Arena Resources to Triple Drilling Rigs
Company Expands from 1 to 3 Rigs
Tim Rochford, president & CEO, stated, "With the delivery of the rig we acquired in December 2005, and a second contract rig, we will for the first time have three rigs drilling at the same time in the Permian Basin."
Do not underestimate the significance of ARD acquiring a third drilling rig. This is especially true given the fact that drilling rig availability is extremely tight. In the last 52 weeks ARD drilled 52 wells according to their latest operational update. This is on a pace of 1 well a week. Now ARD has the capacity not only to double its drilling efforts from 52 to 104 with the acquisition of a rig in December of 2005 but to triple the drilling capacity from 52 to 156 wells a year as a result of the latest announcement. This is a wonderful strategic move by management to position the company to take advantage of the rising price of crude oil. The third drilling rig is also an indicator that another acquisition is on the horizon. Currently ARD has an inventory of about 300 drilling locations in the Fuhrman-Mascho property. While this is effectively a two year inventory with three rigs, the company also is taking into consideration that it needs to increase the inventory by acquiring another property at current rates rather than in the future when rates for crude will be higher. The fact that the company has a two year inventory of drilling locations provides bargaining leverage in any acquisition. Waiting until the drilling inventory is depleted will give the property holder the leverage knowing that ARD is desperate to acquire.
The acquisition of the third drilling rig effectively reduces the drilling inventory from about 3 years to approximately 2 years. The rig acquisition certainly is further evidence that another acquisition will soon be forthcoming.
Company Expands from 1 to 3 Rigs
Tim Rochford, president & CEO, stated, "With the delivery of the rig we acquired in December 2005, and a second contract rig, we will for the first time have three rigs drilling at the same time in the Permian Basin."
Do not underestimate the significance of ARD acquiring a third drilling rig. This is especially true given the fact that drilling rig availability is extremely tight. In the last 52 weeks ARD drilled 52 wells according to their latest operational update. This is on a pace of 1 well a week. Now ARD has the capacity not only to double its drilling efforts from 52 to 104 with the acquisition of a rig in December of 2005 but to triple the drilling capacity from 52 to 156 wells a year as a result of the latest announcement. This is a wonderful strategic move by management to position the company to take advantage of the rising price of crude oil. The third drilling rig is also an indicator that another acquisition is on the horizon. Currently ARD has an inventory of about 300 drilling locations in the Fuhrman-Mascho property. While this is effectively a two year inventory with three rigs, the company also is taking into consideration that it needs to increase the inventory by acquiring another property at current rates rather than in the future when rates for crude will be higher. The fact that the company has a two year inventory of drilling locations provides bargaining leverage in any acquisition. Waiting until the drilling inventory is depleted will give the property holder the leverage knowing that ARD is desperate to acquire.
The acquisition of the third drilling rig effectively reduces the drilling inventory from about 3 years to approximately 2 years. The rig acquisition certainly is further evidence that another acquisition will soon be forthcoming.
posted by -Aztec- at 8:26 AM
<< Home