Penn Virginia Corporation And Penn Virginia Resource Partners, L.P. Announce $31.0M Sale And Purchase Of Royalty Interests
Radnor, PA - Penn Virginia Corporation and Penn Virginia Resource Partners, L.P. recently announced that PVR has purchased royalty interests from PVA's oil and gas exploration and production subsidiary, Penn Virginia Oil & Gas Corporation (PVOG), for $31.0M.
The royalty interests are associated with leases of property located in Wise, Scott and Lee Counties, Virginia, and Harlan and Letcher Counties, Kentucky, with estimated proved reserves of approximately 8.7 billion cubic feet of natural gas equivalent (Bcfe) at January 1, 2007. Approximately 1.1 million cubic feet of natural gas equivalent (MMcfe) per day is currently being produced from the property, net to the royalty interests, and PVR expects operating cash flow from the royalty interests to be approximately $3.9M in 2008. PVR funded the acquisition using its revolving credit facility and PVA will use the net proceeds from the sale to repay borrowings under its revolving credit facility.
On August 30, 2007, PVA announced that it had spent $47.9M to acquire Oklahoma properties with estimated proved reserves of 18.8 Bcfe and net production of approximately 3.1 MMcfe per day. PVA funded this acquisition using its revolving credit facility. PVA expects to match this acquisition with the divesture of the royalties to PVR to effectuate a like kind exchange and defer the tax gain on the sale of the royalties.
Management Comments
A. James Dearlove, Chief Executive Officer of PVR and PVA, said, "With this acquisition of royalty interests, PVR now owns and will manage royalty interests for both coal and oil and gas reserves in an area that has been a part of its asset base for over 100 years. PVR and its predecessor have been involved in the ownership and management of oil and gas royalty interests for many years, and we believe that this latest acquisition fits well with PVR's natural resource management business.
"The royalty interests had become non-core for PVOG and revenues attributable to the divested interests have been replaced by newly acquired assets that are expected to grow rapidly and provide additional upside to PVOG."
SOURCE: Penn Virginia Corporation and Penn Virginia Resource Partners, L.P