Arena Resources Announces Record Third Quarter and Nine-Month 2005 Financial and Operating Results.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. -- 215% Increase in Revenue for the Three Months to $7.9 Million; 317% Increase in Net Income for the Three Months to $3.46 Million 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 financial results for the third quarter and nine months ended Sept. 30, 2005. For the three-month period ended Sept. 30, 2005, Arena had oil and gas revenues of $7,937,785, compared to $2,516,970 for the quarter ended Sept. 30, 2004, a 215% increase. For the three-month period ended Sept. 30, 2005, the company had net income of $3,460,207, or $0.27 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 $830,049 or $0.09 per diluted share, for the same period in 2004, a 317% increase. For the nine-month period ended Sept. 30, 2005, the company reported oil and gas revenues of $16,481,074, compared to oil and gas revenues of $5,509,784 for the nine-month period ended Sept. 30, 2004, a 199% increase. Net income for the nine-month period ended Sept. 30, 2005 was $6,505,433, or $0.54 per diluted share, compared to net income of $1,688,239, or $0.20 per diluted share for the same period in 2004, a 285% increase. The revenue increase was due to increases in production, primarily as a result of current development activity, property acquisitions in 2004 and increased average realized commodity sales prices. For the three months ended Sept. 30, 2005, oil sales volume increased to 123,600 barrels, compared to 54,769 barrels for the same period in 2004, a 126% increase. For the nine months ended Sept. 30, 2005, oil sales volume increased to 293,094 barrels, compared to 133,177 barrels for the same period in 2004, a 120% increase. For the three months ended Sept. 30, 2005, gas sales volume increased to 105,629 MCF MCF malignant catarrhal fever. (thousand cubic feet), compared to 52,698 MCF for the same period in 2004, a 100% increase. For the nine months ended Sept. 30, 2005, gas sales volume increased to 273,912 MCF, compared to 112,724 MCF for the same period in 2004, a 143% increase. The average commodity prices received by Arena were $58.92 per barrel barrel: see English units of measurement. of oil and $6.20 per MCF of natural gas for the quarter ended Sept. 30, 2005, compared to $41.13 per barrel of oil and $5.05 per MCF of natural gas for the quarter ended Sept. 30, 2004. The average prices received for the nine months ended Sept. 30, 2005 were $51.05 per barrel of oil and $5.55 per MCF of natural gas, compared to $37.47 per barrel of oil and $4.62 per MCF of natural gas for the nine-month period ended Sept. 30, 2004. Total 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 and nine months ended Sept. 30, 2005, were $2,421,596 and $5,969,133, respectively, as compared to $1,126,299 and $2,715,450 for the same periods ended Sept. 30, 2004. 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 for the three-month period ended Sept. 30, 2005, were $645,908 compared to $237,212 for the same period ended Sept. 30, 2004. For the nine-month period ended Sept. 30, 2005, depreciation, depletion and amortization totaled $1,550,791 compared to $553,038 for the same period ended Sept. 30, 2004. 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. for the three- and nine-month periods ended Sept. 30, 2005 were $259,978 and $803,082, respectively, compared to $131,619 and $473,391 for the same periods ended Sept. 30, 2004. The company had no outstanding debt on its bank credit facility at Sept. 30, 2005 as compared to $5 million at June June: see month. 30, 2005. 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 nine months ended Sept. 30, 2005 was $11,873,191, or $0.98 per diluted share, compared to net cash flow of $3,224,551, or $0.39 per diluted share for the same period in 2004 (1). Arena Chief Executive Officer Tim Rochford stated, "We are extremely proud of our record results for the third quarter during which production increased 32% over the second quarter 2005, revenues increased 71%, net income 100% and operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. 87%. This quarter reflects the first full quarter of our development drilling and re-stimulation operations on our Fuhrman-Mascho property. During the quarter we drilled 12 new wells on this property and have had a 100% success rate on 25 wells completed to date since April. We will continue to focus on the development of our current properties, while at the same time pursue acquisition opportunities that complement our existing locations." (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 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). and 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). . 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.
CONDENSED STATEMENTS OF OPERATIONS
Three Months Ended Nine Months Ended
Sept. 30, Sept. 30,
------------------ -----------------
2005 2004 2005 2004
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Oil and Gas Revenues $7,937,785 $2,516,970 $16,481,074 $5,509,784
---------- ---------- ----------- ----------
Costs and Operating
Expenses
Oil and gas
production costs 946,380 564,933 2,384,816 1,284,753
Oil and gas
production taxes 569,330 192,535 1,230,444 404,268
Depreciation,
depletion and
amortization 645,908 237,212 1,550,791 553,038
General and adminis-
trative expense 259,978 131,619 803,082 473,391
---------- ---------- ----------- ----------
Total Costs and
Operating
Expenses 2,421,596 1,126,299 5,969,133 2,715,450
---------- ---------- ----------- ----------
Other Income (Expense)
Gain from change in
fair value of put
options 20,627 -- 86,497 2,905
Accretion expense (25,158) (13,007) (74,484) (38,072)
Interest expense (19,266) (60,296) (189,541) (128,407)
---------- ---------- ----------- ----------
Net Other Expense (23,797) (73,303) (177,528) (163,574)
---------- ---------- ----------- ----------
Provision for Deferred
Income Taxes (2,032,185) (487,319) (3,828,980) (942,521)
---------- ---------- ----------- ----------
Net Income $3,460,207 $ 830,049 $6,505,433 $1,688,239
========== ========== ========== ==========
Basic Net Income Per
Common Share $ 0.30 $ 0.10 $ 0.62 $ 0.23
Diluted Net Income
Per Common Share $ 0.27 $ 0.09 $ 0.54 $ 0.20
Basic Weighted-Average
Common Shares
Outstanding 11,491,994 8,164,434 10,554,879 7,500,852
Diluted Weighted-
Average Common
Shares Outstanding 12,982,252 8,880,284 12,061,207 8,301,838
COMPARATIVE OPERATING STATISTICS
(Unaudited)
Three Months Ended
------------------
9/30/05 9/30/04 Change
---------------------------------
Net Production - BOE
per day 1,535 691 +122%
Per BOE:
Average Sales Price $56.22 $39.61 +42%
Operating Costs 10.73 11.92 -10%
DD&A 4.52 3.74 +21%
General & Administrative
Expenses 1.84 2.07 -11%
Interest Expense .14 .95 -85%
(Unaudited)
Nine Months Ended
-----------------
9/30/05 9/30/04 Change
---------------------------------
Net Production - BOE per day 1,241 556 +23%
Per BOE:
Average Sales Price $48.66 $36.26 +34%
Operating Costs 10.68 11.11 -4%
DD&A 4.52 3.64 +24%
General & Administrative
Expenses 2.37 3.12 -24%
Interest Expense .56 .85 -34%
CONDENSED BALANCE SHEET DATA
Sept. 30, Dec. 31,
2005 2004
(Unaudited) (Audited)
----------- -----------
Assets
Current assets $ 9,535,236 $ 2,498,423
Properties, buildings &
equipment, net 50,722,636 32,943,884
Other assets & deposits 0 900,000
----------- -----------
$60,257,872 $36,342,307
=========== ===========
Liabilities & Shareholders'
Equity
Current Liabilities $ 1,618,739 $ 1,840,665
Deferred income taxes 5,885,332 2,129,993
Long-term debt 400,000 10,400,000
Other long-term liabilities 1,379,103 1,363,026
Shareholders' Equity 50,974,698 20,608,623
----------- -----------
$60,257,872 $36,342,307
=========== ===========
CONDENSED STATEMENTS OF CASH FLOWS
Nine Months Ended
Sept. 30,
-----------------------
2005 2004
(Unaudited) (Unaudited)
Cash flows from operating
activities:
Net income $ 6,505,433 $ 1,688,239
Depreciation, depletion and
amortization 1,550,791 553,038
Deferred income taxes 3,828,980 942,521
Other, net (12,013) 40,753
Net changes in operating
assets and liabilities (2,015,112) 189,566
----------- -----------
Net Cash Provided by Operating
Activities 9,858,079 3,414,117
Net Cash Used in Investing
Activities (18,063,288) (2,241,969)
Net Cash Provided by (Used in)
Financing Activities 13,522,477 (384,117)
----------- -----------
Net Increase in Cash 5,317,268 788,031
Cash at Beginning of Period 1,253,969 1,076,676
----------- -----------
Cash at End of Period $ 6,571,237 $ 1,864,707
=========== ===========
RECONCILIATION OF CASH FLOW FROM OPERATIONS
Net cash provided by operating
activities $ 9,858,079 $ 3,414,117
Change in operating assets and
liabilities $ 2,015,112 $ (189,566)
----------- -----------
Cash flow from operations $11,873,191 $ 3,224,551
=========== ===========
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.
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