Penn Virginia Corporation Announces Full-Year and Fourth Quarter 2008 Results

RADNOR, Pa.-- Penn Virginia Corporation (NYSE:PVA) today reported financial and operational results for the three months and year ended December 31, 2008 and provided an update of full-year 2009 guidance.

Fourth Quarter and Full-Year 2008 Highlights

Fourth quarter 2008 results, with comparisons to fourth quarter 2007 results, included the following:

    --  Quarterly record oil and gas production of 13.2 billion cubic feet of
        natural gas equivalent (Bcfe), or 143.8 million cubic feet of natural
        gas equivalent (MMcfe) per day, a 24 percent increase as compared to
        10.7 Bcfe, or 116.1 MMcfe per day;
    --  Operating cash flow, a non-GAAP (generally accepted accounting
        principles) measure, of $95.7 million as compared to $76.3 million;
    --  Net income of $0.3 million, or $0.01 per diluted share, as compared to
        $5.4 million, or $0.14 per diluted share;
    --  Adjusted net loss, a non-GAAP measure which excludes the effects of the
        non-cash change in derivatives fair value and impairments that affect
        comparability to the prior year period, of $0.1 million, or $0.00 per
        diluted share, as compared to adjusted net income of $13.0 million, or
        $0.33 per diluted share; and
    --  Pretax charges for impairment of goodwill of $31.8 million related to
        PVR Midstream acquisitions and an impairment charge of $20.0 million for
        proved oil and gas - see "Impairment Charges".

Full-year 2008 results, with comparisons to full-year 2007 results, included the following:

    --  Record annual oil and gas production of 46.9 Bcfe, or 128.1 MMcfe per
        day, a 15 percent increase as compared to 40.6 Bcfe, or 111.1 MMcfe per
        day;
    --  Record proved reserves of 916 Bcfe, a 35 percent increase as compared to
        680 Bcfe;
    --  Operating cash flow of $413.8 million as compared to $302.5 million;
    --  Net income of $124.2 million, or $2.95 per diluted share, as compared to
        $50.8 million, or $1.32 per diluted share; and
    --  Adjusted net income of $108.3 million, or $2.58 per diluted share, as
        compared to $72.2 million, or $1.88 per diluted share.

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

In the fourth quarter of 2008, our operating loss was $31.9 million, which was $77.0 million, or 171 percent, lower than the $45.1 million of operating income in the fourth quarter of 2007. Excluding $51.8 million of non-cash impairment charges during the quarter (see "Impairment Charges"), the decrease in operating income was $25.2 million. The decrease in operating income, excluding the effects of impairments, was comprised of a $23.1 million decrease in oil and gas segment operating income and a $17.6 million decrease in natural gas midstream segment (PVR Midstream) operating income, excluding the above charges, offset in part by a $12.8 million increase in operating income from the coal and natural resource management segment (PVR Coal & Natural Resource Management) and a $2.7 million decrease in corporate general and administrative (G&A) expenses.

Oil and gas segment operating income decreased by $43.1 million, including the $20.0 million impairment charge to an operating loss of $24.5 million in the fourth quarter of 2008. Excluding the impairment charge, segment operating loss was $4.5 million, or 124 percent, lower than the $18.6 million of segment operating income in the prior year quarter. This decrease was primarily due to an $13.8 million, or 26 percent, increase in operating expenses and a $17.7 million increase in exploration expense. The increase in exploration expense was due primarily to the write-off of exploratory wells deemed to be non-commercial and the expensing of leasehold costs in two areas, offset in part by an $8.2 million, or 11 percent, increase in revenue as a result of the 24 percent production increase.

Operating income for PVR Midstream decreased by $49.4 million, including the $31.8 million goodwill impairment charge, to an operating loss of $28.8 million in the fourth quarter of 2008. Excluding this charge, segment operating income was $3.0 million, 85 percent lower than the $20.6 million of segment operating income in the prior year quarter. This decrease was primarily due to a 35 percent decrease in midstream gross margin and a 62 percent increase in operating expenses, offset in part by a 75 percent increase in system throughput volumes. Operating income for PVR Coal & Natural Resource Management increased by $12.8 million, or 82 percent, to $28.4 million in the fourth quarter of 2008. Operating income for PVR Coal & Natural Resource Management increased due primarily to a 19 percent increase in lessee coal production and a 38 percent increase in average coal royalties per ton, offset in part by a 30 percent increase in operating expenses.

Operating cash flow in the fourth quarter of 2008 increased $19.4 million, or 25 percent, to $95.7 million from $76.3 million in the fourth quarter of 2007. The increase was primarily due to higher operating income, prior to depletion, depreciation and amortization (DD&A) expense and impairments, a decrease in cash paid to settle derivatives, lower cash income taxes paid and an increase in other cash flows from operating activities. These increases were partially offset by increased interest expense and decreased other income.

The decrease in adjusted net income in the fourth quarter of 2008 as compared to the fourth quarter of 2007 was primarily due to the decrease in operating income, excluding impairments, partially offset by the decrease in cash paid to settle derivatives.

The decrease in net income in the fourth quarter of 2008 as compared to the fourth quarter of 2007 was primarily due to the $77.0 million decrease in operating income, including impairments, higher interest expense, lower other income and higher minority interest, partially offset by a $76.2 million increase in derivatives income, resulting mainly from changes in the valuation of unrealized derivative positions, and lower income tax expense.

For the year ended December 31, 2008, operating cash flow was $413.8 million, as compared to $302.5 million in 2007. Operating income was $256.8 million, which includes the $51.8 million of impairments, as compared to $192.6 million in 2007. Adjusted net income was $108.3 million, which excludes the effects of the non-cash change in derivatives fair value and impairments, or $2.58 per diluted share, as compared to $72.2 million, or $1.88 per diluted share, in 2007. Net income was $124.2 million, or $2.95 per diluted share, as compared to $50.8 million, or $1.32 per diluted share.

Management Comment

A. James Dearlove, President and Chief Executive Officer of PVA, said, "We are pleased to report the growth in production and proved reserves in 2008, a year in which strong commodity price and stable financial markets deteriorated significantly by the fourth quarter. For us, the fallout from this erosion in the markets has been a reduction in planned capital expenditures in 2009, as well as additional non-cash impairment charges in our reported financial results during the fourth quarter.

"We expect proved reserve and production growth in 2009 in our oil and gas segment from a number of our core project areas, including the Lower Bossier (Haynesville) Shale in East Texas, the Granite Wash formation in the Mid-Continent region and the Selma Chalk in Mississippi. We continue to encouraged by the early results in the Lower Bossier Shale, as well as the strong results from the Granite Wash and Selma Chalk.

"As is the case with many of our peers in the oil and gas industry, we are taking a cautious approach to our capital spending plans in 2009. We have reduced our full-year 2009 capital expenditures guidance to a range of $225 to $250 million, down slightly from a $250 million capital budget, but we still anticipate year-over-year production growth of nine to 13 percent in 2009. The 2009 oil and gas capital expenditures plan is expected to be funded primarily by operating cash flows, supplemented as needed with our revolving credit facility, on which we had availability of approximately $147 million as of year-end 2008. We continue to maintain an ample inventory of drilling locations which can be exploited to facilitate production growth when market conditions improve.

"PVR Coal & Natural Resource Management continues to provide strong contributions to cash flows, as this segment continued to perform well in the fourth quarter due to 38 percent higher average coal royalties per ton and 19 percent higher lessee coal production than the prior year quarter. We expect continued strength into 2009 for which our lessees have locked in pricing for over 80 percent of their market price sensitive coal production.

"During the fourth quarter, PVR Midstream continued to increase its system throughput volumes, with record volumes 75 percent higher than the prior year quarter and seven percent higher relative to the third quarter of 2008. However, the increase in system throughput volumes in the quarter was more than offset by the impact of a dramatic slowdown in the economy, which has reduced the demand for natural gas liquids (NGLs), and the lingering impacts of hurricanes, which caused a buildup in stored NGLs that could not be processed in the latter part of 2008. General economic conditions and reduced commodity prices in 2009 are expected to continue to dampen margins from this segment, offset by expected increases in system throughput volumes. Our hedging program is expected to provide additional support for our midstream margins in 2009.

"For PVR, which has a capital structure independent of Penn Virginia Corporation, we need to have access to capital to continue the growth of our coal and midstream business segments. Access to the debt and equity capital markets continues to be difficult and we cannot predict when those markets will improve. As of the end of 2008, PVR had approximately $130 million of unused borrowing capacity under its revolving credit facility, which we believe provides adequate cushion to support PVR's working capital needs and some modest growth opportunities."

Oil and Gas Segment Review

Proved natural gas and oil reserves increased by 35 percent in 2008, from 680 Bcfe at December 31, 2007 to 916 Bcfe at December 31, 2008. This increase was primarily the result of successful drilling programs in East Texas, the Mid-Continent region and in Mississippi. Oil and gas production grew 15 percent from 40.6 Bcfe in 2007 to a record 46.9 Bcfe in 2008. Fourth quarter 2008 oil and gas production grew 24 percent to a record 13.2 Bcfe from 10.7 Bcfe in the fourth quarter of 2007, and was 13 percent higher than the previous quarterly record of 11.7 Bcfe in the third quarter of 2008. See PVA's separate operational update news release dated February 6, 2009 for a more detailed discussion of full-year and fourth quarter 2008 drilling and production operations for the oil and gas segment.

During the fourth quarter of 2008, oil and gas segment operating income decreased by $43.1 million to an operating loss of $24.5 million, including a $20.0 million impairment charge. Excluding the impairment charge, the segment operating loss was $4.5 million, a decrease of $23.1 million, or 124 percent, from $18.6 million of operating income in the prior year quarter.

In the fourth quarter of 2008, total oil and gas segment expenses, excluding the impairment charge, increased by $31.5 million, or 53 percent, to $90.5 million, or $6.84 per Mcfe produced, from $59.0 million, or $5.52 per Mcfe produced, in the fourth quarter of 2007, as discussed below:

    --  Fourth quarter 2008 cash operating expenses increased by $1.0 million,
        or four percent, to $26.4 million, or $1.99 per Mcfe produced, from
        $25.4 million, or $2.38 per Mcfe produced, in the fourth quarter of
        2007. The overall increase in cash operating expenses was primarily due
        to the production increase. Decreases in cash operating expenses per
        unit of production as compared to the prior year quarter are discussed
        below:

  • Lease operating expense decreased to $1.22 per Mcfe from $1.45 per Mcfe primarily due to reduced water disposal and gathering costs in East Texas and reduced compression and downhole maintenance costs in several operating areas as compared to the prior year quarter;
  • Taxes other than income decreased to $0.29 per Mcfe from $0.43 per Mcfe primarily due to decreased severance taxes related to lower commodity prices in the fourth quarter of 2008 relative to the prior year quarter; and
  • G&A expense was flat at $0.49 per Mcfe as compared to $0.49 per Mcfe.
    --  Exploration expense increased to $22.7 million in the fourth quarter of
        2008, as compared to $5.0 million in the prior year quarter, primarily
        due to

  • approximately $8.8 million of charges for several exploratory wells in West Virginia determined to be non-commercial during the quarter; and
  • approximately $5.1 million of charges to expense leasehold acquisition costs in two plays in which we have no foreseeable drilling plans.
    --  DD&A expense increased by $12.8 million, or 45 percent, to $41.4
        million, or $3.13 per Mcfe, in the fourth quarter of 2008 from $28.6
        million, or $2.68 per Mcfe, in the prior year quarter. The overall
        increase in DD&A expense was primarily due to the higher depletion rate
        per unit of production, a result of higher drilling costs and leasehold
        acquisitions, as well as the production increase..

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

Operating income for PVR Coal & Natural Resource Management increased 82 percent to $28.4 million in the fourth quarter of 2008 from $15.6 million in the prior year quarter. A weakening economy and the aftermath of hurricanes caused operating income for PVR Midstream, excluding a $31.8 million charge to goodwill, to decrease 85 percent to $3.0 million in the fourth quarter of 2008 from $20.6 million in the prior year quarter. Financial and operational results and full-year 2009 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 11, 2009 (please visit PVR's website, www.pvresource.com, under "For Investors" for a copy of the release).

As previously announced, on February 18, 2009, PVG will pay to unitholders of record as of February 2, 2009 a quarterly cash distribution of $0.38 per unit, or an annualized rate of $1.52 per unit, covering the period of October 1 through December 31, 2008. On an annualized basis, this represents a 19 percent increase over the annualized distribution of $1.28 per unit for the same quarter of 2007 and is unchanged from the distribution paid for the third quarter of 2008.

As a result of PVG's distribution, PVA will receive a cash distribution of approximately $11.4 million in the first quarter of 2009, which would be approximately $45.7 million on an annualized basis.

PVG owns PVR's general partner, including the incentive distribution rights, and is PVR's largest limited partner unitholder. PVG derives its cash flow solely from cash distributions received from PVR. As the owner of the general partner and largest unitholder of PVG, we report our financial results on a consolidated basis with the financial results of PVG.

A conversion of the GAAP-compliant financial statements ("As reported") to the equity method of accounting ("As adjusted") is included in the "Conversion to Non-GAAP Equity Method" table in this release. Using the equity method, PVG's results are reduced to a few line items and the results from oil and gas operations and corporate are therefore highlighted. We believe that this is useful since the oil and gas and corporate segments provide a majority of our cash flow from operations as compared to distributions we receive from PVG. We believe that the financial statements presented using the equity method are less complex and more comparable to those of other oil and gas exploration and production companies.

Impairment Charges

During the fourth quarter of 2008, we incurred approximately $51.8 million of non-cash impairment charges, including:

    --  an impairment charge of $31.8 million to reduce to zero all goodwill
        recorded in conjunction with acquisitions made by PVR Midstream in 2008
        and prior years; and
    --  an impairment charge to proved oil and gas properties of $20.0 million,
        including approximately $11 million for Fayetteville Shale properties,
        approximately $8 million for conventional properties in Oklahoma and
        approximately $1 million for properties in northern West Virginia.

Capital Resources and Impact of Derivatives

As of December 31, 2008, PVA had outstanding borrowings of $562.0 million, including $230.0 million of convertible senior subordinated notes due 2012 and $332.0 million of borrowings under its $479.0 million revolving credit facility. The $210.0 million increase in outstanding borrowings as compared to the $352.0 million at December 31, 2007 was primarily due to higher spending to fund PVA's oil and gas capital expenditures during 2008.

As of December 31, 2008, PVR had outstanding borrowings of $568.1 million under its $700 million revolving credit facility. The $156.4 million increase in outstanding borrowings as compared to the $411.7 million as of December 31, 2007 was primarily due to acquisitions and capital expenditures during 2008, partially offset by the net proceeds from a public offering of common units in May 2008.

Consolidated interest expense increased from $11.5 million in the fourth quarter of 2007 to $12.7 million in the fourth quarter of 2008. For full-year 2008, consolidated interest expense was $44.3 million, as compared to $37.4 million for full-year 2007. The increases were due to higher average levels of outstanding borrowings during 2008 as compared to 2007.

Due to decreases in natural gas and crude oil prices experienced during the fourth quarter, the mark-to-market valuation of PVA and PVR open hedging positions resulted in derivatives income of $51.0 million, as compared to derivatives expense of $25.2 million in the prior year quarter. Included in derivatives income for the fourth quarter of 2008 was $27.7 million related to PVA's oil and gas segment and $23.3 million of derivatives income related to PVR. Cash settlements of derivatives included in these amounts resulted in net cash receipts of $0.7 million during the fourth quarter of 2008, as compared to $5.9 million of net cash payments in the fourth quarter of 2007. Included in the cash settlement of derivatives for the fourth quarter of 2008 was $5.8 million of net cash receipts related to PVA's oil and gas segment and $5.2 million of net cash payments related to PVR.

Guidance for 2009

See the Guidance Table included in this release for guidance estimates for full-year 2009. 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.

Full-Year and Fourth Quarter 2008 Financial and Operational Results Conference Call

A conference call and webcast, during which management will discuss our full-year and fourth quarter 2008 financial and operational results, is scheduled for Thursday, February 12, 2009 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 our 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 26, 2009 at 11:59 p.m. ET by dialing 1-877-660-6853 and using the following replay pass codes: account #286, conference ID #309180. An on-demand replay of the conference call will be available at our 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 East Texas, Mississippi, the Mid-Continent region, the Appalachian Basin and the Gulf Coast of Louisiana and Texas. We also own approximately 77 percent of Penn Virginia GP Holdings, L.P. (NYSE: PVG), the owner of the general partner and the largest unit holder of Penn Virginia Resource Partners, L.P. (NYSE: PVR), a manager of coal and natural resource properties and related assets and the operator of a midstream natural gas gathering and processing business.

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

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


PENN VIRGINIA CORPORATION

CONSOLIDATED STATEMENTS OF EARNINGS - unaudited

(in thousands, except per share data)

                            Three Months Ended        Year Ended

                            December 31,              December 31,

                              2008         2007         2008           2007

Revenues

Natural gas                 $ 73,165     $ 68,208     $ 368,801      $ 262,169

Crude oil                     9,087        7,454        46,529         22,439

Natural gas liquids (NGLs)    2,405        2,220        21,292         5,678

Natural gas midstream         95,523       123,079      589,783        433,174

Coal royalties                33,923       20,685       122,834        94,140

Gain (loss) on the sale of    91           (20     )    31,426         12,416
property and equipment

Other                         11,496       6,898        40,186         22,934

Total revenues                225,690      228,524      1,220,851      852,950

Expenses

Cost of midstream gas         76,374       92,293       484,621        343,293
purchased

Operating                     23,238       20,053       89,891         67,610

Exploration                   22,671       4,998        42,436         28,608

Taxes other than income       5,261        5,728        28,586         21,723

General and administrative
(excluding equity-based       17,313       19,110       66,612         61,726
compensation)

Equity-based compensation     2,175        1,334        7,882          5,257
- (a)

Impairments                   51,764       181          51,764         2,586

Depreciation, depletion       58,755       39,700       192,236        129,523
and amortization

Total expenses                257,551      183,397      964,028        660,326

Operating income (loss)       (31,861 )    45,127       256,823        192,624

Other income (expense)

Interest expense              (12,661 )    (11,541 )    (44,261   )    (37,419 )

Other                         116          1,115        (666      )    3,651

Derivatives                   50,969       (25,214 )    46,582         (47,282 )

Income before minority        6,563        9,487        258,478        111,574
interest and income taxes

Minority interest             8,184        2,660        60,436         30,319

Income tax (benefit)          (1,918  )    1,468        73,874         30,501
expense

Net income                  $ 297        $ 5,359      $ 124,168      $ 50,754

Per share data:

Net income per share,       $ 0.01       $ 0.14       $ 2.97         $ 1.33
basic

Net income per share,       $ 0.01       $ 0.14       $ 2.95         $ 1.32
diluted - (b)

Weighted average shares       41,907       38,805       41,760         38,061
outstanding, basic

Weighted average shares       42,006       39,157       42,031         38,358
outstanding, diluted

                            Three Months Ended        Year Ended

                            December 31,              December 31,

                              2008         2007         2008           2007

Production

Natural gas (MMcf)            11,624       9,930        41,493         37,802

Crude oil (MBbls)             175          85           506            325

NGLs (MBbls)                  92           40           392            136

Total natural gas, crude
oil and NGL production        13,226       10,681       46,881         40,569
(MMcfe)

Prices

Natural gas ($ per Mcf)     $ 6.29       $ 6.87       $ 8.89         $ 6.94

Crude oil ($ per Bbl)       $ 51.93      $ 87.69      $ 91.95        $ 69.04

NGLs ($ per Bbl)            $ 26.14      $ 55.50      $ 54.32        $ 41.75




(a) - Our equity-based compensation expense includes our stock option expense
and the amortization of restricted stock and restricted PVR units related to
employee awards in accordance with SFAS No. 123(R), Share-Based Payment.

(b) - Diluted net income per share includes an adjustment to net income for the
dilutive effect of PVR's net income allocated to PVR units that we own and have
awarded under PVR's long-term incentive compensation plan.




PENN VIRGINIA CORPORATION

CONSOLIDATED BALANCE SHEETS - unaudited

(in thousands)

                        December 31,    December 31,

                        2008            2007

Assets

Current assets        $ 263,518         244,072

Net property and        2,511,175       1,899,014
equipment

Other assets            221,859         110,375

Total assets          $ 2,996,552     $ 2,253,461

Liabilities and
shareholders' equity

Current liabilities   $ 247,594       $ 261,899

Long-term debt of       562,000         352,000
PVA

Long-term debt of       568,100         399,153
PVR

Other liabilities       300,397         251,149
and deferred taxes

Minority interests      299,671         179,162
of subsidiaries

Shareholders' equity    1,018,790       810,098

Total liabilities
and shareholders'     $ 2,996,552     $ 2,253,461
equity

CONSOLIDATED STATEMENTS OF CASH FLOWS - unaudited

(in thousands)

                        Three Months Ended              Year Ended

                        December 31,                    December 31,

                        2008            2007            2008          2007

Cash flows from
operating activities

Net income            $ 297           $ 5,359         $ 124,168     $ 50,754

Adjustments to
reconcile net income
to net cash provided
by operating
activities:

Depreciation,
depletion and           58,755          39,700          192,236       129,523
amortization

Impairments             51,764          181             51,764        2,586

Derivative
contracts:

Total derivative        (49,618  )      26,588          (41,102  )    52,157
losses (gains)

Cash settlements of     654             (5,932   )      (46,086  )    (3,651   )
derivatives

Deferred income         (1,040   )      1,438           60,505        23,340
taxes

Minority interest       8,184           2,660           60,436        30,319

Loss (gain) on sale
of property and         (91      )      20              (31,426  )    (12,416  )
equipment

Dry hole and
unproved leasehold      20,855          4,268           35,847        24,975
expense

Other                   5,980           2,043           7,484         4,961

Operating cash flow
(see attached table     95,740          76,325          413,826       302,548
"Certain Non-GAAP
Financial Measures")

Changes in operating
assets and              11,347          27,724          (30,052  )    10,482
liabilities

Net cash provided by    107,087         104,049         383,774       313,030
operating activities

Cash flows from
investing activities

Acquisitions            (15,562  )      (52,983  )      (293,747 )    (292,001 )

Additions to
property and            (193,308 )      (112,522 )      (585,339 )    (421,509 )
equipment

Other                   (435     )      642             33,519        30,027

Net cash used in        (209,305 )      (164,863 )      (845,567 )    (683,483 )
investing activities

Cash flows from
financing activities

Dividends paid          (2,361   )      (2,129   )      (9,398   )    (8,499   )

Distributions paid
to minority interest    (18,416  )      (13,337  )      (64,245  )    (49,739  )
holders

Borrowings from
(repayments of) bank    (38,889  )      -               7,542         -
indebtedness

Net proceeds from
(repayments of) PVA     152,000         (62,500  )      210,000       131,000
borrowings

Net proceeds from       10,000          47,500          156,000       193,500
PVR borrowings

Net proceeds from
issuance of PVR         -               -               138,141       -
partners' capital

Net proceeds from
issuance of PVA         -               135,441         -             135,441
equity

Cash received for       -               18,187          -             18,187
stock warrants sold

Cash paid for
convertible note        -               (36,817  )      -             (36,817  )
hedges

Other                   (785     )      (5,807   )      7,564         1,569

Net cash provided by    101,549         80,538          445,604       384,642
financing activities

Net increase
(decrease) in cash      (669     )      19,724          (16,189  )    14,189
and cash equivalents

Cash and cash
equivalents -           19,007          14,803          34,527        20,338
beginning of period

Cash and cash
equivalents - end of  $ 18,338        $ 34,527        $ 18,338      $ 34,527
period





PENN VIRGINIA CORPORATION

QUARTERLY SEGMENT INFORMATION - unaudited

(in thousands except where noted)

                                        Coal and
                                        Natural     Natural Gas  Eliminations
                Oil and Gas                                                    Consolidated
                                        Resource    Midstream    and Other

                                        Management

                Amount       (per
                             Mcfe)(a)

Three Months
Ended December
31, 2008

Production

Total natural
gas, crude oil    13,226
and NGLs
(MMcfe)

Natural gas       11,624
(MMcf)

Crude oil         175
(MBbls)

NGLs (MBbls)      92

Coal royalty
tons                                      8,715
(thousands of
tons)

Midstream
system                                                29,768
throughput
volumes (MMcf)

Revenues

Natural gas     $ 73,165     $ 6.29     $ -         $ -          $ -           $ 73,165

Crude Oil         9,087        51.93      -           -            -             9,087

NGLs              2,405        26.14      -           -            -             2,405

Natural gas       -          -            -           118,875      (23,352 )     95,523
midstream

Coal royalties    -          -            33,923      -            -             33,923

Gain on the
sale of           91         -            -           -            -             91
property and
equipment

Other             1,191      -            8,394       1,793        118           11,496

Total revenues    85,939       6.50       42,317      120,668      (23,234 )     225,690

Expenses

Cost of
midstream gas     -            -          -           98,752       (22,378 )     76,374
purchased

Operating         16,089       1.22       2,418       5,706        (975    )     23,238
expense

Exploration       22,671       1.71       -           -            -             22,671

Taxes other       3,856        0.29       565         676          164           5,261
than income

General and       6,415        0.49       2,826       3,741        6,506         19,488
administrative

Impairments       19,963       1.51       -           31,801       -             51,764

Depreciation,
depletion and     41,427       3.13       8,072       8,772        484           58,755
amortization

Total expenses    110,421      8.35       13,881      149,448      (16,199 )     257,551

Operating       $ (24,482 )  $ (1.85 )  $ 28,436    $ (28,780 )  $ (7,035  )   $ (31,861 )
income (loss)

Additions to
property and    $ 184,246    -          $ 2,084     $ 22,011     $ 529         $ 208,870
equipment and
acquisitions

                                        Coal and
                                        Natural     Natural Gas  Eliminations
                Oil and Gas                                                    Consolidated
                                        Resource    Midstream    and Other

                                        Management

                Amount       (per
                             Mcfe)(a)

Three Months
Ended December
31, 2007

Production

Total natural
gas, crude oil    10,681
and NGLs
(MMcfe)

Natural gas       9,930
(MMcf)

Crude oil         85
(MBbls)

NGLs (MBbls)      40

Coal royalty
tons                                      7,342
(thousands of
tons)

Midstream
system                                                17,047
throughput
volumes (MMcf)

Revenues

Natural gas     $ 68,208     $ 6.87     $ -         $ -          $ -           $ 68,208

Crude Oil         7,454        87.69      -         -              -             7,454

NGLs              2,220        55.50      -         -              -             2,220

Natural gas       -          -            -           123,079      -             123,079
midstream

Coal royalties    -          -            20,685      -            -             20,685

Gain on the
sale of           (4      )  -            9           -            (25     )     (20     )
property and
equipment

Other             (148    )  -            5,635       1,489        (78     )     6,898

Total revenues    77,730       7.28       26,329      124,568      (103    )     228,524

Expenses

Cost of
midstream gas     -            -          -           92,293       -             92,293
purchased

Operating         15,523       1.45       1,403       3,326        (199    )     20,053
expense

Exploration       4,998        0.47       -           -            -             4,998

Taxes other       4,598        0.43       278         646          206           5,728
than income

General and       5,255        0.49       2,968       2,839        9,382         20,444
administrative

Impairment of
oil and gas       181          0.02       -           -            -             181
properties

Depreciation,
depletion and     28,595       2.68       6,047       4,865        193           39,700
amortization

Total expenses    59,150       5.54       10,696      103,969      9,582         183,397

Operating       $ 18,580     $ 1.74     $ 15,633    $ 20,599     $ (9,685  )   $ 45,127
income (loss)

Additions to
property and    $ 144,915    -          $ 45        $ 18,463     $ 2,082       $ 165,505
equipment and
acquisitions




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





PENN VIRGINIA CORPORATION

YEAR-TO-DATE SEGMENT INFORMATION - unaudited

(in thousands except where noted)

                                    Coal and
                                    Natural

                                    Resource    Natural    Eliminations
                                                Gas

                Oil and Gas         Management  Midstream  and Other     Consolidated

                           (per
                Amount     Mcfe)
                           (a)

Year Ended
December 31,
2008

Production

Total natural
gas, crude oil    46,881
and NGLs
(MMcfe)

Natural gas       41,493
(MMcf)

Crude oil         506
(MBbls)

NGLs (MBbls)      392

Coal royalty
tons                                  33,690
(thousands of
tons)

Midstream
system                                            98,683
throughput
volumes (MMcf)

Revenues

Natural gas     $ 368,801  $ 8.89   $ -         $ -        $ -           $ 368,801

Crude Oil         46,529     91.95    -           -          -             46,529

NGLs              21,292     54.32    -           -          -             21,292

Natural gas       -        -          -           720,002    (130,219 )    589,783
midstream

Coal royalties    -        -          122,834     -          -             122,834

Gain on the
sale of           30,634   -          792         -          -             31,426
property and
equipment

Other             2,074    -          29,701      8,251      160           40,186

Total revenues    469,330    10.01    153,327     728,253    (130,059 )    1,220,851

Expenses

Cost of
midstream gas     -          -        -           612,530    (127,909 )    484,621
purchased

Operating         59,459     1.27     11,940      20,737     (2,245   )    89,891
expense

Exploration       42,436     0.91     -           -          -             42,436

Taxes other       23,336     0.50     1,680       2,578      992           28,586
than income

General and       21,284     0.45     12,606      14,300     26,304        74,494
administrative

Impairments       19,963     0.43     -           31,801     -             51,764

Depreciation,
depletion and     132,276    2.82     30,805      27,361     1,794         192,236
amortization

Total expenses    298,754    6.37     57,031      709,307    (101,064 )    964,028

Operating       $ 170,576  $ 3.64   $ 96,296    $ 18,946   $ (28,995  )  $ 256,823
income (loss)

Additions to
property and    $ 607,220  -        $ 27,270    $ 304,758  $ (60,162  )  $ 879,086
equipment and
acquisitions

                                    Coal and
                                    Natural

                                    Resource    Natural    Eliminations
                                                Gas

                Oil and Gas         Management  Midstream  and Other     Consolidated

                           (per
                Amount     Mcfe)
                           (a)

Year Ended
December 31,
2007

Production

Total natural
gas, crude oil    40,569
and NGLs
(MMcfe)

Natural gas       37,802
(MMcf)

Crude oil         325
(MBbls)

NGLs (MBbls)      136

Coal royalty
tons                                  32,528
(thousands of
tons)

Midstream
system                                            67,810
throughput
volumes (MMcf)

Revenues

Natural gas     $ 262,169  $ 6.94   $ -         $ -        $ -           $ 262,169

Crude oil         22,439     69.04    -           -          -             22,439

NGLs              5,678      41.75    -           -          -             5,678

Natural gas       -        -          -           433,174    -             433,174
midstream

Coal royalties    -        -          94,140      -          -             94,140

Gain on the
sale of           12,235   -          206       -            (25      )    12,416
property and
equipment

Other             720      -          17,293      4,632      289           22,934

Total revenues    303,241    7.47     111,639     437,806    264           852,950

Expenses

Cost of
midstream gas     -          -        -           343,293    -             343,293
purchased

Operating         46,713     1.15     8,071       12,893     (67      )    67,610
expense

Exploration       28,608     0.71     -           -          -             28,608

Taxes other       17,847     0.44     1,110       1,926      840           21,723
than income

General and       16,281     0.40     10,957      11,958     27,787        66,983
administrative

Impairment of
oil and gas       2,586      0.06     -           -          -             2,586
properties

Depreciation,
depletion and     87,223     2.15     22,690      18,822     788           129,523
amortization

Total expenses    199,258    4.91     42,828      388,892    29,348        660,326

Operating       $ 103,983  $ 2.56   $ 68,811    $ 48,914   $ (29,084  )  $ 192,624
income (loss)

Additions to
property and    $ 512,473  -        $ 146,960   $ 47,082   $ 6,995       $ 713,510
equipment and
acquisitions

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




PENN VIRGINIA CORPORATION

CERTAIN NON-GAAP FINANCIAL MEASURES - unaudited

(in thousands)

                              Three Months Ended        Year Ended

                              December 31,              December 31,

                                2008         2007         2008         2007

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

Net cash provided by          $ 107,087    $ 104,049    $ 383,774    $ 313,030
operating activities

Adjustments:

Changes in operating assets     (11,347 )    (27,724 )    30,052       (10,482 )
and liabilities

Operating cash flow (a)       $ 95,740     $ 76,325     $ 413,826    $ 302,548

Reconciliation of GAAP "Net
income" to Non-GAAP "Net
income as adjusted"

Net income (loss) as          $ 297        $ 5,359      $ 124,168    $ 50,754
reported

Adjustments for derivatives:

Derivative losses included      1,351        1,375        5,480        4,875
in operating income

Derivative losses (gains)       (50,969 )    25,213       (46,582 )    47,282
included in other income

Cash settlements of             654          (5,932  )    (46,086 )    (3,651  )
derivatives

Adjustment for impairments      51,764       181          51,764       2,586

Impact of adjustments on        (3,033  )    (9,190  )    10,616       (17,991 )
minority interest (b)

Impact of adjustments on
income tax (benefit) expense    (85     )    (4,014  )    9,254        (11,443 )
(c)

                              $ (21     )  $ 12,992     $ 108,614    $ 72,412

Less: Portion of subsidiary
net income allocated to
undistributed share-based       (40     )    (16     )    (295    )    (186    )
compensation awards, net of
taxes

Net income (loss) as          $ (61     )  $ 12,976     $ 108,319    $ 72,226
adjusted (d)

Net income (loss) as          $ (0.00   )  $ 0.33       $ 2.58       $ 1.88
adjusted per share, diluted




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

(b) - Minority interest for the three months ended December 31, 2008 and 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, 2008 and 2007.

(c) - The impact of these adjustments on our income tax (benefit) expense
reflects our effective tax rate of 37.3%.

(d) - Net income (loss) as adjusted represents net income (loss) adjusted to
exclude the effects of non-cash changes in the fair value of derivatives, the
effects of impairments and the effect of PVR's net income allocated to PVR units
that we own and has awarded under PVR's long-term incentive compensation plan.
We believe this presentation is commonly used by investors and professional
research analysts in the valuation, comparison, rating and investment
recommendations of companies within the oil and gas exploration and production
industry, as well as companies within the natural gas midstream industry. We use
this information for comparative purposes within these industries. Net income
(loss) as adjusted is not a measure of financial performance under GAAP and
should not be considered as a measure of liquidity or as an alternative to net
income.





PENN VIRGINIA CORPORATION

CONVERSION TO NON-GAAP EQUITY METHOD - unaudited

(in thousands)

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

                Three Months Ended December 31 2008       Three Months Ended December 31 2007

                As Reported    Adjustments   As Adjusted  As Reported  Adjustments   As Adjusted

Revenues

Natural gas     $ 73,165       $ -           $ 73,165     $ 68,208     $ -           $ 68,208

Crude oil         9,087          -             9,087        7,454        -             7,454

NGLs              2,405          -             2,405        2,220        -             2,220

Natural gas       95,523         (95,523  )    -            123,079      (123,079 )    -
midstream

Coal royalties    33,923         (33,923  )    -            20,685       (20,685  )    -

Gain (loss) on
the sale of       91             -             91           (20     )    (9       )    (29     )
property and
equipment

Other             11,496         (10,187  )    1,309        6,898        (7,124   )    (226    )

Total revenues    225,690        (139,633 )    86,057       228,524      (150,897 )    77,627

Expenses

Cost of
midstream gas     76,374         (76,374  )    -            92,293       (92,293  )    -
purchased

Operating         23,238         (7,150   )    16,088       20,053       (4,729   )    15,324

Exploration       22,671         -             22,671       4,998        -             4,998

Taxes other       5,261          (1,241   )    4,020        5,728        (924     )    4,804
than income

General and       19,488         (6,919   )    12,569       20,444       (6,707   )    13,737
administrative

Impairments       51,764         (31,801  )    19,963       181          -             181

Depreciation,
depletion and     58,755         (16,844  )    41,911       39,700       (10,912  )    28,788
amortization

Total expenses    257,551        (140,329 )    117,222      183,397      (115,565 )    67,832

Operating         (31,861   )    696           (31,165 )    45,127       (35,332  )    9,795
income (loss)

Other income
(expense)

Interest          (12,661   )    7,306         (5,355  )    (11,541 )    5,496         (6,045  )
expense

Derivatives       50,969         (23,261  )    27,708       (25,214 )    24,641        (573    )

Equity
earnings in       -              7,408         7,408        -            3,529         3,529
PVG and PVR

Other             116            (333     )    (217    )    1,115        (994     )    121

Income (loss)
before
minority          6,563          (8,184   )    (1,621  )    9,487        (2,660   )    6,827
interest and
income taxes

Minority          8,184          (8,184   )    -            2,660        (2,660   )    -
interest

Income tax
(benefit)         (1,918    )    -             (1,918  )    1,468        -             1,468
expense

Net income      $ 297          $ -           $ 297        $ 5,359      $ -           $ 5,359

                Year Ended December 31, 2008              Year Ended December 31 2007

                As Reported    Adjustments   As Adjusted  As Reported  Adjustments   As Adjusted

Revenues

Natural gas     $ 368,801      $ -           $ 368,801    $ 262,169    $ -           $ 262,169

Crude oil         46,529         -             46,529       22,439       -             22,439

NGLs              21,292         -             21,292       5,678        -             5,678

Natural gas       589,783        (589,783 )    -            433,174      (433,174 )    -
midstream

Coal royalties    122,834        (122,834 )    -            94,140       (94,140  )    -

Gain (loss) on
the sale of       31,426         (792     )    30,634       12,416       (206     )    12,210
property and
equipment

Other             40,186         (37,952  )    2,234        22,934       (21,925  )    1,009

Total revenues    1,220,851      (751,361 )    469,490      852,950      (549,445 )    303,505

Expenses

Cost of
midstream gas     484,621        (484,621 )    -            343,293      (343,293 )    -
purchased

Operating         89,891         (30,367  )    59,524       67,610       (20,964  )    46,646

Exploration       42,436         -             42,436       28,608       -             28,608

Taxes other       28,586         (4,258   )    24,328       21,723       (3,040   )    18,683
than income

General and       74,494         (28,976  )    45,518       66,983       (25,393  )    41,590
administrative

Impairments       51,764         (31,801  )    19,963       2,586        -             2,586

Depreciation,
depletion and     192,236        (58,166  )    134,070      129,523      (41,512  )    88,011
amortization

Total expenses    964,028        (638,189 )    325,839      660,326      (434,202 )    226,124

Operating         256,823        (113,172 )    143,651      192,624      (115,243 )    77,381
income (loss)

Other income
(expense)

Interest          (44,261   )    24,672        (19,589 )    (37,419 )    17,338        (20,081 )
expense

Derivatives       46,582         (16,837  )    29,745       (47,282 )    45,568        (1,714  )

Equity
earnings in       -              42,162        42,162       -            24,257        24,257
PVG and PVR

Other             (666      )    2,739         2,073        3,651        (2,239   )    1,412

Income before
minority          258,478        (60,436  )    198,042      111,574      (30,319  )    81,255
interest and
income taxes

Minority          60,436         (60,436  )    -            30,319       (30,319  )    -
interest

Income tax        73,874         -             73,874       30,501       -             30,501
expense

Net income      $ 124,168      $ -           $ 124,168    $ 50,754     $ -           $ 50,754




(a) - 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 we
do not own. We believe equity method income statements provide useful
information to allow the public to more easily discern PVG's effect on our
operations.





PENN VIRGINIA CORPORATION

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

(in thousands)

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

                       December 31 2008                            December 31, 2007

                       As Reported    Adjustments   As Adjusted    As Reported    Adjustments   As Adjusted

Assets

Current assets         $ 263,518      $ (118,246 )  $ 145,272      $ 244,072      $ (114,707 )  $ 129,365

Net property and         2,511,175      (895,119 )    1,616,056      1,899,014      (731,282 )    1,167,732
equipment

Equity investment in     -              238,852       238,852        -              202,297       202,297
PVG and PVR

Other assets             221,859        (206,256 )    15,603         110,375        (96,262  )    14,113

Total assets           $ 2,996,552    $ (980,769 )  $ 2,015,783    $ 2,253,461    $ (739,954 )  $ 1,513,507

Liabilities and
shareholders' equity

Current liabilities    $ 247,594      $ (81,855  )  $ 165,739      $ 261,899      $ (133,918 )  $ 127,981

Long-term debt of PVA    562,000        -             562,000        352,000        -             352,000

Long-term debt of PVR    568,100        (568,100 )    -              399,153        (399,153 )    -

Other liabilities and    300,397        (31,143  )    269,254        251,149        (27,721  )    223,428
deferred taxes

Minority interests of    299,671        (299,671 )    -              179,162        (179,162 )    -
subsidiaries

Shareholders' equity     1,018,790      -             1,018,790      810,098        -             810,098

Total liabilities and  $ 2,996,552    $ (980,769 )  $ 2,015,783    $ 2,253,461    $ (739,954 )  $ 1,513,507
shareholders' equity

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

                       Three Months Ended December 31 2008         Three Months Ended December 31 2007

                       As Reported    Adjustments   As Adjusted    As Reported    Adjustments   As Adjusted

Cash flows from
operating activities

Net income             $ 297          $ -           $ 297          $ 5,359        $ -           $ 5,359

Adjustments to
reconcile net income
to net cash provided
by operating
activities:

Depreciation,
depletion and            58,755         (16,844  )    41,911         39,700         (10,912  )    28,788
amortization

Impairments              51,764         (31,801  )    19,963         181            -             181

Derivative contracts:

Total derivative         (49,618   )    21,909        (27,709   )    26,588         (25,804  )    784
losses (gains)

Cash settlements of      654            5,187         5,841          (5,932    )    8,816         2,884
derivatives

Minority interest        8,184          (8,184   )    -              2,660          (2,660   )    -

Investment in PVG and    -              (7,408   )    (7,408    )    -              (3,529   )    (3,529    )
PVR

Loss (gain) on the
sale of property and     (91       )    -             (91       )    20             -             20
equipment

Cash distributions       -              11,571        11,571         -              9,789         9,789
from PVG and PVR

Other                    25,796         (2,631   )    23,165         7,749          (385     )    7,364

Operating cash flow      95,741         (28,201  )    67,540         76,325         (24,685  )    51,640

Changes in operating
assets and               11,346         (4,299   )    7,047          27,724         (6,798   )    20,926
liabilities

Net cash provided by
(used in) operating      107,087        (32,500  )    74,587         104,049        (31,483  )    72,566
activities

Cash flows from
investing activities

Acquisitions             (15,562   )    7,345         (8,217    )    (52,983   )    31,038        (21,945   )

Additions to property    (193,308  )    16,750        (176,558  )    (112,522  )    18,468        (94,054   )
and equipment

Other                    (435      )    658           223            642            (661     )    (19       )

Net cash provided by
(used in) investing      (209,305  )    24,753        (184,552  )    (164,863  )    48,845        (116,018  )
activities

Cash flows from
financing activities

Dividends paid           (2,361    )    -             (2,361    )    (2,129    )    -             (2,129    )

Distributions paid to
minority interest        (18,416   )    18,416        -              (13,337   )    13,337        -
holders

Borrowings from bank     (38,889   )    -             (38,889   )    -              -             -
indebtedness

Net proceeds from
(repayments of) PVA      152,000        -             152,000        (62,500   )    -             (62,500   )
borrowings

Net proceeds from
(repayments of) PVR      10,000         (10,000  )    -              47,500         (47,500  )    -
borrowings

Net proceeds from
issuance of PVR          -              -             -              -              -             -
partners' capital

Net proceeds from
issuance of PVA          -              -             -              135,441        -             135,441
equity

Cash received for        -              -             -              18,187         -             18,187
stock warrants sold

Cash paid for
convertible note         -              -             -              (36,817   )    -             (36,817   )
hedges

Other                    (785      )    -             (785      )    (5,807    )    263           (5,544    )

Net cash provided by
(used in) financing      101,549        8,416         109,965        80,538         (33,900  )    46,638
activities

Net increase
(decrease) in cash       (669      )    669           -              19,724         (16,538  )    3,186
and cash equivalents

Cash and cash
equivalents-beginning    19,007         (19,007  )    -              14,803         (13,965  )    838
balance

Cash and cash
equivalents-ending     $ 18,338       $ (18,338  )  $ -            $ 34,527       $ (30,503  )  $ 4,024
balance

                       Year Ended December 31 2008                 Year Ended December 31 2007

                       As Reported    Adjustments   As Adjusted    As Reported    Adjustments   As Adjusted

Cash flows from
operating activities

Net income             $ 124,168      $ -           $ 124,168      $ 50,754       $ -           $ 50,754

Adjustments to
reconcile net income
to net cash provided
by operating
activities:

Depreciation,
depletion and            192,236        (58,166  )    134,070        129,523        (41,512  )    88,011
amortization

Impairments              51,764         (31,801  )    19,963         2,586          -             2,586

Derivative contracts:

Total derivative         (41,102   )    11,357        (29,745   )    52,157         (50,163  )    1,994
losses (gains)

Cash settlements of      (46,086   )    38,466        (7,620    )    (3,651    )    17,779        14,128
derivatives

Minority interest        60,436         (60,436  )    -              30,319         (30,319  )    -

Investment in PVG and    -              (42,162  )    (42,162   )    -              (24,257  )    (24,257   )
PVR

Gain on the sale of
property and             (31,426   )    -             (31,426   )    (12,416   )    -             (12,416   )
equipment

Cash distributions       -              44,018        44,018         -              29,840        29,840
from PVG and PVR

Other                    103,836        (1,421   )    102,415        53,275         452           53,727

Operating cash flow      413,826        (100,145 )    313,681        302,547        (98,180  )    204,367

Changes in operating
assets and               (30,052   )    6,976         (23,076   )    10,483         1,540         12,023
liabilities

Net cash provided by     383,774        (93,169  )    290,605        313,030        (96,640  )    216,390
operating activities

Cash flows from
investing activities

Acquisitions             (293,747  )    260,376       (33,371   )    (292,001  )    176,917       (115,084  )

Additions to property    (585,339  )    71,652        (513,687  )    (421,509  )    48,123        (373,386  )
and equipment

Other                    33,519         (998     )    32,521         30,027         (858     )    29,169

Net cash used in         (845,567  )    331,030       (514,537  )    (683,483  )    224,182       (459,301  )
investing activities

Cash flows from
financing activities

Dividends paid           (9,398    )    -             (9,398    )    (8,499    )    -             (8,499    )

Distributions paid to
minority interest        (64,245   )    64,245        -              (49,739   )    49,739        -
holders

Borrowings from bank     7,542                        7,542          -              -             -
indebtedness

Net proceeds from PVA    210,000        -             210,000        131,000        -             131,000
borrowings

Net proceeds from
(repayments of) PVR      156,000        (156,000 )    -              193,500        (193,500 )    -
borrowings

Net proceeds from
issuance of PVR          138,141        (138,141 )    -              -              -             -
partners' capital

Net proceeds from
issuance of PVA          -              -             -              135,441        -             135,441
equity

Cash received for        -              -             -              18,187         -             18,187
stock warrants sold

Cash paid for
convertible note         -              -             -              (36,817   )    -             (36,817   )
hedges

Other                    7,564          4,200         11,764         1,569          (597     )    972

Net cash provided by     445,604        (225,696 )    219,908        384,642        (144,358 )    240,284
financing activities

Net increase
(decrease) in cash       (16,189   )    12,165        (4,024    )    14,189         (16,816  )    (2,627    )
and cash equivalents

Cash and cash
equivalents-beginning    34,527         (30,503  )    4,024          20,338         (13,687  )    6,651
balance

Cash and cash
equivalents-ending     $ 18,338       $ (18,338  )  $ -            $ 34,527       $ (30,503  )  $ 4,024
balance




(a) - 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 we do own and
including other adjustments to eliminate inter-company transactions. We believe
equity method balance sheets provide useful information to allow the public to
more easily discern PVG's effect on our assets, liabilities and shareholders'
equity.

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




PENN VIRGINIA CORPORATION

GUIDANCE TABLE - unaudited

(dollars in millions except where noted)

We are providing the following guidance regarding financial and operational
results for 2008 and expectations for 2009.

                  Actual

                  First    Second   Third    Fourth   YTD      Full-Year
                  Quarter  Quarter  Quarter  Quarter

                  2008     2008     2008     2008     2008     2009 Guidance

Oil & Gas
Segment:

Production:

Natural gas       9.8      10.1     10.0     11.6     41.5     43.8   -    45.2
(Bcf) (a)

Crude oil         95       119      117      175      506      575    -    625
(MBbls)

NGLs (MBbls)      34       109      157      92       392      625    -    675

Equivalent
production        10.6     11.4     11.7     13.2     46.9     51.0   -    53.0
(Bcfe)

Equivalent
daily
production        115.6    125.7    127.2    143.5    128.1    139.7  -    145.2
(MMcfe per
day)

Expenses:

Cash operating
expenses ($     $ 2.34     2.30     2.29     1.99     2.22     2.00   -    2.10
per Mcfe)

Exploration     $ 4.7      6.7      8.3      22.7     42.4     20.0   -    25.0

Depreciation,
depletion and   $ 2.53     2.76     2.79     3.13     2.82     2.80   -    3.00
amortization
($ per Mcfe)

Impairments       -        -        -        20.0     20.0

Capital
expenditures:

Development     $ 79.1     96.1     145.6    160.6    481.4    210.0  -    220.0
drilling

Exploratory     $ 5.4      6.1      6.6      5.7      23.8     4.0    -    7.0
drilling

Pipeline,
gathering,      $ 4.9      8.8      14.3     8.8      36.8     6.0    -    13.0
facilities

Seismic         $ 0.7      0.3      1.7      1.5      4.2      3.0    -    5.0

Lease
acquisition,    $ 4.6      15.1     67.7     8.1      95.5     2.0    -    5.0
field projects
and other

Total segment
capital         $ 94.7     126.4    235.9    184.7    641.7    225.0  -    250.0
expenditures

Coal and
Natural
Resource
Segment (PVR):

Coal royalty
tons              7.7      8.8      8.5      8.7      33.7     33.5   -    35.0
(millions)

Revenues:

Average coal
royalties per   $ 3.14     3.58     3.92     3.89     3.65     3.50   -    3.65
ton

Other           $ 6.3      7.4      8.4      8.4      30.5     23.0   -    25.0

Expenses:

Cash operating  $ 6.3      7.5      6.6      5.8      26.2     24.0   -    25.0
expenses

Depreciation,
depletion and   $ 6.4      7.5      8.8      8.1      30.8     32.0   -    33.0
amortization

Capital
expenditures:

Expansion and   $ 0.1      24.6     0.5      1.9      27.1     4.0    -    5.0
acquisitions

Other capital   $ -        -        -        0.2      0.2      1.0    -    2.0
expenditures

Total segment
capital         $ 0.1      24.6     0.5      2.1      27.3     5.0    -    7.0
expenditures

Natural Gas
Midstream
Segment (PVR):

System
throughput        190      262      302      324      270      350    -    375
volumes (MMcf
per day) (b)

Expenses:

Cash operating  $ 8.1      8.9      10.5     10.1     37.6     52.0   -    54.0
expenses

Depreciation,
depletion and   $ 5.1      5.4      8.1      8.8      27.4     38.0   -    40.0
amortization

Impairments     $ -        -        -        31.8     31.8

Capital
expenditures:

Expansion and   $ 16.4     86.3     196.6    19.5     318.8    46.0   -    49.0
acquisitions

Maintenance
capital         $ 3.1      3.9      3.8      3.7      14.5     14.0   -    16.0
expenditures

Total segment
capital         $ 19.5     90.2     200.4    23.2     333.3    60.0   -    65.0
expenditures

Corporate and
Other:

General and
administrative  $ 5.9      6.6      5.6      6.1      24.2     19.0   -    21.0
expense - PVA

General and
administrative  $ 0.6      0.6      0.5      0.4      2.1      2.0    -    2.5
expense - PVG

Interest
expense:

PVA end of
period debt     $ 406.0    435.0    410.0    562.0    562.0
outstanding

PVA average       4.6   %  4.1   %  4.1   %  4.2   %  4.2   %
interest rate

Percentage        12.2  %  12.7  %  10.8  %  8.9   %  10.7  %         (c)
capitalized

PVR end of
period debt     $ 413.7    381.2    558.1    568.1    568.1
outstanding

PVR average       5.3   %  4.4   %  4.5   %  4.5   %  4.6   %
interest rate

Minority
interest in     $ 20.1     3.9      28.3     8.2      60.5            (d)
PVG and PVR

Income tax        44    %  64    %  39    %  118   %  37    %         (e)
rate

Cash
distributions   $ 10.4     10.9     10.9     11.5     43.7            (f)
received from
PVG and PVR

Other capital   $ 0.3      0.2      0.7      0.1      1.3      1.0    -    2.0
expenditures

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

See Notes on subsequent pages.




PENN VIRGINIA CORPORATION

GUIDANCE TABLE - unaudited - (continued)

(dollars in millions except where noted)

Notes to Guidance Table:

(a)  The following table shows our current derivative positions for natural gas
     production in the oil and gas segment as of December 31, 2008:




                                               Weighted Average Price

                                 Average                 Purchased

                                 Volume Per              Put /      Sold Call /

                                 Day           Sold Put  Floor      Ceiling

Natural Gas Three-way Collars    (in MMBtu)    (per MMBtu)
(1)

First Quarter 2009               65,000        $ 6.00    $ 8.67     $ 11.68

Second Quarter 2009              40,000        $ 6.38    $ 8.75     $ 10.79

Third Quarter 2009               40,000        $ 6.38    $ 8.75     $ 10.79

Fourth Quarter 2009              30,000        $ 6.83    $ 9.50     $ 13.60

First Quarter 2010               30,000        $ 6.83    $ 9.50     $ 13.60

Crude Oil Three-way Collars (1)  (in barrels)  (per barrel)

First Quarter 2009               500           $ 80.00   $ 110.00   $ 179.00

Second Quarter 2009              500           $ 80.00   $ 110.00   $ 179.00

Third Quarter 2009               500           $ 80.00   $ 110.00   $ 179.00

Fourth Quarter 2009              500           $ 80.00   $ 110.00   $ 179.00




We estimate that, excluding the derivative positions described above, for every
$1.00 per MMBtu increase or decrease in the natural gas price, oil and gas
segment operating income in 2009 would increase or decrease by approximately $41
million. In addition, we estimate that for every $5.00 per barrel increase or
decrease in the oil price, oil and gas segment operating income in 2009 would
increase or decrease by approximately $4 million. This assumes that crude oil
prices, natural gas prices and inlet volumes remain constant at forecasted
levels. These estimated changes in gross margin and operating income exclude
potential cash receipts or payments in settling these derivative positions.




(1) A three-way collar is a combination of options: a sold call, a purchased put
and a sold put. The sold call establishes the maximum price that we will receive
for the contracted commodity volumes. The purchased put establishes the minimum
price that we will receive for the contracted volumes unless the market price
for the commodity falls below the sold put strike price, at which point the
minimum price equals the reference price (i.e., NYMEX) plus the excess of the
purchased put strike price over the sold put strike price.




PENN VIRGINIA CORPORATION

GUIDANCE TABLE - unaudited - (continued)

(dollars in millions except where noted)

     The costless collar natural gas prices per MMBtu per quarter include the
(b)  effects of basis differentials, if any. The following table shows current
     derivative positions for natural gas production in PVR's natural gas
     midstream segment as of December 31, 2008:




                                          Weighted Average Price

                            Average                 Purchased

                            Volume Per              Put /      Sold Call /

                            Day           Sold Put  Floor      Ceiling

Crude Oil Three-Way Collar  (in barrels)  (per barrel)

First Quarter 2009 through  1,000         $ 70.00   $ 90.00    $ 119.25
Fourth Quarter 2009

Frac Spread Collar (1)      (in MMBtu)    (per MMBtu)

First Quarter 2009 through  6,000                   $ 9.09     $ 13.94
Fourth Quarter 2009




     We estimate that, excluding the derivative positions described above, for
     every $1.00 per MMBtu increase or decrease in the natural gas price,
     natural gas midstream gross margin and operating income in 2009 would
     decrease or increase by approximately $4.7 million. In addition, we
     estimate that for every $5.00 per barrel increase or decrease in the oil
     price, natural gas midstream gross margin and operating income in 2009
     would increase or decrease by approximately $4.6 million. This assumes that
     crude oil prices, natural gas prices and inlet volumes remain constant at
     forecasted levels. These estimated changes in gross margin and operating
     income exclude potential cash receipts or payments in settling these
     derivative positions.

     (1) - PVR's frac spread is the spread between the purchase price for the
     natural gas PVR purchases from producers and the sale price for the NGLs
     that PVR sells after processing. PVR hedges against the variability in its
     frac spread by entering into swap derivative contracts to sell NGLs forward
     at a predetermined swap price and to purchase an equivalent volume of
     natural gas forward on an MMBtu basis.

(c)  We capitalize a portion of interest expense incurred to recognize the
     carrying cost of certain unproved properties as required by GAAP.

     We control the general partner of PVG and owns a 77 percent limited partner
(d)  interest in PVG. PVG's operating results are included in our consolidated
     financial statements and minority interest reflected the 23 percent of PVG
     owned by parties other than us.

     Actual income tax expense for the second and fourth quarters of 2008
     include certain adjustments related to the recognition of FIN 48
     settlements and return to provision amounts. Our federal and state
(e)  statutory income tax rates, net of federal income tax benefit, approximate
     39%. Deferred federal and state income taxes in 2009 are expected to
     comprise a significant proportion of our income tax expense (benefit) for
     the full year.

(f)  2008 amounts received are dependent primarily upon distributions paid by
     PVG.




    Source: Penn Virginia Corporation