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Arena Resources Announces Record Financial and Operational Results
for Fourth Quarter and Year End 2004
Tulsa,
Oklahoma — March 18, 2005 — Arena Resources, Inc. (AMEX: ARD, ARD.WS)
("Arena") ("Company") announced today financial results for the fourth quarter
and year ended December 31, 2004. Arena had net income of $891,778, a 348% increase,
on oil and gas revenues of $2,972,346, a 178% increase, for the fourth quarter
compared to net income of $198,886 on revenues of $1,067,890 for the fourth quarter
ended December 31, 2003. For the year ended December 31, 2004, Arena had net income
of $2,580,017, a 219% increase, on revenues of $8,482,130, a 131% increase, as
compared to net income of $809,498 on revenues of $3,665,447 for the year ended
December 31, 2003. Income attributable to common shares for the fourth quarter
was $0.10 per diluted share compared to $0.02 for the fourth quarter ended December
31, 2003. For the year ended December 31, 2004, income attributable to common
shares was $0.30 per diluted share compared to $0.11 per diluted share for the
year ended December 31, 2003. The increase in revenue is attributed to an increase
in production, primarily due to acquisitions made in 2004, and an increase in
commodity prices.
Cash provided by operating activities increased to
$5,995,684 for the year ended December 31, 2004 from $1,652,950 for the year ended
December 31, 2003. Earnings before interest, taxes, depletion and other non-cash
items ("Adjusted EBITDA") was $5,244,868, or $0.60 per diluted share
in 2004, as compared to $1,764,242, or $0.24 per diluted share in 2003. (See attached
schedule for a reconciliation of net income to adjusted EBITDA)
Proved
reserves totaled approximately 21.2 million barrels of oil equivalents (BOE),
a 179% increase over the 7.6 million BOE for the previous year. Future net revenues,
discounted 10%, based on $39.00 per barrel of oil and $5.19 per Mcf, were $302.4
million at year-end 2004. This compares to $66.6 million, using average prices
of $29.25 for oil and $3.46 per Mcf, for year-end 2003.
"2004 proved
to be a tremendous year for us," said Tim Rochford, President and Chief Executive
Officer. "We continued to make strategic acquisitions, improve profit margins
and began our development program ahead of schedule by drilling nine wells in
the last quarter. The fourth quarter's revenue alone represented over 80% of our
total revenue in 2003. We will continue our development program in 2005 with a
planned thirty-three well drilling program beginning in April when we move a rig
on our Fuhrman-Mascho property in the Permian Basin."
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.
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.
For further
information contact:
K M Financial, Inc.
Bill Parsons
480-947-1589
k-m-financial@msn.com
| ARENA
RESOURCES, INC. STATEMENTS OF OPERATIONS |
| | Three
Months Ended | Twelve
Months Ended |
|
Dec.
31, 2004 | Dec.
31, 2003 | Dec.
31, 2004 | Dec.
31, 2003 |
| Oil
and Gas Revenues
Costs and Operating Expenses
Oil
and gas production costs
Oil and gas production taxes
Depreciation,
depletion & amortization
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 and Cumulative Effect
of Change in Accounting
Principle
Provision for Deferred Income Taxes
Income Before
Cumulative Effect of Change in Accounting Principle
Cumulative Effect of Change
in Accounting Principle
Net Income
Basic Income Per
Common Share
Before
cumulative effect of change
in
accounting principle
Net
Income
Diluted
Income Per
Common Share
Before
cumulative effect of change
in accounting principle
Net Income
| $ 2,972,346
691,082
225,435
458,564
196,934
1,572,015
65,346
(15,657)
(27,529)
22,160
1,422,491
(530,713)
891,778
—
$ 891,778
$ 0.10
$ 0.10
$ 0.10
$ 0.10
|
$ 1,067,890
336,603
87,656
163,273
154,680
742,212
7,533
(10,214)
(9,325)
(12,006)
313,672
(114,786)
198,886
—
$ 198,886
$ ( 0.03)
$ ( 0.03)
$ ( 0.02)
$ ( 0.02)
| $ 8,482,130
1,975,835
629,703
1,011,602
670,325
4,287,465
68,251
(53,729)
(155,936)
(141,414)
4,053,251
(1,473,234)
2,580,017
—
$2,580,017
$ 0.33
$ 0.33
$ 0.30
$ 0.30
| $ 3,665,477
1,149,136
269,563
360,282
557,576
2,336,557
47,699
(32,212)
(38,798)
(23,311)
1,305,609
(484,298)
821,311
11,813
$ 809,498
$ ( 0.12)
$ ( 0.12)
$ 0.11
$ 0.11
|
Basic
Weighted-Average
Common
Shares Outstanding
Diluted
Weighted-Average
Common
Shares Outstanding
| |
Dec.
31, 2004
7,873,213
8,694,178
| Dec.
31, 2004
6,759,858
7,241,676 |
| OTHER
FINANCIAL INFORMATION |
| Cash
Flow provided by operating activities |
$5,995,684
| $1,652,950 |
| CONSOLIDATED
BALANCE SHEET |
| |
| Dec.
31, 2004 | Dec.
31, 2003 |
ASSETS
Current Assets
Cash
Account
receivable
Joint
interest billing receivable
Short-term
investments
Prepaid
expenses
Total Current Assets
| |
|
$ 1,253,969
1,149,513
61,805
—
33,136
2,498,423
|
$ 1,076,676
388,910
—
25,234
28,935
1,519,755
|
|
Property and Equipment, Using Full Cost Accounting
Oil
and Gas properties subject to amortization
Drilling
advances
Equipment
Office
equipment
Total Property and Equipment
Less:
Accumulated depreciation and amortization
Net
Property and Equipment
Deferred
Offering Costs
Total Assets
|
34,421,920
900,000
26,687
60,401
35,409,008
(1,565,124)
33,843,884
—
$ 36,342,307
|
8,463,400
351,000
48,480
18,978
8,881,858
(559,229)
8,322,629
130,872
$9,973,256
|
| LIABILITIES
AND STOCKHOLDERS' EQUITY |
|
Current Liabilities
Accounts
payable
Accrued
liabilities
Put
option
Total Current Liabilities
Long-Term
Liabilities
Notes
payable
Notes
payable
to related parties
Put
option
Asset
retirement liability
Deferred
income taxes
Total Long-Term Liabilitiess
| |
|
$ 1,805,865
34,800
—
1,840,665
$ 10,000,000
400,000
95,033
1,267,993
2,129,993
13,893,019
|
$ 229,522
18,440
2,905
250,867
—
400,000
—
607,200
656,759
1,663,959
|
|
Stockholders' Equity
Preferred
stock - $0.001 par value; 10,000,000 shares authorized
No
shares issued or outstanding
Common
stock - $0.001
par value; 10,000,000 shares authorized
9,132,910
shares and 7,152,097 shares outstanding respectively
Additional
paid-in capital
Options
and warrants outstanding
Retained
earnings
Total Stockholders'
Equity
Total
Liabilities and Stockholders' Equity |
—
9,133
15,233,135
2,553,159
2,823,196
20,608,623
$36,342,307
|
—
7,162
6,994,925
813,164
243,179
8,058,430
$9.973,256
|
| |
| Dec.
31, 2004 | Dec.
31, 2003 |
|
Cash Flows From Operating Equities
Net income
Adjustments to reconcile net income to net cash
Provided
by operating activities:
Shares issued for services
Depreciation,
depletion and amortization
Gain from change in fair value of
put option
Cumulative effect of change in accounting principle
Loss on sale of discounted liabilities
Accretion
of discounted liabilities
Changes in assets and liabilities:
Accounts receivable
Pre-paid expenses
Accounts payable and accrued liabilities
Deferred
income taxes
Net Cash Provided by Operating Activities |
$ 2,580,017
—
1,011,602
(68,251)
—
5,586
83,730
(656,864)
(4,201)
1,570,831
1,473,234
5,995,684
|
$ 809,498
75,040
360,282
(47,699)
11,813
—
32,212
(119,474)
(27,807)
74,787
484,298
1,652,950
|
|
Cash Flows From Investing Activities
Proceeds from sale
of equipment
Cash payments on purchase of East Hobbs
Cash
payments on purchase of Furhman-Mascho
Purchase and development
of oil and gas properties
Purchase of property, plant
& equipment
Maturity of long-term investment
Purchase of office equipment
Net Cash Provided by
Operating Activities |
10,500
(1,028,000)
(711,802)
(4,802,141)
—
25,234
(41,423)
(6,547,632)
|
—
—
—
(3,050,558)
(26,686)
51,268
(4,306)
(3,030,282)
|
|
Cash Flows From Financing Activities
Proceeds from issuance
of common stock and warrants,
net
of offering costs
Proceeds from exercise of warrants
Issuance of note payable
Payment
of notes payable
Collection of common stock subscription
receivable
Payment of accrued dividends to preferred
stockholders
Net Cash Provided by (Used in) Financing Activities
Net Increase in Cash
Cash at Beginning of Period
Cash at End of Period |
8,383,557
354,124
2,000,000
(10,008,440)
—
—
729,241
177,293
1,076,676
$1,253,969
|
1,580,328
33,950
—
—
157,500
(114,685)
1,657,093
279,781
796,915
$1.076,676
|
| NON-GAAP
DISCLOSURE RECONCILIATION |
| |
| Dec.
31, 2004 | Dec.
31, 2003 |
|
NET INCOME
Interest expense
Income
tax expense
Depreciation, depletion and amortization
Accretion of discounted liabilities
Shared
issued for services
Gain fromchange in fair value
of put option
Cumulative effect of change in accounting
principle
Loss on sale of equipment
ADJUSTED
EBITDA | $2,580,017
158,950
1,473,234
1,011,602
83,730
—
(68,251)
—
5,586
$5,244,868
|
$809,498
38,798
484,298
360,282
32,212
75,040
(47,699)
11,813
—
$1,764,242
|
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