Panhandle Oil and Gas Inc. Announces Western Oklahoma Lease Agreement
13 Apr, 2012, 12:30 ET
OKLAHOMA CITY, April 13, 2012 /PRNewswire/ -- PANHANDLE OIL AND GAS INC. (NYSE: PHX) today reported that is has leased partial rights to 2,846 of its net mineral acres located in Roger Mills County, Okla., to a large independent exploration and production company for $4,981,000. Panhandle also retained a 3/16th non-cost bearing royalty interest in all production from wells drilled on these leased rights. The rights leased were from the surface to 100 feet below the base of the Virgilian (the base of the Virgilian is equivalent to the base of the Tonkawa). Panhandle retained the rights to the deeper pays including the Hogshooter, Cleveland, Marmaton and Granite Wash. The primary term of the lease is three (3) years with the right to extend for one additional year. The lessee also has the right of first refusal to the deep rights on this mineral acreage, should Panhandle elect to market any of these rights during the primary term of the lease. The transaction does not include any existing Panhandle production or currently booked reserves. Panhandle retains its perpetual mineral ownership.
Paul Blanchard, Sr. VP and COO, stated, "This lease represents a small portion of our mineral position in the area of intense oil and liquids rich drilling currently underway in western Oklahoma and the Texas Panhandle. We have retained our rights to all formations below these shallow leases, which in our opinion, contain the potential for multiple producing horizons, and should yield better and more predictable well results. We have an additional 14,300 net un-leased mineral acres in the 10 counties of active drilling in this oil and liquids rich area, which offer material upside to Panhandle for both additional reserves and production. This transaction, as well as other recent industry transactions in the area provides insight into the value of Panhandle's mineral position in this area."
Michael Coffman, President & CEO, further commented, "Panhandle is committed to maximizing the long term value of its assets for our shareholders, and we believe that this transaction accomplishes that goal. In our assessment, the lease bonus received plus the retained non-cost bearing royalty interest from wells drilled on these leases will exceed the present value of potential working interest participation in those wells. Further, Panhandle will not have to risk any capital investment in the drilling of these wells freeing up capital for other investment opportunities which present more compelling economics and this agreement should accelerate and expand drilling and future development on our mineral position in the area.
"Panhandle routinely weighs the value of leasing its mineral rights against participation with a working interest in drilling opportunities, whether it is well-by-well or on a broader scope. Should additional compelling opportunities to lease our mineral rights become available, Panhandle will evaluate the economic value of those opportunities."
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 on the Internet at www.panhandleoilandgas.com.
SOURCE Panhandle Oil and Gas Inc.
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