Arena Resources Inc. Q2 2009 Earnings Call Transcript

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2009-08-07 16:41:22.0

Tags: Downtime, Call Transcript, Earnings, Arena Resources Inc., DCP Downtime, Seeking Alpha

Question-and-Answer Session

Operator

(Operator Instructions) Our first question comes from Neal Dingmann – Wunderlich Securities.

Neal Dingmann - Wunderlich Securities

Just one related question as far as down time, Phil, you addressed that pretty well. Wondering now with obviously the pipeline lighter in the year, if you could just sort of address kind of what your expectations or I guess you never really planned for downtime, but as we kind of look forward, how you think you can mitigate or what we can kind of expect on that side.

And then if I could sneak in one other towards, Tim, as far as I'm sure the natural question out there is with all this activity and I guess the economics that are out there, just wondering the natural question given the economics, why not bring on a fourth or fifth rig if you can hedge around that and just blocking these [returns]?

Phil Terry

Neal, as I said, we experienced downtimes due to both electricity and our electrical system and also to DCP on the gas gathering side. As I broke down those numbers, we were seeing about 30 days related to electrical downtime, we anticipate that that number will fall quite significantly. Obviously electrical storms play a part in that, but a good number of that 30 days of downtime for the second quarter was directly related to the electrical system being upgraded and new construction.

That process is either complete or very near completion. So we do not anticipate 30 days of downtime for the quarters three and quarters four. And another thing, just looking at the weather patterns in West Texas we're coming out of the spring and summer thunderstorm period. We should see less activity in terms of lightning and storms and quarter three and quarter four are a little calmer than the rest of the year.

So we obviously cannot plan or predict exactly how many down days we'll have but actually we figure if you can keep down time to somewhere around 10% to 15%, you're about right. So about three or four days a month would be accessible to us, which would translate to 9 or 10 days for the quarter as opposed to 30.

The DCP downtime has shown a good pattern of reduction. We had seven down days in April, eight in May and only three in June. Now again, we can't predict exactly how that's going to move forward but we have seen DCP apply some money to refurbishing and redoing some of the compressor facilities and hopefully we'll see a decrease in that downtime also.

 

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