Penn Virginia Corporation Announces First Quarter 2010 Results

RADNOR, Pa.-- Penn Virginia Corporation (NYSE:PVA) today reported financial and operational results for the three months ended March 31, 2010 and provided an update of full-year 2010 guidance.

First Quarter 2010 Highlights

First quarter 2010 results, with comparisons to first quarter 2009 results, included the following:

    --  Quarterly oil and gas production of 10.3 billion cubic feet of natural
        gas equivalent (Bcfe), or 114.9 million cubic feet of natural gas
        equivalent (MMcfe) per day, as compared to 13.7 Bcfe, or 152.3 MMcfe per
        day;
    --  Operating cash flow, a non-GAAP (generally accepted accounting
        principles) measure, of $60.0 million, as compared to $73.4 million;
    --  Operating income of $27.1 million, as compared to an operating loss of
        $7.4 million;
    --  Adjusted net income attributable to PVA, a non-GAAP measure which
        excludes the effects of the non-cash change in derivatives fair value,
        impairments and gains or losses that affect comparability to the prior
        year period, of $1.9 million, or $0.04 per diluted share, as compared to
        adjusted net income of $2.7 million, or $0.06 per diluted share;
    --  Net income attributable to PVA of $13.6 million, or $0.30 per diluted
        share, as compared to net loss attributable to PVA of $7.2 million, or
        $0.17 per diluted share; and
    --  Financial liquidity consisting of undrawn borrowing capacity and cash
        balances at March 31, 2010 of approximately $550 million, as compared to
        approximately $410 million on December 31, 2009.

Reconciliations of non-GAAP financial measures to GAAP-based measures appear in the financial tables later in this release.

Management Comment

A. James Dearlove, President and Chief Executive Officer, said, "Compared to the prior year quarter, we experienced a decline in oil and gas production primarily resulting from our decision to suspend drilling during a large part of 2009. Also affecting production in the first quarter of 2010 were equipment-related delays in well completions in East Texas and the Granite Wash play. As detailed in our separate operational update, we expect our drilling program to intensify in these two areas and anticipate sequential quarterly production growth for the balance of 2010.

"Our realized commodity prices improved during the first quarter relative to the prior year quarter, due to higher prevailing market prices as well as an increase in our production of liquids-rich Granite Wash gas, which was priced at a premium. Significant challenges remain in the natural gas market which is oversupplied. We believe our drilling program, which anticipated weak gas prices in 2010, adds value even in a relatively low natural gas price environment, because the majority of the program is dedicated to oil- and/or liquids-rich plays. The remainder of the drilling program is primarily devoted to testing the gassier Lower Bossier (Haynesville) and Marcellus Shales, as we remain committed to the long-term prospects for natural gas as a fuel of choice.

"For the final three quarters of 2010, we have hedged approximately 50 percent of our estimated natural gas production, at weighted average floor and ceiling prices of $5.72 and $7.65 per MMBtu. During the past twelve months, we also raised over $700 million from the issuances of debt and equity securities and the sales of non-core assets, including the majority of our position in PVG. As a result, we have substantially improved our financial liquidity, with $300 million of unused availability on our revolving credit facility and over $250 million of cash on hand. We expect our strong hedge and liquidity positions will facilitate future growth.

"In March, we completed a public sale of 10 million units of Penn Virginia GP Holdings, L.P. (NYSE: PVG). After the exercise of part of the over-allotment option related to that sale in April, we currently own 23 percent of PVG, which in turn owns the general partner of Penn Virginia Resource Partners, L.P. (NYSE: PVR) and is PVR's largest limited partner unitholder. At current distribution rates, our ownership of PVG and PVR provides us approximately $14 million of annualized pre-tax cash flow."

Oil and Gas Segment Review

First quarter oil and gas production decreased 25 percent to 10.3 Bcfe, or 114.9 MMcfe per day, from 13.7 Bcfe, or 152.3 MMcfe per day, in the first quarter of 2009, and decreased seven percent from 11.3 Bcfe, or 123.1 MMcfe per day, in the fourth quarter of 2009. Excluding production from the divested Gulf Coast assets, pro forma first quarter 2010 production was 10.0 Bcfe, or 111.6 MMcfe per day, a decrease of 13 percent as compared to 11.5 Bcfe, or 128.1 MMcfe per day, in the first quarter of 2009 and a decrease of two percent as compared to 10.3 Bcfe, or 111.8 MMcfe per day, in the fourth quarter of 2009. The decreases in pro forma production were due to natural production declines, significantly reduced drilling activity in 2009 and to a lesser extent by well completion delays due to difficulty in obtaining stimulation equipment in East Texas and in the Granite Wash plays. See our separate operational update news release dated April 29, 2010 for a more detailed discussion of operations for the oil and gas segment.

For the first quarter of 2010, the oil and gas segment operating income of $8.8 million was a $31.5 million improvement over the operating loss of $22.7 million in the prior year quarter. The increase in operating income was due to a 32 percent decrease in total expenses and five percent higher total revenues. The increase in total revenues was primarily due higher commodity prices and realizations for all products, largely offset by the production decrease.

The $28.3 million decrease in total oil and gas segment expenses to $58.9 million, or $5.70 per Mcfe produced, from $87.2 million, or $6.36 per Mcfe produced, in the first quarter of 2009, is discussed below:

    --  First quarter 2010 cash operating expenses decreased $1.3 million, or
        five percent, to $23.4 million as compared to $24.7 million in the first
        quarter of 2009.

        o Lease operating expense decreased by $2.8 million from the prior year
          quarter, primarily resulting from the sale of our Gulf Coast assets in
          January 2010;
        o Taxes other than income were relatively flat as compared to the prior
          year quarter;
        o General and administrative expense increased $1.4 million from the
          prior year quarter, primarily resulting from additional severance and
          relocation costs related to the move of our eastern region office; and
        o Cash operating expenses per unit increased $0.46 per Mcfe produced, or
          seven percent, to $2.26 per Mcfe as compared to $1.80 per Mcfe in the
          prior year quarter, primarily due to the production decrease,
          partially offset by the $1.3 million decrease in cash operating
          expenses.

    --  Exploration expense decreased 72 percent to $6.0 million in the first
        quarter of 2010, as compared to $21.3 million in the prior year quarter,
        due to $9.9 million of drilling rig standby charges in the prior year
        quarter and less exploratory drilling in the first quarter of 2010.
    --  Depreciation, depletion and amortization (DD&A) expense decreased by
        $11.0 million, or 27 percent, to $29.0 million, or $2.82 per Mcfe, in
        the first quarter of 2010 from $40.0 million, or $2.92 per Mcfe, in the
        prior year quarter. The overall decrease in DD&A expense was primarily
        due to the production decrease and a lower depletion rate per unit of
        production. The lower depletion rate was primarily due to the sale of
        Gulf Coast assets early in the first quarter of 2010 and increasing
        contributions to production from the relatively lower depletion rate
        Granite Wash play.

Capital Resources, Credit Facility and Impact of Derivatives

As of March 31, 2010, we had outstanding borrowings of $530.0 million ($500.5 million carrying value), consisting of $300 million ($292.1 million carrying value) of senior unsecured notes due 2016 and $230.0 million ($208.5 million carrying value) of convertible senior subordinated notes due 2012, and no borrowings against our revolving credit facility. Currently, we have approximately $300 million of unused availability on our revolving credit facility and over $250 million of cash on hand.

As of March 31, 2010, PVR had outstanding borrowings of $618.1 million under its $800 million revolving credit facility with remaining revolver borrowing capacity of $180.3 million. In April 2010, PVR issued $300 million of 8.25% senior unsecured notes due in 2018, reducing its revolver debt to $325.5 million and increasing remaining borrowing capacity under its revolver to $472.9 million. PVR's debt is non-recourse to PVA.

Consolidated interest expense increased from $12.5 million in the first quarter of 2009 to $19.5 million in the first quarter of 2010. The increase was due to a higher interest rate on the senior unsecured notes PVA issued in June 2009 and an increase in non-cash, interest rate derivatives expense, partially offset by lower outstanding balances on PVA's revolving credit facility.

Due to fluctuations in commodity prices during the first quarter of 2010, the mark-to-market valuation of our and PVR's open hedging positions resulted in derivatives income of $22.3 million as compared to derivatives income of $10.3 million in the prior year quarter. Included in derivatives income for the first quarter of 2010 was $29.9 million of income related to our oil and gas segment and $7.6 million of expense related to PVR. First quarter 2010 cash settlements of our oil and gas derivatives resulted in net cash receipts of $8.4 million, as compared to $16.3 million of net cash receipts in the prior year quarter. PVR's first quarter 2010 cash settlements of commodity and interest rate derivatives resulted in net cash payments of $1.6 million, as compared to $2.8 million of net cash receipts in the prior year quarter.

Coal & Natural Resource Management and Natural Gas Midstream Segment Review (PVR and PVG)

As the owner of the general partner, we report our financial results on a consolidated basis with the financial results of PVG. A conversion of the GAAP-compliant financial statements ("As reported") to the equity method of accounting ("As adjusted") is included in the "Conversion to Non-GAAP Equity Method" table in this release. Using the equity method, PVG's results are reduced to a few line items and the results from oil and gas operations are therefore highlighted. We believe that the financial statements presented using the equity method are less complex and more comparable to those of other oil and gas exploration and production companies. Financial and operational results and full-year 2010 guidance for each of PVR's segments are provided in the financial tables later in this release. In addition, operational updates for these segments are discussed in more detail in PVR's news release dated May 5, 2010. Please visit PVR's website, www.pvresource.com, under "For Investors" for a copy of the release.

As previously announced, on May 21, 2010, PVG will pay to unitholders of record as of May 3, 2010 a quarterly cash distribution of $0.39 per unit, or an annualized rate of $1.56 per unit. As a result of PVG's distribution, we will receive a cash distribution of $3.4 million in the second quarter of 2010, or $13.8 million on an annualized basis.

Guidance for 2010

See the Guidance Table included in this release for guidance estimates for full-year 2010. These estimates, including capital expenditure plans, which were discussed in our operational update, are meant to provide guidance only and are subject to revision as our and PVR's operating environments change.

First Quarter 2010 Financial and Operational Results Conference Call

A conference call and webcast, during which management will discuss first quarter 2010 financial and operational results, is scheduled for Thursday, May 6, 2010 at 3:00 p.m. ET. Prepared remarks by A. James Dearlove, President and Chief Executive Officer, will be followed by a question and answer period. Investors and analysts may participate via phone by dialing 1-866-630-9986 five to ten minutes before the scheduled start of the conference call (use the passcode 1244163), or via webcast by logging on to our website, www.pennvirginia.com, at least 15 minutes prior to the scheduled start of the call to download and install any necessary audio software. A telephonic replay of the call will be available for two weeks by dialing 1-888-203-1112 (international: 1-719-457-0820) and using the following replay code: 1244163. An on-demand replay of the conference call will be available for two weeks at our website.

Penn Virginia Corporation (NYSE: PVA) is an independent natural gas and oil company focused on the exploration, acquisition, development and production of reserves in onshore regions of the U.S., including East Texas, the Mid-Continent region, Mississippi and the Appalachian Basin. PVA also owns approximately 23 percent of Penn Virginia GP Holdings, L.P. (NYSE: PVG), the owner of the general partner and the largest unit holder of Penn Virginia Resource Partners, L.P. (NYSE: PVR), a manager of coal and natural resource properties and related assets and the operator of a midstream natural gas gathering and processing business.

For more information, please visit our website at www.pennvirginia.com.

Certain statements contained herein that are not descriptions of historical facts are "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Because such statements include risks, uncertainties and contingencies, actual results may differ materially from those expressed or implied by such forward-looking statements. These risks, uncertainties and contingencies include, but are not limited to, the following: the volatility of commodity prices for natural gas, natural gas liquids, or NGLs, crude oil and coal; our ability to access external sources of capital; uncertainties relating to the occurrence and success of capital-raising transactions, including securities offerings and asset sales; reductions in the borrowing base under our revolving credit facility; our ability to develop and replace oil and gas reserves and the price for which such reserves can be acquired; any impairment write-downs of our reserves or assets; reductions in our anticipated capital expenditures; the relationship between natural gas, NGL, crude oil and coal prices; the projected demand for and supply of natural gas, NGLs, crude oil and coal; the availability and costs of required drilling rigs, production equipment and materials; our ability to obtain adequate pipeline transportation capacity for our oil and gas production; competition among producers in the oil and natural gas and coal industries generally and among natural gas midstream companies; the extent to which the amount and quality of actual production of our oil and natural gas or PVR's coal differ from estimated proved oil and gas reserves and recoverable coal reserves; PVR's ability to generate sufficient cash from its businesses to maintain and pay the quarterly distribution to its general partner and its unitholders; the experience and financial condition of PVR's coal lessees and natural gas midstream customers, including the lessees' ability to satisfy their royalty, environmental, reclamation and other obligations to PVR and others; operating risks, including unanticipated geological problems, incidental to our business and to PVR's coal and natural resource management or natural gas midstream business; PVR's ability to acquire new coal reserves or natural gas midstream assets and new sources of natural gas supply and connections to third-party pipelines on satisfactory terms; PVR's ability to retain existing or acquire new natural gas midstream customers and coal lessees; the ability of PVR's lessees to produce sufficient quantities of coal on an economic basis from PVR's reserves and obtain favorable contracts for such production; the occurrence of unusual weather or operating conditions including force majeure events; delays in anticipated start-up dates of our oil and natural gas production, of PVR's lessees' mining operations and related coal infrastructure projects and new processing plants in PVR's natural gas midstream business; environmental risks affecting the drilling and producing of oil and gas wells, the mining of coal reserves or the production, gathering and processing of natural gas; the timing of receipt of necessary governmental permits by us and by PVR or PVR's lessees; hedging results; accidents; changes in governmental regulation or enforcement practices, especially with respect to environmental, health and safety matters, including with respect to emissions levels applicable to coal-burning power generators; uncertainties relating to the outcome of current and future litigation regarding mine permitting; risks and uncertainties relating to general domestic and international economic (including inflation, interest rates and financial and credit markets) and political conditions (including the impact of potential terrorist attacks); PVG's ability to generate sufficient cash from its interests in PVR to maintain and pay the quarterly distribution to its unitholders; uncertainties relating to our continued ownership of interests in PVG and PVR; and other risks set forth in our Annual Report on Form 10-K for the fiscal year ended December 31, 2009.

Additional information concerning these and other factors can be found in our press releases and public periodic filings with the SEC, including our Annual Report on Form 10-K for the year ended December 31, 2009. Many of the factors that will determine our future results are beyond the ability of management to control or predict. Readers should not place undue reliance on forward-looking statements, which reflect management's views only as of the date hereof. We undertake no obligation to revise or update any forward-looking statements, or to make any other forward-looking statements, whether as a result of new information, future events or otherwise.


PENN VIRGINIA CORPORATION

CONSOLIDATED STATEMENTS OF EARNINGS - unaudited

(in thousands, except per share data)

                                                      Three months ended

                                                      March 31,

                                                      2010         2009

Revenues

Natural gas                                           $ 47,988     $ 52,821

Crude oil                                               13,846       6,328

Natural gas liquids (NGLs)                              4,866        3,370

Natural gas midstream                                   151,764      95,206

Coal royalties                                          28,226       30,630

Gain on sale of property and equipment                  211          -

Other                                                   8,610        10,805

Total revenues                                          255,511      199,160

Expenses

Cost of midstream gas purchased                         123,660      79,398

Operating                                               20,521       22,702

Exploration                                             6,029        11,448

Exploration - drilling rig standby charges (a)          -            9,864

Taxes other than income                                 6,848        6,432

General and administrative (excluding equity            18,634       14,396
compensation)

Equity-based compensation - (b)                         4,657        4,090

Depreciation, depletion and amortization                47,574       57,073

Impairments                                             -            1,196

Loss on sale of assets                                  465          -

Total expenses                                          228,388      206,599

Operating income (loss)                                 27,123       (7,439  )

Other income (expense)

Interest expense                                        (19,506 )    (12,502 )

Derivatives                                             22,309       10,255

Other                                                   1,573        1,573

Income (loss) before income taxes and noncontrolling    31,499       (8,113  )
interests

Income tax benefit (expense)                            (8,559  )    4,562

Net income (loss)                                     $ 22,940     $ (3,551  )

Less net income attributable to noncontrolling          (9,346  )    (3,658  )
interests

Income (loss) attributable to PVA                     $ 13,594     $ (7,209  )

Income (loss) per share attributable to PVA

Basic                                                 $ 0.30       $ (0.17   )

Diluted                                               $ 0.30       $ (0.17   )

Weighted average shares outstanding, basic              45,465       41,922

Weighted average shares outstanding, diluted            45,761       41,922

                                                      Three months ended

                                                      March 31,

                                                      2010         2009

Production

Natural gas (MMcf)                                      8,568        11,802

Crude oil (MBbls)                                       186          171

NGLs (MBbls)                                            109          147

Total natural gas, crude oil and NGL production         10,338       13,710
(MMcfe)

Prices

Natural gas ($ per Mcf)                               $ 5.60       $ 4.48

Crude oil ($ per Bbl)                                 $ 74.44      $ 37.01

NGLs ($ per Bbl)                                      $ 44.64      $ 22.93

Prices - Adjusted for derivative settlements

Natural gas ($ per Mcf)                               $ 6.64       $ 5.75

Crude oil ($ per Bbl)                                 $ 75.23      $ 44.90

NGLs ($ per Bbl)                                      $ 44.64      $ 22.93




(a) Drilling rig standby charges represent fees paid in connection with the
deferral of drilling associated with contractually committed rigs and frac tank
rentals.

(b) Our equity-based compensation expense includes our stock option expense and
the amortization of restricted stock and restricted stock units related to
employee awards in accordance with accounting guidance of share-based payments.




PENN VIRGINIA CORPORATION

CONSOLIDATED BALANCE SHEETS - unaudited

(in thousands)

                                                   March 31,      December 31,

                                                   2010           2009

Assets

Current assets                                     $ 455,058      $ 299,242

Net property and equipment                           2,388,649      2,352,358

Other assets                                         236,274        236,907

Total assets                                       $ 3,079,981    $ 2,888,507

Liabilities and shareholders' equity

Current liabilities                                $ 255,582      $ 153,535

Long-term debt of PVR                                618,100        620,100

Revolving credit facility                            -              -

Senior notes                                         292,067        291,749

Convertible notes                                    208,470        206,678

Other liabilities and deferred taxes                 336,012        378,446

PVA shareholders' equity                             987,583        908,088

Noncontrolling interests                             382,167        329,911

Total shareholders' equity                           1,369,750      1,237,999

Total liabilities and shareholders' equity         $ 3,079,981    $ 2,888,507

CONSOLIDATED STATEMENTS OF CASH FLOWS - unaudited

(in thousands)

                                                   Three months ended

                                                   March 31,

                                                   2010           2009

Cash flows from operating activities

Net income (loss)                                  $ 22,940       $ (3,551    )

Adjustments to reconcile net income (loss) to net
cash provided by operating activities:

Depreciation, depletion and amortization             47,574         57,073

Impairments                                          -              1,196

Derivative contracts:

Total derivative gains                               (21,728   )    (9,801    )

Cash receipts to settle derivatives                  6,788          19,148

Deferred income taxes                                (9,000    )    (4,634    )

Dry hole and unproved leasehold expense              5,029          10,504

Noncash interest expense                             4,498          2,711

Other                                                3,901          780

Operating cash flow (see attached table "Certain     60,002         73,426
Non-GAAP Financial Measures")

Changes in operating assets and liabilities          19,265         29,593

Net cash provided by operating activities            79,267         103,019

Cash flows from investing activities

Acquisitions                                         (27,379   )    (3,073    )

Additions to property and equipment                  (45,099   )    (136,213  )

Other                                                23,545         254

Net cash used in investing activities                (48,933   )    (139,032  )

Cash flows from financing activities

Dividends paid                                       (2,556    )    (2,349    )

Distributions paid to noncontrolling interest        (22,501   )    (18,455   )
holders

Repayments of bank borrowings                        -              (7,542    )

Net proceeds from PVA borrowings                     -              58,000

Net (repayments of) proceeds from PVR borrowings     (2,000    )    27,000

Net proceeds from sale of PVG units                  177,000        -

Other                                                612            (9,258    )

Net cash provided by financing activities            150,555        47,396

Net increase (decrease) in cash and cash             180,889        11,383
equivalents

Cash and cash equivalents - beginning of period      98,331         18,338

Cash and cash equivalents - end of period          $ 279,220      $ 29,721





PENN VIRGINIA CORPORATION

QUARTERLY SEGMENT INFORMATION - unaudited

(in thousands except where noted)

                                        Coal and
                                        Natural

Three months
ended March     Oil and Gas             Resource    Natural Gas  Eliminations
31, 2010

                Amount       per Mcfe   Management  Midstream    and Other     Consolidated
                             (a)

Production

Total natural
gas, crude oil    10,338
and NGLs
(MMcfe)

Natural gas       8,568
(MMcf)

Crude oil         186
(MBbls)

NGLs (MBbls)      109

Coal royalty
tons                                      8,243
(thousands of
tons)

Midstream
system                                                27,725
throughput
volumes (MMcf)

Revenues

Natural gas     $ 47,988     $ 5.60     $ -         $ -          $ -           $ 47,988

Crude oil         13,846       74.44      -           -            -             13,846

NGLs              4,866        44.64      -           -            -             4,866

Natural gas       -            -          -           170,609      (18,845 )     151,764
midstream

Coal royalties    -            -          28,226      -            -             28,226

Gain on sale
of property       211          -          -           -            -             211
and equipment

Other             859          -          5,334       2,309        108           8,610

Total revenues    67,770       6.56       33,560      172,918      (18,737 )     255,511

Expenses

Cost of
midstream gas     -          -            -           141,795      (18,135 )     123,660
purchased

Operating         11,968       1.16       1,971       7,292        (710    )     20,521
expense

Exploration       6,029        0.58       -           -            -             6,029

Taxes other       4,905        0.47       475         1,043        425           6,848
than income

General and       6,532        0.63       3,427       4,911        8,421         23,291
administrative

Depreciation,
depletion and     29,022       2.82       7,326       10,492       734           47,574
amortization

Loss on sale      465          0.04       -           -            -             465
of assets

Total expenses    58,921       5.70       13,199      165,533      (9,265  )     228,388

Operating       $ 8,849      $ 0.86     $ 20,361    $ 7,385      $ (9,472  )   $ 27,123
income (loss)

Additions to
property and    $ 64,221                $ 32        $ 7,954      $ 271         $ 72,478
equipment

                                        Coal and
                                        Natural

Three month
ended March     Oil and Gas             Resource    Natural Gas  Eliminations
31, 2009

                             per
                Amount       Mcfe       Management  Midstream    and Other     Consolidated
                             (a)

Production

Total natural
gas, crude oil    13,710
and NGLs
(MMcfe)

Natural gas       11,802
(MMcf)

Crude oil         171
(MBbls)

NGLs (MBbls)      147

Coal royalty
tons                                      8,748
(thousands of
tons)

Midstream
system                                                32,280
throughput
volumes (MMcf)

Revenues

Natural gas     $ 52,821     $ 4.48     $ -         $ -          $ -           $ 52,821

Crude oil         6,328        37.01      -           -            -             6,328

NGLs              3,370        22.93      -           -            -             3,370

Natural gas       -            -          -           117,379      (22,173 )     95,206
midstream

Coal royalties    -            -          30,630      -            -             30,630

Gain on sale
of property       -            -          -           -            -             -
and equipment

Other             2,046        -          7,622       1,128        9             10,805

Total revenues    64,565       4.71       38,252      118,507      (22,164 )     199,160

Expenses

Cost of
midstream gas     -          -            -           100,620      (21,222 )     79,398
purchased

Operating         14,763       1.08       2,107       6,783        (951    )     22,702
expense

Exploration       11,448       0.84       -           -            -             11,448

Exploration -
Drilling rig      9,864        0.72       -           -            -             9,864
standby
charges

Taxes other       4,826        0.35       425         798          383           6,432
than income

General and       5,124        0.37       3,352       4,244        5,766         18,486
administrative

Depreciation,
depletion and     39,999       2.92       7,394       9,109        571           57,073
amortization

Impairments       1,196        0.09       -           -            -             1,196

Total expenses    87,220       6.36       13,278      121,554      (15,453 )     206,599

Operating       $ (22,655 )  $ (1.65 )  $ 24,974    $ (3,047  )  $ (6,711  )   $ (7,439  )
income (loss)

Additions to
property and    $ 120,574               $ 1,300     $ 17,006     $ 406         $ 139,286
equipment

(a) Natural gas revenues are shown per Mcf, crude oil and NGL revenues are shown per Bbl,
and all other amounts are shown per Mcfe.




PENN VIRGINIA CORPORATION

CERTAIN NON-GAAP FINANCIAL MEASURES - unaudited

(in thousands)

                                                        Three months ended

                                                        March 31,

                                                        2010         2009

Reconciliation of GAAP "Net cash provided by operating
activities" to Non-GAAP "Operating cash flow"

Net cash provided by operating activities               $ 79,267     $ 103,019

Adjustments:

Changes in operating assets and liabilities               (19,265 )    (29,593 )

Operating cash flow (a)                                 $ 60,002     $ 73,426

Reconciliation of GAAP "Income (loss) attributable to
PVA" to Non-GAAP "Income (loss) attributable to PVA,
as adjusted"

Net income (loss) attributable to PVA                   $ 13,594     $ (7,209  )

Adjustments for derivatives:

Derivative gains included in net income                   (21,728 )    (9,801  )

Cash receipts to settle derivatives                       6,788        19,148

Adjustment for drilling rig standby charges               -            9,864

Adjustment for impairments                                -            1,196

Adjustment for net loss on sale of assets                 254          -

Impact of adjustments on noncontrolling interests         (4,404  )    (4,275  )

Impact of adjustments on income taxes                     7,376        (6,252  )

                                                        $ 1,880      $ 2,671

Less: Portion of subsidiary net income allocated to
undistributed share-based compensation awards, net of     (28     )    (13     )
taxes

Net income attributable to PVA, as adjusted (b)         $ 1,852      $ 2,658

Net income attributable to PVA, as adjusted, per        $ 0.04       $ 0.06
share, diluted




(a) Operating cash flow represents net cash provided by operating activities
before changes in operating assets and liabilities. We believe that operating
cash flow is widely accepted as a financial indicator of an energy company's
ability to generate cash which is used to internally fund investing activities,
service debt and pay dividends. Operating cash flow is widely used by investors
and professional research analysts in the valuation, comparison, rating and
investment recommendations of companies within the energy industry. Operating
cash flow is presented because we believe it is a useful adjunct to net cash
provided by operating activities under GAAP. Operating cash flow is not a
measure of financial performance under GAAP and should not be considered as an
alternative to cash flows from operating, investing or financing activities, as
an indicator of cash flows, as a measure of liquidity or as an alternative to
net income.

(b) Net income (loss) attributable to PVA as adjusted represents net income
(loss) attributable to PVA adjusted to exclude the effects of non-cash changes
in the fair value of derivatives, drilling rig standby charges, impairments,
gains and losses on the sale of assets and net income of PVR allocated to
unvested PVR restricted units awarded as equity compensation that we hold until
vesting. We believe this presentation is commonly used by investors and
professional research analysts in the valuation, comparison, rating and
investment recommendations of companies within the oil and gas exploration and
production industry, as well as companies within the natural gas midstream
industry. We use this information for comparative purposes within these
industries. Net income (loss) attributable to PVA, as adjusted, is not a measure
of financial performance under GAAP and should not be considered as a measure of
liquidity or as an alternative to net income attributable to PVA.





PENN VIRGINIA CORPORATION

CONVERSION TO NON-GAAP EQUITY METHOD - unaudited

(in thousands)

Reconciliation of GAAP "Income Statements As Reported" to Non-GAAP "Income Statements, as
Adjusted" (a):

                Three months ended March 31, 2010       Three months ended March 31, 2009

                As Reported  Adjustments   As Adjusted  As Reported  Adjustments   As Adjusted

Revenues

Natural gas     $ 47,988     $ -           $ 47,988     $ 52,821     $ -           $ 52,821

Crude oil         13,846       -             13,846       6,328        -             6,328

NGLs              4,866        -             4,866        3,370        -             3,370

Natural gas       151,764      (151,764 )    -            95,206       (95,206  )    -
midstream

Coal royalties    28,226       (28,226  )    -            30,630       (30,630  )    -

Other             8,821        (7,643   )    1,178        10,805       (8,750   )    2,055

Total revenues    255,511      (187,633 )    67,878       199,160      (134,586 )    64,574

Expenses

Cost of
midstream gas     123,660      (123,660 )    -            79,398       (79,398  )    -
purchased

Operating         20,521       (8,553   )    11,968       22,702       (7,939   )    14,763

Exploration       6,029        -             6,029        11,448       -             11,448

Exploration -
drilling rig      -            -             -            9,864        -             9,864
standby
charges

Taxes other       6,848        (1,518   )    5,330        6,432        (1,223   )    5,209
than income

General and       23,291       (9,326   )    13,965       18,486       (8,133   )    10,353
administrative

Depreciation,
depletion and     47,574       (17,818  )    29,756       57,073       (16,503  )    40,570
amortization

Impairments       -            -             -            1,196        -             1,196

Loss on sale      465          -             465          -            -             -
of assets

Total expenses    228,388      (160,875 )    67,513       206,599      (113,196 )    93,403

Operating         27,123       (26,758  )    365          (7,439  )    (21,390  )    (28,829 )
income (loss)

Other income
(expense)

Interest          (19,506 )    5,835         (13,671 )    (12,502 )    5,616         (6,886  )
expense

Derivatives       22,309       7,568         29,877       10,255       7,161         17,416

Equity
earnings in       -            4,336         4,336        -            5,284         5,284
PVG and PVR

Other             1,573        (327     )    1,246        1,573        (329     )    1,244

Income (loss)
before taxes
and               31,499       (9,346   )    22,153       (8,113  )    (3,658   )    (11,771 )
noncontrolling
interests

Income tax
benefit           (8,559  )    -             (8,559  )    4,562        -             4,562
(expense)

Net income        22,940       (9,346   )    13,594       (3,551  )    (3,658   )    (7,209  )
(loss)

Less net
income
attributable      (9,346  )    9,346         -            (3,658  )    3,658         -
to
noncontrolling
interests

Net income
(loss)          $ 13,594     $ -           $ 13,594     $ (7,209  )  $ -           $ (7,209  )
attributable
to PVA




(a) Equity method income statements represent consolidated income statements,
minus 100% of PVG's consolidated results of operations, plus noncontrolling
interest which represents the portion of PVG's consolidated results of
operations that we do not own. We believe equity method income statements
provide useful information to allow the public to more easily discern PVG's
effect on our operations.





PENN VIRGINIA CORPORATION

CONVERSION TO NON-GAAP EQUITY METHOD - unaudited (continued)

(in thousands)

Reconciliation of GAAP "Balance Sheet As Reported" to Non-GAAP "Balance Sheet, as Adjusted" (a):

                       March 31, 2010                                December 31, 2009

                       As Reported    Adjustments     As Adjusted    As Reported    Adjustments     As Adjusted

Assets

Current assets         $ 455,058      $ (106,762   )  $ 348,296      $ 299,242      $ (107,782   )  $ 191,460

Net property and         2,388,649      (893,944   )    1,494,705      2,352,358      (900,844   )    1,451,514
equipment

Equity investment in     -              88,484          88,484         -              155,692         155,692
PVG and PVR

Other assets             236,274        (205,999   )    30,275         236,907        (210,437   )    26,470

Total assets           $ 3,079,981    $ (1,118,221 )  $ 1,961,760    $ 2,888,507    $ (1,063,371 )  $ 1,825,136

Liabilities and
shareholders' equity

Current liabilities    $ 255,582      $ (90,583    )  $ 164,999      $ 153,535      $ (86,323    )  $ 67,212

Long-term debt           1,118,637      (618,100   )    500,537        1,118,527      (620,100   )    498,427

Other liabilities and    336,012        (27,371    )    308,641        378,446        (27,037    )    351,409
deferred taxes

PVA shareholders'        987,583        -               987,583        908,088        -               908,088
equity

Noncontrolling           382,167        (382,167   )    -              329,911        (329,911   )    -
interests

Total shareholders'      1,369,750      (382,167   )    987,583        1,237,999      (329,911   )    908,088
equity

Total liabilities and  $ 3,079,981    $ (1,118,221 )  $ 1,961,760    $ 2,888,507    $ (1,063,371 )  $ 1,825,136
shareholders' equity

Reconciliation of GAAP "Statement of Cash Flows As Reported" to Non-GAAP "Statement of Cash Flows, as Adjusted"
(b):

                       Three months ended March 31, 2010             Three month ended March 31, 2009

                       As Reported    Adjustments     As Adjusted    As Reported    Adjustments     As Adjusted

Cash flows from
operating activities

Net income (loss)      $ 22,940       $ -             $ 22,940       $ (3,551    )  $ -             $ (3,551    )

Adjustments to
reconcile net income
(loss) to net cash
provided by operating
activities:

Depreciation,
depletion and            47,574         (17,818    )    29,756         57,073         (16,503    )    40,570
amortization

Impairments              -              -               -              1,196          -               1,196

Derivative contracts:

Total derivative         (21,728   )    (8,150     )    (29,878   )    (9,801    )    (7,615     )    (17,416   )
losses (gains)

Cash settlements of      6,788          1,646           8,434          19,148         (2,836     )    16,312
derivatives

Deferred income taxes    (9,000    )    -               (9,000    )    (4,634    )    -               (4,634    )

Dry hole and unproved    5,029          -               5,029          10,504         -               10,504
leasehold expense

Investment in PVG and    -              (13,682    )    (13,682   )    -              (8,944     )    (8,944    )
PVR

Cash distributions       -              7,652           7,652          -              11,533          11,533
from PVG and PVR

Noncash interest         4,498          (1,243     )    3,255          2,711          (491       )    2,220
expense

Other                    3,901          (1,076     )    2,825          780            1,768           2,548

Operating cash flow      60,002         (32,671    )    27,331         73,426         (23,088    )    50,338

Changes in operating
assets and               19,265         (8,199     )    11,066         29,593         962             30,555
liabilities

Net cash provided by     79,267         (40,870    )    38,397         103,019        (22,126    )    80,893
operating activities

Net cash used in         (48,933   )    7,714           (41,219   )    (139,032  )    18,041          (120,991  )
investing activities

                                                                                                      -

Net cash provided by     150,555        24,501          175,056        47,396         713             48,109
financing activities

Net increase
(decrease) in cash       180,889        (8,655     )    172,234        11,383         (3,372     )    8,011
and cash equivalents

Cash and cash
equivalents-beginning    98,331         (19,314    )    79,017         18,338         (18,338    )    -
of period

Cash and cash
equivalents-end of     $ 279,220      $ (27,969    )  $ 251,251      $ 29,721       $ (21,710    )  $ 8,011
period




(a) Equity method balance sheets represent consolidated balance sheets, minus
100% of PVG's consolidated balance sheets, excluding noncontrolling interests
which represents the portion of PVG's consolidated balance sheet that we do not
own and including other adjustments to eliminate inter-company transactions. We
believe equity method balance sheets provide useful information to allow the
public to more easily discern PVG's effect on our assets, liabilities and
shareholders' equity.

(b) Equity method statements of cash flows represent consolidated statements of
cash flows, minus 100% of PVG's consolidated statements of cash flows, excluding
noncontrolling interests which represents the portion of PVG's consolidated
results of operations that we do not own and including other adjustments to
eliminate inter-company transactions. We believe equity method statements of
cash flows provide useful information to allow the public to more easily discern
PVG's effect on our cash flows.




PENN VIRGINIA CORPORATION

GUIDANCE TABLE - unaudited

(dollars in millions except where noted)

We are providing the following guidance regarding financial and operational
expectations for full-year 2010.

                                                 Actual

                                                 First Quarter  Full-Year

Oil & Gas Segment:                               2010           2010 Guidance

Production:

Natural gas (Bcf) - (a)                            8.6          37.0  -  39.0

Crude oil (MBbls) - (a)                            186          900   -  950

NGLs (MBbls)                                       109          770   -  850

Equivalent production (Bcfe)                       10.3         47.0  -  50.0

Equivalent daily production (MMcfe per day)        114.9        128.8 -  137.0

Expenses:

Cash operating expenses ($ per Mcfe)             $ 2.26         1.95  -  2.10

Exploration                                      $ 6.0          35.0  -  40.0

Depreciation, depletion and amortization ($ per  $ 2.82         3.00  -  3.10
Mcfe)

Impairments                                      $ -

Loss on sale of assets                           $ 0.5          0.5      0.5

Capital expenditures:

Development drilling                             $ 37.9         250.0 -  274.0

Exploratory drilling                             $ 3.7          40.0  -  45.0

Pipeline, gathering, facilities                  $ 0.2          6.0   -  7.0

Seismic                                          $ 0.4          7.0   -  8.0

Acquisitions, field projects and other           $ 35.5         72.0  -  91.0

Total segment capital expenditures               $ 77.7         375.0 -  425.0

Coal and Natural Resource Segment (PVR):

Coal royalty tons (millions)                       8.2          31.0  -  32.0

Revenues:

Average coal royalties per ton                   $ 3.42         3.30  -  3.40

Average coal royalties per ton, net of coal      $ 3.25         3.15  -  3.25
royalties expense

Other                                            $ 5.3          21.0  -  22.0

Expenses:

Cash operating expenses                          $ 5.9          22.0  -  22.5

Depreciation, depletion and amortization         $ 7.3          28.5  -  29.0

Capital expenditures:

Expansion and acquisitions                       $ -            6.0   -  7.0

Other capital expenditures                       $ -            -     -  0.5

Total segment capital expenditures               $ -            6.0   -  7.5

Natural Gas Midstream Segment (PVR):

System throughput volumes (MMcf per day) (b)       308          350   -  360

Expenses:

Cash operating expenses                          $ 13.2         55.0  -  60.0

Depreciation, depletion and amortization         $ 10.5         42.0  -  44.0

Capital expenditures:

Expansion and acquisitions                       $ 7.4          85.0  -  90.0

Maintenance capital expenditures                 $ 1.9          16.0  -  18.0

Total segment capital expenditures               $ 9.3          101.0 -  108.0

Corporate and Other:

General and administrative expense - PVA         $ 7.4          26.0  -  28.0

General and administrative expense - PVG         $ 1.0          3.0   -  3.5

Interest expense:

PVA end of period debt outstanding               $ 500.5

PVA effective interest rate                        10.9%

PVR end of period debt outstanding               $ 595.1

PVR effective interest rate                        3.8%

Income tax rate                                    38.7%

Cash distributions received from PVG and PVR     $ 7.7

Other capital expenditures                       $ 0.2          2.0   -  2.5




These estimates are meant to provide guidance only and are subject to change as
PVA's and PVR's operating environments change.

See Notes on subsequent pages.




PENN VIRGINIA CORPORATION

GUIDANCE TABLE - unaudited - (continued)

Notes to Guidance Table:

(a) The following table shows our current derivative positions in the oil and
gas segment as of March 31, 2010:

                                            Weighted Average Price

                            Average Volume  Additional
                                                        Floor           Ceiling
                            Per Day         Put Option

Natural gas costless        (MMBtu)                     ($ per MMBtu)
collars

Second quarter 2010         30,000                      5.33            8.02

Third quarter 2010          30,000                      5.33            8.02

Fourth quarter 2010         50,000                      5.65            8.77

First quarter 2011          50,000                      5.65            8.77

Second quarter 2011         30,000                      5.67            7.58

Third quarter 2011          30,000                      5.67            7.58

Fourth quarter 2011         20,000                      6.00            8.50

First quarter 2012          20,000                      6.00            8.50

Natural gas swaps           (MMBtu)                     ($ per MMBtu)

Second quarter 2010         30,000                      6.17

Third quarter 2010          30,000                      6.17

Crude oil costless collars  (barrels)                   ($ per barrel)

Second quarter 2010         500                         60.00           74.75

Third quarter 2010          500                         60.00           74.75

Fourth quarter 2010         500                         60.00           74.75




We estimate that, excluding the derivative positions described above, for every
$1.00 per MMBtu increase or decrease in the natural gas price, oil and gas
segment operating income for the remainder of 2010 would increase or decrease by
approximately $27 million. In addition, we estimate that for every $5.00 per
barrel increase or decrease in the crude oil price, oil and gas segment
operating income for 2010 would increase or decrease by approximately $5
million. This assumes that crude oil prices, natural gas prices and inlet
volumes remain constant at anticipated levels. These estimated changes in gross
margin and operating income exclude potential cash receipts or payments in
settling these derivative positions.




PENN VIRGINIA CORPORATION

GUIDANCE TABLE - unaudited - (continued)

(b) The costless collar natural gas prices per MMBtu per quarter include the
effects of basis differentials, if any. The following table shows current
derivative positions for natural gas production in PVR's natural gas midstream
segment as of March 31, 2010:




                           Average                    Weighted Average Price

                           Volume     Swap            Additional

                           Per Day    Price           Put Option  Put    Call

Crude oil collar           (barrels)                              ($ per barrel)

Second quarter 2010
through fourth quarter     1,750                                  68.86  80.54
2010

First quarter 2011
through fourth quarter     400                                    75.00  98.50
2011

Natural gas purchase swap  (MMBtu)    ($ per MMbtu)

Second quarter 2010
through fourth quarter     7,100      5.885
2010

First quarter 2011
through fourth quarter     6,500      5.796
2011

Ethane Swap                (gallons)  ($ per gallon)

Second quarter 2010        72,000     0.735

NGL - natural gasoline     (gallons)                              (per gallon)
collar

Third quarter 2010
through fourth quarter     42,000                                 $1.55  $2.03
2010

First quarter 2011
through fourth quarter     95,000                                 $1.57  $1.94
2011




We estimate that, excluding the derivative positions described above, for every
$1.00 per MMBtu increase or decrease in the natural gas price, natural gas
midstream gross margin and operating income for 2010 would decrease or increase
by approximately $4 million. In addition, we estimate that for every $5.00 per
barrel increase or decrease in the crude oil price, natural gas midstream gross
margin and operating income for 2010 would increase or decrease by approximately
$6 million. This assumes that crude oil prices, natural gas prices and inlet
volumes remain constant at anticipated levels. These estimated changes in gross
margin and operating income exclude potential cash receipts or payments in
settling these derivative positions.




    Source: Penn Virginia Corporation