Valliance Bank Tower, Suite 1100, 1601 NW Expressway, Oklahoma City, Oklahoma 73118

~~(Former address of principal executive offices, if changed since last report)~~

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. ~~(Check one):~~

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

Outstanding shares of Class A Common stock (voting) at May ~~7, 2020: 16,392,054~~6, 2021: 30,401,168 shares

On July 23, 2020, management of Panhandle Oil and Gas Inc. (the “Company”) concluded, and the Audit Committee of the Board of Directors concurred, that the Company's previously-issued unaudited financial statements as of and for the three- and six- month periods ended March 31, 2020, which were included in the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, originally filed with the Securities and Exchange Commission (the "SEC") on May 7, 2020 (the “Original Filing”), should no longer be relied upon and should be restated to correct the errors discussed below. The Company is filing this Amendment No. 1 to the Quarterly Report on Form 10-Q/A (the “Amendment”), which sets forth the information in the Original Filing in its entirety, as adjusted for the effects of the restatement described below.

During the process of collecting receivables recorded in the oil, NGL and natural gas revenue accrual as of March 31, 2020, the Company identified a misstatement of approximately $705,000 attributable to errors in identifying ownership interests in wells, resulting in an overstatement of the Company’s net revenue interest in three wells. As a result of the overstatement in revenue, refundable income taxes and deferred income taxes were misstated by approximately $176,000 and $47,000, respectively. Oil, NGL and natural gas sales, transportation, gathering and marketing, production taxes and benefit for income taxes were misstated by approximately $765,000, $30,000, $31,000 and $223,000, respectively, for the three and six months ended March 31, 2020. The misstatements were related to the non-recurring revenue accruals discussed in the quarter ended March 31, 2020 and do not affect cash flow from operations, debt and cash balances for the three- and six-month periods ended March 31, 2020.

This Amendment is being filed to (i) restate the unaudited financial statements to correct the misstatements described above (and to reflect corresponding changes to the Risk Factors in Part II, Item 1A, and to Management's Discussion and Analysis of Financial Condition and Results of Operations in Part I, Item 2), and (ii) amend Part 1, Item 4 (Controls and Procedures) to address the material weakness in internal control that caused the misstatements.

~~To reflect the restatement of items described above, this Amendment revises the following sections of the Original Filing:~~

•~~Part I - Item 2.~~ ~~Management's Discussion and Analysis of Financial Conditions and Results of Operations;~~

The misstatements giving rise to this Amendment resulted from a material weakness in internal control over financial reporting. As such, Item 4 of Part I has been amended to include our assessment of the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended. This Amendment includes new certifications from the Company’s Chief Executive Officer and President and Chief Financial Officer dated as of the date of the filing of this Amendment, as required by Sections 302 and 906 of the Sarbanes-Oxley Act of 2002. The certifications are filed with this Amendment as Exhibits 31.1, 31.2, 32.1 and 32.2.

Except as described above, no other changes have been made to the Original Filing. This Amendment does not reflect events occurring after, nor does it modify or update any disclosures that may have been affected by events occurring subsequent to, the date of the filing of the Original Filing.

This Quarterly Report on Form 10-Q (“Form 10-Q”) includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), ~~as amended,~~ and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. In some cases, you can identify forward-looking statements in this Form 10-Q by words such as “anticipate,” “project,” “intend,” “estimate,” “expect,” “believe,” “predict,” “budget,” “projection,” “goal,” “plan,” “forecast,” “target” or similar expressions.

All statements, other than statements of historical facts, included in this report that address activities, events or developments that we expect or anticipate will or may occur in the future are forward-looking statements. Forward-looking statements may include, but are not limited to, statements relating to: our ability to execute our business strategies; the volatility of realized ~~oil~~natural gas and ~~natural gas~~oil prices; the level of production on our properties; estimates of quantities of ~~oil, NGL and~~ natural gas, oil and NGL reserves and their values; general economic or industry conditions; public health crises, such as the COVID-19 pandemic, and any related actions taken by businesses and governments; legislation or regulatory requirements; conditions of the securities markets; our ability to raise capital; changes in accounting principles, policies or guidelines; financial or political instability; acts of war or terrorism; title defects in the properties in which we invest; and other economic, competitive, governmental, regulatory or technical factors affecting our properties, operations or prices.

We caution you that the forward-looking statements contained in this Form 10-Q are subject to risks and uncertainties, many of which are beyond our control, incident to the exploration for and development, production and sale of ~~oil,~~ natural gas, ~~liquids~~oil, and ~~natural gas.~~NGLs. These risks include, but are not limited to, the risks described in Item 1A of the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, ~~2019~~2020 (“Annual Report”), and all quarterly reports on Form 10-Q filed subsequently ~~hereto,~~thereto, including the risks described in Item 1A of this Form 10-Q. Investors should also read the other information in this Form 10-Q and the ~~Company’s~~ Annual Report where risk factors are presented and further discussed.

Should one or more of the risks or uncertainties described above or elsewhere in this Form 10-Q occur, or should underlying assumptions prove incorrect, our actual results and plans could differ materially from those expressed in any forward-looking statements. Any forward-looking statement speaks only as of the date of which such statement is made and the Company undertakes no obligation to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise, except required by applicable law.

Except as required by applicable law, all forward-looking statements attributable to us are expressly qualified in their entirety by this cautionary statement. This cautionary statement should ~~also~~ be considered in connection with any subsequent written or oral forward-looking statements that we or persons acting on our behalf may issue.

The following is a glossary of certain accounting, oil and natural gas industry and other defined terms used in this Form 10-Q:

All references to years in this Form 10-Q, unless otherwise noted, refer to the Company’s fiscal year end of September 30. For example, references to ~~2020~~2021 mean the fiscal year ended September 30, ~~2020.~~2021.

All references to quarters in this Form 10-Q, unless otherwise noted, refer to the Company’s fiscal quarter based on a fiscal year end of September 30. For example, references to first quarter mean the quarter of October 1 through December 31.

References to ~~oil~~natural gas and ~~natural gas~~oil properties in this Form 10-Q inherently include ~~natural gas liquids~~NGL associated with such properties.

	March 31, 2020			September 30, 2019
	(unaudited)
	As Restated						March 31, 2021			September 30, 2020
Assets							(unaudited)
Current assets:
Cash and cash equivalents	$	498,777		$	6,160,691		$	1,270,482		$	10,690,395
Oil, NGL and natural gas sales receivables (net of allowance for uncollectable accounts)		3,208,703			4,377,646
Natural gas, oil, and NGL sales receivables (net of $0 allowance for uncollectable accounts)								4,712,793			2,943,220
Refundable income taxes		3,577,870			1,505,442			2,448,871			3,805,227
Derivative contracts, net		4,216,915			2,256,639
Other		601,412			177,037			752,248			351,088
Total current assets		12,103,677			14,477,455			9,184,394			17,789,930

Properties and equipment at cost, based on successful efforts accounting:
Producing oil and natural gas properties		326,766,558			354,718,398
Non-producing oil and natural gas properties		19,030,785			14,599,023
Producing natural gas and oil properties								329,708,071			324,886,491
Non-producing natural gas and oil properties								21,012,897			18,993,814
Other		1,782,063			1,722,080			582,444			582,444
		347,579,406			371,039,501			351,303,412			344,462,749
Less accumulated depreciation, depletion and amortization		(261,599,529	)		(259,314,590	)		(265,863,136	)		(263,590,801	)
Net properties and equipment		85,979,877			111,724,911			85,440,276			80,871,948

Investments		151,752			205,076

Derivative contracts, net		-			237,505
Operating lease right-of-use assets								649,500			690,316
Other, net								593,150			669,641

Total assets	$	98,235,306		$	126,644,947		$	95,867,320		$	100,021,835

Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	810,095		$	665,160		$	672,507		$	997,637
Derivative contracts, net								3,000,530			281,942
Current portion of operating lease liability								129,672			127,108
Accrued liabilities and other		1,246,544			2,433,466			1,382,066			1,297,363
Short-term debt								-			1,750,000
Total current liabilities		2,056,639			3,098,626			5,184,775			4,454,050

Long-term debt		32,000,000			35,425,000			23,500,000			27,000,000
Deferred income taxes, net		1,265,007			5,976,007			1,041,007			1,329,007
Asset retirement obligations		2,862,523			2,835,781			2,927,662			2,897,522
Derivative contracts, net								625,179			425,705
Operating lease liability, net of current portion								856,142			921,625

Stockholders' equity:
Class A voting common stock, $0.01666 par value; 24,000,500 shares authorized; 16,897,306 issued at March 31, 2020, and Class A voting common stock, $0.01666 par value; 24,000,000 shares authorized; 16,897,306 issued at September 30, 2019		281,509			281,509
Class A voting common stock, $0.01666 par value; 36,000,500 shares authorized; 22,825,226 issued at March 31, 2021, and Class A voting common stock, $0.01666 par value; 24,000,500 shares authorized; 22,647,306 issued at September 30, 2020								380,268			377,304
Capital in excess of par value		3,264,383			2,967,984			11,150,749			10,649,611
Deferred directors' compensation		2,092,426			2,555,781			1,633,939			1,874,007
Retained earnings		61,965,702			81,848,301			54,402,724			56,244,100
		67,604,020			87,653,575			67,567,680			69,145,022
Less treasury stock, at cost; 505,252 shares at March 31, 2020, and 558,051 shares at September 30, 2019		(7,552,883	)		(8,344,042	)
Less treasury stock, at cost; 390,267 shares at March 31, 2021, and 411,487 shares at September 30, 2020								(5,835,125	)		(6,151,096	)
Total stockholders' equity		60,051,137			79,309,533			61,732,555			62,993,926
Total liabilities and stockholders' equity	$	98,235,306		$	126,644,947		$	95,867,320		$	100,021,835

(~~See~~The accompanying ~~notes)~~notes are an integral part of these condensed financial statements.)

	Three Months Ended March 31,						Six Months Ended March 31,
	2020			2019			2020			2019
	(unaudited)						(unaudited)					Three Months Ended March 31,						Six Months Ended March 31,
	As Restated						As Restated					2021			2020			2021			2020
Revenues:												(unaudited)						(unaudited)
Oil, NGL and natural gas sales	$	7,217,618		$	9,221,319		$	14,811,456		$	21,432,038
Natural gas, oil and NGL sales												$	8,345,825		$	7,217,618		$	14,770,804		$	14,811,456
Lease bonuses and rental income		22,092			208,746			549,791			723,303		58,554			22,092			59,987			549,791
Gains (losses) on derivative contracts		4,071,577			(1,793,852	)		3,253,683			2,712,928		(2,348,143	)		4,071,577			(2,602,179	)		3,253,683
Gain on asset sales		-			-			3,272,888			9,096,938		23,257			-			43,525			3,272,888
		11,311,287			7,636,213			21,887,818			33,965,207		6,079,493			11,311,287			12,272,137			21,887,818
Costs and expenses:
Lease operating expenses		1,542,199			1,505,507			2,723,870			3,020,061		1,030,651			1,542,199			2,035,063			2,723,870
Transportation, gathering and marketing		1,356,628			1,482,671			2,739,629			3,072,687		1,319,514			1,356,628			2,600,479			2,739,629
Production taxes		373,754			467,308			701,035			1,076,259		443,154			373,754			719,180			701,035
Depreciation, depletion and amortization		3,373,518			3,623,976			6,329,219			7,437,662		1,777,817			3,373,518			4,038,466			6,329,219
Provision for impairment		29,545,702			-			29,545,702			-		-			29,545,702			-			29,545,702
Interest expense		346,573			485,784			717,238			1,025,154		267,865			346,573			569,763			717,238
General and administrative		2,174,661			2,133,153			4,397,689			4,071,993		2,059,476			2,174,661			3,790,573			4,397,689
Loss on asset sales and other expense (income)		40,066			(852	)		29,136			15,785
Other expense (income)													(102,261	)		40,066			(98,944	)		29,136
		38,753,101			9,697,547			47,183,518			19,719,601		6,796,216			38,753,101			13,654,580			47,183,518
Income (loss) before provision (benefit) for income taxes		(27,441,814	)		(2,061,334	)		(25,295,700	)		14,245,606		(716,723	)		(27,441,814	)		(1,382,443	)		(25,295,700	)

Provision (benefit) for income taxes		(6,987,000	)		(130,000	)		(6,733,000	)		3,441,000		(217,000	)		(6,987,000	)		(286,000	)		(6,733,000	)

Net income (loss)	$	(20,454,814	)	$	(1,931,334	)	$	(18,562,700	)	$	10,804,606	$	(499,723	)	$	(20,454,814	)	$	(1,096,443	)	$	(18,562,700	)




Basic and diluted earnings (loss) per common share (Note 5)	$	(1.24	)	$	(0.11	)	$	(1.12	)	$	0.64
Basic and diluted earnings (loss) per common share (Note 4)												$	(0.02	)	$	(1.24	)	$	(0.05	)	$	(1.12	)

Basic and diluted weighted average shares outstanding:
Common shares		16,384,687			16,679,187			16,362,057			16,712,493		22,429,777			16,384,687			22,403,678			16,362,057
Unissued, directors' deferred compensation shares		139,390			183,206			186,443			217,704		178,597			139,390			177,923			186,443
		16,524,077			16,862,393			16,548,500			16,930,197		22,608,374			16,524,077			22,581,601			16,548,500




Dividends declared per share of common stock and paid in period	$	0.04		$	0.04		$	0.08		$	0.08	$	0.01		$	0.04		$	0.02		$	0.08

Dividends declared per share of
common stock and to be paid in quarter ended June 30												$	0.01		$	-

(~~See~~The accompanying ~~notes)~~notes are an integral part of these condensed financial statements.)

	Class A voting				Capital in			Deferred															Class A voting				Capital in			Deferred
	Common Stock				Excess of			Directors'			Retained			Treasury			Treasury						Common Stock				Excess of			Directors'			Retained			Treasury			Treasury
	Shares		Amount		Par Value			Compensation			Earnings			Shares			Stock			Total			Shares		Amount		Par Value			Compensation			Earnings			Shares			Stock			Total

Balances at September 30, 2019		16,897,306	$	281,509	$	2,967,984		$	2,555,781		$	81,848,301			(558,051	)	$	(8,344,042	)	$	79,309,533
Balances at September 30, 2020																								22,647,306	$	377,304	$	10,649,611		$	1,874,007		$	56,244,100			(411,487	)	$	(6,151,096	)	$	62,993,926

Net income (loss)		-		-		-			-			1,892,114			-			-			1,892,114			-		-		-			-			(596,720	)		-			-			(596,720	)
Purchase of treasury stock		-		-		-			-			-			(632	)		(7,635	)		(7,635	)
Equity offering																								153,375		2,555		223,203			-			-			-			-			225,758
Restricted stock awards		-		-		148,515			-			-			-			-			148,515			-		-		122,978			-			-			-			-			122,978
Dividends ($0.08 per share)		-		-		-			-			(1,319,899	)		-			-			(1,319,899	)
Dividends ($0.02 per share)																								-		-		-			-			(454,936	)		-			-			(454,936	)
Distribution of restricted stock to officers and directors		-		-		(82,821	)		-			-			5,546			82,914			93			-		-		(316,886	)		-			-			21,220			317,239			353
Increase in deferred directors' compensation charged to expense		-		-		-			86,212			-			-			-			86,212			-		-		-			44,527			-			-			-			44,527
Balances at December 31, 2019		16,897,306	$	281,509	$	3,033,678		$	2,641,993		$	82,420,516			(553,137	)	$	(8,268,763	)	$	80,108,933
Net income (loss) (As Restated)		-		-		-			-			(20,454,814	)		-			-			(20,454,814	)
Balances at December 31, 2020																								22,800,681	$	379,859	$	10,678,906		$	1,918,534		$	55,192,444			(390,267	)	$	(5,833,857	)	$	62,335,886
(unaudited)
Net income (loss)																								-		-		-			-			(499,723	)		-			-			(499,723	)
Equity offering																								-		-		(29,240	)		-			-			-			-			(29,240	)
Restricted stock awards		-		-		343,101			-			-			-			-			343,101			-		-		161,170			-			-			-			-			161,170
Dividends ($0.01 per share)																								-		-		-			-			(289,997	)		-			-			(289,997	)
Distribution of restricted stock to officers and directors																								-		-		-			-			-			-			(1,268	)		(1,268	)
Distribution of deferred directors' compensation		-		-		(112,396	)		(603,485	)		-			47,885			715,880			(1	)		24,545		409		339,913			(340,322	)		-			-			-			-
Increase in deferred directors' compensation charged to expense		-		-		-			53,918			-			-			-			53,918			-		-		-			55,727			-			-			-			55,727
Balances at March 31, 2020 (As Restated)		16,897,306	$	281,509	$	3,264,383		$	2,092,426		$	61,965,702			(505,252	)	$	(7,552,883	)	$	60,051,137
Balances at March 31, 2021																								22,825,226	$	380,268	$	11,150,749		$	1,633,939		$	54,402,724			(390,267	)	$	(5,835,125	)	$	61,732,555
(unaudited)

	Class A voting				Capital in			Deferred															Class A voting				Capital in			Deferred
	Common Stock				Excess of			Directors'			Retained			Treasury			Treasury						Common Stock				Excess of			Directors'			Retained			Treasury			Treasury
	Shares		Amount		Par Value			Compensation			Earnings			Shares			Stock			Total			Shares		Amount		Par Value			Compensation			Earnings			Shares			Stock			Total

Balances at September 30, 2018		16,896,881	$	281,502	$	2,824,691		$	2,950,405		$	125,266,945			(145,467	)	$	(2,558,338	)		128,765,205
Balances at September 30, 2019																								16,897,306	$	281,509	$	2,967,984		$	2,555,781		$	81,848,301			(558,051	)	$	(8,344,042	)	$	79,309,533

Net income (loss)		-		-		-			-			12,735,940			-			-			12,735,940			-		-		-			-			1,892,114			-			-			1,892,114
Purchase of treasury stock		-		-		-			-			-			(74,457	)		(1,140,559	)		(1,140,559	)		-		-		-			-			-			(632	)		(7,635	)		(7,635	)
Restricted stock awards		-		-		159,469			-			-			-			-			159,469			-		-		148,515			-			-			-			-			148,515
Dividends ($0.08 per share)		-		-		-			-			(1,347,789	)		-			-			(1,347,789	)		-		-		-			-			(1,319,899	)		-			-			(1,319,899	)
Distribution of restricted stock to officers and directors		425		7		(159,869	)		-			-			9,194			160,022			160			-		-		(82,821	)		-			-			5,546			82,914			93
Increase in deferred directors' compensation charged to expense																								-		-		-			86,212			-			-			-			86,212
Balances at December 31, 2019																								16,897,306	$	281,509	$	3,033,678		$	2,641,993		$	82,420,516			(553,137	)	$	(8,268,763	)	$	80,108,933
(unaudited)
Net income (loss)																								-		-		-			-			(20,454,814	)		-			-			(20,454,814	)
Restricted stock awards																								-		-		343,101			-			-			-			-			343,101
Distribution of deferred directors' compensation		-		-		(8	)		8			-			-			-			-			-		-		(112,396	)		(603,485	)		-			47,885			715,880			(1	)
Increase in deferred directors' compensation charged to expense		-		-		-			80,287			-			-			-			80,287			-		-		-			53,918			-			-			-			53,918
Balances at December 31, 2018		16,897,306	$	281,509	$	2,824,283		$	3,030,700		$	136,655,096			(210,730	)	$	(3,538,875	)	$	139,252,713
Net income (loss)		-		-		-			-			(1,931,334	)		-			-			(1,931,334	)
Purchase of treasury stock		-		-		-			-			-			(175,175	)		(2,827,126	)		(2,827,126	)
Restricted stock awards		-		-		286,852			-			-			-			-			286,852
Dividends		-		-		-			-			(381	)		-			-			(381	)
Distribution of restricted stock to officers and directors		-		-		(73,069	)		-			-			4,441			73,144			75
Distribution of deferred directors' compensation		-		-		(207,842	)		(667,124	)		-			52,399			874,963			(3	)
Increase in deferred directors' compensation charged to expense		-		-		-			51,993			-			-			-			51,993
Balances at March 31, 2019		16,897,306	$	281,509	$	2,830,224		$	2,415,569		$	134,723,381			(329,065	)	$	(5,417,894	)	$	134,832,789
Balances at March 31, 2020																								16,897,306	$	281,509	$	3,264,383		$	2,092,426		$	61,965,702			(505,252	)	$	(7,552,883	)	$	60,051,137
(unaudited)

(~~See~~The accompanying ~~notes)~~notes are an integral part of these condensed financial statements.)

	Six months ended March 31,
	2020			2019
	(unaudited)						Six Months Ended March 31,
	As Restated						2021			2020
Operating Activities							(unaudited)
Net income (loss)	$	(18,562,700	)	$	10,804,606		$	(1,096,443	)	$	(18,562,700	)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation, depletion and amortization		6,329,219			7,437,662			4,038,466			6,329,219
Impairment of producing properties		29,545,702			-			-			29,545,702
Provision for deferred income taxes		(4,711,000	)		3,942,000			(288,000	)		(4,711,000	)
Gain from leasing fee mineral acreage		(544,979	)		(722,912	)		(57,493	)		(544,979	)
Proceeds from leasing fee mineral acreage		559,462			737,812			64,047			559,462
Net (gain) loss on sales of assets		(3,265,449	)		(9,096,938	)		(62,097	)		(3,265,449	)
Directors' deferred compensation expense		140,130			132,280			100,254			140,130
Fair value of derivative contracts		(1,722,771	)		(4,231,222	)
Total (gain) loss on derivative contracts								2,602,179			(3,253,683	)
Cash receipts (payments) on settled derivative contracts								315,883			1,530,912
Restricted stock awards		491,616			446,321			284,148			491,616
Other		7,225			9,326			31,544			7,225
Cash provided (used) by changes in assets and liabilities:
Oil, NGL and natural gas sales receivables		1,168,943			715,935
Natural gas, oil and NGL sales receivables								(1,732,801	)		1,168,943
Other current assets		(232,349	)		(172,645	)		(388,864	)		(232,349	)
Accounts payable		117,561			(77,977	)		(340,404	)		117,561
Income taxes receivable		(2,072,428	)		(538,150	)		1,356,356			(2,072,428	)
Other non-current assets		50,010			17,317			56,545			50,010
Accrued liabilities		(1,189,850	)		(342,361	)		(206,213	)		(1,189,850	)
Total adjustments		24,671,042			(1,743,552	)		5,773,550			24,671,042
Net cash provided by operating activities		6,108,342			9,061,054			4,677,107			6,108,342

Investing Activities
Capital expenditures		(139,755	)		(4,159,683	)		(425,098	)		(139,755	)
Acquisition of minerals and overrides		(10,254,016	)		(1,809,775	)		(7,934,504	)		(10,254,016	)
Investments in partnerships		-			(199	)
Proceeds from sales of assets		3,376,049			9,096,938			21,000			3,376,049
Net cash provided (used) by investing activities		(7,017,722	)		3,127,281			(8,338,602	)		(7,017,722	)

Financing Activities
Borrowings under Credit Facility		5,561,725			8,686,270			-			5,561,725
Payments of loan principal		(8,986,725	)		(15,586,270	)		(5,250,000	)		(8,986,725	)
Net proceeds from equity issuance								(53,482	)		-
Purchases of treasury stock		(7,635	)		(3,967,685	)		-			(7,635	)
Payments of dividends		(1,319,899	)		(1,348,170	)		(454,936	)		(1,319,899	)
Net cash provided (used) by financing activities		(4,752,534	)		(12,215,855	)		(5,758,418	)		(4,752,534	)

Increase (decrease) in cash and cash equivalents		(5,661,914	)		(27,520	)		(9,419,913	)		(5,661,914	)
Cash and cash equivalents at beginning of period		6,160,691			532,502			10,690,395			6,160,691
Cash and cash equivalents at end of period	$	498,777		$	504,982		$	1,270,482		$	498,777

Supplemental Schedule of Noncash Investing and Financing Activities:


Dividends declared and unpaid							$	289,997		$	-
Additions to asset retirement obligations	$	4		$	27,562		$	-		$	4

Gross additions to properties and equipment	$	10,229,121		$	5,654,060		$	8,759,616		$	10,229,121

Equity offering used for acquisitions								(250,000	)		-
Net (increase) decrease in accounts payable for properties and equipment additions		164,650			315,398			(150,014	)		164,650
Capital expenditures and acquisitions	$	10,393,771		$	5,969,458		$	8,359,602		$	10,393,771

(~~See~~The accompanying ~~notes)~~notes are an integral part of these condensed financial statements.)

NOTE 1: Basis of Presentation ~~Restatement of Financials~~ and Accounting Principles

The accompanying unaudited condensed financial statements of ~~Panhandle Oil and Gas~~PHX Minerals Inc. have been prepared in accordance with the instructions to Form 10-Q as prescribed by the SEC. Management believes that all adjustments necessary for a fair presentation of the financial position and results of operations and cash flows for the periods have been included. All such adjustments are of a normal recurring nature. The results are not necessarily indicative of those to be expected for the full fiscal year. The Company’s fiscal year runs from October 1 through September 30.

Certain amounts and disclosures have been condensed or omitted from these financial statements pursuant to the rules and regulations of the SEC. Therefore, these condensed financial statements should be read in conjunction with the financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, ~~2019.~~2020. Unless indicated otherwise or the context requires, the terms “we,” “our,” “us,” ~~“Panhandle”~~“PHX” or “Company” refer to ~~Panhandle Oil and Gas~~PHX Minerals Inc.

The Company has restated its unaudited financial statements to correct an error in its oil, NGL and natural gas revenue accrual, which impacted oil, NGL and natural gas receivables and oil, NGL and natural gas sales. This error was identified during the process of collecting receivables recorded in the oil, NGL and natural gas sales receivable balance as of March 31, 2020.

The following tables illustrate the effect of the error correction on all affected line items of our previously-issued Balance Sheets as of March 31, 2020; Statements of Operations for the three and six months ended March 31, 2020; Statements of Stockholders' Equity for the three months ended March 31, 2020; and Statements of Cash Flows for the six months ended March 31, 2020.

~~In February 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-02,~~ ~~Leases (Topic 842), which will supersede the lease requirements in Topic 840,~~ ~~Leases~~ by requiring lessees to recognize lease assets and lease liabilities classified as operating leases on the balance sheet. See Note 2: Leases for further details related the Company’s adoption of this standard.

~~In July 2018, the FASB issued ASU 2018-11,~~ ~~Leases (Topic 842), Targeted Improvements~~, which would allow entities to apply the transition provisions of the new standard at the adoption date instead of at the earliest comparative period presented in the financial statements, and will allow entities to continue to apply the legacy guidance in Topic 840, including disclosure requirements, in the comparative period presented in the year the new leases standard is adopted. Entities that elect this option would still adopt the new leases standard using a modified retrospective transition method, but would recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption, if any, rather than in the earliest period presented. See Note 2: Leases for further discussion.

~~In June 2016, the FASB issued ASU 2016-13,~~ ~~Financial Instruments~~–~~Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments~~. This standard changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The standard will replace the currently required incurred loss approach with an expected loss model for instruments measured at amortized cost. The standard is effective for interim and annual periods beginning after December 15, 2019, and shall be applied using a modified retrospective approach resulting in a cumulative effect adjustment to retained earnings upon adoption. This standard will be effective for Panhandle starting October 1, 2020. The Company is evaluating the new standard and is currently in the process of estimating its financial statement impact; however, the impact is not expected to be material. Historically, the Company's credit losses on oil, NGL and natural gas sales receivables have been immaterial.

Other accounting standards that have been issued or proposed by the FASB, or other standards-setting bodies, that do not require adoption until a future date are not expected to have a material impact on the financial statements upon adoption.

On October 1, 2019, the Company adopted ASU 2016-02, Leases (Topic 842) using the modified retrospective method. This ASU, as subsequently amended by ASU 2018-01, ASU 2018-10, ASU 2018-11 and ASU 2018-20, requires the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under the previous guidance. The Company elected the adoption practical expedient under ASU 2018-11, and used October 1, 2019, the beginning of the period of adoption, as its date of initial application. The Company elected the set of practical expedients upon transition which will retain the lease classification for leases and any unamortized initial direct costs that existed prior to the adoption of the standard.

The Company’s operating lease right-of-use (“ROU”) assets and operating lease obligations were less than 1% of the Company's total assets as of December 31, 2019, had remaining terms of less than 12 months and were not considered material to the Company; and therefore, the adoption of the standard had no related impact on the Company’s Balance Sheets as of October 1, 2019. Additionally, there was no related impact on the Company’s Statements of Operations, and the standard had no impact on the Company’s debt covenant compliance under existing agreements.

The Company determines if an arrangement is a lease at inception by considering whether (i) explicitly or implicitly identified assets have been deployed in the agreement and (ii) the Company obtains substantially all of the economic benefits from the use of that underlying asset and directs how and for what purpose the asset is used during the term of the agreement. As of March 31, 2020, none of the Company’s leases were classified as financing leases. Operating lease liabilities represent the Company’s obligation to make lease payments arising from the lease. The Company signed a new lease for office space during the quarter ended March 31, 2020, with an anticipated commencement date during the fourth quarter of 2020. The associated lease liability will be recognized at that time and is estimated to be approximately $1 million.

ROU assets represent the Company’s right to use an underlying asset for the lease term and operating lease liabilities represent the Company’s obligation to make lease payments arising from the lease. ROU assets are recognized at commencement date and consist of the present value of remaining lease payments over the lease term, initial direct costs, prepaid lease payments less any lease incentives. Operating lease liabilities are recognized at commencement date based on the present value of remaining lease payments over the lease term. The Company uses the implicit rate, when readily determinable, or its incremental borrowing rate based on the information available at commencement date to determine the present value of lease payments.

The lease terms may include periods covered by options to extend the lease when it is reasonably certain that the Company will exercise that option and periods covered by options to terminate the lease when it is not reasonably certain that the Company will

exercise that option. Lease expense for lease payments will be recognized on a straight-line basis over the lease term. The Company made an accounting policy election to not recognize leases with terms, including applicable options, of less than twelve months on the Company’s Balance Sheets and recognize those lease payments in the Company’s Statements of Operations on a straight-line basis over the lease term. In the event that the Company’s assumptions and expectations change, it may have to revise its ROU assets and operating lease liabilities.

The Company generates lease bonus revenue by leasing its mineral interests to exploration and production companies. A lease agreement represents the Company's contract with a third party and generally conveys the rights to any ~~oil, NGL or~~ natural gas, oil or NGL discovered, grants the Company a right to a specified royalty interest and requires that drilling and completion operations commence within a specified time period. Control is transferred to the lessee and the Company has satisfied its performance obligation when the lease agreement is executed, such that revenue is recognized when the lease bonus payment is received. The Company accounts for its lease bonuses as conveyances in accordance with the guidance set forth in ~~Accounting Standards Codification (“ASC”)~~ASC 932 (Extractive Activities—Oil and Gas), and it recognizes the lease bonus as a cost recovery with any excess above its cost basis in the mineral being treated as a gain. The excess of lease bonus above the mineral basis is shown in the lease bonuses and rental income line item on the Company’s Statements of Operations.

See Note 109 for discussion of the Company’s accounting for derivative contracts.

Sales of ~~oil, NGL and~~ natural gas, oil and NGL are recognized when production is sold to a purchaser and control has transferred. Oil is priced on the delivery date based upon prevailing prices published by purchasers with certain adjustments related to oil quality and physical location. The price the Company receives for natural gas and NGL is tied to a market index, with certain adjustments based on, among other factors, whether a well delivers to a gathering or transmission line, quality and heat content of natural gas, and

prevailing supply and demand conditions, so that the price of natural gas fluctuates to remain competitive with other available natural gas supplies. These market indices are determined on a monthly basis. Each unit of commodity is considered a separate performance obligation; however, as consideration is variable, the Company utilizes the variable consideration allocation exception permitted under the standard to allocate the variable consideration to the specific units of commodity to which they relate.

The following table presents the disaggregation of the Company's ~~oil, NGL and~~ natural gas, oil and NGL revenues for the three and six months ended March 31, ~~2020~~2021 and ~~2019:~~2020:

	Three Months Ended March 31, 2020						Six Months Ended March 31, 2020						Three Months Ended March 31, 2021						Six Months Ended March 31, 2021
	Royalty Interest		Working Interest		Total		Royalty Interest		Working Interest		Total		Royalty Interest		Working Interest		Total		Royalty Interest		Working Interest		Total
	(As Restated)				(As Restated)		(As Restated)				(As Restated)
Natural gas revenue													$	2,366,427	$	2,006,670	$	4,373,097	$	3,556,592	$	4,275,306	$	7,831,898
Oil revenue	$	2,548,648	$	1,641,643	$	4,190,291	$	3,961,859	$	3,693,944	$	7,655,803		1,717,069		1,427,852		3,144,921		2,814,021		2,671,966		5,485,987
NGL revenue		196,311		328,430		524,741		419,088		720,536		1,139,624		410,851		416,956		827,807		641,189		811,730		1,452,919
Natural gas revenue		1,057,610		1,444,976		2,502,586		2,330,724		3,685,305		6,016,029
Oil, NGL and natural gas sales	$	3,802,569	$	3,415,049	$	7,217,618	$	6,711,671	$	8,099,785	$	14,811,456
Natural gas, oil and NGL sales													$	4,494,347	$	3,851,478	$	8,345,825	$	7,011,802	$	7,759,002	$	14,770,804


	Three Months Ended March 31, 2019						Six Months Ended March 31, 2019						Three Months Ended March 31, 2020						Six Months Ended March 31, 2020
	Royalty Interest		Working Interest		Total		Royalty Interest		Working Interest		Total		Royalty Interest		Working Interest		Total		Royalty Interest		Working Interest		Total
Natural gas revenue													$	1,057,610	$	1,444,976	$	2,502,586	$	2,330,724	$	3,685,305	$	6,016,029
Oil revenue	$	1,552,380	$	2,377,225	$	3,929,605	$	3,856,185	$	4,552,400	$	8,408,585		2,548,648		1,641,643		4,190,291		3,961,859		3,693,944		7,655,803
NGL revenue		186,884		629,478		816,362		628,111		1,643,086		2,271,197		196,311		328,430		524,741		419,088		720,536		1,139,624
Natural gas revenue		1,411,154		3,064,198		4,475,352		3,442,266		7,309,990		10,752,256
Oil, NGL and natural gas sales	$	3,150,418	$	6,070,901	$	9,221,319	$	7,926,562	$	13,505,476	$	21,432,038
Natural gas, oil and NGL sales													$	3,802,569	$	3,415,049	$	7,217,618	$	6,711,671	$	8,099,785	$	14,811,456

The Company records revenue in the month production is delivered to the purchaser. As a non-operator, the Company has limited visibility into the timing of when new wells start producing, and production statements may not be received for 30 to 90 days or more after the date production is delivered. As a result, the Company is required to estimate the amount of production delivered to the purchaser and the price that will be received for the sale of the product. The expected sales volumes and prices for these properties are estimated and recorded within the ~~Oil, NGL and~~ natural gas, oil and NGL sales receivables line item on the Company’s Balance Sheets. The difference between the Company's estimates and the actual amounts received for ~~oil, NGL and~~ natural gas, oil and NGL sales is recorded in the quarter that payment is received from the third party. For the three and six months ended March 31, ~~2019,~~2021 and 2020, revenue recognized in these reporting periods related to performance obligations satisfied in prior reporting periods for existing wells was immaterial and considered a change in estimate.

As noted above, as a non-operator, there are instances when the Company is limited by the information operators provide to us. Through cash received on new wells, in the 2021 second quarter, the Company identified several producing properties on our minerals that had production dates prior to the 2021 second quarter. Estimates of the natural gas and oil sales related to those properties were made and are reflected in the second quarter Natural gas, oil and NGL sales on the Company’s Statements of Operations and on the Company’s Balance Sheets in Natural gas, oil and NGL sales receivables. In connection with obtaining more relevant information on new wells on Company acreage, we have recorded a change in estimate for new wells to Natural gas, oil and NGL sales totaling $562,428 of which $246,405 related to the production periods before October 1, 2020, and $316,023 related to the first quarter of 2021.

Through the use of new technological platforms as well as cash received on new wells, in the 2020 second quarter, the Company identified several producing properties on our minerals that had production dates prior to the 2020 second quarter. Estimates of the ~~oil~~natural gas and ~~natural gas~~oil sales related to those properties were made and are reflected in the second quarter ~~Oil,~~Natural gas, oil and NGL ~~and natural gas~~ sales on the Company’s Statements of Operations and on the Company’s Balance Sheets in ~~Oil,~~Natural gas, oil and NGL ~~and natural gas~~ sales receivables. In connection with obtaining more relevant information identifying additional new wells on ~~Panhandle~~Company acreage, we have recorded a change in estimate for new wells to ~~Oil,~~Natural gas, oil and NGL ~~and natural gas~~ sales totaling $1,140,171 of which $651,681 related to the production periods before October 1, 2019, and $488,490 related to first quarter of 2020. This reduced loss before benefit for income taxes by $1,044,297 in the three and six months ended March 31, 2020. This resulted in decreases in both net loss of $778,407 and $0.05 loss per common share for the three months ended March 31, 2020, and decreases in both net loss of $766,335 and $0.05 loss per common share for the six months ended March 31, 2020.

The Company’s provision for income taxes differs from the statutory rate primarily due to estimated federal and state benefits generated from excess federal and Oklahoma percentage depletion, which are permanent tax benefits. Excess percentage depletion, both federal and Oklahoma, can only be taken in the amount that it exceeds cost depletion which is calculated on a unit-of-production basis. Excess tax benefits and deficiencies of stock-based compensation are recognized as provision (benefit) for income taxes in the Company’s Statements of Operations.

Both excess federal percentage depletion, which is limited to certain production volumes and by certain income levels, and excess Oklahoma percentage depletion, which has no limitation on production volume, reduce estimated taxable income or add to estimated taxable loss projected for any year. The federal and Oklahoma excess percentage depletion estimates will be updated throughout the year until finalized with detailed well-by-well calculations at fiscal year-end. Federal and Oklahoma excess percentage depletion, when a provision for income taxes is expected for the year, decreases the effective tax rate, while the effect is to increase the effective tax rate when a benefit for income taxes is expected for the year. The benefits of federal and Oklahoma excess percentage depletion and excess tax benefits and deficiencies of stock-based compensation are not directly related to the amount of pre-tax income (loss) recorded in a period. Accordingly, in periods where a recorded pre-tax income or loss is relatively small, the proportional effect of these items on the effective tax rate may be significant. The effective tax rate for the six months ended March 31, ~~2020,~~2021, was a ~~27%~~21% benefit as compared to a ~~24% provision~~27% benefit for the six months ended March 31, ~~2019.~~2020. The effective tax rate for the quarter ended March 31, ~~2020,~~2021, was a ~~25%~~30% benefit as compared to a 6%25% benefit for the quarter ended March 31, ~~2019.~~2020.

The federal Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted on March 27, 2020. The CARES Act provides relief to corporate taxpayers by permitting a five-year carryback of 2018-2020 Net Operating Losses (“NOLs”), removing the 80% limitation on the carryback of those NOLs, increasing the ~~Section 163(j)~~ 30% limitation on interest expense deductibility under Section 163(j) of the Internal Revenue Code (“IRC”) to 50% of adjusted taxable income for 2019 and 2020, and accelerates refunds for minimum tax credit carryforwards, along with a few other provisions. On July 28, 2020, final regulations were issued under Section 163(j) of the IRC which modified the calculation under the previous proposed regulations of adjusted taxable income for purposes of the 50% limitation on interest expense. Under the final regulations, depreciation, amortization, and depletion capitalizable under Section 263A of the IRC is now added back to tentative taxable income. This change allows all interest expense to be deductible for 2020 and reduces the associated deferred tax asset to 0. During the quarter ended March 31, ~~2020,~~2021, the ~~receipt of~~Company received a tax refund associated with the ~~refundable~~alternative minimum tax ~~credit due to AMT~~(AMT) credits totaling $1.4 million, which was accelerated due to the CARES Act. ~~In addition to~~Additionally, the ~~acceleration~~Company has a $2.2 million receivable associated with the carryback of the AMT refund, an additional $295,544 was recognized as an income tax benefit as a result of the NOL carryback provision allowing the Company to use the previously enacted tax rate of 34% rather than the current tax rate of 21%. 2020 federal net operating loss.

Basic and diluted earnings (loss) per common share is calculated using net income (loss) divided by the weighted average number of voting common shares outstanding, including unissued, vested directors’ deferred compensation shares during the period.

The Company has a $200,000,000 credit facility with a group of banks headed by Bank of Oklahoma (BOK) with a borrowing base of ~~$45,000,000~~$29,400,000 as of March 31, ~~2020,~~2021, and a maturity date of November 30, 2022 (as amended, the “Credit Facility”). The Credit Facility is subject to aat least semi-annual borrowing base ~~determination,~~determinations, wherein BOK applies its commodity pricing forecast to the Company’s reserve forecast and determines a borrowing base. The Credit Facility is secured by ~~certain~~all of the Company’s ~~properties (wellbore only) with a net book value of $42,020,263 at March 31, 2020.~~producing oil and gas properties. The interest rate is based on BOK prime plus from ~~0.50%~~1.00% to ~~1.25%~~1.75%, or 30-day LIBOR plus from ~~2.00%~~2.50% to ~~2.75%~~3.25%. The election of BOK prime or LIBOR is at the Company’s discretion. The interest rate spread from BOK prime or LIBOR will be charged based on the ratio of the loan balance to the borrowing base. The interest rate spread from LIBOR or the prime rate increases as the ratio of loan balance to the borrowing base increases. At March 31, ~~2020,~~2021, the effective interest rate was ~~3.89%~~4.00%.

The Company’s debt is recorded at the carrying amount on its Balance Sheets. The carrying amount of the Credit Facility approximates fair value because the interest rates are reflective of market rates. Debt issuance costs associated with the Credit Facility are presented in Other, net on the Company’s Balance Sheets. Total debt issuance cost net of amortization as of March 31, 2021 was $195,073. The debt issuance cost is amortized over the life of the Credit Facility.

Determinations of the borrowing base are made semi-annually (usually in June and December) or whenever the banks, in their discretion, believe that there has been a material change in the value of the ~~oil and~~Company’s natural gas and oil properties. On December 4, 2020, the Company entered into the eighth amendment to the Credit Facility. The amendment reduced the Quarterly Commitment Reductions from $1,000,000 to $600,000, reduced the consolidated cash balance in the anti-cash hoarding provision from $2,000,000 to $1,000,000, and changed the debt to EBITDA ratio from 4.0:1.00 to 3.50:1.00. The borrowing base after Quarterly

Commitment Reductions was reaffirmed at $30,000,000. The next redetermination ~~is expected to occur~~occurred in ~~June 2020.~~ April 2021. See Note 12: Subsequent Events for further discussion.

The Credit Facility contains customary covenants which, among other things, require periodic financial and reserve reporting and place certain limits on the Company’s incurrence of indebtedness, liens, payment of dividends and acquisitions of stock. In addition, the Company is required to maintain certain financial ratios, a current ratio (as defined in the Credit Facility) of no less than 1.0 to 1.0 and a funded debt to EBITDA ratio (as defined in the Credit Facility) of no more than ~~4.0~~3.5 to 1.0 based on the trailing twelve months. Pursuant to the Credit Facility, the Company is also required to enter into and maintain certain Swap Agreements (as defined in the Credit Facility) for a period of eighteen (18) months fixing prices on oil or gas expected to be produced. At March 31, ~~2020,~~2021, the Company was in compliance with the covenants of the Credit Facility, had ~~$32,000,000~~$23,500,000 outstanding under the Credit Facility and had ~~$13,000,000~~$5,900,000 of borrowing base availability under the Credit Facility.

Annually, non-employee directors may elect to be included in the Deferred Compensation Plan for Non-Employee Directors. This plan provides that each outside director may individually elect to be credited with future unissued shares of Company common stock rather than cash for all or a portion of the annual retainers, Board meeting fees and committee meeting fees. These unissued shares are recorded to each director’s deferred compensation account at the closing market price of the shares (i) on the dates of the Board and committee meetings, and (ii) on the payment dates of the annual retainers. Only upon a director’s retirement, termination, death or a change-in-control of the Company will the shares recorded for such director be issued under this plan. Directors may elect to receive shares, when issued, over annual time periods of up to ten years. The promise to issue such shares in the future is an unsecured obligation of the Company.

InOn March 2010, shareholders approved the Panhandle Oil and Gas Inc. 2010 Restricted Stock Plan (the “2010 Stock Plan”), which made available 200,000 shares of common stock to provide a long-term component to the Company’s total compensation package for its officers and to further align the interest of its officers with those of its shareholders. In March 2014, shareholders approved an amendment to increase the number of shares of common stock reserved for issuance under the 2010 Stock Plan from 200,000 shares to 500,000 shares and to allow the grant of shares of restricted stock to our directors. In March 2020, shareholders approved an amendment to increase the number of shares of common stock reserved for issuance under the 2010 Stock Plan to 750,000 shares. The 2010 Stock Plan, as amended (the “Amended 2010 Stock Plan”), is designed to provide as much flexibility as possible for future grants of restricted stock so that the Company can respond as necessary to provide competitive compensation in order to attract, retain and motivate directors and officers of the Company and to align their interests with those of the Company’s shareholders.

Effective in May 2014, the Board adopted stock repurchase resolutions to allow management, at its discretion, to purchase the Company’s common stock as treasury shares up to an amount equal to the aggregate number of shares of common stock awarded pursuant to the Amended 2010 Restricted Stock Plan, contributed by the Company to its ESOP and credited to the accounts of directors pursuant to the Deferred Compensation Plan for Non-Employee Directors.

Effective in May 2018, the Board of directors approved an amendment to the Company’s existing stock repurchase program (the “Repurchase Program”). As amended, the Repurchase Program continues to allow the Company to repurchase up to $1.5 million of the Company’s common stock at management’s discretion. The Board added language to clarify that this is intended to be an evergreen program as the repurchase of an additional $1.5 million of the Company’s common stock is authorized and approved whenever the previous amount is utilized. In addition, the number of shares allowed to be purchased by the Company under the Repurchase Program is no longer capped at an amount equal to the aggregate number of shares of common stock (i) awarded pursuant

~~to the Amended 2010 Stock Plan, (ii) contributed by the Company to its ESOP, and (iii) credited to the accounts of directors pursuant to the Deferred Compensation Plan for Non-Employee Directors.~~

~~On December 11, 2019,~~22, 2021, the Company awarded 10,038 time-based shares and 15,058 market-based shares of the Company’s common stock as restricted stock to certain officers. The restricted stock vests at the end of a three-year period and contains non-forfeitable rights to receive dividends and voting rights during the vesting period. Upon vesting, the market-based shares that do not meet certain market performance criteria are forfeited. The time-based and market-based shares had fair values on their award date of $122,062 and $160,401, respectively. The fair values for the time-based and the market-based awards will be recognized as compensation expense ratably over the vesting period. The fair value of the market-based shares on their award date is calculated by simulating the Company’s stock prices as compared to the S&P Oil & Gas Exploration & Production ETF (XOP) prices utilizing a Monte Carlo model covering the market performance period (December 11, 2019, through December 11, 2022).

~~On January 2, 2020, the Company awarded 22,300~~125,000 time-based shares of the Company’s common stock as restricted stock to its non-employee directors. ~~The~~These time-based shares had a fair value on their award date of $396,252. On January 5, 2021, the Company awarded 303,750 market-based shares of the Company’s common stock as restricted stock ~~vests on December 31, 2020.~~to certain officers. Upon vesting, the market-based shares that do not meet certain performance criteria are forfeited. The ~~restricted stock contains~~market-based shares contain non-forfeitable rights to receive dividends and to vote the shares during the vesting period. These ~~time-based~~market-based shares had a fair value on their award date of ~~$246,640.~~

On January 16, 2020, upon naming a new Chief Executive Officer, the Company awarded 53,476 time-based shares and 21,988 market-based shares of the Company’s common stock as restricted stock, with the same vesting criteria as the December 11, 2019 awards discussed above. The time-based and market-based shares had fair values on their award date of $500,000 and $179,334, respectively. An additional 37,045 of performance-based shares were awarded to the Company’s officers at that time with a nominal value at their award date.

On March 9, 2020, upon naming a new Chief Financial Officer, the Company awarded 16,340 time-based shares, 2,534 market-based shares and 2,534 performance-based shares of the Company’s common stock as restricted stock, with the same vesting criteria as the December 11, 2019, and January 16, 2020, awards discussed above. The time-based and market-based shares had fair values on their award date of $72,550 and $9,814, respectively. The performance-based shares had a nominal value at their award date.$826,457.

Compensation expense for the restricted stock awards is recognized in G&A. Forfeitures of awards are recognized when they occur. The dilutive impact of all restricted stock plans is immaterial for all periods presented.

The following table summarizes the Company’s pre-tax compensation expense for the three and six months ended March 31, ~~2020~~2021 and ~~2019,~~2020, related to the Company’s market-based, time-based and performance-based restricted stock:

	Three Months Ended				Six Months Ended				Three Months Ended				Six Months Ended
	March 31,				March 31,				March 31,				March 31,
	2020		2019		2020		2019		2021		2020		2021		2020
Market-based, restricted stock	$	200,761	$	182,742	$	274,903	$	246,279	$	79,118	$	200,761	$	89,365	$	274,903
Time-based, restricted stock		142,340		104,110		216,713		200,042		82,052		142,340		194,783		216,713
Performance-based, restricted stock		-		-		-		-		-		-		-		-
Total compensation expense	$	343,101	$	286,852	$	491,616	$	446,321	$	161,170	$	343,101	$	284,148	$	491,616

A summary of the Company’s unrecognized compensation cost for its unvested market-based, time-based and performance-based restricted stock and the weighted-average periods over which the compensation cost is expected to be recognized are shown in the following table:

	As of March 31, 2020				As of March 31, 2021
	Unrecognized Compensation Cost		Weighted Average Period (in years)		Unrecognized Compensation Cost		Weighted Average Period (in years)
Market-based, restricted stock	$	88,147		2.30	$	804,745		2.67
Time-based, restricted stock		827,501		2.19		764,298		1.21
Performance-based, restricted stock		-				-
Total	$	915,648			$	1,569,043

Properties and equipment and related accumulated DD&A as of March 31, 2021, and September 30, 2020, are as follows:

During the first and second quarters of 2021, the Company had no significant divestitures.

During the first quarter of 2020, ~~Panhandle~~PHX closed on the sale of 530 net mineral acres in Eddy County, New Mexico, for $3.4 million. At the time of sale, the assets were mostly amortized and therefore had minimal net book value. Almost all of the value received was a gain on the sale of assets, $3.3 million, in the first quarter of 2020. The Company utilized a like-kind exchange under Internal Revenue Code Section 1031 to defer income tax on all of the gain by offsetting it with the STACK/SCOOP mineral acreage acquisition that was purchased during the quarter using qualified exchange accommodation agreements.

On January 21, 2021, the Company ~~had no divestitures.~~closed on the purchase of 11 net mineral acres in Harrison County, Texas, for a consideration of $362,486.

~~During the first quarter of 2019,~~On December 17, 2020, the Company ~~sold 206~~closed on the purchase of an additional 89 net mineral acres in San Augustine County, Texas, for a purchase price of $1 million.

On November 12, 2020, the Company closed on the purchase of 134 net mineral acres in San Augustine County, Texas, for a purchase price of $750,000.

On October 8, 2020, the Company closed on the purchase of 297 net royalty acres in Grady County, Oklahoma, and 237 net mineral acres and ~~producing oil~~12 net royalty acres in Harrison, Panola and ~~natural gas properties located in Lea and Eddy~~Nacogdoches Counties, ~~New Mexico, to~~Texas, for a ~~private buyer for total net consideration~~purchase price of ~~$9.1~~$5.5 million and ~~recorded a gain on the sale~~153,375 shares of ~~$9.1 million. The~~PHX common stock. This purchase was largely funded with cash from the ~~sale was used to reduce the Company’s outstanding debt under the Credit Facility.~~common stock offering that closed on September 1, 2020.

~~Acquisitions~~These fiscal year 2021 purchases were accounted for as asset acquisitions.

During the first quarter of 2020, ~~Panhandle~~PHX closed on the purchase of 700 net mineral acres in Kingfisher, Canadian and Garvin Counties, Oklahoma, for a purchase price of $9.3 ~~million (after customary closing adjustments).~~million.

During the second quarter of 2019, the Company acquired 329 net mineral acres (which include producing oil and natural gas properties) in the STACK play in Blaine and Caddo Counties, Oklahoma, for $1,386,775.

During the first quarter of 2019, the Company acquired 45 net mineral acres (which include producing oil and natural gas properties) in the STACK play in Blaine County, Oklahoma, with undeveloped locations identified in both the Woodford and Meramac Shales for $423,000.

Management considers the estimation of the Company’s ~~crude~~natural gas, oil ~~NGL~~ and ~~natural gas~~NGL reserves to be the most significant of its judgments and estimates. Changes in ~~crude~~natural gas, oil ~~NGL~~ and ~~natural gas~~NGL reserve estimates affect the Company’s calculation of DD&A, provision for retirement of assets and assessment of the need for asset impairments. On an annual basis, with a semi-annual update, the Company’s Independent Consulting Petroleum Engineer, with assistance from Company staff, prepares estimates of ~~crude~~natural gas, oil ~~NGL~~ and ~~natural gas~~NGL reserves based on available geologic and seismic data, reservoir pressure data, core analysis reports, well logs, analogous reservoir performance history, production data and other available sources of engineering, geologic and geophysical information. Between periods in which reserves would normally be calculated, the Company updates the reserve calculations utilizing appropriate prices for the current period. The estimated ~~oil, NGL and~~ natural gas, oil and NGL reserves were computed using the 12-month average price calculated as the unweighted arithmetic average of the first-day-of-the-month ~~oil, NGL and~~ natural gas, oil and NGL price for each month within the 12-month period prior to the balance sheet date, held flat over the life of the properties. However, projected future ~~crude~~natural gas, oil ~~NGL~~ and ~~natural gas~~NGL pricing assumptions are used by management to prepare estimates of ~~crude~~natural gas, oil ~~NGL~~ and ~~natural gas~~NGL reserves and future net cash flows used in asset impairment assessments and in formulating management’s overall operating decisions. ~~Crude~~Natural gas, oil ~~NGL~~ and ~~natural gas~~NGL prices are volatile and affected by worldwide production and consumption and are outside the control of ~~management (see Item 1A: Risk Factors for a further discussion of price volatility).~~management.

All long-lived assets, principally ~~oil~~natural gas and ~~natural gas~~oil properties, are monitored for potential impairment when circumstances indicate that the carrying value of the asset may be greater than its estimated future net cash flows. The evaluations involve significant judgment since the results are based on estimated future events, such as: inflation rates; future drilling and completion costs; future sales prices for natural gas, oil ~~NGL~~ and ~~natural gas;~~NGL; future production costs; estimates of future ~~oil, NGL and~~ natural gas, oil and NGL reserves to be recovered and the timing thereof; the economic and regulatory climates and other factors. The need to test a property for impairment may result from significant declines in sales prices or unfavorable adjustments to ~~oil, NGL and~~ natural gas, oil and NGL reserves. Between periods in which reserves would normally be calculated, the Company updates the reserve calculations to reflect any material changes since the prior

report was issued and then utilizes updated projected future price decks current with the period. For the three and six months ended March 31, ~~2020,~~2021, the assessment resulted in an impairment provision on producing properties of $29,545,702, primarily due to the decline in commodity prices caused by the ongoing COVID-19 pandemic and the early March 2020 failure by a group of oil producing nations known as OPEC+ to reach an agreement over proposed oil production cuts (see Item 1A: Risk Factors). For the three and six months ended March 31, 2019, the assessment resulted in no0 impairment provisions on producing properties.

During the quarter ended March 31, 2020, ~~impairment~~the Company recorded an impairment in the carrying value of evaluated oil and gas properties of $29.5 million, of which $19.3 million and $7.3 million was recorded on our Fayetteville Shale and Eagle Ford fields, respectively. The remaining $2.9 million of impairment was taken on other producing assets. The discounted cash flows of the properties were prepared using NYMEX strip pricing as of March 31, 2020, using a discount rate of 10% for proved developed and assigning no0 value to undeveloped locations. The Fayetteville Shale assets are dry-gas assets of which the Company acquired a portion in 2011. Low natural gas prices at March 31, 2020, ~~are~~were the primary reason for impairment in this field. The Company recognized an impairment related to the Eagle Ford at September 30, 2019, of $76.6 million primarily due to the removal of working interest PUDs from the Company’s reserve report. The further impairment of the Eagle Ford assets at March 31, 2020, iswas due to the decline in commodity prices over fiscal 2020.

~~A further reduction in oil, NGL and natural gas prices or a decline in reserve volumes may lead to additional impairment in future periods that may be material to the Company.~~

The Company has entered into commodity price derivative agreements, including fixed swap contracts and costless collar contracts. These instruments are intended to reduce the Company’s exposure to short-term fluctuations in the price of ~~oil~~natural gas and ~~natural gas.~~oil. Fixed swap contracts set a fixed price and provide payments to the Company if the index price is below the fixed price, or require payments by the Company if the index price is above the fixed price. Collar contracts set a fixed floor price and a fixed ceiling price and provide payments to the Company if the index price falls below the floor or require payments by the Company if the index price rises above the ceiling. These contracts cover only a portion of the Company’s natural gas and oil production and provide only partial price protection against declines in natural gas and oil prices. ~~These derivative instruments may expose the Company to risk of financial loss and limit the benefit of future increases in prices.~~ The Company’s derivative contracts are currently with Bank of ~~Oklahoma and Koch Supply and Trading LP.~~Oklahoma. The derivative contracts with Bank of Oklahoma are secured under the Credit Facility with Bank of Oklahoma (see Note 6:5: Long-Term Debt). ~~The derivative contracts with Koch Supply and Trading LP are unsecured.~~ The derivative instruments have settled or will settle based on the prices below:

	~~Production volume~~
~~Contract period~~	~~covered per month~~	~~Index~~	~~Contract price~~
~~Natural gas costless collars~~
~~April - October 2020~~	~~10,000 Mmbtu~~	~~NYMEX Henry Hub~~	~~$2.20 floor / $2.59 ceiling~~
~~Natural gas fixed price swaps~~
~~January - December 2020~~	~~80,000 Mmbtu~~	~~NYMEX Henry Hub~~	~~$2.750~~
~~April - October 2020~~	~~10,000 Mmbtu~~	~~NYMEX Henry Hub~~	~~$2.405~~
~~November 2020 - March 2021~~	~~10,000 Mmbtu~~	~~NYMEX Henry Hub~~	~~$2.661~~
~~Oil costless collars~~
~~July 2019 - June 2020~~	~~2,000 Bbls~~	~~NYMEX WTI~~	~~$65.00 floor / $76.15 ceiling~~
~~January - June 2020~~	~~2,000 Bbls~~	~~NYMEX WTI~~	~~$60.00 floor / $67.00 ceiling~~
~~January - December 2020~~	~~2,000 Bbls~~	~~NYMEX WTI~~	~~$55.00 floor / $62.00 ceiling~~
~~Oil fixed price swaps~~
~~January - December 2020~~	~~2,000 Bbls~~	~~NYMEX WTI~~	~~$55.28~~
~~January - December 2020~~	~~2,000 Bbls~~	~~NYMEX WTI~~	~~$58.65~~
~~January - December 2020~~	~~2,000 Bbls~~	~~NYMEX WTI~~	~~$60.00~~
~~January - December 2020~~	~~2,000 Bbls~~	~~NYMEX WTI~~	~~$58.05~~
~~July - December 2020~~	~~2,000 Bbls~~	~~NYMEX WTI~~	~~$58.10~~


Contract period (Calendar Year)	Contract total volume	Index	Contract average price
Natural gas costless collars
Remaining 2021	2,207,500 Mmbtu	NYMEX Henry Hub	$2.35 floor / $3.04 ceiling
2022	2,200,500 Mmbtu	NYMEX Henry Hub	$2.40 floor / $3.12 ceiling
2023	86,000 Mmbtu	NYMEX Henry Hub	$2.25 floor / $2.96 ceiling
Natural gas fixed price swaps
Remaining 2021	1,166,500 Mmbtu	NYMEX Henry Hub	$2.80
2022	377,500 Mmbtu	NYMEX Henry Hub	$2.61
2023	84,000 Mmbtu	NYMEX Henry Hub	$2.56
Oil costless collars
Remaining 2021	33,500 Bbls	NYMEX WTI	$36.76 floor / $45.00 ceiling
2022	68,500 Bbls	NYMEX WTI	$40.25 floor / $50.35 ceiling
Oil fixed price swaps
Remaining 2021	87,000 Bbls	NYMEX WTI	$39.37
2022	59,000 Bbls	NYMEX WTI	$41.51

The Company has elected not to complete all of the documentation requirements necessary to permit these derivative contracts to be accounted for as cash flow hedges. The Company’s fair value of derivative contracts was a net ~~asset~~liability of ~~$4,216,915~~$3,625,709 as of March 31, ~~2020,~~2021, and a net ~~asset~~liability of ~~$2,494,144~~$707,647 as of September 30, ~~2019. Net cash received related to~~2020. Cash receipts or payments in the following table reflect the gain or loss on derivative contracts which settled during the ~~six-month period ended March 31, 2020, was $1,530,912 compared to net cash paid~~respective periods, and the non-cash gain or loss reflect the change in fair value of ~~$1,518,294 in the same period in the~~

~~prior year. Net cash receivedrelated to~~ derivative contracts ~~settled during~~as of the ~~three months ended March 31, 2020, was $629,139 compared to net cash received~~end of ~~$181,107 in~~ the ~~same period in the prior year.~~respective periods:

The fair value amounts recognized for the Company’s derivative contracts executed with the same counterparty under a master netting arrangement may be offset. The Company has the choice of whether or not to offset, but that choice must be applied consistently. A master netting arrangement exists if the reporting entity has multiple contracts with a single counterparty that are subject to a contractual agreement that provides for the net settlement of all contracts through a single payment in a single currency in the event of default on or termination of any one contract. Offsetting the fair values recognized for the derivative contracts outstanding with a single counterparty results in the net fair value of the transactions being reported as an asset or a liability in the Company’s Balance Sheets.

The following table summarizes and reconciles the Company's derivative contracts’ fair values at a gross level back to net fair value presentation on the Company's Balance Sheets at March 31, ~~2020,~~2021, and September 30, ~~2019.~~2020. The Company has offset all amounts subject to master netting agreements in the Company's Balance Sheets at March 31, ~~2020,~~2021, and September 30, ~~2019.~~2020.

	March 31, 2020				September 30, 2019				March 31, 2021												September 30, 2020
	Fair Value (a)				Fair Value (a)				Fair Value (a)												Fair Value (a)
	Commodity Contracts				Commodity Contracts				Commodity Contracts												Commodity Contracts
	Current Assets		Non-Current Assets		Current Assets		Non-Current Assets		Current Assets			Current Liabilities			Non-Current Assets			Non-Current Liabilities			Current Assets			Current Liabilities			Non-Current Liabilities
Gross amounts recognized	$	4,216,915	$	-	$	2,256,639	$	237,505	$	106,480		$	3,107,010		$	177,756		$	802,935		$	864,466		$	1,146,408		$	425,705
Offsetting adjustments		-		-		-		-		(106,480	)		(106,480	)		(177,756	)		(177,756	)		(864,466	)		(864,466	)		-
Net presentation on Condensed Balance Sheets	$	4,216,915	$	-	$	2,256,639	$	237,505	$	-		$	3,000,530		$	-		$	625,179		$	-		$	281,942		$	425,705

(a) See Note ~~11:~~10: Fair Value Measurements for further disclosures regarding fair value of financial instruments.

The fair value of derivative assets and derivative liabilities is adjusted for credit risk. The impact of credit risk was immaterial for all periods presented.

Fair value is defined as the amount that would be received from the sale of an asset or paid for the transfer of a liability in an orderly transaction between market participants, i.e., an exit price. To estimate an exit price, a three-level hierarchy is used. The fair value hierarchy prioritizes the inputs, which refer broadly to assumptions market participants would use in pricing an asset or a liability, into three levels. Level 1 inputs are unadjusted quoted prices in active markets for identical assets and liabilities. Level 2

inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. If the asset or liability has a specified (contractual) term, a Level 2 input must be observable for substantially the full term of the asset or liability. Level 2 inputs include the following: (i) quoted prices for similar assets or liabilities in active markets; (ii) quoted prices for identical or similar assets or liabilities in markets that are not active; (iii) inputs other than quoted prices that are observable for the asset or liability; or (iv) inputs that are derived principally from or corroborated by observable market data by correlation or other means. Level 3 inputs are unobservable inputs for the financial asset or liability.

The following table provides fair value measurement information for financial assets and liabilities measured at fair value on a recurring basis ~~as of~~at March 31, ~~2020:~~2021:

	Fair Value Measurement at March 31, 2020								Fair Value Measurement at March 31, 2021
	Quoted Prices in Active Markets		Significant Other Observable Inputs		Significant Unobservable Inputs		Total Fair		Quoted Prices in Active Markets		Significant Other Observable Inputs			Significant Unobservable Inputs		Total Fair
	(Level 1)		(Level 2)		(Level 3)		Value		(Level 1)		(Level 2)			(Level 3)		Value
Financial Assets (Liabilities):
Derivative Contracts - Swaps	$	-	$	3,114,037	$	-	$	3,114,037	$	-	$	(2,472,697	)	$	-	$	(2,472,697	)
Derivative Contracts - Collars	$	-	$	1,102,878	$	-	$	1,102,878	$	-	$	(1,153,012	)	$	-	$	(1,153,012	)

Level 2 – Market Approach - The fair values of the Company’s swaps and collars are based on a third-party pricing model, which utilizes inputs that are either readily available in the public market, such as natural gas curves and volatility curves, or can be corroborated from active markets. These values are based upon future prices, time to maturity and other factors. These values are then compared to the values given by our counterparties for reasonableness.

The following table presents impairments associated with certain assets that have been measured at fair value on a nonrecurring basis within Level 3 of the fair value hierarchy:

	Quarter Ended March 31,
	2020				2019				Quarter Ended March 31,
	Fair Value		Impairment		Fair Value		Impairment		2021				2020
									Fair Value		Impairment		Fair Value		Impairment
Producing Properties (a)	$	5,288,710	$	29,545,702	$	-	$	-	$	-	$	-	$	5,288,710	$	29,315,807

	Six Months Ended March 31,								Six Months Ended March 31,
	2020				2019				2021				2020
	Fair Value		Impairment		Fair Value		Impairment		Fair Value		Impairment		Fair Value		Impairment

Producing Properties (a)	$	5,288,710	$	29,545,702	$	-	$	-	$	-	$	-	$	5,288,710	$	29,315,807

(a) ~~At the end~~When indicators of ~~each quarter,~~impairment are present, the Company ~~assessed~~assesses the carrying value of its producing properties for impairment. This assessment utilized estimates of future cash flows. Significant judgments and assumptions in these assessments include estimates of future ~~oil, NGL and~~ natural gas, oil and NGL prices using a forward NYMEX curve adjusted for projected inflation, locational basis differentials, drilling plans, expected capital costs and an applicable discount rate commensurate with risk of the underlying cash flow estimates. These assessments identified certain properties with carrying value in excess of their calculated fair ~~values~~.values. This table excludes impairments on properties that were written off during the three months ended March 31, 2020 in the amount $229,895.

At March 31, ~~2020,~~2021, and September 30, ~~2019,~~ 2020, the carrying values of cash and cash equivalents, receivables, and payables are considered to be representative of their respective fair values due to the short-term maturities of those instruments. Financial instruments include long-term debt, which the valuation is classified as Level 2 as the carrying amount of the Company’s Credit Facility approximates fair value because the interest rates are reflective of market rates. The estimated current market interest rates are based primarily on interest rates currently being offered on borrowings of similar amounts and terms. In addition, no valuation input adjustments were considered necessary relating to nonperformance risk for the debt agreements.

The Company may be the subject of threatened or pending legal actions and contingencies in the normal course of conducting our business. The Company provides for costs related to these matters when a loss is probable and the amount can be reasonably estimated. The effect of the outcome of these matters on our future results of operations and liquidity cannot be predicted because any such effect depends on future results of operations and the amount or timing of the resolution of such matters. For certain types of claims, the Company maintains insurance coverage for personal injury and property damage, product liability and other liability coverages in amounts and with deductibles that it believes are prudent, but there can be no assurance that these coverages will be applicable or adequate to cover adverse outcomes of claims or legal proceedings against the Company.

On April 7, 2021, the Company entered into a Ninth Amendment (the “Amendment”) to its Amended and Restated Credit Agreement, dated November 25, 2013 (as amended from time to time, the “Credit Facility”) with BOKF, NA dba Bank of Oklahoma, as lender, issuing bank and administrative agent for several banks and other financial institutions and lenders thereto. The Amendment, among other things, reduces the Company’s borrowing base under the Credit Facility to $29.0 million, extends the maturity date one year to November 30, 2023 and reduces the Quarterly Commitment Reductions from $600,000 to $500,000, commencing on April 15, 2021. Additionally, the Amendment increases the Company’s distribution allowance from $1.0 million to $1.5 million per annum for a period of one year from the date of the Amendment and extends this allowance beyond the date that is one year following the date of the Amendment so long as (i) the Available Commitment is greater than or equal to 20% of the Total Commitment and (ii) the Leverage Ratio on a pro forma basis does not exceed 2.75 to 1.00. The existing prohibition of all Restricted Payments other than the subject distribution allowance and the existing requirement that immediately after giving effect to a permitted Restricted Payment, no Default or Event of Default may exist or result therefrom are to remain in effect.

The Amendment also provides that any cash actually received by the Company in an equity raise is considered “Excluded Cash” (previously, this was limited to cash actually received by the Company in an equity raise on or prior to December 24, 2020) and that such cash may be used for acquisitions by the Company without BOKF’s prior written consent. The capitalized terms which are not defined in this description of the Amendment shall have the meaning given to such terms in the Credit Facility.

Subsequent to March 31, ~~2020,~~2021, the Company paid down an additional $1,750,000 under the Credit Facility, bringing the total outstanding debt balance to $21,750,000, as of April 28, 2021.

Subsequent to March 31, 2021, the Company closed on an underwritten public offering of 6,175,000 common shares (inclusive of overallotment option) with estimated net proceeds of $11.2 million to the Company. The Company intends to use the net proceeds of the offering to fund the Acquisition (as hereinafter defined) and for general corporate purposes.

On April 30, 2021, the Company closed on the acquisition of certain mineral and royalty assets located in Stephens, Carter, Canadian, McClain, Murray, and Garvin Counties, Oklahoma, for aggregate consideration of approximately $10,939,875 (the “Acquisition”), pursuant to a Purchase and Sale Agreement (the “Purchase Agreement”) entered into ~~new derivative contracts as summarized~~by the Company with Palmetto Investment Partners, LLC, Palmetto Investment Partners II, LLC and Crestwood Exploration Partners, LLC, on April 14, 2021. The Acquisition includes mineral and royalty assets totaling approximately 2,514 net royalty acres and 1,889 net mineral acres in the ~~table below:~~SCOOP play. The Acquisition has an effective date of November 1, 2020.

Total consideration for the Acquisition after purchase price adjustments included a cash payment of approximately $8,539,875 and the issuance of 1,200,000 shares of common stock (the “Equity Consideration”), which are being held in escrow to satisfy potential indemnification claims under the Purchase Agreement. The Purchase Agreement includes registration rights relating to the Equity Considerationpursuant to which the Company agrees to register with the Securities and Exchange Commission the shares constituting the Equity Consideration. The Company agrees to file a resale registration statement and to use reasonable best efforts to cause such registration statement to be declared effective as promptly as possible after the filing thereof.

~~Panhandle~~PHX is an owner and manager of perpetual ~~oil~~natural gas and ~~natural gas~~oil mineral interests in resource plays in the United States. Our principal business is maximizing the value of our existing mineral and royalty assets through active management and expanding our asset base through acquisitions of additional mineral and royalty interests.

We currently own interests in leasehold acreage and non-operated working interests in ~~oil and~~ natural gas and oil properties. Exploration and development of our ~~oil~~natural gas and ~~natural gas~~oil properties are conducted by third-party ~~oil~~natural gas and ~~natural gas~~oil exploration and production companies (primarily larger independent operating companies). We do not operate any of our ~~oil~~natural gas and ~~natural gas~~oil properties. While we previously have been an active working interest participant in wells drilled on our mineral and leasehold acreage, our current focus is on growth through mineral acquisitions and development of our significant mineral acreage inventory in our core areas of focus, which include the ~~SCOOP/~~SCOOP, STACK and Arkoma Stack plays in Oklahoma, the Permian Basin in Texas and New Mexico, the Haynesville and Eagle Ford ~~play~~plays in Texas, the Fayetteville play in Arkansas, and the Bakken/Three Forks play in North Dakota. We have ceased taking ~~any~~ working interest positions on our mineral and leasehold acreage and do not plan to take any going forward.

Our results of operations are dependent primarily upon our: existing reserve quantities; costs associated with acquiring new reserves; production quantities and related production costs; and ~~oil, NGL and~~ natural gas, ~~sales~~oil and NGL prices. Although a significant amount of our revenue is currently derived from the production and sale of ~~oil, NGL and~~ natural gas, oil and NGL on our working interests, a growing portion of our revenue is derived from royalties received from the production and sale of natural gas, oil ~~NGL~~ and ~~natural gas.~~NGL.

THREE MONTHS ENDED MARCH 31, ~~2020,~~2021, COMPARED TO THREE MONTHS ENDED MARCH 31, ~~2019~~2020

The Company recorded a second quarter ~~2020~~2021 net loss of ~~$20,454,814,~~$499,723, or ~~$1.24~~$0.02 per share, as compared to a net loss of ~~$1,931,334,~~$20,454,814, or ~~$0.11~~$1.24 per share, in the ~~2019~~2020 quarter. The change in net ~~income (loss)~~loss was principally the result of ~~an increase in provision for~~increased natural gas, oil and NGL sales and decreased G&A, LOE, transportation, gathering and marketing expenses, depreciation, depletion and amortization and impairment ~~(non-cash) and~~expense, partially offset by a decrease in ~~oil, NGL and natural gas sales, partially offset by an increased~~ gain (losses) on derivative contracts and ~~changes in~~income tax ~~provision (benefit).~~benefit. These items are further discussed below.

The increase in natural gas, oil and NGL sales ~~decreased $2,003,701 or 22% for the 2020 quarter. Oil, NGL and~~was primarily due to increases in natural gas, ~~sales were down due to decreases in~~ oil ~~NGL~~ and ~~natural gas~~NGL prices of ~~15%~~54%, ~~35%~~24% and ~~38%~~101%, respectively, and ~~decreases in NGL and natural gas sales volumes of 1% and 9%, respectively, slightly offset by~~ an increase in ~~oil sales~~natural gas volumes of ~~25%.~~13%, partially offset by a decrease in oil and NGL volumes of 40% and 22%, respectively. The following table outlines the Company’s production and average sales prices for ~~oil, NGL and~~ natural gas, oil and NGL for the three-month periods of fiscal 2021 and 2020:

The decrease in oil production was primarily due to naturally declining production in high-interest wells brought online during the first quarter of 2020 in the Bakken play, as well as reduced drilling and ~~2019:~~completion activity in 2021, compared to 2020 in the Eagle Ford and SCOOP plays due to prevailing economic conditions. The decrease in NGL production was primarily attributable

~~The oil~~to production ~~increase is attributable~~downtime and curtailments in high-interest wells in response to ~~producing property royalty acquisitions in the Bakken in North Dakota and Anadarko STACK in Oklahoma, as well as new well drilling on legacy Panhandle mineral acreage~~market conditions in the SCOOP and STACK ~~in Oklahoma. NGL production is relatively flat~~plays, as well as naturally declining production in liquid-rich gas areas of the Anadarko Basin and Arkoma Stack are offset by additional production related to royalty acquisition volumes in the STACK and Bakken, new royalty wells in the SCOOP and Bakken, and operators removing more NGL from the natural gas stream.Granite Wash play. Natural gas volumes ~~are slightly down~~increased as a result of acquisitions in the Haynesville Shale, which were partially offset by naturally declining production in the ~~STACK, Arkoma Stack and~~ Fayetteville Shale, ~~partially offset by royalty acquisition volumes~~production downtime and curtailments in high-interest wells in response to market conditions in the STACK and ~~Bakken and volumes identified in new royalty wells in the~~ SCOOP ~~and Bakken.~~ plays.

When the Company leases its mineral interests, an upfront cash payment, or lease bonus, is generally received. Lease bonuses and rental income ~~decreased $186,654~~increased $36,462 in the ~~2020 quarter.~~2021 quarter primarily as the result of increased leasing activity in the second quarter of 2021.

~~The~~We utilize commodity derivative financial instruments to reduce our exposure to fluctuations in commodity prices. This amount represents the (i) gain (loss) related to fair value adjustments on our open derivative contracts and (ii) gains (losses) on settlements of derivative contracts ~~was a~~for positions that have settled within the period. The net ~~asset of $4,216,915 as of March 31, 2020, and a~~gain (loss) on derivative instruments for the periods indicated includes the following:

The net ~~asset of $817,206 as of March 31, 2019. The Company had a net gain~~loss on derivative contracts ~~of $4,071,577~~ in the ~~2020 quarter as compared~~current period was principally due to ~~a net loss of $1,793,852 in~~ the ~~2019 quarter. During the 2020 quarter, oil and~~ natural gas ~~collars~~ and fixed price swaps experienced a favorable change as NYMEX futures experienced a significant decrease in price during the quarter in relation to their previous position to the collars and the fixed prices of the swaps at the beginning of the 2020 quarter. ~~During the 2019 quarter, the~~ oil collars and fixed price swaps ~~experienced an unfavorable change as NYMEX oil futures experienced a significant increase in price during the quarter~~being less beneficial in relation to their ~~previous position to the collars~~respective contracted volumes and ~~the fixed~~ prices ~~of the swaps~~ at the beginning of the ~~2019 quarter.~~period, compared to such natural gas and oil collars and fixed price swaps being more beneficial in the second quarter of 2020 causing a net gain.

The Company’s natural gas and oil costless collar contracts and fixed price swaps in place at March 31, 2021, had expiration dates of April 2021 through February 2023. The Company utilizes derivative contracts for the purpose of protecting its cash flow and return on investments and cash flow. Net cash received related to derivative contracts settled during the quarter ended March 31, 2020, was $629,139 compared to net cash received of $181,107 in the same period in the prior year.investments.

The Company is responsible for a portion of LOE relating to a well as a working interest owner. LOE includes normally recurring and nonrecurring expenses associated with ~~our~~the Company’s working interests necessary to produce hydrocarbons from our ~~oil and~~ natural gas and oil wells, ~~as well as certain nonrecurring~~including maintenance, repairs, salt water disposal, insurance and workover expenses ~~such as well repairs.~~ related to natural gas and oil properties. Total LOE related to field operating costs ~~increased $36,692~~decreased $511,548, or 2%33%, in the ~~2020~~2021 quarter compared to ~~2019 quarter. LOE per Mcfe increased in~~ the 2020 ~~quarter to $0.65 compared to $0.62 in the 2019~~ quarter. The ~~increase~~decrease in LOE ~~per Mcfe is~~rate was principally the result ~~of LOE costs increasing 2% while total production declined 2% related to declining natural gas production. This decrease in production is a reflection~~ of the Company’s strategic decision ~~at the end of fiscal 2019~~ to ~~cease participating~~not participate with a working interest ~~on its mineral and leasehold acreage and to focus solely on growth through mineral acquisitions going forward. As royalty interest production increases~~ in ~~relation to total company production, LOE per Mcfe is anticipated to be lower.~~new wells.

Transportation, gathering and marketing decreased ~~$126,043~~$37,114, or 9%3%, in the ~~2020~~2021 quarter. This decrease in costs was primarily driven by slightly lower ~~natural gas~~ production in the ~~2020~~2021 quarter compared to the ~~2019~~2020 quarter. The consistent rate per Mcfe was primarily due to the change in natural gas sales in relation to other products. Natural gas sales bear the large majority of ~~our~~the Company’s transportation, gathering and marketing fees. On

Production taxes are paid on produced natural gas and oil based on a ~~per Mcfe basis, these handling fees were $0.57~~percentage of revenues from products sold at both fixed and variable rates established by federal, state or local taxing authorities. Production taxes increased $69,400, or 19%, in the ~~2020 quarter as compared to $0.61 in the 2019~~2021 quarter. The decrease in rate was principally due to increased oil sales as they made up a larger percentage of our total production in the 2020 quarter compared to the 2019 quarter. Oil sales incur much smaller transportation, gathering and marketing fees than NGL and natural gas.

~~Production taxes decreased $93,554 in the 2020 quarter. The decrease~~increase in amount was primarily the result of ~~decreased oil, NGL and~~increased natural gas, oil and NGL sales of ~~$2,003,701~~$1,128,207 in the ~~2020~~2021 quarter as compared to the ~~2019 quarter. Production taxes as a percentage of oil, NGL and natural gas sales increased from 5.1% in the 2019 quarter to 5.2% in the~~ 2020 quarter.

DD&A is the amount of cost basis of ~~oil~~natural gas and ~~natural gas~~oil properties attributable to the volume of hydrocarbons extracted during such period, calculated on a units-of-production ~~basis.~~basis for working interest, and on a straight-line basis for producing and non-producing minerals. Estimates of proved developed producing reserves are a major component of the calculation of depletion. DD&A decreased ~~$250,458~~$1,595,701, or 7%47%, in the ~~2020 quarter. DD&A~~2021 quarter, of which $108,393 of the decrease resulted from production decreasing 3% in the ~~2020~~2021 quarter ~~was $1.42 per Mcfe as compared to $1.50 per Mcfe in the 2019 quarter. DD&A decreased $178,039 as~~and $1,487,308 of such decrease resulted from a ~~result of an $0.08~~$0.65 decrease in the DD&A rate per Mcfe. ~~DD&A decreased $72,419 as a result of production decreasing 2% in the 2020 quarter.~~ The rate decrease was mainly due to ~~the impairment~~impairments taken ~~on the Eagle Ford~~ at the end of ~~fiscal 2019,~~the 2020 second quarter, which lowered the basis of the assets. The rate decrease was partially offset by lower ~~oil, NGL and~~ natural gas, oil and NGL prices utilized in the reserve calculations during the ~~2020~~2021 quarter, as compared to the ~~2019~~2020 quarter, shortening the economic life of wells. This resulted in lower projected remaining reserves on a significant number of wells causing increased units of production DD&A.~~Taking into consideration the impairment of our assets in the 2020 quarter, we expect our DD&A rate going forward to be significantly lower.~~

~~Provision for impairment~~There was ~~$29,545,702 in the~~ ~~2020 quarter as compared to~~ no provision for impairment in the ~~2019~~2021 quarter as compared to $29,545,702 provision for impairment in the 2020 quarter. During the 2020 quarter, impairment of $29,315,807 was recorded on seven different fields, including the Fayetteville and Eagle Ford shales, which ~~represent~~represented 90% of our total ~~impairment.~~impairment in the second quarter of 2020. The Fayetteville Shale assets are dry-gas assets of which the Company acquired a portion in 2011. Low natural gas prices at March 31, 2020, ~~are~~were the primary reason for impairment in this field. The Company recognized an impairment related to the Eagle Ford at September 30, 2019, of $76.6 million primarily due to the removal of working interest PUDs from the Company’s reserve report. The further impairmentImpairment of the Eagle Ford assets at March 31, 2020, iswas due to the decline in commodity prices over fiscal 2020. ~~The remaining $229,895 of impairment was recorded on other assets.~~ The impairment on assets in these seven fields was caused by lower futures prices associated with our products. Futures prices experienced downward pressure resulting in low pricing as of the end of the 2020 quarter. The reduced future net value associated with these fields caused the assets to fail the step one test for impairment as their undiscounted cash flows were not high enough to cover the book basis of the assets. These assets were written down to their fair market value as required by GAAP. NoThe remaining $229,895 of impairment was recorded ~~during~~on other assets.

The decrease in interest expense is due to a lower average debt balance in the ~~2019~~2021 quarter as compared to the 2020 quarter.

Income taxes changed ~~$6,857,000,~~$6,770,000, from ~~a $130,000 benefit in the 2019 quarter to~~ a $6,987,000 benefit in the 2020 quarter to a $217,000 benefit in the 2021 quarter. The effective tax rate changed from a ~~6% benefit in the 2019 quarter to a~~ 25% benefit in the 2020 quarter to a 30% benefit in the 2021 quarter. The change in income taxes resulted primarily from the change in net loss.

When a provision for income taxes is expected for the year, federal and Oklahoma excess percentage depletion decreases the effective tax rate, while the effect is to increase the effective tax rate when a benefit for income taxes is recorded.

G&A expenses are costs not directly associated with the production of natural gas and oil and include the cost of employee salaries and related benefits, office expenses and fees for professional services. G&A decreased $115,185 as compared to the 2020 quarter. The decrease was primarily due to cost reduction efforts by the Company.

SIX MONTHS ENDED MARCH 31, ~~2020,~~2021, COMPARED TO SIX MONTHS ENDED MARCH 31, ~~2019~~2020

The Company recorded a six-month net loss of $1,096,443, or $0.05 per share, in the 2021 period, as compared to a net loss of $18,562,700, or $1.12 per share, in the 2020 ~~period, as compared to net income of $10,804,606, or $0.64 per share, in the 2019~~ period. The change in net income (loss) was principally the result of ~~increase~~decreased G&A, LOE, transportation, gathering and marketing expenses, depreciation, depletion and amortization and impairment expense, partially offset by a decrease in ~~provision for impairment (non-cash), by~~natural gas, oil and NGL sales, gain (losses) on derivative contracts, gain on asset sales and income tax benefit. These items are further discussed below.

Natural gas, oil and NGL sales remained relatively consistent with decreases in oil and ~~gas sales~~NGL volumes of 28% and ~~gain on assets sales,~~10%, respectively, partially offset by ~~decreased DD&A and changes~~increases in ~~our tax provision (benefit).~~

~~Revenue from oil, NGL and~~ natural gas ~~sales decreased $6,620,582 or 31% for the 2020 period. Oil,~~and NGL ~~and natural gas sales were down due to decreases in oil, NGL and natural gas~~ prices of ~~10%~~29% and 41%, ~~36% and 37%, respectively, and decreases in NGL and natural gas sales volumes of 21% and 11%, respectively, slightly offset by an increase in oil sales volumes of 1%.~~respectively. The following table outlines the Company’s production and average sales prices for ~~oil, NGL and~~ natural gas, oil and NGL for the six-month periods of fiscal ~~2020~~2021 and ~~2019:~~2020:

Oil Bbls

Average

NGL Bbls

Average

Mcf

Average

Mcfe

Average

Sold

Price

Sold

Price

Sold

Price

Sold

Price

Six months ended

3/31/2020
(As Restated)

159,021

$
48.14

86,717

$
13.14

3,177,194

$
1.89

4,651,622

$
3.18

3/31/2019

157,200

$
53.49

110,137

$
20.62

3,582,033

$
3.00

5,186,055

$
4.13

	Mcf		Average		Oil Bbls		Average		NGL Bbls		Average		Mcfe		Average
	Sold		Price		Sold		Price		Sold		Price		Sold		Price
Six months ended
3/31/2021		3,211,276	$	2.44		114,945	$	47.73		78,365	$	18.54		4,371,139	$	3.38
3/31/2020		3,177,194	$	1.89		159,021	$	48.14		86,717	$	13.14		4,651,622	$	3.18

The decrease in oil production increase is attributable to producing property royalty acquisitions in the Bakken in North Dakota and Anadarko STACK in Oklahoma, as well as new well drilling on legacy Panhandle mineral acreage. New oil production is offset by naturally declining production and, to a lesser extent, divestitures in the Permian Basin. The NGL production decrease is predominately attributedwas primarily due to naturally declining production in high-interest wells brought online during the first quarter of 2020 in the ~~Anadarko STACK. Additional decline~~Bakken play, as well as reduced drilling and completion activity in 2021, compared to 2020 in the Eagle Ford and SCOOP plays due to prevailing economic conditions. The decrease in NGL production ~~is attributed~~was primarily attributable to ~~divestitures~~production downtime and curtailments in high-interest wells in response to market conditions in the ~~Permian Basin and~~SCOOP play as well as naturally declining production in liquid-rich gas areas of the Anadarko Granite Wash play. Natural gas volumes increased as a result of acquisitions in the Haynesville Shale, which were partially offset by naturally declining production in the ~~Arkoma Stack, Eagle Ford~~Fayetteville Shale, production downtime and ~~Anadarko Basin Granite Wash. The natural gas production decrease is due~~curtailments in high-interest wells in response to ~~naturally declining production in the Anadarko STACK, Arkoma Stack and Fayetteville Shale. This natural gas decrease is offset by royalty acquisition volumes~~market conditions in the STACK and ~~Bakken~~SCOOP plays.

Lease Bonuses and ~~volumes identified in new royalty interest wells~~Rental Income:

When the Company leases its mineral interests, an upfront cash payment, or lease bonus, is generally received. Lease bonuses and rental income decreased $489,804 in the ~~SCOOP and Bakken.~~2021 period due to general slowdown in leasing activity.

The net ~~asset of $817,206 as of March 31, 2019. The Company had a net gain~~loss on derivative contracts ~~of $3,253,683~~ in the ~~2020~~current period ~~as compared to a net gain of $2,712,928 recorded in the 2019 period. The change~~ was principally due to the ~~oil~~natural gas and ~~natural gas~~oil collars and fixed price swaps being ~~more favorable in the 2020 period, as NYMEX futures prices decreased, during the period,~~less beneficial in relation to ~~where they were~~their respective contracted volumes and prices at the beginning of the ~~period. During the 2019~~ period, ~~the gain was principally due~~compared to ~~the~~such natural gas and oil collars and fixed price swaps being more ~~favorable~~beneficial in the ~~2019~~2020 period ~~as NYMEX~~causing a net gain.

The Company’s natural gas and oil ~~futures decreased, during the period,~~costless collar contracts and fixed price swaps in ~~relation to where they were~~place at ~~the beginning~~March 31, 2021, had expiration dates of ~~the period.~~April 2021 through February 2023. The Company utilizes derivative contracts for the purpose of protecting its cash flow and return on investments. Net cash received related to derivative contracts settled during the six-month period ended March 31, 2020, was $1,530,912 compared to net cash paid of $1,518,294 in the same period in the prior year.

Gain on asset sales was $3,272,888 in the 2020 period. The Company sold 530 net mineral acres in Eddy County, New Mexico, for a gain of $3,272,888. During the 2019 period, the Company sold mineral acreage in Lea and Eddy Counties, New Mexico, for a gain of $9,096,938.

The Company is responsible for a portion of LOE relating to a well as a ~~non-operated~~ working interest ~~holder.~~owner. LOE includes normally recurring and nonrecurring expenses associated with ~~our non-operated~~the Company’s working interests necessary to produce hydrocarbons from our ~~oil and~~ natural gas and oil wells, ~~as well as certain nonrecurring~~including maintenance, repairs, salt water disposal, insurance and workover expenses ~~such as well repairs.~~ related to natural gas

and oil properties. Total LOE related to field operating costs decreased ~~$296,191~~$688,807, or ~~10%~~25%, in the 2021 period compared to the 2020 period. ~~This~~The decrease in LOE expense was principally the result of the ~~Company selling some marginal properties~~Company’s strategic decision to not participate with a working interest in ~~fiscal 2019 which had higher operating costs. LOE per Mcfe increased in the 2020 period to $0.59 compared to $0.58 in the 2019 period.~~new wells.

Transportation, gathering and marketing decreased ~~$333,058~~$139,150, or ~~11%~~5%, in the ~~2020~~2021 period. This decrease in costs was primarily driven by lower ~~natural gas~~ production in the ~~2020~~2021 period compared to the ~~2019~~2020 period. The consistent rate per Mcfe was primarily due to the change in natural gas sales in relation to other products. Natural gas sales bear the large majority of ~~our~~the Company’s transportation, gathering and marketing fees. On

Production taxes are paid on produced natural gas and oil based on a ~~per Mcfe basis, these handling fees were $0.59~~percentage of revenues from products sold at both fixed and variable rates established by federal, state or local taxing authorities. Production taxes increased $18,145, or 3%, in the ~~2020 period as compared to $0.59 in the 2019 period. Natural gas handling fees per Mcfe were $0.74 in the 2020 period as compared to $0.73 in the 2019~~2021 period. The increase in natural gas handling fees was offset by increased oil sales as they made up a larger percentage of our total production in the 2020 period compared to the 2019 period. Oil sales incur much smaller transportation, gathering and marketing fees than NGL and natural gas.

~~Production taxes decreased $375,224 in the 2020 period. The decrease~~ in amount was primarily the result of increased prices partially offset by decreased ~~oil, NGL and natural gas sales of $6,620,582~~production volumes in the ~~2020~~2021 period as compared to the ~~2019 period. Production taxes as a percentage of oil, NGL and natural gas sales decreased from 5.0% in the 2019 period to 4.7% in the~~ 2020 period.

DD&A is the amount of cost basis of ~~oil~~natural gas and ~~natural gas~~oil properties attributable to the volume of hydrocarbons extracted during such period, calculated on a units-of-production ~~basis.~~basis for working interest, and on a straight-line basis for producing and non-producing minerals. Estimates of proved developed producing reserves are a major component of the calculation of d~~epletion.~~ depletion. DD&A decreased ~~$1,108,443~~$2,290,753, or ~~15%~~36%, in the ~~2020 period. DD&A~~2021 period, of which $381,457 of the decrease resulted from production decreasing 6% in the ~~2020~~2021 period was $1.36 per Mcfe as compared to $1.43 per Mcfe in the 2019 period. DD&A decreased $766,465 as a result of production decreasing 10% in the 2020 period compared to the 2019 period. An additional decrease of $341,978 was the resultand $1,909,296 of the ~~$0.07~~decrease resulted from a $0.44 decrease in the DD&A rate per Mcfe. The rate decrease was mainly due to ~~the impairment~~impairments taken ~~on the Eagle Ford~~ at the end of ~~fiscal 2019,~~the 2020 second quarter, which lowered the basis of the assets. The rate decrease was partially offset by lower ~~oil, NGL and~~ natural gas, oil and NGL prices utilized in the reserve calculations during the ~~2020 quarter,~~2021 period, as compared to ~~2019 quarter,~~the 2020 period, shortening the economic life of wells. This resulted in lower projected remaining reserves on a significant number of wells causing increased units of production DD&A.

~~Provision for impairment~~There was ~~$29,545,702 for the~~ ~~2020 period as compared to~~ no provision for impairment in the ~~2019~~2021 period as compared to $29,545,702 provision for impairment in the 2020 period. During the 2020 period, impairment of $29,315,807 was recorded on seven different fields, including the Fayetteville and Eagle Ford shales, which ~~represent~~represented 90% of our total impairment. The Fayetteville Shale assets are dry-gas assets of which the Company acquired a portion in 2011. Low natural gas prices at March 31, 2020, ~~are~~were the primary reason for impairment in this field. The Company recognized an impairment related to the Eagle Ford at September 30, 2019, of $76.6 million primarily due to the removal of working interest PUDs from the Company’s reserve report. The further impairmentImpairment of the Eagle Ford assets at March 31, 2020, iswas due to the decline in commodity prices over fiscal 2020. ~~The remaining $229,895 of impairment was recorded on other assets.~~ The impairment on assets in these seven fields was caused by lower futures prices associated with our products. Futures prices experienced downward pressure resulting in low pricing as of the end of the 2020 period. The reduced future net value associated with these fields caused the assets to fail the step one test for impairment as their undiscounted cash flows were not high enough to cover the book basis of the assets. These assets were written down to their fair market value as required by GAAP. NoThe remaining $229,895 of impairment was recorded ~~during the 2019 period.~~on other assets.

~~Interest~~The decrease in interest expense ~~decreased $307,916 or 30%~~is due to a lower average debt balance in the ~~2020 period. This decrease was mainly due to lower outstanding debt balances ($32.0 million at March 31, 2020,~~2021 period as compared to ~~$44.1 million at March 31, 2019).~~

~~G&A expenses are costs not directly associated with the production of oil and natural gas and include the cost of employee salaries and related~~ ~~benefits, office expenses, and fees for professional services. G&A increased $325,696 or 8% in~~ the 2020 period. The increase was primarily the result of higher technical consulting and legal expenses, partially offset by lower personnel expenses. The increase in technical consulting was due to increased cost for our then interim (now current) CEO, geologic and engineering fees. The increase in legal expenses was primarily due to additional work provided pertaining to the Company’s proxy statement. ~~We expect our G&A to decrease going forward as a result of the personnel reduction and other G&A reduction efforts.~~

Income taxes changed ~~$10,174,000,~~$6,447,000, from ~~a $3,441,000 provision in the 2019 period to~~ a $6,733,000 benefit in the 2020 period to a $286,000 benefit in the 2021 period. The effective tax rate changed from a ~~24% provision in the 2019 period to a~~ 27% benefit in the 2020 period to a 21% benefit in the 2021 period.

G&A expenses are costs not directly associated with the production of natural gas and oil and include the cost of employee salaries and related benefits, office expenses and fees for professional services. G&A decreased $607,116 as compared to the 2020 period. The decrease was primarily due to cost reduction efforts by the Company.

The Company had positive working capital of ~~$10,047,038~~$3,999,619 at March 31, ~~2020,~~2021, compared to positive working capital of ~~$11,378,829~~$13,335,880 at September 30, ~~2019.~~2020, which included $7.3 million of cash used for the first quarter acquisitions.

Cash and cash equivalents were ~~$498,777~~$1,270,482 as of March 31, ~~2020,~~2021, compared to ~~$6,160,691~~$10,690,395 at September 30, ~~2019,~~2020, a decrease of ~~$5,661,914.~~$9,419,913. The decrease in cash is primarily associated with the closing of previously announced acquisitions, which were funded by the equity raise from September 2020. Cash flows for the six months ended March 31 are summarized as follows:

Net cash provided (used) by:										For the Six Months Ended March 31,
	2020			2019			Change			2021			2020			Change

Operating activities	$	6,108,342		$	9,061,054		$	(2,952,712	)	$	4,677,107		$	6,108,342		$	(1,431,235	)
Investing activities		(7,017,722	)		3,127,281			(10,145,003	)		(8,338,602	)		(7,017,722	)		(1,320,880	)
Financing activities		(4,752,534	)		(12,215,855	)		7,463,321			(5,758,418	)		(4,752,534	)		(1,005,884	)
Increase (decrease) in cash and cash equivalents	$	(5,661,914	)	$	(27,520	)	$	(5,634,394	)	$	(9,419,913	)	$	(5,661,914	)	$	(3,757,999	)

The Company has started to implement a G&A reduction plan that is expected, when fully implemented, to reduce G&A by between $1 to $2 million annually. This effort includes a reduction in Company personnel which occurred on April 2, 2020, ongoing renegotiations of vendor contracts and other cost-savings measures in areas that are not deemed to be mission critical.

Net cash provided by operating activities decreased ~~$2,952,712~~$1,431,235 during the ~~2020~~2021 period, as compared to the ~~2019~~2020 period, primarily the result of the following:

Net cash used by investing activities increased ~~$10,145,003~~$1,320,880 during the ~~2020~~2021 period, as compared to the ~~2019~~2020 period, primarily due to ~~higher acquisition costs of $8,444,241 and~~ lower net proceeds from the sale of assets of ~~$5,720,889, partially offset by lower~~$3,355,049 and higher payments of ~~$4,019,928~~$285,343 for drilling and completion activity, partially offset by lower acquisition costs of $2,319,512 during ~~2020.~~2021.

Net cash used by financing activities ~~decreased $7,463,321~~increased $1,005,884 during the ~~2020~~2021 period, as compared to the ~~2019~~2020 period, primarily the result of ~~lower~~higher net payments on long-term debt of ~~$3,475,000 and~~$5,250,000 in 2021 compared to $3,425,000 in the prior year period, partially offset by decreased stock repurchases of ~~$3,960,050.~~$7,635 and a decrease of $864,963 in dividend payments as a result of a reduction in the Company’s quarterly dividend from $0.04 per share to $0.01 per share beginning with the June 2020 dividend payment.

Capital expenditures to drill and complete wells ~~decreased $4,019,928 (97%)~~increased $285,343, or 204%, from the ~~2019~~2020 to the ~~2020~~2021 period as a result of increased workover activity in the ~~Company’s strategy to cease participating in any new wells with a working interest at the end of fiscal 2019.~~2021 period. The Company currently has no remaining commitments that would require significant capital to drill and complete ~~wells.~~wells as the Company ceased participating in any new wells with a working interest at the end of fiscal 2019.

Since the Company has decided to cease any further participation in wells with a working interest on its mineral and leasehold acreage, we anticipate that capital expenditures for working interest properties will be minimal going forward, as the expenditures will be limited to capital workovers to enhance existing wells.

On ~~November 14, 2019, Panhandle~~September 1, 2020, the Company closed on an underwritten public offering of 5,750,000 common shares (inclusive of overallotment option) with net proceeds of $8.2 million to the sale of 530 net mineral acres in Eddy County, New Mexico, for $3.4 million. At the time of sale, the assets were mostly amortized and therefore had minimal net book value. Almost all of the value received was a gain on the sale of assets of $3.3 million in the first quarter of 2020. The Company utilized a like-kind exchange under Internal Revenue Code Section 1031 to defer income tax on all of the gain by offsetting it with the STACK/SCOOP mineral acreage acquisition that was purchased during the quarter using qualified exchange accommodation agreements.Company.

On ~~December 18, 2019, Panhandle~~October 8, 2020, the Company closed on the purchase of ~~700~~297 net royalty acres in Grady County, Oklahoma, and 237 net mineral acres and 12 net royalty acres in ~~Kingfisher, Canadian~~Harrison, Panola and ~~Garvin~~Nacogdoches Counties, ~~Oklahoma,~~Texas, for a purchase price of ~~$9.3~~$5.5 million ~~(after~~and 153,375 shares of PHX common stock, subject to customary closing ~~adjustments).~~adjustments. This purchase was mostly funded with cash from ~~our like-kind exchange sales.~~the common stock offering discussed above.

On November 12, 2020, the Company closed on the purchase of 134 net mineral acres in San Augustine County, Texas, for a purchase price of $750,000.

On December 17, 2020, the Company closed on the purchase of an additional 89 net mineral acres in San Augustine County, Texas, for a purchase price of $1 million.

On January 21, 2021, the Company closed on the purchase of 11 net mineral acres in Harrison Counties, Texas, for a consideration of $362,486.

Subsequent the second quarter of 2021, the Company closed on an underwritten public offering of 6,175,000 common shares (inclusive of overallotment option) with estimated net proceeds of $11.2 million to the Company. The Company intends to use the net proceeds of the offering to fund the Acquisition (as hereinafter defined) and for general corporate purposes.

On April 30, 2021, the Company closed on the acquisition of certain mineral and royalty assets located in Stephens, Carter, Canadian, McClain, Murray, and Garvin Counties, Oklahoma, for aggregate consideration of approximately $10,939,875 (the “Acquisition”). The Acquisition includes mineral and royalty assets totaling approximately 2,514 net royalty acres and 1,889 net mineral acres in the SCOOP play. The Acquisition has an effective date of November 1, 2020. Total consideration for the Acquisition after purchase price adjustments included a cash payment of approximately $8,539,875 and the issuance of 1,200,000 shares of common stock.

The Company received lease bonus payments during fiscal ~~2020~~2021 totaling ~~$559,462.~~$64,047. Looking forward, the cash flow from bonus payments associated with the leasing of drilling rights on the Company’s mineral acreage is difficult to project as the ~~Company’s mineral acreage position is diverse.~~current economic downturn has decreased demand for new leasing by operators. However, management plans to continue to actively pursue leasing opportunities.

With continued ~~oil~~natural gas and ~~natural gas~~oil price volatility, management continues to evaluate opportunities for product price protection through additional hedging of the Company’s future ~~oil and~~ natural gas and oil production. Additionally, pursuant to the Credit Facility, the Company is required to enter into and maintain certain Swap Agreements (as defined in the Credit Facility) for a period of eighteen (18) months fixing prices on oil or gas expected to be produced. See Note ~~10:~~9: Derivatives for a complete list of the Company’s outstanding derivative contracts at March 31, ~~2020, and Note 12: Subsequent Events for a listing of additional contracts entered into through May 1, 2020.~~2021.

The use of the Company’s cash provided by operating activities and resultant change to cash is summarized in the table below:

	Six months ended			Six Months Ended
	March 31, 2020			March 31, 2021
Cash provided by operating activities	$	6,108,342		$	4,677,107
Cash provided (used) by:

Capital expenditures - acquisitions		(10,254,016	)		(7,934,504	)
Capital expenditures - drilling and completion of wells		(139,755	)		(425,098	)
Quarterly dividends of $0.08 per share		(1,319,899	)
Treasury stock purchases		(7,635	)
Quarterly dividends of $0.01 per share					(454,936	)
Net borrowings (payments) on credit facility		(3,425,000	)		(5,250,000	)
Proceeds from sale of assets		3,376,049			21,000
Net proceeds from equity issuance					(53,482	)
Net cash used		(11,770,256	)		(14,097,020	)

Net increase (decrease) in cash	$	(5,661,914	)	$	(9,419,913	)

Outstanding borrowings on the ~~credit facility~~Credit Facility at March 31, ~~2020,~~2021, were ~~$32,000,000.~~$23,500,000. As of April 28, 2021, outstanding borrowings were $21,750,000.

Looking forward, the Company expects to fund overhead costs and any dividend payments from cash provided by operating activities, cash on hand and borrowings utilizing ~~our~~the Credit Facility. The Company intends to use any excess cash to repay outstanding debt which would strengthen the Company’s Balance ~~Sheets.~~Sheet. The Company had availability of ~~$13~~$5.9 million at March 31, ~~2020,~~2021, under its Credit Facility and is in compliance with its debt covenants (current ratio, debt to trailing 12-month EBITDA, as defined by the Credit Facility, and restricted payments limited by leverage ratio). The debt covenants limit the maximum ratio of the Company’s debt to EBITDA to no more than 4:3.5:1.

The borrowing base under the Credit Facility was redetermined on ~~January 31, 2020,~~December 4, 2020. The amendment reduced the Quarterly Commitment Reductions from $1,000,000 to $600,000, reduced the consolidated cash balance in the anti-cash hoarding provision from $2,000,000 to $1,000,000, and ~~reduced~~changed the debt to EBITDA ratio from ~~$70 million~~4.0:1.00 to ~~$45 million.~~3.50:1.00. The ~~decrease in~~borrowing base after Quarterly Commitment Reductions was reaffirmed at $30,000,000, and includes a Quarterly Commitment Reduction, whereby the borrowing base is reduced by $600,000 each April 15, July 15, October 15 and January 15, commencing on January 15, 2021.

The Credit Facility was ~~primarily due~~amended on April 7, 2021. The Amendment reduced the Company’s borrowing base under the Credit Facility to $29.0 million, extended the ~~continued decline in oil~~maturity date one year to November 30, 2023 and ~~natural gas futures prices~~reduced the Quarterly Commitment Reductions from $600,000 to $500,000, commencing on April 15, 2021. Additionally, the Amendment increased the Company’s distribution allowance from $1.0 million to $1.5 million per annum for a period of one year from the date of the Amendment and extends this allowance beyond the date that is one year following the date of the Amendment so long as (i) the Available Commitment is greater than or equal to 20% of the Total Commitment and (ii) the Leverage Ratio on a pro forma basis does not exceed 2.75 to 1.00. The existing prohibition of all Restricted Payments other than the subject distribution allowance and the existing requirement that immediately after giving effect to a ~~lesser extent,~~permitted Restricted Payment, no Default or Event of Default may exist or result therefrom are to remain in effect. The Amendment also provides that any cash actually received by the ~~Company’s strategic decision~~Company in an equity raise is considered “Excluded Cash” (previously, this was limited to ~~cease participating with a working interest going forward~~cash actually received by the Company in an equity raise on or prior to December 24, 2020) and that such cash may be used for acquisitions by the ~~corresponding removal of all working interest PUDs as of September 30, 2019.~~Company without BOKF’s prior written consent. Despite the reduction in the borrowing base, we do not expect it will impact the liquidity needed to maintain our normal operating strategies. ~~The~~We expect the next ~~expected~~ redetermination will occur in ~~June 2020. Current liquidity as~~December 2021. The capitalized terms which are not defined in this description of ~~May 1, 2020, is $15,708,558 inclusive of $2,708,558 cash and cash equivalents and $13,000,000 borrowing base availability.~~

~~On November 6, 2017,~~ the ~~Company filed a shelf registration statement with~~Amendment shall have the ~~SEC on Form S-3. This filing authorizes~~meaning given to such terms in the Company to sell up to $75 million in securities, including common stock, preferred stock, debt securities, warrants and units in amounts to be determined at the time of an offering. Any such offering, if it does occur, may take place in one or more transactions. The specific terms of any securities to be sold will be described in supplemental filings with the SEC. The registration statement will expire on November 6, 2020.Credit Facility.

Going forward, we expect that capital expenditures to drill and complete wells ~~will~~are expected to be immaterial. Anticipated cash provided by operating activities may be reduced due to more frequent production stoppages, as it is currently not economic for some operators to ~~produce. For example, Oklahoma, Texas and North Dakota are considering output restrictions/waiver programs.~~continue to produce in the current economic environment. Based on anticipated cash provided by operating activities for ~~2020~~2021 and availability under the Credit Facility, the Company has sufficient liquidity to fund its ongoing operations.

Critical accounting policies are those the Company believes are most important to portraying its financial conditions and results of operations and also require the greatest amount of subjective or complex judgments by management. Judgments and uncertainties regarding the application of these policies may result in materially different amounts being reported under various conditions or using different assumptions. Other than the adoption of ASC ~~842~~326 on October 1, ~~2019, (see Note 2: Leases)~~2020, there have been no material changes to the critical accounting policies previously disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, ~~2019.~~

There were no material changes in our contractual obligations and other commitments as disclosed in our Annual Report on Form 10-K for the fiscal year ended September 30, ~~2019.~~2020.

~~Oil,~~Natural gas, oil and NGL ~~and natural gas~~ prices historically have been volatile, and this volatility is expected to continue, especially in light of the ongoing COVID-19 pandemic and related economic repercussions. The financial condition, liquidity and results of operations of the Company may be adversely impacted by precipitous changes in ~~oil~~natural gas and ~~natural gas~~oil prices. The market price of ~~oil, NGL and~~ natural gas, oil and NGL in ~~2020~~2021 will impact the amount of cash generated from operating activities, which will in turn impact the level of the Company’s capital expenditures and production. Excluding the impact of the Company’s ~~2020~~2021 derivative contracts, the price sensitivity in ~~2020~~2021 for each $1.00 per barrel change in wellhead oil price is ~~$329,199~~$269,785 for operating revenue based on the Company’s prior year oil volumes. The price sensitivity in ~~2020~~2021 for each $0.10 per Mcf change in wellhead natural gas price is ~~$708,676~~$596,271 for operating revenue based on the Company’s prior year natural gas volumes.

The Company utilizes derivative contracts to reduce its exposure to unfavorable changes in ~~oil~~natural gas and ~~natural gas~~oil prices. The Company does not enter into these derivatives for speculative or trading purposes. The Company’s derivative contracts are currently with Bank of ~~Oklahoma and Koch Supply and Trading LP.~~Oklahoma. The derivative contracts with Bank of Oklahoma are secured under the Credit Facility with Bank of Oklahoma. ~~The derivative contracts with Koch Supply and Trading LP are unsecured.~~ These arrangements cover only a portion of the Company’s production, ~~and~~ provide only partial price protection against declines in ~~oil and~~ natural gas ~~prices. These derivative contracts expose the Company to risk of financial loss~~and oil prices and limit the benefit of future increases in prices. For the Company’s oil fixed price swaps, a change of $1.00 in the NYMEX WTI forward strip prices would result in a change to pre-tax operating income of approximately ~~$92,000.~~$151,000. For the Company’s oil collars, a change of $1.00 (below or above the collar) in the NYMEX WTI forward strip prices would result in a change to pre-tax operating income of approximately ~~$36,000.~~$104,427. For the Company’s natural gas fixed price swaps, a change of $0.10 in the NYMEX Henry Hub forward strip pricing would result in a change to pre-tax operating income of

approximately ~~$84,000.~~$160,000. For the Company’s natural gas collars, a change of $.10 (below or above the collar) in the NYMEX Henry Hub forward strip pricing would result in a change to pre-tax operating income of approximately ~~$70,000.~~$436,808.

Operating income could also be impacted, to a lesser extent, by changes in the market interest rates related to the Credit Facility. Borrowings under the Credit Facility bear interest at the BOK prime rate plus from ~~0.50%~~1.00% to ~~1.25%~~1.75%, or 30 day LIBOR plus from ~~2.00%~~2.50% to ~~2.75%~~3.25%. At March 31, ~~2020,~~2021, the Company had ~~$32,000,000~~$23,500,000 outstanding under the Credit Facility and the effective interest rate was ~~3.89%~~4.00%. ~~At this point,~~An increase or decrease of 1.00% in the interest rate would have a corresponding increase or decrease in our annual net income of approximately $235,000, based on the balance outstanding at March 31, 2021.

The Company does not believe that its liquidity has been materially affected by the interest rate uncertainties noted in the last few years, and the Company does not believe that its liquidity to fund its ongoing operations will be significantly impacted in the near future.

The Company maintains “disclosure controls and procedures,” as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, that are designed to ensure that information required to be disclosed in reports the Company files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that such information is collected and communicated to management, including the Company’s Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating its disclosure controls and procedures, management recognized that no matter how well conceived and operated, disclosure controls and procedures can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. The Company’s disclosure controls and procedures have been designed to meet, and management believes they do meet, reasonable assurance standards. Based on their ~~original~~ evaluation as of the end of the fiscal period covered by ~~the Original Filing,~~this Form 10-Q, the Chief Executive Officer and Chief Financial Officer have concluded ~~subject to the limitations noted above, that~~ the Company’s disclosure controls and procedures were effective to ensure material information relating to the Company ~~was~~is made known to them. Subsequent to the Original Filing, a material weakness was identified in the design of the Company’s internal controls, and the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls could no longer be relied upon as of and for the three- and six-month periods ending March 31, 2020.

There were no changes in the Company’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting made during the fiscal quarter or subsequent to the date the assessment was completed. ~~During~~

The Company may be the ~~quarter, there were changes to~~subject of threatened or pending legal actions and contingencies in the ~~Company’s key control owners. However, no changes to the control operating effectiveness is expected as the key controls are still in place.~~

~~In the~~normal course of conducting our business. The Company provides for costs related to these matters when a loss is probable and the ~~Company’s evaluation~~amount can be reasonably estimated. The effect of the ~~material misstatements contained~~outcome of these matters on our future results of operations and liquidity cannot be predicted because any such effect depends on future results of operations and the amount or timing of the resolution of such matters. For certain types of claims, the Company maintains insurance coverage for personal injury and property damage, product liability and other liability coverages in amounts and with deductibles that it believes are prudent, but there can be no assurance that these coverages will be applicable or adequate to cover adverse outcomes of claims or legal proceedings against the Company. The Company is not a party to any pending legal proceedings that the Company believes would, individually or in the Original Filing, management determined that the Company’s internal controls had not been effectively designed to ensure the completeness and accuracy of the oil, NGL and natural gas sales receivable and of oil, NGL and natural gas sales recorded for the three and six months ended March 31, 2020. Specifically, the Company determined that it did notaggregate, have ~~adequate controls for validating revenue interests in new wells which led to the misstatement of oil, NGL and natural gas sales for the three and six months ended March 31, 2020.~~

In light of the misstatements described above, the Company has reassessed its conclusions regarding its disclosure controls and procedures as of March 31, 2020. As a result, the Company has determined that a material ~~weakness in internal control over~~adverse effect on its financial reporting existed as of March 31, 2020, and consequently that the Company’s disclosure controls and procedures as of March 31, 2020, were not effective. The Company’s previous evaluation of its disclosure controls and procedures as of March 31, 2020, should no longer be relied upon.condition, operating results or cash flow.

To address the material weakness described above, the Company is assessing potential remedial actions relating to the Company’s internal controls, as well as additional procedures and process improvements, relating to the oil, NGL and natural gas revenue accrual process, and plans to implement such remedial actions prior to the filing of its Quarterly Report on Form 10-Q for the quarter ended June 30, 2020.

~~Please~~The Company is subject to certain risks and hazards due to the nature of its business activities. For a discussion of these risks, please refer to Item 1A of the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, ~~2019.~~2020. There have been no material changes to ~~our~~the risk factors contained in ~~our~~the Annual Report on Form 10-K for the fiscal year ended September 30, ~~2019, other than as detailed below.~~

~~Management has identified a material weakness in internal controls over financial reporting. Failure~~2020. Additional risks and uncertainties not currently known to ~~remediate this material weakness~~the Company or that the Company currently deems to ~~develop, implement and maintain effective internal controls in future periods could impact the Company’s ability to report accurately and on a timely basis our~~be immaterial also may materially adversely affect business, financial condition ~~and results of operations.~~

Management has identified a material weakness in the Company’s internal controls over the completeness and accuracy of the Company’s oil, NGL and natural gas sales revenue accrual. A "material weakness" is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements would not be prevented or detected on a timely basis. As a result of the material weakness, management concluded that our internal control over financial reporting was not effective ~~as of March 31, 2020~~.

Management is in the process of remediating the identified material weakness in our internal controls. However, there is the potential that our efforts to remedy the material weakness will be ineffective and/or that additional material weaknesses could occur regardless of the remediation or additional controls implemented by the Company. Any failure to effect or maintain new or improved controls, or any difficulties encountered in the implementation thereof, could result in additional material weaknesses or material misstatements in our financial statements. These misstatements could necessitate restatements of our financial statements in the future cause us to fail to meet our reporting obligations, cause investors to lose confidence in or their ability to rely on the Company’s reported financial information, harm our ability to obtain financing, increase the costs associated with future financing transactions and/or increase remediation costs relating to any such misstatements and any weaknesses underlying the same.

~~The ongoing COVID-19 pandemic and the recent OPEC+ price war could disrupt our operations and adversely impact our business and financial~~ results.

The COVID-19 pandemic has resulted in a significant decline in worldwide economic activity, which has led to a precipitous decline in oil prices in response to demand concerns, further exacerbated by the early March 2020 failure by OPEC+ to reach an agreement over proposed oil production cuts and global storage considerations. Oil and natural gas prices are expected to continue to be volatile as a result of these events and the COVID-19 outbreak, and as changes in oil and natural gas inventories, oil demand and economic performance are reported. The COVID-19 pandemic is rapidly evolving, and the ultimate impact of this pandemic is highly uncertain and subject to change. The extent of the impact of the COVID-19 pandemic on our operational and financial performance will depend on future developments, including the duration and spread of the pandemic, its severity, the actions to contain the disease or mitigate its impact, related restrictions on travel, and the duration, timing and severity of the impact on domestic and global oil demand.

~~In the event oil prices remain low, there is a risk that, among other things:~~

The occurrence of certain of these events could have a material adverse effect on the Company’s business and financial results. We cannot predict when prices will improve or stabilize. The COVID-19 pandemic may also intensify the risks described in other risk factors disclosed in our Annual Report on Form 10-K for the fiscal year ended September 30, 2019.

During the three months ended March 31, ~~2020,~~2021, the Company did not repurchase any shares of the Company’s common stock.

Upon approval by the shareholders of the 2010 Stock Plan in March 2010, as amended in May 2018, the Board approved to continue to allow the Company to repurchase up to $1.5 million of the Company’s common stock at management’s discretion. The Board added language to clarify that this is intended to be an evergreen program as the repurchase of an additional $1.5 million of the Company’s common stock is authorized and approved whenever the previous $1.5 million is utilized. In addition, the number of shares allowed to be purchased by the Company under the Repurchase Program is no longer capped at an amount equal to the aggregate number of shares of common stock (i) awarded pursuant to the Company’s Amended 2010 Restricted Stock Plan, (ii) contributed by the Company to its ESOP, and (iii) credited to the accounts of directors pursuant to the Deferred Compensation Plan for Non-Employee Directors.

On October 8, 2020, the Company issued 153,375 shares of the Company’s common stock to Red Stone Resources, LLC as part of the consideration for an asset purchase from Red Stone Resources, LLC. In exchange for the shares, the Company received a $250,000 credit against the purchase price for the assets. The shares were issued in reliance upon the exemption from registration provided by Rule 506 of Regulation D of the Securities Act of 1933. These shares were registered in March 2021.

Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, $0.01666 par value	PHX	New York Stock Exchange

Part I	Financial Information		Page

	Item 1	Condensed Financial Statements		1

		Condensed Balance Sheets – March 31, ~~2020,~~2021, and September 30, ~~2019~~2020		1

		Condensed Statements of Operations – Three and six months ended March 31, ~~2020~~2021 and ~~2019~~2020		2

		Statements of Stockholders’ Equity – Six months ended March 31, ~~2020~~2021 and ~~2019~~2020		3

		Condensed Statements of Cash Flows – Six months ended March 31, ~~2020~~2021 and ~~2019~~2020		4

		Notes to Condensed Financial Statements		5

	Item 2	Management's ~~discussion~~Discussion and ~~analysis~~Analysis of ~~financial condition~~Financial Condition and ~~results~~Results of ~~operations~~Operations		1614

	Item 3	Quantitative and ~~qualitative disclosures~~Qualitative Disclosures about ~~market risk~~Market Risk		24

	Item 4	Controls and ~~procedures~~Procedures		2425

Part II	Other Information

	Item 1	Legal Proceedings		25

	Item 1A	Risk Factors		2625

	Item 2	Unregistered Sales of Equity Securities and Use of Proceeds		2725

	Item 6	Exhibits		2726

	Signatures		2726

ASC	Accounting Standards Codification.
ASU	Accounting Standards Update.
Bbl	barrel.
Board	board of directors of the Company.
BTU	British Thermal Units.
completion	the process of treating a drilled well followed by the installation of permanent equipment for the production of crude oil and/or natural gas.
DD&A	depreciation, depletion and amortization.
EBITDA	earnings before interest, taxes, depreciation and amortization (including impairment). This is a Non-GAAP measure.
ESOP	the Panhandle Oil and Gas Inc. Employee Stock Ownership and 401(k) Plan, a tax qualified, defined contribution plan.
FASB	the Financial Accounting Standards Board.
field	an area consisting of a single reservoir or multiple reservoirs all grouped on, or related to, the same individual geological structural feature or stratigraphic condition. The field name refers to the surface area, although it may refer to both the surface and the underground productive formations.
G&A	general and administrative costs.
GAAP	generally accepted accounting principles.
Independent Consulting Petroleum Engineer(s)	DeGolyer and MacNaughton of Dallas, Texas.
LOE	lease operating expense.
Mcf	thousand cubic feet.
Mcfe	natural gas stated on an Mcf basis and crude oil and natural gas liquids converted to a thousand cubic feet of natural gas equivalent by using the ratio of one Bbl of crude oil or natural gas liquids to six Mcf of natural gas.
Mmbtu	million BTU.
minerals, mineral acres or mineral interests	fee mineral acreage owned in perpetuity by the Company.
NGL	natural gas liquids.
NYMEX	New York Mercantile Exchange.
play	term applied to identified areas with potential oil and/or natural gas reserves.
proved reserves	the quantities of crude oil and natural gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible from a given date forward, from known reservoirs and under existing economic conditions, operating methods, and government regulations prior to the time at which contracts providing the right to operate expire, unless evidence indicates renewal is reasonably certain.
royalty interest	well interests in which the Company does not pay a share of the costs to drill, complete and operate a well, but receives a smaller proportionate share (as compared to a working interest) of production.
SEC	the United States Securities and Exchange Commission.
undeveloped acreage	acreage on which wells have not been drilled or completed to a point that would permit the production of commercial quantities of crude oil and/or natural gas.
working interest	well interests in which the Company pays a share of the costs to drill, complete and operate a well and receives a proportionate share of production.
WTI	West Texas Intermediate.

	Three Months Ended March 31, 2020
	As Reported			Adjustments			As Restated
Oil, NGL and natural gas sales	$	7,982,905			(765,287	)	$	7,217,618
Total revenues		12,076,574			(765,287	)		11,311,287

Transportation, gathering and marketing		1,386,297			(29,669	)		1,356,628
Production taxes		404,728			(30,974	)		373,754
Total cost and expenses		38,813,744			(60,643	)		38,753,101
Income (loss) before provision (benefit) for income taxes		(26,737,170	)		(704,644	)		(27,441,814	)
Provision (benefit) for income taxes		(6,764,000	)		(223,000	)		(6,987,000	)
Net income (loss)	$	(19,973,170	)		(481,644	)	$	(20,454,814	)
Basic and diluted earnings (loss) per common share (Note 5)	$	(1.21	)	$	(0.03	)	$	(1.24	)

	Six Months Ended March 31, 2020
	As Reported			Adjustments			As Restated
Oil, NGL and natural gas sales	$	15,576,743			(765,287	)	$	14,811,456
Total revenues		22,653,105			(765,287	)		21,887,818

Transportation, gathering and marketing		2,769,298			(29,669	)		2,739,629
Production taxes		732,009			(30,974	)		701,035
Total cost and expenses		47,244,161			(60,643	)		47,183,518
Income (loss) before provision (benefit) for income taxes		(24,591,056	)		(704,644	)		(25,295,700	)
Provision (benefit) for income taxes		(6,510,000	)		(223,000	)		(6,733,000	)
Net income (loss)	$	(18,081,056	)		(481,644	)	$	(18,562,700	)
Basic and diluted earnings (loss) per common share (Note 5)	$	(1.09	)	$	(0.03	)	$	(1.12	)

Standard	Description	Date of Adoption	Impact on Financial Statements or Other Significant Matters
New Accounting Pronouncements yet to be Adopted
ASU 2019-12, Simplifying the Accounting for Income Taxes.	This standard is intended to clarify and simplify the accounting for income taxes by removing certain exceptions and amending existing guidance.	Q1 2022	This standard is effective for public business entities beginning after December 15, 2020, with early adoption permitted. The Company does not believe the adoption of this standard will have a material impact on its financial statements and related disclosures.

	For the Three Months Ended March 31,
					Percent
	2021		2020		Incr. or (Decr.)
Natural gas, oil and NGL sales	$	8,345,825	$	7,217,618	16%

Quarter ended	Oil Bbls Sold		NGL Bbls Sold		Mcf Sold		Mcfe Sold
3/31/2020 (As Restated)		93,141		47,487		1,529,367		2,373,135
12/31/2019		65,880		39,230		1,647,827		2,278,487
9/30/2019		75,934		52,219		1,786,167		2,555,085
6/30/2019		96,065		53,903		1,718,561		2,618,369
3/31/2019		74,372		47,875		1,688,043		2,421,525

(a)	EXHIBITS	Exhibit 3.1 – Amended and Restated Certificate of Incorporation of PHX Minerals Inc. (incorporated by reference to Form 10-Q dated February 8, 2021) Exhibit 31.1 – Certification under Section 302 of the Sarbanes-Oxley Act of 2002
		Exhibit 31.2 – Certification under Section 302 of the Sarbanes-Oxley Act of 2002
		Exhibit 32.1 – Certification under Section 906 of the Sarbanes-Oxley Act of 2002
		Exhibit 32.2 – Certification under Section 906 of the Sarbanes-Oxley Act of 2002
		Exhibit 101.INS – XBRL Instance Document
		Exhibit 101.SCH – XBRL Taxonomy Extension Schema Document
		Exhibit 101.CAL – XBRL Taxonomy Extension Calculation Linkbase Document
		Exhibit 101.LAB – XBRL Taxonomy Extension Labels Linkbase Document
		Exhibit 101.PRE – XBRL Taxonomy Extension Presentation Linkbase Document
		Exhibit 101.DEF – XBRL Taxonomy Extension Definition Linkbase Document Exhibit 104 – Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

~~PANHANDLE OIL AND GAS~~PHX MINERALS INC.
		~~PANHANDLE OIL AND GAS~~PHX MINERALS INC.

~~July 29, 2020~~May 6, 2021		/s/ Chad L. Stephens
Date		Chad L. Stephens, President,
		Chief Executive Officer

~~July 29, 2020~~May 6, 2021		/s/ Ralph D’Amico
Date		Ralph D’Amico, Vice President,
		Chief Financial Officer

Quarter ended	Mcf Sold		Oil Bbls Sold		NGL Bbls Sold		Mcfe Sold
3/31/2021		1,735,820		56,269		37,228		2,296,802
12/31/2020		1,475,456		58,675		41,138		2,074,334
9/30/2020		1,423,602		55,626		46,737		2,037,779
6/30/2020		1,361,909		55,138		35,169		1,903,752
3/31/2020		1,529,367		93,141		47,487		2,373,135

Quarter ended	Mcf Sold		Oil Bbls Sold		NGL Bbls Sold		Mcfe Sold
3/31/2021		924,969		31,768		19,088		1,230,105
12/31/2020		487,925		27,840		14,948		744,653
9/30/2020		491,234		27,326		20,181		776,276
6/30/2020		544,249		28,468		16,574		814,501
3/31/2020		549,999		54,077		16,188		971,589

Quarter ended	Oil Bbls Sold		NGL Bbls Sold		Mcf Sold		Mcfe Sold
3/31/2020 (As Restated)		54,077		16,188		549,999		971,589
12/31/2019		25,701		11,402		562,813		785,431
9/30/2019		28,411		16,323		591,773		860,177
6/30/2019		27,895		15,797		526,138		788,290
3/31/2019		30,587		11,959		515,179		770,455

Quarter ended	Oil Bbls Sold		NGL Bbls Sold		Mcf Sold		Mcfe Sold
3/31/2020		39,064		31,299		979,368		1,401,546
12/31/2019		40,179		27,828		1,085,014		1,493,056
9/30/2019		47,523		35,896		1,194,394		1,694,908
6/30/2019		68,170		38,106		1,192,423		1,830,079
3/31/2019		43,785		35,916		1,172,864		1,651,070