Analyzing Production Percent Change
Q4'05 to Q1'06

With first quarter production data available we will monitor changes in quarter over quarter production. The analysis will measure both oil production as well as total oil and gas production percent change between Q4'05 and Q1'06.

Below in Figure 1 it should be noted that ARD is second only to CWEI in terms of oil production percent change. ARD growth was over 3.5X that of the peer group average.


Figure 1. (Click on Image to Enlarge)


The chart in figure 2 depicts both oil and gas production percent change. ARD had the largest percent increase in the peer group. ARD growth was over 3.5X that of the peer group average.


Figure 2. (Click on Image to Enlarge)

Second Quarter Expectations

In the first quarter ARD had one rig drilling active.

ARD CEO Tim Rochford stated, "Our first quarter resulted in 16 development wells drilled and 13 refracs on existing wells on our Fuhrman-Mascho property."

The second quarter will realize up to 5 drilling rigs being active. This increase in drilling activity will no doubt result in the production growth rate increasing.

CEO Rochford commented on the increased second quarter drilling activity, "We have taken delivery of our own drilling rig and now have two rigs drilling full time on the Fuhrman-Mascho. We currently have a third rig drilling on our Seven Rivers Queen property in New Mexico and a fourth rig will soon be operating on our Auntie Em property in Kansas. In June, an additional drilling rig will move onto our Rocky Prospect, also in Kansas. In total, we hope to drill as many as 37 new wells in the second quarter, 31 in the Permian Basin and six in Kansas, while continuing the restimulation of selected existing wells."

In conclusion, ARD oil and gas quarter over quarter production percent change was superior to any company in the peer group. Given the fact that ARD has dramatically increased the number of drilling rigs in Q2 we can expect ARD to continue to dominate production growth among the peer group and to post very strong second quarter results. I'm expecting ARD oil and gas production of 225,000 BOE in the second quarter. This represents a 17.9% increase over Q1 production. The surge in drilling rigs will not only result in increased production and an increase in the quarter over quarter production growth rate but also increased revenues, earnings, cashflow and ultimately share price.