Arena Boosts Proved Reserves by 43%
Arena Resources, Inc. said Thursday that its estimated total proved reserves of oil and natural gas as of December 31, 2006 increased 43% to 43.1 million barrels of oil equivalent (Boe), from 30.2 million Boe at year-end 2005. The 2006 year-end proved reserves consisted of 36.1 million barrels of crude oil (84%) and 42.4 Bcf of natural gas (16%). Of the 43.1 million Boe of total proved reserves, 38% are proved developed and 62% are proved undeveloped. The proved developed reserves consist of proved developed producing (28%), proved developed non-producing (5%) and proved developed behind-pipe (5%).
The estimated present value, using a 10% discount rate, of the future net cash flows before income taxes of the Company's proved oil and natural gas reserves as of December 31, 2006 was $847.7 million, using year-end average pricing of $54.21 per barrel for oil and $5.94 per Mcf for natural gas. This compares to $682.9 million at year-end 2005 using prices of $55.00 per barrel for oil and $8.20 per Mcf for gas. These estimates are based on an independent reserve study of Arena's oil and gas properties prepared by Lee Keeling & Associates, Inc., Tulsa, Oklahoma.
Total net sales production for the fourth quarter of 2006 was 331,200 Boe, as compared to 172,386 Boe for the same period in 2005, an increase of 92%. Net sales production for the full year 2006 was 1,065,613 Boe, compared to 508,430 Boe in 2005, an increase of 110%. The Company's average net daily sales production in the fourth quarter of 2006 was approximately 3,600 Boe per day, as compared to 1,844 Boe in the fourth quarter 2005, and 3,288 Boe in the third quarter 2006.
Mr. Tim Rochford, CEO, stated, "Our acquisition and development activities combined to replace 1,273% of our 2006 production, with over 71% of that being accomplished through our development activities. We completed three acquisitions in December, all contiguous to our Fuhrman-Mascho lease in Andrews County, Texas, adding additional reserves and drilling locations. We drilled 124 new wells, 106 of which were drilled on our Permian Basin properties with a 100% success rate. In Kansas, we drilled eight exploratory wells and four development wells while continuing to acquire additional acreage, and in Oklahoma we drilled six new development wells. Although pleased with our development activity, our fourth quarter production was less than anticipated due to adverse weather conditions and other factors which directly affected oil and gas sales from our Fuhrman-Mascho lease and our East Hobbs and Seven Rivers Units in Lea County, New Mexico. We have announced a preliminary 2007 capital expenditure budget of $94.6 million, with over 80% of it allocated to our Permian Basin properties. We will focus on the continued development of our existing core properties, while continuing to seek additional acquisitions."
Arena Resources, Inc. is an oil and gas exploration, development and production company with current operations in Texas, Oklahoma, Kansas and New Mexico.