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Penn Virginia Corp. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: November 5, 2010 06:16AM
Penn Virginia Corp. (PVA) filed Quarterly Report for the period ended 2010-09-30.
Highlight of Business Operations:
Prior to June 2010, we indirectly owned partner interests in Penn Virginia Resource Partners, L.P., or PVR, which is engaged in the coal and natural resource management and natural gas midstream businesses. Our ownership interests in PVR were held primarily through our general and limited partner interests in PVG. In June 2010, we completed the sale of our remaining limited partner interests in PVG in a secondary public offering for proceeds of approximately $139 million, net of offering costs. In a related transaction, we disposed of 100% of the membership interest in PVG s general partner, thereby relinquishing control of PVG. As a result of these transactions, we recognized a gain of $49.6 million, net of taxes, during the three months ended June 30, 2010 and have deconsolidated PVG from our Condensed Consolidated Financial Statements. The results of operations attributable to PVG through the date of these transactions and prior periods have been presented as discontinued operations in our Condensed Consolidated Financial Statements. Since September 2009, we sold approximately 30.1 million common units representing 77% of the ownership of PVG and raised approximately $450 million in net pre-tax proceeds. Additional information is provided in the Liquidity and Capital Resources discussion that follows.
In August 2010, we acquired approximately 6,800 net acres in the Eagle Ford Shale play in Texas for approximately $31.1 million. The acreage includes over 40 horizontal well locations. We are the operator with a working interest of approximately 75% and a net revenue interest of approximately 57%. In May 2010, we acquired approximately 10,000 net acres in the Marcellus Shale play in Pennsylvania in two transactions for approximately $19.5 million. The first transaction included approximately 7,900 net acres with Marcellus Shale rights and approximately 23,000 net acres with deeper rights. In connection with this acquisition, we granted the seller a 1.5 percent overriding royalty interest on the acquired acreage. The second transaction included approximately 2,100 net acres with rights to the Marcellus Shale and all other formations.
In November 2009, we implemented an organization restructuring that resulted in the transfer of certain corporate and oil and gas accounting and administrative functions from our Kingsport, Tennessee office location to our Houston, Texas and Radnor, Pennsylvania locations. In addition, the restructuring resulted in the relocation of our eastern region oil and gas divisional office from Kingsport to Pittsburgh, Pennsylvania. Approximately 30 employees were terminated in connection with the restructuring, which was substantially completed during the second quarter of 2010. In 2010, we have incurred $2.9 million in costs including termination benefits, relocation costs and other incremental costs associated with expanding our other office locations. In addition, we incurred a lease assignment charge of $3.5 million in connection with the assignment of a lease for our former Kingsport, Tennessee office facility to PVR.
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