Third Quarter Production Increases 34% to 2.6 Bcfe OKLAHOMA CITY,
Aug. 10 /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, 2009.
HIGHLIGHTS FOR THE THREE AND NINE MONTH PERIODS ENDED JUNE 30, 2009
-- Produced a quarterly record 2.6 Bcfe during the third quarter of
2009, a 34% increase from the corresponding 2008 period. --
Reported record nine month production of 7.5 Bcfe, a 36% increase
compared to the corresponding 2008 period. -- Strengthened balance
sheet and reduced debt by $2.5 million to $13.3 million from March
31, 2009. -- Cash provided by operating activities increased 20% in
the 2009 nine months as compared to the 2008 period. -- Continued
to convert Panhandle's mineral rights ownership interests into
producing well interests particularly in the Woodford Shale in
Southeast Oklahoma and the Fayetteville Shale in Arkansas. --
Participated in 151 wells with a working interest thus far in 2009
with only three dry holes. Three Months Results 2009 For the
quarter ending June 30, 2009, the Company recorded a net loss of
$928,512 or $.11 per share as compared to net income of $6,468,885
or $.76 per share for the 2008 third quarter. Capital expenditures
for drilling and equipping wells decreased 55% to $5,238,302, as
compared to the corresponding 2008 quarter. Net cash provided by
operating activities for the 2009 quarter was $5,705,859 as
compared to $9,117,191 for the 2008 quarter. Production for the
2009 third quarter increased 34% to 2,647,474 Mcfe as compared to
1,979,904 Mcfe for the 2008 quarter. Total revenues for the 2009
quarter were $8,779,960 as compared to $18,453,206 for the 2008
quarter. For the 2009 quarter, the average sales price per Mcfe
declined to $3.42 as compared to $10.38 for the 2008 period. The
outstanding balance on the Company's bank line-of-credit at August
3, 2009 was $11.4 million on a borrowing base of $35 million. Nine
Month Results 2009 For the fiscal nine months ended June 30, 2009,
the Company recorded a net loss of $2,748,397 or $.33 per share as
compared to net income for the 2008 nine months of $12,780,473 or
$1.50 per share. Net cash provided by operating activities for the
2009 period increased 20% to $30,617,545 as compared to $25,474,992
for the 2008 nine months. Total revenues for the 2009 nine months
were $28,973,677 as compared to $44,904,231 for the 2008 nine
months. Capital expenditures for drilling and equipping wells
totaled $35,509,890 in the 2009 fiscal period, as compared to
$27,757,275 for the 2008 fiscal period. For the 2009 nine months,
the average sales price per Mcfe declined to $3.74 as compared to
$8.79 for the 2008 period. The Company has in place certain natural
gas fixed swap contracts which cover the remainder of calendar 2009
and all of 2010. Based on current monthly natural gas production
levels, approximately 37% of 2009 natural gas production and
approximately 45% of anticipated 2010 natural gas production is
hedged at weighted average prices of $3.77 per Mcf for 2009 and
$5.30 per Mcf for 2010. These prices are net prices tied to
specific Oklahoma pipelines, as opposed to NYMEX prices. In the
first nine months of fiscal 2009, the Company received total
payments of $1,782,400 on its derivative contracts. These contracts
continue to reduce the Company's exposure to short-term
fluctuations in the price of natural gas. Management Comment
Michael C. Coffman, President and CEO stated, "The economic
downturn and the resulting downward pressure on natural gas demand,
coupled with high natural gas storage levels have combined to
dramatically reduce natural gas sales prices as our fiscal year has
progressed. Our increase in production through the first nine
months of fiscal 2009 has somewhat buffered the effect of the
substantial price decline on revenues. However, cash flow from
operations has remained strong and through the first nine months
20% above last year's level, which has allowed us to continue
drilling principally from available cash." Coffman continued, "We
have been pleased with the results of our drilling program this
year. Quarterly production increased to a record level of 2.6 Bcfe,
which was 34% higher than last year's third quarter volumes and 11%
over production volumes in the second quarter of this year.
Panhandle has a large diversified base of mineral acreage ownership
which continues to provide us substantial drilling opportunities in
three world class shale plays, the Fayetteville Shale in Arkansas
and the Woodford Shales in southeast Oklahoma and the Cana Woodford
Shale in western Oklahoma. In addition, we continue to see new
opportunities in western Oklahoma with horizontal drilling in
several formations that are yielding outstanding results. We have
more than 3,000 3P drilling locations, just in the plays discussed
above, primarily on our perpetually owned fee mineral acreage which
will provide Panhandle drilling opportunities for years to come.
"With that being said, in view of current market prices for natural
gas, we have slowed our drilling activity as the fiscal year has
progressed, which is reflected in third quarter capital
expenditures of $5.2 million as compared to $30.3 million in the
first six months of fiscal 2009. For the next several months, we
will principally commit to drilling projects necessary to protect
our unit rights. The result of this reduced drilling program will
eventually be lower production rates as we defer drilling until
market conditions improve. As we have stated many times, we are
well positioned to weather this current industry and economic
downturn and are prepared to prosper as the industry, product
prices, and economy in general recover. Our ability to drill on our
mineral acres gives us a continuing advantage in capital efficiency
which we will continue to exploit." "We reduced our debt level from
$15.8 million at March 31, 2009 to $13.3 million at June 30. We
used the $2.5 million proceeds from the sale of a partial interest
in the SE Leedey Field in Western Oklahoma to make the debt
reduction. This interest, consisting of approximately 350 Mmcfe of
proved producing reserves (less than 1% of Panhandle's total proved
producing reserves) and 910 acres of leasehold, was sold for what
we consider to be full value. Production from the SE Leedey Field
was approximately 1% of our daily production. The gain from this
sale will be recorded in the fourth fiscal quarter, as the transfer
of the properties was effective July 1, 2009." OPERATING HIGHLIGHTS
Third Third Nine Nine Quarter Quarter Months Months Ended Ended
Ended Ended June 30, June 30, June 30, June 30, 2009 2008 2009 2008
--------- --------- --------- --------- MCFE Sold 2,647,474
1,979,904 7,522,897 5,538,866 Average Sales Price per MCFE $3.42
$10.38 $3.74 $8.79 Barrels Sold 34,145 31,907 99,149 101,027
Average Sales Price per Barrel $53.89 $120.92 $48.81 $100.12 MCF
Sold 2,442,604 1,788,462 6,928,003 4,932,704 Average Sales Price
per MCF $2.96 $9.33 $3.36 $7.82 Quarterly Production Levels Quarter
ended Barrels Sold MCF Sold MCFE ------------- ------------
-------- ---- 6/30/09 34,145 2,442,604 2,647,474 3/31/09 34,744
2,171,660 2,380,124 12/31/08 30,260 2,313,739 2,495,299 9/30/08
31,375 1,995,333 2,183,583 6/30/08 31,907 1,788,462 1,979,904
Derivative contracts in place as of June 30, 2009 (prices below
reflect the Company's net price from the listed Oklahoma pipelines)
Production Volume covered per Indexed (1) Contract period month
Pipeline Fixed price --------------- ------------- --------
----------- March - December, 2009 60,000 mmbtu CEGT $4.01 April -
December, 2009 100,000 mmbtu CEGT $3.71 May - December, 2009 70,000
mmbtu CEGT $3.615 July - December, 2009 70,000 mmbtu PEPL $3.745
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 $5.57 January - December, 2010 50,000 mmbtu PEPL
$5.56 (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 Nine Months
Ended June 30, June 30, 2009 2008 2009 2008 ---- ---- ---- ----
Revenues: Oil and natural gas sales $9,058,169 $20,551,865
$28,114,989 $48,687,560 Lease bonuses and rentals 28,777 32,154
182,019 110,464 Gains (losses) on derivative contracts (470,974)
(2,286,789) 212,578 (4,391,316) Gain on asset sales, interest and
other 114,744 105,963 211,202 190,718 Income of partnerships 49,244
50,013 252,889 306,805 ------ ------ ------- ------- 8,779,960
18,453,206 28,973,677 44,904,231 Costs and expenses: Lease
operating expenses 2,095,933 2,178,732 5,772,401 4,977,151
Production taxes 369,802 675,206 1,117,040 2,431,165 Exploration
costs 112,537 35,394 314,845 397,125 Depreciation, depletion and
amortization 6,844,813 4,671,193 20,882,405 13,376,346 Provision
for impairment 115,892 37,666 2,124,133 385,672 Loss on sale of
assets - 203,387 - 203,387 General and administrative 1,174,315
1,164,743 3,721,070 3,991,566 Interest expense 68,180 - 68,180
44,346 ------ --- ------ ------ 10,781,472 8,966,321 34,000,074
25,806,758 ---------- --------- ---------- ---------- Income (loss)
before provision (benefit) for income taxes (2,001,512) 9,486,885
(5,026,397) 19,097,473 Provision (benefit) for income taxes
(1,073,000) 3,018,000 (2,278,000) 6,317,000 ----------- ---------
----------- --------- Net income (loss) $(928,512) $6,468,885
$(2,748,397) $12,780,473 ========= ========== ===========
=========== Earnings (loss) per common share (Note 4) $(0.11) $0.76
$(0.33) $1.50 ====== ===== ====== ===== Weighted average shares
outstanding: Common shares 8,300,128 8,423,067 8,300,128 8,428,701
Unissued, vested directors' shares 97,867 85,909 96,325 84,911
------ ------ ------ ------ 8,397,995 8,508,976 8,396,453 8,513,612
========= ========= ========= ========= Dividends declared per
share of common stock and paid in period $0.07 $0.07 $0.21 $0.21
===== ===== ===== ===== Consolidated Balance Sheets (unaudited)
June 30, September 30, 2009 2008 ---- ---- Assets Current assets:
Cash and cash equivalents $605,090 $895,708 Oil and natural gas
sales receivables (net) 7,548,471 17,183,128 Short-term derivative
contracts - 646,193 Refundable income taxes - 2,162,305 Assets held
for sale 893,325 - Other 708,143 217,691 ------- ------- Total
current assets 9,755,029 21,105,025 Properties and equipment, at
cost, based on successful efforts accounting: Producing oil and
natural gas properties 195,946,566 175,727,196 Non-producing oil
and natural gas properties 10,254,992 11,216,103 Other 546,676
491,321 ------- ------- 206,748,234 187,434,620 Less accumulated
depreciation, depletion and amortization 106,949,000 87,661,433
----------- ---------- Net properties and equipment 99,799,234
99,773,187 Investments 681,021 736,314 Other 515,247 392,657
------- ------- Total assets $110,750,531 $122,007,183 ============
============ Liabilities and Stockholders' Equity Current
liabilities: Accounts payable $4,586,336 $15,897,565 Short-term
derivative contracts 29,389 - Prepayment of sales price on assets
to be sold 2,514,343 - Accrued liabilities 814,277 608,456 -------
------- Total current liabilities 7,944,345 16,506,021 Long-term
debt 13,332,504 9,704,100 Deferred income taxes 22,818,750
25,943,750 Asset retirement obligations 1,672,978 1,504,411
Long-term derivative contracts 894,240 - Stockholders' equity:
Class A voting common stock, $.0166 par value; 24,000,000 shares
authorized, 8,431,502 issued at June 30, 2009 and at September 30,
2008 140,524 140,524 Capital in excess of par value 2,090,070
2,090,070 Deferred directors' compensation 1,836,048 1,605,811
Retained earnings 64,745,180 69,236,604 ---------- ----------
68,811,822 73,073,009 Less treasury stock, at cost; 131,374 shares
at June 30, 2009 and at September 30, 2008 (4,724,108) (4,724,108)
---------- ---------- Total stockholders' equity 64,087,714
68,348,901 ---------- ---------- Total liabilities and
stockholders' equity $110,750,531 $122,007,183 ============
============ Condensed Consolidated Statements of Cash Flows
(unaudited) Nine months ended June 30, 2009 2008 ---- ----
Operating Activities Net income (loss) $(2,748,397) $12,780,473
Adjustments to reconcile net income (loss) to net cash provided by
operating activities: (Gain) loss, net, on sale of assets (181,760)
83,986 Income of partnerships (252,889) (306,805) Exploration costs
314,845 397,125 Depreciation, depletion and amortization 20,882,405
13,376,346 Provision for impairment 2,124,223 385,672 Deferred
income taxes (3,125,000) 4,275,000 Distributions received from
partnerships 308,182 368,413 Directors' deferred compensation
expense 230,237 225,965 Cash provided by changes in assets and
liabilities: Oil and natural gas sales receivables 9,634,657
(9,359,047) Derivative contracts 1,569,822 3,613,416 Refundable
income taxes 2,162,305 - Other current assets (490,452) (819,020)
Other non-current assets (122,590) - Accounts payable 106,136
130,477 Accrued liabilities 39,902 322,991 Income taxes payable
165,919 - ------- --- Total adjustments 33,365,942 12,694,519
---------- ---------- Net cash provided by operating activities
30,617,545 25,474,992 Investing Activities Capital expenditures,
including dry hole costs (35,509,890) (27,757,275) Proceeds from
leasing of fee mineral acreage 202,007 131,449 Proceeds from asset
sales 2,514,343 181,120 --------- ------- Net cash used in
investing activities (32,793,540) (27,444,706) Financing Activities
Borrowings under credit facility 43,705,195 40,058,723 Payments on
credit facility (40,076,791) (34,701,332) Purchase of treasury
stock - (1,955,761) Payments of dividends (1,743,027) (1,770,615)
---------- ---------- Net cash provided by financing activities
1,885,377 1,631,015 --------- --------- Decrease in cash and cash
equivalents (290,618) (338,699) Cash and cash equivalents at
beginning of period 895,708 989,360 ------- ------- Cash and cash
equivalents at end of period $605,090 $650,661 ======== ========
Supplemental Schedule of Noncash Investing and Financing Activities
Receivable from asset sales $- $658,668 === ======== Additions to
asset retirement obligations $168,567 $- ======== === Gross
additions to properties and equipment $24,069,809 $29,625,707 Net
(increase) decrease in accounts payable for properties and
equipment additions 11,440,081 (1,868,432) ---------- ----------
Capital expenditures, including dry hole costs $35,509,890
$27,757,275 =========== =========== 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 http://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 2008 Form 10-K filed with the
Securities and Exchange Commission. These "Risk Factors" include
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; declines 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; and drilling and operating risks. 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. DATASOURCE: Panhandle Oil and
Gas Inc. CONTACT: Michael C. Coffman of Panhandle Oil and Gas Inc.,
+1-405-948-1560 Web Site: http://www.panhandleoilandgas.com/
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