PANHANDLE OIL AND GAS INC. Reports Second Quarter And Six Months 2020 Results, Announces Dividend Payment And Mid-Year Reserves Update
OKLAHOMA CITY, May 7, 2020 /PRNewswire/ -- PANHANDLE OIL AND GAS INC., "Panhandle" or the "Company," (NYSE: PHX), today reported financial and operating results for the second quarter ended March 31, 2020.
Chad L. Stephens, President and CEO, commented, "Panhandle joins the chorus in thanking our remarkable health care workers, hospital staff and front-line responders in essential jobs that are helping the world through this unprecedented time. Risking their health to save ours is immensely appreciated. I am happy to report that our royalty interest production volumes have increased by 41% as compared to the prior quarter. This is due to the effect of a full quarter of our STACK mineral acquisition that closed last December and additional well activity on our Bakken and SCOOP minerals. The increase more than offset our decrease in working interest production volumes during the same period to generate an overall company production volume growth for the quarter of 10% as compared to the prior quarter. These results allowed us to reduce our debt by another $3.0 million (roughly 8%) since our last quarter. The royalty interest volume growth was not enough to mitigate a continued drop in commodity prices which caused our quarter over quarter adjusted EBITDA and operating cash flow to decline. The economic downturn associated with COVID-19 caused commodity prices to decline further and reduced new drilling activity across the energy patch, including on our minerals. Despite these challenging times, we will maintain our long-term focus on NAV-accretive growth through the acquisition of producing minerals and royalty interests. We recognize that the near-term uncertainty and market volatility make it difficult to transact. As such, in the short term we will focus on the important issues we can control, such as the safety and health of our employees, lowering our G&A costs, reducing our debt, and continually improving our internal systems and processes, in order to be more efficient and effective in pursuing our long term goals when the economy opens up again. As part of our debt reduction effort, the Board voted at the recent May meeting to reduce our quarterly dividend to $0.01. This will allow the Company to apply an additional $2.0 million toward debt reduction and help in maintaining adequate liquidity to operate our business. I remain confident that, by applying these prudent steps of judicious capital allocation and cash management, Panhandle will successfully navigate through the current market uncertainties and emerge as a leaner more efficient company."
SUMMARY OF RESULTS FOR THE PERIODS ENDED MARCH 31, 2020, AND SUBSEQUENT EVENTS
-- Royalty interest volumes sold increased in the second quarter of 2020 to
1.11 Bcfe from 0.79 Bcfe in the first quarter of 2020 primarily due to
having a full quarter of production related to the STACK acquisition
completed in December 2019 and additional mineral interest wells coming
online.
-- As a result of lower commodity prices, we recorded a non-cash impairment
of $29.5 million in the second quarter of 2020.
-- Net loss in the first half of fiscal 2020 was $18.1 million or $1.09 per
share (net income of $11.5 million or $0.69 per share excluding the
non-cash impairment associated primarily with our assets in the
Fayetteville and Eagle Ford shales), as compared to net income of $10.8
million or $0.64 per share in the fiscal 2019 period.
-- Net loss in the second quarter of 2020 was $20.0 million or $1.21 per
share (net income of $9.6 million or $0.58 per share excluding the
non-cash impairment), as compared to net loss of $1.9 million or $0.11
per share in the same period of 2019.
-- Adjusted EBITDA((1)) in the first half of fiscal 2020 was $10.3 million,
as compared to $18.5 million in the fiscal 2019 period, including $3.3
million and $9.1 million gains on asset sales in the adjusted EBITDA for
the 2020 and 2019 periods, respectively.
-- Adjusted EBITDA((1)) for the second quarter of 2020 was $3.1 million, as
compared to $4.0 million in the same period in 2019.
-- Reduced debt from $35.4 million, as of Sept. 30, 2019, to $32.0 million,
as of March 31, 2020. Net debt has been further reduced to approximately
$29.3 million as of May 1, 2020.
-- Debt to adjusted EBITDA (TTM) ratio was 1.12x at March 31, 2020.
-- Subsequent to March 31, 2020, the Company implemented a G&A reduction
plan which we expect, when fully implemented, to reduce G&A by between
$1 to $2 million annually.
-- At its meeting on May 5, 2020, the Company's Board of Directors approved
a payment of a one cent per share quarterly dividend. The dividend will
be payable on June 5, 2020, to stockholders of record on May 21, 2020.
((1) )This is a non-GAAP measure. Refer to the Non-GAAP Reconciliation section.
OPERATING HIGHLIGHTS
---
Second Quarter Ended Second Quarter Ended Six Months Ended Six Months Ended
March 31, 2020 March 31, 2019 March 31, 2020 March 31, 2019
Mcfe Sold 2,511,654 2,421,525 4,790,141 5,186,055
Average
Sales
Price
per
Mcfe $
3.18 $
3.81 $
3.25 $
4.13
Oil Barrels Sold 103,215 74,372 169,095 157,200
Average
Sales
Price
per
Barrel $
46.19 $
52.84 $
48.69 $
53.49
Gas Mcf Sold 1,607,442 1,688,043 3,255,269 3,582,033
Average
Sales
Price
per Mcf $
1.67 $
2.65 $
1.91 $
3.00
NGL Barrels Sold 47,487 47,875 86,717 110,137
Average
Sales
Price
per
Barrel $
11.05 $
17.05 $
13.14 $
20.62
FINANCIAL HIGHLIGHTS
---
Second Quarter Ended Second Quarter Ended Six Months Ended Six Months Ended
March 31, 2020 March 31, 2019 March 31, 2020 March 31, 2019
Working Interest Sales $
3,415,049 $
6,070,901 $
8,099,785 $
13,505,476
Royalty Interest Sales $
4,567,856 $
3,150,418 $
7,476,958 $
7,926,562
Oil, NGL and Natural Gas Sales $
7,982,905 $
9,221,319 $
15,576,743 $
21,432,038
Lease Bonuses and Rental
Income $
22,092 $
208,746 $
549,791 $
723,303
Total Revenue $
12,076,574 $
7,636,213 $
22,653,105 $
33,965,207
LOE per Mcfe $
0.61 $
0.62 $
0.57 $
0.58
Transportation, Gathering and
Marketing per Mcfe $
0.55 $
0.61 $
0.58 $
0.59
Production Tax per Mcfe $
0.16 $
0.19 $
0.15 $
0.21
G&A Expense per Mcfe $
0.87 $
0.88 $
0.92 $
0.79
Interest Expense per Mcfe $
0.14 $
0.20 $
0.15 $
0.20
DD&A per Mcfe $
1.34 $
1.50 $
1.32 $
1.43
Total Expense per Mcfe $
3.67 $
4.00 $
3.69 $
3.80
Impairment $
29,545,702
$ $
29,545,702
$
Net Income (Loss) $
(19,973,170) $
(1,931,334) $
(18,081,056) $
10,804,606
Adj. Pre-Tax Net Income
(Loss) (1) $
(633,906) $
(86,375) $
3,231,875 $
10,014,384
Adjusted EBITDA (1) $
3,086,185 $
4,023,385 $
10,278,332 $
18,477,200
Cash Flow from Operations $
4,009,901 $
5,051,311 $
6,108,342 $
9,061,054
CapEx -Drilling & Completing $
34,490 $
2,713,744 $
139,755 $
4,159,683
CapEx -Mineral Acquisitions $
81,422 $
1,386,775 $
10,254,016 $
1,809,775
Borrowing Base $
45,000,000 $
80,000,000
Debt $
32,000,000 $
44,100,000
Debt/Adjusted EBITDA (TTM)
(1) 1.12 1.50
(1) This is a non-GAAP
measure. Refer to the Non-GAAP
Reconciliation section.
SECOND QUARTER 2020 RESULTS
Oil, NGL and natural gas revenue decreased 13% in the 2020 quarter as production increased 4% and product prices decreased 17% relative to the 2019 quarter. The 2020 quarter revenue included a $4.1 million gain on derivative contracts as compared to a $1.8 million loss for the 2019 quarter.
Total production increased 4% in the 2020 quarter, as compared to the 2019 quarter. Total production increased due to including a full quarter of results associated with the STACK acquisition, which closed in December 2019, and additional royalty oil wells coming online primarily in the Bakken. This increase was partially offset by the natural decline of the production base. The oil production increase of 39% is attributable to producing property royalty acquisitions in the Bakken in North Dakota and Anadarko STACK in Oklahoma, as well as new well drilling on legacy Panhandle mineral acreage in the SCOOP and STACK in Oklahoma. The natural gas production decrease of 5% is the result of naturally declining production in the STACK, Arkoma Stack and Fayetteville Shale, partially offset by royalty acquisition volumes in the STACK and Bakken and volumes identified in new royalty wells in the SCOOP and Bakken. The NGL production remained relatively flat as naturally declining production in liquid-rich gas areas of the Anadarko Basin and Arkoma Stack are offset by additional production related to royalty acquisition volumes in the STACK and Bakken, new royalty wells in the SCOOP and Bakken, and operators removing more NGL from the natural gas stream.
The 8% decrease in total cost per Mcfe in the 2020 quarter relative to the 2019 quarter was primarily driven by higher royalty volumes and an increased proportion of oil compared to NGL and natural gas.
The DD&A rate decrease was mainly due to the impairment taken on the Eagle Ford at the end of fiscal 2019, which lowered the basis of the assets. This 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. This resulted in lower projected remaining reserves on a significant number of wells causing increased units of production DD&A.
The interest expense decrease was mainly attributable to lower average outstanding debt balance during the 2020 quarter as compared to the 2019 quarter.
The decrease in production tax rate was primarily due to lower product prices during the 2020 quarter.
The Company's net income decreased from net loss of $1.9 million in the 2019 quarter to net loss of $20.0 million in the 2020 quarter. The majority of the decrease was due to a non-cash impairment associated primarily with the Fayetteville and the Eagle Ford shales.
SIX MONTHS 2020 RESULTS
Oil, NGL and natural gas revenue decreased 27% in the 2020 period as production decreased 8% and product prices decreased 21% relative to the 2019 period. The 2020 period revenue included a $3.3 million gain on derivative contracts as compared to a $2.7 million gain for the 2019 period.
Total production decreased 8% in the 2020 period, as compared to the 2019 period. This decrease for the 2020 six-month period, was the result of Panhandle electing not to participate with a working interest on 16 wells proposed on its mineral and leasehold acreage, partially offset by the factors discussed above.
The 3% decrease in total cost per MCFE in the 2020 period relative to the 2019 period was primarily driven by lower production as noted above. Interest expense and production taxes were also influenced by lower debt balances outstanding and lower production tax associated with lower commodity prices, respectively.
The Company's net income decreased from net income of $10.8 million in the 2019 period to net loss of $18.1 million in the 2020 period. The majority of the decrease was due to a non-cash impairment associated primarily with the Fayetteville and the Eagle Ford shales.
OPERATIONS UPDATE
During the quarter ended March 31, 2020, we converted 25 gross/0.06 net wells in progress to producing wells. Our inventory of wells in progress decreased to 118 gross wells but increased on a net well basis to 0.50 wells, as new drilling occurred on acreage where we have a higher ownership stake. Permits outstanding increased as new permits were filed, but this increase was offset by fewer permits being converted to wells in progress.
Bakken/
SCOOP/ Three Arkoma
STACK Forks Stack Permian Fayetteville Other Total
Gross Wells
in Progress
on PHX
Acreage:
As of
12/31/19 79 2 11 5 28 125
Net Change 12 -7 -12 -7
As of
3/31/20 91 2 4 5 16 118
Net Wells in
Progress on
PHX
Acreage:
As of
12/31/19 0.19 0.02 0.15 0.13 0.49
Net Change 0.08 -0.01 -0.06 0.01
As of
3/31/20 0.27 0.01 0.15 0.07 0.50
Gross Active
Permits on
PHX
Acreage:
As of
12/31/19 35 13 6 11 65
Net Change 4 4 9 17
As of
3/31/20 39 13 10 20 82
As of
3/31/20:
Rigs Present
on PHX
Acreage 8 1 1 10
Rigs Within
2.5 Miles
of PHX
Acreage 27 6 2 6 41
Leasing Activity
During the second quarter of fiscal 2020, Panhandle leased 36 net mineral acres for an average bonus payment of $603 per net mineral acre and an average royalty of 22%.
Bakken/
SCOOP/ Three Arkoma
STACK Forks Stack Permian Fayetteville Other Total
During Three Months Ended 3/31/20:
Net Mineral Acres Leased 10 23 3 36
Average Bonus per Net Mineral Acre $
1,000 $
50 $
500 $
158 $
603
Average Royalty per Net Mineral Acre 25% 20% 25% 19% 22%
ACQUISITION AND DIVESTITURE UPDATE
During the second quarter of fiscal 2020, Panhandle did not purchase any net mineral acres or sell any net mineral acres.
RESERVES UPDATE
As of March 31, 2020, mid-year proved reserves were 74.6 Bcfe, as calculated by DeGolyer and MacNaughton, the Company's independent consulting petroleum engineering firm. This was a 30% decrease, compared to the 106.4 Bcfe of proved reserves at Sept. 30, 2019, and is primarily attributable to revisions associated with lower natural gas prices. SEC prices used for the March 31, 2020, report averaged $1.90 per Mcf for natural gas, $53.10 per barrel for oil and $15.31 per barrel for NGL, compared to $2.48 per Mcf for natural gas, $54.40 per barrel for oil and $19.30 per barrel for NGL at the Sept. 30, 2019, report. These prices reflect net prices received at the wellhead. Total proved developed reserves decreased 19% to 72.8 Bcfe, as compared to Sept. 30, 2019, reserve volumes. Total proved undeveloped reserves decreased 15.3 Bcfe principally due to reclassifying locations from proven undeveloped to probable undeveloped related to significant reduction in drilling activity in the STACK, SCOOP, Arkoma Stack and Bakken. As per reserve reporting rules, wells that are no longer scheduled to be drilled within five years must be reclassified from proven undeveloped to probable undeveloped.
SECOND QUARTER EARNINGS CALL
Panhandle will host a conference call to discuss second quarter results at 5:00 p.m. EDT on May 7, 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 14 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 34278.
FINANCIALS
Statements of Operations
---
Three Months Ended March 31,
Six Months Ended March 31,
2020 2019 2020 2019
Revenues:
(unaudited)
(unaudited)
Oil, NGL and natural gas sales $
7,982,905 $
9,221,319 $
15,576,743 $
21,432,038
Lease bonuses and rental income 22,092 208,746 549,791 723,303
Gains (losses) on derivative contracts 4,071,577 (1,793,852) 3,253,683 2,712,928
Gain on asset sales 3,272,888 9,096,938
12,076,574 7,636,213 22,653,105 33,965,207
Costs and expenses:
Lease operating expenses 1,542,199 1,505,507 2,723,870 3,020,061
Transportation, gathering and marketing 1,386,297 1,482,671 2,769,298 3,072,687
Production taxes 404,728 467,308 732,009 1,076,259
Depreciation, depletion and amortization 3,373,518 3,623,976 6,329,219 7,437,662
Provision for impairment 29,545,702 29,545,702
Interest expense 346,573 485,784 717,238 1,025,154
General and administrative 2,174,661 2,133,153 4,397,689 4,071,993
Loss on asset sales and other expense
(income) 40,066 (852) 29,136 15,785
38,813,744 9,697,547 47,244,161 19,719,601
Income (loss) before provision (benefit)
for income taxes (26,737,170) (2,061,334) (24,591,056) 14,245,606
Provision (benefit) for income taxes (6,764,000) (130,000) (6,510,000) 3,441,000
Net income (loss) $
(19,973,170) $
(1,931,334) $
(18,081,056) $
10,804,606
Basic and diluted earnings
(loss) per common share $
(1.21) $
(0.11) $
(1.09) $
0.64
Basic and diluted weighted average
shares outstanding:
Common shares 16,384,687 16,679,187 16,362,057 16,712,493
Unissued, directors' deferred
compensation shares 139,390 183,206 186,443 217,704
16,524,077 16,862,393 16,548,500 16,930,197
Dividends declared per share of
common stock and paid in period
$
0.04 $
0.04 $
0.08 $
0.08
===
Balance Sheets
---
March 31, 2020 Sept. 30, 2019
Assets
(unaudited)
Current assets:
Cash and cash equivalents $
498,777 $
6,160,691
Oil, NGL and natural gas sales
receivables (net of allowance for
uncollectable accounts) 3,913,347 4,377,646
Refundable income taxes 3,401,870 1,505,442
Derivative contracts, net 4,216,915 2,256,639
Other 601,412 177,037
Total current assets 12,632,321 14,477,455
Properties and equipment, at cost,
based on successful efforts
accounting:
Producing oil and natural gas
properties 326,766,558 354,718,398
Non-producing oil and natural gas
properties 19,030,785 14,599,023
Other 1,782,063 1,722,080
347,579,406 371,039,501
Less accumulated depreciation,
depletion and amortization (261,599,529) (259,314,590)
Net properties and equipment 85,979,877 111,724,911
Investments 151,752 205,076
Derivative contracts, net 237,505
Total assets $
98,763,950 $
126,644,947
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $
810,095 $
665,160
Accrued liabilities and other 1,246,544 2,433,466
Total current liabilities 2,056,639 3,098,626
Long-term debt 32,000,000 35,425,000
Deferred income taxes 1,312,007 5,976,007
Asset retirement obligations 2,862,523 2,835,781
Stockholders' equity:
Class A voting common stock, $0.01666
par value; 24,000,500 shares
authorized; 16,897,306 issued at
March 31, 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 3,264,383 2,967,984
Deferred directors' compensation 2,092,426 2,555,781
Retained earnings 62,447,346 81,848,301
68,085,664 87,653,575
Less treasury stock, at cost; 505,252
shares at March 31, 2020, and
558,051 shares at Sept. 30, 2019 (7,552,883) (8,344,042)
Total stockholders' equity 60,532,781 79,309,533
Total liabilities and
stockholders' equity $
98,763,950 $
126,644,947
Condensed Statements of Cash Flows
---
Six months ended March 31,
2020 2019
Operating Activities
(unaudited)
Net income (loss) $
(18,081,056) $
10,804,606
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation, depletion and amortization 6,329,219 7,437,662
Impairment of producing properties 29,545,702
Provision for deferred income taxes (4,664,000) 3,942,000
Gain from leasing of fee mineral acreage (544,979) (722,912)
Proceeds from leasing of fee mineral acreage 559,462 737,812
Net (gain) loss on sale of assets (3,265,449) (9,096,938)
Directors' deferred compensation expense 140,130 132,280
Fair value of derivative contracts (1,722,771) (4,231,222)
Restricted stock awards 491,616 446,321
Other 7,225 9,326
Cash provided (used) by changes in assets and
liabilities:
Oil, NGL and natural gas sales receivables 464,299 715,935
Other current assets (232,349) (172,645)
Accounts payable 117,561 (77,977)
Income taxes receivable (1,896,428) (538,150)
Other non-current assets 50,010 17,317
Accrued liabilities (1,189,850) (342,361)
Total adjustments 24,189,398 (1,743,552)
Net cash provided by operating activities 6,108,342 9,061,054
Investing Activities
Capital expenditures (139,755) (4,159,683)
Acquisition of minerals and overrides (10,254,016) (1,809,775)
Investments in partnerships (199)
Proceeds from sales of assets 3,376,049 9,096,938
Net cash provided (used) by investing
activities (7,017,722) 3,127,281
Financing Activities
Borrowings under Credit Facility 5,561,725 8,686,270
Payments of loan principal (8,986,725) (15,586,270)
Purchase of treasury stock (7,635) (3,967,685)
Payments of dividends (1,319,899) (1,348,170)
Net cash provided (used) by financing
activities (4,752,534) (12,215,855)
Increase (decrease) in cash and cash
equivalents (5,661,914) (27,520)
Cash and cash equivalents at beginning of
period 6,160,691 532,502
Cash and cash equivalents at end of
period $
498,777 $
504,982
Supplemental Schedule of Noncash Investing
and Financing Activities
Additions and revisions, net, to
asset retirement obligations $
4 $
27,562
Gross additions to properties and
equipment $
10,229,121 $
5,654,060
Net (increase) decrease in accounts payable
for properties and equipment additions 164,650 315,398
Capital expenditures and
acquisitions $
10,393,771 $
5,969,458
Proved Reserves
Proved Reserves SEC Pricing
March 31, 2020 Sept. 30, 2019
Proved Developed Reserves:
---
Barrels of NGL 1,508,483 1,747,242
Barrels of Oil 1,610,078 1,863,096
Mcf of Gas 54,120,398 67,713,193
Mcfe (1) 72,831,764 89,375,221
Proved Undeveloped Reserves:
---
Barrels of NGL 32,125 226,038
Barrels of Oil 104,249 516,994
Mcf of Gas 918,319 12,560,713
Mcfe (1) 1,736,563 17,018,905
Total Proved Reserves:
---
Barrels of NGL 1,540,608 1,973,280
Barrels of Oil 1,714,327 2,380,090
Mcf of Gas 55,038,717 80,273,906
Mcfe (1) 74,568,327 106,394,126
10% Discounted Estimated Future
Net Cash Flows (before income
taxes):
---
Proved Developed $
58,631,849 $
86,814,212
Proved Undeveloped 4,080,453 23,581,427
Total $
62,712,302 $
110,395,639
SEC Pricing
---
Oil/Barrel $
53.10 $
54.40
Gas/Mcf $
1.90 $
2.48
NGL/Barrel $
15.31 $
19.30
Proved Reserves - Projected Future Pricing (2)
---
10% Discounted Estimated
Future
Proved Reserves
Net Cash Flows (before
income taxes): March 31, 2020 Sept. 30, 2019
---
Proved Developed $
55,461,699 $
99,204,697
Proved Undeveloped 3,371,650 27,518,415
Total $
58,833,349 $
126,723,112
(1) Crude oil and NGL converted to natural gas on a one barrel of crude oil or NGL equals six Mcf of natural gas basis
(2) Projected futures pricing as of March 31, 2020, and Sept. 30, 2019, basis adjusted to Company wellhead price
Hedge Position as of May 1, 2020
---
Period
Product Volume Mcf/Bbl Swap Price Collar Average Collar Average
Floor Price Ceiling Price
---
2020
Natural Gas 240,000 $
2.28 $
2.89
2020
Natural Gas 720,000 $
2.72
2021
Natural Gas 1,080,000 $
2.30 $
2.99
2021
Natural Gas 600,000 $
2.73
2022
Natural Gas 100,000 $
2.73
2020
Crude Oil 30,000 $
58.00 $
65.83
2020
Crude Oil 84,000 $
58.01
2021
Crude Oil 96,000 $
37.00
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.
Second Quarter Second Quarter Six Months Six Months
Ended Ended Ended Ended
March 31, 2020 March 31, 2019 March 31, 2020 March 31, 2019
Net Income
(Loss) $
(19,973,170) $
(1,931,334) $
(18,081,056) $
10,804,606
Plus:
Unrealized
(gains)
losses on
derivatives (3,442,438) 1,974,959 (1,722,771) (4,231,222)
Income Tax
Expense
(Benefit) (6,764,000) (130,000) (6,510,000) 3,441,000
Interest
Expense 346,573 485,784 717,238 1,025,154
DD&A 3,373,518 3,623,976 6,329,219 7,437,662
Impairment 29,545,702 29,545,702
Adjusted
EBITDA $
3,086,185 $
4,023,385 $
10,278,332 $
18,477,200
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.
Second Quarter Second Quarter Six Months Six Months
Ended Ended Ended Ended
March 31, 2020 March 31, 2019 March 31, 2020 March 31, 2019
Net Income (Loss) $
(19,973,170) $
(1,931,334) $
(18,081,056) $
10,804,606
Plus:
Impairment 29,545,702 29,545,702
Unrealized (gains)
losses on
derivatives (3,442,438) 1,974,959 (1,722,771) (4,231,222)
Income Tax Expense
(Benefit) (6,764,000) (130,000) (6,510,000) 3,441,000
Adjusted Pre-Tax
Net Income (Loss) $
(633,906) $
(86,375) $
3,231,875 $
10,014,384
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.
Investors 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.
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SOURCE PANHANDLE OIL AND GAS INC.
