Panhandle Oil and Gas Inc. Reports Fiscal Third Quarter and Nine Months 2017 Results and Operations Update

OKLAHOMA CITY – Aug. 7, 2017 – PANHANDLE OIL AND GAS INC. (NYSE: PHX) today reported financial and operating results for the Company’s fiscal third quarter and nine months ended June 30, 2017.

HIGHLIGHTS FOR THE PERIODS ENDED JUNE 30, 2017

  • Increased total equivalent production 26%, as compared to the quarter ended March 31, 2017.
  • Generated fiscal third quarter 2017 net income of $1,260,758, $0.07 per diluted share, as compared to net loss of $786,795, $0.05 per diluted share, for the 2016 quarter.
  • Generated nine month 2017 net income of $2,492,799, $0.15 per diluted share, compared to net loss of $11,024,074, $0.65 per diluted share, for the 2016 nine months.
  • Collected lease bonus proceeds of $4.0 million in first nine months of fiscal 2017.
  • Generated cash from operating activities of $14,321,237 for the 2017 nine-month period as compared to $18,011,721 of capital expenditures for drilling and equipping wells.
  • Produced on average 32.5 Mmcfe/day for $3.38/Mcfe net realized price during the quarter.
  • Generated 2017 third-quarter and nine-month EBITDA (1) of $6,848,269 and $17,305,783, respectively.

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

MANAGEMENT COMMENTS

Commenting on the results, Paul F. Blanchard Jr., President and CEO, said, “This quarter was a solid one for Panhandle and highlights our focus on growing long-term shareholder value on a per-share basis.

“One of our foundational principles is to limit capital investments to projects we believe will generate appropriate risk-weighted returns for our shareholders. The application of this principle led to declining production during the recent downturn; however, this disciplined approach resulted in conservation of capital and material reductions in our debt. This strategy distinguishes Panhandle from many other oil and gas companies that are primarily focused on delivering production and reserve growth each quarter. Starting in late 2016, we began to see opportunities to make substantial investments in low-risk, high-return wells. We have taken advantage of those opportunities, and are now seeing the benefits of those decisions. The current quarter’s gas production grew by 30% and oil production by 13%, resulting in overall production growth of 26%, as compared to the second quarter of 2017. This production growth was primarily responsible for reducing our breakeven cost structure by 12%, as compared to the prior quarter, which we believe is a reflection of the quality of these investments.

“We anticipate material production growth and significant reductions in our breakeven cost to continue in the fourth quarter as several additional high-quality, low-risk wells are expected to begin producing. Additionally, we are in the process of marketing and selling some of the company’s existing high-cost production, which is anticipated to drive our cost structure down even further.

“Since the products we sell are subject to significant price volatility, another element of our value-generation strategy is to protect our investments and cash flows by hedging future oil and gas production.  Today, we have hedges in place for a majority of remaining 2017 natural gas production at an average floor of $3.06 per Mcf and an average ceiling of $3.34 per Mcf. We also have roughly one quarter of 2018 natural gas production hedged with an average floor of $3.20 per Mcf and an average ceiling of $3.59 per Mcf. A majority of our remaining 2017 oil production is hedged with an average floor of $50.48 per barrel and an average ceiling of $56.12 per barrel.

“We understand that the volatile commodity business we are in necessitates that we always have a debt structure that will withstand product price fluctuations. Our debt at the end of the third quarter was $50 million, yielding a conservative trailing twelve month debt to EBITDA (1) ratio of 2.07. Through the first three quarters of 2017, we financed $18.0 million of capital investments while only borrowing $5.5 million from our line of credit. A majority of those capital expenditures were focused on drilling for natural gas and NGLs.

“Given our investment principles, the volatility of the products we sell and the fact that we do not operate the wells in which we take an ownership interest, it is difficult to predict the timing of future investments and related production as is currently the case. However, we own material mineral and/or leasehold positions in several of the top resource plays in the United States including STACK/Cana, SCOOP, southeastern Oklahoma Woodford Shale, Eagle Ford Shale and Fayetteville Shale. These assets account for more than 570 Bcfe of undeveloped proved, probable and possible reserves. The identified undeveloped locations associated with these reserves are primarily located in the cores of those low risk resource plays. We are confident these assets will continue to deliver long-term, high-return growth for the Company.

“Beginning in third quarter 2017, we considerably ramped up our focus in sourcing and evaluating acquisition opportunities, and we plan to search actively for additional properties we believe will be accretive to the company’s long-term value. We will focus on the acquisition of mineral holdings, but will also consider held-by-production leasehold properties with low risk and material upside.”

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

FISCAL THIRD QUARTER 2017 RESULTS

For the 2017 third quarter, the Company recorded net income of $1,260,758, or $0.07 per diluted share. This compared to a net loss of $786,795, or $0.05 per diluted share, for the 2016 third quarter. Net cash provided by operating activities decreased 27% to $4,972,672 for the 2017 third quarter, versus $6,792,869 for the 2016 third quarter. Capital expenditures for the 2017 fiscal quarter totaled $10,290,467.

Total revenues for the 2017 third quarter were $12,437,186, a 26% increase from $9,864,090 for the 2016 quarter. Oil, NGL and natural gas sales increased $2,632,000 or 36% in the 2017 quarter, compared to the 2016 quarter, as a result of a 33% increase in the average per Mcfe sales price and a 2% increase in Mcfe production. The average sales price per Mcfe of production during the 2017 third quarter was $3.38, compared to $2.55 for the 2016 third quarter. The 2017 quarter included a $1.6 million gain on derivative contracts, as compared to a $1.8 million loss for the 2016 quarter.

Gas production increased 7% to 2,265,091 Mcf for the 2017 quarter, compared to the 2016 quarter, while oil production decreased 15% in the 2017 quarter to 75,467 barrels, versus 88,732 barrels in the 2016 quarter. In addition, 39,337 barrels of NGL were sold in the 2017 quarter, as compared to 40,477 barrels in the 2016 quarter.

NINE MONTHS 2017 RESULTS

For the 2017 nine months, the Company recorded net income of $2,492,799, or $0.15 per diluted share. This compared to a net loss of $11,024,074, or $0.65 per diluted share, for the 2016 nine months. Net cash provided by operating activities decreased 30% year over year to $14,321,237 for the 2017 nine months, versus the 2016 nine months. Capital expenditures for the 2017 nine months totaled $18,011,721. The Company recorded a $10,788 non-cash provision for impairment in the 2017 nine months, as compared to an $11.8 million provision in the 2016 period.

Total revenues for the 2017 nine months were $33,438,117, a 16% increase from $28,902,798 for the 2016 nine months. Oil, NGL and natural gas sales increased $5,230,646 or 23% in the 2017 nine months, compared to the 2016 nine months, as a result of a 39% increase in the average per Mcfe sales price somewhat offset by an 11% decrease in Mcfe production. The average sales price per Mcfe of production during the 2017 nine months was $3.55, compared to $2.56 for the 2016 nine months. The 2017 nine months included a $1,658,347 gain on derivative contracts, as compared to an $842,726 loss for the 2016 period.

Oil production decreased 24% in the 2017 nine months to 217,650 barrels from 285,854 barrels in the 2016 nine months, while gas production decreased 479,936 Mcf, or 8%, compared to the 2016 nine months. In addition, 108,824 barrels of NGL were sold in the 2017 nine months, which was a 14% decrease compared to 2016 NGL volumes.

OPERATIONS UPDATE

Drilling and completion activities continue on five significant projects. Three are in the cores of low-risk resource plays, and two are higher risk plays in the Permian.

In the southeastern Oklahoma Woodford Shale, Panhandle participated in eight significant wells operated by BP, with an average 20% working interest and 27.4% net revenue interest. Four of the wells began producing late in the second quarter of 2017 and the remaining four began producing during the third quarter. Together, these eight wells produced at the combined net rate of 6.9 Mmcf per day in the most recent 30 day period. Activity is increasing in this play as the application of new technology has greatly improved well performance and economics. Panhandle has a 4.8% NRI in an additional well in the play that has been drilled and is anticipated to begin producing in the fourth quarter. Panhandle has an additional 1,411 gross undeveloped locations identified in this play, with 3P net reserves of 221 Bcfe.

A total of ten wells have been drilled on our Eagle Ford leasehold during 2017, and the drilling rig has now been released. We own an average 13.2% working interest and 9.9% net revenue interest in these wells. The first two wells began producing in late April and continue to exceed expectations, with gross production of 110 Mboe combined in the first 60 days.  Four of the remaining wells are currently being completed and are anticipated to begin producing in the first half of August. The remaining four wells are scheduled to be completed in September and are expected to begin producing in October. An additional 96 Eagle Ford infill development locations have been identified on our acreage.

In the STACK/Cana play, the Company is participating with a 17.5% working interest and a 16.25% net revenue interest in six Woodford Shale wells operated by Cimarex Energy. All six wells have been completed and are in the early stages of completion fluid recovery. The wells are expected to be producing at their peak rates within the next 30 days and are anticipated to materially increase the Company’s daily production rate.  Panhandle currently has an additional 1,135 gross undeveloped locations identified in STACK/SCOOP/Cana with 3P net reserves of 166 Bcfe.

In the Permian Basin, QEP is producing its second Woodford Shale test well on our contiguous 43.6-square-mile mineral holdings in Andrews and Winkler Counties, Texas. After 57 days on sales the well has cumulative production of 16,200 Boe and is currently producing 239 Boe per day. Like the first test well on the acreage block, this well has not confirmed the economic viability of the play. Panhandle elected not to participate in both wells with a working interest and therefore has only a royalty interest with no capital invested.

Also in the Permian Basin, Element Petroleum is evaluating the San Andres formation on and around our contiguous 34.5-square-mile gross acreage block in Cochran County, Texas. Panhandle has leased 4,050 net mineral acres to Element and has a proportionately reduced 25% royalty. We also have the right to participate with 10% working interest in each unit as initial unit wells are proposed. With full participation, Panhandle would have a 10% working interest and a 12.1% net revenue interest in these new units on the 34.5-square-mile block. Element is continuing to evaluate the play with two wells producing, one waiting on completion, one being drilled and nine additional wells planned. The two producing wells have combined cumulative production as follows: 30 day – 1.1 Mboe, 60 day – 8.4 Mboe and 90 day – 16.0 Mboe.

FINANCIAL HIGHLIGHTS

Statements of Operations

 

Three Months Ended June 30,

 

 

Nine Months Ended June 30,

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Revenues:

(unaudited)

 

 

(unaudited)

 

Oil, NGL and natural gas sales

$

9,997,898

 

 

$

7,365,898

 

 

$

27,788,018

 

 

$

22,557,372

 

Lease bonuses and rentals

 

819,591

 

 

 

4,281,095

 

 

 

3,991,752

 

 

 

7,188,152

 

Gains (losses) on derivative contracts

 

1,619,697

 

 

 

(1,782,903

)

 

 

1,658,347

 

 

 

(842,726

)

 

 

12,437,186

 

 

 

9,864,090

 

 

 

33,438,117

 

 

 

28,902,798

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lease operating expenses

 

3,391,079

 

 

 

3,520,196

 

 

 

9,545,990

 

 

 

10,274,085

 

Production taxes

 

390,387

 

 

 

196,733

 

 

 

1,129,785

 

 

 

747,714

 

Depreciation, depletion and amortization

 

4,714,350

 

 

 

5,959,482

 

 

 

13,654,268

 

 

 

18,963,017

 

Provision for impairment

 

-

 

 

 

-

 

 

 

10,788

 

 

 

11,849,064

 

Loss (gain) on asset sales and other

 

11,447

 

 

 

17,223

 

 

 

98,445

 

 

 

(187,692

)

Interest expense

 

306,161

 

 

 

331,117

 

 

 

884,928

 

 

 

1,034,027

 

General and administrative

 

1,796,004

 

 

 

1,570,134

 

 

 

5,358,114

 

 

 

5,133,657

 

 

 

10,609,428

 

 

 

11,594,885

 

 

 

30,682,318

 

 

 

47,813,872

 

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

 

1,827,758

 

 

 

(1,730,795

)

 

 

2,755,799

 

 

 

(18,911,074

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision (benefit) for income taxes

 

567,000

 

 

 

(944,000

)

 

 

263,000

 

 

 

(7,887,000

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

$

1,260,758

 

 

$

(786,795

)

 

$

2,492,799

 

 

$

(11,024,074

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted earnings (loss) per common share

$

0.07

 

 

$

(0.05

)

 

$

0.15

 

 

$

(0.65

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common shares

 

16,668,814

 

 

 

16,582,416

 

 

 

16,639,090

 

 

 

16,575,117

 

Unissued, directors' deferred compensation shares

 

254,891

 

 

 

263,649

 

 

 

277,294

 

 

 

259,382

 

 

 

16,923,705

 

 

 

16,846,065

 

 

 

16,916,384

 

 

 

16,834,499

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends declared per share of

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

common stock and paid in period

$

0.04

 

 

$

0.04

 

 

$

0.12

 

 

$

0.12

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance Sheets

 

June 30, 2017

 

 

Sept. 30, 2016

 

Assets

(unaudited)

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

$

560,892

 

 

$

471,213

 

Oil, NGL and natural gas sales receivables (net of

 

5,851,996

 

 

 

5,287,229

 

allowance for uncollectable accounts)

 

 

 

 

 

 

 

Refundable income taxes

 

571,986

 

 

 

83,874

 

Derivative contracts, net

 

1,439,686

 

 

 

-

 

Other

 

222,675

 

 

 

419,037

 

Total current assets

 

8,647,235

 

 

 

6,261,353

 

 

 

 

 

 

 

 

 

Properties and equipment, at cost, based on

 

 

 

 

 

 

 

   successful efforts accounting:

 

 

 

 

 

 

 

Producing oil and natural gas properties

 

443,928,828

 

 

 

434,469,093

 

Non-producing oil and natural gas properties

 

7,462,082

 

 

 

7,574,649

 

Other

 

1,064,172

 

 

 

1,069,658

 

 

 

452,455,082

 

 

 

443,113,400

 

Less accumulated depreciation, depletion and amortization

 

(255,806,129

)

 

 

(251,707,749

)

Net properties and equipment

 

196,648,953

 

 

 

191,405,651

 

 

 

 

 

 

 

 

 

Investments

 

168,209

 

 

 

157,322

 

Derivative contracts, net

 

11,711

 

 

 

-

 

Total assets

$

205,476,108

 

 

$

197,824,326

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable

$

3,791,830

 

 

$

2,351,623

 

Derivative contracts, net

 

-

 

 

 

403,612

 

Accrued liabilities and other

 

1,758,153

 

 

 

1,718,558

 

Total current liabilities

 

5,549,983

 

 

 

4,473,793

 

 

 

 

 

 

 

 

 

Long-term debt

 

50,000,000

 

 

 

44,500,000

 

Deferred income taxes

 

30,825,007

 

 

 

30,676,007

 

Asset retirement obligations

 

3,114,867

 

 

 

2,958,048

 

Derivative contracts, net

 

-

 

 

 

24,659

 

 

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

24,000,000 shares authorized, 16,863,004 issued at June 30,

 

 

 

 

 

 

 

2017, and Sept. 30, 2016

 

280,938

 

 

 

280,938

 

Capital in excess of par value

 

2,531,822

 

 

 

3,191,056

 

Deferred directors' compensation

 

3,367,432

 

 

 

3,403,213

 

Retained earnings

 

112,962,754

 

 

 

112,482,284

 

 

 

119,142,946

 

 

 

119,357,491

 

Less treasury stock, at cost; 191,988 shares at June 30,

 

 

 

 

 

 

 

2017, and 262,708 shares at Sept. 30, 2016

 

(3,156,695

)

 

 

(4,165,672

)

Total stockholders' equity

 

115,986,251

 

 

 

115,191,819

 

Total liabilities and stockholders' equity

$

205,476,108

 

 

$

197,824,326

 

Condensed Statements of Cash Flows

 

Nine months ended June 30,

 

 

2017

 

 

2016

 

Operating Activities

(unaudited)

 

Net income (loss)

$

2,492,799

 

 

$

(11,024,074

)

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

 

 

 

 

 

 

 

  by operating activities:

 

 

 

 

 

 

 

Depreciation, depletion and amortization

 

13,654,268

 

 

 

18,963,017

 

Impairment

 

10,788

 

 

 

11,849,064

 

Provision for deferred income taxes

 

149,000

 

 

 

(10,344,000

)

Gain from leasing of fee mineral acreage

 

(3,999,632

)

 

 

(7,187,377

)

Proceeds from leasing of fee mineral acreage

 

4,026,283

 

 

 

7,494,570

 

Net (gain) loss on sale of assets

 

87,161

 

 

 

(271,080

)

Directors' deferred compensation expense

 

266,182

 

 

 

247,835

 

Restricted stock awards

 

454,854

 

 

 

644,783

 

Other

 

2,897

 

 

 

73,527

 

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

 

 

 

 

 

 

 

Oil, NGL and natural gas sales receivables

 

(564,767

)

 

 

3,472,291

 

Fair value of derivative contracts

 

(1,879,668

)

 

 

5,901,280

 

Refundable production taxes

 

-

 

 

 

476,001

 

Other current assets

 

196,362

 

 

 

69,237

 

Accounts payable

 

(127,375

)

 

 

(698,593

)

Income taxes receivable

 

(488,112

)

 

 

345,897

 

Income taxes payable

 

-

 

 

 

659,319

 

Accrued liabilities

 

40,197

 

 

 

(118,403

)

Total adjustments

 

11,828,438

 

 

 

31,577,368

 

Net cash provided by operating activities

 

14,321,237

 

 

 

20,553,294

 

 

 

 

 

 

 

 

 

Investing Activities

 

 

 

 

 

 

 

Capital expenditures, including dry hole costs

 

(18,011,721

)

 

 

(3,359,518

)

Investments in partnerships

 

(18,531

)

 

 

50,126

 

Proceeds from sales of assets

 

718,700

 

 

 

627,547

 

Net cash provided (used) by investing activities

 

(17,311,552

)

 

 

(2,681,845

)

 

 

 

 

 

 

 

 

Financing Activities

 

 

 

 

 

 

 

Borrowings under debt agreement

 

16,702,602

 

 

 

8,560,234

 

Payments of loan principal

 

(11,202,602

)

 

 

(24,360,234

)

Purchase of treasury stock

 

(407,677

)

 

 

(117,165

)

Payments of dividends

 

(2,012,329

)

 

 

(2,007,658

)

Excess tax benefit on stock-based compensation

 

-

 

 

 

(44,000

)

Net cash provided (used) by financing activities

 

3,079,994

 

 

 

(17,968,823

)

 

 

 

 

 

 

 

 

Increase (decrease) in cash and cash equivalents

 

89,679

 

 

 

(97,374

)

Cash and cash equivalents at beginning of period

 

471,213

 

 

 

603,915

 

Cash and cash equivalents at end of period

$

560,892

 

 

$

506,541

 

 

 

 

 

 

 

 

 

Supplemental Schedule of Noncash Investing and Financing Activities

 

 

 

 

 

 

 

Additions to asset retirement obligations

$

60,276

 

 

$

8,156

 

 

 

 

 

 

 

 

 

Gross additions to properties and equipment

$

19,579,304

 

 

$

3,529,104

 

Net (increase) decrease in accounts payable for properties

 

 

 

 

 

 

 

and equipment additions

 

(1,567,583

)

 

 

(169,586

)

Capital expenditures and acquisitions, including dry hole costs

$

18,011,721

 

 

$

3,359,518

 

OPERATING HIGHLIGHTS

 

Third Quarter Ended

 

 

Third Quarter Ended

 

 

Nine Months Ended

 

 

Nine Months Ended

 

 

June 30, 2017

 

 

June 30, 2016

 

 

June 30, 2017

 

 

June 30, 2016

 

Mcfe Sold

 

2,953,915

 

 

 

2,887,821

 

 

 

7,822,536

 

 

 

8,817,524

 

Average Sales Price per Mcfe

$

3.38

 

 

$

2.55

 

 

$

3.55

 

 

$

2.56

 

Oil Barrels Sold

 

75,467

 

 

 

88,732

 

 

 

217,650

 

 

 

285,854

 

Average Sales Price per Barrel

$

44.38

 

 

$

38.91

 

 

$

46.06

 

 

$

35.35

 

Mcf Sold

 

2,265,091

 

 

 

2,112,567

 

 

 

5,863,692

 

 

 

6,343,628

 

Average Sales Price per Mcf

$

2.65

 

 

$

1.60

 

 

$

2.69

 

 

$

1.72

 

NGL Barrels Sold

 

39,337

 

 

 

40,477

 

 

 

108,824

 

 

 

126,462

 

Average Sales Price per Barrel

$

16.63

 

 

$

12.93

 

 

$

18.08

 

 

$

11.95

 

 

Quarter ended

 

Oil Bbls Sold

 

 

Mcf Sold

 

 

NGL Bbls Sold

 

 

Mcfe Sold

 

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

 

12/31/2016

 

 

75,636

 

 

 

1,849,692

 

 

 

35,651

 

 

 

2,517,414

 

9/30/2016

 

 

78,398

 

 

 

1,940,749

 

 

 

44,598

 

 

 

2,678,725

 

6/30/2016

 

 

88,732

 

 

 

2,112,567

 

 

 

40,477

 

 

 

2,887,821

 

The Company’s derivative contracts in place for natural gas at June 30, 2017, are outlined in its Form 10-Q for the period ending June 30, 2017.

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.

  

Third Quarter Ended

 

 

Nine Months Ended

 

 

June 30, 2017

 

 

June 30, 2017

 

Net Income (Loss)

$

1,260,758

 

 

$

2,492,799

 

Plus:

 

 

 

 

 

 

 

    Income Tax Expense (Benefit)

 

567,000

 

 

 

263,000

 

    Interest Expense

 

306,161

 

 

 

884,928

 

    DD&A

 

4,714,350

 

 

 

13,654,268

 

    Impairment

 

-

 

 

 

10,788

 

EBITDA

$

6,848,269

 

 

$

17,305,783

 

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 2016 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 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 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, 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.