Arena Resources, Inc. — Oil and Gas Development

Arena Resources, Inc. Announces Financial and Operational Results for Fourth Quarter and Year End 2006
2006 Revenues Increase 131%
2006 Net Income Increases 146%
Tulsa, Oklahoma — April 2, 2007 — Arena Resources, Inc. (AMEX: ARD) ("Arena" or the "Company") announced today financial results for the fourth quarter and year ended December 31, 2006. Arena had net income of $5,233,244, a 74% increase, on oil and gas revenues of $16,496,794, a 76% increase, for the fourth quarter compared to net income of $3,014,884 on revenues of $9,362,003 for the fourth quarter ended December 31, 2005. For the year ended December 31, 2006, Arena had net income of $23,267,968 a 146% increase, on revenues of $59,760,117 a 131% increase, as compared to net income of $9,460,683 on revenues of $25,843,077 for the year ended December 31, 2005. Income attributable to common shares for the fourth quarter was $0.34 per diluted share compared to $0.22 for the fourth quarter ended December 31, 2005. For the year ended December 31, 2006, income attributable to common shares was $1.55 per diluted share compared to $0.75 per diluted share for the year ended December 31, 2005. The increase in revenue is attributed to an increase in production, primarily due to development activities and an increase in commodity prices. Net income for the years 2006 and 2005 each included pre-tax non-cash charges of $785,598 and $597,773 respectively, for warrants issued as part of a financing in July, 2005.

Cash provided by operating activities, before changes in working capital, increased to $46,954,906, or $3.13 per diluted share for the year ended December 31, 2006 from $18,594,370, or $1.48 per diluted share for the year ended December 31, 2005. Earnings before interest, taxes, depletion and other non-cash items (“Adjusted EBITDA”) was $47,079,741, as compared to $18,823,994 in 2005. (See accompanying table for a reconciliation of net income to adjusted EBITDA)

Total net sales production for the fourth quarter of 2006 was 331,200 BOE, as compared to 172,386 BOE for the same period in 2005, an increase of 92%. Net production for the full year 2006 was 1,065,613 BOE, compared to 508,430 BOE in 2005, an increase of 110%. The Company’s average net daily sales production in the fourth quarter of 2006 was approximately 3,600 BOE per day, as compared to 1,844 BOE per day in 2005.

Proved reserves totaled approximately 43.1 million barrels of oil equivalents (BOE), a 43% increase over the 30.2 million BOE for the previous year. Future net revenues before income taxes, discounted at 10%, based on average prices of $54.21 per barrel of oil and $5.94 per Mcf of gas, were $847.7 million at year-end 2006. This compared to $682.9 million, using average prices of $55.00 per barrel of oil and $8.20 per Mcf of gas, for year-end 2005.

“2006 proved to be a tremendous year for us,” said Tim Rochford, Chief Executive Officer. “This truly was a year of continued growth through the internal development of our existing assets and the acquisition of three properties that are contiguous to our Fuhrman-Mascho lease. We currently have identified over 1,200 drilling locations on over 60,000 acres and will continue to look for acquisitions that either compliment our existing properties or create new core areas.”

Non-GAAP Financial Measures:
Earnings for the three months ended December 31, 2006 include a non-cash charge for stock based compensation of $240,192. Earnings for the year ended December 31, 2006 include a non-cash charge for stock based compensation of $897,111 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 $1.62 per diluted share for the year ended December 31, 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.

Arena Resources, Inc. is an oil and gas exploration, development and production company with current operations in Oklahoma, Texas, 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.

ARENA RESOURCES, INC. STATEMENTS OF OPERATIONS

Three Months Ended
December 31,

Twelve Months Ended
December 31,

2006

2005

2006

2005

Oil and Gas Revenues

Costs and Operating Expenses
Oil & gas production costs
Oil & gas production taxes
Depreciation, depletion
& amortization
Accretion expense
General & administrative expense

Total Costs &
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

$16,496,794

2,329,550
832,579

3,646,957
22,435
990,650

7,822,171

—
—
(164,842)

(164,842)

8,509,781

(3,276,537)

$ 5,233,244

$ 0.36

$ 0.34

$9,362,003

1,447,671
709,295

1,230,713
28,101
467,395

3,883,175

8,536
(597,773)
(40,083)

(629,320)

4,849,508

(1,834,624)

$ 3,014,884

$ 0.23

$ 0.22

$59,760,117

6,453,831
3,506,347

7,900,099
127,132
3,617,309

21,604,718

—
(785,598)
(124,833)

(910,431)

37,244,968

(13,977,000)

$23,267,968

$ 1.65

$ 1.55

$25,843,077

3,832,486
1,939,739

2,781,504
102,585
1,365,590

10,021,904

95,033
(597,773)
(229,624)

(732,364)

15,088,809

(5,628,126)

$9,460,683

$ 0.85

$ 0.75

	December 31,
	2006	2005
Basic Weighted-Average Common Shares Outstanding Diluted Weighted-Average Common Shares Outstanding	14,066,540 15,024,754	11,164,070 12,600,106

COMPARATIVE OPERATING STATISTICS

Year Ended December 31,

2006

2005

Change

Net Production - BOE per day
Per BOE:
  Average Sales Price

  Operating Costs
  DD&A
  General & Administrative Expenses
  Interest Expense

2,919

$ 56.08

9.35
7.41
3.39
0.12

1,393

$50.83

11.35
5.47
2.69
0.45

110%

10%

- 18%
35%
26%
- 73%

CONSOLIDATED BALANCE SHEET

December 31
2006

December 31
2005

ASSETS
Current Assets
   Cash
   Account receivable
Joint interest billing receivable
   Prepaid expenses
   Total Current Assets

$ 4,919,984
6,702,677
2,949,099
102,585
14,674,345

$ 4,317,114
3,180,749
140,561
35,436
7,673,860

Property and Equipment,
Using Full Cost Accounting
   Oil and Gas properties subject to amortization
   Equipment
   Drilling rig
   Office equipment
   Total Property and Equipment
   Less: Accumulated depreciation and amortization
   Net Property and Equipment
Total Assets

171,708,200
59,332
1,996,899
120,929
173,885,360
(12,246,727)
161,638,633
$ 176,312,978

69,770,685
26,687
1,191,126
106,177
71,094,675
(4,346,628)
66,748,047
$ 74,421,907

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 Liabilitiess

$ 14,367,252
—
628,618
14,995,870

19,300,000
400,000
2,250,332
19,322,724
41,273,056

$ 6,038,691
329,986
221,519
6,590,196

—
400,000
1,515,347
7,187,609
9,102,956

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; 14,668,787 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

—

14,669
81,872,268
2,872,988
—
35,284,127
120,044,052
$176,312,978

—

13,100
45,331,234
1,483,807
(115,545)
12,016,159
58,728,755
$74,421,907

STATEMENTS OF CASH FLOW

December 31
2006

December 31
2005

Cash Flows From Operating Equities
   Net income
   Adjustments to reconcile net income to net cash
   Provided by operating activities:
   Warrants issued for financing expense
   Depreciation, depletion & amortization
   Provision for income taxes
Gain from change in fair value of put option
   Loss on sale of equipment
   Share based compensation
   Accretion of asset retirement obligation
Changes in assets and liabilities:
   Accounts & joint interest receivable
   Other changes in deferred income taxes
   Prepaid expenses
   Excess tax benefits from shared-based
      payment arrangements
   Accounts payable & accrued liabilities
Net Cash Provided by Operating Activities

$ 23,267,968

785,598
7,900,099
13,977,000
—
—
897,111
127,132

(6,330,466)
(320,058)
(67,149)

(1,851,815)
8,729,479
47,114,899

$ 9,460,683

597,773
2,781,504
5,628,126
(95,033)
—
118,732
102,585

(2,109,992)
(82,521)
(2,300)

—
4,419,545
20,819,102

Cash Flows from Investing Activities
   Proceeds from sale of property and equipment
   Purchase and development of oil and gas properties
   Purchase of machinery & office equipment
Net Cash Used in Investing Activities

—
(97,576,774)
(672,130)
(98,248,904)

735,000
(34,665,614)
(1,236,902)
(35,167,516)

Cash Flows From Financing Activities
   Proceeds from issuance of common stock and
      warrants, 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
   Funds received and held for call options
   Funds paid from held for call options
   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

29,788,879

150,000
640,000

1,851,815
1,272,093
(1,265,912)
30,300,000
(11,000,000)

51,736,875
602,870
4,317,114
$ 4,919,984

9,536,938

17,874,621
—

—
—
—
—
(10,000,000)

17,411,559
3,063,145
1,253,969
$ 4,317,114