PHX LISTED NYSE - Panhandle Oil and Gas Inc. · • Panhandle leased out 4,050 contiguous net mineral acres to Element Petroleum on the northwest shelf of the Midland Basin in Cochran

PHX LISTED NYSE®

Panhandle Oil and Gas Inc.

FORWARD-LOOKING STATEMENTS AND RISK FACTORS

This presentation contains projections and other forward-looking statements

within the meaning of Section 27A of the U.S. Securities Act of 1933 and

Section 21E of the U.S. Securities Exchange Act of 1934. These projections

and statements reflect the Company’s current views with respect to future

events and financial performance. No assurances can be given, however,

that these events will occur or that these projections will be achieved, and

actual results could differ materially from those projected as a result of

certain factors. A discussion of these factors is included in the Company's

periodic reports filed with the U.S. Securities and Exchange Commission.

2 NobleCon13 Investor Conference, Boca Raton, FL January 30, 2017

NYSE:PHX

Panhandle Oil and Gas Inc. – Overview

COMPANY DESCRIPTION

• Engaged in oil and gas exploration and production

• Founded in 1926 as a Cooperative Royalty Association

• Went public in 1979 as a C-corporation

• Market Cap - $370 million (as of 1/13/17)

• Current Dividend Yield is 0.72%

• Dividend paid for over 50 consecutive years

• 16.8 million shares outstanding, average trading volume ~36,000 shares per day

• No secondary offerings in Company history

3

NobleCon13 Investor Conference, Boca Raton, FL January 30, 2017 NYSE:PHX


COMPANY OPERATIONS

The Company owns interest in 6,200 gross producing wells

2,200 wells working interest; the majority also have royalty interest associated with our mineral acreage ownership

4,000 wells with royalty interest only

Revenues

75% from working interest

25% from royalty interest

Production mix:

34% Oil and NGL

66% natural gas

4



COMPANY RESERVES

Year-end 2016 proven reserves 124 Bcfe, 81.4 Bcfe (67%) proven developed

4,800+ gross 3-P (proven, probable and possible) undeveloped

locations, primarily in cores of resource plays amounting to 589 Bcfe of

net undeveloped reserves

2014 – 2016 downturn: impairment charge only 8% of our 2014 book value and 5% of our current market capitalization, is a reflection of the quality of our assets

5



COMPANY STRATEGY

• Our investment philosophy is based on generating reasonable returns

for our shareholders in relatively low risk investments

• Participate with a working interest in wells that we believe will earn

reasonable risk-weighted rates of return

• Otherwise, lease our minerals at the best available up-front cash bonus

and royalty percentage

6

NobleCon13 Investor Conference, Boca Raton, FL January 30, 2017

NYSE:PHX



MINERAL AND LEASEHOLD ASSETS

The Company’s foundation is 255,000 net acres of perpetually-owned mineral rights

56,500 net mineral acres are producing

13,300 net mineral acres are leased

185,200 net mineral acres are open

Estimated market value of our undeveloped minerals (leased and open) ~$120 million

Mineral acreage lease bonus proceeds

$8.0 million in FY 2016

$1.9 million YTD in FY 2017

Also own 19,400 net acres of leasehold held by production

7

NYSE:PHX


8


0

20

40

60

80

100

120

OK NM TX ND AR Leasehold

Ne

t A

cr

es

(T

ho

us

an

ds

)

Significant Mineral Acreage Holdings

NYSE:PHX





Material mineral and/or leasehold positions in several top resource plays including:

STACK/CANA/SCOOP, southeastern Oklahoma (Arkoma) Woodford Shale

Eagle Ford Shale

Fayetteville Shale

Potential high impact projects are located in the Permian Basin

Cochran County Texas San Andres project operated by Element Petroleum

Andrews & Winkler Counties Texas Woodford Shale project operated by QEP Resources

9

NYSE:PHX

STACK, CANA and SCOOP Plays


10

SCOOP Woodford/Springer

Continental, Newfield, Marathon, XTO

Cana Woodford

Devon, Cimarex, Continental

Stack Meramec/ Woodford

Devon, Continental, Newfield, Marathon

NYSE:PHX

PHX Mineral Holdings

STACK, CANA and SCOOP Plays – PHX Operations

Diverse mineral and leasehold ownership across several plays

PHX wells primarily operated by Devon, Cimarex, Continental, Newfield and XTO

Current production 3.9 Mmcfe per day

YE 2016 Reserves

Proved – 16.8 Bcfe (13.5% of total)

Probable – 121.1 Bcfe (36% of total)

Possible – 62.8 Bcfe (29% of total)

1,367 undeveloped locations identified

● Current Operations

Elected to participate in six Cimarex operated STACK/CANA Woodford wells

17.5% working interest and 16.25% NRI

The first two wells started drilling in mid-December 2016

All six wells will be drilled before completion operations begin

Production from the six wells is anticipated to begin in the second quarter of 2017

11


Southeastern Oklahoma Woodford Shale


12

Play Outline

Newfield, BP, XTO

NYSE:PHX

PHX Mineral Holdings

Southeastern Oklahoma Woodford Shale – PHX Operations

13


Diverse mineral and leasehold ownership across the play

PHX wells primarily operated by Newfield, BP and XTO


YE 2016 Reserves

Proved – 25.8 Bcfe (21% of total)




Current Operations

We have elected to participate in eight wells

Average 20% WI and 27.4% NRI, operated by BP

Five wells have been drilled and two wells are drilling

The first four wells are being completed and expected to begin producing first quarter of 2017

The remaining 4 wells are projected to begin producing early second quarter of 2017

NYSE:PHX

Eagle Ford Locator Map


14

PHX

NYSE:PHX

PHX Eagle Ford Shale Leasehold Acreage and Active Wells


15

NYSE:PHX

PHX Leasehold Acreage

Eagle Ford Shale – PHX Operations


16

Current net production 349 Boe per day from 71 producing wells

YE 2016 Reserves Proved – 32.6 Bcfe (26.3% of total reserves)

4,255 Mbo (79% Crude Oil)

615 MbNGL (11% NGL)

3.3 Bcf (10% Natural Gas) 106 additional undeveloped Eagle Ford locations

Current Operations

One DUC well was completed in July, 2016

Well was fracture stimulated with enhanced techniques including the use of

significantly more sand and improved diversion

Produced an average of 1,010 Boe per day (90% oil) for the first 30 days of

production, 849 Boe per day for the first 60 days and 769 Boe per day for the first 90

days*

Six month cumulative production to date is ~110,000 Boe

Operator has commenced a ten well drilling program on our acreage

The first two wells are projected to begin producing in April 2017

The next four wells are expected to begin producing in the third quarter 2017

Remaining four wells should be on sales in the fourth quarter 2017.

* rates adjusted for downtime

NYSE:PHX

Permian Basin Andrews & Winkler Counties Woodford Shale Project

17


Permian Basin Andrews & Winkler Counties Woodford Shale Project

• Panhandle leased out ~2,440 contiguous net mineral acres on the Central Basin Uplift in Andrews and Winkler Counties, Texas

• The lease covers a 43.6 square mile area

• Generated $1.2 million in lease bonus revenues to PHX

• Terms to Company

• Panhandle will receive 25% of all production proportionately reduced, in the form of royalty payments from the leased property

• Panhandle has the right to buy back the lease in each unit as initial unit wells are proposed, up to a maximum working interest of 10%

• With full participation (assuming 640 acre units), Panhandle would have a 7% working interest and a 7.5% net revenue interest in all the wells drilled on the 43.6 square mile block

• Current Operations

• The first well has been drilled and completed; started producing in March, 2016 and has cumulative production of ~26,100 Bo + 27,850 Mcf from the Woodford Shale

• The operator is drilling a second 2 mile lateral Woodford Shale well on the block

18


Permian Basin Cochran Co. San Andres Project

19


Permian Basin Cochran Co. San Andres Project

• Panhandle leased out 4,050 contiguous net mineral acres to Element Petroleum on the northwest shelf of the Midland Basin in Cochran Co. Texas

• The lease covers a 34.5 square mile area

• The operator intends to drill 1.5 mile horizontal San Andres wells at ~5,000’ TVD

• The Company generated $2.1 million in lease bonus

• Terms to Company

• Panhandle will receive 25% of all production proportionately reduced , in the form of royalty payments from the leased property

• Panhandle has the right to buy back the lease in each unit as initial unit wells are proposed up to a maximum working interest of 10%

• With full participation Panhandle would have a 10% working interest and a 12.1% net revenue interest in all wells drilled on the 34.5 square mile area

• Current Operations

• The operator, Element, has commenced evaluating the acreage with 9 San Andres test wells

• Four vertical pilot hole wells have been drilled and cored and a fifth is drilling

• Element has also drilled one SWD well and two more are planned

• Lateral drilling and completion in the pilot wells is planned to begin in the first quarter of 2017

20


Panhandle Oil and Gas Inc. – Risk Management

OPERATIONAL RISK

• Mineral ownership is perpetual, no drilling required to hold land assets

Operators are generally large independents who are major resource play developers

PHX leverages the operators experience, knowledge and resources

We chose which wells to participate in with a working interest

We do not pay for geoscience (geologic and geophysical), engineering and land costs

We pay drilling, completion and operating costs only for wells in which we participate with a working interest

BALANCE SHEET

Total debt $44.5 million as of 9/30/16 (2.24 x TTM EBITDA)

Borrowing base $80 million (December 2016 redetermination)

21


Panhandle Oil and Gas Inc. – Risk Management

CURRENT HEDGE POSITION

22


NYSE:PHX

Period Product Volume Mcf/Bbl Swap Price

Collar Average Floor Price

Collar Average Ceiling Price

2017 Natural Gas 3,740,000 $2.87 $3.49

2017 Natural Gas 2,135,000 $3.21

2018 Natural Gas 750,000 $3.44 $3.95

2018 Natural Gas 375,000 $3.63

2017 Crude Oil 183,000 $49.18 $56.73

2017 Crude Oil 69,000 $53.89

“THE MINERAL ACREAGE ADVANTAGE” Economic Impact of Working Interest Participation on Mineral Acres


23

$0.88

$0.66

24%

44%

0

5

10

15

20

25

30

35

40

45

50

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

Finding Cost, $/Mcfe Rate of Return, % (BTAX)

Typical W.I. Owner Typical W.I. OwnerPHX PHX

ASSUMPTIONS:

Reserves 8,110 Mmcf + 611 Mbngl + 79 Mbo

Gross well cost - $6,800,000

Wellhead prices – 12/12/16 NYMEX Strip,

adjusted for basis

RESULTS: MINERAL VS LEASEHOLD OWNERSHIP

25% LOWER FINDING COST

83% HIGHER RATE OF RETURN

This advantage applies to all plays in which

Panhandle drills on owned mineral acres

Example:

STACK/CANA Woodford Shale Well

NYSE:PHX

25% Lower

83% Higher

W.I. NRI

PHX ownership 5% 5%

Typical ownership 5% 3.75%

Financial Highlights – 2016 Fiscal Year

September 30th Fiscal Year End

2016 2015


24

Oil, NGL and natural gas sales $31,411,353 $54,533,914

Lease bonus $7,735,785 $2,010,395

Total revenue $39,063,183 $70,882,093

Net income (loss) ($10,286,884) $9,321,341

Earnings per share ($0.61) $0.56

TTM EBITDA $19,835,571 $44,538,154

Net cash provided by operating activities $14,589,717 $45,571,014

Capital expenditures - drilling $3,986,235 $30,800,625

Long-term debt $44,500,000 $65,000,000

Mcfe sold 11,496,249 13,729,733

Average Mcfe sales price $2.73 $3.97

NYSE:PHX

CONDENSED BALANCE SHEET SEPTEMBER 30, 2016

Current assets $6,572,253

Net property and equipment 191,405,651

Other 157,322

Total assets $198,135,226

Current liabilities $4,498,452

Long-term debt 44,500,000

Deferred income taxes 30,986,907

Asset retirement obligation, other 2,958,048

Shareholders equity 115,191,819

Total liabilities and equity $198,135,226

Financial Highlights – 2016 Fiscal Year End

25


PHX Stock Price History

26


0

5

10

15

20

25

30

12.31.2007 12.31.2008 12.31.2009 12.31.2010 12.31.2011 12.31.2012 12.31.2013 12.31.2014 12.31.2015 12.31.2016

Net of Dividends

NYSE:PHX

3P Undeveloped Reserves Per Debt Adjusted Share

30.38

26.3622.3724.96

20.82

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

2012 2013 2014 2015 2016

Debt Adjusted Shares are Based on Fiscal Year-End Debt and Stock Price

All Years Share Count-Adjusted for Stock Splits

Mc

fe/S

ha

re

Reserves per Share


27

NYSE:PHX

Long Term Growth Strategy

28


PANHANDLE’S PRIMARY GOAL IS THE CREATION OF SHAREHOLDER VALUE OVER THE LONG TERM

Wisely invest in wells drilled on our mineral and leasehold acreage

Acquire additional assets that are accretive to share value

Maximize royalty and lease bonus values when not participating in drilling on our mineral holdings

Place hedges to protect from commodity price downside

Maintain a conservative balance sheet to be prepared for volatility in oil and gas pricing and to also take advantage of the Company's quality investment opportunities

NYSE:PHX

APPENDIX

Appendix Slides

Arkansas Fayetteville Shale

30 NobleCon13 Investor Conference, Boca Raton, FL January 30, 2017

Diverse mineral and/or leasehold ownership across the play

PHX wells primarily operated by Southwestern Energy


YE 2016 Reserves

Proved – 25.5 Bcfe (21% of total)




Southwestern has one rig drilling in the play

NYSE:PHX

Arkansas Fayetteville Shale

NobleCon13 Investor Conference, Boca Raton, FL January 30, 2017 31

NYSE:PHX

Quarterly Production

32


0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

4,500,000

3.3

1.0

8

6.3

0.0

8

9.3

0.0

8

12.3

1.0

8

3.3

1.0

9

6.3

0.0

9

9.3

0.0

9

12.3

1.0

9

3.3

1.1

0

6.3

0.1

0

9.3

0.1

0

12.3

1.1

0

3.3

1.1

1

6.3

0.1

1

9.3

0.1

1

12.3

1.1

1

3.3

1.1

2

6.3

0.1

2

9.3

0.1

2

12.3

1.1

2

3.3

1.1

3

6.3

0.1

3

9.3

0.1

3

12.3

1.1

3

3.3

1.1

4

6.3

0.1

4

9.3

0.1

4

12.3

1.1

4

3.3

1.1

5

6.3

0.1

5

9.3

0.1

5

12.3

1.1

5

3.3

1.1

6

6.3

0.1

6

9.3

0.1

6

GAS Equivalent Oil + NGLMCFE

NYSE:PHX

Royalty Production and Revenue History

NobleCon13 Investor Conference, Boca Raton, FL January 30, 2017 33

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

4.50

5.00

5.50

6.00

$0

$5

$10

$15

$20

$25

$30

$35

$40

$45

$50

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Royalty Volume Bcfe

Royalty Revenue $Million

PHX has over approximately 4,800 identified undeveloped locations and 199,000 mineral acres not currently producing available to feed continued royalty production growth

NYSE:PHX

Year-End 2016 Reserves and 2016 Fiscal Year Production and Revenue by Product

34


66%

50%

72%

8%

9%

7%

43%

19%26%

0

20

40

60

80

100

120

Gas NGL Oil

28%

50%

34%

Fiscal Year 2016 Revenue

Fiscal Year 2016 Production

Year-End 2016

SEC Proved Reserves

NYSE:PHX

Documents

PHX LISTED NYSE - Panhandle Oil and Gas Inc. · • Panhandle leased out 4,050 contiguous net mineral acres to Element Petroleum on the northwest shelf of the Midland Basin in Cochran