OKLAHOMA CITY, Nov. 9, 2016 /PRNewswire/ -- PANHANDLE OIL
AND GAS INC. (NYSE: PHX), "the Company," a non-operating
independent oil and natural gas company with reserves and
production primarily in the Mid-Continent region and the Eagle Ford
Shale, today announced estimated total proved reserve volumes for
the Company's fiscal year ended Sept. 30,
2016, and provided an operations update. Additional
information on the Company can be found at
www.panhandleoilandgas.com.
Proved Reserves
Panhandle's estimated total proved reserves at Sept. 30, 2016, decreased 31% to 124.0 Bcfe from
180.0 Bcfe reported for Sept. 30,
2015, based on SEC mandated pricing. Those SEC prices at the
wellhead at Sept. 30, 2016, were
$1.97 per Mcf of natural gas,
$36.77 per barrel of oil and
$12.22 per barrel of NGL as compared
to Sept. 30, 2015, SEC wellhead
prices of $2.84 per Mcf of natural
gas, $55.27 per barrel of oil and
$19.10 per barrel of NGL. Panhandle's
total estimated proved reserves are approximately 66% natural gas,
26% oil and 8% NGL. Sept. 30, 2016
and 2015, proved reserves were calculated by the independent
petroleum engineering consulting firm DeGolyer and MacNaughton.
At Sept. 30, 2016, approximately
66% of total proved reserves, or 81.4 Bcfe, are categorized as
proved developed as compared to 60%, or 108.1 Bcfe, at Sept. 30, 2015. PUD reserves comprised 34% of
total proved reserves, or 42.6 Bcfe, at Sept. 30, 2016, as compared to 40%, or 71.9 Bcfe,
at Sept. 30, 2015.
Operational Highlights
- Drilling is underway on the eight-well horizontal drilling
program operated by BP America in the southeastern Oklahoma
Woodford gas play. Panhandle has an average 20% working interest
and 27.4% net revenue interest in these wells. These wells should
begin producing in early 2017.
- Element Petroleum has begun a drilling program to test the
potential of the San Andres on Panhandle's ~34.5 square mile (4,053
net mineral acres) block in Cochran
County, Texas. We have the right to participate with a 10%
working interest and 12.1% net revenue interest in wells drilled on
our block, or we can elect not to participate and receive a
non-cost bearing 4.6% royalty interest.
- The operator on the Company's Andrews and Winkler Counties, Texas, mineral acreage block is planning to
drill a second horizontal Woodford
well in early 2017. Panhandle owns 2,439 net mineral acres in the
43.6 square mile block. We have the right to participate with an
average 7% working interest and 7.5% net revenue interest in wells
drilled on the block, or we can elect not to participate and
receive an average non-cost bearing royalty interest of 2.24%.
- New hydraulic fracturing technology was utilized by the
operator in the completion of Panhandle's last Eagle Ford DUC
(drilled uncompleted) well in July
2016. The well was drilled in 2014, but left uncompleted
until this July. Thus far, the well's performance has been
materially better than other wells on our Eagle Ford acreage. The
well produced an average of 1,010 Boe per day (90% oil) for the
first 30 days of production, 849 Boe per day for the first 60 days
and 769 Boe per day for the first 90 days. A pumping unit was
recently installed and the well is currently producing 867 Boe per
day on pump. Cumulative production to date is ~70,000 Boe.
Management Comments
Paul F. Blanchard, Panhandle's
Sr. Vice-President and COO, said: "The Company's total proved
reserves were reduced from 180.0 Bcfe at fiscal year-end 2015 to
124.0 Bcfe at fiscal year-end 2016. This reduction is attributed to
a 64.4 Bcfe negative pricing revision, an unaudited 11.5 Bcfe of
2016 production, somewhat offset by extensions and discoveries of
19.1 Bcfe and a positive performance revision of 0.8 Bcfe.
"Proved developed reserves decreased from 108.1 Bcfe at year-end
2015 to 81.4 Bcfe at year-end 2016. The negative revision to proved
developed reserves due to lower SEC mandated prices at Sept. 30, 2016, was 17.5 Bcfe. Proved developed
reserves were also impacted by 2016 unaudited production of 11.5
Bcfe and a negative performance revision of 1.9 Bcfe. The
extensions and discoveries of 2.4 Bcfe somewhat offset this overall
reduction.
"Negative proved undeveloped pricing revisions of 46.9 Bcfe
primarily had two causes. First, was a decrease in proved
undeveloped reserves, as, at lower commodity prices, wells are
projected to reach their economic limits much earlier than
projected in the 2015 report. Second, a significant number of PUD
locations and reserves were moved to the probable undeveloped
category in plays with low current drilling activity. This was done
to reflect a conservative view of anticipated PUD drilling within
the SEC five-year timeframe. It is our intent to move these
reserves back to PUD when appropriate.
"Panhandle's total 3P (proved, probable and possible) reserves
increased from 656.1 Mcfe in 2015 to 670.1 Mcfe in 2016. This was
the result of increased undeveloped reserves in the Eagle Ford
Shale and the southeastern Oklahoma Woodford Shale, based on
improved well performance in those fields. These additions were
largely offset by the significant negative pricing revisions.
"With recent increases in both oil and gas prices, our outlook
for 2017 is positive. We have material gas drilling underway in the
southeastern Oklahoma Woodford Shale. We also have drilling
underway on our large San Andres mineral block in the Permian Basin
and a second well planned for early 2017, on our Andrews and Winkler mineral block, to test the
Woodford as a possible resource
play. Success and development across our mineral holdings in either
one of these Permian Basin projects would be material to the
Company. We anticipate that profitable drilling will resume on our
Eagle Ford acreage and that there will be drilling on our mineral
holdings in the STACK/SCOOP and CANA plays in 2017."
Michael C. Coffman, Panhandle's
President and CEO, added: "The oil and gas industry experienced
another very difficult year in fiscal 2016 due to extraordinarily
low product prices. Both oil and gas prices have recovered from the
lows seen in our second fiscal quarter when wellhead product prices
averaged $1.64 per Mcf, $27.19 per barrel of oil and $9.85 per barrel of NGL. That contrasts with
fourth quarter average wellhead prices of $2.55 per Mcf, $41.62 per barrel of oil and $14.43 per barrel of NGL.
"With the product prices experienced in 2016, the number of
drilling proposals received was down significantly, and we were not
inclined to commit capital to fund working interest investments in
the majority of those proposals. We did continue to participate, to
a limited extent, in wells in the cores of the SCOOP and CANA/STACK
plays and two wells drilled in the core of the Bakken in the Fort
Berthold area. We also participated in the completion of the one
DUC well on our Eagle Ford acreage. Wells drilled on our mineral
acreage in which we did not commit capital to take a working
interest will generate a royalty for Panhandle from any production
established.
"The Company's operating strategies remained constant through
these difficult times, and we are beginning to resume capital
investing, particularly in natural gas drilling in the southeastern
Oklahoma Woodford play. These investments should materially
increase Panhandle's 2017 daily natural gas production when the
wells come online."
Definition of Press Release Terms:
Mcf: thousand cubic feet of
natural gas
Bcfe: billion cubic feet of natural gas equivalent
Mcfe: thousand cubic feet of natural gas equivalent (Crude oil and
NGL are converted to a thousand cubic feet of natural gas
equivalent by using the ratio of one barrel to six Mcf of natural
gas.)
NGL: natural gas liquids
Boe: barrels of oil equivalent (Natural gas is converted to a
thousand barrels of oil equivalent by using the ratio of six Mcf of
natural gas to one barrel.)
Proved Reserves – SEC Flat Pricing
|
Proved Reserves SEC
Pricing
|
|
|
Sept. 30,
2016
|
|
|
Sept. 30,
2015
|
|
Proved Developed
Reserves:
|
|
|
|
|
|
|
|
Barrels of
NGL
|
|
1,095,256
|
|
|
|
1,466,834
|
|
Barrels of
Oil
|
|
1,980,519
|
|
|
|
2,725,077
|
|
Mcf of Gas
|
|
62,929,047
|
|
|
|
82,899,159
|
|
Mcfe
|
|
81,383,697
|
|
|
|
108,050,625
|
|
Proved Undeveloped
Reserves:
|
|
|
|
|
|
|
|
Barrels of
NGL
|
|
527,447
|
|
|
|
1,453,766
|
|
Barrels of
Oil
|
|
3,445,571
|
|
|
|
4,313,353
|
|
Mcf of Gas
|
|
18,796,551
|
|
|
|
37,314,885
|
|
Mcfe
|
|
42,634,659
|
|
|
|
71,917,599
|
|
Total Proved
Reserves:
|
|
|
|
|
|
|
|
Barrels of
NGL
|
|
1,622,703
|
|
|
|
2,920,600
|
|
Barrels of
Oil
|
|
5,426,090
|
|
|
|
7,038,430
|
|
Mcf of Gas
|
|
81,725,598
|
|
|
|
120,214,044
|
|
Mcfe
|
|
124,018,356
|
|
|
|
179,968,224
|
|
|
|
|
|
|
|
|
|
10% Discounted
Estimated Future
|
|
|
|
|
|
|
|
Net Cash Flows
(before income taxes):
|
|
|
|
|
|
|
|
Proved
Developed
|
$
|
55,586,606
|
|
|
$
|
126,295,752
|
|
Proved
Undeveloped
|
|
(7,696,741)
|
|
|
|
17,948,482
|
|
Total
|
$
|
47,889,865
|
|
|
$
|
144,244,234
|
|
SEC
Pricing
|
|
|
|
|
|
|
|
Oil/Barrel
|
$
|
36.77
|
|
|
$
|
55.27
|
|
Gas/Mcf
|
$
|
1.97
|
|
|
$
|
2.84
|
|
NGL/Barrel
|
$
|
12.22
|
|
|
$
|
19.10
|
|
TABLE 1
Proved Reserves – NYMEX Futures Pricing (1)
10% Discounted
Estimated Future
|
|
Proved
Reserves
|
|
Net Cash Flows
(before income taxes)
|
|
Sept. 30,
2016
|
|
Proved
Developed
|
|
$
|
99,901,435
|
|
Proved
Undeveloped
|
|
|
26,931,306
|
|
Total
|
|
$
|
126,832,741
|
|
|
|
(1)
|
Nymex Futures Pricing
as of Sept. 30, 2016, basis adjusted to Company wellhead
price
|
TABLE 2
Probable and Possible Reserves
DeGolyer and
MacNaughton prepared estimates of the Company's probable and
possible undeveloped reserves utilizing NYMEX futures pricing,
basis adjusted to Company wellhead price.
Estimated Net
Probable and Possible Reserves
|
|
NYMEX Futures Pricing
(1)
|
|
|
Sept. 30,
2016
|
|
Probable
Reserves:
|
|
|
|
Barrels of
NGL
|
|
3,409,288
|
|
Barrels of
Oil
|
|
3,068,012
|
|
Mcf of Gas
|
|
294,285,122
|
|
Mcfe (1)
|
|
333,148,922
|
|
10% Discounted
Estimated Future
|
|
|
|
Net Cash Flows
(before income taxes)
|
$
|
117,856,453
|
|
|
|
|
|
Possible
Reserves:
|
|
|
|
Barrels of
NGL
|
|
1,150,788
|
|
Barrels of
Oil
|
|
866,025
|
|
Mcf of Gas
|
|
200,870,214
|
|
Mcfe (1)
|
|
212,971,092
|
|
10% Discounted
Estimated Future
|
|
|
|
Net Cash Flows
(before income taxes)
|
$
|
51,581,097
|
|
|
|
(1)
|
Nymex Futures Pricing
as of Sept. 30, 2016, basis adjusted to Company wellhead
price
|
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, the Company 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 2015 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;
uncertainties in evaluating oil and gas reserves; 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, 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.
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/panhandle-oil-and-gas-inc-announces-sept-30-2016-reserves-and-operations-update-300359783.html
SOURCE PANHANDLE OIL AND GAS INC.