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Arena
Resources Announces Record Second Quarter and Six Month
2006 Financial and Operating Results
217% Increase In Revenue For The Three
Months to $14.69 Million
276% Increase In Net Income For The Three Months to
$6.44 Million
Tulsa, Oklahoma — August 7, 2006 —
Arena Resources, Inc. (AMEX: ARD) ("Arena" or the "Company")
announced today financial results for the second quarter
and six months ended June 30, 2006. For the three month
period ended June 30, 2006, Arena had oil and gas revenues
of $14,690,068, compared to $4,628,554 for the quarter
ended June 30, 2005, a 217% increase. For the three
month period ended June 30, 2006, the Company had net
income of $6,445,224, or $0.44 per fully diluted share,
compared to net income of $1,715,100, or $0.15 per fully
diluted share, for the same period in 2005, a 276% increase.
For the six month period ended June 30, 2006, the Company
reported oil and gas revenues of $25,070,463, compared
to oil and gas revenues of $8,543,289 for the six month
period ended June 30, 2005, a 193% increase. Net income
for the six month period ended June 30, 2006 was $10,027,900,
or $0.70 per fully diluted share, compared to net income
of $3,001,800, or $0.26 per fully diluted share, for
the same period in 2005, a 234% increase.
The
revenue increase was due to increases in production
volumes, development activity and increased oil and
gas prices. For the three months ended June 30, 2006,
oil sales volume increased to 207,922 barrels, compared
to 92,233 barrels for the same period in 2005, a 125%
increase, and gas sales volume increased to 198,828
MCF (thousand cubic feet), compared to 84,968 MCF for
the same period in 2005, a 134% increase. For the six
months ended June 30, 2006, oil sales volume increased
to 375,089 barrels, compared to 169,494 barrels for
the same period in 2005, a 121% increase, and gas sales
volume increased to 340,864 MCF, compared to 168,283
MCF for the same period in 2005, a 103% increase. The
average commodity prices received by Arena were $64.37
per barrel of oil and $6.57 per MCF of natural gas for
the quarter ended June 30, 2006, compared to $44.97
per barrel of oil and $5.66 per MCF of natural gas for
the quarter ended June 30, 2005. The average prices
received for the six months ended June 30, 2006 were
$60.59 per barrel of oil and $6.88 per MCF of natural
gas, compared to $45.32 per barrel of oil and $5.12
per MCF of natural gas for the six month period ended
June 30, 2005.
Lease operating expenses for the three months ended
June 30, 2006 were $9.13 per barrel of oil equivalent
("BOE"), a 3% decrease from the prior year.
Depreciation, depletion and amortization costs increased
29% to $5.85 per BOE. General and administrative costs,
which included a $213,533 charge for stock based compensation,
were $3.19 per BOE, a 13% increase. For the six months
ended June 30, 2006, lease operating expenses were $9.90
per BOE, a 7% decrease from the prior year. Depreciation,
depletion and amortization costs were $5.70 per BOE,
a 24% increase, and general and administrative costs,
which included a $393,300 charge for stock based compensation,
were $3.41 per BOE, a 10% increase.
There was no outstanding debt on the Company's bank
credit facility at June 30, 2006. Net cash flow from
operations for the three and six months ended June 30,
2006 was $11,886,684, or $0.81 per fully diluted share,
and $19,620,602, or $1.36 per fully diluted share, compared
to net cash flow of $3,277,482, or $0.28, and $5,730,359,
or $0.50 per fully diluted share for the same periods
in 2005 (1).
Arena's Chief Executive Officer, Mr. Tim Rochford, stated,
"We are just now starting to see the results of
having two full-time rigs drilling on our Fuhrman-Mascho
lease. We are currently drilling our 83rd new well on
this lease and have increased our number of re-fracs
from 36 to 52 for 2006. In addition, with the initial
results we have seen from wells drilled in New Mexico
and Kansas in the second quarter due to early rig availability,
we have increased our CAPEX budget an additional $11.5
million and we will drill six more wells at our Seven
Rivers Queen lease in New Mexico and approximately nine
more wells in Kansas in 2006. We continue to add acreage
that compliments our core properties in Texas and Kansas
while also exploring acquisition opportunities."
Non-GAAP Financial Measures:
Earnings for the three months ended June 30, 2006 include
a non-cash charge for stock based compensation of $213,533.
Earnings for the six months ended June 30, 2006 include
a non-cash charge for stock based compensation of $393,300
and a nonrecurring non-cash charge of $785,598 for warrants
issued as part of a financing in July, 2005. Excluding
such items, the Company’s earnings would have
been $0.45 per diluted share for the three months ended
June 30, 2006, and $0.75 for the six months ended June
30, 2006. 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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