Panhandle Oil And Gas Inc. Reports Fourth Quarter And Fiscal Financial 2013 Results

2013 Net Income Increases 89% to $13,960,049 ($1.67 per share) and 2013 Production Increases 22%

Dec 11, 2013, 06:30 ET from Panhandle Oil and Gas Inc.

OKLAHOMA CITY, Dec. 11, 2013 /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, 2013. 

HIGHLIGHTS FOR THE YEAR ENDED SEPT. 30, 2013

  • Recorded 12-month net income of $13,960,049, $1.67 per share, compared to a net income of $7,370,996, $0.88 per share, for fiscal 2012.
  • Increased fiscal 2013 production by 22% over fiscal 2012 to 13.0 billion cubic feet equivalent (Bcfe), the largest in Company history.
  • Increased fiscal year 2013 oil production 53% over 2012 volumes.
  • Generated cash from operating activities of $37.4 million for the year, well in excess of drilling capital expenditures of $26.8 million.
  • Increased oil, NGL and natural gas sales revenues 48% in fiscal 2013, as compared to fiscal 2012.
  • Maintained strong balance sheet with debt to equity of 8.6%.

Fiscal Year 2013 Results

For fiscal 2013, the Company recorded net income of $13,960,049, or $1.67 per share.  This compared to net income of $7,370,996, or $0.88 per share, for fiscal 2012.  Net cash provided by operating activities increased 47% to $37,402,109 for fiscal 2013 versus 2012.  Capital expenditures for drilling and equipping wells in fiscal 2013 totaled $26,765,785, providing in excess of $10 million of free cash flow.  Debt was reduced by $6.6 million during the year. 

Total revenues for 2013 were $62,889,120, increasing 30% from $48,532,317 for 2012.  Fiscal 2012 revenues included lease bonuses and rentals of $7,152,991, as compared to $938,846 in 2013.  The Company was able to complete two significant leases on 5,174 net mineral acres during 2012, receiving $6.5 million in bonus payments, as compared to minor leasing activity in 2013.  Oil, NGL and gas sales revenues increased $19,787,444, or 48%, to $60,605,878 in 2013, as compared to 2012.  This increase was a result of a 22% increase in Mcfe production and a 21% increase in the average per Mcfe sales price.  The average sales price per Mcfe of production during 2013 was $4.68 compared to $3.86 in 2012.

Oil production increased 53% in 2013 to 234,084 barrels from 153,143 barrels in 2012, and gas production increased 1,814,031 Mcf, or 20%, compared to 2012.  Gas production volume increases are principally attributable to the development of the Company's Fayetteville Shale properties and gas production from wells drilled in the oil and NGL rich plays.  Drilling expenditures over the prior 24 months targeting oil and NGL rich plays, principally in Western Oklahoma and the Texas Panhandle, are responsible for the increased oil volumes.  In addition, 111,897 barrels of NGL were sold in fiscal 2013, which was a 13% increase versus 2012.

Fiscal Fourth Quarter 2013 Results

For the 2013 fourth quarter, the Company recorded net income of $5,719,096, or $0.68 per share.  This compared to net income of $182,621, or $0.02 per share, for the 2012 fourth quarter.  Net cash provided by operating activities increased 201% to $13,208,895 for the 2013 fourth quarter, versus the 2012 fourth quarter.  For the quarter, cash flow from operations substantially exceeded costs to drill and equip wells of $6,189,426

Total revenues for the 2013 fourth quarter were $18,396,254, increasing 67% from $11,041,382 for the 2012 quarter.  Oil, NGL and gas sales revenue increased $6,849,393, or 62% in the 2013 quarter, as compared to the 2012 quarter.  This increase was principally a result of a 28% increase in Mcfe production and a 19% increase in the sales price of natural gas.  The average sales price per Mcfe of production during the 2013 fourth quarter was $5.15, a 27% increase from $4.07 for the 2012 fourth quarter.  Oil production increased 74% in the 2013 quarter to 79,387 barrels, versus 45,552 barrels in the 2012 quarter, and gas production increased 568,539 Mcf to 2,820,079 Mcf, a 25% increase from the 2012 quarter.

Management Comments

Michael C. Coffman, President and CEO, said, "Fiscal 2013 provided both exceptional financial and operating results for the Company.  A 53% increase in oil production coupled with a 26% increase in our average natural gas sales price and a 20% increase in natural gas sales volumes increased oil and gas sales revenues 48% to $60.6 million.  Net income for 2013 increased 89% to $13.96 million over 2012 net income.

"These results were achieved from the reinvestment of cash flow in high-quality drilling projects.  In fact, not only did we fully fund drilling costs from cash flow, we reduced outstanding debt during the year by $6.6 million, ending the year with debt of $8.3 million

"Panhandle continues to be in the enviable position of having very low debt coupled with strong cash flows.  This allows us to deploy the capital necessary to take full advantage of all drilling opportunities on our acreage which we anticipate will generate acceptable rates of return.  Our drilling investments over the last two years have yielded exceptional production and reserve growth for Panhandle.  We expect to be able to continue making these investments in fiscal 2014 and beyond.  Management is continually evaluating the execution of our business strategies to be sure we maximize the return on and the value of Panhandle's assets, which in turn will increase our value per share."

OPERATING HIGHLIGHTS

Fourth Quarter Ended

Fourth Quarter Ended

Year Ended

Year Ended

Sept. 30, 2013

Sept. 30, 2012

Sept. 30, 2013

Sept. 30, 2012

MCFE Sold

3,478,639

2,720,080

12,962,215

10,583,440

Average Sales Price per MCFE

$5.15

$4.07

$4.68

$3.86

Barrels of Oil Sold

79,387

45,552

234,084

153,143

Average Sales Price per Barrel

$100.98

$87.24

$91.56

$90.13

MCF of Natural Gas Sold

2,820,079

2,251,540

10,886,329

9,072,298

Average Sales Price per MCF

$3.20

$2.68

$3.31

$2.62

Barrels of NGL Sold

30,373

32,538

111,897

98,714

Average Sales Price per Barrel

$28.89

$32.52

$27.67

$33.23

 

Quarterly Production Levels

Quarter ended

Oil Bbls Sold

MCF Sold

NGL Bbls Sold

MCFE Sold

9/30/13

79,387

2,820,079

30,373

3,478,639

6/30/13

55,474

2,742,996

25,660

3,229,800

3/31/13

52,567

2,778,869

25,190

3,245,411

12/31/12

46,656

2,544,385

30,674

3,008,365

9/30/12

45,552

2,251,540

32,538

2,720,080

6/30/12

38,937

2,273,649

23,680

2,649,351

3/31/12

30,614

2,303,797

27,834

2,654,485

12/31/11

38,040

2,243,312

14,662

2,559,524

 

FINANCIAL HIGHLIGHTS

Statements of Operations

Three Months Ended Sept. 30,

Year Ended Sept. 30,

2013

2012

2013

2012

Revenues:

Oil, NGL and natural gas sales

$

17,918,943

$

11,069,550

$

60,605,878

$

40,818,434

Lease bonuses and rentals

399,367

216,835

938,846

7,152,991

Gains (losses) on derivative contracts

(185,142)

(376,175)

611,024

73,822

Income from partnerships

263,086

131,172

733,372

487,070

18,396,254

11,041,382

62,889,120

48,532,317

Costs and expenses:

Lease operating expenses

2,820,790

2,571,028

11,861,403

9,141,970

Production taxes

657,499

377,544

1,834,840

1,449,537

Exploration costs

(51,032)

595,519

9,795

979,718

Depreciation, depletion and amortization

4,855,581

5,380,502

21,945,768

19,061,239

Provision for impairment

304,829

39,784

530,670

826,508

Loss (gain) on asset sales, interest and other

(646,480)

(6,353)

(785,401)

39,493

General and administrative

1,674,971

1,586,737

6,801,996

6,388,856

9,616,158

10,544,761

42,199,071

37,887,321

Income before provision for income taxes

8,780,096

496,621

20,690,049

10,644,996

Provision for income taxes

3,061,000

314,000

6,730,000

3,274,000

Net income

$

5,719,096

$

182,621

$

13,960,049

$

7,370,996

Basic and diluted earnings per common share:

Net income

$

0.68

$

0.02

$

1.67

$

0.88

Weighted average shares outstanding:

Common shares

8,220,466

8,239,648

8,240,792

8,246,335

Unissued, vested directors' shares

120,076

119,086

116,112

114,596

8,340,542

8,358,734

8,356,904

8,360,931

Dividends declared per share of common stock and paid in period

$

0.07

$

0.07

$

0.28

$

0.28

 

Balance Sheets

Sept. 30, 2013

Sept. 30, 2012

Assets

Current Assets:

Cash and cash equivalents

$

2,867,171

$

1,984,099

Oil, NGL and natural gas sales receivables

13,720,761

8,349,865

Refundable income taxes

-

325,715

Refundable production taxes

662,051

585,454

Deferred income taxes

-

121,900

Derivative contracts

425,198

-

Other

129,998

255,812

Total current assets

17,805,179

11,622,845

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

Producing oil and natural gas properties

304,889,145

275,997,569

Non-producing oil and natural gas properties

8,932,905

10,150,561

Furniture and fixtures

737,368

668,004

314,559,418

286,816,134

Less accumulated depreciation, depletion and amortization

(186,641,291)

(165,199,079)

Net properties and equipment

127,918,127

121,617,055

Investments

1,574,642

1,034,870

Refundable production taxes

540,482

911,960

Total assets

$

147,838,430

$

135,186,730

Liabilities and Stockholders' Equity

Current Liabilities:

Accounts payable

$

8,409,634

$

6,447,692

Derivative contracts

-

172,271

Deferred income taxes

127,100

-

Income taxes payable

751,992

-

Accrued liabilities and other

1,011,865

1,007,779

Total current liabilities

10,300,591

7,627,742

Long-term debt

8,262,256

14,874,985

Deferred income taxes

31,226,907

26,708,907

Asset retirement obligations

2,393,190

2,122,950

Stockholders' equity:

Class A voting common stock, $.0166 par value; 24,000,000 shares authorized, 8,431,502 issued at Sept. 30, 2013 and 2012

140,524

140,524

Capital in excess of par value

2,587,838

2,020,229

Deferred directors' compensation

2,756,526

2,676,160

Retained earnings

96,454,449

84,821,395

101,939,337

89,658,308

Treasury stock, at cost; 200,248 shares at Sept. 30, 2013, and 181,310 shares at Sept. 30, 2012

(6,283,851)

(5,806,162)

Total stockholders' equity

95,655,486

83,852,146

Total liabilities and stockholders' equity

$

147,838,430

$

135,186,730

 

Condensed Statements of Cash Flows

Year ended Sept. 30,

2013

2012

Operating Activities

Net income (loss)

$

13,960,049

$

7,370,996

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation, depletion and amortization

21,945,768

19,061,239

Impairment

530,670

826,508

Provision for deferred income taxes

4,767,000

1,802,000

Exploration costs

9,795

979,718

Gain from leasing of fee mineral acreage

(936,701)

(7,146,299)

Net (gain) loss on sales of assets

(208,750)

(122,504)

Income from partnerships

(733,372)

(487,070)

Distributions received from partnerships

917,718

601,300

Common stock contributed to ESOP

308,450

326,942

Common stock (unissued) to Directors'

Deferred Compensation Plan

377,520

417,347

Restricted stock awards

683,968

330,923

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

Oil, NGL and natural gas sales receivables

(5,370,896)

461,539

Fair value of derivative contracts

(597,469)

388,211

Refundable income taxes

325,715

28,531

Refundable production taxes

294,881

85,926

Other current assets

73,508

(108,098)

Accounts payable

298,191

585,912

Other non-current assets

-

308

Income taxes payable

751,992

-

Accrued liabilities

4,072

(32,233)

Total adjustments

23,442,060

18,000,200

Net cash provided by operating activities

37,402,109

25,371,196

Investing Activities

Capital expenditures, including dry hole costs

(26,765,785)

(25,147,306)

Acquisition of working interest properties

-

(17,399,052)

Acquisition of minerals and overrides

(783,750)

(2,745,069)

Proceeds from leasing of fee mineral acreage

1,023,368

7,265,808

Investments in partnerships

(724,118)

(481,904)

Proceeds from sales of assets

870,610

134,821

Excess tax benefit on stock-based compensation

15,000

83,742

Net cash used in investing activities

(26,364,675)

(38,288,960)

Financing Activities

Borrowings under debt agreement

11,569,652

43,475,443

Payments of loan principal

(18,182,381)

(28,600,458)

Purchases of treasury stock

(1,214,638)

(1,158,957)

Payments of dividends

(2,326,995)

(2,321,164)

Net cash provided by (used in) financing activities

(10,154,362)

11,394,864

Increase (decrease) in cash and cash equivalents

883,072

(1,522,900)

Cash and cash equivalents at beginning of year

1,984,099

3,506,999

Cash and cash equivalents at end of year

$

2,867,171

$

1,984,099

 

Condensed Statements of Cash Flows (continued)

Year ended Sept. 30,

2013

2012

Supplemental Disclosures of Cash Flow Information

Interest paid (net of capitalized interest)

$

157,558

$

127,970

Income taxes paid, net of refunds received

$

870,295

$

1,356,706

Supplemental schedule of noncash investing and financing activities:

Additions and revisions, net, to asset retirement obligations

$

161,065

$

279,075

Gross additions to properties and equipment

$

29,261,285

$

46,201,308

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

(1,711,750)

(909,881)

Capital expenditures, including dry hole costs

$

27,549,535

$

45,291,427

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; 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.  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