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

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

OKLAHOMA CITY – Feb. 6, 2014 – 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.


  • 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.


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.”



First Quarter Ended


First Quarter Ended


Dec. 31, 2013


Dec. 31, 2012

Mcfe Sold






Average Sales Price per Mcfe






Oil Barrels Sold






Average Sales Price per Barrel






Mcf Sold






Average Sales Price per Mcf






NGL Barrels Sold






Average Sales Price per Barrel







Quarter ended


Oil Bbls Sold


Mcf Sold


NGL Bbls Sold


Mcfe Sold














































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.


Statements of Operations


Three Months Ended Dec. 31,







Oil, NGL and natural gas sales






Lease bonuses and rentals






Gains (losses) on derivative contracts






Income from partnerships












Costs and expenses:






Lease operating expenses






Production taxes






Exploration costs






Depreciation, depletion and amortization






Provision for impairment






Loss (gain) on asset sales, interest and other






General and administrative












Income before provision for income taxes












Provision for income taxes












Net income




































Basic and diluted earnings per common share












Basic and diluted weighted average shares outstanding:






Common shares






Unissued, directors' deferred compensation shares












Balance Sheets


Dec. 31, 2013


Sept. 30, 2013






Current assets:






Cash and cash equivalents






Oil, NGL and natural gas sales receivables






Refundable production taxes






Derivative contracts












Total current assets












Properties and equipment, at cost, based on






   successful efforts accounting:






Producing oil and natural gas properties






Non-producing oil and natural gas properties






Furniture and fixtures












Less accumulated depreciation, depletion and amortization






Net properties and equipment


















Refundable production taxes






Total assets












Liabilities and Stockholders' Equity






Current liabilities:






Accounts payable






Derivative contracts






Deferred income taxes






Income taxes payable






Accrued liabilities and other






Total current liabilities












Long-term debt






Deferred income taxes






Asset retirement obligations












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






Capital in excess of par value






Deferred directors' compensation






Retained earnings












Less treasury stock, at cost; 194,830 shares at Dec. 31,






2013, and 200,248 shares at Sept. 30, 2013






Total stockholders' equity






Total liabilities and stockholders' equity






Condensed Statements of Cash Flows


Three months ended Dec. 31,





Operating Activities


Net income






Adjustments to reconcile net income to net cash provided






  by operating activities:






Depreciation, depletion and amortization












Provision for deferred income taxes






Exploration costs






Gain from leasing of fee mineral acreage






Income from partnerships






Distributions received from partnerships






Directors' deferred compensation expense






Restricted stock awards






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






Oil, NGL and natural gas sales receivables






Fair value of derivative contracts






Refundable production taxes






Other current assets






Accounts payable






Income taxes receivable






Income taxes payable






Accrued liabilities






Total adjustments






Net cash provided by operating activities












Investing Activities






Capital expenditures, including dry hole costs






Acquisition of working interest properties






Acquisition of minerals and overrides






Proceeds from leasing of fee mineral acreage






Investments in partnerships






Net cash used in investing activities












Financing Activities






Borrowings under debt agreement






Payments of loan principal






Purchase of treasury stock






Payments of dividends






Excess tax benefit on stock-based compensation






Net cash provided by (used in) financing activities












Increase (decrease) in cash and cash equivalents






Cash and cash equivalents at beginning of period






Cash and cash equivalents at end of period












Supplemental Schedule of Noncash Investing and Financing Activities






Dividends declared and unpaid






Additions to asset retirement obligations












Gross additions to properties and equipment






Net (increase) decrease in accounts payable for properties






and equipment additions






Capital expenditures and acquisitions, including dry hole costs






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

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.