OKLAHOMA CITY, Feb. 8, 2011 /PRNewswire/ -- PANHANDLE OIL AND
GAS INC. (NYSE: PHX) today reported financial and operating results
for the fiscal 2011 first quarter ended December 31, 2010.
FIRST QUARTER 2011 HIGHLIGHTS
- Recorded net income of $1,426,849
as compared to first quarter 2010 net income of $1,708,378
- Generated cash flow from operations of $8,579,664, an increase of 78% as compared to the
2010 quarter
- Reported first quarter production of 2,208,218 Mcfe
- Maintained $0 balance outstanding on credit facility
- Increased capital expenditures to $6,570,808 for the quarter, an increase of 147%
over the 2010 quarter
For the quarter, the Company recorded net income of $1,426,849, or $.17
per share, as compared to a net income of $1,708,378, or $.20
per share, for the 2010 first quarter. Net cash provided by
operating activities increased 78% to $8,579,664 for the 2011 first quarter as compared
to the 2010 first quarter. Capital expenditures for drilling
and equipping wells and leasehold acquisitions increased 147% from
the 2010 first quarter to $6,570,808.
Production for the first quarter of 2011 was 2,208,218 Mcfe.
This was a 4.5% decrease in sequential quarterly production
and a 3% decrease from the 2010 first quarter. The average
sales price per Mcfe of production during the 2011 first quarter
was $4.41 as compared to $4.75 for the 2010 first quarter.
Total revenues for the 2011 quarter decreased 19.6% to
$9,901,548, as compared to
$12,321,352 for the 2010 quarter.
The decrease in revenues resulted from a slight decrease in
production and in the price realized per Mcfe of production, and a
loss from derivative contracts in the 2011 quarter of $21,439 as compared to a gain of $1,403,340 in the 2010 first quarter from
derivative contracts.
MANAGEMENT COMMENTS
Michael C. Coffman, President and
CEO, said, "Cash flow remained strong allowing us to fully fund our
increasing capital expenditures, pay our operating costs and
overhead, make dividend payments, repurchase shares and still
increase our cash position. Although net income was down
$281,529 for the first fiscal quarter
of 2011 as compared to the 2010 first quarter, we are pleased with
the Company's progress so far in fiscal 2011.
"Capital expenditures increased 147% in the 2011 quarter, with a
significant part of the increased drilling dollars going to oil and
natural gas liquids-rich plays in Western
Oklahoma. We expect this trend of increasing drilling
opportunities in these plays to continue throughout 2011.
Panhandle's perpetual mineral acreage ownership in
Western Oklahoma continues to
allow the Company to benefit from this significant industry shift
to oil and natural gas liquids-rich plays. We remain in an
attractive financial position with significant capital available to
take full advantage of these new drilling opportunities; as always
we will maintain our sharp focus on investments that will generate
shareholder value over time."
Paul Blanchard, Senior Vice
President and COO, said, "The reduction in our drilling activity in
2010, as operators shifted emphasis away from dry gas drilling, has
resulted in moderately lower production levels thus far in fiscal
2011. However, as operators continue to shift drilling
activity to oil and natural gas liquids-rich plays, particularly in
Western Oklahoma, we anticipate
production levels will increase. Drilling and completing
these horizontal wells takes time, thus we expect additions to
production beginning in the latter half of 2011 and into 2012.
"Panhandle owns approximately 41,000 net mineral acres in
Western Oklahoma that present us
with drilling opportunities for several years. These
opportunities will allow us to capitalize on the current superior
rates of return these areas generate. We continue to
emphasize for investors the competitive advantage Panhandle enjoys
because we do not need to expend resources to acquire additional
acreage in order to grow our drilling opportunities in these new
plays."
FINANCIAL
HIGHLIGHTS
Consolidated
Statements of Operations
|
|
|
|
|
Three Months
Ended December 31,
|
|
|
|
|
2010
|
|
2009
|
|
Revenues:
|
|
|
|
|
|
Oil and natural gas (and
associated natural gas liquids) sales
|
$
9,731,574
|
|
$ 10,810,432
|
|
|
Lease bonuses and
rentals
|
113,365
|
|
30,828
|
|
|
Gains (losses) on derivative
contracts
|
(21,439)
|
|
1,403,340
|
|
|
Income from
partnerships
|
78,048
|
|
76,752
|
|
|
|
|
9,901,548
|
|
12,321,352
|
|
Costs and expenses:
|
|
|
|
|
|
Lease operating
expenses
|
2,197,870
|
|
2,306,544
|
|
|
Production taxes
|
344,644
|
|
355,042
|
|
|
Exploration costs
|
287,104
|
|
576,261
|
|
|
Depreciation, depletion and
amortization
|
3,434,811
|
|
5,292,695
|
|
|
Loss (gain) on asset sales,
interest and other
|
(5,727)
|
|
(37,366)
|
|
|
General and
administrative
|
1,639,997
|
|
1,416,798
|
|
|
|
|
7,898,699
|
|
9,909,974
|
|
Income before provision for
income taxes
|
2,002,849
|
|
2,411,378
|
|
|
|
|
|
|
|
|
Provision for income
taxes
|
576,000
|
|
703,000
|
|
|
|
|
|
|
|
|
Net income
|
$
1,426,849
|
|
$
1,708,378
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted earnings per
common share
|
$
0.17
|
|
$
0.20
|
|
|
|
|
|
|
|
|
Basic and diluted weighted
average shares outstanding:
|
|
|
|
|
|
Common shares
|
8,301,811
|
|
8,311,636
|
|
|
Unissued, directors' deferred
compensation shares
|
115,483
|
|
100,553
|
|
|
|
|
8,417,294
|
|
8,412,189
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
Balance Sheets
|
|
|
|
|
December 31,
2010
|
|
September
30, 2010
|
|
Assets
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
$
6,622,178
|
|
$
5,597,258
|
|
|
Oil and natural gas sales
receivables, net of allowance for uncollectible accounts
|
6,924,477
|
|
9,063,002
|
|
|
Refundable production
taxes
|
435,073
|
|
804,120
|
|
|
Derivative contracts
|
-
|
|
1,481,527
|
|
|
Other
|
171,827
|
|
412,778
|
|
Total current assets
|
14,153,555
|
|
17,358,685
|
|
|
|
|
|
|
|
|
Properties and equipment, at
cost, based on successful efforts accounting:
|
|
|
|
|
|
Producing oil and natural gas
properties
|
211,911,838
|
|
207,928,578
|
|
|
Non-producing oil and natural
gas properties
|
10,309,142
|
|
9,616,330
|
|
|
Furniture and
fixtures
|
664,135
|
|
656,889
|
|
|
|
|
222,885,115
|
|
218,201,797
|
|
|
Less accumulated depreciation,
depletion and amortization
|
135,304,688
|
|
131,983,249
|
|
Net properties and
equipment
|
87,580,427
|
|
86,218,548
|
|
|
|
|
|
|
|
|
Investments
|
670,577
|
|
754,208
|
|
Derivative contracts
|
53,334
|
|
138,799
|
|
Refundable production
taxes
|
863,938
|
|
654,599
|
|
Total assets
|
$
103,321,831
|
|
$
105,124,839
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders'
Equity
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
Accounts payable
|
$
3,667,736
|
|
$
5,062,806
|
|
|
Deferred income taxes
|
250,100
|
|
354,100
|
|
|
Derivative contracts
|
30,947
|
|
-
|
|
|
Accrued income taxes and other
liabilities
|
1,221,549
|
|
1,842,918
|
|
Total current
liabilities
|
5,170,332
|
|
7,259,824
|
|
|
|
|
|
|
|
|
Deferred income taxes
|
22,995,650
|
|
22,552,650
|
|
Asset retirement
obligations
|
1,733,805
|
|
1,730,369
|
|
|
|
|
|
|
|
|
Stockholders' equity:
|
|
|
|
|
|
Class A voting common stock,
$.0166 par value;
|
|
|
|
|
|
|
24,000,000 shares authorized,
8,431,502 issued at December 31, 2010 and September 30,
2010
|
140,524
|
|
140,524
|
|
|
Capital in excess of par
value
|
1,828,393
|
|
1,816,365
|
|
|
Deferred directors'
compensation
|
2,363,440
|
|
2,222,127
|
|
|
Retained earnings
|
73,863,253
|
|
73,599,733
|
|
|
|
|
78,195,610
|
|
77,778,749
|
|
|
Less treasury stock, at cost;
142,412 shares at
|
|
|
|
|
|
|
December 31, 2010 and 120,560 at
September 30, 2010
|
(4,773,566)
|
|
(4,196,753)
|
|
Total stockholders'
equity
|
73,422,044
|
|
73,581,996
|
|
Total liabilities and
stockholders' equity
|
$
103,321,831
|
|
$
105,124,839
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed
Consolidated Statements of Cash Flows
|
|
|
|
|
Three months
ended December 31,
|
|
|
|
|
2010
|
|
2009
|
|
Operating
Activities
|
|
|
|
|
|
Net income
|
$
1,426,849
|
|
$
1,708,378
|
|
|
Adjustments to reconcile net
income to net cash provided by operating activities:
|
|
|
|
|
|
|
Depreciation, depletion,
amortization and impairment
|
3,434,811
|
|
5,292,695
|
|
|
|
Provision for deferred income
taxes
|
339,000
|
|
383,000
|
|
|
|
Exploration costs
|
287,104
|
|
576,161
|
|
|
|
Net (gain) loss on sale of
assets
|
(111,478)
|
|
(133,192)
|
|
|
|
Income from
partnerships
|
(78,048)
|
|
(76,752)
|
|
|
|
Distributions received from
partnerships
|
110,743
|
|
104,391
|
|
|
|
Directors' deferred compensation
expense
|
141,313
|
|
49,031
|
|
|
|
Restricted stock
awards
|
12,028
|
|
-
|
|
|
Cash provided by changes in
assets and liabilities:
|
|
|
|
|
|
|
Oil and natural gas sales
receivables
|
2,138,525
|
|
(1,253,808)
|
|
|
|
Fair value of derivative
contracts
|
1,597,939
|
|
(1,648,940)
|
|
|
|
Refundable production
taxes
|
159,708
|
|
295,244
|
|
|
|
Other current assets
|
240,951
|
|
(96,725)
|
|
|
|
Accounts payable
|
83,242
|
|
(102,443)
|
|
|
|
Income taxes payable
|
(725,070)
|
|
(51,770)
|
|
|
|
Accrued liabilities
|
(477,953)
|
|
(222,373)
|
|
|
Total adjustments
|
7,152,815
|
|
3,114,519
|
|
|
Net cash provided by operating
activities
|
8,579,664
|
|
4,822,897
|
|
|
|
|
|
|
|
|
Investing
Activities
|
|
|
|
|
|
|
Capital expenditures, including
dry hole costs
|
(6,570,808)
|
|
(2,658,662)
|
|
|
|
Proceeds from leasing of fee
mineral acreage
|
122,678
|
|
56,004
|
|
|
|
Investments in
partnerships
|
50,936
|
|
(1,971)
|
|
|
|
Proceeds from sales of
assets
|
938
|
|
102,881
|
|
|
Net cash used in investing
activities
|
(6,396,256)
|
|
(2,501,748)
|
|
|
|
|
|
|
|
|
Financing
Activities
|
|
|
|
|
|
|
Borrowings under debt
agreement
|
-
|
|
5,000,388
|
|
|
|
Payments of loan
principal
|
-
|
|
(6,862,879)
|
|
|
|
Purchase of treasury
stock
|
(576,813)
|
|
-
|
|
|
|
Payments of dividends
|
(581,675)
|
|
(581,815)
|
|
|
Net cash provided by (used in)
financing activities
|
(1,158,488)
|
|
(2,444,306)
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in cash and
cash equivalents
|
1,024,920
|
|
(123,157)
|
|
|
Cash and cash equivalents at
beginning of period
|
5,597,258
|
|
639,908
|
|
|
Cash and cash equivalents at end
of period
|
$
6,622,178
|
|
$
516,751
|
|
|
|
|
|
|
|
|
Supplemental Schedule of Noncash
Investing and Financing Activities
|
|
|
|
|
|
Dividends declared and
unpaid
|
$
581,654
|
|
$
-
|
|
|
Additions to asset retirement
obligations
|
$
3,436
|
|
$
9,693
|
|
|
|
|
|
|
|
|
|
Gross additions to properties
and equipment
|
$
5,092,496
|
|
$
1,736,461
|
|
|
Net (increase) decrease in
accounts payable for properties and equipment additions
|
1,478,312
|
|
922,201
|
|
|
Capital expenditures, including
dry hole costs
|
$
6,570,808
|
|
$
2,658,662
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PRODUCTION
|
|
|
First
Quarter Ended
|
|
First
Quarter Ended
|
|
|
December 31,
2010
|
|
December 31,
2009
|
|
Mcfe Sold
|
2,208,218
|
|
2,278,133
|
|
Average Sales Price per
Mcfe
|
$4.41
|
|
$4.75
|
|
Barrels Sold
|
24,965
|
|
27,454
|
|
Average Sales Price per
Barrel
|
$79.77
|
|
$71.30
|
|
Mcf Sold
|
2,058,428
|
|
2,113,409
|
|
Average Sales Price per
Mcf
|
$3.76
|
|
$4.19
|
|
|
|
|
|
Quarter
ended
|
|
Barrels
Sold
|
|
Mcf
Sold
|
|
Mcfe
Sold
|
|
12/31/10
|
|
24,965
|
|
2,058,428
|
|
2,208,218
|
|
9/30/10
|
|
26,054
|
|
2,155,769
|
|
2,312,093
|
|
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
|
|
|
|
|
|
|
|
|
The Company's derivative contracts in place for natural gas at
December 31, 2010 are outlined in its
Form 10-Q for the period ending December 31,
2010.
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
2010 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.