OKLAHOMA CITY, May 15, 2014 /PRNewswire/ -- PANHANDLE
OIL AND GAS INC. (NYSE: PHX) today reported that it has signed
an agreement to purchase a 16% non-operated working interest in
11,100 gross leasehold acres (1,775 net acres) located in the core
of the Eagle Ford Shale oil window in LaSalle and Frio Counties, Texas for $80,400,000 from private sellers. The transaction
is projected to close within 30 days and will have an effective
date of April 1, 2014. The
acquisition will be funded utilizing the Company's bank credit
facility.
The acreage block is largely contiguous and entirely held by
production, containing 58 producing wells (52 Eagle Ford, 5
Pearsall, and 1 Buda), 6 Eagle Ford wells currently being completed
and 113 undeveloped Eagle Ford locations. This property is
currently being developed with a one drilling rig program by the
operator, privately held Cheyenne Petroleum Company, a
well-financed Oklahoma City
company, which has a highly qualified technical team in place to
efficiently develop this asset.
Estimated net proved developed reserves, based on April 1, 2014, SEC pricing, are approximately
1,720,000 barrels of oil, 1,730,000 mcf of gas and 297,000 barrels
of NGL. Reserves for the 113 undeveloped locations, which are
projected to have an average effective lateral length of
approximately 7000', are estimated to be 5,570,000 barrels of oil,
4,580,000 mcf of gas and 789,000 barrels of NGL.
Michael C. Coffman, President and
CEO, said: "We are very pleased to be in a position to add this
package of properties in the Eagle Ford Shale to Panhandle's asset
base. These properties produced an average of 733 net
equivalent barrels of oil per day (80% oil, 10% NGL and 10% natural
gas) during the first calendar quarter of 2014. Production
volumes included two new Eagle Ford wells, which only produced the
last 15 days of the quarter at a combined rate of 1,166 Boe/day
gross or 139 Boe/day net. Another six new Eagle Ford wells
have been drilled and are expected to begin producing this month at
a first 30-day average gross rate of approximately 500 Boe/day per
well or a total of approximately 350 Boe/day of additional net
production. This transaction will significantly increase
Panhandle's current oil production, which is approximately 720
barrels per day.
"In addition, the acquisition is projected to be accretive to
fiscal year 2014 earnings and is expected to continue to generate
significant shareholder value for many years.
"In our estimation, the Eagle Ford is the premier oil resource
play in the country. The Eagle Ford has infrastructure in
place to move oil by pipeline to the Gulf Coast and enjoys
reasonable year-round weather conditions. In addition, a number of
large companies are studying and applying new technologies to the
play."
Paul F. Blanchard, Senior
Vice-President and COO, said: "This is a tremendous opportunity for
Panhandle to add material oil reserves to our portfolio in the core
of one of the most prolific oil fields in the world, with the
infrastructure already in place to efficiently develop and market
those reserves. We believe that continued technological
innovation will only add to the ability to efficiently recover more
of the oil in place from the vast resource. In addition to
the Eagle Ford, the property may have future development potential
in the Pearsall, Buda and Austin
Chalk formations."
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.
SOURCE Panhandle Oil and Gas Inc.