UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 10-QSB





(X)  Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2004.



(  )  Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from __________ to __________.



Commission File Number  0-8041





GeoResources, Inc.

(Exact name of small business issuer as specified in its charter)





|Colorado                                                       |  | 84-0505444                         
|-------------------------------------------------------------- |  | -----------------------------------
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S.Employer Identification No.)
|                                                              
|1407 West Dakota Parkway,  Suite 1-B,  Williston,  ND 58801   
|(Address of principal executive offices)                      
|                                                              
|Issuers telephone number:  (701) 572-2020                    



_____________________________________________________________________



CHECK WHETHER THE ISSUER (1) HAS FILED ALL REPORTS REQUIRED TO BE FILED BY SECTION 13 OR 15(d) OF THE EXCHANGE ACT DURING THE PAST 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS.



YES [X]          NO [   ] .



_____________________________________________________________________



State the number of shares outstanding of each of the issuers classes of common stock, as of the latest practicable date.





|Class                                  |                  | Outstanding at November 12, 2004
|-------------------------------------- | ---------------- | --------------------------------
|Common Stock, par value $.01 per share | 3,723,977 shares



_____________________________________________________________________



Transitional Small Business Disclosure Format (check one):  YES  [   ]    NO  [X] .







-#-





GEORESOURCES, INC.

INDEX







PAGE

NUMBER

PART I.

FINANCIAL INFORMATION



Item 1.

Financial Statements



Consolidated Balance Sheets

3

(September 30, 2004, and December 31, 2003)



Consolidated Statements of Operations

4

(Three months ended September 30, 2004, and 2003

and nine months ended September 30, 2004, and 2003)



Consolidated Statements of Cash Flows

5

(Nine months ended September 30, 2004, and 2003)



Notes to Consolidated Financial Statements

6



Item 2.

Management's Discussion and Analysis or Plan of Operation

7



Item 3.

Controls and Procedures

11



PART II.

OTHER INFORMATION

12



--#--





PART I.  FINANCIAL INFORMATION

ITEM 1.  Financial Statements

GEORESOURCES, INC., AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)







|                                                | September 30, |  | December 31,
|----------------------------------------------- | ------------- |  | ------------
|                                                | 2004          |  | 2003        
|ASSETS                                          |               |  |             
|CURRENT ASSETS:                                 |               |  |             
|Cash and equivalents                            | $
467,480     |  | $
343,419   
|Trade receivables, net                          | 1,005,232     |  | 1,084,678   
|Inventories                                     | 299,719       |  | 233,306     
|Prepaid expenses                                | 33,943        |  | 35,335      
|Total current assets                            | 1,806,374     |  | 1,696,738   
|PROPERTY, PLANT AND EQUIPMENT, at cost:         |               |  |             
|Oil and gas properties, using the               |               |  |             
|full cost method of accounting:                 |               |  |             
|Properties being amortized                      | 25,413,647    |  | 24,711,298  
|Properties not subject to amortization          | 297,941       |  | 280,565     
|Drilling rig and equipment                      | 1,385,946     |  | 1,176,940   
|Leonardite plant and equipment                  | 3,265,293     |  | 3,267,634   
|Other                                           | 744,628       |  | 756,211     
|                                                | 31,107,455    |  | 30,192,648  
|Less accumulated depreciation, depletion        |               |  |             
|amortization and impairment                     | (20,863,726)  |  | (20,310,113)
|Net property, plant and equipment               | 10,243,729    |  | 9,882,535   
|                                                |               |  |             
|OTHER ASSETS                                    | 17,500        |  | 5,000       
|TOTAL ASSETS                                    | $
12,067,603  |  | $
11,584,273
|                                                |               |  |             
|LIABILITIES AND STOCKHOLDERS' EQUITY            |               |  |             
|CURRENT LIABILITIES:                            |               |  |             
|Accounts payable                                | $
898,019     |  | $
985,766   
|Accrued expenses                                | 319,885       |  | 404,485     
|Current maturities of long-term debt            | 520,009       |  | 479,457     
|Total current liabilities                       | 1,737,913     |  | 1,869,708   
|LONG-TERM DEBT, less current maturities         | 1,335,417     |  | 1,599,479   
|ASSET RETIREMENT OBLIGATION                     | 1,800,000     |  | 1,735,200   
|DEFERRED INCOME TAXES                           | 484,000       |  | 406,000     
|Total liabilities                               | 5,357,330     |  | 5,610,387   
|STOCKHOLDERS' EQUITY:                           |               |  |             
|Common stock, par value $.01 per share;         |               |  |             
|authorized 10,000,000 shares;                   |               |  |             
|issued and outstanding 3,723,977                |               |  |             
|and 3,723,977 shares, respectively              | 37,240        |  | 37,240      
|Additional paid-in capital                      | 295,932       |  | 295,932     
|Retained earnings                               | 6,377,101     |  | 5,640,714   
|Total stockholders' equity                      | 6,710,273     |  | 5,973,886   
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY      | $
12,067,603  |  | $
11,584,273
|                                                |               |  |             
|See Notes to Consolidated Financial Statements. |               |  |             

--#--





GEORESOURCES, INC., AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)







|                                                               | Three Months Ended
September 30, |  | Nine Months Ended
September 30,
|-------------------------------------------------------------- | -------------------------------- |  | -------------------------------
|                                                              
|                                                               | 2004                             |  | 2003                           
|OPERATING REVENUES:                                            |                                  |  |                                
|Oil and gas sales                                              | $
1,206,352                      |  | $
878,889                      
|Leonardite sales                                               | 297,537                          |  | 181,840                        
|Drilling revenue                                               | 302,778                          |  | 206,787                        
|                                                               |                                  |  |                                
|                                                               | 1,806,667                        |  | 1,267,516                      
|                                                               |                                  |  |                                
|OPERATING COSTS AND EXPENSES:                                  |                                  |  |                                
|Oil and gas production                                         | 500,224                          |  | 426,967                        
|Cost of leonardite sold                                        | 234,363                          |  | 185,121                        
|Drilling costs                                                 | 250,380                          |  | 118,702                        
|Depreciation and depletion                                     | 208,400                          |  | 219,164                        
|Selling, general and administrative                            | 128,637                          |  | 109,531                        
|                                                               |                                  |  |                                
|                                                               | 1,322,004                        |  | 1,059,485                      
|                                                               |                                  |  |                                
|Operating income                                               | 484,663                          |  | 208,031                        
|                                                               |                                  |  |                                
|OTHER INCOME (EXPENSE):                                        |                                  |  |                                
|Interest expense                                               | (21,991)                         |  | (21,837)                       
|Other income, net                                              | 5,256                            |  | 3,959                          
|                                                               |                                  |  |                                
|                                                               | (16,735)                         |  | (17,878)                       
|                                                               |                                  |  |                                
|Income before income taxes                                     | 467,928                          |  | 190,153                        
|                                                               |                                  |  |                                
|Income tax expense                                             | 49,000                           |  | 19,000                         
|                                                               |                                  |  |                                
|Income before cumulative
effect of change in                   |                                  |  |                                
|accounting principle                                           | 418,928                          |  | 171,153                        
|                                                               |                                  |  |                                
|Cumulative effect on prior years
accounting change, net of tax | --                               |  | --                             
|                                                               |                                  |  |                                
|Net income                                                     | $
418,928                        |  | $
171,153                      
|                                                               |                                  |  |                                
|EARNINGS PER SHARE:                                            |                                  |  |                                
|                                                               |                                  |  |                                
|Income before cumulative effect of
accounting change           | $
.11                            |  | $
.05                          
|Cumulative effect of accounting change                         | --                               |  | --                             
|                                                               |                                  |  |                                
|Net income, basic and diluted                                  | $
.11                            |  | $
.05                          
|                                                               |                                  |  |                                
|                                                              
|See Notes to Consolidated Financial Statements.               



--#--





GEORESOURCES, INC., AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)











|                                                  | Nine Months Ended
September 30,
|------------------------------------------------- | -------------------------------
|                                                  | 2004                           
|CASH FLOWS FROM OPERATING ACTIVITIES:             |                                
|Net income                                        | $
736,387                      
|Adjustments to reconcile net income               |                                
|to net cash provided by operating activities:     |                                
|Depreciation and depletion                        | 571,368                        
|Cumulative effect of accounting change            | --                             
|Accretion of asset retirement obligation          | 62,800                         
|Deferred income taxes                             | 78,000                         
|Other                                             | 2,500                          
|Changes in assets and liabilities:                |                                
|Decrease (increase) in:                           |                                
|Trade receivables                                 | 79,446                         
|Inventories                                       | (66,413)                       
|Income tax receivable                             | --                             
|Prepaid expenses and other                        | 1,392                          
|Increase (decrease) in:                           |                                
|Accounts payable                                  | 3,279                          
|Accrued expenses                                  | (84,600)                       
|                                                  |                                
|Net cash provided by operating activities         | 1,384,159                      
|                                                  |                                
|CASH FLOWS FROM INVESTING ACTIVITIES:             |                                
|Additions to property, plant and equipment        | (1,021,588)                    
|                                                  |                                
|Net cash used in investing activities             | (1,021,588)                    
|                                                  |                                
|CASH FLOWS FROM FINANCING ACTIVITIES:             |                                
|Debt issue costs                                  | (15,000)                       
|Proceeds from long-term borrowings                | 125,000                        
|Principal payments on long-term debt              | (348,510)                      
|Cost to purchase common stock                     | --                             
|                                                  |                                
|Net cash used in financing activities             | (238,510)                      
|                                                  |                                
|NET INCREASE IN CASH AND EQUIVALENTS              | 124,061                        
|                                                  |                                
|CASH AND EQUIVALENTS, beginning of period         | 343,419                        
|                                                  |                                
|CASH AND EQUIVALENTS, end of period               | $
467,480                      
|                                                  |                                
|SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION: |                                
|Cash paid for:                                    |                                
|Interest                                          | $
60,617                       
|Income taxes                                      | 1,104                          
|See Notes to Consolidated Financial Statements.   |                                



--#--





GEORESOURCES, INC., AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)







1.

In our opinion, the accompanying unaudited financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly our financial position as of September 30, 2004, and the results of operations and cash flows for the three months and nine months ended September 30, 2004, and 2003.



The results of operations for the period ended September 30, 2004, are not necessarily indicative of the results to be expected for the full fiscal year.



Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. Therefore, it is suggested that these financial statements be read in connection with the audited consolidated financial statements and the notes included in our Annual Report on Form 10-KSB for the Year Ended December 31, 2003.



2.

Certain accounts in the prior-year financial statements have been reclassified for comparative purposes to conform with the presentation in the current-year financial statements.



3.

We assess performance and allocate resources based upon our products and services, which consist principally of:  A) oil and gas exploration, development and production; B) mining and processing of leonardite; and C) oil and gas drilling.  All operations are conducted within the United States.  Sales and other material transactions between the segments have been eliminated.  Certain corporate costs, assets and capital expenditures that are considered to benefit the entire organization are not allocated to our operating segments.  Interest income, interest expense and income taxes are also not allocated to operating segments.  There are no significant accounting differences between internal segment reporting and consolidated external reporting.



Presented below are our identifiable net assets as of the date indicated:



|                             |              | September 30,
2004 |  | December 31,
2003
|---------------------------- | ------------ | ------------------ |  | -----------------
|Oil and gas                  | $
8,975,002  | $
8,576,643       
|Leonardite                   | 769,594      | 848,705           
|Drilling                     | 1,460,874    | 1,362,538         
|General corporate activities | 862,133      | 796,387           
|                             | $
12,067,603 | $
11,584,273      



Presented below is information concerning our operating segments for the periods indicated:



|            | Three months ended September 30, |  | Nine Months Ended September 30,
|----------- | -------------------------------- |  | -------------------------------
|            | 2004                             |  | 2003                           
|Revenue:    |                                  |  |                                
|Oil and gas | $
1,206,352                      |  | $
878,889                      
|Leonardite  | 297,537                          |  | 181,840                        
|Drilling    | 302,778                          |  | 206,787                        
|            | $
1,806,667                      |  | $
1,267,516                    



|                             |           |  |          
|---------------------------- | --------- |  | ---------
|Operating income (loss)      |           |  |          
|Oil and gas                  | $
564,158 |  | $
315,154
|Leonardite                   | 29,934    |  | (33,448) 
|Drilling                     | 19,274    |  | 48,347   
|General corporate activities | (128,703) |  | (122,022)
|                             | $
484,663 |  | $
208,031





4.

Change in Accounting Principle



Effective January 1, 2003, the Company adopted SFAS 143, Accounting for Asset Retirement Obligations which requires that the fair value of a liability for an asset retirement obligation associated with a tangible long-lived asset be recognized in the period in which it is incurred if a reasonable estimate of the fair value can be made. The fair value is measured using expected future cash outflows discounted at the Companys credit-adjusted risk-free interest rate. Accretion expenses will be recognized over time as the discounted liability is accreted to its expected settlement value. The associated asset retirement cost is capitalized as part of the carrying amount of the long-lived asset and consequentially is depreciated over the assets useful life.



The asset retirement obligation recorded by the Company relates to the plugging and abandonment of its oil and gas wells. Previously, the Company assumed that the salvage value of oil and gas well equipment equaled the dismantlement, restoration and reclamation costs. Therefore, no accruals for retirement obligations were made. Under SFAS 143, the Company is required to recognize the fair value of the liability to plug and abandon a well in the period in which the liability is incurred. The initial adoption of SFAS 143 on January 1, 2003, resulted in a one-time non-cash after-tax charge to operations of $23,000 recorded as the cumulative effect of a change in accounting principle.  There are no assets legally restricted for the purpose of settling asset retirement obligations. There is no impact on the Companys cash flows as a result of adopting SFAS 143.





ITEM 2.  Management's Discussion and Analysis or Plan of Operation





This discussion and analysis of financial condition and results of operations, and other sections of this report contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, that are based on management's beliefs, assumptions, current expectations, estimates and projections about the oil, gas and leonardite industry, the economy and about us.  Words such as "may, will, expect, anticipate, estimate or continue, or comparable words are intended to identify forward-looking statements.  These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict with regard to timing, extent, likelihood and degree of occurrence.  Therefore, our actual results and outcomes may materially differ from what may be expressed or forecasted in our forward-looking statements.  Furthermore, we undertake no obligation to update, amend or clarify forward-looking statements, whether as a result of new information, future events or otherwise.



The following discussion should be read in conjunction with our consolidated financial statements and related notes included elsewhere herein. Important factors that could cause actual results to differ materially from the forward-looking statements include, but are not limited to, changes in production volumes; worldwide supply and demand which affect commodity prices for oil; the timing and extent of our success in discovering, acquiring, developing and producing oil, natural gas and leonardite reserves; risks inherent in the drilling and operation of oil and natural gas wells and the mining and processing of leonardite products; future production and development costs; the effect of existing and future laws, governmental regulations and the political and economic climate of the United States; and conditions in the capital markets.



We caution the reader that a number of important factors discussed herein, and in other reports filed with the Securities and Exchange Commission, particularly our Annual Report on Form 10-KSB for the Year Ended December 31, 2003, could affect our actual results and cause actual results to differ materially from those discussed in forward-looking statements.



--#--





Results of Operations - Three Months and Nine Months Ended September 30, 2004, compared to Three Months and Nine Months Ended September 30, 2003



Information concerning our oil and gas operations for the three months and nine months ended September 30, 2004, is set forth in the table below:



|Oil and Gas Operations           
|---------------------------------
|                                 
|                                 
|                                 
|                                 
|                                 
|                                 
|Oil and gas production sold (BOE)
|                                 
|Average price per BOE            
|                                 
|Oil and gas revenue              
|                                 
|Production costs                 
|                                 
|Average production cost per BOE  
|                                 
|Gross Margin                     
|                                 
|                                 



Oil and gas production sold, expressed in barrels of oil equivalent (BOE), declined 2,947 BOE, or 9%, and 9,490 BOE, or 9%, for the three- and nine-month periods ended September 30, 2004, compared to the same periods in the prior year.  These lower volumes were due to the natural decline of our wells, and because we did not add any substantial production through the third quarter of 2004.  The drilling we did in the second quarter of 2004 (1 gross well, 1 net) was a Landa Field well that we considered necessary to drill prior to submitting our application for a unitization with the North Dakota Industrial Commission.  As expected, that well had marginal production pending future water injection.  The unitization application was heard on July 7, 2004 and approved effective October 1, 2004.  Implementation of a water-flood is in progress in what is now the Landa West Madison Unit (LWMU).



Waterflood implementation in the LWMU will consist of running high-pressure water injection lines, installing pumps and numerous controls plus some new production flowlines to initiate water injection into two wells, and consolidating production facilities for seven remaining producing wells.  It is our goal to initiate water injection by year-end 2004.



In addition, we were a non-operating 10% participant in an 8,200-foot wildcat well (1 gross well, 0.1 net) in Mountrail County, ND that was in the process of drilling on September 30, 2004.  Subsequent to the end of the third quarter, casing was run in the well, and a completion is pending.  This well was drilled by our subsidiary, Western Star Drilling Company (WSDC), and it was the first time we elected to participate in a well being drilled by an industry group.  This flexibility to occasionally join other entities in their drilling projects is one of the advantages of having a drilling subsidiary.  Any such drilling participation arrangements are arms-length transactions with GeoResources paying its appropriate share of drilling costs and WSDC billing the projects operator just as it would if we had not participated.



The average price per BOE for the third quarter 2004 increased to $38.88, a change of $13.01, or 50%, above the same period in 2003.  The 2004 nine-month period average price per BOE was $34.31, or $8.12 and 31% higher than the same period in 2003.  Oil and gas revenue for the three-month period ended September 30, 2004, increased $327,000, or 37%, to $1,206,000 due to the 50% higher oil prices, even though production was 9% lower.  Oil and gas revenue for the 2004 nine-month period was also higher reaching $3,123,000 or $490,000 and 19% higher than the $2,633,000 for the same period last year.



With increases in revenue, oil and gas production costs also increased $73,000, or 17%, and $100,000, or 8%, for the three- and nine-month periods of 2004, respectively, when compared to the same periods in 2003.  The increase in both periods was primarily due to our use of higher cash flow to perform more repair, maintenance and workover operations on our existing wells.  In addition, higher state severance taxes, that are directly proportional to revenue, were $19,000 and $30,000 of the increase in production costs for the three- and nine-months periods, respectively.  These higher production costs, including state severance taxes, resulted in costs expressed on a per-equivalent-barrel basis increasing $3.55 per barrel, or 28%, for the three-month period and $2.41 per barrel, or 19%, for the nine-month period of 2004 when compared to the same periods in 2003.  In regard to North Dakota state severance taxes on oil production, the North Dakota Legislative Assembly in 2001 granted numerous severance tax reduction incentives that are subject to revocation upon an inflation adjusted high NYMEX based oil price trigger.  The average oil price through the end of September 2004 will trigger some of our oil properties being taxed at the higher pre-incentive tax rate.  However, we do not believe the higher tax rates will have a significant effect on our overall severance taxes and the rates will be reduced again if prices fall below the inflation adjusted oil price level.  For the nine months of 2004, our composite tax rate for all our production was 6% and, even with the higher tax rates, we estimate overall severance tax rates will not exceed 8%.



Gross margin from oil and gas operations for the third quarter of 2004 increased $254,000, or 56%, more than the same period in 2003.  Gross margin for the nine months was $390,000, or 28%, higher than the same period in 2003.  Gross margin expressed as a percent of revenue was 59% and 56% for the three- and nine-months periods respectively.





Information concerning our leonardite operations for the three months and nine months ended September 30, 2004, is set forth in the table below:



|Leonardite Operations            
|---------------------------------
|                                 
|                                 
|                                 
|                                 
|                                 
|                                 
|Leonardite production sold (tons)
|                                 
|Average revenue per ton          
|                                 
|Leonardite revenue               
|                                 
|Cost of leonardite sold          
|                                 
|Average production cost per ton  
|                                 
|Gross Margin                     
|                                 
|                                 



Leonardite production sold increased 747 tons, or 51%, and 1,821 tons, or 37%, respectively, for the three- and nine-month periods ended September 30, 2004, compared to the equivalent periods in 2003.  For the three months, sales increased due to growth in Texas onshore drilling.  We have also been able to expand both our drilling mud and agricultural customer base.



Leonardite revenue increased $116,000, or 64%, for the three-month period ended September 30, 2004, and $250,000, or 42%, for the comparable nine-month period in 2003.  Average revenue per ton for the three and nine months ended September 30, 2004, increased $10.46, or 8%, and $4.00, or 3%, respectively.  The revenue increase resulted from higher sales of our products due to the factors mentioned above and sales of more of our higher priced specialty products such as Lenalk.  Operators tend to use more expensive mud systems when oil prices are high.  Moderately higher specialty product sales were primarily responsible for the increases in average revenue per ton.



Cost of leonardite sold was 27% higher for the three-month period ended September 30, 2004 and 20% higher for the nine-month period compared to the same periods in 2003 due to the higher production volume.  However, average per ton production costs decreased 16% and 12%, respectively, for the three- and nine-month periods ended September 30, 2004, compared to the same periods in 2003.  Average production cost per ton decreased due to the increased volume of material processed by the plant, which spread our fixed costs over substantially more tons sold than in the prior periods.



As discussed in our Annual Report on Form 10-KSB for the Year Ended December 31, 2003, our leonardite mining operation has a 240-acre Logical Mining Unit (LMU) that contains 160 acres of Bureau of Land Management (BLM) leasehold.  During 2004, we have been in the process of a Surface Mine Permit Revision that is required by the North Dakota Public Service Commission before mining operations can begin on our leased BLM lands.  This permit revision process may have uncertainties and factors that could be beyond our control such as the timing of public notices and requirements imposed by regulatory agencies.  If our leonardite demand were to increase to higher levels, it could unexpectedly shorten the amount of time we have to gain such permits.  Also, the BLM can impose additional permitting requirements of their own.  We believe we are on schedule to acquire all the required regulatory revisions to our mine permit by the time the new mine area would be needed as long as our leonardite demand does not increase significantly, and permitting through state and federal agencies does not take extraordinary amounts of time.



As a result of revenue and expenses, gross margin from leonardite operations for the third quarter of 2004 was about $66,000 higher than the $3,000 deficit for the same period in 2003.  Gross margin for the nine months was $126,000 higher than the $16,000 deficit for the nine months of 2003.  Gross margin expressed as a percent of revenue was 21% and 13% for the three- and nine-month periods ended September 30, 2004, compared to small deficits for the same periods in 2003.





Information concerning our drilling operations for the three months and nine months ended September 30, 2004, is set forth in the table below:



|Drilling Operations    
|-----------------------
|                       
|                       
|                       
|                       
|                       
|                       
|Operating days         
|                       
|Drilling revenue       
|                       
|Average revenue per day
|                       
|Drilling Costs         
|                       
|Average cost per day   
|                       
|Gross Margin           
|                       
|                       



During the first nine months of 2004, Western Star Drilling Companys (WSDC) operations consisted of drilling one well for GeoResources and three for other operators; however, GeoResources participated with a 10% interest in one of the other operators wells.  This compares to three wells drilled for GeoResources and two for other operators in the same period of 2003.  All amounts in the drilling operations table above are presented in conformance with our financial statements.  Accordingly, WSDCs revenue and expenses from the drilling of the portion of wells owned by GeoResources are eliminated in consolidation of the financial statements, and the cost of those wells is capitalized by GeoResources in oil and gas properties, using the full cost method of accounting.  Therefore, the amounts shown in the table represent only drilling operations performed by WSDC for companies other than GeoResources.



Drilling days for projects other than GeoResources increased 3.5 days, or 12%, and 47.7 days, or 163%, for the 2004 three- and nine-months periods, respectively, due to higher demand for the drilling rig.  In the third quarter, GeoResources participated with an industry group for the first time, to drill a well that used WSDCs Rig E-25.



Drilling revenue was $96,000 and $414,000 higher for the three- and nine-months periods, respectively, and by the percentages shown in the table above.  Average revenue per day was $2,200 and $1,000 more in the same two periods and by the percentages shown.  The revenue and revenue per day increases were due to the higher rig utilization coupled with WSDCs ability to charge more for upgraded and additional rig equipment.



Drilling costs were also higher by $132,000 and $497,000 for the three- and nine months periods respectively and by their percentages shown in the table.  Average costs per day increased $3,600 and $3,900 in the same two periods.  The drilling costs increases were primarily due to higher rig utilization and expenses of upgrading, maintaining or in some cases renting additional equipment.





As a result of revenue and expenses, gross margin from drilling operations for the third quarter of 2004 was about $36,000 lower or 41% less than the same period in 2003.  Gross margin for the nine months was $83,000 lower or 94% less than the same period in 2003.  Gross margin expressed as a percent of revenue was 17% and 1% for the three- and nine-month periods ended September 30, 2004, compared to 43% and 43% for the same periods in 2003.  Both of the lower gross margins for the 2004 periods were caused by atypical costs incurred in the 2004 first quarter when there was no offsetting revenue.  GeoResources current goal for its WSDC subsidiary is to maintain a positive gross margin while it adds and improves equipment and specialized drilling capabilities.  During the 2004 nine-months period, two of the three outside drilling customers were repeat customers that had used Rig E-25 for previous wells.





Consolidated Analysis



Total operating revenues increased $539,000, or 43%, and $1,155,000, or 34%, respectively, for the three- and nine-month periods ended September 30, 2004, compared to the same periods in 2003 due to increased energy prices, leonardite sales and drilling operations.  Total operating expenses increased $263,000, or 25%, and $786,000, or 27%, for the same periods.  Operating expenses for oil and gas, leonardite, and drilling were previously discussed.   Depreciation, depletion and amortizationstayed relatively unchanged.  Selling, general and administrative (SG&A) increased $19,000, or 17%, and $48,000, or 12% respectively, for the three- and nine-month periods ended September 30, 2004, compared to the same periods in 2003.  Selling, general and administrative increased due to small increases in numerous SG&A costs such as stockholder expense and a $19,000 non-routine parking lot repair.



Operating income increased to $485,000 and $850,000, respectively, for the three- and nine-month periods ended September 30, 2004, compared to income of $208,000 and $481,000 for the same periods in 2003.  After provisions for non-operating expenses and deferred income taxes, consolidated net income was $419,000, or $0.11, per share and $736,000, or $0.20, per share for the three- and nine-month periods ended September 30, 2004, compared to a net income of $171,000, or $0.05, per share and $400,000, or $0.11, per share for the same periods in 2003.





Liquidity and Capital Resources



At September 30, 2004, we had working capital of $68,000 compared to a working capital deficit of $173,000 at December 31, 2003.  Our current ratio was 1.04 to 1 at September 30, 2004, compared to .91 to 1 at December 31, 2003.



Net cash provided by operating activities was $1,384,000 for the nine months ended September 30, 2004, compared to $1,242,000 for the same period in 2003.  Cash was utilized in 2004 to make payments of $1,022,000 for additions to property, plant and equipment and $349,000 for payments on long-term debt.  During the second quarter, we borrowed $125,000 to help finance our operations.



We believe our cash requirements can be met by cash flows from operations and, if necessary, borrowings on our $3,000,000 line-of-credit, which has funds available for use at September 30, 2004, subject to collateral requirements.  Future cash requirements might also be provided by possible forward sales of oil reserves or additional debt or equity financing.





Item 3.  Controls and Procedures



As of the end of the period covered by this report, we evaluated, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, the effectiveness of the design and operation of our disclosure controls and procedures over financial reporting pursuant to Rule 13a-15 and 15d-15 of the Securities Exchange Act of 1934.  Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures over financial reporting are adequate and effective in timely alerting them to material information required to be included in this quarterly report on Form 10-QSB.



Disclosure controls and procedures, no matter how well designed and implemented, can provide only reasonable assurance of achieving an entitys disclosure objectives.  The likelihood of achieving such objectives is affected by limitations inherent in disclosure controls and procedures.  These limitations include the fact that human judgment in decision-making can be faulty and that breakdowns in internal control can occur because of human failures such as simple errors or mistakes or because of intentional circumvention of the established process.



During the period covered by this report, there have been no significant changes in our internal controls over financial reporting or in other factors, which could significantly affect internal controls over financial reporting, including any corrective actions with regard to significant deficiencies or material weaknesses.





PART II.  OTHER INFORMATION





Item 1. Legal Proceedings.



We are a defendant in a case with respect to a preference claim brought on November 8, 2002, in the United States Bankruptcy Court, Southern District of Texas, Houston Division (adversary proceeding number 02-03827, In Re:  Ramba, Inc., Lowell T. Cage, Trustee v. GeoResources, Inc.)  The bankruptcy trustee of a former leonardite customer, Ambar, Inc. (n/k/a Ramba, Inc.) has sued us for approximately $139,000 in an amended preference claim in Bankruptcy Court.  Our defense has been vigorous, and on September 1, 2004, the District Court considered our Motion for Summary Judgment and ruled in our favor.  On September 14, 2004, the bankruptcy trustee filed a Notice of Appeal.



Except as discussed herein, we are not a party to, nor are any of our properties subject to, any pending material legal proceedings.  We know of no legal proceedings contemplated or threatened against us.





|Item 6. Exhibits.                                                                                                                                                               
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                
|(a)
Exhibits.                                                                                                                                                                   
|                                                                                                                                                                                
|The following are exhibits filed with this report.                                                                                                                              
|                                                                                                                                                                                
|31.1
Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act.                                                                            
|                                                                                                                                                                                
|31.2
Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act.                                                                            
|                                                                                                                                                                                
|32.1
Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act.                                                                            
|                                                                                                                                                                                
|32.2
Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act.                                                                            
|                                                                                                                                                                                
|The other exhibits of the Company are incorporated herein by reference from the exhibit list in the Companys Annual Report on Form 10-KSB for the Year Ended December 31, 2003.
|                                                                                                                                                                                
|                                                                                                                                                                                
|                                                                                                                                                                                
|                                                                                                                                                                                
|                                                                                                                                                                                
|                                                                                                                                                                                



--#--





SIGNATURES





In accordance with the requirements of the Exchange Act, the Registrant caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



GEORESOURCES, INC.





November 12, 2004





/S/  J. P. Vickers



J. P. Vickers

Chief Executive Officer

Chief Financial Officer

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EXHIBIT INDEX

|                                                                                                                                                                                
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit                                                                                                                                                                         
|Number                                                                                                                                                                          
|                                                                                                                                                                                
|31.1
Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act (filed herewith).                                                           
|                                                                                                                                                                                
|31.2
Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act (filed herewith).                                                           
|                                                                                                                                                                                
|32.1
Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act (filed herewith).                                                           
|                                                                                                                                                                                
|32.2
Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act (filed herewith).                                                           
|                                                                                                                                                                                
|The other exhibits of the Company are incorporated herein by reference from the exhibit list in the Companys Annual Report on Form 10-KSB for the Year Ended December 31, 2003.

--#--





EXHIBIT 31.1



Certification of Chief Executive Officer Under

Section 302 of the Sarbanes-Oxley Act of 2002



I, J.P. Vickers, Chief Executive Officer of GeoResources, Inc., certify that:



1.

I have reviewed this Quarterly Report on Form 10-QSB of GeoResources, Inc. (registrant);



2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;



3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;



4.

The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e) and 15d-15(e)) for the registrant and have:



(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;



(b)

Reserved;



(c)

Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and



(d)

Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and



5.

The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions):



(a)

All significant deficiencies and material weaknesses in the design of operation of internal control over financial reporting which are reasonably likely to adversely effect the registrants ability to record, process, summarize and report financial information; and



(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.



Date:

November 12, 2004



Signature:

/s/ J. P. Vickers



J. P. Vickers

Title:

Chief Executive Officer

--#--





EXHIBIT 31.2



Certification of Chief Financial Officer Under

Section 302 of the Sarbanes-Oxley Act of 2002



I, J. P. Vickers, Chief Financial Officer of GeoResources, Inc. certify that:



1.

I have reviewed this Quarterly Report on Form 10-QSB of GeoResources, Inc. (registrant);



2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;



3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;



4.

The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e) and 15d-15(e)) for the registrant and have:



(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;



(b)

Reserved;



(c)

Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and



(d)

Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and



5.

The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions):



(a)

All significant deficiencies and material weaknesses in the design of operation of internal control over financial reporting which are reasonably likely to adversely effect the registrants ability to record, process, summarize and report financial information; and



(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.



Date:

November 12, 2004



Signature:

/s/ J. P. Vickers



J. P. Vickers

Title:

Chief Financial Officer



--#--





EXHIBIT 32.1

Certification of Chief Executive Officer

of GeoResources, Inc Pursuant to 18 U.S.C. Section 1350





I, J. P. Vickers, certify that:



In connection with the Quarterly Report on Form 10-QSB of GeoResources, Inc. (the Company) for the period ended September 30, 2004, as filed with the Securities and Exchange Commission on the date hereof (the Report), I, J. P. Vickers, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:



1.

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and



2.

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.







/S/  J. P. Vickers



J. P. Vickers

Chief Executive Officer

November 12, 2004



--#--





EXHIBIT 32.2

Certification of Chief Financial Officer

of GeoResources, Inc. Pursuant to 18 U.S.C. Section 1350





I, J. P. Vickers, certify that:



In connection with the Quarterly Report on Form 10-QSB of GeoResources, Inc. (the Company) for the period ended September 30, 2004, as filed with the Securities and Exchange Commission on the date hereof (the Report), I, J. P. Vickers, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:



1.

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and



2.

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.







/S/  J. P. Vickers



J. P. Vickers

Chief Financial Officer

November 12, 2004





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