Arena Resources Inc. adds a fourth drilling rig, a contract rig, to accelerate the development of its Fuhrman-Mascho assets in Andrews County, Texas.
The additional rig is drilling its first well. The Fuhrman-Mascho drilling fleet now consists of two Arena owned drilling rigs and two contract rigs.
Arena estimates that the fourth rig will drill 10 wells by year-end, which would result in a total of 175 Fuhrman-Mascho wells drilled in 2009. The current drilling well count for 2009 is 124 wells. Management estimates that the current 2009 capital expenditure budget of $107 million is adequate and that current commodity prices will generate sufficient cash flow to fully fund the four rig development drilling program.
In addition, Arena implements a new hedge, a costless collar, on 1,000 barrels of oil per day with a $70 floor and $92.85 ceiling for 2010.
“The company has consistently stated its intent to accelerate the exploitation of our Fuhrman-Mascho assets as allowed by commodity prices and associated cash flow from operations,” said Phil Terry, president and CEO. “The recent increase in crude oil prices, in combination with decreased drilling and operating costs, provide attractive economics to support the increased activity. We have cash reserves, no debt, and a fully available credit facility, all of which position Arena to develop its current assets and take advantage of other potential growth opportunities.”