Andrews

Arena Resources, Inc. added an estimated 8 million boe of proved reserves in West Texas through the $9 million acquisition of approximately 5,000 acres on two properties in Andrews County. In addition to current production from the San Andres and Queen formations, Arena secured the rights to the Yates gas formation throughout the acreage. The current net production from the properties is about 560 boe/d, weighted 15% gas and 85% oil, Arena said. The company’s initial reserve estimates, as determined by internal engineering evaluations, indicate the properties have an estimated 8 million boe of proved reserves net to Arena, exclusive of any potential Yates gas reserves and any additional probable or possible oil reserves. Arena will be the operator and have a 100% working interest and average net revenue interest in excess of 75% in the properties. In addition to producing wells already on the properties, Arena said its engineering team has identified approximately 120 new drilling locations and potential for more through in-fill drilling and development. One of the properties is located in the Fuhrman-Mascho field immediately adjacent to an 11,300-acre parcel Arena acquired three years ago (see Daily GPI, Dec. 8, 2004). Arena financed the deal, which closed Dec. 11 with an effective date of Dec. 1, through existing cash reserves and by drawing on a $150 million credit facility.