Penn Virginia Announces a $334 Million Oil and Gas Capital Budget and Expected Production Growth Between 17% and 23% for 2007.
RADNOR, Pa. -- Penn Virginia Corporation (NYSE NYSE
See: New York Stock Exchange :PVA PVA
polyvinyl alcohol. ) today announced that its Board of Directors has approved an oil and gas capital expenditures budget for 2007 of $334 million, an increase of approximately 31% over estimated 2006 oil and gas capital expenditures of $254 million, excluding the $71.5 million Crow Creek Crow Creek may refer to the following bodies of water in the United States:
The increase in budgeted capital expenditures is primarily intended to develop the Company's expanding portfolio of resource plays in the Company's four core areas of the Cotton Valley play in east Texas, Appalachia, Mississippi and the Mid-Continent. No material property acquisitions, other than land acquisitions, have been included in the 2007 capital budget. The Company expects to fund the increased capital program with internally-generated cash flow, supplemented with borrowings under its revolving credit Revolving Credit
A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facility and/or through the public debt and equity markets.
A. James Dearlove, President and Chief Executive Officer, said, "We are pleased to announce the expanded capital budget for our 2007 exploration and production activities. The budget reflects our success in a number of diverse plays in several basins. The growth in the 2007 budget over estimated 2006 capital expenditures is related exclusively to development drilling. The exploratory component has remained roughly equal to our 2006 spending level, which further reflects the maturation of our organic growth-driven strategy."
The Company also announced that it anticipates 2007 production will range between 36.5 and 38.5 billion cubic feet of natural gas equivalent ("Bcfe") or average production of between approximately 100 and 105 million cubic feet of natural gas equivalent ("MMcfe") per day, an increase of between 17% and 23% over estimated 2006 production of approximately 31.3 Bcfe, or 86 MMcfe per day.
In 2007, the Company has budgeted approximately $279 million, or 84%, of the capital budget for development-related activities. The breakdown of development-related expenditures is as follows: approximately 87% for drilling and completions, 10% for pipelines, facilities and other infrastructure, and 3% for land acquisition, geological and geophysical, and other costs. Approximately 335 (208.9 net) development wells are scheduled to be drilled, with drilling concentrated in the Company's four core areas including a new Mid-Continent core area which resulted from the Crow Creek acquisition in June 2006. The Company is evaluating the application of horizontal drilling a drilling machine having a horizontal drill spindle.
See also: Horizontal or downspacing in its Cotton Valley and Selma Chalk plays, which, if successful, could alter drilling plans in 2007 and beyond.
Highlights of the budgeted development program include:
* In its Cotton Valley play in east Texas, the Company expects to spend approximately $129 million to drill 92 (55.6 net) wells and for other development activities. The budget anticipates utilizing four to five drilling rigs throughout the year in the joint venture area with GMX GMX Global Message Exchange Resources Inc. (Nasdaq:GMXR) and in the Company's 100-percent working interest area (see exploration below).
* In Appalachia, the Company expects to spend approximately $50 million to drill 56 (30.1 net) wells and for other development activities. The development drilling will encompass predominantly horizontal coalbed methane Coalbed methane is a form of natural gas extracted from coal beds. In recent decades it has become an important source of energy in United States, Canada, and other countries. ("CBM CBM Commodore Business Machines
CBM Coalbed Methane
CBM Christoffel Blindenmission
CBM Condition Based Maintenance
CBM Confidence-Building Measures
CBM Curriculum Based Measurement (education)
CBM Cubic Meter ") wells, along with some conventional vertical wells. The horizontal CBM drilling plan assumes the Company will continue to use a minimum of three horizontal drilling rigs throughout 2007 in its area of mutual interest with CDX CDX Companion Dog Excellent (AKC Obedience Title)
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CDX Community Development Exchange (UK community development organization)
CDX Commercial Data Exchange Gas, LLC (Logical Link Control) See "LANs" under data link protocol.
LLC - Logical Link Control in southern West Virginia Southern West Virginia is a culturally and geographically distinct region in the U.S. state of West Virginia. Generally considered the heart of Appalachia, Southern West Virginia is known for its coal mining heritage and Southern affinity. .
* In Mississippi, the Company expects to spend approximately $38 million to drill 73 (70.9 net) wells and for other development activities. The development drilling will consist primarily of Selma Chalk wells.
* In the Mid-Continent region, the Company expects to spend approximately $54 million to drill 111 (50.5 net) wells and for other development activities. The development drilling will primarily encompass horizontal Hartshorne CBM wells, horizontal Fayetteville Shale, Granite Wash and other conventional wells.
The Company has budgeted approximately $54 million, or 16%, of its capital budget for exploratory activities. The breakdown of exploration-related expenditures is as follows: approximately 72% for drilling and completions, 20% for land acquisition, and 8% for geological and geophysical, and other costs. Approximately 31 (21.0 net) exploratory wells are budgeted to be drilled, with activities concentrated in the Gulf Coast of south Louisiana and south Texas, the east Texas Cotton Valley play and the Mid-Continent area.
Highlights of the budgeted exploration program include:
* In south Louisiana and south Texas, the Company expects to spend approximately $18 million to drill 10 (4.1 net) wells and for other exploratory activities. The exploratory drilling will encompass wells in the Bayou bayou (bī`ō, bī`) [Louisiana Fr.; from Choctaw bayuk=small stream], term used mainly in U.S. Postillion, South Creole, Mystic Bayou and Stella plays in south Louisiana and the Esperanza and Fannett fields in south Texas. The follow-up wells in Bayou Postillion are the result of multiple successful wildcats drilled in 2006.
* In the Cotton Valley play, the Company expects to spend approximately $14 million primarily to drill six (gross and net) Cotton Valley wells in the Company's 100-percent owned area, as well as for additional lease acquisitions.
* In the Mid-Continent region, the Company expects to spend approximately $9 million primarily to drill two (1.5 net) horizontal Woodford Shale wells, as well as for additional lease acquisitions.
* In Appalachia, the Company expects to spend approximately $8 million primarily to drill 11 (8.5 net) horizontal CBM and Devonian Shale wells.
* In the Williston basin, the Company expects to drill two (0.9 net) wells in the Company's operated acreage area in Dunn County Dunn County is the name of several counties in the United States:
The 2007 oil and gas capital budget assumes base NYMEX See New York Mercantile Exchange.
See New York Mercantile Exchange (NYM). commodity prices of $7.00 per MMBtu for natural gas and $60.00 per barrel for crude oil, adjusted for quality and basis differentials. In an effort to better support the operating cash flows Operating cash flow
Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. which underpin the 2007 capital budget, the Company is engaged in a continuous program to hedge primarily its natural gas production at pre-determined prices or price ranges.
Through a combination of fixed-price swaps, collars and three-way collars, the Company currently has hedged approximately 15.4 Bcf of natural gas for 2007 (41% of mid-point estimated gas production in 2007) and 2.6 Bcf of natural gas for 2008. Of the 15.4 Bcf hedged in 2007:
(i) 0.4 Bcf has been hedged at an average NYMEX Henry Hub fixed swap price of $7.12 per MMBtu; (ii) 6.3 Bcf has been hedged using costless collars with weighted average NYMEX Henry Hub prices ranging from $7.97 to $14.93 per MMBtu; and (iii) 8.7 Bcf has been hedged using three-way collars with weighted average NYMEX Henry Hub prices ranging from $7.48 to $9.45 per MMBtu, including additional puts with a weighted average price of $5.03 per MMBtu.
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 natural gas reserves. PVA also owns approximately 82% of Penn Virginia GP Holdings, L.P. (NYSE:PVG PVG Shanghai Pudong International Airport
PVG Packet Voice Gateway
PVG Piano, Vocal, and Guitar (musical score)
PVG Perspective View Generator
PVG Pole Vault Girl (Allison Stokke)
PVG Product Validation Group ), the owner of the general partner and the largest unit holder of Penn Virginia Resource Partners, L.P. (NYSE:PVR See DVR. ), a manager of coal properties and related assets and the operator of a midstream mid·stream
1. The middle part of a stream.
2. The part of a course that is neither at the beginning nor at the end: the midstream of life.
Noun 1. natural gas gathering and processing business. For more information about PVA, visit the Company'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 forward-looking statement
A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. . These risks, uncertainties and contingencies include, but are not limited to, the following: the cost of finding and successfully developing oil and gas reserves; energy prices generally and specifically, the price of crude oil and natural gas; projected demand for crude oil and natural gas; the projected supply of crude oil and natural gas; PVA's ability to obtain adequate pipeline transportation capacity for its oil and gas production; non-performance by third party operators in wells in which PVA owns an interest; competition among producers in the oil and natural gas industry; the extent to which the amount and quality of actual production of PVA's oil and natural gas differs from estimated recoverable proved oil and gas reserves; hazards or operating risks Operating risk
The inherent or fundamental risk of a firm, without regard to financial risk. The risk that is created by operating leverage. Also called business risk. incidental to PVA's business; unanticipated geological problems; the availability of required drilling rigs, materials and equipment; the occurrence of unusual weather or operating conditions including force majeure [French, A superior or irresistible power.] An event that is a result of the elements of nature, as opposed to one caused by human behavior.
The term force majeure events; delays in anticipated start-up dates of PVA's oil and natural gas production; environmental risks affecting the drilling and producing of oil and gas wells; the timing of receipt of necessary governmental permits by PVA; labor relations and costs; accidents; changes in governmental regulation or enforcement practices; uncertainties relating to relating to relate prep → concernant
relating to relate prep → bezüglich +gen, mit Bezug auf +acc the outcome of current and future litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute.
When a person begins a civil lawsuit, the person enters into a process called litigation. regarding mine permitting; and risks and uncertainties relating to general domestic and international economic (including inflation and interest rates) and political conditions (including the impact of potential terrorist attacks).
Additional information concerning these and other factors can be found in PVA's press releases and public periodic filings with the Securities and Exchange Commission, including PVA's Annual Report on Form 10-K Form 10-K
A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information.
See 10-K. for the year ended December 31, 2005. Many of the factors that will determine PVA's 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. PVA undertakes no obligation to revise or update any forward-looking statements, or to make any other forward-looking statements, whether as a result of new information, future events or otherwise.