Arena Resources Announces Financial and Operational Results for Fourth Quarter
and Year End 2008
Tulsa, Oklahoma — March 3, 2009 — Arena Resources, Inc. (NYSE-ARD)(“Arena”)(“Company”) announced today financial results for the fourth quarter and year ended December 31, 2008, which included the following highlights for the calendar year:
• 2008 Revenues of $208.9 million, 109% increase from 2007
• 2008 Net income of $83.6 million, 143% increase from 2007
• 2008 Net cash provided by operating activities before changes in operating assets and liabilities (a non-GAAP measure reconciled below) of $169.4 million, 118% increase from 2007
• Oil and gas production of 2,336,954 barrels of oil equivalent (BOE), 49% increase from 2007
•
Proved oil and gas reserves of 65.6 million BOE, 22.5% increase from 2007 adjusting for 2008 oil and gas sales
Fourth Quarter 2008 Financial and Operational Results
Arena had net income of $13,581,491, a 44% increase, on oil and gas revenues of $32,974,286, a 6% decrease, for the fourth quarter compared to net income of $9,430,894 on revenues of $35,086,399 for the fourth quarter ended December 31, 2007. Income attributable to common shares for the fourth quarter was $0.35 per diluted share ($0.37 per diluted share excluding $1,490,699 non-cash charge for stock based compensation) compared to $0.26 ($0.29 per diluted share excluding $1,663,924 non-cash charge for stock based compensation) for the fourth quarter ended December 31, 2007. The revenue decrease for the fourth quarter was a result of a substantial decrease in commodity prices.
Net cash flow from operations for the three months ended December 31, 2008 was $29,373,173, or $0.76 per fully diluted share, compared to net cash flow of $27,108,010, or $0.76 per fully diluted share for the same period in 2007 (1).
For the three months ended December 31, 2008, oil sales volume increased to 559,805 barrels, compared to 361,797 barrels for the same period in 2007, a 55% increase, and gas sales volume increased to 496,727 MCF (thousand cubic feet), compared to 479,010 MCF for the same period in 2007, a 4% increase. Total net sales production for the fourth quarter of 2008 was 642,593 BOE, as compared to 441,632 BOE for the same period in 2007, an increase of 46%.
The average commodity prices received by Arena were $54.85 per barrel of oil and $4.57 per MCF of natural gas for the quarter ended December 31, 2008, compared to $84.43 per barrel of oil and $9.30 per MCF of natural gas for the quarter ended December 31, 2007. The Company’s average net daily sales production in the fourth quarter of 2008 was approximately 6,985 BOE per day, as compared to 4,800 BOE per day in 2007.
Year End 2008 Financial and Operational Results
For the year ended December 31, 2008, Arena had net income of $83,617,201, a 143% increase, on revenues of $208,858,645, a 109% increase, as compared to net income of $34,441,939 on revenues of $100,089,698 for the year ended December 31, 2007. For the year ended December 31, 2008, income attributable to common shares was $2.20 per diluted share ($2.31 per diluted share excluding $6,586,279 non-cash charge for stock based compensation) compared to $1.02 per diluted share ($1.10 per diluted share excluding $4,140,747 non-cash charge for stock based compensation) for the year ended December 31, 2007. The increase in revenue is attributed to an increase in production, primarily due to increased development activity and an increase in the average commodity prices for 2008.
Net cash flow from operations for the twelve months ended December 31, 2008 was $169,415,361, or $4.47 per fully diluted share, compared to net cash flow of $77,798,614, or $2.31 per fully diluted share for the same period in 2007 (1).
For the twelve months ended December 31, 2008, oil sales volume increased to 2,018,335 barrels, compared to 1,316,025 barrels for the same period in 2007, a 53% increase, and gas sales volume increased to 1,911,713 MCF, compared to 1,503,612 MCF for the same period in 2007, a 27% increase. Net sales production for the full year 2008 was 2,336,954 BOE, compared to 1,566,627 BOE in 2007, an increase of 49%. The average prices received for the twelve months ended December 31, 2008 were $94.16 per barrel of oil and $9.84 per MCF of natural gas, compared to $66.82 per barrel of oil and $8.02 per MCF of natural gas for the twelve month period ended December 31, 2007. The Company’s average net daily sales production for 2008 was approximately 6,385 BOE per day, as compared to 4,290 BOE per day in 2007.
Proved reserves totaled approximately 65.6 million BOE, an 18.4% increase over the 55.4 million BOE for the previous year, and 22.5% when adjusted for 2008 oil and gas sales. Future net revenues before income taxes, discounted at 10%, based on average received prices of $38.30 per barrel of oil and $4.35 per Mcf of gas, were $651.6 million at year-end 2008.
There was no outstanding debt on the Company’s $150 million bank credit facility at December 31, 2008.
Mr. Phil Terry, President & CEO stated, “2008 presented challenges unique to the industry. In July we received $130 per barrel of oil produced – in December we received $34. Cycles are not uncommon in the oil and gas industry, however, having this dramatic a shift in less than six months is. In July, we had four rigs drilling on our Fuhrman Mascho property in Andrews County, Texas, and seriously considering adding a fifth. Today, we have one company-owned rig operating on the Fuhrman Mascho. Currently, every oil and gas operator is presented with a specific set of challenges dependent on a variety of issues including areas of operation, commodity prices and balance sheet. At Arena, we have strived to grow through the acquisition and development of properties that offer exceptional results while maintaining a low cost of operation. We have no long-term debt and are positioned to actively seek and react to acquisition opportunities that compliment our current areas of operation. We are committed to managing our operations and development activity within existing cash flow. As commodity prices stabilize and margins improve we will accelerate our development program accordingly.”
•
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 |
2008
|
|
2008
|
2007
|
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 Gain
Unrealized gain on oil derivatives, net of tax
Total Other
Comprehensive Income
Basic Weighted-Average
Common Shares Outstanding
Diluted Weighted-Average
Common Shares Outstanding
|
$32,974,286
4,853,307
1,575,456
(4,733,492)
6,233,099
87,283
2,370,026
1,490,699
11,876,378
464,184
—
464,184
21,562,092
(7,980,601)
$ 13,581,491
$ 0.36
$ 0.35
8,043,315
$21,624,806
38,164,001
38,765,026
|
$35,086,399
3,554,306
1,938,782
932,361
9,611,266
55,727
1,644,577
1,663,924
19,400,943
251,539
(159,021)
92,518
15,777,974
(6,347,080)
$ 9,430,894
$ 0.28
$ 0.26
($2,801,498)
$6,629,396
34,157,866
35,741,301
|
$208,858,645
17,833,144
10,518,370
4,275,330
29,789,794
309,402
6,970,923
6,586,279
76,283,242
1,299,939
(1,145,456)
154,483
132,729,886
(49,112,685)
$ 83,617,201
$ 2.28
$ 2.20
13,014,099
$96,631,300
36,732,000
37,924,097
|
$100,089,698
11,500,461
5,655,877
932,361
17,968,062
190,904
3,674,974
4,140,747
44,063,386
884,990
(1,411,520)
(526,530)
55,499,782
(21,057,843)
$ 34,441,939
$ 1.07
$ 1.02
($2,801,498)
$31,640,441
32,071,279
33,667,929
|
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COMPARATIVE OPERATING STATISTICS |
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Three Months Ended December 31 |
2008 |
2007 |
Change |
Net Production - BOE per day
Per BOE:
Average Sales Price
Lease Operating Expenses
Production Taxes
DD&A
General & Administrative Expenses
Stock based compensation
Interest Expense
|
|
6,985
$51.31
7.55
2.45
9.70
3.69
2.32
(0.72)
|
4,800
$79.45
8.05
4.39
21.76
3.72
3.77
(0.21)
|
46%
-35%
-6%
-44%
-55%
0%
-38%
243%
|
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Twelve Months Ended December 31 |
2008 |
2007 |
Change |
Net Production - BOE per day
Per BOE:
Average Sales Price
Lease Operating Expenses
Production Taxes
DD&A
General & Administrative Expenses
Stock based compensation
Interest Expense
|
|
6,385
$89.37
7.63
4.50
12.75
2.98
2.82
(0.07)
|
4,292
$63.89
7.34
3.61
11.47
2.35
2.64
0.34
|
49%
40%
4%
25%
11%
27%
7%
-121%
|
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CONSOLIDATED BALANCE SHEET |
| |
|
|
December 31
2008 |
December 31
2007 |
ASSETS
Current Assets
Cash
Account receivable
Joint interest billing receivable
Receivable from oil derivative
Fair value of oil derivative
Deferred income taxes
Prepaid expenses
Total Current Assets
Property and Equipment, Using Full Cost Accounting
Oil and Gas properties subject to amortization
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 |
|
|
$58,489,574
8,637,308
2,836,948
2,508,396
16,210,478
—
847,433
89,530,137
548,714,235
1,670,067
6,899,433
5,799,045
563,082,780
(60,928,142)
502,154,638
$ 591,684,775
|
$ 5,213,459
20,462,160
3,355,537
—
—
1,658,665
133,393
30,823,214
339,887,859
—
6,254,737
4,512,224
350,654,820
(30,497,371)
320,157,449
$ 350,980,663
|
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LIABILITIES AND STOCKHOLDERS' EQUITY |
Current Liabilities
Accounts payable
Income taxes payable
Fair value of oil derivative
Deferred income taxes
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
38,210,187 shares and 34,278,779 shares outstanding respectively
Additional paid-in capital
Retained earnings
Accumulated other comprehensive los
Total Stockholders' Equity
Total Liabilities and Stockholders' Equity |
|
|
$ 12,877,084
—
—
2,066,197
865,955
19,789,547
—
5,066,348
84,533,419
89,599,757
—
38,210
318,701,383
153,343,267
10,212,601
482,295,461
$ 591,684,775
|
$ 12,525,202
539,793
4,446,822
—
1,704,658
19,216,475
35,000,000
3,397,830
35,555,393
72,953,223
—
34,279
190,852,118
69,726,066
(2,801,498)
257,810,965
$ 350,980,663
|
| |
|
|
December 31
2008 |
December 31
2007 |
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
Gain on sale of equipment
Stock based compensation
Accretion of asset retirement obligation
Changes in assets and liabilities:
Accounts, joint interest and oil derivative receivable
Current and 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
Proceeds from sale of property and equipment
Proceeds from sale of oil and gas properties
Purchase and development of oil and gas properties
Purchase of inventory for property development
Purchase of buildings, machinery and office equipment
Net Cash Used in Investing Activities
Cash Flows From Financing Activities
Proceeds from issuance of common stock, 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
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
Supplemental Cash Flow Information
Cash paid for income taxes
Cash paid for interest
Non-Cash Investing and Financing Activities
Common stock issued for properties
Asset retirement obligation incurred in property development
Depreciation on drilling rigs capitalized as oil and gas properties |
|
|
$ 83,617,201
29,789,794
49,112,685
—
6.586,279
309,402
9,835,045
(612,480)
(714,040)
—
(587,238)
177,336,648
—
296,800
(207,022,666)
(1,670,067)
(1,931,517)
(210,327,450)
116,129,461
446,196
4,691,260
—
11,000,000
(46,000,000)
86,266,917
53,276,115
5,213,459
$ 58,489,574
$612,480
$ 1,280,122
—
1,459,534
640,380
|
$ 34,441,939
17,968,062
21,057,843
(881)
4,140,747
190,904
(14,165,921)
—
(30,808)
(4,298,722)
(814,999)
58,488,164
7,000
1,915,640
(168,582,803)
—
(8,615,501)
(175,275,664)
95,089,458
540,295
1,852,500
4,298,722
65,700,000
(50,400,000)
117,080,975
293,475
4,919,984
$ 5,213,459
—
$ 1,438,973
$ 204,750
1,001,613
306,133
|
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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. |
|
|
$ 177,336,648
(7.921,287)
$ 169,415,361
|
58,488,164
19,310,450
$ 77,798,614
|
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NON-GAAP DISCLOSURE RECONCILIATION ADJUSTED EBITDA |
| |
|
|
December 31,
2008 |
December 31,
2007 |
NET INCOME
Interest income
Interest expense
Income tax expense
Depreciation, depletion and amortization
Accretion of discounted liabilities
Stock based compensation
ADJUSTED EBITDA |
|
|
$ 83,617,201
(1,299.939)
1,145,456
49,112,685
29,789,794
309,402
6,586,279
$ 169,260,878
|
$ 34,411,939
(884,990)
1,411,520
21,057,843
17,968,062
190,904
4,140,747
$ 78,326,025
|
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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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