Nov. 5, 2009 (Business Wire) -- Arena Resources, Inc. (NYSE: ARD) (“Arena”) (“Company”) announced today financial results for the three months and nine months ended September 30, 2009.

Three Months Ended September 30, 2009

For the three month period ended September 30, 2009, Arena had oil and gas revenues of $36,060,878 compared to $68,412,686 for the quarter ended September 30, 2008, a 47% decrease. Net income was $12,113,026 or $0.31 per fully diluted share, compared to net income of $26,922,966 or $0.69 per fully diluted share for the same period in 2008, a 55% decrease.

The revenue decrease for the three month period ended September 30, 2009 was due to significant decreases in commodity prices and a slight decrease in oil production volumes partially offset by higher natural gas volumes. Arena’s total sales production for the quarter ended September 30, 2009 was 612,609 BOEs (Barrel of Oil Equivalents). This represents a 1% decrease over the same three month period in 2008 and a 12% increase over the second quarter of 2009. For the three months ended September 30, 2009, oil sales volume decreased to 511,104 barrels, compared to 528,044 barrels for the same period in 2008, a 3% decrease, and gas sales volume increased to 609,030 MCF (thousand cubic feet), compared to 544,746 MCF for the same period in 2008, a 12% increase. The average commodity prices received by Arena were $64.16 per barrel of oil, a 44% decrease, and $5.37 per MCF of natural gas, a 61% decrease, for the quarter ended September 30, 2009, compared to $115.41 per barrel of oil and $13.71 per MCF of natural gas for the quarter ended September 30, 2008.

Lease operating expenses for the three months ended September 30, 2009 were $5.12 per BOE, a 45% decrease from $9.36 the prior year. Production taxes decreased 47% to $3.11 per BOE and depreciation, depletion and amortization costs decreased 7% to $14.68 per BOE. General and administrative costs, which included a $1,098,081 charge for stock based compensation, were $4.84 per BOE, a 12% decrease. Net interest income was $202,340 or $0.33 per BOE, a 62% decrease.

Nine Months Ended September 30, 2009

For the nine month period ended September 30, 2009, the Company reported oil and gas revenues of $83,890,733 compared to oil and gas revenues of $175,884,359 for the nine month period ended September 30, 2008, a 52% decrease. Net income for the nine month period ended September 30, 2009 was $33,014,540 or $0.85 per fully diluted share, compared to net income of $70,035,710 or $1.87 per fully diluted share for the same period in 2008, a 53% decrease.

For the nine months ended September 30, 2009, Arena’s total sales production was 1,728,368 BOEs, a 2% increase over 2008. Oil sales volume increased slightly to 1,461,844 barrels compared to 1,458,530 barrels for the same period in 2008. Gas sales volume increased to 1,599,142 MCF compared to 1,414,987 MCF for the same period in 2008, a 13% increase.

The average prices received for the nine months ended September 30, 2009 were $52.21 per barrel of oil, a 52% decrease, and $4.73 per MCF of natural gas, a 59% decrease, compared to $109.42 per barrel of oil and $11.51 per MCF of natural gas for the nine month period ended September 30, 2008.

For the nine months ended September 30, 2009, lease operating expenses were $6.14 per BOE, a 20% decrease from the prior year. Production taxes were $2.58 per BOE, a 52% decrease. Depreciation, depletion and amortization costs were $13.67 per BOE, a 1% decrease, and general and administrative costs, which included a $3,648,020 charge for stock based compensation, were $5.27 per BOE, a 6% decrease. Net interest income was $0.39 per BOE, a 316% increase.

Net cash flow from operations for the three and nine months ended September 30, 2009 was $29,351,488 or $0.75 per fully diluted share, and $79,910,629 or $2.05 per fully diluted share. This compares to net cash flow of $54,502,204 or $1.40 per fully diluted share and $140,042,188 or $3.73 per fully diluted share for the same periods in 2008 (1).

3^rd Quarter Operations:

During the third quarter of 2009, the Company drilled 49 new San Andres zone development wells at its Fuhrman-Mascho property in Andrews County, Texas. Forty of the wells were completed and producing as of September 30, 2009, while the remaining nine were in various stages of completion. Additionally, twelve development wells which were drilled in the second quarter of 2009 were successfully completed and placed in production. As of September 30, 2009, the Company had drilled 579 new San Andres development wells on this lease since initiating its developmental drilling program in mid-April 2005, and continued our 100% development drilling success rate. In late August, management contracted an additional drilling rig and had three rigs operating full-time at its Fuhrman-Mascho property. It is estimated that these rigs will drill approximately 166 new San Andres zone development wells in 2009.

Arena’s President and Chief Executive Officer, Mr. Phil Terry, stated, “After two sequential quarters of declining production due to operating only one drilling rig, we have now begun to see the results we anticipated from an increase in drilling activity. With two drilling rigs operating for the entire quarter and a third rig starting the end of August, we drilled 49 new development wells on our Fuhrman-Mascho properties in the third quarter. We have seen our average daily production increase from approximately 6,000 BOEs in the second quarter to over 6,600 in the third quarter. September was the single best production month in the Company’s history averaging over 7,400 BOEs per day. We have now added a fourth rig which began the first of November and anticipate that we will now drill approximately 175 new wells in 2009. We recently announced the commencement of construction on our oil gathering and pipeline systems to connect our Fuhrman-Mascho oil production into an existing oil pipeline prior to year-end. When completed, this will immediately save us approximately $1.00 per barrel in transportation charges and improve marketability. We continue to keep our operating costs down and have taken the necessary steps to assure the continuity of our accelerated development as we move through the remainder of 2009 and look forward to 2010.”

Derivative Update

In August 2009, the Company entered into agreements for two zero-cost collars for 2010, the first on 5,000 MMBtu of natural gas per day with a $4.00 floor and $7.87 ceiling for the period January 1, 2010 to December 31, 2010 based on the El Paso Permian Gas Index, and the second on 2,000 barrels of oil per day with a $65.00 floor and $93.00 ceiling for the period January 1, 2010 to December 31, 2010 based on the WTI Index price. Subsequent to September 30, 2009, the Company entered into an agreement for another zero-cost collar on 1,000 barrels of oil per day for the period of January 1, 2010 through December 31, 2010 at a floor of $70.00 and a ceiling of $92.85 based on the WTI Index price.

Capital Expenditures

In September the Board of Directors of Arena approved a $27 million increase in its capital expenditure budget (“CAPEX”) for 2009 to $107 million. Management placed a third drilling rig in operation in late August at Fuhrman-Mascho. The additional funds will be used to increase the number of new development wells to be drilled on this property in 2009 from approximately 125 to an estimated 166, refrac sixteen existing San Andres producing wells, commence the construction of the crude oil gathering system and connecting pipeline and continue the Yates gas development, focusing on the re-completion of existing, idle wellbores.

Credit Facility

As of September 30, 2009, the Company was in compliance with all covenants and did not have any amount outstanding under this credit facility.

Non-GAAP Financial Measures:

Earnings for the three months and nine months ended September 30, 2009 include non-cash charges for stock based compensation of $1,098,081 and $3,648,020 respectively. Excluding such items, the Company’s earnings would have been $0.33 per diluted share for the three months ended September 30, 2009, and $0.91 for the nine months ended September 30, 2009. The Company believes results excluding these items are more comparable to estimates provided by security analysts and, therefore, are useful in evaluating operational trends of the Company and its performance, compared to other similarly situated oil and gas producing companies.

About Arena Resources, Inc.

Arena Resources, Inc. is an oil and gas exploration, development and production company with current operations in Texas, Oklahoma, Kansas and New Mexico.

This release contains forward-looking statements within the meaning of the “safe-harbor” provisions of the Private Securities Litigation Reform Act of 1995 that involve a wide variety of risks and uncertainties, including, without limitations, statements with respect to the Company’s strategy and prospects. Readers and investors are cautioned that the Company’s actual results may differ materially from those described in the forward-looking statements due to a number of factors, including, but not limited to, the Company’s ability to acquire productive oil and/or gas properties or to successfully drill and complete oil and/or gas wells on such properties, general economic conditions both domestically and abroad, and the conduct of business by the Company, and other factors that may be more fully described in additional documents set forth by the Company.