Panhandle Oil and Gas offers stock to investors as it seeks to acquire mineral rights in Oklahoma, Texas and Louisiana
Panhandle Oil and Gas is issuing 5 million shares of new stock to raise cash it will use to acquire mineral interests in Oklahoma, Texas and Louisiana.
Officials estimate the stock offering, which it valued at $1.63 a share, will raise about $7.2 million.
It plans to use $6.4 million of that and stock valued at a half-million dollars to acquire about 795 acres of royalty interests in the Springboard area of the SCOOP play in Oklahoma’s Anadarko Basin and in the Haynesville Shale field in Texas and Louisiana from Red Stone Resources.
Panhandle’s board of directors unanimously approved the acquisition with an effective date of June 1, and also approved the company’s plan to issue the additional stock.
Assuming the stock offering that closes Sept. 1 goes as planned, officials expect Panhandle will close its purchase transaction within the next six months.
"This is an outstanding acquisition for Panhandle that fits very well with our stated strategy to grow the company on an accretive basis,” said Chad Stephens, Panhandle’s CEO. “These assets are a nice blend of producing properties (which include) near term development opportunities and upside potential in core areas with active drilling programs by high quality and well capitalized operators. It also marks our entry into the Haynesville play of East Texas and Louisiana, which we believe has significant potential and provides good development visibility.
“I am very proud of the whole Panhandle team for executing this transaction in an extremely challenging environment."
Officials said the acquired rights give it interests on estimated reserves of about 7.4 billion cubic feet (equivalent), consisting of about 10% oil, 3% natural gas liquids and 87% natural gas.
Currently, those areas are producing about 1.1 million cubic feet (equivalent) daily, with 93% of that natural gas.
Over the next year, it estimates the areas will produce 625 mmcf (e), generating a cash flow of $1.1 million.
Key operators within the SCOOP area include Continental Resources and Marathon Oil, while key operators in the Haynesville area include Aethon Energy, Comstock Resources and Rockcliff Energy.
The deals to acquire the mineral rights and to issue new stock were announced after markets closed Thursday.
Friday morning, the company announced it would price the new shares at $1.63 per share. In addition to the 5 million being offered to investors, underwriters are being given a 30-day option to buy up to 750,000 additional shares.
If investors acquire all 5 million new open market shares, it estimates that would raise about $7.2 million, after expenses.
The company’s stock, traded under the ticker PHX on Nasdaq, opened Friday at $2.10 a share. By 10:15 a.m. (Eastern), its value had fallen by 18.5 cents per share.
Over the past 18 months, Panhandle has moved away from being an oil and gas operator into a company focused on acquiring oil and natural gas minerals.
Currently, it owns minerals involving about 258,000 acres principally located in Oklahoma, North Dakota, Texas, New Mexico and Arkansas, officials said.