Panhandle Oil and Gas Inc. Reports Fiscal First Quarter 2010 Results
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 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.
SOURCE Panhandle Oil and Gas Inc.
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