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Penn Virginia Resource Partners L.P. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: April 29, 2011 08:20AM

Penn Virginia Resource Partners L.P. (PVR) filed Quarterly Report for the period ended 2011-03-31. Penn Virginia Resource Partners L.p. Common Units has a market cap of $1.99 billion; its shares were traded at around $28.06 with a P/E ratio of 29.8 and P/S ratio of 2.3. The dividend yield of Penn Virginia Resource Partners L.p. Common Units stocks is 6.6%. Penn Virginia Resource Partners L.p. Common Units had an annual average earning growth of 27.5% over the past 10 years. GuruFocus rated Penn Virginia Resource Partners L.p. Common Units the business predictability rank of 2-star.

Highlight of Business Operations:

During the three months ended March 31, 2011 and for the year ended December 31, 2010, we incurred $6.4 million and $4.6 million of direct costs associated with the Merger. The aggregate costs of $11.0 million were charged to partners’ capital upon the effective date of the Merger in 2011. At December 31, 2010, the $4.6 million of costs incurred at that time were included in other long-term assets on the consolidated balance sheet. Costs incurred and paid during the three months ended March 31, 2011 are reported under the caption “Cash paid for merger” in financing activities section of the consolidated statement of cash flows. No merger costs were incurred in the three months ended March 31, 2010.

During the three months ended March 31, 2011, we incurred net borrowings of $107.0 million to fund our coal and natural resources acquisition and to finance the construction of natural gas midstream capital expenditures. We also paid $1.0 million of direct costs incurred related to the Merger. During the three months ended March 31, 2011 and 2010 we paid cash distributions to our unitholders of $30.6 million and $30.2 million.

Revolver. On April 19, 2011, we entered into an amended and restated secured credit agreement increasing our borrowing capacity under the Revolver from $850 million to $1.0 billion and extending the maturity date until April 19, 2016. The interest rate under the Revolver fluctuates based on the ratio of our total indebtedness-to-EBITDA. As of April 19, 2011, interest is payable at the base rate plus an applicable margin ranging from 0.75% to 1.75% if we select the base rate indebtedness option under the Revolver or at a rate derived from LIBOR plus an applicable margin ranging from 1.75% to 2.75% if we select the LIBOR-based indebtedness option. As of March 31, 2011, net of outstanding indebtedness of $515.0 million and letters of credit of $1.6 million, we had remaining borrowing capacity of $333.4 million on the $850 million Revolver. The Revolver is available to provide funds for general partnership purposes, including working capital, capital expenditures, acquisitions and quarterly distributions. The weighted average interest rate on borrowings outstanding under the Revolver during the three months ended March 31, 2011 was approximately 2.9%. We do not have a public rating for the Revolver. As of March 31, 2011, we were in compliance with all of our covenants under the Revolver.

Senior Notes. In April 2010, we sold $300.0 million of Senior Notes due on April 15, 2018 with an annual interest rate of 8.25%, which is payable semi-annually in arrears on April 15 and October 15 of each year. The Senior Notes were sold at par, equating to an effective yield to maturity of approximately 8.25%. The net proceeds from the sale of the Senior Notes of approximately $292.6 million, after deducting fees and expenses of approximately $7.4 million, were used to repay borrowings under the Revolver. The Senior Notes are senior to any subordinated indebtedness, and are effectively subordinated to all of our secured indebtedness including the Revolver to the extent of the collateral securing that indebtedness. The obligations under the Senior Notes are fully and unconditionally guaranteed by our current and future subsidiaries, which are also guarantors under the Revolver.

As of March 31, 2011, our remaining borrowing capacity under the $850 million Revolver of approximately $333.4 million is sufficient to meet our anticipated 2011 capital needs and commitments. Our short-term cash requirements for operating expenses and quarterly distributions to our general partner and our unitholders are expected to be funded through operating cash flows. In 2011, we expect to invest approximately $150.0 million in internal growth capital, excluding acquisitions. The majority of the 2011 internal growth capital is expected to be incurred in the natural gas midstream segment, primarily in the Marcellus Shale region. Long-term cash requirements for acquisitions and internal growth capital are expected to be funded by operating cash flows, borrowings under the Revolver and issuances of additional debt and equity securities if available under commercially acceptable terms.

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