current net sales – 11,300 Mcf / day 178 wells drilled with 311 additional undrilled locations Projected 2006 capex – Approximately $26 MM (includes 40 wells and $5.5 MM for pipeline) Approximately 40 new wells each year Scale 0 2mi 1mi - Compressor Sites - Well Sites - Drilled Coreholes GeoMet, Inc. - Potential Drill Loactions - Proved Developed - Shut In Wells - Proved Undeveloped ABANDONED MINES ABANDONED MINES - Pipelines Compressor Sites Cardinal States Gathering Cardinal II Pipeline |
 15 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 11,000 12,000 13,000 14,000 15,000 Feb-03 Apr-03 Jul-03 Sep-03 Dec-03 Mar-04 May-04 Aug-04 Nov-04 Jan-05 Apr-05 Jun-05 Sep-05 Dec-05 Feb-06 May-06 Aug-06 0 25 50 75 100 125 150 175 200 225 250 275 300 Pond Creek Project Increasing Daily Sales 144A Roadshow IPO Roadshow GeoMet Daily Gas Sales Well Count |
 Exploration and Evaluation Properties |
 17 36,573 gross acres (18,287 net acres) in northeastern British Columbia, approximately 60 miles from Fort St. John Cretaceous Age Gething coals Net coal thickness greater than existing development projects Depths from 1,000 to 3,000 feet High gas contents 100 MMcf/d of available pipeline capacity within 3 miles GeoMet operates with a 50% working interest Attractive royalty incentive package for CBM development Deductions for gas & water gathering and water disposal $50,000 royalty credit for wells drilled before 2008 A summer drilling royalty credit of 10% of capital well cost up to $100,000 per well Expected royalty rate < 10% No severance tax Peace River Prospect Project Profile British Columbia Fort St. John |
 18 Prior Activity (6/30/06): Drilled 3 coreholes Drilled 2 pilot wells - producing Recompleted 1 existing well - producing Recompleted and tested water disposal well Estimated investment as of 6/30/06 - $8.6 MM Additional 2006 Activity: Drilling 4 production test wells Drill 1 water disposal well Projected 2H 2006 capex - $4.4 MM (net) Seek to expand acreage position (acquired an additional 3,573 gross acres in May) Peace River Prospect Project Profile 0 1 km 2 km 6/20/2006 Date: GeoMet, Inc. - Producing - Corehole - Salt Water Disposal Well Hudson's Hope New Acreage ? |
 19 Winn, LaSalle and Caldwell Parishes 119,244 net acres Coals of lignite and sub-bituminous rank The coals are a member of the Wilcox Formation which includes sands, shales and siltstones 17 test wells and 60 gas desorption tests allow for accurate estimate of gas in place Redrilled two original test wells Other operators in the area: Devon, Chesapeake, Harvest Gas and Spooner Technical difficulties related to zonal isolation and water encroachment Other Exploration & Evaluation Prospects North Central Louisiana Cameo Prospect Mesa County, Colorado (Piceance Basin) 14,600 net acres in the southwestern portion of the basin Drilled 1 core hole and conducted gas desorption tests The gas content and coal thickness are favorable for CBM development Pursuing opportunities to increase our acreage position in this area |
 Summary Financial Information |
 21 Strong Financial Profile Growing production and cash flow Growing reserve and resource base Low finding and development costs Declining unit operating costs Solid balance sheet Stockholder’s equity increased $107 MM in first half 2006 (proforma) Five year credit facility, $150 MM borrowing base Favorable hedging position Management team has significant public company experience Savvy financial sponsor (Yorktown Partners, LLC) |
 22 Low Finding and Development Costs (1) Finding and development costs include total capital expenditures for exploration, development and acquisition of proved reserves including the net change for the period in both future development costs and the carrying value of unproved properties. (2) Reserve additions for the period used to compute finding and development costs have been estimated by independent petroleum engineers and adjusted for revisions to previous estimates. (3) Data from J.S. Herold Database. Includes a broad universe of Large-Cap, Mid-Cap and Small-Cap E&P companies. 3 Year Average (including future development costs) (1) (2) Cahaba Project (Gurnee Field) $0.86 per Mcf Pond Creek Project (Pond Creek Field) $0.98 per Mcf Combined $0.95 per Mcf 3 Year Average (excluding future development costs) GeoMet $0.74 per Mcf E&P Composite Index (3) $2.47 per Mcf |
 23 Prototypical CBM Field Inclining Production / Declining Unit Costs Source: Actual historical performance of a Black Warrior Basin project. Early Stage Intermediate Stage Mature Stage 0 250 500 750 1,000 1,250 1,500 1,750 2,000 2,250 $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 $4.00 $4.50 $5.00 $5.50 Gas Water Wells LOE |
 24 Pro Forma Capitalization (1) 5,750,000 share offering at $10 per share (net of underwriting discount and expenses
estimated at $850,000). (2) Long-term debt at 6/30/06 includes $73,000,000 of bank debt.. (3) Proved reserves at 12/31/05 of 262.5 Bcf ($ in thousands) Actual Proforma (1) Cash 983 $
983 $
Long-Term Debt (2) 73,862 $ 21,237 $ Stockholders' Equity 149,616 $ 202,241 $ Total Capitalization 223,478 $ 223,478 $ Bank Debt / Capitalization 33% 10% Bank Debt / Proved Mcf (3) 0.28 $ $0.09 June 30, |
 25 Natural Gas Production Hedges (1) Protection is the difference between the floor price and the point where the floor
price phases out. It remains a constant premium as prices continue to decline. Hedge Quantity Three Way Collars MMBtu Cap Floor Protection (1) Summer 2006 (Jul – Oct) Winter 2006 / 2007 Summer 2007 Winter 2007 / 2008 Summer 2008 1,476,000 1,510,000 1,712,000 1,216,000 1,712,000 8.49 11.02 10.50 14.80 10.50 $ $ $ $ $ 7.00 8.20 7.38 9.00 7.00 $ $ $ $ $ 1.12 1.50 1.63 3.00 2.00 $ $ $ $ $ Weighted Average Price / MMBtu |
 26 Corporate Highlights Coalbed Methane is Our Only Business • Experienced technical team of CBM professionals • Track record of success (Black Warrior, Raton, Central Appalachia and Cahaba
Basins) • Comparative advantage Characteristics of Coalbed Methane Availability of large scale, high-impact resource projects at attractive
costs • Attractive CBM operating profile – Low geologic risks – Low F&D costs – Low production costs – Long-lived reserves – Initially inclining production rates Positioned for Growth • 646 identified additional drilling locations (148 pud, 498 probable) • Increase in recovery factors • Exploration projects |
 Appendix |
 28 Proven Management Team J. Darby Seré – President and Chief Executive Officer • 35 years of oil and gas experience including 17 years as CEO of 2 publicly traded
companies • Former President and CEO of Bellwether Exploration Company • Former President and CEO of Bayou Resources, Inc. William C. Rankin – Executive Vice President and Chief Financial Officer • 35 years of experience including 29 years as financial officer with publicly and
privately owned energy companies • Former CFO of Bellwether Exploration Company • Former CFO of Contour Energy Company • Former CFO of Hadson Energy Resources Corporation Philip G. Malone – Senior Vice President of Exploration • Founder of GeoMet • 31 years of experience as a CBM / Coal geologist • Former chief geologist at USX Corporation • Recognized worldwide author and speaker on coalbed methane Brett S. Camp – Senior Vice President of Operations • Founder of GeoMet • 25 years of experience as a CBM / Coal geologist at USX and GeoMet • 17 years of experience managing CBM development projects |
 29 Three gas fired reciprocating compressors are currently in service Current capacity is approximately 12.6 MMcf / d Fourth compressor to be added in late 2006 38.5 Mile Water Pipeline from Cahaba to the Black Warrior River Design Capacity – 45,000 barrels per day Two Water Treatment Ponds at the Cahaba Project – 36,000 barrels/each One Water Discharge Pond at the Black Warrior River – 18,000 barrels Water Gathering Lines - 76 miles of high density polyethylene ranging from 2 to 8 inches in diameter 9 mile 12-inch high-pressure steel pipeline interconnecting with Sonat Re-activating and extending an additional 8 miles in 2006 72 miles of high density polyethylene low pressure pipeline ranging from 3 to 12 inches in diameter Cahaba Project (Gurnee Field) Facilities Overview Compression Water Treatment Pipeline |
 30 Water Gathering Lines • 93 miles of high density polyethylene ranging from 2 to 3 inches in diameter • 6,000 barrels of brine water storage capacity connected to water gathering lines One salt water disposal facility with capacity of 1,440 barrels per day High pressure • 6 miles of 6 inch diameter Low Pressure • 90 miles of high density polyethylene ranging from 3 to 16 inches in diameter Four gas fired reciprocating compressors are in service at Pond Creek #1 compressor station totaling 5,000 HP One electric compressor at Pond Creek #2 compressor station totaling 1,250 HP Current capacity of these five units is approximately 16 MMcf / d Second electric compressor to be added late 2006 Pond Creek Project Facilities Overview Compression Water Treatment Pipeline |