Arena Resources Record 3Q05 Results

Arena reports increase of 215% in revenue for the three months to $7.9 million and a 317% Increase in net income for three months to $3.46 million.

Arena Resources (AMEX:"Arena") reports 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 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 (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 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 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 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 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 30, 2005.

Net cash flow from operations 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 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 and liabilities.

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