OKLAHOMA CITY, Nov. 8, 2010 /PRNewswire-FirstCall/ -- Panhandle
Oil and Gas Inc. (NYSE: PHX, "the Company"), a growing independent
oil and natural gas company with reserves and production in the
Anadarko Basin (Cana) Wood ford Shale, the Arkansas Fayetteville
Shale, several western Oklahoma
liquid-rich plays, including the Granite Wash and the Southeastern
Oklahoma Woodford Shale, today announced estimated total proved
reserve volumes for the Company's fiscal year ended September 30, 2010.
Total Proved Reserves Increase 74%
Panhandle's estimated total proved reserves at September 30, 2010 increased 74% to 103.7 Bcfe
from 59.6 Bcfe reported on September 30,
2009, based on SEC mandated pricing. September 30,
2010 prices of $4.33 per Mcf for
natural gas and $69.23 per barrel for
oil compared to September 30, 2009
prices of $2.86 per Mcf for natural
gas and $66.96 per barrel for oil in
the 2009 reserve report. September 30,
2010 prices were the first calculated based on the SEC
Modernization of Oil and Gas Reporting Rules.
Since 2005, Panhandle's total proved reserves have grown 232%
from 31.2 Bcfe to 103.7 Bcfe, at a compound annual growth rate of
27.2%. This growth is principally the result of reserves
added from development of the two Oklahoma Woodford Shale plays and
the Arkansas Fayetteville Shale. Panhandle's total estimated
proved reserves are 95% natural gas.
At September 30, 2010,
approximately 60% of total proved reserves, or 62.5 Bcfe, are
categorized as proved developed reserves as compared to 50.3 Bcfe
at September 30, 2009. Forty
percent, or 41.2 Bcfe of total proved reserves, are categorized as
proved undeveloped (PUD) at September 30,
2010, as compared to 15%, or 9.2 Bcfe of total PUD reserves
at September 30, 2009. This
increase in PUD reserves is the result of: (a) the addition of a
substantial number of drilling locations now categorized as PUD's
because of the increased delineation of Panhandle's shale plays
resulting from several years of drilling activity in these plays;
(b) the SEC's Modernization of Oil and Gas Reporting Rules
initial adoption by Panhandle at September
30, 2010 expanded the number of locations qualifying as PUD
reserves; (c) the continuing increase in expected per-well reserves
in Panhandle's shale plays due to increasing lateral length and
other advances in well completion technology and; (d) the higher
natural gas price used in the 2010 report, as compared to the 2009
report prices, enabled more PUD locations to calculate economic,
thus allowing inclusion as PUD's in the 2010 report.
Because Panhandle's fiscal year-end is September 30, use of the SEC's Modernization
of Oil and Gas Reporting Rules was adopted by the Company for
the first time in the calculation of September 30, 2010 year-end reserves. In
addition, September 30, 2010 reserves
were calculated by the independent petroleum engineering consulting
firm DeGolyer and MacNaughton. The September 30, 2009 reserves had been calculated
by a small independent petroleum engineering firm in Oklahoma City.
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Proved
Reserves
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SEC
Pricing
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September
30,
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September
30,
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2010
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2009
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Proved Developed
Reserves:
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Barrels of Oil
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861,240
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882,987
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Mcf of Gas
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57,344,190
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45,036,460
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Mcfe (1)
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62,511,630
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50,334,382
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Proved Undeveloped
Reserves:
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Barrels of Oil
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63,769
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37,886
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Mcf of Gas
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40,826,265
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8,991,350
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Mcfe (1)
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41,208,879
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9,218,666
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Total Proved
Reserves:
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Barrels of Oil
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925,009
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920,873
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Mcf of Gas
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98,170,455
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54,027,810
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Mcfe (1)
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103,720,509
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59,553,048
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10% Discounted Estimated
Future
Net Cash Flows (before
federal income taxes)
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Proved
Developed
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$104,027,562
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$73,869,512
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Proved
Undeveloped
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21,960,347
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6,800,080
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Total
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$125,987,909
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$80,669,592
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SEC Pricing
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Oil/Barrels
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$69.23
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$66.96
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Gas/Mcf
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$4.33
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$2.86
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(1) Crude oil converted to a
thousand cubic feet of natural gas equivalent by using the ratio of
one barrel of crude oil to six Mcf of natural gas.
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Mcf, thousand cubic feet of
natural gas
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Bcfe, billion cubic feet of
natural gas equivalent
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Mcfe, thousand cubic feet of
natural gas equivalent
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Probable and Possible Reserves
The Company has calculated probable and possible undeveloped
reserves for certain interests owned in the two Woodford Shale plays in Oklahoma, the Fayetteville Shale in
Arkansas and the Colony Granite
Wash play in western Oklahoma.
Estimates of reserves were prepared by Panhandle's in-house
engineer in accordance with the definitions and guidance used by
the Society of Petroleum Engineers for estimating probable
and possible reserves.
Estimated Net Probable And
Possible Reserves
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Southeastern
Oklahoma Woodford
Shale
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Arkansas
Fayetteville
Shale
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Anadarko
Basin (Cana)
Woodford Shale
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Colony
Granite Wash
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Other
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Total
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Probable, Bcfe
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54.9
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14.0
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16.4
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1.3
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0.5
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87.1
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Possible, Bcfe
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52.4
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43.7
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95.3
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7.8
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0.9
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200.1
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Total, Bcfe
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107.3
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57.7
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111.7
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9.1
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1.4
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287.2
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Average Gross Reserves per
Undeveloped Location, Bcfe
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3.2
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2.1
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4.3
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3.5
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Management Comments
Michael C. Coffman, Panhandle's
President and CEO said: "Fiscal 2010 increases in reserves are the
result of Panhandle's continuing commitment to the more aggressive
operating strategy of taking larger total interests in wells
drilled on our mineral acreage to maximize the value of the
underlying hydrocarbon assets for our shareholders. Our
drilling program continues to dramatically build on the Company's
reserve base year over year. Capital expenditures in 2010
were financed with cash flow. The resulting cash flow from
the additional production, coupled with a reduction in capital
expenditures during fiscal 2010, allowed Panhandle to pay off the
Company's debt and to maintain substantial cash reserves and
substantial available capital through its credit facility. We will
continue to expand our reserve base and increase production volumes
in fiscal 2011 and beyond by taking larger total interests and
drilling on our minerals. We project that our 2011 capital
expenditure level will be substantially higher than 2010 and
anticipate funding these expenditures from cash flow and cash
reserves. Our experienced management team will deploy capital
in projects that are expected to generate an acceptable
rate-of-return with proven and efficient operators in our
world-class plays."
Paul F. Blanchard, Panhandle's
Sr. Vice-President and COO added: "We continue to see new
resource plays develop in areas in which the Company owns its
250,000 plus acres of perpetual fee minerals. These new
resource plays continue to provide Panhandle with additional
reserves. In total, the Company now has over 4,150
undeveloped locations primarily in resource plays. The
emergence of the Anadarko Basin
(Cana) Woodford Shale and the Colony
Granite Wash, along with several other oil or natural gas
liquids-rich plays in western Oklahoma allows us to capitalize on the
current price and superior rates of return in these type projects.
The rapid development of new resource plays over the last few
years on the Company's substantial mineral acreage holdings again
highlights the advantage Panhandle has by owning our acreage and
having the ability to shift investment dollars quickly to more
liquids-rich drilling opportunities without having to expend
capital for additional acreage."
Panhandle Oil and Gas Inc. (NYSE-PHX) is engaged
in the exploration for and production of natural gas and oil.
Additional information on the Company can be found at
www.panhandleoilandgas.com.
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, we 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
2009 Form 10-K filed with the Securities and Exchange Commission.
These "Risk Factors" include 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; declines in the values of our oil and gas properties
resulting in write-downs; the negative impact lower oil and gas
prices could have on our ability to borrow; and drilling and
operating risks.
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.
SOURCE Panhandle Oil and Gas Inc.