OKLAHOMA CITY, Feb. 8, 2016 /PRNewswire/ -- PANHANDLE OIL
AND GAS INC. (NYSE: PHX), the "Company," today reported financial
and operating results for the 2016 fiscal first quarter ending
Dec. 31, 2015.
FIRST QUARTER 2016 RESULTS HIGHLIGHTS
- Recorded first quarter 2016 net loss of $2,799,118, $0.17
per share, compared to net income of $10,233,761, $0.61
per share, for the 2015 first quarter.
- Recorded production of 3,143,400 Mcfe, compared to 3,737,483
Mcfe for the 2015 first quarter.
- Funded capital expenditures of $1.3
million for drilling and equipping wells for the 2016 first
quarter with cash generated by operating activities of $7.7 million during the quarter.
- Collected $2.7 million from
leasing out mineral acreage in the 2016 quarter (not included in
$7.7 million of cash generated by
operating activities).
- Reduced debt $8 million in the
2016 first quarter.
For the 2016 first quarter, the Company recorded a net loss of
$2,799,118, $0.17 per share, compared to a net income of
$10,233,761, $0.61 per share, for the 2015 first quarter. Net
cash provided by operating activities decreased 50% to $7,650,218 for the 2016 first quarter, compared
to the 2015 first quarter. Cash flow from operations fully funded
all capital expenditures for drilling and equipping wells for the
quarter of $1,286,114.
Total revenues for the 2016 first quarter were $11,462,125, compared to $30,999,170 for the 2015 first quarter. Oil, NGL
and natural gas sales decreased $10,464,412 or 54% in the 2016 quarter, compared
to the 2015 quarter, as a result of a 16% decrease in Mcfe
production and a 45% reduction in the average sales price per Mcfe
of production. Sales prices for oil, NGL and natural gas decreased
44%, 51% and 47%, respectively, for the 2016 first quarter when
compared to the 2015 first quarter. The average sales price per
Mcfe during the 2016 first quarter was $2.88, compared to $5.22 for the 2015 first quarter.
Oil production decreased 9% in the 2016 first quarter to 106,362
barrels, compared to 116,583 barrels in the 2015 first quarter. NGL
production decreased 34% in the 2016 quarter to 48,051 barrels, and
natural gas production decreased 15% for the 2016 first quarter,
compared to the 2015 first quarter. The production volume declines
are the result of normal decline in the Company's producing wells.
Drilling and completion capital expenditures for the last year have
been below levels required to add new production sufficient to
offset this natural decline.
Lease operating expenses decreased to $1.13 per Mcfe in the 2016 quarter as compared to
$1.28 in the 2015 quarter. The
reduction was in part the result of operating efficiencies gained
in the Eagle Ford Shale field due to the addition of a salt water
disposal system and the electrification of the field. Further,
natural gas related fees were down as natural gas production
volumes and sales revenues were lower in the 2016 period.
Depreciation, depletion and amortization (DD&A) increased
principally as a result of lower oil, NGL and natural gas prices
utilized in the 2016 period reserve calculations shortening the
economic life of wells, which then results in lower projected
remaining reserves and causes increased units of production
DD&A. Impairment charges in the 2016 period related to more
than 20 fields, which are principally oil and liquids rich
properties.
MANAGEMENT COMMENTS
Michael C. Coffman, President and
CEO said, "At this point, 2016 is shaping up to be a continuation
of difficult times for the energy industry. Product prices remain
low; the outlook for oil and natural gas demand growth compared to
production growth continues to result in oversupply and high
inventory levels.
"The combined result of these factors has been a dramatic
reduction in capital expenditures announced by virtually every
company in the industry. Panhandle's capital expenditure level has
declined steadily over the last year, and we are fine with that,
based on current product prices. We have been able to use the free
cash flow to further reduce our debt, which today stands at
$53.5 million. The $8 million debt reduction in the first quarter
was the largest quarterly debt reduction in Company history, and
was accomplished during these very difficult times in the
industry.
"In addition, we are looking at all alternatives to maximize the
value of our mineral acreage assets to position the Company to be
in the best possible situation not only to ride out the current
environment, but to be in a position to take advantage of strategic
opportunities at the appropriate time."
Paul Blanchard, Senior Vice
President and COO said, "We have always considered our Company to
be unique in the oil and gas business, and we have demonstrated
that uniqueness during the current industry downturn. We have
utilized our significant undeveloped mineral position to generate
$4.6 million in cash proceeds in the
last three quarters by leasing out 8,391 acres or 4.2% of our total
199,000 acres of undeveloped minerals. As a part of this leasing
activity the Company has negotiated the right, on a unit by unit
basis, to exercise the option to participate with up to a 10%
working interest with our mineral holdings in two large blocks in
the Permian Basin that have the potential to become significant oil
fields with several hundred producing wells. As always, we will
also generate non-cost bearing royalty income on all production
from these leased lands whether or not we participate with a
working interest. In addition, the Company is currently analyzing
expressions of interest to lease other material undeveloped mineral
holdings. Our approach to this part of our business remains
consistent, we lease out our mineral holdings only where we believe
the lease bonus and royalty income will exceed the risk adjusted
present value of participating as a working interest owner.
"We have been generating significant lease bonus income and
greatly expanding the royalty and working interest opportunities
for Panhandle during this industry downturn. Most other oil and gas
companies, who are not mineral owners, have been forced to drill
wells and expend precious capital to preserve their opportunity or
lose the land and right to drill as their undeveloped leasehold
expires. They also have to invest additional capital to lease
minerals in new areas in order to expand their opportunity.
Panhandle's mineral holdings are perpetual and therefore never
expire. As a result, we are never forced to drill wells to preserve
our mineral acreage. These facts clearly differentiate our assets
and strategy from others and accentuate the conservative strength
of our Company and its benefits during difficult times in the
industry."
FINANCIAL
HIGHLIGHTS
|
|
Statements of
Operations
|
|
|
Three Months Ended
Dec. 31,
|
|
2015
|
|
2014
|
Revenues:
|
(unaudited)
|
Oil, NGL and natural
gas sales
|
$
|
9,055,288
|
|
$
|
19,519,700
|
Lease bonuses and
rentals
|
|
2,425,504
|
|
|
29,291
|
Gains (losses) on
derivative contracts
|
|
(34,936)
|
|
|
11,250,265
|
Income from
partnerships
|
|
16,269
|
|
|
199,914
|
|
|
11,462,125
|
|
|
30,999,170
|
Costs and
expenses:
|
|
|
|
|
|
Lease operating
expenses
|
|
3,566,536
|
|
|
4,785,350
|
Production
taxes
|
|
321,841
|
|
|
622,512
|
Exploration
costs
|
|
27,790
|
|
|
25,352
|
Depreciation,
depletion and amortization
|
|
6,957,652
|
|
|
6,139,019
|
Provision for
impairment
|
|
3,733,273
|
|
|
2,191,997
|
Loss (gain) on asset
sales and other
|
|
(269,706)
|
|
|
(1,982)
|
Interest
expense
|
|
360,562
|
|
|
402,733
|
General and
administrative
|
|
1,912,079
|
|
|
1,958,428
|
Bad debt expense
(recovery)
|
|
19,216
|
|
|
-
|
|
|
16,629,243
|
|
|
16,123,409
|
Income (loss) before
provision (benefit) for income taxes
|
|
(5,167,118)
|
|
|
14,875,761
|
|
|
|
|
|
|
Provision (benefit)
for income taxes
|
|
(2,368,000)
|
|
|
4,642,000
|
|
|
|
|
|
|
Net income
(loss)
|
$
|
(2,799,118)
|
|
$
|
10,233,761
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
earnings (loss) per common share
|
$
|
(0.17)
|
|
$
|
0.61
|
|
|
|
|
|
|
Basic and diluted
weighted average shares outstanding:
|
|
|
|
|
|
Common
shares
|
|
16,563,942
|
|
|
16,494,805
|
Unissued, directors'
deferred compensation shares
|
|
255,060
|
|
|
262,121
|
|
|
16,819,002
|
|
|
16,756,926
|
|
|
|
|
|
|
Dividends declared
per share of
|
|
|
|
|
|
common stock and paid
in period
|
$
|
0.04
|
|
$
|
0.04
|
|
|
|
|
|
|
Dividends declared
per share of
|
|
|
|
|
|
common stock and to be
paid in quarter ended March 31
|
$
|
0.04
|
|
$
|
0.04
|
Balance
Sheets
|
|
|
Dec. 31,
2015
|
|
Sept. 30,
2015
|
Assets
|
(unaudited)
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
1,503,691
|
|
$
|
603,915
|
Oil, NGL and natural
gas sales receivables (net of
|
|
5,540,926
|
|
|
7,895,591
|
allowance for
uncollectable accounts)
|
|
|
|
|
|
Refundable income
taxes
|
|
-
|
|
|
345,897
|
Refundable production
taxes
|
|
474,839
|
|
|
476,001
|
Derivative contracts,
net
|
|
636,114
|
|
|
4,210,764
|
Other
|
|
911,340
|
|
|
252,016
|
Total current
assets
|
|
9,066,910
|
|
|
13,784,184
|
|
|
|
|
|
|
Properties and
equipment, at cost, based on
|
|
|
|
|
|
successful efforts accounting:
|
|
|
|
|
|
Producing oil and
natural gas properties
|
|
441,316,100
|
|
|
441,141,337
|
Non-producing oil and
natural gas properties
|
|
7,694,635
|
|
|
8,293,997
|
Other
|
|
1,055,935
|
|
|
1,393,559
|
|
|
450,066,670
|
|
|
450,828,893
|
Less accumulated
depreciation, depletion and amortization
|
|
(234,432,151)
|
|
|
(228,036,803)
|
Net properties and
equipment
|
|
215,634,519
|
|
|
222,792,090
|
|
|
|
|
|
|
Investments
|
|
173,423
|
|
|
2,248,999
|
Total
assets
|
$
|
224,874,852
|
|
$
|
238,825,273
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Accounts
payable
|
$
|
2,397,076
|
|
$
|
2,028,746
|
Deferred income
taxes
|
|
863,100
|
|
|
1,517,100
|
Income taxes
payable
|
|
1,073,551
|
|
|
-
|
Accrued liabilities
and other
|
|
1,491,077
|
|
|
1,330,901
|
Total current
liabilities
|
|
5,824,804
|
|
|
4,876,747
|
|
|
|
|
|
|
Long-term
debt
|
|
57,000,000
|
|
|
65,000,000
|
Deferred income
taxes
|
|
36,025,907
|
|
|
39,118,907
|
Asset retirement
obligations
|
|
2,861,160
|
|
|
2,824,944
|
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
|
Class A voting common
stock, $.0166 par value;
|
|
|
|
|
|
24,000,000 shares
authorized, 16,863,004 issued at Dec. 31,
|
|
|
|
|
|
2015, and Sept. 30,
2015
|
|
280,938
|
|
|
280,938
|
Capital in excess of
par value
|
|
2,915,219
|
|
|
2,993,119
|
Deferred directors'
compensation
|
|
3,170,219
|
|
|
3,084,289
|
Retained
earnings
|
|
121,309,373
|
|
|
125,446,473
|
|
|
127,675,749
|
|
|
131,804,819
|
Less treasury stock,
at cost; 284,593 shares at Dec. 31,
|
|
|
|
|
|
2015, and 302,623
shares at Sept. 30, 2015
|
|
(4,512,768)
|
|
|
(4,800,144)
|
Total stockholders'
equity
|
|
123,162,981
|
|
|
127,004,675
|
Total liabilities and
stockholders' equity
|
$
|
224,874,852
|
|
$
|
238,825,273
|
Condensed Statements
of Cash Flows
|
|
|
Three months ended
Dec. 31,
|
|
2015
|
|
2014
|
Operating
Activities
|
(unaudited)
|
Net income
(loss)
|
$
|
(2,799,118)
|
|
$
|
10,233,761
|
Adjustments to
reconcile net income to net cash provided
|
|
|
|
|
|
by operating
activities:
|
|
|
|
|
|
Depreciation,
depletion and amortization
|
|
6,957,652
|
|
|
6,139,019
|
Impairment
|
|
3,733,273
|
|
|
2,191,997
|
Provision for deferred
income taxes
|
|
(3,747,000)
|
|
|
1,184,000
|
Exploration
costs
|
|
27,790
|
|
|
25,352
|
Gain from leasing of
fee mineral acreage
|
|
(2,425,131)
|
|
|
(29,162)
|
Net (gain) loss on
sale of assets
|
|
(271,080)
|
|
|
-
|
Income from
partnerships
|
|
(16,269)
|
|
|
(199,914)
|
Distributions received
from partnerships
|
|
36,253
|
|
|
256,017
|
Directors' deferred
compensation expense
|
|
85,930
|
|
|
101,589
|
Restricted stock
awards
|
|
371,407
|
|
|
165,111
|
Bad debt expense
(recovery)
|
|
19,216
|
|
|
-
|
Cash provided (used)
by changes in assets and liabilities:
|
|
|
|
|
|
Oil, NGL and natural
gas sales receivables
|
|
2,335,449
|
|
|
2,672,119
|
Fair value of
derivative contracts
|
|
3,574,650
|
|
|
(10,431,194)
|
Refundable production
taxes
|
|
1,162
|
|
|
13,205
|
Other current
assets
|
|
(659,324)
|
|
|
99,085
|
Accounts
payable
|
|
(484,882)
|
|
|
565,409
|
Income taxes
receivable
|
|
345,897
|
|
|
-
|
Income taxes
payable
|
|
1,073,551
|
|
|
2,891,600
|
Accrued
liabilities
|
|
(509,208)
|
|
|
(692,505)
|
Total
adjustments
|
|
10,449,336
|
|
|
4,951,728
|
Net cash provided by
operating activities
|
|
7,650,218
|
|
|
15,185,489
|
|
|
|
|
|
|
Investing
Activities
|
|
|
|
|
|
Capital expenditures,
including dry hole costs
|
|
(1,286,114)
|
|
|
(14,901,631)
|
Proceeds from leasing
of fee mineral acreage
|
|
2,693,812
|
|
|
29,798
|
Investments in
partnerships
|
|
44,842
|
|
|
(173,103)
|
Proceeds from sales of
assets
|
|
627,547
|
|
|
-
|
Net cash provided by
(used in) investing activities
|
|
2,080,087
|
|
|
(15,044,936)
|
|
|
|
|
|
|
Financing
Activities
|
|
|
|
|
|
Borrowings under debt
agreement
|
|
2,958,515
|
|
|
12,335,774
|
Payments of loan
principal
|
|
(10,958,515)
|
|
|
(11,620,667)
|
Purchase of treasury
stock
|
|
(117,165)
|
|
|
(120,611)
|
Payments of
dividends
|
|
(668,364)
|
|
|
(666,199)
|
Excess tax benefit on
stock-based compensation
|
|
(45,000)
|
|
|
(59,000)
|
Net cash provided by
(used in) financing activities
|
|
(8,830,529)
|
|
|
(130,703)
|
|
|
|
|
|
|
Increase (decrease) in
cash and cash equivalents
|
|
899,776
|
|
|
9,850
|
Cash and cash
equivalents at beginning of period
|
|
603,915
|
|
|
509,755
|
Cash and cash
equivalents at end of period
|
$
|
1,503,691
|
|
$
|
519,605
|
|
|
|
|
|
|
Supplemental
Schedule of Noncash Investing and Financing
Activities
|
|
|
|
|
|
Dividends declared and
unpaid
|
$
|
669,618
|
|
$
|
666,824
|
Additions to asset
retirement obligations
|
$
|
4,524
|
|
$
|
26,452
|
|
|
|
|
|
|
Gross additions to
properties and equipment
|
$
|
3,455,245
|
|
$
|
13,469,206
|
Net (increase)
decrease in accounts payable for properties
|
|
|
|
|
|
and equipment
additions
|
|
(2,169,131)
|
|
|
1,432,425
|
Capital expenditures
and acquisitions, including dry hole costs
|
$
|
1,286,114
|
|
$
|
14,901,631
|
PRODUCTION
|
|
|
|
|
|
|
|
First Quarter
Ended
|
|
First Quarter
Ended
|
|
Dec. 31,
2015
|
|
Dec. 31,
2014
|
Mcfe Sold
|
|
3,143,400
|
|
|
3,737,483
|
Average Sales Price
per Mcfe
|
$
|
2.88
|
|
$
|
5.22
|
Oil Barrels
Sold
|
|
106,362
|
|
|
116,583
|
Average Sales Price
per Barrel
|
$
|
39.34
|
|
$
|
70.87
|
Mcf Sold
|
|
2,216,922
|
|
|
2,601,161
|
Average Sales Price
per Mcf
|
$
|
1.92
|
|
$
|
3.59
|
NGL Barrels
Sold
|
|
48,051
|
|
|
72,804
|
Average Sales Price
per Barrel
|
$
|
12.78
|
|
$
|
26.19
|
|
|
|
|
|
|
|
|
|
Quarter
ended
|
|
Oil Bbls
Sold
|
|
Mcf Sold
|
|
NGL Bbls
Sold
|
|
Mcfe Sold
|
12/31/2015
|
|
106,362
|
|
2,216,922
|
|
48,051
|
|
3,143,400
|
9/30/2015
|
|
112,237
|
|
2,261,236
|
|
47,738
|
|
3,221,086
|
6/30/2015
|
|
109,738
|
|
2,407,049
|
|
41,737
|
|
3,315,899
|
3/31/2015
|
|
114,567
|
|
2,475,777
|
|
48,681
|
|
3,455,265
|
12/31/2014
|
|
116,583
|
|
2,601,161
|
|
72,804
|
|
3,737,483
|
The Company's derivative contracts in place for natural gas at
Dec. 31, 2015, are outlined in its
Form 10-Q for the period ending Dec. 31,
2015.
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 2015 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; Panhandle's hedging activities may reduce
the realized prices received for natural gas sales; the volatility
of oil and gas prices; the Company'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, as 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-2016-first-quarter-results-300216834.html
SOURCE PANHANDLE OIL AND GAS INC.