Panhandle Oil and Gas Inc. Reports Record 2008 Fiscal Year and Fourth Quarter 2008 Financial Results
(NYSE: PHX) today reported financial results for fiscal year 2008, and the
three-month period ended
share, compared to
revenues increased 77% to
2007. Net cash provided by operating activities increased to
increase of 42% compared to
properties and equipment for drilling and equipping wells and purchasing
leasehold totaled
Production increased 33% to 7,722,450 Mcfe as compared to 5,791,407 Mcfe for
fiscal 2007. The 2008 average sales price per Mcfe increased 38% to
drilling results and our accomplished working interest partners helped fuel
record results at Panhandle Oil and Gas. In addition, our ability to carefully
navigate today’s challenging economic climate, work strategically with our
partners to increase production growth and maintain a strong balance sheet
with low debt not only helped us succeed in 2008, but also favorably positions
us in fiscal 2009. While increased production and reserve growth remains a
firm goal in 2009, we are equally focused on operating principally from cash
flow. We believe our conservative financial structure and our commitment to
low-cost growth strengthens our opportunities in either a low-or high-priced
commodity environment. As we round out 2008 and enter the new year, we look
forward to 2009 with great anticipation as we continue to maximize shareholder
value.”
For the fourth quarter of 2008, the Company recorded net income of
revenues were
Net cash provided by operating activities for the fourth quarter 2008 was
2008 additions to properties and equipment for drilling and equipping wells
and leasehold acquisitions amounted to
the fourth quarter 2007 amount. Fourth quarter 2008 production increased 27%
to 2,183,583 Mcfe, as compared to 1,719,986 Mcfe for the 2007 fourth quarter.
The average sales price per Mcfe increased 49% to
of 2008.
2008 fourth quarter benefited by net realized and unrealized gains on natural
gas collar contracts of
a mark-to-market asset balance of
contracts in place from
net losses of
intended purpose to reduce the Company’s exposure to short-term fluctuations
in the price of natural gas.”
FINANCIAL HIGHLIGHTS
CONSOLIDATED STATEMENTS OF INCOME
Year ended September 30,
2008 2007 2006
Revenues:
Oil and gas sales $69,026,785 $37,449,174 $36,008,527
Lease bonuses and rentals 167,559 208,625 410,984
(Losses) gains on gas collar
contracts (940,823) 765,316 -
Gain on sales of assets and
interest 233,709 322,405 529,804
Income from partnerships 631,891 383,391 536,365
69,119,121 39,128,911 37,485,680
Costs and expenses:
Lease operating expenses and
production taxes 10,055,762 6,057,456 5,262,834
Exploration costs 455,943 1,050,069 222,892
Depreciation, depletion, and
amortization 19,784,660 15,291,625 10,142,367
Provision for impairment 526,380 3,761,832 3,009,953
Loss on sales of assets 204,189 254,395 119,282
General and administrative 5,006,512 3,877,492 3,335,899
Bad debt expense 591,258 - -
Interest expense 44,346 133,578 232,234
36,669,050 30,426,447 22,325,461
Income before provision for income
taxes 32,450,071 8,702,464 15,160,219
Provision for income taxes 10,894,302 2,359,000 4,586,000
Net income $21,555,769 $6,343,464 $10,574,219
Basic earnings per common share:
Net income $2.54 $0.75 $1.25
CONSOLIDATED BALANCE SHEETS
September 30,
2008 2007
Assets
Current Assets:
Cash and cash equivalents $895,708 $989,360
Oil and gas sales receivables, net of
allowance for uncollectible accounts 17,183,128 8,103,250
Fair value of derivative contracts 646,193 106,916
Refundable income taxes and other 2,379,996 112,882
Total current assets 21,105,025 9,312,408
Properties and equipment at cost,
based on successful efforts accounting:
Producing oil and gas properties 175,727,196 125,634,251
Non-producing oil and gas properties 11,216,103 10,697,854
Furniture and fixtures 491,321 625,455
187,434,620 136,957,560
Less accumulated depreciation,
depletion, and amortization 87,661,433 68,424,645
Net properties and equipment 99,773,187 68,532,915
Investments 736,314 690,011
Other 392,657 4,463
Total assets $122,007,183 $78,539,797
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $15,897,565 $1,773,255
Accrued liabilities 608,456 348,042
Total current liabilities 16,506,021 2,121,297
Long-term debt 9,704,100 4,661,471
Deferred income taxes 25,943,750 16,827,750
Asset retirement obligations 1,504,411 1,247,908
Stockholders' equity:
Class A voting common stock,
$.0166 par value; 24,000,000 shares
authorized, 8,431,502 issued at
September 30, 2008 and at
September 30, 2007 140,524 140,524
Capital in excess of par value 2,090,070 2,146,071
Deferred directors' compensation 1,605,811 1,358,778
Retained earnings 69,236,604 50,035,998
73,073,009 53,681,371
Treasury stock, at cost; 131,374
shares at September 30, 2008 and no
shares at September 30, 2007 (4,724,108) -
Total stockholders' equity 68,348,901 53,681,371
Total liabilities and stockholders' equity $122,007,183 $78,539,797
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Year ended September 30,
2008 2007 2006
Operating Activities
Net income $21,555,769 $6,343,464 $10,574,219
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation, depletion,
amortization, and impairment 20,311,040 19,053,457 13,152,320
Deferred income taxes 9,116,000 1,329,000 2,177,000
Lease bonus income - (45,954) (95,892)
Exploration costs 455,943 1,050,069 222,892
Net loss (gain) on sales of
assets 20,632 22,856 (415,951)
Income from partnerships (631,891) (383,391) (536,365)
Distributions received from
partnerships 585,588 465,535 618,509
Common stock issued to ESOP 218,733 221,633 209,574
Common stock (unissued) to
Directors' Deferred Compensation
Plan 247,033 156,209 149,161
Bad debt expense 591,258 - -
Cash provided (used) by changes
in assets and liabilities:
Oil and gas sales
receivables (9,671,136) (1,631,627) 169,824
Fair value of derivative
contracts (539,277) (106,916) -
Refundable income taxes and
other (2,267,114) 1,635,853 (1,889,363)
Other non-current assets (388,194) - -
Accounts payable 59,921 (118,012) (21,361)
Accrued directors' deferred
compensation - - (281,897)
Accrued liabilities 260,414 114,324 (562,525)
Total adjustments 18,368,950 21,763,036 12,895,926
Net cash provided by operating
activities 39,924,719 28,106,500 23,470,145
Investing Activities
Capital expenditures, including dry
hole costs (38,747,749) (27,785,431) (21,738,745)
Proceeds from leasing of fee
mineral acreage 200,356 188,417 493,652
Sale (purchase) of investments - 11,280 (282,000)
Proceeds from sales of assets 840,398 645,055 408,487
Net cash used in investing
activities (37,706,995) (26,940,679) (21,118,606)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
Year ended September 30,
2008 2007 2006
Financing Activities
Borrowings under debt agreement $54,993,249 $18,046,213 $ -
Payments of loan principal (49,950,620) (16,551,395) (2,000,004)
Purchases of treasury stock (4,998,842) - -
Payments of dividends (2,355,163) (2,105,632) (1,556,015)
Net cash used in financing
activities (2,311,376) (610,814) (3,556,019)
(Decrease) increase in cash and cash
equivalents (93,652) 555,007 (1,204,480)
Cash and cash equivalents at
beginning of year 989,360 434,353 1,638,833
Cash and cash equivalents at end of
year $895,708 $989,360 $434,353
Supplemental Disclosures of Cash
Flow Information
Interest paid $167,732 $140,350 $219,898
Income taxes paid, net of refunds
received $4,145,122 $(952,221) $4,781,462
Supplemental schedule of noncash
investing and financing activities:
Reclassification of deferred
compensation liability as equity $ - $ - $1,053,408
Additions and revisions, net, to
asset retirement obligations $151,998 $(213,759) $141,158
Properties and equipment change
included in accounts payable $14,064,389 $327,091 $885,295
OPERATING HIGHLIGHTS
Fourth Fourth
Year Year Quarter Quarter
Ended Ended Ended Ended
September 30, September 30, September 30, September 30,
2008 2007 2008 2007
MCFE Sold 7,722,450 5,791,407 2,183,583 1,719,986
Average Sales
Price per MCFE $8.94 $6.47 $9.31 $6.24
Barrels Sold 132,402 107,344 31,375 31,677
Average Sales
Price per Barrel $103.91 $62.81 $116.12 $72.57
MCF Sold 6,928,038 5,147,343 1,995,333 1,529,924
Average Sales
Price per MCF $7.98 $5.97 $8.37 $5.51
DERIVATIVE CONTRACTS IN PLACE AS OF 9/30/08
(prices below reflect the Company's net price from Oklahoma pipelines)
Production Floor price Ceiling price
Contract volume range range
period covered per month (per mmbtu) (per mmbtu)
October - December, 2008 120,000 mmbtu $6.50 to $6.90 $8.75 to $9.15
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 http://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 2008 Form 10-K soon to be filed with
the Securities and Exchange Commission. These “Risk Factors” include worldwide
economic conditions; 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; declines 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; and drilling and
operating risks.
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.