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Arena
Resources Announces Record Financial Results for First Quarter 2008
172% Increase In Revenue For The Three Months to $45.3 Million
221% Increase In Net Income For The Three Months to $18.3 Million
Tulsa, Oklahoma — May 8, 2008 —
Arena Resources, Inc. (NYSE-ARD)(“Arena”)(“Company”) announced today financial and operational results for the first quarter ended March 31, 2008. Oil and gas revenues were $45,312,392 compared to $16,651,301 for the quarter ended March 31, 2007, a 172% increase and net income was $18,318,395 or $0.51 per diluted share, compared to net income of $5,707,890 or $0.18 per diluted share, for the same period in 2007, a 221% increase.
The revenue increase was due to increases in production volumes, primarily due to development activity, and increases in commodity prices. Arena’s total production for the quarter ended March 31, 2008 was 517,042 BOEs (Barrel of oil equivalents). This represents a 54% increase over the same three month period in 2007 and a 17% increase over the fourth quarter of 2007. For the three months ended March 31, 2008, oil sales volume increased to 453,056 barrels, compared to 282,538 barrels for the same period in 2007, a 60% increase and gas sales volume increased to 383,914 MCF (thousand cubic feet), compared to 324,935 MCF for the same period in 2007, an 18% increase. The average commodity prices received by Arena were $92.10 per barrel of oil and $9.34 per MCF of natural gas for the quarter ended March 31, 2008, compared to $51.71 per barrel of oil and $6.28 per MCF of natural gas for the quarter ended March 31, 2007.
Lease operating expenses, including production taxes, for the three months ended March 31, 2008 were $10.14 per BOE, a 3% increase from the prior year. Depreciation, depletion and amortization costs increased 51% to $11.88 per BOE. General and administrative costs, which included a $1,760,812 charge for stock based compensation, were $5.08 per BOE, a 38% increase, as compared to $3.67 per BOE in 2007, which included a $639,624 charge for stock based compensation.
Net cash flow from operations for the three months ended March 31, 2008 was $37,045,987 or $1.02 per diluted share, a 199% increase, compared to net cash flow of $12,379,230 or $0.40 per diluted share for the same period in 2007 (1).
Arena’s Chief Executive Officer, Mr. Tim Rochford, stated, “We continue to post record revenues, earnings and cash flow. We are a beneficiary of extraordinary commodity prices, especially oil, however, our on-going development program has also resulted in record production. This was the first full quarter of having three drilling rigs at our Fuhrman-Mascho property. We drilled 55 new wells in the quarter, with 54 of them at the Fuhrman-Mascho. Our average daily production increased 50% to over 5,680 BOEs per day. In March alone we averaged over 6,000 BOEs. Our management team did an excellent job of controlling costs which resulted in over a 65% pre-tax operating margin. We are currently evaluating several acquisition opportunities which would compliment our core properties.”
Non-GAAP Financial Measures:
Earnings for the first quarter 2008 include a non-cash charge for stock based compensation of $1,760,812. Excluding such item, the Company’s earnings would have been $0.54 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.
| ARENA
RESOURCES, INC. STATEMENTS OF OPERATIONS |
|
Three Months Ended
March 31,
2008
(Unaudited) |
2007
(Unaudited) |
|
Oil
and Gas Revenues
Costs and Operating Expenses
Oil
& gas production costs
Oil & gas production taxes
Realized loss on oil derivative
Depreciation, depletion & amortization
Accretion expense
General & administrative expense
Stock based compensation expense
Total Costs &
Operating Expenses
Other Income (Expense)
Interest income
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
Other Comprehensive Income
Unrealized loss on oil derivatives,
net of tax
Total Other Comprehensive Income
Basic
Weighted-Average
Common
Shares Outstanding
Diluted Weighted-Average
Common
Shares Outstanding |
$45,312,392
2,911,925
2,329,750
1,588,440
6,139,933
68,425
862,171
1,760,812
15,661,456
40,961
(615,080)
(574,119)
29,076,817
(10,758,422)
$ 18,318,395
$ 0.52
$ 0.51
(384,119)
$ 17,934,276
34,892,570
36,229,426
|
$16,651,301
2,360,949
958,651
—
2,657,555
43,497
595,162
639,624
7,255,438
50,828
(404,167)
(353,339)
9,042,524
(3,334,634)
$5,707,890
$ 0.19
$ 0.18
—
$ 5,707,890
29,512,394
31,256,272 |
| COMPARATIVE
OPERATING STATISTICS |
|
Three Months Ended March 31, |
Net
Production - BOE per day
Per BOE:
Average Sales Price
Operating
Costs
LOE
Production
Taxes
DD&A
General
& Administrative Expenses
G&A
Stock based compensation
Interest
Expense
|
5,682
$ 87.64
5.83
4.51
11.88
1.67
3.41
1.11 |
3,741
$49.46
7.01
2.85
7.89
1.77
1.90
1.05 |
52%
77%
-20%
58%
51%
-6%
79%
6% |
| CONSOLIDATED
BALANCE SHEET |
|
|
March 31
2008 |
December
31
2007 |
ASSETS
Current Assets
Cash
Account receivable
Joint interest billing receivable
Prepaid
expenses
Total Current Assets
|
$ 6,687,188
23,664,455
2,832,756
29,045
33,213,444
|
$ 5,213,459
20,462,160
3,355,537
133,393
29,164,549
|
Property and Equipment,
Using Full Cost Accounting
Oil
and Gas properties subject to amortization
Drilling
rig
Land,
buildings, equipment and leasehold improvements
Total Property and Equipment
Less:
Accumulated depreciation and amortization
Net
Property and Equipment
Total Assets
|
380,850,166
6,423,897
4,860,533
392,134,596
(36,796,492)
355,338,104
$ 388,551,548
|
339,887,859
6,254,737
4,512,224
350,654,820
(30,497,371)
320,157,449
$ 349,321,998
|
| LIABILITIES
AND STOCKHOLDERS' EQUITY |
Current Liabilities
Accounts
payable
Income taxes
payable
Fair value of oil derivative
Accrued
liabilities
Total Current Liabilities
Long-Term
Liabilities
Notes
payable
Asset
retirement liability
Deferred
income taxes
Total Long-Term Liabilities |
$ 13,399,418
—
5,056,201
2,480,044
20,935,663
40,500,000
3,618,305
44,429,683
88,547,988
|
$ 12,525,202
539,793
4,446,822
1,704,658
19,216,475
35,000,000
3,397,830
33,896,728
72,294,558
|
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; 35,107,411
shares and
34,278,779 shares outstanding respectively
Additional
paid-in capital
Retained earnings
Accumulated other comprehensive loss
Total Stockholders'
Equity
Total
Liabilities and Stockholders' Equity |
—
35,108
194,173,945
88,044,461
(3,185,617)
279,067,897
$ 388,561,548
|
—
34,279
190,852,118
69,726,066
(2,801,498)
257,810,965
$ 349,321,998
|
|
|
March 31,
2008 |
March 31,
2007 |
Cash Flows From Operating Equities
Net income
Adjustments to reconcile net income to net cash
provided by operating
activities:
Depreciation,
depletion & amortization
Provision for income taxes
Stock 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 |
$ 18,318,395
6,139,933
10,758,422
1.760,812
68,425
(2,679,514)
(540,000)
104,348
—
1,549,185
35,480,006
|
$ 5,707,890
2,653,585
3,334,634
639,624
43,497
708,355
—
81,515
(1,714,733)
(5,397,930)
6,056,437
|
Cash Flows from Investing Activities
Purchase and development of
oil and gas properties
Purchase of buildings, machinery and office equipment
Net Cash Used in Investing Activities |
(40,550,652)
(517,469)
(41,068,121)
|
(24,373,643)
(1,902,646)
(26,276,289)
|
Cash Flows From Financing Activities
Cash paid for offering completed during 2007
Proceeds from exercise
of warrants
Proceeds from exercise
of options
Excess tax benefits from share-based
payment arrangements
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
Asset retirement obligation incurred
in property development
Depreciation on drilling rigs capitalized as
oil and gas properties
|
(5,000)
38,844
1,528,000
—
5,500,000
—
7,061,844
1,473,729
5,213,459
$6,687,188
$540,000
482,599
252,467
159,187
|
—
270,003
485,500
1,714,733
17,200,000
(400,000)
19,270,236
(949,616)
4,919,984
$3,970,368
—
590,641
75,804
49,922
|
| RECONCILIATION
OF CASH FLOW FROM OPERATIONS |
Net cash provided by
operating activities
Change in operating assets
and liabilities
Cash flow from activities
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.
|
$ 35,480,006
1.565,981
$ 37,045,987
|
$ 6,056,437
6,322,793
$ 12,379,230
|
| NON-GAAP DISCLOSURE RECONCILIATION ADJUSTED EBITDA |
|
NET INCOME
Interest expense
Income tax expense
Depreciation, depletion and amortization
Accretion of discounted liabilities
Stock based compensation
ADJUSTED EBITDA
|
March 31,
2008
$ 18,318,395
574.119
10,758,422
6,139,933
68,425
1,760,812
$ 37,620,106
|
March 31,
2007
$ 5,707,890
353,339
3,334,634
2,657,555
43,497
639,624
$ 12,736,539
|
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:
Bill Parsons
Vice President Investor Relations
480-947-1589
bparsons@arenaresourcesinc.com
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