Arena Resources Announces Financial and Operational Results for First Quarter 2010
Tulsa, Oklahoma — May 10, 2010 — Arena Resources, Inc. (NYSE-ARD)(“Arena”)(“Company”) announced today financial and operational results for the first quarter ended March 31, 2010. Oil and gas revenues were $51,797,626 compared to $20,193,160 for the quarter ended March 31, 2009, and net income was $18,113,091 or $0.46 per diluted share, compared to net income of $6,465,449 or $0.17 per diluted share, for the same period in 2009.
Arena’s total production for the quarter ended March 31, 2010 was 739,523 BOEs (Barrel of oil equivalents). This represents a 30% increase over the same three month period in 2009 and a 16% increase over the three month period ending December 31, 2009. For the three months ended March 31, 2010, oil sales volume increased to 631,052 barrels, compared to 489,249 barrels for the same period in 2009, a 29% increase and gas sales volume increased to 650,828 MCF (thousand cubic feet), compared to 472,823 MCF for the same period in 2009, an 38% increase. The average commodity prices received by Arena were $74.84 per barrel of oil, a 103% increase from $36.89 per barrel of oil received for the quarter ended March 31, 2009, and $7.02 per MCF of natural gas, a 55% increase from the $4.54 per MCF of natural gas received for the same period in 2009.
Lease operating expenses, including production taxes, for the three months ended March 31, 2010 were $9.81 per BOE, a 5% increase from the prior year. Depreciation, depletion and amortization costs increased 31% to $16.63 per BOE. General and administrative costs, which included a $1,608,779 charge for stock based compensation, were $4.74 per BOE, a 1% increase, as compared to $4.71 per BOE in 2009, which included a $1,329,317 charge for stock based compensation.
Net cash flow from operations for the three months ended March 31, 2010 was $42,788,868 or $1.09 per diluted share, compared to net cash flow of $18,920,108 or $0.49 per diluted share for the same period in 2009 (1).
Operations:
During the first quarter of 2010, the Company drilled 87 new San Andres zone development wells at its Fuhrman-Mascho property in Andrews County, Texas, consisting of eight 40-acre wells, sixteen 20-acre wells, fifty-five 10-acre wells and eight five-acre wells. Sixty-four of the wells were completed and producing as of March 31, 2010, while the remaining twenty-three were in various stages of completion. Additionally, twelve development wells which were drilled in the fourth quarter of 2009 were successfully completed and placed in production. The Company has now drilled 740 new San Andres development wells on this lease since initiating its developmental drilling program in mid-April, 2005, and continued its 100% development drilling success rate.
Non-GAAP Financial Measures:
Earnings for the first quarter 2010 include a non-cash charge for stock based compensation of $1,608,779. Excluding such item, the Company’s earnings would have been $0.49 per diluted share. The Company believes results excluding these items are more comparable to estimates provided by security analysts and, therefore, are useful in evaluating operational trends of the Company and its performance, compared to other similarly situated oil and gas producing companies.
(1) Cash Flow from Operations is a non-GAAP financial measure that represents
“Net Cash Provided By Operating Activities” adjusted for the change in operating assets and liabilities. See below for a reconciliation of the related amounts.
About Arena Resources, Inc.
Arena Resources, Inc. is an oil and gas exploration, development and production company with current operations in Texas, Oklahoma, Kansas and New Mexico.
Forward Looking Statements and Additional Information
This release contains forward-looking statements within the meaning of the “safe-harbor” provisions of the Private Securities Litigation Reform Act of 1995 that involve a wide variety of risks and uncertainties, including, without limitations, statements with respect to the Company’s strategy and prospects. Readers and investors are cautioned that the Company’s actual results may differ materially from those described in the forward-looking statements due to a number of factors, including, but not limited to, the Company’s ability to acquire productive oil and/or gas properties or to successfully drill and complete oil and/or gas wells on such properties, general economic conditions both domestically and abroad, and the conduct of business by the Company, and other factors that may be more fully described in additional documents set forth by the Company.
In connection with a proposed transaction among the Company, SandRidge Energy, Inc. (“SandRidge”), and a wholly-owned subsidiary of SandRidge, SandRidge has filed with the Securities and Exchange Commission (the "SEC") a Registration Statement on Form S-4 containing a Joint Proxy Statement/Prospectus (Registration No. 333-166141), and each of SandRidge Energy, Inc. and the Company may file with the SEC other documents regarding the proposed transaction. Free copies of the Registration Statement and the Joint Proxy Statement/Prospectus and other documents filed with the SEC by SandRidge Energy, Inc. and the Company, Inc. can be obtained through the web site maintained by the SEC at www.sec.gov., or by directing a request to the Company, 6555 South Lewis Avenue, Tulsa, Oklahoma 74136, Attention: Investor Relations.
For further information contact:
Bill Parsons, VP Investor Relations
(702) 489-4445
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ARENA RESOURCES, INC. STATEMENTS OF OPERATIONS |
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Three Months Ended
March 31, |
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2010 |
2009 |
 |
Oil and Gas Revenues
Costs and Operating Expenses
Oil and gas production costs
Oil and gas production taxes
Realized loss (gain) on oil derivatives
Depreciation, depletion and amortization
Accretion expense
General and administrative expense
Stock based compensation expense
Total Costs and Operating Expenses
Other Income (Expense)
Interest income
Interest expense
Net Other Expense (Expense)
Income Before Provision for Income Taxes
Provision for Deferred Income Taxes
Net Income
Basic Net Income Per Common Share
Diluted Net Income Per Common Share
Other Comprehensive Income (Loss)
Realized loss (gain) on hedge derivative contract settlements
reclassified from other comprehensive loss (income)
Change in unrealized deferred hedging gains (losses), net of tax
Total Other Comprehensive Income
Basic Weighted-Average
Common Shares Outstanding
Diluted Weighted-Average
Common Shares Outstanding |
|
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$ 51,797,626
4,463,674
2,786,047
(25,500)
12,297,186
131,965
1,895,031
1,608,779
23,157,182
110,494
—
110,494
28,750,938
(10,637,847)
$ 18,113,091
$ 0.47
$ 0.46
—
10,879
$ 18,123,970
38,836,252
39,275,153 |
$ 20,193,160
4,206,783
1,098,339
(5,111,210)
7,231,481
94,750
1,345,452
1,329,317
10,194,912
266,312
—
266,312
10,624,560
(3,799,111)
$ 6,465,449
$ 0.17
$ 0.17
(2,916,308)
9,945
$ 3,559,086
38,210,187
38,793,449 |
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COMPARATIVE OPERATING STATISTICS |
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Three Months Ended March 31, |
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2010 |
2010 |
Change |
Net Production - BOE per day
Per BOE:
Average Sales Price
Operating Costs
LOE
Production Tax
DD&A
General Administrative Expenses
G & A
Stock based compensation
Interest Expense (Income) |
|
8,217
$ 70.04
8.04
3.77
16.63
2.56
2.18
(0.15) |
6,312
$ 35.55
7.41
1.93
12.73
2.37
2.34
(0.47) |
30%
97%
-18%
95%
31%
8%
-7%
-68% |
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CONSOLIDATED BALANCE SHEET |
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March 31
2010 |
December 31
2009 |
ASSETS
Current Assets
Cash
Accounts receivable
Joint interest billing receivable
Receivable from oil derivative
Fair value of oil derivative
Prepaid expenses
Total Current Assets
Property and Equipment, Using Full Cost Accounting
Oil and Gas properties subject to amortization
Oil and gas gathering systems
Inventory for property development
Drilling rigs
Land, buildings, equipment and leasehold improvements
Total Property and Equipment
Less: Accumulated depreciation and amortization
Net Property and Equipment
Total Assets |
|
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$ 55,015,353
19,109,114
2,834,249
25,500
17,268
1,212,171
78,213,655
708,649,133
3,318,186
991,861
6,694,841
6,132,667
725,786,688
(112,919,977)
612,866,711
$ 691,564,356
|
$ 63,635,078
13,103,483
2,392,814
—
—
1,040,513
80,171,888
661,453,134
2,134,876
1,052,538
6,694,841
5,991,983
677,327,372
(100,428,326)
576,899,046
$ 657,070,934
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LIABILITIES AND STOCKHOLDERS' EQUITY |
Current Liabilities
Accounts payable
Current taxes payable
Accrued liabilities
Total Current Liabilities
Long-Term Liabilities
Asset retirement liability
Deferred income taxes
Total Long-Term Liabilities
Stockholders' Equity
Preferred stock - $0.001 par value; 10,000,000 shares authorized
No shares issued or outstanding
Common stock - $0.001 par value; 100,000,000 shares authorized
39,459,963 shares and 38,693,963 shares outstanding respectively
Additional paid-in capital
Retained earnings
Accumulated other comprehensive loss
Total Stockholders' Equity
Total Liabilities and Stockholders' Equity |
|
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$ 18,002,641
—
1,322,964
19,325,605
8,158,997
119,267,035
127,426,032
—
38,460
330,527,853
213,750,537
10,879
544,328,729
$ 691,564,356
|
$ 17,155,260
314,700
1,101,633
18,571,593
7,209,612
108,622,799
115,632,611
—
38,694
326,990,590
195,637,446
—
522,666,730
$ 657,070,934
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Three Months
Ended
March 31
2010 |
Three Months
Ended
March 31
2009 |
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Cash Flows From Operating Activities
Net income
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation, depletion & amortization
Provision for income taxes
Stock based compensation
Accretion of asset retirement obligation
Changes in assets and liabilities:
Accounts and joint interest receivable
Other changes in deferred income taxes
Prepaid expenses
Accounts payable & accrued liabilities
Net Cash Provided by Operating Activities
Cash Flows From Investing Activities
Purchase and development of oil and gas properties
Purchase of inventory for property development
Construction of oil and gas gathering systems
Purchase of buildings, machinery and office equipment
Net Cash Used in Investing Activities
Cash Flows From Financing Activities
Proceeds from exercise of options
Net Cash Provided by Financing Activities
Net Increase (Decrease) in Cash
Cash at Beginning of Period
Cash at End of Period
Supplemental Cash Flow Information
Cash paid for income taxes
Cash paid for interest
Non-Cash Investing and Financing Activities
Asset retirement obligation incurred in property
acquisition and
development
Depreciation on drilling rigs capitalized as oil and gas properties
Use of inventory in property development |
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$ 42,294,179
38,957,641
24,839,439
4.649,928
410,926
(1,513,645)
—
(472,478)
4.513,854
113,679,844
(103,778,202)
(6,068,087)
(2,134,876)
(192,938)
(112,988,770)
1,929,250
1,929,250
(8,619,725)
63,635,078
$ 55,015,353
$ 314,700
—
817,220
194,465
3,282,195
|
$ 83,617,201
29,789,794
49,112,685
86,279
6,502
9,835,045
(612,480)
(714,040)
(587,238)
177,336,648
(207,022,666)
(1,670,067)
—
(1,931,517)
(210,327,450)
—
—
(6,086,300)
58,489,574
$ 52,403,274
—
—
134,232
110,675
1,486,572
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RECONCILIATION OF CASH FLOW FROM OPERATIONS |
Net cash provided by operating activities
Change in operating assets and liabilities
Cash flow from activities
Management believes that the non-GAAP measure of cash flow from operations is useful information for investors because it is used internally and is accepted by the investment community as a means of measuring the Company's ability to fund its capital program. It is also used by professional research analysts in providing investment recommendations pertaining to companies in the oil and gas exploration and production industry. |
|
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$ 314,700
5,890,212
$ 42,788,668 |
$ 11,231,316
7,688,792
$ 18,920,108 |
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NON-GAAP DISCLOSURE RECONCILIATION ADJUSTED EBITDA |
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March 31
2010 |
March 31
2009 |
NET INCOME
Interest (Income) / expense
Income tax expense
Depreciation, depletion and amortization
Accretion of discounted liabilities
Stock based compensation
ADJUSTED EBITDA |
|
|
$ 18,113,091
(110,494)
10,637,647
12,297,186
131,965
1,608,779
$ 42,678,779 |
$ 6,465,449
(266,312)
3,799,111
7,231,481
94,750
1,329,317
$ 18,653,796 |
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