Panhandle Reports 40% Increase in Net Earnings and 26% Production Growth

Panhandle Oil and Gas (Amex: PHX) reported financial results for the third quarter and nine months end, June 30, 2007. For the quarter, the Company recorded a net income of $2,904,078 or $.34 per share as compared to a net income of $2,078,878 or $.25 per share for the 2006 quarter. Total revenues for the 2007 quarter amounted to $10,988,346 as compared to $7,509,352 for the 2006 quarter. Net cash provided by operating activities was $7,158,123 while additions to properties and equipment for drilling and equipping wells and leasehold acquisitions amounted to $8,834,007. Production for the third quarter of 2007 increased 26% to 1,432,023 mcfe as compared to 1,134,814 mcfe for the 2006 quarter. The average sales price per mcfe increased 14% to $7.11.

For the nine months ended June 30, 2007 net income was $4,668,826 or $.55 per share as compared to net income for the 2006 nine months of $9,626,756 or $1.14 per share. Total revenues for the 2007 nine months were $28,063,974 as compared to $28,350,791 for the 2006 nine months. Cash flow from operations for the 2007 period was $17,573,724 as compared to $16,802,056 for the 2006 nine months. Additions to properties and equipment for drilling and equipping wells and purchasing leasehold totaled $19,742,549 in the 2007 period. Production for the 2007 nine months increased 16% to 4,071,421 mcfe as compared to 3,505,050 mcfe for the 2006 nine months. The average sales price per mcfe declined 15% to $6.56.

Michael C. Coffman, Panhandle's President stated, "The Company is three quarters of the way through an exceptional operations year. Production is up 26% for the 2007 third quarter as compared to the 2006 third quarter and 16% for the 2007 nine month period as compared to the 2006 nine month period. This follows the second quarter announcement that March 31, 2007 mid-year proved reserves were up 9% over year end September 30, 2006 proved reserves. The third quarter production increase is primarily the result of production from the Thomas 1-7 well in the Dill City prospect in Washita County, Oklahoma. The Company has a 26.5% net revenue interest in the Thomas and has substantial acreage in 15 sections in the prospect. Currently, two additional wells are completing and one is drilling in Dill City. This will be a very significant property for the Company for the next several years.

We are continuing to be very active in the Woodford shale play where we have committed to participate in over 50 wells with a working interest and in the Fayetteville shale play we have committed to participate in 11 wells with a working interest. We expect activity in both these areas to continue to increase over the next couple of years."

OIL AND GAS SALES BY QUARTER

                      Average              Average                     Average
     Quarter  Barrels  Sales      MCF       Sales     MCFE              MCFE
      Ended    Sold    Price      Sold      Price     Sold             Price

     6/30/07  31,223   $62.15  1,244,685    $6.62   1,432,023          $7.11
     3/31/07  21,877   $55.68  1,173,779    $6.17   1,305,041          $6.48
    12/31/06  22,567   $56.94  1,198,955    $5.67   1,334,357          $6.06
     9/30/06  26,701   $67.75  1,216,720    $5.80   1,376,926          $6.44
     6/30/06  21,473   $67.61  1,005,976    $5.60   1,134,814          $6.24


                             FINANCIAL HIGHLIGHTS

                       Third Quarter  Third Quarter  Nine Months  Nine Months
                           Ended         Ended         Ended        Ended
                          June 30       June 30       June 30      June 30
                            2007          2006          2007         2006
    Revenues
    Oil and Gas Sales  $10,181,501   $7,085,189  $26,718,087   $27,137,207
    Realized Gains on
     Natural Gas Collars    92,400           --      141,600            --
    Unrealized Gains on
     Natural Gas Collars   468,572           --      446,581            --
    Other                  245,873      329,417      757,706     1,213,584
                        10,988,346    7,414,606   28,063,974    28,350,791
    Costs and Expenses
    Lease Operating and
     Production Taxes    1,609,976    1,228,131    4,385,772     4,005,773
    Exploration Costs      224,078       29,289      943,489       211,080
    DD&A                 3,644,062    2,400,623   10,504,001     6,988,814
    Impairment             398,033       32,158    2,027,866       168,553
    Loss on Sale of
     Assets                 (1,522)      17,594      254,395       111,869
    General and
     Administration        913,077      828,208    3,055,791     2,544,867
    Interest                24,064       62,725      110,541       190,079
                         6,811,768    4,598,728   21,281,855    14,221,035
    Income Before
     Provision
     for Income Taxes    4,176,578    2,815,878    6,782,119    14,129,756
    Provision for
     Income Taxes        1,272,500      737,000    2,113,293     4,503,000
    Net Income          $2,904,078   $2,078,878   $4,668,826    $9,626,756
    Cash Provided by
     Operating
     Activities         $7,509,352   $6,423,686  $17,573,724   $16,802,056
    Average Shares
     Outstanding (1)     8,499,648    8,480,322    8,498,868     8,478,859
    Earnings Per
     Share (1)                $.34        $0.25        $0.55         $1.14
    MCFE Sold            1,432,023    1,134,814    4,071,421     3,505,050
    Average Sales Price
     per MCFE                $7.11        $6.24        $6.56         $7.74
    Barrels Sold            31,223       21,473       75,667        70,438
    Average Sales Price
     per Barrel             $62.15       $67.61       $58.72        $61.80
    MCF Sold             1,244,685    1,005,976    3,617,419     3,082,422
    Average Sales Price
     per MCF                 $6.62        $5.60        $6.16         $7.39

    (1) All references to number of shares and per share information, for all
        periods presented, have been adjusted to reflect the 2-for-1 stock
        split, which was effected in the form of a stock dividend, distributed
        on January 9, 2006.

Panhandle Oil and Gas Inc. (Amex: PHX - News) is engaged in the exploration for and production of natural gas and oil.

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