The revenue increase was due to increases in production, primarily as a result of current development activity, property acquisitions in 2004 and increased average realized commodity sales prices. For the three months ended September 30, 2005, oil sales volume increased to 123,600 barrels, compared to 54,769 barrels for the same period in 2004, a 126% increase. For the nine months ended September 30, 2005, oil sales volume increased to 293,094 barrels, compared to133,177 barrels for the same period in 2004, a 120% increase. For the three months ended September 30, 2005, gas sales volume increased to 105,629 MCF (thousand cubic feet), compared to 52,698 MCF for the same period in 2004, a 100% increase. For the nine months ended September 30, 2005, gas sales volume increased to 273,912 MCF, compared to 112,724 MCF for the same period in 2004, a 143% increase. The average commodity prices received by Arena were $58.92 per barrel of oil and $6.20 per MCF of natural gas for the quarter ended September 30, 2005, compared to $41.13 per barrel of oil and $5.05 per MCF of natural gas for the quarter ended September 30, 2004. The average prices received for the nine months ended September 30, 2005 were $51.05 per barrel of oil and $5.55 per MCF of natural gas, compared to $37.47 per barrel of oil and $4.62 per MCF of natural gas for the nine month period ended September 30, 2004.

Total operating expenses for the three and nine months ended September 30, 2005 were $2,421,596 and $5,969,133 respectively, as compared to $1,126,299 and $2,715,450 for the same periods ended September 30, 2004. Depreciation, depletion and amortization costs for the three month period ended September 30, 2005 were $645,908 compared to $237,212 for the same period ended September 30, 2004. For the nine month period ended September 30, 2005, depreciation, depletion and amortization totaled $1,550,791 compared to $553,038 for the same period ended September 30, 2004. General and administrative costs for the three and nine month periods ended September 30, 2005 were $259,978 and $803,082, respectively, compared to $131,619 and $473,391 for the same periods ended September 30, 2004.

The Company had no outstanding debt on its bank credit facility at September 30, 2005 as compared to five million dollars at June 30, 2005.

Net cash flow from operations for the nine months ended September 30, 2005 was $11,873,191, or $0.98 per diluted share, compared to net cash flow of $3,224,551, or $0.39 per diluted share for the same period in 2004 (1).

Arena's Chief Executive Officer, Mr. Tim Rochford, stated, "We are extremely proud of our record results for the third quarter during which production increased 32% over the second quarter 2005, revenues increased 71%, net income 100% and operating cash flow 87%. This quarter reflects the first full quarter of our development drilling and re-stimulation operations on our Fuhrman-Mascho property. During the quarter we drilled 12 new wells on this property and have had a 100% success rate on 25 wells completed to date since April. We will continue to focus on the development of our current properties, while at the same time pursue acquisition opportunities that complement our existing locations."

(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.

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08.25.05
Arena Resources, Inc. Announces Redemption of Public Warrants

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04.13.05
Arena Resources, Inc. Provides
First Quarter 2005
Operations Update