Penn Virginia Corporation Announces the Sale of Appalachian Assets for $100 Million
RADNOR, Pa.--(BUSINESS WIRE)-- Penn Virginia Corporation (PVA) today announced that it has entered into a definitive agreement to sell substantially all of its Appalachian assets, with the exception of the Marcellus Shale, to an undisclosed buyer for gross cash proceeds of $100 million. This sale is expected to close before mid-August and is subject to customary purchase price adjustments and other customary closing conditions. The effective date of the sale is January 1, 2012. We intend to use the net proceeds from this sale to help fund our 2012 capital expenditure plan.
The properties to be sold include vertical and horizontal coalbed methane and conventional properties, as well as royalty interests. The properties had net production of approximately 20 million cubic feet of natural gas equivalent per day during June 2012, almost 100 percent of which was natural gas. As a result of the divestiture, our 2012 production will decrease by an estimated 2.9 billion cubic feet of natural gas equivalent (Bcfe). Estimated proved reserves associated with the divested properties, as determined by our third party engineers at year-end 2011, were 105.7 Bcfe, 96 percent of which were proved developed and 100 percent of which were natural gas.
RBC Richardson Barr served as PVAs financial advisor in connection with the transaction.
H. Baird Whitehead, President and Chief Executive Officer, stated, The divestiture of these non-core natural gas assets will substantially reduce our indebtedness, improve our liquidity and fund further investment in our oily Eagle Ford Shale play in which we have had continuing success. In addition, as a result of this divestiture, we plan to close our Canonsburg, Pennsylvania office, which will reduce our general and administrative expenses.
We had previously discussed the potential sale of our Mid-Continent assets. However, the preliminary bids we received for those assets were unacceptable, due likely to the recent substantial declines in natural gas liquids (NGL) and oil prices. With the higher operating income, cash flow and drilling opportunities associated with our Mid-Continent properties as compared to Appalachia, we are pleased to retain our Mid-Continent assets.
Penn Virginia Corporation is an independent oil and gas company engaged primarily in the development, exploration and production of natural gas and oil in various domestic onshore regions including Texas, Appalachia, the Mid-Continent and Mississippi. For more information, please visit our website at www.pennvirginia.com.
Certain statements contained herein that are not descriptions of historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Because such statements include risks, uncertainties and contingencies, actual results may differ materially from those expressed or implied by such forward-looking statements. These risks, uncertainties and contingencies include, but are not limited to, the following: the volatility of commodity prices for natural gas, natural gas liquids NGLs and oil; our ability to develop, explore for, acquire and replace oil and gas reserves and sustain production; any impairments, write-downs or write-offs of our reserves or assets; the projected demand for and supply of natural gas, NGLs and oil; reductions in the borrowing base under our revolving credit facility; our ability to contract for drilling rigs, supplies and services at reasonable costs; our ability to obtain adequate pipeline transportation capacity for our oil and gas production at reasonable cost and to sell the production at, or at reasonable discounts to, market prices; the uncertainties inherent in projecting future rates of production for our wells and the extent to which actual production differs from estimated proved oil and gas reserves; drilling and operating risks; our ability to compete effectively against other independent and major oil and natural gas companies; uncertainties related to expected benefits from acquisitions of oil and natural gas properties; environmental liabilities that are not covered by an effective indemnity or insurance; the timing of receipt of necessary regulatory permits; the effect of commodity and financial derivative arrangements; our ability to maintain adequate financial liquidity and to access adequate levels of capital on reasonable terms; the occurrence of unusual weather or operating conditions, including force majeure events; our ability to retain or attract senior management and key technical employees; counterparty risk related to their ability to meet their future obligations; changes in governmental regulation or enforcement practices, especially with respect to environmental, health and safety matters; uncertainties relating to general domestic and international economic and political conditions; and other risks set forth in our filings with the Securities and Exchange Commission (SEC).
Additional information concerning these and other factors can be found in our press releases and public periodic filings with the SEC. Many of the factors that will determine our future results are beyond the ability of management to control or predict. Readers should not place undue reliance on forward-looking statements, which reflect managements views only as of the date hereof. We undertake no obligation to revise or update any forward-looking statements, or to make any other forward-looking statements, whether as a result of new information, future events or otherwise.
Penn Virginia Corporation
James W. Dean, 610-687-7531
Vice President, Corporate Development
Source: Penn Virginia CorporationCopyright Business Wire 2012