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Panhandle Oil and Gas Inc Reports Operating Results (10-K)

December 08, 2011 | About:
10qk

10qk

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Panhandle Oil and Gas Inc (PHX) filed Annual Report for the period ended 2011-09-30.

Panhandle Oil And Gas has a market cap of $279.7 million; its shares were traded at around $33.92 with a P/E ratio of 32.1 and P/S ratio of 5.4. The dividend yield of Panhandle Oil And Gas stocks is 0.8%. Panhandle Oil And Gas had an annual average earning growth of 18.6% over the past 10 years. GuruFocus rated Panhandle Oil And Gas the business predictability rank of 2.5-star.

Highlight of Business Operations:

The Company recorded net income of $11,419,690, or $1.36 per share, in 2010 compared to net loss of $2,405,021, or $.29 per share, in 2009. Increased revenues in 2010 were mainly from increases in oil and natural gas sales, gains on derivative contracts and lease bonuses. Higher oil and natural gas prices more than offset a 10% decrease in production resulting in increased oil and natural gas sales; actual and forward looking prices lower than the Companys fixed price swap contracts resulted in gains on derivative contracts in 2010 compared to a loss in 2009; and the renewal of leases on certain of the Companys Arkansas undeveloped mineral acreage increased 2010 revenue from lease bonuses.

Oil and natural gas sales increased $6,647,259 or 18% for 2010, as compared to 2009. Driven by higher oil and natural gas prices of 41% and 30%, respectively, 2010 oil and natural gas sales went up, despite a 10% decrease in combined oil and natural gas production on an Mcfe basis. The production decrease occurred as fewer new wells were drilled and put on line in 2010, thus the production decline of existing wells exceeded the production which came on line from new wells.

LOE increased $497,293 or 7% in 2010. LOE costs per Mcfe of production increased from $.78 in 2009 to $.92 in 2010. Increased natural gas prices, which increased value based fees (primarily gathering, transportation and marketing costs) caused total LOE and LOE per Mcfe to increase. Natural gas production from the southeast Oklahoma Woodford Shale, Anadarko (Cana) Woodford Shale and Fayetteville Shale areas continued to increase as a proportion of total production. Value based fees are charged as a percent of natural gas revenues and are significantly higher in these shale areas than like fees charged in other of the Companys production areas. The total amount of value based fees in these three shale areas typically are 12% to 22% of total natural gas revenues. Value based fees increased $1,201,209, or 36%, in 2010 compared to 2009. Value based fees per Mcfe increased $.17, or 51%, in 2010 compared to 2009.

Production taxes increased $245,336, or 20%, in 2010. The increase was the result of increased sales of oil and natural gas. Oil and natural gas sales in 2010 increased 18%, and production taxes increased 20% compared to 2009. Production taxes were 3.3% of oil and natural gas sales in 2010, compared to 3.2% in 2009. The low overall production tax rate was due to a large proportion of the Companys natural gas revenues coming from horizontally drilled wells, which were eligible for either Oklahoma production tax credits or reduced Arkansas production tax rates.

The provision for impairment decreased $1,858,905 in 2010, as compared to 2009. During 2010, impairment of $605,615 was recorded on six fields. Approximately $380,000 of the impairment was related to the Buffalo Wallow field in Texas, where the first horizontal well in the field was recently drilled and completed with poor economic results. During 2009, impairment of $2,464,520 was recorded on 13 fields driven by depressed oil and natural gas prices, which negatively affected the estimates of future net revenues from oil and natural gas properties.

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