OKLAHOMA CITY, Aug. 6 /PRNewswire-FirstCall/ -- PANHANDLE OIL
AND GAS INC. (NYSE: PHX) today reported financial and operating
results for the fiscal third quarter and nine months ended
June 30, 2010.
HIGHLIGHTS FOR THE PERIODS ENDED JUNE 30,
2010
- Recorded a quarterly net income of $1,511,300 as compared to a third quarter 2009
net loss of $928,512
- Recorded a nine-month net income of $8,383,244 as compared to a 2009 nine-month net
loss of $2,748,397
- Generated cash from operating activities of $20,235,140 for the nine-month period,
substantially in excess of $8,189,105
in capital expenditures
- Increased sequential quarterly production by 7% to
2,236,236 Mcfe as compared to 2,090,154 Mcfe for the second quarter
ended March 31, 2010
- Paid off outstanding balance at June 30, 2010 under the Company's $50 million credit facility.
FISCAL THIRD QUARTER 2010 RESULTS
For the quarter ending June 30,
2010, the Company recorded a net income of $1,511,300, $.18
per share, as compared to a net loss of $928,512, $.11 per
share, for the 2009 third quarter. Total revenues for the
2010 quarter increased 21% over the 2009 quarter to $10,461,870. Cash provided by operating
activities totaled $8,656,728, while
capital expenditures totaled $3,079,595. Production for the third
quarter 2010 was 2,236,236 Mcfe as compared to 2,647,474 Mcfe for
the 2009 quarter (a Company record), but was 7% higher than 2010
second quarter production of 2,090,154 Mcfe. The average per
Mcfe sales price increased 26% for the 2010 third quarter to
$4.32, as compared to $3.42 for the 2009 quarter. The Company recorded
approximately $1,100,000 in the 2010
third quarter and payment was received in July 2010 related to the favorable settlement of
a lawsuit related to one well in western Oklahoma.
NINE MONTHS 2010 RESULTS
For the nine months ended June 30,
2010, the Company recorded a net income of $8,383,244, $1.00
per share, as compared to a net loss of $2,748,397, $.33
per share, for the 2009 nine months. Total revenues for the
2010 nine months were $39,640,106, a
38% increase over the 2009 nine months. Cash provided by
operating activities totaled $20,235,140, which funded capital expenditures of
$8,189,105 and enabled the Company to
pay off its line of credit balance. Production for the 2010
nine months totaled 6,604,523 Mcfe as compared to 7,522,897 Mcfe
for the 2009 nine months. The average per Mcfe sales price
increased 33% for the 2010 nine months to $4.99 as compared to $3.74 for the 2009 nine months. The Company
further recognized a pre-tax gain (realized and unrealized) on
derivative contracts in the 2010 nine months of $5,410,714, compared to a $212,578 gain for the 2009 period.
MANAGEMENT COMMENTS
Michael C. Coffman, President and
CEO said, "We are encouraged that our third quarter 2010 production
increased 7% over second quarter production levels in spite of
reduced capital expenditures as compared to last year's levels.
Although our capex was 77% lower through nine months of 2010
as compared to 2009 levels, Panhandle's nine month production is
only 12% lower than last year, bearing in mind 2009 was a record
production year for the Company. We think this highlights the
strength and quality of Panhandle's asset base in several of the
premier resource plays in North
America. Once we complete our technical evaluation of
each project, we have the advantage of being able to selectively
participate with a working interest only in those quality drilling
projects on our acreage that will add value for our shareholders.
Those projects in which we decide not to invest capital
following our review of the project's technical merit will still
generate a return in the form of a royalty interest when production
is established."
Coffman continued: "Panhandle will benefit from the current
industry focus on drilling liquids-rich areas and oil properties,
because a substantial portion of this drilling is on our
perpetually-owned fee mineral acreage located in developing areas
such as the Granite Wash and Cana
Woodford. Because we already own the mineral rights,
we will not be forced to purchase additional leasehold positions at
higher market rates in order to participate in these drilling
opportunities, and we are not forced to drill to hold acreage.
"Our cash flow from operations has allowed us to completely pay
off our debt, fund capex, and build a cash balance despite low
natural gas prices and we expect to continue to fund drilling from
available cash flow. Panhandle continues to outperform many
larger companies in these difficult market conditions. We
have the balance sheet strength, a strong asset base, and financial
flexibility to efficiently develop our mineral acreage assets,
generate our own projects, or pursue appropriate accretive
acquisitions should those opportunities present themselves."
OPERATIONS UPDATE
Paul Blanchard, Senior Vice
President and COO said, "The volume of drilling proposals in our
key areas continued to increase in the third quarter with activity
accelerating in the Anadarko Basin
Horizontal Granite Wash and the Anadarko Basin 'Cana' Woodford Shale, which are our more oil and
natural gas liquids rich plays.
"During the quarter, the Company participated with a 5.8% Net
Revenue Interest (NRI) in two wells in the Southeastern Oklahoma
Woodford Shale, which produced at the combined rate of 6,600 Mcf
per day during their first month of sales. In the Fayetteville
Shale, Panhandle participated with a 6.0% NRI in a well which
produced 5,500 Mcf per day during its first month of sales. The
Company also participated with a 3.1% NRI in a well in the
Anadarko 'Cana' Woodford Shale which produced an initial rate of
5,400 Mcfd and we participated with a 1.3% NRI in an Anadarko Basin Horizontal Granite Wash well
which yielded initial sales of 11,600 Mcf per day and 600 Bo per
day. On July 20, 2010, we had
nine working interest wells drilling or completing in our three
major shale plays, and there were another 34 working interest wells
in which we have approved to participate with a working interest
which are not yet drilling."
OPERATING HIGHLIGHTS
|
|
|
|
|
Third Quarter
|
|
Third Quarter
|
|
Nine Months
|
|
Nine Months
|
|
|
Ended
|
|
Ended
|
|
Ended
|
|
Ended
|
|
|
June 30, 2010
|
|
June 30, 2009
|
|
June 30, 2010
|
|
June 30, 2009
|
|
Mcfe Sold
|
2,236,236
|
|
2,647,474
|
|
6,604,523
|
|
7,522,897
|
|
Average Sales Price per
MCFE
|
$4.32
|
|
$3.42
|
|
$4.99
|
|
$3.74
|
|
Barrels Sold
|
26,873
|
|
34,145
|
|
76,325
|
|
99,149
|
|
Average Sales Price per
Barrel
|
$73.65
|
|
$53.89
|
|
$73.16
|
|
$48.81
|
|
Mcf Sold
|
2,074,998
|
|
2,442,604
|
|
6,146,573
|
|
6,928,003
|
|
Average Sales Price per
MCF
|
$3.70
|
|
$2.96
|
|
$4.46
|
|
$3.36
|
|
|
|
|
|
|
|
|
|
Quarterly Production
Levels
|
|
|
|
Quarter ended
|
|
Barrels Sold
|
|
Mcf Sold
|
|
Mcfe Sold
|
|
6/30/10
|
|
26,873
|
|
2,074,998
|
|
2,236,236
|
|
3/31/10
|
|
21,998
|
|
1,958,166
|
|
2,090,154
|
|
12/31/09
|
|
27,454
|
|
2,113,409
|
|
2,278,133
|
|
9/30/09
|
|
29,011
|
|
2,181,985
|
|
2,356,051
|
|
6/30/09
|
|
34,145
|
|
2,442,604
|
|
2,647,474
|
|
|
|
|
|
|
|
|
Derivative contracts in place as
of June 30, 2010
(prices below reflect the
Company's net price from the listed Oklahoma
pipelines)
|
|
|
|
|
Production volume
|
Indexed (1)
|
|
|
Contract period
|
covered per month
|
Pipeline
|
Fixed price
|
|
Fixed price swaps
|
|
|
|
|
January - December,
2010
|
100,000 Mmbtu
|
CEGT
|
$5.015
|
|
January - December,
2010
|
50,000 Mmbtu
|
CEGT
|
$5.050
|
|
January - December,
2010
|
100,000 Mmbtu
|
PEPL
|
$5.570
|
|
January - December,
2010
|
50,000 Mmbtu
|
PEPL
|
$5.560
|
|
|
|
|
|
|
Basis protection
swaps
|
|
|
|
|
January - December,
2011
|
50,000 Mmbtu
|
CEGT
|
Nymex -$.27
|
|
January - December,
2011
|
50,000 Mmbtu
|
CEGT
|
Nymex -$.27
|
|
January - December,
2011
|
50,000 Mmbtu
|
PEPL
|
Nymex -$.26
|
|
January - December,
2011
|
50,000 Mmbtu
|
PEPL
|
Nymex -$.27
|
|
January - December,
2012
|
50,000 Mmbtu
|
CEGT
|
Nymex -$.29
|
|
January - December,
2012
|
40,000 Mmbtu
|
CEGT
|
Nymex -$.30
|
|
January - December,
2012
|
50,000 Mmbtu
|
PEPL
|
Nymex -$.29
|
|
January - December,
2012
|
50,000 Mmbtu
|
PEPL
|
Nymex -$.30
|
|
|
|
|
|
|
(1) CEGT - Centerpoint
Energy Gas Transmission's East pipeline in Oklahoma
|
|
|
PEPL
- Panhandle Eastern Pipeline Company's Texas/Oklahoma
mainline
|
|
|
|
|
|
|
|
|
|
|
|
FINANCIAL HIGHLIGHTS
Consolidated Statements of
Operations
(unaudited)
|
|
|
|
|
|
|
Three Months Ended June
30,
|
|
Nine Months Ended June
30,
|
|
|
|
|
2010
|
|
2009
|
|
2010
|
|
2009
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
Oil and natural gas
sales
|
$
9,659,803
|
|
$
9,058,169
|
|
$ 32,981,230
|
|
$ 28,114,989
|
|
|
Lease bonuses and
rentals
|
934,532
|
|
28,777
|
|
1,057,468
|
|
182,019
|
|
|
Gains (losses) on derivative
contracts
|
(218,935)
|
|
(470,974)
|
|
5,410,714
|
|
212,578
|
|
|
Income of
partnerships
|
86,470
|
|
49,244
|
|
190,694
|
|
252,889
|
|
|
|
|
10,461,870
|
|
8,665,216
|
|
39,640,106
|
|
28,762,475
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
Lease operating
expenses
|
1,681,982
|
|
2,095,933
|
|
6,166,102
|
|
5,772,401
|
|
|
Production taxes
|
236,793
|
|
369,802
|
|
1,041,738
|
|
1,117,040
|
|
|
Exploration costs
|
538,262
|
|
112,537
|
|
1,415,025
|
|
314,845
|
|
|
Depreciation, depletion and
amortization
|
5,221,723
|
|
6,844,813
|
|
15,998,498
|
|
20,882,405
|
|
|
Provision for
impairment
|
-
|
|
115,892
|
|
12,370
|
|
2,124,133
|
|
|
Loss (gain) on asset sales,
interest and other
|
(989,152)
|
|
(46,564)
|
|
(987,333)
|
|
(143,022)
|
|
|
General and
administrative
|
1,507,962
|
|
1,174,315
|
|
4,353,462
|
|
3,721,070
|
|
|
|
|
8,197,570
|
|
10,666,728
|
|
27,999,862
|
|
33,788,872
|
|
Income (loss) before provision
(benefit) for income taxes
|
2,264,300
|
|
(2,001,512)
|
|
11,640,244
|
|
(5,026,397)
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision (benefit) for income
taxes
|
753,000
|
|
(1,073,000)
|
|
3,257,000
|
|
(2,278,000)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
$
1,511,300
|
|
$
(928,512)
|
|
$
8,383,244
|
|
$
(2,748,397)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted earnings
(loss) per common share
(Note 3)
|
$
0.18
|
|
$
(0.11)
|
|
$
1.00
|
|
$
(0.33)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted weighted
average shares outstanding:
|
|
|
|
|
|
|
|
|
|
Common shares
|
8,311,636
|
|
8,300,128
|
|
8,311,636
|
|
8,300,128
|
|
|
Unissued, vested directors'
shares
|
112,160
|
|
97,867
|
|
110,640
|
|
96,325
|
|
|
|
|
8,423,796
|
|
8,397,995
|
|
8,422,276
|
|
8,396,453
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared per share
of
|
|
|
|
|
|
|
|
|
|
common stock and paid in
period
|
$
0.07
|
|
$
0.07
|
|
$
0.21
|
|
$
0.21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Balance
Sheets
(Information at June 30, 2010 is
unaudited)
|
|
|
|
|
|
|
June 30, 2010
|
|
September 30, 2009
|
|
Assets
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
$
2,169,634
|
|
$
639,908
|
|
|
Oil and natural gas sales
receivables, net of allowance
|
|
|
|
|
|
|
for uncollectible
accounts
|
8,205,594
|
|
7,747,557
|
|
|
Derivative contracts
|
1,548,598
|
|
-
|
|
|
Deferred income taxes
|
-
|
|
1,934,900
|
|
|
Refundable production
taxes
|
881,349
|
|
616,668
|
|
|
Other
|
1,221,884
|
|
68,817
|
|
Total current assets
|
14,027,059
|
|
11,007,850
|
|
|
|
|
|
|
|
|
Properties and equipment, at
cost, based on
|
|
|
|
|
successful efforts
accounting:
|
|
|
|
|
|
Producing oil and natural gas
properties
|
204,638,307
|
|
198,076,244
|
|
|
Non-producing oil and natural
gas properties
|
10,184,554
|
|
10,332,537
|
|
|
Furniture and
fixtures
|
600,363
|
|
578,460
|
|
|
|
|
215,423,224
|
|
208,987,241
|
|
|
Less accumulated depreciation,
depletion and amortization
|
129,344,929
|
|
112,900,027
|
|
Net properties and
equipment
|
86,078,295
|
|
96,087,214
|
|
|
|
|
|
|
|
|
Investments
|
581,126
|
|
682,391
|
|
Derivative contracts
|
239,781
|
|
-
|
|
Refundable production
taxes
|
494,620
|
|
772,177
|
|
Total assets
|
$
101,420,881
|
|
$
108,549,632
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders'
Equity
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
Accounts payable
|
$
4,305,954
|
|
$
4,810,687
|
|
|
Derivative contracts
|
-
|
|
1,726,901
|
|
|
Accrued liabilities
|
1,706,808
|
|
1,033,570
|
|
Total current
liabilities
|
6,012,762
|
|
7,571,158
|
|
|
|
|
|
|
|
|
Long-term debt
|
-
|
|
10,384,722
|
|
Deferred income taxes
|
22,689,650
|
|
24,064,650
|
|
Asset retirement
obligations
|
1,639,175
|
|
1,620,225
|
|
Derivative contracts
|
-
|
|
786,534
|
|
|
|
|
|
|
|
|
Stockholders' equity:
|
|
|
|
|
|
Class A voting common stock,
$.0166 par value;
|
|
|
|
|
|
|
24,000,000 shares authorized,
8,431,502 issued at
June 30, 2010 and at
September 30, 2009
|
140,524
|
|
140,524
|
|
|
Capital in excess of par
value
|
1,922,053
|
|
1,922,053
|
|
|
Deferred directors'
compensation
|
2,181,650
|
|
1,862,499
|
|
|
Retained earnings
|
71,145,347
|
|
64,507,547
|
|
|
|
|
75,389,574
|
|
68,432,623
|
|
|
Less treasury stock, at cost;
119,866 shares at
|
|
|
|
|
|
|
June 30, 2010 and at September
30, 2009
|
(4,310,280)
|
|
(4,310,280)
|
|
Total stockholders'
equity
|
71,079,294
|
|
64,122,343
|
|
Total liabilities and
stockholders' equity
|
$
101,420,881
|
|
$
108,549,632
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed Consolidated
Statements of Cash Flows
(unaudited)
|
|
|
|
|
|
|
Nine months ended June
30,
|
|
|
|
|
2010
|
|
2009
|
|
Operating
Activities
|
|
|
|
|
|
Net income (loss)
|
$
8,383,244
|
|
$
(2,748,397)
|
|
|
Adjustments to reconcile net
income (loss) to net cash
|
|
|
|
|
|
provided by
operating activities:
|
|
|
|
|
|
|
Unrealized (gains) losses on
natural gas derivative contracts
|
(4,301,814)
|
|
1,569,822
|
|
|
|
Depreciation, depletion,
amortization and impairment
|
16,010,868
|
|
23,006,628
|
|
|
|
Provision for deferred income
taxes
|
613,000
|
|
(3,125,000)
|
|
|
|
Exploration costs
|
1,039,905
|
|
314,845
|
|
|
|
Net (gain) loss on sale of
assets and other
|
(1,139,072)
|
|
(181,760)
|
|
|
|
Income from
partnerships
|
(190,694)
|
|
(252,889)
|
|
|
|
Distributions received from
partnerships
|
270,817
|
|
308,182
|
|
|
|
Directors' deferred compensation
expense
|
319,151
|
|
230,237
|
|
|
|
Other
|
64,555
|
|
-
|
|
|
Cash provided by changes in
assets and liabilities:
|
|
|
|
|
|
|
Oil and natural gas sales
receivables
|
(458,037)
|
|
9,634,657
|
|
|
|
Refundable income
taxes
|
-
|
|
2,162,305
|
|
|
|
Refundable production
taxes
|
12,876
|
|
(474,810)
|
|
|
|
Other current assets
|
(1,153,067)
|
|
(138,232)
|
|
|
|
Accounts payable
|
143,270
|
|
106,136
|
|
|
|
Income taxes payable
|
360,966
|
|
165,919
|
|
|
|
Accrued liabilities
|
259,172
|
|
39,902
|
|
|
Total adjustments
|
11,851,896
|
|
33,365,942
|
|
|
Net cash provided by operating
activities
|
20,235,140
|
|
30,617,545
|
|
|
|
|
|
|
|
|
Investing
Activities
|
|
|
|
|
|
|
Capital expenditures, including
dry hole costs
|
(8,189,105)
|
|
(35,509,890)
|
|
|
|
Proceeds from leasing of fee
mineral acreage
|
1,256,102
|
|
202,007
|
|
|
|
Investments in
partnerships
|
(43,413)
|
|
-
|
|
|
|
Proceeds from sales of
assets
|
401,168
|
|
2,514,343
|
|
|
Net cash used in investing
activities
|
(6,575,248)
|
|
(32,793,540)
|
|
|
|
|
|
|
|
|
Financing
Activities
|
|
|
|
|
|
|
Borrowings under debt
agreement
|
10,799,814
|
|
43,705,195
|
|
|
|
Payments of loan
principal
|
(21,184,536)
|
|
(40,076,791)
|
|
|
|
Payments of dividends
|
(1,745,444)
|
|
(1,743,027)
|
|
|
Net cash provided by (used in)
financing activities
|
(12,130,166)
|
|
1,885,377
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in cash and
cash equivalents
|
1,529,726
|
|
(290,618)
|
|
|
Cash and cash equivalents at
beginning of period
|
639,908
|
|
895,708
|
|
|
Cash and cash equivalents at end
of period
|
$
2,169,634
|
|
$
605,090
|
|
|
|
|
|
|
|
|
Supplemental Schedule of Noncash
Investing and Financing Activities
|
|
|
|
|
|
Additions to asset retirement
obligations
|
$
18,950
|
|
$
168,567
|
|
|
|
|
|
|
|
|
|
Gross additions to properties
and equipment
|
$
7,541,102
|
|
$
24,069,809
|
|
|
Net (increase) decrease in
accounts payable for properties
|
|
|
|
|
|
|
and equipment
additions
|
648,003
|
|
11,440,081
|
|
|
Capital expenditures, including
dry hole costs
|
$
8,189,105
|
|
$
35,509,890
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Panhandle Oil and Gas Inc. (NYSE-PHX) is engaged
in the exploration for and production of natural gas and oil.
Additional information on the Company can be found at
www.panhandleoilandgas.com.
Forward-Looking Statements and Risk Factors
– This report includes "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934.
Forward-looking statements include current expectations or
forecasts of future events. They may include estimates of oil
and gas reserves, expected oil and gas production and future
expenses, projections of future oil and gas prices, planned capital
expenditures for drilling, leasehold acquisitions and seismic data,
statements concerning anticipated cash flow and liquidity and
Panhandle's strategy and other plans and objectives for future
operations. Although Panhandle believes the expectations
reflected in these and other forward-looking statements are
reasonable, we can give no assurance they will prove to be correct.
They can be affected by inaccurate assumptions or by known or
unknown risks and uncertainties. Factors that could cause
actual results to differ materially from expected results are
described under "Risk Factors" in Part 1, Item 1 of Panhandle's
2009 Form 10-K filed with the Securities and Exchange Commission.
These "Risk Factors" include the worldwide economic
recession's continuing negative effects on the natural gas
business; our hedging activities may reduce the realized prices
received for natural gas sales; the volatility of oil and gas
prices; Panhandle's ability to compete effectively against strong
independent oil and gas companies and majors; the availability of
capital on an economic basis to fund reserve replacement costs;
Panhandle's ability to replace reserves and sustain production;
uncertainties inherent in estimating quantities of oil and gas
reserves and projecting future rates of production and the amount
and timing of development expenditures; uncertainties in evaluating
oil and gas reserves; unsuccessful exploration and development
drilling; decreases in the values of our oil and gas properties
resulting in write-downs; the negative impact lower oil and gas
prices could have on our ability to borrow; drilling and operating
risks; and we cannot control activities on our properties as the
Company is a non-operator.
Do not place undue reliance on these forward-looking statements,
which speak only as of the date of this release, and Panhandle
undertakes no obligation to update this information.
Panhandle urges you to carefully review and consider the
disclosures made in this presentation and Panhandle's filings with
the Securities and Exchange Commission that attempt to advise
interested parties of the risks and factors that may affect
Panhandle's business.
SOURCE Panhandle Oil and Gas Inc.
Copyright g. 6 PR Newswire