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Penn Virginia Corp. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: November 2, 2012 10:33AM
Penn Virginia Corp. (PVA) filed Quarterly Report for the period ended 2012-09-30. Penn Virginia Corporation has a market cap of $212.4 million; its shares were traded at around $4.75 with and P/S ratio of 0.7. Penn Virginia Corporation had an annual average earning growth of 6.1% over the past 10 years.
Highlight of Business Operations:Our oil and gas revenues may change significantly from period to period as a result of changes in commodity prices. As part of our risk management strategy, we use derivative instruments to hedge oil and gas prices. During the three months ended September 30, 2012 and 2011, we received $9.2 million and $5.6 million in net cash settlements from oil and gas derivatives.
As illustrated below, oil production volume coupled with improved oil prices were the significant factors for increasing revenues. The increase was partially offset by lower natural gas and NGL production volumes and prices. Included in the price variance for natural gas was approximately $1.6 million of unfavorable adjustments attributable to the change in prices associated with gas imbalances due to us from partners in our Mid-Continent region. In addition, the sale of our Appalachian assets resulted in a reduction to total revenues of $5.8 million during the nine month period. The following table provides an analysis of the change in our revenues for the nine months ended September 30, 2012 as compared to the nine months ended September 30, 2011:
Our oil and gas revenues may change significantly from period to period as a result of changes in commodity prices. As part of our risk management strategy, we use derivative instruments to hedge oil and gas prices. During the nine months ended September 30, 2012 and 2011, we received $22.8 million and $16.5 million in net cash settlements from oil and gas derivatives.
Production and ad valorem taxes decreased during the 2012 period due primarily to Oklahoma severance tax rebates of $2.8 million attributable to horizontal and ultra-deep wells for the period of July 1, 2009 through June 30, 2011. Rebates were also recognized for certain Texas wells. Production taxes also decreased due to the Appalachian asset sale as well as lower overall natural gas volumes and prices in the 2012 period as compared to the 2011 period. The decrease in the 2012 period was partially offset by the effect of a property tax recovery in the 2011 period attributable to wells located in West Virginia. As a percentage of product revenue, production and ad valorem taxes decreased to 3.3% during the 2012 period from 5.1% during the 2011 period.
Our revenues are subject to significant volatility as a result of changes in commodity prices. Accordingly, we actively manage the exposure of our operating cash flows to commodity price fluctuations by hedging the commodity price risk for a portion of our expected production typically through the use of collar, swap and swaption contracts. The level of our hedging activity and duration of the instruments employed depend on our cash flow at risk, available hedge prices and our operating strategy. During the nine months ended September 30, 2012, our commodity derivatives portfolio provided $4.5 million of cash inflows related to lower than anticipated prices received for our oil production and $18.3 million of cash inflows attributable to lower than anticipated prices received for our natural gas production.
Stocks Discussed: PVA,