GeoMet, Inc. (GMET) announced that it has executed an amendment to its bank credit agreement that extends the time available for the Company to cure the existing borrowing base deficiency.

A summary of the key terms of the amendment include:

• Borrowing Base - The borrowing base, currently set at $115 million, will continue to be determined periodically in accordance with the current terms of the credit agreement. Outstanding loans up to the amount of the borrowing base will be classified as the "Tranche A Loan," with any additional loans outstanding being classified as the "Tranche B Loan." Should a future determination of the borrowing base result in a deficiency exceeding $33.6 million, the Company has 30 days to repay such excess. The next borrowing base determination is scheduled to be completed in December of this year.

• Maturity Date of Credit Agreement - April 1, 2014

• Type of Credit Facility - The credit agreement will no longer provide for loans to be available on a revolving basis. As a result, the current outstanding loans, once repaid, may not be re-borrowed by the Company.

• Mandatory Payments - On the first business day following the 24th day of each month, the Company will reduce its loan in an amount equal to the sum of all amounts on deposit in the operating accounts maintained by the Company and any of its subsidiaries, except for (i) all outstanding checks or ACH payments and (ii) an amount equal to $1,000,000. Such loan reduction shall first be applied toward payment of the outstanding principal under the Tranche B Loan until repaid in full, and then toward payment of the outstanding principal under the Tranche A Loan.

• Interest Rates / Fees - The margin on Libor based loans will increase from 2.75% to 3.00% on the Tranche A Loan and to 5.00% on the Tranche B Loan. The existing unused commitment fee is being replaced with a fee equal to a percentage of the Tranche B Loan outstanding, with such fee being payable on December 1, 2012 and at the end of each 3 month period thereafter through December 1, 2013. This fee will be 0.75% on December 1, 2012 and will increase 0.25% each quarter to a maximum fee of 1.75% on December 1, 2013. In addition, a fee equal to 0.50% of the initial Tranche B Loan was paid by the Company upon closing of the amendment.

• Covenants - All financial covenants have been eliminated. The Company will be subject to a limitation on capital expenditures in 2012 and 2013 of $1,500,000 and $1,000,000, respectively. Also, the Tranche B Loan cannot increase as a result of a reduction in the borrowing base determination as of December 2012 by more than 50% of the aggregate principal payments made from the date of the amendment, or by more than 25% of the aggregate principal payments made since the prior determination for any reduction in any borrowing base determination thereafter.

• Maximum Loan Balance - Loans outstanding under the credit agreement may not exceed certain amounts over the remaining term of the credit agreement, commencing with a maximum loan balance of $146.2 million at September 30, 2012 and reducing as of the last day of each fiscal quarter through December 31, 2013, at which time the maximum loan balance may not exceed $129.0 million.

Commenting on the amendment, Bill Rankin, GeoMet's President and Chief Executive Officer, said, "We are pleased to have reached an agreement that provides time to rectify our current borrowing base deficiency which resulted from the severe and rapid decline in natural gas prices beginning late last year. We believe this agreement was possible due to the Company's current hedge position and the long life, shallow decline of our natural gas properties. This structure allows us to continue to operate our properties in a normal manner and to reduce the deficiency with our free cash flow. We believe the unresolved deficiency has been an impediment in our efforts to find a strategic alternative, and this agreement should be constructive in those efforts."