Arena Resources Inc.
4920 South Lewis Street
Suite 107
Tulsa, OK 74105
United States - Map
Phone: 918-747-6060
Web Site: http://www.arenaresourcesinc.com
DETAILS
Index Membership: N/A
Sector: Basic Materials
Industry: Oil & Gas Drilling & Exploration
Full Time Employees: 52
BUSINESS SUMMARY
Arena Resources, Inc. engages in the acquisition, exploration, development, and production of oil and natural gas properties. It owns interests in oil and gas properties located in Oklahoma, Texas, Kansas, and New Mexico. The company primarily sells its oil and natural gas production to end users, marketers, and other purchasers. As of December 31, 2006, Arena Resources had proved reserves of approximately 43.1 million barrels of oil equivalent. The company, thorough its subsidiaries, also involves in the drilling operations. Arena Resources was founded in 2000 and is based in Tulsa, Oklahoma.
-------------------------------------------------------------------------------
Release Source: Arena Resources, Inc.
Arena Resources Announces Record Third Quarter Financial and Operating Results
Friday November 9, 9:00 am ET
47% Increase in Revenue
42% Increase in Net Income
33% Increase in Production
TULSA, Okla.--(BUSINESS WIRE)--Arena Resources, Inc. (NYSE: ARD - News) ("Arena")("Company") announced today financial results for the three months and nine months ended September 30, 2007. For the three month period ended September 30, 2007, Arena had oil and gas revenues of $26,731,699, compared to $18,192,860 for the quarter ended September 30, 2006, a 47% increase, and net income of $11,403,777 (a 42% increase), or $0.32 per fully diluted share, compared to net income of $8,006,824, or $0.26 per fully diluted share, for the same period in 2006. For the nine month period ended September 30, 2007, the Company reported oil and gas revenues of $65,003,299, compared to oil and gas revenues of $43,263,323 for the nine month period ended September 30, 2006, a 50% increase. Net income for the nine month period ended September 30, 2007 was $25,011,045 (a 39% increase), or $0.76 per fully diluted share, compared to net income of $18,034,724, or $0.61 per fully diluted share, for the same period in 2006.
ADVERTISEMENT
The revenue increase for the third quarter was a result of increases in production volumes due to increased development activity and increased commodity prices. For the three months ended September 30, 2007, oil sales volume increased to 344,399 barrels, compared to 256,366 barrels for the same period in 2006, a 34% increase, and gas sales volume increased to 351,498 MCF (thousand cubic feet), compared to 276,881 MCF for the same period in 2006, a 27% increase. For the nine months ended September 30, 2007, oil sales volume increased to 954,228 barrels, compared to 631,455 barrels for the same period in 2006, a 51% increase, and gas sales volume increased to 1,024,602 MCF, compared to 617,745 MCF for the same period in 2006, a 66% increase. The average commodity prices received by Arena were $69.78 per barrel of oil and $7.68 per MCF of natural gas for the quarter ended September 30, 2007, compared to $63.91 per barrel of oil and $6.53 per MCF of natural gas for the quarter ended September 30, 2006. The average prices received for the nine months ended September 30, 2007 were $60.16 per barrel of oil and $7.43 per MCF of natural gas, compared to $61.91 per barrel of oil and $6.75 per MCF of natural gas for the nine month period ended September 30, 2006.
Lease operating expenses, including production taxes, for the three months ended September 30, 2007 were $11.19 per barrel of oil equivalent ("BOE"), a 34% increase from the prior year. Depreciation, depletion and amortization costs increased 27% to $7.54 per BOE. General and administrative costs, which included a $956,072 charge for stock based compensation, were $3.65 per BOE, a 4% decrease. Net interest income was $461,355, or $1.14 per BOE, a 153% increase. For the nine months ended September 30, 2007, lease operating expenses, including production taxes, were $10.37 per BOE, a 12% increase. Depreciation, depletion and amortization costs were $7.43 per BOE, a 28% increase, and general and administrative costs, which included a $2,476,823 charge for stock based compensation, were $4.01 per BOE, a 12% increase. Net interest expense was $0.55 per BOE, a 1200% increase.
There was no outstanding debt on the Company's $150 million bank credit facility at September 30, 2007.
Net cash flow from operations for the three and nine months ended September 30, 2007 was $22,164,986, or $0.62 per fully diluted share, and $50,690,604 or $1.54 per fully diluted share, compared to net cash flow of $14,914,941, or $0.48, and $34,535,543, or $1.16 per fully diluted share for the same periods in 2006 (1).
During the third quarter, Arena drilled 28 new development wells, completing and placing in production 22. The remaining six wells were completed and placed in production in the fourth quarter. Additionally, four development wells drilled in the second quarter of 2007 were successfully completed and placed in production. The Company also re-stimulated ten existing wells, all on its Fuhrman Mascho property in Andrews County, Texas. The Company continues to have a 100% success rate on wells drilled and completed on this asset. Sales as a result of production for the quarter ended September 30, 2007 rose to 402,982 barrels of oil equivalent (BOE), as compared to production of 302,513 BOE for the same quarter in 2006, a 33% increase, and a 5% increase over the 385,318 BOE produced in the second quarter of 2007. Average net daily production increased from 3,288 barrels of oil equivalent per day (BOEPD) in the third quarter of 2006 to approximately 4,380 BOEPD. Production continued to be adversely affected by pipeline issues in New Mexico and Kansas.
Arena's Chief Executive Officer, Mr. Tim Rochford, stated, "We maintained our overall development program in the third quarter, with particular emphasis on our Permian Basin properties. We drilled 28 new development wells and re-fraced ten existing wells on our Fuhrman Mascho properties, despite having only one drilling rig working for over 30 days due to delays in the assembly and delivery of our second company-owned rig. We continued infrastructure improvements and injector well reactivations on our Seven Rivers, North Benson and East Hobbs, New Mexico assets, but continued to have pipeline compression issues on both our East Hobbs asset and Auntie Em property in Kansas. Our third quarter sales of approximately 403,000 BOEs was a 33% increase over the same period in 2006 and an approximate 5% increase over the second quarter. We have now taken delivery of our second company-owned rig and brought back a contract drilling rig we have used in the past, making three active drilling rigs at the Fuhrman Mascho. With the personnel additions we have made we will continue with three rigs into 2008 and are postured to accelerate our development activities moving forward. We have a preliminary CAPEX budget for 2008 of approximately $200 million and project drilling over 200 wells at the Fuhrman Mascho alone. We are continuing to look at acquisition opportunities, primarily concentrating on those that complement our existing properties as evidenced by our recent acquisitions."
Non-GAAP Financial Measures:
Earnings for the three months ended September 30, 2007 include a non-cash charge for stock based compensation of $956,072. Earnings for the nine months ended September 30, 2007 include a non-cash charge for stock based compensation of $2,476,823. Excluding such items, the Company's earnings would have been $0.34 per diluted share for the three months ended September 30, 2007, and $0.81 for the nine months ended September 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.
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.
ARENA RESOURCES, INC.
STATEMENTS OF OPERATIONS
Three Months Ended Nine Months Ended
September 30, September 30,
2007 2006 2007 2006
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Oil and Gas Revenues $26,731,699 $18,192,860 $65,003,299 $43,263,323
Costs and Operating Expenses
Oil and gas production costs 2,969,674 1,455,453 7,946,155 4,124,281
Oil and gas production taxes 1,541,612 1,067,114 3,717,095 2,673,768
Depreciation, depletion and amortization 3,039,529 1,791,681 8,356,796 4,253,142
Accretion expense 46,414 41,755 135,177 104,697
General and administrative expense 1,472,855 1,154,243 4,507,220 2,626,659
Total Costs and Operating Expenses 9,070,084 5,510,246 24,662,443 13,782,547
Other Income (Expense)
Other financing expense - - - (785,598 )
Interest income (expense) 481,387 154,977 633,451 240,415
Interest expense (20,032 ) (19,705 ) (1,252,499 ) (200,406 )
Net Other Income (Expense) 461,355 135,272 (619,048 ) (745,589 )
Income Before Provision for Income Taxes 18,122,970 12,817,886 39,721,808 28,735,187
Provision for Deferred Income Taxes (6,719,193 ) (4,811,062 ) (14,710,763 ) (10,700,463 )
Net Income $11,403,777 $8,006,824 $25,011,045 $18,034,724
Basic Net Income Per Common Share $0.33 $0.27 $0.80 $0.65
Diluted Net Income Per Common Share $0.32 $0.26 $0.76 $0.61
Basic Weighted-Average Common Shares Outstanding 34,068,128 29,251,578 31,368,107 27,731,056
Diluted Weighted-Average Common Shares Outstanding 35,584,238 31,159,484 32,968,114 29,655,078
Other Comprehensive Income
Unrealized loss on oil derivatives, net of tax (22,098 ) - (22,098 ) -
Total Other Comprehensive Income 11,381,679 8,006,824 24,988,947 18,034,724
COMPARATIVE OPERATING STATISTICS
Three Months Ended September 30,
2007 2006 Change
Net Production - BOE per day 4,380 3,288 33 %
Per BOE:
Average Sales Price $66.33 $60.14 10 %
Operating Costs 11.19 8.34 34 %
DD&A 7.54 5.92 27 %
General & Administrative Expenses 3.65 3.82 -4 %
Interest Expense (Income) (1.14 ) (0.45 ) 153 %
Nine Months Ended September 30,
2007 2006 Change
Net Production - BOE per day 4,121 2,690 53 %
Per BOE:
Average Sales Price
$57.78 $58.91 -2 %
Operating Costs 10.37 9.26 12 %
DD&A 7.43 5.79 28 %
General & Administrative Expenses
4.01 3.58 12 %
Interest Expense (Income) 0.55 (0.05 ) -1200 %
ARENA RESOURCES, INC.
CONSOLIDATED BALANCE SHEET
September 30,
December 31,
2007 2006
ASSETS
Current Assets
Cash $32,300,916 $4,919,984
Accounts receivable 14,262,988 6,702,677
Joint interest billing receivable 3,154,002 2,949,099
Prepaid expenses 253,090 102,585
Total Current Assets 49,970,996 14,674,345
Property and Equipment, Using Full Cost Accounting
Oil and gas properties subject to amortization 253,421,876 171,708,200
Equipment 60,051 59,332
Drilling rigs 5,422,313 1,996,899
Office buildings and land 2,868,180 -
Office equipment 210,466 120,929
Total Property and Equipment 261,982,886 173,885,360
Less: Accumulated depreciation and amortization (20,749,318 ) (12,246,727 )
Net Property and Equipment 241,233,568 161,638,633
Total Assets $291,204,564 $176,312,978
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $9,491,288 $14,367,252
Accrued liabilities 903,083 628,618
Total Current Liabilities 10,394,371 14,995,870
Long-Term Liabilities
Notes Payable - 19,300,000
Notes payable to related parties - 400,000
Fair value of oil derivatives 35,076 -
Asset retirement liability 2,584,515 2,250,332
Deferred income taxes 30,213,243 19,322,724
Total Long-Term Liabilities 32,832,834 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; 34,136,646 shares and 29,337,574 shares outstanding, respectively
34,137 29,338
Additional paid-in capital 182,920,821 81,857,599
Options and warrants outstanding 4,749,327 2,872,988
Retained earnings 60,295,172 35,284,127
Accumulated other comprehensive loss (22,098 ) -
Total Stockholders' Equity 247,977,359 120,044,052
Total Liabilities and Stockholders' Equity $291,204,564 $176,312,978
ARENA RESOURCES, INC.
STATEMENTS OF CASH FLOW
Nine Months Ended
September 30,
2007 2006
Cash Flows From Operating Activities
Net income $25,011,045 $18,034,724
Adjustments to reconcile net income to net cash provided by operating activities:
Warrants issued for financing expense - 785,598
Depreciation, depletion and amortization 8,356,796 4,253,142
Provision for income taxes 14,710,763 10,700,463
Stock based compensation 2,476,823 656,919
Accretion of discounted liabilities 135,177 104,697
Changes in assets and liabilities:
Accounts and joint interest receivable (7,765,214 ) (4,357,303 )
Other changes in deferred income taxes - (320,058 )
Prepaid expenses (150,505 ) (156,476 )
Excess tax benefits from shared-based payment arrangements (3,807,266 ) (1,851,813 )
Accounts payable and accrued liabilities (4,646,518 ) 2,410,618
Net Cash Provided by Operating Activities 34,321,101 30,260,511
Cash Flows from Investing Activities
Purchase and development of oil and gas properties (83,235,525 ) (61,556,302 )
Proceeds from sale of oil and gas properties 1,915,640 -
Purchase of buildings, land & equipment (6,383,851 ) (717,818 )
Net Cash Used in Investing Activities (87,703,736 ) (62,274,120 )
Cash Flows From Financing Activities
Proceeds from issuance of common stock, net of offering costs 95,099,298 29,788,881
Proceeds from exercise of warrants 270,003 150,000
Proceeds from exercise of options 1,287,000 640,000
Excess tax benefits from share-based payment arrangements 3,807,266 1,851,813
Funds received and held for call options - 1,272,093
Funds paid from funds held for call options - (1,265,912 )
Proceeds from issuance of notes payable 30,700,000 11,000,000
Payment of notes payable (50,400,000 ) (11,000,000 )
Net Cash Provided by Financing Activities 80,763,567 32,436,875
Net Increase in Cash 27,380,932 423,266
Cash at Beginning of Period 4,919,984 4,317,114
Cash at End of Period $32,300,916 $4,740,380
Supplemental Cash Flow Information
Cash paid for income taxes - $329,986
Cash paid for interest 1,438,973 180,702
Non-Cash Investing and Financing Activities
Common stock issued for properties and equipment - $3,507,872
Asset retirement obligation incurred in property development 270,357 189,326
Depreciation on drilling rig capitalized as part of oil and gas properties 149,766 -
RECONCILIATION OF CASH FLOW FROM OPERATIONS
Net cash provided by operating activities $34,321,101 $30,260,511
Change in operating assets and liabilities 16,369,503 4,275,032
Cash flow from operations $50,690,604 $34,535,543
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.
ARENA RESOURCES, INC.
NON-GAAP DISCLOSURE RECONCILIATION
ADJUSTED EBITDA
Nine Months Ended
September 30, September 30,
2007 2006
NET INCOME $25,011,045 $18,034,724
Warrants issued for financing expense - 785,598
Interest expense 619,048 (40,009 )
Income tax expense 14,710,763 10,700,463
Depreciation, depletion and amortization 8,356,796 4,253,142
Accretion of discounted liabilities 135,177 104,697
Stock based compensation 2,476,823 656,919
ADJUSTED EBITDA $51,309,652 $34,495,534
Contact:
Arena Resources, Inc.
Bill Parsons, 480-947-1589
--------------------------------------------------------------------------------
Very nice rebound (and a new high) from a trip below the 50MA.
http://stockcharts.com/h-sc/ui?s=ARD&p=D&b=5&g=0&id=p84374600962
update
moving up on light vol...