Arena Resources, Inc. (NYSE: ARD) (�Arena� or the �Company�) today
announced its operations update for the fourth quarter of 2007.
During the fourth quarter, Arena drilled a total of 49 new wells;
48 wells on its Fuhrman-Mascho lease in Andrews County, Texas, and
one well on its Y-6 lease in Fisher 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, 2007 were approximately 425,000 BOE (Barrel of Oil
Equivalents), as compared to sales of 331,200 BOE for the same
quarter in 2006, a 28% increase, and a 5% increase over the 402,982
BOE sold in the third quarter of 2007. Total production for the
fourth quarter was approximately 435,000 BOE. Total sales
production for 2007 was approximately 1,550,000 BOE, as compared to
1,065,613 BOE in 2006, a 45% increase. Average net daily sales
increased to approximately 4,620 BOEPD in the fourth quarter 2007,
as compared to 3,600 BOEPD in the fourth quarter of 2006, and 4,380
BOEPD in the third quarter of 2007. In 2007, the Company announced
property lease acquisitions of over 13,000 acres for approximately
$55.5 million. All of the leases are located in West Texas and
Southeast New Mexico and are near, or contiguous to, the Company�s
existing Permian Basin assets. The current net production to the
Company from the leases is approximately 400 BOE per day. The
Company�s internal reserve estimates indicate the leases have
approximately 13 million BOE of proved reserves net to Arena. This
represents an estimated cost of $4.25 per BOE. The Company also
announced its initial capital expenditure budget (�CAPEX�) of $218
million for 2008, an 88% increase over the estimated $116 million
spent on the development of Company properties in 2007. The budget
targets 275 new wells to be drilled, 222 of them on its
Fuhrman-Mascho lease in Andrews County, Texas, approximately 65
re-entries of existing wells, installation of water supply lines
and equipment, conversion of existing wells into water injectors,
general infrastructure upgrades and re-completion of 90 existing
well bores and installation of a gas gathering system for Yates gas
production. The Company currently anticipates the 2008 CAPEX budget
will be funded through cash flow from operations and the Company�s
$150 million credit facility. The Company continues to look for
acquisition opportunities but has made no provision in its initial
2008 budget for any acquisitions. The 2008 CAPEX budget is subject
to change based on market conditions, commodity price changes, rig
availability, drilling results, possible acquisition opportunities
and general operational results. The majority of the budget will be
spent on the Company�s Permian Basin properties with over 90% being
allocated to the further development of those assets. Mr. Tim
Rochford, CEO, stated, �The fourth quarter of 2007 was one of the
most significant in the history of Arena Resources. By adding a
second company-owned drilling rig, we were able to drill a record
number of wells on our Fuhrman-Mascho leases in the quarter and
achieve another record in quarterly and annual production. We made
$55 million of acquisitions during the quarter adding both acreage
and proved reserves to our Permian Basin properties at an estimated
cost of $4.25 per BOE. We were able to finalize our agreement to
develop and sell Yates gas production. We moved into our
company-owned headquarters building in Tulsa and greatly enhanced
our in-house capabilities by adding several senior management
executives. We have nearly doubled our CAPEX budget for 2008 and
look forward to the coming year.� Fourth Quarter Operations Update
PERMIAN BASIN: Fuhrman-Mascho, Andrews County, Texas - The Company
drilled 48 new San Andres zone development wells in the fourth
quarter of 2007. Thirty-four of the wells were completed and
producing as of 12/31/07 while the remaining 14 were in various
stages of completion. Additionally, six development wells which
were drilled in the third quarter were successfully completed and
placed in production. The Company drilled 133 new development wells
in 2007 for a total of 256 new San Andres development wells on this
lease since initiating its developmental drilling program in
mid-April 2005. The Company maintained its 100% development
drilling success rate in 2007. Six of the wells drilled in 2007
were ten acre development wells with the remainder being twenty
acre development wells. The Company performed a re-frac on three
wells during the fourth quarter. The Company re-fraced 37 wells in
2007 for a total of 104 re-fraced wells on this lease since
initiating its re-frac program in 2005 and has scheduled 40
additional wells to be re-fraced in 2008. The Company has three
drilling rigs operating full-time and has estimated it will drill
220 new 40, 20, and 10 acre spacing San Andres zone development
wells in 2008, and will also drill two Clearfork zone development
wells. A fourth drilling rig is currently drilling five wells on a
contract basis at our recently acquired South Fuhrman-Mascho lease.
The Company executed a definitive natural gas purchase contract
covering the Yates gas formation in the Fuhrman-Mascho Field.
Approximately 90 idle well bores are scheduled for re-completions
to the Yates zone in 2008. University Consolidated 9 Unit, Andrews
County, Texas - The Company acquired this lease effective December
1, 2007 and began operating the lease on that date. The lease is
under study to formulate the development drilling program. The
lease is approximately 20 miles east of the Company�s
Fuhrman-Mascho lease. Y6, Fisher County, Texas - The Company
drilled one development well in the fourth quarter of 2007 which
will be completed in 2008. In 2008, the Company has budgeted to
drill three development wells, convert three existing wells to
water injectors, recondition and stimulate four existing wells, and
upgrade injection and lease facilities. East Hobbs Unit, Lea
County, New Mexico � The Company made infrastructure improvements
to the gas sales facilities on this lease in the fourth quarter of
2007. The gas system improvements have been completed and will
result in reducing operating pressures and improving production. In
2008, the Company plans to drill six development wells and convert
five wells to water injection. Seven Rivers Queen, Lea County, New
Mexico � The Company completed lease infrastructure improvements in
the fourth quarter of 2007. In 2008 the Company plans to drill six
development wells, re-frac ten wells, and make additional
infrastructure improvements. Humphrey Queen Unit, Langlie Mattix
Queen Unit, S. Leonard Queen Unit; Lea County, New Mexico � The
Company acquired these leases effective December 1, 2007. The
leases are near the Seven Rivers Queen Unit. The Company has
preliminary plans to drill as many as 15 development wells on the
leases in 2008. The Company also plans to recondition and stimulate
15 wells and make necessary infrastructure improvements. North
Benson Queen, Eddy County, New Mexico � In 2007 the Company
reconditioned and reactivated 12 water injection wells and
completed infrastructure improvements including water supply, water
injection, and tank battery facilities. In 2008 the Company has
scheduled the drilling of 12 development wells. In addition, 15
wells will be re-fraced and improvements will be made to the lease
infrastructure in 2008. Calmon, McClay Federal, Federal E, Red Lake
Unit, Welch; Eddy County, New Mexico � The Company acquired these
leases, which are near the North Benson Queen Unit, effective
October 1, 2007 and began operating the leases on that date. In
2007, the Company made infrastructure improvements and returned
idle well bores to production. The leases are under study to
formulate the development drilling programs. KANSAS: Auntie Em,
Gray County, Kansas � Development drilling was not performed in
2007 due to gas sales curtailment. The Company will not schedule
2008 development drilling until the curtailment issue is resolved.
Syracuse Prospect, Hamilton County, Kansas � A deep test well
drilled in 2006 was re-entered in the fourth quarter of 2007 by
Unit Petroleum (�Unit�), joint venture partner and operator on the
Syracuse Prospect. The well was tested in multiple intervals and
all zones tested were found to be non-commercial. The Unit and
Company joint venture currently has no drilling activity scheduled
for 2008. OKLAHOMA: Ona Morrow, Texas County, Oklahoma � The
Company made lease infrastructure improvements to the injection
water supply system in the fourth quarter of 2007. There were no
wells drilled in the quarter. In 2007, the Company completed
operations on two wells drilled in 2006 and placed those wells on
production. The Company plans to drill three development wells in
2008 and finish construction of the injection water supply system
and related facilities. Midwell, Cimarron County, Oklahoma � The
Company made lease infrastructure improvements to the injection
water supply system in the fourth quarter of 2007. In 2007, the
Company completed operations on two wells drilled in 2006 and
placed those wells on production. In 2008, the Company plans to
drill two additional development wells, convert eight existing
wells to water injectors and complete the injection water supply
system and general infrastructure upgrades. Hanes, Cimarron County,
Oklahoma � The Company made lease infrastructure improvements to
the injection water supply system in the fourth quarter of 2007. In
2007, the Company completed operations on one well that was drilled
in 2006, and constructed an injection water supply line and
facilities. Water injection has been increased as a result of the
2007 work. In 2008, the Company plans to drill one additional
development well, convert one existing well to a water injector,
and upgrade infrastructure. Eva South, Texas County, Oklahoma � The
Company completed lease infrastructure improvements involving the
electrical system and injection system in the fourth quarter of
2007. No development wells were drilled in 2007. In 2008, the
Company plans to drill two additional development wells, convert
one existing well to a water injector and upgrade infrastructure.
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. Arena Resources,
Inc. Initial 2008 CAPEX Budget* � � 2008 CAPEX PROPERTY � � �
(Millions) � Permian Basin: � � Fuhrman-Mascho, Andrews County, TX
$172.95 (Drill 220 San Andres wells, Drill 2 Clearfork wells,
Re-frac 40 wells, Initiate 2 waterfloods, Recomplete 90 Yates wells
& construct gas gathering system, Upgrade infrastructure) �
North Benson Queen, Eddy County, NM 8.25 (Drill 12 wells, Re-frac
15 wells, Upgrade infrastructure) � McClay, Welch & Calmon, Red
Lake Unit, Eddy County, NM 1.88 (Drill 3 wells, Workover 11 wells,
Upgrade infrastructure) � East Hobbs, Lea County, NM 3.63 (Convert
5 wells to water injectors, Drill 6 wells, Upgrade infrastructure)
� Seven Rivers Queen, Lea County, NM 3.83 (Drill 6 wells, Re-frac
10 wells, Upgrade infrastructure) � Humphrey Queen Unit, Langlie
Mattix Queen, S. Leonard Queen Unit, Lea County, NM 7.88 Drill 15
wells, Workover 15 wells, Upgrade infrastructure) � $198.42
Oklahoma: � Midwell, Cimarron County, OK 1.80 (Drill 2 wells,
Convert 4 wells to water injectors, Install equipment) � Ona
Morrow, Texas County, OK 2.00 (Drill 3 wells, Install & upgrade
equipment) � Hanes, Cimarron County, OK 0.75 (Drill 1 well, Convert
1 well to water injector, Install equipment) � Eva South, Texas
County, OK 1.45 (Drill 2 wells, Covert 1 well to water injector,
Upgrade infrastructure) � 6.00 Texas: � Y 6, Fisher County, TX 3.20
(Drill 3 wells, Convert 3 wells to water injectors, Workover 4
wells, Install equipment) � Other: $10.38 � Total $218.0 *Initial
CAPEX budget is subject to change
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