Penn Virginia Resource Partners, L.P. Announces Third Quarter 2010 Results and Declares Quarterly Distribution

Oct 27, 2010, 17:00 ET from Penn Virginia Resource Partners, L.P.

RADNOR, Pa., Oct. 27 /PRNewswire-FirstCall/ -- Penn Virginia Resource Partners, L.P. (NYSE: PVR) today reported financial and operational results for the three months ended September 30, 2010 and provided an update of full-year 2010 guidance.

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Third Quarter 2010 Highlights

Third quarter 2010 highlights and results, with comparisons to third quarter 2009 results, included the following:

  • Quarterly distributable cash flow (DCF), a non-GAAP (generally accepted accounting principles) measure, of $33.9 million as compared to $37.2 million;
  • Net income of $10.8 million, or $0.09 per limited partner unit, as compared to $18.8 million, or $0.24 per limited partner unit;
  • Adjusted net income, a non-GAAP measure which excludes the effects of the non-cash change in derivatives fair value, of $19.4 million, or $0.25 per limited partner unit, as compared to $22.2 million, or $0.30 per limited partner unit;
  • Coal royalties revenue of $35.0 million or $4.10 per ton as compared to $29.8 million or $3.56 per ton;
  • Coal production by lessees of 8.5 million tons, as compared to 8.4 million tons;
  • Quarterly natural gas midstream system throughput volumes of 36.2 billion cubic feet (Bcf), or 394 million cubic feet (MMcf) per day, as compared to 29.8 Bcf, or 324 MMcf per day;
  • Midstream gross margin of $28.6 million, or $0.79 per thousand cubic feet (Mcf), as compared to $26.1 million, or $0.88 per Mcf; and
  • Midstream gross margin, including the cash impact of midstream derivatives, of $28.0 million, or $0.77 per Mcf, as compared to $28.1 million, or $0.94 per Mcf.

Reconciliations of non-GAAP financial measures to GAAP-based measures appear in the financial tables later in this release.

Management Comment  

"We are pleased with the third quarter results" said Bill Shea, CEO. "Our coal segment continued to produce strong results and the increased volumes in midstream business are encouraging as we head into the fourth quarter. The third quarter also saw some exciting developments at PVR including the commencement of construction on our previously announced pipeline in the Marcellus Shale, which is anchored with a contract with Range Resources, and our announcement of the merger of PVG and PVR. Both of these developments are expected to position PVR well for the future," Mr. Shea said.

Cash Distribution

The Board of Directors of Penn Virginia Resources GP, LLC, the general partner of PVR declared a third quarter cash distribution of $0.47 per unit, payable on November 12, 2010 to unitholders of record as of November 8, 2010.  The distribution equates to an annualized rate of $1.88 per unit.

Third Quarter 2010 Results

DCF for the third quarter of 2010 of $33.9 million was $3.3 million, or 9 percent, lower than the $37.2 million of DCF in the third quarter of 2009 primarily due to:

  • a $4.1 million increase in interest expense due to the $300.0 million long-term debt offering completed in April 2010,
  • a $2.8 million increase in maintenance capital expenditures, and
  • a $2.1 million increase in cash payments to settle derivatives.

These decreases in DCF were partially offset by:

  • a $5.4 million increase in operating income adjusted for DD&A for both the coal and midstream segments, due to increased average coal royalties per ton and increased natural gas processing margins.

Coal and Natural Resource Management Segment Review

During the third quarter of 2010, operating income for PVR Coal and Natural Resource Management increased by $5.2 million, or 24 percent, to $26.4 million from $21.2 million in the prior year quarter.  Total revenues increased by $5.2 million, or 15 percent, to $40.4 million from $35.2 million in the prior year quarter primarily due to higher coal royalties revenue.

Coal royalties revenues were 17 percent higher than the prior year quarter, primarily due to a $0.54, or 15 percent increase, in average coal royalties per ton to $4.10 in the third quarter of 2010 as compared to $3.56 in the prior year quarter.  The increase in average coal royalties from the prior year quarter was attributable to higher coal prices.  Total operating expenses in the third quarter this year were essentially even with the prior year quarter.

Natural Gas Midstream Segment Review

During the third quarter of 2010, operating income for PVR Midstream decreased $0.6 million to $6.0 million from $6.6 million in the prior year quarter.  Adjusted for the cash impact of derivatives, operating income decreased $3.2 million, from $8.6 million in the prior year quarter to $5.4 million.  Midstream gross margin increased by 9 percent to $28.6 million, or $0.79 per Mcf, from $26.1 million, or $0.88 per Mcf, in the prior year quarter primarily due to higher throughput volumes.  Adjusted for the cash impact of derivatives, midstream gross margin was $28.0 million, down $0.1 million from $28.1 million in the prior year quarter; on a per unit basis, midstream gross margin adjusted for the cash impact of derivatives was $0.77 per Mcf, down 18 percent from $0.94 per Mcf, in the prior year quarter.

System throughput volumes increased 22 percent to 36.2 Bcf, or approximately 394 MMcf per day, in the third quarter of 2010 from 29.8 Bcf, or approximately 324 MMcf per day, in the prior year quarter.  The increase in volumes was primarily the result of additional volumes on the Crossroads and Panhandle systems and new business in the Pennsylvania Marcellus shale region.  Other expenses increased by $3.3 million to $24.8 million, due to a $1.4 million increase in operating expenses, a $0.5 million increase in general and administrative expense, and a $1.4 million increase in DD&A.

Capital Resources and Impact of Derivatives

As of September 30, 2010, PVR had borrowings of $365.0 million under our $850.0 million revolving credit facility and $13.1 million of cash and equivalents, with remaining borrowing capacity of $483.4 million under the revolver.  Interest expense increased from $6.5 million in the third quarter of 2009 to $10.6 million in the third quarter of 2010 due to the refinancing of short-term borrowings under the credit facility with the issuance of $300.0 million of long term debt in April 2010.

For the third quarter of 2010, derivatives expense was $11.0 million, as compared to derivatives expense of $2.8 million in the prior year quarter.  Cash settlements of derivatives included in these amounts resulted in net cash payments of $2.4 million during the third quarter of 2010 related to commodity and interest rate derivatives, as compared to $0.3 million of net cash payments in the prior year quarter.  See the Natural Gas Midstream Segment Review in this release for a discussion of the impact of derivatives on PVR Midstream's gross margin.  See the Guidance Table included in this release for details of derivative positions as of September 30, 2010.

Guidance for 2010

See the Guidance Table included in this release for updated guidance estimates for full-year 2010.  These estimates, including capital expenditure plans, are meant to provide guidance only and are subject to revision as our operating environment changes.

Third Quarter 2010 Financial and Operational Results Conference Call

A joint conference call and webcast for PVR and Penn Virginia GP Holdings, L.P. (NYSE: 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.pvresource.com, or PVG's website, www.pvgpholdings.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 Resource Partners, L.P. (NYSE: PVR) is a publicly traded limited partnership which owns and manages coal and natural resource properties and related assets, and owns and operates midstream natural gas gathering and processing businesses.  We own more than 800 million tons of proven coal reserves in Northern and Central Appalachia, and the Illinois and San Juan Basins; our midstream natural gas assets are located principally in Texas, Oklahoma and Pennsylvania and include more than 4,100 miles of natural gas gathering pipelines and 6 processing systems with approximately 400 million cubic feet per day of capacity. For more information about PVR, visit our website at www.pvresource.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, NGLs and coal; our ability to access external sources of capital; any impairment writedowns of our assets; the relationship between natural gas, NGL and coal prices; the projected demand for and supply of natural gas, NGLs and coal; competition among producers in the coal industry generally and among natural gas midstream companies; the extent to which the amount and quality of actual production of our coal differs from estimated recoverable coal reserves; our ability to generate sufficient cash from our businesses to maintain and pay the quarterly distribution to our general partner and our unitholders; the experience and financial condition of our coal lessees and natural gas midstream customers, including our lessees' ability to satisfy their royalty, environmental, reclamation and other obligations to us and others; operating risks, including unanticipated geological problems, incidental to our coal and natural resource management or natural gas midstream businesses; our ability to acquire new coal reserves or natural gas midstream assets and new sources of natural gas supply and connections to third-party pipelines on satisfactory terms; our ability to retain existing or acquire new natural gas midstream customers and coal lessees; the ability of our lessees to produce sufficient quantities of coal on an economic basis from our reserves and obtain favorable contracts for such production; the occurrence of unusual weather or operating conditions including force majeure events; delays in anticipated start-up dates of our lessees' mining operations and related coal infrastructure projects and new processing plants in our natural gas midstream business; environmental risks affecting the mining of coal reserves or the production, gathering and processing of natural gas; the timing of receipt of necessary governmental permits by us or our lessees; hedging results; accidents; changes in governmental regulation or enforcement practices, especially with respect to environmental, health and safety matters, including with respect to emissions levels applicable to coal-burning power generators; uncertainties relating to the outcome of current and future litigation regarding mine permitting; risks and uncertainties relating to general domestic and international economic (including inflation, interest rates and financial and credit markets) and political conditions (including the impact of potential terrorist attacks); our ability to complete our previously announced merger; and other risks set forth in our Annual Report on Form 10-K for the fiscal year ended December 31, 2009 and our most recent Quarterly Reports on Form 10-Q.

Additional information concerning these and other factors can be found in our press releases and public periodic filings with the SEC, 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 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 a result of new information, future events or otherwise.

PENN VIRGINIA RESOURCE PARTNERS, 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

8,392

7,767

31,576

24,271

    Depreciation, depletion and amortization

18,702

17,851

54,783

51,971

Total expenses

190,499

127,809

533,787

390,667

Operating income

32,330

27,816

84,952

71,136

Other income (expense)

    Interest expense

(10,639)

(6,505)

(25,368)

(18,486)

    Interest income and other

103

323

615

969

    Derivatives

(11,020)

(2,810)

(11,514)

(12,005)

Net income

$   10,774

$   18,824

$   48,685

$   41,614

Allocation of net income:

    General partner's interest in net income

$     6,187

$     6,291

$   18,842

$   18,576

    Limited partners' interest in net income

$     4,587

$   12,533

$   29,843

$   23,038

Basic and diluted net income per limited partner unit

$       0.09

$       0.24

$       0.57

$       0.43

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

52,293

51,799

52,034

51,799

Other data:

Distributions to limited partners (per unit) - (a)

$       0.47

$       0.47

$       1.41

$       1.41

Distributions paid

$   31,205

$   30,877

$   93,389

$   92,631

Distributable cash flow (non-GAAP) - (b)

$   33,925

$   37,213

$ 101,722

$ 103,432

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

(a) These quarterly distributions are for the periods shown and are payable within 45 days after the end of each quarter to unitholders of record and to our general partner.

(b) See subsequent page for the calculation and description of distributable cash flow.

PENN VIRGINIA RESOURCE PARTNERS, L.P.

CONDENSED CONSOLIDATED BALANCE SHEETS - unaudited

(in thousands)

September 30,

December 31,

2010

2009

Assets

    Cash and cash equivalents

$         13,131

$          8,659

    Accounts receivable

80,087

82,321

    Derivative assets

148

1,331

    Other current assets

7,095

4,468

        Total current assets

100,461

96,779

    Property, plant and equipment, net

932,400

900,844

    Other long-term assets

216,158

210,437

         Total assets

$    1,249,019

$   1,208,060

Liabilities and Partners' Capital

    Accounts payable and accrued liabilities

$         94,000

$        70,405

    Deferred income

3,531

3,839

    Derivative liabilities

13,430

11,251

        Total current liabilities

110,961

85,495

    Derivative liabilities

4,250

4,285

    Other long-term liabilities

29,300

21,673

    Senior notes

300,000

-

    Revolving credit facility

365,000

620,100

    Partners' capital

439,508

476,507

         Total liabilities and partners' capital

$    1,249,019

$   1,208,060

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

$ 10,774

$ 18,824

$  48,685

$ 41,614

 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 the 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

130

1,500

6,017

1,500

    Equity earnings, net of distributions received

110

(1,385)

2,500

(2,456)

    Other

(109)

(300)

(721)

(932)

    Changes in operating assets and liabilities

14,170

1,608

25,196

3,209

        Net cash provided by operating activities

53,995

42,867

146,814

116,425

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

(31,205)

(31,211)

(93,389)

(92,966)

    Proceeds from issuance of senior notes

-

-

300,000

-

    Proceeds from (repayments of) revolving credit facility, net

18,510

31,000

(255,100)

60,000

    Other

(10,270)

-

(18,995)

(9,258)

        Net cash used in financing activities

(22,965)

(211)

(67,484)

(42,224)

Net increase (decrease) in cash and cash equivalents

(1,901)

3,785

4,472

1,782

Cash and cash equivalents - beginning of period

15,032

7,481

8,659

9,484

Cash and cash equivalents - end of period

$ 13,131

$ 11,266

$  13,131

$ 11,266

PENN VIRGINIA RESOURCE PARTNERS, L.P.

CERTAIN NON-GAAP FINANCIAL MEASURES - unaudited

(in thousands, except per unit data)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2010

2009

2010

2009

Reconciliation of GAAP "Net income" to Non-GAAP

"Distributable cash flow"

Net income

$             10,774

$             18,824

$             48,685

$             41,614

Depreciation, depletion and amortization

18,702

17,851

54,783

51,971

Commodity derivative contracts:

 Derivative (gains) losses included in net income

11,020

3,667

12,604

14,235

   Cash receipts (payments) to settle derivatives for the period

(2,435)

(314)

(6,493)

4,135

 Equity earnings from joint venture, net of distributions

110

(1,385)

2,500

(2,456)

 Maintenance capital expenditures

(4,246)

(1,430)

(10,357)

(6,067)

 Distributable cash flow (a)

$             33,925

$             37,213

$           101,722

$           103,432

Distribution to Partners:

 Limited partner units

$             24,578

$             24,346

$             73,313

$             73,037

 Phantom units (b)

33

333

406

333

 General partner interest

501

497

1,496

1,491

 Incentive distribution rights (c)

6,093

6,035

18,174

18,105

 Total cash distribution paid during period

$             31,205

$             31,211

$             93,389

$             92,966

 Total cash distribution paid per unit during period

$                 0.47

$                 0.47

$                 1.41

$                 1.41

Reconciliation of GAAP "Net income" to Non-GAAP

"Net income as adjusted"

 Net income

$             10,774

$             18,824

$             48,685

$             41,614

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 the period

(2,435)

(314)

(6,493)

4,135

 Net income, as adjusted (d)

$             19,359

$             22,177

$             54,796

$             59,984

Allocation of net income, as adjusted:

      General partner's interest in net income, as adjusted

$               6,359

$               6,358

$             18,964

$             18,943

      Limited partners' interest in net income, as adjusted

$             13,000

$             15,819

$             35,832

$             41,041

 Net income, as adjusted, per limited partner unit, basic and diluted

$                 0.25

$                 0.30

$                 0.69

$                 0.78

(a) Distributable cash flow represents net income plus depreciation, depletion and amortization expenses, plus (minus) derivative losses (gains) included in other income, plus (minus) cash received (paid) for derivative settlements, minus equity earnings in joint ventures, plus cash distributions from joint ventures, minus maintenance capital expenditures.  Distributable cash flow is a significant liquidity metric which is an indicator of our ability to generate cash flows at a level that can sustain or support an increase in quarterly cash distributions paid to our partners.  Distributable cash flow is also the quantitative standard used by investors and professional research analysts in the valuation, comparison, rating and investment recommendations of publicly traded partnerships.  Distributable cash flow is presented because we believe it is a useful adjunct to net cash provided by operating activities under GAAP.  Distributable cash flow 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.

(b) Phantom units grants were made in both 2010 and 2009 under our long-term incentive plan.  Phantom units receive distribution rights; thus, we have presented distributions paid to phantom unit holders in our total distributions paid to Partners.

(c) In accordance with our partnership agreement, incentive distribution rights represent the right to receive an increasing percentage of quarterly distributions of available cash from operating surplus after the minimum quarterly distribution and the target distribution levels have been achieved.

(d) Net income, as adjusted, represents net income adjusted to exclude the effects of non-cash changes in the fair value of derivatives.  We believe this presentation is commonly 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 RESOURCE PARTNERS, L.P.

QUARTERLY SEGMENT INFORMATION - unaudited

(in thousands)

Coal and Natural Resource Management

Natural Gas Midstream

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

8,392

    Depreciation, depletion and amortization

7,440

11,262

18,702

      Total expenses

14,034

176,465

190,499

Operating income

$      26,374

$      5,956

$      32,330

Additions to property and equipment and acquisitions

$           169

$    33,077

$      33,246

Coal and Natural Resource Management

Natural Gas Midstream

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

7,767

    Depreciation, depletion and amortization

7,999

9,852

17,851

      Total expenses

13,954

113,855

127,809

Operating income

$      21,225

$      6,591

$      27,816

Additions to property and equipment and acquisitions

$           140

$    39,031

$      39,171

PENN VIRGINIA RESOURCE PARTNERS, L.P.

YEAR-TO-DATE SEGMENT INFORMATION - unaudited

(in thousands)

Coal and Natural Resource Management

Natural Gas Midstream

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

31,576

    Depreciation, depletion and amortization

22,145

32,638

54,783

      Total expenses

43,034

490,753

533,787

Operating income

$      71,516

$    13,436

$      84,952

Additions to property and equipment and acquisitions

$      18,283

$    57,560

$      75,843

Coal and Natural Resource Management

Natural Gas Midstream

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

24,271

    Depreciation, depletion and amortization

23,557

28,414

51,971

      Total expenses

42,043

348,624

390,667

Operating income

$      66,532

$      4,604

$      71,136

Additions to property and equipment and acquisitions

$        2,046

$    71,245

$      73,291

PENN VIRGINIA RESOURCE PARTNERS, L.P.

GUIDANCE TABLE - unaudited

(dollars and tons in millions)

Penn Virginia Resource Partners, L.P. is providing the following guidance regarding financial and operational expectations for full-year 2010.

Actual

First Quarter

Second Quarter

Third Quarter

YTD

Full-Year

2010

2010

2010

2010

2010 Guidance

Coal and natural resource management segment:

Coal royalty tons (millions)

8.2

8.9

8.5

25.6

33.0

-

34.0

Revenues:

Average coal royalties per ton

$

3.42

3.93

4.10

3.82

3.80

-

3.90

Other

$

5.3

5.7

5.4

16.5

21.0

-

22.0

Expenses:

Cash operating expenses

$

5.9

8.4

6.6

20.9

26.0

-

27.0

Depreciation, depletion and amortization

$

7.3

7.4

7.4

22.1

29.0

-

30.0

Capital expenditures:

Expansion and acquisitions

$

0.0

17.8

0.0

17.9

20.0

-

22.0

Maintenance capital expenditures

$

0.0

0.2

0.2

0.5

1.0

-

1.5

Total segment capital expenditures

$

0.0

18.1

0.2

18.4

21.0

-

23.5

Natural gas midstream segment:

System throughput volumes (MMcf per day)

308

320

394

341

340

-

350

Expenses:

Cash operating expenses

$

13.2

16.2

13.5

43.0

56.0

-

60.0

Depreciation, depletion and amortization

$

10.5

10.9

11.3

32.6

44.0

-

46.0

Capital expenditures:

Expansion and acquisitions

$

7.4

14.6

31.0

53.0

110.0

-

120.0

Maintenance capital expenditures

$

1.9

4.0

4.0

9.9

14.0

-

16.0

Total segment capital expenditures

$

9.3

18.6

35.0

62.9

124.0

-

136.0

Other:

Interest expense:

End of period total debt outstanding (a)

$

618.1

627.5

665.0

Effective interest rate

3.8%

5.7%

6.5%

These estimates are meant to provide guidance only and are subject to revision as PVR's operating environment changes.

(a) In April 2010, we sold $300 million of senior unsecured noted due 2018, with an annual coupon of 8.25%, the net proceeds of which were used to repay borrowings under our revolving credit facility.

PENN VIRGINIA RESOURCE PARTNERS, L.P.

DERIVATIVE CONTRACT SUMMARY - unaudited

As of September 30, 2010

Average Volume Per Day

Swap

Weighted Average Price

Price

Put (a)

Call (b)

Crude oil collar

(barrels)

(per barrel)

Fourth quarter 2010 through fourth quarter 2010

                                      750

$70.00

$81.25

Crude oil collar

(barrels)

(per barrel)

Fourth quarter 2010 through fourth quarter 2010

                                   1,000

$68.00

$80.00

Natural gas purchase swap

(MMBtu)

(MMBtu)

Fourth quarter 2010 through fourth quarter 2010

                                   7,100

$5.885

NGL - natural gasoline collar

(gallons)

(per gallon)

Fourth quarter 2010 through fourth quarter 2010

                                 42,000

$1.55

$2.03

NGL - natural gasoline collar

(gallons)

(per gallon)

First quarter 2011 through fourth quarter 2011

                                 95,000

$1.57

$1.94

Crude oil collar

(barrels)

(per barrel)

First quarter 2011 through fourth quarter 2011

                                      400

$75.00

$98.50

Natural gas purchase swap

(MMBtu)

(MMBtu)

First quarter 2011 through fourth quarter 2011

                                   6,500

$5.796

We estimate that, excluding the derivative positions described above, for every $1.00 MMBtu increase or decrease in the natural gas price, natural gas midstream gross margin and operating income for the remainder of 2010 would decrease or increase by approximately $0.2 million.  In addition, we estimate that for every $5.00 per barrel increase or decrease in the crude oil price, our natural gas midstream gross margin and operating income for the remainder of 2010 would increase or decrease by approximately $1.4 million.  This assumes that crude oil prices, natural gas prices and inlet volumes remain constant at anticipated levels.  These estimated changes in gross margin and operating income exclude potential cash receipts or payments in settling these derivative positions.

(a) - Purchased put/floor.

(b) - Sold call/ceiling

Contact:

Stephen R. Milbourne

Director - Investor Relations

Phone: 610-975-8204  Fax: 610-975-8201

E-Mail: invest@pvrpartners.com

SOURCE Penn Virginia Resource Partners, L.P.



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