Panhandle Oil and Gas Inc. Reports Fiscal Second Quarter and Six Months 2018 Results and Mid-Year Reserve Update

OKLAHOMA CITY – May 7, 2018 – PANHANDLE OIL AND GAS INC. (NYSE: PHX) today reported financial and operating results for the Company’s fiscal second quarter and six months ended March 31, 2018.

HIGHLIGHTS FOR THE PERIODS ENDED MARCH 31, 2018

  • Increased total equivalent production 25%, as compared to the quarter ended March 31, 2017, and 31%, as compared to the six months ended March 31, 2017.
  • Generated second quarter 2018 net income of $1,070,176, $0.06 per diluted share, as compared to a net income of $3,470,433, $0.21 per diluted share, for the 2017 quarter.
  • Generated six-month 2018 net income of $14,855,115, $0.87 per diluted share, as compared to a net income of $1,232,041, $0.07 per diluted share, for the 2017 six months.
  • Generated free cash flow of $8,815,501 as cash from operating activities of $15,359,982 for the 2018 six-month period was well in excess of capital expenditures for drilling and equipping wells of $6,544,481.
  • Decreased lease operating expense (LOE) per Mcfe to $1.08 for the six-month period, as compared to $1.26 in the prior year’s six-month period.
  • Reduced debt from $52.2 million, as of Sept. 30, 2017, to $43.5 million, as of March 31, 2018, which has declined further to $42.0 million as of April 30, 2018.
  • Generated 2018 second-quarter and six-month EBITDA (1) of $5,723,205 and $12,505,547, respectively.

    (1)  EBITDA is a Non-GAAP measure. Refer to the Non-GAAP Reconciliation section.

MANAGEMENT COMMENTS

Paul F. Blanchard Jr., President and CEO, said, “Fiscal year-to-date capital investment has been focused in two areas: 1) approximately $4.0 million in the Eagle Ford, primarily for the completion of four wells in the first quarter that were drilled as part of last year’s ten-well Eagle Ford drilling program, and 2) approximately $1.8 million for drilling activity on relatively small working interest wells in Oklahoma’s STACK/Cana/SCOOP and southeastern Oklahoma Woodford plays. Year-to-date capital investments total $6.5 million, with $1.6 million invested in the second quarter.

“During this lower capital investing period, we have continued to direct our free cash flow toward the reduction of debt. As a result, the Company’s debt has been reduced from $52.2 million at the beginning of fiscal 2018 to $43.5 million at the end of the second quarter. Subsequently, our debt at the end of April 2018 was reduced further to $42.0 million, which is a reduction of $10.2 million or approximately 20% during those 7 months.

“Activity on our mineral acreage in the Oklahoma plays has been robust this year. Drilling and completion operations are currently underway on 32 wells, primarily in STACK/Cana/SCOOP. However, this activity has been in units where we own small working interest participation rights, relative to our average ownership and therefore, does not require a significant capital commitment from us. This is in contrast to last year when our participation was in units where we owned much larger than average working interest participation rights. The year-to-year difference is simply the result of our exceptionally diverse and varied mineral ownership in the cores of these plays, where our rights vary from less than 1% in some drilling units up to 50% in others, and the specific units the operators select to drill at any point in time.

“Second quarter 2018 production, in comparison to first quarter, was impacted by three primary factors: 1) relatively steep early decline rates from new high working interest wells placed on production in the second half of 2017 and early 2018, plus temporary production drops associated with the transition of these wells from flowing efficiently up the production casing to requiring downhole equipment modifications to resume efficient flow, 2) the lack of material production from new wells during the quarter and 3) the production loss associated with the sale of 199 marginal working interest properties during the quarter.

“Drilling operations with one rig are planned to begin in mid-May on our Eagle Ford property, where the operator intends to drill six initial wells ($5.3 million capital requirement) from one pad, with the option to drill eight more wells ($10.0 million capital requirement) on two additional pads during calendar 2018. Production from this drilling is anticipated to begin in early fiscal 2019 when the first six-well pad is placed on line. The Company has hedged 126,000 barrels of oil in calendar 2019 at approximately $57.50 per barrel in conjunction with this drilling program as part of our strategy to protect returns on invested capital.”

FISCAL SECOND QUARTER 2018 RESULTS

For the 2018 second quarter, the Company recorded net income of $1,070,176, or $0.06 per diluted share. This compares to a net income of $3,470,433, or $0.21 per diluted share, for the 2017 second quarter. Net cash provided by operating activities increased 44% to $8,161,399 for the 2018 second quarter, versus $5,664,914 for the 2017 second quarter. Capital expenditures totaled $1,559,601 in the 2018 second quarter, compared to $5,546,731 in the 2017 second quarter.

Total revenues for the 2018 second quarter were $11,421,258, an 18% decrease from $13,964,288 for the 2017 quarter. Oil, NGL and natural gas sales increased $3,375,134 or 38% in the 2018 quarter, compared to the 2017 quarter, as a result of a 25% increase in Mcfe production and a 10% increase in the average per Mcfe sales price. The average sales price per Mcfe of production during the 2018 second quarter was $4.17, compared to $3.78 for the 2017 second quarter. Lease bonus income decreased $1,835,005 from $2,334,203 in the 2017 quarter to $499,198 in the 2018 quarter. Also, the 2018 quarter included a $1.3 million loss on derivative contracts, as compared to a $2.7 million gain for the 2017 quarter.

Gas production increased 21% to 2,107,921 Mcf for the 2018 quarter, compared to the 2017 quarter, while oil production increased 24% to 82,312 barrels versus 66,547 barrels. In addition, 56,747 barrels of NGL were sold in the 2018 quarter, as compared to 33,836 barrels in the 2017 quarter.

Total expenses increased $684,227 in the 2018 quarter as compared to the 2017 quarter. This increase was mainly driven by an increase in LOE, production tax and DD&A over the prior year quarter due to increased Mcfe production. Although LOE and DD&A expenses increased over the prior year quarter, the per Mcfe rates both declined comparatively.

SIX MONTHS 2018 RESULTS

For the 2018 six month period, the Company recorded net income of $14,855,115, or $0.87 per diluted share. This compares to net income of $1,232,041, or $0.07 per diluted share, for the 2017 six months. The 2018 six-month results include a $12,825,000 decrease in income tax as a result of the new tax law (see income tax below). Net cash provided by operating activities increased 64% year over year to $15,359,982 for the 2018 six months, versus the 2017 six months. This cash flow fully funded costs to drill and equip wells, as well as significantly pay down our debt. Capital expenditures for the 2018 six months totaled $6,544,481.

Total revenues for the 2018 six months were $23,911,784, a 14% increase from $21,000,931 for the 2017 six months. Oil, NGL and natural gas sales increased $7,363,335, or 41% in the 2018 six months, compared to the 2017 six months, as a result of a 31% increase in Mcfe production and an 8% increase in the average per Mcfe sales price. The average sales price per Mcfe of production during the 2018 six months was $3.95, compared to $3.65 for the 2017 six months. Lease bonus income decreased $2,576,004 from $3,172,161 in the 2017 six months to $596,157 in the 2018 six months. The 2018 six months included a $1.8 million loss on derivative contracts as compared to a $38,650 gain for the 2017 period.

Oil production increased 22% in the 2018 six month period to 173,149 barrels from 142,183 barrels in the 2017 six months, while gas production increased 951,704 Mcf, or 26%, compared to the 2017 six months. In addition, 129,148 barrels of NGL were sold in the 2018 six months, which was an 86% increase compared to 2017 NGL volumes.

Total expenses increased $1,717,779 in the 2018 period as compared to the 2017 period. This increase was mainly driven by an increase in LOE, production tax and DD&A over the prior year six months due to increased Mcfe production. Although LOE and DD&A expenses increased over the prior year six months, the per Mcfe rates both declined comparatively.

INCOME TAX

The provision (benefit) for income tax in the six-month period includes an adjustment of $12,825,000 (benefit) for net deferred tax liabilities as a result of the Tax Cuts and Jobs Act enacted in December 2017 which reduced income tax rates from 35% to 21%. This adjustment represents the Company’s reasonable estimate of the effect of the change in future tax rates on deferred tax items at March 31, 2018. Pre-tax net income was $2,121,115 for the six-month period of 2018.

RESERVES UPDATE

March 31, 2018, mid-year proved reserves were 163.4 Bcfe, as calculated by DeGolyer and MacNaughton, the Company’s independent consulting petroleum engineering firm. This was a decrease of 3%, compared to the 168.6 Bcfe of proved reserves at Sept. 30, 2017. SEC prices used for the March 31, 2018, report averaged $2.65 per Mcf for natural gas, $50.62 per barrel for oil and $22.79 per barrel for NGL, compared to $2.81 per Mcf for natural gas, $46.31 per barrel for oil and $17.55 per barrel for NGL at the Sept. 30, 2017, report. These prices reflect the net prices received at the wellhead. Total proved developed reserves decreased 3% to 107.9 Bcfe, as compared to Sept. 30, 2017, reserve volumes.

FINANCIAL HIGHLIGHTS

Statements of Operations

 

Three Months Ended March 31,

 

 

Six Months Ended March 31,

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Revenues:

(unaudited)

 

 

(unaudited)

 

Oil, NGL and natural gas sales

$

12,266,036

 

 

$

8,890,902

 

 

$

25,153,455

 

 

$

17,790,120

 

Lease bonuses and rentals

 

499,198

 

 

 

2,334,203

 

 

 

596,157

 

 

 

3,172,161

 

Gains (losses) on derivative contracts

 

(1,343,976

)

 

 

2,739,183

 

 

 

(1,837,828

)

 

 

38,650

 

 

 

11,421,258

 

 

 

13,964,288

 

 

 

23,911,784

 

 

 

21,000,931

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lease operating expenses

 

3,217,568

 

 

 

3,105,496

 

 

 

6,844,277

 

 

 

6,154,911

 

Production taxes

 

497,823

 

 

 

371,553

 

 

 

986,813

 

 

 

739,398

 

Depreciation, depletion and amortization

 

4,241,078

 

 

 

4,105,655

 

 

 

9,516,902

 

 

 

8,939,918

 

Provision for impairment

 

-

 

 

 

10,788

 

 

 

-

 

 

 

10,788

 

Loss (gain) on asset sales and other

 

216,472

 

 

 

91,337

 

 

 

(79,186

)

 

 

86,998

 

Interest expense

 

435,951

 

 

 

286,398

 

 

 

867,530

 

 

 

578,767

 

General and administrative

 

1,766,190

 

 

 

1,719,628

 

 

 

3,654,333

 

 

 

3,562,110

 

 

 

10,375,082

 

 

 

9,690,855

 

 

 

21,790,669

 

 

 

20,072,890

 

Income (loss) before provision (benefit) for income taxes

 

1,046,176

 

 

 

4,273,433

 

 

 

2,121,115

 

 

 

928,041

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision (benefit) for income taxes

 

(24,000

)

 

 

803,000

 

 

 

(12,734,000

)

 

 

(304,000

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

$

1,070,176

 

 

$

3,470,433

 

 

$

14,855,115

 

 

$

1,232,041

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted earnings (loss) per common share

$

0.06

 

 

$

0.21

 

 

$

0.87

 

 

$

0.07

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common shares

 

16,766,010

 

 

 

16,644,755

 

 

 

16,725,076

 

 

 

16,624,229

 

Unissued, directors' deferred compensation shares

 

205,867

 

 

 

277,167

 

 

 

267,005

 

 

 

277,200

 

 

 

16,971,877

 

 

 

16,921,922

 

 

 

16,992,081

 

 

 

16,901,429

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends declared per share of

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

common stock and paid in period

$

0.04

 

 

$

0.04

 

 

$

0.08

 

 

$

0.08

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance Sheets

 

March 31, 2018

 

 

Sept. 30, 2017

 

Assets

(unaudited)

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

$

168,562

 

 

$

557,791

 

Oil, NGL and natural gas sales receivables (net of

 

6,475,117

 

 

 

7,585,485

 

allowance for uncollectable accounts)

 

 

 

 

 

 

 

Refundable income taxes

 

792,315

 

 

 

489,945

 

Assets held for sale

 

-

 

 

 

557,750

 

Derivative contracts, net

 

-

 

 

 

544,924

 

Other

 

340,975

 

 

 

253,480

 

Total current assets

 

7,776,969

 

 

 

9,989,375

 

 

 

 

 

 

 

 

 

Properties and equipment, at cost, based on

 

 

 

 

 

 

 

   successful efforts accounting:

 

 

 

 

 

 

 

Producing oil and natural gas properties

 

422,574,038

 

 

 

434,571,516

 

Non-producing oil and natural gas properties

 

7,399,718

 

 

 

7,428,927

 

Other

 

1,510,982

 

 

 

1,067,894

 

 

 

431,484,738

 

 

 

443,068,337

 

Less accumulated depreciation, depletion and amortization

 

(240,207,008

)

 

 

(246,483,979

)

Net properties and equipment

 

191,277,730

 

 

 

196,584,358

 

 

 

 

 

 

 

 

 

Investments

 

224,308

 

 

 

170,486

 

Total assets

$

199,279,007

 

 

$

206,744,219

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable

$

785,880

 

 

$

1,847,230

 

Derivative contracts, net

 

1,881,022

 

 

 

-

 

Accrued liabilities and other

 

1,378,284

 

 

 

1,690,789

 

Total current liabilities

 

4,045,186

 

 

 

3,538,019

 

 

 

 

 

 

 

 

 

Long-term debt

 

43,500,000

 

 

 

52,222,000

 

Deferred income taxes

 

18,280,007

 

 

 

31,051,007

 

Asset retirement obligations

 

2,895,355

 

 

 

3,196,889

 

Derivative contracts, net

 

89,337

 

 

 

28,765

 

 

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

 

Class A voting common stock, $.0166 par value;

 

 

 

 

 

 

 

24,000,000 shares authorized, 16,895,603 issued at March 31,

 

 

 

 

 

 

 

2018, and 16,863,004 issued at Sept. 30, 2017

 

281,481

 

 

 

280,938

 

Capital in excess of par value

 

2,566,003

 

 

 

2,726,444

 

Deferred directors' compensation

 

2,819,516

 

 

 

3,459,909

 

Retained earnings

 

126,837,723

 

 

 

113,330,216

 

 

 

132,504,723

 

 

 

119,797,507

 

Less treasury stock, at cost; 119,650 shares at March 31,

 

 

 

 

 

 

 

2018, and 184,988 shares at Sept. 30, 2017

 

(2,035,601

)

 

 

(3,089,968

)

Total stockholders' equity

 

130,469,122

 

 

 

116,707,539

 

Total liabilities and stockholders' equity

$

199,279,007

 

 

$

206,744,219

 

Condensed Statements of Cash Flows 

 

Six months ended March 31,

 

 

2018

 

 

2017

 

Operating Activities

(unaudited)

 

Net income (loss)

$

14,855,115

 

 

$

1,232,041

 

Adjustments to reconcile net income (loss) to net cash provided

 

 

 

 

 

 

 

  by operating activities:

 

 

 

 

 

 

 

Depreciation, depletion and amortization

 

9,516,902

 

 

 

8,939,918

 

Impairment

 

-

 

 

 

10,788

 

Provision for deferred income taxes

 

(12,771,000

)

 

 

(76,000

)

Gain from leasing of fee mineral acreage

 

(595,946

)

 

 

(3,171,490

)

Proceeds from leasing of fee mineral acreage

 

610,552

 

 

 

3,191,075

 

Net (gain) loss on sale of assets

 

466,128

 

 

 

87,161

 

Directors' deferred compensation expense

 

170,826

 

 

 

176,368

 

Fair value of derivative contracts

 

2,486,518

 

 

 

(384,566

)

Restricted stock awards

 

347,838

 

 

 

317,633

 

Other

 

(1,337

)

 

 

(835

)

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

 

 

 

 

 

 

 

Oil, NGL and natural gas sales receivables

 

1,110,368

 

 

 

136,669

 

Other current assets

 

(87,495

)

 

 

81,325

 

Accounts payable

 

(73,066

)

 

 

(203,053

)

Income taxes receivable

 

(302,370

)

 

 

(792,488

)

Other non-current assets

 

(66,364

)

 

 

-

 

Accrued liabilities

 

(306,687

)

 

 

(195,981

)

Total adjustments

 

504,867

 

 

 

8,116,524

 

Net cash provided by operating activities

 

15,359,982

 

 

 

9,348,565

 

 

 

 

 

 

 

 

 

Investing Activities

 

 

 

 

 

 

 

Capital expenditures

 

(6,544,481

)

 

 

(7,721,254

)

Investments in partnerships

 

7,493

 

 

 

(17,220

)

Proceeds from sales of assets

 

1,129,705

 

 

 

718,700

 

Net cash provided (used) by investing activities

 

(5,407,283

)

 

 

(7,019,774

)

 

 

 

 

 

 

 

 

Financing Activities

 

 

 

 

 

 

 

Borrowings under debt agreement

 

10,596,451

 

 

 

7,038,699

 

Payments of loan principal

 

(19,318,671

)

 

 

(7,538,699

)

Purchase of treasury stock

 

(272,100

)

 

 

(407,677

)

Payments of dividends

 

(1,347,608

)

 

 

(1,340,656

)

Net cash provided (used) by financing activities

 

(10,341,928

)

 

 

(2,248,333

)

 

 

 

 

 

 

 

 

Increase (decrease) in cash and cash equivalents

 

(389,229

)

 

 

80,458

 

Cash and cash equivalents at beginning of period

 

557,791

 

 

 

471,213

 

Cash and cash equivalents at end of period

$

168,562

 

 

$

551,671

 

 

 

 

 

 

 

 

 

Supplemental Schedule of Noncash Investing and Financing Activities

 

 

 

 

 

 

 

Additions to asset retirement obligations

$

13,871

 

 

$

32,236

 

 

 

 

 

 

 

 

 

Gross additions to properties and equipment

$

5,556,196

 

 

$

10,867,308

 

Net (increase) decrease in accounts payable for properties

 

 

 

 

 

 

 

and equipment additions

 

988,285

 

 

 

(3,146,054

)

Capital expenditures and acquisitions

$

6,544,481

 

 

$

7,721,254

 

Proved Reserves

 

Proved Reserves SEC Pricing

 

 

March 31, 2018

 

 

Sept. 30, 2017

 

Proved Developed Reserves:

 

(unaudited)

 

Barrels of NGL

 

 

1,615,186

 

 

 

 

1,768,425

 

Barrels of Oil

 

 

2,041,085

 

 

 

 

2,201,528

 

Mcf of Gas

 

 

86,008,174

 

 

 

 

87,861,043

 

Mcfe (1)

 

 

107,945,800

 

 

 

 

111,680,761

 

Proved Undeveloped Reserves:

 

 

 

 

 

 

 

 

 

Barrels of NGL

 

 

528,795

 

 

 

 

616,274

 

Barrels of Oil

 

 

2,832,003

 

 

 

 

3,308,139

 

Mcf of Gas

 

 

35,296,239

 

 

 

 

33,334,077

 

Mcfe (1)

 

 

55,461,027

 

 

 

 

56,880,555

 

Total Proved Reserves:

 

 

 

 

 

 

 

 

 

Barrels of NGL

 

 

2,143,981

 

 

 

 

2,384,699

 

Barrels of Oil

 

 

4,873,088

 

 

 

 

5,509,667

 

Mcf of Gas

 

 

121,304,413

 

 

 

 

121,195,120

 

Mcfe (1)

 

 

163,406,827

 

 

 

 

168,561,316

 

 

 

 

 

 

 

 

 

 

 

10% Discounted Estimated Future

 

 

 

 

 

 

 

 

 

Net Cash Flows (before income taxes):

 

 

 

 

 

 

 

 

 

Proved Developed

$

 

109,399,362

 

 

$

 

112,276,166

 

Proved Undeveloped

 

 

14,948,256

 

 

 

 

13,746,585

 

Total

$

 

124,347,618

 

 

$

 

126,022,751

 

SEC Pricing

 

 

 

 

 

 

 

 

 

Oil/Barrel

$

 

50.62

 

 

$

 

46.31

 

Gas/Mcf

$

 

2.65

 

 

$

 

2.81

 

NGL/Barrel

$

 

22.79

 

 

$

 

17.55

 

 

 

 

 

 

 

 

 

 

 

Proved Reserves - Projected Future Pricing (2)

 

 

 

 

 

 

 

 

 

 

 

10% Discounted Estimated Future

Proved Reserves

 

Net Cash Flows (before income taxes):

March 31, 2018

 

 

Sept. 30, 2017

 

Proved Developed

$

 

143,317,737

 

 

$

 

146,699,256

 

Proved Undeveloped

 

 

43,285,836

 

 

 

 

45,395,171

 

Total

$

 

186,603,573

 

 

$

 

192,094,427

 

 

 

 

 

 

 

 

 

 

 

(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) Projected futures pricing as of March 31, 2018, and Sept. 30, 2017, basis adjusted to Company wellhead price

 

OPERATING HIGHLIGHTS

 

Second Quarter Ended

 

 

Second Quarter Ended

 

 

Six Months Ended

 

 

Six Months Ended

 

 

March 31, 2018

 

 

March 31, 2017

 

 

March 31, 2018

 

 

March 31, 2017

 

Mcfe Sold

 

2,942,275

 

 

 

2,351,207

 

 

 

6,364,087

 

 

 

4,868,621

 

Average Sales Price per Mcfe

$

4.17

 

 

$

3.78

 

 

$

3.95

 

 

$

3.65

 

Oil Barrels Sold

 

82,312

 

 

 

66,547

 

 

 

173,149

 

 

 

142,183

 

Average Sales Price per Barrel

$

63.20

 

 

$

47.93

 

 

$

58.28

 

 

$

46.96

 

Mcf Sold

 

2,107,921

 

 

 

1,748,909

 

 

 

4,550,305

 

 

 

3,598,601

 

Average Sales Price per Mcf

$

2.72

 

 

$

2.89

 

 

$

2.60

 

 

$

2.72

 

NGL Barrels Sold

 

56,747

 

 

 

33,836

 

 

 

129,148

 

 

 

69,487

 

Average Sales Price per Barrel

$

23.60

 

 

$

19.17

 

 

$

25.00

 

 

$

18.90

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter ended

 

Oil Bbls Sold

 

 

Mcf Sold

 

 

NGL Bbls Sold

 

 

Mcfe Sold

 

3/31/2018

 

 

82,312

 

 

 

2,107,921

 

 

 

56,747

 

 

 

2,942,275

 

12/31/2017

 

 

90,837

 

 

 

2,442,384

 

 

 

72,401

 

 

 

3,421,812

 

9/30/2017

 

 

93,027

 

 

 

2,330,838

 

 

 

65,034

 

 

 

3,279,204

 

6/30/2017

 

 

75,467

 

 

 

2,265,091

 

 

 

39,337

 

 

 

2,953,915

 

3/31/2017

 

 

66,547

 

 

 

1,748,909

 

 

 

33,836

 

 

 

2,351,207

 

The Company’s derivative contracts in place for oil and natural gas at March 31, 2018, are outlined in its Form 10-Q for the period ending March 31, 2018.

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.

EBITDA Reconciliation

EBITDA is defined as net income (loss) plus interest expense, provision for impairment, depreciation, depletion and amortization of properties and equipment (which includes amortization of other assets), and provision (benefit) for income taxes. We believe that certain investors consider EBITDA a useful means of measuring our ability to meet our debt service obligations and evaluating our financial performance. 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 EBITDA may not be comparable to a similarly titled measure of other companies. The following table provides a reconciliation of net income (loss) to EBITDA for the periods indicated.

 

Second Quarter Ended

 

 

Six Months Ended

 

 

March 31, 2018

 

 

March 31, 2018

 

Net Income (Loss)

$

1,070,176

 

 

$

14,855,115

 

Plus:

 

 

 

 

 

 

 

    Income Tax Expense (Benefit)

 

(24,000

)

 

 

(12,734,000

)

    Interest Expense

 

435,951

 

 

 

867,530

 

    DD&A

 

4,241,078

 

 

 

9,516,902

 

    Impairment

 

-

 

 

 

-

 

EBITDA

$

5,723,205

 

 

$

12,505,547

 

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 2017 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.