REPORT TO SHAREHOLDERS FISCAL FIRST QUARTER ENDED DECEMBER 31, 2007
Panhandle is off to an excellent start to fiscal 2008 with a 75% increase in net earnings and a 37% increase in production as compared to the first quarter of 2007. For the first quarter of 2008, Panhandle recorded a net income of $3,480,307 or $.41 per share as compared to a net income of $1,983,493 or $.23 per share for the 2007 quarter. Total revenues for the 2008 quarter amounted to $13,703,803 as compared to $8,931,895 for the 2007 quarter. Net cash provided by operating activities was $7,718,871 while additions to properties and equipment for drilling and equipping wells and leasehold acquisitions amounted to $8,724,389. Production for the first quarter of 2008 increased 37% to 1,831,206 mcfe as compared to 1,334,357 mcfe for the 2007 quarter. The average sales price received for the Company’s oil and gas, on an mcfe basis, increased 19% to $7.22.
The Company is continuing the positive momentum generated in fiscal 2007. The 75% increase in net income resulted from the 37% increase in mcfe production and the increase in our oil and gas sales prices discussed above. This quarter’s production increase, which builds on the increases in fiscal 2007, results from the increased capital expenditure levels of fiscal 2006-2007. This commitment to increased drilling expenditures will continue to generate increases in production and will allow the Company to maximize the value of its assets.
The Company continues to see significant new drilling activity and well proposals on its mineral acreage in the unconventional natural gas plays. Through January 2008, Panhandle has agreed to participate with a working interest in the drilling of 71 wells in the Woodford shale in southeast Oklahoma and 29 wells in the Fayetteville shale in Arkansas. At the end of January, 2008, the Company had an interest in 36 working interest wells and nine royalty interest wells producing in the Woodford shale, and 10 working interest wells and 27 royalty interest wells producing in the Fayetteville shale. The remainder of the referenced working interest wells were pending, drilling or testing. Drilling in both shale plays is expected to remain active for several years. In addition, drilling in the Dill City project in western Oklahoma continues to be active. In the project at the end of January 2008, Panhandle had an interest in 10 new Atoka producing wells, two wells drilling and 11 wells scheduled. Again, this project will remain active through fiscal 2008 and beyond.
Production from the Woodford shale properties, net to Panhandle’s interest, is approximately 92 mmcf per month. Additional wells are being completed and put on production monthly. Net production from the Fayetteville shale properties is growing at a slower pace due to the smaller number of wells in which Panhandle has an interest and the smaller ownership interest in those wells. Net production from the Fayetteville shale properties is approximately 10 mmcf per month. Production from the Dill City project will continue to increase as several wells have recently begun production. Net production from this area, prior to the newest wells going on line, was approximately 46 mmcf and 2,400 barrels per month. Since Panhandle does not operate any of these wells, it is somewhat difficult to obtain the most up-to-date production information on all wells in these areas and to be able to predict when or how many new wells will be drilled or begin production.
The Company continues to be very encouraged by the success of its drilling results over the last two years and will continue to participate aggresively in the further development of the major project areas discussed above. Cash flow and the balance sheet remain strong ensuring the Company will have the capital available to maximize these opportunities.
E. Chris Kauffman
Chairman |
Michael C. Coffman
President, CEO |
View First Quarter 2008 Financial Report