Arena Resources, Inc. Announces Financial and Operational Results for Fourth Quarter
and Year End 2006
2006 Revenues Increase 131%
2006 Net Income Increases 146%
Tulsa, Oklahoma — April 2, 2007 — Arena Resources, Inc. (AMEX: ARD) ("Arena" or the "Company") announced today financial results for the fourth quarter and year ended December 31, 2006. Arena had net income of $5,233,244, a 74% increase, on oil and gas revenues of $16,496,794, a 76% increase, for the fourth quarter compared to net income of $3,014,884 on revenues of $9,362,003 for the fourth quarter ended December 31, 2005. For the year ended December 31, 2006, Arena had net income of $23,267,968 a 146% increase, on revenues of $59,760,117 a 131% increase, as compared to net income of $9,460,683 on revenues of $25,843,077 for the year ended December 31, 2005. Income attributable to common shares for the fourth quarter was $0.34 per diluted share compared to $0.22 for the fourth quarter ended December 31, 2005. For the year ended December 31, 2006, income attributable to common shares was $1.55 per diluted share compared to $0.75 per diluted share for the year ended December 31, 2005. The increase in revenue is attributed to an increase in production, primarily due to development activities and an increase in commodity prices. Net income for the years 2006 and 2005 each included pre-tax non-cash charges of $785,598 and $597,773 respectively, for warrants issued as part of a financing in July, 2005.
Cash provided by operating activities, before changes in working capital, increased to $46,954,906, or $3.13 per diluted share for the year ended December 31, 2006 from $18,594,370, or $1.48 per diluted share for the year ended December 31, 2005. Earnings before interest, taxes, depletion and other non-cash items (“Adjusted EBITDA”) was $47,079,741, as compared to $18,823,994 in 2005. (See accompanying table for a reconciliation of net income to adjusted EBITDA)
Total net sales production for the fourth quarter of 2006 was 331,200 BOE, as compared to 172,386 BOE for the same period in 2005, an increase of 92%. Net production for the full year 2006 was 1,065,613 BOE, compared to 508,430 BOE in 2005, an increase of 110%. The Company’s average net daily sales production in the fourth quarter of 2006 was approximately 3,600 BOE per day, as compared to 1,844 BOE per day in 2005.
Proved reserves totaled approximately 43.1 million barrels of oil equivalents (BOE), a 43% increase over the 30.2 million BOE for the previous year. Future net revenues before income taxes, discounted at 10%, based on average prices of $54.21 per barrel of oil and $5.94 per Mcf of gas, were $847.7 million at year-end 2006. This compared to $682.9 million, using average prices of $55.00 per barrel of oil and $8.20 per Mcf of gas, for year-end 2005.
“2006 proved to be a tremendous year for us,” said Tim Rochford, Chief Executive Officer. “This truly was a year of continued growth through the internal development of our existing assets and the acquisition of three properties that are contiguous to our Fuhrman-Mascho lease. We currently have identified over 1,200 drilling locations on over 60,000 acres and will continue to look for acquisitions that either compliment our existing properties or create new core areas.”
Non-GAAP Financial Measures:
Earnings for the three months ended December 31, 2006 include a non-cash charge for stock based compensation of $240,192. Earnings for the year ended December 31, 2006 include a non-cash charge for stock based compensation of $897,111 and a nonrecurring non-cash charge of $785,598 for warrants issued as part of a financing in July, 2005. Excluding such items, the Company’s earnings would have been $1.62 per diluted share for the year ended December 31, 2006. 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.
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ARENA RESOURCES, INC. STATEMENTS OF OPERATIONS |
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Three Months Ended
December 31, |
Twelve Months Ended
December 31, |
2006
|
|
2006
|
2005
|
Oil and Gas Revenues
Costs and Operating Expenses
Oil and gas production costs
Oil and gas production taxes
Depreciation, depletion & amortization
Accretion expense
General and administrative expense
Total Costs and Operating Expenses
Other Income (Expense)
Gain from change in fair value of put options
Accretion expense
Interest expense
Net Other Income (Expense)
Income Before Provision for Income Taxes
Provision for Deferred Income Taxes
Net Income
Basic Weighted-Average
Common Shares Outstanding
Diluted Weighted-Average
Common Shares Outstanding
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$16,496,794
2,329,550
832,579
3,646,957
22,435
990,650
7,822,171
—
—
(164,842)
(164,842)
8,509,781
(3,276,537)
$ 5,233,244
$ 0.36
$ 0.34
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$7,937,785
946,380
569,330
645,908
25,158
285,828
2,472,604
8,536
(597,773)
(40,083)
(629,320)
4,849,508
(1,834,624)
$ 3,014,884
$ 0.23
$ 0.22
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$43,263,323
4,124,281
2,673,768
4,253,142
104,697
2,626,659
13,782,547
—
(785,598)
(124,833)
(910,431)
37,244,968
(13,977,000)
$23,267,968
$ 1.65
$ 1.55
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$16,481,074
2,384,816
1,230,444
1,550,791
74,484
898,195
6,138,730
95,033
(597,773)
(229,624)
(732,364)
15,088,809
(5,628,126)
$9,460,683
$ 0.85
$ 0.75
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Basic Weighted-Average
Common Shares Outstanding
Diluted Weighted-Average
Common Shares Outstanding |
|
14,066,540
15,024,754
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11,164,070
12,600,106
|
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COMPARATIVE OPERATING STATISTICS |
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Three Months Ended December 31, |
2006 |
2005 |
Change |
Net Production - BOE per day
Per BOE:
Average Sales Price
Operating Costs
DD&A
General & Administrative Expenses
Interest Expense
|
|
2,919
$ 56.08
9.35
7.41
3.39
0.12
|
1,393
$50.83
11.35
5.47
2.69
0.45
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110%
10%
- 18%
35%
26%
- 73%
|
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CONSOLIDATED BALANCE SHEET |
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|
|
December 31
2006 |
December 31
2005 |
ASSETS
Current Assets
Cash
Account receivable
Joint interest billing receivable
Prepaid expenses
Total Current Assets
Property and Equipment, Using Full Cost Accounting
Oil and Gas properties subject to amortization
Equipment
Drilling rig
Office equipment
Total Property and Equipment
Less: Accumulated depreciation and amortization
Net Property and Equipment
Deferred Offering Costs
Total Assets |
|
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$ 4,919,984
6,702,677
2,949,099
102,585
14,674,345
171,708,200
59,332
1,996,899
120,929
173,885,360
(12,246,727)
161,638,633
$ 176,312,978
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$ 4,317,114
3,180,749
140,561
35,436
7,673,860
69,770,685
26,687
1,191,126
106,177
71,094,675
(4,346,628)
66,748,047
$ 74,421,907 |
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LIABILITIES AND STOCKHOLDERS' EQUITY |
Current Liabilities
Accounts payable
Income taxes payable
Accrued liabilities
Total Current Liabilities
Long-Term Liabilities
Notes payable
Notes payable to related parties
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
14,668,787 shares and 13,099,702 shares outstanding respectively
Additional paid-in capital
Options and warrants outstanding
Deferred compensation
Retained earnings
Total Stockholders' Equity
Total Liabilities and Stockholders' Equity |
|
|
$ 14,367,252
—
628,618
14,995,870
19,300,000
400,000
2,250,332
19,322,724
41,273,056
—
14,669
81,872,268
2,872,988
—
35,284,127
120,044,052
$176,312,978
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$ 6,038,691
329,986
221,519
6,590,196
—
400,000
1,515,347
7,187,609
9,102,956
—
13,100
45,331,234
1,483,807
(115,545)
12,016,159
58,728,755
$74,421,907
|
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|
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December 31
2006 |
December 31
2005 |
Cash Flows From Operating Equities
Net income
Adjustments to reconcile net income to net cash
Provided by operating activities:
Warrants issued for financing expense
Depreciation, depletion and amortization
Provision for income taxes
Gain from change in fair value of put option
Loss on sale of equipment
Share based compensation
Accretion of asset retirement obligation
Changes in assets and liabilities:
Accounts & joint interest receivable
Other changes in deferred income taxes
Pre-paid expenses
Excess tax benefits from shared-based payment arrangements
Accounts payable & accrued liabilities
Net Cash Provided by Operating Activities
Cash Flows From Investing Activities
Proceeds from sale of property and equipment
Purchase and development of oil and gas properties
Purchase of machinery & office equipment
Net Cash Provided by Operating Activities
Cash Flows From Financing Activities
Proceeds from issuance of common stock and
warrants, net of offering costs
Proceeds from exercise of warrants, net of offering costs
Proceeds from exercise of options
Excess tax benefits from share-based payment arrangements
Funds received and held for call options
Funds paid from held for call options
Issuance of notes payable
Payment of notes payable
Net Cash Provided by Financing Activities
Net Increase in Cash
Cash at Beginning of Period
Cash at End of Period
|
|
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$ 23,267,968
785,598
7,900,099
13,977,000
—
—
897,111
127,132
(6,330,466)
(320,058)
(67,149)
(1,851,815)
8,729,479
47,114,899
—
(97,576,774)
(672,130)
(98,248,904)
29,788,879
150,000
640,000
1,851,815
1,272,093
(1,265,912)
30,300,000
(11,000,000)
51,736,875
602,870
4,317,114
$ 4,919,984
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$ 9,460,683
597,773
2,781,504
5,628,126
(95,033)
—
118,732
102,585
(2,109,992)
(82,521)
(2,300)
—
4,419,545
20,819,102
735,000
(34,665,614)
(1,236,902)
(35,167,516)
9,536,938
17,874,621
—
—
—
—
—
(10,000,000)
17,411,559
3,063,145
1,253,969
$ 4,317,114
|
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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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$ 47,114,899
(159.993)
$ 46,954,906
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$ 20,819,102
(2,224,732)
$ 18,594,370
|
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NON-GAAP DISCLOSURE RECONCILIATION ADJUSTED EBITDA |
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|
|
December 31
2006 |
December 31
2005 |
NET INCOME
Interest expense
Income tax expense
Depreciation, depletion and amortization
Accretion of discounted liabilities
Gain from change in fair value of put option
Other financing expense
Share based compensation
ADJUSTED EBITDA
|
|
|
$ 23,267,968
124.833
13,977,000
7,900,099
127,132
—
785,598
897,111
$ 47,079,741
|
$ 9,460,683
229,624
5,628,126
2,781,504
102,585
(95,033)
597,773
118,732
$ 18,823,994
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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. |
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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.
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For further information contact:
Bill Parsons • Vice President Investor Relations
480-947-1589 • bparsons@arenaresourcesinc.com |
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