Current PVAC Stock Info

Increases Penn Virginia production by 30%
Penn Virginia (ticker: PVAC) today announced the purchase of Eagle Ford assets from Devon Energy (ticker: DVN) for $205 million.

In total, Penn Virginia will purchase about 19,600 net acres in Lavaca County, Texas from Devon. The majority of the properties are contiguous with Penn Virginia’s existing acreage. According to Penn Virginia, these properties produced around 3,000 BOEPD, 64% of which was oil. The acreage has net proved developed producing reserves of 6.3 MMBOE, with a total resource poten...

Analyst Commentary

From Johnson Rice:
Penn Virginia has announced a $205mm acquisition for 19.6k net acres and 3.0 mboe/d from DVN. The transaction increases PVAC's acreage by 35% and number of lateral drilling feet by 33% for $2.9-5.1k/ac depending on what is included in the valuation. Production guidance goes up for both '17 and '18 by 4% and 60% respectively; capex guidance goes up by $20mm and $95mm respectively. We view this as a strong acquisition due to its tuck-in nature, combined with PVAC's continued derisking of Area-2. The acquisition will be funded with debt. FY:17 production guidance was updated from 10.0-11.0 mboe/d to 10.6-11.2 mboe/d to reflect the acquisition volumes, while adding $20mm of capex. FY:18 guidance was also raised from 12.6-13.7 mboe/d and $125-145mm to 20.0-22.0 mboe/d and $220-240mm, accounting for the acquisition and increasing activity, notably on the Area-2 acreage.

From Wells Fargo:
Devon announced the sale of noncore Eagle Ford and other assets for $340MM. In total, assets represent 4,000 boe/d (60% oil) with $30MM of field level cash flow, so on the surface is an attractive price. Buyer of EF acreage (19,600 net acres in LaVaca) was Penn Virginia (PVAC $ 38.10, Not Rated) for $190MM. In addition and just as important, Devon announced it was progressing with its noncore Barnett asset sale, which is expected to represent 20% of cash flow and production (Johnson County). In total, Barnett represents $400$ 500MM of cash flow and at 6x, the total asset could be worth +/$ 3B, implying +/$ 600MM for 20%.  


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