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Penn Virginia Corporation Provides Third Quarter 2006 Oil and Gas Operational Results.

Announces Fourth Consecutive Quarterly Production Record

RADNOR, Pa. -- Penn Virginia Corporation (NYSE:PVA) today reported record quarterly production and provided an update of its oil and gas operational activities for the third quarter of 2006.

Oil and gas production for the third quarter of 2006 totaled 7.9 billion cubic feet equivalent (Bcfe), or 86 million cubic feet equivalent per day (Mmcfe/day), surpassing the previous quarterly record of 7.5 Bcfe, set in the second quarter of 2006. Production through the first nine months of 2006 was 22.7 Bcfe which is 12 percent higher than the 20.2 Bcfe reported for the same period of 2005. Production increases in the third quarter were partially offset by normal field declines.

The Company's continued growth in production was due to the success of its development and exploratory drilling programs, including the Company's Cotton Valley play in east Texas and the Selma Chalk play in Mississippi.

Based on production and drilling program results through the third quarter, the Company expects full-year 2006 production to range from 30.5 to 32.0 Bcfe.

Oil and gas capital expenditures by Penn Virginia for the third quarter of 2006 were approximately $70 million, consisting of:

* $50 million to drill 54 gross development wells, of which only one was unsuccessful;

* $5 million for exploratory drilling;

* $9 million for leasehold acquisitions and other;

* $1 million for the acquisition of seismic data; and

* $5 million to construct gathering and transmission lines and compressor stations to facilitate production growth in Appalachia and east Texas.

Third Quarter 2006 Operations Update

In the Company's Cotton Valley project in Harrison County, Texas, Penn Virginia drilled nineteen (13.1 net) successful development wells, 17 of which are located within the Company's area of mutual interest (AMI) with GMX Resources Inc. (NASDAQ:GMXR) in the North Carthage field. Two additional wells were drilled outside the AMI on acreage which Penn Virginia has a 100 percent working interest. As a result of the Company's successful and growing development drilling program in the play, net production from the Cotton Valley for the third quarter averaged 12.8 MMcfe/day (net), an increase of 103 percent from the previously reported 6.3 MMcfe per day average during the third quarter of 2005. As of October 20, 2006, daily net Cotton Valley production was approximately 15 Mmcfe/day. Three rigs are currently drilling on the project, a fourth is expected to be delivered next month under a long term contract, and a fifth rig is being shared with GMXR.

During the third quarter, in east Texas the Company drilled a horizontal lateral of approximately 2,100 feet in the Lower Bossier interval, which is approximately 900 feet below the Cotton Valley sands. The well was recently stimulated by a large acidizing treatment, and results will be evaluated over the coming months. During the fourth quarter, drilling of a horizontal well in the Taylor interval of the Cotton Valley will also commence.

Since the second quarter of 2006, the Company has drilled 13 wells approximately 1,500 feet deeper to test and complete four additional intervals below the Cotton Valley sands. All of these intervals have made gas in various quantities after stimulation. The plan going forward is to flow these wells into the pipeline for a sufficient period of time to determine production and reserve potential. During that time, all future drilling and completion will be only through the Cotton Valley sands until it can be determined whether drilling the deeper intervals is incrementally economic.

In Oklahoma, the Company began development of the properties recently acquired from Crow Creek Energy in the Arkoma and Anadarko Basins. Five (3.0 net) operated, HCBM wells were successfully drilled in the Hartshorne coal in Haskell and Pittsburg counties. In addition, the Company participated in four (1.7 net) outside operated wells. Three of the wells were HCBM wells, and the fourth targeted the Hartshorne sand. One of the HCBM wells was plugged and abandoned when drilling problems prevented the successful placement of the lateral in the objective coal. The Company anticipates participating in the drilling of 30 wells by December 31, 2006. Net production for the third quarter averaged 5.9 MMcfe/day. For the remainder of the year, two rigs will be dedicated to drilling HCBM wells, and one rig will drill two Granite Wash wells in Washita County, OK. In addition, drilling is expected to be initiated on the first of two horizontal Fayetteville Shale wells in the Arkoma Basin. To date, the Company has accumulated approximately 12,000 acres in the Fayetteville Shale play and continues to acquire acreage.

In south Louisiana, the Company participated in the drilling of one exploratory well:

* The Miami Corp #3 (0.3 net) was a test of the Company's Highland Park prospect in the Bayou Carlin field. The primary objective in the Operc sands was found to be non-productive and was expensed as an exploratory dry hole.

In addition to the drilling of the exploratory test above, two exploratory wells discussed in the Company's July 27, 2006 press release began production late in the third quarter:

* The Cotton Land Corp. #1 (0.4 net) was a successful test of the Company's Bayou Postillion Prospect in Iberia Parish, Louisiana. The well is flowing to sales at a rate of 10 million cubic feet per day (MMcf/day) and 24 barrels of oil per day (Bopd), gross, from an Oligocene/Discorbis sand with a flowing tubing pressure of approximately 3,000 pounds per square inch (psi). An additional well (0.1 net) just reached total depth and the objective sand based on open hole logs was found to be productive.

* The Miami Corp #1 (0.2 net) was a successful test of the Company's Ardbeg Prospect in St. Mary Parish, Louisiana. The well is currently flowing to sales at a rate just under 2.0 MMcf/day and 88 Bopd, gross, gross, from the Rob 6A sand with a flowing tubing pressure of 4,100 psi.

The Company is currently participating in the drilling of the C.M. Peterson, Jr. #1 operated by Palace Operating Co., which will test our Laphroaig prospect in St. Mary Parish, Louisiana. The proposed total depth is 19,000 feet. Estimated gross unrisked reserves for this prospect are 49 Bcf. The Company is carried to casing point and has a 25 percent working interest after casing point. In addition, the first well in the Mystic Bayou Prospect, located in St. Martin Parish, LA, is expected to spud soon. The Company has a 30 percent working interest in the well, which will be operated by Brigham Exploration (NASDAQ: BEXP) and has an unrisked gross reserve potential of approximately 13 Bcfe.

Four (2.0 net) successful horizontal coalbed methane (HCBM) development wells were drilled on the Company's leasehold positions in West Virginia during the third quarter of 2006. Through the first nine months of the year, the Company has drilled seventeen (8.3 net) successful HCBM development wells. HCBM production through the first three quarters of 2006 was approximately four billion cubic feet (Bcf) which is essentially the same as the first three quarters of 2005. Production has been temporarily affected by water disposal issues, which has resulted in shutting in or temporarily delaying the first production from nine horizontal patterns. Solutions for water disposal are in progress and are expected to be totally implemented by the first quarter of 2007. Three rigs operated by CDX Gas, LLC are currently drilling, and drilling activity is expected to increase in 2007 with the addition of another drilling rig.

In Mississippi, 21 (20.8 net) successful Selma Chalk development wells were drilled during the third quarter in the Company's Baxterville, Gwinville and Maxie fields. Daily production in the Company's Mississippi fields for the third quarter of 2006 was 16.7 Mmcfe/day, up from 15.3 MMcfe/day reported for the third quarter of 2005. The Company continues to actively develop its assets in the Selma Chalk, and currently has two rigs drilling. A total of 85 wells (gross) are expected to be drilled in 2006. The Company plans to drill two horizontal Selma Chalk wells during the fourth quarter. A program is also planned for the fourth quarter to test down spacing the Selma Chalk from 20 acre to 10 acre spacing, which, if successful, would add a significant number of drilling opportunities in our three Selma Chalk fields.

During the third quarter of 2006, the Company also determined that two Williston Basin exploratory wells drilled in previous quarters were non-productive and were written off as exploratory dry holes during the quarter. The second horizontal Ratcliffe well drilled in the Red Bank Prospect in Williams County, ND and the horizontal Bakken Dolomite well drilled in the Redwater Prospect in McCone County, MT both tested 100 percent saltwater. The Company participated with Bill Barrett Corporation (NYSE:BBG) in both prospects.

Hedging Update

Natural gas and crude oil commodity price hedging positions remain in place as disclosed in the Company's Form 10-Q for the second quarter of 2006. The Company did not enter into any new price hedges during the third quarter of 2006.

Penn Virginia Corporation (NYSE:PVA) is an energy company engaged in the exploration, acquisition, development and production of crude oil and natural gas. Through its ownership in Penn Virginia Resource Partners, L.P. (NYSE:PVR), PVA also manages coal properties and related assets and operates a midstream natural gas business. PVA is headquartered in Radnor, PA. For more information about PVA, visit the Company's website at

Forward-looking statements: Penn Virginia Corporation is including the following cautionary statement to make applicable and take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 for any forward-looking statements made by, or on behalf of, the Company. With the exception of historical matters, any matters discussed are forward-looking and, therefore, involve risks and uncertainties that could cause actual results to differ materially from projected results. These risks, uncertainties and contingencies include, but are not limited to, the following: development activities, capital expenditures, acquisitions and dispositions, drilling and exploration programs, expected commencement dates of oil and natural gas production, projected quantities of future oil and natural gas production by the Company, costs and expenditures and projected demand or supply for oil and natural gas. Additional information concerning these and other factors can be found in the Company's press releases and public periodic filings with the Securities and Exchange Commission, including the Company's Annual Report on Form 10-K for the year ended December 31, 2005, filed on March 16, 2006. Except as required by applicable securities laws, the Company does not intend to update its forward-looking statements.
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Publication:Business Wire
Date:Oct 25, 2006
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