Penn Virginia Corporation Provides First Quarter 2008 Oil and Gas Operational Update

Quarterly Production Increases 21 Percent over Prior Year Re-Affirms 2008 Production Growth Guidance of 21 to 27 Percent

RADNOR, Pa.--

Penn Virginia Corporation (NYSE:PVA) today provided updates of its oil and gas operations and full-year 2008 guidance.

First Quarter Highlights and Guidance Update

Operational results for PVA's oil and gas segment during the first quarter of 2008 included the following:

    --  Oil and gas production of 10.5 billion cubic feet of natural
        gas equivalent (Bcfe), or 115.6 million cubic feet of natural
        gas equivalent (MMcfe) per day;

    --  Year-over-year production growth of 21 percent over the 8.7
        Bcfe, or 97.0 MMcfe per day, in the first quarter of 2007;

    --  Oil and gas capital expenditures of approximately $94 million,
        including $5 million for leasehold acquisition; and

    --  52 (38.4 net) wells drilled, all of which were successful.

    Full-year 2008 guidance updates are as follows:

    --  Re-affirmed full-year 2008 production guidance, with estimated
        full-year production of between 49.2 and 51.7 Bcfe, or between
        134.4 and 141.3 MMcfe per day;

    --  Re-affirmed full-year cash operating expense guidance of
        between $2.10 and $2.30 per thousand cubic feet of natural gas
        equivalent (Mcfe); and

    --  Increased 2008 oil and gas capital expenditures guidance from
        $475 million to range between $490 and $510 million.

    First Quarter 2008 Operational Results

Production in the first quarter of 2008 was 10.5 Bcfe, or 115.6 MMcfe per day, an increase of 21 percent over the 8.7 Bcfe, or 97.0 MMcfe per day, in the first quarter of 2007. Daily production in the first quarter of 2008 was essentially flat compared to 116.1 MMcfe per day in the fourth quarter of 2007.

East Texas daily production averaged 30.3 MMcfe per day in the first quarter of 2008, a four percent increase over the fourth quarter of 2007 and a 72 percent increase over the first quarter of 2007. However, first quarter production in East Texas was less than anticipated by approximately 1.1 Bcfe, or 12.4 MMcfe per day, as the result of: (i) the timing of completions of wells drilled on 20-acre spacing basis from common surface locations, which reduced first quarter production by approximately 0.2 Bcfe; (ii) the delay in the startup of the gas processing plant installed by Penn Virginia Resource Partners, L.P. (NYSE:PVR) due to weather, equipment and third-party pipeline delays, which reduced first quarter natural gas liquids (NGL) production and the associated volumetric upgrade by approximately 0.5 Bcfe; and (iii) third-party downstream gathering pipeline restrictions associated with the delayed timing of the plant startup, which reduced first quarter production by approximately 0.4 Bcfe.

In April 2008, PVA began to receive the NGL revenue upgrade from the third party transporter of production volumes that ultimately will be processed by the PVR plant. Plant operations are now expected to commence late in the second quarter, at which time the downstream gathering pipeline restrictions are also expected to be eliminated.

Daily production in the Mid-Continent region averaged 16.1 MMcfe per day in the first quarter of 2008, a 23 percent increase over the fourth quarter of 2007 and a 78 percent increase over the first quarter of 2007, primarily due to the strong results of the horizontal Granite Wash drilling program in Washita County, Oklahoma.

PVA re-affirmed its full-year 2008 production guidance in a range of between 49.2 and 51.7 Bcfe, or between 134.4 and 141.3 MMcfe per day, which would represent an increase of 21 to 27 percent over 2007 levels.

During the first quarter of 2008, unit cash operating expenses were $2.38 per Mcfe, or flat compared to the fourth quarter of 2007, and are expected to decline during 2008 to an average within the guidance range of $2.10 to $2.30 per Mcfe, which remains unchanged. PVA plans to release full financial results and additional 2008 guidance details in a separate first quarter 2008 financial results press release on May 7, 2008.

Capital Expenditures

During the first quarter of 2008, oil and gas capital expenditures were approximately $94 million, consisting of:

    --  $85 million to drill 52 (38.4 net) wells, all of which were
        successful;

    --  $3 million for the expansion of gathering systems and other
        production facilities; and

    --  $6 million for leasehold acquisition, seismic data and other
        expenditures.

PVA's previously-announced 2008 oil and gas capital expenditures budget was $475 million, excluding proved reserve acquisitions. Due to an anticipated increase in leasehold acquisitions, an increase in facility expenditures and the potential for increased drilling activity in a number of plays, PVA now expects full-year 2008 oil and gas capital expenditures will range between $490 and $510 million prior to any reserve acquisitions which may occur.

Management Comment

A. James Dearlove, President and Chief Executive Officer of PVA, said, "We are pleased to report 21 percent production growth in the first quarter of 2008 relative to the prior year quarter, although daily production was flat from the fourth quarter of 2007. The transition in East Texas to 20-acre spaced development and the delayed startup of the PVR processing plant impacted first quarter production volumes. These effects are expected to be short-term in nature and, given the expected higher levels of drilling activity during the remaining quarters of 2008, we remain positive about our expected 2008 production growth of 21 to 27 percent over 2007 levels.

"We have also re-affirmed full-year cash operating expense guidance and increased full-year capital expenditures guidance by $15 to $35 million as a result of expected increased leasehold acquisitions and facility expenditures, as well as the likelihood that we will have higher drilling activity during the latter portion of the year due primarily to success in horizontal development plays, such as the Granite Wash, the Selma Chalk and the Lower Huron Shale. In addition, success in any of the various of exploratory shale plays in which we are currently drilling, such as the Lower Bossier / Haynesville Shale, the Bakken Shale and the Woodford Shale, could result in further increases in 2008 production, drilling activity and capital expenditures."

Operational Updates by Geographical Region

East Texas - During the first quarter of 2008, PVA drilled 30 (20.9 net) wells in East Texas, including: 22 (13.1 net) wells within PVA's area of mutual interest (AMI) with GMX Resources Inc. (NASDAQ:GMXR) and eight (7.8 net) wells in PVA's predominantly 100 percent working interest acreage, with 27 (17.9 net) of the wells drilled on 20-acre spacing.

East Texas production in the first quarter averaged 30.3 MMcfe per day, 72 percent higher than the 17.6 MMcfe per day produced in the first quarter of 2007 and four percent higher than the 29.1 MMcfe per day produced in the fourth quarter of 2007. The production increases resulted from the Cotton Valley development program and were moderated by the issues discussed above. Once the PVR plant begins operations, NGL production will commence and is expected to increase during the remainder of the year as the drilling program increases wellhead gas production.

In March 2008, PVA spud its first horizontal Lower Bossier Shale test well in which PVA has a 100 percent working interest, results from which are expected to be determined by the third quarter of 2008. PVA previously drilled and completed 17 vertical test wells across its acreage, testing a combination of four different reservoirs below the Cotton Valley including the Lower Bossier Shale, which corresponds to the Haynesville Shale referred to by other operators in recent public announcements. The Lower Bossier Shale was completed in most of these vertical test wells and production was tested for varying time periods in each completed well. These tests confirmed the presence of gas, with sustained production rates of approximately 0.1 to 0.3 MMcfe per day per well from vertical completions. Based on the positive results of these tests, PVA expects to drill two to three additional horizontal Lower Bossier Shale wells in 2008 and, if successful, commence an ongoing drilling program in 2009.

Mid-Continent - During the first quarter, PVA drilled three (0.7 net) wells in the Mid-Continent region, including two (0.7 net) horizontal Granite Wash wells.

Mid-Continent production in the first quarter averaged 16.1 MMcfe per day, 78 percent higher than the 9.0 MMcfe per day produced in the first quarter of 2007 and 23 percent higher than the 13.1 MMcfe per day produced in the fourth quarter of 2007. The production increases resulted from successful development programs in the Hartshorne horizontal coalbed methane (HCBM) play in the Arkoma Basin drilled in 2007 and, more recently, the horizontal Granite Wash play in the Anadarko Basin.

The latest two horizontal Granite Wash wells drilled in Washita County, Oklahoma, one of which was a fourth quarter 2007 well operated by PVA and the other a first quarter 2008 well which is outside operated, had initial production (IP) rates of approximately 5.6 and 9.9 MMcfe per day, respectively. These IP rates contributed significantly to the strong sequential growth in the first quarter. Although 16 (5.8 net) horizontal Granite Wash wells are anticipated for 2008, the level of drilling in 2008 may increase due to the success experienced to date and possible increases in drilling activity by both PVA and outside operators. PVA has approximately 9,000 net acres in this area.

PVA commenced its 2008 Hartshorne HCBM drilling program in April and expects a second rig will be drilling by the end of the second quarter. PVA anticipates drilling 49 (34.0 net) Hartshorne HCBM wells during the year. In addition, PVA's first Bakken Shale horizontal well in Dunn County, North Dakota was spud in April as part of a two-well exploratory program testing its approximate 33,000 net acreage position. PVA is the operator of this project with a 51 percent working interest. PVA also plans exploratory horizontal drilling in 2008 for up to four Woodford Shale wells located in both the Arkoma and Anadarko Basins, where it has a total of approximately 40,000 net acres in the play. Results of PVA's Fayetteville Shale program are under evaluation and a decision of whether to continue with this play will be made in 2008.

Selma Chalk / Mississippi - During the first quarter, PVA drilled 14 (13.7 net) development wells in Mississippi, including 12 (11.8 net) vertical wells and two (1.9 net) horizontal wells.

Mississippi production in the first quarter averaged 19.8 MMcfe per day, one percent lower than the 20.1 MMcfe per day produced in the first quarter of 2007 and four percent lower than the 20.6 MMcfe per day produced in the fourth quarter of 2007. The production decreases resulted from reduced drilling activity in the fourth quarter of 2007 and first quarter of 2008 related to a shift to a horizontal drilling program.

By mid-year 2008, PVA expects to have two rigs dedicated primarily to horizontal drilling in the Baxterville and Gwinville Fields and expects production increases to resume during the second half of 2008. The results of the four currently producing horizontal wells, two of which have been on line for over a year, continue to exceed PVA's expectations. A fifth recently completed horizontal well also looks promising, as it had an approximate 0.8 MMcfe per day natural rate prior to stimulation from only the first part of the lateral. PVA's horizontal program in the Selma Chalk is expected to result in production rates that are significantly higher than those associated with its vertical program.

Appalachia - During the first quarter, PVA drilled five (3.0 net) wells in Appalachia, including four (2.0 net) multi-lateral HCBM development wells and one (1.0 net) Lower Huron (Devonian) Shale exploratory well.

Appalachian production in the first quarter averaged 31.2 MMcfe per day, four percent lower than the 32.5 MMcfe per day produced in the first quarter of 2007 and four percent lower than the 32.6 MMcfe per day produced in the fourth quarter of 2007. The decreases were largely attributable to reduced drilling activity in the first quarter and delayed timing in the initiation of production from third-party operated HCBM wells drilled in late 2007 and early 2008.

PVA recently spud the first horizontal Lower Huron Devonian Shale well in its 70,000 mineral fee acreage in southern West Virginia. In addition, a horizontal development program in the Lower Huron Shale is expected to commence in PVA's Mason County, West Virginia acreage later in 2008, subject to the timing of the completion of an approximate 10-mile pipeline. The results of the first two horizontal wells met PVA's expectations with test rates of 0.8 and 0.6 MMcfe per day. PVA has approximately 10,000 net acres in this area.

In addition, PVA has initiated a leasing effort in the Marcellus Shale in Pennsylvania and New York and has acquired in excess of 10,000 net acres to date with drilling expected to commence in 2009.

Gulf Coast - No wells were drilled in the Gulf Coast during the first quarter; however, PVA anticipates drilling in its Bayou Postillion, South Creole and Bayou Sale prospects in South Louisiana and in the Fannett and Rugeley Fields in South Texas during the remainder of 2008.

Gulf Coast production in the first quarter averaged 18.2 MMcfe per day, three percent higher than the 17.7 MMcfe per day produced in the first quarter of 2007 and 12 percent lower than the 20.8 MMcfe per day produced in the fourth quarter of 2007. The increase over the prior year quarter was attributable to successful exploration, primarily in Bayou Postillion in South Louisiana in which a significant discovery was made in late 2006, while the sequential decrease was due to natural declines. Production from Bayou Postillion has been shut in since mid-April due to flooding in the Atchafalaya Basin. PVA's net production affected by the flooding is approximately seven MMcfe per day and production may not resume until mid-May.

Derivative Update

The following table shows PVA's current derivative positions for natural gas and oil production:


                                           Weighted Average Price
                              Average  -------------------------------
                              Volume   Additional
                              Per Day  Put Option    Floor     Ceiling
                             --------- ---------- ------------ -------

Natural Gas Three-Way
 Collars (a)                  (MMBtu)              (per MMBtu)
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             67,500      $5.89    $8.55      $11.26
First quarter 2009              65,000      $6.00    $8.67      $11.68
Second quarter 2009 - (b)       30,000      $5.83    $8.17       $9.65
Third quarter 2009 - (b)        30,000      $5.83    $8.17       $9.65
Fourth quarter 2009 - (b)       20,000      $6.00    $8.75      $12.03
First quarter 2010 - (b)        20,000      $6.00    $8.75      $12.03

Natural Gas Costless Collars  (MMBtu)                 (per MMBtu)
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 Swaps (c)         (MMBtu)                 (per MMBtu)
Second quarter 2008             45,000                   $9.03
Third quarter 2008              45,000                   $9.03

Crude Oil Three-Way Collars  (barrels)            (per barrel)
Second quarter 2008                500     $70.00    $95.00    $108.80
Third quarter 2008                 500     $70.00    $95.00    $108.80

a) 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 prices of the collar beyond the range of a traditional collar contract while defraying the associated cost with the sale of the additional put option.

b) Includes hedges entered into in April 2008.

c) Excludes 15,000 MMBtu per day of basis differential hedges, between Henry Hub and delivery points in Appalachia, at a weighted average swap value of $0.39 per MMBtu from May 2008 through December 2008.

First Quarter 2008 Financial and Operational Results Conference Call

A conference call and webcast, during which management will discuss first quarter 2008 financial and operational results for PVA, is scheduled for Thursday, May 8, 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 May 22, 2008 at 11:59 p.m. ET by dialing 1-877-660-6853 and using the following replay pass codes: account #286, conference ID #281755. 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 and NGLs; our ability to develop and replace oil and gas reserves and the price for which such reserves can be acquired; the relationship between natural gas, oil and NGL prices; the projected demand for and supply of natural gas, crude oil and NGLs; 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; the extent to which the amount and quality of actual production of our oil and natural gas differs from estimated proved oil and gas reserves and recoverable coal reserves; 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 and new processing plants in PVR's natural gas midstream business; environmental risks affecting the drilling and producing of oil and gas wells; the timing of receipt of necessary governmental permits; hedging results; accidents; changes in governmental regulation or enforcement practices, especially with respect to environmental, health and safety matters; risks and uncertainties relating to general domestic and international economic (including inflation, interest rates and financial market) and political conditions (including the impact of potential terrorist attacks).

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, 2007. 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.

Source: Penn Virginia Corporation