Arena Resources Announces Record Revenues, Earnings, Cash Flow and Production for First Quarter 2006; 165% Increase in Revenue for the Three Months to $10.38 Million; 178% Increase in Net Income for the Three Months to $3.58 Million.TULSA Tulsa (tŭl`sə), city (1990 pop. 367,302), seat of Tulsa co., NE Okla., on the Arkansas River east of its junction with the Cimarron; inc. 1898. , Okla. -- Arena Resources Inc. (AMEX AMEX See: American Stock Exchange : ARD Ard (ärd), in the Bible. 1 Son of Benjamin. 2 Benjamite, perhaps the same as (1.) An alternate form is Addar. ) ("Arena")("company") announced today record financial results for the first quarter ended March 31, 2006. For the three month period ended March 31, 2006, Arena had oil and gas revenues of $10,380,395, compared to $3,914,735 for the quarter ended March 31, 2005, a 165% increase and net income of $3,582,676, or $0.25 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, compared to net income of $1,286,700 or $0.11 per diluted share, for the same period in 2005, a 178% increase. The revenue increase was due to increases in production volumes, primarily due to development activity, and increased oil and gas prices. For the three months ended March 31, 2006, oil sales volume increased to 167,167 barrels, compared to 77,260 barrels for the same period in 2005, a 116% increase, and gas sales volume increased to 142,036 MCF MCF malignant catarrhal fever. (thousand cubic feet), compared to 83,315 MCF for the same period in 2005, a 70% increase. The average commodity prices received by Arena were $55.85 per barrel barrel: see English units of measurement. of oil and $7.35 per MCF of natural gas for the quarter ended March 31, 2006, compared to $45.70 per barrel of oil and $4.61 per MCF of natural gas for the quarter ended March 31, 2005. Lease operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. for the three months ended March 31, 2006, were $10.88 per barrel of oil equivalent The barrel of oil equivalent (bboe, sometimes BOE) is a unit of energy based on the approximate energy released by burning one barrel of crude oil. The US Internal Revenue Service defines it as equal to 5.8 × 106 BTU [1]. 5. ("BOE BOE Based on Experience BOE Board of Education BOE Boletín Oficial del Estado (Spanish) BOE Bank of England BOE Board of Equalization BOE Board of Elections BOE Barrel of Oil Equivalent BOE Bind on Equip "), a 10% decrease from the prior year. Depreciation, depletion depletion n. when a natural resource (particularly oil) is being used up. The annual amount of depletion may, ironically, provide a tax deduction for the company exploiting the resource because if the resource they are exploiting runs out, they will no longer be able and amortization costs increased 19% to $5.51 per BOE. General and administrative costs administrative costs, n.pl the overhead expenses incurred in the operation of a dental benefits program, excluding costs of dental services provided. , which included a $179,767 charge for stock-based compensation, were $3.69 per BOE, a 25% increase. Net cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses for the three months ended March 31, 2006, was $7,733,918 or $0.55 per diluted share, compared to net cash flow of $2,452,877 or $0.22 per diluted share for the same period in 2005 (1). Arena's Chief Executive Officer Tim Rochford, stated, "We continue to ramp up Ramp Up To increase a company's operations in anticipation of increased demand. Notes: A company might 'ramp up' operations if they just signed a contract creating substantially more demand for their product. See also: Demand, Economies of Scale our 2006 development program. Our first quarter resulted in 16 development wells drilled and 13 refracs on existing wells on our Fuhrman-Mascho property, where we continue to have a 100% success rate on newly drilled development wells. We have taken delivery of our own drilling rig and now have two rigs drilling full time on the Fuhrman-Mascho. We currently have a third rig drilling on our Seven Rivers Queen property in New Mexico New Mexico, state in the SW United States. At its northwestern corner are the so-called Four Corners, where Colorado, New Mexico, Arizona, and Utah meet at right angles; New Mexico is also bordered by Oklahoma (NE), Texas (E, S), and Mexico (S). and a fourth rig will soon be operating on our Auntie Em property in Kansas Kansas, state, United States Kansas (kăn`zəs), midwestern state occupying the center of the coterminous United States. It is bordered by Missouri (E), Oklahoma (S), Colorado (W), and Nebraska (N). . In June June: see month. , an additional drilling rig will move onto our Rocky Prospect, also in Kansas. In total, we hope to drill as many as 37 new wells in the second quarter, 31 in the Permian Basin The Permian Basin is a sedimentary basin largely contained in the western part of the U.S. state of Texas. It reaches from just south of Lubbock, Texas, to just south of Midland & Odessa, extending westward into the southeastern part of the adjacent state of New Mexico. and six in Kansas, while continuing the restimulation of selected existing wells. With the increase in our credit facility, we are in a position to maintain an aggressive development program, while continuing to seek additional acquisitions." Non-GAAP Financial Measures Earnings for the first quarter 2006 include a non-cash charge Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. for stock-based compensation of $179,767, and a nonrecurring Non`re`cur´ring a. 1. Nonrecurrent; as, the costs of a layoff are considered as a nonrecurring expense s>. non-cash charge of $785,598, for warrants issued as part of a financing in July July: see month. 2005. Excluding such items, income before income taxes would have been $6,652,152. Adjusting for the after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. effect of these items the company's earnings would have been $4,190,856, or $0.30 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 similarly situated adj. with the same problems and circumstances, referring to the people represented by a plaintiff in a "class action," brought for the benefit of the party filing the suit as well as all those "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 Operating Assets Another term for working capital. 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 Oklahoma (ōkləhō`mə), state in SW United States. It is bordered by Missouri and Arkansas (E); Texas, partially across the Red R. (S, W); New Mexico, across the narrow edge of the Oklahoma Panhandle (W); and Colorado and Kansas (N). , Kansas and New Mexico. This release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of the "safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. " provisions of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and 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 and/or conj. Used to indicate that either or both of the items connected by it are involved. Usage Note: And/or is widely used in legal and business writing. 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
March 31,
---------
2006 2005
---- ----
(Unaudited) (Unaudited)
------------ -----------
Oil and Gas Revenues $10,380,395 $3,914,735
------------ -----------
Costs and Operating Expenses
Oil and gas production costs 1,378,419 812,237
Oil and gas production taxes 697,209 286,717
Depreciation, depletion and amortization 1,052,462 421,599
Accretion expense 29,304 22,071
General and administrative expense 703,932 311,855
------------ -----------
Total Costs and Operating Expenses 3,861,326 1,854,479
------------ -----------
Other Income (Expense)
Gain from change in fair value of put
options - 74,046
Other financing expense (785,598) -
Interest expense (46,684) (93,399)
------------ -----------
Net Other Income (Expense) (832,282) (19,353)
------------ -----------
Income Before Provision for Income Taxes 5,686,787 2,040,903
Provision for Deferred Income Taxes (2,104,111) (754,203)
------------ -----------
Net Income $3,582,676 $1,286,700
------------ -----------
Basic Net Income Per Common Share $0.27 $0.13
Diluted Net Income Per Common Share $0.25 $0.11
Basic Weighted-Average Common Shares
Outstanding 13,175,386 9,792,744
Diluted Weighted-Average Common Shares
Outstanding 14,178,356 11,284,939
COMPARATIVE OPERATING STATISTICS
Three Months Ended
March 31,
---------
2006 2005 Change
------- ------- ------
Net Production - BOE per day 2,120 1,013 109%
Per BOE:
Average Sales Price $54.39 $42.95 27%
Operating Costs 10.88 12.06 -10%
DD&A 5.51 4.63 19%
General & Administrative Expenses 3.69 3.42 8%
Interest Expense 0.24 1.02 -76%
ARENA RESOURCES INC.
CONSOLIDATED BALANCE SHEET
March 31, Dec. 31,
2006 2005
---- ----
ASSETS
Current Assets
Cash $7,650,020 $4,317,114
Account receivable 3,315,331 3,180,749
Joint interest billing receivable 265,165 140,561
Prepaid expenses 4,000 35,436
------------ ------------
Total Current Assets 11,234,516 7,673,860
------------ ------------
Property and Equipment, Using Full cost
Accounting
Oil and gas properties subject to
amortization 86,585,408 69,770,685
Equipment 54,645 26,687
Deposits on drilling rig 1,782,508 1,191,126
Office equipment 106,177 106,177
------------ ------------
Total Property and Equipment 88,528,738 71,094,675
Less: Accumulated depreciation and
amortization (5,399,090) (4,346,628)
------------ ------------
Net Property and Equipment 83,129,648 66,748,047
------------ ------------
Total Assets $94,364,164 $74,421,907
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $4,944,570 $6,038,691
Income taxes payable 82,497 329,986
Accrued liabilities 243,725 221,519
------------ ------------
Total Current Liabilities 5,270,792 6,590,196
------------ ------------
Long-Term Liabilities
Notes payable 11,000,000 -
Notes payable to related parties 400,000 400,000
Asset retirement liability 1,585,837 1,515,347
Deferred income taxes 9,219,151 7,187,609
------------ ------------
Total Long-Term Liabilities 22,204,988 9,102,956
------------ ------------
Stockholders' Equity
Preferred stock - $0.001 par value;
10 million shares authorized;
No shares issued or outstanding - -
Common stock - $0.001 par value;
100 million shares authorized;
13,276,702 shares and 13,099,702
shares outstanding, respectively 13,277 13,100
Additional paid-in capital 48,958,545 45,331,234
Options and warrants outstanding 2,317,727 1,483,807
Deferred compensation - (115,545)
Retained earnings 15,598,835 12,016,159
------------ ------------
Total Stockholders' Equity 66,888,384 58,728,755
------------ ------------
Total Liabilities and Stockholders' Equity $94,364,164 $74,421,907
------------ ------------
ARENA RESOURCES INC.
STATEMENTS OF CASH FLOW
Three Months Ended
March 31,
2006 2005
---- ----
Cash Flows From Operating Activities
Net income $3,582,676 $1,286,700
Adjustments to reconcile net income to
net cash provided by operating
activities:
Warrants issued for financing expense 785,598 -
Depreciation, depletion and amortization 1,052,462 421,599
Provision for income taxes 2,104,111 754,203
Gain from change in fair value of put
option - (74,046)
Stock-based compensation 179,767 42,350
Accretion of discounted liabilities 29,304 22,071
Changes in assets and liabilities:
Accounts and joint interest receivable (259,186) (327,638)
Other changes in deferred income taxes (320,058) -
Prepaid expenses 31,436 -
Accounts payable and accrued liabilities (1,071,917) (866,874)
------------ -----------
Net Cash Provided by Operating Activities 6,114,193 1,258,365
------------ -----------
Cash Flows from Investing Activities
Purchase and development of oil and gas
properties (13,446,705) (1,409,705)
Purchase of machinery and equipment (438,300) (10,822)
------------ -----------
Net Cash Used in Investing Activities (13,885,005) (1,420,527)
------------ -----------
Cash Flows From Financing Activities
Proceeds from exercise of warrants, net
of offering costs 103,718 5,672,607
Proceeds from issuance of notes payable 11,000,000 -
Payment of notes payable - (5,000,000)
------------ -----------
Net Cash Provided by Financing Activities 11,103,718 672,607
------------ -----------
Net Increase in Cash 3,332,906 510,445
Cash at Beginning of Period 4,317,114 1,253,969
------------ -----------
Cash at End of Period $7,650,020 $1,764,414
------------ -----------
Supplemental Cash Flow Information
Cash paid for income taxes $329,986 -
Cash paid for interest 46,684 131,421
------------ -----------
Non-Cash Investing and Financing Activities
Common stock issued for properties and
equipment $3,507,872 $261,600
Asset retirement obligation incurred
in property development 41,186 -
RECONCILIATION OF CASH FLOW FROM OPERATIONS
Net cash provided by operating activities $6,114,193 $1,258,365
Change in operating assets and liabilities 1,619,725 1,194,512
------------ -----------
Cash flow from operations $7,733,918 $2,452,877
============ ===========
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 per·tain intr.v. per·tained, per·tain·ing, per·tains 1. To have reference; relate: evidence that pertains to the accident. 2. to companies in the oil and gas exploration and production industry.
ARENA RESOURCES INC.
NON-GAAP DISCLOSURE RECONCILIATION
March 31, March 31,
2006 2005
---- ----
NET INCOME $3,582,676 $1,286,700
Warrants issued for financing expense 785,598 -
Interest expense 46,684 93,399
Income tax expense 2,104,111 754,203
Depreciation, depletion and amortization 1,052,462 421,599
Accretion of discounted liabilities 29,304 22,071
Gain from change in fair value of put
option - (74,046)
Stock-based compensation 179,767 42,350
----------- -----------
ADJUSTED EBITDA $7,780,602 $2,546,276
----------- -----------
|
|
||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion