Current PVAC Stock Info

Penn Virginia Corporation (ticker: PVAC) announced its financial and operational results for Q4 2017 and full year 2017.

Operational Highlights

  • The two-well Geo Hunter pad had a 30-day initial production (“IP”) rate of 3,767 BOEPD and a previously announced 24-hour IP rate of 5,465 BOEPD. In addition, PVAC recorded a 24-hour IP rate from its Southern Hunter Amber two-well pad of 5,092 BOEPD. Both pads utilized the company’s slickwater completion design;
  • PVAC produced 3.8 MMBOE or 10,353 BOEPD (73 percent crude oil), for full year 2017, including 12,340 BOEPD (74 percent crude oil) in the fourth quarter of 2017. This represents a 32% increase over the fourth quarter of 2016. PVAC achieved a 2017 exit rate of approximately 14,650 BOEPD. PVAC has a targeted year-over-year production growth of approximately 125% for 2018 under its current development program;
  • PVAC increased proved reserves by approximately 47 percent to 72.6 BOE representing 710 percent of 2017 production at a drill-bit finding and development cost of approximately $4.40 per barrel of oil equivalent;
  • The company increased drilling locations at year-end to 500 net (589 gross), of which approximately 80 net locations (100 gross) are higher rate of return extended reach laterals (12 in Area 1 and 68 in Area 2)
  • PVAC closed the previously announced acquisition of Eagle Ford assets located primarily in Gonzales and Lavaca Counties, Texas, from Hunt Oil Company on March 1, 2018.

Penn Virginia drilled and turned to sales nine gross (5.3 net) wells during Q4 2017, all of which were in the Eagle Ford Basin. The Geo Hunter pad had a 24-hour IP rate of 5,465 BOEPD, representing 394 BOEPD per 1000 feet lateral. The pad produced 3,767 BOEPD for an IP-30 rate. After the Devon acquisition which was closed in Q3 2017, the company holds 93.2 percent working interest.

In early February 2018, PVAC turned to sales the Southern Hunter Amber pad in Area. The average lateral reach for wells completed on this pad was 8,100 feet. The pad recorded a 24-hour IP rate of 5,092 BOEPD, and the company holds 98.1 percent working interest.

At the end of 2017, Penn Virginia held approximately 73,400 net acres in the Eagle Ford. Pro forma for the Hunt acquisition, the company has approximately 83,100 net Eagle Ford acres with 39,100 in Area 1 and 44,000 in Area 2.

Including the Hunt acquisition, by the end of 2017 PVAC had an estimated 589 gross (500 net) drilling locations and 100 gross (80 net) are anticipated to be extended reach laterals. Approximately 93% of Penn Virginia’s core acreage is held by production.

Proved Reserves

In 2017, PVAC’s total proved reserves increased approximately 47 percent to 72.6 MMBOE compared to 49.5 MMBOE at the end of 2016. The composition of the proved reserves included 77 percent oil, 12 percent NGLs, and 11 percent natural gas.  Out of the proved reserves, 44 percent are classified as proved developed.

PVAC’s standardized measure of discounted future net cash flows relating to proved oil and natural gas reserves was $590.5 million as of December 31, 2017, increasing from $317.6 million as of year-end 2016. The increase was primarily a result of increased proved reserves and the average NYMEX oil and natural gas price.

Financial highlights

  • PVAC reported a net loss of $10.8 million, or $0.72 per diluted share, in the fourth quarter of 2017. Adjusted net income was $15.8 million, or $1.06 per diluted share, in the fourth quarter of 2017. Net income was $32.7 million, or $2.17 per diluted share, for the full year 2017. Adjusted net income was $43.4 million, or $2.88 per diluted share, for the full year 2017;
  • Generated adjusted EBITDAX of $37.4 million in the fourth quarter of 2017, representing a 78 percent increase compared to Q4 2016, or approximately $32.97 per BOE. For the full year 2017, PVAC generated adjusted EBITDAX of $102.2 million, or approximately $27.05 per BOE;
  • Increased the borrowing base under its credit facility by more than 40 percent to $340 million, effective March 1, 2018. Current availability under the credit facility is $164.2 million.

Q4 2017

Total direct operating expenses for the company, which include LOE, gathering, processing and transportation, severance and ad valorem taxes, and cash general and administrative expenses, were $15.9 million for Q4 2017. This represents a $2.2 million increase compared to Q4 2016.

Net loss for Q4 2017 was $10.8 million, compared to a net loss of $1.9 million in Q4 2016. Adjusted net income was $15.8 million in Q4 2017, compared to $10.7 million in Q4 2016.

Adjusted EBITDAX was $37.4 million in Q4 2017, representing a 78% increase from the fourth quarter of 2016.

Full Year 2017

Total direct operating expenses for PVAC were $55.8 million, or $14.76 per BOE in 2017. Net income for 2017 was $32.7 million, with and adjusted net income of $43.4 million.

Adjusted EBITDAX was $102.2 million for 2017.

Hunt acquisition

Yesterday on March 1, 2018 PVAC closed the previously announced acquisition of assets in the Eagle Ford Shale, primarily in Gonzales and Lavaca Counties, from Hunt for $86 million in cash, subject to adjustments. The acquisitions provided proved reserves of approximately 12 MMBOE (86 percent oil) and provides a total resource potential of approximately 29 MMBOE.

Balance Sheet, Liquidity, and 2018 CAPEX

During Q4 2017, PVAC incurred $55.7 million of capital expenditures (excluding acquisitions), and 95 percent was associated with drilling and completion capital. For the full year 2017, PVAC incurred $133 million of capital expenditures, and 94 percent was associated with drilling and completion capital.

Concurrent with the closing of the Hunt acquisition, PVAC’s borrowing base increased to $340 million from $237.5 million. As of December 31, 2017, PVAC had $77 million outstanding on its credit facility and liquidity was $170.7 million. As of March 1, 2018, the PVAC had outstanding borrowings of $175 million, resulting in $164.2 million available under the credit facility.

Capital Expenditures for 2018 are expected to total between $320 and $360 million, with 95 percent of the capital being direction to drilling and completion operations in the Eagle Ford. PVAC plans to drill a total of 55 to 60 gross (45 to 50 net) wells. 33 to 35 of those gross wells are planned to be drilled in Area 1, and 22 to 25 of those gross wells are planned to be drilled in Area 2. In 2018, PVAC plans to drill 22 extended reach lateral wells.


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