As a result of the continuing development program, net production for the quarter ended Dec. 31, 2005, was approximately 171,000 BOEs, as compared to net production of 72,965 BOEs for the same quarter in 2004, a 134% increase, and as compared to 141,429 BOEs for the third quarter 2005, an increase of approximately 21%. December 2005 net daily production was approximately 2,050 BOEs, as compared to daily production of 1,000 BOEs in December 2004, an increase of 105%. Total production for 2005 was approximately 508,000 BOEs compared to 223,333 BOEs for 2004, a 127% increase.
Arena also announced it is adjusting its 2006 capital expenditure budget from $60 to $65 million. This increase reflects the company's plans to accelerate the development schedule of its operations in its Permian Basin properties, with approximately $45 million being allocated to its Fuhrman-Mascho lease in Andrews County, Texas. The budget includes the drilling of a minimum of 120 development wells, multiple workovers and re-stimulations of approximately 36 existing wells, initial development work on the Yates gas formation on the Fuhrman-Mascho lease, and infrastructure additions and improvements. Arena does not budget for acquisitions; however, the company will continue to actively pursue future acquisition opportunities.
Tim Rochford, Arena's president and CEO, stated, "The development program implemented on our Fuhrman-Mascho lease in April 2005 was a big factor in more than doubling our production for the year. Of the 44 wells we drilled in 2005, 36 were on this lease. In 2006, we plan to drill a minimum of 120 development wells with approximately 85 of these on the Fuhrman-Mascho where we have had a 100% success rate to date. We have accordingly increased our capital expenditure budget from $28 million in 2005 to $65 million for 2006. Although we are focusing our efforts on the development of our current leases, we will continue to actively pursue strategic acquisitions in 2006 that complement our existing properties."
Fourth Quarter Operations Update
Fuhrman-Mascho, Andrews County, Texas -- The company drilled 14 new development wells in the fourth quarter. Ten wells have been completed and placed in production, and the remaining four are in various stages of completion. Additionally, three wells which were drilled in the third quarter were successfully completed. The company has drilled through year-end 2005 a total of 36 new development wells, completing and placing into production 32, with a 100% success rate since initiating its developmental drilling program in mid-April 2005. The company performed a re-frac on eight wells during the fourth quarter. In 2005, the company re-fraced 22 wells on this lease. In 2006, the company anticipates drilling 85 development wells and performing 32 - 36 re-fracs with the addition of a recently purchased drilling rig scheduled to be on site by the end of the first quarter.
East Hobbs Unit, Lea County, New Mexico -- The company drilled three development wells in the fourth quarter, two of which were completed and placed in production, with the third well to be completed in January 2006. In 2005, the company also converted four existing wells into water injection wells, opened additional zones in two wells and commenced the initial stage of a waterflood project. In 2006, the company anticipates drilling four additional development wells and converting six additional existing wells into water injection wells as it expands its secondary recovery program.
Seven Rivers Queen, Lea County, New Mexico -- The company performed two re-fracs on existing wells in the fourth quarter and anticipates drilling six development wells in 2006.
Auntie Em Unit, Haskell County, Kansas -- The company drilled two additional development wells in December, both of which were awaiting completion at year end. Four development wells are scheduled to be drilled in 2006.
Rocky Prospect, Greeley County, Kansas -- The company completed and placed in production one exploratory well that was drilled in the third quarter. An additional exploratory well was drilled in the fourth quarter and is awaiting completion. After evaluating the performance of these two wells, the company will determine a development program in 2006 for the Rocky Prospect.
Eva South, Texas County, Oklahoma -- One developmental well was drilled in the fourth quarter and is awaiting completion. A minimum of one additional development well is scheduled to be drilled in 2006.
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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