OKLAHOMA CITY, Feb. 9, 2015 /PRNewswire/ -- PANHANDLE OIL AND
GAS INC. (NYSE: PHX), the "Company," today reported financial and
operating results for the 2015 fiscal first quarter ending
Dec. 31, 2014.
FIRST QUARTER 2015 HIGHLIGHTS
- Recorded first quarter 2015 net income of $10,233,761, $0.61
per share, compared to net income of $4,926,318, $0.29
per share, for the 2014 first quarter.
- Recorded production of 3,737,483 Mcfe, compared to 3,509,270
Mcfe for the 2014 first quarter.
- Increased quarterly oil production by 40% to 116,583 barrels,
compared to 83,413 barrels for the 2014 first quarter.
- Increased quarterly NGL production by 96% to 72,804 barrels,
compared to 37,140 barrels for the 2014 first quarter.
- Funded capital expenditures of $14.9
million for drilling and equipping wells for the 2015 first
quarter with cash generated by operating activities of $15.2 million during the quarter.
- Recorded hedging gain of $11,250,265, prior to provision for income taxes,
in the 2015 first quarter.
For the 2015 first quarter, the Company recorded net income of
$10,233,761, $0.61 per share, compared to net income of
$4,926,318, $0.29 per share, for the 2014 first
quarter. Net cash provided by operating activities increased
28% to $15,185,489 for the 2015 first
quarter, compared to the 2014 first quarter. Cash flow from
operations fully funded all capital expenditures for the quarter of
$14,901,631 for drilling and
equipping wells.
Total revenues for the 2015 first quarter were $30,999,170, compared to $18,396,756 for the 2014 first quarter.
Oil, NGL and natural gas sales increased $1,046,618 or 6% in the 2015 quarter, compared to
the 2014 quarter, as a result of a 7% increase in Mcfe
production. The average sales price per Mcfe of production
during the 2015 first quarter was $5.22, compared to $5.26 for the 2014 first quarter. The
majority of the revenue increase resulted from recording a hedging
gain of $11,250,265, prior to
provision for income taxes, in the first quarter of 2015 as
compared to a loss of $496,901 in the
2014 first quarter. This gain is principally the result of
hedging put in place by the Company shortly after closing on the
Eagle Ford acquisition in June 2014. The contracts will allow
the Company to effectively sell somewhat over 50% of its expected
oil production for approximately $92.00 per barrel, on average, through
December 2015.
Oil production increased 40% in the 2015 first quarter to
116,583 barrels, compared to 83,413 barrels in the 2014 first
quarter. NGL production increased 96% in the 2015 quarter to 72,804
barrels, and natural gas production decreased 7% for the 2015 first
quarter, compared to the 2014 first quarter. The increased
oil production is principally attributable to production from the
Eagle Ford Shale properties, and the majority of the increase in
NGL production was from several of the NGL rich plays in
Oklahoma.
Lease operating expenses increased to $1.28 per Mcfe of production in the 2015 first
quarter as compared to $.94 per Mcfe
in the 2014 first quarter. This increase is a result of the
additional oil production in the Eagle Ford Shale. Those
wells are more cost intensive than the typical historic mix of
Panhandle wells, of which the majority are natural gas producers,
which typically have significantly lower operating costs.
Non-cash impairment charges increased $1,989,006 in the 2015 first quarter as compared
to the 2014 first quarter. These charges were on several
smaller fields principally in western Oklahoma and the Texas Panhandle and were impacted by
significantly reduced oil prices.
MANAGEMENT COMMENTS
Michael C. Coffman, President and
CEO said, "During the first quarter and continuing as we speak, the
industry has seen significant declines in product prices.
Panhandle was able to generate significant earnings for the quarter
principally as a result of hedging gains. Ironically, in
light of current oil and natural gas prices, these hedging gains
allowed the Company to record the largest quarterly net income in
history of $10,233,761. Should
these lower prices for our products persist through the remainder
of 2015, obviously earnings for subsequent quarters will be
negatively affected.
"We expect our capital expenditure level to decline
significantly in subsequent quarters as well proposals received by
Panhandle are expected to materially decline, and our inclination
to deploy capital to take a working interest in proposals will be
reduced until we have a better understanding of where oil and
natural gas prices will settle as the year progresses. As
usual, we will continue to generate no-cost royalty interests in
wells drilled on our mineral acreage. Excess cash flow will
be used to further reduce our bank debt.
"As Panhandle has done in the past, we will manage our way
through this difficult commodity price cycle while continuing to
look for opportunities to deliver growth of shareholder value."
Paul Blanchard, Senior Vice
President and COO said, "The Company's first quarter 2015 oil
production was negatively impacted by the delay in completing six
Eagle Ford Shale wells that were drilled during the quarter.
The operator has elected to defer these completions until oil
prices recover from the current depressed levels and/or service
costs decline materially. Further, the operator has released
the Eagle Ford drilling rig and plans to resume drilling when the
combination of oil prices and service costs create the opportunity
to earn a reasonable rate of return. In the Bakken Shale, the
operator of five recently-drilled wells in which we have a working
interest has also elected to defer the completions of those
wells. Drilling proposals in the Company's other material oil
and NGL rich plays have slowed significantly with the exception of
the 'SCOOP' Woodford and
Springer plays in south central
Oklahoma where operators have
indicated that they will continue to drill on leases that are not
held by production. We further anticipate a slower pace of
drilling in the Fayetteville Shale where the primary operator has
reduced its 2015 drilling budget.
"Panhandle plans to participate only in those wells that will
earn a reasonable rate of return in the current price environment
or where participation will preserve strategic future working
interest participation rights on its mineral acreage. As a
result, we are anticipating a significant drop in subsequent
quarter capital expenditures for the duration of this low commodity
price cycle, which, if prolonged, is expected to translate into a
minor production decline in 2015 as compared to 2014."
FINANCIAL
HIGHLIGHTS
Statements of
Operations
|
|
|
|
|
|
|
|
Three Months Ended
Dec. 31,
|
|
2014
|
|
2013
|
Revenues:
|
(unaudited)
|
Oil, NGL and natural
gas sales
|
$
|
19,519,700
|
|
$
|
18,473,082
|
Lease bonuses and
rentals
|
|
29,291
|
|
|
196,229
|
Gains (losses) on
derivative contracts
|
|
11,250,265
|
|
|
(496,901)
|
Income from
partnerships
|
|
199,914
|
|
|
224,346
|
|
|
30,999,170
|
|
|
18,396,756
|
Costs and
expenses:
|
|
|
|
|
|
Lease operating
expenses
|
|
4,785,350
|
|
|
3,315,397
|
Production
taxes
|
|
622,512
|
|
|
571,564
|
Exploration
costs
|
|
25,352
|
|
|
38,755
|
Depreciation,
depletion and amortization
|
|
6,139,019
|
|
|
5,308,019
|
Provision for
impairment
|
|
2,191,997
|
|
|
202,991
|
Loss (gain) on asset
sales and other
|
|
(1,982)
|
|
|
(77,455)
|
Interest
expense
|
|
402,733
|
|
|
-
|
General and
administrative
|
|
1,958,428
|
|
|
1,873,167
|
|
|
16,123,409
|
|
|
11,232,438
|
Income before
provision for income taxes
|
|
14,875,761
|
|
|
7,164,318
|
|
|
|
|
|
|
Provision for income
taxes
|
|
4,642,000
|
|
|
2,238,000
|
|
|
|
|
|
|
Net income
|
$
|
10,233,761
|
|
$
|
4,926,318
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
earnings per common share
|
$
|
0.61
|
|
$
|
0.29
|
|
|
|
|
|
|
Basic and diluted
weighted average shares outstanding:
|
|
|
|
|
|
Common
shares
|
|
16,494,805
|
|
|
16,463,804
|
Unissued, directors'
deferred compensation shares
|
|
262,121
|
|
|
246,122
|
|
|
16,756,926
|
|
|
16,709,926
|
|
|
|
|
|
|
Balance
Sheets
|
|
|
|
|
|
|
|
Dec. 31,
2014
|
|
Sept. 30,
2014
|
Assets
|
(unaudited)
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
519,605
|
|
$
|
509,755
|
Oil, NGL and natural
gas sales receivables
|
|
13,555,350
|
|
|
16,227,469
|
Refundable production
taxes
|
|
612,791
|
|
|
625,996
|
Derivative contracts,
net
|
|
12,333,036
|
|
|
1,650,563
|
Other
|
|
255,743
|
|
|
354,828
|
Total current
assets
|
|
27,276,525
|
|
|
19,368,611
|
|
|
|
|
|
|
Properties and
equipment, at cost, based on
|
|
|
|
|
|
successful efforts accounting:
|
|
|
|
|
|
Producing oil and
natural gas properties
|
|
430,310,159
|
|
|
418,237,512
|
Non-producing oil and
natural gas properties
|
|
9,394,878
|
|
|
10,260,717
|
Other
|
|
1,372,943
|
|
|
1,317,725
|
|
|
441,077,980
|
|
|
429,815,954
|
Less accumulated
depreciation, depletion and amortization
|
|
(210,823,119)
|
|
|
(204,731,661)
|
Net properties and
equipment
|
|
230,254,861
|
|
|
225,084,293
|
|
|
|
|
|
|
Investments
|
|
2,053,420
|
|
|
1,936,421
|
Derivative contracts,
net
|
|
-
|
|
|
251,279
|
Total
assets
|
$
|
259,584,806
|
|
$
|
246,640,604
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Accounts
payable
|
$
|
6,167,740
|
|
$
|
7,034,773
|
Deferred income
taxes
|
|
765,100
|
|
|
600,100
|
Income taxes
payable
|
|
3,415,443
|
|
|
523,843
|
Accrued liabilities
and other
|
|
1,264,994
|
|
|
1,290,858
|
Total current
liabilities
|
|
11,613,277
|
|
|
9,449,574
|
|
|
|
|
|
|
Long-term
debt
|
|
78,715,107
|
|
|
78,000,000
|
Deferred income
taxes
|
|
38,382,907
|
|
|
37,363,907
|
Asset retirement
obligations
|
|
2,696,836
|
|
|
2,638,470
|
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
|
Class A voting common
stock, $.0166 par value;
|
|
|
|
|
|
24,000,000 shares
authorized, 16,863,004 issued at Dec. 31,
|
|
|
|
|
|
2014, and Sept. 30,
2014
|
|
280,938
|
|
|
280,938
|
Capital in excess of
par value
|
|
2,590,151
|
|
|
2,861,343
|
Deferred directors'
compensation
|
|
3,211,940
|
|
|
3,110,351
|
Retained
earnings
|
|
127,694,926
|
|
|
118,794,188
|
|
|
133,777,955
|
|
|
125,046,820
|
Less treasury stock,
at cost; 355,558 shares at Dec. 31,
|
|
|
|
|
|
2014, and 372,364
shares at Sept. 30, 2014
|
|
(5,601,276)
|
|
|
(5,858,167)
|
Total stockholders'
equity
|
|
128,176,679
|
|
|
119,188,653
|
Total liabilities and
stockholders' equity
|
$
|
259,584,806
|
|
$
|
246,640,604
|
Condensed Statements
of Cash Flows
|
|
|
|
|
|
|
|
Three months ended
Dec. 31,
|
|
2014
|
|
2013
|
Operating
Activities
|
(unaudited)
|
Net income
|
$
|
10,233,761
|
|
$
|
4,926,318
|
Adjustments to
reconcile net income to net cash provided
|
|
|
|
|
|
by operating
activities:
|
|
|
|
|
|
Depreciation,
depletion and amortization
|
|
6,139,019
|
|
|
5,308,019
|
Impairment
|
|
2,191,997
|
|
|
202,991
|
Provision for deferred
income taxes
|
|
1,184,000
|
|
|
326,000
|
Exploration
costs
|
|
25,352
|
|
|
38,755
|
Gain from leasing of
fee mineral acreage
|
|
(29,162)
|
|
|
(196,133)
|
Income from
partnerships
|
|
(199,914)
|
|
|
(224,346)
|
Distributions received
from partnerships
|
|
256,017
|
|
|
279,363
|
Directors' deferred
compensation expense
|
|
101,589
|
|
|
114,069
|
Restricted stock
awards
|
|
165,111
|
|
|
127,976
|
Cash provided (used)
by changes in assets and liabilities:
|
|
|
|
|
|
Oil, NGL and natural
gas sales receivables
|
|
2,672,119
|
|
|
(956,975)
|
Fair value of
derivative contracts
|
|
(10,431,194)
|
|
|
891,970
|
Refundable production
taxes
|
|
13,205
|
|
|
53,824
|
Other current
assets
|
|
99,085
|
|
|
(35,813)
|
Accounts
payable
|
|
565,409
|
|
|
414,267
|
Income taxes
payable
|
|
2,891,600
|
|
|
1,088,350
|
Accrued
liabilities
|
|
(692,505)
|
|
|
(472,288)
|
Total
adjustments
|
|
4,951,728
|
|
|
6,960,029
|
Net cash provided by
operating activities
|
|
15,185,489
|
|
|
11,886,347
|
|
|
|
|
|
|
Investing
Activities
|
|
|
|
|
|
Capital expenditures,
including dry hole costs
|
|
(14,901,631)
|
|
|
(9,892,262)
|
Acquisition of working
interest properties
|
|
-
|
|
|
(1,550,205)
|
Acquisition of
minerals and overrides
|
|
-
|
|
|
(56,250)
|
Proceeds from leasing
of fee mineral acreage
|
|
29,798
|
|
|
216,773
|
Investments in
partnerships
|
|
(173,103)
|
|
|
(143,695)
|
Net cash used in
investing activities
|
|
(15,044,936)
|
|
|
(11,425,639)
|
|
|
|
|
|
|
Financing
Activities
|
|
|
|
|
|
Borrowings under debt
agreement
|
|
12,335,774
|
|
|
2,280,280
|
Payments of loan
principal
|
|
(11,620,667)
|
|
|
(4,542,536)
|
Purchase of treasury
stock
|
|
(120,611)
|
|
|
(122,044)
|
Payments of
dividends
|
|
(666,199)
|
|
|
(664,618)
|
Excess tax benefit on
stock-based compensation
|
|
(59,000)
|
|
|
16,000
|
Net cash provided by
(used in) financing activities
|
|
(130,703)
|
|
|
(3,032,918)
|
|
|
|
|
|
|
Increase (decrease) in
cash and cash equivalents
|
|
9,850
|
|
|
(2,572,210)
|
Cash and cash
equivalents at beginning of period
|
|
509,755
|
|
|
2,867,171
|
Cash and cash
equivalents at end of period
|
$
|
519,605
|
|
$
|
294,961
|
|
|
|
|
|
|
Supplemental
Schedule of Noncash Investing and Financing
Activities
|
|
|
|
|
|
Dividends declared and
unpaid
|
$
|
666,824
|
|
$
|
663,654
|
Additions to asset
retirement obligations
|
$
|
26,452
|
|
$
|
53,653
|
|
|
|
|
|
|
Gross additions to
properties and equipment
|
$
|
13,469,206
|
|
$
|
9,843,214
|
Net (increase)
decrease in accounts payable for properties
|
|
|
|
|
|
and equipment
additions
|
|
1,432,425
|
|
|
1,655,503
|
Capital expenditures
and acquisitions, including dry hole costs
|
$
|
14,901,631
|
|
$
|
11,498,717
|
PRODUCTION
|
|
|
|
|
|
|
|
First Quarter
Ended
|
|
First Quarter
Ended
|
|
Dec. 31,
2014
|
|
Dec. 31,
2013
|
Mcfe Sold
|
|
3,737,483
|
|
|
3,509,270
|
Average Sales Price
per Mcfe
|
$
|
5.22
|
|
$
|
5.26
|
Oil Barrels
Sold
|
|
116,583
|
|
|
83,413
|
Average Sales Price
per Barrel
|
$
|
70.87
|
|
$
|
93.66
|
Mcf Sold
|
|
2,601,161
|
|
|
2,785,952
|
Average Sales Price
per Mcf
|
$
|
3.59
|
|
$
|
3.41
|
NGL Barrels
Sold
|
|
72,804
|
|
|
37,140
|
Average Sales Price
per Barrel
|
$
|
26.19
|
|
$
|
31.35
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter
ended
|
|
Oil Bbls
Sold
|
|
Mcf Sold
|
|
NGL Bbls
Sold
|
|
Mcfe Sold
|
12/31/2014
|
|
116,583
|
|
2,601,161
|
|
72,804
|
|
3,737,483
|
9/30/2014
|
|
126,256
|
|
2,690,493
|
|
55,849
|
|
3,783,123
|
6/30/2014
|
|
70,479
|
|
2,508,346
|
|
63,029
|
|
3,309,394
|
3/31/2014
|
|
66,239
|
|
2,788,768
|
|
51,670
|
|
3,496,222
|
12/31/2013
|
|
83,413
|
|
2,785,952
|
|
37,140
|
|
3,509,270
|
The Company's derivative contracts in place for natural gas at
Dec. 31, 2014, are outlined in its
Form 10-Q for the period ending Dec. 31,
2014.
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
2014 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.
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/panhandle-oil-and-gas-inc-reports-fiscal-2015-first-quarter-results-300032600.html
SOURCE Panhandle Oil and Gas Inc.