Panhandle Oil And Gas Inc. Reports Third Quarter And Nine Months 2012 Results

OKLAHOMA CITY, Aug. 7, 2012 /PRNewswire/ -- PANHANDLE OIL AND GAS INC. (NYSE-PHX-News) today reported financial and operating results for the Company's fiscal third quarter and nine months ended June 30, 2012. 

HIGHLIGHTS FOR THE PERIODS ENDED JUNE 30, 2012

• Recorded a nine-month 2012 net income of $7,188,375 as compared to $5,849,531 for the 2011 nine months
• Generated cash from operating activities of $20,987,279 for the 2012 nine-month period, well in excess of $16,026,416 of capital expenditures for drilling and equipping wells
• Reported 2012 third-quarter and nine-month production of 2,649,351 Mcfe and 7,863,360 Mcfe, respectively, which were increases of 24% and 21%, respectively, as compared to the same periods of fiscal 2011
• Continued to significantly increase oil production in 2012 over 2011, 53% for the quarter and 40% for the nine months
• Maintained low debt level of $8 million

FISCAL THIRD-QUARTER 2012 RESULTS

For the quarter ending June 30, 2012, the Company recorded a net income of $3,100,299, $.37 per share, as compared to a net income of $2,650,429, $.32 per share, for the 2011 third quarter. Total revenues for the 2012 quarter increased 17% to $13,649,692, as compared to the 2011 quarter. Cash provided by operating activities totaled $5,924,519, while capital expenditures for drilling and equipping wells amounted to $3,951,425. Production for the 2012 quarter increased 24% to 2,649,351 Mcfe, as compared to 2,129,160 Mcfe for the 2011 quarter. The major factor influencing the increase in revenues and net income for the 2012 quarter was the receipt of $4.8 million in lease bonus income on 2,743 net mineral acres leased in Roger Mills County, Okla. This income was offset, somewhat, by an average per Mcfe sales price decrease of 39% to $3.19, as compared to $5.26 for the 2011 quarter. The Company continued to increase its oil and natural gas liquids production, which accounted for 14% of Mcfe production in the quarter. It is expected that oil production will continue to increase gradually during the remainder of fiscal 2012.

NINE MONTHS 2012 RESULTS

For the nine months ended June 30, 2012, the Company recorded a net income of $7,188,375, $.86 per share, as compared to a net income of $5,849,531, $.70 per share, for the 2011 nine months. Total revenues for the 2012 nine months increased 15% to $37,490,935, as compared to the 2011 nine months. For the 2012 nine months, cash provided by operating activities totaled $20,987,279, which more than funded drilling capital expenditures of $16,206,416. Production for the 2012 nine months totaled 7,863,360 Mcfe, as compared to 6,489,389 Mcfe for the 2011 nine months. The average per Mcfe sales price decreased 23% for the 2012 nine months to $3.78, as compared to $4.90 for the 2011 nine months. The 2012 nine-month revenue and net income increase was principally the result of lease bonuses and rentals of $6.9 million received in the 2012 nine months, as compared to $225,000 in the 2011 nine months. The Company leased 5,174 net mineral acres in Oklahoma in two transactions, which accounted for $6.5 million of the lease bonus. The Company retained a 3/16 non-cost-bearing royalty in any production established on these acres, while retaining ownership of its mineral acres.

MANAGEMENT COMMENTS

Michael C. Coffman, President and CEO, said, "We continue to be pleased with the increase in our oil and NGL production. Drilling capital expenditures continue to be focused on the much discussed western Oklahoma oil and natural gas liquids rich plays and the core of the Fayetteville Shale in Arkansas. Although the Fayetteville Shale is a dry gas province, the rates of return projected on drilling in the core of the play, based on the current natural gas strip prices, are compelling. Low drilling and completion costs coupled with excellent production and expected ultimate recoveries continue to make these wells attractive for capital allocation even in the lower natural gas price environment experienced through the first nine months of fiscal 2012."

Coffman continued: "The recent significant upward movement in natural gas prices bodes well for the future of Panhandle's asset base, including the acquisitions made earlier in fiscal 2012 as our production and reserve base is heavily weighted to natural gas. We expect natural gas prices to continue their upward movement over the next 12 to 18 months thereby increasing natural gas sales revenues and the value of our natural gas reserves."

OPERATIONS UPDATE

Paul Blanchard, Senior Vice President and COO, said, "Our acquisition in the core of the Fayetteville Shale made early in fiscal 2012 has been primarily responsible for our growth in natural gas production. In aggregate, the Company has invested roughly $25 million to acquire extremely high quality dry gas properties during the last five quarters."

Blanchard continued: "On the other hand, drilling in western Oklahoma and the Texas Panhandle with the resulting new production has been responsible for the considerable growth in oil and NGL production. The horizontal Granite Wash and Cleveland plays have been the most significant contributors to the increase. We expect this increase in drilling to continue for the foreseeable future and expect other western Oklahoma horizontal oil and liquids rich plays such as the Marmaton and the various southern and western Oklahoma Woodford plays to be very active and contribute to the growth as well."

The Company's derivative contracts in place for natural gas at June 30, 2012, are outlined in its Form 10-Q for the period ending June 30, 2012.

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 2011 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; 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.  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.

SOURCE Panhandle Oil and Gas Inc.