The East Hobbs San Andres Unit consists of approximately 920 acres with existing oil and gas production from 19 wells, positive cash flow and additional developmental opportunities. Preliminary engineering reports estimate Arena's interest of the total proven reserves to be in excess of 6.4 million barrel of oil equivalents (BOEs) with present value of reserves, discounted 10% (PV-10) of approximately $73 million and net daily production of approximately 225 BOEs.
Arena management is currently performing its final due diligence with the intent to finalize the acquisition on or before May 7, 2004, with an effective date of March 1, 2004.
Tim Rochford, Arena's chief executive officer, stated, "This property represents our single largest acquisition to date in terms of daily production, proven reserves and future net revenues and is located in close proximity to the three lease acquisitions we made in 2003. Based on our preliminary engineering reports, the company, with this acquisition, will have net daily production of approximately 700 BOEs, proven reserves in excess of 15.9 million BOEs and PV-10 of over $165 million. This will bring the company's net asset value to approximately $21.75 per share."
Rochford further stated, "In addition to a drilling program to be commenced on this property this year, management feels that daily production can be increased immediately through existing well behind-the-pipe opportunities."
Arena Resources Inc. is an oil and gas exploration, development and production company with current operations in Texas, Oklahoma, Kansas and New Mexico.
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