Printer Friendly

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:PVA) 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 acquisition in June 2006.

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 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.

Development-Related Activities

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 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 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 ("CBM") 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 Gas, LLC in southern West Virginia.

* 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.

Exploration-Related Activities

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 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, ND.

Hedging Update

The 2007 oil and gas capital budget assumes base NYMEX 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 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), the owner of the general partner and the largest unit holder of Penn Virginia Resource Partners, L.P. (NYSE:PVR), a manager of coal properties and related assets and the operator of a midstream 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. 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 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 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 the outcome of current and future 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 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.
COPYRIGHT 2006 Business Wire
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2006, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

 Reader Opinion

Title:

Comment:



 

Article Details
Printer friendly Cite/link Email Feedback
Publication:Business Wire
Date:Dec 20, 2006
Words:1606
Previous Article:Alimera Sciences and Bausch & Lomb Announce Transaction for Alaway(TM) OTC Eye Care Product.
Next Article:Arbitron Inc. Announces $150 Million Unsecured Revolving Credit Facility.
Topics:


Related Articles
Penn Virginia Announces 2006 Oil and Gas Capital Budget and Production Target.
Penn Virginia Corporation Announces Record 2005 Results and 2006 Guidance; Reports Record Net Income and Cash Flow.
Range Earns Record $111 Million in 2005.
Penn Virginia Corporation Announces First Quarter 2006 Results.
Penn Virginia Corporation Announces Second Quarter 2006 Results.
Penn Virginia Corporation Announces Third Quarter 2006 Results.
OPEC - Indonesia.
Penn Virginia Corporation Announces 29 Percent Increase in Proved Reserves, 14 Percent Increase in Production and 454 Percent Production Replacement;...
Penn Virginia Corporation Provides First Quarter 2007 Oil and Gas Operational Update.
Parallel Petroleum Announces Production, Revised 2007 CAPEX Budget and Operations Update.

Terms of use | Copyright © 2014 Farlex, Inc. | Feedback | For webmasters