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Arena
Resources, Inc. Announces Record
Revenues, Earnings, Cash Flow and Production
for First Quarter 2006
165% Increase In Revenue For The Three Months
to $10.38 Million
178% Increase In Net Income For The Three Months to
$3.58 Million
Tulsa, Oklahoma — May 11, 2006 —
Arena Resources, Inc. (AMEX: ARD, ARD.WS) ("Arena")
("Company") announced today record financial results
for the first quarter ended March 31, 2006. For the
three month period ended March 31, 2006, Arena had oil
and gas revenues of $10,380,395, compared to $3,914,735
for the quarter ended March 31, 2005, a 165% increase
and net income of $3,582,676, or $0.25 per diluted share,
compared to net income of $1,286,700 or $0.11 per diluted
share, for the same period in 2005, a 178% increase.
The
revenue increase was due to increases in production
volumes, primarily due to development activity, and
increased oil and gas prices. For the three months ended
March 31, 2006, oil sales volume increased to 167,167
barrels, compared to 77,260 barrels for the same period
in 2005, a 116% increase and gas sales volume increased
to 142,036 MCF (thousand cubic feet), compared to 83,315
MCF for the same period in 2005, a 70% increase. The
average commodity prices received by Arena were $55.85
per barrel of oil and $7.35 per MCF of natural gas for
the quarter ended March 31, 2006, compared to $45.70
per barrel of oil and $4.61 per MCF of natural gas for
the quarter ended March 31, 2005.
Lease operating expenses for the three months ended
March 31, 2006 were $10.88 per barrel of oil equivalent
(“BOE”), a 10% decrease from the prior year.
Depreciation, depletion and amortization costs increased
19% to $5.51 per BOE. General and administrative costs,
which included a $179,767 charge for stock based compensation,
were $3.69 per BOE, a 25% increase.
Net cash flow from operations for the three months ended
March 31, 2006 was $7,733,918 or $0.55 per diluted share,
compared to net cash flow of $2,452,877 or $0.22 per
diluted share for the same period in 2005 (1).
Arena's Chief Executive Officer, Mr. Tim Rochford, stated,
"We continue to ramp up our 2006 development program.
Our first quarter resulted in 16 development wells drilled
and 13 re-fracs on existing wells on our Fuhrman-Mascho
property, where we continue to have a 100% success rate
on newly drilled development wells. We have taken delivery
of our own drilling rig and now have two rigs drilling
full time on the Fuhrman-Mascho. We currently have a
third rig drilling on our Seven Rivers Queen property
in New Mexico and a fourth rig will soon be operating
on our Auntie Em property in Kansas. In June, an additional
drilling rig will move onto our Rocky Prospect, also
in Kansas. In total, we hope to drill as many as 37
new wells in the second quarter, 31 in the Permian Basin
and six in Kansas, while continuing the re-stimulation
of selected existing wells. With the increase in our
credit facility, we are in a position to maintain an
aggressive development program, while continuing to
seek additional acquisitions."
Non-GAAP Financial Measures:
Earnings for the first quarter 2006 include a non-cash
charge for stock based compensation of $179,767 and
a nonrecurring non-cash charge of $785,598 for warrants
issued as part of a financing in July, 2005. Excluding
such items, income before income taxes would have been
$6,652,152 million. Adjusting for the after-tax effect
of these items the Company’s earnings would have
been $4,190,856 million or $0.30 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.
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
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March
31, 2006
(Unaudited) |
March
31, 2005
(Unaudited) |
| 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
Other financing
expense
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
Basic
Weighted-Average
Common
Shares Outstanding
Diluted
Weighted-Average
Common
Shares Outstanding |
$ 10,380,395
1,378,419
697,209
1,052,462
29,304
703,932
3,861,326
—
(785,598)
(46,684)
(832,282)
5,686,787
(2,104,111)
$ 3,582,676
$ 0.27
$ 0.25
13,175,386
14,178,356 |
$ 3,914,735
812,237
286,717
421,599
22,071
311,855
1,854,479
74,046
—
(93,399)
(19,353)
2,040,903
(754,203)
$ 1,286,700
$ 0.13
$ 0.11
9,792,744
11,284,939 |
| COMPARATIVE
OPERATING STATISTICS |
| |
Three
Months Ended March 31
|
| Net
Production - BOE per day
Per BOE:
Average Sales Price
Operating
Costs
DD&A
General Administrative Expenses
Interest Expense
|
2,120
$54.39
10.88
5.51
3.69
0.24 |
1,013
$42.95
12.06
4.63
3.42
1.02 |
109%
27%
-10%
19%
8%
-76%
|
| CONSOLIDATED
BALANCE SHEET |
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|
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|
March
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
Deposits on drilling rig
Office equipment
Total Property and Equipment
Less:
Accumulated depreciation and amortization
Net Property and Equipment
Total Assets
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;
13,276,702 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
|
$7,650,020
3,315,331
265,165
4,000
11,234,516
86,585,408
54,645
1,782,508
106,177
88,528,738
(5,399,090)
83,129,648
$ 94,364,164
$ 4,944,570
82,497
243,725
5,270,792
11,000,000
400,000
1,585,837
9,219,151
22,204,988
—
13,277
48,958,545
2,317,727
—
15,598,835
66,888,384
$94,364,164
|
$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
$ 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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March
31, 2006 |
March
31, 2005 |
| Cash
Flows From Operating Activities
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
Stock based compensation
Accretion of discounted liabilities
Changes in assets and liabilities:
Accounts and joint interest receivable
Other changes in deferred income taxes
Prepaid expenses
Accounts payable and accrued liabilities
Net Cash Provided by Operating Activities
Cash Flows from Investing Activities
Purchase and development of oil and gas properties
Purchase of machinery and equipment
Net Cash Used in Investing Activities
Cash
Flows From Financing Activities
Proceeds from exercise of warrants, net of offering
costs
Proceeds from 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
and equipment
Asset retirement obligation incurred
in property development |
$3,582,676
785,598
1,052,462
2,104,111
—
179,767
29,304
(259,186)
(320,058)
31,436
(1,071,917)
6,114,193
(13,446,705)
(438,300)
(13,885,005)
103,718
11,000,000
—
11,103,718
3,332,906
4,317,114
$7,650,020
$329,986
46,684
$3,507,872
41,186
|
$1,286,700
—
421,599
754,203
(74,046)
42,350
22,071
(327,638)
—
—
(866,874)
1,258,365
(1,409,705
(10,822)
(1,420,527)
5,672,607
—
(5,000,000)
672,607
510,445
1,253,969
$1,764,414
—
131,421
$261,600
—
|
| RECONCILIATION
OF CASH FLOW FROM OPERATIONS |
| Net
cash provided by operating activities
Change in operating assets and liabilities
Cash flow from operations
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. |
$6,114,193
1,619,725
$7,733,918
|
$1,258,365
1,194,512
$2,452,877
|
| NON-GAAP
DISCLOSURE RECONCILIATION |
|
|
|
March
31, 2006 |
March
31, 2005 |
| NET
INCOME
Warrants issued for financing expense
Interest expense
Income tax expense
Depreciation, depletion and amortization
Accretion of discounted liabilities
Gain from change in fair value of put option
Stock based compensation
ADJUSTED EBITDA |
$3,582,676
785,598
46,684
2,104,111
1,052,462
29,304
—
179,767
$7,780,602 |
$1,286,700
—
93,399
754,203
421,599
22,071
(74,046)
42,350
$2,546,276 |
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