Panhandle Oil and Gas Inc. Reports Fourth Quarter and Fiscal 2011 Results
Records Net Income of $8,493,912 ($1.01 per share) for Fiscal Year 2011
OKLAHOMA CITY, Dec. 8, 2011 /PRNewswire/ --PANHANDLE OIL AND GAS INC., the "Company", (NYSE-PHX) today reported financial and operating results for the fiscal fourth quarter and twelve months ended Sept. 30, 2011.
HIGHLIGHTS FOR THE THREE- AND TWELVE-MONTH PERIODS ENDED SEPT. 30, 2011
- Recorded 12-month net income of $8,493,912, $1.01 per share, compared to a net income of $11,419,690, $1.36 per share, for fiscal 2010.
- Increased fourth quarter 2011 production by 14% over the third quarter 2011 to 2.4 billion cubic feet equivalent (Bcfe).
- Ended year with zero dollars drawn on the credit facility.
- Cash generated by operating activities was $29.3 million for the year, which fully funded capital expenditures of $27.5 million.
- Continued to convert Panhandle's mineral rights ownership interests into producing working interest wells in the Fayetteville Shale, Anadarko Basin (Cana) Woodford Shale and several other Western Oklahoma oil and natural gas liquids-rich plays, including the Granite Wash play, by growing spending on drilling and equipping wells 97% in 2011 as compared to 2010.
- Purchased approximately $4.8 million of mineral acreage during 2011.
Fiscal Fourth Quarter 2011 Results
The Company recorded net income of $2,644,381, or $.31 per share, as compared to net income of $3,036,446, or $.36 per share, for the 2010 fourth quarter. Capital expenditures in the 2011 quarter increased 227% to $10,186,458, as compared to $3,119,401 in the corresponding 2010 quarter. This increase reflects a continuing industry upswing in drilling activity in the liquids rich and oily plays and the Company purchased approximately $4.5 million of mineral acreage during the 2011 fourth quarter. Net cash provided by operating activities for the 2011 quarter rose 14% to $8,592,240 as compared to $7,567,057 for the 2010 quarter. Total revenues for the 2011 quarter were $12,409,227 as compared to $12,298,310 for the 2010 quarter. For the 2011 quarter, the average realized sales price was $4.78 per Mcfe as compared to $4.80 per Mcfe for the 2010 period.
For the fourth fiscal quarter ended Sept. 30, 2011, production increased to 2,433,114 Mcfe as compared to 2,312,093 Mcfe for the 2010 fourth quarter. Fourth quarter 2011 production was 14% higher than fiscal 2011 third quarter and is reflective of the increased capital expenditures for drilling during the year.
Fiscal Year 2011 Results
The Company recorded a net income of $8,493,912, or $1.01 per share, as compared to net income for fiscal 2010 of $11,419,690, or $1.36 per share. Net cash provided by operating activities for 2011 was $29,283,929 as compared to $27,806,475 for 2010. Total revenues for 2011 decreased to $44,976,651 as compared to $51,938,416 for 2010. The decrease in revenues for 2011 was principally the result of a reduction in gains on derivative contracts of $5.6 million. Capital expenditures for drilling and equipping wells and purchasing mineral acreage totaled $27,545,348 in 2011 as compared to $11,308,506 for 2010. For fiscal 2011, the average realized sales price was $4.87 per Mcfe as compared to $4.94 per Mcfe for 2010.
Oil and gas production volumes and average per Mcfe sales prices were essentially flat for 2011 as compared to 2010; however, net income declined approximately $3 million. In 2010 as compared to 2011, the Company recorded a $5.6 million larger gain on derivative contracts, $.8 million more in lease bonus revenues and $1 million more in gain on asset sales. However, in 2011 as compared to 2010 the Company recorded $4.5 million less DD&A, a $1.7 million lower provision for income taxes, but a $1.1 million larger provision for impairment on certain of its oil and gas properties in small fields.
In a press release dated Nov. 10, 2011, Panhandle announced that proved reserves increased 8% for fiscal 2011 to 111.7 Bcfe. Since fiscal year-end 2006 the Company's total proved reserves have grown 226% from 34.3 Bcfe to 111.7 Bcfe, a compound annual growth rate of 27%. This growth is principally the result of reserves added from development of the two Oklahoma Woodford Shale plays and the Arkansas Fayetteville Shale. Currently total proved reserves are approximately 91% natural gas, 5% oil and 4% NGL.
Over the last 12 – 18 months, drilling activity has continued to become more focused on oily and NGL rich plays. The Company has in excess of 40,000 net legacy acres of minerals in Western Oklahoma which contain several of the plays. New production and reserves from these plays will expand the Company's oil and NGL reserves and production over the coming year. Panhandle's oil and gas sales revenues are currently 74% from natural gas sales, 21% from oil sales and 5% from NGL sales.
Management Comments
Michael C. Coffman, President and CEO, said, "Fiscal 2011 results were encouraging, as the Company was able to deliver strong financial and operational results despite the continuing economic downturn and continuing downward pressure on natural gas prices. This again points out the capital efficiency of drilling on perpetually owned mineral acreage.
During 2011 we were able to focus approximately 80% of our drilling dollars on horizontal drilling projects such as the Cana Woodford Shale, Granite/Atoka Wash, Hogshooter Wash, Marmaton and Tonkawa. These plays in Western Oklahoma are principally NGL rich or oily plays which will yield enhanced rates of return on our drilling expenditures. As long as liquids and oil prices remain at or near current levels, drilling in these plays will continue at a rapid pace."
Paul F. Blanchard, Panhandle's Senior Vice-President and COO, added, "During the year, as natural gas prices continued to decline, we felt an opportunity was developing in certain dry gas plays, principally the Fayetteville Shale, to be able to purchase assets at attractive valuations. We were able to purchase approximately $4.8 million of fee minerals during the fiscal year. Then in October 2011, we purchased interests in 193 non-operated natural gas wells and 1,531 net acres of leasehold in the Fayetteville at a cost of $17.5 million. Production from these acquired properties will boost daily Mcfe production of the Company approximately 12% and will first be reflected in the first fiscal quarter of 2012. Additional acquisitions in the Fayetteville are possible as we consider it to be one of the premier dry gas plays. With low finding costs and improving well performance, this play will continue to prove its economic viability."
OPERATING HIGHLIGHTS
|
Fourth Quarter Ended |
|
Fourth Quarter Ended |
|
Fiscal Year Ended |
|
Fiscal Year Ended |
|
Sept. 30, 2011 |
|
Sept. 30, 2010 |
|
Sept. 30, 2011 |
|
Sept. 30, 2010 |
MCFE Sold |
2,433,114 |
|
2,312,093 |
|
8,922,503 |
|
8,916,616 |
Average Sales Price per MCFE |
$4.78 |
|
$4.80 |
|
$4.87 |
|
$4.94 |
Barrels of Oil Sold |
27,418 |
|
26,054 |
|
104,141 |
|
102,379 |
Average Sales Price per Barrel |
$87.71 |
|
$71.85 |
|
$88.00 |
|
$72.83 |
MCF of Natural Gas Sold |
2,268,606 |
|
2,155,769 |
|
8,297,657 |
|
8,302,342 |
Average Sales Price per MCF |
$4.07 |
|
$4.27 |
|
$4.13 |
|
$4.41 |
Quarterly Production Levels
|
||||||
Quarter ended |
|
Barrels Sold |
|
MCF Sold |
|
MCFE |
9/30/11 |
|
27,418 |
|
2,268,606 |
|
2,433,114 |
6/30/11 |
|
25,382 |
|
1,976,868 |
|
2,129,160 |
3/31/11 |
|
26,376 |
|
1,993,755 |
|
2,152,011 |
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 |
Derivative contracts in place as of Sept. 30, 2011
(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 |
Natural gas fixed price swaps |
|
|
|
April - October 2011 |
50,000 Mmbtu |
NYMEX Henry Hub |
$4.65 |
April - October 2011 |
50,000 Mmbtu |
NYMEX Henry Hub |
$4.65 |
April - October 2011 |
50,000 Mmbtu |
NYMEX Henry Hub |
$4.70 |
April - October 2011 |
50,000 Mmbtu |
NYMEX Henry Hub |
$4.75 |
May - October 2011 |
50,000 Mmbtu |
NYMEX Henry Hub |
$4.50 |
May - October 2011 |
50,000 Mmbtu |
NYMEX Henry Hub |
$4.60 |
June - October 2011 |
50,000 Mmbtu |
NYMEX Henry Hub |
$4.63 |
|
|
|
|
Natural gas basis protection swaps |
|
|
|
January - December 2011 |
50,000 Mmbtu |
CEGT |
NYMEX -$.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 -$.27 |
January - December 2011 |
70,000 Mmbtu |
PEPL |
NYMEX -$.36 |
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 |
|
|
|
|
Oil costless collars |
|
|
|
April - December 2011 |
5,000 Bbls |
NYMEX WTI |
$100 floor/$112 ceiling |
|
|
|
|
(1) CEGT - Centerpoint Energy Gas Transmission's East pipeline in Oklahoma |
|||
PEPL - Panhandle Eastern Pipeline Company's Texas/Oklahoma mainline |
FINANCIAL HIGLIGHTS
Statements of Operations
|
|
|
Three Months Ended Sept. 30, |
|
Twelve Months Ended Sept. 30, |
||||
|
|
|
2011 |
|
2010 |
|
2011 |
|
2010 |
Revenues: |
|
|
|
|
|
|
|
|
|
Oil and natural gas (and associated |
|
|
|
|
|
|
|
|
|
|
natural gas liquids) sales |
|
$ 11,639,139 |
|
$ 11,087,717 |
|
$ 43,469,130 |
|
$ 44,068,947 |
Lease bonuses and rentals |
|
127,417 |
|
63,206 |
|
352,757 |
|
1,120,674 |
|
Gains (losses) on derivative contracts |
|
402,116 |
|
932,947 |
|
734,299 |
|
6,343,661 |
|
Income from partnerships |
|
240,555 |
|
214,440 |
|
420,465 |
|
405,134 |
|
|
|
|
12,409,227 |
|
12,298,310 |
|
44,976,651 |
|
51,938,416 |
Costs and expenses: |
|
|
|
|
|
|
|
|
|
Lease operating expenses and production taxes |
|
2,371,382 |
|
2,432,024 |
|
9,898,509 |
|
9,639,864 |
|
Exploration costs |
|
30,030 |
|
168,748 |
|
1,025,542 |
|
1,583,773 |
|
Depreciation, depletion and amortization |
|
3,929,532 |
|
3,223,625 |
|
14,712,188 |
|
19,222,123 |
|
Provision for impairment |
|
897,216 |
|
593,245 |
|
1,728,162 |
|
605,615 |
|
Loss (gain) on asset sales, interest and other |
|
(4,820) |
|
(40,815) |
|
(68,325) |
|
(1,028,148) |
|
General and administrative |
|
1,465,506 |
|
1,241,037 |
|
5,994,663 |
|
5,594,499 |
|
|
|
|
8,688,846 |
|
7,617,864 |
|
33,290,739 |
|
35,617,726 |
Income before provision |
|
|
|
|
|
|
|
|
|
|
for income taxes |
|
3,720,381 |
|
4,680,446 |
|
11,685,912 |
|
16,320,690 |
Provision for income taxes |
|
1,076,000 |
|
1,644,000 |
|
3,192,000 |
|
4,901,000 |
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ 2,644,381 |
|
$ 3,036,446 |
|
$ 8,493,912 |
|
$ 11,419,690 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted earnings per common share: |
|
|
|
|
|
|
|
|
|
Net income |
|
$ 0.31 |
|
$ 0.36 |
|
$ 1.01 |
|
$ 1.36 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
Common shares |
|
8,245,577 |
|
8,308,701 |
|
8,271,162 |
|
8,310,896 |
|
Unissued, vested directors' shares |
|
126,896 |
|
113,962 |
|
122,728 |
|
111,491 |
|
|
|
8,372,473 |
|
8,422,663 |
|
8,393,890 |
|
8,422,387 |
|
|
|
|
|
|
|
|
|
|
Dividends declared per share of |
|
|
|
|
|
|
|
|
|
|
common stock and paid in period |
|
$ 0.07 |
|
$ 0.07 |
|
$ 0.28 |
|
$ 0.28 |
Balance Sheets
|
|
|
|
|
Sept. 30, 2011 |
|
Sept. 30, 2010 |
Assets |
|
|
|
|
|
|
|
Current Assets: |
|
|
|
|
|||
|
Cash and cash equivalents |
|
$ 3,506,999 |
|
$ 5,597,258 |
||
|
Oil and natural gas sales receivables, net of allowance |
|
|
|
|
||
|
|
for uncollectible accounts |
|
8,811,404 |
|
9,063,002 |
|
|
Refundable income taxes |
|
354,246 |
|
- |
||
|
Refundable production taxes |
|
223,672 |
|
804,120 |
||
|
Derivative contracts |
|
269,329 |
|
1,481,527 |
||
|
Other |
|
|
95,408 |
|
412,778 |
|
Total current assets |
|
13,261,058 |
|
17,358,685 |
|||
|
|
|
|
|
|
|
|
Properties and equipment at cost, based on successful |
|
|
|
|
|||
|
efforts accounting: |
|
|
|
|
||
|
|
Producing oil and natural gas properties |
|
230,554,198 |
|
207,928,578 |
|
|
|
Non-producing oil and natural gas properties |
|
11,100,350 |
|
9,616,330 |
|
|
|
Furniture and fixtures |
|
628,929 |
|
656,889 |
|
|
|
|
|
|
242,283,477 |
|
218,201,797 |
|
|
Less accumulated depreciation, depletion and |
|
|
|
|
|
|
|
|
amortization |
|
146,147,514 |
|
131,983,249 |
Net properties and equipment |
|
96,135,963 |
|
86,218,548 |
|||
|
|
|
|
|
|
|
|
Investments |
|
667,504 |
|
754,208 |
|||
Derivative contracts |
|
- |
|
138,799 |
|||
Refundable production taxes |
|
1,359,668 |
|
654,599 |
|||
Total assets |
|
$ 111,424,193 |
|
$ 105,124,839 |
|||
|
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity |
|
|
|
|
|||
Current Liabilities: |
|
|
|
|
|||
|
Accounts payable |
|
$ 4,899,593 |
|
$ 5,062,806 |
||
|
Deferred income taxes |
|
7,100 |
|
354,100 |
||
|
Accrued liabilities and other |
|
1,040,269 |
|
1,842,918 |
||
Total current liabilities |
|
5,946,962 |
|
7,259,824 |
|||
|
|
|
|
|
|
|
|
Deferred income taxes |
|
24,777,650 |
|
22,552,650 |
|||
Asset retirement obligations |
|
1,843,875 |
|
1,730,369 |
|||
Derivative contracts |
|
53,389 |
|
- |
|||
|
|
|
|
|
|
|
|
Stockholders' equity: |
|
|
|
|
|||
|
Class A voting common stock, $.0166 par value; 24,000,000 shares |
|
|
|
|||
|
|
authorized, 8,431,502 issued at Sept. 30, 2011 and 2010 |
|
140,524 |
|
140,524 |
|
|
Capital in excess of par value |
|
1,924,507 |
|
1,816,365 |
||
|
Deferred directors' compensation |
|
2,665,583 |
|
2,222,127 |
||
|
Retained earnings |
|
79,771,563 |
|
73,599,733 |
||
|
|
|
|
|
84,502,177 |
|
77,778,749 |
|
Treasury stock, at cost; 175,331 shares at Sept. 30, 2011, |
|
|
|
|
||
|
|
and 120,560 shares at Sept. 30, 2010 |
|
(5,699,860) |
|
(4,196,753) |
|
Total stockholders' equity |
|
78,802,317 |
|
73,581,996 |
|||
Total liabilities and stockholders' equity |
|
$ 111,424,193 |
|
$ 105,124,839 |
Condensed Statements of Cash Flows
|
|
|
|
|
|
Year ended Sept. 30, |
||
|
|
|
|
|
|
2011 |
|
2010 |
Operating Activities |
|
|
|
|
||||
Net income (loss) |
|
$ 8,493,912 |
|
$ 11,419,690 |
||||
Adjustments to reconcile net income (loss) to net |
|
|
|
|
||||
|
cash provided by operating activities: |
|
|
|
|
|||
|
|
Depreciation, depletion, amortization |
|
|
|
|
||
|
|
|
and impairment |
|
16,440,350 |
|
19,827,738 |
|
|
|
Provision for deferred income taxes |
|
1,878,000 |
|
777,000 |
||
|
|
Exploration costs |
|
1,025,542 |
|
1,208,653 |
||
|
|
Net (gain) loss on sales of assets |
|
(350,530) |
|
(1,189,605) |
||
|
|
Income from partnerships |
|
(420,465) |
|
(405,134) |
||
|
|
Distributions received from partnerships |
|
553,382 |
|
523,317 |
||
|
|
Other |
|
- |
|
64,555 |
||
|
|
Common stock contributed to ESOP |
|
303,843 |
|
287,194 |
||
|
|
Common stock (unissued) to Directors' |
|
|
|
|
||
|
|
|
Deferred Compensation Plan |
|
443,456 |
|
359,628 |
|
|
|
Restricted stock awards |
|
152,482 |
|
12,028 |
||
|
|
Bad debt expense (recovery) |
|
- |
|
- |
||
|
|
Cash provided (used) by changes in assets |
|
|
|
|
||
|
|
|
and liabilities: |
|
|
|
|
|
|
|
|
|
Oil and natural gas sales receivables |
|
251,598 |
|
(1,315,445) |
|
|
|
|
Fair value of dervative contracts |
|
1,404,386 |
|
(4,133,761) |
|
|
|
|
Refundable income taxes |
|
(354,246) |
|
- |
|
|
|
|
Refundable production taxes |
|
(124,621) |
|
(69,874) |
|
|
|
|
Other current assets |
|
317,370 |
|
(343,961) |
|
|
|
|
Accounts payable |
|
72,119 |
|
(24,896) |
|
|
|
|
Income taxes payable |
|
(922,136) |
|
583,625 |
|
|
|
|
Accrued liabilities |
|
119,487 |
|
225,723 |
Total adjustments |
|
20,790,017 |
|
16,386,785 |
||||
Net cash provided by operating activities |
|
29,283,929 |
|
27,806,475 |
||||
|
|
|
|
|
|
|
|
|
Investing Activities |
|
|
|
|
||||
Capital expenditures, including dry hole costs |
|
(27,545,348) |
|
(11,308,506) |
||||
Proceeds from leasing of fee mineral acreage |
|
389,807 |
|
1,316,377 |
||||
Investments in partnerships |
|
(46,213) |
|
(254,555) |
||||
Proceeds from sales of assets |
|
938 |
|
401,168 |
||||
Net cash used in investing activities |
|
(27,200,816) |
|
(9,845,516) |
||||
|
|
|
|
|
|
|
|
|
Financing Activities |
|
|
|
|
||||
Borrowings under debt agreement |
|
- |
|
10,799,814 |
||||
Payments of loan principal |
|
- |
|
(21,184,536) |
||||
Purchases of treasury stock |
|
(1,851,290) |
|
(291,383) |
||||
Payments of dividends |
|
(2,322,082) |
|
(2,327,504) |
||||
Net cash used in financing activities |
|
(4,173,372) |
|
(13,003,609) |
||||
Increase (decrease) in cash and cash equivalents |
|
(2,090,259) |
|
4,957,350 |
||||
Cash and cash equivalents at beginning of year |
|
5,597,258 |
|
639,908 |
||||
Cash and cash equivalents at end of year |
|
$ 3,506,999 |
|
$ 5,597,258 |
Condensed Statements of Cash Flows (continued)
|
|
|
|
|
|
Year ended Sept. 30, |
||
|
|
|
|
|
|
2011 |
|
2010 |
Supplemental Disclosures of Cash Flow |
|
|
|
|
||||
|
Information |
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
Interest paid (net of capitalized interest) |
|
$ - |
|
$ 60,912 |
||||
Income taxes paid, net of refunds received |
|
$ 2,584,172 |
|
$ 3,530,718 |
||||
|
|
|
|
|
|
|
|
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Supplemental schedule of noncash |
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investing and financing activities: |
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Additions and revisions, net, to asset |
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retirement obligations |
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$ 113,506 |
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$ 110,144 |
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Gross additions to properties and equipment |
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$ 27,310,016 |
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$ 11,585,521 |
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Net (increase) decrease in accounts payable for |
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properties and equipment additions |
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235,332 |
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(277,015) |
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Capital expenditures, including dry hole costs |
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$ 27,545,348 |
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$ 11,308,506 |
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 2011 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; 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; 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.
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