November 8, 2018 - 6:35 AM EST
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Penn Virginia Reports Third Quarter 2018 Results and Provides Operational Update

-- Entered into Definitive Merger Agreement to be Acquired by Denbury Resources --

-- Oil Production Increases Nine Percent over Second Quarter --

HOUSTON, Nov. 08, 2018 (GLOBE NEWSWIRE) -- Penn Virginia Corporation (“Penn Virginia” or the “Company”) (NASDAQ:PVAC) today announced its financial and operational results for the third quarter 2018.

Significant Third Quarter and Recent Highlights

  • Entered into a definitive merger agreement on October 28, 2018, to be acquired by Denbury Resources, Inc. (“Denbury”), with the transaction expected to close in the first quarter of 2019;
  • Produced 22,912 barrels of oil equivalent per day (“BOEPD”) (77% oil) for the third quarter of 2018;
  • Drilled the Amber Porter (SA) Unit 2 2H in approximately 14 days (1,419 feet per day), a Company record for drilling a three string well;
  • Recorded net income of $16.3 million, or $1.06 per diluted share, for the third quarter of 2018; Adjusted net income(1) was $41.8 million, or $2.72 per diluted share, for the third quarter of 2018;
  • Generated adjusted EBITDAX(2) of $85.1 million for third quarter of 2018;
  • Realized cash operating margin(3) per BOE of $47.31 for the third quarter of 2018 with an aggregate realized price of $60.16 per BOE and adjusted direct operating expenses(4) per BOE of $12.84;
  • Yielded a realized oil price of $71.67 per barrel, a $2.24 per barrel premium over the West Texas Intermediate (“WTI”) average price for the third quarter of 2018;
  • Recorded a low lease operating expense (“LOE”) of $4.70 per BOE for the third quarter of 2018;
  • Increased the Company’s borrowing base under its credit facility by more than 30% to $450 million; and
  • Lowered Penn Virginia’s debt to adjusted EBITDAX ratio to 1.9x in the third quarter of 2018, pro forma for acquisitions.

Management Quote

“Continued success in our drilling program and premium LLS-based price realizations during the third quarter drove another period of strong operational and financial performance for Penn Virginia,” said John A. Brooks, President and Chief Executive Officer of Penn Virginia. “The result was an increase in oil production and adjusted EBITDAX from the second quarter of 2018 of nine and 12 percent, respectively, as well as industry leading realized cash margins.”

Mr. Brooks added, “In late October, we announced an agreement to merge Penn Virginia and Denbury. We believe it is the best path forward for Penn Virginia and its shareholders. Both companies share complementary attributes, including high-quality assets and the ability to generate significant free cash flow. We also believe Denbury’s EOR expertise will unlock meaningful value from our significant contiguous acreage position. As a result, the transaction will result in a combined company that is uniquely positioned for long-term success, and provides Penn Virginia’s shareholders with excellent value and significant upside.”

Third Quarter 2018 Operating Results

Total production in the third quarter of 2018 increased four percent from the second quarter of 2018, to approximately 2.1 million BOE, or 22,912 BOEPD (77% oil). Oil production grew nine percent over second quarter of 2018 levels to 17,753 barrels of oil per day.

Penn Virginia drilled and turned to sales 10 gross (9.7 net) wells in the Eagle Ford during the third quarter of 2018. The Company currently has three rigs active with two completion spreads. During the quarter, Penn Virginia drilled its fastest three string well to date. The 19,890 foot Amber Porter (SA) Unit 2 2H well was drilled in approximately 14 days or 1,419 feet per day.

As of November 2, 2018, the Company had approximately 98,600 gross (84,700 net) acres.  Approximately 92% of Penn Virginia’s acreage is held by production. During the first nine months of 2018, the Company has either leased or renewed approximately 4,490 gross (4,250 net) acres.

Third Quarter 2018 Financial Results 

Direct operating expenses, which consist of LOE, gathering, processing and transportation (“GPT”) expenses, production and ad valorem taxes, and cash general and administrative (“G&A”) expenses, were $27.1 million, or $12.86 per BOE, in the third quarter of 2018.  Total G&A expenses for the third quarter of 2018 were $2.92 per BOE, which included $1.1 million of share-based compensation and non-recurring transaction costs, of which $1.0 million was non-cash.  For the third quarter of 2018, adjusted cash G&A expenses(5), which excludes those items, were $2.41 per BOE. Adjusted direct operating expenses(4) per BOE, excluding the aforementioned non-cash and non-recurring G&A items, were $12.84 for the third quarter of 2018. For the third quarter 2018, LOE was $4.70 per BOE.

Net income for the third quarter of 2018 was $16.3 million, or $1.06 per diluted share, compared to net loss of $2.5 million, or $0.17 per diluted share, in the second quarter of 2018.  Adjusted net income(1) was $41.8 million, or $2.72 per diluted share in the third quarter of 2018, versus $37.4 million, or $2.46 per diluted share in the second quarter of 2018.

Adjusted EBITDAX(2) was $85.1 million in the third quarter of 2018, which was 12% higher than the second quarter of 2018. 

Hedging Update

Penn Virginia enters into oil hedges on a portion of its production to help mitigate commodity price risk. 

The table below sets forth Penn Virginia’s current oil hedge positions:

 WTI – Oil
 Volumes
(Barrels Per Day)
WTI - Average Swap Price ($/barrel)LLS - Oil Volumes (Barrels Per Day)LLS - Average Swap Price ($/barrel)Percent of
Oil Production
Hedged (6)
Q4
2018
10,455$57.056,000$65.2756%
20196,415$54.485,000$59.17-
20206,000$54.09---

Balance Sheet and Liquidity

During the third quarter of 2018, the Company incurred $104.6 million of capital expenditures (excluding acquisitions), of which 95% was associated with drilling and completion activities.

As of September 30, 2018, Penn Virginia had $282.5 million outstanding on its credit facility and liquidity of $65.1 million. The Company’s borrowing base under it credit facility was recently increased from $340 million to $450 million, an increase of more than 30 percent. As of November 2, 2018, the Company had outstanding borrowings of $294.5 million on its credit facility and availability of approximately $155 million. 

The Company is committed to maintaining financial discipline and a strong balance sheet with a targeted debt to adjusted EBITDAX ratio of 1.5x or below. As of September 30, 2018, the Company’s debt to adjusted EBITDAX ratio was approximately 1.9x, pro forma for acquisitions.

Guidance

The table below sets forth the Company’s guidance for 2018 (without giving effect to the closing of the acquisition by Denbury and pro forma for Oklahoma asset sale):

  Current   
Production (BOEPD)   % oil 
Fourth Quarter 28,500 - 30,500 75% 
      
Realized Price Differentials      
Oil (off WTI, per barrel) $0.00 - $1.00   
Natural gas (off Henry Hub, per MMBtu) $0.10 - $0.20   
      
Direct Operating Expenses      
Lease operating expense (per BOE) $4.25 - $4.75   
GPT expense (per BOE) $2.25 - $2.75   
Ad valorem and production taxes (percent of product revenue) 5.0% - 5.5%   
Cash G&A expense (per BOE) $2.00 - $2.50   
      
Capital Expenditures (millions) $405 - $410   

2019 Capital Plan

The 2019 capital plan currently calls for a three rig drilling program, which is expected to generate production growth of 50 to 60 percent over 2018 levels. Penn Virginia expects to generate free cash flow in 2019 after funding its capital plans, at current strip pricing.

Denbury Merger Transaction

On October 28, 2018, Penn Virginia entered into a definitive merger agreement (the “Agreement”) to be acquired by Denbury. Under the terms of the Agreement, shareholders of Penn Virginia will receive, subject to proration, a combination of 12.4 shares of Denbury common stock and $25.86 of cash for each share of Penn Virginia common stock, representing consideration to each Penn Virginia shareholder of $79.80 per share based on the closing price of Denbury common stock on October 26, 2018.  Penn Virginia shareholders will be permitted to elect to receive either all stock, all cash or a mix of stock and cash, in each case subject to proration, which will result in the aggregate issuance of approximately 191.667 million Denbury shares and payment by Denbury of $400 million in cash.  Upon closing of the transaction, Denbury shareholders will own approximately 71% of the combined company, and Penn Virginia shareholders will own approximately 29%.

The transaction, which is expected to close in the first quarter of 2019, is subject to the approval of Penn Virginia shareholders holding at least two-thirds of the Company’s common stock, approval by Denbury’s stockholders holding a majority of the outstanding common stock of an amendment to Denbury’s charter to increase its authorized shares and the approval by Denbury’s stockholders of the issuance of shares of Denbury common stock in the merger.  The transaction is also conditioned on clearance under the Hart-Scott Rodino Act, and other customary closing conditions.
           
Upon closing, Denbury’s board of directors will be expanded from eight directors to 10 directors, to include two members of Penn Virginia’s board of directors that are mutually agreed upon by the parties.

Third Quarter 2018 Conference Call

Penn Virginia will not host an earnings call in connection with the third quarter 2018 results. However, certain members of its management will participate in a portion of the Denbury Resources, Inc. third quarter 2018 conference call.

The call is scheduled for 10 a.m. CDT / 11 a.m. EDT on November 8, 2018. The call can be accessed as follows:

By Phone:  Dial toll-free (domestic) 800-230-1093 (international) 612-332-0228 five to ten minutes before the scheduled start of the conference call.  Conference ID: 426561

By Webcast:  A live webcast of the conference call will be available at www.pennvirginia.com.  The webcast will be archived on the website and a telephonic replay will be accessible for at least one month after the call by dialing 800-475-6701 (domestic) or 320-365-3844 (international) and entering the conference ID number: 426561. 

About Penn Virginia Corporation

Penn Virginia Corporation is a pure-play independent oil and gas company engaged in the development and production of oil, NGLs and natural gas, operating in the Eagle Ford shale in south Texas. For more information, please visit our website at www.pennvirginia.com. The information on the Company’s website is not part of this release.

Cautionary Statements Regarding Guidance

The estimates and guidance presented in this release are based on assumptions of capital expenditure levels, prices for oil, natural gas and NGLs, current indications of supply and demand for oil, well results and operating costs.  The guidance provided in this release does not constitute any form of guarantee or assurance that the matters indicated will be achieved. While we believe these estimates and the assumptions on which they are based are reasonable, they are inherently uncertain and are subject to, among other things, significant business, economic, operational and regulatory risks and uncertainties and are subject to material revision. Actual results may differ materially from estimates and guidance.

Forward-Looking Statements 

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. We use words such as "guidance," "projects," “estimates,” “expects,” “continues,” “intends,” “plans,” “believes,” “forecasts,” “future,” “will”, “target” and variations of such words or similar expressions in this press release to identify forward-looking statements. Because such statements include assumptions, 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, all of the risks and uncertainties related to our announced merger with Denbury Resources Inc., including the risk that the conditions to the closing of the transaction are not satisfied, including the risk that required approvals from the shareholders of Denbury or the Company for the transaction are not obtained, litigation relating to the transaction; uncertainties as to the timing of the consummation of the transaction and the ability of each party to consummate the transaction, risks that the proposed transaction disrupts the current plans and operations of Denbury or Penn Virginia, the ability of Denbury and Penn Virginia to retain and hire key personnel, competitive responses to the proposed transaction, unexpected costs, charges or expenses resulting from the transaction, potential adverse reactions or changes to business relationships resulting from the announcement or completion of the transaction, the combined companies’ ability to achieve the growth prospects and synergies expected from the transaction, as well as delays, challenges and expenses associated with integrating the combined companies’ existing businesses, and legislative, regulatory and economic developments. These risks, as well as other risks associated with the proposed transaction, will be more fully discussed in the joint proxy statement/prospectus that will be included in the Registration Statement on Form S-4 that will be filed with the SEC in connection with the proposed transaction.  Other risks and uncertainties include, without limitation, the following: our ability to satisfy our short-term and long-term liquidity needs, including our ability to generate sufficient cash flows from operations or to obtain adequate financing to fund our capital expenditures and meet working capital needs; negative events,  publicity and other developments related to our business, such as the announced merger with Denbury,  adversely affecting our ability to maintain our relationships with our suppliers, service providers, customers, employees, and other third parties; plans, objectives, expectations and intentions contained in this press release that are not historical; our ability to execute our business plan in volatile and depressed commodity price environments; any decline in and volatility of commodity prices for oil, NGLs, and natural gas; our anticipated production and development results; our ability to develop, explore for, acquire and replace oil and natural gas reserves and sustain production; our ability to generate profits or achieve targeted reserves in our development and exploratory drilling and well operations; any impairments, write-downs or write-offs of our reserves or assets; the projected demand for and supply of oil, NGLs and natural gas; our ability to contract for drilling rigs, frac crews, 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 that estimated in our proved oil and natural gas reserves; drilling and operating risks; concentration of assets; our ability to compete effectively against other oil and gas companies; leasehold terms expiring before production can be established and our ability to replace expired leases; costs or results of any strategic initiatives; environmental obligations, results of new drilling activities, locations and methods, costs and 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, and counterparty risk related to the ability of parties to these arrangements to meet their future obligations; the occurrence of unusual weather or operating conditions, including force majeure events and hurricanes; our ability to retain or attract senior management and key employees, including as a result of our announced merger with Denbury Resources Inc.; compliance with and changes in governmental regulations or enforcement practices, especially with respect to environmental, health and safety matters; physical, electronic and cybersecurity breaches; litigation that impacts us, our assets or our midstream service providers; uncertainties relating to general domestic and international economic and political conditions; and other risks set forth in our filings with the SEC, including our annual report on Form 10-K and quarterly reports on Form 10-Q. Additional information concerning these and other factors can be found in our press releases and public filings with the SEC. Many of the factors that will determine our future results are beyond the ability of management to control or predict. In addition, readers should not place undue reliance on forward-looking statements, which reflect management's views only as of the date hereof. The statements in this release speak only as of the date of this release. 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, except as may be required by applicable law. 

Additional Information And Where To Find It

This document does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. The proposed transaction will be submitted to the shareholders of each of Penn Virginia and Denbury for their consideration. Denbury will file with the SEC a Registration Statement on Form S-4 that will include a joint proxy statement/prospectus of Penn Virginia and Denbury. Each of Penn Virginia and Denbury will provide the joint proxy statement/prospectus to their respective shareholders. Penn Virginia and Denbury also plan to file other documents with the SEC regarding the proposed transaction. This document is not a substitute for any prospectus, proxy statement or any other document which Penn Virginia or Denbury may file with the SEC in connection with the proposed transaction. INVESTORS AND SECURITY HOLDERS OF PENN VIRGINIA AND DENBURY ARE URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS AND ANY OTHER RELEVANT DOCUMENTS THAT WILL BE FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS, CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. You may obtain copies of all documents filed with the SEC regarding this transaction, free of charge, at the SEC’s website (www.sec.gov). In addition, investors and shareholders will be able to obtain free copies of the joint proxy statement/prospectus and other documents filed with the SEC by the parties on Penn Virginia’s Investor Relations website (www.http://ir.pennvirginia.com/) (for documents filed with the SEC by Penn Virginia) or Denbury Investor Relations website (https://www.denbury.com/investor-relations/) (for documents filed with the SEC by Denbury).

Participants in the Solicitation

Penn Virginia, Denbury, and certain of their respective directors, executive officers and other members of management and employees, under SEC rules may be deemed to be participants in the solicitation of proxies from Penn Virginia and Denbury shareholders in connection with the proposed transaction. Information regarding the persons who may, under the rules of the SEC, be deemed participants in the solicitation of Penn Virginia and Denbury shareholders in connection with the proposed transaction will be set forth in the joint proxy statement/prospectus when it is filed with the SEC. You can find more detailed information about Penn Virginia’s executive officers and directors in its definitive proxy statement filed with the SEC on March 28, 2018 and Form 8-K filed with the SEC on September 12, 2018. You can find more detailed information about Denbury’s executive officers and directors in its definitive proxy statement filed with the SEC on April 12, 2018. Additional information about Penn Virginia’s executive officers and directors and Denbury’s executive officers and directors can be found in the above-referenced Registration Statement on Form S-4 when it becomes available.

(1)  Adjusted net income is a non-GAAP financial measure. Definitions of non-GAAP financial measures and reconciliations of non-GAAP financial measures to the closest GAAP-based financial measures appear at the end of this release.

(2)  Adjusted EBITDAX is a non-GAAP financial measure. Definitions of non-GAAP financial measures and reconciliations of non-GAAP financial measures to the closest GAAP-based financial measures appear at the end of this release.

(3)  Realized cash operating margin per BOE is a non-GAAP financial measure. Definitions of non-GAAP financial measures and reconciliations of non-GAAP financial measures to the closest GAAP-based financial measures appear at the end of this release.

(4)  Adjusted direct operating expenses per BOE is a non-GAAP financial measure. Definitions of non-GAAP financial measures and reconciliations of non-GAAP financial measures to the closest GAAP-based financial measures appear at the end of this release.

(5)  Adjusted Cash G&A expense is a non-GAAP financial measure. Definitions of non-GAAP financial measures and reconciliations of non-GAAP financial measures to the closest GAAP-based financial measures appear at the end of this release.

(6)  Assumes mid-point of guidance. 

 
PENN VIRGINIA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
and SELECTED OPERATING STATISTICS- unaudited
(in thousands, except per share, production and price data)
 
  Three Months Ended  Nine Months Ended
  September 30,  June 30,  September 30,  September 30,  September 30, 
  2018  2018  2017  2018  2017 
Revenues               
Crude oil $  117,059  $  101,716  $  29,963  $  290,033  $  92,387 
Natural gas liquids (NGLs) (1) 5,976  5,533  2,393  14,455  6,738 
Natural gas 3,768  3,912  1,977  10,470  6,200 
Total product revenues 126,803  111,161  34,333  314,958  105,325 
Gain (loss) on sales of assets, net 2  4  9  81  (60)
Other revenues, net 380  415  117  937  462 
Total revenues 127,185  111,580  34,459  315,976  105,727 
Operating expenses               
Lease operating 9,898  8,730  5,254  25,924  15,540 
Gathering, processing and transportation (1) 4,928  4,574  2,399  12,861  7,505 
Production and ad valorem taxes 7,152  5,795  1,668  17,039  5,766 
General and administrative 5,134  4,447  5,919  14,476  12,034 
Total direct operating expenses 27,112  23,546  15,240  70,300  40,845 
Share-based compensation               
- equity classified awards 1,021  875  1,013  3,472  2,707 
Depreciation, depletion and amortization 35,016  31,273  10,659  88,370  31,545 
Total operating expenses 63,149  55,694  26,912  162,142  75,097 
                
Operating income 64,036  55,886  7,547  153,834  30,630 
Other income (expense)               
Interest expense, net (7,322) (6,150) (1,202) (18,073) (3,014)
Derivatives (40,689) (52,241) (12,275) (111,725) 15,802 
Other, net 241  (16) (17) 167  45 
Income (loss) before income taxes 16,266  (2,521) (5,947) 24,203  43,463 
Income tax benefit (expense) 10  -  -  (153) - 
Net income (loss) $  16,276  $  (2,521) $  (5,947) $  24,050  $  43,463 
                
Net income (loss) per share:               
Basic $  1.08  $  (0.17) $  (0.40) $  1.60  $  2.90 
Diluted $  1.06  $  (0.17) $  (0.40) $  1.57  $  2.89 
                
Weighted average shares outstanding:               
Basic 15,062  15,058  14,994  15,054  14,993 
Diluted 15,344  15,058  14,994  15,278  15,062 
                
                
  Three Months Ended  Nine Months Ended
  September 30,  June 30,  September 30,  September 30,  September 30, 
  2018  2018  2017  2018  2017 
Production               
Crude oil (MBbls) 1,633  1,498  627  4,259  1,920 
NGLs (MBbls) 267  269  125  700  375 
Natural gas (MMcf) 1,248  1,515  676  3,734  2,094 
Total (MBOE) 2,108  2,020  864  5,581  2,644 
Average daily production (BOEPD) 22,912  22,200  9,396  20,444  9,683 
                
Prices               
Crude oil ($ per Bbl) $  71.67  $  67.89  $  47.78  $  68.10  $  48.12 
NGLs ($ per Bbl) (1) $  22.41  $  20.54  $  19.19  $  20.64  $  17.98 
Natural gas ($ per Mcf) $  3.02  $  2.58  $  2.92  $  2.80  $  2.96 
Aggregate ($ per BOE) $  60.16  $  55.02  $  39.72  $  56.43  $  39.84 
                
Prices - Adjusted for derivative settlements               
Crude oil ($ per Bbl) $  62.36  $  59.61  $  49.04  $  59.84  $  47.25 
NGLs ($ per Bbl) (1) $  22.41  $  20.54  $  19.19  $  20.64  $  17.98 
Natural gas ($ per Mcf) $  3.02  $  2.58  $  2.92  $  2.80  $  2.96 
Aggregate ($ per BOE) $  52.94  $  48.89  $  40.63  $  50.13  $  39.21 
                
(1)  NGL revenues for the periods in 2018 are presented net of processing costs. Such costs are included in Gathering, processing and transportation expense in the periods ended in 2017.


 
PENN VIRGINIA CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS - unaudited
(in thousands)
 
           September 30,  December 31, 
           2018  2017 
Assets               
Current assets          $  87,502  $  87,088 
Net property and equipment          858,766  529,059 
Other assets          7,368  13,450 
Total assets          $  953,636  $  629,597 
                
Liabilities and shareholders' equity               
Current liabilities          $  192,603  $  123,958 
Other liabilities          42,781  18,733 
Total long-term debt, net          472,344  265,267 
Total shareholders' equity          245,908  221,639 
Total liabilities and shareholders' equity          $  953,636  $  629,597 
           -  - 
                
 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - unaudited
(in thousands)
 
  Three Months Ended Nine Months Ended
  September 30,  June 30,  September 30,  September 30,  September 30, 
  2018  2018  2017  2018  2017 
Cash flows from operating activities               
Net income (loss) $  16,276  $  (2,521) $  (5,947) $  24,050  $  43,463 
Adjustments to reconcile net income (loss) to               
net cash provided by operating activities:               
Depreciation, depletion and amortization 35,016  31,273  10,659  88,370  31,545 
Derivative contracts:               
Net losses (gains) 40,689  52,241  12,275  111,725  (15,802)
Cash settlements, net (15,214) (12,401) 788  (35,191) (1,670)
Deferred income tax (benefit) expense (10) -  -  153  - 
(Gain) loss on sales of assets, net (2) (4) (9) (81) 60 
Non-cash interest expense 865  848  374  2,509  1,362 
Share-based compensation (equity-classified) 1,021  875  1,013  3,472  2,707 
Other, net 12  13  21  38  59 
Changes in operating assets and liabilities (6,166) 11,412  (4,897) (2,140) (11,430)
Net cash provided by operating activities 72,487  81,736  14,277  192,905  50,294 
Cash flows from investing activities               
Acquisitions, net 1,448  (3,497) (200,162) (85,387) (200,162)
Capital expenditures (121,909) (123,511) (24,261) (323,259) (67,844)
Proceeds from sales of assets, net 5,464  974  -  7,989  - 
Net cash used in investing activities (114,997) (126,034) (224,423) (400,657) (268,006)
Cash flows from financing activities               
Proceeds from credit facility borrowings 39,000  48,500  25,000  205,500  39,000 
Repayment of credit facility borrowings -  -  (5,000) -  (7,000)
Proceeds from second lien loans, net -  -  196,000  -  196,000 
Debt issuance costs paid -  -  (8,472) (754) (9,562)
Proceeds received from rights offering, net -  -  -  -  55 
Other, net -  -  -  -  (55)
Net cash provided by financing activities 39,000  48,500  207,528  204,746  218,438 
Net increase (decrease) in cash and cash equivalents(3,510) 4,202  (2,618) (3,006) 726 
Cash and cash equivalents - beginning of period 11,521  7,319  10,105  11,017  6,761 
Cash and cash equivalents - end of period $  8,011  $  11,521  $  7,487  $  8,011  $  7,487 
                


 
PENN VIRGINIA CORPORATION
CERTAIN NON-GAAP FINANCIAL MEASURES - unaudited
 
Readers are reminded that non-GAAP measures are merely a supplement to, and not a replacement for, or superior to financial measures prepared according to GAAP. They should be evaluated in conjunction with the GAAP financial measures. It should be noted as well that our non-GAAP information may be different from the non-GAAP information provided by other companies. 
 
 
Reconciliation of GAAP "Net income (loss)" to Non-GAAP "Adjusted net income" 
                      
Adjusted net income is a non-GAAP financial measure that represents net income (loss) adjusted to exclude the effects, net of income taxes, of non-cash changes in the fair value of derivatives, net gains and losses on the sales of assets, acquisition, divestiture and strategic transaction costs, executive retirement costs and restructuring expenses. We believe that Non-GAAP adjusted net income and non-GAAP adjusted net income per share amounts provide meaningful supplemental information regarding our operational performance. This information facilitates management's internal comparisons to the Company's historical operating results as well as to the operating results of our competitors. Since management finds this measure to be useful, the Company believes that our investors can benefit by evaluating both non-GAAP and GAAP results. Adjusted net income non-GAAP is not a measure of financial performance under GAAP and should not be considered as a measure of liquidity or as an alternative to net income (loss). 
                      
                      
  Three Months Ended  Nine Months Ended      
  September 30,  June 30,  September 30,  September 30,  September 30,       
  2018  2018  2017  2018  2017       
  (in thousands, except per share amounts)         
Net income (loss) $  16,276  $  (2,521) $  (5,947) $  24,050  $  43,463       
Adjustments for derivatives:                     
Net losses (gains)   40,689    52,241    12,275    111,725    (15,802)      
Cash settlements, net   (15,214)   (12,401)   788    (35,191)   (1,670)      
(Gain) loss on sales of assets, net   (2)   (4)   (9)   (81)   60       
Acquisition, divestiture and strategic transaction costs   44    56    1,505    531    1,505       
Executive retirement costs   -     -     -     250    -        
Other, net   -     -     -     (80)   -        
Restructuring expenses   -     -     -     -     (20)      
Impact of adjustment on income taxes   (10)   -     -     153    -        
Adjusted net income  $  41,783  $  37,371  $  8,612  $  101,357  $  27,536       
                      
Net income (loss), per diluted share $  1.06  $  (0.17) $  (0.40) $  1.57  $  2.89       
Adjusted net income, per diluted share $  2.72  $  2.46  $  0.57  $  6.63  $  1.83       
                      
Reconciliation of GAAP "Net income (loss)" to Non-GAAP "Adjusted EBITDAX"   
                      
Adjusted EBITDAX represents net income (loss) before interest expense, income taxes, depreciation, depletion and amortization expense and share-based compensation expense, further adjusted to exclude the effects of gains and losses on sales of assets, non-cash changes in the fair value of derivatives, and special items including acquisition, divestiture and strategic transaction costs, executive retirement costs and restructuring expenses. We believe this presentation is commonly used by investors and professional research analysts for the valuation, comparison, rating, and investment recommendations of companies within the oil and gas exploration and production industry. We use this information for comparative purposes within our industry. Adjusted EBITDAX is not a measure of financial performance under GAAP and should not be considered as a measure of liquidity or as an alternative to net income (loss). Adjusted EBITDAX as defined by Penn Virginia may not be comparable to similarly titled measures used by other companies and should be considered in conjunction with net income (loss) and other measures prepared in accordance with GAAP, such as operating income or cash flows from operating activities. Adjusted EBITDAX should not be considered in isolation or as a substitute for an analysis of Penn Virginia's results as reported under GAAP. 
                      
  Three Months Ended Nine Months Ended      
  September 30,  June 30,  September 30,  September 30,  September 30,       
  2018  2018  2017  2018  2017       
  (in thousands, except per unit amounts)         
Net income (loss) $  16,276  $  (2,521) $  (5,947) $  24,050  $  43,463       
Adjustments to reconcile to Adjusted EBITDAX:                     
Interest expense, net   7,322    6,150    1,202    18,073    3,014       
Income tax (benefit) expense   (10)   -     -     153    -        
Depreciation, depletion and amortization   35,016    31,273    10,659    88,370    31,545       
Share-based compensation expense (equity-classified)   1,021    875    1,013    3,472    2,707       
(Gain) loss on sales of assets, net   (2)   (4)   (9)   (81)   60       
Adjustments for derivatives:                     
Net losses (gains)   40,689    52,241    12,275    111,725    (15,802)      
Cash settlements, net   (15,214)   (12,401)   788    (35,191)   (1,670)      
Adjustment for special items:                     
Acquisition, divestiture and strategic transaction costs   44    56    1,505    531    1,505       
Executive retirement costs   -     -     -     250    -        
Other, net   (80)   -     -     (80)   -        
Restructuring expenses   -     -     -     -     (20)      
Adjusted EBITDAX $  85,062  $  75,669  $  21,486  $  211,272  $  64,802       
                      
Adjusted EBITDAX per BOE $  40.35  $  37.46  $  24.85  $  37.85  $  24.51       
                      
Reconciliation of GAAP "Income (loss) before income taxes" to Non-GAAP "Realized cash operating margin and cash operating margin per BOE" 
                      
Realized cash operating margin and realized cash operating margin per BOE are a supplemental non-GAAP financial measure that excludes certain non-recurring expenses, certain non-operating items and non-cash  expenses. We believe that the non-GAAP measure of Realized cash operating margin per BOE is useful to investors because it provides readers with a meaningful measure of our operating profitability and provides for greater comparability period-over-period.   
                 Three  Twelve 
  Three Months Ended Nine Months Ended Months Ended  Months Ended 
  September 30,  June 30,  September 30,  September 30,  September 30,  December 31,  December 31, 
  2018  2018  2017  2018  2017  2017  2017 
  (in thousands, except per unit amounts) 
        
Income (loss) before income taxes $  16,266  $  (2,521) $  (5,947) $  24,203  $  43,463  $  (15,744) $  27,719 
Plus:                     
Interest expense, net   7,322    6,150    1,202    18,073    3,014    3,378    6,392 
Derivatives   40,689    52,241    12,275    111,725    (15,802)   33,621    17,819 
Other, net   (241)   16    17    (167)   (45)   (13)   (119)
Share-based compensation                      
 - equity classified awards    1,021    875    1,013    3,472    2,707    1,102    3,809 
Acquisition, divestiture and strategic transaction costs   44    56    1,505    531    1,505    (165)   1,340 
Executive retirement costs   -     -     -     250    -     -     -  
Restructuring expenses   -     -     -     -     (20)   -     (20)
Depreciation, depletion and amortization   35,016    31,273    10,659    88,370    31,545    17,104    48,649 
Less:                     
(Gain) loss on sales of assets, net   (2)   (4)   (9)   (81)   60    (24)   36 
Other revenues, net    (380)   (415)   (117)   (937)   (462)   (159)   (621)
Non-GAAP Realized cash operating margin $  99,735  $  87,671  $  20,598  $  245,439  $  65,965  $  39,100  $  105,004 
                      
Non-GAAP Realized cash operating margin per BOE $  47.31  $  43.40  $  23.83  $  43.98  $  24.95  $  34.44  $  27.79 
                      
Reconciliation of GAAP "Operating expenses" to Non-GAAP "Adjusted direct operating expenses and Adjusted direct operating expenses per BOE" 
                      
Adjusted total direct operating expenses and adjusted total direct operating expenses per BOE are a supplemental non-GAAP financial measure that excludes certain non-recurring expenses and non-cash expenses. We believe that the non-GAAP measure of Adjusted total direct operating expense per BOE is useful to investors because it provides readers with a meaningful measure of our cost profile and provides for greater comparability period-over-period. 
                 Three  Twelve 
  Three Months Ended Nine Months Ended Months Ended   Months Ended 
  September 30,  June 30,  September 30,  September 30,  September 30,  December 31,  December 31, 
  2018  2018  2017  2018  2017  2017  2017 
   (in thousands, except per unit amounts)         
Operating expenses $  63,149  $  55,694  $  26,912  $  162,142  $  75,097  $  33,085  $  108,243 
Less:                      
Share-based compensation - equity-classified awards   (1,021)   (875)   (1,013)   (3,472)   (2,707)   (1,102)   (3,809)
Depreciation, depletion and amortization   (35,016)   (31,273)   (10,659)   (88,370)   (31,545)   (17,104)   (48,649)
Significant special charges:                     
Acquisition, divestiture and strategic transaction costs   (44)   (56)   (1,505)   (531)   (1,505)   165    (1,340)
Executive retirement costs   -     -     -     (250)   -     -     -  
Restructuring expenses   -     -     -     -     20    -     20 
Non-GAAP Adjusted direct operating expenses $  27,068  $  23,490  $  13,735  $  69,519  $  39,360  $  15,044  $  54,465 
                      
Non-GAAP Adjusted direct operating expenses per BOE $  12.84  $  11.63  $  15.89  $  12.46  $  14.89  $  13.25  $  14.41 
                      
Reconciliation of GAAP "General administrative expenses" to Non-GAAP "Adjusted cash-based general and administrative expenses"
 
Adjusted cash-based general and administrative expense ("Adjusted G&A") is a supplemental non-GAAP financial measure that excludes certain non-recurring expenses and non-cash share-based compensation expense. We believe that the non-GAAP measure of Adjusted G&A is useful to investors because it provides readers with a meaningful measure of our recurring G&A expense and provides for greater comparability period-over-period.   
                 Three  Twelve 
  Three Months Ended Nine Months Ended Months Ended   Months Ended 
  September 30,  June 30,  September 30,  September 30,  September 30,  December 31,  December 31, 
  2018  2018  2017  2018  2017  2017  2017 
  (in thousands, except per unit amounts)          
General and administrative expenses - direct $  5,134  $  4,447  $  5,919  $  14,476  $  12,034  $  2,360  $  14,453 
Share-based compensation - equity-classified awards   1,021    875    1,013    3,472    2,707    1,102    3,809 
GAAP General and administrative expenses   6,155    5,322    6,932    17,948    14,741    3,462    18,262 
Less: Share-based compensation - equity-classified awards   (1,021)   (875)   (1,013)   (3,472)   (2,707)   (1,102)   (3,809)
Significant special charges:                     
Acquisition, divestiture and strategic transaction costs   (44)   (56)   (1,505)   (531)   (1,505)   165    (1,340)
Executive retirement costs   -     -     -     (250)   -     -     -  
Restructuring expenses   -     -     -     -     20    -     20 
Adjusted cash-based general and administrative expenses $  5,090  $  4,391  $  4,414  $  13,695  $  10,549  $  2,525  $  13,133 
                      
GAAP General and administrative expenses per BOE $  2.92  $  2.63  $  8.02  $  3.22  $  5.58  $  3.05  $  4.83 
Adjusted cash-based general and administrative expenses per BOE $  2.41  $  2.17  $  5.11  $  2.45  $  3.99  $  2.22  $  3.48 
                      

Contact:
Clay Jeansonne
Investor Relations
Ph: (713) 722-6540
E-Mail: [email protected]

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Source: GlobeNewswire (November 8, 2018 - 6:35 AM EST)

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