During the second quarter, Arena drilled a total of 35 new wells: 20 wells on its Fuhrman-Mascho lease in Andrews County, Texas; seven wells on its Seven Rivers Queen lease in Lea County, N.M.; four wells on its Auntie Em lease in Gray County, Kan.; two wells on its Rocky Prospect in Greeley County, Kan.; and two exploratory wells on its Syracuse Prospect in Hamilton County, Kan. In addition, the company re-stimulated 13 existing wells on its Fuhrman-Mascho lease and five on its Seven Rivers Queen lease.
Production for the quarter ended June 30, 2006, was approximately 240,000 BOE, compared to production of 106,000 BOE for the same quarter in 2005--a 126% increase, and a 26% increase over the 191,000 BOE produced in the first quarter of 2006. Average net daily production increased from 2,133 BOEPD in the first quarter of 2006 to 2,637 BOEPD in the second quarter. Oil and gas revenues for the second quarter of 2006 are estimated to be $14.5 million, compared to $4.6 million for the same period in 2005--a 215% increase and a 40% increase over the $10.38 million generated in the first quarter of 2006.
In May, Arena received approximately $30.3 million in net proceeds from the private sale of 1,150,000 shares of the company's common stock to institutional investors. The funds will be used to bridge the deficit between estimated 2006 cash flow and the current 2006 CAPEX budget of $65 million. In addition, they will allow the company to keep 100% of its credit facility available.
“We are extremely pleased with the results of the second quarter,” said Tim Rochford, Arena’s president and CEO. “We continue to execute our development plan and add acreage to our core properties while continuing to seek acquisition opportunities. We now have two full-time drilling rigs working on our Furhman-Mascho lease and plan to increase the re-fracs of existing wells from 36 to 50 for 2006. We have been able to accelerate our drilling schedule in Kansas and New Mexico due to rig availability, and after determining the results from these wells we will then re-evaluate our CAPEX budget for the remainder of 2006.”
Second Quarter Operations Update
PERMIAN BASIN Fuhrman-Mascho, Andrews County, Texas--Arena drilled 20 new development wells in the second quarter. Seventeen wells have been completed and placed in production and the remaining three are in various stages of completion. Additionally, two development wells that were drilled in the first quarter were successfully completed and placed in production. The company has now drilled a total of 71 new development wells with a 100% success rate since initiating its developmental drilling program in mid-April, 2005. The company performed a re-frac on 13 wells during the second quarter and has now re-fraced 26 wells in 2006 and a total of 48 wells on this lease since initiating its development program. The company took delivery in late April of the drilling rig it purchased in December 2005 and is currently drilling its ninth well with the new rig. With two rigs operating, the company has estimated it will drill 24 new development wells and re-frac 13 existing wells in the third quarter.
Seven Rivers Queen, Lea County, N.M--The company drilled seven new development wells and re-fraced five existing wells in the second quarter. Of the seven wells drilled, six were completed and placed in production and the seventh is currently being completed and readied for production.
East Hobbs Unit, Lea County, N.M.--The company had originally planned to drill five new development wells in the second quarter. Due to the increased drilling on its Seven Rivers Queen lease, the five development wells will be drilled in the third quarter.
KANSAS Auntie Em, Gray County, Kan.--Four additional development wells were drilled in the second quarter. Originally scheduled to be drilled in the fourth quarter, the timetable was moved up due to rig availability. The four are currently being completed and readied for production. With the addition of the four new wells, there will be a total of nine producing wells on this lease with another 30-plus potential drilling locations on 320-acre spacing. The company has continued to add acreage to this lease which now totals approximately 14,000 acres.
Rocky Prospect, Greeley County, Kan.--Two additional development wells were drilled and are currently being readied for production.
Syracuse Prospect, Hamilton County, Kan.--Two exploratory wells were drilled on this 18,000-acre lease and are currently being completed and readied for production. The two wells were drilled as part of a joint venture the company has entered into with another Tulsa-based energy company. The partnership will evaluate the results and then determine a future development program.
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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