ARD

[BigSully1]

 
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.
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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.
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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

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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

[BigSully1]

update

[422fwhp]

moving up on light vol...