SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2018
Commission File Number: 001-31759
PANHANDLE OIL AND GAS INC.
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation
(I.R.S. Employer Identification No.)
Grand Centre, Suite 300, 5400 N. Grand Blvd.
Oklahoma City, OK
(Address of principal executive offices)
Registrant's telephone number: (405) 948-1560
Securities registered under Section 12(b) of the Act:
CLASS A COMMON STOCK (VOTING)
NEW YORK STOCK EXCHANGE
(Title of Class)
(Name of each exchange on which registered)
Securities registered under Section 12(g) of the Act:
(Title of Class)
CLASS B COMMON STOCK (NON-VOTING) $1.00 par value
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Exchange Act of 1934. Yes X No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934. Yes X No
(Facing Sheet Continued)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. X Yes No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period) that the registrant was required to submit and post such files. X Yes No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. X
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Securities Exchange Act of 1934. (Check one):
Large accelerated filer
Accelerated filer X
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. Yes No
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934). Yes X No
The aggregate market value of the voting stock held by non-affiliates of the registrant, computed by using the $19.30 per share closing price of registrant's Class A Common Stock, as reported by the New York Stock Exchange at March 31, 2018, was $303,874,080. As of December 1, 2018, 16,751,414 shares of Class A Common Stock were outstanding. As of December 1, 2018, there were no shares of Class B Common Stock outstanding.
Documents Incorporated By Reference
The information required by Part III of this Report, to the extent not set forth herein, is incorporated by reference from the registrant's Definitive Proxy Statement relating to the annual meeting of stockholders to be held on March 5, 2019. The definitive proxy statement will be filed with the Securities and Exchange Commission within 120 days after the end of the fiscal year to which this Report relates.
T A B L E O F C O N T E N T S
Unresolved Staff Comments
Mine Safety Disclosures
Market for Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Selected Financial Data
Management's Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures about Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Controls and Procedures
Incorporated by Reference to Proxy Statement
Exhibits, Financial Statement Schedules and Reports on Form 8-K
The following defined terms are used in this report:
Bbl – barrel.
Bcf – billion cubic feet.
Bcfe – natural gas stated on a Bcf basis and crude oil and natural gas liquids converted to a billion cubic feet of natural gas equivalent by using the ratio of one million Bbl of crude oil or natural gas liquids to six Bcf of natural gas.
Board – board of directors.
BTU – British Thermal Units.
CEO – Chief Executive Officer.
CFO – Chief Financial Officer.
CFTC – the United States Commodity Futures Trading Commission.
Company – Panhandle Oil and Gas Inc.
Common Stock – the Company's Class A Common Stock.
completion – the post-drilling processes of preparing a well for the production of crude oil and/or natural gas.
conventional – an area believed to be capable of producing crude oil and natural gas occurring in discrete accumulations in structural and stratigraphic traps.
DD&A – depreciation, depletion and amortization.
developed acreage – the number of acres allocated or assignable to productive wells or wells capable of production.
development well – a well drilled within the proved area of a crude oil or natural gas reservoir to the depth of a stratigraphic horizon known to be productive.
dry gas – natural gas that remains in a gaseous state in the reservoir and does not produce large quantities of liquid hydrocarbons when brought to the surface. Also may refer to gas that has been processed or treated to remove a majority of natural gas liquids.
dry hole – exploratory or development well that does not produce crude oil and/or natural gas in economically producible quantities.
ESOP – the Panhandle Oil and Gas Inc. Employee Stock Ownership and 401(k) Plan, a tax qualified, defined contribution plan.
exploratory well – a well drilled to find a new field or to find a new reservoir in a field previously found to be productive of crude oil or natural gas in another reservoir.
FASB – the Financial Accounting Standards Board.
field – an area consisting of a single reservoir or multiple reservoirs all grouped on, or related to, the same individual geological structural feature or stratigraphic condition. The field name refers to the surface area, although it may refer to both the surface and the underground productive formations.
formation – a layer of rock, which has distinct characteristics that differ from nearby rock.
G&A – general and administrative expenses.
gross acres or gross wells – the total acres or wells in which an interest is owned.
held by production or HBP – refers to an oil and gas lease continued into effect into its secondary term for so long as a producing oil and/or gas well is located on any portion of the leased premises or lands pooled therewith.
horizontal drilling – a drilling technique used in certain formations where a well is drilled vertically to a certain depth and then drilled horizontally within a specified interval.
– a process involving the high pressure i njection of water, sand and additives into rock formations to stimulate crude oil and natural gas production.
Independent Consulting Petroleum Engineer(s) or Independent Consulting Petroleum Engineering Firm – DeGolyer and MacNaughton of Dallas, Texas.
LOE – lease operating expense.
Mcf – thousand cubic feet.
Mcfd – thousand cubic feet per day.
Mcfe – natural gas stated on an Mcf basis and crude oil and natural gas liquids converted to a thousand cubic feet of natural gas equivalent by using the ratio of one Bbl of crude oil or natural gas liquids to six Mcf of natural gas.
Mmbtu – million BTU.
Mmcf – million cubic feet.
Mmcfe – natural gas stated on an Mmcf basis and crude oil and natural gas liquids converted to a million cubic feet of natural gas equivalent by using the ratio of one thousand Bbl of crude oil or natural gas liquids to six Mmcf of natural gas.
minerals, mineral acres or mineral interests – fee mineral acreage owned in perpetuity by the Company.
net acres or net wells – the sum of the fractional interests owned in gross acres or gross wells.
NGL – natural gas liquids.
NYMEX – the New York Mercantile Exchange.
NYSE – the New York Stock Exchange.
OPEC – Organization of Petroleum Exporting Countries.
Panhandle – Panhandle Oil and Gas Inc.
PDP – proved developed producing.
play – term applied to identified areas with potential oil, NGL and/or natural gas reserves.
production or produced – volumes of oil, NGL and natural gas that have been both produced and sold.
proved reserves – the quantities of crude oil and natural gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible from a given date forward, from known reservoirs and under existing economic conditions, operating methods, and government regulations prior to the time at which contracts providing the right to operate expire, unless evidence indicates renewal is reasonably certain.
proved developed reserves – reserves expected to be recovered through existing wells with existing equipment and operating methods.
proved undeveloped reserves or PUD – proved reserves expected to be recovered from new wells on undrilled acreage or from existing wells where a relatively major expenditure is required for recompletion.
PV-10 – estimated pre-tax present value of future net revenues discounted at 10% using SEC rules.
royalty interest – well interests in which the Company does not pay a share of the costs to drill, complete and operate a well, but receives a smaller proportionate share (as compared to a working interest) of production.
SEC – the United States Securities and Exchange Commission.
unconventional – an area believed to be capable of producing crude oil and natural gas occurring in accumulations that are regionally extensive, but may lack readily apparent
traps, seals and discrete hydrocarbon water boundaries that typically define conventional reservoirs. These areas tend to have low permeability and may be closely associated with source rock, as is the case with oil and gas shale, tight oil and gas sands , and coalbed methane, and g enerally require horizontal drilling, fracture stimulation treatments or other special recovery processes in order to achieve economic production.
undeveloped acreage – acreage on which wells have not been drilled or completed to a point that would permit the production of commercial quantities of crude oil and/or natural gas.
working interest – well interests in which the Company pays a share of the costs to drill, complete and operate a well and receives a proportionate share of production.
Fiscal year references
All references to years in this report, unless otherwise noted, refer to the Company's fiscal year end of September 30. For example, references to 2018 mean the fiscal year ended September 30, 2018.
References to oil and natural gas properties
References to oil and natural gas properties inherently include NGL associated with such properties.
Panhandle Oil and Gas Inc. was founded in Range, Texas County, Oklahoma, in 1926, as Panhandle Cooperative Royalty Company. The Company operated as a cooperative until 1979, when it merged into Panhandle Royalty Company, and its shares became publicly traded. On April 2, 2007, the Company's name was changed to Panhandle Oil and Gas Inc.
While operating as a cooperative, the Company distributed most of its net income to shareholders as cash dividends. Upon conversion to a public company in 1979, although still paying dividends, the Company began to retain a substantial part of its cash flow to participate with a working interest in the drilling of wells on its mineral acreage and to purchase additional mineral acreage. Several acquisitions of additional mineral and leasehold acreage and small companies were made from 1980 to the present time.
The Company is involved in the acquisition, management and development of non-operated oil and natural gas properties, including wells located on the Company's mineral and leasehold acreage. Panhandle's mineral and leasehold properties are located primarily in Arkansas, New Mexico, North Dakota, Oklahoma and Texas. The majority of the Company's oil, NGL and natural gas production is from wells located in Arkansas, Oklahoma and Texas.
In March 2007, the Company increased its authorized Class A Common Stock from 12 million shares to 24 million shares. On October 8, 2014, the Company split its Class A Common Stock on a 2-for-1 basis.
The Company's office is located at Grand Centre, Suite 300, 5400 N. Grand Blvd., Oklahoma City, OK 73112; telephone – (405) 948-1560; facsimile – (405) 948-2038. The Company's website is www.panhandleoilandgas.com . The Company's Class A Common Stock trades on the NYSE under the symbol PHX.
The Company files periodic reports with the SEC on Forms 10-Q and 10-K. These forms, the Company's annual report to shareholders and current press releases are available free of charge on our website as soon as reasonably practicable after they are filed with the SEC or made available to the public. Also, the Company posts copies of its various corporate governance documents on the website. From time to time, the Company posts other important disclosures to investors in the "Press Release" or "Upcoming Events" section of the website, as allowed by SEC rules.
Materials filed with the SEC may be read and copied at the SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. The SEC also maintains a website at www.sec.gov that contains reports, proxy and information statements, and other information regarding the Company that have been filed electronically with the SEC, including this Form 10-K.