New drilling is accelerating on Arena Resources' busy Fuhrman- Mascho property in west Texas, and improved oil and gas pricing should push the growth even further, company officials said Friday.

Tulsa-based Arena Resources Inc. reported second-quarter net income of $14.4 million, 42 percent lower than the $24.8 million profit generated in the same three months of 2008. Six-month profits totaled $20.9 million, down from $43.1 million in the first half of last year.

Arena's oil sales volumes, however, increased in this year's first six months to 950,740 barrels, up more than 20,000 barrels from the first half of 2008, while gas sales volumes jumped by 20 million cubic feet to nearly 1 billion cubic.

Arena directors earlier in the second quarter increased the company's planned capital expenditures by $20 million for 2009. The new money will pay for more drilling on the Fuhrman-Mascho property.

Arena drilled 33 development wells in the San Andres zone of that property during the second quarter alone, and said two company rigs could help drill 125 new San Andres wells for all of 2009.

"We're seeing some improvements in our oil price structure," CEO Phil Terry said Friday during a conference call with analysts and media, calling the downturn during the past year a "drastic, volatile period.

Arena was committed "that as we got better prices we would employ more rigs," Terry added.

Second-quarter lease operating expenses cost $5.97 per barrel of oil equivalent, 22 percent lower than the same three months last year, according to the earnings report. Arena also revised its credit facility to $150 million but did not have any amount outstanding as of June 30.

Even so, shares of Arena Resources dropped $2.39 Friday to $30.53 on the New York Stock exchange.

The company focuses its exploration and production efforts in Oklahoma, Texas, New Mexico and Kansas.

Rod Walton 581-8457

rod.walton@tulsaworld.com

Originally published by ROD WALTON World Staff Writer.

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