ARD » Topics » Year Ended December 31, 2006 Compared to Year Ended December 31, 2005

This excerpt taken from the ARD 10-K filed Mar 12, 2008.

Year Ended December 31, 2006 Compared to Year Ended December 31, 2005

               Oil and natural gas sales.    Oil and natural gas sales revenue increased approximately $33.92 million to $59.76 million in 2006. Oil sales increased $30.20 million and natural gas sales increased $3.72 million. The oil sales increase was caused by a sales volume increase of 458,619 barrels in 2006, and a 13% increase in the average realized per barrel oil price from $52.41 in 2005 to $59.26 in 2006. These per barrel amounts are calculated by dividing revenue from oil sales by the volume of oil sold, in barrels. The natural gas sales increase was caused by a sales volume increase of 591,380 Mcf in 2006 partially offset by a 4% decrease in the average realized natural gas price per Mcf from $6.72 in 2005 to $6.46 in 2006. These per Mcf amounts are calculated by dividing revenue from gas sales by the volume of gas sold, in Mcf. The volume increase for crude oil and natural gas primarily resulted from development of our existing properties in 2006.

               Oil and gas production costs.    Our aggregate oil and gas production costs increased from $3,832,486 in 2005 to $6,453,831, although such expenses on a Boe basis declined from $7.54 in 2005 to $6.06 in 2006. These per Boe amounts are calculated by dividing our total production costs by our total volume sold, in Boe. This aggregate increase was the result of the drilling of new wells in 2006 and cost increases. The decline on a per Boe basis is attributable to an increase in volume as a result of our development and consolidation of resources available due to our growth.

               Oil and gas production taxes.    Oil and gas production taxes as a percentage of oil and natural gas sales were 7.51% during 2005 and decreased to 5.87% in 2006. Production taxes vary from state to state. Therefore, these taxes are likely to vary in the future depending on the mix of production we generate from various states, and on the possibility that any state may raise its production tax.

               Depreciation, depletion and amortization.    Our depreciation, depletion and amortization expense increased by $5,118,595 to $7,900,099 in 2006. The increase was a result of an increase in the average depreciation, depletion and amortization rate from $5.67 per Boe during 2005 to $7.54 per Boe during 2006. These per Boe amounts are calculated by dividing our total depreciation, depletion and amortization expense by our total volume sold, in Boe. The increased depreciation, depletion and amortization were the result of increased sales volume and an increase in estimated future development costs.

               General and administrative expenses.    General and administrative expenses increased by $2,257,719 to $3,617,309 during 2006. This increase was primarily related to increases in compensation expense associated with an increase in personnel required to administer our growth and compensation expense related to the company’s option plan as a result of adoption of FASB 123(R).

               Other Financing expense.    Other financing expense was $785,598 in 2006, compared to $597,773 in 2005.

               Interest income.    Interest income increased $288,604 to $288,604 in 2006. The increase was due to higher cash balances on hand during portions of 2006.

               Interest expense.    Interest expense increased $183,813 to $413,437 in 2006. The increase was due to higher amounts of debt being outstanding during periods of the year in 2006.

               Income tax expense.    Our effective tax rate was 38% during 2006 and 37% during 2005.

30

               Net income.    Net income increased from $9,460,683 for 2005 to $23,267,968 for 2006. The primary reasons for this increase include higher crude oil prices between periods and an increase in volumes sold, partially offset by lower natural gas prices between periods and higher oil and gas production costs, oil and gas production taxes and general and administrative expenses due to our growth.

This excerpt taken from the ARD 10-K filed Apr 2, 2007.

Year Ended December 31, 2006 Compared to Year Ended December 31, 2005

               Oil and natural gas sales. Oil and natural gas sales revenue increased approximately $33.92 million to $59.76 million in 2006. Oil sales increased $30.20 million and natural gas sales increased $3.72 million. The oil sales increase was caused by a sales volume increase of 458,619 barrels in 2006, and a 13% increase in the average realized per barrel oil price from $52.41 in 2005 to $59.26 in 2006. These per barrel amounts are calculated by dividing revenue from oil sales by the volume of oil sold, in barrels. The natural gas sales increase was caused by a sales volume increase of 591,380 Mcf in 2006 partially offset by a 4% decrease in the average realized natural gas price per Mcf from $6.72 in 2005 to $6.46 in 2006. These per Mcf amounts are calculated by dividing revenue from gas sales by the volume of gas sold, in Mcf. The volume increase for crude oil and natural gas primarily resulted from development of our existing properties in 2006.

               Oil and gas production costs. Our aggregate oil and gas production costs increased from $3,832,486 in 2005 to $6,453,831, although such expenses on a Boe basis declined from $7.54 in 2005 to $6.06 in 2006. These per Boe amounts are calculated by dividing our total production costs by our total volume sold, in Boe. This aggregate increase was the result of the drilling of new wells in 2006 and cost increases. The decline on a per Boe basis is attributable to an increase in volume as a result of our development and consolidation of resources available due to our growth.

               Oil and gas production taxes. Oil and gas production taxes as a percentage of oil and natural gas sales were 7.51% during 2005 and decreased to 5.87% in 2006. Production taxes vary from state to state. Therefore, these taxes are likely to vary in the future depending on the mix of production we generate from various states, and on the possibility that any state may raise its production tax.

               Depreciation, depletion and amortization. Our depreciation, depletion and amortization expense increased by $5,118,595 to $7,900,099 in 2006. The increase was a result of an increase in the average depreciation, depletion and amortization rate from $5.47 per Boe during 2005 to $7.41 per Boe during 2006. These per Boe amounts are calculated by dividing our total depreciation, depletion and amortization expense by our total volume sold, in Boe. The increased depreciation, depletion and amortization was the result of increased sales volume and an increase in estimated future development costs.

               General and administrative expenses. General and administrative expenses increased by $2,257,719 to $3,617,309 during 2006. This increase was primarily related to increases in compensation expense associated with an increase in personnel required to administer our growth and compensation expense related to the company’s option plan as a result of adoption of FASB 123(R).

               Other Financing expense. Other financing expense was $785,598 in 2006, compared to $597,773 in 2005. The increase is a result of the stock price being higher on the date of the expense in 2006 than it was on the date of the expense in 2005.

               Interest expense. Interest expense decreased $104,791 to $124,833 in 2006. The decrease was due to lower amounts of debt being outstanding during periods of the year in 2006 as well as partial offset by interest income received on excess cash on hand during parts of the year.

               Income tax expense. Our effective tax rate was 38% during 2006 and 37% during 2005.

               Net income. Net income increased from $9,460,683 for 2005 to $23,267,968 for 2006. The primary reasons for this increase include higher crude oil prices between periods and an increase in volumes sold, partially offset by lower natural gas prices between periods and higher oil and gas production costs, oil and gas production taxes and general and administrative expenses due to our growth.

31

EXCERPTS ON THIS PAGE:

10-K
Mar 12, 2008
10-K
Apr 2, 2007
Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki