For the three month period ended March 31, 2007, Arena had oil and gas revenues of $16,651,301, compared to $10,380,395 for the quarter ended March 31, 2006, a 60% increase and net income of $5,707,890, or $0.37 per diluted share, compared to net income of $3,582,676 or $0.25 per diluted share, for the same period in 2006, a 59% increase.
The revenue increase was due to increases in production volumes, primarily due to development activity. For the three months ended March 31, 2007, oil sales volume increased to 282,538 barrels, compared to 167,167 barrels for the same period in 2006, a 69% increase and gas sales volume increased to 324,935 MCF (thousand cubic feet), compared to 142,036 MCF for the same period in 2006, a 129% increase. The average commodity prices received by Arena were $51.71 per barrel of oil and $6.28 per MCF of natural gas for the quarter ended March 31, 2007, compared to $55.85 per barrel of oil and $7.35 per MCF of natural gas for the quarter ended March 31, 2006.
Lease operating expenses, including production taxes, for the three months ended March 31, 2007 were $9.86 per barrel of oil equivalent ("BOE"), a 9% decrease from the prior year. Depreciation, depletion and amortization costs increased 43% to $7.89 per BOE. General and administrative costs, which included a $639,624 charge for stock based compensation, were $3.67 per BOE, as compared to $3.69 per BOE in 2006, which included a $179,767 charge for stock based compensation.
Net cash flow from operations for the three months ended March 31, 2007 was $12,379,230 or $0.79 per diluted share, compared to net cash flow of $7,733,918 or $0.55 per diluted share for the same period in 2006.
Arena's Chief Executive Officer, Mr. Tim Rochford, stated, "We continue to ramp up our 2007 development program. Our first quarter resulted in 28 development wells drilled and 13 re-fracs on existing wells on our Fuhrman-Mascho property, where we continue to have a 100% success rate on newly drilled development wells. We have announced an increase in our 2007 CAPEX budget to $104 million, adding an additional 20 development wells to be drilled on our Fuhrman-Mascho lease. In the second quarter, we will continue to concentrate on the development of our Permian Basin properties, as we have budgeted over 30 new development wells to be drilled on our Fuhrman-Mascho lease along with continued infrastructure improvements, water line installations and well conversions in New Mexico."
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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