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Arena Resources Announces 2008 Fourth Quarter Operations Update, Annual Production and Year-End Reserves 2008 Proved Reserves Increase 18.4% 2008 Net Sales Production Increases 49% Tulsa, Oklahoma — February 23, 2009 — Arena Resources, Inc. (NYSE-ARD)(“Arena”)(“Company”) today announced its operations update for the fourth quarter of 2008. During the fourth quarter, Arena drilled a total of 54 new wells; 48 on its Fuhrman-Mascho lease in Andrews County, Texas, five in Lea County, New Mexico, and one deep test well on the Homann lease in Gaines County, Texas. In addition, the Company re-stimulated three existing wells on its Fuhrman-Mascho lease. The results of this drilling activity are described on a property-by-property basis below. Sales for the quarter ended December 31, 2008 were 642,593 BOE (Barrel of Oil Equivalents), as compared to sales of 441,632 BOE for the same quarter in 2007, a 46% increase, and a 4% increase over the 618,835 BOE sold in the third quarter of 2008. Total sales production for 2008 was 2,336,954 BOE, as compared to 1,566,627 BOE in 2007, a 49% increase. Average net daily sales increased to 6,985 BOEPD in the fourth quarter 2008, as compared to 4,800 BOEPD in the fourth quarter of 2007, and 6,726 BOEPD in the third quarter of 2008. The Company also announced today that its estimated total proved reserves of oil and natural gas as of December 31, 2008 increased 18.4% to 65.6 million barrels of oil equivalent (BOE), from 55.4 million BOE at year end 2007, and 22.5% when adjusted for 2008 oil and gas sales. Arena replaced 538% of production in 2008. The 2008 year-end proved reserves consisted of 55.8 million barrels of crude oil (85%) and 58.8 Bcf of natural gas (15%). Of the 65.6 million BOE of total proved reserves, 38% are proved developed and 62% are proved undeveloped. The proved developed reserves consist of proved developed producing (31%), and proved developed non-producing (7%). The estimated present value, using a 10% discount rate, of the future net cash flows before income taxes (“PV-10”) of the Company’s proved oil and natural gas reserves as of December 31, 2008 was $651,554 million, using year-end average received pricing of $38.30 per barrel for oil and $4.35 per Mcf for natural gas. These estimates were audited by the independent engineering firms of Lee Keeling & Associates, Inc., Tulsa, Oklahoma, and Williamson Petroleum Consultants, Midland, Texas. All Arena properties were audited by the respective firms. The Securities and Exchange Commission (“SEC”) has issued new regulations for the oil and gas reserve reporting that take effect next year. One of the significant changes relates to using an average received price based upon the prior twelve month period rather than the current method of using the received prices on the last day of the year. If Arena had used the new SEC guidelines for reserve calculations and pricing, its reserves as of December 31, 2008 would have been approximately 74.4 million BOE with a PV-10 value of $2.37 billion. This value was based on average received prices during 2008 of $95.31 per barrel of oil and $9.62 per Mcf of natural gas. Total capital expenditures for 2008 were approximately $208.8, which included $16.8 million for property acquisitions.
(1) Oil reserves are stated in barrels; gas reserves are stated in thousand cubic feet. Mr. Phil Terry, President & CEO stated, “The fourth quarter of 2008 presented a challenge as we continued to see a dramatic reduction in commodity prices. By mid quarter we had released our two contract drilling rigs and finished the year with only our two Company-owned rigs in operation. We had hoped to begin an aggressive development program in New Mexico the second half of 2008 but with the reduction in oil and gas prices we have deferred it until we see improved commodity prices. The fourth quarter represented the seventeenth consecutive quarter of record production growth since beginning our development program in late 2004. We drilled 221 wells on our Fuhrman-Mascho lease in 2008, with 111 being on 10 acre spacing. The results were comparable to our wells drilled on 20 acre spacing. We plan to continue development on 10 acre spacing with the possibility of drilling one or two “pilot” 5 acre locations. Management is committed to maintaining operations and development within existing cash flow and we are prepared to accelerate development activities when we see production margins improve. We have maintained a strong current cash position with no long-term debt and will continue to seek acquisition opportunities that compliment our core assets.” Fourth Quarter Operations Update PERMIAN BASIN: Fuhrman Mascho, Andrews County, Texas – Net daily sales averaged over 6,100 BOE for the fourth quarter, an increase of over 400 BOEPD compared to the third quarter. Gas sales for the fourth quarter were reduced by approximately 175 BOEPD due to shut-ins in some areas imposed by the gas purchaser for equipment and line repairs. The Company drilled 44 new San Andres zone development wells in the fourth quarter of 2008 consisting of six 40-acre wells, twenty-four 20-acre wells, and fourteen 10-acre wells. Thirty-seven of the wells were completed and producing as of 12/31/08 while the remaining seven were in various stages of completion. Additionally, seven development wells which were drilled in the third quarter were successfully completed and placed in production. The Company drilled 221 new development wells in 2008 which included twenty-three 40-acre wells, eighty-seven 20-acre wells, and one hundred eleven 10-acre wells. Since April 2005, 477 new Fuhrman Mascho San Andres development wells have been drilled. The Company maintained its 100% development drilling success rate in 2008. Three wells were refraced during the fourth quarter and a total of 35 wells were refraced in 2008. Since beginning our refrac program in 2005, 139 wells have now been refraced. The Company owns two drilling rigs and currently has one of the rigs in operation drilling San Andres development wells. The Company will also continue the process of obtaining regulatory approval of proposed Fuhrman Mascho San Andres zone waterflood operations. The Company drilled four Yates gas wells in the fourth quarter of 2008 to obtain reservoir data and to gauge well performance. The four Yates wells are now in various stages of completion. The Fuhrman Mascho Yates zone gas development program is scheduled to begin early in the third quarter of 2009. The pipeline is now in the construction stage and is on schedule for completion late in the second quarter of 2009. The second Company rig will likely be deployed to drill approximately 36 Yates zone gas wells in the second half of 2009. The Company also plans to recomplete as many as 60 currently idle wellbores as Yates gas producers in the second half of 2009. Homann Lease, Gaines County, Texas – The Company drilled the Homann #1 in the fourth quarter to test the Clearfork and San Andres zones. The deeper Clearfork zone was not present; however, the San Andres zone was evaluated as potentially productive. Completion operations continue as the multiple, potential San Andres pay intervals are tested. East Hobbs Unit, Lea County, New Mexico - Three PUD wells were drilled in the fourth quarter of 2008 and one PUD well was drilled in the first quarter of 2009. All four wells are in various stages of completion. Phillips Lea, Hale State; Lea County, New Mexico – A PUD well was drilled on the Phillips Lea and placed on production in December 2008. A PUD well was drilled on the Hale State in the fourth quarter and completion operations are now in progress.
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