Panhandle Oil and Gas Inc. - PHX

Transcription

1 PHX LISTED NYSE 1

2 Panhandle Oil and Gas Inc. - PHX FORWARD-LOOKING STATEMENTS AND RISK FACTORS This presentation contains projections and other forward-looking statements within the meaning of Section 27A of the U.S. Securities Act of 1933 and Section 21E of the U.S. Securities Exchange Act of These projections and statements reflect the Company s current views with respect to future events and financial performance. No assurances can be given, however, that these events will occur or that these projections will be achieved, and actual results could differ materially from those projected as a result of certain factors. A discussion of these factors is included in the Company's periodic reports filed with the U.S. Securities and Exchange Commission. 2

3 PHX Overview COMPANY DESCRIPTION Mineral ownership based non-operated oil and gas exploration and production Founded in 1926 as a Cooperative Royalty Association Went public in 1979 as a C-corporation Market Cap - $355 million (as of 8/03/17) Current Dividend Yield is 0.73% Dividend paid for over 50 consecutive years 16.8 million shares outstanding, average trading volume ~32,000 shares per day, Ticker - PHX Located in Oklahoma City with 20 employees 3

4 PHX - Overview COMPANY OBJECTIVE Grow long term shareholder value by investing in high rate of return drilling on company minerals and leasehold, and the acquisition of additional mineral and leasehold rights Return a portion of cash flow to shareholders through dividend payments (Currently ~ 0.70% yield) COMPANY INVESTMENT STRATEGY Perform detailed geologic, engineering and economic analysis for each active area where the company owns mineral and leasehold interests Participate with a working interest in drilling only where the projected riskweighted rate of return on the investment achieves company objectives If the projected rate of return is not sufficient, lease the mineral acreage for the highest negotiated royalty percentage and lease bonus Use same evaluation process for acquisition of mineral and leasehold interest 4

5 % Increase PHX Stock Price History Excluding Dividends vs. Russell 2000 Index (RUT) Net of Dividends

6 PHX Overview MINERAL AND LEASEHOLD ASSETS The Company s foundation is 255,000 net acres of perpetually-owned mineral rights 56,818 net mineral acres are producing 14,559 net mineral acres are leased 183,627 net mineral acres are open Mineral acreage lease bonus proceeds $8.0 million in FY 2016 $4.2 million YTD in FY 2017 Also own 19,331 net acres of leasehold held by production 6

7 PHX Key Assets MINERAL AND LEASEHOLD ASSETS Bakken Shale Granite Wash STACK/Cana SCOOP Fayetteville Shale Permian Basin Southeast OK Woodford Shale Permian Basin Eagle Ford Shale Oil Window 7

8 PHX - THE MINERAL ACREAGE ADVANTAGE Economic Impact of Working Interest Participation on Mineral Acres Example: STACK/CANA Woodford Shale Well 1.6 Finding Cost, $/Mcfe Rate of Return, % (BTAX) 50 ASSUMPTIONS: W.I. NRI PHX ownership 5% 5% Typical ownership 5% 3.75% % Higher 38% Reserves 8,388 Mmcf Mbngl + 81 Mbo Gross well cost - $6,800,000 Wellhead prices 8/01/17 NYMEX Strip, adjusted for basis RESULTS: MINERAL VS LEASEHOLD OWNERSHIP 25% LOWER FINDING COST $ % Lower $ % % HIGHER RATE OF RETURN This advantage applies to all plays in which Panhandle drills on owned mineral acres 0 Typical W.I. Owner PHX Typical W.I. Owner PHX 0 8

9 PHX Overview COMPANY OPERATIONS The Company owns a non-operated interest in 6,200 gross producing wells 2,200 wells working interest; the majority of which have associated royalty interest derived from our mineral acreage ownership 4,000 wells with royalty interest only Revenues 75% from working interest 25% from royalty interest Production (Third Quarter 2017) 24,891 Mcf per day Bo per day +432 Bngl per day (32.5 Mmcfe per day) 23% Oil and NGL 77% natural gas 9

10 PHX - Quarterly Production MCFE 4,500,000 GAS Equivalent Oil + NGL 4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000, ,

11 PHX Overview COMPANY RESERVES Mid-year 2017 proven reserves Bcfe; 93.9 Bcfe (67%) proven developed ~ 4,800 gross 3-P (proven, probable and possible) undeveloped locations, primarily in cores of resource plays amounting to 570 Bcfe of net undeveloped reserves downturn: impairment charge only 8% of our 2014 book value and 5% of our current market capitalization, is a reflection of the quality of our assets 11

12 PHX - STACK, CANA AND SCOOP PLAYS 12

13 STACK, CANA and SCOOP Plays PHX Ownership Stack Extension Cana/Stack SCOOP Extension SCOOP PHX Mineral Holdings 13

14 STACK, CANA and SCOOP Plays PHX Operations PHX wells primarily operated by Devon, Cimarex, Continental, Newfield and XTO Current production 8.8 Mmcfe per day from 253 producing wells Net Mineral Acreage Stack/Cana & Stack Extension 8,358 total acres in 382 sections 3,054 acres unleased (W.I. rights) 5,304 acres leased (R.I. only) SCOOP & SCOOP Extension 6,165 total acres in 508 sections 3,826 acres unleased (W.I. rights) 2,339 acres leased (R.I. only) Current Operations Participation in six Cimarex operated STACK/CANA Woodford wells 17.5% WI and 16.25% NRI All six wells are in the early stages of completion fluid recovery and are performing as anticipated. After 25 days of flow back, the six wells combined are producing 4,800 Mcf per day Bo per day net to PHX and are still improving 14

15 Southeastern Oklahoma Woodford Shale PHX Ownership PHX Mineral Holdings Play Outline 15

16 Southeastern Oklahoma Woodford Shale PHX Operations PHX wells primarily operated by Newfield, BP and XTO Current production 10.2 Mmcfe per day from 279 producing wells (includes new BP wells) Net Mineral Acreage SE OK Woodford & Extension 7,243 total acres in 269 sections 4,504 acres unleased (W.I. rights) 2,739 acres leased (R.I. only) Current Operations participation in eight BP operated wells Average 20% WI and 27.4% NRI The eight wells are producing at a combined rate of approximately 6,900 Mcf per day net to PHX 16

17 PHX - Eagle Ford Locator Map PHX 17

18 PHX - Eagle Ford Shale Leasehold Acreage and Active Wells PHX Leasehold Acreage 18

19 Eagle Ford Shale PHX Operations Current net production 401 Boe per day from 73 producing wells Average W.I. 14.6%, Average NRI 10.9% in 104 undeveloped locations Current Operations One DUC well was completed in July 2016 Well was fracture stimulated with enhanced techniques including the use of significantly more sand and improved diversion Produced an average of 1,010 Boe per day* (90% oil) for the first 30 days of production and the 90 day cumulative production 63,000 Boe Gross Estimated Ultimate Recovery ~ 575 Mboe A ten well drilling and completion program is underway New well stimulations are modeled after the July 2016 completion The first two wells have begun production. The wells produced an average of 1,170 Boe per day per well in the first 30 days and have a combined cumulative production of 147,000 Boe in the first 90 days The second pad of four wells are being completed and are anticipated to begin producing by mid-august The third pad of four wells has been drilled and the drilling rig has been released. These wells are scheduled to begin production in October The operator plans to resume drilling the identified undeveloped locations when oil prices are more favorable and will generate appropriate returns * rate adjusted for downtime 19

20 PHX - Permian Basin Mineral Acreage Permian Basin Total Acres unleased (W.I. rights) 16,099 Acres leased (R.I. only) 6446 Total acres 22,545 Northwest Shelf Acres unleased (W.I. rights) 9765 Acres leased (R.I. only) 2071 Total acres 11,837 Midland Basin Acres unleased (W.I. rights) 2969 Acres leased (R.I. only) 2189 Total acres 5158 Delaware Basin Acres unleased (W.I. rights) 374 Acres leased (R.I. only) 878 Total acres 1,252 Central Basin Platform Acres unleased (W.I. rights) 2991 Acres leased (R.I. only) 1308 Total acres

21 PHX - Permian Basin Cochran Co. San Andres Project 21

22 PHX - Permian Basin Cochran Co. San Andres Project Panhandle leased out 4,050 contiguous net mineral acres to Element Petroleum on the northwest shelf of the Midland Basin in Cochran Co. Texas The lease covers a 34.5 square mile area The operator intends to drill 1.5 mile horizontal San Andres wells at ~5,000 TVD The Company generated $2.1 million in lease bonus Terms to Company Panhandle will receive 25% of all production proportionately reduced, in the form of royalty payments from the leased property Panhandle has the right to buy back the lease in each unit as initial unit wells are proposed up to a maximum working interest of 10% With full participation Panhandle would have a 10% working interest and a 12.1% net revenue interest in all wells drilled on the 34.5 square mile area Current Operations Five pilot holes have been drilled and cored. Two 1.5-mile San Andres laterals have been completed. One additional well has been drilled and is scheduled to be completed this month. Another well is being drilled. The two producing wells have combined cumulative production as follows: 30day 1.1 Mboe, 60 day 8.4 Mboe, 90 day 16.0 Mbo Thus far, PHX has not exercised its option participate with working interest. We own a non-cost bearing royalty interest in the first 3 wells in the project Nine additional San Andres wells have been scheduled to drill 22

23 Mcfe/Share PHX - 3P Undeveloped Reserves Per Debt Adjusted Share Debt Adjusted Shares are Based on Fiscal Year-End Debt and Stock Price All Years Share Count-Adjusted for Stock Splits 23

24 PHX Risk Management Operational Risk Mineral ownership is perpetual, no drilling required to hold land assets Operators are generally large independents who are major resource play developers PHX leverages the operators experience, knowledge and resources We choose which wells to participate in with a working interest We do not pay for geoscience (geologic and geophysical), engineering and land costs We pay drilling, completion and operating costs only for wells in which we participate with a working interest When we do not participate with a working interest on our minerals, we receive noncost bearing royalty and generally an up-front lease bonus Balance sheet Total debt $48.5 million as of 8/4/17 Borrowing base $80 million Available $31.5 million 24

25 PHX Risk Management Hedge Position as of 8/03/17 Period Product Volume Mcf/Bbl Swap Price Collar Average Floor Price Collar Average Ceiling Price 2017 Natural Gas 1,320,000 $2.93 $ Natural Gas 1,220,000 $ Natural Gas 1,710,000 $3.05 $ Natural Gas 675,000 $ Crude Oil 80,000 $49.38 $ Crude Oil 25,000 $ Crude Oil 24,000 $47.50 $ Crude Oil 12,000 $

26 PHX - Financial Highlights Nine Months Ending June Oil, NGL and natural gas sales $27,788,018 $22,557,372 Lease bonus $3,991,752 $7,188,152 Total revenue $33,438,117 $28,902,798 Net income (loss) $2,492,799 ($11,024,074) Earnings per share $0.15 ($0.65) TTM EBITDA $24,206,320 $20,059,281 Net cash provided by operating activities $14,321,237 $20,553,294 Capital expenditures - drilling $18,011,721 $3,359,518 Long-term debt $50,000,000 $49,200,000 Mcfe sold 7,822,536 8,817,524 Average Mcfe sales price $3.55 $

27 PHX - Financial Highlights 2017 Third Fiscal Quarter End Condensed Balance Sheet June 30, 2017 Current assets $8,647,235 Net property and equipment 196,648,953 Other 179,920 Total assets $205,476,108 Current liabilities $5,549,983 Long-term debt 50,000,000 Deferred income taxes 30,825,007 Asset retirement obligation, other 3,114,867 Shareholders equity 115,986,251 Total liabilities and equity $205,476,108 27

28 PHX - Key Investment Attributes Foundation of perpetual mineral ownership PHX generates revenue whether we participate with a working interest, or take a royalty interest and up-front lease bonus Ownership in multiple premier resource plays Opportunities across the product spectrum - natural gas, NGL and oil Large inventory of very low-risk development opportunities Significant exploration upside in progress Material undeveloped mineral position in oil and gas producing basins Simple balance sheet with low debt Conservative management with long-term value creation focus 28

29 % Increase PHX Stock Price History Excluding Dividends vs. Russell 2000 Index (RUT) Net of Dividends

30 Appendix Slides 30 APPENDIX

31 Arkansas Fayetteville Shale PHX Operations PHX wells primarily operated by Southwestern Energy Current production 6.8 Mmcfe per day from 1,414 producing wells Net Mineral acreage 10,159 total acres in 323 sections 5,334 acres unleased (W.I. rights) 4,826 acres leased (R.I. only) Southwestern has one rig drilling in the play Activity in the Fayetteville and Moorefield Shales 31

32 Arkansas Fayetteville Shale PHX Ownership 32

33 PHX - Royalty Production and Revenue History $50 Royalty Volume Bcfe 6.00 $45 Royalty Revenue $Million 5.50 $40 PHX has over 4,800 identified undeveloped locations and 198,186 mineral acres not currently producing available to feed continued royalty production growth $ $ $ $ $ $ $ $

34 PHX MY 2017 Reserves & 2017 Third Quarter Production & Revenue by Product 120 Oil NGL Gas % 24% 23% 15% 8% 34% 9% 40% 60 6% 40 67% 77% 60% 20 0 Mid-Year 2017 SEC Proved Reserves Third Quarter 2017 Production Third Quarter 2017 Revenue 34