RADNOR, Pa.--
Penn Virginia Corporation (NYSE:PVA) today reported financial and operational results for the fiscal year and three months ended December 31, 2007.
Full-Year and Fourth Quarter 2007 Highlights
Full-year 2007 results, with comparisons to full-year 2006 results, included the following:
-- Record annual oil and gas production of 40.6 billion cubic feet of
natural gas equivalent (Bcfe), or 111.1 million cubic feet of
natural gas equivalent (MMcfe) per day, a 30 percent increase as
compared to 31.3 Bcfe, or 85.6 MMcfe per day;
-- Record proved reserves of 680 Bcfe, a 40 percent increase as
compared to 487 Bcfe;
-- Operating cash flow, a non-GAAP (generally accepted accounting
principles) measure, of $301.2 million as compared to $262.0
million;
-- Net income of $50.8 million, or $1.32 per diluted share, as
compared to $75.9 million, or $2.01 per diluted share; and
-- Adjusted net income, a non-GAAP measure which excludes the effects
of a non-cash change in derivatives fair value, of $69.8 million,
or $1.82 per diluted share, as compared to $60.7 million, or $1.61
per diluted share.
Fourth quarter 2007 results, with comparisons to fourth quarter 2006 results, included the following:
-- Oil and gas production of 10.7 Bcfe, or 116.1 MMcfe per day, a 25
percent increase as compared to 8.6 Bcfe, or 93.0 MMcfe per day;
-- Operating cash flow of $75.0 million as compared to $64.0 million;
-- Net income of $5.4 million, or $0.14 per diluted share, as compared
to $10.7 million, or $0.28 per diluted share; and
-- Adjusted net income of $12.8 million, or $0.33 per diluted share,
as compared to $7.1 million, or $0.19 per diluted share.
A reconciliation of non-GAAP financial measures appears in the financial tables later in this release.
For 2007, operating income was $192.6 million, which was $22.1 million, or 13 percent, higher than 2006. The increase was primarily due to higher production in the oil and gas segment and higher processing margins in the natural gas midstream (PVR Midstream) segment, offset in part by higher operating expenses in the oil and gas segment, lower operating income from the coal and natural resource management (PVR Coal & NRM) segment and higher corporate general and administrative (G&A) expense. Operating cash flow for 2007 increased $39.2 million, or 15 percent, as compared to 2006, primarily due to the increase in operating income and a decrease in cash paid to settle derivatives, partially offset by higher interest expense resulting from increased debt levels. The 15 percent increase in adjusted net income was primarily due to the increase in operating income and a decrease in cash paid to settle derivatives, partially offset by the increase in interest expense. The increase in corporate G&A expense related primarily to increased personnel-related costs resulting from new employees added during 2007, higher stock-based compensation expense, new information systems conversion costs and a full year of PVG-related expenses in 2007.
In addition to the factors discussed above relating to the increase in operating income, the 33 percent decrease in net income in 2007 was primarily due to a $69.7 million increase in derivatives expense resulting mainly from changes in the valuation of unrealized derivative positions and higher interest expense, along with the related effects on income tax expense and minority interest.
In the fourth quarter of 2007, operating income was $45.1 million, which was $17.8 million, or 65 percent, higher than the fourth quarter of 2006. The increase was primarily due to higher production in the oil and gas segment and higher processing margins from PVR Midstream, offset in part by higher operating expenses in the oil and gas segment, lower segment operating income from PVR Coal & NRM and higher corporate G&A expense. Operating cash flow increased $11.0 million, or 17 percent, primarily due to the increase in operating income and a decrease in cash paid to settle derivatives, partially offset by higher interest expense resulting from increased debt levels. The 81 percent increase in adjusted net income was primarily due to the increase in operating income and a decrease in cash paid to settle derivatives, partially offset by the increase in interest expense. The increase in corporate G&A related primarily to increased personnel-related costs resulting from new employees added during 2007, higher stock-based compensation expense, new information systems conversion costs and a full quarter of PVG-related expenses in 2007.
The 50 percent decrease in net income in the fourth quarter of 2007 was primarily due to a $34.1 million increase in derivatives expense resulting mainly from changes in the valuation of unrealized derivative positions and higher interest expense, along with the related effects on income tax expense and minority interest.
Management Comment
A. James Dearlove, President and Chief Executive Officer of PVA, said, "We are pleased with the performance of our oil and gas operations, which delivered a 30 percent production increase in 2007 and a 25 percent fourth quarter production increase over the prior year quarter. This exceeds our original 2007 guidance, which estimated a 17 to 23 percent increase in production, excluding acquisitions. As a result of our results in 2007 and based on our 2008 capital expenditures budget, we are expecting production growth of 21 to 27 percent in 2008, excluding contributions from acquisitions or significant exploratory success.
"We also reported record proved reserves of 680 Bcfe at year-end 2007, a 40 percent increase over the prior year levels with 71 percent replaced through the drillbit. We replaced 628 percent of 2007 production at a reserve replacement cost of $2.04 per thousand cubic feet of natural gas equivalent (Mcfe). We drilled 289 gross wells during 2007 and anticipate drilling approximately 330 gross wells during 2008 as part of our $475 million oil and gas capital expenditures budget.
"In December 2007, we completed successful public securities offerings, raising approximately $372 million of gross proceeds from the dual offerings of both convertible debt and equity. In addition to broadening access to Penn Virginia by the investment community, the capital raise allowed us to dramatically reduce our bank borrowings such that we had over $350 million of credit availability at year-end 2007.
"PVR Midstream, the natural gas midstream segment of Penn Virginia Resource Partners, L.P. (NYSE:PVR), experienced a strong increase in operating income and cash flow throughout 2007 as the fractionation or "frac" spread - which is the difference between the price of natural gas liquids (NGLs) sold and the cost of natural gas purchased on a per MMBtu basis - was at record high levels and has remained strong into early 2008. PVR Midstream is expecting organic growth in 2008, including the completion of two new gas processing plants in Texas, one of which will process most of PVA's liquids-rich Cotton Valley natural gas production in east Texas.
"PVR Coal & NRM completed two coal reserve acquisitions in the Illinois Basin during 2007. In addition, PVR Coal & NRM completed significant acquisitions in Appalachia of forestland ($93 million) and oil and gas royalties ($31 million). Coal production by PVR's lessees was essentially flat in 2007 relative to the prior year, due to disruptions of Appalachian production in the fourth quarter; however, lessee tonnage is expected to increase in 2008. The overall market for coal improved during 2007 as spot prices increased in the areas where our royalties are market sensitive, although most of our lessees' contracts with their customers are long-term in nature. The primary reasons for the improvement in the coal market were increased domestic demand, as well as increased exports of Appalachian coal.
"The pretax value of our 82 percent stake in Penn Virginia GP Holdings, L.P. (NYSE: PVG), the owner of the general partner and largest limited partner of PVR, has increased by approximately $300 million, or approximately $7.25 per PVA share, since its initial public offering in December 2006. Considering the increased market value of PVG, as well as the approximate $41 million current annualized run rate of distributions that we receive from PVG, we are very pleased with the performance of this investment.
"We look forward to continued growth in 2008 and believe that we have the proper strategies in place at each business segment and the financial strength to achieve that growth."
Oil and Gas Segment Review
Proved natural gas and oil reserves increased by 40 percent in 2007, from 487 Bcfe at December 31, 2006 to 680 Bcfe at December 31, 2007. This increase was a result of successful drilling programs and acquisitions in the Cotton Valley play in east Texas, the Mid-Continent region and the Selma Chalk play in Mississippi. Oil and gas production grew 30 percent from 31.3 Bcfe in 2006 to a record 40.6 Bcfe in 2007. Fourth quarter 2007 oil and gas production grew 25 percent to 10.7 Bcfe from 8.6 Bcfe in the fourth quarter of 2006. See today's separate operational update news release for a more detailed discussion of full year and fourth quarter 2007 drilling and production operations for the oil and gas business segment.
Oil and gas operating income for 2007 was $104.2 million, or 23 percent higher than the $84.8 million in 2006. Total oil and gas revenues increased by 29 percent from $236.0 million in 2006 to $303.2 million in 2007. The increase in revenues was primarily attributable to the production increase and a $12.2 million gain on the sale in September 2007 of non-operated working interests in oil and gas properties, partially offset by a six percent decrease in the realized natural gas price.
In 2007, total oil and gas segment expenses increased by $47.9 million, or 32 percent, to $199.0 million, or $4.91 per Mcfe produced, from $151.1 million, or $4.83 per Mcfe produced, in 2006, as discussed below:
-- Cash operating expenses, which include lease operating expense,
taxes other than income and G&A expense, increased by $28.8
million, or 55 percent, to $80.8 million, or $1.99 per Mcfe
produced, in 2007 from $52.0 million, or $1.66 per Mcfe produced,
in 2006. The overall increase in cash operating expenses was due
primarily to the production increase. Increases in cash operating
expenses per unit of production are discussed below:
-- Lease operating expense increased to $1.15 per Mcfe from $0.88
per Mcfe, primarily due to a general increase in oilfield service
costs and activity in all operating areas as well as additional
expenses in a number of operating areas related to workovers,
water disposal, gathering, compression, and repairs and
maintenance; and
-- Taxes other than income increased to $0.44 per Mcfe from $0.38
per Mcfe primarily due to a severance tax refund received in 2006
related to production in the Cotton Valley play.
-- Exploration expense decreased by $5.7 million, or 17 percent, to
$28.6 million in 2007 from $34.3 million in 2006 due to increased
success in 2007 relative to the prior year.
-- Depletion, depreciation and amortization (DD&A) expense increased
by $30.8 million, or 55 percent, to $87.0 million, or $2.14 per
Mcfe, from $56.2 million, or $1.80 per Mcfe. The overall increase
in DD&A expense was primarily due to the production increase. The
higher depletion rate per unit of production was primarily due to
a shift in the production mix to areas with relatively high
depletion rates, including the Gulf Coast, east Texas, Appalachia
and the Mid-Continent.
Oil and gas operating income for the fourth quarter of 2007 was $18.8 million, or 117 percent higher than the $8.7 million in the fourth quarter of 2006. Total oil and gas revenues increased by 35 percent from $57.7 million in the fourth quarter of 2006 to $77.7 million in the fourth quarter of 2007. The increase in revenues was primarily attributable to the production increase, as well as a four percent increase in the realized natural gas price and a 57 percent increase in the realized oil and condensate price.
In the fourth quarter of 2007, total oil and gas segment expenses increased by $10.1 million, or 20 percent, to $58.9 million, or $5.52 per Mcfe produced, from $49.0 million, or $5.73 per Mcfe produced, in the fourth quarter of 2006, as discussed below:
-- Cash operating expenses increased by $10.7 million, or 73 percent,
to $25.4 million, or $2.38 per Mcfe produced, in the fourth
quarter of 2007 from $14.7 million, or $1.72 per Mcfe produced, in
the fourth quarter of 2006. The overall increase in cash operating
expenses was due in part to the production increase. Increases in
cash operating expenses per unit of production are discussed
below:
-- Lease operating expense increased to $1.45 per Mcfe from $0.93
per Mcfe, primarily due to:
-- increased water disposal costs in east Texas caused by a
disposal facility reaching capacity, necessitating more
expensive trucking of associated water production until new
disposal facilities can be completed by mid-2008;
-- added compression in east Texas, Mississippi and south
Louisiana due to increased production volumes;
-- higher downhole maintenance expenses in several operating
areas; and
-- increased third party gathering charges in east Texas
pending hook up to PVR Midstream's gas processing plant in
east Texas in the first quarter of 2008, at which time
gathering charges are expected to be more than offset by
increased revenue from NGL production;
In addition, the unexpected loss of production at a significant
producing well in south Texas (approximately four MMcfe per
day) for approximately two months during the quarter and the
divestitures of low-cost royalty and working interest
properties in Appalachia contributed to the increase in per
unit expense during the quarter; and
-- Taxes other than income increased to $0.43 per Mcfe from $0.31
per Mcfe, primarily due to a severance tax refund received in the
fourth quarter of 2006 related to production in the Cotton Valley
play.
-- Exploration expense decreased by $3.3 million, or 40 percent, to
$5.0 million in the fourth quarter of 2007 from $8.3 million in
the prior year quarter due to increased success in the fourth
quarter of 2007 relative to the prior year quarter.
-- DD&A expense increased by $10.9 million, or 62 percent, to $28.4
million, or $2.66 per Mcfe, from $17.5 million, or $2.04 per Mcfe.
The overall increase in DD&A expense was due in part to the
production increase. The higher depletion rate per unit of
production was primarily due to a shift in the production mix to
areas with relatively high depletion rates, including the Gulf
Coast, east Texas, Appalachia and the Mid-Continent.
Natural Gas Midstream and Coal & NRM Segments (PVR)
Operating income for PVR Midstream increased 67 percent to $48.9 million in 2007 from $29.4 million in the prior year. Fourth quarter 2007 segment operating income increased 191 percent to $20.6 million from $7.1 million in the prior year quarter. Operating income for PVR Coal & NRM decreased six percent to $68.8 million in 2007 from $73.4 million in the prior year. In the fourth quarter of 2007, operating income for PVR Coal & NRM decreased by 15 percent to $15.6 million from $18.3 million in the prior year quarter. Financial and operational results and full-year 2008 guidance for each of these 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 February 13, 2008 (please visit PVR's website, www.pvresource.com under "For Investors," for a copy of the release).
Consolidated Financial Statements
PVA is the largest unitholder of PVG and reports its financial results on a consolidated basis with the financial results of PVG. Similarly, PVG owns PVR's general partner, including the incentive distribution rights, and is PVR's largest limited partner unitholder, and reports its financial results on a consolidated basis with the financial results of PVR. PVG currently has no separate operating activities apart from those conducted by PVR and derives its cash flow solely from cash distributions received from PVR.
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" section of this release. Using the equity method, PVG's results are reduced to a few line items and the results from oil and gas operations and corporate are therefore highlighted. Management believes that this is useful since the oil and gas and corporate segments provide a majority of the cash flow from operations generated by PVA, as compared to distributions PVA receives from PVG and PVR. Management believes 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.
Partnership Distributions
As previously announced, on February 19, 2008, PVG will pay to unitholders of record as of February 4, 2008 a quarterly cash distribution covering the period October 1 through December 31, 2007 in the amount of $0.32 per unit, or an annualized rate of $1.28 per unit. This annualized distribution represents a $0.08 per unit, or seven percent, increase over the annualized distribution of $1.20 per unit paid in the prior quarter and a 33 percent increase over the annualized distribution of $0.96 per unit for the same quarter of 2007.
As the result of PVG's distribution increase, PVA will receive a cash distribution of approximately $10.3 million in the first quarter of 2008 or approximately $41.1 million on an annualized basis.
Capital Resources and Impact of Derivatives
As of December 31, 2007, PVA had outstanding borrowings of $352.0 million, including $230.0 million of convertible senior subordinated notes due 2012 and $122.0 of borrowings under its revolving credit facility. The $131.0 million increase in outstanding borrowings as compared to the $221.0 million at December 31, 2006 was primarily due to higher spending to fund PVA's oil and gas capital expenditures and acquisitions during 2007, partially offset by the net proceeds from the offering of 3.45 million shares of common stock in December 2007 and the divestitures of working and royalty interests. PVR's outstanding borrowings as of December 31, 2007 were $411.7 million, including $12.6 million of senior unsecured notes classified as current portion of long-term debt, an increase from $218.0 million as of December 31, 2006. The increase in PVR's outstanding borrowings was primarily due to coal reserve and forestland acquisitions and natural gas midstream capital expenditures. Consolidated interest expense increased from $24.8 million in 2006 to $37.4 million in 2007. Consolidated interest expense increased from $7.5 million in the fourth quarter of 2006 to $11.5 million in the fourth quarter of 2007. The increases were due higher weighted average levels of outstanding borrowings during 2007 as compared to the prior year periods.
During 2007, derivatives expense was $47.3 million, as compared to income of $19.5 million in 2006. Derivatives expense related to PVR Midstream, included in consolidated derivatives expense, was $45.6 million in 2007. Cash settlements of derivatives included in these amounts resulted in net cash payments of $3.7 million during 2007, as compared to $8.9 million of net cash receipts in 2006. Cash settlements of derivatives related to PVR Midstream, included in consolidated cash settlements, were $17.8 million of net cash payments in 2007. For the fourth quarter of 2007, derivatives expense was $25.2 million, as compared to income of $8.1 million in the prior year quarter. Derivatives expense related to PVR Midstream was $24.6 million in the fourth quarter of 2007. Cash settlements of derivatives included in these amounts resulted in net cash payments of $5.9 million during the fourth quarter of 2007, as compared to $1.5 million of net cash receipts in the fourth quarter of 2006. Cash settlements of derivatives related to PVR Midstream were $8.8 million of net cash payments in the fourth quarter of 2007. See the natural gas midstream segment review in this release for a discussion of the impact of derivatives on PVR Midstream's gross processing margin.
Based on derivatives currently in place for natural gas production, we have hedged approximately 38 to 40 percent of natural gas production for 2008, based on the latest production guidance, at weighted average collar floors and ceilings of $7.85 and $9.65 per MMBtu. See the Guidance Table included in this release for details of production guidance and derivative positions.
Guidance for 2008
See the Guidance Table included in this release for guidance estimates for full-year 2008. These estimates, including capital expenditure plans, are meant to provide guidance only and are subject to revision as PVA's and PVR's operating environments change.
Conference Call
A conference call and webcast, during which management will discuss 2007 full-year and fourth quarter financial and operational results for PVA, is scheduled for Thursday, February 14, 2008 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 1-877-407-9205 five to ten minutes before the scheduled start of the conference call, or via webcast by logging on to PVA's website at www.pennvirginia.com at least 20 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 until February 28, 2008 at 11:59 p.m. ET by dialing 1-877-660-6853 and using the following replay pass codes: account #286, conference ID #270353. An on-demand replay of the conference call will be available at PVA's website beginning shortly after the call.
Headquartered in Radnor, PA and a member of the S&P SmallCap 600 Index, 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 the Cotton Valley play in east Texas, the Selma Chalk play in Mississippi, the Mid-Continent region, the Appalachian Basin and the Gulf Coast of Louisiana and Texas. PVA also owns approximately 82 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 PVA's 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, crude oil, NGLs and coal; the cost of finding and successfully developing oil and gas reserves; our ability to acquire new oil and gas reserves and the price for which such reserves can be acquired; energy prices generally and specifically, the price of natural gas, crude oil, NGLs and coal; the relationship between natural gas and NGL prices; the price of coal and its comparison to the price of natural gas and crude oil; the projected demand for natural gas, crude oil, NGLs and coal; the projected supply of natural gas, crude oil, NGLs and coal; the availability of required drilling rigs, production equipment and materials; our ability to obtain adequate pipeline transportation capacity for our oil and gas production; non-performance by third party operators in wells in which we own an interest; 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 differs from estimated recoverable proved oil and gas reserves and coal reserves; PVR's ability to generate sufficient cash from its midstream and coal and natural resource management businesses to pay the minimum quarterly distribution to its general partner and its unitholders; hazards or operating risks incidental to our business and to PVR's coal or midstream business; PVR's ability to acquire new coal reserves or natural gas midstream assets on satisfactory terms; the price for which PVR can acquire coal reserves; PVR's ability to continually find and contract for new sources of natural gas supply for its midstream business; PVR's ability to retain existing or acquire new natural gas midstream customers; PVR's ability to lease new and existing coal reserves; the ability of PVR's lessees to produce sufficient quantities of coal on an economic basis from PVR's reserves; the ability of PVR's lessees to obtain favorable contracts for coal produced from its reserves; PVR's exposure to the credit risk of its coal lessees and natural gas midstream customers; hazards or operating risks incidental to natural gas midstream operations; unanticipated geological problems; the dependence of PVR's natural gas midstream business on having connections to third party pipelines; the occurrence of unusual weather or operating conditions including force majeure events; the failure of equipment or processes to operate in accordance with specifications or expectations; the failure of PVR's infrastructure and its lessees' mining equipment or processes to operate in accordance with specifications or expectations; delays in anticipated start-up dates of our oil and natural gas production and PVR's lessees' mining operations and related coal infrastructure projects; 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; the risks associated with having or not having price risk management programs; labor relations and costs; 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 and interest rates) and political conditions (including the impact of potential terrorist attacks); the experience and financial condition of PVR's coal lessees and natural gas midstream customers, including their ability to satisfy their royalty, environmental, reclamation and other obligations to PVR and others; PVR's ability to expand its natural gas midstream business by constructing new gathering systems, pipelines and processing facilities on an economic basis and in a timely manner; coal handling joint venture operations; changes in financial market conditions; and PVG's ability to generate sufficient cash from its interests in PVR to maintain and pay the quarterly distribution to its general partner and its unitholders.
Additional information concerning these and other factors can be found in our press releases and public periodic filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2006. 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 the result of new information, future events or otherwise.
PENN VIRGINIA CORPORATION
OPERATIONS SUMMARY - unaudited
Three Months Ended Year Ended
December 31, December 31,
------------------- -------------------
2007 2006 2007 2006
--------- --------- --------- ---------
Production
Natural gas (MMcf) 9,930 7,959 37,802 28,968
Oil and condensate
(MBbls) 125 99 461 382
Total oil, condensate and
natural gas production
(MMcfe) 10,681 8,553 40,569 31,260
Coal royalty tons
(thousands) 7,342 8,311 32,528 32,778
Midstream system
throughput volumes
(MMcf) 17,047 16,761 67,810 61,995
Prices and margin
Natural gas ($ per Mcf) $ 6.87 $ 6.60 $ 6.94 $ 7.35
Oil and condensate ($ per
Bbl) $ 77.28 $ 49.08 $ 60.97 $ 55.59
Average gross coal
royalty ($ per ton) $ 2.82 $ 2.99 $ 2.89 $ 2.99
Gross midstream
processing margin (in
thousands) $ 30,786 $ 17,396 $ 89,881 $ 68,121
CONSOLIDATED STATEMENTS OF EARNINGS - unaudited
(in thousands, except per share data)
Three Months Ended Year Ended
December 31, December 31,
------------------- -------------------
2007 2006 2007 2006
--------- --------- --------- ---------
Revenues
Natural gas $ 68,208 $ 52,535 $262,169 $212,919
Oil and condensate 9,674 4,859 28,117 21,237
Natural gas midstream 123,079 97,375 433,174 402,715
Coal royalties 20,685 24,875 94,140 98,163
Other 6,878 5,835 35,350 18,895
--------- --------- --------- ---------
Total revenues 228,524 185,479 852,950 753,929
--------- --------- --------- ---------
Expenses
Cost of midstream gas
purchased 92,293 79,979 343,293 334,594
Operating 20,053 13,968 67,610 47,406
Exploration 4,998 8,269 28,608 34,330
Taxes other than income 5,728 3,550 21,723 14,767
General and
administrative 20,444 16,277 66,983 49,566
Impairment of oil and gas
properties 181 8,517 2,586 8,517
Depreciation, depletion
and amortization 39,700 27,636 129,523 94,217
--------- --------- --------- ---------
Total expenses 183,397 158,196 660,326 583,397
--------- --------- --------- ---------
Operating income 45,127 27,283 192,624 170,532
Other income (expense)
Interest expense (11,541) (7,540) (37,419) (24,832)
Derivatives (25,214) 8,094 (47,282) 19,497
Other 1,115 2,580 3,651 3,718
--------- --------- --------- ---------
Income before minority
interest and income taxes 9,487 30,417 111,574 168,915
Minority interest 2,660 11,831 30,319 43,018
Income tax expense 1,468 7,883 30,501 49,988
--------- --------- --------- ---------
Net income $ 5,359 $ 10,703 $ 50,754 $ 75,909
========= ========= ========= =========
Per share data:
Net income per share, basic $ 0.14 $ 0.29 $ 1.33 $ 2.03
========= ========= ========= =========
Net income per share, diluted
(a) $ 0.14 $ 0.28 $ 1.32 $ 2.01
========= ========= ========= =========
Weighted average shares
outstanding, basic 38,805 37,492 38,061 37,362
Weighted average shares
outstanding, diluted 39,157 37,872 38,358 37,732
(a) - The diluted EPS numerator includes an adjustment for the
dilutive effect of PVR's net income.
PENN VIRGINIA CORPORATION
CONSOLIDATED BALANCE SHEETS - unaudited
(in thousands)
December December
31, 31,
2007 2006
---------- ----------
Assets
Current assets $ 227,799 $ 192,383
Net property and
equipment 1,899,014 1,358,383
Other assets 110,375 82,383
---------- ----------
Total assets $2,237,188 $1,633,149
========== ==========
Liabilities and
Shareholders' Equity
Current liabilities $ 261,899 $ 172,690
Long-term debt 352,000 221,000
Long-term debt of
Penn Virginia
Resource Partners,
L.P. 399,153 207,214
Other liabilities
and deferred taxes 234,876 211,448
Minority interest -
(a) 179,162 438,372
Shareholders' equity
- (a) 810,098 382,425
---------- ----------
Total
liabilities
and
shareholders'
equity $2,237,188 $1,633,149
========== ==========
(a) - The decrease in minority interest and corresponding increase in
shareholders' equity is primarily due to a gain recognized on the
sale of PVR's common units in its initial public offering in 2001 and
each subsequent PVR equity issuance to third parties. In accordance
with SEC Staff Accounting Bulletin No. 51, PVA deferred recognition
of the gain until all PVR junior securities converted to common units
in May 2007.
CONSOLIDATED STATEMENTS OF CASH FLOWS - unaudited
(in thousands)
Three Months Ended Year Ended
December 31, December 31,
---------------------- --------------------
2007 2006 2007 2006
---------- ---------- --------- ---------
Operating Activities
Net income $ 5,359 $ 10,703 $ 50,754 $ 75,909
Adjustments to
reconcile net
income to net cash
provided by
operating
activities:
Depreciation,
depletion and
amortization 39,700 27,636 129,523 94,217
Commodity derivative
contracts:
Total derivative
losses (gains) 26,588 (7,493) 52,157 (17,535)
Cash receipts
(payments) to
settle
derivatives for
period (5,932) 1,486 (3,651) (8,947)
Deferred income
taxes 69 5,949 21,971 38,020
Minority interest 2,660 11,831 30,319 43,018
Gain on sale of
properties (117) - (12,553) -
Impairment of oil
and gas properties 181 8,517 2,586 8,517
Dry hole and
unproved leasehold
expense 4,278 6,577 24,985 24,502
Other 2,180 (1,223) 5,098 4,260
---------- ---------- --------- ---------
Operating cash flow
(see attached table
"Reconciliation of
Certain Non-GAAP
Financial
Measures") 74,966 63,983 301,189 261,961
Changes in operating
assets and
liabilities 29,093 14,775 11,851 13,858
---------- ---------- --------- ---------
Net cash
provided by
operating
activities 104,059 78,758 313,040 275,819
---------- ---------- --------- ---------
Investing Activities
Proceeds from sale
of property and
equipment 14 99 29,399 2,604
Acquisitions (61,429) (23,687) (300,447) (195,166)
Additions to
property and
equipment (104,086) (87,534) (413,073) (269,773)
Other 628 - 628 -
---------- ---------- --------- ---------
Net cash used in
investing
activities (164,873) (111,122) (683,493) (462,335)
---------- ---------- --------- ---------
Financing Activities
Dividends paid (2,129) (2,100) (8,499) (8,398)
Distributions paid
to minority
interest holders (13,337) (10,483) (49,739) (38,627)
Proceeds from
issuance of
partners' capital
by PVG - 117,818 860 117,818
Net proceeds from
(repayments of) PVA
borrowings (62,500) 41,000 131,000 142,000
Proceeds from sale
of stock warrants 18,187 - 18,187 -
Cash paid for
convertible notes
hedges (36,817) - (36,817) -
Net proceeds from
(repayments of) PVR
borrowings 47,500 (108,600) 193,500 (37,100)
Proceeds from PVA
stock offering, net
of expenses 135,441 - 135,441 -
Debt issuance costs (8,141) - (8,141) -
Other 2,334 2,681 8,850 5,248
---------- ---------- --------- ---------
Net cash
provided by
financing
activities 80,538 40,316 384,641 180,941
---------- ---------- --------- ---------
Net increase (decrease)
in cash and cash
equivalents 19,724 7,952 14,189 (5,575)
Cash and cash
equivalents-beginning
balance 14,803 12,386 20,338 25,913
---------- ---------- --------- ---------
Cash and cash
equivalents-ending
balance $ 34,527 $ 20,338 $ 34,527 $ 20,338
========== ========== ========= =========
PENN VIRGINIA CORPORATION
QUARTERLY SEGMENT INFORMATION - unaudited
(dollars in thousands except where noted)
Coal and
Natural
Resource
Oil and Gas Management
---------------- -----------
(per
Mcfe)
Amount *
--------- ------
Three Months Ended December 31, 2007
Production
Total oil, condensate and gas (MMcfe) 10,681
Natural gas (MMcf) 9,930
Crude oil and condensate (MBbls) 125
Coal royalty tons (thousands of tons) 7,342
Midstream system throughput volumes
(MMcf)
Revenues
Natural gas $ 68,208 $ 6.87 $ -
Oil and condensate 9,674 77.28 -
Natural gas midstream - - -
Coal royalties - - 20,685
Gain (loss) on the sale of
properties (3) - 8
Other (149) - 5,636
--------- ------ -----------
Total revenues 77,730 7.28 26,329
--------- ------ -----------
Expenses
Cost of midstream gas purchased - - -
Operating expense 15,523 1.45 1,403
Exploration 4,998 0.47 -
Taxes other than income 4,598 0.43 278
General and administrative 5,255 0.49 2,968
Impairment of oil and gas properties 181 0.02 -
Depreciation, depletion and
amortization 28,368 2.66 6,047
--------- ------ -----------
Total expenses 58,923 5.52 10,696
--------- ------ -----------
Operating income (loss) $ 18,807 $ 1.76 $ 15,633
--------- ------ -----------
Additions to property and equipment and
acquisitions $144,927 $ 45
Natural
Gas
Midstream Other Consolidated
---------- -------- ------------
Three Months Ended December 31, 2007
Production
Total oil, condensate and gas (MMcfe)
Natural gas (MMcf)
Crude oil and condensate (MBbls)
Coal royalty tons (thousands of tons)
Midstream system throughput volumes
(MMcf) 17,047
Revenues
Natural gas $ - $ - $ 68,208
Oil and condensate - - 9,674
Natural gas midstream 123,079 - 123,079
Coal royalties - - 20,685
Gain (loss) on the sale of
properties - (25) (20)
Other 1,489 (78) 6,898
---------- -------- ------------
Total revenues 124,568 (103) 228,524
---------- -------- ------------
Expenses
Cost of midstream gas purchased 92,293 - 92,293
Operating expense 3,326 (199) 20,053
Exploration - - 4,998
Taxes other than income 646 206 5,728
General and administrative 2,839 9,382 20,444
Impairment of oil and gas
properties - - 181
Depreciation, depletion and
amortization 4,865 420 39,700
---------- -------- ------------
Total expenses 103,969 9,809 183,397
---------- -------- ------------
Operating income (loss) $ 20,599 $(9,912) $ 45,127
---------- -------- ------------
Additions to property and equipment
and acquisitions $ 18,461 $ 2,082 $ 165,515
Coal and
Natural
Resource
Oil and Gas Management
--------------- -----------
(per
Mcfe)
Amount *
-------- ------
Three Months Ended December 31, 2006
Production
Total oil, condensate and gas (MMcfe) 8,553
Natural gas (MMcf) 7,959
Crude oil and condensate (MBbls) 99
Coal royalty tons (thousands of tons) 8,311
Midstream system throughput volumes (MMcf)
Revenues
Natural gas $52,535 $ 6.60 $ -
Oil and condensate 4,859 49.08 -
Natural gas midstream - - -
Coal royalties - - 24,875
Gain on the sale of properties (75) - -
Other 354 - 4,991
-------- ------ -----------
Total revenues 57,673 6.74 29,866
-------- ------ -----------
Expenses
Cost of midstream gas purchased - - -
Operating expense 7,913 0.93 3,039
Exploration 8,269 0.97 -
Taxes other than income 2,648 0.31 369
General and administrative 4,177 0.49 2,808
Impairment of oil and gas properties 8,517 1.00 -
Depreciation, depletion and
amortization 17,482 2.04 5,349
-------- ------ -----------
Total expenses 49,006 5.73 11,565
-------- ------ -----------
Operating income (loss) $ 8,667 $ 1.01 $ 18,301
-------- ------ -----------
Additions to property and equipment and
acquisitions (1) $88,535 $ 11,795
Natural
Gas
Midstream Other Consolidated
---------- -------- ------------
Three Months Ended December 31, 2006
Production
Total oil, condensate and gas (MMcfe)
Natural gas (MMcf)
Crude oil and condensate (MBbls)
Coal royalty tons (thousands of tons)
Midstream system throughput volumes
(MMcf) 16,761
Revenues
Natural gas $ - $ - $ 52,535
Oil and condensate - - 4,859
Natural gas midstream 97,375 - 97,375
Coal royalties - 24,875
Gain on the sale of properties - - (75)
Other 529 36 5,910
---------- -------- ------------
Total revenues 97,904 36 185,479
---------- -------- ------------
Expenses
Cost of midstream gas purchased 79,979 - 79,979
Operating expense 3,014 2 13,968
Exploration - - 8,269
Taxes other than income 366 167 3,550
General and administrative 2,816 6,476 16,277
Impairment of oil and gas
properties - - 8,517
Depreciation, depletion and
amortization 4,643 162 27,636
---------- -------- ------------
Total expenses 90,818 6,807 158,196
---------- -------- ------------
Operating income (loss) $ 7,086 $(6,771) $ 27,283
---------- -------- ------------
Additions to property and equipment
and acquisitions (1) $ 9,438 $ 1,453 $ 111,221
* Natural gas revenues are shown per Mcf, oil and gas condensate revenues are shown per Bbl, and all other amounts are shown per Mcfe. (1) 2006 Coal and natural resource management segment excludes noncash capital expenditures of $0.3 million and acquisitions of assets other than property or equipment of $1.2 million.
PENN VIRGINIA CORPORATION
YEAR-TO-DATE SEGMENT INFORMATION
(dollars in thousands except where noted)
Coal and
Natural
Resource
Oil and Gas Management
---------------- -----------
(per
Mcfe)
Amount *
--------- ------
Year Ended December 31, 2007
Production
Total oil, condensate and gas (MMcfe) 40,569
Natural gas (MMcf) 37,802
Crude oil and condensate (MBbls) 461
Coal royalty tons (thousands of tons) 32,528
Midstream system throughput volumes
(MMcf)
Revenues
Natural gas $262,169 $ 6.94 $ -
Oil and condensate 28,117 60.97 -
Natural gas midstream - - -
Coal royalties - - 94,140
Gain (loss) on the sale of
properties 12,235 - 206
Other 720 - 17,293
--------- ------ -----------
Total revenues 303,241 7.47 111,639
--------- ------ -----------
Expenses
Cost of midstream gas purchased - - -
Operating expense 46,713 1.15 8,071
Exploration 28,608 0.71 -
Taxes other than income 17,847 0.44 1,110
General and administrative 16,281 0.40 10,957
Impairment of oil and gas properties 2,586 0.06 -
Depreciation, depletion and
amortization 86,996 2.14 22,690
--------- ------ -----------
Total expenses 199,031 4.91 42,828
--------- ------ -----------
Operating income (loss) $104,210 $ 2.57 $ 68,811
--------- ------ -----------
Additions to property and equipment and
acquisitions $512,485 $ 146,960
Natural
Gas
Midstream Other Consolidated
---------- --------- ------------
Year Ended December 31, 2007
Production
Total oil, condensate and gas
(MMcfe)
Natural gas (MMcf)
Crude oil and condensate (MBbls)
Coal royalty tons (thousands of
tons)
Midstream system throughput volumes
(MMcf) 67,810
Revenues
Natural gas $ - $ - $ 262,169
Oil and condensate - - 28,117
Natural gas midstream 433,174 - 433,174
Coal royalties - - 94,140
Gain (loss) on the sale of
properties - (25) 12,416
Other 4,632 289 22,934
---------- --------- ------------
Total revenues 437,806 264 852,950
---------- --------- ------------
Expenses
Cost of midstream gas purchased 343,293 - 343,293
Operating expense 12,893 (67) 67,610
Exploration - - 28,608
Taxes other than income 1,926 840 21,723
General and administrative 11,958 27,787 66,983
Impairment of oil and gas
properties - - 2,586
Depreciation, depletion and
amortization 18,822 1,015 129,523
---------- --------- ------------
Total expenses 388,892 29,575 660,326
---------- --------- ------------
Operating income (loss) $ 48,914 $(29,311) $ 192,624
---------- --------- ------------
Additions to property and equipment
and acquisitions $ 47,080 $ 6,995 $ 713,520
Coal and
Natural
Resource
Oil and Gas Management
---------------- -----------
(per
Mcfe)
Amount *
--------- ------
Year Ended December 31, 2006
Production
Total oil, condensate and gas (MMcfe) 31,260
Natural gas (MMcf) 28,968
Crude oil and condensate (MBbls) 382
Coal royalty tons (thousands of tons) 32,778
Midstream system throughput volumes
(MMcf)
Revenues
Natural gas $212,919 $ 7.35 $ -
Oil and condensate 21,237 55.59 -
Natural gas midstream - - -
Coal royalties - - 98,163
Gain on the sale of properties (233) - 6
Other 2,033 - 14,812
--------- ------ -----------
Total revenues 235,956 7.55 112,981
--------- ------ -----------
Expenses
Cost of midstream gas purchased - - -
Operating expense 27,403 0.88 8,600
Exploration 34,330 1.10 -
Taxes other than income 11,810 0.38 934
General and administrative 12,826 0.41 9,604
Impairment of oil and gas properties 8,517 0.27 -
Depreciation, depletion and
amortization 56,237 1.80 20,399
--------- ------ -----------
Total expenses 151,123 4.83 39,537
--------- ------ -----------
Operating income (loss) $ 84,833 $ 2.71 $ 73,444
--------- ------ -----------
Additions to property and equipment and
acquisitions (1) $331,551 $ 92,697
Natural
Gas
Midstream Other Consolidated
---------- --------- ------------
Year Ended December 31, 2006
Production
Total oil, condensate and gas
(MMcfe)
Natural gas (MMcf)
Crude oil and condensate (MBbls)
Coal royalty tons (thousands of
tons) 25,186
Midstream system throughput volumes
(MMcf)
Revenues
Natural gas $ - $ - $ 212,919
Oil and condensate - - 21,237
Natural gas midstream 402,715 - 402,715
Coal royalties - - 98,163
Gain on the sale of properties - (9) (236)
Other 2,195 91 19,131
---------- --------- ------------
Total revenues 404,910 82 753,929
---------- --------- ------------
Expenses
Cost of midstream gas purchased 334,594 - 334,594
Operating expense 11,403 - 47,406
Exploration - - 34,330
Taxes other than income 1,420 603 14,767
General and administrative 11,023 16,113 49,566
Impairment of oil and gas
properties - - 8,517
Depreciation, depletion and
amortization 17,094 487 94,217
---------- --------- ------------
Total expenses 375,534 17,203 583,397
---------- --------- ------------
Operating income (loss) $ 29,376 $(17,121) $ 170,532
---------- --------- ------------
Additions to property and equipment
and acquisitions (1) $ 37,015 $ 3,676 $ 464,939
* Natural gas revenues are shown per Mcf, oil and gas condensate revenues are shown per Bbl, and all other amounts are shown per Mcfe. (1) 2006 Oil and gas segment excludes noncash expenditures of $32.8 million.
PENN VIRGINIA CORPORATION
RECONCILIATION OF CERTAIN NON-GAAP FINANCIAL MEASURES - unaudited
(in thousands, except per share data)
Three Months Ended Year Ended
December 31, December 31,
------------------- -------------------
2007 2006 2007 2006
--------- --------- --------- ---------
Reconciliation of GAAP "Net
cash provided by operating
activities" to Non-GAAP
"Operating cash flow"
------------------------------
Net cash provided by operating
activities $104,059 $ 78,758 $313,040 $275,819
Adjustments:
Changes in operating assets
and liabilities (29,093) (14,775) (11,851) (13,858)
--------- --------- --------- ---------
Operating cash flow (Note 1) $ 74,966 $ 63,983 $301,189 $261,961
========= ========= ========= =========
Reconciliation of GAAP "Net
income" to Non-GAAP "Net
income as adjusted"
------------------------------
Net income as reported $ 5,359 $ 10,703 $ 50,754 $ 75,909
Adjustments for derivatives:
Derivative losses included in
operating income 1,374 601 4,875 1,962
Derivative losses (gains)
included in other income 25,214 (8,094) 47,282 (19,497)
Cash receipts (payments) to
settle derivatives for
period (5,932) 1,486 (3,651) (8,947)
Impact of adjustments on
minority interest (Note 2) (9,190) (185) (17,991) 1,262
Impact of adjustments on
income tax expense (4,014) 2,553 (11,443) 10,012
--------- --------- --------- ---------
Net income as adjusted (Note
3) $ 12,811 $ 7,065 $ 69,826 $ 60,702
========= ========= ========= =========
Net income as adjusted per
share, diluted $ 0.33 $ 0.19 $ 1.82 $ 1.61
Note 1 - Operating cash flow represents net cash provided by operating activities before changes in assets and liabilities. Operating cash flow is presented because PVA believes it is a useful adjunct to net cash provided by operating activities under accounting principles generally accepted in the United States (GAAP). PVA believes that operating cash flow is widely accepted as a financial indicator of an oil and gas company's ability to generate cash which is used to internally fund exploration and development activities, service debt and pay dividends. This measure is widely 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. 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, or a measure of liquidity or as an alternative to net income. Note 2 - Minority interest for the quarter ended December 31, 2007 has been adjusted for the effect of incentive distribution rights and reflects the minority interest percentage of net income recognized for the year ended December 31, 2007. Note 3 - Net income as adjusted represents net income excluding any gains or losses on derivatives, adjusted for any cash settlements received (paid) and adjusted for related minority interest and income taxes. The Company believes "net income as adjusted" provides a useful measure which excludes the impact of mark-to-market accounting.
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" (see Note 1 below):
----------------------------------------------------------------------
Three Months Ended December 31,
2007 - (unaudited)
-------------------------------
As As
Reported Adjustments Adjusted
--------- ----------- ---------
Revenues
Natural gas $ 68,208 $ - $ 68,208
Oil and condensate 9,674 - 9,674
Natural gas midstream 123,079 (123,079) -
Coal royalties 20,685 (20,685) -
Gain on the sale of properties - - -
Other 6,878 (7,133) (255)
--------- ----------- ---------
Total revenues 228,524 (150,897) 77,627
--------- ----------- ---------
Expenses
Cost of midstream gas purchased 92,293 (92,293) -
Operating 20,053 (4,729) 15,324
Exploration 4,998 - 4,998
Taxes other than income 5,728 (924) 4,804
General and administrative 20,444 (6,707) 13,737
Impairment of oil and gas
properties 181 - 181
Depreciation, depletion and
amortization 39,700 (10,912) 28,788
--------- ----------- ---------
Total expenses 183,397 (115,565) 67,832
--------- ----------- ---------
Operating income 45,127 (35,332) 9,795
Other income (expense)
Interest expense (11,541) 5,496 (6,045)
Derivatives (25,214) 24,641 (573)
Equity earnings in PVG and PVR - 3,529 3,529
Interest income and other 1,115 (994) 121
--------- ----------- ---------
Income before minority interest and
income taxes 9,487 (2,660) 6,827
Minority interest 2,660 (2,660) -
Income tax expense 1,468 - 1,468
--------- ----------- ---------
Net income $ 5,359 $ - $ 5,359
========= =========== =========
Three Months Ended December 31,
2006 - (unaudited)
-------------------------------
As As
Reported Adjustments Adjusted
--------- ----------- ---------
Revenues
Natural gas $ 52,535 $ - $ 52,535
Oil and condensate 4,859 - 4,859
Natural gas midstream 97,375 (97,375) -
Coal royalties 24,875 (24,875) -
Gain on the sale of properties - - -
Other 5,835 (5,520) 315
--------- ----------- ---------
Total revenues 185,479 (127,770) 57,709
--------- ----------- ---------
Expenses
Cost of midstream gas purchased 79,979 (79,979) -
Operating 13,968 (6,053) 7,915
Exploration 8,269 - 8,269
Taxes other than income 3,550 (735) 2,815
General and administrative 16,277 (6,021) 10,256
Impairment of oil and gas
properties 8,517 - 8,517
Depreciation, depletion and
amortization 27,636 (9,992) 17,644
--------- ----------- ---------
Total expenses 158,196 (102,780) 55,416
--------- ----------- ---------
Operating income 27,283 (24,990) 2,293
Other income (expense)
Interest expense (7,540) 5,062 (2,478)
Derivatives 8,094 (416) 7,678
Equity earnings in PVG and PVR - 9,970 9,970
Interest income and other 2,580 (1,457) 1,123
--------- ----------- ---------
Income before minority interest and
income taxes 30,417 (11,831) 18,586
Minority interest 11,831 (11,831) -
Income tax expense 7,883 - 7,883
--------- ----------- ---------
Net income $ 10,703 $ - $ 10,703
========= =========== =========
Year Ended December 31, 2007
---------------------------------
As
Reported Adjustments As Adjusted
--------- ----------- -----------
Revenues (unaudited) (unaudited)
Natural gas $262,169 $ - $ 262,169
Oil and condensate 28,117 - 28,117
Natural gas midstream 433,174 (433,174) -
Coal royalties 94,140 (94,140) -
Gain on the sale of properties - - -
Other 35,350 (22,131) 13,219
--------- ----------- -----------
Total revenues 852,950 (549,445) 303,505
--------- ----------- -----------
Expenses
Cost of midstream gas purchased 343,293 (343,293) -
Operating 67,610 (20,964) 46,646
Exploration 28,608 - 28,608
Taxes other than income 21,723 (3,040) 18,683
General and administrative 66,983 (25,393) 41,590
Impairment of oil and gas
properties 2,586 - 2,586
Depreciation, depletion and
amortization 129,523 (41,512) 88,011
--------- ----------- -----------
Total expenses 660,326 (434,202) 226,124
--------- ----------- -----------
Operating income 192,624 (115,243) 77,381
Other income (expense)
Interest expense (37,419) 17,338 (20,081)
Derivatives (47,282) 45,568 (1,714)
Equity earnings in PVG and PVR - 24,257 24,257
Interest income and other 3,651 (2,239) 1,412
--------- ----------- -----------
Income before minority interest and
income taxes 111,574 (30,319) 81,255
Minority interest 30,319 (30,319) -
Income tax expense 30,501 - 30,501
--------- ----------- -----------
Net income $ 50,754 $ - $ 50,754
========= =========== ===========
Year Ended December 31, 2006
---------------------------------
As
Reported Adjustments As Adjusted
--------- ----------- -----------
Revenues (unaudited) (unaudited)
Natural gas $212,919 $ - $ 212,919
Oil and condensate 21,237 - 21,237
Natural gas midstream 402,715 (402,715) -
Coal royalties 98,163 (98,163) -
Gain on the sale of properties - - -
Other 18,895 (17,013) 1,882
--------- ----------- -----------
Total revenues 753,929 (517,891) 236,038
--------- ----------- -----------
Expenses
Cost of midstream gas purchased 334,594 (334,594) -
Operating 47,406 (20,003) 27,403
Exploration 34,330 - 34,330
Taxes other than income 14,767 (2,354) 12,413
General and administrative 49,566 (21,024) 28,542
Impairment of oil and gas
properties 8,517 - 8,517
Depreciation, depletion and
amortization 94,217 (37,493) 56,724
--------- ----------- -----------
Total expenses 583,397 (415,468) 167,929
--------- ----------- -----------
Operating income 170,532 (102,423) 68,109
Other income (expense)
Interest expense (24,832) 18,821 (6,011)
Derivatives 19,497 11,260 30,757
Equity earnings in PVG and PVR - 31,683 31,683
Interest income and other 3,718 (2,359) 1,359
--------- ----------- -----------
Income before minority interest and
income taxes 168,915 (43,018) 125,897
Minority interest 43,018 (43,018) -
Income tax expense 49,988 - 49,988
--------- ----------- -----------
Net income $ 75,909 $ - $ 75,909
========= =========== ===========
Note 1 - Equity method income statements represent consolidated income statements, minus 100% of PVG's consolidated results of operations, plus minority interest which represents the portion of PVG's consolidated results of operations that PVA does not own. PVA believes equity method income statements provide useful information to allow the public to more easily discern PVG's effect on PVA's operations.
PENN VIRGINIA CORPORATION
CONVERSION TO NON-GAAP EQUITY METHOD - (continued) - unaudited
(in thousands)
Reconciliation of GAAP "Balance Sheet As Reported" to Non-GAAP
"Balance Sheet As Adjusted" (see Note 2 below):
----------------------------------------------------------------------
December 31, 2007
-----------------------------------
As Reported Adjustments As Adjusted
----------- ----------- -----------
Assets (unaudited) (unaudited)
Current assets $ 227,799 $ (114,707) $ 113,092
Net property and equipment 1,899,014 (731,282) 1,167,732
Equity investment in PVG and PVR - 199,675 199,675
Other assets 110,375 (96,262) 14,113
----------- ----------- -----------
Total assets $2,237,188 $ (742,576) $1,494,612
=========== =========== ===========
Liabilities and Shareholders'
Equity
Current liabilities $ 261,899 $ (136,540) $ 126,728
Long-term debt 352,000 - 352,000
Long-term debt of Penn Virginia
Resource Partners, L.P. 399,153 (399,153) -
Other liabilities and deferred
taxes 234,876 (27,721) 205,786
Minority interest 179,162 (179,162) -
Shareholders' equity 810,098 - 810,098
----------- ----------- -----------
Total liabilities and
shareholders' equity $2,237,188 $ (742,576) $1,494,612
=========== =========== ===========
December 31, 2006
-----------------------------------
As Reported Adjustments As Adjusted
----------- ----------- -----------
Assets (unaudited) (unaudited)
Current assets $ 192,383 $ (83,710) $ 108,673
Net property and equipment 1,358,383 (556,513) 801,870
Equity investment in PVG and PVR - (35,914) (35,914)
Other assets 82,383 (76,046) 6,337
----------- ----------- -----------
Total assets $1,633,149 $ (752,183) $ 880,966
=========== =========== ===========
Liabilities and Shareholders'
Equity
Current liabilities $ 172,690 $ (90,048) $ 82,642
Long-term debt 221,000 - 221,000
Long-term debt of Penn Virginia
Resource Partners, L.P. 207,214 (207,214) -
Other liabilities and deferred
taxes 211,448 (16,549) 194,899
Minority interest 438,372 (438,372) -
Shareholders' equity 382,425 - 382,425
----------- ----------- -----------
Total liabilities and
shareholders' equity $1,633,149 $ (752,183) $ 880,966
=========== =========== ===========
Reconciliation of GAAP "Statement of Cash Flows As Reported" to Non-
GAAP "Statement of Cash Flows As Adjusted" (see Note 3 below):
----------------------------------------------------------------------
Three Months Ended December 31,
2007 (unaudited)
-----------------------------------
As Reported Adjustments As Adjusted
----------- ----------- -----------
Operating Activities
Net income $ 5,359 $ - $ 5,359
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation, depletion and
amortization 39,700 (10,912) 28,788
Commodity derivative contracts:
Total derivative losses
(gains) 26,588 (25,804) 784
Cash receipts (payments) to
settle derivatives for period (5,932) 8,816 2,884
Minority interest 2,660 (2,660) -
Investment in PVG and PVR - (3,529) (3,529)
Gain on sale of properties (117) - (117)
Impairment of oil and gas
properties 181 - 181
Cash distributions from PVG and
PVR - 9,789 9,789
Other 6,527 (385) 6,142
----------- ----------- -----------
Operating cash flow 74,966 (24,685) 50,281
Changes in operating assets and
liabilities 29,093 (6,798) 22,295
----------- ----------- -----------
Net cash provided by operating
activities 104,059 (31,483) 72,576
----------- ----------- -----------
Investing Activities
Other 642 (661) (19)
Acquisitions (61,429) 31,038 (30,391)
Additions to property and
equipment (104,086) 18,468 (85,618)
----------- ----------- -----------
Net cash used in investing
activities (164,873) 48,845 (116,028)
----------- ----------- -----------
Financing Activities
Dividends paid (2,129) - (2,129)
Distributions paid to minority
interest holders (13,337) 13,337 -
Proceeds from issuance of
partners' capital by PVG - - -
Net proceeds from (repayments
of) PVA borrowings (62,500) - (62,500)
Net proceeds from (repayments
of) PVR borrowings 47,500 (47,500) -
Proceeds from PVA stock offering 135,441 - 135,441
Proceeds from sale of stock
warrants 18,187 - 18,187
Cash paid for convertible notes
hedges (36,817) - (36,817)
Debt issuance costs (8,141) 263 (7,878)
Other 2,334 - 2,334
----------- ----------- -----------
Net cash provided by financing
activities 80,538 (33,900) 46,638
----------- ----------- -----------
Net increase (decrease) in cash
and cash equivalents 19,724 (16,538) 3,186
Cash and cash equivalents-
beginning balance 14,803 (13,965) 838
----------- ----------- -----------
Cash and cash equivalents-ending
balance $ 34,527 $ (30,503) $ 4,024
=========== =========== ===========
Three Months Ended December 31,
2006 (unaudited)
-----------------------------------
As Reported Adjustments As Adjusted
----------- ----------- -----------
Operating Activities
Net income $ 10,703 $ - $ 10,703
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation, depletion and
amortization 27,636 (9,992) 17,644
Commodity derivative contracts:
Total derivative losses
(gains) (7,493) (262) (7,755)
Cash receipts (payments) to
settle derivatives for period 1,486 4,034 5,520
Minority interest 11,831 (11,831) -
Investment in PVG and PVR - (9,970) (9,970)
Gain on sale of properties - - -
Impairment of oil and gas
properties 8,517 - 8,517
Cash distributions from PVG and
PVR - 5,895 5,895
Other 11,303 1,000 12,303
----------- ----------- -----------
Operating cash flow 63,983 (21,126) 42,857
Changes in operating assets and
liabilities 14,775 (3,186) 11,589
----------- ----------- -----------
Net cash provided by operating
activities 78,758 (24,312) 54,446
----------- ----------- -----------
Investing Activities
Other 99 (3) 96
Acquisitions (23,687) 9,673 (14,014)
Additions to property and
equipment (87,534) 11,560 (75,974)
----------- ----------- -----------
Net cash used in investing
activities (111,122) 21,230 (89,892)
----------- ----------- -----------
Financing Activities
Dividends paid (2,100) - (2,100)
Distributions paid to minority
interest holders (10,483) 10,483 -
Proceeds from issuance of
partners' capital by PVG 117,818 (117,818) -
Net proceeds from (repayments
of) PVA borrowings 41,000 - 41,000
Net proceeds from (repayments
of) PVR borrowings (108,600) 108,600 -
Proceeds from PVA stock offering - - -
Proceeds from sale of stock
warrants - - -
Cash paid for convertible notes
hedges - - -
Debt issuance costs - - -
Other 2,681 375 3,056
----------- ----------- -----------
Net cash provided by financing
activities 40,316 1,640 41,956
----------- ----------- -----------
Net increase (decrease) in cash
and cash equivalents 7,952 (1,442) 6,510
Cash and cash equivalents-
beginning balance 12,386 (12,245) 141
----------- ----------- -----------
Cash and cash equivalents-ending
balance $ 20,338 $ (13,687) $ 6,651
=========== =========== ===========
Year Ended December 31, 2007
-----------------------------------
As Reported Adjustments As Adjusted
----------- ----------- -----------
Operating Activities (unaudited) (unaudited)
Net income $ 50,754 $ - $ 50,754
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation, depletion and
amortization 129,523 (41,512) 88,011
Commodity derivative contracts:
Total derivative losses
(gains) 52,157 (50,163) 1,994
Cash receipts (payments) to
settle derivatives for period (3,651) 17,779 14,128
Minority interest 30,319 (30,319) -
Investment in PVG and PVR - (24,257) (24,257)
Gain on sale of properties (12,553) - (12,553)
Impairment of oil and gas
properties 2,586 - 2,586
Cash distributions from PVG and
PVR - 29,839 29,839
Other 52,054 452 52,506
----------- ----------- -----------
Operating cash flow 301,189 (98,181) 203,009
Changes in operating assets and
liabilities 11,851 1,540 13,391
----------- ----------- -----------
Net cash provided by operating
activities 313,040 (96,641) 216,400
----------- ----------- -----------
Investing Activities
Other 30,027 (858) 29,169
Acquisitions (300,447) 176,917 (123,530)
Additions to property and
equipment (413,073) 48,123 (364,950)
----------- ----------- -----------
Net cash used in investing
activities (683,493) 224,182 (459,311)
----------- ----------- -----------
Financing Activities
Dividends paid (8,499) - (8,499)
Distributions paid to minority
interest holders (49,739) 49,739 -
Proceeds from issuance of
partners' capital by PVG 860 (860) -
Net proceeds from PVA borrowings 131,000 - 131,000
Net proceeds from (repayments
of) PVR borrowings 193,500 (193,500) -
Proceeds from PVA stock offering 135,441 - 135,441
Proceeds from sale of stock
warrants 18,187 - 18,187
Cash paid for convertible notes
hedges (36,817) - (36,817)
Debt issuance costs (8,141) 263 (7,878)
Other 8,850 - 8,850
----------- ----------- -----------
Net cash provided by financing
activities 384,641 (144,358) 240,284
----------- ----------- -----------
Net increase (decrease) in cash
and cash equivalents 14,189 (16,816) (2,627)
Cash and cash equivalents-
beginning balance 20,338 (13,687) 6,651
----------- ----------- -----------
Cash and cash equivalents-ending
balance $ 34,527 $ (30,503) $ 4,024
=========== =========== ===========
Year Ended December 31, 2006
-----------------------------------
As Reported Adjustments As Adjusted
----------- ----------- -----------
Operating Activities (unaudited) (unaudited)
Net income $ 75,909 $ - $ 75,909
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation, depletion and
amortization 94,217 (37,493) 56,724
Commodity derivative contracts:
Total derivative losses
(gains) (17,535) (13,213) (30,748)
Cash receipts (payments) to
settle derivatives for period (8,947) 19,439 10,492
Minority interest 43,018 (43,018) -
Investment in PVG and PVR - (31,683) (31,683)
Gain on sale of properties - - -
Impairment of oil and gas
properties 8,517 - 8,517
Cash distributions from PVG and
PVR - 22,186 22,186
Other 66,782 (2,332) 64,450
----------- ----------- -----------
Operating cash flow 261,961 (86,114) 175,847
Changes in operating assets and
liabilities 13,858 7,617 21,475
----------- ----------- -----------
Net cash provided by operating
activities 275,819 (78,497) 197,322
----------- ----------- -----------
Investing Activities
Other 2,604 (36) 2,568
Acquisitions (195,166) 91,259 (103,907)
Additions to property and
equipment (269,773) 38,453 (231,320)
----------- ----------- -----------
Net cash used in investing
activities (462,335) 129,676 (332,659)
----------- ----------- -----------
Financing Activities
Dividends paid (8,398) - (8,398)
Distributions paid to minority
interest holders (38,627) 38,627 -
Proceeds from issuance of
partners' capital by PVG 117,818 (117,818) -
Net proceeds from PVA borrowings 142,000 - 142,000
Net proceeds from (repayments
of) PVR borrowings (37,100) 37,100 -
Proceeds from PVA stock offering - - -
Proceeds from sale of stock
warrants - - -
Cash paid for convertible notes
hedges - - -
Debt issuance costs - - -
Other 5,248 375 5,623
----------- ----------- -----------
Net cash provided by financing
activities 180,941 (41,716) 139,225
----------- ----------- -----------
Net increase (decrease) in cash
and cash equivalents (5,575) 9,463 3,888
Cash and cash equivalents-
beginning balance 25,913 (23,150) 2,763
----------- ----------- -----------
Cash and cash equivalents-ending
balance $ 20,338 $ (13,687) $ 6,651
=========== =========== ===========
Note 2 - Equity method balance sheets represent consolidated balance sheets, minus 100% of PVG's consolidated balance sheets, excluding minority interest which represents the portion of PVG's consolidated balance sheet that PVA does not own and including other adjustments to eliminate inter-company transactions. PVA believes equity method balance sheets provide useful information to allow the public to more easily discern PVG's effect on the PVA's assets, liabilities and shareholders' equity. Note 3 - Equity method statements of cash flows represent consolidated statements of cash flows, minus 100% of PVG's consolidated statements of cash flows, excluding minority interest which represents the portion of PVG's consolidated results of operations that PVA does not own and including other adjustments to eliminate inter-company transactions. PVA believes equity method statements of cash flows provide useful information to allow the public to more easily discern PVG's effect on the PVA's cash flows.
PENN VIRGINIA CORPORATION
GUIDANCE TABLE
(dollars in millions except where noted)
Penn Virginia Corporation is providing the following guidance
regarding financial and operational expectations for 2008.
Actual
----------------------------------------------
First Second Third Fourth
Quarter Quarter Quarter Quarter YTD
2007 2007 2007 2007 2007
--------- --------- --------- --------- ------
Oil & Gas Segment:
---------------------
Production:
Natural gas (Bcf) -
See Note a 8.1 9.4 10.4 9.9 37.8
Crude oil and
condensate
(MBbl's) 107 113 116 125 461
Equivalent
production (Bcfe) 8.7 10.1 11.1 10.7 40.6
Equivalent daily
production
(MMcfed) 97.0 110.7 120.7 116.1 111.2
Expenses:
Cash operating
expenses ($ per
Mcfe) $ 1.90 1.81 1.87 2.38 1.99
Exploration $ 5.0 5.7 12.9 5.0 28.6
Impairment of oil
and gas properties $ - - 2.4 0.2 2.6
Depreciation,
depletion and
amortization ($
per Mcfe) $ 2.04 1.85 2.00 2.66 2.14
Capital
Expenditures:
Development
drilling $ 69.4 77.9 83.1 80.0 310.4
Exploratory
drilling $ 19.2 8.5 7.0 7.8 42.5
Pipeline,
gathering,
facilities $ 4.9 5.3 4.4 8.1 22.7
Seismic $ 0.9 0.7 0.6 0.6 2.8
Lease acquisition,
field projects and
other $ 0.8 12.1 17.8 23.1 53.8
Proved property
acquisitions $ 1.4 7.1 54.3 25.4 88.2
Total segment
capital
expenditures $ 96.6 111.6 167.2 145.0 520.4
Coal and Natural
Resource Segment
(PVR):
---------------------
Coal royalty tons
(millions) 8.3 8.1 8.8 7.3 32.5
Revenues:
Average royalty per
ton $ 3.02 2.98 2.76 2.82 2.89
Other $ 3.5 4.4 4.0 5.6 17.5
Expenses:
Cash operating
expenses $ 5.1 5.5 4.9 4.6 20.1
Depreciation,
depletion and
amortization $ 5.6 5.3 5.8 6.0 22.7
Capital
Expenditures:
Expansion and
acquisitions $ 0.4 52.1 93.4 31.0 176.9
Maintenance capital
expenditures $ 0.1 - - - 0.1
Total segment
capital
expenditures $ 0.5 52.1 93.4 31.0 177.0
Natural Gas Midstream
Segment (PVR):
---------------------
Throughput volumes
(MMcf per day) -
see Note c 177 187 194 185 186
Expenses:
Cash operating
expenses $ 6.9 6.3 6.7 6.8 26.8
Depreciation,
depletion and
amortization $ 4.6 4.5 4.8 4.9 18.8
Capital
Expenditures:
Expansion and
acquisitions $ 5.7 6.9 9.1 17.0 38.7
Maintenance capital
expenditures $ 1.9 2.7 2.8 2.4 9.8
Total segment
capital
expenditures $ 7.6 9.6 11.9 19.4 48.5
Corporate and Other:
---------------------
General and
administrative
expense - PVA - see
Note d $ 5.2 5.2 6.4 8.5 25.3
General and
administrative
expense - PVG - see
Note d $ 0.8 0.5 0.2 0.9 2.5
Interest expense:
PVA average long-
term debt
outstanding $ 242.0 306.5 384.3 418.9 337.7
PVA interest rate 6.5% 6.6% 7.3% 6.7% 6.7%
Percentage
capitalized -
see Note e 25% 17% 15% 11% 16%
PVR average long-
term debt
outstanding $ 221.8 241.6 295.7 396.8 289.3
PVR interest rate
assumed 6.2% 5.9% 5.9% 6.6% 6.2%
Minority interest in
PVG & PVR $ 9.3 9.2 9.1 2.7 30.3
Income tax rate 39% 39% 39% 22% 38%
Cash distributions
received from
PVG/PVR $ 2.4 8.4 9.1 9.7 29.6
Other capital
expenditures $ 1.5 2.3 1.1 2.4 7.3
2008 Guidance
--------------------------
Oil & Gas Segment:
-------------------------------------------
Production:
Natural gas (Bcf) - See Note a 43.2 - 45.1
Crude oil and condensate (MBbl's) 1,000.0 - 1,100.0
Equivalent production (Bcfe) 49.2 - 51.7
Equivalent daily production (MMcfed) 134.4 - 141.3
Expenses:
Cash operating expenses ($ per Mcfe) 2.10 - 2.30
Exploration 30.0 - 40.0
Impairment of oil and gas properties - - -
Depreciation, depletion and amortization
($ per Mcfe) 2.50 - 2.65
Capital Expenditures:
Development drilling 377.3
Exploratory drilling 50.6
Pipeline, gathering, facilities 27.8
Seismic 4.3
Lease acquisition, field projects and
other 14.8
Proved property acquisitions -
Total segment capital expenditures 474.8
Coal and Natural Resource Segment (PVR):
-------------------------------------------
Coal royalty tons (millions) 33.5 - 35.5
Revenues:
Average royalty per ton 2.65 - 2.75
Other 25.0 - 27.0
Expenses:
Cash operating expenses 21.0 - 23.0
Depreciation, depletion and amortization 31.0 - 33.0
Capital Expenditures:
Expansion and acquisitions 2.0
Maintenance capital expenditures 0.2
Total segment capital expenditures 2.2
Natural Gas Midstream Segment (PVR):
-------------------------------------------
Throughput volumes (MMcf per day) - see
Note c 220 - 230
Expenses:
Cash operating expenses 34.0 - 36.0
Depreciation, depletion and amortization 22.0 - 24.0
Capital Expenditures:
Expansion and acquisitions 8.0
Maintenance capital expenditures 13.0
Total segment capital expenditures 21.0
Corporate and Other:
-------------------------------------------
General and administrative expense - PVA -
see Note d 20.0 - 21.0
General and administrative expense - PVG -
see Note d 3.0 - 3.5
Interest expense:
PVA average long-term debt outstanding 436.4
PVA interest rate 7%
Percentage capitalized - see Note e 11%
PVR average long-term debt outstanding 433.5
PVR interest rate assumed 7%
Minority interest in PVG & PVR see Note f
Income tax rate see Note g
Cash distributions received from PVG/PVR see Note h
Other capital expenditures 0.5 - 1.0
These estimates are meant to provide guidance only and are subject to
change as PVA's operating environment changes.
See Notes on following page.
PENN VIRGINIA CORPORATION
GUIDANCE TABLE
Notes to Guidance Table:
----------------------------------------------------------------------
a - The following table shows PVA's current derivative positions for
natural gas production as of December 31, 2007:
Weighted Average Price
---------------------------
Average
Volume Additional
Per Day Put Option Floor Ceiling
---------- ----------- ------- -------
Natural Gas Costless (in
Collars MMbtu) (per MMbtu)
First Quarter 2008
(ceiling reduced to $8.50
for Feb and March) 10,000 $ 9.00 $ 17.95
First Quarter 2008 (2)
(February and March only) 20,000 $ 7.82 $ 8.50
Second Quarter 2008 10,000 $ 7.50 $ 9.10
Third Quarter 2008 10,000 $ 7.50 $ 9.10
Fourth Quarter 2008
(October only) 10,000 $ 7.50 $ 9.10
Natural Gas Three-way (in
Collars (1) MMbtu) (per MMbtu)
First Quarter 2008 22,500 $ 5.44 $ 8.00 $ 12.64
Second Quarter 2008 22,500 $ 5.00 $ 7.11 $ 9.09
Third Quarter 2008 22,500 $ 5.00 $ 7.11 $ 9.09
Fourth Quarter 2008 2,500 $ 5.00 $ 8.00 $ 10.75
Fourth Quarter 2008
(October only) 20,000 $ 5.00 $ 7.00 $ 8.89
Fourth Quarter 2008
(November and December
only) 20,000 $ 5.75 $ 8.00 $ 12.80
Fourth Quarter 2008 (2) 20,000 $ 5.50 $ 8.38 $ 10.09
First Quarter 2009 10,000 $ 6.00 $ 8.00 $ 13.00
First Quarter 2009 (2) 20,000 $ 5.50 $ 8.38 $ 10.09
Second Quarter 2009 10,000 $ 5.50 $ 7.50 $ 9.10
Third Quarter 2009 10,000 $ 5.50 $ 7.50 $ 9.10
Natural Gas Swaps (in
MMbtu)
Second Quarter 2008 (2) 20,000 $ 8.35
Third Quarter 2008 (2) 20,000 $ 8.35
(1) A three-way collar contract consists of a collar contract
plus a put option contract sold by PVA with a price below the
floor price of the collar. This additional put requires PVA to
make a payment to the counterparty if the settlement price for
any settlement period is below the put option price. Combining
the collar contract with the additional put option results in
PVA's entitlement to a net payment equal to the difference
between the floor price of the collar contract and the
additional put option price if the settlement price is equal to
or less than the additional put option price. If the settlement
price is greater than the additional put option price, the
result is the same as it would have been with a collar contract
only. This strategy enables PVA to increase the floor and the
ceiling price of the collar beyond the range of a traditional
collar contract while defraying the associated cost with the
sale of the additional put option.
(2) Entered into in January 2008
b - The costless collar natural gas prices per MMBtu per quarter
include the effects of basis differentials, if any.
Weighted
Average Weighted Average Price
---------------
Volume Average Collars
---------------
Per Day Price Put Call
--------- ----------- ------- -------
Frac Spread (in
MMBtu) (per MMBtu)
First Quarter 2008 through
Fourth Quarter 2008 7,824 $ 5.020
Ethane Sale Swap (in (per
gallons) gallon)
First Quarter 2008 through
Fourth Quarter 2008 34,440 $ 0.4700
Propane Sale Swaps (in (per
gallons) gallon)
First Quarter 2008 through
Fourth Quarter 2008 26,040 $ 0.7175
Crude Oil Sale Swaps (in (per
barrels) barrel)
First Quarter 2008 through
Fourth Quarter 2008 560 $ 49.27
Natural Gasoline Collar (in
gallons) (per gallon)
First Quarter 2008 through
Fourth Quarter 2008 6,300 $1.4800 $1.6465
Crude Oil Collar (in
barrels) (per barrel)
First Quarter 2008 through
Fourth Quarter 2008 400 $ 65.00 $ 75.25
Natural Gas Sale Swaps (in
MMbtu) (per MMbtu)
First Quarter 2008 through
Fourth Quarter 2008 4,000 $ 6.97
c - Management estimates that excluding the above derivative
positions, for every $1.00 per MMBtu decrease or increase in
natural gas prices from the $7.50 per MMBtu budgeted 2008
benchmark price, natural gas midstream gross processing margin
and operating income in 2008 would increase or decrease,
respectively, by $12.0 million. This assumes oil and other
liquids prices and inlet volumes remain constant at budgeted
levels. In addition, management also estimates that excluding
the above derivative positions, for every $5.00 per barrel
increase or decrease in the oil prices from the $80.00 per
barrel budgeted 2008 benchmark price, natural gas midstream
gross processing margin and operating income would increase or
decrease, respectively, by $10.8 million. This assumes natural
gas prices and inlet volumes remain constant at budgeted levels.
These estimated changes in gross margin and operating income
exclude the potential cash receipts or payments in settling
these derivative positions.
d - Year-to-date 2007 results and full-year 2008 guidance reflects
increased incentive compensation costs in general and
administrative expense.
e - PVA capitalizes a portion of interest expense incurred to
recognize the carrying cost of certain unproved properties as
required by accounting principles generally accepted in the
United States.
f - PVA controls the general partner of PVA GP Holdings, L.P. ("PVG")
and owns an 82 percent limited partner interest in PVG. PVG's
operating results are included in PVA's consolidated financial
statements, and minority interest reflects the 18 percent of PVG
owned by parties other than PVA.
g - Deferred federal and state income taxes are expected to comprise
approximately 60% to 70% of PVA's income tax expense for the
full year.
h - 2008 amounts received are dependent primarily upon distributions
paid by Penn Virginia GP Holdings, L.P. (NYSE:PVG).
Source: Penn Virginia Corporation
Released February 13, 2008