EX-99.1 2 v173533_ex99-1.htm Unassociated Document
EXHIBIT 99.1
Penn Virginia Corporation
 
Three Radnor Corporate Center, Suite 300, 100 Matsonford Road, Radnor, PA 19087
 
 
FOR IMMEDIATE RELEASE
 

Contact:
James W. Dean
Vice President, Corporate Development
Ph: (610) 687-7531 Fax: (610) 687-3688
E-Mail: invest@pennvirginia.com
 
PENN VIRGINIA CORPORATION
ANNOUNCES FOURTH QUARTER AND FULL-YEAR 2009 RESULTS

RADNOR, PA (BusinessWire) February 10, 2010 – Penn Virginia Corporation (NYSE: PVA) today reported financial and operational results for the three months and year ended December 31, 2009 and provided an update of full-year 2010 guidance.

Fourth Quarter 2009 Highlights
Fourth quarter 2009 results, with comparisons to fourth quarter 2008 results, included the following:
 
 
·
Record proved reserves of 942 billion cubic feet of natural gas equivalent (Bcfe) as of December 31, 2009, as compared to 916 Bcfe as of December 31, 2008;
 
 
·
Quarterly oil and gas production of 11.3 billion cubic feet of natural gas equivalent (Bcfe), or 123.1 million cubic feet of natural gas equivalent (MMcfe) per day, as compared to 13.2 Bcfe, or 143.8 MMcfe per day;
 
 
·
Operating cash flow, a non-GAAP (generally accepted accounting principles) measure, of $74.4 million as compared to $95.7 million;
 
 
·
Operating income of $20.6 million, which included $11.1 million of non-cash impairment charges, as compared to an operating loss of $31.9 million, which included $51.8 million of non-cash impairment charges;
 
 
·
Adjusted net loss attributable to PVA, a non-GAAP measure which excludes the effects of the non-cash change in derivatives fair value, impairments and gains or losses that affect comparability to the prior year period, of $0.4 million, or $0.01 per diluted share, as compared to adjusted net income of $10.7 million, or $0.26 per diluted share;
 
 
·
Net loss attributable to PVA of $5.4 million, or $0.12 per diluted share, as compared to net loss attributable to PVA of $0.5 million, or $0.01 per diluted share; and
 
 
·
Financial liquidity consisting of undrawn borrowing capacity and cash balances at December 31, 2009, pro forma to include the net proceeds from our January 2010 Gulf Coast divestiture,of approximately $410 million, as compared to approximately $150 million on December 31, 2008.

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

Management Comment
A. James Dearlove, President and Chief Executive Officer, said, “Compared to the prior year quarter, we experienced significant declines in commodity prices and a 14 percent decrease in oil and gas production resulting from our decision to suspend drilling during a large part of 2009.  However, the fourth quarter of 2009 came in as expected and we believe we are well-positioned for growth in 2010 and beyond.  As detailed in our separate operational update, fourth quarter production was at the high end of our expectations and we expect growth of six to 13 percent in 2010, pro forma the divestiture of our Gulf Coast assets.  Due to the improved pricing environment and outlook for natural gas we have recommenced drilling and currently have six operated rigs running in our core plays.
 

“For 2010, we have hedged approximately 55 percent of our estimated natural gas production, at average floor and ceiling prices of $6.09 and $8.19 per MMBtu, respectively.  During 2009 and through January 2010, we raised over $510 million from the issuances of debt and equity securities and the sale of non-core assets, including a portion of our position in PVG.  As a result, we have substantially improved our financial liquidity, with $300 million of unused availability on our revolving credit facility and over $100 million of cash on hand.  We expect our strong hedge and liquidity positions to facilitate future growth in our focused, resource play-driven operations.

“In addition to our core oil and gas exploration and production business segment, we own 51 percent of Penn Virginia GP Holdings, L.P. (NYSE: PVG).  PVG owns the general partner of Penn Virginia Resource Partners, L.P. (NYSE: PVR) and is PVR’s largest limited partner unitholder.  As the owner of the general partner and largest unitholder of PVG, we report our financial results on a consolidated basis with the financial results of PVG.  At current distribution rates, our ownership of PVG and PVR provides us approximately $30 million of annualized pre-tax cash flow.”

Full-Year 2009 Consolidated Results
For the year ended December 31, 2009, operating cash flow was $280.5 million, as compared to $413.8 million in 2008.  We incurred an operating loss of $98.2, which included charges of $127.7 million for impairments on assets held for sale, drilling rig standby charges and other impairments, as compared to operating income in 2008 of $256.8 million, which included charges of $51.8 million for impairments and $31.4 million of gains on the sale of assets.  The adjusted net loss attributable to PVA, which excludes the effects of non-cash impairments, change in derivatives fair value, drilling rig standby charges and gains on the sale of assets, was $14.1 million, or $0.32 per diluted share, as compared to adjusted net income attributable to PVA of $85.5 million, or $2.03 per diluted share, in 2008.  The net loss attributable to PVA was $114.6 million, or $2.62 per diluted shared, as compared to net income attributable to PVA of $121.1 million, or $2.87 per diluted share, in 2008 due primarily to the decrease in operating income.  Oil and gas production increased nine percent to a record 51.0 Bcfe and proved reserves increased three percent to a record 942 Bcfe.  At PVR, lessee coal production and natural gas midstream system throughput volumes were also fiscal year records for those segments.

Oil and Gas Segment Review
Fourth quarter oil and gas production decreased 14 percent to 11.3 Bcfe, or 123.1 MMcfe per day, from 13.2 Bcfe, or 143.8 MMcfe per day, in the fourth quarter of 2008, and nine percent from 12.4 Bcfe, or 134.9 MMcfe per day, in the third quarter of 2009.  See our separate operational update news release dated February 4, 2010 for a more detailed discussion of operations for the oil and gas segment.

For the fourth quarter of 2009, the oil and gas segment operating loss of $8.0 million was a $16.5 million improvement over the operating loss of $24.5 million in the prior year quarter.  Adjusting for a non-cash impairment charges (primarily on assets held for sale and subsequently divested) of $9.6 million in the fourth quarter of 2009 and a non-cash impairment charge of $20.0 million in the fourth quarter of 2008, operating income was $1.6 million, or $6.1 million greater than operating loss of $4.5 million in the prior year quarter.  The increase in adjusted operating income was due to a $30.1 million decrease in non-cash exploration and depreciation, depletion and amortization (DD&A) expenses and a $3.0 million decrease in cash operating expenses, due to reduced drilling and production in the fourth quarter of 2009, partially offset by a $26.9 million decrease in total revenues.  The 31 percent decrease in total revenues was primarily due to a $2.03 per thousand cubic feet (Mcf), or 32 percent, decrease in the natural gas price and the 14 percent production decrease, partially offset by a 41 percent increase in the oil price and a 36 percent increase in the price of natural gas liquids (NGLs).
 
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In the fourth quarter of 2009, total oil and gas segment expenses, excluding the impairment and rig standby charges, decreased by $32.5 million, or 36 percent, to $57.9 million, or $5.11 per Mcfe produced, from $90.5 million, or $6.84 per Mcfe produced, in the fourth quarter of 2008, as discussed below:
 
 
·
Fourth quarter 2009 cash operating expenses were $23.4 million, or $2.06 per Mcfe produced, as compared to $26.4 million, or $1.99 per Mcfe produced, in the fourth quarter of 2008.  The increase in unit cash operating expenses was primarily due to higher segment general and administrative (G&A) expense and taxes other than income, partially offset by lower lease operating expense, as discussed below:
 
 
-
Lease operating expense decreased seven percent to $1.14 per Mcfe from $1.22 per Mcfe primarily due to decreased overall service costs due to lower commodity prices;
 
 
-
Taxes other than income increased 17 percent to $0.34 per Mcfe from $0.29 per Mcfe primarily due to the production decrease; and
 
 
-
Segment G&A expense increased 20 percent to $0.59 per Mcfe as compared to $0.49 per Mcfe primarily due to the production decrease and additional costs related to an office relocation.
 
 
·
Exploration expense decreased 87 percent to $2.9 million in the fourth quarter of 2009, as compared to $22.7 million in the prior year quarter, due in part to a lack of exploratory drilling in the fourth quarter of 2009 and $13.9 million of charges in the prior year quarter for dry-hole costs and a write-off of leasehold acquisition costs.
 
 
·
DD&A expense decreased by $10.2 million, or 25 percent, to $31.2 million, or $2.74 per Mcfe, in the fourth quarter of 2009 from $41.4 million, or $3.13 per Mcfe, in the prior year quarter.  The overall decrease in DD&A expense was primarily due to the production decrease and a lower depletion rate per unit of production.  The lower depletion rate was primarily due to an impairment of Gulf Coast assets held for sale (subsequently divested) during the third quarter of 2009 and increasing contributions to production from the high-return Granite Wash play.

During the fourth quarter of 2009, we incurred approximately $9.6 million of impairments.  These charges were primarily related to Gulf Coast assets held for sale which were subsequently sold in January 2010.

Coal & Natural Resource Management and
Natural Gas Midstream Segment Review (PVR and PVG)
As the owner of the general partner and largest unitholder of PVG, we report our financial results on a consolidated basis with the financial results of PVG.  A conversion of the GAAP-compliant financial statements (“As reported”) to the equity method of accounting (“As adjusted”) is included in the “Conversion to Non-GAAP Equity Method” table in this release.  Using the equity method, PVG’s results are reduced to a few line items and the results from oil and gas operations are therefore highlighted.  We believe that the financial statements presented using the equity method are less complex and more comparable to those of other oil and gas exploration and production companies.  Financial and operational results and full-year 2010 guidance for each of PVR’s segments are provided in the financial tables later in this release.  In addition, operational updates for these segments are discussed in more detail in PVR’s news release dated February 10, 2010.  Please visit PVR’s website, www.pvresource.com, under “For Investors” for a copy of the release.

As previously announced, on February 19, 2010, PVG will pay to unitholders of record as of February 2, 2010 a quarterly cash distribution of $0.38 per unit, or an annualized rate of $1.52 per unit.  The distribution remains unchanged from the distribution paid in the previous quarter.  As a result of PVG’s distribution, we will receive a cash distribution of $7.6 million in the first quarter of 2010, or $30.5 million on an annualized basis.


 
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Capital Resources, Credit Facility and Impact of Derivatives
As of December 31, 2009, we had outstanding borrowings of $530.0 million ($498.4 million carrying value), consisting of $300 million ($291.7 million carrying value) of senior unsecured notes due 2016 and $230.0 million ($206.7 million carrying value) of convertible senior subordinated notes due 2012 and no borrowings against our revolving credit facility.  The $32.0 million decrease in outstanding borrowings as compared to the $562.0 million at December 31, 2008 was primarily due to the repayment of revolver debt following a $64.9 million offering of PVA common shares in May 2009 and a $118.1 million offering of PVG common units in September 2009, as well as free cash flow during the second half of 2009, net of spending to fund our oil and gas capital expenditures.  Currently, we have $300 million of unused availability on our revolving credit facility and over $100 million of cash on hand.

As of December 31, 2009, PVR had outstanding borrowings of $620.1 million under its $800 million revolving credit facility with remaining revolver borrowing capacity of $178.3 million.  The $52.0 million increase in outstanding PVR borrowings as compared to $568.1 million outstanding as of December 31, 2008 was primarily due to PVR capital expenditures during 2009.  PVR’s debt is non-recourse to PVA.

Consolidated interest expense increased from $14.0 million in the fourth quarter of 2008 to $18.6 million in the fourth quarter of 2009.  The increase was due to a higher interest rate on the senior unsecured notes PVA issued in June 2009 and higher average level of outstanding borrowings during the fourth quarter of 2009 as compared to the prior year quarter.

Due to decreases in natural gas and crude oil prices experienced during the fourth quarter, the mark-to-market valuation of our and PVR’s open hedging positions resulted in derivatives income of $3.4 million in the fourth quarter as compared to derivatives income of $51.0 million in the prior year quarter.  Included in derivatives income for the fourth quarter of 2009 was $11.1 million of income related to our oil and gas segment and $7.7 million of expense related to PVR.  Fourth quarter 2009 cash settlements of our oil and gas derivatives resulted in net cash receipts of $10.3 million, as compared to $5.8 million of net cash receipts in the same quarter of 2008.  PVR’s fourth quarter 2009 cash settlements of commodity and interest rate derivatives result in net cash payments of $1.1 million, as compared to $5.2 million of net cash payments in the same quarter of 2008.

Guidance for 2010
See the Guidance Table included in this release for guidance estimates for full-year 2010.  These estimates, including capital expenditure plans, which were discussed in our operational update, are meant to provide guidance only and are subject to revision as our and PVR’s operating environments change.

Full-Year and Fourth Quarter 2009 Financial and Operational Results Conference Call
A conference call and webcast, during which management will discuss fourth quarter 2009 financial and operational results, is scheduled for Thursday, February 11, 2010 at 3:00 p.m. ET.  Prepared remarks by A. James Dearlove, President and Chief Executive Officer, will be followed by a question and answer period.  Investors and analysts may participate via phone by dialing 1-866-630-9986 five to ten minutes before the scheduled start of the conference call, or via webcast by logging on to our website, www.pennvirginia.com, at least 15 minutes prior to the scheduled start of the call to download and install any necessary audio software.  A telephonic replay of the call will be available for two weeks by dialing 1-888-203-1112 (international: 1-719-457-0820) and using the following replay code: 7649645.  An on-demand replay of the conference call will be available for two weeks at our website.
 
******
 
Penn Virginia Corporation (NYSE: PVA) is an independent natural gas and oil company focused on the exploration, acquisition, development and production of reserves in onshore regions of the U.S., including East Texas, Mississippi, the Mid-Continent region and the Appalachian Basin.  We also own approximately 51 percent of PVG, the owner of the general partner and the largest unit holder of PVR, a manager of coal and natural resource properties and related assets and the operator of a midstream natural gas gathering and processing business.  For more information, please visit PVA’s website at www.pennvirginia.com.
 
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Certain statements contained herein that are not descriptions of historical facts are “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.  Because such statements include risks, uncertainties and contingencies, actual results may differ materially from those expressed or implied by such forward-looking statements.  These risks, uncertainties and contingencies include, but are not limited to, the following: the volatility of commodity prices for natural gas, NGLs, crude oil and coal; our ability to access external sources of capital; uncertainties relating to the occurrence and success of capital-raising transactions, including securities offerings and asset sales; reductions in the borrowing base under our Revolver; our ability to develop and replace oil and gas reserves and the price for which such reserves can be acquired; any impairment write-downs of our reserves or assets; reductions in our anticipated capital expenditures; the relationship between natural gas, NGL, crude oil and coal prices; the projected demand for and supply of natural gas, NGLs, crude oil and coal; the availability and costs of required drilling rigs, production equipment and materials; our ability to obtain adequate pipeline transportation capacity for our oil and gas production; competition among producers in the oil and natural gas and coal industries generally and among natural gas midstream companies; the extent to which the amount and quality of actual production of our oil and natural gas or PVR’s coal differ from estimated proved oil and gas reserves and recoverable coal reserves; PVR’s ability to generate sufficient cash from its businesses to maintain and pay the quarterly distribution to its general partner and its unitholders; the experience and financial condition of PVR’s coal lessees and natural gas midstream customers, including the lessees’ ability to satisfy their royalty, environmental, reclamation and other obligations to PVR and others; whether the sale of our Gulf Coast assets closes during the fourth quarter and at the anticipated price; operating risks, including unanticipated geological problems, incidental to our business and to PVR’s coal or natural gas midstream businesses; PVR’s ability to acquire new coal reserves or natural gas midstream assets and new sources of natural gas supply and connections to third-party pipelines on satisfactory terms; PVR’s ability to retain existing or acquire new natural gas midstream customers and coal lessees; the ability of PVR’s lessees to produce sufficient quantities of coal on an economic basis from PVR’s reserves and obtain favorable contracts for such production; the occurrence of unusual weather or operating conditions including force majeure events; delays in anticipated start-up dates of our oil and natural gas production, of PVR’s lessees’ mining operations and related coal infrastructure projects and new processing plants in PVR’s natural gas midstream business; environmental risks affecting the drilling and producing of oil and gas wells, the mining of coal reserves or the production, gathering and processing of natural gas; the timing of receipt of necessary governmental permits by us and by PVR or PVR’s lessees; hedging results; accidents; changes in governmental regulation or enforcement practices, especially with respect to environmental, health and safety matters, including with respect to emissions levels applicable to coal-burning power generators; uncertainties relating to the outcome of current and future litigation regarding mine permitting; risks and uncertainties relating to general domestic and international economic (including inflation, interest rates and financial and credit markets) and political conditions (including the impact of potential terrorist attacks); PVG’s ability to generate sufficient cash from its interests in PVR to maintain and pay the quarterly distribution to its unitholders; uncertainties relating to our continued ownership of interests in PVG and PVR; and other risks set forth in our Annual Report on Form 10-K for the fiscal year ended December 31, 2008.

Additional information concerning these and other factors can be found in our press releases and public periodic filings with the SEC, including our Annual Report on Form 10-K for the year ended December 31, 2008.  Many of the factors that will determine our future results are beyond the ability of management to control or predict.  Readers should not place undue reliance on forward-looking statements, which reflect management’s views only as of the date hereof.  We undertake no obligation to revise or update any forward-looking statements, or to make any other forward-looking statements, whether as a result of new information, future events or otherwise.

 
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PENN VIRGINIA CORPORATION
  
CONSOLIDATED STATEMENTS OF EARNINGS - unaudited
  
(in thousands, except per share data)
  
                         
   
Three Months Ended
    
Year Ended
  
   
December 31,
    
December 31,
  
   
2009
    
2008 (a)
    
2009
    
2008 (a)
  
Revenues
                        
Natural gas
   $ 40,361     $ 73,165     $ 169,666     $ 368,801  
Crude oil
     11,846       9,087       43,258       46,529  
Natural gas liquids (NGLs)
     5,182       2,405       15,735       21,292  
Natural gas midstream
     138,893       95,523       428,016       589,783  
Coal royalties
     29,987       33,923       120,435       122,834  
Gain on sale of property and equipment
     427       91       2,345       31,426  
Other
     10,201       11,496       35,682       40,186  
Total revenues
     236,897       225,690       815,137       1,220,851  
Expenses
                                
Cost of midstream gas purchased
     105,275       76,374       333,854       484,621  
Operating
     20,249       23,238       86,766       89,891  
Exploration
     3,383       22,671       37,970       42,436  
Exploration - drilling rig standby charges - (b)
     (530 )     —       19,784       —  
Taxes other than income
     5,417       5,261       22,073       28,586  
General and administrative (excluding equity compensation)
     19,793       17,313       67,274       66,612  
Equity-based compensation - (c)
     1,420       2,175       12,726       7,882  
Depreciation, depletion and amortization
     50,207       58,755       223,367       192,236  
Impairments on assets held for sale
     9,500       —       97,400       —  
Impairments
     1,598       51,764       10,526       51,764  
Loss on sale of assets
     —       —       1,599       —  
Total expenses
     216,312       257,551       913,339       964,028  
                                 
Operating income (loss)
     20,585       (31,861 )     (98,202 )     256,823  
                                 
Other income (expense)
                                
Interest expense
     (18,552 )     (13,986 )     (68,884 )     (49,299 )
Derivatives
     3,376       50,969       11,854       46,582  
Other
     338       116       2,612       (666 )
                                 
Income (loss) before income taxes and noncontrolling interests
     5,747       5,238       (152,620 )     253,440  
Income tax benefit (expense)
     5,665       2,432       75,252       (71,920 )
                                 
Net income (loss)
   $ 11,412     $ 7,670     $ (77,368 )   $ 181,520  
Less net income attributable to noncontrolling interests
     (16,763 )     (8,184 )     (37,275 )     (60,436 )
                                 
Income (loss) attributable to PVA
   $ (5,351 )   $ (514 )   $ (114,643 )   $ 121,084  
                                 
Income (loss) per share attributable to PVA
                                
Basic
   $ (0.12 )   $ (0.01 )   $ (2.62 )   $ 2.89  
Diluted
   $ (0.12 )   $ (0.01 )   $ (2.62 )   $ 2.87  
                                 
Weighted average shares outstanding, basic
     45,434       41,907       43,811       41,760  
Weighted average shares outstanding, diluted
     45,434       41,907       43,811       42,031  
                                 
                                 
   
Three Months Ended
    
Year Ended
  
   
December 31,
    
December 31,
  
   
2009
    
2008
    
2009
    
2008
  
Production
                                
Natural gas (MMcf)
     9,480       11,624       43,338       41,493  
Crude oil (MBbls)
     162       175       750       506  
NGLs (MBbls)
     146       92       527       392  
Total natural gas, crude oil and NGL production (MMcfe)
     11,328       13,226       51,000       46,881  
                                 
Prices
                                
Natural gas ($ per Mcf)
   $ 4.26     $ 6.29     $ 3.91     $ 8.89  
Crude oil ($ per Bbl)
   $ 73.12     $ 51.93     $ 57.68     $ 91.95  
NGLs ($ per Bbl)
   $ 35.49     $ 26.14     $ 29.86     $ 54.32  
                                 
                                 
                                 
 
(a)
As a result of adopting accounting guidance for convertible debt instruments that may be settled in cash upon conversion (including partial cash settlement), we are required to present our results of operations retrospectively as if the standard had been in effect for all periods presented.
   
(b)
Drilling rig standby charges represent fees paid in connection with the deferral of drilling associated with contractually committed rigs and frac tank rentals.
   
(c)
Our equity-based compensation expense includes our stock option expense and the amortization of restricted stock and restricted stock units related to employee awards in accordance with accounting guidance of share-based payments.

 
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PENN VIRGINIA CORPORATION
  
CONSOLIDATED BALANCE SHEETS - unaudited
  
(in thousands)
  
   
December 31,
    
December 31,
  
   
2009
    
2008
  
Assets
            
Current assets
   $ 306,542     $ 263,518  
Net property and equipment
     2,352,358       2,512,177  
Other assets
     236,907       220,870  
Total assets
   $ 2,895,807     $ 2,996,565  
                 
Liabilities and shareholders' equity
                
Current liabilities
   $ 160,835     $ 247,594  
Long-term debt of PVR
     620,100       568,100  
Revolving credit facility
     —       332,000  
Senior notes
     291,749       —  
Convertible notes
     206,678       199,896  
Other liabilities and deferred taxes
     264,558       312,645  
PVA shareholders' equity
     1,021,976       1,039,103  
Noncontrolling interests
     329,911       297,227  
Total shareholders' equity
     1,351,887       1,336,330  
Total liabilities and shareholders' equity
   $ 2,895,807     $ 2,996,565  
                 
                 
                 
 
CONSOLIDATED STATEMENTS OF CASH FLOWS - unaudited
  
(in thousands)
  
                         
   
Three Months Ended
    
Year Ended
  
   
December 31,
    
December 31,
  
   
2009
    
2008
    
2009
    
2008
  
Cash flows from operating activities
                        
Net income (loss)
   $ 11,412     $ 7,670     $ (77,368 )   $ 181,520  
Adjustments to reconcile net income (loss) to
                                
net cash provided by operating activities:
                                
Depreciation, depletion and amortization
     50,207       58,755       223,367       192,236  
Impairments
     11,098       51,764       107,926       51,764  
Derivative contracts:
                                
Total derivative losses (gains)
     (2,512 )     (49,618 )     (5,333 )     (41,102 )
Cash receipts (payments) to settle derivatives
     9,211       654       61,147       (46,086 )
Deferred income taxes
     (12,496 )     (1,554 )     (83,224 )     58,551  
Dry hole and unproved leasehold expense
     2,802       20,855       33,278       35,847  
Other
     4,660       7,214       20,724       (18,904 )
Operating cash flow  (see attached table
                                
"Certain Non-GAAP Financial Measures")
     74,382       95,740       280,517       413,826  
Changes in operating assets and liabilities
     (20,458 )     11,347       (4,570 )     (30,052 )
Net cash provided by operating activities
     53,924       107,087       275,947       383,774  
                                 
Cash flows from investing activities
                                
Acquisitions
     (8,633 )     (15,562 )     (46,894 )     (293,747 )
Additions to property and equipment
     (20,901 )     (193,308 )     (239,459 )     (585,339 )
Other
     7,543       (435 )     16,241       33,519  
Net cash used in investing activities
     (21,991 )     (209,305 )     (270,112 )     (845,567 )
                                 
Cash flows from financing activities
                                
Dividends paid
     (2,558 )     (2,361 )     (9,836 )     (9,398 )
Distributions paid to noncontrolling interest holders
     (22,806 )     (18,416 )     (78,171 )     (64,245 )
Proceeds from (repayments of) bank borrowings
     —       (38,889 )     (7,542 )     7,542  
Net proceeds from (repayments of) PVA borrowings
     —       152,000       (332,000 )     210,000  
Net proceeds from PVR borrowings
     (8,000 )     10,000       52,000       156,000  
Net proceeds from issuance of PVA senior notes
     —       —       291,009       —  
Net proceeds from issuance of PVR partners' capital
     —       —       —       138,141  
Net proceeds from sale of PVG units
     —       —       118,080       —  
Net proceeds from issuance of PVA equity
     —       —       64,835       —  
Other
     (5,272 )     (785 )     (24,217 )     7,564  
Net cash provided by financing activities
     (38,636 )     101,549       74,158       445,604  
                                 
Net increase (decrease) in cash and cash equivalents
     (6,703 )     (669 )     79,993       (16,189 )
Cash and cash equivalents - beginning of period
     105,034       19,007       18,338       34,527  
Cash and cash equivalents - end of period
   $ 98,331     $ 18,338     $ 98,331     $ 18,338  
 
 
- 7 -
 

PENN VIRGINIA CORPORATION
QUARTERLY SEGMENT INFORMATION - unaudited
(in thousands except where noted)
 
Three months ended December 31, 2009  
Oil and Gas
  
Coal and
Natural
Resource
    
Natural Gas
    
Eliminations
        
   
Amount
    
per Mcfe (a)
  
Management
    
Midstream
    
and Other
    
Consolidated
  
Production
                                    
Total natural gas, crude oil and NGLs (MMcfe)
     11,328                                
Natural gas (MMcf)
     9,480                                
Crude oil (MBbls)
     162                                
NGLs (MBbls)
     146                                
Coal royalty tons (thousands of tons)
                   8,456                    
Midstream system throughput volumes (MMcf)
                     27,902              
                                           
Revenues
                                          
Natural gas
   $ 40,361     $ 4.26     $ —     $ —     $ —     $ 40,361  
Crude oil
     11,846       73.12       —       —       —       11,846  
NGLs
     5,182       35.49       —       —       —       5,182  
Natural gas midstream
     —               —       155,907       (17,014 )     138,893  
Coal royalties
     —               29,987       —       —       29,987  
Gain on sale of property and equipment
     427               —       —       —       427  
Other
     1,176               6,038       2,969       18       10,201  
Total revenues
     58,992       5.21       36,025       158,876       (16,996 )     236,897  
Expenses
                                                
Cost of midstream gas purchased
     —               —       121,454       (16,179 )     105,275  
Operating expense
     12,911       1.14       2,080       6,093       (835 )     20,249  
Exploration
     3,383       0.30       —       —       —       3,383  
Exploration - drilling rig standby charges
     (530 )     (0.05 )     —       —       —       (530 )
Taxes other than income
     3,800       0.34       558       1,028       31       5,417  
General and administrative
     6,655       0.59       3,107       3,640       7,811       21,213  
Depreciation, depletion and amortization
     31,187       2.74       7,773       10,491       756       50,207  
Impairments on assets held for sale
     9,500       0.84       —       —       —       9,500  
Impairments
     87       0.01       1,511       —       —       1,598  
Total expenses
     66,993       5.91       15,029       142,706       (8,416 )     216,312  
                                                 
Operating income (loss)
   $ (8,001 )   $ (0.70 )   $ 20,996     $ 16,170     $ (8,580 )   $ 20,585  
                                                 
                                                 
Additions to property and equipment
   $ 21,805             $ 206     $ 7,180     $ 343     $ 29,534  
                                                 
                                                 
 
Three months ended December 31, 2008  
Oil and Gas
    
Coal and
Natural
Resource
      
Natural Gas
      
Eliminations
        
   
Amount
    
per Mcfe (a)
    
Management
      
Midstream
      
and Other
    
Consolidated
  
Production
                                                
Total natural gas, crude oil and NGLs (MMcfe)
     13,226                                          
Natural gas (MMcf)
     11,624                                          
Crude oil (MBbls)
     175                                          
NGLs (MBbls)
     92                                          
Coal royalty tons (thousands of tons)
                     8,715                          
Midstream system throughput volumes (MMcf)
                       29,786                  
                                                 
Revenues
                                                
Natural gas
   $ 73,165     $ 6.29     $ —     $ —     $ —     $ 73,165  
Crude oil
     9,087       51.93       —       —       —       9,087  
NGLs
     2,405       26.14       —       —       —       2,405  
Natural gas midstream
     —               —       118,875       (23,352 )     95,523  
Coal royalties
     —               33,923       —       —       33,923  
Gain on sale of property and equipment
     91               —       —       —       91  
Other
     1,191               8,394       1,793       118       11,496  
Total revenues
     85,939       6.50       42,317       120,668       (23,234 )     225,690  
Expenses
                                                
Cost of midstream gas purchased
     —               —       98,752       (22,378 )     76,374  
Operating expense
     16,089       1.22       2,418       5,706       (975 )     23,238  
Exploration
     22,671       1.71       —       —       —       22,671  
Taxes other than income
     3,856       0.29       565       676       164       5,261  
General and administrative
     6,415       0.49       2,826       3,741       6,506       19,488  
Depreciation, depletion and amortization
     41,427       3.13       8,072       8,772       484       58,755  
Impairments
     19,963       1.51       —       31,801       —       51,764  
Total expenses
     110,421       8.35       13,881       149,448       (16,199 )     257,551  
                                                 
Operating income (loss)
   $ (24,482 )   $ (1.85 )   $ 28,436     $ (28,780 )   $ (7,035 )   $ (31,861 )
                                                 
                                                 
Additions to property and equipment
   $ 184,246             $ 2,084     $ 22,011     $ 529     $ 208,870  
                                                 
(a) Natural gas revenues are shown per Mcf, crude oil and NGL revenues are shown per Bbl, and all other amounts are shown per Mcfe.
  
 

 
 
- 8 -
 

 
PENN VIRGINIA CORPORATION
YEAR-TO-DATE SEGMENT INFORMATION - unaudited
(in thousands except where noted)
 
Year ended December 31, 2009  
Oil and Gas
    
Coal and
Natural
Resource
    
Natural Gas
    
Eliminations
        
   
Amount
    
per Mcfe (a)
    
Management
    
Midstream
    
and Other
    
Consolidated
  
Production
                                    
Total natural gas, crude oil and NGLs (MMcfe)
     51,000                                
Natural gas (MMcf)
     43,338                                
Crude oil (MBbls)
     750                                
NGLs (MBbls)
     527                                
Coal royalty tons (thousands of tons)
                   34,330                    
Midstream system throughput volumes (MMcf)
                     121,335              
                                           
Revenues
                                          
Natural gas
   $ 169,666     $ 3.91     $ —     $ —     $ —     $ 169,666  
Crude oil
     43,258       57.68       —       —       —       43,258  
NGLs
     15,735       29.86       —       —       —       15,735  
Natural gas midstream
     —               —       504,789       (76,773 )     428,016  
Coal royalties
     —               120,435       —       —       120,435  
Gain on sale of property and equipment
     2,345               —       —       —       2,345  
Other
     4,080               24,165       7,315       122       35,682  
Total revenues
     235,084       4.61       144,600       512,104       (76,651 )     815,137  
Expenses
                                                
Cost of midstream gas purchased
     —               —       406,583       (72,729 )     333,854  
Operating expense
     55,699       1.09       8,660       26,451       (4,044 )     86,766  
Exploration
     37,970       0.74       —       —       —       37,970  
Exploration - drilling rig standby charges
     19,784       0.39       —       —       —       19,784  
Taxes other than income
     16,556       0.32       1,704       3,090       723       22,073  
Gneral and administrative
     22,625       0.44       13,867       16,301       27,207       80,000  
Depreciation, depletion and amortization
     150,429       2.96       31,330       38,905       2,703       223,367  
Impairments on assets held for sale
     97,400       1.91       —       —       —       97,400  
Impairments
     9,015       0.18       1,511       —       —       10,526  
Loss on sale of assets
     1,599       0.03       —       —       —       1,599  
Total expenses
     411,077       8.06       57,072       491,330       (46,140 )     913,339  
                                                 
Operating income (loss)
   $ (175,993 )   $ (3.45 )   $ 87,528     $ 20,774     $ (30,511 )   $ (98,202 )
                                                 
                                                 
Additions to property and equipment
   $ 203,678             $ 2,252     $ 78,425     $ 1,998     $ 286,353  
                                                 
                                                 
 
 
Year ended December 31, 2008
  
Oil and Gas
    
Coal and
Natural
Resource
    
Natural Gas
    
Eliminations
        
   
Amount
    
per Mcfe (a)
    
Management
    
Midstream
    
and Other
    
Consolidated
  
Production
                                    
Total natural gas, crude oil and NGLs (MMcfe)
     46,881                                
Natural gas (MMcf)
     41,493                                
Crude oil (MBbls)
     506                                
NGLs (MBbls)
     392                                
Coal royalty tons (thousands of tons)
                   33,690                    
Midstream system throughput volumes (MMcf)
                     98,683              
                                           
Revenues
                                          
Natural gas
   $ 368,801     $ 8.89     $ —     $ —     $ —     $ 368,801  
Crude oil
     46,529       91.95       —       —       —       46,529  
NGLs
     21,292       54.32       —       —       —       21,292  
Natural gas midstream
     —               —       720,002       (130,219 )     589,783  
Coal royalties
     —               122,834       —       —       122,834  
Gain on sale of property and equipment
     30,634               792       —       —       31,426  
Other
     2,074               29,701       8,251       160       40,186  
Total revenues
     469,330       10.01       153,327       728,253       (130,059 )     1,220,851  
Expenses
                                                
Cost of midstream gas purchased
     —               —       612,530       (127,909 )     484,621  
Operating expense
     59,459       1.27       11,940       20,737       (2,245 )     89,891  
Exploration
     42,436       0.91       —       —       —       42,436  
Taxes other than income
     23,336       0.50       1,680       2,578       992       28,586  
General and administrative
     21,284       0.45       12,606       14,300       26,304       74,494  
Depreciation, depletion and amortization
     132,276       2.82       30,805       27,361       1,794       192,236  
Impairments
     19,963       0.43       —       31,801       —       51,764  
Total expenses
     298,754       6.37       57,031       709,307       (101,064 )     964,028  
                                                 
Operating income (loss)
   $ 170,576     $ 3.64     $ 96,296     $ 18,946     $ (28,995 )   $ 256,823  
                                                 
                                                 
Additions to property and equipment
   $ 607,220             $ 27,270     $ 304,758     $ (60,162 )   $ 879,086  
                                                 
(a) Natural gas revenues are shown per Mcf, crude oil and NGL revenues are shown per Bbl, and all other amounts are shown per Mcfe.
  

 
- 9 -
 
 

PENN VIRGINIA CORPORATION
  
CERTAIN NON-GAAP FINANCIAL MEASURES - unaudited
  
(in thousands)
  
                         
                         
   
Three Months Ended
    
Year Ended
  
   
December 31,
    
December 31,
  
   
2009
    
2008
    
2009
    
2008
  
Reconciliation of GAAP "Net cash provided by operating activities"
                        
to Non-GAAP "Operating cash flow"
                        
Net cash provided by operating activities
   $ 53,924     $ 107,087     $ 275,947     $ 383,774  
Adjustments:
                                
Changes in operating assets and liabilities
     20,458       (11,347 )     4,570       30,052  
                                 
Operating cash flow (a)
   $ 74,382     $ 95,740     $ 280,517     $ 413,826  
                                 
Reconciliation of GAAP "Net income (loss) attributable to PVA"
                                
to Non-GAAP "Net income (loss) attributable to PVA, as adjusted"
                                
Net income (loss) attributable to PVA
   $ (5,351 )   $ (514 )   $ (114,643 )   $ 121,084  
Adjustments for derivatives:
                                
Derivative losses (gains) included in income
     (2,512 )     (49,618 )     (5,333 )     (41,102 )
Cash receipts (payments) to settle derivatives
     9,211       654       61,147       (46,086 )
Adjustment for drilling rig standby charges
     (530 )     —       19,784       —  
Adjustment for impairments
     11,098       51,764       107,926       51,764  
Adjustment for net gains on sale of assets
     (427 )     (91 )     (746 )     (31,426 )
Impact of adjustments on noncontrolling interests
     (6,629 )     (3,033 )     (16,123 )     10,616  
Impact of adjustments on income taxes
     (5,183 )     11,616       (66,042 )     20,955  
                                 
    $ (323 )   $ 10,778     $ (14,030 )   $ 85,805  
Less: Portion of subsidiary net income (loss) allocated to undistributed share-based compensation awards, net of taxes
     (42 )     (40 )     (116 )     (295 )
                                 
Net income (loss) attributable to PVA, as adjusted (b)
   $ (365 )   $ 10,738     $ (14,146 )   $ 85,510  
                                 
Net income (loss) attributable to PVA, as adjusted, per share, diluted
   $ (0.01 )   $ 0.26     $ (0.32 )   $ 2.03  
                                 
 
(a)
Operating cash flow represents net cash provided by operating activities before changes in operating assets and liabilities.  We believe that operating cash flow is widely accepted as a financial indicator of an energy company's ability to generate cash which is used to internally fund investing activities, service debt and pay dividends.  Operating cash flow is widely used by investors and professional research analysts in the valuation, comparison, rating and investment recommendations of companies within the energy industry.  Operating cash flow is presented because we believe it is a useful adjunct to net cash provided by operating activities under GAAP.  Operating cash flow is not a measure of financial performance under GAAP and should not be considered as an alternative to cash flows from operating, investing or financing activities, as an indicator of cash flows, as a measure of liquidity or as an alternative to net income.
   
(b)
Net income (loss) attributable to PVA as adjusted represents net income (loss) attributable to PVA adjusted to exclude the effects of non-cash changes in the fair value of derivatives, drilling rig standby charges, impairments, gains and losses on the sale of assets and net income of PVR allocated to unvested PVR restricted units awarded as equity compensation that we hold until vesting. We believe this presentation is commonly used by investors and professional research analysts in the valuation, comparison, rating and investment recommendations of companies within the oil and gas exploration and production industry, as well as companies within the natural gas midstream industry.  We use this information for comparative purposes within these industries.  Net income (loss) attributable to PVA, as adjusted, is not a measure of financial performance under GAAP and should not be considered as a measure of liquidity or as an alternative to net income attributable to PVA.
 
 
- 10 -
 

PENN VIRGINIA CORPORATION
  
CONVERSION TO NON-GAAP EQUITY METHOD - unaudited
  
(in thousands)
  
                                     
Reconciliation of GAAP "Income Statements As Reported" to Non-GAAP "Income Statements, as Adjusted" (a):
  
                                     
   
Three months ended December 31, 2009
    
Three months ended December 31, 2008
  
   
As Reported
  
Adjustments
  
As Adjusted
  
As Reported
  
Adjustments
  
As Adjusted
  
Revenues
                                    
Natural gas
   $ 40,361     $ —     $ 40,361     $ 73,165     $ —     $ 73,165  
Crude oil
     11,846       —       11,846       9,087       —       9,087  
NGLs
     5,182       —       5,182       2,405       —       2,405  
Natural gas midstream
     138,893       (138,893 )     —       95,523       (95,523 )     —  
Coal royalties
     29,987       (29,987 )     —       33,923       (33,923 )     —  
Other
     10,628       (9,007 )     1,621       11,587       (10,187 )     1,400  
Total revenues
     236,897       (177,887 )     59,010       225,690       (139,633 )     86,057  
Expenses
                                                
Cost of midstream gas purchased
     105,275       (105,275 )     —       76,374       (76,374 )     —  
Operating
     20,249       (8,173 )     12,076       23,238       (7,150 )     16,088  
Exploration
     3,383       —       3,383       22,671       —       22,671  
Exploration - drilling rig standby charges
     (530 )     —       (530 )     —       —       —  
Taxes other than income
     5,417       (1,586 )     3,831       5,261       (1,241 )     4,020  
General and administrative
     21,213       (7,146 )     14,067       19,488       (6,919 )     12,569  
Depreciation, depletion and amortization
     50,207       (18,264 )     31,943       58,755       (16,844 )     41,911  
Impairments on assets held for sale
     9,500       —       9,500       —       —       —  
Impairments
     1,598       (1,511 )     87       51,764       (31,801 )     19,963  
Loss on sale of assets
     —       —       —       —       —       —  
Total expenses
     216,312       (141,955 )     74,357       257,551       (140,329 )     117,222  
                                                 
Operating income (loss)
     20,585       (35,932 )     (15,347 )     (31,861 )     696       (31,165 )
                                                 
Other income (expense)
                                                
Interest expense
     (18,552 )     6,167       (12,385 )     (13,986 )     7,306       (6,680 )
Derivatives
     3,376       7,709       11,085       50,969       (23,261 )     27,708  
Equity earnings in PVG and PVR
     —       5,626       5,626       —       7,408       7,408  
Other
     338       (333 )     5       116       (333 )     (217 )
                                                 
Income (loss) before taxes and noncontrolling interests
     5,747       (16,763 )     (11,016 )     5,238       (8,184 )     (2,946 )
Income tax benefit (expense)
     5,665       —       5,665       2,432       —       2,432  
                                                 
Net income (loss)
     11,412       (16,763 )     (5,351 )     7,670       (8,184 )     (514 )
Less net income attributable to noncontrolling interests
     (16,763 )     16,763       —       (8,184 )     8,184       —  
                                                 
Net income (loss) attributable to PVA
   $ (5,351 )   $ —     $ (5,351 )   $ (514 )   $ —     $ (514 )
                                                 
 
   
Year ended December 31, 2009
    
Year ended December 31, 2008
  
   
As Reported
  
Adjustments
  
As Adjusted
  
As Reported
  
Adjustments
  
As Adjusted
  
Revenues
                                                
Natural gas
   $ 169,666     $ —     $ 169,666     $ 368,801     $ —     $ 368,801  
Crude oil
     43,258       —       43,258       46,529       —       46,529  
NGLs
     15,735       —       15,735       21,292       —       21,292  
Natural gas midstream
     428,016       (428,016 )     —       589,783       (589,783 )     —  
Coal royalties
     120,435       (120,435 )     —       122,834       (122,834 )     —  
Other
     38,027       (31,480 )     6,547       71,612       (38,744 )     32,868  
Total revenues
     815,137       (579,931 )     235,206       1,220,851       (751,361 )     469,490  
Expenses
                                                
Cost of midstream gas purchased
     333,854       (333,854 )     —       484,621       (484,621 )     —  
Operating
     86,766       (35,111 )     51,655       89,891       (30,367 )     59,524  
Exploration
     37,970       —       37,970       42,436       —       42,436  
Exploration - drilling rig standby charges
     19,784       —       19,784       —       —       —  
Taxes other than income
     22,073       (4,794 )     17,279       28,586       (4,258 )     24,328  
General and administrative
     80,000       (32,545 )     47,455       74,494       (28,976 )     45,518  
Depreciation, depletion and amortization
     223,367       (70,235 )     153,132       192,236       (58,166 )     134,070  
Impairments on assets held for sale
     97,400       —       97,400       —       —       —  
Impairments
     10,526       (1,511 )     9,015       51,764       (31,801 )     19,963  
Loss on sale of assets
     1,599       —       1,599       —       —       —  
Total expenses
     913,339       (478,050 )     435,289       964,028       (638,189 )     325,839  
                                                 
Operating income (loss)
     (98,202 )     (101,881 )     (200,083 )     256,823       (113,172 )     143,651  
                                                 
Other income (expense)
                                                
Interest expense
     (68,884 )     24,653       (44,231 )     (49,299 )     24,672       (24,627 )
Derivatives
     11,854       19,714       31,568       46,582       (16,837 )     29,745  
Equity earnings in PVG and PVR
     —       21,592       21,592       —       42,162       42,162  
Other
     2,612       (1,353 )     1,259       (666 )     2,739       2,073  
                                                 
Income (loss) before taxes and noncontrolling interests
     (152,620 )     (37,275 )     (189,895 )     253,440       (60,436 )     193,004  
                                                 
Income tax benefit (expense)
     75,252       —       75,252       (71,920 )     —       (71,920 )
                                                 
Net income (loss)
     (77,368 )     (37,275 )     (114,643 )     181,520       (60,436 )     121,084  
Less net income attributable to noncontrolling interests
     (37,275 )     37,275       —       (60,436 )     60,436       —  
                                                 
Net income (loss) attributable to PVA
   $ (114,643 )   $ —     $ (114,643 )   $ 121,084     $ —     $ 121,084  
                                                 
                                                 
 
(a)
Equity method income statements represent consolidated income statements, minus 100% of PVG’s consolidated results of operations, plus noncontrolling interest which represents the portion of PVG’s consolidated results of operations that we do not own.  We believe equity method income statements provide useful information to allow the public to more easily discern PVG’s effect on our operations.

 
 
- 11 -
 


PENN VIRGINIA CORPORATION
  
CONVERSION TO NON-GAAP EQUITY METHOD - unaudited (continued)
  
(in thousands)
  
                                     
Reconciliation of GAAP "Balance Sheet As Reported" to Non-GAAP "Balance Sheet, as Adjusted" (a):
        
                                     
   
December 31, 2009
    
December 31, 2008
  
   
As Reported
  
Adjustments
  
As Adjusted
  
As Reported
  
Adjustments
  
As Adjusted
  
Assets
                                    
Current assets
   $ 306,542     $ (107,782 )   $ 198,760     $ 263,518     $ (126,299 )   $ 137,219  
Net property and equipment
     2,352,358       (900,844 )     1,451,514       2,512,177       (895,119 )     1,617,058  
Equity investment in PVG and PVR
     —       155,692       155,692       —       241,296       241,296  
Other assets
     236,907       (210,437 )     26,470       220,870       (206,256 )     14,614  
Total assets
   $ 2,895,807     $ (1,063,371 )   $ 1,832,436     $ 2,996,565     $ (986,378 )   $ 2,010,187  
                                                 
Liabilities and shareholders' equity
                                                
Current liabilities
   $ 160,835     $ (86,323 )   $ 74,512     $ 247,594     $ (89,908 )   $ 157,686  
Long-term debt
     1,118,527       (620,100 )     498,427       1,099,996       (568,100 )     531,896  
Other liabilities and deferred taxes
     264,558       (27,037 )     237,521       312,645       (31,143 )     281,502  
                                                 
PVA shareholders' equity
     1,021,976       —       1,021,976       1,039,103       —       1,039,103  
Noncontrolling interests
     329,911       (329,911 )     —       297,227       (297,227 )     —  
Total shareholders' equity
     1,351,887       (329,911 )     1,021,976       1,336,330       (297,227 )     1,039,103  
Total liabilities and shareholders' equity
   $ 2,895,807     $ (1,063,371 )   $ 1,832,436     $ 2,996,565     $ (986,378 )   $ 2,010,187  
                                                 
                                                 
 
Reconciliation of GAAP "Statement of Cash Flows As Reported" to Non-GAAP "Statement of Cash Flows, as Adjusted" (b):
  
                                                 
   
Three months ended December 31, 2009
    
Three months ended December 31, 2008
  
   
As Reported
  
Adjustments
  
As Adjusted
  
As Reported
  
Adjustments
  
As Adjusted
  
Cash flows from operating activities
                                                
Net income (loss)
   $ 11,412     $ —     $ 11,412     $ 7,670     $ —     $ 7,670  
Adjustments to reconcile net income (loss) to
                                          
net cash provided by operating activities:
                                          
Depreciation, depletion and amortization
     50,207       (18,264 )     31,943       58,755       (16,844 )     41,911  
Impairments
     11,098       (1,511 )     9,587       51,764       (31,801 )     19,963  
Derivative contracts:
                                                
Total derivative losses (gains)
     (2,512 )     (8,466 )     (10,978 )     (49,618 )     21,909       (27,709 )
Cash receipts (payments) to settle derivatives
     9,211       1,135       10,346       654       5,187       5,841  
Deferred income taxes
     (12,496 )     —       (12,496 )     (1,554 )     —       (1,554 )
Dry hole and unproved leasehold expense
     2,802       —       2,802       20,855       —       20,855  
Investment in PVG and PVR
     —       (23,224 )     (23,224 )     —       (15,592 )     (15,592 )
Cash distributions from PVG and PVR
     —       7,347       7,347       —       11,571       11,571  
Other
     4,660       (1,357 )     3,303       7,214       (2,631 )     4,583  
Operating cash flow
     74,382       (44,340 )     30,042       95,740       (28,201 )     67,539  
Changes in operating assets and liabilities
     (20,458 )     8,303       (12,155 )     11,347       (4,299 )     7,048  
Net cash provided by operating activities
     53,924       (36,037 )     17,887       107,087       (32,500 )     74,587  
                                                 
Net cash used in investing activities
     (21,991 )     7,111       (14,880 )     (209,305 )     24,753       (184,552 )
                                                 
Net cash provided by financing activities
     (38,636 )     30,806       (7,830 )     101,549       8,416       109,965  
                                                 
Net increase (decrease) in cash and cash equivalents
     (6,703 )     1,880       (4,823 )     (669 )     669       —  
Cash and cash equivalents-beginning of period
     105,034       (21,194 )     83,840       19,007       (19,007 )     —  
Cash and cash equivalents-end of period
   $ 98,331     $ (19,314 )   $ 79,017     $ 18,338     $ (18,338 )   $ —  
                                                 
                                                 
 
   
Year ended December 31, 2009
    
Year ended December 31, 2008
  
   
As Reported
  
Adjustments
  
As Adjusted
  
As Reported
  
Adjustments
  
As Adjusted
  
Cash flows from operating activities
                                                
Net income (loss)
   $ (77,368 )   $ —     $ (77,368 )   $ 181,520     $ —     $ 181,520  
Adjustments to reconcile net income (loss) to
                                          
net cash provided by operating activities:
                                          
Depreciation, depletion and amortization
     223,367       (70,235 )     153,132       192,236       (58,166 )     134,070  
Impairments
     107,926       (1,511 )     106,415       51,764       (31,801 )     19,963  
Derivative contracts:
                                                
Total derivative losses (gains)
     (5,333 )     (22,700 )     (28,033 )     (41,102 )     11,357       (29,745 )
Cash settlements of derivatives
     61,147       (3,000 )     58,147       (46,086 )     38,466       (7,620 )
Deferred income taxes
     (83,224 )     —       (83,224 )     58,551       —       58,551  
Dry hole and unproved leasehold expense
     33,278       —       33,278       35,847       —       35,847  
Investment in PVG and PVR
     —       (62,911 )     (62,911 )     —       (102,598 )     (102,598 )
Cash distributions from PVG and PVR
     —       42,279       42,279       —       44,018       44,018  
Other
     20,724       (2,620 )     18,104       (18,904 )     (1,421 )     (20,325 )
Operating cash flow
     280,517       (120,698 )     159,819       413,826       (100,145 )     313,681  
Changes in operating assets and liabilities
     (4,570 )     4,763       193       (30,052 )     6,976       (23,076 )
Net cash provided by operating activities
     275,947       (115,935 )     160,012       383,774       (93,169 )     290,605  
                                                 
Net cash used in investing activities
     (270,112 )     79,530       (190,582 )     (845,567 )     331,030       (514,537 )
                                                 
Net cash provided by financing activities
     74,158       35,429       109,587       445,604       (225,696 )     219,908  
                                                 
Net increase (decrease) in cash and cash equivalents
     79,993       (976 )     79,017       (16,189 )     12,165       (4,024 )
Cash and cash equivalents-beginning of period
     18,338       (18,338 )     —       34,527       (30,503 )     4,024  
Cash and cash equivalents-end of period
   $ 98,331     $ (19,314 )   $ 79,017     $ 18,338     $ (18,338 )   $ —  
                                                 
                                                 
 
(a)
Equity method balance sheets represent consolidated balance sheets, minus 100% of PVG’s consolidated balance sheets, excluding noncontrolling interests which represents the portion of PVG’s consolidated balance sheet that we do not own and including other adjustments to eliminate inter-company transactions.  We believe equity method balance sheets provide useful information to allow the public to more easily discern PVG’s effect on our assets, liabilities and shareholders’ equity.

(b)
Equity method statements of cash flows represent consolidated statements of cash flows, minus 100% of PVG’s consolidated statements of cash flows, excluding noncontrolling interests which represents the portion of PVG’s consolidated results of operations that we do not own and including other adjustments to eliminate inter-company transactions.  We believe equity method statements of cash flows provide useful information to allow the public to more easily discern PVG’s effect on our cash flows.
 
 
- 12 -
 

PENN VIRGINIA CORPORATION
  
GUIDANCE TABLE - unaudited
  
(dollars in millions except where noted)
  
                                                 
We are providing the following guidance regarding financial and operational expectations for full-year 2010.
  
                                                 
   
Actual
                    
   
First
Quarter
    
Second
Quarter
    
Third
Quarter
    
Fourth
Quarter
    
YTD
    
Full-Year
  
Oil & Gas Segment:
  
2009
    
2009
    
2009
    
2009
    
2009
    
2010 Guidance
  
Production:
                                                
Natural gas (Bcf) - (a)
     11.8       11.4       10.6       9.5       43.3       38.2       —       41.4  
Crude oil (MBbls) - (a)
     171       215       202       162       750       900       —       975  
NGLs (MBbls)
     147       140       94       146       527       575       —       625  
Equivalent production (Bcfe)
     13.7       13.6       12.4       11.3       51.0       47.0       —       51.0  
Equivalent daily production (MMcfe per day)
     152.3       149.5       134.9       123.1       139.7       128.8       —       139.7  
                                                                 
Expenses:
                                                                
Cash operating expenses ($ per Mcfe)
   $ 1.80       1.79       1.82       2.06       1.86       1.95       —       2.10  
Exploration
   $ 21.3       17.5       16.1       2.8       57.7       40.0       —       50.0  
Depreciation, depletion and amortization ($ per Mcfe)
   $ 2.92       2.94       3.17       2.74       2.96       3.00       —       3.10  
Impairments
   $ 1.2       3.3       92.4       9.6       106.4                          
 
                                                               
Capital expenditures:
                                                                
Development drilling
   $ 76.5       37.3       8.3       18.1       140.2       250.0       —       275.0  
Exploratory drilling
   $ 1.5       —       0.7       0.3       2.5       40.0       —       50.0  
Pipeline, gathering, facilities
   $ 5.1       2.4       0.9       1.0       9.4       7.0       —       8.0  
Seismic
   $ 0.7       0.4       0.1       —       1.2       10.0       —       11.0  
Lease acquisition, field projects and other
   $ 1.8       2.8       5.8       8.1       18.5       68.0       —       81.0  
Total segment capital expenditures
   $ 85.6       42.9       15.8       27.5       171.8       375.0       —       425.0  
                                                                 
Coal and Natural Resource Segment (PVR):
                                                                
Coal royalty tons (millions)
     8.7       8.7       8.4       8.5       34.3       31.0       —       32.0  
                                                                 
Revenues:
                                                                
Average coal royalties per ton
   $ 3.50       3.43       3.56       3.55       3.51       3.30       —       3.40  
Average coal royalties per ton, net of coal royalties expense
   $ 3.36       3.25       3.37       3.38       3.34       3.15       —       3.25  
Other
   $ 7.6       5.1       5.4       6.0       24.1       21.0       —       22.0  
                                                                 
Expenses:
                                                                
Cash operating expenses
   $ 5.9       6.6       6.0       5.7       24.2       22.0       —       22.5  
Depreciation, depletion and amortization
   $ 7.4       8.2       8.0       7.8       31.3       28.5       —       29.0  
                                                                 
Capital expenditures:
                                                                
Expansion and acquisitions
   $ 1.3       0.6       0.1       0.1       2.1       6.0       —       7.0  
Other capital expenditures
   $ —       —       —       0.2       0.2       —       —       0.5  
Total segment capital expenditures
   $ 1.3       0.6       0.1       0.3       2.3       6.0       —       7.5  
                                                                 
Natural Gas Midstream Segment (PVR):
                                                                
System throughput volumes (MMcf per day) (b)
     359       344       324       303       332       350       —       360  
                                                                 
Expenses:
                                                                
Cash operating expenses
   $ 11.8       11.6       11.6       10.8       45.8       55.0       —       60.0  
Depreciation, depletion and amortization
   $ 9.1       9.5       9.8       10.5       38.9       42.0       —       44.0  
                                                                 
Capital expenditures:
                                                                
Expansion and acquisitions
   $ 11.2       10.3       37.9       5.0       64.4       34.0       —       42.0  
Other capital expenditures
   $ 3.3       1.4       1.4       2.3       8.4       16.0       —       18.0  
Total segment capital expenditures
   $ 14.5       11.7       39.3       7.3       72.8       50.0       —       60.0  
                                                                 
Corporate and Other:
                                                                
General and administrative expense - PVA
   $ 5.2       5.8       6.4       7.4       24.8       22.0       —       24.0  
General and administrative expense - PVG
   $ 0.5       0.6       0.9       0.4       2.4       2.5       —       3.0  
Interest expense:
                                                                
PVA end of period debt outstanding
   $ 591.5       564.3       496.3       498.4       498.4                          
PVA average interest rate
     4.3 %     6.0 %     9.8 %     12.6 %     8.2 %                        
PVR end of period debt outstanding
   $ 595.1       597.1       628.1       620.1       620.1                          
PVR average interest rate
     3.9 %     4.2 %     4.2 %     3.9 %     4.1 %                        
                                                                 
Income tax rate
     38.8 %     39.7 %     38.7 %     51.4 %     39.6 %                        
Cash distributions received from PVG and PVR
   $ 11.5       11.6       11.5       7.6       42.2                          
Other capital expenditures
   $ 0.6       0.9       0.2       0.3       2.0       1.5       —       2.0  
                                                                 
                                                                 
These estimates are meant to provide guidance only and are subject to change as PVA's and PVR's operating environments change.
  
                                                                 
See Notes on subsequent pages.
                                                                

 
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PENN VIRGINIA CORPORATION
GUIDANCE TABLE - unaudited - (continued)
 
Notes to Guidance Table:
 
(a)
The following table shows our current derivative positions in the oil and gas segment as of December 31, 2009:
 
         
Weighted Average Price
  
   
Average Volume
Per Day
    
Additional
Put Option
  
Floor
    
Ceiling
  
                         
Natural gas costless collars  
(MMBtu)
          
($ per MMBtu)
          
First quarter 2010
     35,000             4.96       7.41  
Second quarter 2010
     30,000             5.33       8.02  
Third quarter 2010
     30,000             5.33       8.02  
Fourth quarter 2010
     50,000             5.65       8.77  
First quarter 2011
     50,000             5.65       8.77  
Second quarter 2011
     30,000             5.67       7.58  
Third quarter 2011
     30,000             5.67       7.58  
Fourth quarter 2011
     20,000             6.00       8.50  
First quarter 2012
     20,000             6.00       8.50  
                               
Natural gas three-way collars (1)  
(MMBtu)
            
($ per MMBtu)
          
First quarter 2010
     30,000       6.83       9.50       13.60  
                                 
Natural gas swaps  
(MMBtu)
            
($ per MMBtu)
          
First quarter 2010
     15,000               6.19          
Second quarter 2010
     30,000               6.17          
Third quarter 2010
     30,000               6.17          
                                 
Crude oil costless collars  
(barrels)
            
($ per barrel)
          
First quarter 2010
     500               60.00       74.75  
Second quarter 2010
     500               60.00       74.75  
Third quarter 2010
     500               60.00       74.75  
Fourth quarter 2010
     500               60.00       74.75  
 
We estimate that, excluding the derivative positions described above, for every $1.00 per MMBtu increase or decrease in the natural gas price, oil and gas segment operating income for 2010 would increase or decrease by approximately $17.8 million.  In addition, we estimate that for every $5.00 per barrel increase or decrease in the crude oil price, oil and gas segment operating income for 2010 would increase or decrease by approximately $1.8 million.  This assumes that crude oil prices, natural gas prices and inlet volumes remain constant at anticipated levels.  These estimated changes in gross margin and operating income exclude potential cash receipts or payments in settling these derivative positions.

(1) A three-way collar is a combination of options: a sold call, a purchased put and a sold put.  The sold call establishes the maximum price that we will receive for the contracted commodity volumes.  The purchased put establishes the minimum price that we will receive for the contracted volumes unless the market price for the commodity falls below the sold put strike price, at which point the minimum price equals the reference price (i.e., NYMEX) plus the excess of the purchased put strike price over the sold put strike price.
 
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PENN VIRGINIA CORPORATION
GUIDANCE TABLE - unaudited - (continued)
                     
                     
(b)
The costless collar natural gas prices per MMBtu per quarter include the effects of basis differentials, if any. The following table
 
shows current derivative positions for natural gas production in PVR's natural gas midstream segment as of December 31, 2009:
 
                         
   
Average
          
Weighted Average Price
  
   
Volume
    
Swap
              
   
Per Day
    
Price
    
Put
    
Call
  
                         
Crude oil collar
  
(barrels)
          
($ per barrel)
  
First quarter 2010 through fourth quarter 2010
     750             70.00       81.25  
                               
Crude oil collar
  
(barrels)
          
($ per barrel)
  
First quarter 2010 through fourth quarter 2010
     1,000             68.00       80.00  
                               
Natural gas purchase swap  
(MMBtu)
    
($ per MMbtu)
                  
First quarter 2010 through fourth quarter 2010
     5,000       5.815                  
                                 
NGL - natural gasoline collar
  
(gallons)
          
(per gallon)
  
First quarter 2011 through fourth quarter 2011
     60,000             $ 1.55     $ 1.92  
                                 
Crude oil collar
  
(barrels)
            
(per barrel)
  
First quarter 2011 through fourth quarter 2011
     400             $ 75.00     $ 98.50  
                                 
Natural gas purchase swap
  
(MMBtu)
    
($ per MMBtu)
                  
First quarter 2011 through fourth quarter 2011
     3,000       6.430                  
                                 
 
We estimate that, excluding the derivative positions described above, for every $1.00 per MMBtu increase or decrease in the natural gas price, natural gas midstream gross margin and operating income for 2010 would decrease or increase by approximately $6.9 million.  In addition, we estimate that for every $5.00 per barrel increase or decrease in the crude oil price, natural gas midstream gross margin and operating income for 2010 would increase or decrease by approximately $11.5 million.  This assumes that crude oil prices, natural gas prices and inlet volumes remain constant at anticipated levels.  These estimated changes in gross margin and operating income exclude potential cash receipts or payments in settling these derivative positions.
 
 
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