Panhandle Oil and Gas Inc. Reports Third Quarter and Nine Months 2020 Results and Announces Dividend Payment

OKLAHOMA CITY, Aug. 13, 2020 – PANHANDLE OIL AND GAS INC., “Panhandle” or the “Company,” (NYSE: PHX), today reported financial and operating results for the third quarter and nine months ended June 30, 2020.  

Chad L. Stephens, President and CEO, commented, “Clearly the third quarter was challenging given the effects of the global pandemic on the economy and the energy markets. Our sales volumes were down as operators curtailed production and brought fewer wells online due to low commodity prices. While we have made significant strides in reducing costs in the quarter, it was not enough to offset lower revenue. In spite of these challenges, we managed to generate free cash flow which we used to further reduce debt. The energy sector is stabilizing as the rig count seems to have found a floor and operators are talking about bringing curtailed wells back on line and setting reasonable drilling plans going forward. The deal flow for mineral assets is also picking up, and we expect more opportunities to come to market in the second half of 2020. We will continue to focus on areas that we can control such as cost discipline, debt reduction and sourcing mineral acquisition opportunities, which we believe will create value for our shareholders in the long run.” 

SUMMARY OF RESULTS FOR THE PERIODS ENDED JUNE 30, 2020, AND SUBSEQUENT EVENTS

  • Total volumes sold decreased in the third quarter 2020 by 0.47 Bcfe, or 20%, and royalty volumes decreased by 0.16 Bcfe, or 16%, from the second quarter 2020, primarily due to timing of payments from operators as a higher number of new wells were paid in the second quarter compared to the third quarter.
  • Net loss in the third quarter 2020 was $3.6 million, or $0.21 per share, as compared to net loss of $20.5 million, or $1.24 per share, in the second quarter 2020.
  • Adjusted EBITDA(1) for the third quarter 2020 was $1.2 million, as compared to $2.4 million in the second quarter 2020, mainly due to 20% lower production volumes and 39% lower realized prices.
  • Reduced debt from $35.4 million, as of Sept. 30, 2019, to $30.0 million, as of June 30, 2020. Net debt has been further reduced to approximately $26.9 million as of Aug. 11, 2020.
  • Debt to adjusted EBITDA (TTM) ratio was 1.48x at June 30, 2020.
  • Subsequent to June 30, 2020, the Company sold 5,925 open and non-producing net mineral acres for $793,617 with the proceeds applied toward further debt reduction.
  • Total G&A decreased by $265,871 from the second quarter as a result of the Company’s ongoing cost reduction efforts.
  • Approved a payment of a one cent per share dividend payable on Sept. 11, 2020, to stockholders of record on Aug. 27, 2020. 
  1. This is a non-GAAP measure. Refer to the Non-GAAP Reconciliation section.

OPERATING HIGHLIGHTS

 

Third Quarter Ended

 

 

Third Quarter Ended

 

 

Nine Months Ended

 

 

Nine Months Ended

 

 

June 30, 2020

 

 

June 30, 2019

 

 

June 30, 2020

 

 

June 30, 2019

 

Mcfe Sold

 

1,903,752

 

 

 

2,618,369

 

 

 

6,555,378

 

 

 

7,804,424

 

Average Sales Price per Mcfe

$

1.85

 

 

$

3.74

 

 

$

2.80

 

 

$

4.00

 

Oil Barrels Sold

 

55,138

 

 

 

96,065

 

 

 

214,159

 

 

 

253,265

 

Average Sales Price per Barrel

$

25.94

 

 

$

57.50

 

 

$

42.43

 

 

$

55.01

 

Gas Mcf Sold

 

1,361,909

 

 

 

1,718,561

 

 

 

4,539,103

 

 

 

5,300,594

 

Average Sales Price per Mcf

$

1.36

 

 

$

2.00

 

 

$

1.73

 

 

$

2.68

 

NGL Barrels Sold

 

35,169

 

 

 

53,903

 

 

 

121,887

 

 

 

164,040

 

Average Sales Price per Barrel

$

6.62

 

 

$

15.33

 

 

$

11.26

 

 

$

18.88

 

FINANCIAL HIGHLIGHTS

 

 

Third Quarter Ended

 

 

Third Quarter Ended

 

 

Nine Months Ended

 

 

Nine Months Ended

 

 

 

June 30, 2020

 

 

June 30, 2019

 

 

June 30, 2020

 

 

June 30, 2019

 

    Working Interest Sales

 

$

1,876,489

 

 

$

6,659,237

 

 

$

9,976,274

 

 

$

20,164,713

 

    Royalty Interest Sales

 

$

1,641,072

 

 

$

3,123,100

 

 

$

8,352,743

 

 

$

11,049,662

 

Oil, NGL and Natural Gas Sales

 

$

3,517,561

 

 

$

9,782,337

 

 

$

18,329,017

 

 

$

31,214,375

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lease Bonuses and Rental Income

 

$

22,996

 

 

$

229,075

 

 

$

572,787

 

 

$

952,378

 

Total Revenue

 

$

2,705,383

 

 

$

16,342,394

 

 

$

24,593,201

 

 

$

50,307,601

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LOE per Mcfe

 

$

0.60

 

 

$

0.62

 

 

$

0.59

 

 

$

0.59

 

Transportation, Gathering and Marketing per Mcfe

 

$

0.50

 

 

$

0.58

 

 

$

0.56

 

 

$

0.59

 

Production Tax per Mcfe

 

$

0.07

 

 

$

0.19

 

 

$

0.13

 

 

$

0.20

 

G&A Expense per Mcfe

 

$

1.00

 

 

$

0.69

 

 

$

0.96

 

 

$

0.75

 

Interest Expense per Mcfe

 

$

0.13

 

 

$

0.20

 

 

$

0.15

 

 

$

0.20

 

DD&A per Mcfe

 

$

1.29

 

 

$

1.67

 

 

$

1.34

 

 

$

1.51

 

Total Expense per Mcfe

 

$

3.59

 

 

$

3.95

 

 

$

3.73

 

 

$

3.84

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Impairment

 

$

358,826

 

 

$

-

 

 

$

29,904,528

 

 

$

-

 

Net Income (Loss)

 

$

(3,555,215

)

 

$

4,604,236

 

 

$

(22,117,915

)

 

$

15,408,842

 

Adj. Pre-Tax Net Income (Loss) (1)

 

$

(1,536,925

)

 

$

4,024,933

 

 

$

990,306

 

 

$

14,039,317

 

Adjusted EBITDA (1)

 

$

1,168,834

 

 

$

8,934,653

 

 

$

10,742,522

 

 

$

27,411,853

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash Flow from Operations

 

$

3,717,398

 

 

$

5,271,897

 

 

$

9,825,740

 

 

$

14,332,951

 

CapEx - Drilling & Completing

 

$

56,413

 

 

$

(810,043

)

 

$

196,168

 

 

$

3,349,640

 

CapEx - Mineral Acquisitions

 

$

50,000

 

 

$

3,310,691

 

 

$

10,304,016

 

 

$

5,120,466

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Borrowing Base

 

 

 

 

 

 

 

 

 

$

32,000,000

 

 

$

80,000,000

 

Debt

 

 

 

 

 

 

 

 

 

$

30,000,000

 

 

$

41,500,000

 

Debt/Adjusted EBITDA (TTM) (1)

 

 

 

 

 

 

 

 

 

 

1.48

 

 

 

1.26

 

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

RESULTS OF THIRD QUARTER 2020 COMPARED TO THIRD QUARTER 2019

The Company recorded a third quarter 2020 net loss of $3,555,215, or $0.21 per share, as compared to net income of $4,604,236, or $0.28 per share, in the 2019 quarter. The decrease was principally the result of decreased oil, NGL and natural gas sales, loss on derivative contracts in the third quarter and decreased gain on asset sales, partially offset by a decrease in DD&A, transportation, gathering and marketing expenses, production taxes and changes in tax provision (benefit).

Oil, NGL and natural gas sales decreased $6,264,776, or 64%, for the 2020 quarter due to decreases in oil, NGL and natural gas prices of 55%, 57% and 32%, respectively, and decreases in oil, NGL and natural gas sales volumes of 43%, 35% and 21%, respectively.

Although production is down in all three product categories, it is notable that production is down for working interest volumes and slightly up for royalty interest volumes due to new royalty interest wells brought online, as compared to June 30, 2019. The primary factor for the oil production decrease is attributable to the Eagle Ford Shale working interest wells, where the natural decline on new wells brought online in March 2019 is coupled with recent delays in performing mechanical repairs due to poor economics related to low oil prices. Decreases are also attributable to the natural decline of the working interest production base. NGL production decline is attributable to curtailed production along with the natural decline of the working interest production base in liquid-rich gas areas of the STACK, SCOOP and Arkoma Stack. Natural gas volumes have decreased as a result of curtailments in response to market conditions in the STACK, SCOOP and Arkoma Stack, in addition to the natural decline of working interest production base in all the areas. New royalty interest production has increased, even though we have experienced reduced activity as a result of market conditions; this increase is primarily associated with mineral acquisitions and new wells brought online. While we cannot estimate the curtailed volumes or timing, we expect the deferred production to resume to normal rates as market conditions and prices improve.

The Company had a net loss on derivative contracts of $838,282 in the 2020 quarter as compared to a net gain of $2,313,195 in the 2019 quarter. During the 2020 quarter, oil and natural gas collars and fixed price swaps experienced an unfavorable change as NYMEX futures experienced an increase in price during the quarter in relation to their previous position to the collars and the fixed prices of the swaps at the beginning of the 2020 quarter.

The 9% decrease in total cost per Mcfe in the 2020 quarter relative to the 2019 quarter was primarily driven by a decrease in DD&A. DD&A decreased $1,918,475 or 44% in the 2020 quarter to $1.29 per Mcfe as compared to $1.67 per Mcfe in the 2019 quarter. $1,193,410 of the decrease was a result of production decreasing 27% in the 2020 quarter. Also, DD&A decreased $725,065 as a result of a $0.38 decrease in the DD&A rate per Mcfe due to impairments taken at the end of fiscal 2019 and the 2020 second quarter, which lowered the basis of the assets. The rate decrease was partially offset by lower oil, NGL and natural gas prices utilized in the reserve calculations during the 2020 quarter, as compared to the 2019 quarter, shortening the economic life of wells.

RESULTS OF NINE MONTHS ENDED JUNE 30, 2020, COMPARED TO NINE MONTHS ENDED JUNE 30, 2019

The Company recorded a nine-month net loss of $22,117,915, or $1.34 per share, in the 2020 period, as compared to net income of $15,408,842, or $0.92 per share, in the 2019 period. The decrease was principally the result of increased provision for impairment (non-cash), decreased oil, NGL and natural gas sales, decreased gains on derivative contacts and decreased gain on asset sales, partially offset by decreased lease operating expenses, decreased transportation, gathering and marketing expenses, decreased production taxes, decreased DD&A and changes in our tax provision (benefit).

Oil, NGL and natural gas sales decreased $12,885,358, or 41%, for the 2020 period due to decreases in oil, NGL and natural gas prices of 23%, 40% and 35%, respectively, and decreases in oil, NGL and natural gas sales volumes of 15%, 26% and 14%, respectively.

Total production decreased 16% in the 2020 period, as compared to the 2019 period. This decrease for the 2020 nine-month period, was the result of Panhandle electing not to participate with a working interest on 18 wells proposed on its mineral and leasehold acreage, as well as the factors for the third quarter 2020 results discussed above.

The 3% decrease in total cost per MCFE in the 2020 period, relative to the 2019 period, was primarily driven by a decrease in DD&A as noted above.

OPERATIONS UPDATE

During the quarter ended June 30, 2020, we converted 48 gross/0.22 net wells in progress to producing wells. Our inventory of wells in progress decreased to 85 gross wells and 0.44 net wells, as drilling has slowed down due to the current pricing environment. Permits outstanding decreased due to current economics.

 

 

 

 

 

 

Bakken/

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SCOOP/

 

 

Three

 

 

Arkoma

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

STACK

 

 

Forks

 

 

Stack

 

 

Permian

 

 

Fayetteville

 

 

Other

 

 

Total

 

Gross Wells in Progress on PHX Acreage:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of 3/31/20

 

 

91

 

 

 

2

 

 

 

4

 

 

 

5

 

 

 

-

 

 

 

16

 

 

 

118

 

Net Change

 

 

-22

 

 

 

-

 

 

 

-3

 

 

 

-1

 

 

 

 

 

 

 

-7

 

 

 

-33

 

As of 6/30/20

 

 

69

 

 

 

2

 

 

 

1

 

 

 

4

 

 

 

-

 

 

 

9

 

 

 

85

 

Net Wells in Progress on PHX Acreage:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of 3/31/20

 

 

0.27

 

 

 

-

 

 

 

0.01

 

 

 

0.15

 

 

 

-

 

 

 

0.07

 

 

 

0.50

 

Net Change

 

 

-0.04

 

 

 

 

 

 

 

-0.01

 

 

 

-0.01

 

 

 

-

 

 

 

-

 

 

 

-0.06

 

As of 6/30/20

 

 

0.23

 

 

 

-

 

 

 

-

 

 

 

0.14

 

 

 

-

 

 

 

0.07

 

 

 

0.44

 

Gross Active Permits on PHX Acreage:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of 3/31/20

 

 

39

 

 

 

13

 

 

 

10

 

 

 

-

 

 

 

-

 

 

 

16

 

 

 

78

 

Net Change

 

 

-1

 

 

 

-2

 

 

 

-1

 

 

 

-

 

 

 

 

 

 

 

-3

 

 

 

-7

 

As of 6/30/20

 

 

38

 

 

 

11

 

 

 

9

 

 

 

-

 

 

 

-

 

 

 

13

 

 

 

71

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of 6/30/20:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rigs Present on PHX Acreage

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Rigs Within 2.5 Miles of PHX Acreage

 

 

10

 

 

 

4

 

 

 

-

 

 

 

1

 

 

 

-

 

 

 

-

 

 

 

15

 

Leasing Activity

During the third quarter of fiscal 2020, Panhandle leased 120 net mineral acres for an average bonus payment of $188 per net mineral acre and an average royalty of 19%.

 

 

 

 

 

 

Bakken/

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SCOOP/

 

 

Three

 

 

Arkoma

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

STACK

 

 

Forks

 

 

Stack

 

 

Permian

 

 

Fayetteville

 

 

Other

 

 

Total

 

During Three Months Ended 6/30/20:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Mineral Acres Leased

 

 

36

 

 

 

-

 

 

 

44

 

 

 

-

 

 

 

-

 

 

 

40

 

 

 

120

 

Average Bonus per Net Mineral Acre

 

$

125

 

 

 

-

 

 

$

300

 

 

 

-

 

 

 

-

 

 

$

25

 

 

$

188

 

Average Royalty per Net Mineral Acre

 

22%

 

 

 

-

 

 

19%

 

 

-

 

 

 

-

 

 

13%

 

 

19%

 

ACQUISITION AND DIVESTITURE UPDATE

During the third quarter of fiscal 2020, Panhandle did not purchase any net mineral acres or sell any net mineral acres.

THIRD QUARTER EARNINGS CALL

Panhandle will host a conference call to discuss third quarter results at 5:00 p.m. EDT on Aug. 13, 2020. Management’s discussion will be followed by a question and answer session with investors. To participate on the conference call, please dial 844-602-0380 (domestic) or 862-298-0970 (international). A replay of the call will be available for seven days after the call. The number to access the replay of the conference call is 877-481-4010 and the PIN for the replay is 35580.

FINANCIALS

Statements of Operations
 

 

Three Months Ended June 30,

 

 

Nine Months Ended June 30,

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Revenues:

 

 

 

 

 

Oil, NGL and natural gas sales

$

3,517,561

 

 

$

9,782,337

 

 

$

18,329,017

 

 

$

31,214,375

 

Lease bonuses and rental income

 

22,996

 

 

 

229,075

 

 

 

572,787

 

 

 

952,378

 

Gains (losses) on derivative contracts

 

(838,282

)

 

 

2,313,195

 

 

 

2,415,401

 

 

 

5,026,123

 

Gain on asset sales

 

3,108

 

 

 

4,017,787

 

 

 

3,275,996

 

 

 

13,114,725

 

 

 

2,705,383

 

 

 

16,342,394

 

 

 

24,593,201

 

 

 

50,307,601

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lease operating expenses

 

1,147,948

 

 

 

1,619,690

 

 

 

3,871,818

 

 

 

4,639,749

 

Transportation, Gathering and Marketing

 

956,653

 

 

 

1,529,270

 

 

 

3,696,282

 

 

 

4,601,959

 

Production taxes

 

134,249

 

 

 

488,779

 

 

 

835,284

 

 

 

1,565,038

 

Depreciation, depletion and amortization

 

2,464,568

 

 

 

4,383,043

 

 

 

8,793,787

 

 

 

11,820,705

 

Provision for impairment

 

358,826

 

 

 

-

 

 

 

29,904,528

 

 

 

-

 

Interest expense

 

241,191

 

 

 

526,677

 

 

 

958,429

 

 

 

1,551,831

 

General and administrative

 

1,908,790

 

 

 

1,809,439

 

 

 

6,306,479

 

 

 

5,881,432

 

Other expense (income)

 

(73,687

)

 

 

66,260

 

 

 

(44,551

)

 

 

82,045

 

 

 

7,138,538

 

 

 

10,423,158

 

 

 

54,322,056

 

 

 

30,142,759

 

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

 

(4,433,155

)

 

 

5,919,236

 

 

 

(29,728,855

)

 

 

20,164,842

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision (benefit) for income taxes

 

(877,940

)

 

 

1,315,000

 

 

 

(7,610,940

)

 

 

4,756,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

$

(3,555,215

)

 

$

4,604,236

 

 

$

(22,117,915

)

 

$

15,408,842

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted earnings (loss) per common share

$

(0.21

)

 

$

0.28

 

 

$

(1.34

)

 

$

0.92

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common shares

 

16,403,243

 

 

 

16,515,498

 

 

 

16,375,736

 

 

 

16,646,828

 

Unissued, directors' deferred compensation shares

 

141,799

 

 

 

170,066

 

 

 

152,500

 

 

 

183,206

 

 

 

16,545,042

 

 

 

16,685,564

 

 

 

16,528,236

 

 

 

16,830,034

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dividends declared per share of

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

common stock and paid in period

$

0.01

 

 

$

0.04

 

 

$

0.09

 

 

$

0.12

 

Balance Sheets

 

June 30, 2020

 

 

Sept. 30, 2019

 

Assets

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

$

2,025,081

 

 

$

6,160,691

 

Oil, NGL and natural gas sales receivables (net of

 

2,183,216

 

 

 

4,377,646

 

allowance for uncollectable accounts)

 

 

 

 

 

 

 

Refundable income taxes

 

1,640,350

 

 

 

1,505,442

 

Derivative contracts, net

 

1,819,977

 

 

 

2,256,639

 

Other

 

490,697

 

 

 

177,037

 

Total current assets

 

8,159,321

 

 

 

14,477,455

 

 

 

 

 

 

 

 

 

Net properties and equipment, based on successful efforts method of accounting

 

83,038,001

 

 

 

111,427,021

 

Investments

 

113,408

 

 

 

205,076

 

Derivative contracts, net

 

-

 

 

 

237,505

 

Deferred income taxes, net

 

181,993

 

 

 

-

 

Other, net

 

231,387

 

 

 

297,890

 

Total assets

$

91,724,110

 

 

$

126,644,947

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable

$

724,289

 

 

$

665,160

 

Accrued liabilities and other

 

1,485,708

 

 

 

2,433,466

 

Short-term debt

 

2,000,000

 

 

 

-

 

Total current liabilities

 

4,209,997

 

 

 

3,098,626

 

 

 

 

 

 

 

 

 

Long-term debt

 

28,000,000

 

 

 

35,425,000

 

Deferred income taxes

 

-

 

 

 

5,976,007

 

Asset retirement obligations

 

2,871,603

 

 

 

2,835,781

 

Derivative contracts, net

 

140,466

 

 

 

-

 

 

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

 

Class A voting common stock, $0.01666 par value; 24,000,500

 

 

 

 

 

 

 

shares authorized; 16,897,306 issued at June 30, 2020, and

 

 

 

 

 

 

 

Class A voting common stock, $0.01666 par value; 24,000,000

 

 

 

 

 

 

 

shares authorized; 16,897,306 issued at Sept. 30, 2019

 

281,509

 

 

 

281,509

 

Capital in excess of par value

 

3,375,400

 

 

 

2,967,984

 

Deferred directors' compensation

 

1,829,786

 

 

 

2,555,781

 

Retained earnings

 

58,244,355

 

 

 

81,848,301

 

 

 

63,731,050

 

 

 

87,653,575

 

Less treasury stock, at cost; 483,588 shares at June 30,

 

 

 

 

 

 

 

2020, and 558,051 shares at Sept. 30, 2019

 

(7,229,006

)

 

 

(8,344,042

)

Total stockholders' equity

 

56,502,044

 

 

 

79,309,533

 

Total liabilities and stockholders' equity

$

91,724,110

 

 

$

126,644,947

 

Condensed Statements of Cash Flows

 

Nine months ended June 30,

 

 

2020

 

 

2019

 

Operating Activities

 

 

Net income (loss)

$

(22,117,915

)

 

$

15,408,842

 

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

 

 

 

 

 

 

 

  by operating activities:

 

 

 

 

 

 

 

Depreciation, depletion and amortization

 

8,793,787

 

 

 

11,820,705

 

Impairment of producing properties

 

29,904,528

 

 

 

-

 

Provision for deferred income taxes

 

(6,158,000

)

 

 

5,150,000

 

Gain from leasing of fee mineral acreage

 

(567,975

)

 

 

(951,832

)

Proceeds from leasing of fee mineral acreage

 

582,458

 

 

 

967,337

 

Net (gain) loss on sale of assets

 

(3,258,994

)

 

 

(13,114,725

)

Directors' deferred compensation expense

 

184,188

 

 

 

197,820

 

Total (gain) loss on derivative contracts

 

(2,415,401

)

 

 

(5,026,123

)

Cash receipts (payments) on settled derivative contracts

 

3,230,034

 

 

 

(1,099,402

)

Restricted stock awards

 

619,812

 

 

 

606,232

 

Other

 

3,718

 

 

 

15,848

 

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

 

 

 

 

 

 

 

Oil, NGL and natural gas sales receivables

 

2,194,430

 

 

 

1,597,667

 

Other current assets

 

(121,635

)

 

 

(859,258

)

Accounts payable

 

31,755

 

 

 

3,270

 

Income taxes receivable

 

(134,908

)

 

 

(476,846

)

Other non-current assets

 

6,544

 

 

 

6,949

 

Accrued liabilities

 

(950,686

)

 

 

86,467

 

Total adjustments

 

31,943,655

 

 

 

(1,075,891

)

Net cash provided by operating activities

 

9,825,740

 

 

 

14,332,951

 

 

 

 

 

 

 

 

 

Investing Activities

 

 

 

 

 

 

 

Capital expenditures

 

(196,168

)

 

 

(3,349,640

)

Acquisition of minerals and overrides

 

(10,304,016

)

 

 

(5,120,466

)

Investments in partnerships

 

-

 

 

 

(1,648

)

Proceeds from sales of assets

 

3,457,500

 

 

 

13,114,969

 

Net cash provided (used) by investing activities

 

(7,042,684

)

 

 

4,643,215

 

 

 

 

 

 

 

 

 

Financing Activities

 

 

 

 

 

 

 

Borrowings under debt agreement

 

6,061,725

 

 

 

15,053,345

 

Payments of loan principal

 

(11,486,725

)

 

 

(24,553,345

)

Purchase of treasury stock

 

(7,635

)

 

 

(6,465,186

)

Payments of dividends

 

(1,486,031

)

 

 

(2,013,005

)

Net cash provided (used) by financing activities

 

(6,918,666

)

 

 

(17,978,191

)

 

 

 

 

 

 

 

 

Increase (decrease) in cash and cash equivalents

 

(4,135,610

)

 

 

997,975

 

Cash and cash equivalents at beginning of period

 

6,160,691

 

 

 

532,502

 

Cash and cash equivalents at end of period

$

2,025,081

 

 

$

1,530,477

 

 

 

 

 

 

 

 

 

Supplemental Schedule of Noncash Investing and Financing Activities

 

 

 

 

 

 

 

Additions and revisions, net, to asset retirement obligations

$

4

 

 

$

27,782

 

 

 

 

 

 

 

 

 

Gross additions to properties and equipment

$

10,335,534

 

 

$

8,149,347

 

Net (increase) decrease in accounts payable for properties

 

 

 

 

 

 

 

and equipment additions

 

164,650

 

 

 

320,759

 

Capital expenditures and acquisitions

$

10,500,184

 

 

$

8,470,106

 

Derivative Contracts as of Aug. 11, 2020

Period

 

Product

 

Volume Mcf/Bbl

 

 

Swap Price

 

 

Collar Average Floor Price

 

 

Collar Average Ceiling Price

 

2020

 

Natural Gas

 

 

469,500

 

 

 

 

 

 

$

2.30

 

 

$

2.98

 

2020

 

Natural Gas

 

 

414,500

 

 

$

2.68

 

 

 

 

 

 

 

 

 

2021

 

Natural Gas

 

 

2,424,500

 

 

 

 

 

 

$

2.30

 

 

$

3.00

 

2021

 

Natural Gas

 

 

1,014,500

 

 

$

2.69

 

 

 

 

 

 

 

 

 

2022

 

Natural Gas

 

 

202,500

 

 

 

 

 

 

$

2.30

 

 

$

3.02

 

2022

 

Natural Gas

 

 

125,500

 

 

$

2.70

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2020

 

Crude Oil

 

 

21,500

 

 

 

 

 

 

$

45.19

 

 

$

52.55

 

2020

 

Crude Oil

 

 

50,000

 

 

$

58.02

 

 

 

 

 

 

 

 

 

2021

 

Crude Oil

 

 

43,500

 

 

 

 

 

 

$

36.69

 

 

$

44.39

 

2021

 

Crude Oil

 

 

96,000

 

 

$

37.00

 

 

 

 

 

 

 

 

 

2022

 

Crude Oil

 

 

13,000

 

 

 

 

 

 

$

36.81

 

 

$

44.62

 

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. 

Adjusted EBITDA Reconciliation

Adjusted EBITDA is defined as net income (loss) plus interest expense, provision for impairment, depreciation, depletion and amortization of properties and equipment, including amortization of other assets, provision (benefit) for income taxes and unrealized (gains) losses on derivative contracts. We have included a presentation of adjusted EBITDA because we recognize that certain investors consider adjusted EBITDA a useful means of measuring our ability to meet our debt service obligations and evaluating our financial performance. Adjusted 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 adjusted EBITDA may not be comparable to a similarly titled measure of other companies. The following table provides a reconciliation of net income (loss) to adjusted EBITDA for the periods indicated.

 

Third Quarter Ended

 

 

Third Quarter Ended

 

 

Nine Months Ended

 

 

Nine Months Ended

 

 

June 30, 2020

 

 

June 30, 2019

 

 

June 30, 2020

 

 

June 30, 2019

 

Net Income (Loss)

$

(3,555,215

)

 

$

4,604,236

 

 

$

(22,117,915

)

 

$

15,408,842

 

Plus:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Unrealized (gains) losses on derivatives

 

2,537,404

 

 

 

(1,894,303

)

 

 

814,633

 

 

 

(6,125,525

)

    Income Tax Expense (Benefit)

 

(877,940

)

 

 

1,315,000

 

 

 

(7,610,940

)

 

 

4,756,000

 

    Interest Expense

 

241,191

 

 

 

526,677

 

 

 

958,429

 

 

 

1,551,831

 

    DD&A

 

2,464,568

 

 

 

4,383,043

 

 

 

8,793,787

 

 

 

11,820,705

 

    Impairment

 

358,826

 

 

 

-

 

 

 

29,904,528

 

 

 

-

 

Adjusted EBITDA

$

1,168,834

 

 

$

8,934,653

 

 

$

10,742,522

 

 

$

27,411,853

 

Adjusted Pre-Tax Net Income (Loss) Reconciliation

Adjusted pre-tax net income (loss) is defined as net income (loss) plus provision for impairment, provision (benefit) for income taxes and unrealized (gains) losses on derivative contracts. We have included a presentation of adjusted pre-tax net income (loss) because we recognize that certain investors consider adjusted pre-tax net income (loss) a useful means of evaluating our financial performance. Adjusted pre-tax net income (loss) 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 adjusted pre-tax net income (loss) may not be comparable to a similarly titled measure of other companies. The following table provides a reconciliation of net income (loss) to adjusted pre-tax net income (loss) for the periods indicated.

 

Third Quarter Ended

 

 

Third Quarter Ended

 

 

Nine Months Ended

 

 

Nine Months Ended

 

 

June 30, 2020

 

 

June 30, 2019

 

 

June 30, 2020

 

 

June 30, 2019

 

Net Income (Loss)

$

(3,555,215

)

 

$

4,604,236

 

 

$

(22,117,915

)

 

$

15,408,842

 

Plus:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Impairment

 

358,826

 

 

 

-

 

 

 

29,904,528

 

 

 

-

 

Unrealized (gains) losses on derivatives

 

2,537,404

 

 

 

(1,894,303

)

 

 

814,633

 

 

 

(6,125,525

)

   Income Tax Expense (Benefit)

 

(877,940

)

 

 

1,315,000

 

 

 

(7,610,940

)

 

 

4,756,000

 

Adjusted Pre-Tax Net Income (Loss)

$

(1,536,925

)

 

$

4,024,933

 

 

$

990,306

 

 

$

14,039,317

 

Panhandle Oil and Gas Inc. (NYSE: PHX) Oklahoma City-based, Panhandle Oil and Gas Inc. is an oil and natural gas mineral company with a strategy to proactively pursue the acquisition of additional minerals in our core areas of focus. Panhandle owns approximately 258,000 net mineral acres principally located in Oklahoma, North Dakota, Texas, New Mexico and Arkansas. Approximately 71% of this mineral count is unleased and undeveloped. Additional information on the Company can be found at www.panhandleoilandgas.com.

Cautionary Statement Regarding Forward-Looking Statements

This press release 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. Words such as “anticipates,” “plans,” “estimates,” “believes,” “expects,” “intends,” “will,” “should,” “may” and similar expressions may be used to identify forward-looking statements. Forward-looking statements are not statements of historical fact and reflect Panhandle’s current views about future events. Forward-looking statements may include, but are not limited to, statements relating to: our future financial and operating results; our ability to execute our business strategies; estimations and the respective values of oil, NGL and natural gas reserves; the level of production on our properties and the future expenses associated therewith; projections and volatility of future realized oil and natural gas prices; planned capital expenditures associated with our mineral, leasehold and non-operated working interests; statements concerning anticipated cash flow and liquidity; and our 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. Such forward-looking statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the Company. These forward-looking statements involve certain risks and uncertainties that could cause the results to differ materially from those expected by the Company’s management. Information concerning these risks and other factors can be found in the Company’s filings with the Securities and Exchange Commission, including its Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q, available on the Company's website or the SEC’s website at www.sec.gov.

nvestors are cautioned that any such statements are not guarantees of future performance and that actual results or developments may differ materially from those projected in forward-looking statements. The forward-looking statements in this press release are made as of the date hereof, and the Company does not undertake any obligation to update the forward-looking statements as a result of new information, future events or otherwise.