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Penn Virginia Resource Partners L.P. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: May 7, 2012 06:19AM

Penn Virginia Resource Partners L.P. (PVR) filed Quarterly Report for the period ended 2012-03-31. Penn Va Resrc has a market cap of $2.02 billion; its shares were traded at around $24.39 with a P/E ratio of 19.1 and P/S ratio of 1.7. The dividend yield of Penn Va Resrc stocks is 8%. Penn Va Resrc had an annual average earning growth of 11.2% over the past 10 years.



Highlight of Business Operations:

During the three months ended March 31, 2012, we recognized a $124.8 million impairment charge related to our tangible and intangible natural gas gathering assets in the natural gas midstream segment located in the southern portion of the Fort Worth Basin of north Texas (the “North Texas Gathering System”). The impairment was triggered by continuing market declines of natural gas prices and lack of drilling in the area. The North Texas Gathering System represented less than 1% of our consolidated total revenues for the three months ended March 31, 2012 and 2011. The Partnership does not expect to incur any significant cash expenditures in the next several years with respect to these natural gas gathering assets as a result of the impairment.

Coal royalties, which accounted for 84% of the coal and natural resource management segment revenues for the three months ended March 31, 2012 and 86% for the same period in 2011, were lower as compared to 2011. The decrease was attributed to decreased production offset by higher realized coal royalty per ton primarily in the Central Appalachia region. A ramp up in both thermal and metallurgical coal pricing, as well as production, caused 2011 to be a strong year. We have seen a decrease in coal prices and production during the first quarter of 2012 (relative to the fourth quarter of 2011) related primarily to changes in market demand due to a mild winter and low natural gas prices. Both reasons have become variables as to why coal stock piles have risen in the industry and have brought prices down. Despite the softening of coal prices, the coal prices received by our lessees during the first quarter of 2012 were still higher than what they received in the first quarter of 2011.

We generated a portion of our gross margin from contractual arrangements under which the gross margin is exposed to increases and decreases in the price of natural gas and NGLs. As part of our risk management strategy, we use derivative financial instruments to hedge NGLs sold and natural gas purchased when it is opportunistic. Midstream gross margin, including the cash impact of existing midstream derivatives, was $37.6 million compared to $33.0 million. This $4.6 million increase was primarily due to the increased system volumes and related fee-based gathering revenues earned on the Marcellus system.

Coal royalties, which accounted for 84% of the coal and natural resource management segment revenues for the three months ended March 31, 2012 and 86% for the same period in 2011, were lower as compared to 2011. The decrease was attributed to decreased production partially offset by higher realized coal royalty per ton primarily in the Central and Northern Appalachia regions. A ramp up in both thermal and metallurgical coal pricing, as well as production, caused 2011 to be a strong year. We have seen a decrease in both coal prices and production during the first quarter of 2012 (relative to the fourth quarter of 2011) related primarily to changes in market demand due to a mild winter and low natural gas prices. Both reasons have become variables as to why coal stock piles have risen in the industry and have brought prices down. However, coal prices received by our lessees during the first quarter of 2012 were still higher than what they received in the first quarter of 2011.

Read the The complete Report



Stocks Discussed: PVR,
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