ARD Q2 Results a Home Run
Total Production Estimated at 240,000 BOE on Estimated Revenue of $14.5 Million

The Q2 Operational Update was released this morning promptly at market open. ARD results for Q2 were nothing short of not only a "home run" but one that was 'hit out of the park.'

Let me begin by saying that I expected ARD to have sequential quarter over quarter production growth of between 15% and 19% for oil and an increase 14% to 16% for gas. My most optimistic case for total oil and gas production was for a quarter over quarter production increase of 35,539 BOE for a total output during the second quarter of 226,000 BOE.

ARD not only topped my most optimistic projection but they went off my projection scale by large margin. My best case quarter over quarter projection of 35,539 BOE for combined oil and gas production represented an increase of 18.6%. ARD came in at a 25.7% quarter over quarter production increase. This topped even my most optimistic projection by 7.1 percentage points or 38%.

THIS IS INCREDIBLE!!!!

Is it any wonder that SunTrust upgraded ARD shares from neutral to buy?!

Revenues were very strong as well! ARD did $14.5mm.

Oil Production Estimates
Lets do the math: My best case scenario for oil production was a quarter over quarter increase of 18% or 31,752 Bbl. If we add this amount to Q1 oil production of 167,117 we come up with a best case total oil production of 198,869.

I previously determined average realized oil price for Q2 was $63.26. Total Oil production considering my best case scenario would have been:
198,869 X $63.26 = $12,580,452

Gas Production Estimates
Quarter over quarter gas production best case scenario called for an increase of 16% or 3787 BOE. The previous quarter had gas production of 23,672. Therefore the best case scenario would have reflected total gas production for Q2 of 27,459 BOE. Based on $5 NG per Mcf($30 per BOE)we would have had total Q2 gas revenues of:
27,459 X $30 = $823,770

Total Oil and Gas Production Estimates
Adding both best case oil and gas revenues:
$12,580,452 + $823,770 = $13,404,222

Previous Q1 revenues were $10.38 million. My most best case scenario was calling for a revenue increase of 29%.

ARD Tops Production and Revenue Estimates
ARD came in at about $14.5 million or a sequential increase of 39.6%. This topped my best case scenario by 10.6 percentage points or 36.5%.

I believe total oil production was between 88% of total production or 211,000 Bbl. Gas production was near 29,000 BOE for Q2 up from previous quarter of 23,672 BOE.

EXCELLENT QUARTER!

Thankyou Tim and Stan! Keep up the good work.

ARD shares are EXTREMELY UNDERVALUED in light of most recent Q2 RESULTS. If you factor in a very conservative 42% net profit margin and 15.225 million fully diluted shares we arrive at $0.40 EPS. Consensus was for $0.35. The consequences of these results are for ARD shares to continue the march towards my 2006 target price of $60 per share.