TULSA, Okla., Nov 05, 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).

3rd 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.

(1)  Cash Flow from Operations is a non-GAAP financial measure that
   represents "Net Cash Provided By Operating Activities" adjusted
   for the change in operating assets and liabilities. See below for
   a reconciliation of the related amounts.
   

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.
   STATEMENTS OF OPERATIONS
   Three Months Ended             Nine Months Ended
   September 30,                  September 30,
   2009           2008            2009           2008
   (Unaudited)    (Unaudited)     (Unaudited)    (Unaudited)
   Oil and Gas Revenues                                             $36,060,878    $68,412,686     $83,890,733    $175,884,359
   Costs and Operating Expenses
   Oil and gas production costs                                     3,137,035      5,790,236       10,614,882     12,979,837
   Oil and gas production taxes                                     1,904,924      3,629,326       4,455,164      8,942,914
   Realized loss (gain) on oil derivatives                          -              3,462,283       (15,870,007 )  9,008,822
   Depreciation, depletion and amortization                         8,994,389      9,841,972       23,634,894     23,556,695
   Accretion expense                                                102,499        79,502          294,189        222,119
   General and administrative expense                               1,869,771      1,574,726       5,458,711      4,600,897
   Stock based compensation expense                                 1,098,081      1,845,863       3,648,020      5,095,580
   Total Costs and Operating Expenses                               17,106,699     26,223,908      32,235,853     64,406,864
   Other Income (Expense)
   Interest income                                                  202,340        546,089         678,646        835,755
   Interest expense                                                 -              -               -              (1,145,456
   )
   Net Other Expense                                                202,340        546,089         678,646        (309,701  
   )
   Income Before Provision for Income Taxes                         19,156,519     42,734,867      52,333,526     111,167,794
   Provision for Deferred Income Taxes                              (7,043,493  )  (15,811,901 )   (19,318,986 )  (41,132,084
   )
   Net Income                                                       $12,113,026    $26,922,966     $33,014,540    $70,035,710
   Basic Net Income Per Common Share                                $0.32          $0.71           $0.86          $1.93
   Diluted Net Income Per Common Share                              $0.31          $0.69           $0.85          $1.87
   Other Comprehensive Income (Loss)
   Realized loss (gain) on hedge derivative contract settlements    -              4,940,665       (10,222,546 )  6,950,305
   reclassified from other comprehensive loss (income), net of tax
   Change in unrealized deferred hedging gains (losses), net of tax 44,281         2,863,848       9,945          (1,979,732
   )
   Total Comprehensive Income                                       $12,157,307    $34,727,479     $22,801,939    $75,006,494
   Basic Weighted-Average Common Shares Outstanding                 38,385,073     37,976,326      38,281,141     36,251,182
   Diluted Weighted-Average Common Shares Outstanding               38,992,258     38,978,001      38,901,519     37,499,289
   

COMPARATIVE OPERATING STATISTICS
   Three Months Ended September 30,
   2009        2008         Change
   Net Production - BOE per day       6,659       6,726        -1   %
   Per BOE:
   Average Sales Price                58.86       110.55       -47  %
   Lease Operating Expenses           5.12        9.36         -45  %
   Production Taxes                   3.11        5.86         -47  %
   DD&A                               14.68       15.81        -7   %
   General & Administrative Expenses  3.05        2.55         20   %
   Stock Based Compensation           1.79        2.98         -40  %
   Interest Expense                   (0.33 )     (0.88  )     -62  %
   Nine Months Ended September 30,
   2009        2008         Change
   Net Production - BOE per day       6,331       6,184        2    %
   Per BOE:
   Average Sales Price                48.54       103.81       -53  %
   Lease Operating Expenses           6.14        7.66         -20  %
   Production Taxes                   2.58        5.28         -51  %
   DD&A                               13.67       13.81        -1   %
   General & Administrative Expenses  3.16        2.71         17   %
   Stock Based Compensation           2.11        3.01         -30  %
   Interest Expense                   (0.39 )     0.18         316  %
   

ARENA RESOURCES, INC.
   CONSOLIDATED BALANCE SHEET
   September 30,   December 31,
   2009            2008
   ASSETS
   Current Assets
   Cash                                                               $67,779,486     $58,489,574
   Accounts receivable                                                12,716,863      8,637,308
   Joint interest billing receivable                                  2,352,537       2,836,948
   Receivable from oil derivative                                     -               2,508,396
   Fair value of oil derivative                                       -               16,210,478
   Prepaid expenses                                                   1,554,886       847,433
   Total Current Assets                                               84,403,772      89,530,137
   Property and Equipment, Using Full cost Accounting
   Oil and gas properties subject to amortization                     620,132,699     548,714,235
   Inventory for property development                                 1,015,769       1,670,067
   Drilling rigs                                                      7,235,008       6,899,433
   Land, buildings, equipment and leasehold improvements              5,828,348       5,799,045
   Total Property and Equipment                                       634,211,824     563,082,780
   Less: Accumulated depreciation and amortization                    (84,971,991  )  (60,928,142  )
   Net Property and Equipment                                         549,239,833     502,154,638
   Total Assets                                                       $633,643,605    $591,684,775
   LIABILITIES AND STOCKHOLDERS' EQUITY
   Current Liabilities
   Accounts payable                                                   $11,057,376     $12,877,084
   Deferred income taxes                                              -               6,046,508
   Accrued liabilities                                                1,782,036       865,955
   Total Current Liabilities                                          12,839,412      19,789,547
   Long-Term Liabilities
   Asset retirement liability                                         6,091,856       5,066,348
   Deferred income taxes                                              103,901,036     84,533,419
   Total Long-Term Liabilities                                        109,992,892     89,599,767
   Stockholders' Equity
   Preferred stock - $0.001 par value; 10,000,000 shares authorized;  -               -
   No shares issued or outstanding
   Common stock - $0.001 par value; 100,000,000 shares authorized;    38,424          38,210
   38,423,789 shares and 38,210,187 shares outstanding, respectively
   Additional paid-in capital                                         324,415,070     318,701,383
   Retained earnings                                                  186,357,807     153,343,267
   Accumulated other comprehensive loss                               -               10,212,601
   Total Stockholders' Equity                                         510,811,301     482,295,461
   Total Liabilities and Stockholders' Equity                         $633,643,605    $591,684,775
   

ARENA RESOURCES, INC.
   STATEMENTS OF CASH FLOW
   Nine Months Ended
   September 30,
   2009           2008
   Cash Flows From Operating Activities
   Net income                                                           $33,014,540    $70,035,710
   Adjustments to reconcile net income to net cash provided by
   operating activities:
   Depreciation, depletion and amortization                             23,634,894     23,556,695
   Provision for income taxes                                           19,318,986     41,132,084
   Stock based compensation                                             3,648,020      5,095,580
   Accretion of asset retirement obligation                             294,189        222,119
   Changes in assets and liabilities:
   Accounts and joint interest receivable                               (1,086,748  )  388,103
   Income taxes payable                                                 -              (612,480     )
   Prepaid expenses                                                     (707,453    )  (732,837     )
   Accounts payable and accrued liabilities                             (903,627    )  3,373,813
   Net Cash Provided by Operating Activities                            77,212,801     142,458,787
   Cash Flows from Investing Activities
   Purchase and development of oil and gas properties                   (65,362,425 )  (151,469,679 )
   Purchase of inventory for property development                       (4,261,467  )  (1,392,728   )
   Purchase of buildings, drilling rigs & equipment                     (364,878    )  (1,350,237   )
   Net Cash Used in Investing Activities                                (69,988,770 )  (154,212,644 )
   Cash Flows From Financing Activities
   Proceeds from issuance of common stock, net of offering costs        -              116,130,189
   Proceeds from exercise of warrants                                   537,341        236,179
   Proceeds from exercise of options                                    1,528,540      4,417,260
   Proceeds from issuance of notes payable                              -              11,000,000
   Payment of notes payable                                             -              (46,000,000  )
   Net Cash Provided by Financing Activities                            2,065,881      85,783,628
   Net Increase (Decrease) in Cash                                      9,289,912      74,029,771
   Cash at Beginning of Period                                          58,489,574     5,213,459
   Cash at End of Period                                                $67,779,486    $79,243,230
   Supplemental Cash Flow Information
   Cash paid for income taxes                                           -              $612,480
   Cash paid for interest                                               -              1,280,122
   Non-Cash Investing and Financing Activities
   Asset retirement obligation incurred in property development         731,319        1,076,648
   Depreciation on drilling rigs capitalized as oil and gas properties  408,955        480,380
   Use of inventory in property development                             4,915,765      -
   RECONCILIATION OF CASH FLOW FROM OPERATIONS
   Net cash provided by operating activities                            $77,212,801    $142,458,787
   Change in operating assets and liabilities                           2,697,828      (2,416,599   )
   Cash flow from operations                                            $79,910,629    $140,042,188
   Management believes that the non-GAAP measure of cash flow from
   operations is useful information for investors because it is used
   internally and is accepted by the investment community as a means
   of measuring the Company's ability to fund its capital program. It
   is also used by professional research analysts in providing
   investment recommendations pertaining to companies in the oil and
   gas exploration and production industry.
   

ARENA RESOURCES, INC.
   NON-GAAP DISCLOSURE RECONCILIATION
   ADJUSTED EBITDA
   Nine Months Ended
   September 30,  September 30,
   2009           2008
   NET INCOME                                $33,014,540    $70,035,710
   Interest expense (gain)                   (678,646    )  309,701
   Income tax expense                        19,318,986     41,132,084
   Depreciation, depletion and amortization  23,634,894     23,556,695
   Accretion of discounted liabilities       294,189        222,119
   Stock based compensation                  3,648,020      5,095,580
   ADJUSTED EBITDA                           $79,231,983    $140,351,889
   

SOURCE: Arena Resources, Inc.

   Arena Resources, Inc. 
   Bill Parsons, V.P. Investor Relations 
   480-947-1589
   

Copyright Business Wire 2009
   
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