Panhandle Oil and Gas Inc. Reports Fourth Quarter and Fiscal 2016 Financial Results and an Operations Update

OKLAHOMA CITY – Dec. 12, 2016 – PANHANDLE OIL AND GAS INC., the “Company,” (NYSE: PHX) today reported financial and operating results for the fiscal year ended Sept. 30, 2016, and for the fiscal fourth quarter, an update on its bank line-of-credit borrowing base and provided an operations update.

SIGNIFICANT ITEMS FOR THE PERIODS ENDED SEPT. 30, 2016

  • Recorded a fourth quarter 2016 net income of $737,190, $0.05 per share, compared to a net loss of $887,681, $0.05 per share, for the 2015 fourth quarter.
  • Recorded a fiscal year 2016 net loss of $10,286,884, $0.61 per share, compared to a net income of $9,321,341, $0.56 per share, for fiscal 2015.
  • Posted total fiscal 2016 production of 11.5 billion cubic feet equivalent (Bcfe).
  • Generated cash from operating activities of $14.6 million for the year, well in excess of capital expenditures of $4.0 million.
  • Generated lease bonus income of $7.7 million in fiscal 2016, which is not included in cash flow from operations.
  • Reduced debt $20.5 million during fiscal 2016.
  • Incurred non-cash impairment provision for fiscal 2016 of $12.0 million.
     

Fiscal Fourth Quarter 2016 Results

For the 2016 fourth quarter, the Company recorded net income of $737,190, or $0.05 per share. This compared to net loss of $887,681, or $0.05 per share, for the 2015 fourth quarter. Net cash provided by operating activities was $1,530,993 for the 2016 fourth quarter versus $8,223,212 for the 2015 fourth quarter. Fourth quarter 2016 cash from operating activities again exceeded costs to drill and equip wells of $626,717. The Company recorded a gain of $2.4 million on asset sales in the 2016 fourth quarter as small interests in more than 2,000 wells which were the Company’s share of a liquidated partnership were sold.

Total revenues for the 2016 fourth quarter were $10,151,389, a decrease of 25% from $13,455,001 for the 2015 quarter. Oil, NGL and gas sales decreased $2,279,094, or 20% in the 2016 quarter, as compared to the 2015 quarter. This revenue decrease was a result of decreased oil, NGL and natural gas volumes of 30%, 7% and 14%, respectively, and decreased oil prices of 6%, slightly offset by increased NGL and natural gas prices of 2% and 5%, respectively. Average sales price per Mcfe of production during the 2016 fourth quarter was $3.31, a 4% decrease from $3.46 in the 2015 fourth quarter. Oil production decreased in the 2016 quarter to 78,398 barrels, versus 112,237 barrels in the 2015 quarter, while gas production decreased 14% to 1,940,749 Mcf, and NGL production decreased 7% to 44,598 barrels. Natural decline and significantly reduced capital expenditures to drill and complete new wells combined to reduce production volumes. Additionally, gains on derivative contracts were $0.8 million in the 2016 quarter compared to $2.1 million in the 2015 quarter.

Fiscal Year 2016 Results

For fiscal 2016, the Company recorded a net loss of $10,286,884, or $0.61 per share. This compared to a net income of $9,321,341, or $0.56 per share, for fiscal 2015. Net cash provided by operating activities decreased 68% to $14.6 million for 2016 versus 2015, and was in excess of capital expenditures in fiscal 2016, which totaled $4.0 million.

Total revenues for 2016 were $39,063,183, a decrease of 45% from $70,882,093 for 2015. Oil, NGL and natural gas sales revenues decreased $23,122,561 or 42% in 2016, as compared to 2015. This revenue decrease was a result of decreased oil, NGL and natural gas prices of 31%, 31% and 30%, respectively, and decreased oil, NGL and natural gas production volumes of 20%, 19% and 15%, respectively. Overall results were a 16% decrease in Mcfe production volumes and a 31% decrease in the average sales price per Mcfe to $2.73, as compared to $3.97 in 2015. Revenue from lease bonuses in 2016 was $7.7 million, compared to $2.0 million in 2015. Losses on derivative contracts totaled $0.1 million in 2016 as compared to gains of $13.8 million in 2015. The majority of the derivative gains in 2015 were for oil contracts put in place in fiscal 2014 to protect oil prices received for production from the Eagle Ford Shale properties.

Oil, NGL and natural gas sales decreased $23,122,561, or 42%, for 2016, as compared to 2015. The decrease was due to decreased oil, NGL and natural gas prices, coupled with lower oil, NGL and natural gas production volumes. The decrease in oil production was primarily the result of natural production decline in the Eagle Ford Shale, which was not offset by new production in the play due to significantly reduced drilling activity. Declining production from various fields in western Oklahoma, the Texas Panhandle and the Northern Oklahoma Mississippian contributed to the decrease to a lesser extent. NGL production volume decreases were largely the result of natural production decline in the Anadarko Woodford Shale in western and central Oklahoma and the Anadarko Basin Granite Wash in western Oklahoma and the Texas Panhandle. Natural gas production volume decreases were primarily the result of naturally declining production in the Fayetteville Shale. Declining production from the Anadarko Basin Granite Wash and the southeastern Oklahoma Woodford Shale also contributed to the decrease to a lesser extent.

Total costs and expenses for 2016 increased $336,315, or 0.6% over 2015. Lease operating expenses declined $3.9 million, principally as a result of operating efficiencies in the Eagle Ford Shale field. However, provision for impairment increased $7.0 million in 2016 as a result of severely depressed oil, NGL and natural gas prices during 2016. The Company also recorded a $2.6 million gain on asset sales in 2016, as compared to only $0.4 million in 2015.

Bank Line-of-Credit Update

On December 8, 2016, Panhandle’s bank line-of-credit borrowing base was reaffirmed and remained unchanged at $80 million. This compares to a current outstanding balance of $43.7 million. Availability under the line of $36.3 million is in excess of projected needs. Based on currently expected product prices, the Company anticipates funding normal operations and an expanded drilling capital expenditure program in 2017 from internally generated cash flow and utilization of borrowing under the bank line-of-credit.

Management Comments

Michael C. Coffman, President and CEO, said, “As have all companies in the oil and gas industry, Panhandle experienced a very difficult year in 2016, brought on by extremely low product prices. Our average per Mcfe sales price of $2.73 in 2016 compared to $3.97 in 2015 and $5.88 in 2014.

“We were able to supplement cash flows from oil and gas sales during the year by generating $8.0 million of lease bonus proceeds and selling the assets of a liquidated partnership and other minor assets, thus generating another $4.5 million. Combined with our cash flows from operations, this allowed Panhandle to fund capital expenditures, pay dividends and reduce debt by $20.5 million. This reduced debt level put the Company in a position to be able to comfortably fund a significant amount of low-risk drilling just recently proposed on our acreage in three core areas of shale plays.”

Paul Blanchard, Senior Vice President and COO, said, “We chose not to participate in the majority of wells proposed to us in 2016 because we did not believe they would earn reasonable rates of return at the NYMEX futures pricing at that time. Instead, we focused on leasing out our mineral acreage in what we considered to be relatively higher risk areas as compared to our core resource play holdings.

“As product prices climbed later in fiscal 2016 and into the first quarter of fiscal 2017, we have seen meaningful activity return to our core resource play holdings. Participation in this activity is expected to generate solid rates of return at current NYMEX strip prices.

“Drilling is underway on an eight-well horizontal drilling program operated by BP America in the Southeastern Oklahoma Woodford Shale gas play. Panhandle has an average of 20% working interest and 27.4% net revenue interest in these wells, which should begin producing in the second fiscal quarter of 2017.

“Panhandle recently received notice from Cimarex Energy of their plans to drill six wells on Panhandle leasehold in the core of the STACK/CANA play beginning in December 2016. Panhandle has elected to participate with 17.5% working interest and a 16.25% net revenue interest in these Woodford Shale wells. Cimarex plans to drill the wells with two rigs and projects they will begin producing early in the third fiscal quarter of 2017.

“Pad drilling is scheduled to resume on our Eagle Ford leasehold acreage in our second fiscal quarter of 2017. The operator plans to move in one rig and drill a ten-well program. This activity should occur over a roughly six- to seven-month period. Panhandle will have 16% working interest in six of the wells that are entirely located on our acreage and approximately 8.2% working interest in the other four that are roughly half on our acreage. The operator intends to apply techniques used in the completion of the most recent well on the acreage block, which began producing last summer. Production from this well was significantly higher than previous wells on the block, and this new drilling is expected to yield similar results.

“The drilling detailed above will be on some of the lowest risk acreage in the Company’s portfolio, as it is in the cores of well-developed and understood resource plays. These investments should materially increase Panhandle’s daily oil, NGL and natural gas production when the wells come online. The Company also has two exciting higher-risk plays being tested in the Permian Basin.

“Element Petroleum has commenced testing the economic viability of drilling horizontal San Andres oil wells on our Cochran County, Texas, mineral block. Prior to December 2016, Element drilled and cored two pilot holes on our mineral acreage. In December 2016 and January 2017 they plan to drill and core three additional pilot wells on and adjacent to our block. Element has also completed a salt water disposal (SWD) well and has an additional SWD well planned on the block. Their intent is to use the technical data from these five pilot wells to determine the optimum placement of the lateral in the San Andres. Once that has been determined, Element plans to drill and complete 1.5-mile long laterals in the five pilot wells to test the productivity of the San Andres on and adjacent to our mineral acreage. Panhandle owns 4,053 net mineral acres on the gross 34.5-square-mile block, which were leased to Element Petroleum in December 2015. The lease terms provide Panhandle a 25%, proportionately reduced, royalty and the right to buy back up to a 10% working interest in each drilling unit on the lease, as initial unit wells are proposed. Where Panhandle exercises this right, we will own a 10% working interest and a 12.1% net revenue interest in those drilling units. These terms allow Panhandle to not risk capital in the concept testing phase, but to begin participation with a working interest position once economic viability has been established. If successful, there is potential to develop this acreage with multiple San Andres oil wells per unit.

QEP Resources is testing the economic viability of a Woodford Shale resource play on a block of mineral acreage we own in Andrews and Winkler Counties, Texas. The initial Woodford Shale test well, which began producing in early 2015, was a productive oil well, but it was uneconomic. QEP has proposed to drill a second Woodford well with a two-mile long lateral in early 2017. The second well will optimize the fracture stimulation and completion design, utilizing data acquired from the first well completion. Panhandle’s mineral block consists of 2,439 net acres covering 43.6 square miles. Our lease to QEP provides Panhandle a 25% proportionately reduced royalty and the right to buy back up to 10% working interest in each drilling unit on the lease as initial unit wells are proposed. Where Panhandle exercises this right, we will own an average 7.0% working interest and a 7.5% net revenue interest in those drilling units. This allows Panhandle to not risk capital in the concept testing phase, but to begin participation with a working interest position once economic viability has been established. If successful, there is potential to develop this acreage with multiple Woodford Shale oil wells per unit.

FINANCIAL HIGHLIGHTS

Statements of Operations

  

 

Three Months Ended Sept. 30,

 

 

Year Ended Sept. 30,

 

 

 

2016

 

 

2015

 

 

2016

 

 

2015

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Oil, NGL and natural gas sales

 

$

8,853,981

 

 

$

11,133,075

 

 

$

31,411,353

 

 

$

54,533,914

 

Lease bonuses and rentals

 

 

547,633

 

 

 

64,652

 

 

 

7,735,785

 

 

 

2,010,395

 

Gains (losses) on derivative contracts

 

 

756,371

 

 

 

2,115,551

 

 

 

(86,355

)

 

 

13,822,506

 

Income from partnerships

 

 

(6,596

)

 

 

141,723

 

 

 

2,400

 

 

 

515,278

 

 

 

 

10,151,389

 

 

 

13,455,001

 

 

 

39,063,183

 

 

 

70,882,093

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lease operating expenses

 

 

3,316,004

 

 

 

4,238,428

 

 

 

13,590,089

 

 

 

17,472,408

 

Production taxes

 

 

323,918

 

 

 

318,085

 

 

 

1,071,632

 

 

 

1,702,302

 

Exploration costs

 

 

1,483

 

 

 

36

 

 

 

31,589

 

 

 

48,404

 

Depreciation, depletion and amortization

 

 

5,524,548

 

 

 

6,141,070

 

 

 

24,487,565

 

 

 

23,821,139

 

Provision for impairment

 

 

152,207

 

 

 

1,476,431

 

 

 

12,001,271

 

 

 

5,009,191

 

Loss (gain) on asset sales and other

 

 

(2,396,624

)

 

 

(371,408

)

 

 

(2,624,642

)

 

 

(398,994

)

Interest expense

 

 

310,592

 

 

 

355,427

 

 

 

1,344,619

 

 

 

1,550,483

 

General and administrative

 

 

2,006,071

 

 

 

1,965,114

 

 

 

7,139,728

 

 

 

7,339,320

 

Bad debt expense (recovery)

 

 

-

 

 

 

180,499

 

 

 

19,216

 

 

 

180,499

 

 

 

 

9,238,199

 

 

 

14,303,682

 

 

 

57,061,067

 

 

 

56,724,752

 

Income (loss) before provision (benefit)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

for income taxes

 

 

913,190

 

 

 

(848,681

)

 

 

(17,997,884

)

 

 

14,157,341

 

Provision (benefit) for income taxes

 

 

176,000

 

 

 

39,000

 

 

 

(7,711,000

)

 

 

4,836,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

737,190

 

 

$

(887,681

)

 

$

(10,286,884

)

 

$

9,321,341

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted earnings per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

0.05

 

 

$

(0.05

)

 

$

(0.61

)

 

$

0.56

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common shares

 

 

16,402,172

 

 

 

16,546,528

 

 

 

16,577,799

 

 

 

16,522,462

 

Unissued, vested directors' shares

 

 

269,461

 

 

 

251,005

 

 

 

263,057

 

 

 

246,442

 

 

 

 

16,671,633

 

 

 

16,797,533

 

 

 

16,840,856

 

 

 

16,768,904

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends declared per share of

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

common stock and paid in period

 

$

0.04

 

 

$

0.04

 

 

$

0.16

 

 

$

0.16

 

Balance Sheets

  

 

Sept. 30, 2016

 

 

Sept. 30, 2015

 

Assets

 

 

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

471,213

 

 

$

603,915

 

Oil, NGL and natural gas sales receivables,

 

 

 

 

 

 

 

 

net of allowance for uncollectable accounts

 

 

5,287,229

 

 

 

7,895,591

 

Refundable income taxes

 

 

83,874

 

 

 

345,897

 

Refundable production taxes

 

 

-

 

 

 

476,001

 

Deferred income taxes

 

 

310,900

 

 

 

-

 

Derivative contracts, net

 

 

-

 

 

 

4,210,764

 

Other

 

 

419,037

 

 

 

252,016

 

Total current assets

 

 

6,572,253

 

 

 

13,784,184

 

 

 

 

 

 

 

 

 

 

Properties and equipment at cost, based on successful

 

 

 

 

 

 

 

 

efforts accounting:

 

 

 

 

 

 

 

 

Producing oil and natural gas properties

 

 

434,469,093

 

 

 

441,141,337

 

Non-producing oil and natural gas properties

 

 

7,574,649

 

 

 

8,293,997

 

Furniture and fixtures

 

 

1,069,658

 

 

 

1,393,559

 

 

 

 

443,113,400

 

 

 

450,828,893

 

Less accumulated depreciation, depletion and

 

 

 

 

 

 

 

 

amortization

 

 

(251,707,749

)

 

 

(228,036,803

)

Net properties and equipment

 

 

191,405,651

 

 

 

222,792,090

 

 

 

 

 

 

 

 

 

 

Investments

 

 

157,322

 

 

 

2,248,999

 

Total assets

 

$

198,135,226

 

 

$

238,825,273

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

2,351,623

 

 

$

2,028,746

 

Derivative contracts, net

 

 

403,612

 

 

 

-

 

Deferred income taxes

 

 

-

 

 

 

1,517,100

 

Accrued liabilities and other

 

 

1,718,558

 

 

 

1,330,901

 

Total current liabilities

 

 

4,473,793

 

 

 

4,876,747

 

 

 

 

 

 

 

 

 

 

Long-term debt

 

 

44,500,000

 

 

 

65,000,000

 

Deferred income taxes

 

 

30,986,907

 

 

 

39,118,907

 

Asset retirement obligations

 

 

2,958,048

 

 

 

2,824,944

 

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 Sept. 30, 2016 and 2015

 

 

280,938

 

 

 

280,938

 

Capital in excess of par value

 

 

3,191,056

 

 

 

2,993,119

 

Deferred directors' compensation

 

 

3,403,213

 

 

 

3,084,289

 

Retained earnings

 

 

112,482,284

 

 

 

125,446,473

 

 

 

 

119,357,491

 

 

 

131,804,819

 

Treasury stock, at cost; 262,708 shares at Sept. 30, 2016,

 

 

 

 

 

 

 

 

and 302,623 shares at Sept. 30, 2015

 

 

(4,165,672

)

 

 

(4,800,144

)

Total stockholders' equity

 

 

115,191,819

 

 

 

127,004,675

 

Total liabilities and stockholders' equity

 

$

198,135,226

 

 

$

238,825,273

 

Condensed Statements of Cash Flows

 

 

Year ended Sept. 30,

 

 

 

2016

 

 

2015

 

Operating Activities

 

 

 

 

 

 

 

 

Net income (loss)

 

$

(10,286,884

)

 

$

9,321,341

 

Adjustments to reconcile net income (loss) to net

 

 

 

 

 

 

 

 

cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation, depletion and amortization

 

 

24,487,565

 

 

 

23,821,139

 

Impairment

 

 

12,001,271

 

 

 

5,009,191

 

Provision for deferred income taxes

 

 

(9,960,000

)

 

 

2,672,000

 

Exploration costs

 

 

31,589

 

 

 

48,404

 

Gain from leasing of fee mineral acreage

 

 

(7,732,023

)

 

 

(2,007,993

)

Net (gain) loss on sales of assets

 

 

(2,688,408

)

 

 

-

 

Income from partnerships

 

 

(2,400

)

 

 

(515,278

)

Distributions received from partnerships

 

 

33,201

 

 

 

736,280

 

Common stock contributed to ESOP

 

 

200,158

 

 

 

185,113

 

Common stock (unissued) to Directors'

 

 

 

 

 

 

 

 

Deferred Compensation Plan

 

 

329,465

 

 

 

302,353

 

Restricted stock awards

 

 

781,479

 

 

 

895,127

 

Bad debt expense (recovery)

 

 

19,216

 

 

 

180,499

 

Cash provided (used) by changes in assets

 

 

 

 

 

 

 

 

and liabilities:

 

 

 

 

 

 

 

 

Oil, NGL and natural gas sales receivables

 

 

2,589,146

 

 

 

8,151,379

 

Fair value of derivative contracts

 

 

4,639,035

 

 

 

(2,308,922

)

Refundable income taxes

 

 

262,023

 

 

 

(345,897

)

Refundable production taxes

 

 

476,001

 

 

 

149,995

 

Other current assets

 

 

(167,021

)

 

 

102,812

 

Accounts payable

 

 

(811,749

)

 

 

(343,186

)

Income taxes payable

 

 

-

 

 

 

(523,843

)

Accrued liabilities

 

 

388,053

 

 

 

40,500

 

Total adjustments

 

 

24,876,601

 

 

 

36,249,673

 

Net cash provided by operating activities

 

 

14,589,717

 

 

 

45,571,014

 

 

 

 

 

 

 

 

 

 

Investing Activities

 

 

 

 

 

 

 

 

Capital expenditures, including dry hole costs

 

 

(3,986,235

)

 

 

(30,800,625

)

Acquisition of working interest properties

 

 

-

 

 

 

(308,180

)

Proceeds from leasing of fee mineral acreage

 

 

8,049,434

 

 

 

2,053,900

 

Investments in partnerships

 

 

50,126

 

 

 

(533,580

)

Proceeds from sales of assets

 

 

4,501,726

 

 

 

-

 

Net cash used in investing activities

 

 

8,615,051

 

 

 

(29,588,485

)

 

 

 

 

 

 

 

 

 

Financing Activities

 

 

 

 

 

 

 

 

Borrowings under debt agreement

 

 

12,339,101

 

 

 

25,833,116

 

Payments of loan principal

 

 

(32,839,101

)

 

 

(38,833,116

)

Purchases of treasury stock

 

 

(117,165

)

 

 

(242,313

)

Payments of dividends

 

 

(2,677,305

)

 

 

(2,669,056

)

Excess tax benefit on stock-based compensation

 

 

(43,000

)

 

 

23,000

 

Net cash provided by (used in) financing activities

 

 

(23,337,470

)

 

 

(15,888,369

)

Increase (decrease) in cash and cash equivalents

 

 

(132,702

)

 

 

94,160

 

Cash and cash equivalents at beginning of year

 

 

603,915

 

 

 

509,755

 

Cash and cash equivalents at end of year

 

$

471,213

 

 

$

603,915

 

 

 

Year ended Sept. 30,

 

 

 

2016

 

 

2015

 

Supplemental Disclosures of Cash Flow

 

 

 

 

 

 

 

 

Information

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest paid (net of capitalized interest)

 

$

1,365,474

 

 

$

1,558,885

 

Income taxes paid, net of refunds received

 

$

2,029,977

 

 

$

3,009,939

 

 

 

 

 

 

 

 

 

 

Supplemental schedule of noncash

 

 

 

 

 

 

 

 

investing and financing activities:

 

 

 

 

 

 

 

 

Additions and revisions, net, to asset

 

 

 

 

 

 

 

 

retirement obligations

 

$

14,095

 

 

$

70,529

 

 

 

 

 

 

 

 

 

 

Gross additions to properties and equipment

 

$

5,118,733

 

 

$

26,183,115

 

Net (increase) decrease in accounts payable for

 

 

 

 

 

 

 

 

properties and equipment additions

 

 

(1,132,498

)

 

 

4,925,690

 

Capital expenditures, including dry hole costs

 

$

3,986,235

 

 

$

31,108,805

 

OPERATING HIGHLIGHTS

  

Fourth Quarter Ended

 

 

Fourth Quarter Ended

 

 

Year Ended

 

 

Year Ended

 

 

Sept. 30, 2016

 

 

Sept. 30, 2015

 

 

Sept. 30, 2016

 

 

Sept. 30, 2015

 

MCFE Sold

 

2,678,725

 

 

 

3,221,086

 

 

 

11,496,249

 

 

 

13,729,733

 

Average Sales Price per MCFE

$

3.31

 

 

$

3.46

 

 

$

2.73

 

 

$

3.97

 

Barrels of Oil Sold

 

78,398

 

 

 

112,237

 

 

 

364,252

 

 

 

453,125

 

Average Sales Price per Barrel

$

41.62

 

 

$

44.18

 

 

$

36.70

 

 

$

53.12

 

MCF of Natural Gas Sold

 

1,940,749

 

 

 

2,261,236

 

 

 

8,284,377

 

 

 

9,745,223

 

Average Sales Price per MCF

$

2.55

 

 

$

2.43

 

 

$

1.92

 

 

$

2.73

 

Barrels of NGL Sold

 

44,598

 

 

 

47,738

 

 

 

171,060

 

 

 

210,960

 

Average Sales Price per Barrel

$

14.43

 

 

$

14.10

 

 

$

12.60

 

 

$

18.25

 

Quarterly Production Levels

Quarter ended

 

Oil Bbls Sold

 

 

MCF Sold

 

 

NGL Bbls Sold

 

 

MCFE Sold

 

9/30/16

 

 

78,398

 

 

 

1,940,749

 

 

 

44,598

 

 

 

2,678,725

 

6/30/16

 

 

88,732

 

 

 

2,112,567

 

 

 

40,477

 

 

 

2,887,821

 

3/31/16

 

 

90,760

 

 

 

2,014,139

 

 

 

37,934

 

 

 

2,786,303

 

12/31/15

 

 

106,362

 

 

 

2,216,922

 

 

 

48,051

 

 

 

3,143,400

 

9/30/15

 

 

112,237

 

 

 

2,261,236

 

 

 

47,738

 

 

 

3,221,086

 

6/30/15

 

 

109,738

 

 

 

2,407,049

 

 

 

41,737

 

 

 

3,315,899

 

3/31/15

 

 

114,567

 

 

 

2,475,777

 

 

 

48,681

 

 

 

3,455,265

 

12/31/14

 

 

116,583

 

 

 

2,601,161

 

 

 

72,804

 

 

 

3,737,483

 

Derivative contracts in place as of Dec. 2, 2016

  

 

Production volume

 

Indexed

 

 

Contract period

 

covered per month

 

pipeline

 

Fixed price

Natural gas costless collars

 

 

 

 

 

 

October - December 2016

 

70,000 Mmbtu

 

NYMEX Henry Hub

 

$2.75 floor / $3.05 ceiling

October - December 2016

 

50,000 Mmbtu

 

NYMEX Henry Hub

 

$2.90 floor / $3.40 ceiling

November 2016 - March 2017

 

50,000 Mmbtu

 

NYMEX Henry Hub

 

$2.25 floor / $3.65 ceiling

November 2016 - March 2017

 

80,000 Mmbtu

 

NYMEX Henry Hub

 

$2.25 floor / $3.95 ceiling

November 2016 - March 2017

 

50,000 Mmbtu

 

NYMEX Henry Hub

 

$2.60 floor / $3.25 ceiling

January - June 2017

 

50,000 Mmbtu

 

NYMEX Henry Hub

 

$2.85 floor / $3.35 ceiling

January - December 2017

 

50,000 Mmbtu

 

NYMEX Henry Hub

 

$2.80 floor / $3.47 ceiling

January - December 2017

 

50,000 Mmbtu

 

NYMEX Henry Hub

 

$3.00 floor / $3.35 ceiling

April - December 2017

 

50,000 Mmbtu

 

NYMEX Henry Hub

 

$2.80 floor / $3.35 ceiling

April - December 2017

 

50,000 Mmbtu

 

NYMEX Henry Hub

 

$2.75 floor / $3.35 ceiling

April - December 2017

 

30,000 Mmbtu

 

NYMEX Henry Hub

 

$3.00 floor / $3.65 ceiling

May - December 2017

 

50,000 Mmbtu

 

NYMEX Henry Hub

 

$3.00 floor / $3.60 ceiling

 

 

 

 

 

 

 

Natural gas fixed price swaps

 

 

 

 

 

 

October 2016 - March 2017

 

25,000 Mmbtu

 

NYMEX Henry Hub

 

$3.200

November 2016 - April 2017

 

80,000 Mmbtu

 

NYMEX Henry Hub

 

$2.955

January - December 2017

 

25,000 Mmbtu

 

NYMEX Henry Hub

 

$3.100

April - December 2017

 

50,000 Mmbtu

 

NYMEX Henry Hub

 

$3.070

April - December 2017

 

50,000 Mmbtu

 

NYMEX Henry Hub

 

$3.210

April - December 2017

 

30,000 Mmbtu

 

NYMEX Henry Hub

 

$3.300

 

 

 

 

 

 

 

Oil costless collars

 

 

 

 

 

 

July - December 2016

 

3,000 Bbls

 

NYMEX WTI

 

$35.00 floor / $49.00 ceiling

October - December 2016

 

3,000 Bbls

 

NYMEX WTI

 

$40.00 floor / $47.25 ceiling

October 2016 - March 2017

 

3,000 Bbls

 

NYMEX WTI

 

$40.00 floor / $58.50 ceiling

October 2016 - March 2017

 

3,000 Bbls

 

NYMEX WTI

 

$45.00 floor / $54.00 ceiling

October 2016 - March 2017

 

3,000 Bbls

 

NYMEX WTI

 

$45.00 floor / $55.50 ceiling

January - December 2017

 

3,000 Bbls

 

NYMEX WTI

 

$50.00 floor / $55.00 ceiling

April - December 2017

 

2,000 Bbls

 

NYMEX WTI

 

$50.00 floor / $57.50 ceiling

July - December 2017

 

5,000 Bbls

 

NYMEX WTI

 

$45.00 floor / $56.25 ceiling

 

 

 

 

 

 

 

Oil fixed price swaps

 

 

 

 

 

 

January - December 2017

 

3,000 Bbls

 

NYMEX WTI

 

$53.890

April - December 2017

 

2,000 Bbls

 

NYMEX WTI

 

$54.200

 

 

 

 

 

 

 

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; 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; unsuccessful exploration and development drilling; decreases in the values of Panhandle’s oil and gas properties resulting in write-downs; the negative impact lower oil and gas prices could have on the Company’s ability to borrow; drilling and operating risks; and Panhandle cannot control activities on its 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. 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.