Panhandle Royalty Co. (AMEX: PHX).(Interview)

Publication: Oil and Gas Investor

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COPYRIGHT 2005 Hart Publications, Inc.

Oil and Gas Investor: What drives your company forward.

Peace: Our company is a mineral-owning company first, but we use those minerals to participate in wells with a working interest instead of leasing them out to other companies. We do lease to them if the economics do not look good enough to us.

Our business is that we own 259,000-plus net acres of minerals in the U.S., with a considerable amount being in Oklahoma. With that spread of ownership, we participate and pay our share of the well cost. We have better net revenue than the operator, who has taken leases from other people and paid them three-sixteenths royalty. We should make a better rate of return than the operator who pays royalty.

This is a substantially funded company, not just something that occurred overnight. We do not operate a single well, but we do have a working interest right now in over 1,250 producing wells, and we have a royalty interest in about another 3,700 wells. Over the years, we have been growing and accumulating, particularly since 1991 with working interest participation.

OGI: Where are you currently active?

Peace: Most of our activity is in Oklahoma. Our single most active county is Roger Mills, which is in the west-central part of the state near the Texas Panhandle. About 25% of our revenue comes off of wells that are producing there, mostly gas. Then Beckham County,...

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