Penn Virginia GP Holdings, L.P. Announces Third Quarter 2010 Results and Declares Quarterly Distribution

Oct 27, 2010, 17:00 ET from Penn Virginia GP Holdings, L.P.

RADNOR, Pa., Oct. 27 /PRNewswire-FirstCall/ -- Penn Virginia GP Holdings, L.P. (NYSE: PVG) today reported financial results for the three months ended September 30, 2010.

Distributable cash, a non-GAAP (generally accepted accounting principles) measure, was $15.2 million for the three months ended September 30, 2010, an increase of $0.4 million, or three percent, from the prior year quarter.  Adjusted net income attributable to PVG, a non-GAAP measure that excludes the effects of the non-cash change in derivatives fair value that affects comparability to prior periods, was $12.5 million, or $0.32 per limited partner unit, as compared to $11.4 million, or $0.29 per limited partner unit, in the prior year quarter.  Net income attributable to PVG was $7.3 million, or $0.19 per limited partner unit, as compared to $10.2 million, or $0.26 per limited partner unit, in the prior year quarter.

Reconciliations of distributable cash and adjusted net income to GAAP-based measures appear in the financial tables later in this release.

The Board of Directors of PVG GP, LLC, the general partner of PVG, declared a third quarter cash distribution of $0.39 per limited partner unit, payable on November 19, 2010 to unitholders of record as of November 15, 2010. The distribution equates to an annualized rate of $1.56 per unit, and represents a $0.01 per unit, or three percent, increase over the $0.38 per unit distribution paid in the same quarter of 2009.

We own the general partner, including the incentive distribution rights, and are the largest limited partner unitholder of Penn Virginia Resource Partners, L.P. (NYSE: PVR), and we report our financial results on a consolidated basis with the financial results of PVR.  We currently have no separate operating activities other than those conducted by PVR and derive our cash flow solely from cash distributions received from PVR.

Financial and operational updates, as well as full-year 2010 guidance for PVR and its coal and natural resource management and natural gas midstream segments, are discussed in more detail in PVR's news release dated October 27, 2010 (please visit PVR's website, www.pvresource.com, under "For Investors" for a copy of the release).

Guidance for Full-Year 2010

See the Guidance Table included in PVR's October 27, 2010 release for guidance estimates for full-year 2010.

Third Quarter 2010 Financial and Operational Results Conference Call

A joint conference call and webcast for PVR and PVG, during which management will discuss third quarter 2010 financial and operational results, is scheduled for Thursday, October 28, 2010 at 11:00 a.m. ET.  Prepared remarks by William H. Shea, Jr., Chief Executive Officer, will be followed by a question and answer period.  Interested parties may participate via phone by dialing 800-860-2442 (international 412-858-4600) five to ten minutes before the scheduled start of the conference call (reference the Penn Virginia Resource Partners call), or listen via webcast by logging on to our website, www.pvgpholdings.com, or PVR's website, www.pvresource.com, at least 15 minutes prior to the scheduled start of the call to download and install any necessary audio software.  An on-demand replay of the conference call will be available on both websites shortly after the conclusion of the call.  A telephonic replay of the call will be available through November 4 by dialing 877-344-7529 (international: 412-317-0088) and using conference playback number 445416.

Penn Virginia GP Holdings, L.P. (NYSE: PVG) is a publicly traded limited partnership which owns the general partner interest, all of the incentive distribution rights and an approximate 37 percent limited partner interest in PVR, a manager of coal and natural resource properties and related assets and the operator of a midstream natural gas gathering and processing business.

For more information about us, please visit our website at www.pvgpholdings.com.  For more information about PVR, please visit its website at www.pvresource.com.

Certain statements contained herein and incorporated herein by reference to the PVR news release dated October 27, 2010 that are not descriptions of historical facts are "forward-looking" statements by PVR 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 are discussed in more detail in PVR's news release dated October 27, 2010 and in our press releases and public periodic filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2009 and our most recent Quarterly Reports on Form 10-Q.  Many of the factors that will determine PVR's and, therefore, 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 management's 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 the result of new information, future events or otherwise.

PENN VIRGINIA GP HOLDINGS, L.P.

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS - unaudited

(dollars in thousands, except per unit data)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2010

2009

2010

2009

Revenues

    Natural gas midstream

$ 180,207

$ 118,443

$ 497,362

$ 348,882

    Coal royalties

34,983

29,821

98,088

90,448

    Coal services

1,975

1,869

5,976

5,502

    Other

5,664

5,492

17,313

16,971

Total revenues

222,829

155,625

618,739

461,803

Expenses

    Cost of gas purchased

151,657

92,355

415,111

285,129

    Operating

11,748

9,836

32,317

29,296

    General and administrative

9,029

8,646

34,367

26,249

    Depreciation, depletion and amortization

18,702

17,851

54,783

51,971

Total expenses

191,136

128,688

536,578

392,645

Operating income

31,693

26,937

82,161

69,158

Other income (expense)

    Interest expense

(10,639)

(6,505)

(25,368)

(18,486)

    Interest income and other

111

344

654

1,020

    Derivatives

(11,020)

(2,810)

(11,514)

(12,005)

Net income

10,145

17,966

45,933

39,687

Net income attributable to noncontrolling interests

(2,864)

(7,794)

(18,671)

(14,327)

Net income attributable to Penn Virginia GP Holdings, L.P.

$     7,281

$   10,172

$   27,262

$   25,360

Net income per limited partner unit, basic and diluted

$       0.19

$       0.26

$       0.70

$       0.65

Weighted average number of units outstanding, basic and diluted (in thousands)

39,075

39,075

39,075

39,075

Other data:

Coal and natural resource management segment:

    Coal royalty tons (in thousands)

8,530

8,387

25,645

25,874

    Average coal royalties ($ per ton)

$       4.10

$       3.56

$       3.82

$       3.50

Natural gas midstream segment:

    System throughput volumes (MMcf)

36,233

29,811

93,120

93,433

    Gross margin (in thousands)

$   28,550

$   26,088

$   82,251

$   63,753

PENN VIRGINIA GP HOLDINGS, L.P.

CONDENSED CONSOLIDATED BALANCE SHEETS - unaudited

(in thousands)

September 30,

December 31,

2010

2009

Assets

    Cash and cash equivalents

$         18,515

$        19,314

    Accounts receivable

80,331

82,321

    Derivative assets

148

1,331

    Other current assets

8,353

4,816

        Total current assets

107,347

107,782

    Property, plant and equipment, net

932,400

900,844

    Other long-term assets

216,157

210,437

         Total assets

$    1,255,904

$   1,219,063

Liabilities and partners' capital

    Accounts payable and accrued liabilities

$         92,722

$        71,233

    Deferred income

3,531

3,839

    Derivative liabilities

13,430

11,251

        Total current liabilities

109,683

86,323

    Derivative liabilities

4,250

4,285

    Other long-term liabilities

30,402

22,752

    PVR senior notes

300,000

-

    PVR revolving credit facility

365,000

620,100

    PVG partners' capital

219,044

249,696

    Noncontrolling interests in PVR

227,525

235,907

         Total liabilities and partners' capital

$    1,255,904

$   1,219,063

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  - unaudited

(in thousands)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2010

2009

2010

2009

Cash flows from operating activities

    Net income

$         10,145

$        17,966

$  45,933

$ 39,687

    Adjustments to reconcile net income to

       net cash provided by operating activities:

    Depreciation, depletion and amortization

18,702

17,851

54,783

51,971

    Commodity derivative contracts:

    Total derivative (gains) losses included in net income

11,020

3,667

12,604

14,235

    Cash receipts (payments) to settle derivatives for period

(2,435)

(314)

(6,493)

4,135

    Non-cash interest expense

1,633

1,416

4,243

3,149

    Non-cash unit-based compensation

137

1,500

6,024

1,500

    Equity earnings, net of distributions

110

(1,386)

2,500

(2,456)

    Other

(108)

(297)

(722)

(931)

    Changes in operating assets and liabilities

11,235

1,892

21,959

3,540

        Net cash provided by operating activities

50,439

42,295

140,831

114,830

Cash flows from investing activities

    Acquisitions, net of cash acquired

(6)

(27,648)

(17,870)

(29,510)

    Additions to property, plant and equipment

(33,240)

(11,523)

(57,973)

(43,781)

    Other

315

300

985

872

        Net cash used in investing activities

(32,931)

(38,871)

(74,858)

(72,419)

Cash flows from financing activities

    Distributions to partners

(30,619)

(30,323)

(91,403)

(90,297)

    Proceeds from PVR issuance of senior notes

-

-

300,000

-

    Proceeds from (repayments of) revolving credit facility, net

18,510

31,000

(255,100)

60,000

    Purchase of PVR limited partner units

-

-

(1,092)

-

    Debt issuance costs

(10,430)

-

(19,177)

(9,258)

        Net cash required by (used in) financing activities

(22,539)

677

(66,772)

(39,555)

Net increase (decrease) in cash and cash equivalents

(5,031)

4,101

(799)

2,856

Cash and cash equivalents - beginning of period

23,546

17,093

19,314

18,338

Cash and cash equivalents - end of period

$         18,515

$        21,194

$  18,515

$ 21,194

PENN VIRGINIA GP HOLDINGS, L.P.

CERTAIN NON-GAAP FINANCIAL MEASURES - unaudited

(in thousands, except per unit data)

The following tables present the calculation of distributable cash to PVG and reconciliation of net income attributable to PVG with respect to the three and nine months ended September 30, 2010 and 2009:

Three Months Ended

Nine Months Ended

Calculation of Non-GAAP "Distributable cash"

September 30,

September 30,

Distributable cash:

2010 (a)

2009

2010 (a)

2009

    Cash distributions received from PVR associated with:

       2% general partner interest

$                      502

$                         497

$                1,501

$                 1,491

       General partner incentive distribution rights

6,093

6,035

18,231

18,105

       PVR common units

9,230

9,206

27,667

27,618

    Total cash received from PVR

15,825

15,738

47,399

47,214

   Deduct:  Net expenses of PVG on a stand-alone basis (b)

(629)

(858)

(2,752)

(1,927)

   Cash reserve for working capital

43

(32)

1,070

(743)

Distributable cash (c)

$                 15,239

$                    14,848

$              45,717

$               44,544

    Cash distributions to be paid to partners of PVG

      To Penn Virginia Corporation

$                         -

$                      7,629

$                3,443

$               30,487

      To public unitholders

15,239

7,219

42,274

14,057

Total cash distributions to be paid

$                 15,239

$                    14,848

$              45,717

$               44,544

Distribution per limited partner unit (paid in subsequent period)

$                     0.39

$                        0.38

$                  1.17

$                   1.14

Weighted-average units outstanding, basic and diluted

39,075

39,075

39,075

39,075

Reconciliation of GAAP "Net income" to Non-GAAP "Net income

as adjusted"

Net income attributable to PVG

$                   7,281

$                    10,172

$              27,262

$               25,360

Adjustments for derivatives:

 Derivative (gains) losses included in net income

11,020

3,667

12,604

14,235

 Cash receipts (payments) to settle derivatives for period

(2,435)

(314)

(6,493)

4,135

Impact of adjustments on noncontrolling interests (d)

(3,376)

(2,115)

(2,344)

(6,631)

Net income attributable to PVG, as adjusted (e)

$                 12,490

$                    11,410

$              31,029

$               37,099

Net income attributable to PVG, as adjusted, per limited partner unit,

basic and diluted

$                     0.32

$                        0.29

$                  0.79

$                   0.95

(a) The three and nine months ended September 30, 2010 columns represent cash distributions expected to be received from PVR and cash distributions expected to be paid to unitholders of PVG in November 2010.

(b) Estimated net expenses of PVG, which represent general and administrative expenses, partially offset by interest income.

(c) Distributable cash represents cash distributions received from PVR, minus our net expenses, minus cash reserve for working capital.  Distributable cash is presented because we believe it is a useful adjunct to net income under GAAP.  Distributable cash is a significant liquidity metric which is an indicator of our ability to pay quarterly cash distributions to our limited partners.  Distributable cash is also the quantitative standard used throughout the investment community with respect to publicly traded partnerships.  Distributable cash is not a measure of financial performance under GAAP and should not be considered as an alternative to cash flows from operating, investing or financing activities, as an indicator of cash flows, as a measure of liquidity or as an alternative to net income.

(d) Noncontrolling interests in net income adjusts for the effects of incentive distribution rights and reflects the noncontrolling interests percentage of net income. The ratio of net income and net income attributable to noncontrolling interests calculated on a GAAP basis was used to estimate the impact of adjustments on noncontrolling interests.  A  pro forma calculation of net income attributable to noncontrolling interests was not performed.

(e) Net income as adjusted represents net income adjusted to exclude the effects of non-cash changes in the fair value of derivatives, and adjustments for an estimate of the related noncontrolling interests.  We believe this presentation  is widely used by investors and professional research analysts in the valuation, comparison, rating and investment recommendations of companies in the  natural gas midstream industry.  We use this information for comparative purposes within the industry.  Net income as adjusted 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.

PENN VIRGINIA GP HOLDINGS, L.P.

QUARTERLY SEGMENT INFORMATION - unaudited

(in thousands)

Coal and Natural Resource Management

Natural Gas Midstream

Other

Consolidated

Three months ended September 30, 2010

Revenues

    Natural gas midstream

$                                          -

$                180,207

$                           -

$                180,207

    Coal royalties

34,983

-

-

34,983

    Coal services

1,975

-

-

1,975

    Timber

1,437

-

-

1,437

    Oil and gas royalties

631

-

-

631

    Other

1,382

2,214

-

3,596

       Total revenues

40,408

182,421

-

222,829

Expenses

    Cost of gas purchased

-

151,657

-

151,657

    Operating

2,908

8,840

-

11,748

    General and administrative

3,686

4,706

637

9,029

    Depreciation, depletion and amortization

7,440

11,262

-

18,702

      Total expenses

14,034

176,465

637

191,136

Operating income (loss)

$                                  26,374

$                    5,956

$                     (637)

$                  31,693

Additions to property, plant and equipment and acquisitions

$                                       169

$                  33,077

$                           -

$                  33,246

Coal and Natural Resource Management

Natural Gas Midstream

Other

Consolidated

Three months ended September 30, 2009

Revenues

    Natural gas midstream

$                                          -

$                118,443

$                           -

$                118,443

    Coal royalties

29,821

-

-

29,821

    Coal services

1,869

-

-

1,869

    Timber

1,582

-

-

1,582

    Oil and gas royalties

535

-

-

535

    Other

1,372

2,003

-

3,375

       Total revenues

35,179

120,446

-

155,625

Expenses

    Cost of gas purchased

-

92,355

-

92,355

    Operating

2,435

7,401

-

9,836

    General and administrative

3,520

4,247

879

8,646

    Depreciation, depletion and amortization

7,999

9,852

-

17,851

      Total expenses

13,954

113,855

879

128,688

Operating income (loss)

$                                  21,225

$                    6,591

$                     (879)

$                  26,937

Additions to property, plant and equipment and acquisitions

$                                       140

$                  39,031

$                           -

$                  39,171

PENN VIRGINIA GP HOLDINGS, L.P.

YEAR-TO-DATE SEGMENT INFORMATION - unaudited

(in thousands)

Coal and Natural Resource Management

Natural Gas Midstream

Other

Consolidated

Nine months ended September 30, 2010

Revenues

    Natural gas midstream

$                          -

$                497,362

$                           -

$                497,362

    Coal royalties

98,088

-

-

98,088

    Coal services

5,976

-

-

5,976

    Timber

4,488

-

-

4,488

    Oil and gas royalties

2,000

-

-

2,000

    Other

3,998

6,827

-

10,825

       Total revenues

114,550

504,189

-

618,739

Expenses

    Cost of gas purchased

-

415,111

-

415,111

    Operating

7,670

24,647

-

32,317

    General and administrative

13,219

18,357

2,791

34,367

    Depreciation, depletion and amortization

22,145

32,638

-

54,783

      Total expenses

43,034

490,753

2,791

536,578

Operating income (loss)

$                  71,516

$                  13,436

$                  (2,791)

$                  82,161

Additions to property, plant and equipment and acquisitions

$                  18,283

$                  57,560

$                           -

$                  75,843

Coal and Natural Resource Management

Natural Gas Midstream

Other

Consolidated

Nine months ended September 30, 2009

Revenues

    Natural gas midstream

$                          -

$                348,882

$                           -

$                348,882

    Coal royalties

90,448

-

-

90,448

    Coal services

5,502

-

-

5,502

    Timber

4,355

-

-

4,355

    Oil and gas royalties

1,783

-

-

1,783

    Other

6,487

4,346

-

10,833

       Total revenues

108,575

353,228

-

461,803

Expenses

    Cost of gas purchased

-

285,129

-

285,129

    Operating

7,211

22,085

-

29,296

    General and administrative

11,275

12,996

1,978

26,249

    Depreciation, depletion and amortization

23,557

28,414

-

51,971

      Total expenses

42,043

348,624

1,978

392,645

Operating income (loss)

$                  66,532

$                    4,604

$                  (1,978)

$                  69,158

Additions to property, plant and equipment and acquisitions

$                    2,046

$                  71,245

$                           -

$                  73,291

Contact:

Stephen R. Milbourne

Director, Investor Relations

Ph: 610-975-8204   Fax: 610-975-8201

E-Mail: invest@pvrpartners.com

SOURCE Penn Virginia GP Holdings, L.P.



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