SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
DATE OF REPORT: (Date of Earliest Event Reported) AUGUST 12, 2003
PANHANDLE ROYALTY COMPANY
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(Exact name of registrant as specified in its charter)
OKLAHOMA 0-9116 73-1055775
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(State of Incorporation) (Commission File) (I.R.S. Employer
Number Identification No.)
GRAND CENTRE SUITE 210, 5400 NORTH GRAND BLVD., OKLAHOMA CITY, OK 73112
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(Address of principal executive offices)
Registrant's telephone number including area code: (405) 948-1560
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ITEM 12. REGULATION FD DISCLOSURE
This Form 8-K is filed pursuant to Item 12 and contains the
Company's earnings release for the third quarter of fiscal 2003,
which was released on August 12, 2003.
- PANHANDLE ROYALTY COMPANY (NASDAQ-PANRA) completed its best fiscal
third quarter in Company history on June 30, 2003. This quarter was
also the second best of all quarters in Company history, exceeded only
by this fiscal year's second quarter. Total quarterly revenue of
$5,662,139 provided a net income after provision for income tax of
$1,538,583 or 73 cents per share. These were increases of 49% and 239 %
respectively over last year's quarter. Net gas sales for the quarter
were 999,246 MCF at an average price of $4.77 per MCF. Net oil sales
for the quarter were 27,864 barrels at an average price of $27.79 per
barrel. By converting oil to gas equivalent total production was
1,166,430 MCFE. Gas volume and average gas price were increases of
15.6% and 49% respectively. Oil volume was a 7.9% decrease while
average oil price climbed 8.8%.
Expenses for the quarter, before income taxes, were $3,468,556, an
increase of 9.4% over last year's quarter. Cash flow from operating
activity was $4,535,305, an increase of 182% over last year's quarter.
Total assets at $50,201,219, were an increase of 10.5% over the fiscal
2002 quarter. Similarly, shareholders equity increased 26% to
$21,065,742. A regular 7 cents per share dividend was paid during the
quarter.
H W PEACE II, COMPANY PRESIDENT AND CEO STATED:
"It was an increase in oil and gas price coupled with a hefty
increase in natural gas production compared to last year's quarter that
more than offset a small decrease in oil production to provide
Panhandle its best third quarter in history. Oil price continues to
remain high because of lower than normal national inventories due to
the Iraq conflict and earlier instability in producing countries such
as Venezuela and Nigeria. Lower Company oil production was the result
of fewer new oil wells being drilled and the natural decline of older
producers. Year over year quarterly gas volume increases are due to an
increase in the number of new gas wells with higher initial production
rates and the flattening of the production decline in older wells."
"Through June 30th, Panhandle had received proposals to
participate or other indications that 254 working interest wells would
be commenced in fiscal 2003. This is essentially the same number as
last year; however, we have had 104 completed to date, an increase of
14 over last year. Seventy-seven of these working interest completions
are gas wells. There were thirty-nine other working interest wells
either drilling or testing for completion. Additionally, there were 189
wells permitted, drilling, testing or completed where Panhandle has
only a royalty interest. A total of 91 of these royalty interest wells
have been completed; an increase of 23 over last year. Success rate to
date for all wells completed is 89%. Net well costs paid to date are
approximately 7.5 million dollars. Cash revenue has not yet been
received from 54% of the completions."
"We are receiving an increasing number of well proposals with the
greatest number being in the Anadarko basin of Western Oklahoma,
particularly in Beckham and Roger Mills counties, for carbonate wash
reservoirs of Pennsylvanian geologic age and for Pennsylvanian age
Cleveland sand bar reservoirs. The good natural gas price is driving
this increased activity and has in nine months given us our best year
in history. Revenue and net income already exceed last year, our
previous best full year. Well costs, though rising, still remain in the
reasonable range compared to 2001. We are investing a substantial
amount of our cash flow into new drilling and the remainder to pay down
debt in an orderly manner. Industry economists and forecasters continue
to predict increasing demand for natural gas. The location of our fee
minerals in gas prone producing areas should allow Panhandle to
continue taking more favorable advantage of those holdings to establish
greater gas reserves in the future. The Wood Oil Company acquisition in
October 2001 is now having a significant positive impact upon our
increased drilling, production and revenue."
THREE MONTHS ENDED MARCH 31, SIX MONTHS ENDED MARCH 31,
2003 2002 2003 2002
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Revenues $ 5,662,139 $ 3,792,994 $17,106,826 $ 9,869,379
Income before Cumulative Effect
of Accounting Change $ 1,538,583 $ 453,684 $ 4,464,238 $ 89,705
Cumulative Effect of Accounting Change,
Net of Taxes of $28,500 (1) $ -- $ -- $ 46,500 $ --
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Net Income $ 1,538,583 $ 453,684 $ 4,510,738 $ 89,705
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Average Shares Outstanding - Diluted 2,104,599 2,093,093 2,102,278 2,092,343
Diluted Earnings per Share:
Income before Cumulative Effect
of Accounting Change $ .73 $ .21 $ 2.12 $ .04
Cumulative Effect
of Accounting Change (1) $ -- $ -- $ .02 $ --
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Net Income $ .73 $ .21 $ 2.14 $ .04
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Barrels Sold 27,864 30,238 85,086 96,679
Average Sales Price per Barrel $ 27.79 $ 25.54 $ 29.32 $ 21.55
MCF Sold 999,246 864,108 2,956,157 2,879,901
Average Sales Price per MCF $ 4.77 $ 3.20 $ 4.86 $ 2.55
(1) Represents the income effect of the adoption, on October 1, 2002,
of SFAS No. 143, Accounting for Asset Retirement Obligations
Panhandle Royalty Company (NASDAQ-PANRA) is a publicly held diversified mineral
holding company engaged in the acquisition, ownership, management and
development of its fee minerals. It actively participates in the exploration,
drilling, production and acquisition of hydrocarbons on internally and
externally generated prospects. Its stock is traded on the NASDAQ small cap
stock market under the symbol PANRA. The Company's office is located in Oklahoma
City while its mineral holdings and production are situated in Oklahoma, New
Mexico, Texas and 20 other states.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PANHANDLE ROYALTY COMPANY
/s/ Michael C. Coffman
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DATE: August 12, 2003 Michael C. Coffman, Vice President
Chief Financial Officer,
Secretary & Treasurer