Panhandle Oil and Gas Inc. Reports Fiscal 2014 First Quarter Results

Records 129% Increase in Net Income to $4,926,318 ($0.59 per share) and a 17% Production Increase

Feb 06, 2014, 16:01 ET from Panhandle Oil and Gas Inc.

OKLAHOMA CITY, Feb. 6, 2014 /PRNewswire/ -- PANHANDLE OIL AND GAS INC. (NYSE: PHX), the "Company," today reported financial and operating results for the 2014 fiscal first quarter ending Dec. 31, 2013.

FIRST QUARTER 2014 HIGHLIGHTS

  • Recorded first quarter 2014 net income of $4,926,318, $0.59 per share, compared to net income of $2,148,298, $0.26 per share, for the 2013 first quarter.
  • Recorded highest quarterly Mcfe production in Company history of 3,509,270 Mcfe, compared to 3,008,365 Mcfe for the 2013 first quarter.
  • Increased quarterly oil production by 79% to 83,413 barrels, a Company record, compared to 46,656 barrels for the 2013 first quarter.
  • Increased quarterly NGL production by 21% to 37,140 barrels, compared to 30,674 barrels for the 2013 first quarter.
  • Fully funded capital expenditures of $9.9 million for drilling and equipping wells for the 2014 first quarter with cash generated by operating activities of $11.9 million during the quarter.
  • Reduced debt $2.3 million during the quarter to $6 million.

For the 2014 first quarter, the Company recorded net income of $4,926,318, $0.59 per share, compared to net income of $2,148,298, $0.26 per share, for the 2013 first quarter.  Net cash provided by operating activities increased 66% to $11,886,347 for the 2014 first quarter, compared to the 2013 first quarter.  Cash flow from operations fully funded all capital expenditures for the quarter of $11,498,717, which included $9,892,262 for drilling and equipping wells.  Drilling capital expenditures in fiscal 2014 principally were directed toward oily and NGL rich plays, principally in western and southern Oklahoma.  In addition, in the first quarter the Company made a small bolt-on acquisition of producing gas wells and associated acreage in the Fayetteville Shale for $1.6 million

Total revenues for the 2014 quarter were $18,396,756, compared to $14,180,435 for the 2013 quarter.  Oil, NGL and natural gas sales increased $5,714,128 or 45% in the 2014 quarter, compared to the 2013 quarter, as a result of a 17% increase in Mcfe production and a 24% increase in the average per Mcfe sales price.  The average sales price per Mcfe of production during the 2014 first quarter was $5.26, compared to $4.24 for the 2013 first quarter.  Additionally, 2014 first quarter total costs and expenses were down slightly, and costs and expenses per Mcfe of production were down substantially to $3.20 as compared to $3.77 for the 2013 quarter.

Oil production increased 79% in the 2014 quarter to 83,413 barrels, compared to 46,656 barrels in the 2013 quarter. NGL production increased 21% in the 2014 quarter to 37,140 barrels, and natural gas production increased 9% for the 2014 quarter, compared to the 2013 quarter.

MANAGEMENT COMMENTS

Michael C. Coffman, President and CEO said, "Our first quarter financial and operational results again demonstrate that continuing to execute on the Company's fundamental business strategies while maintaining a longer-term outlook will increase shareholder value. This quarter's net income of $4,926,318 is a function of record production levels of oil and NGL's and improved product prices.  The 2014 winter has driven natural gas prices to 3-year high levels, which we expect to moderate as we move into spring. However, these current prices and expected prices through 2014 should continue to have a positive effect on 2014 earnings."

Coffman continued: "We have maintained the discipline to invest in quality, lower-risk drilling and acquisition opportunities, which are expected to earn reasonable rates of return. These oil and NGL rich, as well as natural gas projects, have allowed Panhandle to materially grow production and reserves over the last few years with no debt increases or shareholder dilution, and we have also been successful in reducing our costs per Mcfe of production, further adding to Company profitability."

Paul Blanchard, Senior Vice President and COO said, "Panhandle is extremely well positioned to benefit from increasing natural gas prices. We have grown natural gas production, reserves and undeveloped opportunity materially through the trough in the gas market over the last several years. During that period the Company has invested $27 million in the acquisition of additional developed and undeveloped natural gas properties, principally in the core of the Fayetteville Shale. Our most recent acquisition consisted of developed and undeveloped properties in the Fayetteville Shale and was closed in the first quarter of fiscal 2014, for $1.6 million.

"Our oil production grew 79% in the first quarter of fiscal 2014 compared to the same period last year. This rate of oil production growth was largely the result of elevated oil drilling activity during the second half of fiscal 2013. The increased level of capital expenditures experienced in the current quarter was in part due to the cost associated with that activity. Our pace of oil well drilling thus far in 2014 has moderated from that level, which, when combined with the natural decline from new oil properties, is anticipated to result in a leveling off of oil production for the second quarter of fiscal 2014. Substantial oil and NGL drilling opportunity exists on our mineral holdings, and we anticipate development of those reserves will continue for many years."

PRODUCTION

First Quarter Ended

First Quarter Ended

Dec. 31, 2013

Dec. 31, 2012

Mcfe Sold

3,509,270

3,008,365

Average Sales Price per Mcfe

$

5.26

$

4.24

Oil Barrels Sold

83,413

46,656

Average Sales Price per Barrel

$

93.66

$

83.86

Mcf Sold

2,785,952

2,544,385

Average Sales Price per Mcf

$

3.41

$

3.11

NGL Barrels Sold

37,140

30,674

Average Sales Price per Barrel

$

31.35

$

30.31

 

 

Quarter ended

Oil Bbls Sold

Mcf Sold

NGL Bbls Sold

Mcfe Sold

12/31/2013

83,413

2,785,952

37,140

3,509,270

9/30/2013

79,387

2,820,079

30,373

3,478,639

6/30/2013

55,474

2,742,996

25,660

3,229,800

3/31/2013

52,567

2,778,869

25,190

3,245,411

12/31/2012

46,656

2,544,385

30,674

3,008,365

The Company's derivative contracts in place for natural gas at Dec. 31, 2013, are outlined in its Form 10-Q for the period ending Dec. 31, 2013.

 

FINANCIAL HIGHLIGHTS

Statements of Operations

Three Months Ended Dec. 31,

2013

2012

Revenues:

(unaudited)

Oil, NGL and natural gas sales

$

18,473,082

$

12,758,954

Lease bonuses and rentals

196,229

374,392

Gains (losses) on derivative contracts

(496,901)

892,693

Income from partnerships

224,346

154,396

18,396,756

14,180,435

Costs and expenses:

Lease operating expenses

3,315,397

3,296,562

Production taxes

571,564

303,553

Exploration costs

38,755

19,767

Depreciation, depletion and amortization

5,308,019

5,639,020

Provision for impairment

202,991

154,965

Loss (gain) on asset sales, interest and other

(77,455)

43,186

General and administrative

1,873,167

1,898,084

11,232,438

11,355,137

Income before provision for income taxes

7,164,318

2,825,298

Provision for income taxes

2,238,000

677,000

Net income

$

4,926,318

$

2,148,298

Basic and diluted earnings per common share

$

0.59

$

0.26

Basic and diluted weighted average shares outstanding:

Common shares

8,231,902

8,250,109

Unissued, directors' deferred compensation shares

123,061

122,285

8,354,963

8,372,394

 

 

Balance Sheets

Dec. 31, 2013

Sept. 30, 2013

Assets

(unaudited)

Current assets:

Cash and cash equivalents

$

294,961

$

2,867,171

Oil, NGL and natural gas sales receivables

14,677,736

13,720,761

Refundable production taxes

708,506

662,051

Derivative contracts

-

425,198

Other

165,811

129,998

Total current assets

15,847,014

17,805,179

Properties and equipment, at cost, based on successful efforts accounting:

Producing oil and natural gas properties

314,483,789

304,889,145

Non-producing oil and natural gas properties

8,873,666

8,932,905

Furniture and fixtures

737,929

737,368

324,095,384

314,559,418

Less accumulated depreciation, depletion and amortization

(191,820,197)

(186,641,291)

Net properties and equipment

132,275,187

127,918,127

Investments

1,663,320

1,574,642

Refundable production taxes

440,203

540,482

Total assets

$

150,225,724

$

147,838,430

Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable

$

7,168,398

$

8,409,634

Derivative contracts

466,772

-

Deferred income taxes

84,100

127,100

Income taxes payable

1,840,342

751,992

Accrued liabilities and other

1,203,080

1,011,865

Total current liabilities

10,762,692

10,300,591

Long-term debt

6,000,000

8,262,256

Deferred income taxes

31,595,907

31,226,907

Asset retirement obligations

2,477,441

2,393,190

Stockholders' equity:

Class A voting common stock, $.0166 par value; 24,000,000 shares authorized, 8,431,502 issued at Dec. 31, 2013, and Sept. 30, 2013

140,524

140,524

Capital in excess of par value

2,456,303

2,587,838

Deferred directors' compensation

2,870,595

2,756,526

Retained earnings

100,052,495

96,454,449

105,519,917

101,939,337

Less treasury stock, at cost; 194,830 shares at Dec. 31, 2013, and 200,248 shares at Sept. 30, 2013

(6,130,233)

(6,283,851)

Total stockholders' equity

99,389,684

95,655,486

Total liabilities and stockholders' equity

$

150,225,724

$

147,838,430

 

 

Condensed Statements of Cash Flows

Three months ended Dec. 31,

2013

2012

Operating Activities

(unaudited)

Net income

$

4,926,318

$

2,148,298

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation, depletion and amortization

5,308,019

5,639,020

Impairment

202,991

154,965

Provision for deferred income taxes

326,000

338,000

Exploration costs

38,755

19,767

Gain from leasing of fee mineral acreage

(196,133)

(373,440)

Income from partnerships

(224,346)

(154,396)

Distributions received from partnerships

279,363

194,147

Directors' deferred compensation expense

114,069

114,164

Restricted stock awards

127,976

257,877

Cash provided (used) by changes in assets and liabilities:

Oil, NGL and natural gas sales receivables

(956,975)

115,645

Fair value of derivative contracts

891,970

(936,914)

Refundable production taxes

53,824

212,834

Other current assets

(35,813)

47,528

Accounts payable

414,267

(361,777)

Income taxes receivable

-

319,735

Income taxes payable

1,088,350

-

Accrued liabilities

(472,288)

(577,210)

Total adjustments

6,960,029

5,009,945

Net cash provided by operating activities

11,886,347

7,158,243

Investing Activities

Capital expenditures, including dry hole costs

(9,892,262)

(6,864,399)

Acquisition of working interest properties

(1,550,205)

-

Acquisition of minerals and overrides

(56,250)

(330,000)

Proceeds from leasing of fee mineral acreage

216,773

384,790

Investments in partnerships

(143,695)

(243,519)

Net cash used in investing activities

(11,425,639)

(7,053,128)

Financing Activities

Borrowings under debt agreement

2,280,280

4,171,662

Payments of loan principal

(4,542,536)

(4,591,890)

Purchase of treasury stock

(122,044)

(116,632)

Payments of dividends

(664,618)

(580,991)

Excess tax benefit on stock-based compensation

16,000

15,000

Net cash provided by (used in) financing activities

(3,032,918)

(1,102,851)

Increase (decrease) in cash and cash equivalents

(2,572,210)

(997,736)

Cash and cash equivalents at beginning of period

2,867,171

1,984,099

Cash and cash equivalents at end of period

$

294,961

$

986,363

Supplemental Schedule of Noncash Investing and Financing Activities

Dividends declared and unpaid

$

663,654

$

583,438

Additions to asset retirement obligations

$

53,653

$

42,156

Gross additions to properties and equipment

$

9,843,214

$

5,218,194

Net (increase) decrease in accounts payable for properties and equipment additions

1,655,503

1,976,205

Capital expenditures and acquisitions, including dry hole costs

$

11,498,717

$

7,194,399

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 2013 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.

SOURCE Panhandle Oil and Gas Inc.



RELATED LINKS

http://www.panhandleoilandgas.com