Penn Virginia Corporation Announces Second Quarter 2006 Results.RADNOR Radnor may refer to:
Virginia, state of the south-central United States. It is bordered by the Atlantic Ocean (E), North Carolina and Tennessee (S), Kentucky and West Virginia (W), and Maryland and the District of Columbia (N and NE). Corporation (NYSE NYSE See: New York Stock Exchange :PVA PVA polyvinyl alcohol. ) today reported second quarter 2006 net income of $18.2 million, or $0.96 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, compared to $7.6 million, or $0.41 per diluted share, for the second quarter of 2005. For the second quarter of 2006, operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. was $49.9 million, compared to second quarter 2005 operating income of $26.4 million. Net cash provided by operating activities was a record $84.2 million for the second quarter of 2006, an increase of 57 percent over the $53.8 million reported for the second quarter of 2005. Operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. , a non-GAAP measure, was $68.8 million for the second quarter of 2006, or 29 percent above $53.5 million reported for the second quarter of 2005. The increases in net income, operating income and cash flow were primarily due to increased natural gas revenues as a result of higher commodity prices and record oil and gas production volumes, along with increased operating income contributions from the Company's ownership in Penn Virginia Resource Partners, L.P. (NYSE:PVR See DVR. ), which is reported under the coal and natural gas midstream mid·stream n. 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. segments below. The increase in net income was offset in part by increased derivative derivative: see calculus. derivative In mathematics, a fundamental concept of differential calculus representing the instantaneous rate of change of a function. losses from PVR. A reconciliation of non-GAAP financial measures appears in the financial tables later in this release. In the first six months of 2006, PVA reported net cash provided by operating activities of $149.9 million, a 77 percent increase over the same period of 2005. Operating cash flow, a non-GAAP measure, was $131.4 million for the first half of 2006, or 36 percent above the first half of 2005. Net income for the 2006 period was $42.3 million, or $2.24 per diluted share, compared to $14.7 million, or $0.79 per diluted share, for the first six months of 2005. Management Comment A. James James, person in the Bible James, in the Gospel of St. Luke, kinsman of St. Jude. The original does not specify the relationship. James, rivers, United States James. Dearlove, President and Chief Executive Officer, said, "Natural gas production for the second quarter of 2006 was a new quarterly record, approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. eight percent over the corresponding quarter in 2005 and up slightly over the first quarter of 2006. Natural gas prices for the quarter, while higher than the same period in 2005, have declined since the first quarter of 2006. "We continue to be pleased with the results of our development drilling programs. In the east Texas Cotton Valley program, we are testing deeper intervals which could add reserves and further improve returns from the play, both in the joint venture area with GMX GMX Global Message Exchange Resources Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :GMXR) and in our 100 percent owned area. We have an active leasing effort to add acreage in this play type. In our Selma Selma, city (1990 pop. 23,755), seat of Dallas co., S central Ala., on the Alabama River, in a fertile farm area; inc. 1820. Machinery, paper products, construction materials, transportation equipment, furniture, textiles, apparel, dairy products, and lumber are Chalk play in Mississippi Mississippi, state, United States Mississippi (mĭs'əsĭp`ē), one of the Deep South states of the United States. It is bordered by Alabama (E), the Gulf of Mexico (S), Arkansas and Louisiana, with most of the border formed by , in addition to an aggressive drilling program, we are adding acreage when available and studying down-spacing and horizontal drilling a drilling machine having a horizontal drill spindle. See also: Horizontal as ways to enhance that play. Our Appalachian Ap`pa`la´chi`an a. 1. Of or pertaining to a chain of mountains in the United States, commonly called the Allegheny ltname> mountains. Noun 1. 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 ) drilling program is on track and we believe that new ownership of CDX CDX Companion Dog Excellent (AKC Obedience Title) CDX Cyber-Defense Exercise CDX Central Data Exchange 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 , our partner in that play, bodes well for our joint venture with them. In south Louisiana Louisiana (ləwē'zēăn`ə, l  ē'–), state in the S central United States. It is bounded by Mississippi, with the Mississippi R. and south Texas, various high potential
wells are being drilled and evaluated."Our acquisition of Crow Creek Crow Creek may refer to the following bodies of water in the United States:
BASIN Brothers And Sisters In Need over the remainder of 2006, along with one or two Granite granite, coarse-grained igneous rock of even texture and light color, composed chiefly of quartz and feldspars. It usually contains small quantities of mica or hornblende, and minor accessory minerals may be present. Wash wells in western Oklahoma Western Oklahoma can usually be defined as all territory west of Interstate 35, and west of Oklahoma City. It is usually broken up into two primary regions: Northwestern Oklahoma and Southwestern Oklahoma. . We continue to seek non-conventional, resource plays such as CBM and shale shale, sedimentary rock formed by the consolidation of mud or clay, having the property of splitting into thin layers parallel to its bedding planes. Shale tends to be fissile, i.e., it tends to split along planar surfaces between the layers of stratified rock. to expand our prospect inventory and take advantage of our in-house In-house In the context of general equities, keeping an activity within the firm. For example, rather than go to the marketplace and sell a security for a client to anyone, an attempt is made to find a buyer to complete the transaction with the firm. expertise. "PVR reported another record quarter, primarily from continued strong coal prices and increased coal production by our lessees, and from the highest natural gas processing Natural gas processing plants, or fractionators, are used to purify the raw natural gas extracted from underground gas fields and brought up to the surface by gas wells. The processed natural gas, used as fuel by residential, commercial and industial consumers, is almost pure margins we have seen since entering the midstream business in early 2005. During the second quarter, PVR completed the acquisition of 69 million tons (Transparent Optical Networking Services) A marketing term for providing dark fiber to a customer. The customer is responsible for generating the transmission signal and interpreting it at the other end. See dark fiber. of high quality central Appalachian coal reserves, which are expected to provide growth in production for PVR over the next several years as new mines are constructed on the property. PVR also closed an acquisition of 115 miles of 12 and 16 inch pipeline and related assets which are contiguous Adjacent or touching. Contrast with fragmentation. See contiguous file. to its largest gathering system and processing plant in the panhandle panhandle, in geography, a strip of land projecting from the main body of an area and shaped like the handle of a pan, such as the panhandles of West Virginia, Texas, and Alaska. of Texas and Oklahoma Oklahoma (ōkləhō`mə), state in SW United States. It is bordered by Missouri and Arkansas (E); Texas, partially across the Red R. (S, W); New Mexico, across the narrow edge of the Oklahoma Panhandle (W); and Colorado and Kansas (N). , which is expected to increase operating efficiencies and support organic growth in that area. "The strong performance in both of PVR's business segments provided support for the Partnership's recently announced seven percent quarterly cash distribution increase to $0.375 per unit or $1.50 per unit on an annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. basis. As the owner of PVR's incentive distribution rights, we have the right to receive 50 percent of any future cash distribution increases above the $1.50 per unit, with the limited partners receiving the other 50 percent. On July July: see month. 11, 2006, we announced that our wholly owned subsidiary Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. , Penn Virginia GP Holdings, L.P. (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 ), which owns the general partner interest, all of the incentive distribution rights, 7.5 million common units and 7.6 million subordinated Subordinated A claim ranked lower in priority than other claims. Common stock claims are always subordinated to debt. units in PVR, had filed a registration statement with the Securities and Exchange Commission for an initial public offering of six million of its common units representing limited partner interests. The PVG offering could increase by up to 900,000 additional common units if the underwriters exercise a 30-day purchase option they are expected to be granted. If the offering is completed, proceeds from the offering will be used by PVG to purchase newly issued Class B units from PVR and to make a capital contribution to PVR to maintain its two percent general partner interest. PVR expects to use the proceeds from the Class B units to repay credit facility debt." Oil and Gas Segment Review See the Company's July 27, 2006, news release for a more detailed discussion of second quarter 2006 drilling and production operations for the oil and gas segment. As previously announced in the Company's news release on June June: see month. 13, 2006, the Company closed its acquisition of Crow Creek Holding Corporation for $71.5 million cash, funded by the Company's existing bank facility. The acquisition of Crow Creek expands the Company's oil and gas operations into the mid-continent region of the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , primarily in the Oklahoma portions of the Arkoma and Anadarko Basins The Anadarko Basin is one of the most prolific natural gas reserves in North America, with ultimate gas production in excess of 100 trillion cubic feet of gas.[1] External links
References 1. . The acquired business contributed $0.2 million to second quarter 2006 operating income since the acquisition date of June 13, 2006. The Board of Directors has authorized au·thor·ize tr.v. au·thor·ized, au·thor·iz·ing, au·thor·iz·es 1. To grant authority or power to. 2. To give permission for; sanction: a 37 percent increase in the Company's 2006 oil and gas capital expenditures budget to $322 million from $235 million previously budgeted. In addition to the Crow Creek acquisition, the increase is primarily to drill wells in the Arkoma and Anadarko basins of Oklahoma following the acquisition and to drill additional wells in the Company's Cotton Valley play in east Texas. Oil and gas operating income for the second quarter of 2006 was $24.4 million, compared to $8.8 million reported for the same quarter of 2005. Total oil and gas segment revenues increased by 16 percent to $55.6 million from $48.1 million in the second quarter of 2005. A nine percent increase in oil and natural gas production, from 6.9 billion cubic feet equivalent (Bcfe) in the second quarter of 2005 to a record 7.5 Bcfe in the second quarter of 2006, accounted for most of the revenue increase. Increased realized prices accounted for the remainder of the revenue increase. The average realized sales price for natural gas in the second quarter of 2006 was $7.17 per thousand cubic feet (Mcf), an increase of three percent from $6.94 per Mcf realized in the second quarter of 2005. Because we accounted for our derivatives derivatives In finance, contracts whose value is derived from another asset, which can include stocks, bonds, currencies, interest rates, commodities, and related indexes. Purchasers of derivatives are essentially wagering on the future performance of that asset. using hedge accounting Why is hedge accounting necessary? Many financial institutions and corporate businesses (entities) use derivative financial instruments to hedge their exposure to different risks (eg interest rate risk, foreign exchange risk, commodity risk, etc). in 2005, cash settlements on derivatives were included in the average realized sales price in the second quarter of 2005. Adjusted for cash received on derivative contracts settled during the second quarter of 2006, oil and gas segment revenues and the average realized sales price for natural gas would have increased by $1.6 million and $0.22 per Mcf to $57.2 million and $7.39 per Mcf. Total oil and gas segment expenses decreased 21 percent to $31.2 million in the second quarter of 2006 compared to $39.3 million in the second quarter of 2005, primarily due to the following: --Operating expenses increased to $6.6 million in the second quarter of 2006 from $4.0 million in the second quarter of 2005. The increase was primarily due to additional leased compression compression, external stress applied to an object or substance, tending to cause a decrease in volume (see pressure). Gases can be compressed easily, solids and liquids to a very small degree if at all. at fields with increased production, downhole maintenance charges associated with horizontal horizontal /hor·i·zon·tal/ (hor?i-zon´t'l) 1. parallel to the plane of the horizon. 2. occupying or confined to a single level in a hierarchy. horizontal parallel to the plane of the horizon. CBM wells in Appalachia Appalachia, region: see Appalachian Mountains. Appalachia West Virginia coal mining region known for its abysmal poverty. [Am. Hist.: NCE, 160] See : Poverty and Selma Chalk wells in Mississippi, increased surface repair costs and increased gathering fees related to horizontal CBM and Cotton Valley wells. --Exploration expense decreased to $5.5 million in the second quarter of 2006 from $17.9 million in the second quarter of 2005. The decrease was primarily due to expensing approximately $1.6 million of drilling costs incurred through the second quarter of 2005 and $11.5 million of previously unevaluated unproved leasehold An estate, interest, in real property held under a rental agreement by which the owner gives another the right to occupy or use land for a period of time. leasehold n. costs incurred in 2001 related to an exploratory well in south Texas that was determined to be unsuccessful in the second quarter of 2005. --General and administrative expenses increased to $3.0 million in the second quarter of 2006 from $2.5 million in the second quarter of 2005, primarily due to increased payroll payroll a list of employees, their salary rates, tax deductions, amounts paid, payroll tax, long service leave entitlements. costs. --Depreciation, depletion depletion n. when a natural resource (particularly oil) is being used up. The annual amount of depletion may, ironically, provide a tax deduction for the company exploiting the resource because if the resource they are exploiting runs out, they will no longer be able and amortization (DD&A) expense increased to $12.7 million in the second quarter of 2006 from $11.7 million in the second quarter of 2005. The increase was primarily the result of the nine percent quarter-to-quarter production increase. The DD&A rate remained relatively constant at $1.70 per Mcfe produced in the second quarter of 2006 compared to $1.69 per Mcfe produced in the second quarter of 2005. Coal Segment Review (Penn Virginia Resource Partners, L.P. - NYSE:PVR) Second quarter 2006 operating income in the coal segment was a record $19.3 million, or 18 percent higher than the $16.3 million reported in the second quarter of 2005. Revenues increased to a record $27.9 million in the second quarter of 2006, an 18 percent increase over the $23.6 million reported in the second quarter of 2005. The increase was mainly a result of increased coal royalty Compensation for the use of property, usually copyrighted works, patented inventions, or natural resources, expressed as a percentage of receipts from using the property or as a payment for each unit produced. revenues, which increased to $24.3 million in the second quarter of 2006, a 21 percent increase over $20.1 million in the second quarter of 2005. Higher coal prices were the primary reason for increased average royalty per ton, up nine percent to $3.04 in the second quarter of 2006 from $2.78 in the second quarter of 2005. Coal production from PVR properties increased to 8.0 million tons in the second quarter of 2006 from 7.3 million tons in the second quarter of 2005. The increase was primarily due to production from properties acquired in 2005 in the western Kentucky Kentucky, state, United States Kentucky (kəntŭk`ē, kĭn–), one of the so-called border states of the S central United States. It is bordered by West Virginia and Virginia (E); Tennessee (S); the Mississippi R. portion of the Illinois Illinois, river, United States Illinois, river, 273 mi (439 km) long, formed by the confluence of the Des Plaines and Kankakee rivers, NE Ill., and flowing SW to the Mississippi at Grafton, Ill. It is an important commercial and recreational waterway. Basin as well as production from properties acquired in central Appalachia in the second quarter of 2006. Expenses increased to $8.6 million in the second quarter of 2006 from $7.3 million in the second quarter of 2005, due primarily to increased general and administrative expenses resulting from additional payroll costs related to 2005 acquisitions and DD&A resulting from higher coal production. Natural Gas Midstream Segment Review (Penn Virginia Resource Partners, L.P. - NYSE:PVR) Second quarter 2006 operating income in the natural gas midstream segment was a record $10.0 million compared to $4.1 million in the second quarter of 2005. Inlet inlet /in·let/ (-let) a means or route of entrance. pelvic inlet the upper limit of the pelvic cavity. thoracic inlet the elliptical opening at the summit of the thorax. volumes at the midstream segment's gas processing plants and gathering systems were a record 12.7 billion cubic feet (Bcf) or approximately 140 million cubic feet per day (MMcfpd) for the second quarter of 2006, an 11 percent increase from 126 MMcfpd for the second quarter of 2005. Gross processing margin for the second quarter of 2006, consisting of midstream revenues minus the cost of gas purchased, was a record $19.7 million, an increase of 58 percent over $12.5 million for the second quarter of 2005. Average NGL NGL - A dialect of IGL. prices increased quarter over quarter while average natural gas prices decreased over the same period, leading to an increase in the gross processing margin. Expenses other than cost of gas purchased were $9.9 million for the second quarter of 2006 compared to $9.2 million for the second quarter of 2005. Adjusted for cash payments on derivative contracts settled during the quarter, the gross processing margin was $15.2 million, an increase of 42 percent over $10.7 million for the second quarter of 2005. Capital Resources and Impact of Derivatives As of June 30, 2006, Penn Virginia had borrowed $145.0 million 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. PVR's outstanding borrowings as of June 30, 2006, were $316.6 million, including $9.8 million of senior unsecured Unsecured A loan or equity interest that is given without any guarantee of payment, performance, satisfaction or opportunity for return from the recipient. No property, interest or security is used as collateral in either a guarantee or a pledge. notes classified as current portion of long-term debt Current Portion Of Long-Term Debt A portion of the balance sheet that represents the total amount of long-term debt that must be paid within the next year. The balance sheet has a liability section, which is broken down into long-term and current debt. . Primarily due to increased PVR and PVA borrowings and higher interest rates, interest expense increased from $3.5 in the second quarter of 2005 to $5.4 million in the second quarter of 2006. The Company uses commodity price derivative positions, as summarized later in this release, to manage price risk in its oil and gas and natural gas midstream segments. In the oil and gas segment, the Company has hedged hedge n. 1. A row of closely planted shrubs or low-growing trees forming a fence or boundary. 2. A line of people or objects forming a barrier: a hedge of spectators along the sidewalk. approximately 50 percent of its current natural gas production for the second half of 2006, dropping to 20 percent and six percent for 2007 and 2008. For the second half of 2006 and full year 2007 and 2008, through PVR the natural gas midstream segment has hedged approximately 67, 30, and 30 percent of its commodity price exposure, based on its share of current plant production. Beginning May 1, 2006, PVA elected e·lect v. e·lect·ed, e·lect·ing, e·lects v.tr. 1. To select by vote for an office or for membership. 2. To pick out; select: elect an art course. to discontinue dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: hedge accounting prospectively. From that date forward, the Company recognizes mark-to-market Mark-to-market Adjustment of the book value or collateral value of a security to reflect current market value. gains and losses in earnings currently, rather than deferring such amounts on its balance sheet. This change will have no impact on the Company's reported cash flows. Net income for the second quarter of 2006 included a $6.4 million net derivative loss, which was the net of a $5.5 million gain on oil and gas segment derivatives and an $11.9 million loss on natural gas midstream segment derivatives. Future results of operations will be affected by the volatility Volatility 1. A statistical measure of the tendency of a market or security to rise or fall sharply within a period of time. 2. A variable in option pricing formulas that denotes the extent to which the return of the underlying asset will fluctuate between now and the of mark-to-market gains and losses, which fluctuate with changes in oil and gas prices. Guidance for 2006 See the Guidance Table included in this release for guidance estimates for 2006. These estimates, including capital expenditure plans, are meant to provide guidance only and are subject to revision (programming) revision - A release of a piece of software which is not a major release or a bugfix, but only introduces small changes or new features. as PVA's operating environment In computing, an operating environment is the environment in which users run programs, whether in a command line interface, such as in MS-DOS or the Unix shell, or in a graphical user interface, such as in the Macintosh operating system. changes. Conference Call A conference call and webcast, at which management will discuss second quarter 2006 results and the outlook for the remainder of 2006, is scheduled for Thursday Thursday: see week. , August 3, 2006, at 3:00 p.m. EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT . 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 Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the webcast by logging on to the Company's website at www.pennvirginia.com at least 20 minutes prior to the scheduled start of the call to download To receive a file transmitted over a network. In any communications session, "download" means receive, and "upload" means send. The download/upload often implies a big/little scenario, in which data is being downloaded from the "big" server into the "little" user's computer. and install any necessary audio software. A telephone replay of the call will be available until August 4, 2006, at 11:59 p.m. EDT by dialing 1-877-660-6853 and using replay passcodes: account number 286 and conference number 209049. An on-demand On-Demand refers to a service or feature which addresses the user's need for instant gratification and immediacy of use. In most cases the value proposition for an on-demand service is wrapped up in the fact that the user or consumer of the service avoids a significant up-front replay of the call will also be available at the Company's website beginning shortly after the call. A registration statement relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the PVG common units has been filed with the Securities and Exchange Commission but has not yet become effective. The PVG common units may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This communication does not constitute an offer to sell or the solicitation solicitation In criminal law, the act of asking, inducing, or directing someone to commit a crime. The person soliciting another becomes an accomplice to the crime. The term also refers to the act of obtaining bribes, as well as to the crime of a prostitute who offers sexual of an offer to buy nor shall there be any sale of the PVG common units in any state in which such offer, solicitation or sale would be unlawful Contrary to or unauthorized by law; illegal. When applied to promises, agreements, or contracts, the term denotes that such agreements have no legal effect. The law disapproves of such conduct because it is immoral or contrary to public policy. prior to registration or qualification under the securities laws of any jurisdiction. Penn Virginia Corporation (NYSE:PVA) is an energy company engaged in the exploration, acquisition, development and production of crude oil and natural gas. PVA is also the general partner and the largest unit holder in Penn Virginia Resource Partners, L.P. (NYSE:PVR), which manages coal properties and related assets and operates a midstream natural gas gathering and processing business. PVA is headquartered in Radnor, PA. 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 for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. " statements within the meaning of Section 27A of the Securities Act of 1933, as amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. , and Section 21E of the Securities Exchange Act of 1934, as amended. Because such statements include risks, uncertainties and contingencies Contingencies (ISSN 1048-9851) is the bimonthly magazine of the American Academy of Actuaries, providing a large and diverse readership with general interest and technical articles on a wide range of issues related to the actuarial profession. , actual results may differ materially from those expressed or implied Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. 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; PVA's ability to acquire new oil and gas reserves and the price for which such reserves can be acquired; energy prices generally and specifically, the price of crude oil, natural gas, NGLs and coal; the relationship between natural gas and NGL prices; the price of coal and its comparison to the price of natural gas and oil; the volatility of commodity prices for crude oil, natural gas, NGLs and coal; the projected demand for crude oil, natural gas, NGLs and coal; the projected supply of crude oil, natural gas, NGLs and coal; 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 and coal industries generally and among natural gas midstream companies; the extent to which the amount and quality of actual production of PVA's oil and natural gas or PVR's coal differs from estimated recoverable proved oil and gas reserves and coal reserves; PVR's ability to generate sufficient cash from its midstream and coal businesses to pay the minimum quarterly distribution to its general partner and its unitholders; hazards
Hazards is an independent, union-friendly magazine based in Sheffield, England, which has won major international awards. 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 Contingent upon or pertaining to something that is more important; that which is necessary, appertaining to, or depending upon another known as the principal. Under Workers' Compensation statutes, a risk is deemed incidental to employment when it is related to whatever a to PVA's business and to PVR's coal or midstream business; PVR's ability to successfully manage its relatively new natural gas midstream business; PVR's ability to acquire new coal reserves or midstream assets on satisfactory terms; the price for which coal reserves can be acquired; PVR's ability to continually con·tin·u·al adj. 1. Recurring regularly or frequently: the continual need to pay the mortgage. 2. find and contract for new sources of natural gas supply for its midstream business; PVR's ability to retain existing or acquire new midstream customers; PVR's ability to lease new and existing coal reserves; the ability of PVR's lessees to produce sufficient quantities of coal on an economic basis from PVR's reserves; the ability of PVR's lessees to obtain favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. contracts for coal produced from its reserves; PVR's exposure to the credit risk of its coal lessees and midstream customers; hazards or operating risks incidental to midstream operations; unanticipated geological ge·ol·o·gy n. pl. ge·ol·o·gies 1. The scientific study of the origin, history, and structure of the earth. 2. The structure of a specific region of the earth's crust. 3. A book on geology. problems; the dependence of PVR's midstream business on having connections to third party pipelines; 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; the failure of equipment or processes to operate in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with specifications or expectations; the failure of PVR's infrastructure and its lessees' mining equipment or processes to operate in accordance with specifications or expectations; delays in anticipated start-up Start-up The earliest stage of a new business venture. dates of PVA's oil and natural gas production and PVR's lessees' mining operations and related coal infrastructure projects; environmental risks affecting the drilling and producing of oil and gas wells, the mining of coal reserves or the production, gathering and processing of natural gas; the timing of receipt of necessary governmental permits by PVA and by PVR or PVR's lessees; the risks associated with having or not having price risk management programs; labor relations and costs; accidents; changes in governmental regulation or enforcement practices, especially with respect to environmental, health and safety matters, including with respect to emissions emissions npl → émissions fpl emissions npl → Emissionen pl levels applicable to coal-burning Adj. 1. coal-burning - fueled by burning coal; "a coal-fired ship" coal-fired fueled - heated, driven, or produced by burning fuel power generators; uncertainties relating to 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; risks and uncertainties relating to general domestic and international economic (including inflation and interest rates) and political conditions (including the impact of potential terrorist attacks); the experience and financial condition of PVR's coal lessees and midstream customers, including the lessees' ability to satisfy their royalty, environmental, reclamation Reclamation A claim for the right to return or the right to demand the return of a security that has been previously accepted as a result of bad delivery or other irregularities in the delivery and settlement process. and other obligations to PVR and others; PVR's ability to expand its midstream business by constructing new gathering systems, pipelines and processing facilities on an economic basis and in a timely manner; coal handling joint venture operations; changes in financial market conditions; and the completion of PVG's initial public offering. 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. Form 10-K See 10-K. for the year ended December December: see month. 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 here·of adv. Of this. hereof Adverb Formal or law of or concerning this Adv. 1. hereof - of or concerning this; "the twigs hereof are physic" . 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.
PENN VIRGINIA CORPORATION
OPERATIONS SUMMARY
Three Months Six Months
Ended Ended
June 30, June 30,
----------------- -----------------
2006 2005 2006 2005
-------- -------- -------- --------
Production
Natural gas (MMcf) 6,926 6,438 13,677 12,353
Oil and condensate (Mbbl) 95 76 186 161
Total oil, condensate and
natural gas production (MMcfe) 7,496 6,894 14,793 13,319
Coal royalty tons (thousands) 7,966 7,250 15,686 13,965
Inlet volumes (MMcf) 12,735 11,489 24,788 15,396
Prices and margin
Natural gas ($/Mcf) $ 7.17 $ 6.94 $ 8.03 $ 6.71
Oil and condensate ($/Bbl) $ 59.19 $ 44.03 $ 55.99 $ 41.98
Coal royalties ($/ton) $ 3.04 $ 2.78 $ 2.98 $ 2.73
Gross midstream processing
margin (in thousands) $ 19,658 $ 12,504 $ 30,188 $ 16,945
CONSOLIDATED STATEMENTS OF EARNINGS - unaudited
(in thousands, except per share data)
Three Months Six Months
Ended Ended
June 30, June 30,
----------------- -----------------
2006 2005 2006 2005
-------- -------- -------- --------
Revenues
Natural gas $ 49,634 $ 44,680 $109,844 $ 82,940
Oil and condensate 5,623 3,346 10,414 6,759
Natural gas midstream 95,350 85,133 204,531 111,411
Coal royalties 24,254 20,129 46,676 38,182
Other 4,289 4,677 8,592 6,883
-------- -------- -------- --------
Total revenues 179,150 157,965 380,057 246,175
-------- -------- -------- --------
Expenses
Cost of midstream gas
purchased 75,692 72,629 174,343 94,466
Operating 10,701 8,368 19,179 13,467
Exploration 5,510 17,931 13,401 25,590
Taxes other than income 3,930 4,054 8,895 7,401
General and administrative 11,714 8,787 22,389 15,507
Depreciation, depletion and
amortization 21,664 19,779 43,245 35,623
-------- -------- -------- --------
Total expenses 129,211 131,548 281,452 192,054
-------- -------- -------- --------
Operating income 49,939 26,417 98,605 54,121
Other income (expense)
Interest expense (5,396) (3,497) (10,184) (6,875)
Interest and other income 363 376 759 695
Derivatives (6,379) (447) (6,537) (14,764)
-------- -------- -------- --------
Income from operations before
minority interest and income
taxes 38,527 22,849 82,643 33,177
Minority interest 7,759 10,246 12,648 8,590
Income tax expense 12,551 4,956 27,670 9,900
-------- -------- -------- --------
Net income $ 18,217 $ 7,647 $ 42,325 $ 14,687
======== ======== ======== ========
Per share data
Net income per share, basic $ 0.98 $ 0.41 $ 2.27 $ 0.79
======== ======== ======== ========
Net income per share, diluted $ 0.96 $ 0.41 $ 2.24 $ 0.79
======== ======== ======== ========
Weighted average shares
outstanding, basic 18,677 18,517 18,668 18,503
Weighted average shares
outstanding, diluted 18,913 18,719 18,897 18,706
PENN VIRGINIA CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands)
June 30, Dec. 31,
2006 2005
---------- ----------
(unaudited)
Assets
Current assets $ 130,548 $ 178,185
Net property and
equipment 1,234,636 983,219
Equity investments 24,644 26,672
Goodwill 7,718 7,718
Intangibles, net 35,518 38,051
Other assets 20,870 17,701
---------- ----------
Total assets $1,453,934 $1,251,546
========== ==========
Liabilities and
Shareholders' Equity
Current liabilities $ 140,268 $ 154,528
Long-term debt 145,000 79,000
Long-term debt of
Penn Virginia
Resource Partners,
L.P. 306,730 246,846
Other liabilities
and deferred taxes 201,058 147,340
Minority interest in
Penn Virginia
Resource Partners,
L.P. 308,407 313,524
Shareholders'
equity 352,471 310,308
---------- ----------
Total
liabilities
and
shareholders'
equity $1,453,934 $1,251,546
========== ==========
CONSOLIDATED STATEMENTS OF CASH FLOWS - unaudited
(in thousands)
Three Months Ended Six Months Ended
June 30, June 30,
---------------------- --------------------
2006 2005 2006 2005
---------- ---------- --------- ---------
Operating Activities
Net income $ 18,217 $ 7,647 $ 42,325 $ 14,687
Adjustments to
reconcile net
income to net cash
provided by
operating
activities:
Depreciation,
depletion and
amortization 21,664 19,779 43,245 35,623
Commodity
derivative
contracts:
Total derivative
losses 6,454 529 7,633 15,149
Cash settlements of
derivatives (2,888) (1,923) (6,217) (2,226)
Minority interest 7,759 10,246 12,648 8,590
Deferred income
taxes 9,941 500 18,823 4,043
Dry hole and
unproved leasehold
expense 3,984 16,477 8,359 18,916
Other 3,716 289 4,564 1,889
---------- ---------- --------- ---------
Operating cash flow
(see attached
table
"Reconciliation of
Certain Non-GAAP
Financial
Measures") 68,847 53,544 131,380 96,671
Changes in
operating assets
and liabilities 15,358 271 18,520 (12,005)
---------- ---------- --------- ---------
Net cash
provided by
operating
activities 84,205 53,815 149,900 84,666
---------- ---------- --------- ---------
Investing Activities
Proceeds from sale
of properties 1,247 985 2,475 10,751
Additions to
property and
equipment (58,758) (40,374) (105,539) (77,960)
Acquisitions, net
of cash acquired (158,418) (17,693) (164,663) (222,677)
---------- ---------- --------- ---------
Net cash used
in investing
activities (215,929) (57,082) (267,727) (289,886)
---------- ---------- --------- ---------
Financing Activities
Dividends paid (2,103) (2,082) (4,197) (4,163)
Distributions paid
to minority
interest holders (9,173) (7,968) (18,317) (13,756)
Proceeds from
issuance of PVR
partners' capital - 1,251 - 126,436
Net proceeds from
PVA borrowings 78,000 11,000 66,000 13,000
Net proceeds from
PVR borrowings 64,800 5,700 61,500 86,000
Payments for debt
issuance costs - - - (2,039)
Issuance of stock 14 60 734 557
---------- ---------- --------- ---------
Net cash
provided by
financing
activities 131,538 7,961 105,720 206,035
---------- ---------- --------- ---------
Net increase (decrease)
in cash and cash
equivalents (186) 4,694 (12,107) 815
Cash and cash
equivalents-beginning
balance 13,992 21,592 25,913 25,471
---------- ---------- --------- ---------
Cash and cash
equivalents-ending
balance $ 13,806 $ 26,286 $ 13,806 $ 26,286
========== ========== ========= =========
PENN VIRGINIA CORPORATION
QUARTER SEGMENT INFORMATION - unaudited
(Dollars in millions except where noted)
Natural
Oil and Gas
Gas Coal Midstream Other Consolidated
------------- ----- ---------- ----- ------------
(per
Amount Mcfe)*
------ ------
Three months ended
June 30, 2006
Production
Oil, condensate
and gas (Bcfe) 7.5
Natural gas
(Bcf) 6.9
Crude oil and
condensate
(Mbbl) 95
Coal royalty tons
(millions of
tons) 8.0
Inlet volumes
(Bcf) 12.7
Revenues
Natural gas $49.6 $7.17 $ - $ - $ - $49.6
Oil and
condensate 5.6 59.19 - - - 5.6
Natural gas
midstream - - 95.4 - 95.4
Coal royalties - 24.3 - - 24.3
Other 0.4 3.6 0.2 0.1 4.3
------ ------ ----- ----- ----- ------
Total
revenues 55.6 7.42 27.9 95.6 0.1 179.2
------ ------ ----- ----- ----- ------
Expenses
Cost of
midstream gas
purchased - - - 75.7 - 75.7
Operating 6.6 0.88 1.3 2.8 - 10.7
Exploration 5.5 0.74 - - - 5.5
Taxes other
than income 3.4 0.45 0.1 0.3 0.1 3.9
General and
administrative 3.0 0.40 2.5 2.7 3.5 11.7
Depreciation,
depletion and
amortization 12.7 1.70 4.7 4.1 0.2 21.7
------ ------ ----- ----- ----- ------
Total
expenses 31.2 4.17 8.6 85.6 3.8 129.2
------ ------ ----- ----- ----- ------
Operating income
(loss) $24.4 $3.26 $19.3 $10.0 $(3.7) $50.0
------ ------ ----- ----- ----- ------
Additions to
property and
equipment and
acquisitions, net
of cash
acquired (1) $128.3 $69.2 $18.9 $ 0.7 $217.1
Natural
Oil and Gas
Gas Coal Midstream Other Consolidated
------------- ----- ---------- ----- ------------
(per
Amount Mcfe)*
------ ------
Three months ended
June 30, 2005
Production
Oil, condensate
and gas (Bcfe) 6.9
Natural gas
(Bcf) 6.4
Crude oil and
condensate
(Mbbl) 76.0
Coal royalty tons
(millions of
tons) 7.3
Inlet volumes
(Bcf) 11.5
Revenues
Natural gas $44.7 $6.94 $ - $ - $ - $44.7
Oil and
condensate 3.3 44.03 - - - 3.3
Natural gas
midstream - - 85.1 - 85.1
Coal royalties - 20.1 - - 20.1
Other 0.1 3.5 0.8 0.3 4.7
------ ------ ----- ----- ----- ------
Total
revenues 48.1 6.98 23.6 85.9 0.3 157.9
------ ------ ----- ----- ----- ------
Expenses
Cost of
midstream gas
purchased - - - 72.6 - 72.6
Operating 4.0 0.57 1.1 3.2 0.1 8.4
Exploration 17.9 2.60 - - - 17.9
Taxes other
than income 3.2 0.47 0.2 0.5 0.2 4.1
General and
administrative 2.5 0.36 1.7 1.8 2.8 8.8
Depreciation,
depletion and
amortization 11.7 1.69 4.3 3.7 0.1 19.8
------ ------ ----- ----- ----- ------
Total
expenses 39.3 5.69 7.3 81.8 3.2 131.6
------ ------ ----- ----- ----- ------
Operating income
(loss) $ 8.8 $1.29 $16.3 $4.1 $(2.9) $26.3
------ ------ ----- ----- ----- ------
Additions to
property and
equipment and
acquisitions, net
of cash
acquired (2) $48.0 $19.6 $3.6 $ 0.1 $71.3
* Natural gas revenues are shown per Mcf, oil and gas condensate
revenues are shown per Bbl, and all other amounts are shown per Mcfe.
(1) Oil and gas segment includes noncash expenditures of $32.2
million.
(2) Oil and gas segment includes noncash expenditures of $13.2
million.
PENN VIRGINIA CORPORATION
YEAR-TO-DATE SEGMENT INFORMATION - unaudited
(Dollars in millions except where noted)
Natural
Gas
Oil and Gas Coal Midstream Other Consolidated
-------------- ----- --------- ----- ------------
(per
Amount Mcfe)*
------ ------
Six months ended
June 30, 2006
Production
Oil, condensate
and gas (Bcfe) 14.8
Natural gas
(Bcf) 13.7
Crude oil and
condensate
(Mbbl) 186
Coal royalty
tons (millions
of tons) 15.7
Inlet volumes
(Bcf) 24.8
Revenues
Natural gas $109.8 $8.03 $ - $ - $ - $ 109.8
Oil and
condensate 10.4 55.99 - - - 10.4
Natural gas
midstream - - 204.5 - 204.5
Coal royalties - 46.7 - - 46.7
Other 1.1 6.5 0.9 0.1 8.6
------ ------ ----- --------- ----- ------------
Total
revenues 121.3 8.21 53.2 205.4 0.1 380.0
------ ------ ----- --------- ----- ------------
Expenses
Cost of
midstream gas
purchased - - - 174.3 - 174.3
Operating 11.6 0.78 2.2 5.4 - 19.2
Exploration 13.4 0.91 - - - 13.4
Taxes other
than income 7.4 0.50 0.4 0.7 0.4 8.9
General and
administrative 5.5 0.37 4.7 5.7 6.5 22.4
Depreciation,
depletion and
amortization 25.4 1.72 9.5 8.1 0.2 43.2
------ ------ ----- --------- ----- ------------
Total
expenses 63.3 4.28 16.8 194.2 7.1 281.4
------ ------ ----- --------- ----- ------------
Operating
Income $ 58.0 $3.93 $36.4 $ 11.2 $(7.0) $ 98.6
------ ------ ----- --------- ----- ------------
Additions to
property and
equipment and
acquisitions,
net of cash
acquired (2) $172.5 $75.2 $ 21.5 $ 1.0 $ 270.2
Natural Gas
Midstream
Oil and Gas Coal (1) Other Consolidated
-------------- ----- ---------------- ------------
(per
Amount Mcfe)*
------ ------
Six months ended
June 30, 2005
Production
Oil, condensate
and gas (Bcfe) 13.3
Natural gas
(Bcf) 12.4
Crude oil and
condensate
(Mbbl) 161.0
Coal royalty
tons (millions
of tons) 14.0
Inlet volumes
(Bcf) 15.4
Revenues
Natural gas $ 82.9 $6.71 $ - $ - $ - $ 82.9
Oil and
condensate 6.8 41.98 - - - 6.8
Natural gas
midstream - - 111.4 - 111.4
Coal royalties - 38.2 - - 38.2
Other 0.2 5.3 0.9 0.5 6.9
------ ------ ----- --------- ----- ------------
Total
revenues 89.9 6.75 43.5 112.3 0.5 246.2
------ ------ ----- --------- ----- ------------
Expenses
Cost of
midstream gas
purchased - - - 94.5 - 94.5
Operating 7.1 0.53 2.2 4.0 0.2 13.5
Exploration 25.6 1.92 - - - 25.6
Taxes other
than income 6.1 0.45 0.5 0.6 0.2 7.4
General and
administrative 4.3 0.32 4.0 2.2 5.0 15.5
Depreciation,
depletion and
amortization 22.3 1.68 8.2 4.9 0.2 35.6
------ ------ ----- --------- ----- ------------
Total
expenses 65.4 4.91 14.9 106.2 5.6 192.1
------ ------ ----- --------- ----- ------------
Operating
Income $ 24.5 $1.84 $28.6 $ 6.1 $(5.1) $ 54.1
------ ------ ----- --------- ----- ------------
Additions to
property and
equipment and
acquisitions,
net of cash
acquired (3) $ 85.3 $29.0 $ 199.5 $ 0.1 $ 313.9
* Natural gas revenues are shown per Mcf, oil and gas condensate
revenues are shown per Bbl, and all other amounts are shown per Mcfe.
(1) Natural Gas Midstream segment acquired in March 2005.
(2) Oil and gas segment includes noncash expenditures of $32.2
million.
(3) Oil and gas segment includes noncash expenditures of $13.2
million.
PENN VIRGINIA CORPORATION
RECONCILIATION OF CERTAIN NON-GAAP FINANCIAL MEASURES - unaudited
(in thousands)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ -------------------
2006 2005 2006 2005
--------- -------- --------- ---------
Reconciliation of GAAP "Net
cash provided by operating
activities" to Non-GAAP
"Operating cash flow"
------------------------------
Net cash provided by operating
activities $84,205 $53,815 $149,900 $84,666
Adjustments:
Changes in operating assets
and liabilities (15,358) (271) (18,520) 12,005
--------- -------- --------- ---------
Operating cash flow (see
Note 1 below) $68,847 $53,544 $131,380 $96,671
========= ======== ========= =========
Reconciliation of GAAP
"Additions to property and
equipment" to Non-GAAP
"Capital expenditures"
------------------------------
Additions to property and
equipment $58,758 $40,374 $105,539 $77,960
Acquisitions, net of cash
acquired 158,418 17,693 164,663 222,677
Seismic expenditures 1,229 1,177 3,640 6,079
Delay rentals and other
expenditures 299 276 1,406 591
Noncash lease acquisitions - 13,250 - 13,250
Acquisitions of non-PPE assets
and liabilities 29,915 - 29,915 -
Change in accrued capital
expenditures 5,857 - 3,506 -
Change in noncash well
accruals (2,203) (3,591) (1,050) (880)
Less: Capitalized interest (516) (687) (906) (1,307)
--------- -------- --------- ---------
Capital expenditures (see
Note 2 below) $251,757 $68,492 $306,713 $318,370
========= ======== ========= =========
Note 1 - Operating cash flow represents net cash provided by operating
activities before changes in assets and liabilities. Operating cash
flow is presented because management believes it is a useful adjunct
to net cash provided by operating activities under accounting
principles generally accepted in the United States (GAAP). Management
believes that operating cash flow is widely accepted as a financial
indicator of an oil and gas company's ability to generate cash which
is used to internally fund exploration and development activities,
service debt and pay dividends. This measure is widely used by
investors and professional research analysts in the valuation,
comparison, rating and investment recommendations of companies within
the oil and gas exploration and production industry. Operating cash
flow is not a measure of financial performance under GAAP and should
not be considered as an alternative to cash flows from operating,
investing, or financing activities as an indicator of cash flows, or
as a measure of liquidity, or as an alternative to net income.
Note 2 - Capital expenditures represents cash additions to property
and equipment, plus cash paid for acquisitions, plus seismic
expenditures, delay rentals and other expenditures, change in accrued
capital expenditures and non-cash well accruals, minus capitalized
interest. Management believes capital expenditures provide useful
information regarding the Company's capital program as a supplement to
cash additions to property and equipment.
PENN VIRGINIA CORPORATION
GUIDANCE TABLE
(Dollars in millions except where noted)
Penn Virginia Corporation is providing the following guidance
regarding financial and operational expectations for 2006.
Actual
-----------------------
First Second
Quarter Quarter YTD
2006 2006 2006 2006 Guidance
-------- ------- ------ ---------------
Oil & Gas Segment:
------------------------------
Production:
Natural gas (Bcf) - See
Note a 6.8 6.9 13.7 28.2 - 30.0
Crude oil and condensate
(Mbbl) - See Note b 91 95 186 300 - 350
Equivalent production
(Bcfe) 7.3 7.6 14.8 30.0 - 32.0
Equivalent daily
production (MMcfe) 81.1 83.2 81.8 82.2 - 87.7
Expenses:
Direct expenses $ 11.5 13.0 24.5 48.0 - 50.0
Exploration $ 7.9 5.5 13.4 32.0 - 35.0
Depreciation, depletion
and amortization ($ per
Mcfe) $ 1.73 1.70 1.72 1.70 - 1.80
Capital Expenditures:
Development drilling $ 28.2 37.8 66.0 150.0 - 160.0
Exploratory drilling $ 9.9 8.8 18.7 35.0 - 40.0
Pipeline, gathering,
facilities $ 2.8 4.3 7.1 20.0 - 22.0
Seismic $ 2.4 1.2 3.6 6.0 - 7.0
Lease acquisition, field
projects and other - See
Note c $ 3.9 9.4 13.3 31.2 - 33.2
Proved property
acquisitions $ - 72.5 72.5 71.5 - 71.5
Total Oil & Gas Capital
Expenditures $ 47.2 134.0 181.2 313.7 - 333.7
Coal Segment (PVR):
------------------------------
Coal royalty tons (millions) 7.7 8.0 15.7 31.5 - 34.5
Revenues:
Average royalty per ton $ 2.90 3.04 2.98 2.90 - 3.00
Other $ 2.9 3.6 6.5 12.0 - 14.0
Expenses:
Direct expenses $ 3.5 3.9 7.3 17.0 - 18.0
Depreciation, depletion
and amortization $ 4.7 4.7 9.5 20.0 - 22.0
Capital Expenditures:
Expansion and
acquisitions $ 4.8 69.2 74.0 82.0 - 84.0
Maintenance capital
expenditures $ 0.1 - 0.1 0.3 - 0.4
Total Coal Capital
Expenditures $ 4.9 69.2 74.1 82.3 - 84.4
Natural Gas Midstream Segment
(PVR):
------------------------------
Inlet volumes (MMcf per day)
- see Note d 134 140 132 130 - 140
Expenses:
Direct expenses $ 5.9 5.8 11.8 23.0 - 24.0
Depreciation, depletion
and amortization $ 4.1 4.1 8.1 15.5 - 17.5
Capital Expenditures:
Expansion and
acquisitions $ 0.6 17.4 18.0 32.0 - 33.0
Maintenance capital
expenditures $ 2.0 2.3 4.3 2.0 - 3.0
Total Midstream Capital
Expenditures $ 2.6 19.7 22.3 34.0 - 36.0
Corporate and Other:
------------------------------
General and administrative
expense $ 2.9 3.5 6.5 11.0 - 13.0
Interest expense:
PVA average long-term
debt outstanding $ 73.5 91.5 84.7 140.0 - 160.0
PVA interest rate 5.3% 5.4% 5.4% 6.5% - 7.0%
Percentage capitalized
- see Note e 37% 32% 34% 60% - 70%
PVR average long-term
debt outstanding $ 254.2 284.1 271.6 290.0 - 300.0
PVR interest rate assumed 5.9% 6.0% 6.0% 6.5% - 7.0%
Minority interest in PVR -
see Note f $ 4.9 7.8 12.6 see Note e
Income tax rate - see Note g 39% 41% 40% 40%
Other capital expenditures $ 0.3 0.7 1.0 5.0 - 6.0
These estimates are meant to provide guidance only and are subject to
change as the operating environment of the Company changes.
See Notes on following page.
PENN VIRGINIA CORPORATION
GUIDANCE TABLE
(Dollars in millions except where noted)
Notes to Guidance Table:
------------------------------
a - The oil and gas segment's natural gas derivative positions as of
June 30, 2006, are summarized below:
Weighted Average
Price per MMbtu
------------------
Average Collars
MMbtu ----------------
Per Day Additional Floor Ceiling
Put
------- ---------- ------- -------
Third Quarter 2006
Costless collar 24,935 $7.70 $12.01
Three-way collar 25,000 $4.50 $6.00 $9.40
Stand-alone put 1,304 $9.00
Fourth Quarter 2006
Costless collar 26,261 $8.15 $15.15
Three-way collar
(October only) 25,000 $4.50 $6.00 $9.40
Stand-alone put 1,304 $9.00
First Quarter 2007
Costless collar 20,000 $9.00 $19.03
Three-way collar 3,000 $5.00 $8.00 $11.25
Second Quarter 2007
Costless collar 15,000 $7.33 $12.93
Three-way collar 3,000 $5.00 $8.00 $11.25
Third Quarter 2007
Costless collar 15,000 $7.33 $12.93
Three-way collar 3,000 $5.00 $8.00 $11.25
Fourth Quarter 2007
Costless collar 11,685 $8.28 $15.78
Three-way collar 3,000 $5.00 $8.00 $11.25
First Quarter 2008
Costless collar 10,000 $9.00 $17.95
Three-way collar 2,500 $5.00 $8.00 $10.75
Second Quarter 2008
Three-way collar 2,500 $5.00 $8.00 $10.75
Third Quarter 2008
Three-way collar 2,500 $5.00 $8.00 $10.75
Fourth Quarter 2008
Three-way collar 2,500 $5.00 $8.00 $10.75
The costless collar natural gas prices per MMbtu per quarter include
the effects of basis differentials, if any.
b - The oil and gas segment's oil derivative positions as of June 30,
2006, are summarized below:
Weighted Average
Price per Bbl
-------------------
Average Collars
Bbbls ----------------
Per Day Floor Ceiling
-------- -------- -------
Third Quarter 2006 through
Fourth Quarter 2007 200 $60.00 $72.20
c - Lease acquisition includes total non-cash expenditures of $32.2
million in the six months ended June 30, 2006, related to deferred
taxes in the Crow Creek Acquisition.
d - The natural gas midstream segment's derivative positions as of
June 30, 2006, are summarized below:
Average Weighted
Volume Average
Per Day Price
-------- --------
Ethane Swaps (revenue) (in gallons) (per gallon)
Third Quarter 2006 81,480 $0.5038
Fourth Quarter 2006 73,126 $0.4870
First Quarter 2007 through
Fourth Quarter 2007 34,440 $0.5050
First Quarter 2008 through
Fourth Quarter 2008 34,440 $0.4700
Propane Swaps (revenue) (in gallons) (per gallon)
Third Quarter 2006 59,605 $0.7497
Fourth Quarter 2006 52,080 $0.7060
First Quarter 2007 through
Fourth Quarter 2007 26,040 $0.7550
First Quarter 2008 through
Fourth Quarter 2008 26,040 $0.7175
Crude Oil Swaps (revenue) (in barrels) (per barrel)
Third Quarter 2006 through
Fourth Quarter 2006 1,100 $44.45
First Quarter 2007 through
Fourth Quarter 2007 560 $50.80
First Quarter 2008 through
Fourth Quarter 2008 560 $49.27
Crude Oil Collars (in barrels) (per barrel)
(revenue)
Third Quarter 2006 through
Fourth Quarter 2006
(October only) 270 $73.59
Natural Gas Swaps (cost of
gas purchased) (in MMbtu) (per MMbtu)
Third Quarter 2006 9,000 $6.86
Fourth Quarter 2006 8,005 $6.98
First Quarter 2007 through
Fourth Quarter 2007 4,000 $6.97
First Quarter 2008 through
Fourth Quarter 2008 4,000 $6.97
e - The Company capitalizes a portion of interest expense incurred to
recognize the carrying cost of certain unproved properties as
required by accounting principles generally accepted in the United
States.
f - Penn Virginia owns 39 percent of Penn Virginia Resource Partners,
L.P. (PVR). Minority interest reflects the remaining 61 percent
owned by parties other than Penn Virginia, less the general
partner's incentive distribution rights.
g - Deferred federal and state income taxes are expected to comprise
approximately 60% to 70% of the Company's income tax expense for
the full year.
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