Company Records Net Income of $1,708,378 or $.20 Per Share OKLAHOMA
CITY, Feb. 8 /PRNewswire-FirstCall/ -- PANHANDLE OIL AND GAS INC.
(NYSE:PHX) today reported financial and operating results for the
fiscal first quarter ended December 31, 2009. FIRST QUARTER 2010
HIGHLIGHTS -- Recorded net income of $1,708,378 as compared to
first quarter 2009 net loss of $874,629 -- Generated a 9.8%
increase in total revenues -- Reported first quarter production of
2,278,144 Mcfe -- Strengthened balance sheet by reducing debt to
$8.5 million at December 31, 2009 For the quarter, the Company
recorded net income of $1,708,378, or $.20 per share as compared to
a net loss of $874,629, or $.10 per share, for the 2009 first
quarter. Total revenues for the 2010 quarter increased 9.8% to
$12,424,503, as compared to $11,319,702 for the 2009 quarter.
Capital expenditures for drilling and equipping wells and leasehold
acquisitions decreased 86% from the 2009 first quarter to
$2,658,662. Net cash provided by operating activities was
$4,820,926 for the 2010 first quarter. Production for the first
quarter of 2010 was 2,278,144 Mcfe. This was a 3% decrease in
sequential quarterly production and a 9% decrease from the 2009
first quarter. The average sales price per Mcfe of production
during the 2010 first quarter was $4.75 as compared to $4.25 for
the 2009 first quarter. FINANCIAL REVIEW Michael C. Coffman,
President and CEO said, "After a challenging year in fiscal 2009
Panhandle recorded a profit of $1,708,378 for the first quarter of
fiscal 2010. The first quarter average sales price per Mcfe of
$4.75 was an increase of $.96 per Mcfe over the 2009 full fiscal
year per Mcfe sales price of $3.79. In addition, our natural gas
hedging contracts contributed $1.4 million to first quarter
revenues. Current natural gas futures prices point to an average
realized price in the $5.00 - $5.50 range during 2010, which is
equivalent to the prices used to develop our 2010 capital and
operational program and should allow us to have a profitable year."
"For the quarter cash provided by operating activities totaled
$4,820,926 while capital expenditures for drilling and completion
costs were $2,658,662. Our cash flow both funded drilling costs and
enabled us to reduce our debt approximately $1.9 million during the
quarter to $8.5 million at December 31, 2009. We expect capital
expenditures to increase as the year progresses as most operators
in the shale plays in which we are involved have announced plans to
ramp up drilling activity in calendar 2010. With our strong
financial position, we will participate in those drilling
opportunities which are economically viable in the expected price
environment." OPERATIONS REVIEW Paul Blanchard, Vice President and
COO said, "The reduction in our drilling activity in Panhandle's
principal plays was evident from our significantly lower capital
expenditure level in the first quarter. Our production, however,
decreased only 3% from the fourth quarter of fiscal 2009. This very
modest production decrease, given the capital deployed, indicates
the quality of our drilling opportunities in several world class
shale plays. The completion of five wells in the Southeastern
Oklahoma Woodford Shale in late November added an average of 2,240
Mcf per day to our production for one month of the 2010 first
quarter. These wells are expected to be on-line for the entire
second quarter of 2010. Also, three additional Woodford Shale wells
in which our net revenue interest is approximately 11% per well,
are drilled and should be completed and on line in late February or
early March. In addition, one well in the Anadarko Basin "Cana"
Woodford Shale went on production in mid-December and this well is
projected to contribute approximately 300 Mcf per day to our
production in the second quarter. We currently have seven wells
producing in the "Cana" and one well drilling in which we have a
9.5% net revenue interest. That well should come on-line in late
March 2010. Currently we have two additional wells scheduled to be
drilled and four wells proposed for drilling in the play. In the
Arkansas Fayetteville Shale, three wells in which our net revenue
interest is approximately 10% were placed on production in early
January and are expected to be on-line for the entire quarter. Key
operators in the Company's resource plays have announced plans to
increase drilling activity in 2010. As a result, we project
increases in capital expenditures as the year progresses. We expect
the increase in drilling investments to result in the Company
re-establishing its upward momentum in production volumes as these
new wells come on line in future quarters." Derivative contracts in
place as of December 31, 2009 (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
--------------- ----------------- ----------- ----------- 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 -------------------------------------
Three Months Ended December 31, 2009 2008 (unaudited)
------------------------------- Revenues: Oil and natural gas sales
$10,810,432 $10,616,664 Lease bonuses and rentals 30,828 113,380
Gains (losses) on natural gas derivative contracts 1,403,340
393,007 Gain on asset sales, interest and other 103,151 58,060
Income from partnerships 76,752 138,591 ---------- ----------
12,424,503 11,319,702 Costs and expenses: Lease operating expenses
2,306,544 1,749,143 Production taxes 355,042 406,748 Exploration
costs 576,261 172,265 Depreciation, depletion and amortization
5,292,695 6,950,092 Provision for impairment - 1,875,920 General
and administrative 1,416,798 1,219,163 Interest expense 65,785 -
---------- ---------- 10,013,125 12,373,331 ---------- ----------
Income (loss) before provision (benefit) for income taxes 2,411,378
(1,053,629) Provision (benefit) for income taxes 703,000 (179,000)
---------- ---------- Net income (loss) $1,708,378 $(874,629)
========== ========== Earnings (loss) per common share $0.20
$(0.10) ========== ========== Weighted average shares outstanding:
Common shares 8,311,636 8,300,128 Unissued, vested directors'
shares 100,553 87,915 ---------- ---------- 8,412,189 8,388,043
========== ========== PRODUCTION ---------- First Quarter Ended
First Quarter Ended December 31, 2009 December 31, 2008
------------------- ------------------- Mcfe Sold 2,278,144
2,495,299 Average Sales Price per MCFE $4.75 $4.25 Barrels Sold
27,454 30,260 Average Sales Price per Barrel $71.30 $51.80 Mcf Sold
2,113,420 2,313,739 Average Sales Price per MCF $4.19 $3.91 Quarter
ended Barrels Sold Mcf Sold Mcfe Sold ------------- ------------
-------- --------- 12/31/09 27,454 2,113,420 2,278,144 9/30/09
29,011 2,181,985 2,356,051 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 Consolidated Balance Sheets ---------------------------
December 31, 2009 September 30, 2009 (unaudited) -----------------
------------------ Assets Current assets: Cash and cash equivalents
$516,751 $639,908 Oil and natural gas sales receivables, net of
allowance for uncollectible accounts 9,001,365 7,747,557 Deferred
income taxes 1,622,900 1,934,900 Refundable production taxes
178,324 616,668 Other 165,542 68,817 ------------ ------------
Total current assets 11,484,882 11,007,850 Properties and
equipment, at cost, based on successful efforts accounting:
Producing oil and natural gas properties 199,839,742 198,076,244
Non-producing oil and natural gas properties 10,248,480 10,332,537
Furniture and fixtures 584,060 578,460 ------------ ------------
210,672,282 208,987,241 Less accumulated depreciation, depletion
and amortization 118,733,463 112,900,027 ------------ ------------
Net properties and equipment 91,938,819 96,087,214 Investments
656,723 682,391 Refundable production taxes 915,277 772,177
------------ ------------ Total assets $104,995,701 $108,549,632
============ ============ Liabilities and Stockholders' Equity
Current liabilities: Accounts payable $3,786,043 $4,810,687
Derivative contracts 864,495 1,726,901 Accrued liabilities 759,427
1,033,570 ------------ ------------ Total current liabilities
5,409,965 7,571,158 Long-term debt 8,522,231 10,384,722 Deferred
income taxes 24,135,650 24,064,650 Asset retirement obligations
1,629,918 1,620,225 Derivative contracts - 786,534 Stockholders'
equity: Class A voting common stock, $.0166 par value; 24,000,000
shares authorized, 8,431,502 issued at December 31, 2009 and at
September 30, 2009 140,524 140,524 Capital in excess of par value
1,922,053 1,922,053 Deferred directors' compensation 1,911,530
1,862,499 Retained earnings 65,634,110 64,507,547 ------------
------------ 69,608,217 68,432,623 Less treasury stock, at cost;
119,866 shares at December 31, 2009 and at September 30, 2009
(4,310,280) (4,310,280) ------------ ------------ Total
stockholders' equity 65,297,937 64,122,343 ------------
------------ Total liabilities and stockholders' equity
$104,995,701 $108,549,632 ============ ============ Condensed
Consolidated Statements of Cash Flows
----------------------------------------------- Three months ended
December 31, 2009 2008 (unaudited) -------------------------------
Operating Activities Net income (loss) $1,708,378 $(874,629)
Adjustments to reconcile net income (loss) to net cash provided by
operating activities: Unrealized gains (losses) on natural gas
derivative contracts (1,648,940) 646,193 Depreciation, depletion,
amortization and impairment 5,292,695 8,826,012 Deferred income
taxes (net) 383,000 205,000 Exploration costs 576,161 172,265 Net
(gain) loss on sale of assets (133,192) (115,377) Income from
partnerships (76,752) (138,591) Distributions received from
partnerships 102,420 150,164 Directors' deferred compensation
expense 49,031 38,629 Cash provided by changes in assets and
liabilities: Oil and natural gas sales receivables (1,253,808)
6,528,078 Refundable income taxes - (386,512) Refundable production
taxes 295,244 (194,212) Other current assets (96,725) 27,915
Accounts payable (102,443) 501,227 Income taxes payable (51,770)
Accrued liabilities (222,373) (330,669) ---------- -----------
Total adjustments 3,112,548 15,930,122 ---------- ----------- Net
cash provided by operating activities 4,820,926 15,055,493
Investing Activities Capital expenditures, including dry hole costs
(2,658,662) (18,442,452) Proceeds from leasing of fee mineral
acreage 56,004 118,955 Proceeds from sales of assets 102,881 2,000
---------- ----------- Net cash used in investing activities
(2,499,777) (18,321,497) Financing Activities Borrowings under debt
agreement 5,000,388 18,316,045 Payments of loan principal
(6,862,879) (15,023,806) Payments of dividends (581,815) (581,009)
---------- ----------- Net cash provided by (used in) financing
activities (2,444,306) 2,711,230 ---------- ----------- Decrease in
cash and cash equivalents (123,157) (554,774) Cash and cash
equivalents at beginning of period 639,908 895,708 ----------
----------- Cash and cash equivalents at end of period $516,751
$340,934 ========== =========== Supplemental Schedule of Noncash
Investing and Financing Activities Dividends declared and unpaid $-
$581,009 ========== =========== Additions to asset retirement
obligations $9,693 $90,059 ========== =========== Gross additions
to properties and equipment $1,736,461 $12,385,991 Net (increase)
decrease in accounts payable for properties and equipment additions
922,201 6,056,461 ---------- ----------- Capital expenditures,
including dry hole costs $2,658,662 $18,442,452 ==========
=========== 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 2009 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.
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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