Panhandle Oil and Gas Inc. Reports First Quarter 2009 Results
Company Posts Record Production Results
For the quarter, the Company recorded a net loss of
FIRST QUARTER 2009 HIGHLIGHTS
- Reported record first quarter production: 2,495,299 Mcfe compared to 1,831,206 Mcfe
- Posted a 14% increase in sequential production growth
- Maintained a strong balance sheet with low debt levels
- Increased working interests in key operating areas
- Continued to leverage Panhandle’s mineral rights ownership interest
“First quarter 2009 results were impacted by 40% and 37% decreases in the average sales prices for both oil and natural gas, respectively. Significant downward pressure on commodity prices forced Panhandle to recognize non-cash impairment charges on the Company’s oil and gas properties of
Panhandle Oil & Gas expects the current low natural gas and oil price environment to reduce the Company’s drilling activity for the remainder of fiscal 2009. The Company plans to reduce its capital expenditures budget to approximately
Coffman concluded, “While recent events in the world financial markets have created headwinds in the commodity sector, we at Panhandle Oil and Gas remain confident. Our key assets in the highly regarded
“We closely monitor and evaluate our capital expenditure level and will continue to participate in wells we assess as adding value for the Company and our shareholders in 2009.”
OPERATING HIGHLIGHTS
First Quarter Ended First Quarter Ended
December 31, 2008 December 31, 2007
MCFE Sold 2,495,299 1,831,206
Average Sales Price per MCFE $4.25 $7.22
Barrels Sold 30,260 36,721
Average Sales Price per Barrel $51.80 $86.40
MCF Sold 2,313,739 1,610,880
Average Sales Price per MCF $3.91 $6.24
Quarterly Production Levels
Quarter ended Barrels Sold MCF Sold MCFE
12/31/08 30,260 2,313,739 2,495,299
9/30/08 31,375 1,995,333 2,183,583
6/30/08 31,907 1,788,462 1,979,904
3/31/08 32,399 1,533,363 1,727,757
12/31/07 36,721 1,610,880 1,831,206
FINANCIAL HIGHLIGHTS
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
Three Months Ended
December 31,
2008 2007
Revenues:
Oil and natural gas sales $10,616,664 $13,226,094
Lease bonuses and rentals 113,380 10,446
Gains on natural gas collar contracts 393,007 263,786
Gain on asset sales, interest and other 58,060 52,394
Income of partnerships 138,591 151,083
11,319,702 13,703,803
Costs and expenses:
Lease operating expenses 1,749,143 1,344,901
Production taxes 406,748 829,604
Exploration costs 172,265 209,981
Depreciation, depletion and
amortization 6,950,092 4,256,610
Provision for impairment 1,875,920 122,009
General and administrative 1,219,163 1,597,045
Interest expense - 44,346
12,373,331 8,404,496
(Loss) income before (benefit)
provision for income taxes (1,053,629) 5,299,307
(Benefit) provision for income taxes (179,000) 1,819,000
Net (loss) income $(874,629) $3,480,307
(Loss) earnings per common share $(0.10) $0.41
Weighted average shares outstanding:
Common shares 8,300,128 8,431,502
Unissued, vested directors' shares 87,915 78,748
8,388,043 8,510,250
Dividends declared per share of
common stock and paid in period $0.07 $0.07
Dividends declared per share of common
stock for and to be paid in the quarter
ended March 31 $0.07 $0.07
CONSOLIDATED BALANCE SHEETS
(unaudited)
December 31, September 30,
2008 2008
Assets
Current assets:
Cash and cash equivalents $340,934 $895,708
Oil and natural gas sales receivables (net) 10,655,050 17,183,128
Fair value of natural gas collar contracts - 646,193
Refundable income taxes 2,548,817 2,162,305
Other 582,096 217,691
Total current assets 14,126,897 21,105,025
Properties and equipment, at cost, based
on successful efforts accounting:
Producing oil and natural gas properties 185,500,036 175,727,196
Non-producing oil and natural gas
properties 11,840,466 11,216,103
Other 504,111 491,321
197,844,613 187,434,620
Less accumulated depreciation, depletion
and amortization 94,599,231 87,661,433
Net properties and equipment 103,245,382 99,773,187
Investments 724,741 736,314
Other 194,549 392,657
Total assets $118,291,569 $122,007,183
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $10,342,331 $15,897,565
Accrued liabilities 858,796 608,456
Total current liabilities 11,201,127 16,506,021
Long-term debt 12,996,339 9,704,100
Deferred income taxes 26,148,750 25,943,750
Asset retirement obligations 1,594,470 1,504,411
Stockholders' equity:
Class A voting common stock, $.0166 par
value; 24,000,000 shares authorized,
8,431,502 issued at December 31, 2008
and at September 30, 2008 140,524 140,524
Capital in excess of par value 2,090,070 2,090,070
Deferred directors' compensation 1,644,440 1,605,811
Retained earnings 67,199,957 69,236,604
71,074,991 73,073,009
Less treasury stock, at cost; 131,374
shares at December 31, 2008 and at
September 30, 2008 (4,724,108) (4,724,108)
Total stockholders' equity 66,350,883 68,348,901
Total liabilities and stockholders'
equity $118,291,569 $122,007,183
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Three months ended December 31,
2008 2007
Operating Activities
Net (loss) income $(874,629) $3,480,307
Adjustments to reconcile net (loss) income
to net cash provided by operating activities:
Gain, net, on asset sales (115,377) (16,942)
Income of partnerships (138,591) (151,083)
Exploration costs 172,265 209,981
Depreciation, depletion and amortization 6,950,092 4,256,610
Provision for impairment 1,875,920 122,009
Deferred income taxes 205,000 1,431,000
Distributions received from partnerships 150,164 171,619
Directors' deferred compensation expense 38,629 31,012
Cash provided by changes in assets and
liabilities:
Oil and natural gas sales receivables 6,528,078 (2,161,389)
Fair value of natural gas collar contracts 646,193 (202,386)
Refundable income taxes (386,512) -
Other current assets (364,405) 22,153
Other non-current assets 198,108 -
Accounts payable 501,227 150,657
Accrued liabilities (330,669) 375,323
Total adjustments 15,930,122 4,238,564
Net cash provided by operating activities 15,055,493 7,718,871
Investing Activities
Capital expenditures, including dry
hole costs (18,442,452) (7,579,345)
Proceeds from leasing of fee mineral
acreage 118,955 15,137
Proceeds from asset sales 2,000 6,270
Net cash used in investing activities (18,321,497) (7,557,938)
Financing Activities
Borrowings under credit facility 18,316,045 7,776,160
Payments on credit facility (15,023,806) (7,584,911)
Payments of dividends (581,009) (590,205)
Net cash provided by (used in) financing
activities 2,711,230 (398,956)
Decrease in cash and cash equivalents (554,774) (238,023)
Cash and cash equivalents at beginning of
period 895,708 989,360
Cash and cash equivalents at end of period $340,934 $751,337
Supplemental Schedule of Noncash Investing
and Financing Activities
Dividends declared and unpaid $581,009 $590,205
Additions to asset retirement obligations $90,059 $-
Net decrease (increase) in accounts payable
for properties and equipment additions $6,056,461 $(1,145,044)
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 2008 Form 10-K filed with the Securities and Exchange Commission. These “Risk Factors” includes 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; 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.