Panhandle Oil & Gas Inc. said its total proved reserves had increased 36% at the end of the third quarter, thanks in part to its acquisition of producing properties and drilling locations in the Eagle Ford Shale last June.
The Oklahoma City-based company said Thursday that its estimated total proved reserves rose from 151.8 Bcfe on Sept. 30, 2013, to 206.2 Bcfe on Sept. 30, 2014 -- an increase of 36%. Panhandle said its total estimated proved reserves are approximately 69% natural gas, 22% oil and 9% natural gas liquids (NGL).
Last May, Panhandle said it had signed an agreement to purchase a 16% non-operated working interest in 11,100 gross (1,775 net) acres in the core of the Eagle Ford from private sellers for $80.4 million (see Shale Daily, May 19). The deal closed on June 17.
The Eagle Ford purchase helped boost Panhandle's oil reserves for the 2014 fiscal year by 361%. NGL reserves increased 88% and natural gas reserves rose 8% for the fiscal year.
"Substantially all of the 5.9 million bbl of proved oil reserves growth in fiscal 2014 can be attributed to the Eagle Ford acquisition," Panhandle said Thursday. "In addition, proved reserves of 971,000 bbl of NGL and 4.9 Bcf of gas were attributable to the Eagle Ford acquisition."
The company said that in accordance with U.S. Securities and Exchange Commission rules, 33 undeveloped drilling locations in the Eagle Ford -- which are considered to be proved reserves from a technical standpoint but aren't scheduled to be drilled within the next five years -- have been classified as probable reserves in Panhandle's internal probable and possible reserve evaluation for 2014.
"This includes 1.4 million bbl of oil, 211,000 bbl of NGL and 1.1 Bcf of gas," the company said, adding that it intends to classify the aforementioned reserves as proved undeveloped (PUD) when the locations are drilled within the next five years.
As of Sept. 30, 2014, about 56% of Panhandle's total proved reserves (115.2 Bcfe) was categorized as proved developed, while the remaining 44% (90.9 Bcfe) were classified as PUD.
"Obviously fiscal 2014 was highlighted by the largest acquisition in company history," said CEO Michael Coffman. "The purchase of 63 producing wells and 109 undeveloped Eagle Ford locations adds significant oil production and reserves for Panhandle. Even at today's reduced oil prices, drilling on our Eagle Ford properties continues and will create value for the company.
"Paired with drilling on [our] legacy mineral acreage properties, we expect to continue to grow reserves and profitable production in a planned and patient manner, as has been our strategy for many years. Expectations for fiscal 2015 are that approximately 50% of our capital expenditures will go to Eagle Ford development drilling, and the remaining 50% will go to drilling on the company's legacy mineral acreage properties."
Panhandle currently has one rig deployed in the Eagle Ford, drilling four to five wells on a pad. Last September, the Eagle Ford produced 825 boe/d net to Panhandle, from 67 wells -- 61 targeting the Eagle Ford, five in the Pearsall Shale and one in the Buda Limestone formation.
Panhandle currently holds 255,300 net acres, including 113,568 in Oklahoma and 43,196 in Texas. It also has holdings in New Mexico (57,374 net acres), Arkansas (11,992), North Dakota (11,179), Colorado (8,217), Florida (3,832), Kansas (3,082), South Dakota (1,825), Montana (1,008) and Indiana (27).