Panhandle uses $9.5 million acquisition to add to its mineral holdings

Oklahoma City-based Panhandle Oil and Gas announced the closing on a $9.56 million acquisition of 700 mineral acres in the core of Oklahoma’s STACK play.

The official closing was Dec. 18 but the transaction has an effective date of Sept. 1, 2019, entitling the company to revenues from volumes produced on and after the date. The announcement did not indicate who the seller was, nor the location of the 700 acres except to identify them being in the STACK play.

The Transaction was funded from cash on hand in 1031 escrow accounts associated with the sale of largely non-producing assets in the Permian Basin and a small amount of borrowing on Panhandle’s credit facility.

Transaction Highlights:

  • 700 net mineral acres / 964 net royalty acres (100% leased)
  • Expected to add 124 boepd (6:1 basis) of production (67% liquids) from 87 producing wells
  • Annualized cash flow of $1.2 million based on September 2019 actual results
  • 3 gross wells in progress
  • 139 gross undeveloped locations upside
  • Top operators by net mineral acres are Devon, Encana, Cimarex and Marathon
  • 1 rig currently operating on acquired minerals
  • 11 additional rigs and 77 active permits proximate to acquired minerals

Chad Stephens, CEO, said, “I am happy to announce the closing of our first sizeable acquisition since being named Interim CEO. This acquisition is consistent with our stated strategy of focusing on mineral and royalty assets and actively participating in the consolidation currently taking place in the mineral sector.”

“It is also another example of how Panhandle’s active portfolio management can create value on a tax efficient basis as we shifted from mostly stranded undeveloped minerals in the Permian with lack of line of sight development to minerals with current cash and more development visibility. As we enter 2020, Panhandle will continue to make the evaluation of acquisition opportunities that create value on a NAV basis a top priority.”

The 700 more acres adds to the 258,000 net mineral acres owned by Panhandle in Oklahoma, North Dakota, Texas, New Mexico and Arkansas. The company says that 70% of the mineral count is unleased and undeveloped.