Table of Contents

 

 

 

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

 

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**FORM 10-Q**

 

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**(MarkOne)**

 

x         **QUARTERLYREPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACTOF 1934**

 

**For the quarterly period ended September 30,2009**

 

**OR**

 

o            **TRANSITIONREPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACTOF 1934**

 

**For the transition periodfrom                to                **

 

**Commission file number 001-16749**

 

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**GeoPetro Resources Company**

(Exact name of registrant as specified in its charter)

 

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

 

**(415) 398-8186**

(Registrant’s telephone number, including area code)

 

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

 

Indicateby check mark whether the registrant has submitted electronically and posted onits corporate Web site, if any, every Interactive Data File required to besubmitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 ofthis chapter) during the preceding 12 months (or for such shorter period thatthe registrant was required to submit and post suchfiles).  Yes o  No o

 

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

 

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

 

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

 

There were 34,284,646 shares of no par value commonstock outstanding on November 9, 2009.

 

 

 

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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,** | ** ** |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|------------------------|------------|-----------------------|------------|
| ** **                                                                                                                                                                                                       | ** ** | **2009**               | ** ** | **2008**              | ** ** |
| **ASSETS**                                                                                                                                                                                                       |       |                   |       |                  |       |
| **Current assets:**                                                                                                                                                                                              |       |                   |       |                  |       |
| Cash  and cash equivalents                                                                                                                                                                                       |       | $                      | 1,645,006  |                  | $          | 770,779 |   |
| Trade  accounts receivable—natural gas sales                                                                                                                                                                |       | 278,864                |       | 4,266                 |       |
| Accounts  receivable—other                                                                                                                                                                                  |       | 22,836                 |       | 35,107                |       |
| Prepaid  expenses                                                                                                                                                                                                |       | 133,855                |       | 212,938               |       |
| Total  current assets                                                                                                                                                                                            |       | 2,080,561              |       | 1,023,090             |       |
|                                                                                                                                                                                                             |       |                   |       |                  |       |
| **Oil and gas properties, at cost (full cost method):**                                                                                                                                                          |       |                   |       |                  |       |
| Unproved  properties                                                                                                                                                                                             |       | 9,953,679              |       | 10,500,498            |       |
| Proved  properties                                                                                                                                                                                               |       | 49,572,988             |       | 48,346,939            |       |
| Gas  processing plant, at cost                                                                                                                                                                                   |       | 10,285,573             |       | 10,707,982            |       |
| Less—accumulated  depletion, depreciation, and impairment                                                                                                                                                   |       | (18,611,636            | )          | (16,522,304           | )          |
| Net  oil and gas properties                                                                                                                                                                                      |       | 51,200,604             |       | 53,033,115            |       |
|                                                                                                                                                                                                             |       |                   |       |                  |       |
| **Furniture, fixtures and equipment, at cost, net of  depreciation**                                                                                                                                             |       | 2,942                  |       | 12,364                |       |
| **Other assets—deposits and other noncurrent assets**                                                                                                                                                       |       | 16,127                 |       | 7,436                 |       |
| **Total Assets**                                                                                                                                                                                                 |       | $                      | 53,300,234 |                  | $          | 54,076,005 |   |
|                                                                                                                                                                                                             |       |                   |       |                  |       |
| **LIABILITIES  AND SHAREHOLDERS’ EQUITY**                                                                                                                                                                   |       |                   |       |                  |       |
|                                                                                                                                                                                                             |       |                   |       |                  |       |
| **Current Liabilities:**                                                                                                                                                                                         |       |                   |       |                  |       |
| Trade  payables                                                                                                                                                                                                  |       | $                      | 1,926,008  |                  | $          | 1,137,432 |   |
| Current  portion of long term notes payable                                                                                                                                                                      |       | 1,254,582              |       | 600,000               |       |
| Interest  payable                                                                                                                                                                                                |       | 114,851                |       | 1,479                 |       |
| Dividends  payable                                                                                                                                                                                               |       | 68,583                 |       | —                |       |
| Production  taxes payable                                                                                                                                                                                        |       | 331,525                |       | 311,168               |       |
| Other  taxes payable                                                                                                                                                                                             |       | —                 |       | 20,833                |       |
| Royalty  owners payable                                                                                                                                                                                          |       | 1,101,401              |       | 1,103,830             |       |
| Total  current liabilities                                                                                                                                                                                       |       | 4,796,950              |       | 3,174,742             |       |
|                                                                                                                                                                                                             |       |                   |       |                  |       |
| **Long Term Notes Payable**                                                                                                                                                                                      |       | 5,830,507              |       | 7,019,449             |       |
| **Asset Retirement Obligations**                                                                                                                                                                                 |       | 63,478                 |       | 59,099                |       |
| **Total Liabilities**                                                                                                                                                                                            |       | 10,690,935             |       | 10,253,290            |       |
|                                                                                                                                                                                                             |       |                   |       |                  |       |
| **Commitments and Contingencies (Notes 2 and 8)**                                                                                                                                                                |       | —                 |       | —                |       |
|                                                                                                                                                                                                             |       |                   |       |                  |       |
| **Shareholders’ Equity:**                                                                                                                                                                                   |       |                   |       |                  |       |
| Series B  preferred stock, no par value; 6,800,000 shares authorized 4,121,004 shares  issued and outstanding at September 30, 2009. Liquidation preference of  $3,159,246 at September 30, 2009. |       | 3,031,710              |       | —                |       |
| Common  stock, no par value; 100,000,000 shares authorized; 34,284,646 shares issued  and outstanding at September 30, 2009 and December 31, 2008,  respectively                                  |       | 53,397,733             |       | 53,397,733            |       |
| Additional  paid-in capital                                                                                                                                                                                      |       | 2,936,739              |       | 2,610,596             |       |
| Accumulated  deficit                                                                                                                                                                                             |       | (16,756,883            | )          | (12,185,614           | )          |
| Total  shareholders’ equity                                                                                                                                                                                 |       | 42,609,299             |       | 43,822,715            |       |
|                                                                                                                                                                                                             |       |                   |       |                  |       |
| **Total Liabilities and Shareholders’ Equity**                                                                                                                                                              |       | $                      | 53,300,234 |                  | $          | 54,076,005 |   |

 

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

 

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**GEOPETRO RESOURCES COMPANY**

 

**UNAUDITED CONSOLIDATED STATEMENTS OFOPERATIONS**

 
| ** **                                             | ** ** | **Three Months Ended September 30,** | ** ** | **Nine months Ended September 30,** | ** ** |
|--------------------------------------------------------|------------|----------------------------------------------------------|------------|---------------------------------------------------------|------------|
| ** **                                             | ** ** | **2009**                                                 | ** ** | **2008**                                                | ** ** | **2009** | ** ** | **2008** | ** ** |
|                                                   |       |                                                     |       |                                                    |       |   |   |   |   |
| Revenues:                                              |       |                                                     |       |                                                    |       |   |   |   |   |
| Natural  gas sales                                     |       | $                                                        | 973,653    |                                                    | $          | 1,313,308 |   | $ | 2,919,923 |   | $ | 6,106,898 |   |
|                                                   |       |                                                     |       |                                                    |       |   |   |   |   |
| Costs  and expenses:                                   |       |                                                     |       |                                                    |       |   |   |   |   |
| Plant  operating expense                               |       | 1,396,346                                                |       | —                                                  |       | 3,749,484 |   | — |   |
| Lease  operating expense                               |       | 93,773                                                   |       | 296,927                                                 |       | 478,187 |   | 1,287,309 |   |
| General  and administrative                            |       | 561,227                                                  |       | 601,757                                                 |       | 2,026,821 |   | 1,921,270 |   |
| Net  profits interest                                  |       | —                                                   |       | 112,308                                                 |       | — |   | 601,237 |   |
| Impairment  expense                                    |       | 939,703                                                  |       | —                                                  |       | 939,703 |   | 63,766 |   |
| Depreciation  and depletion expense                    |       | 432,559                                                  |       | 343,364                                                 |       | 1,159,050 |   | 1,326,099 |   |
| Total  costs and expenses                              |       | 3,423,608                                                |       | 1,354,356                                               |       | 8,353,245 |   | 5,199,681 |   |
|                                                   |       |                                                     |       |                                                    |       |   |   |   |   |
| Income  (loss) from operations                         |       | (2,449,955                                               | )          | (41,048                                                 | )          | (5,433,322 | ) | 907,217 |   |
|                                                   |       |                                                     |       |                                                    |       |   |   |   |   |
| Other  Income and (Expense):                           |       |                                                     |       |                                                    |       |   |   |   |   |
|                                                   |       |                                                     |       |                                                    |       |   |   |   |   |
| Interest  expense                                      |       | (163,645                                                 | )          | —                                                  |       | (563,991 | ) | — |   |
| Interest  income                                       |       | 976                                                      |       | 25,741                                                  |       | 4,949 |   | 73,609 |   |
| Gain  on sale of equipment                             |       | 1,488,687                                                |       | —                                                  |       | 1,488,687 |   | — |   |
| Total  other income (expense)                          |       | 1,326,018                                                |       | 25,741                                                  |       | 929,645 |   | 73,609 |   |
|                                                   |       |                                                     |       |                                                    |       |   |   |   |   |
| Income  (Loss) Before Taxes                            |       | (1,123,937                                               | )          | (15,307                                                 | )          | (4,503,677 | ) | 980,826 |   |
|                                                   |       |                                                     |       |                                                    |       |   |   |   |   |
| Income  tax (expense) benefit                          |       | 2,836                                                    |       | (335                                                    | )          | 991 |   | (15,630 | ) |
|                                                   |       |                                                     |       |                                                    |       |   |   |   |   |
| Net  Income (Loss)                                     |       | (1,121,101                                               | )          | (15,642                                                 | )          | (4,502,686 | ) | 965,196 |   |
|                                                   |       |                                                     |       |                                                    |       |   |   |   |   |
| Dividend                                               |       | (43,871                                                  | )          | —                                                  |       | (68,583 | ) | — |   |
|                                                   |       |                                                     |       |                                                    |       |   |   |   |   |
| Net  Income (Loss) Available to Common Shareholders    |       | $                                                        | (1,164,972 | )                                                       | $          | (15,642 | ) | $ | (4,571,269 | ) | $ | 965,196 |   |
|                                                   |       |                                                     |       |                                                    |       |   |   |   |   |
| Earnings  (Loss) per Share:                            |       |                                                     |       |                                                    |       |   |   |   |   |
| Basic                                                  |       | $                                                        | (0.03      | )                                                       | $          | (0.00 | ) | $ | (0.13 | ) | $ | 0.03 |   |
| Diluted                                                |       | $                                                        | (0.03      | )                                                       | $          | (0.00 | ) | $ | (0.13 | ) | $ | 0.03 |   |
|                                                   |       |                                                     |       |                                                    |       |   |   |   |   |
| Weighted  Average Number of Common Shares Outstanding: |       |                                                     |       |                                                    |       |   |   |   |   |
| Basic                                                  |       | 34,284,646                                               |       | 32,783,736                                              |       | 34,284,646 |   | 32,413,979 |   |
| Diluted                                                |       | 34,284,646                                               |       | 32,783,736                                              |       | 34,284,646 |   | 33,045,931 |   |

 

***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,  2009**                      | ** ** | **September 30,  2008** | ** ** |
| **Cash Flows From Operating Activities:**                                                            |       |                                              |       |   |   |
|                                                                                                 |       |                                              |       |   |   |
| Net  income (loss)                                                                                   |       | $                                                 | (4,502,686 | ) | $ | 965,196 |   |
| Adjustments  to reconcile net income (loss) to net cash provided by (used in) operating  activities: |       |                                              |       |   |   |
| Depreciation  and depletion                                                                          |       | 1,159,050                                         |       | 1,326,099 |   |
| Share-based  compensation expense                                                                    |       | 299,133                                           |       | 165,408 |   |
| Non-cash  interest expense                                                                           |       | 37,849                                            |       | — |   |
| Impairment  expense                                                                                  |       | 939,703                                           |       | 63,766 |   |
| Gain  on sales of assets                                                                             |       | (1,488,687                                        | )          | — |   |
| Accretion  of discount on asset retirement obligations                                               |       | 3,503                                             |       | 3,185 |   |
| Changes  in operating assets and liabilities:                                                        |       |                                              |       |   |   |
| Accounts  receivable - natural gas sales                                                             |       | (274,598                                          | )          | 819,125 |   |
| Other  assets                                                                                        |       | 82,663                                            |       | 183,604 |   |
| Current  liabilities                                                                                 |       | 393,236                                           |       | 119,018 |   |
| Net  cash provided by (used in) operating activities                                                 |       | (3,350,834                                        | )          | 3,645,401 |   |
|                                                                                                 |       |                                              |       |   |   |
| **Cash Flows from Investing Activities:**                                                            |       |                                              |       |   |   |
|                                                                                                 |       |                                              |       |   |   |
| Additions  to oil and gas properties                                                                 |       | (678,352                                          | )          | (5,345,519 | ) |
| Additions  to gas treatment plant                                                                    |       | (83,097                                           | )          | — |   |
| Acquisition  of furniture, fixtures & equipment                                             |       | —                                            |       | (4,305 | ) |
| Dispositions  of equipment                                                                           |       | 2,500,000                                         |       | — |   |
| Net  cash provided by (used in) investing activities                                                 |       | 1,738,551                                         |       | (5,349,824 | ) |
|                                                                                                 |       |                                              |       |   |   |
| **Cash Flows from Financing Activities:**                                                            |       |                                              |       |   |   |
|                                                                                                 |       |                                              |       |   |   |
| Proceeds  from sale of common shares, option and warrant exercises, net                              |       | —                                            |       | 375,000 |   |
| Proceeds  from sale of preferred stock Series B, net                                            |       | 3,031,710                                         |       | — |   |
| Proceeds  from promissory notes                                                                      |       | 1,177,000                                         |       | — |   |
| Payments  of loan fee                                                                                |       | (15,200                                           | )          | — |   |
| Repayments  of notes payable                                                                         |       | (1,707,000                                        | )          | — |   |
| Net  cash provided by financing activities                                                           |       | 2,486,510                                         |       | 375,000 |   |
|                                                                                                 |       |                                              |       |   |   |
| **Net Increase (Decrease) in Cash and Cash Equivalents:**                                            |       | 874,227                                           |       | (1,329,423 | ) |
|                                                                                                 |       |                                              |       |   |   |
| **Cash and Cash Equivalents:**                                                                       |       |                                              |       |   |   |
| Beginning  of period                                                                                 |       | 770,779                                           |       | 4,294,565 |   |
| End  of period                                                                                       |       | $                                                 | 1,645,006  |   | $ | 2,965,142 |   |
|                                                                                                 |       |                                              |       |   |   |
| **Supplemental Disclosure of Cash Flow Information:**                                                |       |                                              |       |   |   |
| Cash  paid for interest                                                                              |       | $                                                 | 412,769    |   | $ | — |   |
|                                                                                                 |       |                                              |       |   |   |
| Cash  paid for income taxes                                                                          |       | $                                                 | (991       | ) | $ | 15,630 |   |

 

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

 

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**GEOPETRO RESOURCES COMPANY**

 

**UNAUDITED STATEMENT OF SHAREHOLDERS’EQUITY**
|                                                                            |       |                     |       |                     |       |                  |       |                        |       |            |       |                   |       |        |       |        |       |       |       |   |        |   |       |       |
|---------------------------------------------------------------------------------|------------|--------------------------|------------|--------------------------|------------|-----------------------|------------|-----------------------------|------------|-----------------|------------|------------------------|------------|-------------|------------|-------------|------------|------------|------------|--------|-------------|--------|------------|------------|
| ** **                                                                      | ** ** | **Preferred Stock** | ** ** | **Preferred Stock** | ** ** | ** **            | ** ** | ** **                  | ** ** | ** **      | ** ** | ** **             | ** ** | **Total**   | ** ** |
| ** **                                                                      | ** ** | **Series B**        | ** ** | **Series AA**       | ** ** | **Common Stock** | ** ** | **Additional Paid-in** | ** ** | **Accumulated** | ** ** | **Shareholders’** | ** ** |
| ** **                                                                      | ** ** | **Shares**               | ** ** | **Amount**               | ** ** | **Shares**            | ** ** | **Amount**                  | ** ** | **Shares**      | ** ** | **Amount**             | ** ** | **Captial** | ** ** | **Deficit** | ** ** | **Equity** | ** ** |
| Balances,  December 31, 2008                                               |       | —                   |       | $                        | —     |                  | —     |                        | $          | —          |       | 34,284,646             |       | $           | 53,397,733 |        | $          | 2,610,596  |       | $      | (12,185,614 | )      | 43,822,715 |       |
|                                                                            |       |                     |       |                     |       |                  |       |                        |       |            |       |                   |       |        |       |        |       |       |       |
| Issuance  of preferred stock Series B for cash, net from private placement |       | 4,121,004                |       | 3,031,710                |       | —                |       | —                      |       | —          |       | —                 |       | —      |       | —      |       | 3,031,710  |       |
| Fair  market value of the options                                               |       | —                   |       | —                   |       | —                |       | —                      |       | —          |       | —                 |       | 299,133     |       | —      |       | 299,133    |       |
| Fair  market value of the warrants related to notes                             |       |                     |       |                     |       |                  |       |                        |       |            |       |                   |       | 27,010      |       |        |       | 27,010     |       |
| Net  Income                                                                     |       | —                   |       | —                   |       | —                |       | —                      |       | —          |       | —                 |       | —      |       | (4,502,686  | )          | (4,502,686 | )          |
| Dividends  on Series B Preferred Stock                                     |       |                     |       |                     |       |                  |       |                        |       |            |       |                   |       |        |       | (68,583     | )          | (68,583    | )          |
|                                                                            |       |                     |       |                     |       |                  |       |                        |       |            |       |                   |       |        |       |        |       |       |       |
| Balances,  September 30, 2009                                              |       | 4,121,004                |       | $                        | 3,031,710  |                  | —     |                        | $          | —          |       | 34,284,646             |       | $           | 53,397,733 |        | $          | 2,936,739  |       | $      | (16,756,883 | )      | $          | 42,609,299 |   |
|                                                                                 |            |                          |            |                          |            |                       |            |                             |            |                 |            |                        |            |             |            |             |            |            |            |        |             |        |            |            |  |

 

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**GEOPETRO RESOURCES COMPANY**

 

**NOTES TO UNAUDITEDCONSOLIDATED FINANCIAL STATEMENTS**

 

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

 

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

 

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

 

*Changein Accounting Method and Basis of Presentation - Revenue Recognition*—Prior to December 31, 2008, revenuewas recognized upon delivery of oil and gas production and was shown net ofapplicable royalty payments, as well as processing, gathering, transportationand marketing fees. The Company recognized revenue from the Madisonville Fieldnet of applicable fees to gather, treat, transport and market the Company’snatural gas production. The applicable fees were paid to unrelated thirdparties.  On December 31, 2008, the Company completed the acquisitionof the Plant from Madisonville Gas Processing, LP (“MGP”). As of January 1,2009, revenue is being recognized without the netting of applicable royaltypayments, as well as processing, gathering, transportation and marketing feessince we have acquired the Plant. For all periods presented, revenue from theMadisonville Field is recognized when the price for gas delivered became fixedand determinable.

 

*Impairmentof Oil and Gas Properties*—Under full cost accounting, a ceiling test isperformed to ensure that unamortized capitalized costs in each cost center(country) do not exceed their fair value.  Impairment is recognized whenthe carrying value is greater than the discounted future cash flows.  Inthe event of impairment, the amount by which the carrying value exceeds theestimated fair value of the long-lived asset is charged to earnings. Thepresent 

 

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value of estimated future net revenues is computed byapplying current oil and gas prices to estimated future production of provedoil and gas reserves as of period-end, less estimated future expenditures to beincurred in developing and producing the proved reserves assuming thecontinuation of existing economic conditions.  We recognized no impairmentof evaluated properties at September 30, 2009.  Under current accounting rules, we arerequired to use the natural gas price prevailing on the last day of ouraccounting period to determine whether any impairment needs to berecognized.  However, we are permitted in certain circumstances to use aprice that is in effect subsequent to our period end but prior to the issuanceof our financial statements.  In determining that no impairment existed atSeptember 30, 2009, we utilized the price prevailing on October 30,2009 to determine that the carrying value of the unamortized capitalized costsin our United States cost center did not exceed the discounted future cashflows from those properties.  Had we used the price prevailing on September 30,2009, we would have recognized an impairment expense of $7,921,708.

 

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

 

As of September 30, 2009, we have a workingcapital deficit of $2,716,389, and for the nine months ended, our cash used inoperating activities amounted to $3,350,834.  We estimate our minimuminvestment needs during (i) the remainder of 2009 and (ii) calendar2010, amount to $4,500,000 related to our natural gas processing plant and ournatural gas properties within the Madisonville field.  Our results ofnatural gas operations amounted to a deficit of $4,571,269 for the nine monthsended September 30, 2009.  Further, we have debt service and dividendrequirements that will require cash payments.  We hold working interestsin undeveloped leases, seismic options, lease options and foreign concessionsand we have participated in seismic surveys and the drilling of test wells onundeveloped properties.  We plan further leasehold acquisitions andseismic operations for the remainder of 2009 and future periods.  Exploratoryand developmental drilling is scheduled during 2010 and future periods on ourundeveloped properties.  During the nine months ended September 30,2009, we raised $850,000 in convertible notes that were converted into our Series BPreferred Stock on April 30, 2009, an additional $2,181,710 in our Series BPreferred Stock, and issued $1,177,000 inpromissory notes. On September 30, 2009, we completed the sale of certainidle equipment from our natural gas processing plant for total cash proceeds of$2.5 million.  During October 2009, we issued a promissory note fortotal gross proceeds of $720,000 ( net proceeds of $691,200) and issued anadditional 3,395,000 shares of Series B Preferred Stock for total grossproceeds of $2,546,250.  In addition tothese items, we will need to raise additional equity or enter into newborrowing arrangements to finance our operating deficit and our continuedparticipation in planned activities. If additional financing is not available,we will be compelled to reduce the scope of our business activities.  Ifwe are unable to fund our operating cash flow needs and planned capitalinvestments, it will be necessary to farm-out our interest in proposed wells,sell a portion of our interest in prospects, sell a portion of our interest inour producing oil and gas properties, reduce general and administrativeexpenses, or a combination of all of these factors.

 

**3.****    ****RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS:**

 

In December 2007, the FASB issued ASC 805-10(formerly SFAS No. 141 (revised 2007)), *BusinessCombinations*. ASC 805-10, 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. ASC 805-10 is effective for fiscal years beginning on or after December 15,2008, with early adoption prohibited. This standard will change our accountingtreatment for business combinations on a prospective basis.

 

In December 2007, the FASB issued ASC 810-10(formerly SFAS No. 160), *NoncontrollingInterests in Consolidated Financial Statements, an Amendment of ASC 860-10(formerly ARB No. 51)*. ASC 810-10 establishes accounting andreporting standards for noncontrolling interests in a subsidiary and for thedeconsolidation of a subsidiary. Minority interests are recharacterized asnoncontrolling interests and classified as a component of equity. It also establishesa single method 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. The adoption of ASC 810-10 on January 1, 2009 did not have amaterial impact on our financial position or results of operations.

 

In March 2008, theFASB issued ASC 815-10 (formerly SFAS No. 161), *Disclosures about Derivative Instruments and Hedging Activities*,an amendment of FASB Statement No. 133.  ASC 815-10 amends andexpands the disclosure requirements of FASB Statement No. 133 with theintent to provide users of financial statement with an enhanced understandingof (i) how and why an entity uses derivative instruments, (ii) howderivative instruments and the related 

 

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hedged items areaccounted for under FASB Statement No. 133 and its relatedinterpretations, and (iii) how derivative instruments and related hedgeditems affect and entity’s financial position, financial performance and cashflows.  The adoption of ASC 815-10 on January 1, 2009 did not have amaterial impact on our reported financial position or results of operations.

 

In June 2008, theFASB ratified the consensus reached on ASC 815-40 (formerly Emerging IssuesTask Force (“EITF”) Issue No. 07-05), Determining Whether an Instrument(or Embedded Feature) Is Indexed to an Entity’s Own Stock. ASC 815-40 clarifiesthe determination of whether an instrument (or an embedded feature) is indexedto an entity’s own stock, which would qualify as a scope exception under ASC815-10, Accounting for Derivative Instruments and Hedging Activities. ASC815-40 is effective for financial statements issued for fiscal years beginningafter December 15, 2008. Early adoption for an existing instrument is notpermitted. The adoption of ASC 815-40 on January 1, 2009 did not have amaterial effect on our consolidated financial statements.

 

In December 2008,the SEC issued the final rule on the Modernization of Oil and GasReporting.  This SEC ruling revises its oil and gas reserves reportingrequirements effective for fiscal years ending on or after December 31,2009, with early adoption prohibited.  These revisions by the SEC areintended to provide investors with a more meaningful and comprehensiveunderstanding of oil and gas reserves.  These changes include:

 

·     Modifying prices usedto estimate reserves for SEC disclosure purposes to a 12-month average priceinstead of a single-day, period-end price.

 

·     Requiring certainadditional disclosures around proved undeveloped reserves, internal controlsused to ensure objectivity of the estimation process, and qualifications ofthose preparing and/or auditing the reserves.

 

·     Expanding thedefinition of oil and gas reserves and providing clarification of certainconcepts and technologies used in the reserve estimation process.

 

·     Allowing optionaldisclosure of probable and possible reserves and permitting optional disclosureof price sensitivity analysis.

 

Historically, the reserves calculated based on the SEC’sreporting requirements were also used to calculate depletion on our producingproperties, as required by ASC 932-235 (formerly SFAS 69) “Disclosures aboutOil and Gas Producing Activities”. However, the change in the SEC reportingrequirements has not yet been adopted by the FASB. The SEC has announced itsintent to discuss potential amendments to ASC 932-235 with the FASB so that thereserves disclosed remain consistent with the reserves used to calculatedepletion on our producing properties. Any such change would impact our futurefinancial results. The SEC has indicated that it may delay the effective dateof the revised reporting requirements if the FASB does not make conformingamendments by December 31, 2009.

 

On June 30, 2009, we adopted ASC 855-10 (formerlySFAS No. 165) *Subsequent Events*.ASC 855-10 establishes general standards of accounting for and disclosure ofevents that occur after the balance sheet date but before financial statementsare issued or are available to be issued. Specifically, ASC 855-10 sets forththe period after the balance sheet date during which management of a reportingentity should evaluate events or transactions that may occur for potentialrecognition or disclosure in the financial statements, the circumstances underwhich an entity should recognize events or transactions occurring after thebalance sheet date in its financial statements, and the disclosures that anentity should make about events or transactions that occurred after the balancesheet date. The adoption of ASC 855-10 had no impact on our results, cash flowor financial position as management already followed a similar approachprior to the adoption of this standard.

 

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

 

Basic net loss per common share is computed bydividing the net loss attributable to common shareholders by the weightedaverage number of shares of common stock outstanding during the period.

 

Diluted net loss per common share is computed in thesame manner, but also considers the effect of common stock shares underlyingthe following:

 
| ** **                                  | ** ** | **For  the nine months ended** | ** ** |
|---------------------------------------------|------------|--------------------------------|------------|
| ** **                                  | ** ** | **September 30,  2009**   | ** ** | **September 30,  2008** | ** ** |
| Stock  options (Note 8)                     |       | 2,720,000                      |       | 2,740,000 |   |
| Warrants  (Note 9)                          |       | 1,342,857                      |       | 2,141,855 |   |
| Convertible  Preferred Stock, Series B |       | 4,121,004                      |       | — |   |

 

All of the common shares underlying the stock options,warrants and convertible preferred stock, Series B above were excludedfrom diluted weighted average shares outstanding for the three and nine monthsended September 30, 2009 and three months ended September 30, 2008because their effects were antidilutive.

 

The following is areconciliation of the numerator and denominator of our basic and diluted earningper share for the nine months ended September 30, 2008.

 
| ** **                                 | ** ** | **Nine months ended September 30, 2008** | ** ** |
|--------------------------------------------|------------|------------------------------------------|------------|
| ** **                                 | ** ** | **Income (numerator)**                   | ** ** | **Shares (denominator)** | ** ** | **Per-share amount** | ** ** |
|                                       |       |                                     |       |   |   |   |   |
| Basic earnings  per share:                 |       |                                     |       |   |   |   |   |
| Net income                                 |       | $                                        | 965,196    |   | 32,413,979 |   | $ | 0.03 |   |
| Effective of  dilutive securities:         |       |                                     |       |   |   |   |   |
| Share-based  compensation, treasury method |       | —                                   |       | 631,952 |   |   |   |
|                                       |       |                                     |       |   |   |   |   |
| Net income plus  assumed conversions       |       | $                                        | 965,196    |   | $ | 33,045,931 |   | $ | 0.03 |   |
|                                            |            |                                          |            |  |  |  |  |  |  |  |

 

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

 

On December 31, 2008, the Company completed the acquisitionof a natural gas treatment plant (the “Plant”) from MGP, in exchange for sharesof GeoPetro’s common stock, assumption of debt and a cash payment (“theAcquisition”). The Plant is located in Madison County, Texas and the new ownerof the Plant is GeoPetro’s wholly-owned indirect subsidiary, MadisonvilleMidstream LLC (“MM”).

 

Our results of operations for the three and  nine months ended September 30, 2009include the operating results of the Plant. However, our results of operationsfor the three and  nine months ended September 30,2008 do not include the operating results of the natural gas treatment plantbecause such acquisition closed on December 31, 2008. The followingcondensed pro forma information gives effect to the acquisition as if it hadoccurred on January 1, 2008. The pro forma information has been includedin the notes as required by generally accepted accounting principles and isprovided for comparison purposes only. The pro forma financial information isnot necessarily indicative of the financial results that would have occurredhad the acquisition been effective on the dates indicated and should not beviewed as indicative of operations in the future.

 
| ** **                                  | ** ** | **Three Months**       | ** ** | **Nine Months**        | ** ** |
|---------------------------------------------|------------|------------------------|------------|------------------------|------------|
| ** **                                  | ** ** | **Ended**              | ** ** | **Ended**              | ** ** |
| ** **                                  | ** ** | **September 30, 2008** | ** ** | **September 30, 2008** | ** ** |
| Operating  revenues                         |       | $                      | 3,089,035  |                   | $          | 13,841,215 |   |
| Total operating  expenses                   |       | $                      | 3,743,496  |                   | $          | 13,102,514 |   |
| Earnings (loss)  applicable to common stock |       | $                      | (512,468   | )                      | $          | 492,921 |   |
| Net earnings  (loss) per share - basic      |       | $                      | (0.02      | )                      | $          | 0.01 |   |
| Net earnings (loss)  per share - diluted    |       | $                      | (0.02      | )                      | $          | 0.01 |   |

 

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

 

Debt at September 30, 2009 and December 31,2008 consisted of the following:

 
| ** **                                                 | ** ** | **September 30,  2009** | ** ** | **December 31,  2008** | ** ** |
|------------------------------------------------------------|------------|------------------------------|------------|-----------------------------|------------|
|                                                       |       |                         |       |                        |       |
| Promissory notes dated December 23,  2008 (a)         |       | $                            | 1,050,000  |                        | $          | 1,050,000 |   |
| Promissory notes dated May 2009(b)                    |       | 365,000                      |       | —                      |       |
| Promissory notes dated June 2009(c)                   |       | 300,000                      |       | —                      |       |
| Bridge notes dated August and  September 2009(d) |       | 380,000                      |       | —                      |       |
| Bank of Oklahoma loan  (e)                                 |       | 5,122,847                    |       | 6,697,847                   |       |
|                                                       |       | 7,217,847                    |       | 7,747,847                   |       |
| Less current portion of  long term debt                    |       | (1,280,000                   | )          | (600,000                    | )          |
| Less discount on  promissory notes                         |       | (107,340                     | )          | (128,398                    | )          |
|                                                       |       | $                            | 5,830,507  |                        | $          | 7,019,449 |   |

 

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(a)   The Company issued four promissory notestotaling $1,050,000 during December 2008 with maturity dates in December 2011.The notes may be repaid at any time without penalty. The notes bear an annualrate of eight percent (8%), with such interest payable quarterly in arrears.The principal amount and accrued and unpaid interest are due and payable on December 23,2011. In connection with the notes, the Company paid loan origination fees totaling$6,000 and granted three-year exercisable warrants to purchase 105,000 CommonShares and reissued 15,000 warrants at $1.00 per share. We also issued 150,000warrants as a finder’s fee. The fair value of the warrants on the dates ofissuance, $122,764 and the $6,000 of loan origination fees, was recorded as adebt discount and is being amortized over the life of the promissory note. Asof September 30, 2009, the unamortized debt discount was $96,207.

 

(b)   During the nine months ended September 30,2009 the Company borrowed $365,000 pursuant to two separate three-year loans.The notes have maturity dates in May 2012.  The notes may be repaidat any time without penalty.  The notes bear an annual rate of eightpercent (8%), with such interest payable quarterly in arrears.  Theprincipal amount and accrued and unpaid interest are due and payable on May 2012. In connection with the notes, the Company granted three-year exercisablewarrants to purchase 36,500 Common Shares warrants at $1.00 per share. The fairvalue of the warrants on the dates of issuance, $12,724, was recorded as a debtdiscount and is being amortized over the life of the promissory note. As of September 30,2009, the unamortized debt discount was $12,194.

 

(c)   In June 2009 the Company borrowed$300,000 pursuant to two separate one-year loans. The two notes have maturitydates in May 2010.  The notes may be repaid at any time withoutpenalty.  The notes bear an annual rate of eight percent (8%), with suchinterest payable quarterly in arrears.  The principal amount and accruedand unpaid interest are due and payable on May 2010.  In connectionwith the notes, the Company granted three-year exercisable warrants to purchase30,000 Common Shares warrants at $1.00 per share. The fair value of thewarrants on the dates of issuance, $7,537, was recorded as a debt discount andis being amortized over the life of the promissory note. As of September 30,2009, the unamortized debt discount was $5,652.

 

(d)   During August and September 2009,the Company borrowed $380,000 pursuant to four separate one-year bridgeloans.  The notes have maturity date in August 31, 2010. The notes may be repaid at any time without penalty.  The note bears an annual rate of ten percent(10%), with such interest payable at maturity.  The principal amount andaccrued and unpaid interest are due and payable on August 31, 2010. In connection with the notes, the Company granted three-year warrantsexercisable to purchase 14,000 Common Shares at $1.00 per share. The fair valueof the warrants on the dates of issuance, $6,750, was recorded as a debtdiscount and is being amortized over the life of the bridge note. As of September 30,2009, the unamortized debt discount was $6,082. On October 6, 2009, werepaid one of the bridge notes in the principal amount of $100,000 plus accruedinterest.

 

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(e)   Effective December 31, 2008, the Companyassumed $7,697,847 of Madisonville Gas Processing LP’s (“MGP”) bank debtrelated to the Company’s acquisition of the Madisonville Gas Treatment Plant(the “Plant”) via a (i) $1 million cash payment applied directly towardsdebt principal reduction, and (ii) a refinancing by GeoPetro of the$6,697,847 remaining balance in the form of a 3 year Amended and Restated TermLoan Agreement with the lender, Bank of Oklahoma (“BOK”).  The terms ofthe three year loan provide for minimum quarterly principal payments of$150,000 and interest payable quarterly in arrears at prime plus 4% or Liborplus 5.5% at the option of the Company. At September 30, 2009, theinterest rate was approximately 6% (LIBOR + 5.5%).  Additional principalwill be payable upon GeoPetro meeting certain net operating cash flowthresholds during the three year term of the loan.  The loan is secured bya first lien on the Madisonville Midstream Plant and all of the Company’sproved natural gas reserves located at the Madisonville Project.  Inaddition, GeoPetro has agreed to pay, at the time the loan is repaid in full, aloan origination fee of $60,000 for any annual period during which the loanprincipal remains outstanding.  There is no prepayment penalty.  TheAmended and Restated Term Loan Agreement contains customary affirmative andnegative covenants including restrictions on incurring additional debt andrequiring that the Company maintain a minimum tangible net worth of at least$35,000,000. On September 30, 2009, GeoPetro sold certain idle equipmentto an unrelated party in the amount of $2.5 million. GeoPetro used a portion ofthe proceeds to repay $1.125 million principal to Bank of Oklahoma.

 

**7.**    **INCOMETAXES:**

 

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 2004.  The Company does, however, have net operatinglosses generated in tax years 1997 and after, which remain open forexamination.

 

The Company adopted the provisions of ASC 740-10(formerly FASB Interpretation No. 48), Accounting for Uncertainty inIncome Taxes, on January 1, 2007. As of December 31, 2008 the Companyhad no unrecognized tax benefits. There have been no changes during the yearwith respect to unrecognized tax benefits.  The Company does not foreseethe total amounts of unrecognized tax benefits significantly increasing withinthe next 12 months.  Furthermore, no corresponding interest and penaltieshave been accrued as the Company is in a net operating loss position.

 

The Company provides for income taxes in accordancewith ASC 740-10 (formerly Statement of Financial Accounting Standards No. 109,Accounting for Income Taxes. ASC 740-10 requires the recognition of deferredtax assets 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.

 

The effective tax rate for the nine month period endedSeptember 30, 2009 was 0%, and for the year ended December 31, 2008was (7.9) percent, and differs from statutory rates primarily due to changes inthe valuation allowance.

 

**8.**    **COMMONSTOCK OPTIONS*:***

 

There were no material changes to common stock optionsfrom those disclosed in the audited annual consolidated financial statementsfor the year ended December 31, 2008 except the following.

 

On June 26, 2009, the Company granted a total of60,000 5 year options to four non-management directors. The weighted averagefair value of options granted as calculated under the Black-Scholes pricingmodel was $0.33 per share with the following weighted-average assumptions:risk-free, weighted-average interest rate of 2.53 percent based on the U.S.Treasury yield curve in effect at the time of grant, expected dividend yield of0 percent, expected life of 5 years from the date of grant, and expectedvolatility of 113 percent based on the Company’s historical daily stock tradingsince February 16, 2007.

 

On April 27, 2009, the Company reduced the optionprice previously granted to an officer from $2.10 per share to $1.00 per sharebased on the new employment agreement. The fair value of the repricing optionswas insignificant.

 

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The options outstanding as of September 30, 2009have the following contractual lives:

 
| **Number of  Options  Outstanding** | ** ** | **Number of  Options  Exercisable** | ** ** | **Exercise  Prices** | ** ** | **Weighted Average  Remaining  Contractual Life** | ** ** |
|------------------------------------------|------------|------------------------------------------|------------|----------------------|------------|-------------------------------------------------------------|------------|
| 210,000                                  |       | 150,000                                  |       | 1.00                 |       | 4.51                                                        |       |
| 1,600,000                                |       | 1,600,000                                |       | 2.10                 |       | 3.68                                                        |       |
| 150,000                                  |       | 90,000                                   |       | 3.85                 |       | 1.54                                                        |       |
| 10,000                                   |       | 8,000                                    |       | 4.25                 |       | 0.25                                                        |       |
| 740,000                                  |       | 148,000                                  |       | 4.28                 |       | 3.74                                                        |       |
| 10,000                                   |       | 8,000                                    |       | 6.25                 |       | 0.69                                                        |       |
| 2,720,000                                |       | 2,004,000                                |       |                 |       |                                                        |       |

 

The total intrinsic value of options outstanding wasapproximately $0 and $332,500 at September 30, 2009 and 2008 respectively.The intrinsic value for exercisable options was $0 and $332,500 at September 30,2009 and 2008, respectively.

 

As of September 30, 2009, there are 2,004,000options which are exercisable. The remaining 716,000 options will becomeexercisable over the next four years. The stock compensation expense related tothe unvested awards is $1,305,418.

 

**9.**    **COMMONSTOCK WARRANTS*:***

 

On April 10, 2009, the Company extended theexpiration date on a warrant to purchase 114,000 shares of common stock(exercisable at $3.50 per share) to December 15, 2011.  The fairvalue of the warrant extension was insignificant.

 

On March 31, 2009, the Company extended theexpiration date on a warrant to purchase 100,000 shares of common stock(exercisable at $5.25 per share) to March 31, 2014.  The fair valueof the warrant extension was insignificant.

 

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

 

**10.**  **GAIN ON SALE OFEQUIPMENT*:***

 

On September 10, 2009, the Company’s subsidiary,Madisonville Midstream, LLC entered into an agreement to sell certain idleequipment related to the plant to an unrelated third party, Gas Processors, Inc.,for a purchase price of $2.5 million. A nonrefundable deposit of $250,000 wasreceived on September 10, 2009 and the remaining balance of $2.25 millionwas tendered to Madisonville Midstream on the closing date of September 30,2009.  Concurrent with the receipt of thesales proceeds, the Company paid $1,125,000 to reduce the principal balance onthe Bank of Oklahoma loan. The Company recorded a gain of $1,488,687 on thesale.

 

**11.**  **COMMITMENTS ANDCONTINGENCIES*:***

 

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

 

On September 11, 2009, the Company’s subsidiary,Redwood Energy Production, L.P. filed an Original Petition for DeclaratoryJudgment against Devon Energy Production Company (“Devon”) regarding certainoverriding royalty interests and related revenue amounts claimed by Devon.  The Company previously accrued all amountsowed pursuant to these overriding royalty interests as royalty owners payable.  In the opinion of management based onconsultation with legal counsel, these proceedings are not expected to have amaterial adverse effect on our financial condition or results of operations.

 

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**12.  SUBSEQUENT EVENTS THROUGH NOVEMBER 9, 2009.**

 

On October 23, 2009,we issued a promissory note for total gross proceeds of $720,000 (net proceedsof $691,200).  The note has a maturitydate of October 31, 2010 and bears interest at 10% per annum, payable atmaturity.  We issued to the note holderwarrants exercisable to purchase 36,000 shares of our common stock.  Each warrant is exercisable for a three yearterm to purchase one share of our common stock at a price of $1.00 per share.

 

On October 8, 2009, theCompany filed a Certificate of Amendment with the California Secretary of Statefor the purpose of amending its Articles of Incorporation to increase the totalnumber of authorized shares of Series B Preferred Stock from 6,800,000 to7,523,000 shares of Series B Preferred Stock. During October 2009, weissued an additional 3,395,000 shares of Series B Preferred Stock fortotal gross proceeds of $2,546,250.

 

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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”, all of which are difficult to predictand which expressly qualify all subsequent oral and written forward-lookingstatements attributable to us or persons acting on our behalf. In light ofthese risks, uncertainties and assumptions, the forward looking eventsdiscussed may not occur. We do not have any intention or obligation to updateforward-looking statements included in 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 379,547 gross (161,171 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 2009. We expect the majorityof our capital expenditures in 2009 and 2010 will be for the MadisonvilleProject.

 

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** **

**Resultsof Operations**

 

Thefinancial information with respect to the nine months ended September 30,2009 and 2008 that is discussed below is unaudited. In the opinion ofmanagement, such information contains all adjustments, consisting only ofnormal recurring accruals, necessary for a fair presentation of the results forsuch periods.  The results of operations for interim periods are notnecessarily indicative of the results of operations for the full fiscal years.

 
| ** **                                                | ** ** | **Nine  Months Ended**       | ** ** |
|-----------------------------------------------------------|------------|------------------------------|------------|
| ** **                                                | ** ** | **September 30,  2009** | ** ** | **September 30,  2008** | ** ** |
| ** **                                                | ** ** | **(unaudited)**              | ** ** | **(unaudited)** | ** ** |
| **Consolidated Statement of Operations:**                 |       |                         |       |   |   |
| **Revenues**                                              |       | $                            | 2,919,923  |   | $ | 6,106,898 |   |
| **Plant operating expense**                               |       | 3,749,484                    |       | — |   |
| **Lease operating expense**                               |       | 478,187                      |       | 1,287,309 |   |
| **General and administrative**                            |       | 2,026,821                    |       | 1,921,270 |   |
| **Net profits expense**                                   |       | —                       |       | 601,237 |   |
| **Impairment expense**                                    |       | 939,703                      |       | 63,766 |   |
| **Depreciation and depletion expense**                    |       | 1,159,050                    |       | 1,326,099 |   |
| **Earnings (loss) from operations**                       |       | (5,433,322                   | )          | 907,217 |   |
| **Net income (loss)**                                     |       | (4,502,686                   | )          | 965,196 |   |
| **Net income (loss) attributable to common shareholders** |       | (4,571,269                   | )          | $ | 965,196 |   |
|                                                           |            |                              |            |  |  |  |  |

 

**Revenueand Operating Trends in 2009**

 

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

 

In2005 we secured a commitment from MGP to install and make operational additionaltreating facilities capable of treating 50 MMcf/d, which combined with thecapacity of the current in-service treating facilities will represent a totaldesigned treating capacity of 68 MMcf/d for the Madisonville treatmentplant.   In early November 2007, MGP began testing theadditional treatment facilities by accepting 20 MMcf/d at theinlet.   Subsequently in December 2007, MGP temporarilysuspended the operations of the additional treatment facilities in order tomake modifications to more effectively deal with the presence of diamondoids inthe gas stream produced from the Rodessa Formation.

 

During2008, MGP analyzed various options for removing the diamondoids; however, theydid not complete the necessary plant system modifications.  On December 31,2008, we purchased the gas treatment plant (the “Plant”) and related gatheringpipeline from MGP in exchange for assumption of secured debt, payment ofcertain outstanding payables of MGP and shares of GeoPetro’s commonstock.  The effective date of the acquisition was December 31, 2008and the new owner of the Plant is GeoPetro’s wholly-owned, indirect subsidiary,Madisonville Midstream LLC (“MM”).  We anticipate completing installationof the system modifications required in the plant in 2010.  In themeantime, the existing, in service portion of the plant continues to operatewith an effective capacity of approximately 15 MMcf/d of inlet gas.

 

Whilethere can be no assurance we will be successful, our goal is to make thenecessary upgrades to the acquired gas treatment plant and increase theproduction rates from our wells which may result in higher net production andincreased revenue during the later quarterly periods in 2010 as compared to thenine months ended September 30, 2009. To accomplish the plant upgrades, wewill need to raise capital in 2009 and 2010. While we have been successful in raising some of the needed capital in2009 year to date, additional needed funds may not be available, or may not be availableon favorable terms due to the tight credit markets and persisting weakness inthe stock market,.

 

Duringthe nine months ended September 30, 2009, we did not generate sufficientrevenues to cover the plant operating expenses and lease operating expenses inour Madisonville Project.  This was due to low production volumes, highshrinkage rates in the gas plant and low natural gas prices.   Inorder to address this shortfall, we have implemented measures to increaseproduction volumes and reduce operating expenses earlier in 2009. We utilizedidle equipment and implemented operating efficiencies in the Plant to reducethe Plant inlet pressure in June 2009. This measure increased the combinedproduction from the Magness #1 and Fannin #1 wells from previous levels. Inaddition, subject to capital availability, we plan to workover the Mitchell #1well and to frac and connect via gathering line the Wilson #1 well. Once theabove production enhancements are completed, the Company expects the combinedRodessa formation production to increase from current rates.  The Companyhopes to realize both intermediate and long term cost and operatingefficiencies by consolidating the upstream and midstream portions ofMadisonville under common ownership. Prior to the consolidation, MGP andGeoPetro employed a combined total of 30 persons, whereas subsequent to theconsolidation, GeoPetro and MM now employ a combined total of 21 persons,representing a net reduction of 9 persons (30% of the combinedpre-consolidation workforce). Despite the challenges of the currentenvironment, we accomplished the necessary goal of vertically integrating ourposition in the Madisonville field.  We continue to explore other longerterm cost saving and efficiency measures in the Plant.

 

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**IndustryOverview for the nine months ended September 30, 2009**

 

Thenine months ended September 30, 2009 saw weaker natural gas prices. TheHouston Ship Channel price, the index price prevailing in the locale of ourMadisonville Project in Madison County, Texas, as quoted in Gas Daily as of September 30,2009, was $3.41 per Mcf versus $5.25 per Mcf as of December 31,2008.  Natural gas prices have been very volatile during 2008 and 2009 dueto supply concerns earlier in 2008, and more recently due to recession concernsarising from the current global financial crisis and a resultant decline indemand for natural gas.

 

**CompanyOverview for the nine months ended September 30, 2009**

 

Ournet loss for the nine months ended September 30, 2009 was $4,502,686. Fromour inception, through mid-2003, we only received nominal revenues from our oiland natural gas activities, while incurring substantial acquisition and explorationcosts and overhead expenses which have resulted in an accumulated deficitthrough September 30, 2009 of $16,756,883. Commencing in May 2003, weplaced our Madisonville Project into production. All of our natural gas salesfor nine months ended September 30, 2009 were derived from ourMadisonville Project, from three producing wells, the Magness #1 well (the “MagnessWell”), the Fannin #1 well (the “Fannin Well”), and the Mitchell #1 well (the “MitchellWell”).

 

**Comparisonof Results of Operations for the three months ended September 30, 2009 and2008**

 

Duringthe three months ended September 30, 2009, we had gross natural gasrevenues from the treatment plant of $971,354 and revenues from treating thirdparty gas in the Plant of $2,299. During this period, our gross production fromour wells was 374,697 Mcf (production net of royalties of 269,900 Mcf) and ouraverage natural gas price realized was $2.59 per Mcf. During the three monthsended September 30, 2008, we had net oil and natural gas revenues of$1,313,308. Our net production for the three months ended September 30,2008 was 281,337 Mcf and our average natural gas price realized was $4.67 perMcf. Revenues decreased in the three months ended September 30, 2009 ascompared to the prior year period due to lower natural gas prices and 4% lowernet production volumes. Net natural gas prices were approximately 45% lower forthe three months ended September 30, 2009 versus the same period in2008.  The average natural gas price of $4.67 per Mcf for the 2008 periodwas net of treating, gathering, marketing and transportation fees (collectivelythe “Fees”) in accordance with our contracts with MGP and Gateway ADACPipeline, LLC.  The average natural gas price of $2.59 per Mcf for the2009 period was not “net” of the aforementioned Fees since the contracts thatwere in place with MGP were terminated as of December 31, 2008.

 

Priorto December 31, 2008, revenue was recognized upon delivery of oil and gasproduction and was shown net of applicable royalty payments, as well asprocessing, gathering, transportation and marketing fees. As indicated in thepreceding paragraph, the Company recognized revenue from the Madisonville Fieldnet of applicable fees to treat, gather, transport and market the Company’s naturalgas production. The applicable fees were paid to unrelated third parties. On December 31, 2008, the Company completed the acquisition of the Plantfrom MGP. Commencing January 1, 2009, revenue is being recognized withoutthe netting of applicable royalty payments, as well as processing, gathering,transportation and marketing fees since we have acquired the Plant. For allperiods presented, revenue from the Madisonville Field is recognized when theprice for gas delivered became fixed and determinable.

 

Ourresults of operations for the three months ended September 30, 2009include the operating results of the Plant, but our results of operations forthe three months ended September 30, 2008 do not include the operatingresults of the natural gas treatment plant because such acquisition closed on December 31,2008. The following condensed pro forma information gives effect to theacquisition as if it had occurred on January 1, 2008. The pro formainformation has been included in the notes to the financial statements includedelsewhere in this document as required by generally accepted accountingprinciples and is provided for comparison purposes only. The pro formafinancial information is not necessarily indicative of the financial resultsthat would have occurred had the acquisition been effective on the datesindicated and should not be viewed as indicative of operations in the future.

 
| ** **                         | ** ** | **Three  Months  Ended  September 30, 2008** | ** ** |
|------------------------------------|------------|---------------------------------------------------|------------|
| Operating  revenues                |       | $                                                 | 3,089,035  |   |
| Total  operating expenses          |       | $                                                 | 3,743,496  |   |
| Loss  applicable to common stock   |       | $                                                 | (512,468   | ) |
| Net  loss per share — basic   |       | $                                                 | (0.02      | ) |
| Net  loss per share — diluted |       | $                                                 | (0.02      | ) |

 

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Duringthe three months ended September 30, 2009, we incurred plant operatingexpenses of $1,396,346. Our average plant operating cost for the 2009 periodwas $3.72 per Mcf on net throughput of 375,554 Mcf. We purchased the gastreatment plant effective on December 31, 2008, thus there was no plantoperating expense for the comparable 2008 period.

 

Duringthe three months ended September 30, 2009, we incurred lease operatingexpense of $93,773. Our net average lifting cost for the 2009 period was $0.35per Mcf. During the three months ended September 30, 2008, we incurredlease operating expense of $296,927. Our net average lifting cost for the 2008period was $1.06 per Mcf. The average lifting cost per Mcf in 2009 was lowerdue to cost cutting efforts and a reduction of ad valorem property taxesapplicable to the wells.

 

Duringthe three months ended September 30, 2009, we incurred no net profitsinterest expense associated with the Magness, the Fannin, and the Mitchellwells as compared to $112,308 during the three months ended September 30,2008. The decrease resulted from lower gas prices and production volumes in thethree months ended September 30, 2009 versus 2008. The net profit interestis 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 30,2009 were $561,227 compared to $601,757 for the three months ended September 30,2008. This represents a $40,530 or 7% decrease over the prior year period. Thelower G&A expense incurred in 2009 was due primarily to the reduced costsassociated with Canadian filings and with SOX compliance in 2009.

 

Forthe three months ended September 30, 2009, the impairment expense was$939,703 versus $0 for the same period of 2008.  The 2009 impairmentwrite-downs were due to cost of certain wells drilled on our Canadian oil andgas properties which were deemed to be fully evaluated during the latestquarter resulting in ceiling test write downs. We determined during the quarter that the reserve potential associatedwith these wells did not merit further expenditures.

 

Depreciation,depletion and amortization expense (“DD&A”) for the three months ended September 30,2009 was $432,559 as compared to $343,364 in the same period of 2008, whichamounts primarily represent amortization of the oil and gas properties for thethree months ended September 30, 2009 and 2008, respectively. The 26%increase was due primarily to the plant depreciation expense associated withthe gas treatment plant acquired on December 31, 2008.

 

Lossfrom operations totaled $2,449,955 for the three months ended September 30,2009 as compared to $41,048 for the three months ended September 30, 2008.The increase in the loss from operations was due primarily to lower gas prices,lower production volume, and higher expenses.

 

Otherincome for the three months ended September 30, 2009 and 2008 consisted ofinterest income in the amount of $976 and $25,741, respectively. Interestincome decreased due primarily to lower average cash and cash equivalentbalances resulting from the acquisition of the gas treatment plant on December 31,2008 and lower income during the respective period of 2009. During the threemonths ended September 30, 2009, we realized a gain on the sale ofequipment of $1,488,687 relating to the sale of idle equipment in ourMadisonville Plant.

 

**Comparisonof Results of Operations for the nine months ended September 30, 2009 and2008**

 

Duringthe nine months ended September 30, 2009, we had gross natural gasrevenues from the treatment plant of $2,849,507 and revenues from treatingthird party gas in the Plant of $70,416. During this period, our grossproduction from our wells was 985,563 Mcf (production net of royalties of 711,177 Mcf) and our average natural gasprice realized was $2.89 per Mcf. During the nine months ended September 30,2008, we had net oil and natural gas revenues of $6,106,898. Our net productionfor the nine months ended September 30, 2008 was 1,106,521 Mcf and ouraverage natural gas price realized was $5.52 per Mcf. Revenues decreased in thenine months ended September 30, 2009 as compared to the prior year perioddue to lower natural gas prices and 36% lower net production volumes due to i)higher shrinkage rates in the plant and, ii) natural decline reserve in the wells. Net natural gas prices wereapproximately 48% lower for the nine months ended September 30, 2009versus the same period in 2008.  The average natural gas price of $5.52per Mcf for the 2008 period was net of treating, gathering, marketing andtransportation fees (collectively the “Fees”) in accordance with our contractswith MGP and Gateway ADAC Pipeline, LLC.  The average natural gas price of$2.89 per Mcf for the 2009 period was not “net” of the aforementioned Feessince the contracts that were in place with MGP were terminated as of December 31,2008.

 

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Priorto December 31, 2008, revenue was recognized upon delivery of oil and gasproduction and was shown net of applicable royalty payments, as well asprocessing, gathering, transportation and marketing fees. As indicated in thepreceding paragraph, the Company recognized revenue from the Madisonville Fieldnet of applicable fees to treat, gather, transport and market the Company’snatural gas production. The applicable fees were paid to unrelated thirdparties.  On December 31, 2008, the Company completed the acquisitionof the Plant from MGP. Commencing January 1, 2009, revenue is beingrecognized without the netting of applicable royalty payments, as well asprocessing, gathering, transportation and marketing fees since we have acquiredthe Plant. For all periods presented, revenue from the Madisonville Field isrecognized when the price for gas delivered became fixed and determinable.

 

Ourresults of operations for the nine months ended September 30, 2009 includethe operating results of the Plant, but our results of operations for the ninemonths ended September 30, 2008 do not include the operating results ofthe natural gas treatment plant because such acquisition closed on December 31,2008. The following condensed pro forma information gives effect to theacquisition as if it had occurred on January 1, 2008. The pro formainformation has been included in the notes to the financial statements includedelsewhere in this document as required by generally accepted accountingprinciples and is provided for comparison purposes only. The pro formafinancial information is not necessarily indicative of the financial resultsthat would have occurred had the acquisition been effective on the datesindicated and should not be viewed as indicative of operations in the future.

 
| ** **                             | ** ** | **Nine  Months Ended  September 30, 2008** | ** ** |
|----------------------------------------|------------|-------------------------------------------------|------------|
| Operating  revenues                    |       | $                                               | 13,841,215 |   |
| Total  operating expenses              |       | $                                               | 13,102,514 |   |
| Earnings  applicable to common stock   |       | $                                               | 492,921    |   |
| Net  earnings per share — basic   |       | $                                               | 0.01       |   |
| Net  earnings per share — diluted |       | $                                               | 0.01       |   |

 

Duringthe nine months ended September 30, 2009, we incurred plant operatingexpenses of $3,749,484. Our average plant operating cost for the 2009 periodwas $3.71 per Mcf on net throughput of 1,009,746 Mcf. We purchased the gas treatmentplant effective on December 31, 2008, thus there was no plant operatingexpense for the comparable 2008 period.

 

Duringthe nine months ended September 30, 2009, we incurred lease operatingexpense of $478,187. Our net average lifting cost for the 2009 period was $0.67per Mcf. During the nine months ended September 30, 2008, we incurredlease operating expense of $1,287,309. Our net average lifting cost for the2008 period was $1.16 per Mcf. The average lifting cost per Mcf in 2009 waslower due to cost cutting efforts and a reduction of ad valorem taxesapplicable to the wells.

 

Duringthe nine months ended September 30, 2009, we incurred no net profitsinterest expense associated with the Magness, the Fannin, and the Mitchellwells as compared to $601,237 during the nine months ended September 30,2008. The decrease resulted from lower gas prices and production volumes in thenine months ended September 30, 2009 versus 2008. The net profit interestis 12.5% of the net operating profit from our Magness, Fannin,and Mitchell wells.

 

Generaland administrative (“G&A”) expenses for the nine months ended September 30,2009 were $2,026,821 compared to $1,921,270 for the nine months ended September 30,2008. This represents a $105,551 or 5% increase over the prior year period. Thehigher G&A expense incurred in 2009 was due primarily to the amortizationof stock compensation expense associated with common stock options issued in June 2008and June 2009.

 

Forthe nine months ended September 30, 2009, impairment expense was $939,703versus $63,766 for the same period of 2008.  The impairment write-downswere due to cost of certain wells drilled on our Canadian oil and gasproperties which were deemed to be fully evaluated during the respectiveperiods resulting in ceiling test write downs. We determined during the quarterthat the reserve potential associated with these wells did not merit furtherexpenditures.

 

Depreciation,depletion and amortization expense (“DD&A”) for the nine months ended September 30,2009 was $1,159,050 as compared to $1,326,099 in the same period of 2008, whichamounts primarily represent amortization of the oil and gas properties for thenine months ended September 30, 2009 and 2008, respectively. The 13%decrease was due to lower net production in the nine months ended September 30,2009 offset by added depreciation from plant of $164,282.

 

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Lossfrom operations totaled $5,433,322 for the nine months ended September 30,2009 as compared to income from operations of $907,217 for the nine monthsended September 30, 2008. The increase in the loss from operations was dueprimarily to lower gas prices, lower production volume, and higher expenses.

 

Otherincome for the nine months ended September 30, 2009 and 2008 consisted ofinterest income in the amount of $4,949 and $73,609, respectively. Interestincome decreased due primarily to lower average cash and cash equivalentbalances because of the acquisition of the gas treatment plant in December 31,2008. During the nine months ended September 30, 2009, we realized again on the sale of equipment of $1,488,687 relating to the sale of idleequipment in our Madisonville Plant.

 

Duringthe nine months ended September 30, 2009 and 2008, we incurred interestexpense of $563,991 and $0, respectively. We borrowed funds in late December 2008and during the nine months ended September 30, 2009 to fund the plantacquisition and working capital requirements. There were no borrowingsoutstanding in the same period of 2008.

 

**RecentDevelopments**

 

During the nine months ended September 30, 2009we borrowed $850,000 pursuant to five separate three year loans which wereconvertible into a newly designated class of preferred stock of GeoPetro, Series BConvertible Preferred Stock (the “Series B Preferred Stock”) and$1,177,000 pursuant to eleven separate loans.  The $850,000 in loansconverted into Series B Preferred Stock on April 30, 2009, along withan additional $1,000,000 which was advanced during April for a totalsubscription in the private placement of 2,466,670 shares for a purchase priceof $0.75 per share and an aggregate investment of $1,850,000. The holders of Series BStock are entitled to receive an annual dividend at the rate of $0.06 per shareand are entitled to such number of votes per share as equals the number ofcommon shares into which each share of Series B Stock is convertible. Eachshare of Series B Stock is convertible, at the option of the holder, intofully paid and non-assessable common shares on a one-for-one basis, subject tocertain adjustments. The Series B Stock will automatically convert intocommon shares on a one-for-one share basis effective the first trading dayafter the reported high selling price for the Company’s common shares on anyinternational, national or regional securities exchange or inter-dealerquotation system including but not limited to, NASDAQ, the Pink Sheets or the Over-the-CounterBulletin Board, is at least $1.50 per share for any ten consecutive tradingdays. If an automatic conversion occurs within one year after the Series BStock was purchased from the Company, a holder will receive, on the one-yearanniversary date of his, her or its purchase, a cash dividend equivalent to afull year of dividends less any dividends paid before such conversion.

 

In accordance with the provisions of an agreement withAdelphi Energy Limited (“Adelphi”) and our wholly owned subsidiary, GeoPetroResources (South Bengara-II) Pte. Ltd., we relinquished our interest in therecently awarded South Bengara-II production sharing contract, onshoreIndonesia.  On May 18, 2009, we received repayment of an advance wehad previously made to Adelphi in the amount of $95,000 in connection with theacquisition of the production sharing contract.

 

On September 10,2009, the Company’s subsidiary, Madisonville Midstream, LLC reached anagreement to sell certain idle equipment related to the plant to Gas Processors, Inc.for a sale price of $2.5 million. A nonrefundable deposit of $250,000 wasreceived on September 10, 2009. The remaining balance of $2.25 million wasreceived on September 30, 2009.  Ofthe $2,500,000 sales proceeds, $1,125,000 was applied toward a reduction of theprincipal balance on the Bank of Oklahoma term loan.

 

BetweenAugust 3, 2009 and October 13, 2009, we entered into preferredstock purchase agreements for the private placement of 5,049,333 shares of Series BPreferred Stock for a purchase price of $0.75 per share and an aggregateinvestment, before offering costs, of $3,787,000.  Significant rights and preferences attachingto the Series B Preferred Stock are described above.

 

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BetweenAugust 3, 2009 and October 23, 2009, we issued promissory notesfor total gross proceeds of $1,000,000 (net proceeds of $960,000).  We issued to the note holders warrantsexercisable to purchase 50,000 shares of our common stock.  Each warrant is exercisable for a three yearterm to purchase one share of our common stock at a price of $1.00 per share.  The issuance dates, maturity dates andinterest rates for these promissory notes are as follows:

 
| **DATE OF** | ** ** | **MATURITY** | ** ** | **INTEREST** | ** ** | **PRINCIPAL** | ** **      |
|-------------|------------|--------------|------------|--------------|------------|---------------|-----------------|
| **NOTE**    | ** ** | **DATE**     | ** ** | **RATE**     | ** ** | **AMOUNT**    | ** **      |
|        |       |         |       |         |       |          |            |
| 08/13/09    |       | 08/30/10     |       | 10           | %          | $             | 100,000         |   |
| 08/21/09    |       | 08/30/10     |       | 10           | %          | 100,000       |            |
| 09/01/09    |       | 08/30/10     |       | 10           | %          | 30,000        |            |
| 09/16/09    |       | 08/30/10     |       | 10           | %          | 50,000        |            |
| 10/23/09    |       | 10/31/10     |       | 10           | %          | 720,000       |            |
|        |       |         |       |         |       | $             |  1,000,000 |   |

 

On September 11,2009, our subsidiary, Redwood Energy Production, L.P. filed an OriginalPetition for Declaratory Judgment against Devon Energy Production Company (“Devon”)regarding certain overriding royalty interests and related revenue amountsclaimed by Devon.  We have previouslyaccrued all amounts owed pursuant to these overriding royalty interests asroyalty owners payable.  In the opinionof management based on consultation with legal counsel, these proceedings arenot expected to have a material adverse effect on our financial condition orresults of operations.

 

**Liquidityand Capital Resources**

 

We hada working capital deficit of $2,716,389 at September 30, 2009 versus$2,151,652 at December 31, 2008. Our working capital decreased during ninemonths ended September 30, 2009 due primarily to weaker gas prices andlower production.

 

Wehave historically financed our business activities through September 30,2009 principally through issuances of common shares, promissory notes andcommon share purchase warrants in private placements and an initial publicoffering. These financings are summarized as follows:

 
| ** **                                                      | ** ** | **Nine  Months Ended**      | ** ** |
|-----------------------------------------------------------------|------------|----------------------------------|------------|
| ** **                                                      | ** ** | **September 30, 2009** | ** ** | **September 30, 2008** | ** ** |
| Proceeds  from sale of common shares and warrant exercises, net |       | $                                | —     |   | $ | 375,000 |   |
| Proceeds  from sale of Preferred Series B                  |       | 3,031,710                        |       | — |   |
| Proceeds  from promissory notes                                 |       | 1,177,000                        |       | — |   |
| Payments  of loan fee                                           |       | (15,200                          | )          | — |   |
| Repayment  of notes payable                                     |       | (1,707,000                       | )          | — |   |
|                                                            |       |                             |       |   |   |
| Net cash  provided by financing activities                      |       | $                                | 2,486,510  |   | $ | 375,000 |   |

 

Thenet proceeds of our equity financings have been primarily used in the workingcapital requirement and invested in oil and natural gas properties and the gastreatment plant totaling $761,449 and $5,345,519 in oil and natural gasproperties for the nine months ended September 30, 2009 and 2008,respectively.

 

Ourcash balance at September 30, 2009 was $1,645,006 compared to a cashbalance of $770,779 at December 31, 2008. The change in our cash balanceis summarized as follows:

 
| Cash  balance at December 31, 2008       |   | $          | 770,779   |   |
|-----------------------------------------------|--------|------------|-----------|--------|
| Sources  of cash:                             |   |       |      |
| Cash  provided by investment activities       |   | 1,738,551  |      |
| Cash  provided by financing activities        |   | 2,486,510  |      |
| Total  sources of cash including cash on hand |   | 4,995,840  |      |
|                                          |   |       |      |
| Uses  of cash:                                |   |       |      |
| Cash  used in operating activities            |   | (3,350,834 | )         |
| Total  uses of cash                           |   | (3,350,834 | )         |
|                                          |   |       |      |
| Cash  balance at September 30, 2009      |   | $          | 1,645,006 |   |

 

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Duringthe nine months ended September 30, 2009, we raised $850,000 from theissuance of convertible loans and $1,177,000 from the issuance of promissorynotes to accredited investors all of which were subordinated to the Bankof Oklahoma loan and unsecured.  The $850,000 promissory notes convertedto Series B Preferred Stock effective April 30, 2009.  We raisedan additional $2,181,710 from the issuance of Series B Preferred Stockduring nine months ended September 30, 2009.

 

Ourcurrent cash and cash equivalents and anticipated cash flow from operations maynot be sufficient to meet our working capital, capital expenditures and growthstrategy requirements for the foreseeable future. See “Outlook for 2009/2010”for a description of our expected capital expenditures for 2009/2010. If we areunable to generate revenues necessary to finance our operations over thelong-term, we may have to seek additional capital through the sale of ourequity or borrowing. As noted in “Recent Developments,” we periodically borrowfunds pursuant to short and long term promissory notes to finance ouractivities.

 

As of September 30,2009, we have a working capital deficit of $2,716,389, and for the nine monthsended September 30, 2009, our cash used in operating activities amountedto $3,350,834.  Further, we estimate our minimum investment needs duringthe remainder of 2009 and calendar 2010 to be $4,500,000 related to our naturalgas processing plant and our natural gas properties within the Madisonvillefield.  Due to the current natural gas commodity price environment, ourresults of natural gas operations amounted to a loss of $1,307,748 for the ninemonths ended September 30, 2009.  Further, we have debt service anddividend requirements that will require cash payments.  We hold workinginterests in undeveloped leases, seismic options, lease options and foreignconcessions and we have participated in seismic surveys and the drilling oftest wells on undeveloped properties.  We plan further leaseholdacquisitions and seismic operations for the remainder of 2009 and futureperiods.  Exploratory and developmental drilling is scheduled during 2009and future periods on our undeveloped properties.  Subsequent to September 30,2009, we have raised additional capital through a bridge loan financing andthrough issuance of additional shares of our Series B PreferredStock.  We are also attempting to raise additional cash through the saleor farmout of certain of our unproved properties.   In addition to these items, we need to raiseadditional equity or enter into new borrowing arrangements to finance ouroperating deficit and our continued participation in planned activities. Ifadditional financing is not available, we will be compelled to reduce the scopeof our business activities.  If we are unable to fund our operating cashflow needs and planned capital investments, it will be necessary to farm-outour interest in proposed wells, sell a portion of our interest in prospects,sell a portion of our interest in our producing oil and gas properties, sellall or a portion of our gas plant, reduce general and administrative expenses,or a combination of all of these factors.

 

Asdiscussed in the “Outlook for 2009/2010”, we are forecasting capitalexpenditures of $6.8 million during 2009/2010. We will need to obtain adequatesources of cash to fund our anticipated capital expenditures through the end of2009 and to follow through with plans for continued investments in oil and gasproperties. Our success, in part, depends on our ability to generate additionalfinancing and farmout certain of our projects.  Additionally, as a resultof the 2008 economic downturn, the Company may have difficulty raisingsufficient funds to meet our projected funding requirements. The tight creditmarkets and downturn in the stock market may impair our ability to generateadditional financing.

 

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

 

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**ContractualObligations**

 

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

 

**OffBalance Sheet Arrangements**

 

Fromtime to time, we enter into off-balance sheet arrangements and transactionsthat can give rise to off-balance sheet obligations. As of September 30,2009, our off-balance sheet arrangements and transactions include operatinglease agreements. We do not believe that these arrangements are reasonablylikely to materially affect our liquidity or availability of, or requirementsfor, capital resources.

 

**FinancialInstruments**

 

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

 

**Outlookfor 2009/2010**

 

Dependingon capital availability, we are forecasting capital spending of up toapproximately $6.8 million during the year 2009 and 2010, allocated as follows:

 

1                          Madisonville Project, Madison County,Texas — Approximately $5.5 million may be expended in the Madisonville Fieldarea as follows: $3 million for capital maintenance and repair on new gastreatment plant; $2 million toward the fracture stimulation and hook up costsof the Wilson Well; and $500,000 for the Mitchell well workover.

 

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

 

3.                       California and Indonesia — Approximately$0.3 million to be utilized for land, geologic and geophysical costs.

 

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

 

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

 

**Impactof Inflation & Changing Prices**

 

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

 

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

 

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

 

**CriticalAccounting Estimates**

 

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

 

**Risksand Uncertainties**

 

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

 

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

 

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

 

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

 

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

 

*Hedging.* We did not enter into any hedging transactions duringthe nine months ended September 30, 2009 and 2008.

 

**Item 4. Controls and Procedures**

 

**Evaluationof Disclosure Controls and Procedures**

 

Basedon their evaluation as of nine months ended September 30, 2009, our ChiefExecutive Officer and Chief Financial Officer have concluded that ourdisclosure controls and procedures (as defined in Rules 13a-15(e) and15d-15(e) under the Exchange Act) are effective to ensure that informationrequired to be disclosed in reports that we file or submit under the ExchangeAct are recorded, processed, summarized and reported within the time periodsspecified in the SEC’s rules and forms and in providing reasonableassurance that information required to be disclosed by the Company in suchreports is accumulated and communicated to the Company’s management, includingits Chief Executive Officer and Chief Financial Officer, as appropriate toallow timely decisions regarding required disclosures.

 

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

 

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**PART II. OTHER INFORMATION**

 

**Item 1.  Legal Proceedings.**

 

Fromtime to time, we are party to litigation or other legal and administrativeproceedings that we consider to be a part of the ordinary course of ourbusiness. Currently, On September 11, 2009, our subsidiary, Redwood EnergyProduction, L.P. filed an Original Petition for Declaratory Judgment againstDevon Energy Production Company (“Devon”) regarding certain overriding royaltyinterests and related revenue amounts claimed by Devon.  The Company previously accrued all amountsowed pursuant to these overriding royalty interests as royalty ownerspayable.  In the opinion of managementbased on consultation with legal counsel, these proceedings are not expected tohave a material adverse effect on our financial condition or results ofoperations.

 

**Item 1A.  Risk Factors.**

 

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

 

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

 

**UnregisteredSales of Securities**

 

Duringthe quarter ended September 30, 2009, we entered into preferred stockpurchase agreements with 49 accredited investors for the private placement of1,654,337 shares of newly designated Series B Convertible Preferred Stock,for a purchase price of $0.75 per share and an aggregate investment of $1,240,753. We issued the Series B Convertible Preferred Stock in reliance on theexemption from registration provided for under Section 4(2) of theSecurities Act, and Rule 506 of Regulation D thereunder. We relied on theexemption from registration provided for under Section 4(2) of theSecurities Act based in part on the representations made by the investors,including the representations with respect to the investors’ status asaccredited investors, as such term is defined in Rule 501(a) of theSecurities Act, and the their investment intent with respect to the sharespurchased. We paid $59,043 as finders fees and commissions in connection withthis offering.

 

**Use ofProceeds**

 

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

 

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

 

1.      Madisonville Project, Madison County, Texas. Up to approximately $8 millionwill be expended in the Madisonville Field area towards the drilling andcompletion of one deep exploratory well location to an estimated depth of18,000 feet.

 

2.      Alaska Cook Inlet Project, up to approximately $2.0 million will be expendedfor the drilling of pilot program wells.

 

3.      General working capital.

 

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

 

**Item 3.  Defaults Upon Senior Securities**

 

Not applicable.

 

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

 

Not applicable.

 

**Item 5.  Other Information.**

 

Not applicable

 

**Item 6.  Exhibits**

 

**EXHIBIT INDEX**

 
| **Exhibit  Number** | ** ** | **Description**                                                                                                                                                                                                                                                                                                                                                                                                         |
|---------------------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.1  (2)            |       | Amended and Restated  Articles of Incorporation of GeoPetro Resources Company                                                                                                                                                                                                                                                                                                                                           |
|                |       |                                                                                                                                                                                                                                                                                                                                                                                                                    |
| 3.2  (8)            |       | Second Amended and  Restated Bylaws of the GeoPetro Resources Company                                                                                                                                                                                                                                                                                                                                                   |
|                |       |                                                                                                                                                                                                                                                                                                                                                                                                                    |
| 4.1  (2)            |       | Form of Warrant  issued by GeoPetro Resources Company to various investors on various dates.                                                                                                                                                                                                                                                                                                                       |
|                |       |                                                                                                                                                                                                                                                                                                                                                                                                                    |
| 4.2  (3)            |       | Specimen Common Stock  Certificate                                                                                                                                                                                                                                                                                                                                                                                      |
|                |       |                                                                                                                                                                                                                                                                                                                                                                                                                    |
| 4.3                 |       | Form of common  stock purchase warrant issued to various investors dated August 13, 2007  (filed as exhibit 4.1 to the Company’s Report on Form 8-K as filed with  the Securities and Exchange Commission on August 16, 2007, and  incorporated herein by reference)                                                                                                                           |
|                |       |                                                                                                                                                                                                                                                                                                                                                                                                                    |
| 4.4                 |       | Registration Rights  Agreement between GeoPetro Resources Company and various investors dated  August 13, 2007 (filed as Exhibit B to the Form of Unit  Subscription Agreement dated August 13, 2007 filed as Exhibit 10.20  to the Company’s Report on Form 8-K as filed with the Securities and  Exchange Commission on August 16, 2007 and incorporated herein by reference) |
|                |       |                                                                                                                                                                                                                                                                                                                                                                                                                    |
| 4.5  (6)            |       | Placement Agent Warrant  dated August 13, 2007                                                                                                                                                                                                                                                                                                                                                                     |
|                |       |                                                                                                                                                                                                                                                                                                                                                                                                                    |
| 5.1  (6)            |       | Opinion of Greene  Radovsky Maloney Share & Hennigh LLP                                                                                                                                                                                                                                                                                                                                                        |
|                |       |                                                                                                                                                                                                                                                                                                                                                                                                                    |
| 10.1 (2)            |       | Joint Venture Agreement  Bengara II, Dated January 1, 2000                                                                                                                                                                                                                                                                                                                                                         |
|                |       |                                                                                                                                                                                                                                                                                                                                                                                                                    |
| 10.2 (2)            |       | Production Sharing  Contract Bengara II, Dated December 4, 1997                                                                                                                                                                                                                                                                                                                                                    |
|                |       |                                                                                                                                                                                                                                                                                                                                                                                                                    |
| 10.4 (2)            |       | Exploration Permit#408,  Dated July 2, 1997                                                                                                                                                                                                                                                                                                                                                                        |
|                |       |                                                                                                                                                                                                                                                                                                                                                                                                                    |
| 10.5 (2)            |       | Madisonville Field  Development Agreement Dated August 1, 2005                                                                                                                                                                                                                                                                                                                                                     |
|                |       |                                                                                                                                                                                                                                                                                                                                                                                                                    |
| 10.6 (2)            |       | Alaska Cook Inlet  Option dated April 20, 2005                                                                                                                                                                                                                                                                                                                                                                     |
|                |       |                                                                                                                                                                                                                                                                                                                                                                                                                    |
| 10.7 (2)†      |       | The 2001 Stock  Incentive Plan                                                                                                                                                                                                                                                                                                                                                                                          |

 

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| 10.8 (2)†  |   | The 2004 Stock Option  and Appreciation Rights Plan                                                                                                                                                                                             |
|-----------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|            |   |                                                                                                                                                                                                                                            |
| 10.9 (2)†  |   | Stuart Doshi Employment  Agreement, Dated July 28, 1997 (effective July 1, 1997) and  amendments dated January 11, 2001, July 1, 2003, April 20,  2004, May 9, 2005, July 28, 2005 and January 30, 2006 |
|            |   |                                                                                                                                                                                                                                            |
| 10.10 (2)† |   | David Creel Employment  Agreement, Dated April 28, 1998 and amendments dated September 15,  2000, May 12, 2003 and January 1, 2005                                                                                          |
|            |   |                                                                                                                                                                                                                                            |
| 10.11 (2)† |   | J. Chris Steinhauser  Employment Agreement, Dated September 19, 2000 and amendments dated December 12,  2002 and January 1, 2005                                                                                                 |
|            |   |                                                                                                                                                                                                                                            |
| 10.12 (2)       |   | Office Lease Agreement,  Dated effective March 1, 2004                                                                                                                                                                                     |
|            |   |                                                                                                                                                                                                                                            |
| 10.13 (4)       |   | Form of  Subscription Agreement for GeoPetro Resources Company stock executed by  various investors on various dates.                                                                                                                      |
|            |   |                                                                                                                                                                                                                                            |
| 10.19 (5)       |   | Shares Sale &  Purchase Agreement Dated September 29, 2006                                                                                                                                                                        |
|            |   |                                                                                                                                                                                                                                            |
| 10.20 (6)       |   | Form of Unit  Subscription Agreement Dated August 13, 2007                                                                                                                                                                            |
|            |   |                                                                                                                                                                                                                                            |
| 10.22 (6)       |   | Promissory Note to  Stuart Doshi dated February 12, 2007                                                                                                                                                                                   |
|            |   |                                                                                                                                                                                                                                            |
| 10.23 (7)† |   | Third Amendment to J.  Chris Steinhauser Employment Agreement dated December 18, 2007                                                                                                                                                      |
|            |   |                                                                                                                                                                                                                                            |
| 10.24 (9)† |   | Employment Agreement  with J. Chris Steinhauser dated April 27, 2009                                                                                                                                                                       |
|            |   |                                                                                                                                                                                                                                            |
| 10.25 (9)† |   | Sixth Amendment to  David Creel Employment Agreement dated April 28, 2009                                                                                                                                                                  |
|            |   |                                                                                                                                                                                                                                            |
| 10.26 (10)      |   | Related Party Promissory  Note Dated June 18, 2009                                                                                                                                                                                         |
|            |   |                                                                                                                                                                                                                                            |
| 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.      |
|   |   |                                                                                                                                                                                                                                       |
| (9)    |   | Filed as the  identically numbered exhibit to the Form 10-Q, as filed with the  Securities and Exchange Commission on May 11, 2009, and incorporated  herein by reference.                                                       |
|   |   |                                                                                                                                                                                                                                       |
| (10)   |   | Filed as the  identically numbered exhibit to the Form 10-Q, as filed with the  Securities and Exchange Commission on August 10, 2009, and incorporated  herein by reference.                                                    |
|   |   |                                                                                                                                                                                                                                       |
| † |   | Indicates a management  or compensatory plan or arrangement                                                                                                                                                                                |

 

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**SIGNATURES**

 

Pursuantto the requirements of Section 13 or 15(d) of the Securities ExchangeAct of 1934, the registrant has duly caused this report to be signed on itsbehalf by the undersigned, thereunto duly authorized, on November 9, 2009.

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

 

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