The majority of Panhandle Oil and Gas Inc.'s revenues are derived from the production and sale of oil and natural gas. The Company's oil and gas holdings, including its mineral acreage and its interests in producing wells, both working interests and royalty interests, are centered in Oklahoma. The Company's proved reserves at September 30, 2012 were 124.7 Bcfe, with approximately 90% being natural gas. Panhandle does not operate any of its oil and gas properties. Exploration on and development of the Company's oil and gas properties are conducted in association with operating oil and gas companies, primarily large independent companies. The Company has been an active working interest participant for many years in wells drilled on the Company's mineral acreage. The Company has become very active in unconventional resource projects on its mineral acreage in the southeast Oklahoma Woodford shale, the Arkansas Fayetteville shale, the Anadarko Cana Woodford shale and the horizontal Anadarko Basin Granite Wash and several other of the oily and natural gas liquids plays in western Oklahoma. Panhandle's activity in these projects began in 2007 and is expected to continue for many years as it has more than 4,000 potential drilling locations in these plays. The majority of capital expenditures for drilling in 2013 will be on resource projects in western Oklahoma that are either oil or natural gas liquids-rich projects. Panhandle owns approximately 41,000 net mineral acres in western Oklahoma.