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Penn Virginia Resource Partners L.P. Reports Operating Results (10-K)
Posted by: gurufocus (IP Logged)
Date: February 24, 2012 09:47AM
Penn Virginia Resource Partners L.P. (PVR) filed Annual Report for the period ended 2011-12-31. Penn Va Resrc has a market cap of $1.94 billion; its shares were traded at around $25.15 with a P/E ratio of 18.3 and P/S ratio of 2.2. The dividend yield of Penn Va Resrc stocks is 8.2%. Penn Va Resrc had an annual average earning growth of 14.8% over the past 10 years.
Highlight of Business Operations:We will be considered to have constructively terminated as a partnership for federal income tax purposes if there is a sale or exchange within a twelve-month period of 50% or more of the total interests in our capital and profits. For purposes of determining whether the 50% threshold has been met, multiple sales of the same interest will be counted only once. Our termination would, among other things, result in the closing of our taxable year for all unitholders which could result in us filing two tax returns (and unitholders receiving two Schedule K-1s) for one calendar year. Our termination could also result in a deferral of depreciation deductions allowable in computing our taxable income. In the case of a unitholder reporting on a taxable year other than a calendar year, the closing of our taxable year may also result in more than twelve months of our taxable income or loss being includable in his taxable income for the year of termination. Our termination would not affect our classification as a partnership for federal income tax purposes, but instead, we would be treated as a new partnership for federal income tax purposes. If treated as a new partnership, we must make new tax elections and could be subject to penalties if we are unable to determine that a termination occurred. The IRS has announced a relief procedure whereby if a publicly traded partnership that has technically terminated requests and the IRS grants special relief, among other things, the partnership may be permitted to provide only a single Schedule K-1 to unitholders for the tax years in which the termination occurs.
As of December 31, 2011, we owned or controlled approximately 893 million tons of proven and probable coal reserves in Central and Northern Appalachia, the Illinois Basin and the San Juan Basin. We enter into long-term leases with experienced, third-party mine operators, providing them the right to mine our coal reserves in exchange for royalty payments. We actively work with our lessees to develop efficient methods to exploit our reserves and to maximize production from our properties. We do not operate any mines. In 2011, our lessees produced 38.4 million tons of coal from our properties and paid us coal royalties revenues of $162.9 million, for an average royalty per ton of $4.25. Approximately 81% of our coal royalties revenues in 2011 was derived from coal mined on our properties under leases containing royalty rates based on the higher of a fixed base price or a percentage of the gross sales price. The balance of our coal royalties revenues for the respective periods was derived from coal mined on our properties under leases containing fixed royalty rates that escalate annually.
Coal royalties, which accounted for 86% of the coal and natural resource management segment revenues for year ended December 31, 2011, were higher as compared to 2010. The increase was attributed to increased production and higher realized coal royalty per ton primarily in the Central Appalachian and San Juan regions. Average coal prices received by lessees increased in 2011 compared to 2010 due to strong market pricing for thermal and metallurgical coal.
Coal royalties revenues increased due to higher production and realized coal royalties per ton. The Middle Fork acquisition on January 25, 2011 contributed $10.2 million to Central Appalachia coal royalties and 1.7 million tons of coal production. Equipment added during 2010 to the mines in the San Juan Basin increased production and related coal royalties compared to the prior year.
We recognize coal royalties revenues on the basis of tons of coal sold by our lessees and the corresponding revenues from those sales. Since we do not operate any coal mines, we do not have access to actual production and revenues information until after the month of production. Therefore, our financial results include estimated revenues and accounts receivable for the month of production. We record any differences, which historically have not been significant, between the actual amounts ultimately received and the original estimates in the period they become finalized.
Stocks Discussed: PVR,