ARD v SU: Why ARD is the Better Investment
Arena Resources has the Advantage in Terms of Fundamentals and Future Growth Prospects

Analysis of the information and facts reveals that ARD is the better investment based on a whole host of reasons. Lets us begin the comparison and grasp a better understanding of why ARD shares will appreciate faster over time than those of SU.

1. Production Growth: ARD has been growing oil and gas production much faster than SU since 2002. Specifically each company had the following production growth:
______ARD____SU_____
2003:__93%____5%
2004:__73%____5%
2005:__127%__-21%

Average annual production growth for ARD is over 97%. In contrast, SU has been experiencing an average production decline of over 3.6% since 2002. In a best case scenario SU is targeting 350,000 BOE/D for 2008. That is only 10.4% annual growth in production until 2008. ARD will no doubt continue to grow production a rate many times that of SU.

(SU data taken from 2005 Annual report page 5. ARD data taken from various 10K filings.)

2. Revenue Growth
SU: 71% (Quarterly YoY)
ARD: 217% (Quarterly YoY)

Clearly ARD has been growing quarterly revenues faster than SU in the YoY. Also, between 2003 and 2005 SU did not even double their annual revenues. In contrast, ARD increased their annual revenues by a factor of 7.

4. Net Income Growth
SU: 7%
ARD: 244%

The above figures represent average annual growth in net income since 2003. Clearly ARD has significantly superior growth in net income.

5. EPS Growth:
SU: 12%
ARD: 733%

The above figures represent the EPS growth between 2003 and 2005. ARD grew EPS in the latest two year period over 61X faster than that of SU.

6. Share Price Growth:
SU: 200%
ARD: 500% +

As share price longterm is always a function of earnings, the fact that ARD grew earnings faster than SU in the previous two years it should come as no surprise that ARD share price appreciation was also greater. Just remember: The 3 main drivers for share price growth are Earnings, Earnings, Earnings! (Here is the ARD v SU comparison.)

7. Operating Margin (ttm):
SU: 25%
ARD: 65%

ARD is THE low cost producer of oil and gas. Over 86% of production is oil. ARD operating margin is the highest in the oil and gas universe. SU operating margin is average at best.

8. Net Profit Margin (ttm)
SU: 22%
ARD: 38%

ARD is over 72% MORE EFFICIENT than SU in converting revenue dollars into earnings.

9. Debt/Equity Ratio (The Lower the # the Better)
SU: 0.29
ARD: 0.00

ARD is virtually debt free. In contrast, SU has over $2.1 BILLION in debt or 29% debt when measured against the value of its equity.

10. Market Cap (The Lower the # the Better)
SU: $35 Billion
ARD: $571 million

Since ARD has the smaller market cap it will be easier for ARD to double the size of the company from $571 million to $1.142 Billion as compared to SU growing from a $35 Billion company to one of $70 Billion. SU has a lot more resistance in growth potential than ARD. Consequently future share price will be much more limited at SU than at ARD.

The above 10 components of each company's fundamentals is a fair representation of why ARD is the better investment. It should be very clear that ARD has the had the superior grow in production, revenues, net income and EPS and will continue to maintain this advantage into the future. $10,000 invested in ARD today will be worth more on August 31, 2007 than if the money were invested in SU. If anyone wants to put their reputation on the line by challenging this assessment I"d be more than happy to revisit both companies one year from now.

Any takers?

sincerely,
Dok