(Source: Business Wire)
Arena Resources, Inc. (NYSE:ARD) ("Arena" or the "Company"), today announced its operations update for the fourth quarter of 2008. During the fourth quarter, Arena drilled a total of 54 new wells: 48 on its Fuhrman-Mascho lease in Andrews County, Texas, five in Lea County, New Mexico, and one deep test well on the Homann lease in Gaines County, Texas. In addition, the Company re-stimulated three existing wells on its Fuhrman-Mascho lease. The results of this drilling activity are described on a property-by-property basis below.
Sales for the quarter ended December 31, 2008, were 642,593 BOE (Barrel of Oil Equivalents), as compared to sales of 441,632 BOE for the same quarter in 2007, a 46% increase, and a 4% increase over the 618,835 BOE sold in the third quarter of 2008. Total sales production for 2008 was 2,336,954 BOE, as compared to 1,566,627 BOE in 2007, a 49% increase. Average net daily sales increased to 6,985 BOEPD in the fourth quarter of 2008, as compared to 4,800 BOEPD in the fourth quarter of 2007, and 6,726 BOEPD in the third quarter of 2008.
The Company also announced today that its estimated total proved reserves of oil and natural gas as of December 31, 2008, increased 18.4% to 65.6 million barrels of oil equivalent (BOE), from 55.4 million BOE at year end 2007, and 22.5% when adjusted for 2008 oil and gas sales. Arena replaced 538% of production in 2008. The 2008 year-end proved reserves consisted of 55.8 million barrels of crude oil (85%) and 58.8 Bcf of natural gas (15%). Of the 65.6 million BOE of total proved reserves, 38% are proved developed and 62% are proved undeveloped. The proved developed reserves consist of proved developed producing (31%), and proved developed non-producing (7%).
The estimated present value, using a 10% discount rate, of the future net cash flows before income taxes ("PV-10") of the Company's proved oil and natural gas reserves as of December 31, 2008, was $651,554 million, using year-end average received pricing of $38.30 per barrel for oil and $4.35 per Mcf for natural gas. These estimates were audited by the independent engineering firms of Lee Keeling & Associates, Inc., Tulsa, Oklahoma, and Williamson Petroleum Consultants, Midland, Texas. All Arena properties were audited by the respective firms.
The Securities and Exchange Commission ("SEC") has issued new regulations for the oil and gas reserve reporting that take effect next year. One of the significant changes relates to using an average received price based upon the prior twelve-month period rather than the current method of using the received prices on the last day of the year. If Arena had used the new SEC guidelines for reserve calculations and pricing, its reserves as of December 31, 2008, would have been approximately 74.4 million BOE with a PV-10 value of $2.37 billion. This value was based on average received prices during 2008 of $95.31 per barrel of oil and $9.62 per Mcf of natural gas.
Total capital expenditures for 2008 were approximately $208.8, which included $16.8 million for property acquisitions.
