Panhandle Oil and Gas Inc. Reports Fiscal 2014 First Quarter Results - WKRN News 2

Panhandle Oil and Gas Inc. Reports Fiscal 2014 First Quarter Results

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SOURCE Panhandle Oil and Gas Inc.

Records 129% Increase in Net Income to $4,926,318 ($0.59 per share) and a 17% Production Increase

OKLAHOMA CITY, Feb. 6, 2014 /PRNewswire/ -- PANHANDLE OIL AND GAS INC. (NYSE: PHX), the "Company," today reported financial and operating results for the 2014 fiscal first quarter ending Dec. 31, 2013.

FIRST QUARTER 2014 HIGHLIGHTS

  • Recorded first quarter 2014 net income of $4,926,318, $0.59 per share, compared to net income of $2,148,298, $0.26 per share, for the 2013 first quarter.
  • Recorded highest quarterly Mcfe production in Company history of 3,509,270 Mcfe, compared to 3,008,365 Mcfe for the 2013 first quarter.
  • Increased quarterly oil production by 79% to 83,413 barrels, a Company record, compared to 46,656 barrels for the 2013 first quarter.
  • Increased quarterly NGL production by 21% to 37,140 barrels, compared to 30,674 barrels for the 2013 first quarter.
  • Fully funded capital expenditures of $9.9 million for drilling and equipping wells for the 2014 first quarter with cash generated by operating activities of $11.9 million during the quarter.
  • Reduced debt $2.3 million during the quarter to $6 million.

For the 2014 first quarter, the Company recorded net income of $4,926,318, $0.59 per share, compared to net income of $2,148,298, $0.26 per share, for the 2013 first quarter.  Net cash provided by operating activities increased 66% to $11,886,347 for the 2014 first quarter, compared to the 2013 first quarter.  Cash flow from operations fully funded all capital expenditures for the quarter of $11,498,717, which included $9,892,262 for drilling and equipping wells.  Drilling capital expenditures in fiscal 2014 principally were directed toward oily and NGL rich plays, principally in western and southern Oklahoma.  In addition, in the first quarter the Company made a small bolt-on acquisition of producing gas wells and associated acreage in the Fayetteville Shale for $1.6 million

Total revenues for the 2014 quarter were $18,396,756, compared to $14,180,435 for the 2013 quarter.  Oil, NGL and natural gas sales increased $5,714,128 or 45% in the 2014 quarter, compared to the 2013 quarter, as a result of a 17% increase in Mcfe production and a 24% increase in the average per Mcfe sales price.  The average sales price per Mcfe of production during the 2014 first quarter was $5.26, compared to $4.24 for the 2013 first quarter.  Additionally, 2014 first quarter total costs and expenses were down slightly, and costs and expenses per Mcfe of production were down substantially to $3.20 as compared to $3.77 for the 2013 quarter.

Oil production increased 79% in the 2014 quarter to 83,413 barrels, compared to 46,656 barrels in the 2013 quarter. NGL production increased 21% in the 2014 quarter to 37,140 barrels, and natural gas production increased 9% for the 2014 quarter, compared to the 2013 quarter.

MANAGEMENT COMMENTS

Michael C. Coffman, President and CEO said, "Our first quarter financial and operational results again demonstrate that continuing to execute on the Company's fundamental business strategies while maintaining a longer-term outlook will increase shareholder value. This quarter's net income of $4,926,318 is a function of record production levels of oil and NGL's and improved product prices.  The 2014 winter has driven natural gas prices to 3-year high levels, which we expect to moderate as we move into spring. However, these current prices and expected prices through 2014 should continue to have a positive effect on 2014 earnings."

Coffman continued: "We have maintained the discipline to invest in quality, lower-risk drilling and acquisition opportunities, which are expected to earn reasonable rates of return. These oil and NGL rich, as well as natural gas projects, have allowed Panhandle to materially grow production and reserves over the last few years with no debt increases or shareholder dilution, and we have also been successful in reducing our costs per Mcfe of production, further adding to Company profitability."

Paul Blanchard, Senior Vice President and COO said, "Panhandle is extremely well positioned to benefit from increasing natural gas prices. We have grown natural gas production, reserves and undeveloped opportunity materially through the trough in the gas market over the last several years. During that period the Company has invested $27 million in the acquisition of additional developed and undeveloped natural gas properties, principally in the core of the Fayetteville Shale. Our most recent acquisition consisted of developed and undeveloped properties in the Fayetteville Shale and was closed in the first quarter of fiscal 2014, for $1.6 million.

"Our oil production grew 79% in the first quarter of fiscal 2014 compared to the same period last year. This rate of oil production growth was largely the result of elevated oil drilling activity during the second half of fiscal 2013. The increased level of capital expenditures experienced in the current quarter was in part due to the cost associated with that activity. Our pace of oil well drilling thus far in 2014 has moderated from that level, which, when combined with the natural decline from new oil properties, is anticipated to result in a leveling off of oil production for the second quarter of fiscal 2014. Substantial oil and NGL drilling opportunity exists on our mineral holdings, and we anticipate development of those reserves will continue for many years."

PRODUCTION








First Quarter Ended


First Quarter Ended


Dec. 31, 2013


Dec. 31, 2012

Mcfe Sold


3,509,270



3,008,365

Average Sales Price per Mcfe

$

5.26


$

4.24

Oil Barrels Sold


83,413



46,656

Average Sales Price per Barrel

$

93.66


$

83.86

Mcf Sold


2,785,952



2,544,385

Average Sales Price per Mcf

$

3.41


$

3.11

NGL Barrels Sold


37,140



30,674

Average Sales Price per Barrel

$

31.35


$

30.31

 

 



















Quarter ended


Oil Bbls Sold


Mcf Sold


NGL Bbls Sold


Mcfe Sold

12/31/2013


83,413


2,785,952


37,140


3,509,270

9/30/2013


79,387


2,820,079


30,373


3,478,639

6/30/2013


55,474


2,742,996


25,660


3,229,800

3/31/2013


52,567


2,778,869


25,190


3,245,411

12/31/2012


46,656


2,544,385


30,674


3,008,365

The Company's derivative contracts in place for natural gas at Dec. 31, 2013, are outlined in its Form 10-Q for the period ending Dec. 31, 2013.

 

FINANCIAL HIGHLIGHTS

Statements of Operations








Three Months Ended Dec. 31,


2013


2012

Revenues:

(unaudited)

Oil, NGL and natural gas sales

$

18,473,082


$

12,758,954

Lease bonuses and rentals


196,229



374,392

Gains (losses) on derivative contracts


(496,901)



892,693

Income from partnerships


224,346



154,396



18,396,756



14,180,435

Costs and expenses:






Lease operating expenses


3,315,397



3,296,562

Production taxes


571,564



303,553

Exploration costs


38,755



19,767

Depreciation, depletion and amortization


5,308,019



5,639,020

Provision for impairment


202,991



154,965

Loss (gain) on asset sales, interest and other


(77,455)



43,186

General and administrative


1,873,167



1,898,084



11,232,438



11,355,137

Income before provision for income taxes


7,164,318



2,825,298







Provision for income taxes


2,238,000



677,000







Net income

$

4,926,318


$

2,148,298































Basic and diluted earnings per common share

$

0.59


$

0.26







Basic and diluted weighted average shares outstanding:






Common shares


8,231,902



8,250,109

Unissued, directors' deferred compensation shares


123,061



122,285



8,354,963



8,372,394

 

 

Balance Sheets








Dec. 31, 2013


Sept. 30, 2013

Assets

(unaudited)




Current assets:






Cash and cash equivalents

$

294,961


$

2,867,171

Oil, NGL and natural gas sales receivables


14,677,736



13,720,761

Refundable production taxes


708,506



662,051

Derivative contracts


-



425,198

Other


165,811



129,998

Total current assets


15,847,014



17,805,179







Properties and equipment, at cost, based on successful efforts accounting:






Producing oil and natural gas properties


314,483,789



304,889,145

Non-producing oil and natural gas properties


8,873,666



8,932,905

Furniture and fixtures


737,929



737,368



324,095,384



314,559,418

Less accumulated depreciation, depletion and amortization


(191,820,197)



(186,641,291)

Net properties and equipment


132,275,187



127,918,127







Investments


1,663,320



1,574,642

Refundable production taxes


440,203



540,482

Total assets

$

150,225,724


$

147,838,430







Liabilities and Stockholders' Equity






Current liabilities:






Accounts payable

$

7,168,398


$

8,409,634

Derivative contracts


466,772



-

Deferred income taxes


84,100



127,100

Income taxes payable


1,840,342



751,992

Accrued liabilities and other


1,203,080



1,011,865

Total current liabilities


10,762,692



10,300,591







Long-term debt


6,000,000



8,262,256

Deferred income taxes


31,595,907



31,226,907

Asset retirement obligations


2,477,441



2,393,190







Stockholders' equity:






Class A voting common stock, $.0166 par value; 24,000,000 shares authorized, 8,431,502 issued at Dec. 31, 2013, and Sept. 30, 2013


140,524



140,524

Capital in excess of par value


2,456,303



2,587,838

Deferred directors' compensation


2,870,595



2,756,526

Retained earnings


100,052,495



96,454,449



105,519,917



101,939,337

Less treasury stock, at cost; 194,830 shares at Dec. 31, 2013, and 200,248 shares at Sept. 30, 2013


(6,130,233)



(6,283,851)

Total stockholders' equity


99,389,684



95,655,486

Total liabilities and stockholders' equity

$

150,225,724


$

147,838,430

 

 

Condensed Statements of Cash Flows








Three months ended Dec. 31,


2013


2012

Operating Activities

(unaudited)

Net income

$

4,926,318


$

2,148,298

Adjustments to reconcile net income to net cash provided by operating activities:






Depreciation, depletion and amortization


5,308,019



5,639,020

Impairment


202,991



154,965

Provision for deferred income taxes


326,000



338,000

Exploration costs


38,755



19,767

Gain from leasing of fee mineral acreage


(196,133)



(373,440)

Income from partnerships


(224,346)



(154,396)

Distributions received from partnerships


279,363



194,147

Directors' deferred compensation expense


114,069



114,164

Restricted stock awards


127,976



257,877

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






Oil, NGL and natural gas sales receivables


(956,975)



115,645

Fair value of derivative contracts


891,970



(936,914)

Refundable production taxes


53,824



212,834

Other current assets


(35,813)



47,528

Accounts payable


414,267



(361,777)

Income taxes receivable


-



319,735

Income taxes payable


1,088,350



-

Accrued liabilities


(472,288)



(577,210)

Total adjustments


6,960,029



5,009,945

Net cash provided by operating activities


11,886,347



7,158,243







Investing Activities






Capital expenditures, including dry hole costs


(9,892,262)



(6,864,399)

Acquisition of working interest properties


(1,550,205)



-

Acquisition of minerals and overrides


(56,250)



(330,000)

Proceeds from leasing of fee mineral acreage


216,773



384,790

Investments in partnerships


(143,695)



(243,519)

Net cash used in investing activities


(11,425,639)



(7,053,128)







Financing Activities






Borrowings under debt agreement


2,280,280



4,171,662

Payments of loan principal


(4,542,536)



(4,591,890)

Purchase of treasury stock


(122,044)



(116,632)

Payments of dividends


(664,618)



(580,991)

Excess tax benefit on stock-based compensation


16,000



15,000

Net cash provided by (used in) financing activities


(3,032,918)



(1,102,851)







Increase (decrease) in cash and cash equivalents


(2,572,210)



(997,736)

Cash and cash equivalents at beginning of period


2,867,171



1,984,099

Cash and cash equivalents at end of period

$

294,961


$

986,363







Supplemental Schedule of Noncash Investing and Financing Activities






Dividends declared and unpaid

$

663,654


$

583,438

Additions to asset retirement obligations

$

53,653


$

42,156







Gross additions to properties and equipment

$

9,843,214


$

5,218,194

Net (increase) decrease in accounts payable for properties and equipment additions


1,655,503



1,976,205

Capital expenditures and acquisitions, including dry hole costs

$

11,498,717


$

7,194,399

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 2013 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; our 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; 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, and Panhandle undertakes no obligation to update this information.  Panhandle urges you to carefully review and consider the disclosures made in this presentation and Panhandle's filings with the Securities and Exchange Commission that attempt to advise interested parties of the risks and factors that may affect Panhandle's business.

©2012 PR Newswire. All Rights Reserved.

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