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NYSE: PHX Annual Shareholder Meeting March 3 rd , 2011 The Waterford Marriott Oklahoma City, OK
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NYSE: PHX
Annual Shareholder MeetingMarch 3rd, 2011
The Waterford MarriottOklahoma City, OK
Annual Shareholder Meeting, March 3, 2011 2
Forward-Looking Statements and Risk Factors – This report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements include current expectations or forecasts of future events. They may include estimates of oil and gas reserves, expected oil and gas production and future expenses, projections of future oil and gas prices, planned capital expenditures for drilling, leasehold acquisitions and seismic data, statements concerning anticipated cash flow and liquidity and Panhandle’s strategy and other plans and objectives for future operations. Although Panhandle believes the expectations reflected in these and other forward-looking statements are reasonable, we can give no assurance they will prove to be correct. They can be affected by inaccurate assumptions or by known or unknown risks and uncertainties. Factors that could cause actual results to differ materially from expected results are described under “Risk Factors” in Part 1, Item 1 of Panhandle’s 2010 Form 10-K filed with the Securities and Exchange Commission. These “Risk Factors” include the volatility of oil and gas prices; Panhandle’s ability to compete effectively against strong independent oil and gas companies and majors; the availability of capital on an economic basis to fund reserve replacement costs; Panhandle’s ability to replace reserves and sustain production; uncertainties inherent in estimating quantities of oil and gas reserves and projecting future rates of production and the amount and timing of development expenditures; uncertainties in evaluating oil and gas reserves; unsuccessful exploration and development drilling; declines in the values of our oil and gas properties resulting in write-downs; the negative impact lower oil and gas prices could have on our ability to borrow; and drilling and operating risks.
Do not place undue reliance on these forward-looking statements, which speak only as of the date of this release, and Panhandle undertakes no obligation to update this information. Panhandle urges you to carefully review and consider the disclosures made in this presentation and Panhandle’s filings with the Securities and Exchange Commission that attempt to advise interested parties of the risks and factors that may affect Panhandle’s business.
Annual Shareholder Meeting, March 3, 2011 3
Condensed Balance Sheet September 30, 2010Current assets $17,358,605Property and equipment 218,201,797Less accumulated DD&A (131,983,249)Net property and equipment 86,218,548
Other 1,547,606
Total assets $105,124,839Current liabilities $7,259,824Long-term debt 0Deferred income taxes 22,552,650Asset retirement obligation 1,730,369Shareholders equity: Stock and paid in capital 1,956,889 Retained earnings 73,599,733 Deferred directors’ compensation 2,222,127 Treasury stock (4,196,753)
Total liabilities and equity $105,124,839
Annual Shareholder Meeting, March 3, 2011 4
Year Ended September 30,
2010 2009
Revenue $51,938,416 $37,272,614
Net income (loss) $11,419,690 $(2,405,021)
Earnings (loss) per share $1.36 $(.29)
Net cash provided by operating activities
$27,806,475 $37,710,606
Capital expenditures $11,308,506 $39,915,051
Mcfe produced 8,916,616 9,878,948
Average Mcfe sales price $4.94 $3.79
Long-term debt $0 $10,384,722
Condensed Balance Sheet December 31, 2010Current assets $14,153,555 Property and equipment 222,885,115 Less accumulated DD&A (135,304,688)Net property and equipment 87,580,427 Other 1,587,849 Total assets $103,321,831
Current liabilities $5,170,332Long-term debt 0Deferred income taxes 22,995,650 Asset retirement obligation 1,733,805 Shareholders equity: Stock and paid in capital 1,968,917 Retained earnings 73,863,253 Deferred directors’ compensation 2,363,440 Treasury stock (4,773,566)
Total liabilities and equity $103,321,831
Annual Shareholder Meeting, March 3, 2011 5
Annual Shareholder Meeting, March 3, 2011 6
First Quarter EndedDecember 31,
2010 2009
Revenue $9,901,548 $12,321,352
Net income (loss) $1,426,849 $1,708,378
Earnings (loss) per share $.17 $.20
Net cash provided by operating activities
$8,579,664 $4,822,897
Capital expenditures $6,570,808 $2,658,662
Mcfe produced 2,208,218 2,278,133
Average Mcfe sales price $4.41 $4.75
Long-term debt $0 $8,522,231
Annual Shareholder Meeting, March 3, 2011 7
$80 million credit facility with Oklahoma banks, maturity November 30, 2014
Current outstanding balance on credit facility; $0 Paid off debt with cash flow (no equity issuance)$35 million borrowing base
•Natural Gas Swaps
Pipeline Basis SwapsJanuary - December
20112012
270,000 mmbtu 190,000 mmbtu
$.29$.29
Contract Period Volume/Month Average NYMEX Price
April – October
2011 200,000 mmbtu $4.69
Annual Shareholder Meeting, March 3, 2011 8
0
5
10
15
20
25
30
35
40
Annual Shareholder Meeting, March 3, 2011 9
Total U.S. mineral ownership of ~255,000 acres Superior investment economics
Participation as a working interest owner on our mineral acreage generates superior economics. We retain our proportionate share of royalty revenue.
Focused development of our high quality asset base in four ofthe nation’s premier resource plays
Anadarko Basin ‘Cana’ Woodford Shale Arkansas Fayetteville Shale Southeastern Oklahoma Woodford Shale Anadarko Basin horizontal Granite/Atoka Wash
Recent development of western Oklahoma oil and natural gas liquids rich horizontal Cleveland, Hogshooter, Marmaton, Tonkawa and Mississippian
Annual Shareholder Meeting, March 3, 2011 10
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
Annual Shareholder Meeting, March 3, 2011 11
Exceptional Reserve Growth
• Record proved reserves at year-end 2010 Fiscal year-end 2010 proved reserves increased to 103.7 Bcfe A 74% increase over 2009
• Record 3P (proved, probable and possible) reserves at year-end 2010 Fiscal year-end 2010 3P reserves increased to 390.9 Bcfe A 32.6% increase over 2009
• Record year-end 2010 inventory of undeveloped locations Over 4,150 undeveloped locations
• The YE 2010 proved reserve appraisal was performed by DeGolyer and MacNaughton (PHX initial report under new SEC reserve reporting rules)
Annual Shareholder Meeting, March 3, 2011 12
Annual Shareholder Meeting, March 3, 2011
13
Annual Shareholder Meeting, March 3, 2011 14
Proved Reserve GrowthProved Reserve Growth
27.7 28.735.5
41.350.3
62.55.6
12.89.2
41.2
6.4
3.6
0.0
20.0
40.0
60.0
80.0
100.0
120.0
2005 2006 2007 2008 2009 2010
Pro
ved
Res
erv
es (
Bcf
e)
Proved Developed Reserves Proved Undeveloped Reserves
Annual Shareholder Meeting, March 3, 2011 15
86.1 87.4 87.1
75.0
147.9
200.1
0.0
50.0
100.0
150.0
200.0
250.0
300.0
350.0
400.0
2008 2009 2010
Pro
ved
/Pos
sib
le R
eser
ves,
(B
cfe)
Probable Possible
Annual Shareholder Meeting, March 3, 2011 16
Annual Shareholder Meeting, March 3, 2011 17
Diverse mineral ownership across the play Interest (WI or RI) in 21% of all producing wells in the play PHX wells primarily operated by Newfield, Devon and BP Current production 7.6 Mmcfe per day Reserves
Proved – 31.9 Bcfe (30.8% of total) Probable – 54.9 Bcfe (63.0% of total) Possible – 52.4 Bcfe (26.2% of total)
Average undeveloped reserves per well 3.2 Bcfe per location with 8 locations per section
Mineral ownership generates superior returns
Annual Shareholder Meeting, March 3, 2011 18
Current Development Area
6,310 net PHX acres
144 PHX producing working interest wells w/6.1% average NRI
48 PHX producing royalty interest wells
3.6% average NRI in 210 sections
1,214 Undeveloped locations
759 net PHX acres per million shares outstanding
Annual Shareholder Meeting, March 3, 2011 19
Annual Shareholder Meeting, March 3, 2011 20
Diverse mineral ownership across the play
Interest (WI or RI) in 16% of all producing wells in the play
PHX wells primarily operated by Southwestern Energy and Chesapeake
Current production 5.2 Mmcfe per day
Reserves Proved – 24.8 Bcfe (23.9% of total) Probable – 14.0 Bcfe (16.1% of total) Possible – 43.7 Bcfe (21.8% of total)
Average undeveloped reserves per well2.1 Bcfe per location with 8 locations per section
Mineral ownership generates superior returns
Annual Shareholder Meeting, March 3, 2011 21
Current Development Area
2.2% average NRI in 249 sections
1,735 Undeveloped locations
879 net PHX acres per million shares outstanding
Current Development Area
7,308 net PHX acres
114 PHX producing working interest wells w/4.3% average NRI
308 PHX producing royalty interest wells
Annual Shareholder Meeting, March 3, 2011 22
Annual Shareholder Meeting, March 3, 2011 23
Diverse mineral ownership across initial playand expansion areas
Interest (WI or RI) in 18% of all producing wells in the play
PHX wells primarily operated by Devon and Cimarex
Current production 1.7 Mmcfe per day
Reserves Proved – 14.9 Bcfe (14.4% of total) Probable – 16.4 Bcfe (18.8% of total) Possible – 95.3 Bcfe (47.6% of total)
● Average undeveloped reserves per well 4.3 Bcfe per location with 8 locations per section
● Mineral ownership generates superior returns
Annual Shareholder Meeting, March 3, 2011 24
Current Development Area
3,545 net PHX acres
15 PHX producing working interest wells w/5.2% average NRI
4 PHX producing royalty interest wells
2.8% average NRI in 135 sections
1,063 Undeveloped locations
427 net PHX acresper million shares outstanding
Annual Shareholder Meeting, March 3, 2011 25
Annual Shareholder Meeting, March 3, 2011 26
Potential Development
Area
10,440 net PHX acres
3.4% average NRI in 355 sections
1,256 net PHX acres per million shares outstanding
Reserve Study Area
500 net PHX Acres
2.5% average NRI in 30 sections
~ 100 Probable/Possible Undeveloped locations
Annual Shareholder Meeting, March 3, 2011 27
Annual Shareholder Meeting, March 3, 2011 28
Annual Shareholder Meeting, March 3, 2011 29
● Joiner City Prospect
● Generated by PHX in 2007
● Woodford shale depth of ~ 9,500’
● 100+ section total prospect area
● 2,700 net PHX leasehold acres
● 7.3% average W.I. in 58 sections
● Initial horizontal well is currently recovering fracture treatmentload water
