OKLAHOMA CITY, May 9, 2019 /PRNewswire/ -- PANHANDLE OIL
AND GAS INC., the "Company," (NYSE: PHX), today reported financial
and operating results for the second quarter and six months ended
March 31, 2019.
Paul F. Blanchard Jr., President
and CEO commented, "During the first half of fiscal 2019, we
continued to execute our corporate strategy of optimizing our
mineral portfolio, maintaining a strong financial position and
generating optimal cash flow. This execution included several
specific initiatives: 1) selling mineral acreage in New Mexico and purchasing mineral acreage in
the STACK play in Oklahoma, both
at valuations that were very attractive to Panhandle, 2)
repurchasing approximately $4.0
million of our stock at a price we believe represents an
attractive long-term value to our shareholders and 3) reducing debt
by $6.9 million."
Mr. Blanchard continued, "Our unique mineral holdings, including
large positions of both leased and open minerals in key areas,
provide us with several levers to generate significant cash flow
moving forward, and to continue to optimize our portfolio. Two
special portfolio optimization projects underway for the second
half of 2019 include the marketing of additional high-value Permian
Basin mineral acreage and a new marketing effort to lease out a
multiple-county package of Panhandle mineral acreage in the STACK
and SCOOP plays. Much of this STACK and SCOOP acreage was
previously held by the Company as unleased to allow for potential
working interest participation. Each of these projects have the
potential to generate meaningful cash flow for the Company. We are
also aggressively pursuing the acquisition of additional mineral
acreage with significant undeveloped potential in the Bakken and
the STACK and SCOOP plays as part of our strategy. In that regard,
we executed an agreement earlier this week to purchase additional
Bakken mineral acreage from a private seller for $3.48 million. The details of the transaction are
in the acquisition and divestiture section of this release.
Finally, our seven new Eagle Ford Shale working interest wells
began producing at the end of the second quarter and are performing
in line with our pre-drilling expectations. These wells are
expected to materially increase Panhandle's third quarter oil
production."
HIGHLIGHTS FOR THE PERIODS ENDED MARCH
31, 2019
- Net income in the first half of 2019 was $10.8 million or $0.64 per share, as compared to $14.9 million or $0.87 per share in the same period of 2018.
Adjusted pre-tax net income(1) increased 117% in the
first half of 2019 to $10.0 million
or $0.59 per share, as compared to
$4.6 million or $0.27 per share in the first half of 2018.
Adjusted pre-tax net loss for the 2019 second quarter was
$0.1 million.
- Adjusted EBITDA(1) grew 23% in the first half of
2019 to $18.5 million, as compared to
$15.0 million in 2018, including a
$9.1 million gain on asset sales in
the adjusted EBITDA for the 2019 period. Adjusted EBITDA for the
2019 second quarter was $4.0
million.
- The Company repurchased $4.0
million of stock during the first half of 2019 at an average
price of $15.89 per share, of which,
$2.9 million was purchased in the
second quarter.
- Reduced debt from $51.0 million,
as of Sept. 30, 2018, to $44.1 million, as of March
31, 2019, which has declined further to $42.0 million as of May 7,
2019.
- Debt to enterprise value and debt to adjusted EBITDA (TTM) were
14.50% and 1.50x, respectively, at March 31,
2019.
- The total return to shareholders in the first half of 2019 was
$12.2 million through stock
repurchases, dividends and debt reduction. This equates to an
effective annualized yield of approximately 9.4% for that
period.
- Royalty interest oil, NGL and natural gas sales increased 22.2%
to $7.9 million in the first half of
2019 as compared to $6.5 million for
the same period last year.
(1)
|
This is a Non-GAAP
measure. Refer to the Non-GAAP Reconciliation section.
|
OPERATING
HIGHLIGHTS
|
|
|
Second Quarter
Ended
|
|
|
Second Quarter
Ended
|
|
|
Six Months
Ended
|
|
|
Six Months
Ended
|
|
|
March 31,
2019
|
|
|
March 31,
2018
|
|
|
March 31,
2019
|
|
|
March 31,
2018
|
|
Mcfe Sold
|
|
2,421,525
|
|
|
|
2,942,274
|
|
|
|
5,186,055
|
|
|
|
6,364,087
|
|
Average Sales Price
per Mcfe
|
$
|
3.81
|
|
|
$
|
4.17
|
|
|
$
|
4.13
|
|
|
$
|
3.95
|
|
Oil Barrels
Sold
|
|
74,372
|
|
|
|
82,312
|
|
|
|
157,200
|
|
|
|
173,149
|
|
Average Sales Price
per Barrel
|
$
|
52.84
|
|
|
$
|
63.20
|
|
|
$
|
53.49
|
|
|
$
|
58.28
|
|
Gas Mcf
Sold
|
|
1,688,043
|
|
|
|
2,107,920
|
|
|
|
3,582,033
|
|
|
|
4,550,305
|
|
Average Sales Price
per Mcf
|
$
|
2.65
|
|
|
$
|
2.72
|
|
|
$
|
3.00
|
|
|
$
|
2.60
|
|
NGL Barrels
Sold
|
|
47,875
|
|
|
|
56,747
|
|
|
|
110,137
|
|
|
|
129,148
|
|
Average Sales Price
per Barrel
|
$
|
17.05
|
|
|
$
|
23.60
|
|
|
$
|
20.62
|
|
|
$
|
25.00
|
|
FINANCIAL
HIGHLIGHTS
|
|
|
|
Second Quarter
Ended
|
|
|
Second Quarter
Ended
|
|
|
Six Months
Ended
|
|
|
Six Months
Ended
|
|
|
|
March 31,
2019
|
|
|
March 31,
2018
|
|
|
March 31,
2019
|
|
|
March 31,
2018
|
|
Working Interest Sales
|
|
$
|
6,070,901
|
|
|
$
|
8,701,919
|
|
|
$
|
13,505,476
|
|
|
$
|
18,668,088
|
|
Royalty Interest Sales
|
|
$
|
3,150,418
|
|
|
$
|
3,564,117
|
|
|
$
|
7,926,562
|
|
|
$
|
6,485,367
|
|
Oil, NGL and Natural
Gas Sales
|
|
$
|
9,221,319
|
|
|
$
|
12,266,036
|
|
|
$
|
21,432,038
|
|
|
$
|
25,153,455
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease Bonuses and
Rental Income
|
|
$
|
208,746
|
|
|
$
|
499,198
|
|
|
$
|
723,303
|
|
|
$
|
596,157
|
|
Total
Revenue
|
|
$
|
7,636,213
|
|
|
$
|
11,421,258
|
|
|
$
|
33,965,207
|
|
|
$
|
23,911,784
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LOE per
Mcfe
|
|
$
|
1.23
|
|
|
$
|
1.09
|
|
|
$
|
1.17
|
|
|
$
|
1.08
|
|
Production Tax per
Mcfe
|
|
$
|
0.19
|
|
|
$
|
0.17
|
|
|
$
|
0.21
|
|
|
$
|
0.16
|
|
DD&A per
Mcfe
|
|
$
|
1.50
|
|
|
$
|
1.44
|
|
|
$
|
1.43
|
|
|
$
|
1.50
|
|
G&A Expense per
Mcfe
|
|
$
|
0.88
|
|
|
$
|
0.60
|
|
|
$
|
0.79
|
|
|
$
|
0.57
|
|
Interest Expense per
Mcfe
|
|
$
|
0.20
|
|
|
$
|
0.15
|
|
|
$
|
0.20
|
|
|
$
|
0.14
|
|
Total Expense per
Mcfe
|
|
$
|
4.00
|
|
|
$
|
3.45
|
|
|
$
|
3.80
|
|
|
$
|
3.45
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
|
|
$
|
(1,931,334)
|
|
|
$
|
1,070,176
|
|
|
$
|
10,804,606
|
|
|
$
|
14,855,115
|
|
Adj. Pre-Tax Net
Income (Loss) (1)
|
|
$
|
(86,375)
|
|
|
$
|
2,681,658
|
|
|
$
|
10,014,384
|
|
|
$
|
4,607,633
|
|
Adjusted EBITDA
(1)
|
|
$
|
4,023,385
|
|
|
$
|
7,358,687
|
|
|
$
|
18,477,200
|
|
|
$
|
14,992,065
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flow from
Operations
|
|
$
|
5,051,311
|
|
|
$
|
8,161,399
|
|
|
$
|
9,061,054
|
|
|
$
|
15,359,982
|
|
CapEx - Drilling
& Equipping
|
|
$
|
2,713,744
|
|
|
$
|
1,559,601
|
|
|
$
|
4,159,683
|
|
|
$
|
6,544,481
|
|
CapEx -
Acquisitions
|
|
$
|
1,386,775
|
|
|
$
|
-
|
|
|
$
|
1,809,775
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Borrowing
Base
|
|
|
|
|
|
|
|
|
|
$
|
80,000,000
|
|
|
$
|
80,000,000
|
|
Debt
|
|
|
|
|
|
|
|
|
|
$
|
44,100,000
|
|
|
$
|
43,500,000
|
|
Debt/Adjusted EBITDA
(TTM) (1)
|
|
|
|
|
|
|
|
|
|
|
1.50
|
|
|
|
1.52
|
|
Debt to Enterprise
Value (1)
|
|
|
|
|
|
|
|
|
|
|
14.50
|
%
|
|
|
11.84
|
%
|
(1)
|
This is a Non-GAAP
measure. Refer to the Non-GAAP Reconciliation section.
|
SECOND QUARTER 2019 RESULTS
Total production decreased 18% in the 2019 quarter, as compared
to the 2018 quarter. Total production has decreased due to the
natural decline of the production base and, to a lesser extent, the
result of marginal property divestitures. This was partially offset
by the production from new royalty and working interest wells. The
oil production decrease is primarily from the Eagle Ford Shale
properties, a result of naturally declining production, as well as
shut-in time for wells offsetting the newly completed (March 2019) seven-well program during stimulation
and flowback. This decrease was somewhat offset by the mineral
acquisition of Bakken oil-producing properties in August 2018. The NGL production decrease is
attributed to both natural production decline and operators
electing to remove less NGLs from the natural gas stream due to
lower NGL prices. These decreases in the liquid-rich production
from the prior year's drilling program in the Anadarko Basin Woodford Shale and Eagle Ford
Shale were partially offset by new well drilling in the Arkoma
Woodford and STACK in Oklahoma.
Decreased gas production was due to naturally declining production
in the Anadarko Woodford and Arkoma Woodford shales, well workovers
in the Arkoma Woodford Shale and, to a lesser extent, marginal
property divestitures during 2018. These decreases were partially
offset by new drilling in the STACK and Anadarko Woodford.
The total production in the second quarter of 2018 saw
significant increases due to our substantial 2017 drilling program
in the Arkoma Woodford (8 wells), Anadarko Woodford (6 wells) and
Eagle Ford (10 wells) shales, which began production just before or
during the quarter. All of these wells had significantly higher
than average NRI's and were producing at high rates during that
time. As with virtually all horizontal wells, production from these
wells experienced significant declines during their first year.
This decline, along with materially lower capital expenditures
during fiscal 2018 and the first half of fiscal 2019, accounted for
a material portion of the Company's production decline experienced
in the 2019 comparable periods.
Average daily production in the second quarter of 2019 decreased
10% when compared to the first quarter of 2019. A material portion
of the decrease was due to the following factors: adjustments to
prior quarter receivable balances, operators electing to remove
less NGL from the natural gas stream due to lower NGL prices and
the sale of producing properties in the first quarter.
Oil, NGL and natural gas revenue decreased 25% in the 2019
quarter as production decreased 18% and product prices decreased
relative to the 2018 quarter. The 2019 quarter included a
$1.8 million loss on derivative
contracts as compared to a $1.3
million loss for the 2018 quarter.
The 16% increase in total cost per MCFE in the 2019 quarter
relative to the 2018 quarter was primarily driven by lower
production as noted above. In the 2018 quarter there was
significant production from lower cost wells (wells that have very
high royalty interest in relation to their working interest). These
wells had large initial production rates that drove the per Mcfe
rate down across most expense categories. As expected, production
on these wells has declined in the 2019 quarter from their previous
high rates. Interest expense and production taxes were also
influenced, respectively, by higher bank interest rates and
production tax rate. G&A expense also increased due to
non-recurring restricted stock and other compensation expenses tied
to retirement clauses and other employee changes.
The Company's net income (loss) changed from net income of
$1.1 million in the 2018 quarter to a
net loss of $1.9 million in the 2019
quarter. The majority of the change was due to lower production and
decreased prices in the 2019 quarter. Adjusted pre-tax net income
(loss) (1) was $0.1
million net loss in the 2019 quarter, as compared to net
income of $2.7 million in the 2018
quarter.
(1)
|
This is a Non-GAAP
measure. Refer to the Non-GAAP Reconciliation section.
|
SIX MONTHS 2019 RESULTS
Total production decreased 19% in the 2019 period, as compared
to the 2018 period. This decrease for the 2019 six-month period,
was due to factors consistent with those discussed above. Panhandle
also elected not to participate with a working interest on 32 wells
proposed on its minerals.
Oil, NGL and natural gas revenue decreased 15% in the 2019
period as production decreased 19% and product prices increased
relative to the 2018 period. The 2019 period included a
$2.7 million gain on derivative
contracts as compared to a $1.8
million loss for the 2018 period.
In the 2019 period, the Company sold mineral acreage in Lea and
Eddy Counties, N.M., for a gain of $9,096,938. In the 2018 period, the Company sold
its working interest in several marginal properties in Oklahoma for a loss of $466,129.
The 10% increase in total cost per MCFE in the 2019 period
relative to the 2018 period was primarily driven by lower
production as noted above. In the 2018 period there were
significant increases in production from lower cost wells (wells
that have very high royalty interest in relation to their working
interest). These wells had large initial production rates that
drove the cost per Mcfe down across most expense categories. As
expected, in the 2019 period the production on these wells has
declined from their initial high rates. Interest expense and
production taxes were also influenced, respectively, by higher bank
interest rates and production tax rate increases in Oklahoma during the 2019 period. G&A
expense also increased due to non-recurring restricted stock and
other compensation expenses.
The Company's net income decreased $4.1
million in the 2019 period, as compared to the 2018 period.
The 2018 period was materially impacted by the Tax Cuts and Jobs
Act enacted in December 2017, and the
2019 period was materially impacted by the gain on sale of assets
and the mark-to-market gain on Panhandle's derivatives. Adjusted
pre-tax net income (1) was $10.0
million in the 2019 period, as compared to $4.6 million in the 2018 period.
The Company generated excess free cash flow, enabling us to
return $5.3 million to shareholders
through dividend payments and stock repurchases, while also paying
down $6.9 million of debt.
(1)
|
This is a Non-GAAP
measure. Refer to the Non-GAAP Reconciliation section.
|
OPERATIONS UPDATE
Eagle Ford
Seven Eagle Ford Shale wells began production at the end of the
second quarter. The Company's average working interest in this
group of wells is 10.8% (8% net revenue), as the wells are located
partially on the Company's 16% working interest (12% net revenue)
acreage and partially on acreage Panhandle does not own. The
average initial 30-day production rate from the seven wells was 860
Boe per day (69 Boepd net to Panhandle). This is in line with
projected production for these Eagle Ford Shale wells. These wells
are expected to materially increase third quarter oil
production.
Oklahoma
Drilling activity on the Company's Oklahoma mineral acreage continues to be
strong, with 15 rigs currently active on royalty interest wells.
The majority of the activity is in SCOOP and STACK with 13 royalty
interest wells drilling.
Permian Basin
Two rigs are currently drilling royalty interest wells on our
mineral holdings in the Permian Basin in Texas and New
Mexico.
Bakken
One rig is drilling a royalty interest well on our mineral
holdings in the Bakken in North
Dakota.
Rig Activity
In addition to the 18 rigs currently drilling royalty interest
wells on Panhandle acreage, 87 rigs are currently drilling within
2.5 miles of Panhandle acreage, which is an indication of future
potential drilling interest on our mineral acreage.
Leasing Activity
The Company leased out 336 mineral acres at approximately
$622/acre in the quarter at an
average royalty rate of 20.3%.
ACQUISITION AND DIVESTITURE UPDATE
Panhandle acquired 374 mineral acres in the core of the STACK
play in western Oklahoma in the
first half of 2019 for $1,809,775 or
$4,800/acre. This acreage is in an
area of current drilling, primarily by Continental Resources, for
both the Meramec and Woodford in
Blaine and Caddo Counties, Okla.
On May 6, 2019, Panhandle entered
into a definitive agreement to acquire 319 net mineral acres in the
core of the Bakken/Three Forks play, principally in McKenzie and Dunn Counties, N.D., for $3.48 million. There are 324 Bakken and Three
Forks wells with net royalty production of approximately 52 Boe per
day and an additional 130 Bakken and Three Forks undeveloped
locations on the mineral acreage. Drilling and completion
operations are underway on 49 of the undeveloped locations and 5
locations have been permitted. Cash flow for May 2019 is estimated at $52,300. The transaction is expected to close by
the end of May 2019 and will be
funded utilizing the Company's bank credit facility.
During the first quarter of 2019, the Company sold 2,016 net
mineral acres and producing oil and gas properties located in Lea
and Eddy Counties, N.M., to a private buyer for total net
consideration of $9,096,938 and
recorded a gain on the sale of $9,096,938.
The Company intends to continue optimizing its mineral portfolio
through strategic sales and purchases. Panhandle is unique in the
industry, in that the net book value of our entire 260,000-acre
mineral portfolio is only $71 per
acre. This affords the Company the opportunity to generate material
net income and EBITDA on lease bonuses and the strategic sale of
minerals.
RESERVES UPDATE
March 31, 2019, mid-year proved reserves were 159.5 Bcfe,
as calculated by DeGolyer and MacNaughton, the Company's
independent consulting petroleum engineering firm. This was an 8%
decrease, compared to the 173.6 Bcfe of proved reserves at
Sept. 30, 2018. SEC prices used for
the March 31, 2019, report averaged $2.75 per Mcf for natural gas, $61.63 per barrel for oil and $23.46 per barrel for NGL, compared to
$2.56 per Mcf for natural gas,
$62.86 per barrel for oil and
$26.13 per barrel for NGL at the
Sept. 30, 2018, report. These prices
reflect net prices received at the wellhead. Total proved developed
reserves decreased 4% to 105.0 Bcfe, as compared to Sept. 30, 2018, reserve volumes. Total proved
undeveloped reserves decreased 9.3 Bcfe principally due to 12 Eagle
Ford Shale wells being reclassified from proven undeveloped to
probable undeveloped as the wells are no longer scheduled to be
drilled within five years of when they were classified as proven
undeveloped. To a lesser extent, the change of our Arkoma Basin Woodford proven undeveloped locations from
working interest to royalty interest also contributed to the
decrease. This change was made to reflect our current intent to
lease these minerals and not participate with a working interest
when they are drilled.
SECOND QUARTER EARNINGS CALL
Panhandle will host a conference call to discuss second quarter
results at 5:00 p.m. E.D.T. on
May 9, 2019. Management's discussion
will be followed by a question and answer session with investors.
To participate on the conference call, please dial 877-407-9210
(domestic) or 201-689-8049 (international). A replay of the call
will be available for 14 days after the call. The number to access
the replay of the conference call is 877-481-4010 and the PIN for
the replay is 46460.
FINANCIALS
|
|
Statements of
Operations
|
|
|
Three Months Ended
March 31,
|
|
|
Six Months Ended
March 31,
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
Revenues:
|
(unaudited)
|
|
|
(unaudited)
|
|
Oil, NGL and natural
gas sales
|
$
|
9,221,319
|
|
|
$
|
12,266,036
|
|
|
$
|
21,432,038
|
|
|
$
|
25,153,455
|
|
Lease bonuses and
rental income
|
|
208,746
|
|
|
|
499,198
|
|
|
|
723,303
|
|
|
|
596,157
|
|
Gains (losses) on
derivative contracts
|
|
(1,793,852)
|
|
|
|
(1,343,976)
|
|
|
|
2,712,928
|
|
|
|
(1,837,828)
|
|
Gain on asset
sales
|
|
-
|
|
|
|
-
|
|
|
|
9,096,938
|
|
|
|
-
|
|
|
|
7,636,213
|
|
|
|
11,421,258
|
|
|
|
33,965,207
|
|
|
|
23,911,784
|
|
Costs and
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease operating
expenses
|
|
2,988,178
|
|
|
|
3,217,568
|
|
|
|
6,092,748
|
|
|
|
6,844,277
|
|
Production
taxes
|
|
467,308
|
|
|
|
497,823
|
|
|
|
1,076,259
|
|
|
|
986,813
|
|
Depreciation,
depletion and amortization
|
|
3,623,976
|
|
|
|
4,241,078
|
|
|
|
7,437,662
|
|
|
|
9,516,902
|
|
Interest
expense
|
|
485,784
|
|
|
|
435,951
|
|
|
|
1,025,154
|
|
|
|
867,530
|
|
General and
administrative
|
|
2,133,153
|
|
|
|
1,766,190
|
|
|
|
4,071,993
|
|
|
|
3,654,333
|
|
Loss on asset sales
and other
|
|
(852)
|
|
|
|
216,472
|
|
|
|
15,785
|
|
|
|
(79,186)
|
|
|
|
9,697,547
|
|
|
|
10,375,082
|
|
|
|
19,719,601
|
|
|
|
21,790,669
|
|
Income (loss) before
provision (benefit) for income taxes
|
|
(2,061,334)
|
|
|
|
1,046,176
|
|
|
|
14,245,606
|
|
|
|
2,121,115
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision (benefit)
for income taxes
|
|
(130,000)
|
|
|
|
(24,000)
|
|
|
|
3,441,000
|
|
|
|
(12,734,000)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
$
|
(1,931,334)
|
|
|
$
|
1,070,176
|
|
|
$
|
10,804,606
|
|
|
$
|
14,855,115
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
earnings (loss) per common share
|
$
|
(0.11)
|
|
|
$
|
0.06
|
|
|
$
|
0.64
|
|
|
$
|
0.87
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
weighted average shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
shares
|
|
16,679,187
|
|
|
|
16,766,010
|
|
|
|
16,712,493
|
|
|
|
16,725,076
|
|
Unissued, directors'
deferred compensation shares
|
|
183,206
|
|
|
|
205,867
|
|
|
|
217,704
|
|
|
|
267,005
|
|
|
|
16,862,393
|
|
|
|
16,971,877
|
|
|
|
16,930,197
|
|
|
|
16,992,081
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared
per share of common stock and paid in period
|
$
|
0.04
|
|
|
$
|
0.04
|
|
|
$
|
0.08
|
|
|
$
|
0.08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
Sheets
|
|
|
March 31,
2019
|
|
|
Sept. 30,
2018
|
|
Assets
|
(unaudited)
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
504,982
|
|
|
$
|
532,502
|
|
Oil, NGL and natural
gas sales receivables (net of allowance for uncollectable
accounts)
|
|
6,385,694
|
|
|
|
7,101,629
|
|
Refundable income
taxes
|
|
571,315
|
|
|
|
33,165
|
|
Derivative contracts,
net
|
|
715,223
|
|
|
|
-
|
|
Other
|
|
751,525
|
|
|
|
578,880
|
|
Total current
assets
|
|
8,928,739
|
|
|
|
8,246,176
|
|
|
|
|
|
|
|
|
|
Properties and
equipment, at cost, based on successful efforts
accounting:
|
|
|
|
|
|
|
|
Producing oil and
natural gas properties
|
|
432,969,755
|
|
|
|
427,448,584
|
|
Non-producing oil and
natural gas properties
|
|
12,521,442
|
|
|
|
12,563,519
|
|
Other
|
|
1,686,490
|
|
|
|
1,529,770
|
|
|
|
447,177,687
|
|
|
|
441,541,873
|
|
Less accumulated
depreciation, depletion and amortization
|
|
(250,606,416)
|
|
|
|
(243,257,472)
|
|
Net properties and
equipment
|
|
196,571,271
|
|
|
|
198,284,401
|
|
|
|
|
|
|
|
|
|
Investments
|
|
197,340
|
|
|
|
219,109
|
|
Derivative contracts,
net
|
|
101,983
|
|
|
|
-
|
|
Total
assets
|
$
|
205,799,333
|
|
|
$
|
206,749,686
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
Accounts
payable
|
$
|
487,756
|
|
|
$
|
881,130
|
|
Derivative contracts,
net
|
|
-
|
|
|
|
3,064,046
|
|
Accrued liabilities
and other
|
|
1,451,427
|
|
|
|
1,791,950
|
|
Total current
liabilities
|
|
1,939,183
|
|
|
|
5,737,126
|
|
|
|
|
|
|
|
|
|
Long-term
debt
|
|
44,100,000
|
|
|
|
51,000,000
|
|
Deferred income
taxes
|
|
22,030,007
|
|
|
|
18,088,007
|
|
Asset retirement
obligations
|
|
2,897,354
|
|
|
|
2,809,378
|
|
Derivative contracts,
net
|
|
-
|
|
|
|
349,970
|
|
|
|
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
|
|
|
Class A voting common
stock, $0.0166 par value;
|
|
|
|
|
|
|
|
24,000,000 shares
authorized, 16,897,306 issued at March 31, 2019, and
16,896,881 issued at Sept. 30, 2018
|
|
281,509
|
|
|
|
281,502
|
|
Capital in excess of
par value
|
|
2,830,224
|
|
|
|
2,824,691
|
|
Deferred directors'
compensation
|
|
2,415,569
|
|
|
|
2,950,405
|
|
Retained
earnings
|
|
134,723,381
|
|
|
|
125,266,945
|
|
|
|
140,250,683
|
|
|
|
131,323,543
|
|
|
|
|
|
|
|
|
|
Less treasury stock,
at cost; 329,065 shares at March 31, 2019, and 145,467
shares at Sept. 30, 2018
|
|
(5,417,894)
|
|
|
|
(2,558,338)
|
|
Total stockholders'
equity
|
|
134,832,789
|
|
|
|
128,765,205
|
|
Total liabilities and
stockholders' equity
|
$
|
205,799,333
|
|
|
$
|
206,749,686
|
|
Condensed Statements
of Cash Flows
|
|
|
Six months ended
March 31,
|
|
|
2019
|
|
|
2018
|
|
Operating
Activities
|
(unaudited)
|
|
Net income
(loss)
|
$
|
10,804,606
|
|
|
$
|
14,855,115
|
|
Adjustments to
reconcile net income (loss) to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
Depreciation,
depletion and amortization
|
|
7,437,662
|
|
|
|
9,516,902
|
|
Provision for deferred
income taxes
|
|
3,942,000
|
|
|
|
(12,771,000)
|
|
Gain from leasing of
fee mineral acreage
|
|
(722,912)
|
|
|
|
(595,946)
|
|
Proceeds from leasing
of fee mineral acreage
|
|
737,812
|
|
|
|
610,552
|
|
Net (gain) loss on
sale of assets
|
|
(9,096,938)
|
|
|
|
466,128
|
|
Directors' deferred
compensation expense
|
|
132,280
|
|
|
|
170,826
|
|
Fair value of
derivative contracts
|
|
(4,231,222)
|
|
|
|
2,486,518
|
|
Restricted stock
awards
|
|
446,321
|
|
|
|
347,838
|
|
Other
|
|
9,326
|
|
|
|
(1,337)
|
|
Cash provided (used)
by changes in assets and liabilities:
|
|
|
|
|
|
|
|
Oil, NGL and natural
gas sales receivables
|
|
715,935
|
|
|
|
1,110,368
|
|
Other current
assets
|
|
(172,645)
|
|
|
|
(87,495)
|
|
Accounts
payable
|
|
(77,977)
|
|
|
|
(73,066)
|
|
Income taxes
receivable
|
|
(538,150)
|
|
|
|
(302,370)
|
|
Other non-current
assets
|
|
17,317
|
|
|
|
(66,364)
|
|
Accrued
liabilities
|
|
(342,361)
|
|
|
|
(306,687)
|
|
Total
adjustments
|
|
(1,743,552)
|
|
|
|
504,867
|
|
Net cash provided by
operating activities
|
|
9,061,054
|
|
|
|
15,359,982
|
|
|
|
|
|
|
|
|
|
Investing
Activities
|
|
|
|
|
|
|
|
Capital
expenditures
|
|
(4,159,683)
|
|
|
|
(6,544,481)
|
|
Acquisition of
minerals and overrides
|
|
(1,809,775)
|
|
|
|
-
|
|
Investments in
partnerships
|
|
(199)
|
|
|
|
7,493
|
|
Proceeds from sales of
assets
|
|
9,096,938
|
|
|
|
1,129,705
|
|
Net cash provided
(used) by investing activities
|
|
3,127,281
|
|
|
|
(5,407,283)
|
|
|
|
|
|
|
|
|
|
Financing
Activities
|
|
|
|
|
|
|
|
Borrowings under debt
agreement
|
|
8,686,270
|
|
|
|
10,596,451
|
|
Payments of loan
principal
|
|
(15,586,270)
|
|
|
|
(19,318,671)
|
|
Purchase of treasury
stock
|
|
(3,967,685)
|
|
|
|
(272,100)
|
|
Payments of
dividends
|
|
(1,348,170)
|
|
|
|
(1,347,608)
|
|
Net cash provided
(used) by financing activities
|
|
(12,215,855)
|
|
|
|
(10,341,928)
|
|
|
|
|
|
|
|
|
|
Increase (decrease) in
cash and cash equivalents
|
|
(27,520)
|
|
|
|
(389,229)
|
|
Cash and cash
equivalents at beginning of period
|
|
532,502
|
|
|
|
557,791
|
|
Cash and cash
equivalents at end of period
|
$
|
504,982
|
|
|
$
|
168,562
|
|
|
|
|
|
|
|
|
|
Supplemental
Schedule of Noncash Investing and Financing
Activities
|
|
|
|
|
|
|
|
Additions to asset
retirement obligations
|
$
|
27,562
|
|
|
$
|
13,871
|
|
|
|
|
|
|
|
|
|
Gross additions to
properties and equipment
|
$
|
5,654,060
|
|
|
$
|
5,556,196
|
|
Net (increase)
decrease in accounts payable for properties and equipment
additions
|
|
315,398
|
|
|
|
988,285
|
|
Capital expenditures
and acquisitions
|
$
|
5,969,458
|
|
|
$
|
6,544,481
|
|
Proved
Reserves
|
|
|
Proved Reserves SEC
Pricing
|
|
|
March 31,
2019
|
|
|
Sept. 30,
2018
|
|
Proved Developed
Reserves:
|
(unaudited)
|
|
Barrels of
NGL
|
|
2,046,499
|
|
|
|
2,085,706
|
|
Barrels of
Oil
|
|
2,242,621
|
|
|
|
2,334,587
|
|
Mcf of Gas
|
|
79,229,340
|
|
|
|
83,151,954
|
|
Mcfe (1)
|
|
104,964,060
|
|
|
|
109,673,712
|
|
Proved Undeveloped
Reserves:
|
|
|
|
|
|
|
|
Barrels of
NGL
|
|
1,240,424
|
|
|
|
848,484
|
|
Barrels of
Oil
|
|
2,775,374
|
|
|
|
3,649,835
|
|
Mcf of Gas
|
|
30,457,852
|
|
|
|
36,910,082
|
|
Mcfe (1)
|
|
54,552,640
|
|
|
|
63,899,996
|
|
Total Proved
Reserves:
|
|
|
|
|
|
|
|
Barrels of
NGL
|
|
3,286,923
|
|
|
|
2,934,190
|
|
Barrels of
Oil
|
|
5,017,995
|
|
|
|
5,984,422
|
|
Mcf of Gas
|
|
109,687,192
|
|
|
|
120,062,036
|
|
Mcfe (1)
|
|
159,516,700
|
|
|
|
173,573,708
|
|
|
|
|
|
|
|
|
|
10% Discounted
Estimated Future
|
|
|
|
|
|
|
|
Net Cash Flows
(before income taxes):
|
|
|
|
|
|
|
|
Proved
Developed
|
$
|
121,564,750
|
|
|
$
|
125,915,804
|
|
Proved
Undeveloped
|
|
64,133,866
|
|
|
|
78,657,354
|
|
Total
|
$
|
185,698,616
|
|
|
$
|
204,573,158
|
|
SEC
Pricing
|
|
|
|
|
|
|
|
Oil/Barrel
|
$
|
61.63
|
|
|
$
|
62.86
|
|
Gas/Mcf
|
$
|
2.75
|
|
|
$
|
2.56
|
|
NGL/Barrel
|
$
|
23.46
|
|
|
$
|
26.13
|
|
|
|
|
|
|
|
|
|
Proved Reserves -
Projected Future Pricing (2)
|
|
|
|
|
|
|
|
|
|
10% Discounted
Estimated Future
|
Proved
Reserves
|
|
Net Cash Flows
(before income taxes):
|
March 31,
2019
|
|
|
Sept. 30,
2018
|
|
Proved
Developed
|
$
|
130,988,726
|
|
|
$
|
155,728,130
|
|
Proved
Undeveloped
|
|
73,536,614
|
|
|
|
104,462,753
|
|
Total
|
$
|
204,525,340
|
|
|
$
|
260,190,883
|
|
|
|
|
|
|
|
|
|
(1) Crude oil and NGL
converted to natural gas on a one barrel of crude oil or NGL equals
six Mcf of natural gas basis
|
|
(2) NYMEX Futures
Pricing as of March 31, 2019, and Sept. 30, 2018, basis adjusted to
Company wellhead price
|
|
Hedge Position as of
May 9, 2019
|
|
Period
|
|
Product
|
|
Volume
Mcf/Bbl
|
|
|
Swap Price
|
|
|
Collar Average
Floor Price
|
|
|
Collar Average
Ceiling Price
|
|
2019
|
|
Natural
Gas
|
|
|
3,400,000
|
|
|
$
|
2.99
|
|
|
|
|
|
|
|
|
|
2020
|
|
Natural
Gas
|
|
|
1,260,000
|
|
|
$
|
2.81
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2019
|
|
Crude Oil
|
|
|
58,000
|
|
|
|
|
|
|
$
|
59.31
|
|
|
$
|
69.47
|
|
2019
|
|
Crude Oil
|
|
|
102,000
|
|
|
$
|
58.12
|
|
|
|
|
|
|
|
|
|
2020
|
|
Crude Oil
|
|
|
48,000
|
|
|
|
|
|
|
$
|
58.75
|
|
|
$
|
66.79
|
|
2020
|
|
Crude Oil
|
|
|
72,000
|
|
|
$
|
57.98
|
|
|
|
|
|
|
|
|
|
Non-GAAP Reconciliation
This news release includes certain "non-GAAP financial measures"
under the rules of the Securities and Exchange Commission,
including Regulation G. These non-GAAP measures are calculated
using GAAP amounts in our financial statements.
Adjusted EBITDA Reconciliation
Adjusted EBITDA is defined as net income (loss) plus interest
expense, provision for impairment, depreciation, depletion and
amortization of properties and equipment, including amortization of
other assets, provision (benefit) for income taxes and unrealized
(gains) losses on derivative contracts. We recognize that certain
investors consider adjusted EBITDA a useful means of measuring our
ability to meet our debt service obligations and evaluating our
financial performance. Adjusted EBITDA has limitations and should
not be considered in isolation or as a substitute for net income,
operating income, cash flow from operations or other consolidated
income or cash flow data prepared in accordance with GAAP. Because
not all companies use identical calculations, this presentation of
adjusted EBITDA may not be comparable to a similarly titled measure
of other companies. The following table provides a reconciliation
of net income (loss) to adjusted EBITDA for the periods
indicated.
|
Second Quarter
Ended
|
|
|
Second Quarter
Ended
|
|
|
Six Months
Ended
|
|
|
Six Months
Ended
|
|
|
March 31,
2019
|
|
|
March 31,
2018
|
|
|
March 31,
2019
|
|
|
March 31,
2018
|
|
Net Income
(Loss)
|
$
|
(1,931,334)
|
|
|
$
|
1,070,176
|
|
|
$
|
10,804,606
|
|
|
$
|
14,855,115
|
|
Plus:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized (gains)
losses on derivatives
|
|
1,974,959
|
|
|
|
1,635,482
|
|
|
|
(4,231,222)
|
|
|
|
2,486,518
|
|
Income Tax Expense (Benefit)
|
|
(130,000)
|
|
|
|
(24,000)
|
|
|
|
3,441,000
|
|
|
|
(12,734,000)
|
|
Interest Expense
|
|
485,784
|
|
|
|
435,951
|
|
|
|
1,025,154
|
|
|
|
867,530
|
|
DD&A
|
|
3,623,976
|
|
|
|
4,241,078
|
|
|
|
7,437,662
|
|
|
|
9,516,902
|
|
Impairment
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Adjusted
EBITDA
|
$
|
4,023,385
|
|
|
$
|
7,358,687
|
|
|
$
|
18,477,200
|
|
|
$
|
14,992,065
|
|
Adjusted Pre-Tax Net Income (Loss) Reconciliation
Adjusted pre-tax net income (loss) is defined as net income
(loss) plus provision (benefit) for income taxes and unrealized
(gains) losses on derivative contracts. We recognize that certain
investors consider adjusted pre-tax net income (loss) a useful
means of evaluating our financial performance. Adjusted pre-tax net
income (loss) has limitations and should not be considered in
isolation or as a substitute for net income, operating income, cash
flow from operations or other consolidated income or cash flow data
prepared in accordance with GAAP. Because not all companies use
identical calculations, this presentation of adjusted pre-tax net
income (loss) may not be comparable to a similarly titled measure
of other companies. The following table provides a reconciliation
of net income (loss) to adjusted pre-tax net income (loss) for the
periods indicated.
|
Second Quarter
Ended
|
|
|
Second Quarter
Ended
|
|
|
Six Months
Ended
|
|
|
Six Months
Ended
|
|
|
March 31,
2019
|
|
|
March 31,
2018
|
|
|
March 31,
2019
|
|
|
March 31,
2018
|
|
Net Income
(Loss)
|
$
|
(1,931,334)
|
|
|
$
|
1,070,176
|
|
|
$
|
10,804,606
|
|
|
$
|
14,855,115
|
|
Plus:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized (gains)
losses on derivatives
|
|
1,974,959
|
|
|
|
1,635,482
|
|
|
|
(4,231,222)
|
|
|
|
2,486,518
|
|
Income Tax Expense (Benefit)
|
|
(130,000)
|
|
|
|
(24,000)
|
|
|
|
3,441,000
|
|
|
|
(12,734,000)
|
|
Adjusted Pre-Tax
Net Income (Loss)
|
$
|
(86,375)
|
|
|
$
|
2,681,658
|
|
|
$
|
10,014,384
|
|
|
$
|
4,607,633
|
|
|
Enterprise Value
Calculation
|
|
|
Second Quarter
Ended
|
|
|
Second Quarter
Ended
|
|
|
Six Months
Ended
|
|
|
Six Months
Ended
|
|
|
March 31,
2019
|
|
|
March 31,
2018
|
|
|
March 31,
2019
|
|
|
March 31,
2018
|
|
Market
Value
|
$
|
260,121,384
|
|
|
$
|
323,775,893
|
|
|
$
|
260,121,384
|
|
|
$
|
323,775,893
|
|
Debt
|
|
44,100,000
|
|
|
|
43,500,000
|
|
|
|
44,100,000
|
|
|
|
43,500,000
|
|
Enterprise
Value
|
$
|
304,221,384
|
|
|
$
|
367,275,893
|
|
|
$
|
304,221,384
|
|
|
$
|
367,275,893
|
|
Panhandle Oil and Gas Inc. (NYSE:
PHX) Oklahoma City-based, Panhandle Oil and Gas Inc.
is an oil and natural gas mineral and leasehold acreage-focused
capital allocator seeking the highest per share returns while
maintaining a conservative net leverage ratio to ensure
survivability and prosperity in all business and mineral commodity
price cycles. The capital allocation tools include: (i) selective
participation in working interest wells on its existing holdings in
the highest quality, low-risk projects that are projected to exceed
our corporate return threshold; (ii) aggressive leasing of its
mineral holdings outside of areas of potential working interest
participation; (iii) acquisition of mineral acreage, in the cores
of resource plays, with substantial undeveloped opportunities that
meet or exceed our corporate return threshold; (iv) divestiture of
minerals with limited optionality and mineral rights when the
amount negotiated exceeds our projected total value; (v) payment of
quarterly dividends, with optionality for special dividends when
available capital exceeds operational requirements and has no other
higher shareholder return option for an extended time period; and
(vi) repurchase of common shares when the share price trades at a
material discount to the Company's estimated intrinsic value.
Panhandle's principal properties are located in Oklahoma, Arkansas, Texas, New
Mexico and North Dakota.
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 2018 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; Panhandle's hedging activities may reduce
the realized prices received for oil and natural gas sales; the
volatility of oil and gas prices; the Company'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 our inability to 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, as 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.
View original
content:http://www.prnewswire.com/news-releases/panhandle-oil-and-gas-inc-reports-second-quarter-and-six-months-2019-results-and-mid-year-reserves-update-300847509.html
SOURCE PANHANDLE OIL AND GAS INC.