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) MAY 14, 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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Panhandle Royalty Company
FORM 8-K
May 14, 2003
ITEM 9. REGULATION FD DISCLOSURE
This Form 8-K is filed pursuant to Item 12 and contains the
Company's earnings release for the second quarter of fiscal 2003, which was
released on May 14, 2003.
PANHANDLE ROYALTY COMPANY (NASDAQ-PANRA) reported the single
highest quarterly revenue and earnings in its 77 year's of existence. For the
fiscal second quarter ending March 31, 2003, revenue of $6,980,939 provided a
net income of $2,320,674 or $1.10 per share after provision for income taxes.
Revenues were an increase of 154% over last year's quarter, while record
positive net income compared to a loss of $287,123. Net gas sales for the
quarter were 1,005,376 mcf at an average price of $5.94 per mcf. Net oil sales
for the quarter were 29,613 barrels at an average price of $32.21 per barrel.
Gas volume and price were increases of 3.9% and 184% respectively. Oil volume
was a decrease of 13.1%, while price increased 65.3% over the fiscal 2002
quarter.
Expenses for the quarter, before income taxes were $3,657,265,
an increase of 16.4% over last year's quarter. Cash flow from operating
activity was $2,827,889, an increase of 95.2% from last year's quarter.
Total assets at $48,831,643, were an increase of 4.3% over last year's
second quarter. Similarly, shareholders equity increased 20.4% to
$19,672,912. A normal 7 cents per share dividend was paid during the
quarter.
H W PEACE II, COMPANY PRESIDENT AND CEO STATED:
"Excellent product price plus an increase in gas volume sales
more than offset a decrease in oil volume. Price for natural gas was
high due to a normal winter, decreased U.S. gas deliverability and a
slight increase in demand reducing volumes in underground storage to
the lowest level in decades at winters end.
At normal storage summer refill rates it appears we will enter
the 2003 winter well below normal storage volume. This is currently
supporting this spring's gas price in the $5.00/mcf range. The Iraq
conflict, a Venezuelan oil workers strike and an uprising in Nigeria
combined to reduce domestic oil supplies during the quarter. This was
the primary reason for oil being over $30/bbl. These international
affairs have mostly been resolved and it appears oil prices should
return to $24 to $26/bbl at the well head."
"Higher prices, particularly for natural gas, are now
beginning to create a steady increase in well proposals. This is
increasingly true in areas where Panhandle has mineral ownership and/or
leases. The majority of these new wells are in the deeper areas of the
Anadarko basin for reservoirs in the 12,000' to 21,000' depth range.
During the first half of fiscal 2003, Panhandle had a working interest
in 60 well completions with an additional 34 drilling or testing and
had approved participation in another 63 which should commence drilling
this year."
Panhandle Royalty Company
FORM 8-K
May 14, 2003
Additionally, there were 53 royalty interest only wells
completed and 33 others either drilling or testing. Success rate for
all completions was 84%. Cash revenue has not been received for 51 of
these completions."
"Panhandle is utilizing all of its cash flow to participate in
the drilling of wells on its favorably situated fee minerals and
existing leasehold while continuing to reduce debt obtained in
acquiring Wood Oil Company last fiscal year. Approximately 82% of
current revenue is derived from natural gas sales. This should continue
as most new wells where we have an interest, are being drilled for
natural gas prone reservoirs. Should gas price continue in today's
range, we expect a continually increasing number of well proposals
during the second half of fiscal 2003."
THREE MONTHS ENDED MARCH 31, SIX MONTHS ENDED MARCH 31,
2003 2002 2003 2002
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Revenues $ 6,980,939 $ 2,745,824 $ 11,444,687 $ 6,076,385
Income (Loss) Before Cumulative Effect
of Accounting Change $ 2,320,674 $ (287,123) $ 2,925,655 $ (363,979)
Cumulative Effect of Accounting Change,
Net of Taxes of $28,500 (1) $ -- $ -- $ 46,500 $ --
Net Income (Loss) $ 2,320,674 $ (287,123) $ 2,972,155 $ (363,979)
Average Shares Outstanding - Diluted 2,103,157 2,066,441 2,100,543 2,066,441
Diluted Earnings (Loss) per Share:
Income before Cumulative Effect
of Accounting Change $ 1.10 $ (.14) $ 1.39 $ (.18)
Cumulative Effect
of Accounting Change (1) $ -- $ -- $ .02 $ --
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Net Income $ 1.10 $ (.14) $ 1.41 $ (.18)
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Barrels Sold 29,613 34,092 57,222 66,440
Average Sales Price per Barrel $ 32.21 $ 19.48 $ 30.06 $ 19.73
MCF Sold 1,005,376 967,146 1,956,911 $ 2,015,794
Average Sales Price per MCF $ 5.94 $ 2.09 $ 4.91 $ 2.26
(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.
Panhandle Royalty Company
FORM 8-K
May 14, 2003
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
DATE: May 14, 2003 Michael C. Coffman, Vice President
Chief Financial Officer,
Secretary & Treasurer