Arena Resources Adds Proved Reserves in Permian Basin
Arena Resources has acquired three properties located in Andrews County, Texas for a purchase price of $6,117,500, consisting of $5.8 million in cash and 10,200 shares of restricted common stock of the Company valued at $31.13 per share. The cash portion of the purchase price was financed by borrowing on the Company's $150 million credit facility. The effective dates are October 1, 2006 for two of the acquisitions, and November 1, 2006 for the third acquisition.
The Leases consist of approximately 5,000 acres. Arena will be the operator and have an average working interest of 97% and average net revenue interest of 74% in these properties. The Leases are contiguous to the Company's Fuhrman-Mascho lease acquired in December 2004. In addition to the producing wells currently on the Leases, Arena's engineering team has identified 90 new drilling locations on 20 acre spacing, with the potential to increase that number through additional in-fill drilling and development.
Production and Reserves
The current net production to the Company from the Leases is approximately 100 BOE (Barrels of Oil Equivalent) per day. The Company's initial reserve estimates, as determined by internal engineering evaluations, indicate the Leases have approximately 4.7 million BOEs of proved reserves net to Arena based on 20 acre spacing. This represents an estimated cost of $1.30 per BOE.
Mr. Tim Rochford, President and CEO of Arena, stated, "We have continued to look for acquisitions that will complement our existing properties. These acquisitions allow us to add significant reserves and drilling locations to our current inventory in the Fuhrman-Mascho at a very attractive price. We have been working on acquiring these properties since we acquired the Fuhrman-Mascho leases in December 2004, and are very pleased to have been able to successfully close these acquisitions."
Arena announced it has also increased its capital expenditure budget to $93 million. The $16.5 million increase in the 2006 capital expenditure budget is primarily a result of the acquisitions described above and escalated development and infrastructure work on the Company's Fuhrman-Mascho lease in Andrews County, Texas and on the East Hobbs San Andres Unit and the Seven Rivers Queen Unit, both located in Lea County, 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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