Arena Resources, Inc. — Oil and Gas Development

Arena Resources, Inc. Announces Second Quarter and Six Month 2007 Financial and Operating Results
47% Increase In Revenue For The Three Months
to Record $21.6 Million
Tulsa, Oklahoma — August 7, 2007 — Arena Resources, Inc. (NYSE-ARD)(“Arena”)(“Company”) announced today financial results for the three months and six months ended June 30, 2007. For the three month period ended June 30, 2007, Arena had oil and gas revenues of $21,620,299, compared to $14,690,068 for the quarter ended June 30, 2006, a 47% increase and net income of $7,899,378, or $0.49 per fully diluted share, compared to net income of $6,445,224, or $0.44 per fully diluted share, for the same period in 2006, a 23% increase. For the six month period ended June 30, 2007, the Company reported oil and gas revenues of $38,271,600, compared to oil and gas revenues of $25,070,463 for the six month period ended June 30, 2006, a 53% increase. Net income for the six month period ended June 30, 2007 was $13,607,268, or $0.86 per fully diluted share, compared to net income of $10,027,900, or $0.70 per fully diluted share, for the same period in 2006, a 36% increase.

The revenue increase was a result of increases in production volumes due to increased development activity, offset by a decrease in the realized per barrel oil prices of 11% and 10% for the three and six month periods ended June 30, 2007, respectively. For the three months ended June 30, 2007, oil sales volume increased to 327,290 barrels, compared to 207,922 barrels for the same period in 2006, a 57% increase, and gas sales volume increased to 348,169 MCF (thousand cubic feet), compared to 198,828 MCF for the same period in 2006, a 75% increase. For the six months ended June 30, 2007, oil sales volume increased to 609,828 barrels, compared to 375,089 barrels for the same period in 2006, a 63% increase, and gas sales volume increased to 673,104 MCF, compared to 340,864 MCF for the same period in 2006, a 97% increase. The average commodity prices received by Arena were $57.29 per barrel of oil and $ 8.24 per MCF of natural gas for the quarter ended June 30, 2007, compared to $64.37 per barrel of oil and $6.57 per MCF of natural gas for the quarter ended June 30, 2006. The average prices received for the six months ended June 30, 2007 were $54.70 per barrel of oil and $7.30 per MCF of natural gas, compared to $60.59 per barrel of oil and $6.88 per MCF of natural gas for the six month period ended June 30, 2006.

Lease operating expenses, including production taxes, for the three months ended June 30, 2007 were $9.95 per barrel of oil equivalent (“BOE”), a 9% increase from the prior year. Depreciation, depletion and amortization costs increased 18% to $6.90 per BOE. General and administrative costs, which included an $881,127 charge for stock based compensation, were $4.67 per BOE, a 46% increase. Interest expense was $727,064, or $1.89 per BOE, an 836% increase. For the six months ended June 30, 2007, lease operating expenses, including production taxes, were $9.91 per BOE, no change from the prior year. Depreciation, depletion and amortization costs were $7.36 per BOE, a 29% increase, and general and administrative costs, which included a $1,520,751 charge for stock based compensation, were $4.20 per BOE, a 23% increase. Interest expense was $1.50 per BOE, a 582% increase.

There was no outstanding debt on the Company’s $150 million bank credit facility at June 30, 2007.

Net cash flow from operations for the three and six months ended June 30, 2007 was $16,146,388, or $1.00 per fully diluted share, and $28,525,618, or $1.80 per fully diluted share, compared to net cash flow of $11,886,684, or $0.81, and $19,620,602, or $1.36 per fully diluted share for the same periods in 2006 (1).

Arena’s Chief Executive Officer, Mr. Tim Rochford, stated, “Despite some weather and power outage disruptions, we were able to successfully continue our overall development program in the second quarter, with particular emphasis on our Permian Basin properties, where we plan to begin testing some additional wells on 10 acre spacing. We drilled 28 new development wells and re-fraced 12 existing wells on our Fuhrman Mascho properties and continued infrastructure improvements and well conversions into water injectors on our East Hobbs and North Benson New Mexico assets. Our second quarter production of 385,000 BOEs was a 60% increase over the same period in 2006 and over a 14% increase from the first quarter. We completed a $100 million common stock offering eliminating all long term debt and providing sufficient capex funding, based on our current budget, into 2008. We contracted for a second company-owned drilling rig for our Fuhrman Mascho properties. We also entered into a letter of intent with a Houston-based company to produce and sell gas from the Yates formation on our Fuhrman Mascho properties beginning in late second quarter 2008. In July, we entered into an agreement for a zero-cost collar on 1,000 barrels a day of oil production with a floor of $65.00 and a ceiling of $80.50, effective August 1, 2007 and running through December 31, 2008. We are continuing to look at acquisition opportunities, primarily concentrating on those that compliment our existing properties.”

Non-GAAP Financial Measures:
Earnings for the three months ended June 30, 2007 include a non-cash charge for stock based compensation of $881,127. Earnings for the six months ended June 30, 2007 include a non-cash charge for stock based compensation of $1,520,751. Excluding such items, the Company’s earnings would have been $0.53 per diluted share for the three months ended June 30, 2007, and $0.92 for the six months ended June 30, 2007. 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. STATEMENTS OF OPERATIONS

Three Months Ended
June 30,

Six Months Ended
June 30,

2007
(Unaudited)

2006
(Unaudited)

2007(Unaudited)

2006
(Unaudited)

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)
Other financing expense
Interest income (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

$21,620,299

2,615,533
1,216,832

2,659,712
45,265
1,799,579

8,336,921

—
(727,064)

(727,064)

12,556,314

(4,656,936)

$ 7,899,378

$ 0.52

$ 0.49

15,236,867

16,123,772

$14,690,068

1,290,409
909,445

1,408,999
33,638
768,484

4,410,975

—
(48,579)

(48,579)

10,230,514

(3,785,290)

$6,445,224

$ 0.47

$ 0.44

13,779,031

14,712,264

$38,271,600

4,976,482
2,175,483

5,317,267
88,762
3,034,365

15,592,359

—
(1,080,403)

(1,080,403)

21,598,838

7,991,570

$13,607,268

$ 0.91

$ 0.86

14,997,860

15,878,011

$25,070,463

2,668,828
1,606,654

2,461,461
62,942
1,472,416

8,272,301

(785,598)
(95,263)

(880,861)

15,917,301

(5,889,401)

$10,027,900

$ 0.74

$ 0.70

13,478,876

14,401,181

COMPARATIVE OPERATING STATISTICS

Three Months Ended June 30,

2007

2006

Change

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

  Operating Costs
  DD&A
  General & Administrative Expenses
  Interest Expense (income)

4,234

$ 56.11

9.95
6.90
4.67
1.89

2,649

$60.94

9.13
5.85
3.19
0.20

60%

-8%

9%
18%
46%
836%

Six Months Ended June 30,

2007

2006

Change

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

  Operating Costs
  DD&A
  General & Administrative Expenses
  Interest Expense (income)

3,989

$ 53.01

9.91
7.36
4.20
1.50

2,386

$58.05

9.90
5.70
3.41
0.22

67%

-9%

0%
29%
23%
582%

CONSOLIDATED BALANCE SHEET

June 30
2007

December 31
2006

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

$ 47,957,170
8,043,435
2,867,835
329,178
59,197,618

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

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

225,126,382
60,051
3,879,948
1,941,232
126,128
231,133,741
(17,659,867)
213,473,874
$ 272,671,492

171,708,200
59,332
1,996,899
—
120.929
173,885,360
(12,246,727)
161,638,633
$ 176,312,978

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities
   Accounts 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

$ 9,954,441
803,838
10,758,279

—
—
2,466,231
23,507,028
25,973,259

$ 14,367,252
628,618
14,995,870

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

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
   Retained earnings
   Total Stockholders' Equity
Total Liabilities and Stockholders' Equity

—

17,001
183,177,620
3,853,938
48,891,395
235,939,954
$ 272,671,492

—

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

STATEMENTS OF CASH FLOW

	Six Months Ended June 30,
	2007	2006

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
Stock based compensation
   Accretion of discounted liabilities
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

$ 13,607,268

—
5,217,267
7,991,570
1.520,751
88,762

(1,259,494)
—
(226,593)

(3,807,266)
(4,282,610)
18,949,655

$ 10,027,900

785,598
2,461,461
5,889,401
393,300
62,942

(3,035,274)
(222,657)
(320,058)

(1,851,813)
604,634
14,795,434

Cash Flows from Investing Activities
   Purchase and development of oil and gas properties
   Proceeds from sale of oil and gas properties
   Purchase of building equipment
Net Cash Used in Investing Activities

(55,061,822)
1,915,640
(3,830,199)
(56,976,381)

(34,194,713)
—
(704,379)
(34,899,092)

Cash Flows From Financing Activities
   Proceeds from issuance of common stock and
      warrants, net of offering costs
   Proceeds from exercise of warrants
   Proceeds from exercise of options
   Excess tax benefits from share-based
     payment arrangements
   Funds received and held for call options
   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 Financial Activities
  Common stock issues for properties and equipment
  Asset retirement obligation incurred
    in property development
  Depreciation on drilling rig capitalized
    as part of oil and gas properties

95,399,643
270,003
1,287,000

3,807,266
—
30,700,000
(50,400,000)

81,063,912
43,037,186
4,919,984
$ 47,957,170

—
$ 1, 232,467

—

172,156

99,844

29,858,463
150,000
640,000

1,851,813
1,272,093
11,000,000
(11,000,000)

33,772,369
13,668,711
4,317,114
$ 17,985,825

$ 329,986
180,702

$3,507,872

113,807

—