Table ofContents

 

 

 

**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 September 30,2008**

 

**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)

 

| **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.

 

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

 

Indicateby check mark whether the registrant is a shell company (as defined in Rule 12b-2of the Exchange Act). Yes  o      No  x.

 

There were 32,784,646 sharesof no par value common stock outstanding on November 14, 2008.

 

 

 

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Table ofContents

 

**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**

 
| ** **                                                                                                                                                                                    | ** ** | **September 30,** | ** ** | **December 31,** | ** ** |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|------------------------|------------|-----------------------|------------|
| ** **                                                                                                                                                                                    | ** ** | **2008**               | ** ** | **2007**              | ** ** |
| **ASSETS**                                                                                                                                                                                    |       |                   |       |                  |       |
| **Current assets:**                                                                                                                                                                           |       |                   |       |                  |       |
| Cash and cash equivalents                                                                                                                                                                     |       | $                      | 2,965,142  |                  | $          | 4,294,565 |   |
| Trade accounts receivable—oil and gas sales                                                                                                                                              |       | 146,063                |       | 965,188               |       |
| Accounts receivable—other                                                                                                                                                                |       | 33,140                 |       | 345,862               |       |
| Prepaid expenses                                                                                                                                                                              |       | 246,701                |       | 118,065               |       |
| Total current assets                                                                                                                                                                          |       | 3,391,046              |       | 5,723,680             |       |
|                                                                                                                                                                                          |       |                   |       |                  |       |
| **Oil and gas properties, at cost (full cost  method):**                                                                                                                                      |       |                   |       |                  |       |
| Unevaluated properties                                                                                                                                                                        |       | 10,225,762             |       | 5,848,195             |       |
| Evaluated properties                                                                                                                                                                          |       | 48,397,498             |       | 47,428,750            |       |
| Less—accumulated depletion and impairment                                                                                                                                                |       | (16,293,702            | )          | (14,917,700           | )          |
| Net oil and gas properties                                                                                                                                                                    |       | 42,329,558             |       | 38,359,245            |       |
|                                                                                                                                                                                          |       |                   |       |                  |       |
| **Furniture, fixtures and equipment, at cost, net  of accumulated depreciation**                                                                                                              |       | 17,169                 |       | 26,727                |       |
| **Other assets—deposits and other noncurrent  assets**                                                                                                                                   |       | 7,436                  |       | 6,954                 |       |
| **Total Assets**                                                                                                                                                                              |       | $                      | 45,745,209 |                  | $          | 44,116,606 |   |
|                                                                                                                                                                                          |       |                   |       |                  |       |
| **LIABILITIES AND SHAREHOLDERS’  EQUITY**                                                                                                                                                |       |                   |       |                  |       |
|                                                                                                                                                                                          |       |                   |       |                  |       |
| **Current Liabilities:**                                                                                                                                                                      |       |                   |       |                  |       |
| Trade accounts payable                                                                                                                                                                        |       | $                      | 807,195    |                  | $          | 666,293 |   |
| Production taxes payable                                                                                                                                                                      |       | 255,548                |       | 407,246               |       |
| Other taxes payable                                                                                                                                                                           |       | 2,324                  |       | 161,032               |       |
| Royalty owners payable                                                                                                                                                                        |       | 1,211,780              |       | 979,743               |       |
| Net profits interest payable                                                                                                                                                                  |       | 203,998                |       | 147,513               |       |
| Total current liabilities                                                                                                                                                                     |       | 2,480,845              |       | 2,361,827             |       |
|                                                                                                                                                                                          |       |                   |       |                  |       |
| **Asset Retirement Obligations**                                                                                                                                                              |       | 57,707                 |       | 53,726                |       |
| **Total Liabilities**                                                                                                                                                                         |       | 2,538,552              |       | 2,415,553             |       |
|                                                                                                                                                                                          |       |                   |       |                  |       |
| **Commitments and Contingencies (Notes 2 and 8)**                                                                                                                                             |       | —                 |       | —                |       |
|                                                                                                                                                                                          |       |                   |       |                  |       |
| **Shareholders’ Equity:**                                                                                                                                                                |       |                   |       |                  |       |
| Common stock, no par value; 100,000,000 shares authorized; 32,784,646  and 31,950,970 shares issued and outstanding at September 30, 2008  and December 31, 2007, respectively |       | 51,867,733             |       | 51,492,733            |       |
| Additional paid-in capital                                                                                                                                                                    |       | 2,384,517              |       | 2,219,109             |       |
| Accumulated deficit                                                                                                                                                                           |       | (11,045,593            | )          | (12,010,789           | )          |
| Total shareholders’ equity                                                                                                                                                               |       | 43,206,657             |       | 41,701,053            |       |
|                                                                                                                                                                                          |       |                   |       |                  |       |
| **Total Liabilities and Shareholders’ Equity**                                                                                                                                           |       | $                      | 45,745,209 |                  | $          | 44,116,606 |   |

 

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

 

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**GEOPETRO RESOURCES COMPANY**

 

**UNAUDITED CONSOLIDATED STATEMENTS OFOPERATIONS**

 
| ** **                                                | ** ** | **Three Months Ended September 30,** | ** ** | **Nine months Ended September 30,** | ** ** |
|-----------------------------------------------------------|------------|----------------------------------------------------------|------------|---------------------------------------------------------|------------|
| ** **                                                | ** ** | **2008**                                                 | ** ** | **2007**                                                | ** ** | **2008** | ** ** | **2007** | ** ** |
| **Revenues**                                              | ** ** | ** **                                               | ** ** | ** **                                              | ** ** | ** ** | ** ** | ** ** | ** ** |
| Oil and gas sales                                         |       | $                                                        | 1,313,308  |                                                    | $          | 1,231,370 |   | $ | 6,106,898 |   | $ | 5,443,562 |   |
|                                                      |       |                                                     |       |                                                    |       |   |   |   |   |
| **Costs and expenses:**                                   |       |                                                     |       |                                                    |       |   |   |   |   |
| Lease operating expense                                   |       | 296,927                                                  |       | 315,982                                                 |       | 1,287,309 |   | 1,162,089 |   |
| General and administrative                                |       | 601,757                                                  |       | 482,388                                                 |       | 1,921,270 |   | 2,009,307 |   |
| Net profits interest                                      |       | 112,308                                                  |       | 118,916                                                 |       | 601,237 |   | 547,504 |   |
| Impairment expense                                        |       | —                                                   |       | 495,874                                                 |       | 63,766 |   | 495,874 |   |
| Depreciation and depletion expense                        |       | 343,364                                                  |       | 509,436                                                 |       | 1,326,099 |   | 1,739,306 |   |
| Total costs and expenses                                  |       | 1,354,356                                                |       | 1,922,596                                               |       | 5,199,681 |   | 5,954,080 |   |
|                                                      |       |                                                     |       |                                                    |       |   |   |   |   |
| **Income (Loss) from operations**                         |       | (41,048                                                  | )          | (691,226                                                | )          | 907,217 |   | (510,518 | ) |
|                                                      |       |                                                     |       |                                                    |       |   |   |   |   |
| **Other Income and (Expense):**                           |       |                                                     |       |                                                    |       |   |   |   |   |
|                                                      |       |                                                     |       |                                                    |       |   |   |   |   |
| Interest expense                                          |       | —                                                   |       | (92,626                                                 | )          | — |   | (271,071 | ) |
| Interest income                                           |       | 25,741                                                   |       | 38,161                                                  |       | 73,609 |   | 94,362 |   |
| **Total other income (expense)**                          |       | 25,741                                                   |       | (54,465                                                 | )          | 73,609 |   | (176,709 | ) |
|                                                      |       |                                                     |       |                                                    |       |   |   |   |   |
| **Income (Loss) Before Taxes**                            |       | (15,307                                                  | )          | (745,691                                                | )          | 980,826 |   | (687,227 | ) |
|                                                      |       |                                                     |       |                                                    |       |   |   |   |   |
| **Income tax expense**                                    |       | (335                                                     | )          | —                                                  |       | (15,630 | ) | (2,300 | ) |
|                                                      |       |                                                     |       |                                                    |       |   |   |   |   |
| **Net Income (Loss)**                                     |       | $                                                        | (15,642    | )                                                       | $          | (745,691 | ) | $ | 965,196 |   | $ | (689,527 | ) |
|                                                      |       |                                                     |       |                                                    |       |   |   |   |   |
| **Earnings (Loss) per Share:**                            |       |                                                     |       |                                                    |       |   |   |   |   |
| Basic                                                     |       | $                                                        | (0.00      | )                                                       | $          | (0.02 | ) | $ | 0.03 |   | $ | (0.02 | ) |
| Diluted                                                   |       | $                                                        | (0.00      | )                                                       | $          | (0.02 | ) | $ | 0.03 |   | $ | (0.02 | ) |
|                                                      |       |                                                     |       |                                                    |       |   |   |   |   |
| **Weighted Average Number of Common Shares Outstanding:** |       |                                                     |       |                                                    |       |   |   |   |   |
| Basic                                                     |       | 32,783,736                                               |       | 30,603,475                                              |       | 32,413,979 |   | 29,215,952 |   |
| Diluted                                                   |       | 32,783,736                                               |       | 30,603,475                                              |       | 33,045,931 |   | 29,215,952 |   |

 

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

 

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**GEOPETRO RESOURCES COMPANY**

 

**UNAUDITED CONSOLIDATED STATEMENTS OFCASH FLOWS**

 
| ** **                                                                                | ** ** | **For the Nine Months Ended** | ** ** |
|-------------------------------------------------------------------------------------------|------------|---------------------------------------------------|------------|
| ** **                                                                                | ** ** | **September 30,  2008**                      | ** ** | **September 30,  2007** | ** ** |
| **Cash Flows From Operating Activities:**                                                 |       |                                              |       |   |   |
|                                                                                      |       |                                              |       |   |   |
| Net income (loss)                                                                         |       | $                                                 | 965,196    |   | $ | (689,527 | ) |
| Adjustments to reconcile net income (loss) to net cash provided by  operating activities: |       |                                              |       |   |   |
| Depreciation and depletion                                                                |       | 1,326,099                                         |       | 1,739,306 |   |
| Share-based compensation expense                                                          |       | 165,408                                           |       | 104,805 |   |
| Non-cash interest expense                                                                 |       | —                                            |       | 162,537 |   |
| Impairment expense                                                                        |       | 63,766                                            |       | 495,874 |   |
| Accretion of discount on asset retirement obligations                                     |       | 3,185                                             |       | 2,419 |   |
| Changes in operating assets and liabilities:                                              |       |                                              |       |   |   |
| Accounts receivable - oil and gas sales                                                   |       | 819,125                                           |       | (420,741 | ) |
| Other assets                                                                              |       | 183,604                                           |       | (18,781 | ) |
| Current liabilities                                                                       |       | 119,018                                           |       | (641,534 | ) |
| Net cash provided by operating activities                                                 |       | 3,645,401                                         |       | 734,358 |   |
|                                                                                      |       |                                              |       |   |   |
| **Cash Flows from Investing Activities:**                                                 |       |                                              |       |   |   |
|                                                                                      |       |                                              |       |   |   |
| Oil and gas property expenditures                                                         |       | (5,345,519                                        | )          | (2,644,002 | ) |
| Acquisition of furniture, fixtures & equipment                                   |       | (4,305                                            | )          | (5,881 | ) |
| Decrease in related party notes receivable                                                |       | —                                            |       | 1,000,000 |   |
| Net cash used in investing activities                                                     |       | (5,349,824                                        | )          | (1,649,883 | ) |
|                                                                                      |       |                                              |       |   |   |
| **Cash Flows from Financing Activities:**                                                 |       |                                              |       |   |   |
|                                                                                      |       |                                              |       |   |   |
| Proceeds from sale of common shares, option and warrant exercises,  net                   |       | 375,000                                           |       | 7,825,608 |   |
| Proceeds from promissory notes, net                                                       |       | —                                            |       | 1,000,000 |   |
| Payments of loan fee                                                                      |       | —                                            |       | (57,000 | ) |
| Repayments of promissory notes                                                            |       | —                                            |       | (100,000 | ) |
| Net cash provided by financing activities                                                 |       | 375,000                                           |       | 8,668,608 |   |
|                                                                                      |       |                                              |       |   |   |
| **Net Increase (Decrease) in Cash and Cash  Equivalents:**                                |       | (1,329,423                                        | )          | 7,753,083 |   |
|                                                                                      |       |                                              |       |   |   |
| **Cash and Cash Equivalents:**                                                            |       |                                              |       |   |   |
| Beginning of period                                                                       |       | 4,294,565                                         |       | 734,561 |   |
| End of period                                                                             |       | $                                                 | 2,965,142  |   | $ | 8,487,644 |   |
|                                                                                      |       |                                              |       |   |   |
| **Supplemental Disclosure of Cash Flow  Information:**                                    |       |                                              |       |   |   |
| Cash paid for interest                                                                    |       | $                                                 | —     |   | $ | 108,535 |   |
|                                                                                      |       |                                              |       |   |   |
| Cash paid for income taxes                                                                |       | $                                                 | 15,630     |   | $ | 1,500 |   |

 

***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, 2007.

 

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. For the unevaluated properties, the Company evaluatesthe possibility of potential impairment on a quarterly basis. During the ninemonths ended September 30, 2008, approximately $63,766 of unevaluated propertycosts related to our Canadian properties were reclassified to proved propertyand a ceiling test impairment was recorded in the Canadian full cost pool. Thecomputation of share-based compensation expense requires assumptions such asvolatility, expected life and the risk-free interest rate. It is at leastreasonably possible these estimates could be revised in the near term, andthese revisions could be material.

 

Certain reclassifications have been made to priorperiod financial statements to conform with the current presentation.

 

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

 

We hold working interests in undeveloped leases,seismic options, lease options and foreign concessions and we have participatedin seismic surveys and the drilling of test wells on undeveloped properties.Further leasehold acquisitions and seismic operations are planned for 2008 andfuture periods.  In addition, exploratory and developmental drilling isscheduled in future periods on our undeveloped properties.  We anticipatethat these exploration activities together with others that may be entered intomay impose financial requirements which may exceed our existing workingcapital. We may need to raise additional equity or enter into new borrowingarrangements to finance our continued participation in planned activities.Further, we have farmed-out certain of our projects.  However, ifadditional financing is not available, we may be compelled to reduce the scopeof our business activities. If we are unable to fund planned expenditures, itmay be necessary to forfeit our interest in proposed wells, farm-out ourinterest in proposed wells, sell a portion of our interests in prospects anduse the sale proceeds to fund participation for a lesser interest, reducegeneral and administrative expenses, or a combination of all of these factors.

 

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

 

In September 2006, the FASB issued SFAS No. 157,*Fair Value Measurements*, which weadopted on January 1, 2008.  SFAS 157 provides a definition of fairvalue, establishes a framework for measuring fair value, and expandsdisclosures about fair value measurements for future transactions. The adoptionof this pronouncement did not impact our financial position or results of operations.

 

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.

 

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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 will be recharacterized as noncontrollinginterests and classified as a component of equity. It also establishes a singlemethod of accounting for changes in a parent’s ownership interest in asubsidiary and requires expanded disclosures. This statement is effective forfiscal years beginning on or after December 15, 2008, with early adoptionprohibited. We do not expect the adoption of this statement will have amaterial impact 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. SFAS No. 161 is effective forfinancial statements issued for years and interim periods beginning after November 15,2008. We do not expect the adoption of SFAS No. 161 to have a significanteffect on our reported financial position or results of operations.

 

**4.****    ****EARNINGS PER COMMON SHARE:**

 

Basic earnings per share excludes dilution and iscalculated by dividing net income or loss by the weighted average number ofcommon shares outstanding for the period. Diluted earnings per share reflectsthe potential dilution that could occur if securities or other contracts toissue common stock were exercised or converted into common stock or resulted inthe issuance of common stock that then shared from the earnings of the entity.There were 2,131,855 outstanding common stock warrants as well as 990,000outstanding common stock options at September 30, 2008  that were not included in the diluted EPScalculation because the warrants’ and options’ exercise prices were greaterthan the average market price of the common shares.

 
| ** **                                       | ** ** | **Three Months Ended September 30,** | ** ** | **Nine Months Ended September 30,** | ** ** |
|--------------------------------------------------|------------|----------------------------------------------------------|------------|---------------------------------------------------------|------------|
| ** **                                       | ** ** | **2008**                                                 | ** ** | **2007**                                                | ** ** | **2008** | ** ** | **2007** | ** ** |
| Numerators:                                      |       |                                                     |       |                                                    |       |   |   |   |   |
| Net Income (Loss)                                |       | $                                                        | (15,642    | )                                                       | $          | (745,691 | ) | $ | 965,196 |   | $ | (689,527 | ) |
|                                             |       |                                                     |       |                                                    |       |   |   |   |   |
| Denominator:                                     |       |                                                     |       |                                                    |       |   |   |   |   |
| Weighted Average Shares Outstanding              |       | 32,783,736                                               |       | 30,603,475                                              |       | 32,413,979 |   | 29,215,952 |   |
| Outstanding Options                              |       | Anti-dilutive                                            |       | Anti-dilutive                                           |       | 592,817 |   | Anti-dilutive |   |
| Outstanding Warrants                             |       | Anti-dilutive                                            |       | Anti-dilutive                                           |       | 39,135 |   | Anti-dilutive |   |
| Average Number of Shares for Diluted Calculation |       | 32,783,736                                               |       | 30,603,475                                              |       | 33,045,931 |   | 29,215,952 |   |
| Diluted EPS                                      |       | $                                                        | (0.00      | )                                                       | $          | (0.02 | ) | $ | 0.03 |   | $ | (0.02 | ) |

 

**5.****     ****INCOME TAXES:**

 

The Company files income tax returns in the U.S.federal jurisdiction and various states.  There are currently no federalor state income tax examinations underway.  Furthermore, the Company is nolonger subject to U.S. federal income tax examinations by the Internal RevenueService for tax years before 2005 and for state and local tax authorities fortax years before 2002.  The Company does, however, have net operatinglosses generated in tax years 1997 and after, which remain open forexamination.

 

The Company adopted the provisions of FASBInterpretation No. 48, Accounting for Uncertainty in Income Taxes, on January 1,2007.  The Company does not foresee the total amounts of unrecognized taxbenefits significantly increasing within the next 12 months.  Furthermore,no corresponding interest and penalties have been accrued as the Company is ina net operating loss position.

 

The Company provides for income taxes in accordancewith Statement of Financial Accounting Standards No. 109, Accounting forIncome Taxes (“SFAS 109”). SFAS 109 requires the recognition of deferred taxassets and liabilities for the expected future tax consequences of temporarydifferences between the financial statement carrying amounts and the tax basisof the assets and liabilities. Where it is more likely than not that a taxbenefit will not be realized, a valuation allowance is recorded to reduce thedeferred tax asset to its realizable value.

 

A valuation allowance has been provided against theCompany’s net deferred tax assets as the Company believes that it is morelikely than not that the net deferred tax assets will not be realized.

 

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The effective tax rate for the nine month period endedSeptember 30, 2008 and for the year ended December 31, 2007 is 3.1percent, and differs from statutory rates primarily due to changes in thevaluation allowance.

 

**6.****     ****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, 2007 except as follows:

 

On June 27, 2008, the Company issued 820,000common stock options to officers, directors, and employees at a price of $4.28per share with a term of 5 years from the date issued (expiring June 26,2013) and shall vest over five years pursuant to the Stock Option Plan.

 

The weighted average fair value of options granted on June 27,2008, as calculated under the Black-Scholes pricing model is $2.17. The fairvalue of each new issued option grant is estimated on the date of grant usingthe Black-Scholes option pricing model with the following weighted-averageassumptions: risk-free, weighted-average interest rate of 3.5% based on theU.S. Treasury yield curve in effect at the time of grant, expected dividend yieldof 0 percent, expected life of 5 years from the date of grant, and expectedvolatility of 65.68%.

 

On April 25, 2008, an officer and directorexercised options to purchase 750,000 shares of common stock at an exerciseprice of $0.50 per share. The options had an expiration date of April 30,2008.

 

The options outstanding as of September 30, 2008have 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                 |       | 4.67                                                        |       |
| 150,000                                  |       | 60,000                                   |       | 3.85                 |       | 2.54                                                        |       |
| 10,000                                   |       | 6,000                                    |       | 4.25                 |       | 1.25                                                        |       |
| 820,000                                  |       | —                                   |       | 4.28                 |       | 4.74                                                        |       |
| 10,000                                   |       | 6,000                                    |       | 6.25                 |       | 1.69                                                        |       |
| 2,740,000                                |       | 1,822,000                                |       |                 |       |                                                        |       |

 

The total intrinsic value of options outstanding wasapproximately $332,500 and $8,158,500 at September 30, 2008 and 2007,respectively. The intrinsic value for exercisable options was $332,500 and$7,486,500 at September 30, 2008 and 2007, respectively.

 

As of September 30, 2008, there are 1,822,000options which are exercisable. The remaining 918,000 options will becomeexercisable over the next five years. The stock compensation expense related tothe unvested awards is $1,829,853.

 

**7.****     ****COMMON STOCK WARRANTS*:***

 

On July 2, 2008, the Company issued 83,676 sharesof common stock pursuant to a cashless exercise of 175,125 common stockwarrants.

 

**8.****     ****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, 2007 except as follows:

 

*SouthDry Hollow Prospect, Lavaca County, Texas*—On February 26, 2008, the Company’s subsidiary,South Texas GeoPetro LLC, entered into a participation agreement wherein itacquired a 15% non-operated working interest in the South Dry Hollow Prospect,which is located in Lavaca County, Texas. On February 25, 2008, the Company paid a $150,000 prospect fee andadvanced $1.1 million to drill the Eichhorn #1 Well. The Eichorn #1 Well wasdrilled to a depth of approximately 16,650 feet and is currently beingevaluated for production.

 

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**9.****     ****SUBSEQUENT EVENTS*:***

 

*Office Lease*— The lease for the Company’s principalexecutive office located at One Maritime Plaza, Suite 700, San Francisco,CA 94111 has been amended to extend the term of the sublease for an additionalone (1) year and two (2) months and the new expiration day is April 30,2010.

 

*Acquisition of SouthBengara-II Block* – On November 13, 2008, the Company acquired aninterest in a new production sharing contract (“PSC”) in Indonesia.  Pursuant to a joint bid agreement (“JBA”)with Adelphi Energy Limited and Continental Energy Corporation, the group'sjoint venture company, ACG (South Bengara-II) Pte. Ltd. (“ACG”), signed a newPSC for the South Bengara-II block. GeoPetro's wholly owned subsidiary,GeoPetro Resources (South Bengara-II) Pte. Ltd., owns a 24.999% stake in ACGand its new PSC.  ACG, in accordance withthe terms of its bid and the PSC, is obliged to pay a signing bonus of$1,000,000 and complete a work program during the first 3 PSC contract yearswhich includes conducting geological and geophysical field surveys and studies,acquiring at least 100 line kilometers of new 2D seismic, and drilling oneexploration well for a total minimum expenditure of $7,850,000.  In accordance with the provisions of the JBA,GeoPetro will pay 50% of the signing bonus and 50% of the first $3,000,000 inwork program expenditures. Thereafter it will pay its 24.999% equity share ofcosts and be entitled to the same share of revenues.

 

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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 arean oil and gas company in the business of exploring and developing oil andnatural gas reserves on a worldwide basis. Since inception, we have conductedleasehold acquisition, exploration and drilling activities on our NorthAmerican, Australian and Indonesian prospects. These projects currentlyencompass approximately 372,317 gross (158,401 net) acres, consisting ofmineral leases, production sharing contracts and exploration permits that giveus the right to explore for, develop and produce oil and natural gas. Most ofthese properties are in the exploration, appraisal or development drillingphase and have not begun to produce revenue from the sale of oil and naturalgas. Excluding minor interest and dividend income, our only significant cashinflows until 2003 were the recovery of capital invested in projects throughsale or other divestiture of interests in oil and gas prospects to industrypartners.

 

Since2003, substantially all of our revenue has been generated from natural gassales derived from the Magness #1, the Fannin #1, and the Mitchell #1 wells inthe Madisonville Field in East Texas under spot gas purchase contracts atmarket prices. Natural gas sales from the Madisonville Field are expected toaccount for substantially all of our revenues for 2008. We expect the majorityof our capital expenditures in 2008 and 2009 will be spent on the MadisonvilleProject.

 

**Resultsof Operations**

 

Thefinancial information with respect to the nine months ended September 30,2008 and 2007 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.

 

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| ** **                                | ** ** | **Nine Months Ended**  | ** ** |
|-------------------------------------------|------------|----------------------------------|------------|
| ** **                                | ** ** | **September 30, 2008** | ** ** | **September 30, 2007** | ** ** |
| ** **                                | ** ** | **(unaudited)**                  | ** ** | **(unaudited)** | ** ** |
| **Consolidated Statement of Operations:** |       |                             |       |   |   |
| **Revenues**                              |       | $                                | 6,106,898  |   | $ | 5,443,562 |   |
| **Lease operating expense**               |       | 1,287,309                        |       | 1,162,089 |   |
| **General and administrative**            |       | 1,921,270                        |       | 2,009,307 |   |
| **Net profits expense**                   |       | 601,237                          |       | 547,504 |   |
| **Impairment expense**                    |       | 63,766                           |       | 495,874 |   |
| **Depreciation and depletion expense**    |       | 1,326,099                        |       | 1,739,306 |   |
| **Earnings (Loss) from operations**       |       | 907,217                          |       | (510,518 | ) |
| **Net income (loss)**                     |       | $                                | 965,196    |   | $ | (689,527 | ) |

 

**IndustryOverview for the nine months ended September 30, 2008**

 

Thenine months ended September 30, 2008 saw moderately weaker natural gasprices. The Houston Ship Channel price, the index price prevailing in thelocale of our Madisonville Project in Madison County, Texas, as quoted in GasDaily as of September 30, 2008, was $6.77 per Mcf versus $6.81 per Mcf asof December 31, 2007. Natural gas prices have been very volatile during2008 year to date due to supply concerns earlier in the year, and more recentlydue to recession concerns arising from the current financial crisis.

** **

In thefuture we may need to raise capital, and due to the tight credit markets anddownturn in the stock market, funds may not be available, or if available, maybe on unfavorable terms.  Exploratory anddevelopment drilling is scheduled during 2008 and future periods on ourundeveloped properties. It is anticipated that these exploration activitiestogether with others that may be entered into will impose financialrequirements which will exceed our existing working capital. We may raiseadditional equity and/or debt capital, and we may farm-out certain of ourprojects to finance our continued participation in planned activities. However,if additional financing is not available, we may be compelled to reduce thescope of our business activities. If we are unable to fund plannedexpenditures, it may be necessary to:

 
| 1.     |   | forfeit our interest in  wells that are proposed to be drilled;                                                              |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                         |
| 2.     |   | farm-out our interest  in proposed wells;                                                                                    |
|   |   |                                                                                                                         |
| 3.     |   | sell a portion of our  interest in prospects and use the sale proceeds to fund our participation for  a lesser interest; and |
|   |   |                                                                                                                         |
| 4.     |   | reduce general and  administrative expenses.                                                                                 |

 

**CompanyOverview for the nine months ended September 30, 2008**

 

Ournet income after taxes for the nine months ended September 30, 2008 was$965,196. From our inception, through mid-2003, we only received nominalrevenues from our oil and natural gas activities, while incurring substantialacquisition and exploration costs and overhead expenses which have resulted inan accumulated deficit through September 30, 2008 of $11,045,593.Commencing in May 2003, we placed our Madisonville Project intoproduction. Substantially all of our oil and natural gas sales for the ninemonths ended September 30, 2008 were derived from our MadisonvilleProject, from three producing wells, the UMC Ruby Magness #1 well (the “MagnessWell”), the Angela Farris Fannin #1 well (the “Fannin Well”), and the Mitchell#1 well (the “Mitchell Well”).

 

**Comparisonof Results of Operations for the three months ended September 30, 2008 and2007**

 

Duringthe three months ended September 30, 2008, we had oil and natural gasrevenues of $1,313,308. Our net production was 281,337 Mcf of natural gas at anaverage price of $4.67 per Mcf. During the three months ended September 30,2007, we had oil and natural gas revenues of $1,231,370. Our net production forthe three months ended September 30, 2007 was 448,214 Mcf at an averageprice of $2.75 per Mcf.  Revenueincreased in the three months ended September 30, 2008 as compared to theprior year period due to higher natural gas prices. The 37% lower productionvolumes for the three months ended September 30, 2008 as compared to thesame period of 2007 was due to (i) disruption due to HurricaneIke in September (plant was shut down for 10 days due to storm and lack ofelectricity), and (ii) higher shrinkage rates in the plant, and (iii) restrictedproduction rates due to high 

 

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inletpressures into the plant.Natural gas prices were approximately 70% higher for the three months ended September 30,2008 versus the same period in 2007.

 

Duringthe three months ended September 30, 2008, we incurred lease operatingexpense of $296,927. Our average lifting cost for the 2008 period was $1.06 perMcf. During the three months ended September 30, 2007, we incurred leaseoperating expense of $315,982. Our average lifting cost for the 2007 period was$0.70 per Mcf. The average lifting cost per Mcf in 2008 was higher due to lowernet production in proportion to fixed components of LOE (281,337 net productionvolume three months ended September 30, 2008 versus 448,214 net productionvolume in the same period of 2007).

 

Duringthe three months ended September 30, 2008, we incurred net profitsinterest expense of $112,308 associated with the Magness, the Fannin, and theMitchell wells as compared to $118,916 during the three months ended September 30,2007. The 6% decrease resulted from adjustment of ad valorem taxes of priorperiods in the three months ended September 30, 2008. The net profitinterest is 12.5% of the net operating profit from our Magness, Fannin,and Mitchell wells.

 

Generaland administrative (“**G&A**”)expenses for the three months ended September 30, 2008 were $601,757compared to $482,388 for the three months ended September 30, 2007. Thisrepresents a $119,369 or 25% increase over the prior year period. The higherG&A expense incurred in 2008 was due primarily to costs associated withimplementation of the Sarbanes-Oxley Act of 2002 requirements, additionalpersonnel, and share-based compensation associated with option grants made in2008.

 

The 2008 third quarter impairment expense was $-0-versus $495,874 for the 2007 third quarter. The 2007 impairment expense was dueto dry hole drilled associated with the Wildwood project in Canada, whichresulted in a ceiling test write down.

 

Depreciationand depletion expense for the three months ended September 30, 2008 was$343,364 as compared to $509,436 in the same period of 2007, which amountsprimarily represent depletion of the oil and gas properties for the threemonths ended September 30, 2008 and 2007, respectively. The 33% decreasewas due to lower net production in the three-month period of 2008.

 

Lossfrom operations totaled $41,048 for the three months ended September 30,2008 as compared to $691,226 for the same period of 2007. The decrease in theloss from operations was due primarily to higher gas prices and no impairmentwrite-downs in the three months ended September 30, 2008.

 

Otherincome for the three months ended September 30, 2008 and 2007 consisted ofinterest income in the amount of $25,741 and $38,161, respectively.  The higher interest income in the threemonths ended September 30, 2007 was due primarily to higher average cashand cash equivalent balances during the 2007 period.

 

Duringthe three months ended September 30, 2008 and 2007, we incurred interestexpense of $-0- and $92,626, respectively. We had no outstanding debt duringthe third quarter of 2008 since all loans were paid in full in October 2007.

 

Netloss before taxes for the three months ended September 30, 2008 was$15,307 as compared to net loss before taxes of $745,691 for the three monthsended September 30, 2007. The decrease in net loss before taxes during thethree months ended September 30, 2008 was primarily due to higher gasprices, lower expenses and an impairment recorded in the comparable 2007period.

 

**Comparisonof Results of Operations for the nine months ended September 30, 2008 and2007**

 

Duringthe nine months ended September 30, 2008, we had oil and natural gasrevenues of $6,106,898, and our net production was 1,106,521 Mcf of natural gasat an average price of $5.52 per Mcf. During the nine months ended September 30,2007, we had oil and natural gas revenues of $5,443,562 and our net productionwas 1,556,551 Mcf at an average price of $3.50 per Mcf. Revenues increased inthe nine months ended September 30, 2008 as compared to the prior yearperiod due to higher natural gas prices. The 29% lower production volumes forthe nine months ended September 30, 2008 as compared to the same period of2007 was due to (i) disruption due to Hurricane Ike in September (plantwas shut down for 10 days), and (ii) higher shrinkage rates in the plant, and (iii) restrictedproduction rates due to high inlet pressures into the plant. Natural gas prices were approximately58% higher for the nine months ended September 30, 2008 versus the sameperiod in 2007.

 

Duringthe nine months ended September 30, 2008, we incurred lease operatingexpense of $1,287,309. Our average lifting cost for the 2008 period was $1.16per Mcf. During the nine months ended September 30, 2007, we incurredlease operating expense of $1,162,089. Our average lifting cost for the 2007period was $0.75 per Mcf. The average lifting cost per Mcf in 2008 was higherdue to a workover performed on the Magness well during that period and due tolower production.

 

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During the nine months ended September 30,2008, we incurred net profits interest expense of $601,237 associated with theMagness, the Fannin, and the Mitchell wells as compared to $547,504 during thenine months ended September 30, 2007. The 10% increase resulted fromhigher gas prices in the nine months ended September 30, 2008 versus 2007.The net profit interest is 12.5% of the net operating profit from our Magness,Fannin, and Mitchell wells.

 

General and administrative (“**G&A**”) expenses for the nine monthsended September 30, 2008 were $1,921,270 compared to $2,009,307 for thenine months ended September 30, 2007. This represents a $88,037 or 4%decrease over the prior year period. The higher G&A expense incurred in2007 was due primarily to costs associated with our initial SEC registrationand American Stock Exchange listing.

 

The 2008 nine months ended September 30, theimpairment expense was $63,766 versus $495,874 for the same period of 2007. The2008 impairment expense was the remaining costs associated with a dry holedrilled in 2007 in the Wildwood project in Canada. Under the full costaccounting, the impairment is evaluated based on each cost center on a countryby country basis.

 

Depreciation and depletion expense for the ninemonths ended September 30, 2008 was $1,326,099 as compared to $1,739,306in the same period of 2007, which amounts primarily represent depletion of theoil and gas properties for the nine months ended September 30, 2008 and2007, respectively. The 24% decrease was due to lower net production in thenine months period of 2008.

 

Income from operations totaled $907,217 for the ninemonths ended September 30, 2008 as compared to loss from operations of$510,518 for the nine months ended September 30, 2007. The increase in theincome from operations was due primarily to higher gas prices and lowerexpenses.

 

Other income for the nine months ended September 30,2008 and 2007 consisted of interest income in the amount of $73,609 and$94,362, respectively. The higher interest income in 2007 was due primarily tointerest received on a note receivable. The note was repaid on June 29,2007.

 

During the nine months ended September 30, 2008and 2007, we incurred interest expense of $-0- and $271,071, respectively. Wehad no outstanding debt during the nine months ended September 30, 2008since all loans were paid in full in October 2007.

 

Net income before taxes for the nine months ended September 30,2008 was $980,826 as compared to net loss before taxes of $687,227 for the ninemonths ended September 30, 2007. The increase in net income during thenine months ended September 30, 2008 was primarily due to higher gas priceand lower expenses.

 

Income tax expense for the nine months ended September 30,2008 was $15,630 compared to $2,300 in the same period of 2007. The increasedincome tax expense was due to alternative minimum tax incurred in the ninemonths ended September 30, 2008.

 

**Recent Developments**

 

In 2005 we secured a commitment from MadisonvilleGas Processing, LP (“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 October 2007, MGP informed us thatthey had partially completed construction of the additional treatingfacilities.  Subsequently in November 2007,MGP commenced phase-in of the additional treating capacity reaching a temporarypeak inlet volume of 21 mmcf/d out of the total contracted 50 mmcf/d designcapacity at such facilities. However, operations at the additional treatingfacilities were suspended by MGP in December 2007 in order to make thenecessary modifications to effectively deal with the presence of diamondoids inthe gas stream produced from the Rodessa Formation. A diamondoid is a rare,naturally occurring compound that can segregate out of the gas stream upon adecrease in temperature and pressure and as such, could cause operationalproblems for the nitrogen rejection portion of the additional treatingfacilities.  MGP previously obtained adetail laboratory composition analysis of the diamondoids, conducted a pilottest of a diamondoid removal process at the field level and is currentlydesigning modifications to the operating system.  MGP indicates that removal of the diamondoidswill require flowing the natural gas stream through a hydrocarbon contactorafter the gas stream has had the hydrogen sulfide and carbon dioxideremoved.  Through this contactor process,the hydrocarbons will absorb the diamondoids from the gas stream prior to entryinto the nitrogen removal tower.  In the meantime, the existing, inservice portion of the plant continues to treat inlet gas.

 

On February 26, 2008, our subsidiary, SouthTexas GeoPetro LLC, entered into a participation agreement wherein it acquireda 15% non-operated working interest in the South Dry Hollow Prospect, which islocated in Lavaca County, Texas. On February 25, 2008, the Company paid a$150,000 prospect fee and advanced $1.1 million to drill the Eichhorn #1 Well.The Eichorn #1 Well was drilled to a depth of approximately 16,650 feet and iscurrently being evaluated for production.

 

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On April 25, 2008, an officer and directorexercised options to purchase 750,000 shares of common stock at an exerciseprice of $0.50 per share. The options had an expiration date of April 30,2008.

 

On July 2, 2008, we issued 83,676 shares of ourcommon stock pursuant to a cashless exercise of 175,125 common stock warrants.

 

On July 31, 2008, we entered into a thirdamendment with Pioneer Oil Company (“Pioneer”). Per the terms of the amendment, the Company paid Pioneer the sum of$1,168,093 on August 7, 2008, which represents the second and finalpayment for leases comprising 116,806 acres onshore in Cook Inlet,Alaska.  The amendment further providedthat the work program requiring $2.5 million in expenditures by GeoPetro hasbeen eliminated in its entirety.

 

On October 14, 2008, we amended the lease for ourprincipal executive office located at One Maritime Plaza, Suite 700, SanFrancisco, CA 94111, to extend the term of the sublease for an additional one (1) yearand two (2) months and the new expiration day is April 30, 2010.

 

**Liquidity and Capital Resources**

 

We had a working capital surplus of $910,201 at September 30,2008 versus $3,361,853 at December 31, 2007. Our working capital decreasedduring nine months ended September 30, 2008 due primarily to ourparticipation in the drilling of a well in South Texas and the final payment toPioneer to secure the leases in Cook Inlet, Alaska.

 

We have historically financed our businessactivities principally through issuances of common shares, promissory notes andcommon share purchase warrants in private placements and an initial publicoffering. However, during the nine months ended September 30, 2008, we hadminor financing activities. These financings are summarized as follows:

 
| ** **                                                      | ** ** | **Nine Months Ended**  | ** ** |
|-----------------------------------------------------------------|------------|----------------------------------|------------|
| ** **                                                      | ** ** | **September 30, 2008** | ** ** | **September 30, 2007** | ** ** |
| Proceeds from sale of common shares and  warrant exercises, net |       | $                                | 375,000    |   | $ | 7,825,608 |   |
| Proceeds from promissory notes                                  |       | —                           |       | 1,000,000 |   |
| Payments of loan fee                                            |       | —                           |       | (57,000 | ) |
| Repayments of promissory notes                                  |       | —                           |       | (100,000 | ) |
|                                                            |       |                             |       |   |   |
| Net cash provided by financing activities                       |       | $                                | 375,000    |   | $ | 8,668,608 |   |

 

The net proceeds of our equity financings have beenprimarily invested in oil and natural gas properties totaling $5,345,519 and$2,644,002 for the nine months ended September 30, 2008 and 2007,respectively.

 

Our cash balance at September 30, 2008 was$2,965,142 compared to a cash balance of $4,294,565 at December 31, 2007.The change in our cash balance is summarized as follows:

 
| Cash balance at December 31, 2007        |   | $          | 4,294,565 |   |
|-----------------------------------------------|--------|------------|-----------|--------|
| Sources of cash:                              |   |       |      |
| Cash provided by operating activities         |   | 3,645,401  |      |
| Cash provided by financing activities         |   | 375,000    |      |
| Total sources of cash including cash on  hand |   | 8,314,966  |      |
|                                          |   |       |      |
| Uses of cash:                                 |   |       |      |
| Cash used in investing activities:            |   |       |      |
| Oil and natural gas property expenditures     |   | (5,345,519 | )         |
| Furniture, fixtures and equipment             |   | (4,305     | )         |
| Total uses of cash                            |   | (5,349,824 | )         |
|                                          |   |       |      |
| Cash balance at September 30, 2008       |   | $          | 2,965,142 |   |

 

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Our current cash and cash equivalents andanticipated cash flow from operations may not be sufficient to meet our workingcapital, capital expenditures and growth strategy requirements for theforeseeable future. See “Outlook for 2008/2009” for a description of ourexpected capital expenditures for 2008. If we are unable to generate revenuesnecessary to finance our operations over the long-term, we may have to seekadditional capital through the sale of our equity or borrowing. Due to thetight credit markets and downturn in the stock market, such capital through thesale of our equity or borrowing may not be available, or if available, may beon unfavorable terms.  As noted in theannual report on form 10-K for the year ended December 31, 2007 in “RecentDevelopments,” we periodically borrowed funds pursuant to short term promissorynotes to finance our activities.

 

As discussed in the “Outlook for 2008/2009”, we areforecasting capital expenditures of $29.2 million during 2008/2009. We willneed to obtain adequate sources of cash to fund our anticipated capitalexpenditures through the end of 2008/2009 and to follow through with plans forcontinued investments in oil and gas properties. Our success, in part, dependson our ability to generate additional financing and farm-out certain of ourprojects.  As noted in the previousparagraph, the tight credit markets and downturn in the stock market may impairour ability to generate additional financing.

 

Since our inception, we have participated as aworking interest owner in the acquisition of undeveloped leases, seismicoptions, lease options and foreign concessions and have participated in seismicsurveys and the drilling of test wells on our undeveloped properties. Furtherleasehold acquisitions, drilling and seismic operations are planned for the remainderof 2008 and future periods. In addition, exploratory and development drillingis scheduled during 2008 and future periods on our undeveloped properties. Itis anticipated that these exploration activities together with others that maybe entered into will impose financial requirements which will exceed ourexisting working capital. We may raise additional equity and/or debt capital,and we may farm-out certain of our projects to finance our continuedparticipation in planned activities. However, if additional financing is notavailable, we may be compelled to reduce the scope of our business activities.If we are unable to fund planned expenditures, it may be necessary to:

 
| 1.     |   | forfeit  our interest in wells that are proposed to be drilled;                                                              |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                         |
| 2.     |   | farm-out  our interest in proposed wells;                                                                                    |
|   |   |                                                                                                                         |
| 3.     |   | sell  a portion of our interest in prospects and use the sale proceeds to fund our  participation for a lesser interest; and |
|   |   |                                                                                                                         |
| 4.     |   | reduce  general and administrative expenses.                                                                                 |

 

We will continue to analyze the potentialeffects of the global economic downturn on our business and prospects and ourability to generate additional financing.

 

**Contractual Obligations**

 

We have assumed various contractual obligations andcommitments in the normal course of our operations and financingactivities.  We have described these obligations and commitments in our “Management’sDiscussion and Analysis of Financial Condition and Results of Operations”section in our Annual Report on Form 10-K for the year ended December 31,2007.  There were no material changes to our contractual obligations sinceDecember 31, 2007, except as mentioned herein in “Recent Developments.”

 

**Off Balance Sheet Arrangements**

 

From time to time, we enter into off-balance sheetarrangements and transactions that can give rise to off-balance sheetobligations. As of September 30, 2008, our off-balance sheet arrangementsand transactions include operating lease agreements and gas transportation commitments.We do not believe that these arrangements are reasonably likely to materiallyaffect our liquidity or availability of, or requirements for, capitalresources.

 

**Financial Instruments**

 

We currently have no natural gas price financialinstruments or hedges in place. Similarly, we have no financial derivatives.Our natural gas marketing contracts use “spot” market prices. Given theuncertainty of the timing and volumes of our natural gas production this year,we do not currently plan to enter into any long term fixed-price natural gascontracts, swap or hedge positions, other gas financial instruments orfinancial derivatives in 2008.

 

**Outlook for 2008/2009**

 

Depending on capital availability, we areforecasting capital spending of up to approximately $29.2 million during theyear(s) 2008/2009, allocated as follows:

 
| 1. |   | Madisonville  Project, Madison County, Texas. Approximately $16.5 million may be expended  in the Madisonville Field area as follows: $1.5 million toward the fracture  stimulation and hook up costs of the Wilson Well and $15.0 million toward the  drilling of a deep well. |
|----|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

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| 2.     |   | Central  Alberta Project. Up to approximately $2.7 million may be expended to  drill an exploratory well in the Swan Hills Prospect.                                                                                         |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                              |
| 3.     |   | Cook  Inlet, Alaska. Up to $5.0 million may be expended toward the drilling and  completion of one exploratory well and an additional $2.0 million to be  utilized for land acquisition and geologic and geophysical costs.       |
|   |   |                                                                                                                                                                                                                              |
| 4.     |   | Indonesia.  Up to $3.0 million may be expended toward the drilling, completion and  testing of wells as well as the acquisition of seismic data in the Bengara II  PSC as well as acquisition costs associated with new ventures. |

 

We may, in our discretion, decide to allocateresources towards other projects in addition to or in lieu of, those listedabove should other opportunities arise and as circumstances warrant. We currentlydo not have sufficient working capital to fund all of the capital expenditurelisted above. See “Liquidity and Capital Resources.”

 

We expect commodity prices to be volatile,reflecting the current tight supply and demand fundamentals for North Americannatural gas and world crude oil. Political events around the world, which aredifficult to predict, will continue to influence both oil and gas prices. 

 

**Impact of Inflation & Changing Prices**

 

We are highly dependent upon natural gas pricing.  Higher prices for oil and gas often lead tohigher levels of drilling activity which in turn lead to higher costs toexplore, develop and acquire oil and gas reserves due to greater competitionfor resources and supplies. These higher costs could affect the returns on ourcapital expenditures. Higher crude prices could also help keep natural gasprices high by keeping alternative fuels, such as heating oil and residualfuel, expensive.  A material decrease in current and projectednatural gas prices could impair our ability to raise additional capital onacceptable terms. Likewise, a material decrease in current and projectednatural gas prices could also impact our revenues and cash flows. This couldimpact our ability to fund future activities.

 

Changing prices have had a significant impact oncosts of drilling and completing wells, particularly in the Madisonville Fieldarea where we are currently the most active. The estimated cost of drilling andcompleting a Rodessa formation well at approximately 12,300 feet of depth hasincreased from $3.0 million in 2001 to $7.5 million in 2008 due to higher costsassociated with tubular goods, well equipment, and day rates for drillingcontracts, among other factors. These higher costs have impacted and willcontinue to impact our income from operations in the form of higher depletionexpense.

 

**Critical Accounting Estimates**

 

Our consolidated financial statements have beenprepared by management in accordance with U.S. GAAP. We refer you to thecorresponding section in Part II, Item 7 and the notes to the consolidatedfinancial statements of our Annual Report on Form 10-K for the year ended December 31,2007 for the description of critical accounting policies and estimates.

 

**Risks and Uncertainties**

 

There are a number of risks that face participantsin the U.S., Canadian and international oil and natural gas industry, includinga number of risks that face us in particular. Accordingly, there are risksinvolved in an ownership of our securities. See “Risk Factors” in our Annual Reporton Form 10-K for the year ended December 31, 2007 as well as the riskfactors set forth herein for a description of the principal risks faced by usin addition to the risk factor described below.

 

**Risksassociated with recent economic trends could adversely affect our financialperformance.**

 

As widely reported, the global financialmarkets have been experiencing extreme disruption in recent months, includingseverely diminished liquidity and credit availability. Concurrently, economicweakness has begun to accelerate globally. We believe these conditions have notmaterially impacted our financial position as of September 30, 2008 orliquidity for the nine months ended September 30, 2008. However, our financialcondition and performance could be negatively impacted if either of theseconditions exists for a sustained period of time, or if there is furtherdeterioration in financial markets and major economies. We are unable topredict the likely duration and severity of the current disruption in financialmarkets and adverse economic conditions in the U.S. and the world.

 

**Item 3. Quantitative andQualitative Disclosures About Market Risk**

 

We are exposed to market risks arising fromfluctuating prices of crude oil, natural gas and interest rates as discussedbelow.

 

*Commodity Risk.*  Our major commodity price riskexposure is to the prices received for our natural gas production. Realizedcommodity prices received for our production are the spot prices applicable tonatural gas in the East Texas region. Prices received for natural gas arevolatile and unpredictable and are beyond our control. For the nine monthsended September 30, 2008, a 10% change in the prices received for naturalgas production would have had an approximate $700,000 impact on our revenues.

 

*Currency TranslationRisk.  *Becauseour revenues and expenses are primarily in U.S. dollars, we have littleexposure to currency translation risk, and, therefore, we have no plans in theforeseeable future to implement hedges or financial instruments to manageinternational currency changes.

 

*Hedging.* We did not enter into any hedgingtransactions during the nine montshs ended September 30, 2008 and 2007.

 

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** **

**Item 4. Controls and Procedures**

 

**Evaluation of Disclosure Controls and Procedures**

 

Based on their evaluation as of the end of the thirdquarter ended September 30, 2008, our Chief Executive Officer and Chief FinancialOfficer have concluded that our disclosure controls and procedures (as definedin Rules 13a-15(e) and 15d-15(e) under the Exchange Act) areeffective to ensure that information required to be disclosed in reports thatwe file or submit under the Exchange Act are recorded, processed, summarizedand reported within the time periods specified in the SEC’s rules andforms and in providing reasonable assurance that information required to bedisclosed by the Company in such reports is accumulated and communicated to theCompany’s management, including its Chief Executive Officer and Chief FinancialOfficer, as appropriate to allow timely decisions regarding requireddisclosures.

 

During the most recent fiscal quarter, there havebeen no changes in our internal control over financial reporting that havematerially affected, or are reasonably likely to materially affect, ourinternal control over financial reporting.

 

**PART II.OTHER INFORMATION**

 

**Item 1.  LegalProceedings.**

 

From time to time, we are party to litigation orother legal and administrative proceedings that we consider to be a part of theordinary course of our business. Currently, we are not involved in any legalproceedings nor are we party to any pending or threatened claims that could,individually or in the aggregate, reasonably be expected to have a materialadverse effect on our financial condition, cash flow or results of operations.

 

**Item 1A.  RiskFactors.**

 

As of the date of this filing, except as set forth below,there have been no material changes from the risk factors previously disclosedin our Annual Report on Form 10-K for the year ended December 31,2007, referred to as our 2007 Annual Report. An investment in our securitiesinvolves various risks. When considering an investment in our company, youshould consider carefully all of the risk factors described in our 2007 AnnualReport as well as the risk factors set forth herein. 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.

 

**Risksassociated with recent economic trends could adversely affect our financialperformance.**

 

As widely reported, the global financialmarkets have experienced extreme disruption in recent months, includingseverely diminished liquidity and credit availability. Concurrently, economicweakness has begun to accelerate globally. We believe these conditions have notmaterially impacted our financial position as of September 30, 2008 orliquidity for the nine months ended September 30, 2008; however, our financialcondition and performance could be negatively impacted if either of theseconditions exists for a sustained period of time, or if there is furtherdeterioration in financial markets and major economies. We are unable topredict the likely duration and severity of the current disruption in financialmarkets and adverse economic conditions in the U.S. and the world.

 

In the future we may need to raise capital, and dueto the tight credit markets and downturn in the stock market, funds may not beavailable, or may be available only on unfavorable terms. Due to the recentdecrease in our stock price, we may have to sell more shares to raise the sameamount of money than we would have in the past, resulting in greater dilutionto existing shareholders than would be the case if our stock price was higher.  We have scheduled exploratory and developmentdrilling during 2008 and future periods on our undeveloped properties. It isanticipated that these exploration activities together with others that we mayundertake will impose financial requirements which will exceed our existingworking capital. We may raise additional equity and/or debt capital, and we mayfarm-out certain of our projects to finance our continued participation inplanned activities; however, if additional financing is not available, we maybe compelled to reduce the scope of our business activities. If we are unableto fund planned expenditures, it may be necessary to:

 
| 1.     |   | forfeit  our interest in wells that we propose to drill;                                                                     |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                         |
| 2.     |   | farm-out  our interest in proposed wells;                                                                                    |
|   |   |                                                                                                                         |
| 3.     |   | sell  a portion of our interest in prospects and use the sale proceeds to fund our  participation for a lesser interest; and |
|   |   |                                                                                                                         |
| 4.     |   | reduce  general and administrative expenses.                                                                                 |

 

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

 

**Unregistered Sales of Securities**

 

On April 29, 2008, we issued 750,000 shares ofcommon stock to an officer and director, an accredited investor, pursuant to anexercise of stock options at $0.50 per share for proceeds of $375,000.  These shares were issued pursuant to Rule 701promulgated 

 

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underthe Securities Act, in that they were offered and sold pursuant to a writtencontract relating to compensation, as provided by Rule 701. On July 2,2008, we issued 83,676 shares of common stock pursuant to a cashless exerciseof 175,125 common stock warrants.****These shareswere issued pursuant to an exemption from the registration requirements of theSecurities Act pursuant to Section 4(2) of the Securities Act and Rule 506of Regulation D without payment of underwriting discounts or commissions to anyperson.

 

**Use of Proceeds**

 

On our registration statement on Form S-1 (Reg.No. 333-135485) we registered up to 16,499,991 shares of our common stock,no par value per share, including 4,301,355 shares of common stock issuableupon exercise of warrants and options, for resale by selling shareholders. Theregistration statement was declared effective by the Securities and ExchangeCommission in February 2007. The offering commenced in February 2007and has not terminated. On our registration statement on Form S-1 (Reg. No. 333-146557)we registered up to 2,002,599 shares of outstanding common stock and the resaleof up 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 $10,008,955, which we expect touse for general working capital purposes and the drilling of wells in ourTexas, Alaska, California, Canadian and Indonesian prospects.

 

If less than the $10,008,955 proceeds are realizedfrom the exercise of such warrants and options, the proceeds will be spent inthe following order of priority:

 
| 1.     |   | Alaska  Cook Inlet Project, up to approximately $5.0 million will be expended for the  drilling of pilot program wells.                                                                                                                        |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                           |
| 2.     |   | Madisonville  Project, Madison County, Texas. Up to approximately $5 million will be  expended in the Madisonville Field area towards the drilling and completion  of one deep exploratory well location to an estimated depth of 18,000 feet. |
|   |   |                                                                                                                                                                                                                                           |
| 3.     |   | General  working capital.                                                                                                                                                                                                                      |

 

We do not know if, or how many, of the warrants oroptions will be exercised. This is our best estimate of our use of proceedsgenerated from the possible exercise of warrants or options based on thecurrent state of our business operations, our current plans and currenteconomic and industry conditions. Any changes in the projected use of proceedswill be made at the sole discretion of our board of directors.

 

**Item 3.  Defaults UponSenior Securities**

 

Not applicable.

 

**Item 4.  Submission ofMatters to a Vote of the Security Holders.**

 

On June 27, 2008, the Company held its annualstockholders meeting. The Board proposed, and the shareholders approved, (i) theelection of each of the Company’s Directors for an additional term of one yearto expire at the Company’s next Annual Meeting and (ii) ratification ofthe appointment of Hein & Associates, LLP as the Company’s independentregistered public accounting firm for the fiscal year ending December 31,2008. The number or votes cast for and against, or withheld, as to eachDirector and for the Ratification of Hein & Associates, LLP were asfollows:

 
| ** **       | ** ** | **Stuart J.** | ** ** | **David V.** | ** ** | **J. Chris** | ** ** | **Thomas D.** | ** ** | **David G.** | ** ** | **Nick**   | ** ** | **Jeffrey**  | ** ** |
|------------------|------------|--------------------|------------|-------------------|------------|-------------------|------------|--------------------|------------|-------------------|------------|------------|------------|--------------|------------|
| ** **       | ** ** | **Doshi**          | ** ** | **Creel**         | ** ** | **Steinhauser**   | ** ** | **Cunningham**     | ** ** | **Anderson**      | ** ** | **DeMare** | ** ** | **Friedman** | ** ** |
|             |       |               |       |              |       |              |       |               |       |              |       |       |       |         |       |
| Shares in  Favor |       | 17,573,661         |       | 17,436,225        |       | 17,461,325        |       | 17,562,955         |       | 17,632,955        |       | 17,578,955 |       | 17,972,705   |       |
| Shares  Withheld |       | 1,023,231          |       | 1,160,667         |       | 1,135,567         |       | 1,033,937          |       | 963,937           |       | 1,017,937  |       | 627,187      |       |

 
| Ratification  of the appointment of Hein & Associates, LLP: |   | For: 18,501,892 |   |
|----------------------------------------------------------------------|--------|-----------------|--------|
|                                                                 |   | Against: 94,000 |   |
|                                                                 |   | Abstain: 1,000  |   |

 

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**Item 5.  OtherInformation.**

 

Not applicable

 

**Item 6.  Exhibits**

 
| **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                                                                                                                                                                                                                                                                                                                                                     |

 

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| 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                                             |
|            |   |                                                                                                                                    |
| 31.1 (1)        |   | Rule 13a-14(a)/15d-14(a) Certification  of Chief Executive Officer.                                                           |
|            |   |                                                                                                                                    |
| 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 the Registration Statement on  Form S-1, (No. 333-135485), as filed with the Securities and  Exchange Commission on September 30, 2006, and incorporated herein by  reference. |
|   |   |                                                                                                                                                                                                                                        |
| (3)    |   | Filed  as the identically numbered exhibit to the Registration Statement on  Form S-1, (No. 333-135485), as filed with the Securities and  Exchange Commission on January 31, 2007, and incorporated herein by  reference.   |
|   |   |                                                                                                                                                                                                                                        |
| (4)    |   | Filed  as Exhibit 10.14 to the Registration Statement on Form S-1  (No. 333-135485) as filed with the Securities and Exchange Commission on  September 30, 2006, and incorporated herein by reference.                  |
|   |   |                                                                                                                                                                                                                                        |
| (5)    |   | Filed  as the identically numbered exhibit to the Registration Statement on  Form S-1 (No. 333-135485), as filed with the Securities and  Exchange Commission on January 9, 2007, and incorporated herein by  reference.     |
|   |   |                                                                                                                                                                                                                                        |
| (6)    |   | Filed  as the identically numbered exhibit to the Registration Statement on  Form S-1 (No. 333-146557), as filed with the Securities and  Exchange Commission on October 9, 2007, and incorporated 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, 2007 and  incorporated herein by reference.                                           |
|   |   |                                                                                                                                                                                                                                        |
| (8)    |   | Filed  as the identically numbered exhibit to the Registration Statement on Form S-1  (No. 333-135485), as filed with the Securities and Exchange Commission  on April 25, 2008, and incorporated herein by reference.       |
|   |   |                                                                                                                                                                                                                                        |
| † |   | Indicates  a management or compensatory plan or arrangement                                                                                                                                                                                 |

 

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**SIGNATURES**

 

Pursuant to the requirements of Section 13 or15(d) of the Securities Exchange Act of 1934, the registrant has dulycaused this report to be signed on its behalf by the undersigned, thereuntoduly authorized, on November 14, 2008.

 
|       | **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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