Arena Resources Announces Record Financial Results for First Quarter 2008
172% Increase In Revenue For The Three Months to $45.3 Million
221% Increase In Net Income For The Three Months to $18.3 Million
Tulsa, Oklahoma — May 8, 2008 — Arena Resources, Inc. (NYSE-ARD)(“Arena”)(“Company”) announced today financial and operational results for the first quarter ended March 31, 2008. Oil and gas revenues were $45,312,392 compared to $16,651,301 for the quarter ended March 31, 2007, a 172% increase and net income was $18,318,395 or $0.51 per diluted share, compared to net income of $5,707,890 or $0.18 per diluted share, for the same period in 2007, a 221% increase.
The revenue increase was due to increases in production volumes, primarily due to development activity, and increases in commodity prices. Arena’s total production for the quarter ended March 31, 2008 was 517,042 BOEs (Barrel of oil equivalents). This represents a 54% increase over the same three month period in 2007 and a 17% increase over the fourth quarter of 2007. For the three months ended March 31, 2008, oil sales volume increased to 453,056 barrels, compared to 282,538 barrels for the same period in 2007, a 60% increase and gas sales volume increased to 383,914 MCF (thousand cubic feet), compared to 324,935 MCF for the same period in 2007, an 18% increase. The average commodity prices received by Arena were $92.10 per barrel of oil and $9.34 per MCF of natural gas for the quarter ended March 31, 2008, compared to $51.71 per barrel of oil and $6.28 per MCF of natural gas for the quarter ended March 31, 2007.
Lease operating expenses, including production taxes, for the three months ended March 31, 2008 were $10.14 per BOE, a 3% increase from the prior year. Depreciation, depletion and amortization costs increased 51% to $11.88 per BOE. General and administrative costs, which included a $1,760,812 charge for stock based compensation, were $5.08 per BOE, a 38% increase, as compared to $3.67 per BOE in 2007, which included a $639,624 charge for stock based compensation.
Net cash flow from operations for the three months ended March 31, 2008 was $37,045,987 or $1.02 per diluted share, a 199% increase, compared to net cash flow of $12,379,230 or $0.40 per diluted share for the same period in 2007 (1).
Arena’s Chief Executive Officer, Mr. Tim Rochford, stated, “We continue to post record revenues, earnings and cash flow. We are a beneficiary of extraordinary commodity prices, especially oil, however, our on-going development program has also resulted in record production. This was the first full quarter of having three drilling rigs at our Fuhrman-Mascho property. We drilled 55 new wells in the quarter, with 54 of them at the Fuhrman-Mascho. Our average daily production increased 50% to over 5,680 BOEs per day. In March alone we averaged over 6,000 BOEs. Our management team did an excellent job of controlling costs which resulted in over a 65% pre-tax operating margin. We are currently evaluating several acquisition opportunities which would compliment our core properties.”
Non-GAAP Financial Measures:
Earnings for the first quarter 2008 include a non-cash charge for stock based compensation of $1,760,812. Excluding such item, the Company’s earnings would have been $0.54 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.
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ARENA RESOURCES, INC. STATEMENTS OF OPERATIONS |
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Three Months Ended
March 31, |
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2008
(Unaudited) |
2007
(Unaudited) |
Oil and Gas Revenues
Costs and Operating Expenses
Oil & gas production costs
Oil & gas production taxes
Realized loss on oil derivative
Depreciation, depletion & amortization
Accretion expense
General & administrative expense
Stock based compensation expense
Total Costs and Operating Expenses
Other Income (Expense)
Interest income
Interest expense
Net Other Income (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
Unrealized loss on oil derivatives, net of tax
Total Other Comprehensive Income
Basic Weighted-Average
Common Shares Outstanding
Diluted Weighted-Average
Common Shares Outstanding
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$45,312,392
2,911,925
2,329,750
1,588,440
6,139,933
68,425
862,171
1,760,812
15,661,456
40,961
(615,080)
(574,119)
29,076,817
(10,758,422)
$ 18,318,395
$ 0.52
$ 0.51
(384,119)
$ 17,934,276
34,892,570
36,229,426
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$16,651,301
2,360,949
958,651
—
2,657,555
43,497
595,162
639,624
7,255,438
50,828
(404,167)
(353,339)
9,042,524
(3,334,634)
$5,707,890
$ 0.19
$ 0.18
—
$ 5,707,890
29,512,394
31,256,272
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COMPARATIVE OPERATING STATISTICS |
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Three Months Ended March 31, |
2006 |
2007 |
Change |
Net Production - BOE per day
Per BOE:
Average Sales Price
Operating Costs
LOE
Production Taxes
DD&A
General & Administrative Expenses
G&A
Stock based compensation
Interest Expens
|
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5,682
$ 87.64
5.83
4.51
11.88
1.67
3.41
1.11
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3,741
$49.46
7.01
2.85
7.89
1.77
1.90
1.05
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52%
77%
-20%
58%
51%
-6%
79%
6%
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CONSOLIDATED BALANCE SHEET |
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March 31
2008 |
December 31
2007 |
ASSETS
Current Assets
Cash
Account receivable
Joint interest billing receivable
Prepaid expenses
Total Current Assets
Property and Equipment, Using Full Cost Accounting
Oil and Gas properties subject to amortization
Drilling rig
Land, buildings, equipment and leasehold improvements
Total Property and Equipment
Less: Accumulated depreciation and amortization
Net Property and Equipment
Deferred Offering Costs
Total Assets |
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$ 6,687,188
23,664,455
2,832,756
29,045
33,213,444
380,850,166
6,423,897
4,860,533
392,134,596
(36,796,492)
355,338,104
$ 388,551,548 |
$ 5,213,459
20,462,160
3,355,537
133,393
29,164,549
339,887,859
6,254,737
4,512,224
350,654,820
(30,497,371)
320,157,449
$ 349,321,998 |
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LIABILITIES AND STOCKHOLDERS' EQUITY |
Current Liabilities
Accounts payable
Income taxes payable
Fair value of oil derivative
Accrued liabilities
Total Current Liabilities
Long-Term Liabilities
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 - $0.001 par value; 100,000,000 shares authorized
35,107,411 shares and 34,278,779 shares outstanding respectively
Additional paid-in capital
Retained earnings
Accumulated other comprehensive loss
Total Stockholders' Equity
Total Liabilities and Stockholders' Equity |
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$ 13,399,418
—
5,056,201
2,480,044
20,935,663
40,500,000
3,618,305
44,429,683
88,547,988
—
35,108
194,173,945
88,044,461
(3,185,617)
279,067,897
$ 388,561,548
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$ 12,525,202
539,793
4,446,822
1,704,658
19,216,475
35,000,000
3,397,830
33,896,728
72,294,558
—
34,279
190,852,118
69,726,066
(2,801,498)
257,810,965
$ 349,321,998
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Three
Months Ended
March 31
2008 |
Three
Months Ended
March 31
2007 |
Cash Flows From Operating Equities
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 & joint interest receivable
Other changes in deferred income taxes
Prepaid expenses
Excess tax benefits from shared-based
payment arrangements
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 buildings, machinery and office equipment
Net Cash Provided by Operating Activities
Cash Flows From Financing Activities
Cash paid for offering completed during 2007
Proceeds from exercise of warrants
Proceeds from exercise of options
Excess tax benefits from share-based payment arrangements
Proceeds from issuance of notes payable
Payment of notes payable
Net Cash Provided by (Used in) Financing Activities
Net Increase 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 development
Depreciation on drilling rigs capitalized as oil and gas properties |
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$ 18,318,395
6,139,933
10,758,422
1.760,812
68,425
(2,679,514)
(540,000)
104,348
—
1,549,185
35,480,006
(40,550,652)
(517,469)
(41,068,121)
(5,000)
38,844
1,528,000
—
5,500,000
—
7,061,844
1,473,729
5,213,459
$6,687,188
$540,000
482,599
252,467
159,187
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$ 5,707,890
2,653,585
3,334,634
639,624
43,497
708,355
—
81,515
(1,714,733)
(5,397,930)
6,056,437
(24,373,643)
(1,902,646)
(26,276,289)
—
270,003
485,500
1,714,733
17,200,000
(400,000)
19,270,236
(949,616)
4,919,984
$3,970,368
—
590,641
75,804
49,922
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RECONCILIATION OF CASH FLOW FROM OPERATIONS |
Net cash provided by
operating activities
Change in operating assets
and liabilities
Cash flow from activities
Management believes that the non-GAAP measure of cash flow from operations is useful information for investors because it is used internally and is accepted by the investment community as a means of measuring the Company's ability to fund its capital program. It is also used by professional research analysts in providing investment recommendations pertaining to companies in the oil and gas exploration and production industry. |
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$ 35,480,006
1.565,981
$ 37,045,987
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6,056,437
6,322,793
$ 12,379,230
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NON-GAAP DISCLOSURE RECONCILIATION ADJUSTED EBITDA |
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March 31,
2008 |
March 31,
2007 |
NET INCOME
Interest expense
Income tax expense
Depreciation, depletion and amortization
Accretion of discounted liabilities
Stock based compensation
ADJUSTED EBITDA |
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$ 18,318,395
574.119
10,758,422
6,139,933
68,425
1,760,812
$ 37,620,106
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$ 5,707,890
353,339
3,334,634
2,657,555
43,497
639,624
$ 12,736,539
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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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