-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, C25qCoZFw0jGzzs8vbV/jghNLimf95dzVVs1fj2HhwLG9Xx0yOIpYcFyghtcBdE8 Zf7xJ4uJqP25vI7fbWZ0Wg== 0000950134-96-000417.txt : 19960216 0000950134-96-000417.hdr.sgml : 19960216 ACCESSION NUMBER: 0000950134-96-000417 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960214 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: PANHANDLE ROYALTY CO CENTRAL INDEX KEY: 0000315131 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 731055775 STATE OF INCORPORATION: OK FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-09116 FILM NUMBER: 96518584 BUSINESS ADDRESS: STREET 1: 5400 NW GRAND BLVD STREET 2: GRAND CENTRE STE 210 CITY: OKLAHOMA CITY STATE: OK ZIP: 73112 BUSINESS PHONE: 4059481560 10QSB 1 FORM 10-Q PERIOD ENDED 12-31-95 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB ( X ) Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the period ended December 31, 1995 ---------------------------------------- ( ) Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to ---------------------- ----------------------- Commission File Number 0-9116 --------------------------------------------------------- PANHANDLE ROYALTY COMPANY - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) OKLAHOMA 73-1055775 - ----------------------------------- ------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) Grand Centre Suite 210, 5400 NW Grand Blvd., Okla. City, Oklahoma 73112 - -------------------------------------------------------------------------------- (Address of principal executive offices) Registrant's telephone number including area code (405) 948-1560 ------------------------------ 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 ----- ----- Outstanding shares of Class A Common stock (voting) at February 5, 1996: 675,064 - ----------- 2 INDEX Page Part I. Financial Information Item 1. Financial Statements Condensed Consolidated Balance Sheets - December 31, 1995 (unaudited) and September 30, 1995.................................. 1 Condensed Consolidated Statements of Income - Three months ended December 31, 1995 and 1994 (unaudited).............. 2 Condensed Consolidated Statements of Cash Flows - Three months ended December 31, 1995 and 1994 (unaudited)......................................... 3 Notes to Condensed Consolidated Financial Statements (unaudited) ............................. 4 Item 2. Management's discussion and analysis of financial condition and results of operations................. 4 Part II. Other Information Item 6. Exhibits and reports on Form 8-K.................... 6 3 PART I. FINANCIAL INFORMATION PANHANDLE ROYALTY COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS (Information at December 31, 1995 is unaudited)
December 31, September 30, ASSETS 1995 1995 ------ -------------- -------------- Current Assets: Cash and cash equivalents $ 637,759 $ 443,862 Oil and gas sales and other receivables 664,800 587,911 Prepaid expenses 15,579 2,221 -------------- -------------- Total current assets 1,318,138 1,033,994 Properties and equipment, at cost, based on successful efforts accounting 21,442,796 18,944,202 Less accumulated depreciation, depletion and amortization 12,574,752 12,328,527 -------------- ------------- Net properties and equipment 8,868,044 6,615,675 Other assets 107,716 107,716 -------------- ------------- $ 10,293,898 $ 7,757,385 ============== ============= LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ Current liabilities: Accounts payable, accrued liabilities and gas imbalance liability $ 372,226 $ 147,421 Dividends payable 62,684 62,088 Income taxes payable 61,850 -- Deferred income taxes 203,000 203,000 ------------- ------------ Total current liabilities 699,760 412,509 Long-term debt 2,000,000 -- Deferred income taxes 710,000 710,000 Stockholders' equity: Class A voting common stock, $.10 par value; 1,000,000 shares authorized, 679,586 issued and outstanding at December 31, 1995 and 679,642 at September 30, 1995 67,959 67,964 Capital in excess of par value 399,396 400,334 Retained earnings 6,416,783 6,166,578 -------------- ------------ Total stockholders' equity 6,884,138 6,634,876 -------------- ------------- $ 10,293,898 $ 7,757,385 ============== =============
(See accompanying notes) (1) 4 PANHANDLE ROYALTY COMPANY CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
Three Months Ended Dec. 31, --------------------------------- 1995 1994 ----------- ------------ Revenues: Oil and gas sales $ 1,178,810 $ 676,200 Lease bonuses and rentals 1,800 10,339 Interest 6,052 12,292 Other 787 383 ----------- ----------- 1,187,449 699,214 Costs and expenses: Lease operating expenses, production taxes 225,507 148,069 Dry hole costs 12,838 29,476 Depreciation, depletion and amortization 246,225 160,068 General & administrative 263,058 245,159 Interest expense 23,237 -- ----------- ----------- 770,865 582,772 ----------- ----------- Income before provision for income taxes 416,584 116,442 Provision for income taxes 64,500 -- ----------- ----------- Net Income $ 352,084 $ 116,442 =========== =========== Net income per share of common stock $ .52 $ .17 =========== =========== Dividends declared per share of common stock $ .15 $ .15 =========== =========== Weighted average shares outstanding 679,628 678,000 =========== ===========
(See accompanying notes) (2) 5 PANHANDLE ROYALTY COMPANY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Three months ended Dec. 31, -------------------------------- 1995 1994 ---------- ----------- Cash flows from operating activities: Net income $ 352,084 $ 116,442 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, depletion and amortization 246,225 160,068 Cash provided (used) by changes in assets and liabilities: Oil and gas sales and other receivables ( 76,889) ( 1,245) Prepaid expenses and other assets ( 13,358) -- Income taxes payable 61,850 ( 11,327) Accounts payable, accrued liabilities and dividends payable 225,401 ( 13,776) ---------- ---------- Total adjustments 443,229 133,720 ---------- ---------- Net cash provided by operating activities 795,313 250,162 Cash flows from investing activities: Purchases of and development of properties and equipment (2,498,594) ( 367,433) ---------- ---------- Net cash used in investing activities (2,498,594) ( 367,433) Cash flows from financing activities: Loan proceeds 2,100,000 -- Payment of loan principal ( 100,000) -- Acquisition of the Company's common shares ( 943) ( 2,189) Payment of dividends ( 101,879) ( 101,996) --------- ---------- Net cash provided (used) in financing activities 1,897,178 ( 104,185) ---------- ---------- Increase (decrease) in cash and cash equivalents 193,897 ( 221,456) Cash and cash equivalents at beginning of period 443,862 1,099,668 ---------- ---------- Cash and cash equivalents at end of period $ 637,759 $ 878,212 ========== ==========
(See accompanying notes) (3) 6 PANHANDLE ROYALTY COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. The consolidated results presented for the three-month periods ended December 31, 1995 and 1994 are unaudited, but management of Panhandle Royalty Company believes that all adjustments necessary for a fair presentation of the consolidated results of operations for the periods have been included. All such adjustments are of a normal recurring nature. The consolidated results are not necessarily indicative of those to be expected for the full year. 2. The Company utilizes tight gas sands production tax credits to reduce its federal income tax liability. These credits are scheduled to be available through the year 2002. 3. Earnings per share of common stock are computed using the weighted average number of shares outstanding during the period. 4. The Company has a revolving line of credit with Bank One, Texas, in the amount of $2,500,000. The credit matures on January 3, 1998. At February 14, 1996, the Company had $1,850,000 outstanding under the facility. Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS LIQUIDITY AND CAPITAL RESOURCES At December 31, 1995, working capital was $618,378 as compared to $621,485 at September 30, 1995. Cash and cash equivalents were $637,758 at December 31, 1995 as compared to $443,862 at September 30, 1995. Cash flow provided by operating activities for the quarter ended December 31, 1995 was $795,312 as compared to $250,162 for the quarter ended December 31, 1994. The increase in cash and cash flow provided by operating activities is the result of substantially increased oil and gas sales revenues in the fiscal 1996 quarter as compared to the 1995 quarter. The Company continued to increase its expenditures for the purchase of and development of its oil and gas properties. Expenditures for the first quarter of fiscal 1996 amounted to $2,498,594 as compared to $367,433 for the first quarter of fiscal 1995. $2,100,000 of the 1996 expenditures were funded by accessing the Company's line-of-credit with its bank. The remaining $398,594 was funded by internally generated cash flow. The majority of the funds expended were to purchase a 50% interest in 65,632 net mineral acres located mainly in Oklahoma and Texas. These properties were purchased at a cost of $2,115,115 and are principally non-producing, but will add approximately $150,000 to cash flow during fiscal 1996 before consideration of interest expense on the loan. The Company intends to actively pursue development of these properties by participating in the drilling of wells on the properties, which should generate additional cash flow from oil and gas sales. At December 31, 1995 the Company had commitments for ongoing and proposed drilling and equipment costs on new wells totaling $798,000. These costs, as well as Company operating costs for the remaining three quarters of fiscal 1996, are expected to be paid from cash flow and available working capital. In addition, the Company anticipates having sufficient cash available to make substantial principal payments on the bank line-of-credit. However, as the principal amount of the line-of-credit is not due and payable until January 1998, should cash flow be lower than expectations, principal payments could be scaled back. (4) 7 Recent winter weather has increased natural gas sales prices and created an increased demand for natural gas. The increased gas prices and gas production is expected to last into the spring months, and coupled with continuing increases in oil production, should translate into increased cash flow in fiscal 1996 over 1995 levels. RESULTS OF OPERATIONS Oil and gas sales revenues increased $502,610 to $1,178,810 for the quarter ended December 31, 1995 as compared to $676,200 for the quarter ended December 31, 1994. This increase is principally the result of significantly increased oil sales volumes along with increased gas sales volumes and a higher average gas sales price. The chart below outlines the Company's production and average sales prices for oil and natural gas in the first quarters of fiscal 1996 and 1995.
PRODUCTION ---------------------------------------- OIL GAS ------------------ ------------------- Total Average Total Average Bbls Price/Bbl MCF Price/MCF ------ --------- ------- --------- Quarter ended 12/31/95 36,811 $ 17.36 349,736 $ 1.50 Quarter ended 12/32/94 14,191 $ 16.68 315,838 $ 1.39
The 22,620 barrel increase in oil production for the first fiscal 1996 quarter over the first fiscal 1995 quarter is the direct result of new wells coming on line in the Dagger Draw field of New Mexico. This field is the Company's largest oil producing field, and there continues to be further drilling in the field. Oil production for the remainder of fiscal 1996 should be increased over fiscal 1995 levels as production from this field continues to increase. Additional wells are currently being drilled in the field. Increased gas sales volumes and gas sales prices are the result of the winter weather experienced thus far in fiscal 1996 and, as discussed earlier, these increases are expected to continue at least into the second and third quarters of fiscal 1996. Costs and expenses increased $188,093 in the 1996 quarter to $770,865 as compared to $582,772 in the 1995 quarter. Lease operating expenses, production taxes and seismic costs increased $77,438 in the 1996 period as compared to the 1995 period. This increase was attributable to increased gross production taxes paid on the increased oil and gas sales revenues, and in addition, lease operating expenses increased as a result of expenses incurred on certain well workovers during the period. As the Company continues to participate in the drilling of additional working interest wells, lease operating expense will increase as new wells go on-line. The Company computes depreciation, depletion and amortization costs (DD&A) using the units of production method, thus DD&A, in the 1996 quarter, was higher as production volumes were substantially larger than in the 1995 quarter. Interest expense was $23,237 in the 1996 quarter as compared to $0 in the 1995 quarter. The Company paid interest on the $2,100,000 borrowed in November 1995 but had no debt in the first quarter of fiscal 1995. The provision for income taxes in fiscal 1996 continues to be favorably affected by tax credits available for the production of "tight gas sands" natural gas. The Company's first quarter 1996 income before the provision for income taxes was substantially increased over the 1995 amount, thus the provision for income taxes was increased. The above-mentioned tax credits will not offset the entire expected provision for income taxes during fiscal 1996. (5) 8 Net earnings in the 1996 first quarter were $ .52 per share as compared to $ .17 per share for the 1995 quarter. The increase was a function of increased oil and gas sales revenues, as discussed earlier, offset somewhat by increased costs and expenses. As natural gas prices are expected to remain somewhat higher than fiscal 1995 levels and oil production volumes are expected to remain at an increased level for fiscal 1996, management expects 1996 financial results to continue to outpace those recorded in fiscal 1995. However, should several of the Company's exploratory drilling projects result in dry holes, earnings would be negatively impacted, but cash flow would not be substantially affected. PART II. OTHER INFORMATION Item 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits - Exhibit 27 -- Financial Data Schedule (b) FORM 8-K was filed on November 29, 1995 reporting the Company had acquired a 50% interest in 65,632 net mineral acres at a cost of $2,115,115. SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. PANHANDLE ROYALTY COMPANY February 14, 1996 /s/ H W Peace II - ----------------- ---------------------------------- Date H. W. Peace II, President February 14, 1996 /s/ Michael C. Coffman - ----------------- ----------------------------------- Date Michael C. Coffman, Vice President, Secretary and Treasurer (6) 9 INDEX TO EXHIBITS
EXHIBIT NUMBER DESCRIPTION - ------- ----------- 27 Financial Data Schedule
EX-27 2 FINANCIAL DATA SCHEDULE
5 3-MOS SEP-30-1996 OCT-01-1995 DEC-31-1995 637,759 0 664,800 0 0 1,318,138 21,442,796 12,574,752 10,293,898 699,760 0 67,959 0 0 6,816,179 10,293,898 1,178,810 1,187,449 225,507 747,628 0 0 23,237 416,584 64,500 352,084 0 0 0 352,084 .52 .52
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