ARD CEO Tim Rochford Sells 200,000 Common Shares
Two Day Transaction Size is Record for CEO; Represents First Time CEO has Sold Shares Prior to Release of Reserve Report

The CEO share sale on February 1-2 may seem bearish at first glance due to the number of shares sold. After all, this is the largest block of shares that he has sold in a two day span going back to the birth of the company in 2001. In fact, this is the largest share sale by the CEO in any 30 day span. In 2006 Rochford sold 140,000 shares in a period between September 18 and October 4th. However, one needs to understand that the timing of the share sale is extremely bullish.

Timing of Share Sale is Bullish

This is the first time in the history of the company that CEO Tim Rochford has sold shares prior to the Reserve Report announcement. This is also the first time that Tim has sold shares prior to the release of the operational results of the fourth quarter and full year. Certainly Tim would be subjecting himself to a potential SEC investigation if he sold his shares with either a disappointing reserves report or operational results.

We already know operationally the company produced approximately 325,000 BOE in Q4'06. This is below guidance. However, there were valid reasons for the shortfall in production which will ultimately be reflected in the fourth quarter revenues, net income and EPS. One should expect good news as it relates to the year-end reserve report. Expect at least a 40.2% increase in proved reserves over the previous year.

One should also expect to hear good news as it relates to the Syracuse Project in southwest Kansas with the joint venture partner. Specifically don't be surprised if Tim announces the presence of commercial oil production on this project in association with the St.Louis formation. Expect the partnership to reveal initial development plans. This increased activity in Kansas and the likely presence of oil bearing hydrocarbons fits perfectly with Tim's decision to give the day to day operational control to the newly appointed President and Chief Operating Officer, Phil Terry. The creation of this $160,000 a year position is further proof of the likelihood oil has been found in Kansas. This amount is more than the combined salaries of CEO Rochford, Chairman McCabe and CFO Broaddrick in 2006. Tim is a low cost man. He couldn't justify creating a new $160,000 upper level management position in the absence of significant growth going forward.

Below is a chart indicating ARD CEO Tim Rochford's common stock sales by year. The chart below tells the story of Tim's investment in Arena. The first four years of the company's existence he did not sell a single share nor profit from his investment of time and money. This is especially true given the fact that his annual salary has been no greater than $36,000 a year. Only since 2005 has ARD CEO Tim Rochford finally realized some return on his investment by virtue of his sales of common stock.

The chart below indicates that Tim's holdings are declining over time. The sales of common stock are partially being offset by increases in stock options. The picture below indicates that Tim has not decreased his position significantly in ARD shares and stock options when taken in aggregate. Certainly stock options are comprising a larger percentage of Tim's ARD portfolio.

In summary, Tim is finally beginning to see some return on his investment in Arena Resources. The size of the latest common stock sales should not be viewed as bearish. Instead the timing of these share sales should be clear indication of good things to come. His ownership in the company has not decreased significantly even with the common stock sales as a result of stock option awards. Additionally the appointment of Phil Terry as the new President and Chief Operating Officer at a salary of $160,000 a year is further proof of significant drilling opportunities not only in the Permian Basin but also as they relate to the very probable presence of oil bearing hydrocarbons in the Syracuse Project's St.Louis Formation.