-----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, BVRNrLyP3M/hGlmK0cJjoK+VkgjC8LJHJtZzfdT5bQQcIg2CkPRGHVHL4Z2VXvRj +o8qpUv14EAdqCwGvhniHg== 0000950134-99-004136.txt : 19990517 0000950134-99-004136.hdr.sgml : 19990517 ACCESSION NUMBER: 0000950134-99-004136 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990514 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: SEC FILE NUMBER: 000-09116 FILM NUMBER: 99621850 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 10QSB FOR QUARTER ENDING MARCH 31, 1999 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 March 31, 1999 ( ) 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 N Grand Blvd., Oklahoma 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 May 10, 1999: 2,047,542 --------- 2 INDEX Part I. Financial Information Item 1. Financial Statements Page Condensed Consolidated Balance Sheets - March 31, 1999 (unaudited) and September 30, 1998......................................... 1 Condensed Consolidated Statements of Income - Three Months and Six months ended March 31, 1999 and 1998 (unaudited)........................ 2 Condensed Consolidated Statements of Cash Flows - Six months ended March 31, 1999 and 1998 (Unaudited)................................................ 3 Notes to Condensed Consolidated Financial Statements (unaudited)..................................... 4 Item 2. Management's discussion and analysis of financial condition and results of operations......................... 5 Part II. Other Information Item 4. Submission of matters to a vote of security holders......... 7 Item 5. Other Information........................................... 7 Item 6. Exhibits and reports on Form 8-K............................ 8 3 PART I. FINANCIAL INFORMATION PANHANDLE ROYALTY COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS (Information at March 31, 1999 is unaudited) March 31, September 30, 1999 1998 ------------ ------------- Assets Current assets: Cash $ 91,649 $ 320,210 Oil and gas sales and other receivables 634,764 716,648 Income taxes receivables 277,090 152,090 Prepaid expenses 10,156 27,391 ----------- ----------- Total current assets 1,013,659 1,216,339 Properties and equipment, at cost, based on successful efforts accounting Producing Oil and Gas Properties 23,095,665 22,360,790 Non producing Oil and Gas Properties 5,720,717 5,693,399 Other 249,492 241,567 ----------- ----------- 29,065,874 28,295,756 Less accumulated depreciation, depletion and amortization 17,336,409 16,600,499 ----------- ----------- Net properties and equipment 11,729,465 11,695,257 Other assets 107,716 107,716 ----------- ----------- $12,850,840 $13,019,312 =========== =========== Liabilities And Stockholders' Equity Current liabilities: Accounts payable, accrued liabilities and gas imbalance liability $ 414,047 $ 620,413 Dividends payable 32,456 31,656 Income taxes payable -- -- Deferred income taxes 112,000 112,000 ----------- ----------- Total current liabilities 558,503 764,069 Deferred income taxes 1,532,000 1,451,000 Long-term debt 300,000 -- Stockholders' equity Class A voting Common Stock, $.0333 par value; 6,000,000 shares authorized, 2,047,542 issued and outstanding at March 31,1999 and 2,047,602 at September 30, 1998 68,251 68,254 Capital in excess of par value 515,379 515,823 Retained Earnings 9,876,707 10,220,166 ----------- ----------- 10,460,337 10,804,243 ----------- ----------- Total stockholders' equity $12,850,840 $13,019,312 =========== ===========
(1) 4 PANHANDLE ROYALTY COMPANY CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) Three Months Ended March 31, Six Months Ended March 31, ---------------------------- ---------------------------- 1999 1998 1999 1998 ----------- ------------- ----------- ------------- Revenues: Oil and gas sales $ 937,682 $ 1,322,550 $ 1,968,815 $ 3,132,319 Lease bonuses and rentals 2,381 200 6,852 7,651 Interest 1,479 12,663 5,262 21,861 Other 128 251 3,214 772 ----------- ------------- ----------- ------------- 941,670 1,335,664 1,984,143 3,162,603 Costs and expenses: Lease operating expenses and production taxes 205,682 249,048 409,637 533,003 Exploration costs 208,984 206,175 297,067 265,564 Depreciation, depletion, amortization and impairment 363,167 244,383 735,910 613,444 General and administrative 275,478 264,783 646,287 627,776 Interest expense 8,104 1,559 8,890 1,559 ----------- ------------- ----------- ------------- 1,061,415 965,948 2,097,791 2,041,346 ----------- ------------- ----------- ------------- Income (loss) before provision for income taxes (119,745) 369,716 (113,648) 1,121,257 Provision (benefit) for income taxes (44,000) 70,000 (44,000) 235,000 ----------- ------------- ----------- ------------- Net income (loss) $ (75,745) $ 299,716 $ (69,648) $ 886,257 =========== ============= =========== ============= Basic earnings (loss) per share (Note 4) $ (.04) $ .15 $ (.03) $ .43 =========== ============= =========== ============= Diluted earnings (loss) per share (Note 4) $ (.04) $ .15 $ (.03) $ .43 =========== ============= =========== ============= Dividends declared per share of common stock $ .07 $ .10 $ .13 $ .17 =========== ============= =========== =============
(See accompanying notes) (2) 5 PANHANDLE ROYALTY COMPANY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Six months ended March 31, -------------------------- 1999 1998 ----------- ----------- Cash flows from operating activities: Net income (loss) $ (69,648) $ 886,257 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation, depletion and amortization 735,910 613,444 Deferred income taxes 81,000 -- Exploration costs 297,067 265,564 Cash provided (used) by changes in assets and liabilities: Oil and gas sales and income tax receivable (43,116) 99,112 Prepaid expenses and other assets 17,235 (15,884) Income taxes payable -- 22,134 Accounts payable, accrued liabilities, gas imbalance liability and dividends payable (205,566) (73,049) ----------- ----------- Total adjustments 926,530 911,321 ----------- ----------- Net cash provided by operating activities 812,882 1,797,578 Cash flows from investing activities: Purchase of and development of properties and equipment (1,067,185) (1,337,353) ----------- ----------- Net cash used in investing activities (1,067,185) (1,337,353) Cash flows from financing activities: Borrowings under line of credit 300,000 -- Acquisition of Company's common shares (447) (2,724) Payment of dividends (273,811) (340,909) ----------- ----------- Net cash provided (used) in financing activities 25,742 (343,633) ----------- ----------- Increase (decrease) in cash and cash equivalents (228,561) 116,592 Cash and cash equivalents at beginning of period 320,210 872,797 ----------- ----------- Cash and cash equivalents at ed of period $ 91,649 $ 989,389 =========== =========== Supplemental disclosure of cash flow information: Interest paid $ 8,890 $ 1,559 Income taxes paid 180 212,866 ----------- ----------- $ 9,070 $ 214,425 =========== ===========
(See accompanying notes) (3) 6 PANHANDLE ROYALTY COMPANY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. The consolidated results presented for the six-month and three-month periods ended March 31, 1999 and 1998 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, if any. These credits are scheduled to be available through the year 2002. 3. On February 26, 1999, the Company's Board of Directors approved a proposal to (1) amend the Company's duration from fifty years to perpetuity; (2) amend the Company's Articles of Incorporation to increase the number of authorized shares of Class A Common Stock from 1,000,000 shares to 6,000,000 shares; (3) effect a 3-for-1 stock split of the outstanding Class A Common Stock and a corresponding reduction of the par value per share from $.10 to $.03 a; (4) adopt amendments to the Articles of Incorporation and Bylaws to change voting rights from one vote per shareholder to one vote per share; and (5) amend the Articles of Incorporation to provide that generally any merger, consolidation, liquidation or dissolution of the Company or sale of substantially all of the assets of the Company require the affirmative vote of the holders of 66 2/3% or more of the Company's outstanding Class A Common Stock. On May 7, 1999, these proposals were put forth to a vote of the shareholders, for which a majority of the shareholders voted in favor of each proposal, causing these proposals to become effective on such date. The Class A Common Stock split will be effected in the form of a stock dividend to be distributed on June 1, 1999, to shareholders of record on May 7, 1999. All agreements concerning Common Stock of the Company, including the Company's Employee Stock Ownership Plan and the Company's commitment under the Deferred Compensation Plan for Non-Employee Directors, provide for the issuance or commitment, respectively of additional shares of the Company's stock due to the declaration of the stock split. All references to number of shares, per share, and authorized share information in the accompanying condensed consolidated financial statements has been adjusted to reflect the stock split and increase in authorized shares approved on May 7, 1999, at the Special Meeting of the Shareholders of the Company. 4. In February 1997, the Financial Accounting Standards Board issued Statement No. 128, Earnings per Share, which was adopted by the Company on December 31, 1997. The Company's diluted earnings per share calculation takes into account certain shares that may be issued under the Non-Employee Director's Deferred Compensation Plan. The following table sets forth the computation of basic and diluted earnings per share: Three months ended March 31, Six months ended March 31, ------------------------------ ---------------------------- 1999 1998 1999 1998 ------------ ----------- ----------- ----------- Numerator for primary and diluted earnings per share: Net income (loss) $ (75,745) 299,716 $ (69,648) $ 886,257 ------------ ----------- ----------- ----------- Denominator: For basic earnings per share Weighted average shares 2,047,557 2,039,325 2,047,578 2,039,394 Effect of potential diluted shares: Directors deferred compensation shares 15,038 10,890 14,919 10,890 ------------ ----------- ----------- ----------- Denominator for diluted earnings per share - adjusted weighted average shares and potential shares 2,062,595 2,050,215 2,062,497 2,050,284 ============ =========== ========== =========== Basic earnings (loss) per share $ (.04) $ .15 $ (.03) $ .43 ============ =========== ========== =========== Diluted earnings (loss) per share $ (.04) $ .15 $ (.03) $ .43 ============ =========== ========== ===========
(4) 7 5. The Company has a revolving line of credit with Bank One, Texas, in the amount of $2,500,000. The credit facility matures on January 3, 2001. At March 31, 1999, and on May 4, 1999, the Company had $300,000 outstanding under the facility. Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FORWARD-LOOKING STATEMENTS AND RISK FACTORS Forward-Looking Statements for 1999 and later periods are made in this document. Such statements represent estimates of management based on the Company's historical operating trends, its proved oil and gas reserves and other information currently available to management. The Company cautions that the forward-looking statements provided herein are subject to all the risks and uncertainties incident to the acquisition, development and marketing of, and exploration for oil and gas reserves. These risks include, but are not limited to, oil and natural gas price risk, environmental risks, drilling risk, reserve quantity risk and operations and production risk. For all the above reasons, actual results may vary materially from the forward-looking statements and there is no assurance that the assumptions used are necessarily the most likely to occur. LIQUIDITY AND CAPITAL RESOURCES At March 31, 1999 working capital was $425,156 as compared to $452,270 at September 30, 1998. Cash flow from operating activities for the first six months of fiscal 1999 was $812,882 as compared to $1,797,578 for the first six months of fiscal 1998. This decrease of $984,696 is directly attributable to a decline in oil and gas sales revenue during the fiscal 1999 six months. The decline in oil and gas sales revenues is discussed in detail in "Results of Operations". Capital expenditures on oil and gas activities in the first six months of 1999 amounted to $1,067,185 as compared to $1,337,353 in the first six months of fiscal 1998. This decreased spending on oil and gas property development was mainly a result of the low market price of crude oil. Several oil wells projected to be drilled in the 1999 six month period were postponed until oil prices recover or in some instances, may not be drilled. The Company expects to continue its ongoing business strategy of actively pursuing the development of its oil and gas properties by participating in the drilling of additional wells on these properties. Currently, crude oil market prices are recovering and management expects drilling in the last six months of fiscal 1999, to increase over levels seen in the first six months of fiscal 1999. The Company has historically funded this drilling and other capital expenditures as well as overhead costs and dividend payments from operating cash flow. However, in December 1998, the Company borrowed $300,000 under its bank line of credit to help fund these costs. At March 31, 1999, the Company had remaining projected costs of $1,300,465, for its share of drilling and equipment costs on working interest wells which have been proposed or were in the process of being drilled or completed. The Company's cash flow for the year may be less than the amount needed to fully fund the above drilling obligations, overhead and dividend payments. Thus, the bank line of credit may be utilized, on an as needed basis, to allow the Company to continue its aggressive approach of developing its oil and gas properties. The line of credit and expected cash flow are more than sufficient to meet all expected capital obligations. Future capital expenditure amounts may vary due to many factors, including drilling results, oil and gas prices, industry conditions and acquisition opportunities, among others. A significant acquisition of producing properties could increase capital expenditures greatly and would again be financed by additional debt or possibly debt and equity. (5) 8 RESULTS OF OPERATIONS Revenues decreased for both the three month and six month periods ended march 31,1999, as compared to the same periods in fiscal 1998. The decreases were the result of oil and gas sales revenues decreasing 37% and 29% for the 1999 six month and three month periods, respectively, as compared to the same periods in fiscal 1998. The chart below outlines the Company's production and average sales prices for crude oil and natural gas for the three month and six month periods of fiscal 1999 and 1998: BARRELS AVERAGE MCF AVERAGE SOLD PRICE SOLD PRICE ------- ------- ------- ------- Three months ended 3/31/99 15,185 $ 11.49 456,219 $ 1.68 Three months ended 3/31/98 28,253 $ 14.33 433,206 $ 2.12 Six months ended 3/31/99 34,169 $ 11.90 835,885 $ 1.87 Six months ended 3/31/98 59,865 $ 16.93 875,254 $ 2.42
As shown by the chart both oil production and the average oil sales price decreased for both the three month and six month periods of fiscal 1999, compared to the respective periods in fiscal 1998. Oil sales volumes continued to be adversely affected by the operator of the Dagger Draw Field in New Mexico (the Company's major oil producing field) electing to shut-in those wells due to low crude oil market prices. In late March these wells began being placed back on production, thus, management expects oil production volumes to increase somewhat during the third and fourth fiscal quarter of 1999. Gas sales volumes remained relatively steady in the 1999 periods, as compared to the 1998 periods. Management expects gas sales volumes to increase for the remainder of fiscal 1999, as compared to the first six months, as several new wells continue producing and additional wells come on line. Costs and expenses increased marginally in both 1999 periods as compared to the 1998 periods. The increases were principally due to increased depreciation, depletion, amortization, and impairment costs (DD&A) in the 1999 periods, offset somewhat by decreased lease operating expenses and production taxes in the 1999 periods. The increase DD&A expenses were the result of high DD&A rates on several of the Company's newer wells in fiscal 1999. These new wells are producing initial flush production, which increases the units-of-production DD&A. In addition, DD&A rates were increased on several of the Company's marginal producing wells during the 1999 six month period as these wells are producing at less than expected rates, and may not have reserve quantities which had been expected. Production taxes were lower in the fiscal 1999 periods as these taxes are paid as a percentage of oil and sales revenues. The provision for income taxes for the 1999 periods is at the statutory rate. The rate in 1998 differs from the statutory rate due to tight sands production tax credits and percentage depletion. Net income decreased substantially for both the 1999 periods, as compared to the 1998 periods, due to the factors discussed above. Currently, both oil and natural gas prices have increased over the prices seen in the first six months of fiscal 1999. In addition, both oil and gas sales volumes are expected to increase in the last six months of fiscal 1999, thus, financial results for the last half of fiscal 1999 should improve as compared to the first half of fiscal 1999. Should additional exploratory drilling prospects result in non-productive wells which would increase exploration costs, and/or the market price of oil or natural gas decline, expected earnings would be negatively impacted. YEAR 2000 ISSUES Much of the computer software in use today may not be able to accurately process data beyond the year 1999. The majority of computer systems process data using two digits for the year of transaction, rather than the full four digits. This may cause many systems to be unable to accurately process year 2000 transactions. The Company has completed its assessment of both its computer ("IT systems") and operational equipment ("non-IT systems") as of June 30, 1998. The Company has replaced its computer system hardware with new hardware which has operating systems that are represented as being 2000 compliant. The Company's software supplier is in the process of revising software licensed by the Company with software represented to be year 2000 compliant. The system software reprogramming is expected to be complete in mid 1999 with installation and testing by July 1999. The Company has no non-IT systems which are expected to be impacted in any material manner by year 2000. (6) 9 The cost of replacement of the Company's IT systems noted above was less than $25,000. Cost of the year 2000 compliant system software will be included in the Company's standard annual license fee. Other costs to access the year 2000 matter or become compliant therewith are not expected to be significant. Should any of the operators of the properties in which the Company has an interest, purchasers who buy oil and gas from the Company's properties or financial institutions ("External Agents") used by the Company not properly address the year 2000 matter, there could be some delay in the Company receiving payment for the sale of oil and gas. Should this occur, the Company may be required to borrow additional amounts on its available line of credit, thus incurring additional interest expense over that otherwise anticipated. However, the Company does not expect the year 2000 will have a material impact on its financial position or results of operations. The Company has no systems which directly interface with External Agents. PART II. OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders (a) The annual meeting of shareholders was held on February 26, 1999. (b) Three directors were elected for three year terms at the meeting. Also, ratification of the selection of Ernst & Young LLP as independent auditors for the Company was voted upon. The directors elected and the results of voting were as follows: Shareholders -------------------------------- For Against Withheld Directors --- ------- -------- - --------- HW Peace II 806 22 Robert A. Reece 805 23 Jerry L. Smith 808 20 Auditors - -------- Ernst & Young LLP 801 7 19 Item 5. Other Information (a) On February 26, 1999, the Company's Board of Directors approved five proposals to (1) amend the Company's duration from fifty years to perpetuity; (2) amend the Company's Articles of Incorporation to increase the number of authorized shares of Class A Common Stock from 1,000,000 shares to 6,000,000 shares; (3) effect a 3-for-1 stock split of the outstanding Class A Common Stock and a corresponding reduction of the par value per share from $.10 to $.03 a; (4) adopt amendments to the Articles of Incorporation and Bylaws to change voting rights from one vote per shareholder to one vote per share; and (5) amend the Articles of Incorporation to provide that generally any merger, consolidation, liquidation or dissolution of the Company or sale of substantially all of the assets of the Company require the affirmative vote of the holders of 66 2/3% or more of the Company's outstanding Class A Common Stock. On May 7, 1999, these proposals were put forth to a vote of the shareholders, for which a majority of the shareholders voted in favor of each proposal, causing these proposals to become effective on such date. The Class A Common Stock split will be effected in the form of a stock dividend to be distributed on June 1, 1999, to shareholders of record on May 7, 1999. (7) 10 The Results of Voting were as Follows:
Shareholders --------------------------------------------------------------------- For Against Withheld Broker Non-Votes ----- ------- -------- ---------------- Proposal 1. 1,364 16 30 155 Proposal 2. 1,349 33 28 151 Proposal 3. 1,348 39 25 151 Proposal 4. 1,264 119 27 152 Proposal 5. 1,335 49 29 151
Item 6. EXHIBITS AND REPORT ON FORM 8-K (a) Exhibits - Exhibit 3(i) -- Certificate of Amendment to Articles of Incorporation - Exhibit 27 -- Financial Date Schedule (b) FORM 8-K dated February 26, 1999, disclosing board of directors approval of proposals referred to in Item 5. (a) herein. 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 May 14, 1999 /s/ H W PEACE II - ------------------ -------------------------------------- Date H W Peace II, President and Chief Executive Officer May 14, 1999 /s/ MICHAEL C. COFFMAN - ------------------ -------------------------------------- Date Michael C. Coffman, Vice President, Chief Financial Officer and Secretary and Treasurer (8) 11 EXHIBIT INDEX EXHIBIT NUMBER DESCRIPTION - ------- ----------- 3(i) Certificate of Amendment to Articles of Incorporation 27 Financial Data Schedule EX-3.(I) 2 CERTIFICATE OF AMENDMENT TO ARTICLES OF INCORP. 1 EXHIBIT 3(i) Certificate of Amendment to Articles of Incorporation of Panhandle Royalty Company We, the undersigned officers of Panhandle Royalty Company, an Oklahoma corporation (the "Corporation"), in order to effect an amendment to the Articles of Incorporation of the Corporation, hereby certify as follows: 1. The amendment set forth herein was duly adopted in accordance with the procedures set forth in Section 1077 of the Oklahoma General Corporation Act. 2. The Articles of Incorporation of the Corporation is hereby amended as follows: (i) ARTICLE THREE of the Articles of Incorporation of the Corporation is amended and restated in its entirety to read as follows: The duration of this corporation is perpetual. (ii) ARTICLE FIVE of the Articles of Incorporation is amended and restated in its entirety to read as follows: The total number of shares of capital stock which the Corporation shall have authority to issue is six million five hundred shares (6,000,500), divided into six million (6,000,000) shares of Class A Common Stock of the par value of three and one-third cents (3 1/3 cents) per share and five hundred (500) shares of Class B Common Stock of the par value of one and no/100 Dollars($1.00) per share. With respect to all matters to which the holders of Class A Common Stock are entitled to vote, each holder of Class A Common Stock shall be entitled to vote for each share of Class A Common Stock that is registered in such shareholder's name on the applicable record date, except as may be otherwise required by law. Class B Common Stock shall be nonvoting stock of the corporation. (iii) A new ARTICLE NINE shall be added to the Articles of Incorporation to read as follows: 2 No merger, consolidation, liquidation or dissolution of the corporation, nor any action that would result in the same or other disposition of all or substantially all of the assets of the corporation shall be valid unless first approved by the affirmative vote of the holders of at least sixty-six and two-thirds percent (66 2/3%) of the outstanding shares of capital stock then entitled to vote on such matters; provided, however, that if any such action has been approved prior to the vote by the shareholders by a two-thirds of the corporation's whole Board, the affirmative vote of the holders of a majority of the outstanding shares of capital stock then entitled to vote on such matters shall be required, to the extent such shareholder approval is otherwise required by the Oklahoma General Corporation Act. The provisions set forth in this Article may not be repealed, altered or amended, in any respect whatsoever, unless such repeal, alteration or amendment is approved by either (a) the affirmative vote of holders of sixty-six and two-thirds percent (66 2/3%) of the shares of capital stock of the corporation then issued and outstanding and entitled to vote on such matters, or (b) the affirmative vote of two-thirds of the whole Board of the corporation and the affirmative vote of holders of a majority of the shares of the corporation's capital stock then issued and outstanding and entitled to vote on such matters. 3. The remaining paragraphs of Articles of Incorporation shall remain in full force and effect and shall not be affected by this amendment. IN WITNESS WHEREOF, the undersigned officers have signed this Certificate of Amendment on this 7th day of May, 1999. PANHANDLE ROYALTY COMPANY an Oklahoma corporation BY: /s/ HW PEACE II ------------------------ , President ATTEST: /s/ MICHAEL C. COFFMAN - ------------------------ , Secretary EX-27 3 FINANCIAL DATA SCHEDULE
5 6-MOS SEP-30-1999 OCT-01-1998 MAR-31-1999 91,649 0 911,854 0 0 1,013,659 29,065,874 17,336,409 12,850,840 558,503 0 0 0 68,251 10,392,086 12,850,840 1,968,815 1,984,143 409,637 1,679,264 0 0 8,890 (113,648) (44,000) (69,648) 0 0 0 (69,648) (0.03) (0.03)
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