Production boost helps Panhandle’s net income

Location continued to be a major emphasis for Panhandle Oil and Gas Inc. throughout a fiscal year that brought it improved production rates and a significant jump in net income. Company officials said the year was notable because of Panhandle's reentry into the mineral acquisitions market by going after properties in the core of the Bakken field in North Dakota and the SCOOP and STACK plays in Oklahoma. Over the year, they said Panhandle acquired 4,306 mineral acres, spending $11.3 million (a $2,600 per acre average). Panhandle CEO Paul F. Blanchard said those purchases met the company's tests for providing substantial future development opportunities while meeting or exceeding its threshold for expected returns. Also during fiscal 2018, the company unloaded 324 marginal properties and closed a deal to sell 206 acres it held in Lea and Eddy counties in New Mexico, fetching $9.3 million, or about $45,000 per acre. As it made those changes, the company grew its annual production to 12.3 billion cubic feet of natural gas equivalent, compared to 11.1 billion equivalent cubic feet the previous year. Officials said they saw the biggest production climb in natural gas liquids, which was up 47 percent year over year. Oil and natural gas production rates also climbed by single digits for the year. They said the increases were driven by production from several higher than average working interest wells Panhandle owns in parts of in the Woodford Shale in southeastern Oklahoma, in northwestern Oklahoma's STACK

play and in the south Texas Eagle Ford Shale.

As of this month, 23 rigs were drilling Panhandle acreage.

Financially, Panhandle reported it earned a net income of $14.6 million for fiscal 2018.

Company officials said Panhandle realized a net gain of nearly $12.74 million from the Tax Cut and

Jobs Act of 2017, adding that to about $1.9 million in other net income it brought in.

Officials said the gain actually was more, but had to be adjusted about $4.9 million lower for losses on derivatives contracts for the year running from Oct. 1, 2017, through Sept. 30 of this year.

As for its fourth quarter, Panhandle officials said the firm earned a net income of about $555,000, compared to about $1 million the same

period a year ago.

Generally, officials said they believe the company performed well during fiscal 2018, as it was able to use free cash flow to return $3.9 million to shareholders through both dividends and stock repurchases and to pay its debt down by $1.2 million, to $51 million.

Also on Wednesday, Panhandle announced it would pay a 4-cent quarterly dividend on March 7 to shareholders of record on Feb. 19 and said its

annual shareholder meeting will be on March 5.

"The fourth quarter and fiscal 2018 results reflect the execution of the company's corporate strategy of maximizing shareholder value, maintaining a strong financial position and generating optimal cash flow," Blanchard said. "We are enthusiastic about our ability to generate significant cash flow moving forward, given the flexibility that we have within our portfolio."