Arena Resources reduces capital spending budget

TULSA, Okla. - Oil and natural gas explorer Arena Resources Inc. said Wednesday it was reducing its 2008 capital spending budget 24 percent because of the drastic drop in commodity prices and the uncertain economy.

Arena said it has lowered its estimated capital expenditure budget to $189 million from the $248 million level it announced in June.

Oil producers are coming off a quarter in which crude prices reached an all-time high of $147.27. But prices have since tumbled more than 50 percent, and the global economic malaise has raised questions about energy demand at least into 2009.

The company said it had notified the owners of two contract drilling rigs operating at a site in Andrews County, Texas, that the contracts would not be renewed. Instead, Arena said it will use two company-owned rigs to develop the site.

The company said it is confident it can continue to increase production at an annual rate of 20 percent to 25 percent while operating within existing cash flow.

Arena also announced the acquisition of another 6,400 acres in Andrews County, Texas, bringing its total in the county to roughly 32,500 acres.

Its share price rose $1.60, or 6.5 percent, to $26.29 in late-morning trading.

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