Panhandle Oil and Gas Inc.

Transcription

1 PHX LISTED NYSE

2 Panhandle Oil and Gas Inc. 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 Panhandle Oil and Gas Inc. Overview COMPANY DESCRIPTION Mineral ownership based oil and gas exploration and production Founded in 1926 as a Cooperative Royalty Association Went public in 1979 as a C-corporation Market Cap - $316 million (as of 3/29/17) Current Dividend Yield is 0.90% Dividend paid for over 50 consecutive years 16.8 million shares outstanding, average trading volume ~25,000 shares per day No secondary offerings in Company history Located in Oklahoma City with 20 employees 3

4 Panhandle Oil and Gas Inc. Overview MINERAL AND LEASEHOLD ASSETS The Company s foundation is 255,000 net acres of perpetually-owned mineral rights 56,705 net mineral acres are producing 14,231 net mineral acres are leased 184,134 net mineral acres are open Mineral acreage lease bonus proceeds $8.0 million in FY 2016 $3.1 million YTD in FY 2017 Also own 19,400 net acres of leasehold held by production 4

5 Panhandle Oil and Gas Inc. Overview COMPANY OBJECTIVE Return a portion of cash flow to shareholders through dividend payments (Currently ~ 1% yield) Grow long term share price by investing in high rate of return drilling on company minerals and leasehold and on the acquisition of additional mineral and leasehold rights COMPANY INVESTMENT STRATEGY Perform detailed geologic, engineering and economic analysis for each active area where the company owns minerals and leasehold interest 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 lease bonus and royalty percentage available Use same evaluation process for acquisition of mineral and leasehold interest 5

6 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% Reserves 8,110 Mmcf Mbngl + 79 Mbo $ % Lower 83% Higher 24% 44% Gross well cost - $6,800,000 Wellhead prices 12/12/16 NYMEX Strip, adjusted for basis RESULTS: MINERAL VS LEASEHOLD OWNERSHIP $ % LOWER FINDING COST 83% 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 6

7 % Increase PHX Stock Price History Excluding Dividends vs. Russell 2000 Index (RUT) Net of Dividends

8 Mcfe/Share 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 8

9 Panhandle Oil and Gas Inc. Overview COMPANY RESERVES Year-end 2016 proven reserves 124 Bcfe, 81.4 Bcfe (66%) proven developed 4,800+ gross 3-P (proven, probable and possible) undeveloped locations, primarily in cores of resource plays amounting to 589 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 9

10 Panhandle Oil and Gas Inc. Overview COMPANY OPERATIONS The Company owns interest in 6,200 gross producing wells 2,200 wells working interest; the majority also have royalty interest associated with our mineral acreage ownership Sold 138 marginal wellbores in March 2017 for $690,000 (May 01, 2017 effective date) 4,000 wells with royalty interest only Revenues 75% from working interest 25% from royalty interest Production (First Quarter 2017) 20,105 Mcf per day Bo per day +388 Bngl per day (27.4 Mmcfe per day) 27% Oil and NGL 73% natural gas 10

11 Panhandle Oil and Gas Inc. Overview 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 11

12 Panhandle Oil and Gas Inc. Overview MINERAL AND LEASEHOLD ASSETS Material mineral and/or leasehold positions in several top resource plays including: STACK/CANA/SCOOP Southeastern Oklahoma (Arkoma) Woodford Shale Eagle Ford Shale Fayetteville Shale Permian Basin Granite Wash Potential high impact projects are located in the Permian Basin Cochran County Texas San Andres project operated by Element Petroleum Andrews & Winkler Counties Texas Woodford Shale project operated by QEP Resources 12

13 STACK, CANA AND SCOOP PLAYS 13

14 STACK, CANA and SCOOP Plays Stack Extension Cana/Stack SCOOP Extension SCOOP PHX Mineral Holdings 14

15 STACK, CANA and SCOOP Plays PHX Operations PHX wells primarily operated by Devon, Cimarex, Continental, Newfield and XTO Current production 3.8 Mmcfe per day from 256 producing wells Net Mineral Acreage Stack/Cana & Stack Extension 8,354 total acres in 382 sections 3,200 acres unleased (W.I. rights) 5,154 acres leased (R.I. only) SCOOP & SCOOP Extension 6190 total acres in 510 sections 3,838 acres unleased (W.I. rights) 2,352 acres leased (R.I. only) Current Operations Elected to participate in six Cimarex operated STACK/CANA Woodford wells 17.5% working interest and 16.25% NRI All six wells have been drilled and are being prepared for completion operations Production from the six wells is anticipated to begin in the third fiscal quarter of

16 Southeastern Oklahoma Woodford Shale PHX Mineral Holdings Play Outline 16

17 Southeastern Oklahoma Woodford Shale PHX Operations PHX wells primarily operated by Newfield, BP and XTO Current production 7.0 Mmcfe per day from 271 producing wells (includes new BP wells) Net Mineral Acreage SE OK Woodford & Extension 7,409 total acres in 270 sections 4,619 acres unleased (W.I. rights) 2,790 acres leased (R.I. only) Current Operations We elected to participate in eight wells Average 20% WI and 27.4% NRI, operated by BP Seven wells have been drilled and the eighth well is being drilled The first four wells are currently producing 3,993 Mcf per day net to PHX The remaining 4 wells are projected to begin producing in the third fiscal quarter of

18 Eagle Ford Locator Map PHX 18

19 PHX Eagle Ford Shale Leasehold Acreage and Active Wells PHX Leasehold Acreage 19

20 Eagle Ford Shale PHX Operations Current net production 338 Boe per day from 71 producing wells Average W.I. 14.9%, Average NRI 11.1% in 106 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 six month cumulative production is ~110,000 Boe Gross Estimated Ultimate Recovery ~ 575 Mboe Operator has commenced a ten well drilling program on our acreage The first two wells are being completed The next four wells are being drilled and are expected to begin producing in the third fiscal quarter 2017 Remaining four wells should be on sales in the fourth fiscal quarter 2017 New well stimulations are planned to model July 2016 completion * rates adjusted for downtime 20

21 Permian Basin Mineral Acreage Permian Basin Total Acres unleased (W.I. rights) 16,504 Acres leased (R.I. only) 6,086 Total acres 22,590 Northwest Shelf Acres unleased (W.I. rights) 9,842 Acres leased (R.I. only) 1,995 Total acres 11,837 Midland Basin Acres unleased (W.I. rights) 3,152 Acres leased (R.I. only) 2,047 Total acres 5,199 Delaware Basin Acres unleased (W.I. rights) 389 Acres leased (R.I. only) 863 Total acres 1,252 Central Basin Platform Acres unleased (W.I. rights) 3,121 Acres leased (R.I. only) 1,181 Total acres 4,302 21

22 Permian Basin Andrews & Winkler Counties Woodford Shale Project 22

23 Permian Basin Andrews & Winkler Counties Woodford Shale Project Panhandle leased out ~2,440 contiguous net mineral acres on the Central Basin Uplift in Andrews and Winkler Counties, Texas The lease covers a 43.6 square mile area Generated $1.2 million in lease bonus revenues to PHX 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 (assuming 640 acre units), Panhandle would have a 7% working interest and a 7.5% net revenue interest in all the wells drilled on the 43.6 square mile block Current Operations The first well has been drilled and completed; started producing in March 2016 and has cumulative production of ~26,100 Bo + 27,850 Mcf from the Woodford Shale The operator has drilled a second 2 mile lateral Woodford Shale well on the block, completion is anticipated in April

24 Permian Basin Cochran Co. San Andres Project 24

25 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 lateral have been drilled Eight additional San Andres wells have been scheduled to drill Element has also drilled one SWD well, another is being drilled and a third is planned The first well has been completed and is recovering completion fluids The second well is currently being completed 25

26 Panhandle Oil and Gas Inc. 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 chose 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 BALANCE SHEET Total debt $44.0 million as of 3/31/17 Borrowing base $80 million Available $36 million 26

27 Panhandle Oil and Gas Inc. Risk Management HEDGE POSITION AS OF 3/1/17 Period Product Volume Mcf/Bbl Swap Price Collar Average Floor Price Collar Average Ceiling Price 2017 Natural Gas 3,020,000 $2.92 $ Natural Gas 1,775,000 $ Natural Gas 750,000 $3.44 $ Natural Gas 675,000 $ Crude Oil 147,000 $49.59 $ Crude Oil 63,000 $

28 Financial Highlights First Fiscal Quarter Oil, NGL and natural gas sales $8,899,218 $9,055,288 Lease bonus $837,958 $2,425,504 Total revenue $7,051,673 $11,462,125 Net income (loss) ($3,345,392) ($5,167,118) Earnings per share ($0.13) ($0.17) TTM EBITDA $15,732,442 $26,813,013 Net cash provided by operating activities $3,683,651 $10,344,030 Capital expenditures - drilling $2,174,523 $1,286,114 Long-term debt $44,100,000 $57,000,000 Mcfe sold 2,517,414 3,143,400 Average Mcfe sales price $3.54 $

29 Financial Highlights 2017 First Fiscal Quarter End CONDENSED BALANCE SHEET DECEMBER 31, 2016 Current assets $6,383,213 Net property and equipment 189,967,134 Other 172,352 Total assets $196,522,699 Current liabilities $8,360,114 Long-term debt 44,100,000 Deferred income taxes 29,569,007 Asset retirement obligation, other 3,001,410 Shareholders equity 111,492,168 Total liabilities and equity $196,522,699 29

30 Key Investment Attributes Foundation of perpetual mineral ownership PHX generates revenue whether we participate with a Working Interest, or take a Lease Bonus and a Royalty Interest Ownership in multiple premier resource plays Exposure 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 30

31 Appendix Slides APPENDIX

32 Arkansas Fayetteville Shale PHX wells primarily operated by Southwestern Energy Current production 7.0 Mmcfe per day from 1,382 producing wells Net Mineral acreage 10,187 total acres in 325 sections 5,361 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 32

33 Arkansas Fayetteville Shale 33

34 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, ,

35 Royalty Production and Revenue History $50 $45 $40 $35 $30 Royalty Volume Bcfe Royalty Revenue $Million PHX has over approximately 4,800 identified undeveloped locations and 198,365 mineral acres not currently producing available to feed continued royalty production growth $ $20 $15 $10 $ $

36 Year-End 2016 Reserves & 2017 First Quarter Production & Revenue by Product 120 Gas NGL Oil % 26% 8% 27% 18% 9% 47% 39% 60 8% % 73% 53% 0 Year-End 2016 SEC Proved Reserves First Quarter 2017 Production First Quarter 2017 Revenue 36