Arena Resources Increases 2005 Capital Expenditure Budget to $24 Million
Arena Resources has increased its capital expenditure budget by $5.5 million for 2005 to $24 million. On July 14, 2005, the company announced an increase of $4 million in its capital expenditure budget to approximately $18.5 million based on the level of development activity on its Fuhrman-Mascho lease in Andrews County, Texas. Management has now increased the number of development wells to be drilled on the Fuhrman-Mascho in 2005 to 35, 13 of which will be drilled in the fourth quarter. The increase also includes three additional test wells, for a total of four in 2005, to the Yates gas formation to further evaluate development potential. The company has maintained the number of re-stimulations of existing wells at 20. The company has also accelerated the consolidation and modernization of the infrastructure of the lease in preparation for future developmental drilling.
In addition, the company has continued to improve and develop a number of its other properties. In the fourth quarter Arena will drill two development wells and convert one additional well to water injection in preparation for secondary recovery on its East Hobbs lease, drill one development well on its Eva South lease in Texas County, Okla., convert three wells to water injection in preparation for secondary recovery on its Y-6 unit in Fisher County, Texas, and drill three additional wells in Kansas (two developmental wells on the Auntie Em lease and a second exploratory well on the Rocky Prospect).
Arena management estimates that based on the current level of activity, with no additional acquisitions, its capital expenditure budget for 2006 will be approximately $35 million; however, management will examine the proposed budget more closely at year end, with the possibility of increasing it based on the opportunity to accelerate specific lease development. It is anticipated that the majority of the 2006 capital expenditure budget will be used to further develop the Fuhrman-Mascho lease, on which the company estimates there are currently a minimum of 139 proved undeveloped locations to be drilled.
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