Table of Contents

 

 

 

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

 

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**FORM 10-Q**

 

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**(MarkOne)**

 
| **x** | ** ** | **QUARTERLY  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE  ACT OF 1934** |
|-------|------------|---------------------------------------------------------------------------------------------------------|

 

**For the quarterly period ended March 31,2009**

 

**OR**

 
| **o** | ** ** | **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 001-16749**

 

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**GeoPetro Resources Company**

(Exact name of registrant as specified in its charter)

 

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| **California**                                            | ** ** | **94-3214487**                       |
|-----------------------------------------------------------|------------|--------------------------------------|
| (State of incorporation)                                  |       | (IRS Employer Identification Number) |
|                                                      |       |                                 |
| **One Maritime Plaza, Suite 700  San Francisco, CA** | ** ** | **94111**                            |
| (Address of principal executive offices)                  |       | (Zip Code)                           |

 

**(415) 398-8186**

(Registrant’s telephone number, including area code)

 

Indicateby check mark whether the registrant: (1) has filed all reports requiredto be filed by Section 13 or 15(d) of the Securities Exchange Act of1934 during the preceding 12 months (or for such shorter period that theregistrant was required to file such reports), and (2) has been subject tosuch filing requirements for the past 90 days.  Yes x No o.

 

Indicate by check mark whether the registrant hassubmitted electronically and posted on its corporate Web site, if any, every InteractiveData File required to be submitted and posted pursuant to Rule 405 ofRegulation S-T (§232.405 of this chapter) during the preceding 12 months (orfor such shorter period that the registrant was required to submit and post suchfiles).  Yes o  No o

 

Indicateby check mark whether the registrant is a large accelerated filer, anaccelerated filer, a non-accelerated filer, or a smaller reporting company. Seedefinitions of “large accelerated filer,” “accelerated filer,” and “smallerreporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 
| Large accelerated filer o                |   | Accelerated filer x         |
|-----------------------------------------------|--------|----------------------------------|
|                                          |   |                             |
| Non-accelerated filer o                  |   | Smaller reporting company o |
| (Do not check if a smaller reporting company) |   |                             |

 

Indicate by check markwhether the registrant is a shell company (as defined in Rule 12b-2 of theExchange Act). Yes o  No x.

 

There were 34,284,646shares of no par value common stock outstanding on May 11, 2009.

 

 

 

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##### **Table of Contents**

##### ** **

**TABLE OF CONTENTS**

 
| PART I.  FINANCIAL INFORMATION                                                                      |   |
|----------------------------------------------------------------------------------------------------------|--------|
| Item 1. Financial Statements                                                                        |   |
| Item 2. Management’s Discussion and Analysis of  Financial Condition and Results of Operations |   |
| Item 3. Quantitative and Qualitative Disclosures  about Market Risk                                 |   |
| Item 4. Controls and Procedures                                                                     |   |
| PART II.  OTHER INFORMATION                                                                         |   |
| Item 1.  Legal Proceedings                                                                          |   |
| Item 1A.  Risk Factors                                                                              |   |
| Item 2. Unregistered Sales of Securities and Use of  Proceeds                                            |   |
| Item 3. Defaults Upon Senior Securities                                                             |   |
| Item 4. Submission of Matters to a Vote of  Security Holders                                        |   |
| Item 5.  Other Information                                                                          |   |
| Item 6. Exhibits                                                                                    |   |
| SIGNATURES                                                                                               |   |

 

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**PART I. FINANCIAL INFORMATION**

 

**Item 1.   Financial Statements.**

 

**GEOPETRO RESOURCES COMPANY**

 

**UNAUDITED CONSOLIDATED BALANCE SHEETS**

 
| ** **                                                                                                                                                                 | ** ** | **March 31,** | ** ** | **December 31,** | ** ** |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|--------------------|------------|-----------------------|------------|
| ** **                                                                                                                                                                 | ** ** | **2009**           | ** ** | **2008**              | ** ** |
| **ASSETS**                                                                                                                                                                 |       |               |       |                  |       |
| **Current assets:**                                                                                                                                                        |       |               |       |                  |       |
| Cash and cash equivalents                                                                                                                                                  |       | $                  | 270,615    |                  | $          | 770,779 |   |
| Trade accounts receivable—natural gas sales                                                                                                                           |       | 236,474            |       | 4,266                 |       |
| Accounts receivable—other                                                                                                                                             |       | 47,473             |       | 35,107                |       |
| Prepaid expenses                                                                                                                                                           |       | 150,252            |       | 212,938               |       |
| Total current assets                                                                                                                                                       |       | 704,814            |       | 1,023,090             |       |
|                                                                                                                                                                       |       |               |       |                  |       |
| **Oil and gas properties, at cost (full cost  method):**                                                                                                                   |       |               |       |                  |       |
| Unevaluated properties                                                                                                                                                     |       | 10,921,447         |       | 10,500,498            |       |
| Evaluated properties                                                                                                                                                       |       | 48,408,296         |       | 48,346,939            |       |
| Gas processing plant, at cost                                                                                                                                              |       | 10,919,018         |       | 10,707,982            |       |
| Less—accumulated depletion, depreciation, and impairment                                                                                                              |       | (16,827,584        | )          | (16,522,304           | )          |
| Net oil and gas properties                                                                                                                                                 |       | 53,421,177         |       | 53,033,115            |       |
|                                                                                                                                                                       |       |               |       |                  |       |
| **Furniture, fixtures and equipment, at cost, net  of depreciation**                                                                                                       |       | 7,558              |       | 12,364                |       |
| **Other assets—deposits and other noncurrent  assets**                                                                                                                |       | 7,527              |       | 7,436                 |       |
| **Total Assets**                                                                                                                                                           |       | $                  | 54,141,076 |                  | $          | 54,076,005 |   |
|                                                                                                                                                                       |       |               |       |                  |       |
| **LIABILITIES AND SHAREHOLDERS’  EQUITY**                                                                                                                             |       |               |       |                  |       |
|                                                                                                                                                                       |       |               |       |                  |       |
| **Current Liabilities:**                                                                                                                                                   |       |               |       |                  |       |
| Trade payables                                                                                                                                                             |       | $                  | 2,341,153  |                  | $          | 1,137,432 |   |
| Current portion of long term notes payable                                                                                                                                 |       | 600,000            |       | 600,000               |       |
| Interest payable                                                                                                                                                           |       | 91,765             |       | 1,479                 |       |
| Production taxes payable                                                                                                                                                   |       | 129,439            |       | 311,168               |       |
| Other taxes payable                                                                                                                                                        |       | 17,653             |       | 20,833                |       |
| Royalty owners payable                                                                                                                                                     |       | 1,100,253          |       | 1,103,830             |       |
| Total current liabilities                                                                                                                                                  |       | 4,280,263          |       | 3,174,742             |       |
|                                                                                                                                                                       |       |               |       |                  |       |
| **Convertible Notes Payable**                                                                                                                                              |       | 850,000            |       | —                |       |
| **Long Term Notes Payable**                                                                                                                                                |       | 6,880,179          |       | 7,019,449             |       |
| **Asset Retirement Obligations**                                                                                                                                           |       | 60,524             |       | 59,099                |       |
| **Total Liabilities**                                                                                                                                                      |       | 12,070,966         |       | 10,253,290            |       |
|                                                                                                                                                                       |       |               |       |                  |       |
| **Commitments and Contingencies (Notes 2 and 8)**                                                                                                                          |       | —             |       | —                |       |
|                                                                                                                                                                       |       |               |       |                  |       |
| **Shareholders’ Equity:**                                                                                                                                             |       |               |       |                  |       |
| Common stock, no par value; 100,000,000 shares authorized; 34,284,646  shares issued and outstanding at March 31, 2009 and  December 31, 2008, respectively |       | 53,397,733         |       | 53,397,733            |       |
| Additional paid-in capital                                                                                                                                                 |       | 2,715,394          |       | 2,610,596             |       |
| Accumulated deficit                                                                                                                                                        |       | (14,043,017        | )          | (12,185,614           | )          |
| Total shareholders’ equity                                                                                                                                            |       | 42,070,110         |       | 43,822,715            |       |
|                                                                                                                                                                       |       |               |       |                  |       |
| **Total Liabilities and Shareholders’ Equity**                                                                                                                        |       | $                  | 54,141,076 |                  | $          | 54,076,005 |   |
|                                                                                                                                                                            |            |                    |            |                       |            |  |  |  |

 

***See accompanyingnotes to these unaudited consolidated financial statements.***

 

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**GEOPETRO RESOURCES COMPANY**

 

**UNAUDITED CONSOLIDATED STATEMENTS OFOPERATIONS**

 
| ** **                                                 | ** ** | **Three Months Ended**   | ** ** |
|------------------------------------------------------------|------------|--------------------------|------------|
| ** **                                                 | ** ** | **March 31,  2009** | ** ** | **March 31,  2008** | ** ** |
| **Revenues**                                               |       |                     |       |   |   |
| Natural gas plant sales                                    |       | $                        | 876,068    |   | $ | — |   |
| Natural gas sales                                          |       | —                   |       | 2,142,598 |   |
| Total revenues                                             |       | 876,068                  |       | 2,142,598 |   |
|                                                       |       |                     |       |   |   |
| **Costs and expenses:**                                    |       |                     |       |   |   |
| Plant operating                                            |       | 1,044,772                |       | — |   |
| Lease operating                                            |       | 300,879                  |       | 343,823 |   |
| General and administrative                                 |       | 848,938                  |       | 715,423 |   |
| Net profits interest                                       |       | —                   |       | 228,061 |   |
| Depreciation and depletion                                 |       | 310,086                  |       | 534,430 |   |
| Total costs and expenses                                   |       | 2,504,675                |       | 1,821,737 |   |
|                                                       |       |                     |       |   |   |
| **Income (loss) from operations**                          |       | (1,628,607               | )          | 320,861 |   |
|                                                       |       |                     |       |   |   |
| **Other Income and (Expense):**                            |       |                     |       |   |   |
|                                                       |       |                     |       |   |   |
| Interest expense                                           |       | (232,439                 | )          | — |   |
| Interest income                                            |       | 3,643                    |       | 30,065 |   |
| Total other expense                                        |       | (228,796                 | )          | 30,065 |   |
|                                                       |       |                     |       |   |   |
| **Income (Loss) Before Taxes**                             |       | (1,857,403               | )          | 350,926 |   |
|                                                       |       |                     |       |   |   |
| Income tax expense                                         |       | —                   |       | (6,800 | ) |
|                                                       |       |                     |       |   |   |
| **Net Income (Loss)**                                      |       | $                        | (1,857,403 | ) | $ | 344,126 |   |
|                                                       |       |                     |       |   |   |
| **Earnings (Loss) per Share:**                             |       |                     |       |   |   |
| Basic                                                      |       | $                        | (0.05      | ) | $ | 0.01 |   |
| Diluted                                                    |       | $                        | (0.05      | ) | $ | 0.01 |   |
|                                                       |       |                     |       |   |   |
| **Weighted Average Number of Common Shares  Outstanding:** |       |                     |       |   |   |
| Basic                                                      |       | 34,284,646               |       | 31,950,970 |   |
| Diluted                                                    |       | 34,284,646               |       | 33,210,448 |   |

 

***See accompanyingnotes to these unaudited consolidated financial statements.***

 

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**GEOPETRO RESOURCES COMPANY**

 

**UNAUDITED CONSOLIDATED STATEMENTS OFCASH FLOWS**

 
| ** **                                                                                          | ** ** | **For the Three Months Ended** | ** ** |
|-----------------------------------------------------------------------------------------------------|------------|----------------------------------------------------|------------|
| ** **                                                                                          | ** ** | **March 31,  2009**                           | ** ** | **March 31,  2008** | ** ** |
| **Cash Flows From Operating Activities:**                                                           |       |                                               |       |   |   |
|                                                                                                |       |                                               |       |   |   |
| Net income (loss)                                                                                   |       | $                                                  | (1,857,403 | ) | $ | 344,126 |   |
| Adjustments to reconcile net income (loss) to net cash provided by  (used in) operating activities: |       |                                               |       |   |   |
| Depreciation and depletion                                                                          |       | 310,086                                            |       | 534,430 |   |
| Share-based compensation expense                                                                    |       | 104,798                                            |       | 30,355 |   |
| Non-cash interest expense                                                                           |       | 10,730                                             |       | — |   |
| Accretion of discount on asset retirement obligations                                               |       | 1,140                                              |       | 1,037 |   |
| Changes in operating assets and liabilities:                                                        |       |                                               |       |   |   |
| Accounts receivable - natural gas sales                                                             |       | (232,208                                           | )          | 117,145 |   |
| Other assets                                                                                        |       | 50,229                                             |       | (170,187 | ) |
| Current liabilities                                                                                 |       | 928,185                                            |       | 209,871 |   |
| Net cash provided by (used in) operating activities                                                 |       | (684,443                                           | )          | 1,066,777 |   |
|                                                                                                |       |                                               |       |   |   |
| **Cash Flows from Investing Activities:**                                                           |       |                                               |       |   |   |
|                                                                                                |       |                                               |       |   |   |
| Additions to oil and gas properties                                                                 |       | (482,021                                           | )          | (2,211,876 | ) |
| Additions to gas treatment plant                                                                    |       | (33,700                                            | )          | — |   |
| Acquisition of furniture, fixtures & equipment                                             |       | —                                             |       | (1,701 | ) |
| Net cash used in investing activities                                                               |       | (515,721                                           | )          | (2,213,577 | ) |
|                                                                                                |       |                                               |       |   |   |
| **Cash Flows from Financing Activities:**                                                           |       |                                               |       |   |   |
|                                                                                                |       |                                               |       |   |   |
| Proceeds from convertible notes, net                                                                |       | 850,000                                            |       | — |   |
| Repayments of promissory notes                                                                      |       | (150,000                                           | )          | — |   |
| Net cash provided by financing activities                                                           |       | 700,000                                            |       | — |   |
|                                                                                                |       |                                               |       |   |   |
| **Net Increase (Decrease) in Cash and Cash  Equivalents:**                                          |       | (500,164                                           | )          | (1,146,800 | ) |
|                                                                                                |       |                                               |       |   |   |
| **Cash and Cash Equivalents:**                                                                      |       |                                               |       |   |   |
| Beginning of period                                                                                 |       | 770,779                                            |       | 4,294,565 |   |
| End of period                                                                                       |       | $                                                  | 270,615    |   | $ | 3,147,765 |   |
|                                                                                                |       |                                               |       |   |   |
| **Supplemental Disclosure of Cash Flow  Information:**                                              |       |                                               |       |   |   |
| Cash paid for interest                                                                              |       | $                                                  | 130,923    |   | $ | — |   |
|                                                                                                |       |                                               |       |   |   |
| Cash paid for income taxes                                                                          |       | $                                                  | —     |   | $ | 6,800 |   |

 

***See accompanyingnotes to these unaudited consolidated financial statements.***

 

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**GEOPETRO RESOURCES COMPANY**

 

**NOTES TO UNAUDITED CONSOLIDATEDFINANCIAL STATEMENTS**

 

**1.****     ****BASIS OF PRESENTATION AND USE OFESTIMATES:**

 

The interim consolidated financial statements ofGeoPetro Resources Company (“we,” “us,” “our,” “GeoPetro” or the “Company”) areunaudited and contain all adjustments (consisting primarily of normal recurringaccruals) necessary for a fair statement of the results for the interim periodspresented. Results for interim periods are not necessarily indicative ofresults to be expected for a full year or for previously reported periods duein part, but not limited to, the volatility in crude oil and natural gascommodity prices, interest rates, estimates of reserves, drilling risks,geological risks, transportation restrictions, the timing of acquisitions,product demand, market competition, interruption in production and our abilityto obtain additional capital. You should read these consolidated interimfinancial statements in conjunction with the audited consolidated financialstatements and notes thereto included in GeoPetro’s Annual Report on Form 10-Kfor the year ended December 31, 2008.

 

The accompanying financial statements have been preparedin accordance with accounting principles generally accepted in the UnitedStates of America (“GAAP”) and include the accounts of GeoPetro and itswholly-owned subsidiaries. Intercompany accounts and transactions areeliminated. In preparing the accompanying financial statements, management hasmade certain estimates and assumptions that affect reported amounts in thefinancial statements. Actual results may differ from those estimates.Significant assumptions are required in the valuation of proved oil and naturalgas reserves, which may affect the amount at which oil and natural gasproperties are recorded. The computation of share-based compensation expenserequires assumptions such as volatility, expected life and the risk-freeinterest rate. It is at least reasonably possible these estimates could berevised in the near term, and these revisions could be material.

 

*Changein Accounting Method and Basis of Presentation - Revenue Recognition*—Prior to December 31, 2008, revenuewas recognized upon delivery of oil and gas production and was shown net ofapplicable royalty payments, as well as marketing, processing andtransportation fees. The Company recognized revenue from the Madisonville Fieldnet of applicable fees to gather, treat and transport the Company’s natural gasproduction. The applicable fees were paid to unrelated third parties.  On December 31,2008, the Company completed the acquisition of the Plant from MGP. Goingforward and commencing with the first quarter ended March 31, 2009, revenueis being recognized without the netting of applicable royalty payments, as wellas marketing, processing and transportation fees since we have acquired thePlant. For all periods presented, revenue from the Madisonville Field isrecognized when the price for gas delivered became fixed and determinable.

 

*Impairment of Oil and Gas Properties*—Under full cost accounting, a ceiling test is performedto ensure that unamortized capitalized costs in each cost center (country) donot exceed their fair value.  Impairmentis recognized when the carrying value is greater than the discounted futurecash flows.  In the event of impairment,the amount by which the carrying value exceeds the estimated fair value of thelong-lived asset is charged to earnings. The present value of estimated futurenet revenues is computed by applying current oil and gas prices to estimatedfuture production of proved oil and gas reserves as of period-end, lessestimated future expenditures to be incurred in developing and producing the provedreserves assuming the continuation of existing economic conditions.  We recognized no impairment of evaluatedproperties at March 31, 2009 or 2008. Under current accounting rules, we are required to use the natural gasprice prevailing on the last day of our accounting period to determine whetherany impairment needs to be recognized. However, we are permitted in certain circumstances to use a price thatis in effect subsequent to our period end but prior to the issuance of ourfinancial statements.  In determiningthat no impairment existed at March 31, 2009, we utilized the priceprevailing on May 7, 2009 to determine that the carrying value of theunamortized capitalized costs in our United States cost center did not exceedthe discounted future cash flows from those properties.  Had we used the price prevailing on March 31,2009, we would have recognized an impairment expense of $5,485,246.

 

**2.****     ****LIQUIDITY:**

 

As of March 31, 2009, we have a working capitaldeficit of $3,575,449, and for the three months ended, our cash used inoperating activities amounted to $684,443. We estimate our minimum investment needs during the remainder of 2009amount to $4,500,000 related to our natural gas processing plant and ournatural gas properties within the Madisonville field.  Our results of natural gas operationsamounted to a deficit of $469,583 for the three months ended March 31,2009.  Further, we have debt service anddividend requirements that will require cash payments.  We hold working interests in undevelopedleases, seismic options, lease options and foreign concessions and we haveparticipated in seismic surveys and the drilling of test wells on undevelopedproperties.  We plan further leaseholdacquisitions and seismic operations for the remainder of 2009 and futureperiods.  Exploratory and developmental drilling is scheduled during 2009and future periods on our undeveloped properties.  Subsequent to March 31,2009, we have raised an additional $1,000,000 in convertible notes that wereconverted into our Series B Preferred Stock, and we potentially plan tosell idle equipment from our natural gas 

 

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processing plant. In addition to these items, we need to raise additional equity or enterinto new borrowing arrangements to finance our operating deficit and ourcontinued participation in planned activities. If additional financing is notavailable, we will be compelled to reduce the scope of our businessactivities.  If we are unable to fund ouroperating cash flow needs and planned capital investments, it will be necessaryto farm-out our interest in proposed wells, sell a portion of our interest inprospects, sell a portion of our interest in our producing oil and gasproperties, reduce general and administrative expenses, or a combination of allof these factors.

 

**3.****     ****RECENTLY ISSUED ACCOUNTINGPRONOUNCEMENTS:**

 

In December 2007, the FASB issued SFAS No. 141(revised 2007), *Business Combinations*(“SFASNo. 141R”). SFAS No. 141R, which among other things, establishesprinciples and requirements for how the acquirer in a business combination (i) recognizesand measures in its financial statements the identifiable assets acquired, theliabilities assumed, and any noncontrolling interest in the acquired business, (ii) recognizesand measures the goodwill acquired in the business combination or a gain from abargain purchase, and (iii) determines what information to disclose toenable users of the financial statements to evaluate the nature and financialeffects of the business combination. SFAS No. 141R is effective for fiscalyears beginning on or after December 15, 2008, with early adoptionprohibited. This standard will change our accounting treatment for businesscombinations on a prospective basis.

 

In December 2007, the FASB issued SFAS No. 160,*Noncontrolling Interests in ConsolidatedFinancial Statements, an Amendment of ARB No. 51* (“SFAS No. 160”).SFAS No. 160 establishes accounting and reporting standards fornoncontrolling interests in a subsidiary and for the deconsolidation of asubsidiary. Minority interests are recharacterized as noncontrolling interestsand classified as a component of equity. It also establishes a single method ofaccounting for changes in a parent’s ownership interest in a subsidiary andrequires expanded disclosures. This statement is effective for fiscal yearsbeginning on or after December 15, 2008, with early adoption prohibited.The adoption of SFASB No. 160 on January 1, 2009 did not have a materialimpact on our financial position or results of operations.

 

In March 2008, theFASB issued SFAS No. 161, *Disclosuresabout Derivative Instruments and Hedging Activities*, an amendment ofFASB Statement No. 133.  SFAS 161 amends and expands thedisclosure requirements of FASB Statement No. 133 with the intent toprovide users of financial statement with an enhanced understanding of (i) howand why an entity uses derivative instruments, (ii) how derivativeinstruments and the related hedged items are accounted for under FASB StatementNo. 133 and its related interpretations, and (iii) how derivativeinstruments and related hedged items affect and entity’s financial position,financial performance and cash flows. The adoption of SFAS No. 161 on January 1, 2009 did not have amaterial impact on our reported financial position or results of operations.

 

In June 2008, theFASB ratified the consensus reached on Emerging Issues Task Force (“EITF”) IssueNo. 07-05, Determining Whether an Instrument (or Embedded Feature) IsIndexed to an Entity’s Own Stock (“EITF No. 07-05”). EITF No. 07-05clarifies the determination of whether an instrument (or an embedded feature)is indexed to an entity’s own stock, which would qualify as a scope exceptionunder SFAS No. 133, Accounting for Derivative Instruments and HedgingActivities. EITF No. 07-05 is effective for financial statements issuedfor fiscal years beginning after December 15, 2008. Early adoption for anexisting instrument is not permitted. The adoption of EITF No. 07-05 onJanuary 1, 2009 did not have a material effect on our consolidated financialstatements.

 

In December 2008,the SEC issued the final rule on the Modernization of Oil and Gas Reporting.  This SEC ruling revises its oil and gasreserves reporting requirements effective for fiscal years ending on or after December 31,2009, with early adoption prohibited. These revisions by the SEC are intended to provide investors with a moremeaningful and comprehensive understanding of oil and gas reserves.  These changes include:

 

·      Modifying prices used to estimate reserves for SECdisclosure purposes to a 12-month average price instead of a single-day,period-end price.

 

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·      Requiring certain additional disclosures around provedundeveloped reserves, internal controls used to ensure objectivity of theestimation process, and qualifications of those preparing and/or auditing thereserves.

 

·      Expanding the definition of oil and gas reserves andproviding clarification of certain concepts and technologies used in thereserve estimation process.

 

·      Allowing optional disclosure of probable and possiblereserves and permitting optional disclosure of price sensitivity analysis.

 

Historically, the reserves calculated based on the SEC’sreporting requirements were also used to calculate depletion on our producingproperties, as required by SFAS 69, “Disclosures about Oil and Gas ProducingActivities” (SFAS 69). However, the change in the SEC reporting requirementshas not yet been adopted by the FASB. The SEC has announced its intent todiscuss potential amendments to SFAS 69 with the FASB so that the reservesdisclosed remain consistent with the reserves used to calculate depletion onour producing properties. Any such change would impact our future financialresults. The SEC has indicated that it may delay the effective date of therevised reporting requirements if the FASB does not make conforming amendmentsby December 31, 2009.

 

**4.****     ****EARNINGS (LOSS) PER COMMON SHARE:**

 

Basic net loss per commonshare is computed by dividing the net loss attributable to common shareholdersby the weighted average number of shares of common stock outstanding during theperiod.

 

Diluted net loss percommon share is computed in the same manner, but also considers the effect ofcommon stock shares underlying the following:

 
| ** **             | ** ** | **For the three months ended** | ** ** |
|------------------------|------------|--------------------------------|------------|
| ** **             | ** ** | **March 31,  2009**       | ** ** | **March 31,  2008** | ** ** |
| Stock options (Note 8) |       | 2,735,000                      |       | 2,670,000 |   |
| Warrants (Note 9)      |       | 1,237,357                      |       | 2,414,688 |   |

 

All of the common shares underlying the stock optionsand warrants above were excluded from diluted weighted average sharesoutstanding for the three months ended March 31, 2009 because theireffects were antidilutive. On March 31, 2008, the diluted weighted averageshares outstanding included 66,678 common shares of warrant and 1,192,800common shares of options.

 

**5.****     ****GAS PROCESSING PLANT**

** **

On December 31, 2008, the Company completed theacquisition of a natural gas treatment plant (the “Plant”) from MadisonvilleGas Processing, LP (“MGP”), in exchange for shares of GeoPetro’s common stock,assumption of debt and a cash payment (“the Acquisition”). The Plant is locatedin Madison County, Texas and the new owner of the Plant is GeoPetro’swholly-owned indirect subsidiary, Madisonville Midstream LLC (“MM”).

 

Our results of operations for the three months endedMarch 31, 2009 include the operating results of the Plant, but our results ofoperations for the three months ended March 31, 2008 do not include theoperating results of the natural gas treatment plant because such acquisitionclosed on December 31, 2008. The following condensed pro forma informationgives effect to the acquisition as if it had occurred on January 1, 2008.The pro forma information has been included in the notes as required bygenerally accepted accounting principles and is provided for comparisonpurposes only. The pro forma financial information is not necessarilyindicative of the financial results that would have occurred had theacquisition been effective on the dates indicated and should not be viewed asindicative of operations in the future.

 
| ** **                                   | ** ** | **Three Months Ended  March 31,** | ** ** |
|----------------------------------------------|------------|----------------------------------------|------------|
| ** **                                   | ** ** | **2008**                               | ** ** |
| Operating revenues                           |       | $                                      | 5,248,928  |   |
| Total operating expenses                     |       | $                                      | 4,570,664  |   |
| Earnings (loss) applicable to common stock   |       | $                                      | 459,090    |   |
| Net earnings (loss) per share — basic   |       | $                                      | 0.01       |   |
| Net earnings (loss) per share — diluted |       | $                                      | 0.01       |   |

 

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**6****.****     ****DEBT*:***

 

Debt at March 31, 2009 and December 31, 2008consisted of the following:

 
| ** **                                                              | ** ** | **March 31,  2009** | ** ** | **December 31,  2008** | ** ** |
|-------------------------------------------------------------------------|------------|--------------------------|------------|-----------------------------|------------|
| ** **                                                              | ** ** | ** **               | ** ** | ** **                  | ** ** |
| Promissory notes dated December 23, 2008 (a)                       |       | $                        | 1,050,000  |                        | $          | 1,050,000 |   |
| Convertible Promissory notes dated January and  March 2009(b) |       | 850,000                  |       | —                      |       |
| Bank of Oklahoma loan (c)                                               |       | 6,547,847                |       | 6,697,847                   |       |
|                                                                    |       | 8,447,847                |       | 7,747,847                   |       |
| Less current portion of long term debt                                  |       | (600,000                 | )          | (600,000                    | )          |
| Less discount on promissory notes relating to loan fees                 |       | (117,668                 | )          | (128,398                    | )          |
|                                                                    |       | $                        | 7,730,179  |                        | $          | 7,019,449 |   |

 

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(a)   The Company issued four promissory notes totaling$1,050,000 during December 2008 with maturity dates in December 2011.The notes may be repaid at any time without penalty. The notes bear an annualrate of eight percent (8%), with such interest payable quarterly in arrears.The principal amount and accrued and unpaid interest are due and payable on December 23,2011. In connection with the notes, the Company paid loan origination feestotaling $6,000 and granted three-year exercisable warrants to purchase 105,000Common Shares and reissued 15,000 warrants at $1.00 per share. We also issued150,000 warrants as a finder’s fee. The fair value of the warrants on the datesof issuance, $122,764 and the $6,000 of loan origination fees, was recorded asa debt discount and is being amortized over the life of the promissory note. Asof March 31, 2009, the unamortized debt discount was $117,668.

 

(b)   During the three months ended March 31, 2009 theCompany borrowed $850,000 pursuant to five separate three-year loans which wereconvertible into a newly designated class of preferred stock of GeoPetro, Series BConvertible Preferred Stock (the “Series B Preferred Stock”).  Subsequent to March 31, 2009, we issued anadditional $1,000,000 of these instruments. The $1,850,000 in loans converted into Series B Preferred Stock on April30, 2009.  The convertible loans have maturitydates in January and March of 2012.  The notes may be repaid at any time withoutpenalty.  The notes bear an annual rateof eight percent (8%), with such interest payable quarterly in arrears.  The principal amount and accrued and unpaidinterest are due and payable on January and March 2012.  The number of shares that were issuable underthe convertible notes outstanding as of March 31, 2009 is calculated by aformula that determines the number of shares to be issued based upon the priceof the preferred shares upon conversion and the amount of principal and accruedinterest outstanding.  Uponimplementation of EITF Issue 07-5, *Determining Whether anInstrument (or Embedded Feature) is Indexed to an Entity’s Own Stock*,management determined that the conversion feature qualified as a derivativeresulting in the fair market value to be recorded as a liability.  The fair market value of the conversionfeature was deemed to be immaterial of March 31, 2009 and therefore noliability is recorded.

 

(C)   Effective December 31, 2008, the Company assumed$7,697,847 of Madisonville Gas Processing LP’s (“MGP”) bank debt related to theCompany’s acquisition of the Madisonville Gas Treatment Plant (the “Plant”) viaa (i) $1 million cash payment applied directly towards debt principalreduction, and (ii) a refinancing by GeoPetro of the $6,697,847 remainingbalance in the form of a 3 year Amended and Restated Term Loan Agreement withthe lender, Bank Oklahoma (“BOK”).  Theterms of the three year loan provide for minimum quarterly principal paymentsof $150,000 and interest payable quarterly in arrears at prime plus 4% or Liborplus 5.5% at the option of the Company. At March 31, 2009, the interestrate was 6.674% (LIBOR + 5.5%). Additional principal will be payable upon GeoPetro meeting certain netoperating cash flow thresholds during the three year term of the loan.  The loan is secured by a first lien on theMadisonville Midstream Plant and all of the Company’s proved natural gasreserves located at the Madisonville Project. In addition, GeoPetro has agreed to pay, at the time the loan is repaidin full, a loan origination fee of $60,000 for any annual period during whichthe loan principal remains outstanding. There is no prepayment penalty. The Amended and Restated Term Loan Agreement contains customaryaffirmative and negative covenants including restrictions on incurringadditional debt and requiring that the Company maintain a minimum tangible networth of at least $35,000,000.

 

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** **

**7.**      **INCOME TAXES:**

 

The Company files incometax returns in the U.S. federal jurisdiction and various states.  There are currently no federal or stateincome tax examinations underway. Furthermore, the Company is no longer subject to U.S. federal income taxexaminations by the Internal Revenue Service for tax years before 2005 and forstate and local tax authorities for tax years before 2004.  The Company does, however, have net operatinglosses generated in tax years 1997 and after, which remain open forexamination.

 

The Company adopted theprovisions of FASB Interpretation No. 48, Accounting for Uncertainty inIncome Taxes, on January 1, 2007. As December 31, 2008 the Companyhad no unrecognized tax benefits. There have been no changes during the yearwith respect to unrecognized tax benefits. The Company does not foresee the total amounts of unrecognized taxbenefits significantly increasing within the next 12 months.  Furthermore, no corresponding interest and penaltieshave been accrued as the Company is in a net operating loss position.

 

The Company provides forincome taxes in accordance with Statement of Financial Accounting Standards No. 109,Accounting for Income Taxes (“SFAS 109”). SFAS 109 requires the recognition ofdeferred tax assets and liabilities for the expected future tax consequences oftemporary differences between the financial statement carrying amounts and thetax basis of the assets and liabilities. Where it is more likely than not thata tax benefit will not be realized, a valuation allowance is recorded to reducethe deferred tax asset to its realizable value.

 

A valuation allowance hasbeen provided against the Company’s net deferred tax assets as the Companybelieves that it is more likely than not that the net deferred tax assets willnot be realized.

 

The effective tax rate for the three month periodended March 31, 2009 was 0%, and for the year ended December 31, 2008is (7.9) percent, and differs from statutory rates primarily due to changes inthe valuation allowance.

 

**8.**      **COMMON STOCK OPTIONS*:***

 

There were no material changes to common stock optionsfrom those disclosed in the audited annual consolidated financial statementsfor the year ended December 31, 2008. The options outstanding as of March 31,2009 have the following contractual lives:

 
| **Number of  Options  Outstanding** | ** ** | **Number of  Options  Exercisable** | ** ** | **Exercise  Prices** | ** ** | **Weighted Average  Remaining  Contractual Life** | ** ** |
|------------------------------------------|------------|------------------------------------------|------------|----------------------|------------|-------------------------------------------------------------|------------|
| 1,750,000                                |       | 1,750,000                                |       | 2.10                 |       | 4.17                                                        |       |
| 150,000                                  |       | 60,000                                   |       | 3.85                 |       | 2.04                                                        |       |
| 10,000                                   |       | 8,000                                    |       | 4.25                 |       | 0.76                                                        |       |
| 815,000                                  |       | —                                   |       | 4.28                 |       | 4.24                                                        |       |
| 10,000                                   |       | 6,000                                    |       | 6.25                 |       | 1.19                                                        |       |
| 2,735,000                                |       | 1,824,000                                |       |                 |       |                                                        |       |

 

The total intrinsic value of options outstanding wasapproximately $0 and $2,875,000 at March 31, 2009 and 2008 respectively.The intrinsic value for exercisable options was $0 and $2,640,500 at March 31,2009 and 2008, respectively.

 

As of March 31, 2009, there are 1,824,000 optionswhich are exercisable. The remaining 911,000 options will become exercisableover the next four years. The stock compensation expense related to theunvested awards is $1,614,012.

 

**9.**      **COMMON STOCK WARRANTS*:***

 

On March 31, 2009, the Company extended theexpiration date on a warrant to purchase 100,000 shares of common stock(exercisable at $5.25 per share) to March 31, 2014.  The fair value of the warrant extension of$215,039 was recorded to common stock and offset additional paid in capital.

 

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On February 23, 2009, the Company issued 50,000shares of the common stock warrants to a non-related party expiring February 22,2012 with a strike price of $1.00 per share. Warrants granted shall vestaccording the following schedule: 25% immediately; 25% at the three monthanniversary of the signing of the agreement; 25% at the six month anniversaryof the signing of the agreement; and 25% at the nine month anniversary of thesigning of the agreement. The grant-date fair value of the warrants amounted to$8,106, using the Black-Scholes valuation method, which is recognized ingeneral and administrative expense on our consolidated statement of operationsratably over the requisite service period as defined by the vesting scheduleabove.

 

**10.**    **COMMITMENTS AND CONTINGENCIES*:***

 

There are no material changes to commitments andcontingencies from those disclosed in the audited annual consolidated financialstatements for the year ended December 31, 2008.

 

**11.**    **SUBSEQUENT EVENTS*:***

 

During the threemonths ended March 31, 2009 we borrowed $850,000 pursuant to five separatethree year loans which were convertible into a newly designated class ofpreferred stock of GeoPetro, Series B Convertible Preferred Stock (the “Series BPreferred Stock”).  The $850,000 in loansconverted into Series B Preferred Stock on April 30, 2009, along withan additional $1,000,000 which was advanced during April for a totalsubscription in the private placement to date of 2,466,672 shares for apurchase price of $0.75 per share and an aggregate investment of $1,850,000.The holders of Series B Stock are entitled to receive an annual dividendat the rate of $0.06 per share and are entitled to such number of votes pershare as equals the number of common shares into which each share of Series BStock is convertible. Each share of Series B Stock is convertible, at theoption of the holder, into fully paid and non-assessable common shares on aone-for-one basis, subject to certain adjustments. The Series B Stock willautomatically convert into common shares on a one-for-one share basis effectivethe first trading day after the reported high selling price for the Company’scommon shares on any international, national or regional securities exchange orinter-dealer quotation system including but not limited to, NASDAQ, the PinkSheets or the Over-the-Counter Bulletin Board, is at least $1.50 per share forany ten consecutive trading days. If an automatic conversion occurs within oneyear after the Series B Stock was purchased from the Company, a holderwill receive, on the one-year anniversary date of his, her or its purchase, acash dividend equivalent to a full year of dividends less any dividends paidbefore such conversion.

 

On April 10, 2009, the Company extended the dateof expiration on 114,000 warrants to December 15, 2011.

 

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**Item 2. Management’s Discussion and Analysis ofFinancial Condition and Results of Operations**

 

*Thefollowing discussion and analysis should be read in conjunction withaccompanying financial statements and related notes included elsewhere in thisreport. It contains forward looking statements that reflect our future plans,estimates, beliefs and expected performance. The forward looking statements aredependent upon events, risks and uncertainties that may be outside our control.Our actual results could differ materially from those discussed in theseforward looking statements.*

 

*Factorsthat could cause or contribute to such differences include, but are not limitedto, market prices for natural gas and oil, economic and competitive conditions,regulatory changes, estimates of proved reserves, potential failure to achieveproduction from development drilling projects, capital expenditures and otheruncertainties, as well as those factors discussed below and elsewhere in thisreport, particularly in “Risk Factors” and “Cautionary Notes Regarding ForwardLooking Statements”, all of which are difficult to predict and which expresslyqualify all subsequent oral and written forward-looking statements attributableto us or persons acting on our behalf. In light of these risks, uncertaintiesand assumptions, the forward looking events discussed may not occur. We do nothave any intention or obligation to update forward-looking statements includedin this report after the date of this report, except as required by law.*

 

**Overview**

 

We are an oil and gascompany in the business of exploring and developing oil and natural gasreserves on a worldwide basis. Since inception, we have conducted leaseholdacquisition, exploration and drilling activities on our North American,Australian and Indonesian prospects. These projects currently encompass approximately379,547 gross (161,171 net) acres, consisting of mineral leases, productionsharing contracts and exploration permits that give us the right to explorefor, develop and produce oil and natural gas. Most of these properties are inthe exploration, appraisal or development drilling phase and have not begun toproduce revenue from the sale of oil and natural gas. Excluding minor interestand dividend income, our only significant cash inflows until 2003 were therecovery of capital invested in projects through sale or other divestiture ofinterests in oil and gas prospects to industry partners.

 

Since 2003, substantiallyall of our revenue has been generated from natural gas sales derived from theMagness #1, the Fannin #1, and the Mitchell #1 wells in the Madisonville Fieldin East Texas under spot gas purchase contracts at market prices. Natural gassales from the Madisonville Field are expected to account for substantially allof our revenues for 2009. We expect the majority of our capital expenditures in2009 will be for the Madisonville Project.

 

**Resultsof Operations**

 

Thefinancial information with respect to the three months ended March 31,2009 and 2008 that is discussed below is unaudited. In the opinion ofmanagement, such information contains all adjustments, consisting only ofnormal recurring accruals, necessary for a fair presentation of the results forsuch periods.  The results of operations for interim periods are notnecessarily indicative of the results of operations for the full fiscal years.

 
| ** **                                | ** ** | **Three Months Ended**  | ** ** |
|-------------------------------------------|------------|-------------------------|------------|
| ** **                                | ** ** | **March 31, 2009** | ** ** | **March 31, 2008** | ** ** |
| ** **                                | ** ** | **(unaudited)**         | ** ** | **(unaudited)** | ** ** |
| **Consolidated Statement of Operations:** |       |                    |       |   |   |
| **Revenues**                              |       | $                       | 876,068    |   | $ | 2,142,598 |   |
| **Plant operating expense**               |       | 1,044,772               |       | — |   |
| **Lease operating expense**               |       | 300,879                 |       | 343,823 |   |
| **General and administrative**            |       | 848,938                 |       | 715,423 |   |
| **Net profits expense**                   |       | —                  |       | 228,061 |   |
| **Depreciation and depletion expense**    |       | 310,086                 |       | 534,430 |   |
| **Earnings (loss) from operations**       |       | (1,628,607              | )          | 320,861 |   |
| **Net income (loss)**                     |       | (1,857,403              | )          | 344,126 |   |
|                                           |            |                         |            |  |  |  |  |

 

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**Revenueand Operating Trends in 2009**

 

Wedeveloped an onsite plan to treat and remove impurities from the MadisonvilleProject natural gas in order to meet pipeline-quality specifications. TheMadisonville Project is located in East Texas. In 2003, the construction andinstallation of a natural gas treatment plant with a designed capacity of 18million cubic feet of gas per day (“MMcf/d”) and associated pipeline andgathering facilities were completed. The treatment plant and associatedgathering facilities were owned by an unaffiliated third party.

 

In 2005 we secured acommitment from MGP to install and make operational additional treatingfacilities capable of treating 50 MMcf/d, which combined with the capacity ofthe current in-service treating facilities will represent a total designedtreating capacity of 68 MMcf/d for the Madisonville treatment plant.   In early November 2007, MGP begantesting the additional treatment facilities by accepting 20 MMcf/d at theinlet.   Subsequently in December 2007, MGP temporarily suspended theoperations of the additional treatment facilities in order to make modifications to moreeffectively deal with the presence of diamondoids in the gas stream producedfrom the Rodessa Formation.

 

During 2008, MGP analyzed various options for removing thediamondoids; however, they did not complete the necessary plant system modifications.  On December 31, 2008, wepurchased the gas treatment plant (the “Plant”) and related gathering pipelinefrom MGP in exchange for assumption of secured debt, payment of certainoutstanding payables of MGP and shares of GeoPetro’s common stock.  The effective date of the acquisition was December 31,2008 and the new owner of the Plant is GeoPetro’s wholly-owned, indirectsubsidiary, Madisonville Midstream LLC (“MM”). We expect to completeinstallation of the system modifications required in the plant in 2009.  In the meantime, the existing, in serviceportion of the plant continues to operate with an effective capacity ofapproximately 15 MMcf/d of inlet gas.

 

While there can be no assurance we will be successful,our goal is to make the necessary upgrades to the acquired gas treatment plantand increase the production rates from our wells which may result in higher netproduction and increased revenue during the later quarterly periods in 2009 ascompared to the first quarter of 2009. To accomplish the plant upgrades, we willneed to raise capital in 2009. Due to the tight credit markets and persistingweakness in the stock market, funds may not be available, or may not beavailable on favorable terms.

 

During the three monthsended March 31, 2009, we did not generate sufficient revenues to cover theplant operating expenses and lease operating expenses in our MadisonvilleProject.  This was due to low productionvolumes, high shrinkage rates in the gas plant and low natural gas prices.   In order to address this shortfall, we areimplementing immediate measures to increase production volumes and reduceoperating expenses. We plan to utilize idle equipment and implement operatingefficiencies in the Plant to reduce the Plant inlet pressure. Preliminary testresults suggest this change in pressure has the potentional to increase thecombined production from the Magness #1 and Fannin #1 wells from currentlevels. This measure is expected to be completed during the second quarter. Inaddition, subject to capital availability, we subsequently plan to workover theMitchell #1 well and to frac and connect via gathering line the Wilson #1 well.Once the above production enhancements are completed, the Company expects thecombined Rodessa formation production to increase from current rates.  The Company hopes to realize bothintermediate and long term cost and operating efficiencies by consolidating theupstream and midstream portions of Madisonville under common ownership. Priorto the consolidation, MGP and GeoPetro employed a combined total of 30 persons,whereas subsequent to the consolidation, GeoPetro and MM now employ a combinedtotal of 21 persons, representing a net reduction of 9 persons (30% of thecombined pre-consolidation workforce). Despite the challenges of the current environment,we accomplished the necessary goal of vertically integrating our position inthe Madisonville field.  We continue to explore other longer term costsaving and efficiency measures in the Plant.

 

**IndustryOverview for the three months ended March 31, 2009**

 

The first quarter of 2009saw weaker natural gas prices. The Houston Ship Channel price, the index priceprevailing in the locale of our Madisonville Project in Madison County, Texas,as quoted in Gas Daily as of March 31, 2009, was $3.37 per Mcf versus$5.25 per Mcf as of December 31, 2008. Natural gas prices have been very volatile during 2008 and early 2009due to supply concerns earlier in 2008, and more recently due to recessionconcerns arising from the current global financial crisis and a resultantdecline in demand for natural gas.

 

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**CompanyOverview for the three months ended March 31, 2009**

 

Our netloss after taxes for the quarter ended March 31, 2009 was $1,857,403. Fromour inception, through mid-2003, we only received nominal revenues from our oiland natural gas activities, while incurring substantial acquisition andexploration costs and overhead expenses which have resulted in an accumulateddeficit through March 31, 2009 of $14,043,017. Commencing in May 2003,we placed our Madisonville Project into production. All of our oil and naturalgas sales for the quarter ended March 31, 2009 were derived from ourMadisonville Project, from three producing wells, the UMC Ruby Magness #1 well(the “Magness Well”), the Angela Farris Fannin #1 well (the “Fannin Well”), andthe Mitchell #1 well (the “Mitchell Well”).

 

**Comparisonof Results of Operations for the three months ended March 31, 2009 and2008**

 

Duringthe three months ended March 31, 2009, we had gross natural gas revenuesfrom the treatment plant of $827,736 and revenues from treating third party gasin the Plant of $48,332. Our gross production from our wells was 253,590 Mcf(production net of royalties of 183,346 Mcf) of natural gas at an average priceof $3.26 per Mcf. During the three months ended March 31, 2008, we had netoil and natural gas revenues of $2,142,598. Our net production for the threemonths ended March 31, 2008 was 450,650 Mcf at an average price of $4.75per Mcf. Revenues decreased in the three months ended March 31, 2009 ascompared to the prior year period due to lower natural gas prices and 59% lowernet production volumes. Net natural gas prices were approximately 31% lower forthe three months ended March 31, 2009 versus the same period in 2008.  The average natural gas price of $4.75 perMcf for the 2008 period was net of treating, gathering, marketing andtransportation fees in accordance with our contracts with MGP and Gateway ADACPipeline, LLC.  The contracts that werein place with MGP were terminated as of December 31, 2008.

 

Priorto December 31, 2008, revenue was recognized upon delivery of oil and gasproduction and was shown net of applicable royalty payments, as well asmarketing, processing and transportation fees. As indicated in the precedingparagraph, the Company recognized revenue from the Madisonville Field net ofapplicable fees to gather, treat and transport the Company’s natural gasproduction. The applicable fees were paid to unrelated third parties.  On December 31,2008, the Company completed the acquisition of the Plant from MGP. Goingforward and commencing with the first quarter ended March 31, 2009,revenue is being recognized without the netting of applicable royalty payments,as well as marketing, processing and transportation fees since we have acquiredthe Plant. For all periods presented, revenue from the Madisonville Field isrecognized when the price for gas delivered became fixed and determinable.

 

Our results of operations for the three months endedMarch 31, 2009 include the operating results of the Plant, but our results ofoperations for the three months ended March 31, 2008 do not include theoperating results of the natural gas treatment plant because such acquisitionclosed on December 31, 2008. The following condensed pro forma informationgives effect to the acquisition as if it had occurred on January 1, 2008.The pro forma information has been included in the notes to the financialstatements included else-where in this document as required by generallyaccepted accounting principles and is provided for comparison purposes only.The pro forma financial information is not necessarily indicative of thefinancial results that would have occurred had the acquisition been effectiveon the dates indicated and should not be viewed as indicative of operations inthe future.

 
| ** **                                   | ** ** | **Three Months Ended  March 31,** | ** ** |
|----------------------------------------------|------------|----------------------------------------|------------|
| ** **                                   | ** ** | **2008**                               | ** ** |
| Operating revenues                           |       | $                                      | 5,248,928  |   |
| Total operating expenses                     |       | $                                      | 4,570,664  |   |
| Earnings (loss) applicable to common stock   |       | $                                      | 459,090    |   |
| Net earnings (loss) per share — basic   |       | $                                      | 0.01       |   |
| Net earnings (loss) per share — diluted |       | $                                      | 0.01       |   |

 

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Duringthe three months ended March 31, 2009, we incurred plant operatingexpenses of $1,044,772. Our average plant operating cost for the 2009 periodwas $3.79 per Mcf on gross throughput of 275,549 Mcf. We purchased the gastreatment plant effective on December 31, 2008, thus there was no plantoperating expense for the comparable 2008 period.

 

Duringthe three months ended March 31, 2009, we incurred lease operating expenseof $300,879. Our net average lifting cost for the 2009 period was $1.64 perMcf. During the three months ended March 31, 2008, we incurred leaseoperating expense of $343,823. Our net average lifting cost for the 2008 periodwas $0.76 per Mcf. The average lifting cost per Mcf in 2009 was higher due tolower net production volume, over which we apply the fixed component of leaseoperating expense.

 

Duringthe three months ended March 31, 2009, we incurred no net profits interestexpense associated with the Magness, the Fannin, and the Mitchell wells ascompared to $228,061 during the three months ended March 31, 2008. Thedecrease resulted from lower gas prices in the three months ended March 31,2009 versus 2008. The net profit interest is 12.5% of the net operating profitfrom our Magness, Fannin, and Mitchell wells.

 

Generaland administrative (“G&A”)expenses for the three months ended March 31, 2009 were $848,938 comparedto $715,423 for the three months ended March 31, 2008. This represents a$133,515 or 19% increased over the prior year period. The higher G&Aexpense incurred in 2009 was due primarily to costs associated with increasedaudit fees and the amortization of stock compensation expense associated withthe newly issued options in June 2008.

 

Depreciation,depletion and amortization expense (“DD&A”) for the three months ended March 31,2009 was $310,086 as compared to $534,430 in the same period of 2008, whichamounts primarily represent amortization of the oil and gas properties for thethree months ended March 31, 2009 and 2008, respectively. The 42% decreasewas due to lower net production in the three months ended March 31, 2009.

 

Lossfrom operations totaled $1,628,607 for the three months ended March 31,2009 as compared to income from operations of $320,861 for the three monthsended March 31, 2008. The increase in the loss from operations was dueprimarily to lower gas prices, lower production volume, and higher expenses.

 

Otherincome for the three months ended March 31, 2009 and 2008 consisted ofinterest income in the amount of $3,643 and $30,065, respectively. Interestincome decreased due primarily to lower average cash and cash equivalentbalances because of treatment plant purchased in December 31, 2008.

 

Duringthe three months ended March 31, 2009 and 2008, we incurred interestexpense of $232,439 and $0, respectively. We borrowed funds in late December 2008and the first quarter of 2009 related to the plant acquisition and workingcapital requirements. There were no borrowings outstanding in the first quarterof 2008.

 

Netloss before taxes for the three months ended March 31, 2009 was $1,857,403as compared to net income before taxes of $350,926 for the three months ended March 31,2008. The net loss incurred during the three months ended March 31, 2009was primarily due to weaker gas prices, lower production volumes and expensesassociated with the gas treatment plant.

 

Incometax expense for the three months ended March 31, 2009 was $0 compared to$6,800 in the same period of 2008. The income tax expense in 2008 was due toalternative minimum tax incurred in the first quarter of 2008.

 

**RecentDevelopments**

 

During the three months ended March 31, 2009 weborrowed $850,000 pursuant to five separate three year loans which wereconvertible into a newly designated class of preferred stock of GeoPetro, Series BConvertible Preferred Stock (the “Series B Preferred Stock”).  The $850,000 in loans converted into Series BPreferred Stock on April 30, 2009, along with an additional $1,000,000which was advanced during April for a total subscription in the privateplacement to date of 2,466,672 shares for a purchase price of $0.75 per shareand an aggregate investment of $1,850,000. The holders of Series B Stockare entitled to receive an annual dividend at the rate of $0.06 per share andare entitled to such number of votes per share as equals the number of commonshares into which each share of Series B Stock is convertible. Each shareof Series B Stock is

 

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convertible, at the option of the holder, into fully paid andnon-assessable common shares on a one-for-one basis, subject to certainadjustments. The Series B Stock will automatically convert into commonshares on a one-for-one share basis effective the first trading day after thereported high selling price for the Company’s common shares on anyinternational, national or regional securities exchange or inter-dealerquotation system including but not limited to, NASDAQ, the Pink Sheets or theOver-the-Counter Bulletin Board, is at least $1.50 per share for any tenconsecutive trading days. If an automatic conversion occurs within one yearafter the Series B Stock was purchased from the Company, a holder willreceive, on the one-year anniversary date of his, her or its purchase, a cashdividend equivalent to a full year of dividends less any dividends paid beforesuch conversion.

 

**Liquidityand Capital Resources**

 

We hada working capital deficit of $3,575,449 at March 31, 2009 versus$2,151,652 at December 31, 2008. Our working capital decreased duringthree months ended March 31, 2009 due primarily to weaker gas prices andlower production.

 

Wehave historically financed our business activities through March 31, 2009principally through issuances of common shares, promissory notes and commonshare purchase warrants in private placements and an initial public offering.These financings are summarized as follows:

 
| ** **                                | ** ** | **Three Months Ended**  | ** ** |
|-------------------------------------------|------------|------------------------------|------------|
| ** **                                | ** ** | **March 31, 2009** | ** ** | **March 31, 2008** | ** ** |
| Proceeds from promissory notes            |       | $                            | 850,000    |   | — |   |
| Repayment of promissory notes             |       | (150,000                     | )          | — |   |
|                                      |       |                         |       |   |   |
| Net cash provided by financing activities |       | $                            | 700,000    |   | $ | — |   |
|                                           |            |                              |            |  |  |  |  |

 

Thenet proceeds of our equity financings have been primarily invested in oil andnatural gas properties totaling $482,021 and $2,211,876 for the three monthsended March 31, 2009 and 2008, respectively.

 

Ourcash balance at March 31, 2009 was $270,615 compared to a cash balance of$770,779 at December 31, 2008. The change in our cash balance issummarized as follows:

 
| Cash balance at December 31, 2008       |   | $          | 770,779 |   |
|----------------------------------------------|--------|------------|---------|--------|
| Sources of cash:                             |   |       |    |
| Cash provided by financing activities        |   | 700,000    |    |
| Total sources of cash including cash on hand |   | 1,470,779  |    |
|                                         |   |       |    |
| Uses of cash:                                |   |       |    |
| Cash used in operating activities            |   | (684,443   | )       |
| Cash used in investing activities:           |   |       |    |
| Oil and natural gas property expenditures    |   | (482,021   | )       |
| Gas treatment plant                          |   | (33,700    | )       |
| Total uses of cash                           |   | (1,200,164 | )       |
|                                         |   |       |    |
| Cash balance at March 31, 2009          |   | $          | 270,615 |   |

 

Duringfirst quarter of 2009, we raised $850,000 from convertible loans fromaccredited investors, each having the following terms:  (i) 8% annual simple interest payablequarterly in arrears, (ii) principal and any unpaid outstanding interestshall be payable at the end of three years, (iii) subordinated to the Bankof Oklahoma loan and (iv) unsecured. The promissory notes converted to Preferred Stock Series Beffective April 30, 2009.

 

Ourcurrent cash and cash equivalents and anticipated cash flow from operations maynot be sufficient to meet our working capital, capital expenditures and growthstrategy requirements for the foreseeable future. See “Outlook for 2009” for adescription of our expected capital expenditures for 2009. If we are unable togenerate revenues necessary to finance our operations over the long-term, wemay have to seek additional capital through the sale of our equity orborrowing. As noted in “Recent Developments,” we periodically borrow fundspursuant to short and long term promissory notes to finance our activities.

 

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As of March 31,2009, we have a working capital deficit of $3,575,449, and for the three monthsended, our cash used in operating activities amounted to $684,443.  Further, we estimate our minimum investmentneeds during the remainder of 2009 amount to be $4,500,000 related to ournatural gas processing plant and our natural gas properties within theMadisonville field.  Due to the currentnatural gas commodity price environment, our results of natural gas operationsamounted to a deficit of $469,583 for the three months ended March 31,2009.  Further, we have debt service anddividend requirements that will require cash payments.  We hold working interests in undevelopedleases, seismic options, lease options and foreign concessions and we haveparticipated in seismic surveys and the drilling of test wells on undevelopedproperties.  We plan further leaseholdacquisitions and seismic operations for the remainder of 2009 and futureperiods.  Exploratory and developmental drilling is scheduled during 2009and future periods on our undeveloped properties.  Subsequent to March 31,2009, we have raised an additional $1,000,000 in convertible notes that wereconverted into our Series B Preferred Stock, and we potentially plan tosell idle equipment from our natural gas processing plant.  In addition to these items, we need to raiseadditional equity or enter into new borrowing arrangements to finance ouroperating deficit and our continued participation in planned activities. Ifadditional financing is not available, we will be compelled to reduce the scopeof our business activities.  If we areunable to fund our operating cash flow needs and planned capital investments,it will be necessary to farm-out our interest in proposed wells, sell a portionof our interest in prospects, sell a portion of our interest in our producingoil and gas properties, reduce general and administrative expenses, or acombination of all of these factors.

 

Asdiscussed in the “Outlook for 2009”, we are forecasting capital expenditures of$7.5 million during 2009. We will need to obtain adequate sources of cash tofund our anticipated capital expenditures through the end of 2009 and to followthrough with plans for continued investments in oil and gas properties. Oursuccess, in part, depends on our ability to generate additional financing andfarmout certain of our projects. Additionally, as a result of the 2008 economic downturn, the Company mayhave difficulty raising sufficient funds to meet our projected funding requirements.The tight credit markets and downturn in the stock market may impair ourability to generate additional financing.

 

Wewill continue to analyze the potential effects of the global economic downturnon our business and prospects and our ability to generate additional financing.

 

**ContractualObligations**

 

Wehave assumed various contractual obligations and commitments in the normalcourse of our operations and financing activities.  We have describedthese obligations and commitments in our “Management’s Discussion and Analysisof Financial Condition and Results of Operations” section in our Annual Reporton Form 10-K for the year ended December 31, 2008.  There wereno material changes to our contractual obligations since December 31, 2008except the borrowings described in “Recent Developments”.

 

**OffBalance Sheet Arrangements**

 

Fromtime to time, we enter into off-balance sheet arrangements and transactionsthat can give rise to off-balance sheet obligations. As of March 31, 2009,our off-balance sheet arrangements and transactions include operating leaseagreements. We do not believe that these arrangements are reasonably likely tomaterially affect our liquidity or availability of, or requirements for,capital resources.

 

**FinancialInstruments**

 

Wecurrently have no natural gas price financial instruments or hedges in place.Similarly, we have no financial derivatives. Our natural gas marketingcontracts use “spot” market prices. Given the uncertainty of the timing andvolumes of our natural gas production this year, we do not currently plan toenter into any long term fixed-price natural gas contracts, swap or hedgepositions, other gas financial instruments or financial derivatives in 2009.

 

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**Outlookfor 2009**

 

Dependingon capital availability, we are forecasting capital spending of up toapproximately $7.5 million during the year 2009, allocated as follows:

 

1         Madisonville Project, Madison County, Texas— Approximately $6.1 million may be expended in the Madisonville Field area asfollows: $3 million for capital maintenance and repair on new gas treatmentplant; $2 million toward the fracture stimulation and hook up costs of theWilson Well; $500,000 for the Mitchell well workover; $300,000 for lowering theline pressure; and $300,000 for lease acquisitions.

 

2.        Cook Inlet, Alaska — Approximately $1.0million to be utilized for land delay rentals, geologic and geophysical costs,wellsite preparation, permitting, and logistics.

 

3.        California and Indonesia — Approximately$0.4 million to be utilized for land, geologic and geophysical costs.

 

Wemay, in our discretion, decide to allocate resources towards other projects inaddition to or in lieu of, those listed above should other opportunities ariseand as circumstances warrant. We currently do not have sufficient workingcapital to fund all of the capital expenditure listed above. See “Liquidity andCapital Resources.”

 

Weexpect commodity prices to be volatile, reflecting the current tight supply anddemand fundamentals for North American natural gas and world crude oil.Political events around the world, which are difficult to predict, willcontinue to influence both oil and gas prices. Higher prices for oil and gasoften lead to higher levels of drilling activity which in turn lead to highercosts to explore, develop and acquire oil and gas reserves due to greatercompetition for resources and supplies. These higher costs could affect thereturns on our capital expenditures. Higher crude prices could also help keepnatural gas prices high by keeping alternative fuels, such as heating oil andresidual fuel, expensive.

 

**Impactof Inflation & Changing Prices**

 

We arehighly dependent upon natural gas pricing. A material decrease in current andprojected natural gas prices could impair our ability to raise additionalcapital on acceptable terms. Likewise, a material decrease in current andprojected natural gas prices could also impact our revenues and cash flows.This could impact our ability to fund future activities.

 

GeoPetroanticipates significantly lower average natural gas prices in 2009 compared to2008. This will likely have a material negative impact on our cash flow andrevenues.

 

Changingprices have had a significant impact on costs of drilling and completing wells,particularly in the Madisonville Field area where we are currently the mostactive. The estimated cost of drilling and completing a Rodessa formation wellat approximately 12,300 feet of depth has increased from $3.0 million in 2001to $7.5 million in 2008 due to higher costs associated with tubular goods, wellequipment, and day rates for drilling contracts, among other factors. Thesehigher costs have impacted and will continue to impact our income fromoperations in the form of higher depletion expense.  We have not recently updated our costestimates for drilling these wells but expect that current costs are lower thanthose prevailing in 2008.

 

**CriticalAccounting Estimates**

 

Ourconsolidated financial statements have been prepared by management inaccordance with U.S. GAAP. We refer you to the corresponding section in Part II,Item 7 and the notes to the consolidated financial statements of our AnnualReport on Form 10-K for the year ended December 31, 2008 for thedescription of critical accounting policies and estimates.

 

**Risksand Uncertainties**

 

Thereare a number of risks that face participants in the U.S., Canadian andinternational oil and natural gas industry, including a number of risks thatface us in particular. Accordingly, there are risks involved in an ownership ofour securities. See “Risk Factors” in our Annual Report on Form 10-K forthe year ended December 31, 2008 for a description of the principal risksfaced by us.

 

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**Item 3. Quantitative and Qualitative Disclosures AboutMarket Risk**

 

We areexposed to market risks arising from fluctuating prices of crude oil, naturalgas and interest rates as discussed below.

 

*Commodity Risk.*  Our major commodity price risk exposure isto the prices received for our natural gas production. Realized commodityprices received for our production are the spot prices applicable to naturalgas in the East Texas region. Prices received for natural gas are volatile andunpredictable and are beyond our control.

 

*Currency Translation Risk.  *Because our revenues and expenses areprimarily in U.S. dollars, we have little exposure to currency translationrisk, and, therefore, we have no plans in the foreseeable future to implementhedges or financial instruments to manage international currency changes.

 

*Hedging.* We did not enter into any hedging transactions duringthe three months ended March 31 2009 and 2008.

 

**Item 4. Controls and Procedures**

 

**Evaluationof Disclosure Controls and Procedures**

 

Basedon their evaluation as of the end of the first quarter ended March 31,2009, our Chief Executive Officer and Chief Financial Officer have concludedthat our disclosure controls and procedures (as defined in Rules 13a-15(e) and15d-15(e) under the Exchange Act) are effective to ensure that informationrequired to be disclosed in reports that we file or submit under the ExchangeAct are recorded, processed, summarized and reported within the time periodsspecified in the SEC’s rules and forms and in providing reasonableassurance that information required to be disclosed by the Company in suchreports is accumulated and communicated to the Company’s management, includingits Chief Executive Officer and Chief Financial Officer, as appropriate toallow timely decisions regarding required disclosures.

 

Duringthe most recent fiscal quarter, there have been no changes in our internalcontrol over financial reporting that have materially affected, or arereasonably likely to materially affect, our internal control over financialreporting.

 

**PART II. OTHER INFORMATION**

 

**Item 1.  Legal Proceedings.**

 

Fromtime to time, we are party to litigation or other legal and administrativeproceedings that we consider to be a part of the ordinary course of ourbusiness. Currently, we are not involved in any legal proceedings nor are weparty to any pending or threatened claims that could, individually or in theaggregate, reasonably be expected to have a material adverse effect on ourfinancial condition, cash flow or results of operations.

 

**Item 1A.  Risk Factors.**

 

As ofthe date of this filing, there have been no material changes from the riskfactors previously disclosed in our “Risk Factors” in our Annual Report on Form 10-Kfor the year ended December 31, 2008, referred to as our 2008 AnnualReport. An investment in our securities involves various risks. Whenconsidering an investment in our company, you should consider carefully all ofthe risk factors described in our 2008 Annual Report. These risks anduncertainties are not the only ones facing us and there may be additionalmatters that we are unaware of or that we currently consider immaterial.

 

**Item 2.**  **UnregisteredSales of Securities and Use of Proceeds.**

 

**UnregisteredSales of Securities**

 

Duringfirst quarter of 2009, we raised $850,000 by issuing convertible promissorynotes to accredited investors, each having the following terms:  (i) 8% annual simple interest payablequarterly in arrears, (ii) principal and any unpaid outstanding interestshall be payable at the end of three years, (iii) subordinated to the BOKloan and (iv) be unsecured.  Thepromissory notes converted to Preferred Stock Series B effective April 30,2009.  The Company issued the convertiblepromissory notes in reliance on the exemption from registration provided forunder Section 4(2) of the Securities Act, and Rule 506 ofRegulation D thereunder. The Company relied on the exemption from registrationprovided for under Section 4(2) of the Securities Act based in parton the representations made by the investors, including the representationswith respect to the investors’ status as accredited investors, as such term isdefined in Rule 501(a) of the Securities Act, and the theirinvestment intent with respect to the Shares purchased.

 

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**Use ofProceeds**

 

On ourregistration statement on Form S-1 (Reg. No. 333-135485) weregistered up to 16,499,991 shares of our common stock, no par value per share,including 4,301,355 shares of common stock issuable upon exercise of warrantsand options, for resale by selling shareholders. The registration statement wasdeclared effective by the Securities and Exchange Commission in February 2007.The offering commenced on in February 2007 and has not terminated. On ourregistration statement on Form S-1 (Reg. No. 333-146557) weregistered up to 2,002,599 shares of outstanding common stock and the resale ofup to 780,857 shares of common stock issuable upon exercise of warrants, forresale by selling shareholders. The registration statement was declaredeffective by the Securities and Exchange Commission in October 2007. Theoffering commenced in October 2007 and has not terminated. We will notreceive any proceeds from the sale of our common stock by the sellingshareholders under the registration statements; however if all warrants andoptions to acquire our common stock being registered thereunder are exercised,we will realize cash proceeds of approximately $12,267,006, which we expect touse for general working capital purposes and the drilling of wells in ourTexas, Alaska, California and Indonesian prospects.

 

Ifless than the $12,267,006 proceeds are realized from the exercise of suchwarrants and options, the proceeds will be spent in the following order ofpriority:

 

1.       Alaska Cook Inlet Project, up toapproximately $2.0 million will be expended for the drilling of pilot programwells.

 

2.       Madisonville Project, Madison County,Texas. Up to approximately $10 million will be expended in the MadisonvilleField area towards the drilling and completion of one deep exploratory welllocation to an estimated depth of 18,000 feet.

 

3.       General working capital.

 

We donot know if, or how many, of the warrants or options will be exercised. This isour best estimate of our use of proceeds generated from the possible exerciseof warrants or options based on the current state of our business operations,our current plans and current economic and industry conditions. Any changes inthe projected use of proceeds will be made at the sole discretion of our boardof directors.

 

**Item 3.  Defaults Upon Senior Securities**

 

Not applicable.

 

**Item 4.  Submission of Matters to a Vote of theSecurity Holders.**

 

Not applicable

 

**Item 5.  Other Information.**

 

Not applicable

 

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**Item 6.  Exhibits**

 

**EXHIBIT INDEX**

 
| **Exhibit  Number** | ** ** | **Description**                                                                                                                                                                                                                                                                                                                                                                                                          |
|---------------------|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.1 (2)             |       | Amended and Restated  Articles of Incorporation of GeoPetro Resources Company                                                                                                                                                                                                                                                                                                                                            |
|                |       |                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 3.2 (8)             |       | Second Amended and  Restated Bylaws of the GeoPetro Resources Company                                                                                                                                                                                                                                                                                                                                                    |
|                |       |                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 4.1 (2)             |       | Form of Warrant  issued by GeoPetro Resources Company to various investors on various dates.                                                                                                                                                                                                                                                                                                                        |
|                |       |                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 4.2 (3)             |       | Specimen Common Stock  Certificate                                                                                                                                                                                                                                                                                                                                                                                       |
|                |       |                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 4.3                 |       | Form of common  stock purchase warrant issued to various investors dated August 13, 2007  (filed as exhibit 4.1 to the Company’s Report on Form 8-K as filed with  the Securities and Exchange Commission on August 16, 2007, and  incorporated herein by reference)                                                                                                                            |
|                |       |                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 4.4                 |       | Registration Rights  Agreement between GeoPetro Resources Company and various investors dated  August 13, 2007 (filed as Exhibit B to the Form of Unit  Subscription Agreement dated August 13, 2007 filed as Exhibit 10.20  to the Company’s Report on Form 8-K as filed with the Securities and  Exchange Commission on August 16, 2007 and incorporated herein by  reference) |
|                |       |                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 4.5 (6)             |       | Placement Agent Warrant  dated August 13, 2007                                                                                                                                                                                                                                                                                                                                                                      |
|                |       |                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 5.1 (6)             |       | Opinion of Greene  Radovsky Maloney Share & Hennigh LLP                                                                                                                                                                                                                                                                                                                                                         |
|                |       |                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 10.1 (2)            |       | Joint Venture Agreement  Bengara II, Dated January 1, 2000                                                                                                                                                                                                                                                                                                                                                          |
|                |       |                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 10.2 (2)            |       | Production Sharing  Contract Bengara II, Dated December 4, 1997                                                                                                                                                                                                                                                                                                                                                     |
|                |       |                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 10.4 (2)            |       | Exploration Permit#408,  Dated July 2, 1997                                                                                                                                                                                                                                                                                                                                                                         |
|                |       |                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 10.5 (2)            |       | Madisonville Field  Development Agreement Dated August 1, 2005                                                                                                                                                                                                                                                                                                                                                      |
|                |       |                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 10.6 (2)            |       | Alaska Cook Inlet  Option dated April 20, 2005                                                                                                                                                                                                                                                                                                                                                                      |
|                |       |                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 10.7 (2)†      |       | The 2001 Stock  Incentive Plan                                                                                                                                                                                                                                                                                                                                                                                           |
|                |       |                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 10.8 (2)†      |       | The 2004 Stock Option  and Appreciation Rights Plan                                                                                                                                                                                                                                                                                                                                                                      |
|                |       |                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 10.9 (2)†      |       | Stuart Doshi Employment  Agreement, Dated July 28, 1997 (effective July 1, 1997) and  amendments dated January 11, 2001, July 1, 2003, April 20,  2004, May 9, 2005, July 28, 2005 and January 30, 2006                                                                                                                                                                          |
|                |       |                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 10.10 (2)†     |       | David Creel Employment  Agreement, Dated April 28, 1998 and amendments dated September 15,  2000, May 12, 2003 and January 1, 2005                                                                                                                                                                                                                                                                   |
|                |       |                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 10.11 (2)†     |       | J. Chris Steinhauser  Employment Agreement, Dated September 19, 2000 and amendments dated  December 12, 2002 and January 1, 2005                                                                                                                                                                                                                                                                          |
|                |       |                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 10.12 (2)           |       | Office Lease Agreement,  Dated effective March 1, 2004                                                                                                                                                                                                                                                                                                                                                              |
|                |       |                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 10.13 (4)           |       | Form of  Subscription Agreement for GeoPetro Resources Company stock executed by  various investors on various dates.                                                                                                                                                                                                                                                                                               |
|                |       |                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 10.19 (5)           |       | Shares Sale &  Purchase Agreement Dated September 29, 2006                                                                                                                                                                                                                                                                                                                                                 |
|                |       |                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 10.20 (6)           |       | Form of Unit  Subscription Agreement Dated August 13, 2007                                                                                                                                                                                                                                                                                                                                                     |
|                |       |                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 10.22 (6)           |       | Promissory Note to  Stuart Doshi dated February 12, 2007                                                                                                                                                                                                                                                                                                                                                            |
|                |       |                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 10.23 (7)†     |       | Third Amendment to J.  Chris Steinhauser Employment Agreement dated December 18, 2007                                                                                                                                                                                                                                                                                                                               |
|                |       |                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 10.24 (1)†     |       | Employment Agreement  with J. Chris Steinhauser dated April 27, 2009                                                                                                                                                                                                                                                                                                                                                |
|                |       |                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 10.25 (1)†     |       | Sixth Amendment to  David Creel Employment Agreement dated April 28, 2009                                                                                                                                                                                                                                                                                                                                           |
|                |       |                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 31.1 (1)            |       | Rule 13a-14(a)/15d-14(a) Certification  of Chief Executive Officer.                                                                                                                                                                                                                                                                                                                                            |

 

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| 31.2 (1) |   | Rule 13a-14(a)/15d-14(a) Certification  of Chief Financial Officer.                                                           |
|----------|--------|-----------------------------------------------------------------------------------------------------------------------------------------|
|     |   |                                                                                                                                    |
| 32.1 (1) |   | Certification of Chief  Executive Officer and Chief Financial Officer of GeoPetro Resources Company  pursuant to 18 U.S.C. § 1350. |

 

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(1)        Filed herewith.

 

(2)        Filed as the identically numbered exhibit to theRegistration Statement on Form S-1, (No. 333-135485), as filed withthe Securities and Exchange Commission on September 30, 2006, andincorporated herein by reference.

 

(3)        Filed as the identically numbered exhibit to theRegistration Statement on Form S-1, (No. 333-135485), as filed withthe Securities and Exchange Commission on January 31, 2007, andincorporated herein by reference.

 

(4)        Filed as Exhibit 10.14 to the RegistrationStatement on Form S-1 (No. 333-135485) as filed with the Securitiesand Exchange Commission on September 30, 2006, and incorporated herein byreference.

 

(5)        Filed as the identically numbered exhibit to theRegistration Statement on Form S-1 (No. 333-135485), as filed withthe Securities and Exchange Commission on January 9, 2007, andincorporated herein by reference.

 

(6)        Filed as the identically numbered exhibit to theRegistration Statement on Form S-1 (No. 333-146557), as filed withthe Securities and Exchange Commission on October 9, 2007, andincorporated herein by reference.

 

(7)        Filed as Exhibit 10.1 to the Company’s Report on Form 8-K,as filed with the Securities and Exchange Commission on December 21, 2007and incorporated herein by reference.

 

(8)        Filed as the identically numbered exhibit to theRegistration Statement on Form S-1 (No. 333-135485), as filed withthe Securities and Exchange Commission on April 25, 2008, and incorporatedherein by reference.

 

†           Indicates a management or compensatory plan orarrangement

 

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**SIGNATURES**

 

Pursuantto the requirements of Section 13 or 15(d) of the Securities ExchangeAct of 1934, the registrant has duly caused this report to be signed on itsbehalf by the undersigned, thereunto duly authorized, on May 11, 2009.

 
| ** ** | **GEOPETRO  RESOURCES COMPANY** |
|------------|---------------------------------|
|       |                            |
|       | By:                             | /s/ Stuart J. Doshi |
|       |                            | Stuart J. Doshi |
|       |                            | Chairman of the Board  of Directors, President and  Chief Executive Officer |
|       |                            |   |
|       | By:                             | /s/ J. Chris  Steinhauser |
|       |                            | J. Chris Steinhauser |
|       |                            | Vice President of  Finance and |
|       |                            | Chief Financial  Officer, Principal |
|       |                            | Accounting Officer and  Director |

 

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